Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2014 | Jun. 02, 2015 | Jun. 30, 2014 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Green Ballast, Inc. | ||
Entity Central Index Key | 1,526,543 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | No | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 0 | ||
Entity Common Stock, Shares Outstanding | 75,182,829 | ||
Document Fiscal Year Focus | 2,014 | ||
Document Fiscal Period Focus | FY | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2014 |
Balance Sheets
Balance Sheets - USD ($) | Dec. 31, 2014 | Dec. 31, 2013 |
Current assets: | ||
Cash and cash equivalents | $ 4,374 | $ 30,402 |
Trade accounts receivable, less allowance for doubtful accounts of $3,086 and $22,448 at December 31, 2014 and 2013, respectively | 7,054 | 337,663 |
Inventories | 506,751 | 438,850 |
Prepaid expenses and other | 9,861 | 11,439 |
Total current assets | 528,040 | 818,354 |
Equipment, net | 14,033 | 21,221 |
Intangible assets, net | 1,382,849 | 1,509,521 |
Other assets | 4,450 | 4,450 |
Total assets | 1,929,372 | 2,353,546 |
Current liabilities: | ||
Current maturities of debt | 4,209,517 | 4,172,016 |
Accounts payable | 1,315,988 | 1,278,279 |
Accrued wages | 626,261 | 507,168 |
Accrued expenses | 224,956 | 209,787 |
Accrued interest | 1,093,352 | 622,566 |
Dividends payable | 0 | 203,416 |
Total current liabilities | 7,470,074 | 6,993,232 |
Long term debt | 0 | 0 |
Total liabilities | $ 7,470,074 | $ 6,993,232 |
Commitments and contingencies (Note 11) | ||
Temporary equity: | ||
Redeemable preferred stock, $1.00 par value: Authorized 5,000,000 shares: 3,000,000 shares designated as Series A; issued and none outstanding at December 31, 2014 and 1,400,000 shares outstanding at December 31, 2013 | $ 0 | $ 1,400,000 |
Permanent equity (deficit): | ||
Common stock, $0.0001 par value. Authorized 245,000,000 shares; issued and outstanding 75,182,829 shares and 94,115,609 shares at December 31, 2014 and December 31, 2013, respectively | 3,258 | 4,602 |
Additional paid-in capital | 7,470,795 | 5,803,681 |
Accumulated deficit | (13,014,755) | (11,847,969) |
Total permanent deficit | (5,540,702) | (6,039,686) |
Total liabilities, temporary equity, and permanent deficit | $ 1,929,372 | $ 2,353,546 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2014 | Dec. 31, 2013 |
Current assets: | ||
Trade accounts receivable, allowance for doubtful accounts | $ 3,086 | $ 22,448 |
Permanent equity (deficit): | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized (in shares) | 245,000,000 | 245,000,000 |
Common stock, issued (in shares) | 75,182,829 | 94,115,609 |
Common stock, outstanding (in shares) | 75,182,829 | 94,115,609 |
Redeemable Preferred Stock [Member] | ||
Temporary equity: | ||
Temporary equity, par value (in dollars per share) | $ 1 | $ 1 |
Temporary equity, authorized (in shares) | 5,000,000 | 5,000,000 |
Series A Redeemable Preferred Stock [Member] | ||
Temporary equity: | ||
Temporary equity, par value (in dollars per share) | $ 1 | |
Temporary equity, authorized (in shares) | 3,000,000 | 3,000,000 |
Temporary equity, issued (in shares) | 0 | 1,400,000 |
Temporary equity, outstanding (in shares) | 0 | 1,400,000 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Statements of Operations [Abstract] | ||
Net sales | $ 318,022 | $ 1,446,365 |
Cost of sales | 183,554 | 1,105,220 |
Gross profit | 134,468 | 341,145 |
Operating expenses | ||
Payroll and related expenses | 202,052 | 1,110,321 |
Professional fees | 209,181 | 361,675 |
Marketing and advertising expenses | 66,813 | 184,277 |
Depreciation and amortization | 149,216 | 150,213 |
Travel and entertainment | 12,808 | 167,235 |
Rent | 64,102 | 72,730 |
Directors and officers insurance | 59,114 | 59,114 |
Other insurance | 7,254 | 100,166 |
Other | 37,912 | 118,797 |
Total operating expenses | 808,452 | 2,324,528 |
Loss from operations | (673,984) | (1,983,383) |
Interest expense, net | (492,802) | (721,476) |
Loss before income taxes | (1,166,786) | (2,704,859) |
Income taxes | 0 | 0 |
Net loss | (1,166,786) | (2,704,859) |
Current period preferred dividends | (111,996) | (111,996) |
Benefit of surrender of preferred stock | 1,400,000 | 0 |
Benefit of forgiveness of preferred dividends | 315,412 | 0 |
Net income (loss) available to common shareholders | $ 436,630 | $ (2,816,855) |
Net loss per share - Basic and diluted (in dollars per share) | $ (0.005) | $ (0.03) |
Weighted average common shares outstanding: | ||
Basic and diluted (in shares) | 88,874,357 | 98,316,866 |
Statement of Stockholders' Defi
Statement of Stockholders' Deficit - USD ($) | Series A Redeemable Preferred Stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2012 | $ 1,400,000 | $ 4,599 | $ 5,137,507 | $ (9,143,110) | $ (4,001,004) |
Balance (in shares) at Dec. 31, 2012 | 1,400,000 | 102,497,289 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock compensation for stock awards to consultants | $ 0 | $ 0 | (6,910) | 0 | (6,910) |
Stock compensation for stock awards to consultants (in shares) | 0 | 0 | |||
Stock compensation for restricted stock awards to employees | $ 0 | $ 0 | 16,736 | 0 | 16,736 |
Stock compensation for restricted stock awards to employees (in shares) | 0 | 0 | |||
Forfeited stock awards to consultants | $ 0 | $ 0 | 0 | 0 | 0 |
Forfeited stock awards to consultants (in shares) | 0 | (540,000) | |||
Forfeited stock awards to employees | $ 0 | $ 0 | 0 | 0 | 0 |
Forfeited stock awards to employees (in shares) | 0 | (7,866,680) | |||
Issuance of common stock | $ 0 | $ 3 | 5,018 | 0 | 5,021 |
Issuance of common stock (in shares) | 0 | 25,000 | |||
Dividends declared | $ 0 | $ 0 | (111,996) | 0 | (111,996) |
Forgiveness of directors fees and wages | 0 | 0 | 763,326 | 0 | 763,326 |
Forgiveness of dividends declared | 0 | ||||
Surrender of preferred stock | 0 | ||||
Net loss | 0 | 0 | 0 | (2,704,859) | (2,704,859) |
Balance at Dec. 31, 2013 | $ 1,400,000 | $ 4,602 | 5,803,681 | (11,847,969) | (6,039,686) |
Balance (in shares) at Dec. 31, 2013 | 1,400,000 | 94,115,609 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock compensation for restricted stock awards to employees | $ 0 | $ 0 | 62,354 | 0 | 62,354 |
Stock compensation for restricted stock awards to employees (in shares) | 0 | 0 | |||
Forfeited stock awards to employees | $ 0 | $ 0 | 0 | 0 | 0 |
Forfeited stock awards to employees (in shares) | 0 | (5,495,280) | |||
Dividends declared | $ 0 | $ 0 | (111,996) | 0 | (111,996) |
Forgiveness of directors fees and wages | 0 | ||||
Forgiveness of dividends declared | 0 | 0 | 315,412 | 0 | 315,412 |
Surrender of preferred stock | $ (1,400,000) | $ 0 | 1,400,000 | 0 | 1,400,000 |
Surrender of preferred stock (in shares) | (1,400,000) | 0 | |||
Surrender of common stock | $ 0 | $ (1,344) | 1,344 | 0 | 0 |
Surrender of common stock (in shares) | 0 | (13,437,500) | |||
Net loss | $ 0 | $ 0 | 0 | (1,166,786) | (1,166,786) |
Balance at Dec. 31, 2014 | $ 0 | $ 3,258 | $ 7,470,795 | $ (13,014,755) | $ (5,540,702) |
Balance (in shares) at Dec. 31, 2014 | 0 | 75,182,829 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities: | ||
Net loss | $ (1,166,786) | $ (2,704,859) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Amortization of intangibles | 126,672 | 126,672 |
Depreciation of equipment | 7,188 | 7,187 |
Accretion of debt discounts | 11,709 | 334,548 |
Provision for bad debts | 3,086 | 22,448 |
Stock awards to outside advisor and consultants (benefit) | 0 | (6,910) |
Stock-based compensation expense | 62,354 | 16,736 |
Changes in operating assets and liabilities: | ||
Trade accounts receivable | 327,523 | 143,981 |
Inventories | (67,901) | 212,214 |
Contract costs in excess of billings | 0 | 100,978 |
Prepaid expenses and other | 1,578 | 9,228 |
Accounts payable | 37,709 | 400,701 |
Accrued expenses | 15,169 | (62,289) |
Accrued interest | 470,786 | 382,950 |
Accrued wages | 119,093 | 724,878 |
Net cash used in operating activities | (51,820) | (291,537) |
Cash flows from investing activities: | ||
Net cash used in investing activities | 0 | 0 |
Cash flows from financing activities: | ||
Proceeds from issuance of short-term debt | 328,488 | 771,500 |
Repayment of short-term debt | (302,696) | (465,000) |
Net cash provided by financing activities | 25,792 | 306,500 |
Increase (decrease) in cash and cash equivalents | (26,028) | 14,963 |
Cash and cash equivalents, beginning of period | 30,402 | 15,439 |
Cash and cash equivalents, end of period | 4,374 | 30,402 |
Supplemental cash flow information: | ||
Cash paid during the year for interest | 37,573 | 4,616 |
Supplemental non-cash flow information: | ||
Surrender of preferred stock | 1,400,000 | 0 |
Forgiveness of directors fees and wages | 0 | 763,326 |
Dividends declared but not paid | 111,996 | 111,996 |
Forgiveness of dividends declared | $ 315,412 | $ 0 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2014 | |
Description of Business [Abstract] | |
Description of Business | (1) Description of Business Green Ballast, Inc. (the “Company”) was incorporated in the State of Delaware on April 13, 2011. The Company is headquartered in Memphis, Tennessee. The Company develops, markets, and distributes daylight harvesting and programmable ballasts for fluorescent fixtures, which incorporates energy efficient technology. On April 15, 2011, the Company was capitalized with $3,000,000 contributed by Green Ballast LLC (“GBL”), which consisted of $2,532,000 in cash and $468,000 in inventory of ballasts. In exchange, 32,500,000 shares of common stock, 1,200,000 shares of redeemable Series A preferred stock, and a convertible promissory note in the principal amount of $1,800,000 (the “GBL Note”) were issued by the Company. The proceeds from the capitalization were used to purchase certain assets, including intellectual property, from Gemini Master Fund, Ltd. (“Gemini”) for a purchase price of $2,200,000, pursuant to an asset purchase agreement. The consideration paid consisted of $400,000 in cash, and the issuance of a convertible promissory note in the principal amount of $1,800,000 (the “Gemini Note”) and warrants to purchase up to 5,000,000 shares of common stock. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2014 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | (2) Summary of Significant Accounting Policies (a) Basis of Presentation The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles. The Company early adopted Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. This standard removes all incremental financial reporting requirements from U.S. generally accepted accounting principles for development stage entities, including the removal of Topic 915 from the FASB Accounting Standards Codification. Upon adoption, the Company no longer reports its operations as a developmental stage entity and eliminated all inception to date information. (b) Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the valuation allowances for receivables and deferred income tax assets; carrying value of intangibles; valuation of share-based compensation; and other equity and debt instruments. (c) Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. (d) Trade Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company recorded a provision of $3,086 and $22,448 in 2014 and 2013, respectively, to the allowance for doubtful accounts. The Company recognized write-offs of $0 and $3,127 in 2014 and 2013, respectively. The Company does not have any off-balance-sheet credit exposure related to its customers. (e) Inventories Inventories consist primarily of lighting ballasts and are stated at the lower of cost or market. Cost is determined using the first-in, first-out method. (f) Revenue Recognition The Company recognizes revenue when products are shipped and the customer takes ownership and assumes risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists, and the sales price is fixed or determinable. Shipping and other transportation costs charged to buyers are recorded in both sales and cost of sales. Short-term construction-type contracts are accounted for under the completed-contract method. Revenues under the completed-contract method are recognized upon substantial completion which includes acceptance by the customer. Costs incurred by the Company for contracts accounted for under the completed-contract method are capitalized as costs in excess of billings and are charged to cost of goods sold in the period that the related revenue is recognized. (g) Prepaid Expenses and Other Prepaid expenses and other consist of prepaid insurance and prepaid software subscriptions. (h) Equipment Equipment is stated at cost. Depreciation on equipment is calculated on the straight-line method over the estimated useful lives of the assets. The estimated useful life of equipment is five years. Total depreciation was $7,188 and was $7,187 for the years ended December 31, 2014 and 2013, respectively, which was recorded as operating expense. (i) Other Assets Other assets consist of capitalized costs related to the design of graphics associated with the Company’s website. (j) Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in interest expense and penalties in selling, general, and administrative expenses. (k) Long-Lived Assets Long-lived assets, such as purchased intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary. (l) Commitments and Contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. (m) Shipping and Handling Fees and Costs All amounts billed to a customer in a sales transaction related to shipping and handling represent revenues earned and are included in net sales. Costs incurred by the Company for shipping and handling are reported as selling expenses. (n) Fair Value Measurements The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. In the ordinary course of business, the Company becomes a party to financial instruments, which primarily consist of cash equivalents, accounts receivable, accounts payable, and other obligations. Based upon their respective maturity and terms, prevailing interest rates, and other pertinent factors, management believes the carrying value of these financial instruments reasonably approximates their fair value as of December 31, 2014 and 2013, respectively. (o) Product Warranties The Company provides a five-year warranty on all of its ballast products. In the event of a warranty claim, the Company will replace the product and reimburse the purchaser $10 per ballast to defray any installation costs. Estimated future warranty costs are accrued and charged to cost of goods sold in the period that the related revenue is recognized. Warranty liability is included in accrued expenses and was $20,000 at December 31, 2014 and 2013. Warranty expense was $747 and $13,229 for the years ended December 31, 2014 and 2013, respectively. |
Going Concern
Going Concern | 12 Months Ended |
Dec. 31, 2014 | |
Going Concern [Abstract] | |
Going Concern | (3) Going Concern The Company is still in the process of developing and sufficiently executing its business plan to sustain financial viability. The Company has sustained operating losses since its inception and has relied primarily on funds raised through the sale of equity or debt securities, and short-term financings to fund its operations. The Company did not experience a substantial increase in sales in 2013 or 2014, and additional financing was needed to fund its operations. As of December 31, 2014 the Company has a working capital deficit of $6,942,034 and stockholders’ deficit of $5,540 , 702 and has used $26,028 of cash in operations. As of December 31, 2013, the Company has a working capital deficit of $6,174,878 and stockholders’ deficit of $6,039,686 and cash totaling $14,963 was provided by operations. In addition, the Company may not have sufficient liquidity to meet its debt service requirements or to satisfy other financial obligations. These issues raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern. During 2013, four members of management executed waivers to forgo their respective accrued salaries and seven directors executed waivers to forgo their respective accrued director fees as of June 30, 2013. This forgiveness of accrued salaries and fees was accounted for as a capital contribution since these individuals are also shareholders of the Company. Accordingly, the Company increased its additional paid-in capital by $763,326 to account for these waivers for the year ended December 31, 2013. The Company did not renew any employment contracts and all contracts were terminated as of March 31, 2014. One employee is being paid monthly through a consulting fee arrangement. The Company’s ability to continue as a going concern is subject to its ability to obtain necessary funding from outside sources, including additional funding from the sale of equity or debt securities and short-term financings, and to increase sales of its products. The Company is presently engaged in discussions with several potential investors in order to raise the additional funds needed to sustain its operations. Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern. However, there can be no assurance that such additional funding will occur or that the Company can implement its strategic plans. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2014 | |
Intangible Assets [Abstract] | |
Intangible Assets | (4) Intangible Assets Intangible assets comprised intellectual property with a gross carrying amount of $1,852,591 at both December 31, 2014 and 2013 that was determined based on the fair value of the consideration given, net of accumulated amortization of $469,742 and $343,070 at December 31, 2014 and 2013, respectively. The intellectual property consists primarily of a patent, which is amortized over a period of approximately 15 years, which represents the estimated useful life of the patent. Estimated annual amortization expense for each of the next five years is approximately $127,000. Based on the current and projected near term operating results for the Company, the ability to project long-term operating results is not considered reliable. Therefore, management has decided that the intangibles are impaired as of December 31, 2014. The Company determined the fair value exceeded the carrying value as of December 31, 2014 and 2013. The Company relied on a recent third-party purchase of a portion of the Company’s indebtedness , which is secured primarily by the intangibles, in order to estimate the fair value of the intangibles. This method indicated that the carrying value of the intangibles is less than the implied fair value. Accordingly, no impairment charge was recognized. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2014 | |
Debt Disclosure [Abstract] | |
Debt | (5) Debt The GBL Note bears interest at 8% per annum, matured in due course on April 15, 2013, and is secured by all of the Company’s assets, including its intellectual property. The GBL Note had a principal balance of $1,800,000 and a discount of approximately $528,000 recorded in connection with the relative fair value allocation of the GBL Note at the April 15, 2011 initial capitalization date. The discount is recognized as an adjustment to interest expense over the life of the note using a method that approximates the effective-interest method. The GBL Note is automatically converted into shares of redeemable Series A preferred stock on the basis of one share for every $1.00 that the outstanding principal amount of the GBL Note is reduced by repayment or conversion. The GBL Note has an outstanding principal balance of $1,600,000 as of December 31, 2014 and 2013. As described below, the Gemini Note was transferred to LIG, LLC (“LIG”) in December 2014. Pursuant to its terms, the Gemini Note bears interest at 8% per annum and may be converted into shares of common stock at $0.225 per share for a total of 8 million shares of common stock. It matured in due course on April 15, 2013. As the outstanding principal amount of the Gemini Note is reduced by conversion or repayment, the Gemini Note automatically converts to Series A redeemable preferred stock. The Gemini Note is secured by the Company’s assets, including its intellectual property. The security interests granted to Gemini (which rights were subsequently transferred to LIG) and GBL are each first priority liens and rank equally with each other. The Gemini Note had a principal balance of $1,800,000 and a discount of approximately $408,000 recorded to reflect the fair value adjustment to the Gemini Note in connection with a nonmonetary exchange to acquire the intellectual property from Gemini. The discount is recognized as an adjustment to interest expense over the life of the note using a method that approximates the effective-interest method. In addition, the Gemini Note included warrants to purchase up to 5,000,000 share of common stock. These warrants are described in more detail in note 6. The Gemini Note has an outstanding principal balance of $1,600,000 as of December 31, 2014 and 2013. From October 2012 to January 2013, the Company entered into purchase agreements with certain accredited investors pursuant to which the Company issued eleven 8% Mandatorily Convertible Notes (the “Investor Notes”) in the aggregate principal amount of $675,000 and an aggregate of 675,000 shares of common stock, $0.0001 par value per share for aggregate proceeds of $675,000. These Investor Notes matured on October 16, 2013 and had a principal balance of $675,000 as of that date. The common stock was recorded at its fair value of $140,000. A resulting discount to the Investor Notes was recognized as an adjustment to interest expense over the life of the note using a method that approximates the effective-interest method. Upon a closing of a subsequent private placement of our equity or equity linked securities (a “Subsequent Offering”) and upon the completion of a recapitalization of our capital stock resulting in the reduction of the number of shares of our outstanding Common Stock (each, a “Conversion Event”), the outstanding principal amount of each Investor Note is automatically convertible into shares of our Common Stock. The number of shares of Common Stock to be issued upon conversion is equal to (a)(i) the principal amount of the Investor Note (ii) divided by the pre-money valuation of the Company used in the Subsequent Offering, and then (iii) multiplied by the number of shares of Common Stock outstanding after the Conversion Event (the “Base Number”), plus (b) 20% of the Base Number. On the conversion date, all accrued but unpaid interest on the Notes will be forgiven. The Investor Notes have an outstanding aggregate principal balance of $675,000 as of December 31, 2014 and 2013. From January 2013 to June 2013, the Company borrowed an aggregate principal amount of $400,000 in twenty-five day short term loans from certain accredited investors in order to fund operations (the “January 2013 Notes”). The January 2013 Notes bore interest at 12% per annum. From March to July 2013, the January 2013 Notes were paid off on their maturity dates . In June 2013, the Company borrowed a total of $65,000 from GBL to fund operations. This loan was paid off in 7 days. In August 2013, the Company borrowed an aggregate of $100,000 from its Chief Executive Officer in order to fund operations (the “August 2013 Notes”). The August 2013 Notes bore interest at 12% per annum, matured on December 16, 2013, and were secured by accounts receivable, inventory and funds received upon sale of inventory or payment on accounts. As of December 31, 2013, the August 2013 Notes were outstanding. During August 2014, $67,000 was repaid and $33,000 remained outstanding as of December 31, 2014. In October 2013, the Company borrowed $208,725 from an accredited investor in order to purchase inventory for certain jobs (the “October 2013 Note”). The October 2013 Note was issued for an original issue discount of $27,225. No interest payments were made on the October 2013 Note prior to the maturity date of March 1, 2014. The October 2013 Note is secured by certain inventory of the Company and accounts receivable. The October 2013 Note was not repaid by the maturity date so penalty interest of 18% per annum was charged from the maturity date until dates of repayment. From April 2014 to August 2014, the October 2013 Note, including all interest and penalties related thereto, was repaid . In January 2014, the Company borrowed $241,517 from the Company’s affiliate, IRC, to fund operations (the “January 2014 Note”). The January 2014 Note bore interest at 8% per annum, matures on January 1, 2016, and was unsecured. As of December 31, 2014, the outstanding principal balance on the January 2014 Note was $241,517 . The Company also borrowed an additional $26,971 from IRC, which it repaid to IRC in 2014. In July 2014, the Company entered into an agreement with a financial advisory firm to provide strategic, financial, operational and other relevant advisory services to help optimize the Company’s growth strategy and enhance shareholder value. The Company agreed to pay a monthly retainer fee of $20,000 during term of Agreement. From July 2014 to December 2014, the Company borrowed the total sum of $60,000 from an accredited investor to pay said retainer fees, by issuing three 8% convertible notes in the aggregate principal amount of $60,000 (the “July 2014 Notes”). The July 2014 Notes are subject to a conversion into common stock at the option of the holder on a dollar for dollar basis on the same terms as other investors when a conversion event occurs as defined in the July 2014 Notes . As of December 31, 2014, the outstanding principal balance on the July 2014 Note was $60,000. In March 2014, notification of disposition of collateral held by the Company’s noteholders, Gemini and GBL, was given to Company. Gemini proposed to sell all property and assets of the Company at a foreclosure sale to the highest qualified bidder held in May 2014. The sale did not take place because Gemini agreed to sell its debt to LIG. In December 2014, an Assignment of the Gemini Note was entered into from Gemini to LIG. The outstanding principal balance of $1,600,000, the warrants to purchase an aggregate of 5,000,000 shares of common stock and 1,017,384 shares of common stock owned by Gemini were transferred to LIG. Also, 2,000,000 shares of common stock owned by GB Solutions, LLC, a related party to Gemini, were also transferred to LIG. Since each of the Gemini Note, GBL Note, Investor Notes and August 2013 Notes have matured, the Company is accruing late fees and penalty interest. Summary of Indebtedness: December 31, 2014 December 31, 2013 GBL Note $ 1,600,000 $ 1,600,000 Gemini Note 1,600,000 (1) 1,600,000 Investor Notes 675,000 675,000 August 2013 Notes 33,000 100,000 October 2013 Note — 208,725 January 2014 Note 241,517 — July 2014 Notes 60,000 — Less unamortized discounts on above Notes — (11,709 ) Total debt $ 4,209,517 $ 4,172,016 Less current maturities of debt (4,209,517 ) (4,172,016 ) Long term debt $ — $ — (1) The Gemini Note was owned by LIG, LLC as of December 31, 2014. The debt agreements contain various nonfinancial covenants. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2014 | |
Income Taxes [Abstract] | |
Income Taxes | (6) Income Taxes The recorded income tax expense rate differs from the U.S. federal income tax rate of 34% as a result of nondeductible interest expense related to the GBL and Gemini Notes, as well as the Company recording a 100% valuation allowance on all of its net temporary deductible differences, including net operating loss carryforwards. The reconciliation between the federal statutory tax rate and the Company’s effective tax rate for the years ended December 31, 2014 and 2013 is as follows: December 31, 2014 December 31, 2013 Expected federal tax benefit 34.00 % 34.00 % Increase (reduction) resulting from: State tax-net of federal tax benefit 2.28 3.11 Nondeductible expenses (15.94 ) (9.35 ) Valuation Allowance (20.34 ) (27.76 ) Effective tax — % — % As of December 31, 2014, the Company has estimated that it has approximately $8,535,000 of U.S. federal and state net operating loss carryforwards, which expire beginning 2026, available to offset future taxable income. The significant components of deferred income taxes as of December 31, 2014 and 2013 are as follows: December 31, 2014 December 31, 2013 Deferred tax assets: Provision for bad debts $ 1,182 $ 8,595 Warranty reserve 7,658 7,658 Intangible Amortization 2,487 1,275 Other 766 766 Net operating loss carry forwards 3,268,069 3,029,492 Deferred tax assets 3,280,162 3,047,786 Deferred tax liabilities: Depreciation (928 ) (5,877 ) Deferred tax liabilities (928 ) (5,877 ) Net deferred tax asset 3,279,234 3,041,909 Valuation allowance (3,279,234 ) (3,041,909 ) $ — $ — The valuation allowance for deferred tax assets as of December 31, 2014 and 2013 was $3,279,234 and $3,041,909, respectively. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of carryforward periods) and projected future taxable income in making this assessment. Based upon the lack of operating history of the Company, management believes it is more likely than not that the Company will not realize the benefits of these deductible differences, including net operating loss carryforwards. No unrecognized tax benefits exist as of December 31, 2014 and 2013. Internal Revenue Code Section 382 places a limitation (the “Section 382 limitation”) on the amount of taxable income which can be offset by net operating loss carryforwards after a change in control (generally greater than a 50% change in ownership) of a loss corporation. Generally, after a control change, a loss corporation cannot deduct operating loss carryforwards in excess of the Section 382 limitation. The Company will continue to evaluate whether these changes have occurred and whether it is subject to any Section 382 limitations. If these changes have occurred, the ultimate realization of the net operating losses could be permanently impaired. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2014 | |
Stockholders Equity [Abstract] | |
Stockholders Equity | (7) Stockholders’ Equity (a) Common Stock Holders of common stock are entitled to one vote per share, to receive dividends and, upon liquidation or dissolution, are entitled to receive all assets available for distribution to stockholders. The holders have no preemptive or other subscription rights and there are no redemption or sinking fund provisions with respect to such shares. Common stock is subordinate to the preferred stock with respect to dividend rights and rights upon liquidation, winding-up, and dissolution of the Company. During 2013, the Company issued 25,000 shares of common stock totaling $5,021. In December 2014, a Stock Surrender Agreement was entered into by the Company and GBL. GBL owned 20,437,500 shares of common stock and 1,400,000 shares of preferred stock of the Company at December 18, 2014. In order to help facilitate potential restructuring of the Company for the benefit of all shareholders and creditors, GBL surrendered 13,437,500 shares of common stock and 1,400,000 shares of preferred stock to the Company. GBL received no consideration for the stock other than the benefit the Company will receive in its restructuring process. GBL then transferred 5,000,000 shares to IRC - Interstate Realty Corporation. GBL then sold 2,000,000 shares of common stock to other investors. After surrendering the stock and selling the shares, GBL owned 0 shares of common stock and 0 shares of preferred stock as of December 31, 2014. Dividends of $315,412 were also forgiven during December 2014. (b) Common Stock Warrants In connection with the issuance of the Gemini Note to purchase intellectual property from Gemini, warrants to acquire 5,000,000 shares of common stock were issued. These warrants consist of the following: · 1,500,000 of the warrants are exercisable at $0.30 per share with a forced exercise once the shares of common stock are trading at $0.60 per share for 15 out of any 20 consecutive trading days. · 1,500,000 of the warrants are exercisable at $0.40 per share with a forced exercise once the shares of common stock are trading at $0.80 per share for 15 out of any 20 consecutive trading days. · 2,000,000 of the warrants are exercisable at $0.60 per share with a forced exercise once the shares of common stock are trading at $1.20 per share for 15 out of any 20 consecutive trading days. The forced exercise provisions are not enforceable (a) to the extent that their enforcement would result in Gemini owning in excess of 9.9% of the Company’s outstanding shares of common stock; (b) if at any time during the previous six months the Company forced the exercise of any of the warrants; (c) if the Company fails to maintain an effective registration statement and current prospectus covering the resale of the shares underlying the warrants; (d) if the shares underlying the warrants fail to be, or fail to remain, listed, or quoted on an acceptable trading market; (e) if the Company fails to authorize and reserve for issuance the requisite number of shares of common stock; (f) if the Company enters bankruptcy or insolvency proceedings or breaches the terms of the warrants; (g) if the volume weighted average price of the common stock drops to or below $0.50 per share; or (h) if the daily dollar trading volume of the common stock drops to or below $30,000. The warrants are valid for seven years following the date of issuance. LIG may redeem the warrants for cash at the value of the warrants if the Company fails to: (a) use reasonable efforts to file a registration statement registering the common stock underlying the warrants; (b) reasonably diligently respond to comments from the Securities and Exchange Commission (the “SEC”) in connection with the registration of common stock; (c) use best efforts to cause the common stock underlying the warrants to be registered; or (d) take any action to voluntarily withdraw registration of the common stock underlying the warrants. The warrants were determined to have a fair value of approximately $61,000 and are recorded as a component of stockholders’ equity and as a discount to the Gemini Note that is amortized over its life using a method that approximates the effective-interest method. In 2012, the Company and Gemini agreed to modify the terms of the warrants to lower the exercise price to $0.25 per warrant share. This transaction resulted in an increase in the fair value of the warrants of $58,467 and was recorded as an increase to additional paid-in capital and a discount to the Gemini Note that is amortized over the life of the Note. As discussed in note 5, Gemini assigned its outstanding warrants to LIG, LLC in December 2014. |
8% Series A Redeemable Preferre
8% Series A Redeemable Preferred Stock | 12 Months Ended |
Dec. 31, 2014 | |
8% Series A Redeemable Preferred Stock [Abstract] | |
8% Series A Redeemable Preferred Stock | (8) 8% Series A Redeemable Preferred Stock Authorized capital stock includes 8% Series A redeemable preferred stock with a par value of $1.00 per share. The Series A redeemable preferred stock pays a fixed dividend of $0.08 per share, per year, payable monthly and has a liquidation value of $1.00 per share. In connection with the relative fair value allocation between the common stock and GBL Note issued as part of its initial capitalization, the Company recognized a discount on the 8% Series A redeemable preferred stock of approximately $605,000. As a majority of the Company’s board of directors are employees of GBL’s parent company, the 8% Series A redeemable preferred stock is considered redeemable at the option of the holder and, therefore, is classified outside of permanent equity. As discussed in note 7 (a), GBL surrendered its 1,400,000 shares of preferred stock of the Company in December 2014. |
Stock Compensation Plan
Stock Compensation Plan | 12 Months Ended |
Dec. 31, 2014 | |
Stock Compensation Plan [Abstract] | |
Stock Compensation Plan | (9) Stock Compensation Plan In 2011, the Company adopted a restricted stock compensation plan (the “Plan”) pursuant to which the Company’s board of directors may grant unvested shares of common stock (stock awards) to officers and key employees and consultants approved by the board of directors. On June 23, 2011, the Company granted 57,500,000 shares of common stock, which represented the maximum aggregate number of common stock that may be issued under the Plan. Included in the 57,500,000 shares that were granted were 1,350,000 shares that were granted to certain consultants in exchange for services provided to the Company, as further discussed in note 7. The grant date fair value of these restricted shares was approximately $61,000. The stock awards will vest if the following market conditions are met: · One-third of such restricted stock will vest on the first date on which the Company attains an average market capitalization for any 10 trading days during any 15 consecutive trading day period in excess of $15.87 million; · One-third of such restricted stock will vest on the first date on which the Company attains an average market capitalization for any 10 trading days during any 15 consecutive trading day period in excess of $60 million; and · One-third of such restricted stock will vest on the first date on which the Company attains an average market capitalization for any 10 trading days during any 15 consecutive trading day period in excess of $120 million. In addition, the stock awards will vest upon a change of control of the Company or upon the death of the participant under the Plan. The board of directors may, in its discretion, accelerate the vesting of a stock award or waive or amend any conditions of a stock award grant under the Plan. A participant may vote and receive dividends on the stock award before it has vested. The participant may not sell, assign, transfer, or pledge the stock award until it has vested subject to the restriction described above. In addition, if the stock award vests, the participant may not transfer or pledge the stock award until GBL has either received or has the ability to realize an amount equal to its initial capital contribution of $3 million. If the participant is no longer a consultant or, in the case of an employee, has voluntarily terminated his or her employment before the participant’s stock award vests, the participant will forfeit all of his or her unvested stock award. If an employee is terminated by the Company before the employee’s stock award has vested, the employee may retain the equivalent of 1/60th of the employee’s unvested stock award for every month or partial month of employment prior to termination. In such event, the retained stock award will vest in the same manner and amount had the employee remained employed at the time the vesting conditions set forth above occur, if at all. The stock awards include restrictions on transferability, as determined by Company’s board of directors. The Company’s stock awards qualify for classification as equity, and such awards contain no provisions to allow an employee to force cash settlement by the Company. The initial measurement date is the date the stock awards were granted. The fair value of these stock awards is $0.045 per share. The first one-third of such restricted stock was vested because the conditions were met. Due to the termination of employment contracts, the awards became service period awards and reallocated over the employees’ service periods. This resulted in an adjustment to APIC. In 2013, the total amount of compensation expense for the restricted shares award to employees was decreased by $517,718 and adjustment to outside consultants was decreased by $18,467. At December 31, 2014 and 2013, there was approximately $ 0 and $62 , 354 , respectively, of total unrecognized compensation cost related to the stock awards granted under the Plan. |
Related Parties
Related Parties | 12 Months Ended |
Dec. 31, 2014 | |
Related Parties [Abstract] | |
Related Parties | (10) Related Parties The Company subleases its principal offices from CBRE | Memphis for $5,000 per month. The Company accrues any unpaid amounts for rent as an account payable. The Company paid $0 to CBRE | Memphis and accrued $60,000 for rent for both years ended December 31, 2014 and 2013 for the office space provided. The Company’s Chief Executive Officer, J. Kevin Adams is the chief executive officer of CBRE | Memphis. The Company believes the terms and amounts being paid for these services and for our subleased offices are no less favorable than the terms we could have obtained from unaffiliated third parties. On April 15, 2011, the Company entered into an accounting services agreement and a marketing services agreement with IRC – Interstate Realty Corporation, which is a related party through its ownership of the Company’s common stock and through its chairman and chief executive officer, who is J. Kevin Adams, the Company’s Chief Executive Officer. The agreement for accounting and marketing services had an initial term of one year, subject to automatic one-year extensions unless we or IRC – Interstate Realty Corporation provides written notice of termination. The Company paid $0 to IRC – Interstate Realty Corporation and accrued $42,000 for fees for both fiscal years ended December 31, 2014 and 2013 for the accounting and marketing services provided. The managing member of GBL is IRC - Interstate Realty Corporation. J. Kevin Adams, the Company’s Chief Executive Officer and President, is the Chairman and Chief Executive Officer of IRC - Interstate Realty Corporation. In January 2014, the Company borrowed $241,517 from IRC, to fund operations (the “January 2014 Note”). The January 2014 Note bore interest at 8% per annum, matures on January 1, 2016, and was unsecured. The Company also borrowed an additional $26,971 from IRC which it repaid to IRC in 2014. In December 2014, the Company entered into a stock surrender agreement with GBL. Pursuant to the agreement, GBL surrendered 13,437,500 shares of common stock and 1,400,000 shares of preferred stock to the Company. GBL received no consideration for the stock other than the benefits the Company will receive. In August 2013, the Company borrowed an aggregate of $100,000 from J. Kevin Adams, the Company’s Chief Executive Officer and President, in order to fund operations (the “August 2013 Notes”). The August 2013 Notes bore interest at 12% per annum, matured on December 16, 2013, and were secured by accounts receivable, inventory and funds received upon sale of inventory or payment on accounts. As of December 31, 2013, the August 2013 Notes were outstanding. During August 2014, $67,000 was repaid and $33,000 remained outstanding as of December 31, 2014. Additionally, see note 5 for a summary of related party indebtedness outstanding at December 31, 2014 and 2013. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2014 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | (11) Commitments and Contingencies Warranties The Company provides standard warranties on all of its products for the repair or replacement of defective products within five years from the date of purchase. The Company has recourse provisions that would allow recovery of warranty costs from its suppliers. The Company has not incurred any significant warranty claims since its inception. Litigation On June 28, 2013, the Company terminated William H. Bethell’s employment for cause and removed him as Chief Financial Officer and Treasurer. On July 10, 2013, the Company was named as a respondent in a complaint filed by Mr. Bethell with the American Arbitration Association in Memphis, Tennessee. In the complaint, Mr. Bethell alleged a breach of contract, and asserted that the Company terminated his employment in contravention of his employment contract. The complaint seeks monetary damages for unpaid salary through the termination date and for the remainder of the term of his employment contract, additional shares of Common Stock of the Company and the release of Mr. Bethell from certain non-compete and confidentiality agreements. The Company believes it properly terminated Mr. Bethell’s employment, and that the Company has strong defenses to this claim. The arbitrators were recently selected and the arbitration is proceeding. On August 5, 2013, the Company filed a lawsuit in the United States District Court for the Western District of Tennessee, Western Division against Mr. Bethell, GNAC, LLC, Nick Bussanich and various unnamed defendants. The Company’s lawsuit alleged that Messers. Bethell and Bussanich defamed the Company, violated non-compete agreements and non-disclosure agreements and breached their fiduciary duty and duty of loyalty by, among other things, soliciting sales from the Company’s then-current customers and communicating untrue information about it. The lawsuit further alleged that the various defendants conspired together and tortuously interfered with the Company’s business relationships and induced its employees to breach their contracts with the Company. Subsequently, the Company voluntarily dismissed the lawsuit. Other than the disclosure provided above, the Company is not currently aware of any legal proceedings ongoing, pending, or threatened, which are expected to have a material adverse effect on the Company’s business or financial condition, and no such legal proceedings occurred during the fiscal years ended December 31, 2014 and December 31, 2013. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | (a) Basis of Presentation The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles. The Company early adopted Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. This standard removes all incremental financial reporting requirements from U.S. generally accepted accounting principles for development stage entities, including the removal of Topic 915 from the FASB Accounting Standards Codification. Upon adoption, the Company no longer reports its operations as a developmental stage entity and eliminated all inception to date information. |
Use of Estimates | (b) Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the valuation allowances for receivables and deferred income tax assets; carrying value of intangibles; valuation of share-based compensation; and other equity and debt instruments. |
Cash and Cash Equivalents | (c) Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. |
Trade Accounts Receivable | (d) Trade Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company recorded a provision of $3,086 and $22,448 in 2014 and 2013, respectively, to the allowance for doubtful accounts. The Company recognized write-offs of $0 and $3,127 in 2014 and 2013, respectively. The Company does not have any off-balance-sheet credit exposure related to its customers. |
Inventories | (e) Inventories Inventories consist primarily of lighting ballasts and are stated at the lower of cost or market. Cost is determined using the first-in, first-out method. |
Revenue Recognition | (f) Revenue Recognition The Company recognizes revenue when products are shipped and the customer takes ownership and assumes risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists, and the sales price is fixed or determinable. Shipping and other transportation costs charged to buyers are recorded in both sales and cost of sales. Short-term construction-type contracts are accounted for under the completed-contract method. Revenues under the completed-contract method are recognized upon substantial completion which includes acceptance by the customer. Costs incurred by the Company for contracts accounted for under the completed-contract method are capitalized as costs in excess of billings and are charged to cost of goods sold in the period that the related revenue is recognized. |
Prepaid Expenses and Other | (g) Prepaid Expenses and Other Prepaid expenses and other consist of prepaid insurance and prepaid software subscriptions. |
Equipment | (h) Equipment Equipment is stated at cost. Depreciation on equipment is calculated on the straight-line method over the estimated useful lives of the assets. The estimated useful life of equipment is five years. Total depreciation was $7,188 and was $7,187 for the years ended December 31, 2014 and 2013, respectively, which was recorded as operating expense. |
Other Assets | (i) Other Assets Other assets consist of capitalized costs related to the design of graphics associated with the Company’s website. |
Income Taxes | (j) Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in interest expense and penalties in selling, general, and administrative expenses. |
Long-Lived Assets | (k) Long-Lived Assets Long-lived assets, such as purchased intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary. |
Commitments and Contingencies | (l) Commitments and Contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. |
Shipping and Handling Fees and Costs | (m) Shipping and Handling Fees and Costs All amounts billed to a customer in a sales transaction related to shipping and handling represent revenues earned and are included in net sales. Costs incurred by the Company for shipping and handling are reported as selling expenses. |
Fair Value Measurements | (n) Fair Value Measurements The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. In the ordinary course of business, the Company becomes a party to financial instruments, which primarily consist of cash equivalents, accounts receivable, accounts payable, and other obligations. Based upon their respective maturity and terms, prevailing interest rates, and other pertinent factors, management believes the carrying value of these financial instruments reasonably approximates their fair value as of December 31, 2014 and 2013, respectively. |
Product Warranties | (o) Product Warranties The Company provides a five-year warranty on all of its ballast products. In the event of a warranty claim, the Company will replace the product and reimburse the purchaser $10 per ballast to defray any installation costs. Estimated future warranty costs are accrued and charged to cost of goods sold in the period that the related revenue is recognized. Warranty liability is included in accrued expenses and was $20,000 at December 31, 2014 and 2013. Warranty expense was $747 and $13,229 for the years ended December 31, 2014 and 2013, respectively. |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2014 | |
Debt Disclosure [Abstract] | |
Schedule of debt | Summary of Indebtedness: December 31, 2014 December 31, 2013 GBL Note $ 1,600,000 $ 1,600,000 Gemini Note 1,600,000 (1) 1,600,000 Investor Notes 675,000 675,000 August 2013 Notes 33,000 100,000 October 2013 Note — 208,725 January 2014 Note 241,517 — July 2014 Notes 60,000 — Less unamortized discounts on above Notes — (11,709 ) Total debt $ 4,209,517 $ 4,172,016 Less current maturities of debt (4,209,517 ) (4,172,016 ) Long term debt $ — $ — (1) The Gemini Note was owned by LIG, LLC as of December 31, 2014. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2014 | |
Income Taxes [Abstract] | |
Effective income tax rate reconciliation | The reconciliation between the federal statutory tax rate and the Company’s effective tax rate for the years ended December 31, 2014 and 2013 is as follows: December 31, 2014 December 31, 2013 Expected federal tax benefit 34.00 % 34.00 % Increase (reduction) resulting from: State tax-net of federal tax benefit 2.28 3.11 Nondeductible expenses (15.94 ) (9.35 ) Valuation Allowance (20.34 ) (27.76 ) Effective tax — % — % |
Components of deferred income taxes | The significant components of deferred income taxes as of December 31, 2014 and 2013 are as follows: December 31, 2014 December 31, 2013 Deferred tax assets: Provision for bad debts $ 1,182 $ 8,595 Warranty reserve 7,658 7,658 Intangible Amortization 2,487 1,275 Other 766 766 Net operating loss carry forwards 3,268,069 3,029,492 Deferred tax assets 3,280,162 3,047,786 Deferred tax liabilities: Depreciation (928 ) (5,877 ) Deferred tax liabilities (928 ) (5,877 ) Net deferred tax asset 3,279,234 3,041,909 Valuation allowance (3,279,234 ) (3,041,909 ) $ — $ — |
Description of Business (Detail
Description of Business (Details) - USD ($) | Dec. 31, 2014 | Dec. 31, 2013 | Apr. 15, 2011 |
Capital | $ 3,000,000 | ||
Common stock issued for exchange (in shares) | 32,500,000 | ||
Temporary equity, shares issued (in shares) | 1,200,000 | ||
Convertible promissory note issued | $ 1,800,000 | ||
Assets | $ 1,929,372 | $ 2,353,546 | |
Asset Purchase Agreement [Member] | |||
Convertible promissory note issued | 1,800,000 | ||
Assets | 2,200,000 | ||
Cash | $ 400,000 | ||
Common stock purchased by issuance of warrants (in shares) | 5,000,000 | ||
Cash [Member] | |||
Capital | $ 2,532,000 | ||
Inventory [Member] | |||
Capital | $ 468,000 |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Details) | 12 Months Ended | |
Dec. 31, 2014USD ($)$ / Ballast | Dec. 31, 2013USD ($) | |
Summary of Significant Accounting Policies [Abstract] | ||
Allowance for doubtful accounts receivable | $ 3,086 | $ 22,448 |
Allowance for doubtful accounts receivable write-offs | $ 0 | 3,127 |
Equipment [Abstract] | ||
Estimated useful life | 5 years | |
Depreciation of equipment | $ 7,188 | 7,187 |
Product Warranties [Abstract] | ||
Product warranty period | 5 years | |
Warranty reimbursement claim (in dollars per unit) | $ / Ballast | 10 | |
Warranty liability | $ 20,000 | 20,000 |
Warranty expenses | $ 747 | $ 13,229 |
Going Concern (Details)
Going Concern (Details) | 12 Months Ended | ||
Dec. 31, 2014USD ($)Employee | Dec. 31, 2013USD ($)DirectorManagement | Dec. 31, 2012USD ($) | |
Going Concern [Abstract] | |||
Working capital deficit | $ 6,942,034 | $ 6,174,878 | |
Stockholder's deficit | (5,540,702) | (6,039,686) | $ (4,001,004) |
Net cash used in operating activities | $ (26,028) | $ (14,963) | |
Number of directors executed waivers | Director | 7 | ||
Number of members of management executed waivers | Management | 4 | ||
Increase in additional paid in capital | $ 763,326 | ||
Number of employee paid monthly through consulting fee arrangement | Employee | 1 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Intangible Assets [Abstract] | ||
Finite-lived intangible assets, gross | $ 1,852,591 | $ 1,852,591 |
Finite-lived intangible assets, accumulated amortization | $ 469,742 | $ 343,070 |
Finite-lived intangible assets, useful life | 15 years | |
Finite-lived intangible assets, amortization expense, year one | $ 127,000 | |
Finite-lived intangible assets, amortization expense, year two | 127,000 | |
Finite-lived intangible assets, amortization expense, year three | 127,000 | |
Finite-lived intangible assets, amortization expense, year four | 127,000 | |
Finite-lived intangible assets, amortization expense, year five | $ 127,000 |
Debt (Details)
Debt (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||||||||
Aug. 31, 2014 | Jul. 31, 2014 | Jan. 31, 2014 | Oct. 31, 2013 | Aug. 31, 2013 | Jan. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Jun. 30, 2013 | ||
Less unamortized discounts on above | $ 0 | $ (11,709) | ||||||||
Total debt | 4,209,517 | 4,172,016 | ||||||||
Less current maturities of debt | (4,209,517) | (4,172,016) | ||||||||
Long term debt | 0 | 0 | ||||||||
Debt instrument, unamortized discount | $ 0 | $ 11,709 | ||||||||
Class of warrant or right, outstanding | 5,000,000 | |||||||||
Common stock, par or stated value per share | $ 0.0001 | $ 0.0001 | ||||||||
Gbl Note [Member] | ||||||||||
Long-term Debt, Gross | $ 1,600,000 | $ 1,600,000 | ||||||||
Less unamortized discounts on above | $ (528,000) | |||||||||
Debt instrument, interest rate, stated percentage | 8.00% | |||||||||
Debt instrument, maturity date | Apr. 15, 2013 | |||||||||
Debt instrument, face amount | $ 1,800,000 | |||||||||
Debt instrument, unamortized discount | $ 528,000 | |||||||||
Debt instrument, convertible, conversion price | $ 1 | |||||||||
Outstanding principal balance | $ 1,600,000 | 1,600,000 | ||||||||
Long-term debt, gross | 1,600,000 | 1,600,000 | ||||||||
Gbl Note [Member] | 7 days [Member] | ||||||||||
Debt instrument, face amount | $ 65,000 | |||||||||
Gemini Note [Member] | ||||||||||
Long-term Debt, Gross | 1,600,000 | [1] | 1,600,000 | |||||||
Less unamortized discounts on above | $ (408,000) | |||||||||
Debt instrument, interest rate, stated percentage | 8.00% | |||||||||
Debt instrument, maturity date | Apr. 15, 2013 | |||||||||
Debt instrument, face amount | $ 1,800,000 | |||||||||
Debt instrument, unamortized discount | $ 408,000 | |||||||||
Debt instrument, convertible, conversion price | $ 0.225 | |||||||||
Debt conversion, converted instrument, shares issued | 8,000,000 | |||||||||
Class of warrant or right, outstanding | 1,017,384 | |||||||||
Outstanding principal balance | $ 1,600,000 | [1] | 1,600,000 | |||||||
Long-term debt, gross | $ 1,600,000 | [1] | 1,600,000 | |||||||
GB [Member] | ||||||||||
Class of warrant or right, outstanding | 2,000,000 | |||||||||
Investor Note [Member] | ||||||||||
Long-term Debt, Gross | $ 675,000 | $ 675,000 | 675,000 | |||||||
Debt instrument, interest rate, stated percentage | 8.00% | |||||||||
Debt instrument, maturity date | Oct. 16, 2013 | |||||||||
Debt instrument, face amount | $ 675,000 | |||||||||
Outstanding principal balance | 675,000 | 675,000 | 675,000 | |||||||
Long-term debt, gross | $ 675,000 | 675,000 | 675,000 | |||||||
Common stock, par or stated value per share | $ 0.0001 | |||||||||
Proceeds from issuance of common stock | $ 675,000 | |||||||||
Common stock fair value | $ 140,000 | |||||||||
Common stock, base number | 20.00% | |||||||||
January 2013 Notes [Member] | Twenty Five days [Member] | ||||||||||
Debt instrument, interest rate, stated percentage | 12.00% | |||||||||
Debt instrument, face amount | $ 400,000 | |||||||||
January 2014 Note [Member] | ||||||||||
Long-term Debt, Gross | 241,517 | 0 | ||||||||
Debt instrument, interest rate, stated percentage | 8.00% | |||||||||
Debt instrument, maturity date | Jan. 1, 2016 | |||||||||
Outstanding principal balance | 241,517 | 0 | ||||||||
Long-term debt, gross | 241,517 | 0 | ||||||||
Due to affiliate | $ 241,517 | |||||||||
Additional borrowings from affiliate | $ 26,971 | |||||||||
July 2014 Notes [Member] | ||||||||||
Long-term Debt, Gross | 60,000 | 0 | ||||||||
Outstanding principal balance | 60,000 | 0 | ||||||||
Long-term debt, gross | 60,000 | 0 | ||||||||
Retainer fee | $ 20,000 | |||||||||
July 2014 Notes [Member] | Accredited Investor [Member] | ||||||||||
Long-term Debt, Gross | $ 60,000 | |||||||||
Debt instrument, interest rate, stated percentage | 8.00% | |||||||||
Debt instrument, face amount | $ 60,000 | |||||||||
Outstanding principal balance | 60,000 | |||||||||
Long-term debt, gross | 60,000 | |||||||||
October 2013 Note [Member] | ||||||||||
Long-term Debt, Gross | 0 | 208,725 | ||||||||
Outstanding principal balance | 0 | 208,725 | ||||||||
Long-term debt, gross | 0 | 208,725 | ||||||||
October 2013 Note [Member] | Accredited Investor [Member] | ||||||||||
Less unamortized discounts on above | $ (27,225) | |||||||||
Debt instrument, interest rate, stated percentage | 18.00% | |||||||||
Debt instrument, maturity date | Mar. 1, 2014 | |||||||||
Debt instrument, face amount | $ 208,725 | |||||||||
Debt instrument, unamortized discount | 27,225 | |||||||||
Debt instrument, interest payments | $ 0 | |||||||||
August 2013 Notes [Member] | ||||||||||
Long-term Debt, Gross | 33,000 | 100,000 | ||||||||
Outstanding principal balance | 33,000 | 100,000 | ||||||||
Long-term debt, gross | 33,000 | $ 100,000 | ||||||||
August 2013 Notes [Member] | Chief Executive Officer [Member] | ||||||||||
Long-term Debt, Gross | 33,000 | |||||||||
Debt instrument, interest rate, stated percentage | 12.00% | |||||||||
Debt instrument, maturity date | Dec. 16, 2013 | |||||||||
Debt instrument, face amount | $ 100,000 | |||||||||
Outstanding principal balance | 33,000 | |||||||||
Long-term debt, gross | $ 33,000 | |||||||||
Debt repaid | $ 67,000 | |||||||||
[1] | The Gemini Note was owned by LIG, LLC as of December 31, 2014. |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Taxes [Abstract] | ||
Percentage of change in ownership (in hundredths) | 50.00% | |
Federal statutory tax rate (in hundredths) | 34.00% | 34.00% |
Operating loss carryforwards | $ 8,535,000 | |
Operating loss carryforwards, expiration date | Jan. 1, 2026 | |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | ||
Expected federal tax benefit | 34.00% | 34.00% |
Increase (reduction) resulting from: [Abstract] | ||
State tax-net of federal tax benefit | 2.28% | 3.11% |
Nondeductible expenses | (15.94%) | (9.35%) |
Valuation Allowance | (20.34%) | (27.76%) |
Effective tax | 0.00% | 0.00% |
Deferred tax assets [Abstract] | ||
Provision for bad debts | $ 1,182 | $ 8,595 |
Warranty reserve | 7,658 | 7,658 |
Intangible Amortization | 2,487 | 1,275 |
Other | 766 | 766 |
Net operating loss carryforwards | 3,268,069 | 3,029,492 |
Deferred tax assets | 3,280,162 | 3,047,786 |
Deferred tax liabilities [Abstract] | ||
Depreciation | (928) | (5,877) |
Deferred tax liabilities | (928) | (5,877) |
Net deferred tax asset | 3,279,234 | 3,041,909 |
Valuation allowance | (3,279,234) | (3,041,909) |
Net deferred tax asset, net of valuation allowance | $ 0 | $ 0 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | Dec. 18, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Related Party Transaction [Line Items] | ||||
Stock issued during period, value, new issues | $ 5,021 | |||
Common stock, shares outstanding (in shares) | 75,182,829 | 94,115,609 | ||
Dividend declared forgiveness | $ 315,412 | $ 0 | ||
Warrants issued during period number of warrants (in shares) | 5,000,000 | |||
Warrants exercisable price per share (in dollars per share) | $ 0.25 | |||
Percentage of common stock outstanding, enforceable (in hundredths) | 9.90% | |||
Weighted average price of common stock (in dollars per share) | $ 0.50 | |||
Daily dollar trading volume of common stock | $ 30,000 | |||
Warrants and rights outstanding | 61,000 | |||
Adjustments to additional paid in capital, warrant issued | $ 58,467 | |||
Common Stock [Member] | ||||
Related Party Transaction [Line Items] | ||||
Stock issued during period, shares, new issues (in shares) | 25,000 | |||
Stock issued during period, value, new issues | $ 3 | |||
Common stock shares surrendered (in shares) | 13,437,500 | |||
Preferred stock shares surrendered (in shares) | 0 | |||
Common stock sold (in shares) | 2,000,000 | |||
Dividend declared forgiveness | $ 0 | |||
Warrant 1 [Member] | ||||
Related Party Transaction [Line Items] | ||||
Warrants issued during period number of warrants (in shares) | 1,500,000 | |||
Warrants exercisable price per share (in dollars per share) | $ 0.3 | |||
Warrants exercisable, trading price (in dollars per share) | $ 0.6 | |||
Warrant 1 [Member] | Maximum [Member] | ||||
Related Party Transaction [Line Items] | ||||
Number of consecutive trading days | 20 days | |||
Warrant 1 [Member] | Minimum [Member] | ||||
Related Party Transaction [Line Items] | ||||
Number of consecutive trading days | 15 days | |||
Warrant 2 [Member] | ||||
Related Party Transaction [Line Items] | ||||
Warrants issued during period number of warrants (in shares) | 1,500,000 | |||
Warrants exercisable price per share (in dollars per share) | $ 0.4 | |||
Warrants exercisable, trading price (in dollars per share) | $ 0.8 | |||
Warrant 2 [Member] | Maximum [Member] | ||||
Related Party Transaction [Line Items] | ||||
Number of consecutive trading days | 20 days | |||
Warrant 2 [Member] | Minimum [Member] | ||||
Related Party Transaction [Line Items] | ||||
Number of consecutive trading days | 15 days | |||
Warrant 3 [Member] | ||||
Related Party Transaction [Line Items] | ||||
Warrants issued during period number of warrants (in shares) | 2,000,000 | |||
Warrants exercisable price per share (in dollars per share) | $ 0.6 | |||
Warrants exercisable, trading price (in dollars per share) | $ 1.2 | |||
Warrant 3 [Member] | Maximum [Member] | ||||
Related Party Transaction [Line Items] | ||||
Number of consecutive trading days | 20 days | |||
Warrant 3 [Member] | Minimum [Member] | ||||
Related Party Transaction [Line Items] | ||||
Number of consecutive trading days | 15 days | |||
Green Ballast LLC [Member] | ||||
Related Party Transaction [Line Items] | ||||
Common stock, shares outstanding (in shares) | 20,437,500 | 0 | ||
Preferred stock share outstanding (in shares) | 1,400,000 | 0 | ||
Common stock shares surrendered (in shares) | 13,437,500 | |||
Preferred stock shares surrendered (in shares) | 1,400,000 | 1,400,000 | ||
Interstate Realty Corporation [Member] | ||||
Related Party Transaction [Line Items] | ||||
Common stock shares surrendered (in shares) | 13,437,500 | |||
Preferred stock shares surrendered (in shares) | 1,400,000 | |||
Shares transferred to other related party (in shares) | 5,000,000 |
8% Series A Redeemable Prefer28
8% Series A Redeemable Preferred Stock (Details) - USD ($) | Dec. 18, 2014 | Dec. 31, 2014 |
Series A Redeemable Preferred Stock [Member] | ||
Preferred stock, dividend rate (in hundredths) | 8.00% | |
Preferred stock, par value (in dollars per share) | $ 1 | |
Preferred stock, fixed dividend (in dollars per share) | 0.08 | |
Preferred stock, liquidation preference value (in dollars per share) | $ 1 | |
Preferred stock, discount on shares | $ 605,000 | |
GBL [Member] | ||
Preferred stock, shares surrendered (in shares) | 1,400,000 | 1,400,000 |
Stock Compensation Plan (Detail
Stock Compensation Plan (Details) - USD ($) | Jun. 23, 2011 | Dec. 31, 2014 | Dec. 31, 2013 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation, grant date fair value of restricted shares | $ 61,000 | ||
Number of trading days | 10 days | ||
Number of consecutive trading days | 15 days | ||
Share based compensation arrangement by share based payment award, vest based on average market capitalization one | $ 15,870,000 | ||
Share based compensation arrangement by share based payment award, vest based on average market capitalization two | 60,000,000 | ||
Share based compensation arrangement by share based payment award, vest based on average market capitalization three | $ 120,000,000 | ||
Share-based compensation arrangement by share-based payment award granted fair value (in dollars per share) | $ 0.045 | ||
Employee unrecognized compensation cost | $ 0 | $ 62,354 | |
Initial capital contribution | $ 3,000,000 | ||
Common Stock [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation arrangement by share-based payment award, grants in period (in shares) | 57,500,000 | ||
Consultants [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Decrease in restricted share based compensation | 18,467 | ||
Consultants [Member] | Common Stock [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation arrangement by share-based payment award, grants in period (in shares) | 1,350,000 | ||
Employees [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Decrease in restricted share based compensation | $ 517,781 |
Related Parties (Details)
Related Parties (Details) - USD ($) | Dec. 18, 2014 | Aug. 31, 2014 | Jan. 31, 2014 | Aug. 31, 2013 | Aug. 15, 2011 | Dec. 31, 2014 | Dec. 31, 2013 |
Related Party Transaction [Line Items] | |||||||
Subleases monthly rental expense | $ 64,102 | $ 72,730 | |||||
Borrowings outstanding | 0 | 0 | |||||
January 2014 Note [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Additional borrowings from affiliate | $ 26,971 | ||||||
J. Kevin Adams [Member] | August 2013 Notes [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Total borrowings | $ 100,000 | ||||||
Interest rate on borrowings (in hundredths) | 12.00% | ||||||
Maturity date | Dec. 16, 2013 | ||||||
Borrowings repaid | $ (67,000) | ||||||
Borrowings outstanding | 33,000 | ||||||
Interstate Realty Corporation [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Rental expense paid | 0 | ||||||
Initial term of agreement | 1 year | ||||||
Automatic extensions on agreement | 1 year | ||||||
Professional fees paid | 0 | 0 | |||||
Professional fees accrued | 42,000 | 42,000 | |||||
Common stock surrendered (in shares) | 13,437,500 | ||||||
Preferred stock, shares surrendered (in shares) | 1,400,000 | ||||||
Interstate Realty Corporation [Member] | January 2014 Note [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Total borrowings | $ 241,517 | ||||||
Interest rate on borrowings (in hundredths) | 8.00% | ||||||
Maturity date | Jan. 1, 2016 | ||||||
Additional borrowings from affiliate | $ 26,971 | ||||||
CB Richard Ellis Memphis [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Subleases monthly rental expense | 5,000 | ||||||
Rental expense paid | 0 | ||||||
Accrued rental expense | $ 60,000 | $ 60,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 12 Months Ended |
Dec. 31, 2014 | |
Commitments and Contingencies [Abstract] | |
Term of Warranty provided on products | 5 years |