Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jul. 31, 2016 | Sep. 13, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | MamaMancini's Holdings, Inc. | |
Entity Central Index Key | 1,520,358 | |
Document Type | 10-Q | |
Document Period End Date | Jul. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --01-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 27,245,344 | |
Trading Symbol | MMMB | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,017 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jul. 31, 2016 | Jan. 31, 2016 |
Assets: | ||
Cash | $ 264,446 | $ 587,422 |
Accounts receivable, net | 1,360,243 | 1,476,582 |
Inventories | 407,978 | 252,752 |
Prepaid expenses | 226,474 | 154,458 |
Due from manufacturer - related party | 2,180,863 | 2,248,781 |
Total current assets | 4,440,004 | 4,719,995 |
Property and equipment, net | 1,091,835 | 1,047,455 |
Total Assets | 5,531,839 | 5,767,450 |
Liabilities: | ||
Accounts payable and accrued expenses | 395,950 | 769,551 |
Line of credit, net | 933,001 | |
Term loan | 120,000 | 120,000 |
Promissory notes | 156,275 | 266,808 |
Notes payable - related party | 125,000 | |
Convertible note payable | 270,000 | 2,540,000 |
Total current liabilities | 942,225 | 4,754,360 |
Term loan - net of current | 260,000 | 320,000 |
Line of credit - net of current portion | 1,096,630 | |
Promissory notes - net of current portion | 69,767 | |
Convertible note payable - net of current portion | 2,540,323 | |
Notes payable - related party | 125,000 | |
Total long-term liabilities | 4,021,953 | 389,767 |
Total Liabilities | 4,964,178 | 5,144,127 |
Commitments and contingencies | ||
Stockholders' Equity | ||
Preferred stock value | ||
Common stock, $0.00001 par value; 250,000,000 shares authorized; 27,245,334 and 26,507,516 shares issued and outstanding, respectively | 272 | 265 |
Additional paid in capital | 15,513,497 | 14,954,928 |
Common stock subscribed, $0.00001 par value; 66,667 shares, respectively | 1 | 1 |
Accumulated deficit | (14,796,609) | (14,182,371) |
Less: Treasury stock, 230,000 shares, respectively | (149,500) | (149,500) |
Total Stockholders' Equity | 567,661 | 623,323 |
Total Liabilities and Stockholders' Equity | 5,531,839 | 5,767,450 |
Series A Preferred Stock [Member] | ||
Stockholders' Equity | ||
Preferred stock value |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jul. 31, 2016 | Jan. 31, 2016 |
Preferred stock, par value | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 19,880,000 | 19,880,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 27,245,334 | 26,507,516 |
Common stock, shares outstanding | 27,245,334 | 26,507,516 |
Common stock subscribed, par value | $ 0.00001 | $ 0.00001 |
Common stock subscribed, shares | 66,667 | 66,667 |
Treasury stock, shares | 230,000 | 230,000 |
Series A Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 120,000 | 120,000 |
Preferred stock, shares issued | 23,400 | 0 |
Preferred stock, shares outstanding | 23,400 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2016 | Jul. 31, 2015 | Jul. 31, 2016 | Jul. 31, 2015 | |
Income Statement [Abstract] | ||||
Sales - net of slotting fees and discounts | $ 4,138,280 | $ 2,739,200 | $ 8,062,257 | $ 6,092,479 |
Cost of sales | 2,772,966 | 2,091,032 | 5,221,744 | 4,499,331 |
Gross profit | 1,365,314 | 648,168 | 2,840,513 | 1,593,148 |
Operating expenses | ||||
Research and development | 37,225 | 20,479 | 67,787 | 43,558 |
General and administrative expenses | 1,437,256 | 1,390,625 | 2,937,113 | 3,173,746 |
Total operating expenses | 1,474,481 | 1,411,104 | 3,004,900 | 3,217,304 |
Loss from operations | (109,167) | (762,936) | (164,387) | (1,624,156) |
Other expenses | ||||
Interest expense | (157,949) | (124,705) | (319,711) | (248,062) |
Amortization of debt discount | (9,694) | (83,437) | (18,819) | (182,270) |
Amortization of closing costs | (29,228) | (40,374) | ||
Total other expenses | (167,643) | (237,370) | (338,530) | (470,706) |
Net loss | (276,810) | (1,000,306) | (502,917) | (2,094,862) |
Less: preferred dividends | (46,800) | (10,959) | (111,321) | (10,959) |
Net loss available to common stockholders | $ (323,610) | $ (1,011,265) | $ (614,238) | $ (2,105,821) |
Net loss per common share - basic and diluted | $ (0.01) | $ (0.04) | $ (0.02) | $ (0.08) |
Weighted average common shares outstanding - basic and diluted | 27,039,199 | 26,085,916 | 26,776,279 | 26,071,767 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jul. 31, 2016 | Jul. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (502,917) | $ (2,094,862) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 159,703 | 137,585 |
Amortization of debt discount | 18,819 | 182,270 |
Share-based compensation | 352,137 | 3,055 |
(Increase) Decrease in: | ||
Accounts receivable | 116,339 | 1,016,864 |
Inventories | (155,226) | (29,089) |
Prepaid expenses | (43,891) | (21,649) |
Due from manufacturer - related party | 67,918 | 10,910 |
Increase (Decrease) in: | ||
Accounts payable and accrued expenses | (36,285) | (58,222) |
Liabilities to be settled in stock | 49,347 | |
Net Cash Used In Operating Activities | (23,403) | (763,417) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Cash paid for fixed assets | (204,083) | (100,683) |
Net Cash Used In Investing Activities | (204,083) | (100,683) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of preferred stock | 350,000 | |
Stock issuance costs | (150,811) | |
Deferred offering costs | (19,021) | |
Proceeds from demand notes | 650,000 | |
Debt issuance costs | (6,191) | |
Borrowings (repayments) of line of credit, net | 144,810 | (357,936) |
Repayment of term loan | (60,000) | (60,000) |
Repayment of promissory notes | (180,300) | |
Net Cash (Used In) Provided By Financing Activities | (95,490) | 406,041 |
Net Decrease in Cash | (322,976) | (458,059) |
Cash - Beginning of Period | 587,422 | 854,995 |
Cash - End of Period | 264,446 | 396,936 |
SUPPLEMENTARY CASH FLOW INFORMATION: | ||
Income taxes | ||
Interest | 76,311 | 223,062 |
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Stock issuance costs paid in the form of warrants | 76,608 | |
Conversion of demand notes to preferred stock | 650,000 | |
Stock issued for debt discount on convertible note | 39,600 | |
Accrued dividends | 10,959 | |
Stock issued for Series A Preferred dividends | 178,314 | |
Prepaid stock-based compensation | 28,125 | |
Accrued interest reclassified to principal balance of convertible note | $ 270,323 |
Nature of Operations and Basis
Nature of Operations and Basis of Presentation | 6 Months Ended |
Jul. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations and Basis of Presentation | Note 1 - Nature of Operations and Basis of Presentation Nature of Operations MamaMancinis Holdings, Inc. (the Company), (formerly known as Mascot Properties, Inc.) was organized on July 22, 2009 as a Nevada corporation. The Company has a year-end of January 31. The Company is a manufacturer and distributor of beef meatballs with sauce, turkey meatballs with sauce, and other similar meats and sauces. The Companys customers are located throughout the United States, with a large concentration in the Northeast and Southeast. Basis of Presentation The condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP) and include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. The unaudited financial information furnished herein reflects all adjustments, consisting solely of normal recurring items, which in the opinion of management are necessary to fairly state the financial position of the Company and the results of its operations for the periods presented. This report should be read in conjunction with the Companys consolidated financial statements and notes thereto included in the Companys Form 10-K for the year ended January 31, 2016 filed on April 21, 2016. The Company assumes that the users of the interim financial information herein have read or have access to the audited financial statements for the preceding fiscal year and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The condensed consolidated balance sheet at January 31, 2016 was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. The results of operations for the interim periods presented are not necessarily indicative of results for the year ending January 31, 2017. The Company adopted Accounting Standards Update (ASU) 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company incurred a net loss available to common shareholders of $614,238 and $2,105,821 during the six months ended July 31, 2016 and 2015, respectively. Also, as of July 31, 2016, the Company had $264,446 in cash, and working capital of $3,497,779. These factors all raise substantial doubt about the ability of the Company to continue as a going concern. In their report for the fiscal year ended January 31, 2016, the Companys auditors have expressed an opinion that, as a result of the conditions noted, there is substantial doubt regarding the ability to continue as a going concern. Managements plans include raising additional funding from debt and/or equity transactions that will be used to refinance the Companys maturing debt and for general working capital purposes. These financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jul. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting Policies Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Such estimates and assumptions impact, among others, the following: allowance for doubtful accounts, inventory obsolescence and the fair value of share-based payments. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the condensed consolidated financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from our estimates. Risks and Uncertainties The Company operates in an industry that is subject to intense competition and change in consumer demand. The Companys operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure. The Company has experienced, and in the future expects to continue to experience, variability in sales and earnings. The factors expected to contribute to this variability include, among others, (i) the cyclical nature of the grocery industry, (ii) general economic conditions in the various local markets in which the Company competes, including the general downturn in the economy, and (iii) the volatility of prices pertaining to food and beverages in connection with the Companys distribution of the product. These factors, among others, make it difficult to project the Companys operating results on a consistent basis. Cash The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. The Company held no cash equivalents at July 31, 2016 or January 31, 2016. The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company generally does not require collateral to support customer receivables. The Company provides an allowance for doubtful accounts based upon a review of the outstanding accounts receivable, historical collection information and existing economic conditions. The Company determines if receivables are past due based on days outstanding, and amounts are written off when determined to be uncollectible by management. The maximum accounting loss from the credit risk associated with accounts receivable is the amount of the receivable recorded, which is the face amount of the receivable net of the allowance for doubtful accounts. As of July 31, 2016 and January 31, 2016, the Company had reserves of $2,000. Inventories Inventories are stated at average cost using the first-in, first-out (FIFO) valuation method. Inventory was comprised of the following at July 31, 2016 and January 31, 2016: July 31, 2016 January 31, 2016 Finished goods $ 407,978 $ 252,752 Property and Equipment Property and equipment are recorded at cost. Depreciation expense is computed using straight-line methods over the estimated useful lives. Asset lives for financial statement reporting of depreciation are: Machinery and equipment 2-7 years Furniture and fixtures 3-5 years Leasehold improvements 3-10 years Fair Value of Financial Instruments For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amount of the Companys short-term financial instruments approximates fair value due to the relatively short period to maturity for these instruments. Stock Issuance Costs Stock issuance costs are capitalized as incurred. Upon the completion of the offering, the stock issuance costs are reclassified to equity and netted against proceeds. In the event the costs are in excess of the proceeds, the costs are recorded to expense. In the case of an aborted offering, all costs are expensed. Offering costs recorded to equity for the three and six months ended July 31, 2016 and 2015 were $0 and $0, respectively. Research and Development Research and development is expensed as incurred. Research and development expenses for the three months ended July 31, 2016 and 2015 were $37,225 and $20,479, respectively. Research and development expenses for the six months ended July 31, 2016 and 2015 were $67,787 and $43,558, respectively. Shipping and Handling Costs The Company classifies freight billed to customers as sales revenue and the related freight costs as general and administrative expenses. Revenue Recognition The Company records revenue for products when all of the following have occurred: (1) persuasive evidence of an arrangement exists, (2) the product is delivered, (3) the sales price to the customer is fixed or determinable, and (4) collectability of the related customer receivable is reasonably assured. There is no stated right of return for products. The Company meets these criteria upon shipment. Expenses such as slotting fees, sales discounts, and allowances are accounted for as a direct reduction of revenues as follows: Six Months Ended July 31, 2016 Six Months Ended July 31, 2015 Gross Sales $ 8,298,592 $ 6,249,578 Less: Slotting, Discounts, Allowances 236,335 157,099 Net Sales $ 8,062,257 $ 6,092,479 Cost of Sales Cost of sales represents costs directly related to the production and manufacturing of the Companys products. Costs include product development, freight, packaging, and print production costs. Advertising Costs incurred for producing and communicating advertising for the Company are charged to operations as incurred. Producing and communicating advertising expenses for the three months ended July 31, 2016 and 2015 were $350,665 and $521,626, respectively. Producing and communicating advertising expenses for the six months ended July 31, 2016 and 2015 were $771,557 and $1,438,558, respectively. Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation Stock Compensation Equity Based Payments to Non-Employees The Company recognizes all forms of share-based payments, including stock option grants, warrants and restricted stock grants, at their fair value on the grant date, which are based on the estimated number of awards that are ultimately expected to vest. Share-based payments, excluding restricted stock, are valued using a Black-Scholes option pricing model. Grants of share-based payment awards issued to non-employees for services rendered have been recorded at the fair value of the share-based payment, which is the more readily determinable value. The grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. If an award is granted, but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the termination of service. Stock-based compensation expenses are included in cost of goods sold or selling, general and administrative expenses, depending on the nature of the services provided, in the condensed consolidated statement of operations. Share-based payments issued to placement agents are classified as a direct cost of a stock offering and are recorded as a reduction in additional paid in capital. For the three months ended July 31, 2016 and 2015, share-based compensation amounted to $172,929 and $77,621, respectively. For the six months ended July 31, 2016 and 2015, share-based compensation amounted to $352,137 and $79,663, respectively. During the three and six months ended June 30, 2015, share-based compensation included stock issuance costs of $76,608 paid in form of warrants. For the six months ended July 31, 2016, when computing fair value of share-based payments, the Company has considered the following variables: July 31, 2016 Risk-free interest rate 1.07% to 1.33 % Expected life of grants 2.5 to 3.5 years Expected volatility of underlying stock 166% to 179 % Dividends 0 % The expected option term is computed using the simplified method as permitted under the provisions of ASC 718-10-599. The Company uses the simplified method to calculate expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. The expected stock price volatility for the Companys stock options was determined by the historical volatilities for industry peers and used an average of those volatilities. Risk free interest rates were obtained from U.S. Treasury rates for the applicable periods. Earnings (Loss) Per Share Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss), adjusted for changes in income or loss that resulted from the assumed conversion of convertible shares, by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. The Company had the following potential common stock equivalents at July 31, 2016: Series A Preferred 3,466,667 Common stock warrants, exercise price range of $0.675-$2.50 4,964,734 Common stock options, exercise price of $0.39-$2.97 799,404 Total common stock equivalents 9,230,805 The Company had the following potential common stock equivalents at July 31, 2015: Series A Preferred 1,000,000 Liabilities to be settled in stock 65,617 Common stock warrants, exercise price range of $1.00-$2.50 1,884,735 Common stock options, exercise price of $1.00-$2.97 496,404 Total common stock equivalents 3,446,756 Since the Company reflected a net loss during the three and six months ended July 31, 2016 and 2015, the effect of considering any common stock equivalents, would have been anti-dilutive. A separate computation of diluted earnings (loss) per share is not presented. Income Taxes Income taxes are provided in accordance with ASC No. 740, Accounting for Income Taxes Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company is no longer subject to tax examinations by tax authorities for years prior to 2012. Reclassification Certain prior period amounts have been reclassified to conform to current period presentation. Recent Accounting Pronouncements In May 2014, the FASB issued a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The standards core principle (issued as ASU 2014-09 by the FASB), is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The new guidance must be adopted using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. In August 2015, the FASB issued ASU No. 2015-14, which defers the effective date of ASU 2014-09 by one year, and would allow entities the option to early adopt the new revenue standard as of the original effective date. This ASU is effective for public reporting companies for interim and annual periods beginning after December 15, 2017. The Company is currently evaluating its adoption method and the impact of the standard on its condensed consolidated financial statements. In March 2015, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). In April 2016, the FASB issued ASU No. 2016-09, Compensation Stock Compensation In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross verses Net) In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying consolidated financial statements. |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jul. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 3 - Property and Equipment: Property and equipment on July 31, 2016 and January 31, 2016 are as follows: July 31, 2016 January 31, 2016 Machinery and Equipment $ 1,311,480 $ 1,112,522 Furniture and Fixtures 23,067 17,942 Leasehold Improvements 429,282 429,282 1,763,829 1,559,746 Less: Accumulated Depreciation 671,994 512,291 $ 1,091,835 $ 1,047,455 Depreciation expense charged to income for the three months ended July 31, 2016 and 2015 amounted to $83,000 and $70,385, respectively. Depreciation expense charged to income for the six months ended July 31, 2016 and 2015 amounted to $159,703 and $137,585, respectively. |
Investment in Meatball Obsessio
Investment in Meatball Obsession, LLC | 6 Months Ended |
Jul. 31, 2016 | |
Investments in and Advances to Affiliates, Schedule of Investments [Abstract] | |
Investment in Meatball Obsession, LLC | Note 4 - Investment in Meatball Obsession, LLC During 2011 the Company acquired a 34.62% interest in Meatball Obsession, LLC (MO) for a total investment of $27,032. This investment is accounted for using the equity method of accounting. Accordingly, investments are recorded at acquisition cost plus the Companys equity in the undistributed earnings or losses of the entity. At December 31, 2011 the investment was written down to $0 due to losses incurred by MO. The Companys ownership interest in MO has decreased due to dilution. At July 31, 2016 and January 31, 2016, the Companys ownership interest in MO was 12% and 12%, respectively. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jul. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 5 - Related Party Transactions Joseph Epstein Foods On March 1, 2010, the Company entered into a five year agreement with Joseph Epstein Foods (the Manufacturer) who is a related party. The Manufacturer is co-owned by the CEO and President of the Company. The Company analyzed the relationship with the Manufacturer to determine if the Manufacturer is a variable interest entity as defined by FASB ASC 810 Consolidation Under the terms of the agreement if the Company specifies any change in packaging or shipping materials which results in the manufacturer incurring increased expense for packaging and shipping materials or in the Manufacturer being unable to utilize obsolete packaging or shipping materials in ordinary packaging or shipping, the Company agrees to pay as additional product cost the additional cost for packaging and shipping materials and to purchase at cost such obsolete packaging and shipping materials. If the Company requests any repackaging of the product, other than due to defects in the original packaging, the Company will reimburse the Manufacturer for any labor costs incurred in repackaging. Per the agreement, all product delivery shipping costs are the expense of the Company. The Company agreed with the Manufacturer at the end of the last fiscal year that Company would purchase a minimum of $963,000 of product each month and that any amount below that sum would be a charge of 12% of that shortfall each month. In return, the Manufacturer obligated itself to offer the Company competitive prices and would not co-pack for other suppliers and would either maintain or lower its payable to the Company each quarter. In addition, the Manufacturer agreed to rebate the Company any overage of gross margin above 12% each month. From time to time the Company will make improvements to the Manufacturers facility. The improvements are capitalized and depreciated over the estimated useful life. During the three months ended July 31, 2016 and 2015, the Company purchased inventory of $2,667,959 and $1,624,008, respectively, from the Manufacturer. During the six months ended July 31, 2016 and 2015, the Company purchased inventory of $5,368,970 and $4,049,630, respectively, from the Manufacturer. During the three months ended July 31, 2016 and 2015, the Manufacturer incurred expenses of $6,000 and $6,000, respectively, on behalf of the Company for shared administrative expenses and salary expenses. During the six months ended July 31, 2016 and 2015, the Manufacturer incurred expenses of $12,000 and $12,000, respectively, on behalf of the Company for shared administrative expenses and salary expenses. At July 31, 2016 and January 31, 2016, the amount due from the Manufacturer is $2,180,863 and $2,248,781 respectively. Meatball Obsession, LLC A current director of the Company is the chairman of the board and shareholder of Meatball Obsession LLC (MO). For the three months ended July 31, 2016 and 2015, the Company generated approximately $223 and $6,528 in revenues from MO, respectively. For the six months ended July 31, 2016 and 2015, the Company generated approximately $10,325 and $31,936 in revenues from MO, respectively. As of July 31, 2016 and January 31, 2016, the Company had a receivable of $0 and $6,512 due from MO, respectively. WWS, Inc. A current director of the Company is the president of WWS, Inc. For the three months ended July 31, 2016 and 2015, the Company recorded $12,000 and $12,000 in commissions and consulting expense from WWS, Inc. generated sales, respectively. For the six months ended July 31, 2016 and 2015, the Company recorded $24,000 and $24,000 in commissions and consulting expense from WWS, Inc. generated sales, respectively. Notes Payable During the year ended January 31, 2016, the Company received aggregate proceeds of $125,000 from notes payable with the CEO of the Company. The notes bear interest at a rate of 4% per annum and mature on December 31, 2016. During the six months ended July 31, 2016, the notes were extended until February 2018. As of July 31, 2016, the outstanding principal balance of the notes was $125,000. |
Promissory Notes
Promissory Notes | 6 Months Ended |
Jul. 31, 2016 | |
Debt Disclosure [Abstract] | |
Promissory Notes | Note 6 - Promissory Notes On October 31, 2015, the Company entered into a promissory note agreement with a third party to settle outstanding payables. The note is for a total principal balance of $358,832, bearing interest at a rate of 10% and maturing in October 2017. The Company is required to prepay the note 10% of the net proceeds received upon the closing of a capital raise, except for, those transactions conducted with the Companys Chief Executive Officer. The Company paid $248,373 toward the outstanding balance, a portion of which is 10% of the net proceeds from the final closing of the private placement in November 2015. As of July 31, 2016 and January 31, 2016, the outstanding balance on the note was $120,272 and $239,459, respectively. In January 2016, the Company entered into a promissory note agreement with a third party to settle outstanding payables. The note is for a total principal balance of $116,003, bearing interest at a rate of 6% and maturing in October 2016. As of July 31, 2016 and January 31, 2016, the outstanding balance on the note was $36,003 and $97,116, respectively. As of July 31, 2016 and January 31, 2016, the aggregate outstanding balance on the notes was $156,275 and $336,575, respectively. |
Loan and Security Agreement
Loan and Security Agreement | 6 Months Ended |
Jul. 31, 2016 | |
Debt Disclosure [Abstract] | |
Loan and Security Agreement | Note 7 - Loan and Security Agreement On September 3, 2014, the Company entered into a Loan and Security Agreement (Loan and Security Agreement) with Entrepreneur Growth Capital, LLC (EGC) which contains a line of credit. As of July 31, 2016 and January 31, 2016, the outstanding balance on the line of credit was $1,096,630 and $933,001, respectively, net of debt discount of $7,801 and $26,620, respectively. In September 2016 the agreement was amended and the total facility increased to an aggregate principal amount of up to $3,200,000. The facility consists of the following: ● Accounts Revolving Line of Credit: $ 2,150,000 ● Inventory Revolving Line of Credit: $ 350,000 ● Term Loan: $ 700,000 EGC may from time to time make loans in an aggregate amount not to exceed the Accounts Revolving Line of Credit up to 85% of the net amount of Eligible Accounts (as defined in the Loan and Security Agreement). EGC may from time to time make loans in an aggregate amount not to exceed the Inventory Revolving Line of Credit against Eligible Inventory (as defined in the Loan and Security Agreement) in an amount up to 50% of finished goods and in an amount up to 20% of raw material. The revolving interest rates is equal to the highest prime rate in effect during each month as generally reported by Citibank, N.A. plus (a) 2.5% on loans and advances made against eligible accounts and (b) 4.0% on loans made against eligible inventory. The term loan bears interest at a rate of the highest prime rate in effect during each month as generally reported by Citibank, N.A. plus 4.0%. The initial term of the facility is for a period of two years and will automatically renew for an additional one year period. The Company was required to pay a one-time, up-front facility fee equal to 2.25% of the total $3,100,000 facility and pays an annualized maintenance fee equal to 3% of the total facility. In the event of default, the Company shall pay 10% above the stated rates of interest per the Agreement. The drawdowns are secured by all of the assets of the Company. During the first quarter of 2016, the Company adopted ASU 2015-03, Interest Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs The debt discount will be amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt, using the straight-line method which approximates the effective interest method. The amortization of debt discount is included as a component of other expense in the condensed consolidated statements of operations. There was unamortized debt discount of $7,801 and $26,620 as of July 31, 2016 and January 31, 2016, respectively. As of July 31, 2016 and January 31, 2016 the outstanding balance on the line of credit was $1,104,431and $959,621, respectively. In September 2016, the line of credit maturity date was extended to September 30, 2018 and is consequently shown as a long-term liability on the condensed consolidated balance sheets. On September 3, 2014, the Company also entered into a 5 year $600,000 Secured Promissory Note (EGC Note) with EGC. The EGC Note is payable in 60 monthly installments of $10,000. The EGC Note bears interest at the prime rate plus 4.0% and is payable monthly, in arrears. In the event of default, the Company shall pay 10% above the stated rates of interest per the Loan and Security Agreement. The EGC Note is secured by all of the assets of the Company. The outstanding balance on the term loan was $380,000 and $440,000 as of July 31, 2016 and January 31, 2016, respectively. In September 2016, the ECG Note was increased to $700,000 with an extended maturity date of September 30, 2021. Additionally, in connection with the Loan and Security Agreement, Carl Wolf, the Companys Chief Executive Officer entered into a Guarantee Agreement with EGC, personally guaranteeing all the amounts borrowed on behalf of the Company under the Loan and Security Agreement. |
Convertible Note
Convertible Note | 6 Months Ended |
Jul. 31, 2016 | |
Debt Disclosure [Abstract] | |
Convertible Note | Note 8 - Convertible Note On December 19, 2014, the Company entered into a securities purchase agreement (the Manatuck Purchase Agreement) with Manatuck Hill Partners, LLC (Manatuck) whereby the Company issued a convertible redeemable debenture (the Manatuck Debenture) in favor of Manatuck. The Manatuck Debenture is for $2,000,000 bearing interest at a rate of 14% and matures in February 2016. Upon issuance of the Manatuck Debenture, the Company granted Manatuck 200,000 shares of the Companys restricted common stock. In April 2015, the maturity date was extended to May 2016 and 30,000 shares of restricted common stock were issued to Manatuck. Based on managements review, the accounting for debt modification applied. The Company valued the 30,000 shares at the grant date share price of $1.32 and recorded $39,600 to debt discount on the condensed consolidated balance sheet. Upon issuance of the debenture and subsequent extension, a debt discount of $498,350 was recorded for the fees incurred by the buyer as well as the value of the common shares granted to Manatuck. The debt discount will be amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt, using the straight-line method which approximates the effective interest method. The amortization of debt discount is included as a component of other expense in the condensed consolidated statements of operations. There was unamortized debt discount of $0 and $0 as of July 31, 2016 and January 31, 2016, respectively. On October 29, 2015, the note was further amended to extend the maturity date to December 19, 2016. Per the terms of the execution of the extension, the Company was required to purchase the above 230,000 shares issued to Manatuck for a share price of $0.65, a value of $149,500 and incurred an amendment fee of $170,500, both of which were added to the outstanding principal of the debt. In addition, the extension reduced accrued interest by $220,000 and increased the outstanding principal of the debt by $220,000. Based on managements review, the accounting for debt extinguishment applied. In accordance with the accounting for debt extinguishment, the Company wrote-off the existing debt of $2,000,000, wrote-off the unamortized debt discount of $190,483 and wrote-off the remaining debt issuance costs relating to this note of $19,106. The loss on debt extinguishment of $380,089 on the statement of operations is comprised of the write-off of the remaining debt discount of $190,483, the write-off of the debt issuance costs of $19,106, and the amendment fee of $170,500. In August 2016, the note was further amended to extend the maturity date to September 30, 2017. The principal amount of the note shall be increased to $2,898,523, which shall be inclusive of accrued interest payable through October 31, 2016. In addition, the Company shall pay an origination fee of $50,000, payable in cash on October 31, 2016. The outstanding balance including principal and interest at July 31, 2016 was $2,810,323. The outstanding principal balance as of January 31, 2016 was $2,540,000. Optional conversion to convertible preferred stock is available upon completion of a qualified offering (as defined in the Manatuck Purchase Agreement) while the Manatuck Debenture is outstanding. Upon conversion of the Manatuck Debenture, the Company shall issue Manatuck shares of common stock as defined in the Manatuck Purchase Agreement. Future maturities of long-term debt are as follows: For the Twelve Month Period Ending July 31, 2017 $ 546,275 2018 2,785,323 2019 1,216,630 2020 20,000 $ 4,568,228 |
Concentrations
Concentrations | 6 Months Ended |
Jul. 31, 2016 | |
Risks and Uncertainties [Abstract] | |
Concentrations | Note 9 - Concentrations Revenues During the six months ended July 31, 2016, the Company earned revenues from four customers representing approximately 20%, 13%, 12% and 11% of gross sales. As of July 31, 2016, these customers represented approximately 22%, 21%, 6% and 11% of total gross outstanding receivables, respectively. During the six months ended July 31, 2015, the Company earned revenues from three customers representing approximately 19%, 17% and 12% of gross sales. As of July 31, 2015, these customers represented approximately 15%, 22% and 10% of total gross outstanding receivables, respectively. Cost of Sales For the six months ended July 31, 2016 and 2015, one vendor (a related party) represented 100% and 95% of the Companys purchases, respectively. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jul. 31, 2016 | |
Equity [Abstract] | |
Stockholders' Equity | Note 10 - Stockholders Equity (A) Series A Convertible Preferred Stock Transactions On May 28, 2015, the Company amended its articles of incorporation to establish the designation, powers, rights, privileges, preferences and restrictions of the Series A Convertible Preferred Stock (Series A Preferred). The Company authorized 120,000 shares of Series A Preferred with each share of our Series A Preferred having a par value of $0.00001 and stated value equal to $100, as adjusted for stock dividends, combinations, splits and certain other events. The Company analyzed the conversion feature for potential derivative classification. On May 28, 2015, the Company amended its articles of incorporation to establish the designation, powers, rights, privileges, preferences and restrictions of the Series A Convertible Preferred Stock (Series A Preferred). The Company authorized 120,000 shares of Series A Preferred with each share of our Series A Preferred having a par value of $0.00001 and stated value equal to $100 (Stated Value), as adjusted for stock dividends, combinations, splits and certain other events. The Company analyzed the conversion feature for potential derivative classification. Despite the ratchet features included in the conversion option, the Company concluded that equity treatment was warranted since the feature was clearly and closely related to the host contract. The holders of the Series Preferred A will be entitled to (a) dividends at a rate of 8% per annum, (b) a liquidation preference equal to $0.675 per Series A Preferred share, (c) the option to convert the Series A Preferred shares to a number of shares of common stock calculated by dividing the Stated Value by $0.675 and (d) warrants to purchase a number of common shares calculated by dividing the Stated Value by $0.675 exercisable for a period of five years at a price of $1.00 per share. There is also an automatic conversion based on the occurrence of certain events detailed in the Certificate of Designation. As of July 31, 2016, all accrued dividends had been paid in Company common stock. Additionally, in April 2016 the Company granted an aggregate of an additional 2,510,001 Warrants to investors in a prior offering. These Warrants are for a term of five (5) years at an exercise price of $1.50 per share. During May 2015, six directors of the Company entered into convertible note agreements with a maturity date of July 22, 2016 for total proceeds to the Company of $650,000. In June 2015, the notes were converted into Series A Preferred. Additional proceeds of $560,000 were received pursuant to closings that occurred in June, August and September. In connection with the closings, the Company also granted warrants to purchase 1,481,481 and 179,259 shares of common stock at $0.675 per share to shareholders and the placement agent, respectively. The warrants granted to the placement agent have a grant date fair value of $84,547 which is treated as a direct cost of the Financing and has been recorded as a reduction in additional paid in capital. During November 2015, the Company completed the final closing of a private placement with 11 accredited investors and issued an aggregate of 10,200 shares of Series A Preferred and warrants to purchase 1,511,112 shares of common stock for aggregate gross proceeds to the Company of $1,020,000. Stock issuance costs of $132,600 were paid to placement agents yielding net proceeds of $887,400. Of these issuance costs, approximately $86,000 were pursuant to the promissory note agreement as discussed in Note 6. As discussed in Note 6, during January 2016, the Company settled an outstanding payable with one of its vendors by issuing a promissory note in the principal amount of $116,003 and 1,100 shares of the Companys Series A Preferred and warrants to purchase 162,963 shares of common stock. (B) Common Stock Transactions Common Stock During the six months ended July 31, 2016, the Company issued 333,902 shares of its common stock to the holders of the Series A Preferred stockholders for the dividends in arrears totaling $178,314. During the six months ended July 31, 2016, the Company issued 403,916 shares of its common stock to employees and consultants for services rendered a value of $259,881. Treasury Stock As discussed in Note 8, upon amendment of the Manatuck Debenture on October 29, 2015, the Company repurchased the 230,000 shares for an aggregate purchase price of $149,500 which is presented as Treasury Stock on the condensed consolidated balance sheets. (C) Options The following is a summary of the Companys option activity: Options Weighted Average Exercise Price Outstanding January 31, 2016 496,404 $ 1.04 Exercisable January 31, 2016 496,404 $ 1.04 Granted 385,000 $ 0.46 Exercised - $ - Forfeited/Cancelled - $ - Outstanding July 31, 2016 881,404 $ 0.78 Exercisable July 31, 2016 799,404 $ 0.78 Options Outstanding Options Exercisable Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price $ 0.39 2.97 881,404 2.76 years $ 0.78 799,404 $ 0.78 At July 31, 2016 and 2015, the total intrinsic value of options outstanding and exercisable was $107,720 and $0, respectively. (D) Warrants The following is a summary of the Companys warrant activity: Warrants Weighted Average Exercise Price Outstanding January 31, 2016 4,964,734 $ 0.80 Exercisable January 31, 2016 4,964,734 $ 0.80 Granted - $ - Exercised - $ - Forfeited/Cancelled - $ - Outstanding July 31, 2016 4,964,734 $ 0.80 Exercisable July 31, 2016 4,964,734 $ 0.80 Warrants Outstanding Warrants Exercisable Range of Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price $ 0.68-$2.50 4,964,734 3.61 years $ 0.80 4,964,734 $ 0.80 At July 31, 2016 and 2015, the total intrinsic value of warrants outstanding and exercisable was $247,770 and $0, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jul. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 11 - Commitments and Contingencies Litigations, Claims and Assessments From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business. The Company is currently not aware of any such legal proceedings or claims that they believe will have, individually or in the aggregate, a material adverse effect on its business, financial condition or operating results. Licensing and Royalty Agreements On March 1, 2010, the Company was assigned a Development and License agreement (the Agreement). Under the terms of the Agreement the Licensor shall develop for the Company a line of beef meatballs with sauce, turkey meatballs with sauce and other similar meats and sauces for commercial manufacture, distribution and sale (each a Licensor Product and collectively the Licensor Products). Licensor shall work with Licensee to develop Licensor Products that are acceptable to Licensee. Upon acceptance of a Licensor Product by Licensee, Licensors trade secret recipes, formulas methods and ingredients for the preparation and production of such Licensor Products (the Recipes) shall be subject to this Development and License Agreement. The term of the Agreement (the Term) shall consist of the Exclusive Term and the Non-Exclusive Term. The 12-month period beginning on each January 1 and ending on each December 31 is referred to herein as an Agreement Year. The Exclusive Term began on January 1, 2009 (the Effective Date) and ends on the 50th anniversary of the Effective Date, unless terminated or extended as provided herein. Licensor, at its option, may terminate the Exclusive Term by notice in writing to Licensee, delivered between the 60th and the 90th day following the end of any Agreement Year if, on or before the 60th day following the end of such Agreement Year, Licensee has not paid Licensor Royalties with respect to such Agreement Year at least equal to the minimum royalty (the Minimum Royalty) for such Agreement Year. Subject to the foregoing sentence, and provided Licensee has not breached this Agreement and failed to cure such breach in accordance herewith, Licensee may extend the Exclusive Term for an additional twenty five (25) years, by notice in writing to Licensor, delivered on or before the 50th anniversary of the Effective Date. The Non-Exclusive Term begins upon expiration of the Exclusive Term and continues indefinitely thereafter, until terminated by Licensor due to a material breach hereof by Licensee that remains uncured after notice and opportunity to cure in accordance herewith, or until terminated by Licensee. Either party may terminate this Agreement in the event that the other party materially breaches its obligations and fails to cure such material breach within sixty (60) days following written notice from the non-breaching party specifying the nature of the breach. The following termination rights are in addition to the termination rights provided elsewhere in the agreement. ● Termination by Licensee - Licensee shall have the right to terminate this Agreement at any time on sixty (60) days written notice to Licensor. In such event, all moneys paid to Licensor shall be deemed non-refundable. Under the terms of the Agreement the Company is required to pay quarterly royalty fees as follows: During the Exclusive Term and the Non-Exclusive Term the Company will pay a royalty equal to the royalty rate (the Royalty Rate), multiplied by Companys Net Sales. As used herein, Net Sales means gross invoiced sales of Products, directly or indirectly to unrelated third parties, less (a) discounts (including cash discounts), and retroactive price reductions or allowances actually allowed or granted from the billed amount (collectively Discounts); (b) credits, rebates, and allowances actually granted upon claims, rejections or returns, including recalls (voluntary or otherwise) (collectively, Credits); (c) freight, postage, shipping and insurance charges; (d) taxes, duties or other governmental charges levied on or measured by the billing amount, when included in billing, as adjusted for rebates and refunds; and (e) provisions for uncollectible accounts determined in accordance with reasonable accounting methods, consistently applied. The Royalty Rate shall be: 6% of net sales up to $500,000 of net sales for each Agreement year; 4% of Net Sales from $500,000 up to $2,500,000 of Net Sales for each Agreement year; 2% of Net Sales from $2,500,000 up to $20,000,000 of Net Sales for each Agreement year; and 1% of Net Sales in excess of $20,000,000 of Net Sales for each Agreement year. In order to continue the Exclusive term, the Company shall pay a minimum royalty with respect to the preceding Agreement year as follows: Agreement Year Minimum Royalty to be Paid with Respect to Such Agreement Year 1 st nd $ - 3 rd th $ 50,000 5 th th $ 75,000 8 th th $ 100,000 10 th $ 125,000 The Company incurred $55,980 and $45,542 of royalty expenses for the three months ended July 31, 2016 and 2015. The Company incurred $141,684 and $131,379 of royalty expenses for the six months ended July 31, 2016 and 2015. Royalty expenses are included in general and administrative expenses on the condensed consolidated statement of operations. Agreements with Placement Agents and Finders (A) April 1, 2015 The Company entered into a fourth Financial Advisory and Investment Banking Agreement with Spartan Capital Securities, LLC (Spartan) effective April 1, 2015 (the Spartan Advisory Agreement). Pursuant to the Spartan Advisory Agreement, the Company shall pay to Spartan a non-refundable monthly fee of $10,000 through October 1, 2015. The monthly fee shall survive any termination of the Agreement. Additionally, (i) if at least $4,000,000 is raised in the Financing, the Company shall pay to Spartan a non-refundable fee of $5,000 per month from November 1, 2015 through October 2017; and (ii) if at least $5,000,000 is raised in the Financing, the Company shall pay to Spartan a non-refundable fee of $5,000 per month from November 1, 2017 through October 2019. If $10,000,000 or more is raised in the Financing, the Company shall issue to Spartan shares of its common stock having an aggregate value of $5,000 (as determined by reference to the average volume weighted average trading price for the last five trading days of the immediately preceding month) on the first day of each month during the period from November 1, 2015 through October 1, 2019. The Company upon closing of the Financing shall pay consideration to Spartan, in cash, a fee in an amount equal to 10% of the aggregate gross proceeds raised in the Financing and 3% of the aggregate gross proceeds raised in the Financing for expenses incurred by Spartan. The Company shall grant and deliver to Spartan at the closing of the Financing, for nominal consideration, five year warrants to purchase a number of shares of the Companys common stock equal to 10% of the number of shares of common stock (and/or shares of common stock issuable upon exercise of securities or upon conversion or exchange of convertible or exchangeable securities) sold at such closing. The warrants shall be exercisable at any time during the five year period commencing on the closing to which they relate at an exercise price equal to the purchase price per share of common stock paid by investors in the Financing or, in the case of exercisable, convertible, or exchangeable securities, the exercise, conversion or exchange price thereof. If the Financing is consummated by means of more than one closing, Spartan shall be entitled to the fees provided herein with respect to each such closing. During the year ended January 31, 2016, the Company paid to Spartan a one-time engagement fee of $10,000. In connection with the Initial Closing, the Company agreed to pay an aggregate cash fee and non-accountable allowance of $157,300. The Company also granted warrants to purchase 179,259 shares of common stock at $0.675 per share. The warrants have a grant date fair value of $84,547 which is treated as a direct cost of the Financing and has been recorded as a reduction in additional paid in capital. Operating Lease In January 2015, the Company began a lease agreement for office space in East Rutherford, NJ. The lease is for a 51 month term expiring on March 31, 2019 with annual payments of $18,848. Total future minimum payments required under operating lease as of July 31, 2016 are as follows. For the Twelve Month Period Ending July 31, 2017 $ 18,848 2018 18,848 2019 12,565 $ 50,261 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jul. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 12 Subsequent Events The Company has evaluated subsequent events through the date the financial statements were available to be issued. Based on this evaluation, the Company has identified no reportable subsequent events other than those disclosed elsewhere in these financials. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jul. 31, 2016 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Such estimates and assumptions impact, among others, the following: allowance for doubtful accounts, inventory obsolescence and the fair value of share-based payments. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the condensed consolidated financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from our estimates. |
Risks and Uncertainties | Risks and Uncertainties The Company operates in an industry that is subject to intense competition and change in consumer demand. The Companys operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure. The Company has experienced, and in the future expects to continue to experience, variability in sales and earnings. The factors expected to contribute to this variability include, among others, (i) the cyclical nature of the grocery industry, (ii) general economic conditions in the various local markets in which the Company competes, including the general downturn in the economy, and (iii) the volatility of prices pertaining to food and beverages in connection with the Companys distribution of the product. These factors, among others, make it difficult to project the Companys operating results on a consistent basis. |
Cash | Cash The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. The Company held no cash equivalents at July 31, 2016 or January 31, 2016. The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company generally does not require collateral to support customer receivables. The Company provides an allowance for doubtful accounts based upon a review of the outstanding accounts receivable, historical collection information and existing economic conditions. The Company determines if receivables are past due based on days outstanding, and amounts are written off when determined to be uncollectible by management. The maximum accounting loss from the credit risk associated with accounts receivable is the amount of the receivable recorded, which is the face amount of the receivable net of the allowance for doubtful accounts. As of July 31, 2016 and January 31, 2016, the Company had reserves of $2,000. |
Inventories | Inventories Inventories are stated at average cost using the first-in, first-out (FIFO) valuation method. Inventory was comprised of the following at July 31, 2016 and January 31, 2016: July 31, 2016 January 31, 2016 Finished goods $ 407,978 $ 252,752 |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost. Depreciation expense is computed using straight-line methods over the estimated useful lives. Asset lives for financial statement reporting of depreciation are: Machinery and equipment 2-7 years Furniture and fixtures 3-5 years Leasehold improvements 3-10 years |
Fair Value of Financial Instruments | Fair Value of Financial Instruments For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amount of the Companys short-term financial instruments approximates fair value due to the relatively short period to maturity for these instruments. |
Stock Issuance Costs | Stock Issuance Costs Stock issuance costs are capitalized as incurred. Upon the completion of the offering, the stock issuance costs are reclassified to equity and netted against proceeds. In the event the costs are in excess of the proceeds, the costs are recorded to expense. In the case of an aborted offering, all costs are expensed. Offering costs recorded to equity for the three and six months ended July 31, 2016 and 2015 were $0 and $0, respectively. |
Research and Development | Research and Development Research and development is expensed as incurred. Research and development expenses for the three months ended July 31, 2016 and 2015 were $37,225 and $20,479, respectively. Research and development expenses for the six months ended July 31, 2016 and 2015 were $67,787 and $43,558, respectively. |
Shipping and Handling Costs | Shipping and Handling Costs The Company classifies freight billed to customers as sales revenue and the related freight costs as general and administrative expenses. |
Revenue Recognition | Revenue Recognition The Company records revenue for products when all of the following have occurred: (1) persuasive evidence of an arrangement exists, (2) the product is delivered, (3) the sales price to the customer is fixed or determinable, and (4) collectability of the related customer receivable is reasonably assured. There is no stated right of return for products. The Company meets these criteria upon shipment. Expenses such as slotting fees, sales discounts, and allowances are accounted for as a direct reduction of revenues as follows: Six Months Ended July 31, 2016 Six Months Ended July 31, 2015 Gross Sales $ 8,298,592 $ 6,249,578 Less: Slotting, Discounts, Allowances 236,335 157,099 Net Sales $ 8,062,257 $ 6,092,479 |
Cost of Sales | Cost of Sales Cost of sales represents costs directly related to the production and manufacturing of the Companys products. Costs include product development, freight, packaging, and print production costs. |
Advertising | Advertising Costs incurred for producing and communicating advertising for the Company are charged to operations as incurred. Producing and communicating advertising expenses for the three months ended July 31, 2016 and 2015 were $350,665 and $521,626, respectively. Producing and communicating advertising expenses for the six months ended July 31, 2016 and 2015 were $771,557 and $1,438,558, respectively. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation Stock Compensation Equity Based Payments to Non-Employees The Company recognizes all forms of share-based payments, including stock option grants, warrants and restricted stock grants, at their fair value on the grant date, which are based on the estimated number of awards that are ultimately expected to vest. Share-based payments, excluding restricted stock, are valued using a Black-Scholes option pricing model. Grants of share-based payment awards issued to non-employees for services rendered have been recorded at the fair value of the share-based payment, which is the more readily determinable value. The grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. If an award is granted, but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the termination of service. Stock-based compensation expenses are included in cost of goods sold or selling, general and administrative expenses, depending on the nature of the services provided, in the condensed consolidated statement of operations. Share-based payments issued to placement agents are classified as a direct cost of a stock offering and are recorded as a reduction in additional paid in capital. For the three months ended July 31, 2016 and 2015, share-based compensation amounted to $172,929 and $77,621, respectively. For the six months ended July 31, 2016 and 2015, share-based compensation amounted to $352,137 and $79,663, respectively. During the three and six months ended June 30, 2015, share-based compensation included stock issuance costs of $76,608 paid in form of warrants. For the six months ended July 31, 2016, when computing fair value of share-based payments, the Company has considered the following variables: July 31, 2016 Risk-free interest rate 1.07% to 1.33 % Expected life of grants 2.5 to 3.5 years Expected volatility of underlying stock 166% to 179 % Dividends 0 % The expected option term is computed using the simplified method as permitted under the provisions of ASC 718-10-599. The Company uses the simplified method to calculate expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. The expected stock price volatility for the Companys stock options was determined by the historical volatilities for industry peers and used an average of those volatilities. Risk free interest rates were obtained from U.S. Treasury rates for the applicable periods. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss), adjusted for changes in income or loss that resulted from the assumed conversion of convertible shares, by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. The Company had the following potential common stock equivalents at July 31, 2016: Series A Preferred 3,466,667 Common stock warrants, exercise price range of $0.675-$2.50 4,964,734 Common stock options, exercise price of $0.39-$2.97 799,404 Total common stock equivalents 9,230,805 The Company had the following potential common stock equivalents at July 31, 2015: Series A Preferred 1,000,000 Liabilities to be settled in stock 65,617 Common stock warrants, exercise price range of $1.00-$2.50 1,884,735 Common stock options, exercise price of $1.00-$2.97 496,404 Total common stock equivalents 3,446,756 Since the Company reflected a net loss during the three and six months ended July 31, 2016 and 2015, the effect of considering any common stock equivalents, would have been anti-dilutive. A separate computation of diluted earnings (loss) per share is not presented. |
Income Taxes | Income Taxes Income taxes are provided in accordance with ASC No. 740, Accounting for Income Taxes Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company is no longer subject to tax examinations by tax authorities for years prior to 2012. |
Reclassification | Reclassification Certain prior period amounts have been reclassified to conform to current period presentation. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The standards core principle (issued as ASU 2014-09 by the FASB), is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The new guidance must be adopted using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. In August 2015, the FASB issued ASU No. 2015-14, which defers the effective date of ASU 2014-09 by one year, and would allow entities the option to early adopt the new revenue standard as of the original effective date. This ASU is effective for public reporting companies for interim and annual periods beginning after December 15, 2017. The Company is currently evaluating its adoption method and the impact of the standard on its condensed consolidated financial statements. In March 2015, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). In April 2016, the FASB issued ASU No. 2016-09, Compensation Stock Compensation In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross verses Net) In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying consolidated financial statements. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jul. 31, 2016 | |
Accounting Policies [Abstract] | |
Schedule of Inventories | Inventory was comprised of the following at July 31, 2016 and January 31, 2016: July 31, 2016 January 31, 2016 Finished goods $ 407,978 $ 252,752 |
Schedule of Property and Equipment Estimated Useful Lives | Asset lives for financial statement reporting of depreciation are: Machinery and equipment 2-7 years Furniture and fixtures 3-5 years Leasehold improvements 3-10 years |
Schedule of Expenses of Slotting Fees, Sales Discounts and Allowances are Accounted as Direct Reduction of Revenues | Expenses such as slotting fees, sales discounts, and allowances are accounted for as a direct reduction of revenues as follows: Six Months Ended July 31, 2016 Six Months Ended July 31, 2015 Gross Sales $ 8,298,592 $ 6,249,578 Less: Slotting, Discounts, Allowances 236,335 157,099 Net Sales $ 8,062,257 $ 6,092,479 |
Schedule of Fair Value of Share Based Payments | For the six months ended July 31, 2016, when computing fair value of share-based payments, the Company has considered the following variables: July 31, 2016 Risk-free interest rate 1.07% to 1.33 % Expected life of grants 2.5 to 3.5 years Expected volatility of underlying stock 166% to 179 % Dividends 0 % |
Schedule of Common Stock Equivalents | The Company had the following potential common stock equivalents at July 31, 2016: Series A Preferred 3,466,667 Common stock warrants, exercise price range of $0.675-$2.50 4,964,734 Common stock options, exercise price of $0.39-$2.97 799,404 Total common stock equivalents 9,230,805 The Company had the following potential common stock equivalents at July 31, 2015: Series A Preferred 1,000,000 Liabilities to be settled in stock 65,617 Common stock warrants, exercise price range of $1.00-$2.50 1,884,735 Common stock options, exercise price of $1.00-$2.97 496,404 Total common stock equivalents 3,446,756 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jul. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment on July 31, 2016 and January 31, 2016 are as follows: July 31, 2016 January 31, 2016 Machinery and Equipment $ 1,311,480 $ 1,112,522 Furniture and Fixtures 23,067 17,942 Leasehold Improvements 429,282 429,282 1,763,829 1,559,746 Less: Accumulated Depreciation 671,994 512,291 $ 1,091,835 $ 1,047,455 |
Loan and Security Agreement (Ta
Loan and Security Agreement (Tables) | 6 Months Ended |
Jul. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Line of Credit | The facility consists of the following: ● Accounts Revolving Line of Credit: $ 2,150,000 ● Inventory Revolving Line of Credit: $ 350,000 ● Term Loan: $ 700,000 |
Convertible Note (Tables)
Convertible Note (Tables) | 6 Months Ended |
Jul. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Future Maturities of Long Term Debt | Future maturities of long-term debt are as follows: For the Twelve Month Period Ending July 31, 2017 $ 546,275 2018 2,785,323 2019 1,216,630 2020 20,000 $ 4,568,228 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) (Tables) | 6 Months Ended |
Jul. 31, 2016 | |
Equity [Abstract] | |
Summary of Option Activity | The following is a summary of the Companys option activity: Options Weighted Average Exercise Price Outstanding January 31, 2016 496,404 $ 1.04 Exercisable January 31, 2016 496,404 $ 1.04 Granted 385,000 $ 0.46 Exercised - $ - Forfeited/Cancelled - $ - Outstanding July 31, 2016 881,404 $ 0.78 Exercisable July 31, 2016 799,404 $ 0.78 |
Summary of Option Outstanding and Exercisable | Options Outstanding Options Exercisable Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price $ 0.39 2.97 881,404 2.76 years $ 0.78 799,404 $ 0.78 |
Schedule of Warrants Activity | The following is a summary of the Companys warrant activity: Warrants Weighted Average Exercise Price Outstanding January 31, 2016 4,964,734 $ 0.80 Exercisable January 31, 2016 4,964,734 $ 0.80 Granted - $ - Exercised - $ - Forfeited/Cancelled - $ - Outstanding July 31, 2016 4,964,734 $ 0.80 Exercisable July 31, 2016 4,964,734 $ 0.80 |
Schedule of Warrants Outstanding and Exercisable | Warrants Outstanding Warrants Exercisable Range of Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price $ 0.68-$2.50 4,964,734 3.61 years $ 0.80 4,964,734 $ 0.80 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jul. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Royalty Minimum Payment by Preceding Agreement Year | In order to continue the Exclusive term, the Company shall pay a minimum royalty with respect to the preceding Agreement year as follows: Agreement Year Minimum Royalty to be Paid with Respect to Such Agreement Year 1 st nd $ - 3 rd th $ 50,000 5 th th $ 75,000 8 th th $ 100,000 10 th $ 125,000 |
Schedule of Future Minimum Payments Under Operating Leases | Total future minimum payments required under operating lease as of July 31, 2016 are as follows. For the Twelve Month Period Ending July 31, 2017 $ 18,848 2018 18,848 2019 12,565 $ 50,261 |
Nature of Operations and Basi25
Nature of Operations and Basis of Presentation (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jul. 31, 2016 | Jul. 31, 2015 | Jul. 31, 2016 | Jul. 31, 2015 | Jan. 31, 2016 | Jan. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||
Net loss available to common shareholders | $ 323,610 | $ 1,011,265 | $ 614,238 | $ 2,105,821 | ||
Cash | 264,446 | $ 396,936 | 264,446 | $ 396,936 | $ 587,422 | $ 854,995 |
Working capital deficit | 3,497,779 | 3,497,779 | ||||
Unamortized debt issuance costs | $ 26,620 | $ 26,620 |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jul. 31, 2016 | Jul. 31, 2015 | Jul. 31, 2016 | Jul. 31, 2015 | Jan. 31, 2016 | |
Accounting Policies [Abstract] | |||||
Cash equivalents | |||||
Accounts receivable reserves | 2,000 | 2,000 | $ 2,000 | ||
Stock offering cost | 0 | $ 0 | 0 | $ 0 | |
Research and development expense | 37,225 | 20,479 | 67,787 | 43,558 | |
Advertising expenses | 350,665 | 521,626 | 771,557 | 1,438,558 | |
Share based compensation | $ 172,929 | $ 77,621 | 352,137 | 3,055 | |
Stock issuance costs | $ 76,608 |
Summary of Significant Accoun27
Summary of Significant Accounting Policies - Schedule of Inventories (Details) - USD ($) | Jul. 31, 2016 | Jan. 31, 2016 |
Accounting Policies [Abstract] | ||
Finished goods | $ 407,978 | $ 252,752 |
Summary of Significant Accoun28
Summary of Significant Accounting Policies - Schedule of Property and Equipment Estimated Useful Lives (Details) | 6 Months Ended |
Jul. 31, 2016 | |
Minimum [Member] | Machinery And Equipment [Member] | |
Property and equipment estimated useful lives | 2 years |
Minimum [Member] | Furniture And Fixtures [Member] | |
Property and equipment estimated useful lives | 3 years |
Minimum [Member] | Leasehold Improvements [Member] | |
Property and equipment estimated useful lives | 3 years |
Maximum [Member] | Machinery And Equipment [Member] | |
Property and equipment estimated useful lives | 7 years |
Maximum [Member] | Furniture And Fixtures [Member] | |
Property and equipment estimated useful lives | 5 years |
Maximum [Member] | Leasehold Improvements [Member] | |
Property and equipment estimated useful lives | 10 years |
Summary of Significant Accoun29
Summary of Significant Accounting Policies - Schedule of Expenses of Slotting Fees, Sales Discounts and Allowances are Accounted as Direct Reduction of Revenues (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2016 | Jul. 31, 2015 | Jul. 31, 2016 | Jul. 31, 2015 | |
Accounting Policies [Abstract] | ||||
Gross sales | $ 8,298,592 | $ 6,249,578 | ||
Less: slotting, discounts, allowances | 236,335 | 157,099 | ||
Net sales | $ 4,138,280 | $ 2,739,200 | $ 8,062,257 | $ 6,092,479 |
Summary of Significant Accoun30
Summary of Significant Accounting Policies - Schedule of Fair Value of Share Based Payments (Details) | 6 Months Ended |
Jul. 31, 2016 | |
Risk-free interest rate, minimum | 1.07% |
Risk-free interest rate, maximum | 1.33% |
Expected volatility of underlying stock, minimum | 166.00% |
Expected volatility of underlying stock, maximum | 179.00% |
Dividends | 0.00% |
Minimum [Member] | |
Expected life of grants | 2 years 6 months |
Maximum [Member] | |
Expected life of grants | 3 years 6 months |
Summary of Significant Accoun31
Summary of Significant Accounting Policies - Schedule of Common Stock Equivalents (Details) - shares | Jul. 31, 2016 | Jul. 31, 2015 |
Accounting Policies [Abstract] | ||
Series A Preferred | 3,466,667 | 1,000,000 |
Liabilities to be settled in stock | 65,617 | |
Common stock warrants, exercise price | 4,964,734 | 1,884,735 |
Common stock options, exercise price | 799,404 | 496,404 |
Total common stock equivalents | 9,230,805 | 3,446,756 |
Summary of Significant Accoun32
Summary of Significant Accounting Policies - Schedule of Common Stock Equivalents (Details) (Parenthetical) - $ / shares | Jul. 31, 2016 | Jan. 31, 2016 | Jul. 31, 2015 |
Common stock options, exercise price | $ 0.78 | $ 1.04 | |
Minimum [Member] | |||
Common stock warrants, exercise price | 0.675 | $ 1 | |
Common stock options, exercise price | 0.39 | 1 | |
Maximum [Member] | |||
Common stock warrants, exercise price | 2.50 | 2.50 | |
Common stock options, exercise price | $ 2.97 | $ 2.97 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2016 | Jul. 31, 2015 | Jul. 31, 2016 | Jul. 31, 2015 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 83,000 | $ 70,385 | $ 159,703 | $ 137,585 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | Jul. 31, 2016 | Jan. 31, 2016 |
Property, Plant and Equipment [Abstract] | ||
Machinery and Equipment | $ 1,311,480 | $ 1,112,522 |
Furniture and Fixtures | 23,067 | 17,942 |
Leasehold Improvements | 429,282 | 429,282 |
Property plant and equipment, gross | 1,763,829 | 1,559,746 |
Less: Accumulated Depreciation | 671,994 | 512,291 |
Property, plant and equipment, net | $ 1,091,835 | $ 1,047,455 |
Investment in Meatball Obsess35
Investment in Meatball Obsession, LLC (Details Narrative) - Meatball Obsession, LLC [Member] - USD ($) | Dec. 31, 2011 | Jul. 31, 2016 | Jan. 31, 2016 |
Percentage of equity interest acquired in business combination | 34.62% | ||
Investment in business combination | $ 27,032 | ||
Reduction in investment due to losses in affiliates | $ 0 | ||
Ownership interest percentage | 12.00% | 12.00% |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | Oct. 29, 2015 | Aug. 31, 2016 | May 31, 2015 | Jul. 31, 2016 | Jul. 31, 2015 | Jul. 31, 2016 | Jul. 31, 2015 | Jan. 31, 2016 |
Purchased inventory from manufacturer | $ 2,667,959 | $ 1,624,008 | $ 5,368,970 | $ 4,049,630 | ||||
Administrative expenses and salary expenses | 6,000 | 6,000 | 12,000 | 12,000 | ||||
Due from manufacturer - related party | 2,180,863 | 2,180,863 | $ 2,248,781 | |||||
Due from related party | ||||||||
Proceeds from notes payable with related party | 650,000 | |||||||
Note mature date | Dec. 19, 2016 | Sep. 30, 2017 | Jul. 22, 2016 | |||||
Note principal balance amount | 125,000 | 125,000 | ||||||
Meatball Obsession, LLC [Member] | ||||||||
Revenue from related parties | 223 | 6,528 | 10,325 | 31,936 | ||||
Due from related party | 0 | 0 | $ 6,512 | |||||
WWS, Inc [Member] | ||||||||
Commission expense | $ 12,000 | $ 12,000 | 24,000 | 24,000 | ||||
CEO [Member] | ||||||||
Proceeds from notes payable with related party | $ 125,000 | |||||||
Note bears interest rate per annum | 4.00% | 4.00% | ||||||
Note mature date | Dec. 31, 2016 | |||||||
Joseph Epstein Foods [Member] | ||||||||
Minimum purchase of product each month amount | $ 963,000 | |||||||
Percentage of shortfall each month | 12.00% | |||||||
Percentage of overage of gross margin each month | 12.00% | |||||||
Purchased inventory from manufacturer | $ 2,843,012 | $ 2,425,621 |
Promissory Notes (Details Narra
Promissory Notes (Details Narrative) - USD ($) | Oct. 31, 2015 | Oct. 29, 2015 | Aug. 31, 2016 | Jan. 31, 2016 | Nov. 30, 2015 | May 31, 2015 | Jul. 31, 2016 | Jul. 31, 2015 |
Note principal balance | $ 2,898,523 | |||||||
Debt maturity date | Dec. 19, 2016 | Sep. 30, 2017 | Jul. 22, 2016 | |||||
Repayment of outstanding balace | $ 180,300 | |||||||
Outstanding balance on note | $ 336,575 | 156,275 | ||||||
Private Placement [Member] | ||||||||
Percentage of prepay note | 10.00% | |||||||
Repayment of outstanding balace | $ 248,373 | |||||||
Promissory Note Agreement [Member] | Third Party [Member] | ||||||||
Note principal balance | $ 358,832 | |||||||
Debt interest rate | 10.00% | |||||||
Debt maturity date | Oct. 31, 2017 | |||||||
Percentage of prepay note | 10.00% | |||||||
Outstanding balance on note | 239,459 | 120,272 | ||||||
Promissory Note Agreement One [Member] | Third Party [Member] | ||||||||
Note principal balance | $ 116,003 | |||||||
Debt interest rate | 6.00% | |||||||
Debt maturity date | Oct. 31, 2016 | |||||||
Outstanding balance on note | $ 97,116 | $ 36,003 |
Loan and Security Agreement (De
Loan and Security Agreement (Details Narrative) - USD ($) | Sep. 03, 2014 | Jul. 31, 2016 | Jan. 31, 2016 |
Line of credit | $ 1,096,630 | $ 933,001 | |
Line of credit debt discount | 7,801 | 26,620 | |
Loan and Security Agreement [Member] | Entrepreneur Growth Capital LLC [Member] | |||
Line of credit | 1,104,431 | 959,621 | |
Line of credit debt discount | 7,801 | 26,620 | |
Line of credit aggregate value | $ 3,200,000 | ||
Percentage of accounts revolving line of credit maximum | 85.00% | ||
Percentage of finished goods amount | 50.00% | ||
Percentage of raw material amount | 20.00% | ||
Line of credit interest rate description | The revolving interest rates is equal to the highest prime rate in effect during each month as generally reported by Citibank, N.A. plus (a) 2.5% on loans and advances made against eligible accounts and (b) 4.0% on loans made against eligible inventory. The term loan bears interest at a rate of the highest prime rate in effect during each month as generally reported by Citibank, N.A. plus 4.0%. The initial term of the facility is for a period of two years and will automatically renew for an additional one year period. The Company was required to pay a one-time, up-front facility fee equal to 2.25% of the total $3,100,000 facility and pays an annualized maintenance fee equal to 3% of the total facility. In the event of default, the Company shall pay 10% above the stated rates of interest per the Agreement. The drawdowns are secured by all of the assets of the Company. | ||
Line of credit annual facility percentage | 2.25% | ||
Line of credit default stated rates of interest | 10.00% | ||
Secured Promissory Note [Member] | Entrepreneur Growth Capital LLC [Member] | |||
Term loan outstanding | 380,000 | $ 440,000 | |
Related party debt current | $ 700,000 | ||
Secured Promissory Note [Member] | Entrepreneur Growth Capital LLC [Member] | |||
Line of credit aggregate value | $ 600,000 | ||
Line of credit interest rate description | The EGC Note bears interest at the prime rate plus 4.0% and is payable monthly, in arrears. In the event of default, the Company shall pay 10% above the stated rates of interest per the Loan and Security Agreement. | ||
Line of credit default stated rates of interest | 10.00% | ||
Term of loan | 5 years | ||
Repayment of secured debt, monthly installment basis | $ 10,000 | ||
Note payable, during period | 60 months |
Loan and Security Agreement - S
Loan and Security Agreement - Schedule of Line of Credit (Details) | Sep. 03, 2014USD ($) |
Accounts Revolving Line of Credit [Member] | |
Line of credit facility | $ 2,150,000 |
Inventory Revolving Line of Credit [Member] | |
Line of credit facility | 350,000 |
Term Loan [Member] | |
Line of credit facility | $ 700,000 |
Convertible Note (Details Narra
Convertible Note (Details Narrative) - USD ($) | Oct. 29, 2015 | Dec. 19, 2014 | Aug. 31, 2016 | Nov. 30, 2015 | Jul. 31, 2015 | May 31, 2015 | Jul. 31, 2016 | Jul. 31, 2015 | Jul. 31, 2016 | Jul. 31, 2015 | Jan. 31, 2016 |
Common stock price per shares | $ 0.675 | ||||||||||
Debt discount | $ 9,694 | $ 83,437 | $ 18,819 | $ 182,270 | |||||||
Unamortized debt discount | 0 | 0 | $ 0 | ||||||||
Debt maturity date | Dec. 19, 2016 | Sep. 30, 2017 | Jul. 22, 2016 | ||||||||
Sale of stock during period | 230,000 | 10,200 | |||||||||
Sale of stock price per share | $ 0.65 | ||||||||||
Sale of stock during period, value | $ 149,500 | ||||||||||
Amendment fee | 170,500 | 170,500 | |||||||||
Accrued interest | 220,000 | ||||||||||
Increased in outstanding principal of debt | 220,000 | ||||||||||
Outstanding principal debt | $ 2,898,523 | ||||||||||
Debt extinguishment | 2,000,000 | ||||||||||
Unamortized debt discount | 190,483 | 190,483 | |||||||||
Debt issuance cost | $ 19,106 | 19,106 | 19,106 | ||||||||
Loss on debt extinguishment | 380,089 | ||||||||||
Remaining debt discount | 190,483 | ||||||||||
Convertible note payable | 270,000 | 270,000 | $ 2,540,000 | ||||||||
Interest payable | $ 2,810,323 | 2,810,323 | |||||||||
October 31, 2016 [Member] | |||||||||||
Origination fees | $ 50,000 | ||||||||||
Manatuck Hill Partners, LLC [Member] | |||||||||||
Debt discount | $ 498,350 | ||||||||||
Manatuck Purchase Agreement [Member] | Manatuck Hill Partners, LLC [Member] | |||||||||||
Convertible debenture | $ 2,000,000 | ||||||||||
Convertible debt, interest rate percentage | 14.00% | ||||||||||
Debt maturity month year | February 2,016 | ||||||||||
Number of restricted common stock granted, shares | 200,000 | 30,000 | |||||||||
Debt maturity extended month year | May 2,016 | ||||||||||
Common stock price per shares | $ 1.32 | $ 1.32 | $ 1.32 | ||||||||
Debt discount | $ 39,600 |
Convertible Note - Schedule of
Convertible Note - Schedule of Future Maturities of Long Term Debt (Details) | Jul. 31, 2016USD ($) |
Debt Disclosure [Abstract] | |
2,017 | $ 546,275 |
2,018 | 2,785,323 |
2,019 | 1,216,630 |
2,020 | 20,000 |
Future maturities of long term debt total | $ 4,568,228 |
Concentrations (Details Narrati
Concentrations (Details Narrative) | 6 Months Ended | |
Jul. 31, 2016 | Jul. 31, 2015 | |
Sales Revenue [Member] | Customer A [Member] | ||
Concentrations of risk percentage | 20.00% | 19.00% |
Sales Revenue [Member] | Customer B [Member] | ||
Concentrations of risk percentage | 13.00% | 17.00% |
Sales Revenue [Member] | Customer C [Member] | ||
Concentrations of risk percentage | 12.00% | 12.00% |
Sales Revenue [Member] | Customer D [Member] | ||
Concentrations of risk percentage | 11.00% | |
Accounts Receivable [Member] | Customer A [Member] | ||
Concentrations of risk percentage | 22.00% | 15.00% |
Accounts Receivable [Member] | Customer B [Member] | ||
Concentrations of risk percentage | 21.00% | 22.00% |
Accounts Receivable [Member] | Customer C [Member] | ||
Concentrations of risk percentage | 6.00% | 10.00% |
Accounts Receivable [Member] | Customer D [Member] | ||
Concentrations of risk percentage | 11.00% | |
Cost Of Sales [Member] | Vendor One [Member] | ||
Concentrations of risk percentage | 100.00% | 95.00% |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) | Oct. 29, 2015USD ($)shares | Oct. 29, 2015shares | May 28, 2015USD ($)$ / sharesshares | Aug. 31, 2016USD ($) | Jul. 31, 2016USD ($)$ / sharesshares | Jan. 31, 2016USD ($)$ / sharesshares | Nov. 30, 2015USD ($)Accreditedshares | Jun. 30, 2015USD ($) | May 31, 2015USD ($)Integer$ / sharesshares | Jul. 31, 2016USD ($)$ / sharesshares | Jul. 31, 2015USD ($) |
Preferred stock, shares authorized | shares | 19,880,000 | 19,880,000 | 19,880,000 | ||||||||
Preferred stock, par value | $ / shares | $ 0.00001 | $ 0.00001 | $ 0.00001 | ||||||||
Shares issued exercise price per share | $ / shares | $ 0.675 | ||||||||||
Number of warrants granted to purchase of shares of common stock | shares | 1,511,112 | ||||||||||
Number of directors | Integer | 6 | ||||||||||
Convertible note agreements maturity date | Dec. 19, 2016 | Sep. 30, 2017 | Jul. 22, 2016 | ||||||||
Proceeds from convertible note | $ 650,000 | ||||||||||
Additional proceeds from convertible note | $ 560,000 | ||||||||||
Warrants grant date fair value | $ 84,547 | ||||||||||
Number of accredited investors | Accredited | 11 | ||||||||||
Number of shares issued | shares | 230,000 | 10,200 | |||||||||
Gross proceeds from issuance of stock | $ 1,020,000 | ||||||||||
Stock issuance costs | 132,600 | $ 150,811 | |||||||||
Net proceeds from issuance of stock | 887,400 | ||||||||||
Debt issuance cost | $ 86,000 | 6,191 | |||||||||
Notes principal amount | $ 2,898,523 | ||||||||||
Repurchase of treasury stock, shares | shares | 230,000 | ||||||||||
Repurchase of treasury stock | $ 149,500 | ||||||||||
Total intrinsic value of options outstanding and exercisable | $ 107,720 | 107,720 | 107,720 | ||||||||
Total intrinsic value of warrants outstanding and exercisable | 0 | 0 | 0 | ||||||||
Warrant [Member] | |||||||||||
Total intrinsic value of options outstanding and exercisable | 247,770 | 247,770 | 247,770 | ||||||||
Total intrinsic value of warrants outstanding and exercisable | $ 0 | $ 0 | $ 0 | ||||||||
Shareholders [Member] | |||||||||||
Shares issued exercise price per share | $ / shares | $ 0.675 | ||||||||||
Number of warrants granted to purchase of shares of common stock | shares | 1,481,481 | ||||||||||
Placement Agent [Member] | |||||||||||
Shares issued exercise price per share | $ / shares | $ 0.675 | ||||||||||
Number of warrants granted to purchase of shares of common stock | shares | 179,259 | ||||||||||
Warrants grant date fair value | $ 84,547 | ||||||||||
Employees [Member] | |||||||||||
Number of stock issued for employees services , shares | shares | 403,916 | ||||||||||
Number of stock issued for employees services | $ 259,881 | ||||||||||
Investors [Member] | |||||||||||
Number of warrants granted to purchase of shares of common stock | shares | 2,510,001 | 2,510,001 | |||||||||
Warrants term | 5 years | ||||||||||
Warrants exercise price per share | $ / shares | $ 1.50 | $ 1.50 | |||||||||
Series A Preferred Stock [Member] | |||||||||||
Preferred stock, shares authorized | shares | 120,000 | ||||||||||
Preferred stock, par value | $ / shares | $ 0.00001 | ||||||||||
Preferred stock adjusted for stock dividends | $ 100 | ||||||||||
Percentage of preferred stock dividends rate | 8.00% | ||||||||||
Preferred stock liquidation preference per share | $ / shares | $ 0.675 | ||||||||||
Conversion of stock dividing par value | $ / shares | $ 0.675 | ||||||||||
Common stock exercisable period | 5 years | ||||||||||
Number of warrants granted to purchase of shares of common stock | shares | 162,963 | ||||||||||
Notes principal amount | $ 116,003 | ||||||||||
Issuance of common stock shares for cashless exercise of warrants | shares | 1,100 | ||||||||||
Warrant [Member] | |||||||||||
Conversion of stock dividing par value | $ / shares | $ 0.675 | ||||||||||
Shares issued exercise price per share | $ / shares | $ 1 | ||||||||||
Series A Preferred Stockholders [Member] | |||||||||||
Number common stock shares issued for dividends in arrears | shares | 333,902 | ||||||||||
Number common stock issued for dividends in arrears | $ 178,314 |
Stockholders' Equity (Deficit44
Stockholders' Equity (Deficit) - Summary of Option Activity (Details) | 6 Months Ended |
Jul. 31, 2016$ / sharesshares | |
Equity [Abstract] | |
Options Outstanding, Beginning balance | shares | 496,404 |
Options Exercisable, Beginning balance | shares | 496,404 |
Options, Granted | shares | 385,000 |
Options, Exercised | shares | |
Options, Forfeited/Cancelled | shares | |
Options Outstanding, Ending balance | shares | 881,404 |
Options Exercisable, Ending balance | shares | 799,404 |
Options Outstanding, Weighted Average Exercise Price, Beginning balance | $ / shares | $ 1.04 |
Options Exercisable, Weighted Average Exercise Price, Beginning balance | $ / shares | 1.04 |
Weighted Average Exercise Price, Granted | $ / shares | 0.46 |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Exercise Price, Forfeited/Cancelled | $ / shares | |
Options Outstanding, Weighted Average Exercise Price, Ending balance | $ / shares | 0.78 |
Options Exercisable, Weighted Average Exercise Price, Ending balance | $ / shares | $ 0.78 |
Stockholders' Equity (Deficit45
Stockholders' Equity (Deficit) - Summary of Option Outstanding and Exercisable (Details) - Range Of Exercise Price One [Member] | 6 Months Ended |
Jul. 31, 2016$ / sharesshares | |
Range of exercise price lower range limit | $ 0.39 |
Range of exercise price upper range limit | $ 2.97 |
Number of Options Outstanding | shares | 881,404 |
Weighted Average Remaining Contractual Life (in years), Options Outstanding | 2 years 9 months 4 days |
Weighted Average Exercise Price, Options Outstanding | $ 0.78 |
Number of Options Exercisable | shares | 799,404 |
Weighted Average Exercise Price, Options Exercisable | $ 0.78 |
Stockholders' Equity (Deficit46
Stockholders' Equity (Deficit) - Schedule of Warrants Activity (Details) - Warrant [Member] | 6 Months Ended |
Jul. 31, 2016$ / sharesshares | |
Warrants Outstanding, Beginning balance | shares | 4,964,734 |
Warrants Exercisable, Beginning balance | shares | 4,964,734 |
Warrants, Granted | shares | |
Warrants, Exercised | shares | |
Warrants, Forfeited/Cancelled | shares | |
Warrants Outstanding, Ending balance | shares | 4,964,734 |
Warrants Exercisable, Ending balance | shares | 4,964,734 |
Warrants Outstanding, Weighted Average Exercise Price, Beginning balance | $ / shares | $ 0.80 |
Warrants Exercisable, Weighted Average Exercise Price, Beginning balance | $ / shares | 0.80 |
Weighted Average Exercise Price, Granted | $ / shares | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Exercise Price, Forfeited/Cancelled | $ / shares | |
Warrants Outstanding, Weighted Average Exercise Price, Ending balance | $ / shares | 0.80 |
Warrants Exercisable, Weighted Average Exercise Price, Ending balance | $ / shares | $ 0.80 |
Stockholders' Equity (Deficit47
Stockholders' Equity (Deficit) - Schedule of Warrants Outstanding and Exercisable (Details) - Warrant [Member] - $ / shares | 6 Months Ended | |
Jul. 31, 2016 | Jan. 31, 2016 | |
Range of Exercise Price, lower limit | $ 0.68 | |
Range of Exercise Price, upper limit | $ 2.50 | |
Number of Warrants Outstanding | 4,964,734 | 4,964,734 |
Weighted Average Remaining Contractual Life (in Years) | 3 years 7 months 10 days | |
Weighted Average Exercise Price, Warrants Outstanding | $ 0.80 | |
Number of Warrants Exercisable | 4,964,734 | 4,964,734 |
Weighted Average Exercise Price, Warrants Exercisable | $ 0.80 | $ 0.80 |
Commitments and Contingencies48
Commitments and Contingencies (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jul. 31, 2016 | Jul. 31, 2015 | Jul. 31, 2016 | Jul. 31, 2015 | Jan. 31, 2016 | |
Royalty expenses | $ 55,980 | $ 45,542 | $ 141,684 | $ 131,379 | |
Warrants issued to investors | 179,259 | ||||
Shares issued exercise price per share | $ 0.675 | ||||
Warrants grant date fair value | $ 84,547 | ||||
Operating lease annual payments | 50,261 | $ 50,261 | |||
Spartan Capital Securities, LLC [Member] | |||||
Percentage of fee equal to aggregate gross proceeds | 10.00% | ||||
Percentage of fees equal to aggregate gross proceeds for expenses | 3.00% | ||||
Percentage of common stock issuable | 10.00% | ||||
One-time engagement fee | 10,000 | ||||
Cash fee and non-accountable allowance | $ 157,300 | ||||
Spartan Capital Securities, LLC [Member] | Advisory Agreement [Member] | |||||
Nonrefundable monthly fee amount | $ 10,000 | ||||
Spartan Capital Securities, LLC [Member] | Advisory Agreement [Member] | March 31, 2019 [Member] | |||||
Operating lease expiration term | 51 months | ||||
Lease agreement expire date | Mar. 31, 2019 | ||||
Operating lease annual payments | $ 18,848 | $ 18,848 | |||
Minimum [Member] | Spartan Capital Securities, LLC [Member] | Advisory Agreement [Member] | |||||
Nonrefundable monthly fee amount | $ 5,000 | ||||
Nonrefundable monthly fee term | November 1, 2015 through October 2017 | ||||
Aggregate gross proceeds fee | $ 4,000,000 | ||||
Maximum [Member] | Spartan Capital Securities, LLC [Member] | Advisory Agreement [Member] | |||||
Nonrefundable monthly fee amount | $ 5,000 | ||||
Nonrefundable monthly fee term | November 1, 2017 through October 2019 | ||||
Aggregate gross proceeds fee | $ 5,000,000 | ||||
Year 1 [Member] | |||||
Percentage of royalty on net sales | 6.00% | ||||
Royalty revenue | $ 500,000 | ||||
Year 2 [Member] | |||||
Percentage of royalty on net sales | 4.00% | ||||
Year 2 [Member] | Minimum [Member] | |||||
Royalty revenue | $ 500,000 | ||||
Year 2 [Member] | Maximum [Member] | |||||
Royalty revenue | $ 2,500,000 | ||||
Year 3 [Member] | |||||
Percentage of royalty on net sales | 2.00% | ||||
Year 3 [Member] | Minimum [Member] | |||||
Royalty revenue | $ 2,500,000 | ||||
Year 3 [Member] | Maximum [Member] | |||||
Royalty revenue | $ 20,000,000 | ||||
Year 4 [Member] | |||||
Percentage of royalty on net sales | 1.00% | ||||
Royalty revenue | $ 20,000,000 | ||||
$10,000,000 or More Raised Financing [Member] | Spartan Capital Securities, LLC [Member] | Advisory Agreement [Member] | |||||
Nonrefundable monthly fee amount | $ 5,000 | ||||
Nonrefundable monthly fee term | November 1, 2015 through October 1, 2019 | ||||
Aggregate gross proceeds fee | $ 10,000,000 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Royalty Minimum Payment by Preceding Agreement Year (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2016 | Jul. 31, 2015 | Jul. 31, 2016 | Jul. 31, 2015 | |
Minimum Royalty to be Paid | $ 55,980 | $ 45,542 | $ 141,684 | $ 131,379 |
Agreement Year 1st and 2nd [Member] | ||||
Minimum Royalty to be Paid | ||||
Agreement Year 3rd and 4th [Member] | ||||
Minimum Royalty to be Paid | 50,000 | |||
Agreement Year 5th, 6th and 7th [Member] | ||||
Minimum Royalty to be Paid | 75,000 | |||
Agreement Year 8th and 9th [Member] | ||||
Minimum Royalty to be Paid | 100,000 | |||
Agreement Year 10th and thereafter [Member] | ||||
Minimum Royalty to be Paid | $ 125,000 |
Commitments and Contingencies50
Commitments and Contingencies - Schedule of Future Minimum Payments Under Operating Leases (Details) | Jul. 31, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,017 | $ 18,848 |
2,018 | 18,848 |
2,019 | 12,565 |
Total | $ 50,261 |