Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Apr. 30, 2017 | Jun. 12, 2017 | |
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 | Apr. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --01-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 27,947,539 | |
Trading Symbol | MMMB | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,018 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Apr. 30, 2017 | Jan. 31, 2017 |
Assets: | ||
Cash | $ 436,447 | $ 666,580 |
Accounts receivable, net | 2,301,737 | 1,817,820 |
Inventories | 180,929 | 443,623 |
Prepaid expenses | 79,686 | 135,747 |
Due from manufacturer - related party | 2,016,046 | 2,079,708 |
Total current assets | 5,014,845 | 5,143,478 |
Property and equipment, net | 1,311,777 | 1,175,508 |
Deposit on machinery and equipment | 423,383 | |
Total Assets | 6,750,005 | 6,318,986 |
Liabilities: | ||
Accounts payable and accrued expenses | 770,071 | 484,752 |
Line of credit, net | 1,608,191 | 1,363,145 |
Term loan | 140,004 | 140,004 |
Note payable - net | 1,666,950 | 1,401,906 |
Total current liabilities | 4,185,216 | 3,389,807 |
Term loan - net of current | 478,327 | 513,328 |
Note payable - net of current portion | 751,055 | 1,298,819 |
Notes payable - related party | 117,656 | 117,656 |
Total long-term liabilities | 1,347,038 | 1,929,803 |
Total Liabilities | 5,532,254 | 5,319,610 |
Commitments and contingencies | ||
Stockholders' Equity: | ||
Preferred stock value | ||
Common stock, $0.00001 par value; 250,000,000 shares authorized; 27,947,539 and 27,810,717 shares issued and outstanding, respectively | 279 | 278 |
Additional paid in capital | 15,961,978 | 15,825,029 |
Common stock subscribed, $0.00001 par value; 66,667 shares, respectively | 1 | 1 |
Accumulated deficit | (14,595,007) | (14,676,432) |
Less: Treasury stock, 230,000 shares, respectively | (149,500) | (149,500) |
Total Stockholders' Equity | 1,217,751 | 999,376 |
Total Liabilities and Stockholders' Equity | 6,750,005 | 6,318,986 |
Series A Preferred Stock [Member] | ||
Stockholders' Equity: | ||
Preferred stock value |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Apr. 30, 2017 | Jan. 31, 2017 |
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 | 27,947,539 | 27,810,717 |
Common stock, shares outstanding | 27,947,539 | 27,810,717 |
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 | 23,400 |
Preferred stock, shares outstanding | 23,400 | 23,400 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Apr. 30, 2017 | Apr. 30, 2016 | |
Income Statement [Abstract] | ||
Sales - net of slotting fees and discounts | $ 5,357,301 | $ 3,923,977 |
Cost of sales | 3,457,723 | 2,448,778 |
Gross profit | 1,899,578 | 1,475,199 |
Operating expenses | ||
Research and development | 25,588 | 30,562 |
General and administrative expenses | 1,557,828 | 1,499,857 |
Total operating expenses | 1,583,416 | 1,530,419 |
Income (loss) from operations | 316,162 | (55,220) |
Other expenses | ||
Interest expense | (170,657) | (161,762) |
Amortization of debt discount | (17,280) | (9,125) |
Total other expenses | (187,937) | (170,887) |
Net income (loss) | 128,225 | (226,107) |
Less: preferred dividends | (46,800) | (64,521) |
Net income (loss) available to common stockholders | $ 81,425 | $ (290,628) |
Net income (loss) per common share - basic | $ 0 | $ (0.01) |
Net income (loss) per common share - diluted | $ 0 | $ (0.01) |
Weighted average common shares outstanding - basic | 27,810,717 | 26,507,516 |
Weighted average common shares outstanding - diluted | 32,532,135 | 26,507,516 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - 3 months ended Apr. 30, 2017 - USD ($) | Series A Preferred Stock [Member] | Common Stock [Member] | Treasury Stock [Member] | Additional Paid In Capital [Member] | Common Stock Subscribed [Member] | Accumulated Deficit [Member] | Total |
Balance at Jan. 31, 2017 | $ 278 | $ (149,500) | $ 15,825,029 | $ 1 | $ (14,676,432) | $ 999,376 | |
Balance, shares at Jan. 31, 2017 | 23,400 | 27,810,717 | (230,000) | ||||
Common stock issued for services | $ 1 | 82,999 | 83,000 | ||||
Common stock issued for services, shares | 87,554 | ||||||
Stock options issued for services | 7,150 | 7,150 | |||||
Series A Preferred dividend issued in common shares | 46,800 | 46,800 | |||||
Series A Preferred dividend issued in common shares, shares | 49,268 | ||||||
Series A Preferred dividend | (46,800) | (46,800) | |||||
Net loss | 128,225 | 128,225 | |||||
Balance at Apr. 30, 2017 | $ 279 | $ (149,500) | $ 15,961,978 | $ 1 | $ (14,595,007) | $ 1,217,751 | |
Balance, shares at Apr. 30, 2017 | 23,400 | 27,947,539 | (230,000) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Apr. 30, 2017 | Apr. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ 128,225 | $ (226,107) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation | 107,081 | 76,703 |
Amortization of debt discount and debt issuance costs | 17,280 | 9,125 |
Share-based compensation | 90,150 | 179,208 |
(Increase) Decrease in: | ||
Accounts receivable | (483,917) | (248,619) |
Inventories | 262,694 | (254,233) |
Prepaid expenses | 56,061 | (15,087) |
Due from manufacturer - related party | 63,662 | 51,730 |
Increase (Decrease) in: | ||
Accounts payable and accrued expenses | 285,319 | (10,582) |
Net Cash Provided by (Used In) Operating Activities | 526,555 | (437,862) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Cash paid for fixed assets | (666,733) | (18,650) |
Net Cash Used In Investing Activities | (666,733) | (18,650) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repayment of note payable | (300,000) | |
Borrowings (repayments) of line of credit, net | 245,046 | 481,039 |
Repayment of term loan | (35,001) | (30,000) |
Repayment of promissory notes | (79,490) | |
Net Cash (Used In) Provided By Financing Activities | (89,955) | 371,549 |
Net Decrease in Cash | (230,133) | (84,963) |
Cash - Beginning of Period | 666,580 | 587,422 |
Cash - End of Period | 436,447 | 502,459 |
SUPPLEMENTARY CASH FLOW INFORMATION: | ||
Income taxes | ||
Interest | 66,941 | 72,311 |
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Stock issued for Series A Preferred dividends | 46,800 | 131,513 |
Accrued dividends | 46,800 | 64,521 |
Debt extension fee included in principal balance of note | $ 52,236 |
Nature of Operations and Basis
Nature of Operations and Basis of Presentation | 3 Months Ended |
Apr. 30, 2017 | |
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 MamaMancini’s 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, beef meat loaf and other similar meats and sauces. The Company’s 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 Company’s consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended January 31, 2017 filed on April 23, 2017. 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, 2017 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, 2018. Going Concern Analysis Going Concern Analysis The Company had a net income (loss) of $128,225 and $(226,107) for the three months ended April 30, 2017 and 2016. As a result, these conditions had raised substantial doubt regarding our ability to continue as a going concern. However, as of April 30, 2017, we had cash and working capital of $436,447 and $829,629, respectively. During the three months ended April 30, 2017, the Company generated cash from operations of $526,555. In addition, management was able to negotiate the terms of its note payable with one of the lenders and intends to exercise an option to extend the maturity date of the note payable to May 1, 2018. Also, the continued revenue growth coupled with improved gross margins and control of expenses leads management to conclude that it is probable that the Company’s cash resources will be sufficient to meet our cash requirements through the first quarter of fiscal year ended January 31, 2019. If necessary, management also determined that it is probable that external sources of debt and/or equity financing could be obtained based on management’s history of being able to raise capital coupled with current favorable market conditions. As a result of both management’s plans and current favorable trends in improving cash flow, the Company concluded that the initial conditions which raised substantial doubt regarding the ability to continue as a going concern have been alleviated. Therefore, the accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the matters discussed herein. While we believe in the viability of management’s strategy to generate sufficient revenue, control costs and the ability to raise additional funds if necessary, there can be no assurances to that effect. The Company’s ability to continue as a going concern is dependent upon the ability to further implement the business plan, generate sufficient revenues and to control operating expenses. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Apr. 30, 2017 | |
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 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 Company’s 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 a potential general downturn in the economy, and (iii) the volatility of prices pertaining to food and beverages in connection with the Company’s distribution of the product. These factors, among others, make it difficult to project the Company’s 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 April 30, 2017 or January 31, 2017. 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 April 30, 2017 and January 31, 2017, 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 April 30, 2017 and January 31, 2017: April 30, 2017 January 31, 2017 Finished goods $ 180,929 $ 443,623 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 years Leasehold improvements * (*) Amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever period is shorter. 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 Company’s 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. Research and Development Research and development is expensed as incurred. Research and development expenses for the three months ended April 30, 2017 and 2016 were $25,588 and $30,562, 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: Three Months Ended April 30, 2017 Three Months Ended April 30, 2016 Gross Sales $ 5,473,205 $ 4,040,988 Less: Slotting, Discounts, Allowances 115,905 117,011 Net Sales $ 5,357,301 $ 3,923,977 Cost of Sales Cost of sales represents costs directly related to the production and manufacturing of the Company’s 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 April 30, 2017 and 2016 were $317,594 and $420,892, 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 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 April 30, 2017 and 2016, share-based compensation amounted to $90,150 and $179,208, respectively. For the three months ended April 30, 2017 and 2016, when computing fair value of share-based payments, the Company has considered the following variables: April 30, 2017 April 30, 2016 Risk-free interest rate 1.18 % 1.28% to 1.33 % Expected life of grants 4.0 years 2.5 years Expected volatility of underlying stock 188 % 178% to 179 % Dividends 0 % 0 % The expected option term is computed using the “simplified” method as permitted under the provisions of ASC 718-10-S99. 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 Company’s 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 per share (“EPS”) is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to Section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16, basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants. The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net income (loss) attributable to common stockholders per common share. For the Three Months Ended April 30, 2017 April 30, 2016 Numerator: Net income/(loss) attributable to common stockholders $ 81,425 $ (290,628 ) Effect of dilutive securities: — — Diluted net income (loss) $ 81,425 $ (290,628 ) Denominator: Weighted average common shares outstanding - basic 27,810,717 26,507,516 Dilutive securities (a): Series A Preferred 3,466,667 — Options 198,495 — Warrants 1,056,256 — Weighted average common shares outstanding and assumed conversion - diluted 32,532,135 26,507,516 Basic net income (loss) per common share $ 0.00 $ (0.01 ) Diluted net income (loss) per common share $ 0.00 $ (0.01 ) (a) - Anti-dilutive securities excluded: 3,779,884 9,189,805 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 2013. Recent Accounting Pronouncements In July 2015, the FASB issued the ASU No. 2015-11 “ Inventory (Topic 330) Simplifying the Measurement of Inventory” . In April 2016, the FASB issued ASU No. 2016-09, “ Compensation – Stock Compensation (Topic 718) In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” In April 2016, the FASB issued ASU No. 2016-10, “ Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing (Topic 606) Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross verses Net) (Topic 606) In May 2016, the FASB issued ASU No. 2016-12, “ Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory”, In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230)” 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 | 3 Months Ended |
Apr. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 3 - Property and Equipment: Property and equipment on April 30, 2017 and January 31, 2017 are as follows: April 30, 2017 January 31, 2017 Machinery and Equipment $ 1,193,726 $ 1,193,473 Furniture and Fixtures 23,067 17,942 Leasehold Improvements 1,063,170 825,198 2,279,963 2,036,613 Less: Accumulated Depreciation 968,186 861,105 $ 1,311,777 $ 1,175,508 Depreciation expense charged to income for the three months ended April 30, 2017 and 2016 amounted to $107,081 and $76,703, respectively. |
Investment in Meatball Obsessio
Investment in Meatball Obsession, LLC | 3 Months Ended |
Apr. 30, 2017 | |
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 Company’s 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 Company’s ownership interest in MO has decreased due to dilution. At April 30, 2017 and January 31, 2017, the Company’s ownership interest in MO was 12% and 12%, respectively. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Apr. 30, 2017 | |
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 investments in equipment located at the Manufacturer’s facility. The equipment is capitalized and depreciated by the Company over the estimated useful life. During the three months ended April 30, 2017 and 2016, the Company purchased inventory of $3,307,107 and $2,843,012, respectively, from the Manufacturer. During the three months ended April 30, 2017 and 2016, the Manufacturer incurred expenses of $15,000 and $6,000, respectively, on behalf of the Company for shared administrative expenses and salary expenses. At April 30, 2017 and January 31, 2017, the amount due from the Manufacturer is $2,016,046 and $2,079,708 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 April 30, 2017 and 2016, the Company generated approximately $22,571 and $10,102 in revenues from MO, respectively. As of April 30, 2017 and January 31, 2017, the Company had a receivable of $9,849 and $8,189 due from MO, respectively. WWS, Inc. A current director of the Company is the president of WWS, Inc. For the three months ended April 30, 2017 and 2016, the Company recorded $12,000 and $12,000 in commission expense from WWS, Inc. generated sales, respectively. Notes Payable – Related Party 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 matured on December 31, 2016. The notes were subsequently extended until February 2019. As of April 30, 2017 and January 31, 2017, the outstanding principal balance of the notes was $117,656. |
Loan and Security Agreement
Loan and Security Agreement | 3 Months Ended |
Apr. 30, 2017 | |
Debt Disclosure [Abstract] | |
Loan and Security Agreement | Note 6 - 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 April 30, 2017 and January 31, 2017, the outstanding balance on the line of credit was $1,608,191 and $1,363,145, 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 is required to pay an annual facility fee equal to 0.75% of the total $3,200,000 facility and pays an annualized maintenance fee equal to 2.16% 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. Due to the terms of the agreement regarding a subjective acceleration clause and a lockbox arrangement, the line of credit is shown as a current 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. In September 2016, the ECG Note was increased to $700,000 with an extended maturity date of September 30, 2021. The amended EGC Note is payable in 60 monthly installments of $11,667. 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 $618,331 and $653,332 as of April 30, 2017 and January 31, 2017, respectively. Additionally, in connection with the Loan and Security Agreement, Carl Wolf, the Company’s 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. |
Note Payable
Note Payable | 3 Months Ended |
Apr. 30, 2017 | |
Debt Disclosure [Abstract] | |
Note Payable | Note 7 –Note Payable 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 Company’s 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 management’s 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 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 consolidated statements of operations. 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 management’s 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 and also removed the convertible feature of the note. The principal amount of the note was increased to $2,898,523, which is inclusive of accrued interest payable through October 31, 2016. In addition, the Company paid an origination fee of $50,000 on October 31, 2016 which is recorded as a debt discount and will be amortized over the remaining life of the note using the effective interest method. On March 10, 2017, the Company further extended the maturity date to May 1, 2018. Per the terms of the amended agreement: 1) The Company will pay to Manatuck a cash fee equal to two percent (2%) of the mutually-agreed pro-forma balance payable on account of the note as of March 31, 2017, which shall include all interest which would be accrued on the note through March 31, 2017; 2) The Company shall make monthly principal payments to Manatuck as follows: March 2017-December 2017 $ 150,000 January 2018-May 1, 2018 $ 200,000 Based on management’s review of the amended agreement and extension, the accounting for debt modification applied. The Company accrued the 2% fee totaling $52,236 which is recorded as a debt discount and will be amortized over the remaining life of the note using the effective interest method. There was unamortized debt discount of $83,050 and $48,094 as of April 30, 2017 and January 31, 2017, respectively. The outstanding balance including principal and interest and net of debt discount at April 30, 2017 and January 31, 2017 was $2,418,005 and $2,700,725, respectively. Future maturities of all debt (including debt discussed above in Notes 5, 6 and 7) are as follows: For the Twelve-Month Period Ending April 30, 2018 $ 3,498,195 2019 1,008,715 2020 140,004 2021 140,004 2022 58,315 $ 4,845,233 |
Concentrations
Concentrations | 3 Months Ended |
Apr. 30, 2017 | |
Risks and Uncertainties [Abstract] | |
Concentrations | Note 8 - Concentrations Revenues During the three months ended April 30, 2017, the Company earned revenues from two customers representing approximately 35% and 13% of gross sales. During the three months ended April 30, 2016, the Company earned revenues from four customers representing approximately 14%, 13%, 12% and 11% of gross sales. As of April 30, 2017, these two customers represented approximately 41% and 15% of total gross outstanding receivables, respectively. As of April 30, 2016, these four customers represented approximately 16%, 8%, 14% and 25% of total gross outstanding receivables, respectively Cost of Sales For the three months ended April 30, 2017 and 2016, one vendor (a related party) represented approximately 100% and 98% of the Company’s purchases, respectively. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Apr. 30, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | Note 9 - Stockholders’ Equity Common Stock During the three months ended April 30, 2017, the Company issued 49,268 shares of its common stock to the holders of the Series A Preferred stockholders for the dividends in arrears totaling $46,800. During the three months ended April 30, 2017, the Company issued 87,554 shares of its common stock to employees and consultants for services rendered of $83,000. Treasury Stock As discussed in Note 7, 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 Company’s option activity: Options Weighted Average Exercise Price Outstanding – January 31, 2017 881,404 $ 0.78 Exercisable – January 31, 2017 799,404 $ 0.78 Granted - $ - Exercised - $ - Forfeited/Cancelled (229,404 ) $ 1.00 Outstanding – April 30, 2017 652,000 $ 0.71 Exercisable – April 30, 2017 576,000 $ 0.80 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 – 2.97 652,000 2.76 years $ 0.71 576,000 $ 0.80 At April 30, 2017 the total intrinsic value of options outstanding and exercisable was $188,570 and $159,870, respectively. For the three months ended April 30, 2017 and 2016, the Company recognized an aggregate of $7,150 and $80,470, respectively. At April 30, 2017, unrecognized stock based compensation was $40,248. (D) Warrants The following is a summary of the Company’s warrant activity: Warrants Weighted Average Exercise Price Outstanding – January 31, 2017 7,311,770 $ 1.04 Exercisable – January 31, 2017 7,311,770 $ 1.04 Granted - $ - Exercised - $ - Forfeited/Cancelled (150,000 ) $ 1.00 Outstanding – April 30, 2017 7,161,770 $ 1.05 Exercisable – April 30, 2017 7,161,770 $ 1.05 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 7,161,770 3.31 years $ 1.05 7,161,770 $ 1.05 At April 30, 2017, the total intrinsic value of warrants outstanding and exercisable was $1,003,444 and $1,033,444, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Apr. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 10 - 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, Licensor’s 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 Company’s “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 $116,947 and $85,704 of royalty expenses for the three months ended April 30, 2017 and 2016. Royalty expenses are included in general and administrative expenses on the 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 Company’s 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. During the three months ended April 30, 2017, no payments were made to Spartan. 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 $18,847. Total future minimum payments required under operating lease as of April 30, 2017 are as follows: For the Twelve Months Ending April 30, 2018 $ 18,847 2019 17,281 $ 36,218 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Apr. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 11 – 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) | 3 Months Ended |
Apr. 30, 2017 | |
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 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 Company’s 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 a potential general downturn in the economy, and (iii) the volatility of prices pertaining to food and beverages in connection with the Company’s distribution of the product. These factors, among others, make it difficult to project the Company’s 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 April 30, 2017 or January 31, 2017. 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 April 30, 2017 and January 31, 2017, 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 April 30, 2017 and January 31, 2017: April 30, 2017 January 31, 2017 Finished goods $ 180,929 $ 443,623 |
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 years Leasehold improvements * (*) Amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever period is shorter. |
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 Company’s 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. |
Research and Development | Research and Development Research and development is expensed as incurred. Research and development expenses for the three months ended April 30, 2017 and 2016 were $25,588 and $30,562, 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: Three Months Ended April 30, 2017 Three Months Ended April 30, 2016 Gross Sales $ 5,473,205 $ 4,040,988 Less: Slotting, Discounts, Allowances 115,905 117,011 Net Sales $ 5,357,301 $ 3,923,977 |
Cost of Sales | Cost of Sales Cost of sales represents costs directly related to the production and manufacturing of the Company’s 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 April 30, 2017 and 2016 were $317,594 and $420,892, 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 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 April 30, 2017 and 2016, share-based compensation amounted to $90,150 and $179,208, respectively. For the three months ended April 30, 2017 and 2016, when computing fair value of share-based payments, the Company has considered the following variables: April 30, 2017 April 30, 2016 Risk-free interest rate 1.18 % 1.28% to 1.33 % Expected life of grants 4.0 years 2.5 years Expected volatility of underlying stock 188 % 178% to 179 % Dividends 0 % 0 % The expected option term is computed using the “simplified” method as permitted under the provisions of ASC 718-10-S99. 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 Company’s 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 Earnings per share (“EPS”) is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to Section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16, basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants. The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net income (loss) attributable to common stockholders per common share. For the Three Months Ended April 30, 2017 April 30, 2016 Numerator: Net income/(loss) attributable to common stockholders $ 81,425 $ (290,628 ) Effect of dilutive securities: — — Diluted net income (loss) $ 81,425 $ (290,628 ) Denominator: Weighted average common shares outstanding - basic 27,810,717 26,507,516 Dilutive securities (a): Series A Preferred 3,466,667 — Options 198,495 — Warrants 1,056,256 — Weighted average common shares outstanding and assumed conversion - diluted 32,532,135 26,507,516 Basic net income (loss) per common share $ 0.00 $ (0.01 ) Diluted net income (loss) per common share $ 0.00 $ (0.01 ) (a) - Anti-dilutive securities excluded: 3,779,884 9,189,805 |
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 2013. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In July 2015, the FASB issued the ASU No. 2015-11 “ Inventory (Topic 330) Simplifying the Measurement of Inventory” . In April 2016, the FASB issued ASU No. 2016-09, “ Compensation – Stock Compensation (Topic 718) In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” In April 2016, the FASB issued ASU No. 2016-10, “ Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing (Topic 606) Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross verses Net) (Topic 606) In May 2016, the FASB issued ASU No. 2016-12, “ Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory”, In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230)” 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) | 3 Months Ended |
Apr. 30, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Inventories | Inventory was comprised of the following at April 30, 2017 and January 31, 2017: April 30, 2017 January 31, 2017 Finished goods $ 180,929 $ 443,623 |
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 years Leasehold improvements * (*) Amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever period is shorter. |
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: Three Months Ended April 30, 2017 Three Months Ended April 30, 2016 Gross Sales $ 5,473,205 $ 4,040,988 Less: Slotting, Discounts, Allowances 115,905 117,011 Net Sales $ 5,357,301 $ 3,923,977 |
Schedule of Fair Value of Share-Based Payments | For the three months ended April 30, 2017 and 2016, when computing fair value of share-based payments, the Company has considered the following variables: April 30, 2017 April 30, 2016 Risk-free interest rate 1.18 % 1.28% to 1.33 % Expected life of grants 4.0 years 2.5 years Expected volatility of underlying stock 188 % 178% to 179 % Dividends 0 % 0 % |
Schedule of Earnings Per Share, Basic and Diluted | The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net income (loss) attributable to common stockholders per common share. For the Three Months Ended April 30, 2017 April 30, 2016 Numerator: Net income/(loss) attributable to common stockholders $ 81,425 $ (290,628 ) Effect of dilutive securities: — — Diluted net income (loss) $ 81,425 $ (290,628 ) Denominator: Weighted average common shares outstanding - basic 27,810,717 26,507,516 Dilutive securities (a): Series A Preferred 3,466,667 — Options 198,495 — Warrants 1,056,256 — Weighted average common shares outstanding and assumed conversion - diluted 32,532,135 26,507,516 Basic net income (loss) per common share $ 0.00 $ (0.01 ) Diluted net income (loss) per common share $ 0.00 $ (0.01 ) (a) - Anti-dilutive securities excluded: 3,779,884 9,189,805 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Apr. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment on April 30, 2017 and January 31, 2017 are as follows: April 30, 2017 January 31, 2017 Machinery and Equipment $ 1,193,726 $ 1,193,473 Furniture and Fixtures 23,067 17,942 Leasehold Improvements 1,063,170 825,198 2,279,963 2,036,613 Less: Accumulated Depreciation 968,186 861,105 $ 1,311,777 $ 1,175,508 |
Loan and Security Agreement (Ta
Loan and Security Agreement (Tables) | 3 Months Ended |
Apr. 30, 2017 | |
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 |
Note Payable (Tables)
Note Payable (Tables) | 3 Months Ended |
Apr. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Future Maturities of Long Term Debt | Future maturities of all debt (including debt discussed above in Notes 5, 6 and 7) are as follows: For the Twelve-Month Period Ending April 30, 2018 $ 3,498,195 2019 1,008,715 2020 140,004 2021 140,004 2022 58,315 $ 4,845,233 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Apr. 30, 2017 | |
Equity [Abstract] | |
Summary of Option Activity | The following is a summary of the Company’s option activity: Options Weighted Average Exercise Price Outstanding – January 31, 2017 881,404 $ 0.78 Exercisable – January 31, 2017 799,404 $ 0.78 Granted - $ - Exercised - $ - Forfeited/Cancelled (229,404 ) $ 1.00 Outstanding – April 30, 2017 652,000 $ 0.71 Exercisable – April 30, 2017 576,000 $ 0.80 |
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 – 2.97 652,000 2.76 years $ 0.71 576,000 $ 0.80 |
Schedule of Warrants Activity | The following is a summary of the Company’s warrant activity: Warrants Weighted Average Exercise Price Outstanding – January 31, 2017 7,311,770 $ 1.04 Exercisable – January 31, 2017 7,311,770 $ 1.04 Granted - $ - Exercised - $ - Forfeited/Cancelled (150,000 ) $ 1.00 Outstanding – April 30, 2017 7,161,770 $ 1.05 Exercisable – April 30, 2017 7,161,770 $ 1.05 |
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 7,161,770 3.31 years $ 1.05 7,161,770 $ 1.05 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Apr. 30, 2017 | |
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 April 30, 2017 are as follows: For the Twelve Months Ending April 30, 2018 $ 18,847 2019 17,281 $ 36,218 |
Nature of Operations and Basi25
Nature of Operations and Basis of Presentation (Details Narrative) - USD ($) | 3 Months Ended | |||
Apr. 30, 2017 | Apr. 30, 2016 | Jan. 31, 2017 | Jan. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Net loss | $ 128,225 | $ (226,107) | ||
Cash | 436,447 | 502,459 | $ 666,580 | $ 587,422 |
Working capital deficit | 829,629 | |||
Net cash generated from operating activities | $ 526,555 | $ (437,862) |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | ||
Apr. 30, 2017 | Apr. 30, 2016 | Jan. 31, 2017 | |
Accounting Policies [Abstract] | |||
Cash equivalents | |||
Accounts receivable reserves | 2,000 | $ 2,000 | |
Research and development expense | 25,588 | $ 30,562 | |
Advertising expenses | 317,594 | 420,892 | |
Share-based compensation | $ 90,150 | $ 179,208 |
Summary of Significant Accoun27
Summary of Significant Accounting Policies - Schedule of Inventories (Details) - USD ($) | Apr. 30, 2017 | Jan. 31, 2017 |
Accounting Policies [Abstract] | ||
Finished goods | $ 180,929 | $ 443,623 |
Summary of Significant Accoun28
Summary of Significant Accounting Policies - Schedule of Property and Equipment Estimated Useful Lives (Details) | 3 Months Ended | |
Apr. 30, 2017 | ||
Furniture and Fixtures [Member] | ||
Property and equipment estimated useful lives | 3 years | |
Leasehold Improvements [Member] | ||
Property and equipment estimated useful lives | 0 years | [1] |
Minimum [Member] | Machinery and Equipment [Member] | ||
Property and equipment estimated useful lives | 2 years | |
Maximum [Member] | Machinery and Equipment [Member] | ||
Property and equipment estimated useful lives | 7 years | |
[1] | Amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever period is shorter. |
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 | |
Apr. 30, 2017 | Apr. 30, 2016 | |
Accounting Policies [Abstract] | ||
Gross Sales | $ 5,473,205 | $ 4,040,988 |
Less: Slotting, Discounts, Allowances | 115,905 | 117,011 |
Net Sales | $ 5,357,301 | $ 3,923,977 |
Summary of Significant Accoun30
Summary of Significant Accounting Policies - Schedule of Fair Value of Share-Based Payments (Details) | 3 Months Ended | |
Apr. 30, 2017 | Apr. 30, 2016 | |
Accounting Policies [Abstract] | ||
Risk-free interest rate | 1.18% | |
Risk-free interest rate, minimum | 1.28% | |
Risk-free interest rate, maximum | 1.33% | |
Expected life of grants | 4 years | 2 years 6 months |
Expected volatility of underlying stock | 188.00% | |
Expected volatility of underlying stock, minimum | 178.00% | |
Expected volatility of underlying stock, maximum | 179.00% | |
Dividends | 0.00% | 0.00% |
Summary of Significant Accoun31
Summary of Significant Accounting Policies - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) | 3 Months Ended | |
Apr. 30, 2017 | Apr. 30, 2016 | |
Accounting Policies [Abstract] | ||
Net income/(loss) attributable to common stockholders | $ 81,425 | $ (290,628) |
Effect of dilutive securities | ||
Diluted net income (loss) | $ 81,425 | $ (290,628) |
Weighted average common shares outstanding - basic | 27,810,717 | 26,507,516 |
Series A Preferred | 3,466,667 | |
Options | 198,495 | |
Warrants | 1,056,256 | |
Weighted average common shares outstanding and assumed conversion - diluted | 32,532,135 | 26,507,516 |
Basic net income (loss) per common share | $ 0 | $ (0.01) |
Diluted net income (loss) per common share | $ 0 | $ (0.01) |
(a) - Anti-dilutive securities excluded | 3,779,884 | 9,189,805 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | |
Apr. 30, 2017 | Apr. 30, 2016 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 107,081 | $ 76,703 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | Apr. 30, 2017 | Jan. 31, 2017 |
Property, Plant and Equipment [Abstract] | ||
Machinery and Equipment | $ 1,193,726 | $ 1,193,473 |
Furniture and Fixtures | 23,067 | 17,942 |
Leasehold Improvements | 1,063,170 | 825,198 |
Property plant and equipment, gross | 2,279,963 | 2,036,613 |
Less: Accumulated Depreciation | 968,186 | 861,105 |
Property, plant and equipment, net | $ 1,311,777 | $ 1,175,508 |
Investment in Meatball Obsess34
Investment in Meatball Obsession, LLC (Details Narrative) - Meatball Obsession, LLC [Member] - USD ($) | Dec. 31, 2011 | Apr. 30, 2017 | Jan. 31, 2017 |
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 | Mar. 01, 2010 | Aug. 31, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | Jan. 31, 2016 | Jan. 31, 2017 |
Voting rights description | For purposes of the agreement, a Change of Control shall occur when a third party who is not currently a shareholder of the Company acquires control of at least fifty-one percent (51%) of the voting shares of the Company. | ||||||
Purchased inventory from manufacturer | $ 3,307,107 | $ 2,843,012 | |||||
Administrative expenses and salary expenses | 15,000 | 6,000 | |||||
Due from manufacturer - related party | 2,016,046 | $ 2,079,708 | |||||
Proceeds from notes payable with related party | 650,000 | ||||||
Debt maturity date | Dec. 19, 2016 | Sep. 30, 2017 | |||||
Note principal balance amount | 117,656 | 117,656 | |||||
Meatball Obsession, LLC [Member] | |||||||
Revenue from related parties | 22,571 | 10,102 | |||||
Due from related party | 9,849 | $ 8,189 | |||||
WWS, Inc [Member] | |||||||
Commission expense | 12,000 | $ 12,000 | |||||
CEO [Member] | |||||||
Proceeds from notes payable with related party | $ 125,000 | ||||||
Note bears interest rate per annum | 4.00% | ||||||
Debt maturity date | Dec. 31, 2016 | ||||||
CEO [Member] | Extended Maturity [Member] | |||||||
Debt maturity date | Feb. 28, 2019 | ||||||
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% |
Loan and Security Agreement (De
Loan and Security Agreement (Details Narrative) - USD ($) | Oct. 29, 2015 | Sep. 03, 2014 | Sep. 30, 2016 | Aug. 31, 2016 | Apr. 30, 2017 | Jan. 31, 2017 |
Line of credit | $ 1,608,191 | $ 1,363,145 | ||||
Debt instrument, increase | $ 220,000 | |||||
Extended maturity date | Dec. 19, 2016 | Sep. 30, 2017 | ||||
Repayment of secured debt, monthly installment basis | 2,418,005 | 2,700,725 | ||||
Loan and Security Agreement [Member] | Entrepreneur Growth Capital LLC [Member] | ||||||
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 is required to pay an annual facility fee equal to 0.75% of the total $3,200,000 facility and pays an annualized maintenance fee equal to 2.16% 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 | 0.75% | |||||
Line of credit facility annualized maintenance fee | $ 3,200,000 | |||||
Line of credit fee percentage | 2.16% | |||||
Line of credit default stated rates of interest | 10.00% | |||||
Secured Promissory Note [Member] | Entrepreneur Growth Capital LLC [Member] | ||||||
Debt instrument, increase | $ 700,000 | |||||
Extended maturity date | Sep. 30, 2021 | |||||
Term loan outstanding | $ 618,331 | $ 653,332 | ||||
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 | $ 11,667 |
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 |
Note Payable (Details Narrative
Note Payable (Details Narrative) - USD ($) | Mar. 31, 2017 | Oct. 31, 2016 | Oct. 29, 2015 | Dec. 19, 2014 | Aug. 31, 2016 | Apr. 30, 2015 | Apr. 30, 2017 | Apr. 30, 2016 | Jan. 31, 2017 |
Common stock price per shares | $ 0.675 | ||||||||
Debt discount | $ 17,280 | $ 9,125 | |||||||
Unamortized debt discount | 83,050 | $ 48,094 | |||||||
Debt maturity date | Dec. 19, 2016 | Sep. 30, 2017 | |||||||
Sale of stock during period | 230,000 | ||||||||
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 | ||||||||
Debt extinguishment | 2,000,000 | ||||||||
Unamortized debt discount | 190,483 | 190,483 | |||||||
Debt issuance cost | 19,106 | 19,106 | |||||||
Loss on debt extinguishment | 380,089 | ||||||||
Remaining debt discount | $ 190,483 | ||||||||
Outstanding principal debt | $ 2,898,523 | ||||||||
Origination fees | $ 50,000 | 50,000 | |||||||
Accrued fee percentage | 2.00% | ||||||||
Debt fee | $ 52,236 | ||||||||
Debt instrument, periodic payment | $ 2,418,005 | $ 2,700,725 | |||||||
Manatuck Purchase Agreement [Member] | March 1, 2017 [Member] | |||||||||
Debt maturity month year | May 1, 2018 | ||||||||
Debt instrument, description | Upon exercise of the Option, the Company will pay to Manatuck a cash fee equal to two percent (2%) of the mutually-agreed pro-forma balance payable on account of the note as of March 31, 2017, which shall include all interest which would be accrued on the note through March 31, 2017 which can be included in the outstanding principal balance of the note | ||||||||
Manatuck Purchase Agreement [Member] | March 2017-December 2017 [Member] | |||||||||
Outstanding principal debt | $ 150,000 | ||||||||
Manatuck Purchase Agreement [Member] | January 2018-May 1, 2018 [Member] | |||||||||
Outstanding principal debt | $ 200,000 | ||||||||
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 | ||||||||
Debt discount | $ 498,350 | $ 39,600 |
Note Payable - Schedule of Futu
Note Payable - Schedule of Future Maturities of Long Term Debt (Details) | Apr. 30, 2017USD ($) |
Debt Disclosure [Abstract] | |
2,018 | $ 3,498,195 |
2,019 | 1,008,715 |
2,020 | 140,004 |
2,021 | 140,004 |
2,022 | 58,315 |
Future maturities of long term debt total | $ 4,845,233 |
Concentrations (Details Narrati
Concentrations (Details Narrative) | 3 Months Ended | |
Apr. 30, 2017 | Apr. 30, 2016 | |
Sales Revenue [Member] | Customer A [Member] | ||
Concentrations of risk percentage | 35.00% | 14.00% |
Sales Revenue [Member] | Customer B [Member] | ||
Concentrations of risk percentage | 13.00% | 13.00% |
Sales Revenue [Member] | Customer C [Member] | ||
Concentrations of risk percentage | 12.00% | |
Sales Revenue [Member] | Customer D [Member] | ||
Concentrations of risk percentage | 11.00% | |
Accounts Receivable [Member] | Customer A [Member] | ||
Concentrations of risk percentage | 41.00% | 16.00% |
Accounts Receivable [Member] | Customer B [Member] | ||
Concentrations of risk percentage | 15.00% | 8.00% |
Accounts Receivable [Member] | Customer C [Member] | ||
Concentrations of risk percentage | 14.00% | |
Accounts Receivable [Member] | Customer D [Member] | ||
Concentrations of risk percentage | 25.00% | |
Cost Of Sales [Member] | Vendor One [Member] | ||
Concentrations of risk percentage | 100.00% | 98.00% |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Oct. 29, 2015 | Apr. 30, 2017 | Apr. 30, 2016 |
Number of stock issued for employees services | $ 83,000 | ||
Repurchase of treasury stock, shares | 230,000 | ||
Repurchase of treasury stock | $ 149,500 | $ (149,500) | |
Total intrinsic value of options outstanding | 188,570 | ||
Total intrinsic value of options exercisable | 159,870 | ||
Recognized stock options | 7,150 | $ 80,470 | |
Unrecognized stock based compensation | 40,248 | ||
Warrant [Member] | |||
Total intrinsic value of options exercisable | 1,033,444 | ||
Total intrinsic value of warrants outstanding | $ 1,003,444 | ||
Employees [Member] | |||
Number of stock issued for employees services , shares | 87,554 | ||
Number of stock issued for employees services | $ 83,000 | ||
Series A Preferred Stockholders [Member] | |||
Number common stock shares issued for dividends in arrears | 49,268 | ||
Number common stock issued for dividends in arrears | $ 46,800 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Option Activity (Details) | 3 Months Ended |
Apr. 30, 2017$ / sharesshares | |
Equity [Abstract] | |
Options Outstanding, Beginning balance | shares | 881,404 |
Options Exercisable, Beginning balance | shares | 799,404 |
Options, Granted | shares | |
Options, Exercised | shares | |
Options, Forfeited/Cancelled | shares | (229,404) |
Options Outstanding, Ending balance | shares | 652,000 |
Options Exercisable, Ending balance | shares | 576,000 |
Options Outstanding, Weighted Average Exercise Price, Beginning balance | $ / shares | $ 0.78 |
Options Exercisable, Weighted Average Exercise Price, Beginning balance | $ / shares | 0.78 |
Weighted Average Exercise Price, Granted | $ / shares | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Exercise Price, Forfeited/Cancelled | $ / shares | 1 |
Options Outstanding, Weighted Average Exercise Price, Ending balance | $ / shares | 0.71 |
Options Exercisable, Weighted Average Exercise Price, Ending balance | $ / shares | $ 0.80 |
Stockholders' Equity - Summar43
Stockholders' Equity - Summary of Option Outstanding and Exercisable (Details) - Range Of Exercise Price One [Member] | 3 Months Ended |
Apr. 30, 2017$ / sharesshares | |
Range of exercise price lower range limit | $ 0.39 |
Range of exercise price upper range limit | $ 2.97 |
Number of Options Outstanding | shares | 652,000 |
Weighted Average Remaining Contractual Life (in years), Options Outstanding | 2 years 9 months 3 days |
Weighted Average Exercise Price, Options Outstanding | $ 0.71 |
Number of Options Exercisable | shares | 576,000 |
Weighted Average Exercise Price, Options Exercisable | $ 0.80 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Warrants Activity (Details) - Warrant [Member] | 3 Months Ended |
Apr. 30, 2017$ / sharesshares | |
Warrants Outstanding, Beginning balance | shares | 7,311,770 |
Warrants Exercisable, Beginning balance | shares | 7,311,770 |
Warrants, Granted | shares | |
Warrants, Exercised | shares | |
Warrants, Forfeited/Cancelled | shares | (150,000) |
Warrants Outstanding, Ending balance | shares | 7,161,770 |
Warrants Exercisable, Ending balance | shares | 7,161,770 |
Warrants Outstanding, Weighted Average Exercise Price, Beginning balance | $ / shares | $ 1.04 |
Warrants Exercisable, Weighted Average Exercise Price, Beginning balance | $ / shares | 1.04 |
Weighted Average Exercise Price, Granted | $ / shares | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Exercise Price, Forfeited/Cancelled | $ / shares | 1 |
Warrants Outstanding, Weighted Average Exercise Price, Ending balance | $ / shares | 1.05 |
Warrants Exercisable, Weighted Average Exercise Price, Ending balance | $ / shares | $ 1.05 |
Stockholders' Equity - Schedu45
Stockholders' Equity - Schedule of Warrants Outstanding and Exercisable (Details) - Warrant [Member] - $ / shares | 3 Months Ended | |
Apr. 30, 2017 | Jan. 31, 2017 | |
Range of Exercise Price, lower limit | $ 0.68 | |
Range of Exercise Price, upper limit | $ 2.50 | |
Number of Warrants Outstanding | 7,161,770 | 7,311,770 |
Weighted Average Remaining Contractual Life (in Years) | 3 years 3 months 22 days | |
Weighted Average Exercise Price, Warrants Outstanding | $ 1.05 | |
Number of Warrants Exercisable | 7,161,770 | 7,311,770 |
Weighted Average Exercise Price, Warrants Exercisable | $ 1.05 | $ 1.04 |
Commitments and Contingencies46
Commitments and Contingencies (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Jan. 31, 2015 | Apr. 30, 2017 | Apr. 30, 2016 | Jan. 31, 2016 | |
Royalty expenses | $ 116,947 | $ 85,704 | ||
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 | $ 36,218 | |||
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 | |||
Operating lease expiration term | 51 months | |||
Lease agreement expire date | Mar. 31, 2019 | |||
Operating lease annual payments | $ 18,847 | |||
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 | |
Apr. 30, 2017 | Apr. 30, 2016 | |
Minimum Royalty to be Paid | $ 116,947 | $ 85,704 |
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 Contingencies48
Commitments and Contingencies - Schedule of Future Minimum Payments Under Operating Leases (Details) | Apr. 30, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,018 | $ 18,847 |
2,019 | 17,281 |
Total | $ 36,218 |