Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Oct. 31, 2018 | Dec. 11, 2018 | |
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 | Oct. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --01-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 31,866,241 | |
Trading Symbol | MMMB | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,019 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Oct. 31, 2018 | Jan. 31, 2018 |
Current Assets: | ||
Cash | $ 460,089 | $ 581,322 |
Accounts receivable, net | 3,223,311 | 3,084,715 |
Inventories | 1,004,845 | 824,276 |
Prepaid expenses | 204,485 | 261,980 |
Total current assets | 4,892,730 | 4,752,293 |
Property and equipment, net | 3,044,383 | 2,499,875 |
Deposits | 20,177 | 20,177 |
Total Assets | 7,957,290 | 7,272,345 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 3,763,915 | 3,456,918 |
Line of credit, net | 2,206,036 | 2,688,764 |
Term loans | 315,540 | 106,938 |
Capital leases payable | 53,730 | |
Notes payable – related party | 109,844 | |
Notes payable – net | 1,530,625 | 1,403,082 |
Total current liabilities | 7,979,690 | 7,655,702 |
Term loans - net of current | 568,920 | 651,677 |
Capital leases payable – net of current | 173,177 | |
Note payable - net of current | 250,000 | |
Notes payable - related party | 532,000 | 649,656 |
Total long-term liabilities | 1,274,097 | 1,551,333 |
Total Liabilities | 9,253,787 | 9,207,035 |
Commitments and contingencies | ||
Stockholders’ Deficit: | ||
Preferred stock value | ||
Common stock, $0.00001 par value; 250,000,000 shares authorized; 31,866,241 and 31,753,437 shares issued and outstanding as of October 31, 2018 and January 31, 2018, respectively | 320 | 319 |
Additional paid in capital | 16,512,832 | 16,344,794 |
Accumulated deficit | (17,660,149) | (18,130,303) |
Less: Treasury stock, 230,000 shares, respectively | (149,500) | (149,500) |
Total Stockholders’ Deficit | (1,296,497) | (1,934,690) |
Total Liabilities and Stockholders’ Deficit | 7,957,290 | 7,272,345 |
Series A Preferred Stock [Member] | ||
Stockholders’ Deficit: | ||
Preferred stock value |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Oct. 31, 2018 | Jan. 31, 2018 |
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 | 31,866,241 | 31,753,437 |
Common stock, shares outstanding | 31,866,241 | 31,753,437 |
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 | 0 | 23,400 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2018 | Oct. 31, 2017 | Oct. 31, 2018 | Oct. 31, 2017 | |
Income Statement [Abstract] | ||||
Sales-net of slotting fees and discounts | $ 8,242,847 | $ 7,351,355 | $ 21,625,671 | $ 19,714,090 |
Costs of Sales | 5,555,359 | 4,979,504 | 14,047,647 | 13,047,131 |
Gross profit | 2,687,488 | 2,371,851 | 7,578,024 | 6,666,959 |
Operating expenses: | ||||
Research and development | 31,628 | 10,316 | 98,807 | 77,647 |
General and administrative | 2,119,751 | 2,103,081 | 6,259,769 | 5,767,759 |
Total operating expenses | 2,151,379 | 2,113,397 | 6,358,576 | 5,845,406 |
Income from operations | 536,109 | 258,454 | 1,219,448 | 821,553 |
Other expenses | ||||
Interest expense | (159,688) | (198,662) | (648,969) | (571,584) |
Amortization of debt discount | (20,073) | (30,447) | (100,325) | (56,457) |
Total other expenses | (179,761) | (229,109) | (749,294) | (628,041) |
Net income | 356,348 | 29,345 | 470,154 | 193,512 |
Less: preferred dividends | (91,565) | |||
Net income available to common stockholders | $ 356,348 | $ 29,345 | $ 470,154 | $ 101,947 |
Net income per common share - basic | $ 0.01 | $ 0 | $ 0.01 | $ 0 |
Net income per common share - diluted | $ 0.01 | $ 0 | $ 0.01 | $ 0 |
Weighted average common shares outstanding – basic | 31,866,241 | 31,503,665 | 31,836,178 | 29,152,736 |
Weighted average common shares outstanding – diluted | 32,489,369 | 33,283,110 | 32,459,307 | 30,932,181 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Deficit (Unaudited) - 9 months ended Oct. 31, 2018 - USD ($) | Series A Preferred Stock [Member] | Common Stock [Member] | Treasury Stock [Member] | Additional Paid In Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Jan. 31, 2018 | $ 319 | $ (149,500) | $ 16,344,794 | $ (18,130,303) | $ (1,934,690) | |
Balance, shares at Jan. 31, 2018 | 31,753,437 | (230,000) | ||||
Share-based compensation | 128,039 | 128,039 | ||||
Common stock issued for the exercise of options | 40,000 | $ 40,000 | ||||
Common stock issued for the exercise of options, shares | 40,000 | 40,000 | ||||
Common stock issued for the exercise of warrants | $ 1 | (1) | ||||
Common stock issued for the exercise of warrants, shares | 72,804 | |||||
Net income | 470,154 | 470,154 | ||||
Balance at Oct. 31, 2018 | $ 320 | $ (149,500) | $ 16,512,832 | $ (17,660,149) | $ (1,296,497) | |
Balance, shares at Oct. 31, 2018 | 31,866,241 | (230,000) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 470,154 | $ 193,512 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 511,878 | 368,604 |
Amortization of debt discount | 100,325 | 56,457 |
Share-based compensation | 128,039 | 229,400 |
(Increase) Decrease in: | ||
Accounts receivable | (138,596) | (1,041,370) |
Inventories | (180,569) | (288,175) |
Prepaid expenses | 57,495 | 56,806 |
Increase (Decrease) in: | ||
Accounts payable and accrued expenses | 699,699 | 1,604,562 |
Net Cash Provided by Operating Activities | 1,648,425 | 1,179,796 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Cash paid for fixed assets | (1,026,386) | (1,411,786) |
Net Cash Used in Investing Activities | (1,026,386) | (1,411,786) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repayment of note payable - related party | (7,812) | |
Repayment of term loan | (174,155) | (105,003) |
Borrowings from term loan | 300,000 | 251,671 |
Repayment of note payable | (600,000) | (950,000) |
Borrowings (repayments) of line of credit, net | (467,087) | 940,775 |
Proceeds from capital lease | 213,250 | |
Repayment of capital lease obligations | (16,343) | |
Debt extension fees | (31,125) | |
Proceeds from exercise of options | 40,000 | |
Net Cash Provided by (Used in) Financing Activities | (743,272) | 137,443 |
Net Decrease in Cash | (121,233) | (94,547) |
Cash - Beginning of Period | 581,322 | 670,807 |
Cash - End of Period | 460,089 | 576,260 |
SUPPLEMENTARY CASH FLOW INFORMATION: | ||
Income taxes | ||
Interest | 302,034 | 535,685 |
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Accrued interest on note payable reclassified to principal | 392,702 | |
Capital lease asset additions | 30,000 | |
Stock issued for Series A Preferred dividends | 91,565 | |
Debt issuance costs included in principal balance of note | $ 52,236 |
Nature of Operations and Basis
Nature of Operations and Basis of Presentation | 9 Months Ended |
Oct. 31, 2018 | |
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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Oct. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting Policies 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. Following the closing of the merger with Joseph Epstein Food Enterprises, Inc. (“JEFE”) on November 1, 2017, the financial statements of JEFE are consolidated with that of the Company. The prior period financial statements included in the condensed consolidated financial statements have been adjusted to reflect this transaction. 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, 2018 filed on May 16, 2018. 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, 2018 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, 2019. 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 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 October 31, 2018 and January 31, 2018. 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 October 31, 2018 and January 31, 2018, the Company had reserves of $2,000. Inventories Inventories are stated at the lower of cost or net realizable value using the first-in, first-out (FIFO) valuation method. Inventory was comprised of the following at October 31, 2018 and January 31, 2018: October 31, 2018 January 31, 2018 Raw Materials $ 455,923 $ 486,917 Work in Process 54,303 21,387 Finished goods 494,619 315,972 $ 1,004,845 $ 824,276 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. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of operations. 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. Research and Development Research and development is expensed as incurred. Research and development expenses for the three months ended October 31, 2018 and 2017 were $31,628 and $10,316, respectively. Research and development expenses for the nine months ended October 31, 2018 and 2017 were $98,807 and $77,647, 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 In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) Revenue Recognition Revenue from Contracts with Customers (Topic 606)—Narrow-Scope Improvements and Practical Expedients The Company adopted this guidance and related amendments as of the first quarter of fiscal 2019, applying the full retrospective transition method. The Company has determined that there are no material changes to the recognition, timing and classification of revenues and expenses; additionally, the adoption of ASU 2014-09 did not have a significant impact to pretax income upon adoption or on the consolidated financial statement disclosures. The Company’s sales predominantly contain a single performance obligation and revenue is recognized at a single point in time when ownership, risks and rewards transfer. Typically, this occurs when the goods are shipped to the customer. Revenues are recognized in an amount that reflects the net consideration the Company expects to receive in exchange for the goods. The Company reports all amounts billed to a customer in a sale transaction as revenue, including those amounts related to shipping and handling. Shipping and handling costs are included in cost of goods sold. Under the new revenue guidance, the Company recognizes shipping and handling activities as a fulfillment of the Company’s promise to transfer products to its customers. The Company promotes its products with advertising, consumer incentives and trade promotions. These programs include discounts, slotting fees, coupons, rebates, in-store display incentives and volume-based incentives. Customer trade promotion and consumer incentive activities are recorded as a reduction to the sale price based on amounts estimated as being due to customers and consumers at the end of a period. The Company derives these estimates principally on historical utilization and redemption rates. Payment terms in the Company’s invoices are based on the billing schedule established in contracts and purchase orders with customers. The Company generally recognizes the related trade receivable when the goods are shipped. Expenses such as slotting fees, sales discounts, and allowances are accounted for as a direct reduction of revenues as follows: Nine Months Ended October 31, 2018 Nine Months Ended October 31, 2017 Gross Sales $ 21,942,660 $ 20,055,073 Less: Slotting, Discounts, Allowances 316,989 340,983 Net Sales $ 21,625,671 $ 19,714,090 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 October 31, 2018 and 2017 were $339,987 and $522,823, respectively. Producing and communicating advertising expenses for the nine months ended October 31, 2018 and 2017 were $1,246,170 and $1,261,766, 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 October 31, 2018 and 2017, share-based compensation amounted to $48,876 and $81,901, respectively, relating to options issued to board members, employees and consultants for services rendered. For the nine months ended October 31, 2018 and 2017, share-based compensation amounted to $128,039 and $229,400, respectively, relating to options issued to board members, employees and consultants for services rendered. For the nine months ended October 31, 2018 and 2017, when computing fair value of share-based payments, the Company has considered the following variables: October 31, 2018 October 31, 2017 Risk-free interest rate 1.99% to 2.78 % 1.18% to 1.60 % Expected life of grants 1.95 to 3.0 years 2 to 3.51 years Expected volatility of underlying stock 101% to 172 % 139% to 298 % 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 estimated using the historical volatilities of the Company’s common stock. 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 October 31, 2018 October 31, 2017 Numerator: Net income attributable to common stockholders $ 356,348 $ 29,345 Effect of dilutive securities: - - Diluted net income $ 356,348 $ 29,345 Denominator: Weighted average common shares outstanding - basic 31,866,241 31,503,665 Dilutive securities (a): Series A Preferred - - Options 156,462 - Warrants 466,667 1,569,456 Weighted average common shares outstanding and assumed conversion – diluted 32,489,369 33,073,121 Basic net income per common share $ 0.01 $ 0.00 Diluted net income per common share $ 0.01 $ 0.00 (a) - Anti-dilutive securities excluded: 3,074,904 3,041,001 For the Nine Months Ended October 31, 2018 October 31, 2017 Numerator: Net income attributable to common stockholders $ 470,154 $ 101,947 Effect of dilutive securities: - - Diluted net income $ 470,154 $ 101,947 Denominator: Weighted average common shares outstanding - basic 31,836,178 29,152,736 Dilutive securities (a): Series A Preferred - - Options 156,462 - Warrants 466,667 1,569,456 Weighted average common shares outstanding and assumed conversion – diluted 32,459,307 30,722,192 Basic net income per common share $ 0.01 $ 0.00 Diluted net income per common share $ 0.01 $ 0.00 (a) - Anti-dilutive securities excluded: 3,074,904 3,041,001 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 2014. Related Parties The Company follows subtopic ASC 850-10 for the identification of related parties and disclosure of related party transactions. Pursuant to Section 850-10-20, the related parties include: (a) affiliates of the Company (“Affiliate” means, with respect to any specified person, any other person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such person, as such terms are used in and construed under Rule 405 under the Securities Act); (b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity; (c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (d) principal owners of the Company; (e) management of the Company; (f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02 which will require recognition on the balance sheet for the rights and obligations created by leases with terms greater than twelve months. The new standard is effective for fiscal years and interim periods within those years beginning after December 15, 2018, with early adoption permitted. The Company plans to adopt this guidance at the beginning of its first quarter of fiscal 2020 and plans to utilize the transition option which does not require application of the guidance to comparative periods in the year of adoption. While the Company continues to evaluate this standard and the effect on related disclosures, the primary effect of adoption will be recording right-of-use assets and corresponding lease obligations for current operating leases. The adoption is expected to have a material impact on the Company’s consolidated balance sheets, but not on the consolidated statements of income or cash flows. However, the ultimate impact of adopting ASU 2016-02 will depend on the Company’s lease portfolio as of the adoption date. Additionally, the Company is in the process of reviewing current accounting policies, changes to business processes, systems and controls to support adoption of the new standard. Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying condensed consolidated financial statements. Reclassification Certain prior period amounts have been reclassified to conform to current period presentation. Subsequent Events The Company evaluates subsequent events and transactions that occur after the balance sheet date for potential recognition or disclosure. Any material events that occur between the balance sheet date and the date that the financial statements were issued are disclosed as subsequent events, while the financial statements are adjusted to reflect any conditions that existed at the balance sheet date. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Oct. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 3 - Property and Equipment: Property and equipment on October 31, 2018 and January 31, 2018 are as follows: October 31, 2018 January 31, 2018 Machinery and Equipment $ 2,655,064 $ 2,431,589 Furniture and Fixtures 81,099 71,969 Leasehold Improvements 2,894,950 2,071,169 5,631,113 4,574,727 Less: Accumulated Depreciation 2,586,730 2,074,852 $ 3,044,383 $ 2,499,875 During the nine months ended October 31, 2018, leasehold improvements increased by $823,781 in relation to the continued plant expansion in progress since 2017. Depreciation expense charged to income for the three months ended October 31, 2018 and 2017 amounted to $174,045 and $128,399, respectively. Depreciation expense charged to income for the nine months ended October 31, 2018 and 2017 amounted to $511,878 and $368,604, respectively. |
Investment in Meatball Obsessio
Investment in Meatball Obsession, LLC | 9 Months Ended |
Oct. 31, 2018 | |
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 October 31, 2018 and January 31, 2018, the Company’s ownership interest in MO was 12% and 12%, respectively. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Oct. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 5 - Related Party Transactions 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 October 31, 2018 and 2017, the Company generated approximately $40,401 and $29,684 in revenues from MO, respectively. For the nine months ended October 31, 2018 and 2017, the Company generated approximately $81,111 and $62,723 in revenues from MO, respectively. As of October 31, 2018 and January 31, 2018, the Company had a receivable of $53,608 and $32,869 due from MO, respectively. WWS, Inc. A current director of the Company is the president of WWS, Inc. For the three months ended October 31, 2018 and 2017, the Company recorded $12,000 in commission expense from WWS, Inc. generated sales. For the nine months ended October 31, 2018 and 2017, the Company recorded $36,000 in commission expense from WWS, Inc. generated sales. 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 October 31, 2018 and January 31, 2018, the outstanding principal balance of the notes was $109,844 and $117,656, respectively. The Company received advances from the CEO of the Company which bear interest at 8%. The advances are due on February 1, 2020. At October 31, 2018 and January 31, 2018, there was $400,000 of principal outstanding, respectively. The Company received advances from an entity 100% owned by the CEO of the Company, which bear interest at 8%. The advances are due on February 1, 2020. At October 31, 2018 and January 31, 2018 and 2017, there was $132,000 of principal outstanding, respectively. For the three months ended October 31, 2018 and 2017, the Company recorded interest expense of $6,185 and $11,817, respectively, related to the above related party notes payable. For the nine months ended October 31, 2018 and 2017, the Company recorded interest expense of $38,872 and $35,452, respectively, related to the above related party notes payable. |
Loan and Security Agreement
Loan and Security Agreement | 9 Months Ended |
Oct. 31, 2018 | |
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. In September 2016, the agreement was amended and the total facility increased to an aggregate principal amount of up to $3,200,000. In June 2018, the line was increased by $300,000. The increase was personally guaranteed by the CEO of the Company. As of October 31, 2018 and January 31, 2018, the outstanding balance on the line of credit was $2,240,490 and $2,702,390, respectively. In May 2018, the agreement was amended to extend the termination date to October 1, 2020. 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 was further amended in October 2017 to increase the note to $800,000 with principal payments of $13,795. 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. Effective June 6, 2018, the Company executed a Secured Promissory Note with EGC which provides for $300,000 in financing with a maturity date of June 1, 2020. The Note provides for 24 monthly payments of $12,500 together with interest on the outstanding balance at Four percent (4%) over the applicable prime rate. The outstanding balance on the term loans was $884,460 and $758,615 as of October 31, 2018 and January 31, 2018, respectively. |
Notes Payable
Notes Payable | 9 Months Ended |
Oct. 31, 2018 | |
Debt Disclosure [Abstract] | |
Notes Payable | Note 7 – Notes 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. Subsequent to issuance, the note was amended to extend the maturity date and also removed the convertible feature of the note. On January 22, 2018, the Company further extended the maturity date to November 1, 2018. On July 17, 2018, the Company further extended the maturity date to May 1, 2019. The Company paid 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 July 17, 2018, which shall include all interest which would be accrued on the note through July 17, 2018. Total accrued interest of $392,702 was added to the outstanding principal balance as of the extension date. The 2% fee was expensed in accordance with debt extinguishment accounting. There was unamortized debt discount of $0 and $84,841 as of October 31, 2018 and January 31, 2018, respectively. The outstanding principal net of debt discount at October 31, 2018 and January 31, 2018 was $1,280,625 and $1,403,082, respectively. On April 29, 2015, the Company entered into a note payable with a bank for $250,000, which was used to pay down and replace a prior note payable. The note bears interest at 3.75%, with interest being due monthly. The note is due in full on the maturity date of April 1, 2019. The note is fully guaranteed by the Company’s Chief Executive Officer. The outstanding balance on the note was $250,000 as of October 31, 2018 and January 31, 2018. |
Capital Leases Payable
Capital Leases Payable | 9 Months Ended |
Oct. 31, 2018 | |
Debt Disclosure [Abstract] | |
Capital Leases Payable | Note 8 – Capital Leases Payable Capital lease obligations consisted of the following at October 31, 2018: October 31, 2018 Capital lease obligation to a financing company for a term of four (4) years, collateralized by equipment, with interest at 7.5% per annum, with principal and interest due and payable in monthly installments of $5,152 and buyout purchase option of $31,988 at end of lease (i) $ 200,145 Capital lease obligation to a financing company for a term of five (5) years, collateralized by kitchen equipment, with interest at 5.9% per annum, with principal and interest due and payable in monthly installments of $610 and buyout purchase option of $1 at end of lease 26,762 226,907 Less current maturities 53,730 Capital lease obligation, net of current maturities $ 173,177 (i) In May 2018, the Company executed a sale-leaseback arrangement with an unrelated third party whereby the Company sold its equipment and leased it back for a period of 4 years. Pursuant to the agreement, the Company received gross proceeds of $213,250. This transaction is recorded as a financing transaction with the assets and related financing obligation on the condensed consolidated balance sheet. The lease expires in April 2022 and includes purchase, renewal and return options and certain default provisions requiring the Company to perform repairs and maintenance, make timely rent payments and insure the equipment. Future maturities of all debt and capital leases (including debt discussed above in Notes 5, 6, 7 and 8) are as follows: For the Twelve Months Ending October 31, 2019 $ 4,215,775 2020 866,078 2021 228,859 2022 174,557 2023 4,603 $ 5,489,872 |
Concentrations
Concentrations | 9 Months Ended |
Oct. 31, 2018 | |
Risks and Uncertainties [Abstract] | |
Concentrations | Note 9- Concentrations Revenues During the nine months ended October 31, 2018, the Company earned revenues from one customer representing approximately 52% of gross sales. During the nine months ended October 31, 2017, the Company earned revenues from three customers representing approximately 24%, 12% and 11% of gross sales. As of October 31, 2018, this customer represented approximately 50% of total gross outstanding receivables, respectively. As of October 31, 2017, these two customers represented approximately 43% and 13% of total gross outstanding receivables, respectively. |
Stockholders' Deficit
Stockholders' Deficit | 9 Months Ended |
Oct. 31, 2018 | |
Equity [Abstract] | |
Stockholders' Deficit | Note 10 - Stockholders’ Deficit (A) Options The following is a summary of stock options issued by the Company: Options Weighted Average Exercise Price Outstanding – January 31, 2018 866,000 $ 0.87 Exercisable – January 31, 2018 699,000 $ 0.78 Granted 130,000 $ 0.89 Exercised (40,000 ) $ 1.00 Forfeited/Cancelled (257,000 ) $ - Outstanding – October 31, 2018 699,000 $ 0.74 Exercisable – October 31, 2018 516,500 $ 0.64 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 – 1.38 699,000 3.00 years $ 0.74 516,500 $ 0.64 At October 31, 2018 the total intrinsic value of options outstanding and exercisable was $122,040 and $122,040, respectively. For the nine months ended October 31, 2018 and 2017, the Company recognized share-based compensation related to options of an aggregate of $128,039 and $229,400, respectively. At October 31, 2018, unrecognized share-based compensation was $116,163. (D) Warrants The following is a summary of the Company’s warrant activity: Warrants Weighted Average Exercise Price Outstanding – January 31, 2018 7,061,399 $ 1.06 Exercisable – January 31, 2018 7,061,399 $ 1.06 Granted - $ - Exercised (467,496 ) $ 1.00 Forfeited/Cancelled (401,905 ) $ - Outstanding – October 31, 2018 6,191,998 $ 1.03 Exercisable – October 31, 2018 6,191,998 $ 1.03 Warrants Outstanding Warrants Exercisable 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 6,191,998 2.08 years $ 1.03 6,191,998 $ 1.03 At October 31, 2018, the total intrinsic value of warrants outstanding and exercisable was $364,000 and $364,000, respectively. During the nine months ended October 31, 2018, 467,496 warrants were exercised by the warrant holders on a cashless basis. The Company issued 72,804 shares of common stock as a result of this exercise. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Oct. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 11 - Commitments and Contingencies Litigation, 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 Exclusive Term began on January 1, 2009 (the “Effective Date”) and ends on the 50th anniversary of the Effective Date. 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 $105,834 and $98,133 of royalty expenses for the three months ended October 31, 2018 and 2017. The Company incurred $306,690 and $304,324 of royalty expenses for the nine months ended October 31, 2018 and 2017. Royalty expenses are included in general and administrative expenses on the condensed consolidated statement of operations. Agreements with Placement Agents and Finders 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. If the Company enters into a change of control transaction during the term of the agreement through October 1, 2022, the Company shall pay to Spartan a fee equal to 3% of the consideration paid or received by the Company and/or its stockholders in such transaction. During the nine months ended October 31, 2018, no payments were made to Spartan. Operating Lease The Company has a lease for office, manufacturing, and warehouse space in East Rutherford, NJ. The lease expires on March 31, 2024, with a 5-year renewal option. The Company leases additional office space in East Rutherford, NJ. This lease is for a 51-month term expiring on March 31, 2019 with annual payments of $18,847. Rent expense for the nine months ended October 31, 2018 and 2017 was $213,975 and $216,928, respectively. Total future minimum payments required under the lease as of October 31, 2018 are as follows: Twelve Months Ending January 31, 2019 (remaining) $ 66,841 2020 201,599 2021 199,757 2022 209,846 2023 211,864 Thereafter 247,174 Total $ 1,137,054 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Oct. 31, 2018 | |
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. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Oct. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 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. Following the closing of the merger with Joseph Epstein Food Enterprises, Inc. (“JEFE”) on November 1, 2017, the financial statements of JEFE are consolidated with that of the Company. The prior period financial statements included in the condensed consolidated financial statements have been adjusted to reflect this transaction. 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, 2018 filed on May 16, 2018. 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, 2018 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, 2019. |
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 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 October 31, 2018 and January 31, 2018. 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 October 31, 2018 and January 31, 2018, the Company had reserves of $2,000. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value using the first-in, first-out (FIFO) valuation method. Inventory was comprised of the following at October 31, 2018 and January 31, 2018: October 31, 2018 January 31, 2018 Raw Materials $ 455,923 $ 486,917 Work in Process 54,303 21,387 Finished goods 494,619 315,972 $ 1,004,845 $ 824,276 |
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. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of operations. |
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. |
Research and Development | Research and Development Research and development is expensed as incurred. Research and development expenses for the three months ended October 31, 2018 and 2017 were $31,628 and $10,316, respectively. Research and development expenses for the nine months ended October 31, 2018 and 2017 were $98,807 and $77,647, 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 In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) Revenue Recognition Revenue from Contracts with Customers (Topic 606)—Narrow-Scope Improvements and Practical Expedients The Company adopted this guidance and related amendments as of the first quarter of fiscal 2019, applying the full retrospective transition method. The Company has determined that there are no material changes to the recognition, timing and classification of revenues and expenses; additionally, the adoption of ASU 2014-09 did not have a significant impact to pretax income upon adoption or on the consolidated financial statement disclosures. The Company’s sales predominantly contain a single performance obligation and revenue is recognized at a single point in time when ownership, risks and rewards transfer. Typically, this occurs when the goods are shipped to the customer. Revenues are recognized in an amount that reflects the net consideration the Company expects to receive in exchange for the goods. The Company reports all amounts billed to a customer in a sale transaction as revenue, including those amounts related to shipping and handling. Shipping and handling costs are included in cost of goods sold. Under the new revenue guidance, the Company recognizes shipping and handling activities as a fulfillment of the Company’s promise to transfer products to its customers. The Company promotes its products with advertising, consumer incentives and trade promotions. These programs include discounts, slotting fees, coupons, rebates, in-store display incentives and volume-based incentives. Customer trade promotion and consumer incentive activities are recorded as a reduction to the sale price based on amounts estimated as being due to customers and consumers at the end of a period. The Company derives these estimates principally on historical utilization and redemption rates. Payment terms in the Company’s invoices are based on the billing schedule established in contracts and purchase orders with customers. The Company generally recognizes the related trade receivable when the goods are shipped. Expenses such as slotting fees, sales discounts, and allowances are accounted for as a direct reduction of revenues as follows: Nine Months Ended October 31, 2018 Nine Months Ended October 31, 2017 Gross Sales $ 21,942,660 $ 20,055,073 Less: Slotting, Discounts, Allowances 316,989 340,983 Net Sales $ 21,625,671 $ 19,714,090 |
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 October 31, 2018 and 2017 were $339,987 and $522,823, respectively. Producing and communicating advertising expenses for the nine months ended October 31, 2018 and 2017 were $1,246,170 and $1,261,766, 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 October 31, 2018 and 2017, share-based compensation amounted to $48,876 and $81,901, respectively, relating to options issued to board members, employees and consultants for services rendered. For the nine months ended October 31, 2018 and 2017, share-based compensation amounted to $128,039 and $229,400, respectively, relating to options issued to board members, employees and consultants for services rendered. For the nine months ended October 31, 2018 and 2017, when computing fair value of share-based payments, the Company has considered the following variables: October 31, 2018 October 31, 2017 Risk-free interest rate 1.99% to 2.78 % 1.18% to 1.60 % Expected life of grants 1.95 to 3.0 years 2 to 3.51 years Expected volatility of underlying stock 101% to 172 % 139% to 298 % 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 estimated using the historical volatilities of the Company’s common stock. 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 October 31, 2018 October 31, 2017 Numerator: Net income attributable to common stockholders $ 356,348 $ 29,345 Effect of dilutive securities: - - Diluted net income $ 356,348 $ 29,345 Denominator: Weighted average common shares outstanding - basic 31,866,241 31,503,665 Dilutive securities (a): Series A Preferred - - Options 156,462 - Warrants 466,667 1,569,456 Weighted average common shares outstanding and assumed conversion – diluted 32,489,369 33,073,121 Basic net income per common share $ 0.01 $ 0.00 Diluted net income per common share $ 0.01 $ 0.00 (a) - Anti-dilutive securities excluded: 3,074,904 3,041,001 For the Nine Months Ended October 31, 2018 October 31, 2017 Numerator: Net income attributable to common stockholders $ 470,154 $ 101,947 Effect of dilutive securities: - - Diluted net income $ 470,154 $ 101,947 Denominator: Weighted average common shares outstanding - basic 31,836,178 29,152,736 Dilutive securities (a): Series A Preferred - - Options 156,462 - Warrants 466,667 1,569,456 Weighted average common shares outstanding and assumed conversion – diluted 32,459,307 30,722,192 Basic net income per common share $ 0.01 $ 0.00 Diluted net income per common share $ 0.01 $ 0.00 (a) - Anti-dilutive securities excluded: 3,074,904 3,041,001 |
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 2014. |
Related Parties | Related Parties The Company follows subtopic ASC 850-10 for the identification of related parties and disclosure of related party transactions. Pursuant to Section 850-10-20, the related parties include: (a) affiliates of the Company (“Affiliate” means, with respect to any specified person, any other person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such person, as such terms are used in and construed under Rule 405 under the Securities Act); (b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity; (c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (d) principal owners of the Company; (e) management of the Company; (f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02 which will require recognition on the balance sheet for the rights and obligations created by leases with terms greater than twelve months. The new standard is effective for fiscal years and interim periods within those years beginning after December 15, 2018, with early adoption permitted. The Company plans to adopt this guidance at the beginning of its first quarter of fiscal 2020 and plans to utilize the transition option which does not require application of the guidance to comparative periods in the year of adoption. While the Company continues to evaluate this standard and the effect on related disclosures, the primary effect of adoption will be recording right-of-use assets and corresponding lease obligations for current operating leases. The adoption is expected to have a material impact on the Company’s consolidated balance sheets, but not on the consolidated statements of income or cash flows. However, the ultimate impact of adopting ASU 2016-02 will depend on the Company’s lease portfolio as of the adoption date. Additionally, the Company is in the process of reviewing current accounting policies, changes to business processes, systems and controls to support adoption of the new standard. Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying condensed consolidated financial statements. |
Reclassification | Reclassification Certain prior period amounts have been reclassified to conform to current period presentation. |
Subsequent Events | Subsequent Events The Company evaluates subsequent events and transactions that occur after the balance sheet date for potential recognition or disclosure. Any material events that occur between the balance sheet date and the date that the financial statements were issued are disclosed as subsequent events, while the financial statements are adjusted to reflect any conditions that existed at the balance sheet date. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Oct. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Inventories | Inventory was comprised of the following at October 31, 2018 and January 31, 2018: October 31, 2018 January 31, 2018 Raw Materials $ 455,923 $ 486,917 Work in Process 54,303 21,387 Finished goods 494,619 315,972 $ 1,004,845 $ 824,276 |
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: Nine Months Ended October 31, 2018 Nine Months Ended October 31, 2017 Gross Sales $ 21,942,660 $ 20,055,073 Less: Slotting, Discounts, Allowances 316,989 340,983 Net Sales $ 21,625,671 $ 19,714,090 |
Schedule of Fair Value of Share-Based Payments | For the nine months ended October 31, 2018 and 2017, when computing fair value of share-based payments, the Company has considered the following variables: October 31, 2018 October 31, 2017 Risk-free interest rate 1.99% to 2.78 % 1.18% to 1.60 % Expected life of grants 1.95 to 3.0 years 2 to 3.51 years Expected volatility of underlying stock 101% to 172 % 139% to 298 % 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 October 31, 2018 October 31, 2017 Numerator: Net income attributable to common stockholders $ 356,348 $ 29,345 Effect of dilutive securities: - - Diluted net income $ 356,348 $ 29,345 Denominator: Weighted average common shares outstanding - basic 31,866,241 31,503,665 Dilutive securities (a): Series A Preferred - - Options 156,462 - Warrants 466,667 1,569,456 Weighted average common shares outstanding and assumed conversion – diluted 32,489,369 33,073,121 Basic net income per common share $ 0.01 $ 0.00 Diluted net income per common share $ 0.01 $ 0.00 (a) - Anti-dilutive securities excluded: 3,074,904 3,041,001 For the Nine Months Ended October 31, 2018 October 31, 2017 Numerator: Net income attributable to common stockholders $ 470,154 $ 101,947 Effect of dilutive securities: - - Diluted net income $ 470,154 $ 101,947 Denominator: Weighted average common shares outstanding - basic 31,836,178 29,152,736 Dilutive securities (a): Series A Preferred - - Options 156,462 - Warrants 466,667 1,569,456 Weighted average common shares outstanding and assumed conversion – diluted 32,459,307 30,722,192 Basic net income per common share $ 0.01 $ 0.00 Diluted net income per common share $ 0.01 $ 0.00 (a) - Anti-dilutive securities excluded: 3,074,904 3,041,001 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Oct. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment on October 31, 2018 and January 31, 2018 are as follows: October 31, 2018 January 31, 2018 Machinery and Equipment $ 2,655,064 $ 2,431,589 Furniture and Fixtures 81,099 71,969 Leasehold Improvements 2,894,950 2,071,169 5,631,113 4,574,727 Less: Accumulated Depreciation 2,586,730 2,074,852 $ 3,044,383 $ 2,499,875 |
Capital Leases Payable (Tables)
Capital Leases Payable (Tables) | 9 Months Ended |
Oct. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Capital Lease Obligations | Capital lease obligations consisted of the following at October 31, 2018: October 31, 2018 Capital lease obligation to a financing company for a term of four (4) years, collateralized by equipment, with interest at 7.5% per annum, with principal and interest due and payable in monthly installments of $5,152 and buyout purchase option of $31,988 at end of lease (i) $ 200,145 Capital lease obligation to a financing company for a term of five (5) years, collateralized by kitchen equipment, with interest at 5.9% per annum, with principal and interest due and payable in monthly installments of $610 and buyout purchase option of $1 at end of lease 26,762 226,907 Less current maturities 53,730 Capital lease obligation, net of current maturities $ 173,177 (i) In May 2018, the Company executed a sale-leaseback arrangement with an unrelated third party whereby the Company sold its equipment and leased it back for a period of 4 years. Pursuant to the agreement, the Company received gross proceeds of $213,250. This transaction is recorded as a financing transaction with the assets and related financing obligation on the condensed consolidated balance sheet. The lease expires in April 2022 and includes purchase, renewal and return options and certain default provisions requiring the Company to perform repairs and maintenance, make timely rent payments and insure the equipment. |
Schedule of Future Maturities of Long Term Debt | Future maturities of all debt and capital leases (including debt discussed above in Notes 5, 6, 7 and 8) are as follows: For the Twelve Months Ending October 31, 2019 $ 4,215,775 2020 866,078 2021 228,859 2022 174,557 2023 4,603 $ 5,489,872 |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 9 Months Ended |
Oct. 31, 2018 | |
Equity [Abstract] | |
Summary of Option Activity | The following is a summary of stock options issued by the Company: Options Weighted Average Exercise Price Outstanding – January 31, 2018 866,000 $ 0.87 Exercisable – January 31, 2018 699,000 $ 0.78 Granted 130,000 $ 0.89 Exercised (40,000 ) $ 1.00 Forfeited/Cancelled (257,000 ) $ - Outstanding – October 31, 2018 699,000 $ 0.74 Exercisable – October 31, 2018 516,500 $ 0.64 |
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 – 1.38 699,000 3.00 years $ 0.74 516,500 $ 0.64 |
Schedule of Warrants Activity | The following is a summary of the Company’s warrant activity: Warrants Weighted Average Exercise Price Outstanding – January 31, 2018 7,061,399 $ 1.06 Exercisable – January 31, 2018 7,061,399 $ 1.06 Granted - $ - Exercised (467,496 ) $ 1.00 Forfeited/Cancelled (401,905 ) $ - Outstanding – October 31, 2018 6,191,998 $ 1.03 Exercisable – October 31, 2018 6,191,998 $ 1.03 |
Schedule of Warrants Outstanding and Exercisable | Warrants Outstanding Warrants Exercisable 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 6,191,998 2.08 years $ 1.03 6,191,998 $ 1.03 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Oct. 31, 2018 | |
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 the lease as of October 31, 2018 are as follows: Twelve Months Ending January 31, 2019 (remaining) $ 66,841 2020 201,599 2021 199,757 2022 209,846 2023 211,864 Thereafter 247,174 Total $ 1,137,054 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Oct. 31, 2018 | Oct. 31, 2017 | Oct. 31, 2018 | Oct. 31, 2017 | Jan. 31, 2018 | |
Accounting Policies [Abstract] | |||||
Cash equivalents | |||||
Accounts receivable reserves | 2,000 | 2,000 | $ 2,000 | ||
Research and development expense | 31,628 | $ 10,316 | 98,807 | $ 77,647 | |
Advertising expenses | 339,987 | 522,823 | 1,246,170 | 1,261,766 | |
Share-based compensation | $ 48,876 | $ 81,901 | $ 128,039 | $ 229,400 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Inventories (Details) - USD ($) | Oct. 31, 2018 | Jan. 31, 2018 |
Accounting Policies [Abstract] | ||
Raw Materials | $ 455,923 | $ 486,917 |
Work in Process | 54,303 | 21,387 |
Finished goods | 494,619 | 315,972 |
Inventories | $ 1,004,845 | $ 824,276 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Property and Equipment Estimated Useful Lives (Details) | 9 Months Ended | |
Oct. 31, 2018 | ||
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 Accoun_7
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 | 9 Months Ended | ||
Oct. 31, 2018 | Oct. 31, 2017 | Oct. 31, 2018 | Oct. 31, 2017 | |
Accounting Policies [Abstract] | ||||
Gross Sales | $ 21,942,660 | $ 20,055,073 | ||
Less: Slotting, Discounts, Allowances | 316,989 | 340,983 | ||
Net Sales | $ 8,242,847 | $ 7,351,355 | $ 21,625,671 | $ 19,714,090 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Schedule of Fair Value of Share-Based Payments (Details) | 9 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Dividends | 0.00% | 0.00% |
Minimum [Member] | ||
Risk-free interest rate | 1.99% | 1.18% |
Expected life of grants | 1 year 11 months 12 days | 2 years |
Expected volatility of underlying stock | 101.00% | 139.00% |
Maximum [Member] | ||
Risk-free interest rate | 2.78% | 1.60% |
Expected life of grants | 3 years | 3 years 6 months 3 days |
Expected volatility of underlying stock | 172.00% | 298.00% |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2018 | Oct. 31, 2017 | Oct. 31, 2018 | Oct. 31, 2017 | |
Accounting Policies [Abstract] | ||||
Net income attributable to common stockholders | $ 356,348 | $ 29,345 | $ 470,154 | $ 101,947 |
Effect of dilutive securities: | ||||
Diluted net income | $ 356,348 | $ 29,345 | $ 470,154 | $ 101,947 |
Weighted average common shares outstanding - basic | 31,866,241 | 31,503,665 | 31,836,178 | 29,152,736 |
Series A Preferred | ||||
Options | 156,462 | 156,462 | ||
Warrants | 466,667 | 1,569,456 | 466,667 | 1,569,456 |
Weighted average common shares outstanding and assumed conversion - diluted | 32,489,369 | 33,073,121 | 32,459,307 | 30,722,192 |
Basic net income per common share | $ 0.01 | $ 0 | $ 0.01 | $ 0 |
Diluted net income per common share | $ 0.01 | $ 0 | $ 0.01 | $ 0 |
(a) - Anti-dilutive securities excluded: | 3,074,904 | 3,041,001 | 3,074,904 | 3,041,001 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2018 | Oct. 31, 2017 | Oct. 31, 2018 | Oct. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||||
Increase in leasehold improvements | $ 823,781 | |||
Depreciation expense | $ 174,045 | $ 128,399 | $ 511,878 | $ 368,604 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | Oct. 31, 2018 | Jan. 31, 2018 |
Property, Plant and Equipment [Abstract] | ||
Machinery and Equipment | $ 2,655,064 | $ 2,431,589 |
Furniture and Fixtures | 81,099 | 71,969 |
Leasehold Improvements | 2,894,950 | 2,071,169 |
Property and Equipment, Gross | 5,631,113 | 4,574,727 |
Less: Accumulated Depreciation | 2,586,730 | 2,074,852 |
Property and Equipment, Net | $ 3,044,383 | $ 2,499,875 |
Investment in Meatball Obsess_2
Investment in Meatball Obsession, LLC (Details Narrative) - Meatball Obsession, LLC [Member] - USD ($) | Dec. 31, 2011 | Oct. 31, 2018 | Jan. 31, 2018 |
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 ($) | Apr. 29, 2015 | Oct. 31, 2018 | Oct. 31, 2017 | Oct. 31, 2018 | Oct. 31, 2017 | Jan. 31, 2016 | Jan. 31, 2018 | Jan. 31, 2017 |
Interest expense related party | $ 6,185 | $ 11,817 | $ 38,872 | $ 35,452 | ||||
Notes Payable [Member] | ||||||||
Note bears interest rate per annum | 3.75% | |||||||
Debt maturity date | Apr. 1, 2019 | |||||||
Meatball Obsession, LLC [Member] | ||||||||
Revenue from related parties | 40,401 | 29,684 | 81,111 | 62,723 | ||||
Due from related party | 53,608 | 53,608 | $ 32,869 | |||||
WWS, Inc [Member] | ||||||||
Commission expense | 12,000 | $ 12,000 | 36,000 | $ 36,000 | ||||
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] | Notes Payable [Member] | ||||||||
Note principal balance amount | $ 109,844 | $ 109,844 | 117,656 | |||||
CEO [Member] | Notes Payable One [Member] | ||||||||
Note bears interest rate per annum | 8.00% | 8.00% | ||||||
Debt maturity date | Feb. 1, 2020 | |||||||
Note principal balance amount | $ 400,000 | $ 400,000 | 400,000 | |||||
CEO [Member] | Notes Payable Two [Member] | ||||||||
Note bears interest rate per annum | 8.00% | 8.00% | ||||||
Debt maturity date | Feb. 1, 2020 | |||||||
Note principal balance amount | $ 132,000 | $ 132,000 | $ 132,000 | $ 132,000 | ||||
Ownership percentage | 100.00% | 100.00% | ||||||
CEO [Member] | Extended Maturity [Member] | ||||||||
Debt maturity date | Feb. 28, 2019 |
Loan and Security Agreement (De
Loan and Security Agreement (Details Narrative) - USD ($) | Jun. 06, 2018 | May 31, 2018 | Sep. 03, 2014 | May 31, 2018 | Oct. 31, 2017 | Sep. 30, 2016 | Oct. 31, 2018 | Jun. 30, 2018 | Jan. 31, 2018 |
Line of credit | $ 2,240,490 | $ 2,702,390 | |||||||
Term of loan | 4 years | ||||||||
Term loan outstanding | $ 884,460 | $ 758,615 | |||||||
Entrepreneur Growth Capital, LLC [Member] | |||||||||
Extended maturity date | Oct. 1, 2020 | ||||||||
Entrepreneur Growth Capital, LLC [Member] | Secured Promissory Note [Member] | |||||||||
Extended maturity date | Jun. 1, 2020 | ||||||||
Repayment of secured debt, monthly instalment basis | $ 12,500 | ||||||||
Secured promissory note | $ 300,000 | ||||||||
Monthly payment description | Note provides for 24 monthly payments | ||||||||
Entrepreneur Growth Capital, LLC [Member] | Secured Promissory Note [Member] | Prime Rate [Member] | |||||||||
Debt interest rate | 4.00% | ||||||||
Loan and Security Agreement [Member] | Entrepreneur Growth Capital, LLC [Member] | CEO [Member] | |||||||||
Line of credit | $ 300,000 | ||||||||
Loan and Security Agreement [Member] | Entrepreneur Growth Capital, LLC [Member] | Maximum [Member] | |||||||||
Line of credit | $ 3,200,000 | ||||||||
Secured Promissory Note [Member] | Entrepreneur Growth Capital LLC [Member] | |||||||||
Extended maturity date | Sep. 30, 2021 | ||||||||
Term of loan | 5 years | ||||||||
Line of credit aggregate value | $ 600,000 | ||||||||
Debt instrument, increase | $ 800,000 | $ 700,000 | |||||||
Repayment of secured debt, monthly instalment basis | $ 11,667 | $ 13,795 | |||||||
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% |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | Jan. 22, 2018 | Apr. 29, 2015 | Oct. 31, 2018 | Oct. 31, 2017 | Jul. 17, 2018 | Jan. 31, 2018 |
Unamortized debt discount, net | $ 0 | $ 84,841 | ||||
Outstanding principal debt | 1,280,625 | 1,403,082 | ||||
Repayable of note payable | 600,000 | $ 950,000 | ||||
Notes Payable [Member] | ||||||
Debt, interest rate percentage | 3.75% | |||||
Outstanding principal debt | $ 250,000 | $ 250,000 | ||||
Repayable of note payable | $ 250,000 | |||||
Debt maturity date | Apr. 1, 2019 | |||||
Manatuck Hill Partners, LLC [Member] | ||||||
Debt extended maturity date | Nov. 1, 2018 | |||||
Debt, interest rate percentage | 2.00% | |||||
Accrued interest | $ 392,702 | |||||
Debt extinguishment fee percentage | 2.00% |
Capital Leases Payable - Schedu
Capital Leases Payable - Schedule of Capital Lease Obligations (Details) - USD ($) | Oct. 31, 2018 | Jan. 31, 2018 | |
Less current maturities | $ 53,730 | ||
Capital lease obligation, net of current maturities | 173,177 | ||
Capital Lease Obligation One [Member] | |||
Total Capital lease obligation | [1] | 200,145 | |
Capital Lease Obligation Two [Member] | |||
Total Capital lease obligation | 26,762 | ||
Capital Lease Obligation [Member] | |||
Total Capital lease obligation | 226,907 | ||
Less current maturities | 53,730 | ||
Capital lease obligation, net of current maturities | $ 173,177 | ||
[1] | In May 2018, the Company executed a sale-leaseback arrangement with an unrelated third party whereby the Company sold its equipment and leased it back for a period of 4 years. Pursuant to the agreement, the Company received gross proceeds of $213,250. This transaction is recorded as a financing transaction with the assets and related financing obligation on the condensed consolidated balance sheet. The lease expires in April 2022 and includes purchase, renewal and return options and certain default provisions requiring the Company to perform repairs and maintenance, make timely rent payments and insure the equipment. |
Capital Leases Payable - Sche_2
Capital Leases Payable - Schedule of Capital Lease Obligations (Details) (Parenthetical) - USD ($) | 1 Months Ended | 9 Months Ended |
May 31, 2018 | Oct. 31, 2018 | |
Debt instrument term | 4 years | |
Gross proceeds form lease | $ 213,250 | |
Lease expiration date | Apr. 30, 2022 | |
Capital Lease Obligation One [Member] | ||
Debt instrument term | 4 years | |
Debt interest rate | 7.50% | |
Debt instrument monthly instalments | $ 5,152 | |
Purchase option | $ 31,988 | |
Capital Lease Obligation Two [Member] | ||
Debt instrument term | 5 years | |
Debt interest rate | 5.90% | |
Debt instrument monthly instalments | $ 610 | |
Purchase option | $ 1 |
Capital Leases Payable - Sche_3
Capital Leases Payable - Schedule of Future Maturities of Long Term Debt (Details) | Oct. 31, 2018USD ($) |
Debt Disclosure [Abstract] | |
2,019 | $ 4,215,775 |
2,020 | 866,078 |
2,021 | 228,859 |
2,022 | 174,557 |
2,023 | 4,603 |
Future maturities of long term debt total | $ 5,489,872 |
Concentrations (Details Narrati
Concentrations (Details Narrative) | 9 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Sales Revenue [Member] | Customer [Member] | ||
Concentrations of risk percentage | 52.00% | |
Sales Revenue [Member] | Customer One [Member] | ||
Concentrations of risk percentage | 24.00% | |
Sales Revenue [Member] | Customer Two [Member] | ||
Concentrations of risk percentage | 12.00% | |
Sales Revenue [Member] | Customer Three [Member] | ||
Concentrations of risk percentage | 11.00% | |
Accounts Receivable [Member] | Customer [Member] | ||
Concentrations of risk percentage | 50.00% | |
Accounts Receivable [Member] | Customer One [Member] | ||
Concentrations of risk percentage | 43.00% | |
Accounts Receivable [Member] | Customer Two [Member] | ||
Concentrations of risk percentage | 13.00% |
Stockholders' Deficit (Details
Stockholders' Deficit (Details Narrative) - USD ($) | 9 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Total intrinsic value of options outstanding | $ 122,040 | |
Total intrinsic value of options exercisable | 122,040 | |
Recognized stock options | 128,039 | $ 229,400 |
Unrecognized stock based compensation | 116,163 | |
Warrant [Member] | ||
Total intrinsic value of warrants outstanding | 364,000 | |
Total intrinsic value of warrants exercisable | $ 364,000 | |
Number of warrants exercised | 467,496 | |
Number of shares issued for warrants exercises | 72,804 |
Stockholders' Deficit - Summary
Stockholders' Deficit - Summary of Option Activity (Details) | 9 Months Ended |
Oct. 31, 2018$ / sharesshares | |
Equity [Abstract] | |
Options, Outstanding, Beginning balance | shares | 866,000 |
Options, Exercisable, Beginning balance | shares | 699,000 |
Options, Granted | shares | 130,000 |
Options, Exercised | shares | (40,000) |
Options, Forfeited/Cancelled | shares | (257,000) |
Options, Outstanding, Ending balance | shares | 699,000 |
Options, Exercisable, Ending balance | shares | 516,500 |
Options Outstanding, Weighted Average Exercise Price, Beginning balance | $ / shares | $ 0.87 |
Options Exercisable, Weighted Average Exercise Price, Beginning balance | $ / shares | 0.78 |
Weighted Average Exercise Price, Granted | $ / shares | 0.89 |
Weighted Average Exercise Price, Exercised | $ / shares | 1 |
Weighted Average Exercise Price, Forfeited/Cancelled | $ / shares | |
Options Outstanding, Weighted Average Exercise Price, Ending balance | $ / shares | 0.74 |
Options Exercisable, Weighted Average Exercise Price, Ending balance | $ / shares | $ 0.64 |
Stockholders' Deficit - Summa_2
Stockholders' Deficit - Summary of Option Outstanding and Exercisable (Details) | 9 Months Ended |
Oct. 31, 2018$ / sharesshares | |
Equity [Abstract] | |
Range of exercise price lower range limit | $ 0.39 |
Range of exercise price upper range limit | $ 1.38 |
Number of Options Outstanding | shares | 699,000 |
Weighted Average Remaining Contractual Life (in years), Options Outstanding | 3 years |
Weighted Average Exercise Price, Options Outstanding | $ 0.74 |
Number of Options Exercisable | shares | 516,500 |
Weighted Average Exercise Price, Options Exercisable | $ 0.64 |
Stockholders' Deficit - Schedul
Stockholders' Deficit - Schedule of Warrants Activity (Details) - Warrant [Member] | 9 Months Ended |
Oct. 31, 2018$ / sharesshares | |
Warrants Outstanding, Beginning balance | shares | 7,061,399 |
Warrants Exercisable, Beginning balance | shares | 7,061,399 |
Warrants, Granted | shares | |
Warrants, Exercised | shares | (467,496) |
Warrants, Forfeited/Cancelled | shares | (401,905) |
Warrants Outstanding, Ending balance | shares | 6,191,998 |
Warrants Exercisable, Ending balance | shares | 6,191,998 |
Warrants Outstanding, Weighted Average Exercise Price, Beginning balance | $ / shares | $ 1.06 |
Warrants Exercisable, Weighted Average Exercise Price, Beginning balance | $ / shares | 1.06 |
Weighted Average Exercise Price, Granted | $ / shares | |
Weighted Average Exercise Price, Exercised | $ / shares | 1 |
Weighted Average Exercise Price, Forfeited/Cancelled | $ / shares | |
Warrants Outstanding, Weighted Average Exercise Price, Ending balance | $ / shares | 1.03 |
Warrants Exercisable, Weighted Average Exercise Price, Ending balance | $ / shares | $ 1.03 |
Stockholders' Deficit - Sched_2
Stockholders' Deficit - Schedule of Warrants Outstanding and Exercisable (Details) - Warrant [Member] - $ / shares | 9 Months Ended | |
Oct. 31, 2018 | Jan. 31, 2018 | |
Range of Exercise Price, lower limit | $ 0.68 | |
Range of Exercise Price, upper limit | $ 2.50 | |
Number of Warrants Outstanding | 6,191,998 | 7,061,399 |
Weighted Average Remaining Contractual Life (in Years) | 2 years 29 days | |
Weighted Average Exercise Price, Warrants Outstanding | $ 1.03 | |
Number of Warrants Exercisable | 6,191,998 | 7,061,399 |
Weighted Average Exercise Price, Warrants Exercisable | $ 1.03 | $ 1.06 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
May 31, 2018 | Oct. 31, 2018 | Oct. 31, 2017 | Oct. 31, 2018 | Oct. 31, 2017 | |
Royalty expenses | $ 105,834 | $ 98,133 | $ 306,690 | $ 304,324 | |
Lease agreement expire date | Apr. 30, 2022 | ||||
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 | ||||
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% | ||||
Percentage of fee equal to consideration paid | 3.00% | ||||
Agreement term description | If the Company enters into a change of control transaction during the term of the agreement through October 1, 2022, the Company shall pay to Spartan a fee equal to 3% of the consideration paid or received by the Company and/or its stockholders in such transaction. | ||||
Spartan Capital Securities, LLC [Member] | Financial Advisory and Investment Banking Agreement [Member] | |||||
Nonrefundable monthly fee amount | $ 10,000 | ||||
Spartan Capital Securities, LLC [Member] | Financial Advisory and Investment Banking Agreement [Member] | At least $4,000,000 Raised Financing [Member] | |||||
Nonrefundable monthly fee amount | $ 5,000 | ||||
Nonrefundable monthly fee term | November 1, 2015 through October 2017 | ||||
Aggregate gross proceeds fee | $ 4,000,000 | ||||
Spartan Capital Securities, LLC [Member] | Financial Advisory and Investment Banking Agreement [Member] | At least $5,000,000 Raised Financing [Member] | |||||
Nonrefundable monthly fee amount | $ 5,000 | ||||
Nonrefundable monthly fee term | November 1, 2017 through October 2019 | ||||
Aggregate gross proceeds fee | $ 5,000,000 | ||||
Spartan Capital Securities, LLC [Member] | Financial Advisory and Investment Banking Agreement [Member] | $10,000,000 or More Raised Financing [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 | ||||
Operating Lease [Member] | |||||
Lease agreement expire date | Mar. 31, 2024 | ||||
Operating lease expiration term | 5 years | 5 years | |||
Office Space [Member] | |||||
Lease agreement expire date | Mar. 31, 2019 | ||||
Operating lease expiration term | 51 months | 51 months | |||
Operating lease annual payments | $ 18,847 | ||||
Rent expense | $ 213,975 | $ 216,928 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Royalty Minimum Payment by Preceding Agreement Year (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2018 | Oct. 31, 2017 | Oct. 31, 2018 | Oct. 31, 2017 | |
Minimum Royalty to be Paid | $ 105,834 | $ 98,133 | $ 306,690 | $ 304,324 |
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 Contingencies_3
Commitments and Contingencies - Schedule of Future Minimum Payments Under Operating Leases (Details) | Oct. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2019 (remaining) | $ 66,841 |
2,020 | 201,599 |
2,021 | 199,757 |
2,022 | 209,846 |
2,023 | 211,864 |
Thereafter | 247,174 |
Total | $ 1,137,054 |