Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | Apr. 14, 2016 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Synergy CHC Corp. | |
Entity Central Index Key | 1,562,733 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 81,692,954 | |
Trading Symbol | SNYR | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,016 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Current Assets: | ||
Cash and cash equivalents | $ 3,763,085 | $ 3,640,893 |
Restricted cash | 158,142 | 607,084 |
Accounts Receivable | 1,618,650 | 3,979,857 |
Prepaid expenses | 502,867 | 422,434 |
Inventory | 676,839 | 686,655 |
Total Current Assets | 6,719,583 | 9,336,923 |
Fixes assets, net | 72,497 | 12,017 |
Goodwill | 11,046,400 | 11,496,402 |
Intangible assets, net | 6,089,066 | 5,915,262 |
Total Assets | 23,927,546 | 26,760,604 |
Current Liabilities: | ||
Accounts payable and accrued liabilities | 3,175,181 | 5,032,102 |
Provision for income taxes payable | $ 1,012,783 | 910,894 |
Earn out payment | 2,551,500 | |
Current portion of long-term debt, net of debt discount and debt issuance cost, related party | $ 4,062,639 | 3,025,669 |
Current portion of long-term debt | 750,000 | 750,000 |
Warrant derivative liability | 2,009,681 | 3,096,179 |
Total Current Liabilities | $ 11,010,284 | 15,366,344 |
Long-term Liabilities: | ||
Note payable | 750,000 | |
Royalty payable | $ 282,601 | 258,897 |
Note payable, net of debt discount and debt issuance cost, related party | 4,101,833 | 4,965,650 |
Total Long-term Liabilities | 4,384,434 | 5,974,547 |
Total Liabilities | $ 15,394,718 | $ 21,340,891 |
Commitments and contingencies | ||
Stockholders' Equity: | ||
Common stock, $0.00001 par value; 300,000,000 shares authorized; 81,692,954 shares issued and outstanding | $ 817 | $ 817 |
Common stock to be issued | 68,000 | 68,000 |
Additional paid in capital | 14,223,376 | 13,920,735 |
Accumulated deficit | (5,759,365) | (8,569,841) |
Total stockholders' equity | 8,532,828 | 5,419,713 |
Total Liabilities and Stockholders' Equity | $ 23,927,546 | $ 26,760,604 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 81,692,954 | 81,692,954 |
Common stock, shares outstanding | 81,692,954 | 81,692,954 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Statement [Abstract] | ||
Revenue | $ 8,267,751 | $ 1,600,249 |
Cost of sales | 2,036,577 | 605,282 |
Gross profit | 6,231,174 | 994,967 |
Operating expenses | ||
Selling and marketing | 1,447,676 | 733,589 |
General and administrative | 1,868,805 | 314,820 |
Depreciation and amortization | 278,637 | 77,242 |
Total operating expenses | 3,595,118 | 1,125,651 |
Income (loss) from operations | 2,636,056 | $ (130,684) |
Other (income) expenses | ||
Interest income | (3,924) | |
Interest expense | 431,264 | $ 171,393 |
Remeasurement gain on translation of foreign subsidiary | (240,806) | |
Gain on change in fair value of derivative liability | (1,086,498) | |
Amortization of debt discount | 475,600 | $ 2,089,005 |
Amortization of debt issuance cost | 66,039 | 27,321 |
Total other (income) expenses | (358,325) | 2,287,719 |
Net Income (loss) before income taxes | 2,994,381 | (2,418,404) |
Income tax expense | 183,905 | 0 |
Net Income (loss) after tax | $ 2,810,476 | $ (2,418,404) |
Net income (loss) per share - basic | $ 0.03 | $ (0.04) |
Net income (loss) per share - diluted | $ 0.03 | $ (0.04) |
Weighted average common shares outstanding Basic | 81,692,954 | 65,883,030 |
Weighted average common shares outstanding Diluted | 85,380,496 | 65,883,030 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash Flows from Operating Activities | ||
Net income (loss) | $ 2,810,476 | $ (2,418,404) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 278,637 | 77,242 |
Amortization of debt issuance cost | 66,039 | 27,321 |
Stock based compensation expense | 302,641 | $ 12,000 |
Change in the fair value of derivative liability | (1,086,498) | |
Remeasurement gain on translation of foreign subsidiary | (240,806) | |
Non cash implied interest | 42,717 | |
Amortization of debt discount | 475,600 | $ 2,089,005 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 2,361,207 | 981,574 |
Inventory | 9,815 | (48,940) |
Prepaid expense | (80,433) | (40,272) |
Accounts payable and accrued liabilities | (1,514,226) | (184,304) |
Net cash provided by operating activities | 3,425,171 | 495,221 |
Cash Flows from Investing Activities | ||
Payments for acquisition of fixed assets | $ (62,921) | (1,654) |
Payments for acquisition of Factor Nutrition Labs | $ (4,500,000) | |
Restricted cash | $ 448,942 | |
Net cash provided by (used in) investing activities | $ 386,021 | $ (4,501,654) |
Cash Flows from Financing Activities | ||
Proceeds from notes payable | $ 6,000,000 | |
Repayment of notes payable | $ (1,137,500) | |
Payment of earn out liability | $ (2,551,500) | |
Payment of debt issuance cost | $ (289,045) | |
Advances from related party note | 11,184 | |
Proceeds from exercise of warrant | 1 | |
Net cash (used in) provided by financing activities | $ (3,689,000) | 5,722,140 |
Net increase in cash and cash equivalents | 122,192 | 1,715,707 |
Cash and Cash Equivalents, beginning of period | 3,640,893 | 338 |
Cash and Cash Equivalents, end of period | 3,763,085 | $ 1,716,045 |
Supplemental Disclosure of Cash Flow Information: | ||
Interest | 407,560 | |
Income taxes | 141,447 | |
Supplemental Disclosure of Non-cash Investing and Financing Activities: | ||
Reallocation of goodwill related to acquisition of Factor Nutrition to intellectual property | $ 450,000 | |
Common stock issued for settlement of debt | $ 100,000 | |
Beneficial conversion feature on warrants issued concurrent with debt | 3,415,514 | |
Assumption of assets and liabilities as part of acquisition transaction | 9,332,559 | |
Note issued as part of asset purchase agreement | $ 1,500,000 |
Nature of the Business
Nature of the Business | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of the Business | Note 1 Nature of the Business Synergy CHC Corp. (Synergy, we, us, our or the Company) (formerly Synergy Strips Corp.) was incorporated on December 29, 2010 in Nevada under the name Oro Capital Corporation. On April 21, 2014, the Company changed its fiscal year end from July 31 to December 31. On April 28, 2014, the Company changed its name to Synergy Strips Corp.. On August 5, 2015, the Company changed its name to Synergy CHC Corp. The Company is a consumer health care company that is in the process of building a portfolio of best-in-class consumer product brands. Synergys strategy is to grow its portfolio both organically and by further acquisition. Synergy is the sole owner of three subsidiaries: Neuragen Corp., Breakthrough Products, Inc. and NomadChoice Pty Ltd. and the results have been consolidated in these statements. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 Summary of Significant Accounting Policies General The accompanying condensed consolidated financial statements as of March 31, 2016 and December 31, 2015 and for the three months ended March 31, 2016 and 2015 are unaudited. These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and are presented in accordance with the requirements of Rule S-X of the Securities and Exchange Commission (the SEC) and with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2016. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2015 and footnotes thereto included in the Companys Annual Report on Form 10-K filed with the SEC. Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation . Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Significant estimates are assumptions about collection of accounts receivable, useful life of fixed and intangible assets, goodwill and assumptions used in Black-Scholes-Merton, or BSM, valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate. Cash and Cash Equivalents The Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents. As of March 31, 2016 the Company had no cash equivalents. The Company maintains its cash and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (FDIC) in accounts that at times may be in excess of the federally insured limit of $250,000 per bank. The Company minimizes this risk by placing its cash deposits with major financial institutions. At March 31, 2016, the uninsured balance amounted to $3,501,952. Capitalization of Fixed Assets The Company capitalizes expenditures related to property and equipment, subject to a minimum rule, that have a useful life greater than one year for: (1) assets purchased; (2) existing assets that are replaced, improved or the useful lives have been extended; or (3) all land, regardless of cost. Acquisitions of new assets, additions, replacements and improvements (other than land) costing less than the minimum rule in addition to maintenance and repair costs, including any planned major maintenance activities, are expensed as incurred. Intangible Assets We evaluate the recoverability of intangible assets periodically and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that Impairment exists. All of our intangible assets are subject to amortization. Intangible assets are amortized on a straight line basis over the useful lives. Long-lived Assets Long-lived assets include equipment and intangible assets other than those with indefinite lives. We assess the carrying value of our long-lived asset groups when indicators of impairment exist and recognize an impairment loss when the carrying amount of a long-lived asset is not recoverable when compared to undiscounted cash flows expected to result from the use and eventual disposition of the asset. Indicators of impairment include significant underperformance relative to historical or projected future operating results, significant changes in our use of the assets or in our business strategy, loss of or changes in customer relationships and significant negative industry or economic trends. When indications of impairment arise for a particular asset or group of assets, we assess the future recoverability of the carrying value of the asset (or asset group) based on an undiscounted cash flow analysis. If carrying value exceeds projected, net, undiscounted cash flows, an additional analysis is performed to determine the fair value of the asset (or asset group), typically a discounted cash flow analysis, and an impairment charge is recorded for the excess of carrying value over fair value. As of March 31, 2016, our qualitative analysis of long-lived assets did not indicate any impairment. Goodwill An asset purchase is accounted for under the purchase method of accounting. Under that method, assets and liabilities of the business acquired are recorded at their estimated fair values as of the date of the acquisition, with any excess of the cost of the acquisition over the estimated fair value of the net tangible and intangible assets acquired recorded as goodwill. As of March 31, 2016, our qualitative analysis of goodwill did not indicate any impairment. Revenue Recognition The Company recognizes revenue in accordance with the Financial Accounting Standards Boards (FASB), Accounting Standards Codification (ASC) 605, Revenue Recognition (ASC 605). ASC 605 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred and/or service has been performed; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. The Company believes that these criteria are satisfied upon shipment from its fulfillment centers. Certain of our distributors may also perform a separate function as a co-packer on our behalf. In such cases, ownership of and title to our products that are co-packed on our behalf by those co-packers who are also distributors, passes to such distributors when we are notified by them that they have taken transfer or possession of the relevant portion of our finished goods. Freight billed to customers is presented as revenues, and the related freight costs are presented as cost of goods sold. Cancelled orders are refunded if not already dispatched, refunds are only paid if stock is damaged in transit, discounts are only offered with specific promotions and orders will be refilled if lost in transit. Accounts receivable Accounts receivable are generally unsecured. The Company establishes an allowance for doubtful accounts receivable based on the age of outstanding invoices and managements evaluation of collectability. Accounts are written off after all reasonable collection efforts have been exhausted and management concludes that likelihood of collection is remote. Any future recoveries are applied against the allowance for doubtful accounts. Advertising Expense The Company expenses marketing, promotions and advertising costs as incurred. Such costs are included in general and administrative expense in the accompanying unaudited condensed consolidated statements of operations. Research and Development Costs incurred in connection with the development of new products and processing methods are charged to general and administrative expenses as incurred. Income Taxes The Company utilizes FASB ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recorded when it is more likely-than-not that a deferred tax asset will not be realized. The Company generated a deferred tax asset through net operating loss carry-forward. However, a valuation allowance of 100% has been established due to the uncertainty of the Companys realization of the net operating loss carry forward prior to its expiration. NomadChoice Pty Ltd, the Companys wholly-owned foreign subsidiary, is subject to income taxes in the jurisdictions in which it operates. Significant judgment is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The company recognizes liabilities for anticipated tax audit issues based on the Companys current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made. Net Earnings (Loss) Per Common Share The Company computes earnings per share under ASC subtopic 260-10, Earnings Per Share. Basic earnings (loss) per share is computed by dividing the net income (loss) attributable to the common stockholders (the numerator) by the weighted average number of shares of common stock outstanding (the denominator) during the reporting periods. Diluted earnings per share is computed by increasing the denominator by the weighted average number of additional shares that could have been outstanding from securities convertible into common stock (using the treasury stock method), unless their effect on net loss per share is anti-dilutive. As of March 31, 2016, options to purchase 5,000,000 shares of common stock and warrants to purchase 9,132,002 shares of common stock were outstanding. These potential shares were included in the shares used to calculate diluted earnings per share. Going Concern The Companys unaudited condensed consolidated financial statements are prepared using U.S. GAAP applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company had accumulated deficit at March 31, 2016 of $5,759,365. The Company had a working capital deficit of $4,290,701 as of March 31, 2016. Due to acquisitions during 2015 of revenue-producing products, the Company believes it has established an ongoing source of revenue that is sufficient to cover its operating costs. Managements plans to continue as a going concern include raising additional capital through borrowing and sales of common stock. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Fair Value Measurements The Company measures and discloses the fair value of assets and liabilities required to be carried at fair value in accordance with ASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value, establishes a framework for measuring fair value, and enhances fair value measurement disclosure. ASC 825 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825 establishes three levels of inputs that may be used to measure fair value: Level 1 - Quoted prices for identical assets or liabilities in active markets to which we have access at the measurement date. Level 2 - Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 - Unobservable inputs for the asset or liability. The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement. As of March 31, 2016, the Company has determined that there were no assets or liabilities measured at fair value, except for the warrant derivative liability. Inventory Inventory consists of raw materials, components and finished goods. The Companys inventory is stated at the lower of cost (FIFO cost basis) or market. Finished goods include the cost of labor to assemble the items. Stock-Based Compensation The Company adopted the provisions of ASC 718. We estimate the fair value of stock options using a binomial model, consistent with the provisions of ASC 718 and SEC Staff Accounting Bulletin No. 107, Share-Based Payment. Option-pricing models require the input of highly subjective assumptions, including the price volatility of the underlying stock. We determined that the use of implied volatility is expected to be more reflective of market conditions and, therefore, could reasonably be expected to be a better indicator of our expected volatility than historical volatility. The expected term assumption used in calculating the estimated fair value of our stock-based compensation awards using the Black-Scholes-Merton (BSM) model is based on detailed historical data about employees exercise behavior, vesting schedules, and death and disability probabilities. In addition, we are required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. We estimate the forfeiture rate based on historical experience of our stock-based awards that are granted, exercised and cancelled. We believe the resulting BSM calculation provides a more refined estimate of the fair value of our employee stock options. Foreign Currency Translation The functional currency of the Companys foreign subsidiary (Nomadchoice Pty Ltd.) is the U.S. Dollar. The Companys foreign subsidiary maintains its record using local currency (Australian Dollar). All monetary assets and liabilities of the foreign subsidiary were translated into U.S. Dollars at quarter end exchange rates, non-monetary assets and liabilities of the foreign subsidiary were translated into U.S. Dollars at transaction day exchange rates. Income and expense items related to non-monetary items were translated at exchange rates prevailing during the transaction date and other incomes and expenses were translated using average exchange rate for the period. The resulting translation adjustments, net of income taxes, were recorded in statements of operations as Remeasurement gain or loss on translation of foreign subsidiary. Concentrations of Credit Risk In the normal course of business, the Company provides credit terms to its customers; however, collateral is not required. Accordingly, the Company performs credit evaluations of its customers and maintains allowances for possible losses which, when realized, were within the range of managements expectations. From time to time, a higher concentration of credit risk exist on outstanding accounts receivable for a select number of customers due to individual buying patterns. Warehousing costs Warehouse costs include all third party warehouse rent fees and any additional costs relating to assembly or special pack-outs of the Company products are charged to general and administrative expenses as incurred. Product display costs All displays manufactured and purchased by the Company are for placement of product in retail stores. This also includes all costs for display execution and setup and retail services are charged to general and administrative expenses as incurred. Warrant Derivative Liabilities ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to the requirements of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed to be conventional, as described. A Black-Scholes-Merton option-pricing model, with dilution effects, was utilized to estimate the fair value of the Warrant Derivative Liabilities as of March 31, 2016. This model is subject to the significant assumptions discussed below and requires the following key inputs with respect to the Company and/or instrument: Input March 31, 2016 Stock Price $ 0.45 Exercise Price $ 0.49 Expected Life (in years) 9.0 Stock Volatility 156.96 % Risk-Free Rate 1.78 % Dividend Rate 0 % Outstanding Shares of Common Stock 4,547,243 Cost of Sales Cost of sales includes the purchase cost of products sold and all costs associated with getting the products into the retail stores including buying and transportation costs. Debt Issuance Costs Debt issuance costs consist primarily of arrangement fees, professional fees and legal fees. These costs are netted off with the related loan and are being amortized to interest expense over the term of the related debt facilities. Impairment of Long-Lived Assets When facts and circumstances indicate that the carrying values of long-lived assets, including fixed assets, may be impaired, an evaluation of recoverability is performed by comparing the carrying value of the assets to projected future cash flows in addition to other quantitative and qualitative analyses. Upon indication that the carrying value of such assets may not be recoverable, the Company recognizes an impairment loss as a charge against current operations. Long-lived assets to be disposed of are reported at the lower of the carrying amount or fair value, less estimated costs to sell. The Company makes judgments related to the expected useful lives of long-lived assets and its ability to realize undiscounted cash flows in excess of the carrying amounts of such assets which are affected by factors such as the ongoing maintenance and improvements of the assets, changes in economic conditions and changes in operating performance. As the Company assesses the ongoing expected cash flows and carrying amounts of its long-lived assets, these factors could cause the Company to realize a material impairment charge. Shipping Costs Shipping and handling costs billed to customers are recorded in sales. Shipping costs incurred by the company are recorded in selling and marketing expenses. Related parties Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and 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. All transactions with related parties shall be recorded at fair value of the goods or services exchanged. Property purchased from a related party is recorded at the cost to the related party and any payment to or on behalf of the related party in excess of the cost is reflected as a distribution to the related party. Segment Reporting Segment identification and selection is consistent with the management structure used by the Companys chief operating decision maker to evaluate performance and make decisions regarding resource allocation, as well as the materiality of financial results consistent with that structure. Based on the Companys management structure and method of internal reporting, the Company has one operating segment. The Companys chief operating decision maker does not review operating results on a disaggregated basis; rather, the chief operating decision maker reviews operating results on an aggregate basis. Reclassification of Prior Period Presentation Certain reclassifications have been made to conform the prior period data to the current presentations. These reclassifications had no effect on the reported results. Recent Accounting Pronouncements ASU 2016-01 In January 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-01, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company is currently evaluating the impact of adopting this guidance. ASU 2015-17 In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. Currently deferred taxes for each tax jurisdiction are presented as a net current asset or liability and net noncurrent asset or liability on the balance sheet. To simplify the presentation, the new guidance requires that deferred tax liabilities and assets for all jurisdictions along with any related valuation allowances be classified as noncurrent in a classified statement of financial position. This guidance is effective for interim and annual reporting periods beginning after December 15, 2016, and early adoption is permitted. The Company has adopted this guidance in the fourth quarter of the year ended December 31, 2015 on a retrospective basis. The adoption of this guidance did not have a material impact on the Companys financial position, results of operations or cash flows, and did not have any effect on prior periods due to the full valuation allowance against the Companys net deferred tax assets. ASU 2015-16 In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement Period Adjustments. Changes to the accounting for measurement-period adjustments relate to business combinations. Currently, an acquiring entity is required to retrospectively adjust the balance sheet amounts of the acquiree recognized at the acquisition date with a corresponding adjustment to goodwill as a result of changes made to the balance sheet amounts of the acquiree. The measurement period is the period after the acquisition date during which the acquirer may adjust the balance sheet amounts recognized for a business combination (generally up to one year from the date of acquisition). The changes eliminate the requirement to make such retrospective adjustments, and, instead require the acquiring entity to record these adjustments in the reporting period they are determined. The new standard is effective for both public and private companies for periods beginning after December 15, 2015. Adoption of this new standard did not have any impact on the Companys financial position, results of operations or cash flows. ASU 2015-14 In August 2015, the FASB issued ASU No. 2015-14, Revenue From Contracts With Customers (Topic 606). The amendments in this ASU defer the effective date of ASU 2014-09. Public business entities should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. We are still evaluating the effect of the adoption of ASU 2014-09. ASU 2015-11 In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory (Topic 330). ASU 2015-11 simplifies the accounting for the valuation of all inventory not accounted for using the last-in, first-out (LIFO) method by prescribing that inventory be valued at the lower of cost and net realizable value. ASU 2015-11 is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 on a prospective basis. We do not expect the adoption of ASU 2015-11 to have a material effect on our financial position, results of operations or cash flows. ASU 2015-05 In April 2015, the FASB issued ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40). ASU 2015-05 provides guidance regarding the accounting for a customers fees paid in a cloud computing arrangement; specifically about whether a cloud computing arrangement includes a software license, and if so, how to account for the software license. ASU 2015-05 is effective for public companies annual periods, including interim periods within those fiscal years, beginning after December 15, 2015 on either a prospective or retrospective basis. Early adoption is permitted. Adoption of this new standard did not have any impact on the Companys financial position, results of operations or cash flows. ASU 2015-07 In May 2015, the FASB issued ASU No. 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) This guidance eliminates the requirement to categorize investments within the fair value hierarchy if their fair value is measured using the net asset value (NAV) per share practical expedient in the FASBs fair value measurement guidance. The new standard is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2015. Adoption of this new standard did not have any impact on the Companys financial position, results of operations or cash flows. ASU 2015-03 In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments are effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The amendments are to be applied on a retrospective basis, wherein the balance sheet of each individual period presented is adjusted to reflect the period-specific effects of applying the new guidance. The Company reclassified debt issuance cost of $312,812 and $378,852 from other assets to liabilities and netted off with the related loans in the liabilities as of March 31, 2016 and December 31, 2015, respectively. ASU 2015-02 In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which is intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). The ASU focuses on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. In addition to reducing the number of consolidation models from four to two, the new standard simplifies the FASB Accounting Standards Codification and improves current U.S. GAAP by placing more emphasis on risk of loss when determining a controlling financial interest, reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity (VIE), and changing consolidation conclusions for companies in several industries that typically make use of limited partnerships or VIEs. The ASU will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. Adoption of this new standard did not have any impact on the Companys financial position, results of operations or cash flows. ASU 2015-01 In January 2015, the FASB issued ASU No. 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. This ASU eliminates from U.S. GAAP the concept of extraordinary items. ASU 2015-01 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. Adoption of this new standard did not have any impact on the Companys financial position, results of operations or cash flows. ASU 2014-17 In November 2014, the FASB issued ASU No. 2014-17, Business Combinations (Topic 805): Pushdown Accounting. This ASU provides an acquired entity with an option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity. An acquired entity may elect the option to apply pushdown accounting in the reporting period in which the change-in-control event occurs. If pushdown accounting is applied to an individual change-in-control event, that election is irrevocable. ASU 2014-17 was effective on November 18, 2014. The adoption of ASU 2014-17 did not have any effect on our financial position, results of operations or cash flows. ASU 2014-16 In November 2014, the FASB issued ASU 2014-16, Derivatives and Hedging (Topic 815). ASU 2014-16 addresses whether the host contract in a hybrid financial instrument issued in the form of a share should be accounted for as debt or equity. ASU 2014-16 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. We do not currently have issued, nor are we investors in, hybrid financial instruments. Adoption of this new standard did not have any impact on the Companys financial position, results of operations or cash flows. ASU 2014-15 In August 2 |
Inventory
Inventory | 3 Months Ended |
Mar. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Inventory | Note 3 Inventory Inventory consists of finished goods, components and raw materials. The Companys inventory is stated at the lower of cost (FIFO cost basis) or market. The carrying value of inventory consisted of the following: March 31, 2016 December 31, 2015 Finished goods $ 513,536 $ 535,908 Components 127,897 115,340 Raw Materials 35,406 35,406 Total inventory $ 676,839 $ 686,654 As of January 22, 2015, inventory was pledged to Knight Therapeutics under the Loan Agreement (see note 10). |
Accounts Receivable
Accounts Receivable | 3 Months Ended |
Mar. 31, 2016 | |
Receivables [Abstract] | |
Accounts Receivable | Note 4 Accounts Receivable Accounts receivable, net of allowances for sales returns and doubtful accounts, consisted of the following: March 31, 2016 December 31, 2015 Trade accounts receivable $ 1,715,349 $ 4,101,148 Less allowances (96,699 ) (121,291 ) Total accounts receivable, net $ 1,618,650 $ 3,979,857 During the year ended December 31, 2015, the Company charged $50,000 to bad debt expense in setting up an allowance. |
Prepaid Expenses
Prepaid Expenses | 3 Months Ended |
Mar. 31, 2016 | |
Prepaid Expense and Other Assets [Abstract] | |
Prepaid Expenses | Note 5 Prepaid Expenses Prepaid expenses consisted of the following: March 31, 2016 December 31, 2015 Advances for inventory $ 266,388 $ 171,494 Media production 70,587 55,849 Insurance 42,078 54,519 Trade shows 28,800 45,700 Deposits 41,228 41,228 Consultants 4,000 24,000 Rent 10,786 16,216 Media 20,650 - Miscellaneous 18,350 13,428 Total $ 502,867 $ 422,434 |
Concentration of Credit Risk
Concentration of Credit Risk | 3 Months Ended |
Mar. 31, 2016 | |
Risks and Uncertainties [Abstract] | |
Concentration of Credit Risk | Note 6 Concentration of Credit Risk Cash and cash equivalents The Company maintains its cash and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (FDIC) in accounts that at times may be in excess of the federally insured limit of $250,000 per bank. The Company minimizes this risk by placing its cash deposits with major financial institutions. At March 31, 2016 and December 31, 2015, the uninsured balances amounted to $3,501,592 and $3,453,290, respectively. Accounts receivable As of March 31, 2016, four customers accounted for 77% of the Companys accounts receivable. As of December 31, 2015, one customer accounted for 78% of the Companys accounts receivable. Major customers For the three months ended March 31, 2016, two customers accounted for approximately 26% of the Companys gross revenue. For the year ended December 31, 2015, two customers accounted for approximately 71% of the Companys gross revenues. Substantially all of the Companys business is with companies in the United States. Major suppliers For the period ended March 31, 2016 and the year ended December 31, 2015, our products were made by the following suppliers: FOCUSfactor Pittsburgh, PA Tustin, CA Flat Tummy Tea Highland, NY - Neuragen Linthicum Heights, MD - UrgentRx Ogden, UT - It is the opinion of management that the products can be produced by other manufacturers and the choice to utilize these suppliers is not a significant concentration. |
Fixed Assets and Intangible Ass
Fixed Assets and Intangible Assets | 3 Months Ended |
Mar. 31, 2016 | |
Assets | |
Fixed Assets and Intangible Assets | Note 7 Fixed Assets and Intangible Assets As of March 31, 2016 and December 31, 2015, fixed assets and intangible assets consisted of the following: March 31, 2016 December 31, 2015 Property and equipment $ 24,395 $ 18,187 Less accumulated depreciation (8,397 ) (6,170 ) Construction in progress 56,499 - Fixed assets, net $ 72,497 $ 12,017 Depreciation expense for the three months ended March 31, 2016 and 2015 was $2,227 and $75, respectively March 31, 2016 December 31, 2015 FOCUSfactor intellectual property $ 1,450,000 $ 1,000,000 Intangible assets subject to amortization 5,523,017 5,521,751 Less accumulated amortization (883,950 ) (606,489 ) Intangible assets, net $ 6,089,067 $ 5,915,262 Amortization expense for the three months ended March 31, 2016 and 2015 was $276,410 and $77,167, respectively. These intangible assets were acquired through Asset Purchase Agreement and Stock Purchase Agreements entered into during 2015. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 8 Related Party Transactions The Company accrued and paid consulting fees of $25,000 per month to a company owned by Mr. Jack Ross, Chief Executive Officer of the Company. As of March 31, 2016, the total outstanding balance was $0. On January 22, 2015, the Company entered into a Loan Agreement with Knight Therapeutics (Barbados) Inc. (Knight), a related party, for the purchase of the Focus Factor assets. At March 31, 2016, the Company owed Knight $4,110,521 on this loan, net of discount (see Note 10). On June 26, 2015, the Company entered into a Security Agreement with Knight Therapeutics, Inc., through its wholly owned subsidiary Neuragen Corp., for the purchase of Knight Therapeutics, Inc.s assets. At March 31, 2016, the Company owed Knight $538,102 in relation to this agreement (see Note 10). On August 18, 2015, the Company entered into a Consulting Agreement with Kara Harshbarger, the co-founder of Hand MD, LLC, pursuant to which she will provide marketing and sales related service. The Company will pay Ms. Harshbarger $10,000 a month for one year unless the Consulting Agreement is terminated earlier by either party. Hand MD, LLC is a 50% owner in Hand MD Corp. The Company expensed $30,000 through payroll for the three months ended March 31, 2016. As of March 31, 2016, the total outstanding balance was $0. On November 12, 2015, the Company entered into a Loan Agreement with Knight Therapeutics (Barbados) Inc., a related party, for the purchase of NomadChoice Pty Limited and Breakthrough Products, Inc. At March 31, 2016, the Company owed Knight $3,828,660 on this loan, net of discount (see Note 10). At March 31, 2016 NomadChoice Pty Ltd., a subsidiary of the Company, owed Knight Therapeutics $46,323 in connection with a royalty distribution agreement. |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 3 Months Ended |
Mar. 31, 2016 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Liabilities | Note 9 Accounts Payable and Accrued Liabilities As of March 31, 2016 and December 31, 2015, accounts payable and accrued liabilities consisted of the following: March 31, 2016 December 31, 2015 Accrued payroll $ 35,099 $ 128,237 Accrued legal fees 50,955 38,752 Accounting fees 67,248 - Manufacturers 1,082,696 1,527,333 Inventory 34,548 - Promotions 353,050 1,213,021 Returns allowance 883,668 1,128,133 Customers 411,033 411,033 Interest 45,206 110,754 Royalties 46,323 71,573 Warehousing 7,298 31,748 Others 158,057 371,518 Total $ 3,175,181 $ 5,032,102 |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Notes Payable | Note 10 Notes Payable The Companys loans payable at March 31, 2016 and December 31, 2015 are as follows: March 31, 2016 December 31, 2015 Loans payable $ 11,288,103 $ 12,406,589 Unamortized debt discount (2,060,819 ) (2,536,418 ) Unamortized debt issuance cost (312,812) (378,852) Total 8,914,472 9,491,319 Less: Current portion (4,812,639 ) (3,775,669 ) Long-term portion $ 4,101,833 $ 5,715,650 $6,000,000 January 22, 2015 Loan: On January 22, 2015, the Company entered into a Loan and Security Agreement (Loan Agreement) with Knight Therapeutics (Barbados) Inc. (Knight), pursuant to which Knight agreed to loan the Company $6.0 million (the Loan), and which amount was borrowed at closing (the Financing) for the purpose of acquiring the Focus Factor Business (defined below). At closing, the Company paid Knight an origination fee of $120,000 and a work fee of $60,000 and also paid $40,000 of Knights expenses associated with the Loan. The Loan bears interest at a rate of 15% per year; provided, however, that upon the occurrence of an equity or convertible equity offering by the Company of at least $1.0 million, the interest rate will drop to 13% per year. Interest accrues quarterly and is payable in arrears on March 31, June 30, September 30 and December 31 in each year, beginning on March 31, 2015. All outstanding principal and accrued and unpaid interest is due on the earliest to occur of either January 20, 2017 (the Maturity Date), or the date that Knight, in its discretion, accelerates the Companys obligations due to an event of default. The Company may extend the Maturity Date for two successive additional 12-month periods if at March 31, 2016 and March 31, 2017, respectively, the Companys revenues exceed $13.0 million and its EBITDA exceeds $2.0 million for the respective 12-month period then ending. Principal payments under the Loan Agreement commenced on June 30, 2015 and continue quarterly as set forth on the Repayment Schedule to the Loan Agreement. Subject to certain restrictions, the Company may prepay the outstanding principal of the Loan (in whole but not in part) at any time if the Company pays a concurrent prepayment fee equal to the greater of (i) the total unpaid annual interest that would have been payable during the year in which the prepayment is made if the prepayment is made prior to the first anniversary of the closing, and (ii) $300,000. The Companys obligations under the Loan Agreement are secured by a first priority security interest in all present and future assets of the Company. The Company also agreed to not pledge or otherwise encumber its intellectual property assets, subject to certain customary exceptions. The Loan Agreement includes customary representations, warranties, and affirmative and restrictive covenants, including covenants to attain and maintain certain financial metrics, and to not merge or dispose of assets, acquire other businesses (except for businesses substantially similar or complementary to the Companys business and the aggregate consideration to be paid does not exceed $100,000) or make capital expenditures in excess of $100,000 over the Companys annual business plan in any year. The Loan Agreement also includes customary events of default, including payment defaults, breaches of covenants, change of control and material adverse effect default. Upon the occurrence of an event of default and during the continuation thereof, the principal amount of the Loan will bear a default interest rate of an additional 5%. In connection with the Loan Agreement, the Company issued to Knight a warrant that entitled Knight to purchase 4,595,187 shares of common stock of the Company (Common Stock) on or prior to close of business on January 30, 2015 (the ST Warrant). The aggregate exercise price of the Common Stock under the ST Warrant is $1.00. Knight exercised the ST Warrant on January 22, 2015. Also in connection with the Loan Agreement, the Company issued to Knight a warrant to purchase 3,584,759 shares of Common Stock on or prior to the close of business of January 22, 2025 (the LT Warrant). The exercise price per share of the Common Stock under the LT Warrant is $0.34. The LT Warrant provides for cashless exercise. The LT Warrant also provides that in the event the closing price of the Common Stock remains above $1.00 for six consecutive months, Knight will forfeit the difference between the number of shares acquired under the LT Warrant prior to 90 days after such six-month period, and 25% of the shares purchasable under the LT Warrant. The beneficial conversion feature of the warrants issued to the noteholders amounted to $1,952,953 (ST warrants) and $1,462,560 (LT warrants), respectively, and was recorded as debt discount of the corresponding debt. The Company recognized amortization of debt discount of $218,253 (LT warrants) during the three months ended March 31, 2016. Unamortized debt discount as of March 31, 2016 amounted to $389,479. The Company also recorded deferred financing costs of $289,045 with respect to the above loan in 2015. The Company recognized amortization of deferred financing costs of $35,636 during the three months ended March 31, 2016. The Company recognized and paid interest expense of $181,814 during the three months ended March 31, 2016. Accrued interest expense was $0 as of March 31, 2016. Loan payable balance was $4,500,000 as of March 31, 2016. $1,500,000 January 22, 2015 Loan: On January 22, 2015, the Company issued a 0% promissory note in a principal amount of $1,500,000 in connection with an Asset Purchase Agreement. The note has a maturity date of January 20, 2017, with $750,000 to be paid on or before January 20, 2016 and an additional $750,000 to be paid on or before January 20, 2017. Loan payable balance was $750,000 as of March 31, 2016. $950,000 June 26, 2015 Security Agreement: On June 26, 2015, the Company, through its wholly owned subsidiary, Neuragen Corp. (Neuragen), issued a 0% promissory note in a principal amount of $950,000 in connection with an Asset Purchase Agreement. The note requires $250,000 to be paid on or before June 30, 2016, and $700,000 to be paid in quarterly installments (beginning with the quarter ended September 30, 2015) equal to the greater of $12,500 or 5% of U.S. net sales, and 2% of U.S. net sales of Neuragen for 60 months thereafter. The payment of such amounts is secured by a security interest in certain assets, undertakings and property (Collateral) pursuant to the Security Agreement, which will be released upon receipt of total payments of $1.2 million. The Company also recorded deferred financing costs of $10,486 with respect to the above agreement in 2015. The Company recognized amortization of deferred financing costs of $1,293 during the three months ended March 31, 2016. The Company has recorded present value of future payments of $538,102 and $515,854 as of March 31, 2016 and December 31, 2015, respectively. The Company has recorded interest expense of $19,013 for the three months ended March 31, 2016. $5,500,000 November 12, 2015 Loan: On November 12, 2015, we entered into a First Amendment to Loan Agreement (First Amendment) with Knight, pursuant to which Knight agreed to loan us an additional $5.5 million, and which amount was borrowed at closing (the Financing) for the purpose of acquiring Breakthrough Products, Inc. and NomadChoice Pty Limited through Stock Purchase Agreements. At closing, we paid Knight an origination fee of $110,000 and a work fee of $55,000 and also paid $24,000 of Knights expenses associated with the Loan. The Loan bears interest at a rate of 15% per year. The interest rate will decrease to 13% if we meet certain equity-fundraising targets. The New Loan Agreement matures on November 11, 2017. In connection with the New Loan Agreement, we issued Knight a warrant that entitles Knight to purchase 5,550,625 shares of our common stock (Knight Warrant Shares) representing approximately 6.5% of our fully diluted capital, which Knight exercised in full on November 12, 2015. Knight also received a 10-year warrant entitling Knight to purchase up to 4,547,243 shares of our common stock at $0.49 per share (Knight Warrants). The beneficial conversion feature of the warrants issued to the noteholders amounted to $2,553,287 (5,550,625 warrants) and $2,067,258 (4,547,243 warrants), respectively, and was recorded as debt discount of the corresponding debt in 2015. For derivative liability calculation on 4,547,243 warrants, refer to Note 15. The Company recognized amortization of debt discount of $257,347 (4,547,243 warrants) during the three months ended March 31, 2016. Unamortized debt discount as of March 31, 2016 amounted to $1,671,339. The Company also recorded deferred financing costs of $233,847 with respect to the above loan in 2015. The Company recognized amortization of deferred financing costs of $29,111 during the three months ended March 31, 2015. The Company recognized interest expense of $206,250 during the three months ended March 31, 2016. Accrued interest expense was $45,206 as of March 31, 2016. The balance at March 31, 2016 was $5,500,000. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2016 | |
Equity [Abstract] | |
Stockholders' Equity | Note 11 Stockholders Equity The total number of shares of all classes of capital stock which the Company is authorized to issue is 300,000,000 shares of common stock with $0.00001 par value. As of both March 31, 2016 and December 31, 2015, there were 81,692,954 shares of the Companys common stock issued and outstanding. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 12 Commitments & Contingencies Litigation: From time to time the Company may become a party to litigation in the normal course of business. Management believes that there are no current legal matters that would have a material effect on the Companys financial position or results of operations. Operating leases In April 2014, a subsidiary entered into an extension of a non-cancellable operating lease for office space that expires on March 31, 2017. Rent expense under this lease for the three months ended March 31, 2016 was $8,923 per month less a $3,010 per month sublease through March 2017. In December 2015, a subsidiary entered into a non-cancellable operating lease for office space through November 2016. Rental payments under this lease are $5,500 Australian dollars per month, which is approximately $4,200. In December 2015, the Company entered into a non-cancellable operating lease for office space through December 2016. Rental payments under this lease are $5,500 per month. The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of March 31, 2016: Year ending December 31: 2016 remaining nine months $ 163,407 2017 26,769 Total $ 190,176 On December 8, 2014, a subsidiary entered into a non-cancellable 36 month phone lease with an estimated cost of $894 a month. The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of March 31, 2016: Year ending December 31: 2016 remaining nine months $ 8,046 2017 9,834 Total $ 17,880 |
Stock Options
Stock Options | 3 Months Ended |
Mar. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Options | Note 13 Stock Options On July 30, 2014, the Companys board of directors approved the Companys 2014 Equity Incentive Plan and the reservation of 15,525,000 shares of common stock for issuance under such plan. Such plan was approved by the Companys shareholders and became effective on August 5, 2015. On April 2, 2014, the Company granted 1,000,000 options with an exercise price of $0.25 per share to a company owned by Mr. Jack Ross, Chief Executive Officer of the Company. On December 14, 2015, the Company granted 1,000,000 options each with an exercise price of $0.25 per share to two Board Members of the Company. On December 14, 2015, the Company granted 1,000,000 options each with an exercise price of $0.65 per share to two employees of the Company. The following table summarizes the changes in options outstanding and the related prices for the shares of the Companys common stock issued to employees and consultants under a stock option plan at March 31, 2016: Options Outstanding Options Exercisable Exercise Prices ($) Number Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price ($) Number Exercisable Weighted Average Exercise Price ($) $ 0.25 - $0.65 5,000,000 8.4 $ 0.41 3,000,000 $ 0.25 The stock option activity for the three months ended March 31, 2016 is as follows: Options Outstanding Weighted Average Exercise Price Outstanding at December 31, 2015 5,000,000 $ 0.41 Granted - - Exercised - - Expired or canceled - - Outstanding at March 31, 2016 5,000,000 $ 0.41 Stock-based compensation expense related to vested options was $302,641 during the three months ended March 31, 2016. The Company determined the value of share-based compensation for options vesting during the period using the Black-Scholes fair value option-pricing model with the following weighted average assumptions: estimated fair value of Companys common stock of $0.74, risk-free interest rate of 2.23%, volatility of 154%, expected lives of 10 years, and dividend yield of 0%. Stock options outstanding as of March 31, 2016, as disclosed in the above table, have an intrinsic value of $600,000. |
Stock Warrants
Stock Warrants | 3 Months Ended |
Mar. 31, 2016 | |
Stock Warrants | |
Stock Warrants | Note 14 Stock Warrants The following table summarizes the changes in warrants outstanding and the related prices for the shares of the Companys common stock at March 31, 2016: Warrants Outstanding Warrants Exercisable Exercise Prices ($) Number Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price ($) Number Exercisable Weighted Average Exercise Price ($) $ 0.34 3,584,759 8.85 $ 0.34 3,584,759 $ 0.34 0.49 4,547,243 9.65 0.49 4,547,243 0.49 5.00 1,000,000 2.75 5.00 1,000,000 5.00 The warrant activity for the three months ended March 31, 2016 is as follows: Options Outstanding Weighted Average Exercise Price Outstanding at December 31, 2015 $ 9,132,002 $ 0.92 Granted - - Exercised - - Expired or canceled - - Outstanding at March 31, 2016 $ 9,132,002 $ 0.92 |
Derivatives
Derivatives | 3 Months Ended |
Mar. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Note 15 Derivatives The Company has incurred a liability for the estimated fair value of a derivative warrant instrument. The estimated fair value of the derivative warrant instruments has been calculated using the Black-Scholes fair value option-pricing model with key input variables provided by management, as of the issue date, with the valuation offset against additional paid in capital, and at each reporting date, with changes in fair value recorded as gains or losses on revaluation in non-operating income (expense). The Company identified embedded derivatives related to the warrants issued along with loan payable entered into in November 2015. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the warrants and to adjust the fair value as of each subsequent balance sheet date. At the inception of the warrants, the Company determined a fair value of $2,067,258 of the embedded derivative. The fair value of the embedded derivative was determined using the Black-Scholes Model based on the following assumptions: November 12, 2015 Risk-free interest rate 2.32 % Expected remaining term 10 Years Expected volatility 157.56 % Dividend yield 0 % The initial fair values of the embedded derivative of $2,067,258 was allocated as a debt discount $2,067,258. Fair value at December 31, 2015 was estimated to be $3,096,179 and based on the following assumptions: December 31, 2015 Risk-free interest rate 2.27 % Expected remaining term 9.75 Years Expected volatility 152.07 % Dividend yield 0 % During the year ended December 31, 2015, the increase in the fair value of the warrant derivative liability of $1,028,921 was recorded as a loss on change in fair value of derivative liability. Fair value at March 31, 2016 was estimated to be $2,009,681 and based on the following assumptions: March 31, 2016 Risk-free interest rate 1.78 % Expected remaining term 9.5 Years Expected volatility 156.96 % Dividend yield 0 % During the period ended March 31, 2016, the decrease in the fair value of the warrant derivative liability of $1,086,498 was recorded as a gain on change in fair value of derivative liability. |
Segments
Segments | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Segments | Note 16 Segments Segment identification and selection is consistent with the management structure used by the Companys chief operating decision maker to evaluate performance and make decisions regarding resource allocation, as well as the materiality of financial results consistent with that structure. Based on the Companys management structure and method of internal reporting, the Company has one operating segment. The Companys chief operating decision maker does not review operating results on a disaggregated basis; rather, the chief operating decision maker reviews operating results on an aggregate basis. Net sales attributed to customers in the United States and foreign countries for the period ended March 31, 2016 and 2015 were as follows: March 31, 2016 March 31, 2015 United States $ 8,198,083 $ 1,600,249 Foreign countries 69,668 - $ 8,267,751 $ 1,600,249 The Companys net sales by product group for the period ended March 31, 2016 and 2015 were as follows: March 31, 2016 March 31, 2015 Nutraceuticals $ 7,865,915 $ 1,600,249 Over the Counter (OTC) 377,063 - Cosmeceuticals 24,773 - $ 8,267,751 $ 1,600,249 (1) Net sales for any other product group of similar products are less than 10% of consolidated net sales. Long-lived assets (net) attributable to operations in the United States and foreign countries as of March 31, 2016 and December 31, 2015 were as follows: March 31, 2016 December 31, 2015 United States $ 17,191,578 $ 17,411,598 Foreign countries 16,385 12,081 $ 17,207,963 $ 17,423,679 |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2016 | |
Business Combinations [Abstract] | |
Acquisitions | Note 17 Acquisitions In the Companys Annual Report on Form 10-K, the following disclosure was made with regard to the Companys initial allocation of the fair value of the assets and liabilities acquired in the FOCUSfactor acquisition. Note 3 Acquisitions Asset Purchase Agreement with Factor Nutrition Labs The Company has accounted for this transaction under the acquisition method of accounting. Under the acquisition method of accounting, the total acquisition consideration price is allocated to the assets acquired and liabilities assumed based on their preliminary estimated fair values based on the managements estimates as of the date of the acquisition. The Company expects to retain the services of independent valuation firm to determine the fair value of these identifiable intangible assets. Once determined, the Company will reallocate the purchase price of the acquisition based on the results of the independent evaluation if they are materially different from the allocations as recorded on January 22, 2015. The Company expects the purchase price allocations for the acquisition of Focus Factor Business to be completed by the filing of first quarter 2016 statements. The Company has consulted with a valuation professional to assist in determining the fair value of the identifiable FOCUSfactor intangible assets. As a result of this work, the Company has increased the amount allocated to the FOCUSfactor indefinite-lived brand and patent by $450,000 and reduced the amount recorded to goodwill by an identical amount. This adjustment had no effect on the income statement. The Company believes that the restated amount of $1,450,000 properly states the fair value of the FOCUSfactor brand and patent. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 18 Income Taxes Income tax expense was $183,905 for the three months ended March 31, 2016, compared to $0 for the same period in 2015. The current provision is attributable to Australian operations and the current tax rate in effect in that country. The total deferred tax asset is calculated by multiplying a domestic (US) 34% marginal tax rate by the cumulative net operating loss carryforwards (NOL). The Company currently has NOLs, which expire through 2035. The deferred tax asset related to the NOLs. Management has determined based on all the available information that a 100% valuation reserve is required. For U.S. purposes, the Company has not completed its evaluation of NOL utilization limitations under Internal Revenue Code, as amended (the Code) Section 382, change of ownership rules. If the Company has had a change in ownership the NOLs would be limited as to the amount that could be utilized each year, based on the Code. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 19 Subsequent Events Management evaluated all activities of the Company through the issuance date of the Companys unaudited condensed consolidated financial statements and concluded that no subsequent events have occurred that would require adjustments or disclosure into the unaudited condensed consolidated financial statements. |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
General | General The accompanying condensed consolidated financial statements as of March 31, 2016 and December 31, 2015 and for the three months ended March 31, 2016 and 2015 are unaudited. These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and are presented in accordance with the requirements of Rule S-X of the Securities and Exchange Commission (the SEC) and with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2016. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2015 and footnotes thereto included in the Companyss Annual Report on Form 10-K filed with the SEC. |
Basis of Presentation | Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation . |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Significant estimates are assumptions about collection of accounts receivable, useful life of fixed and intangible assets, goodwill and assumptions used in Black-Scholes-Merton, or BSM, valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents. As of March 31, 2016 the Company had no cash equivalents. The Company maintains its cash and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (FDIC) in accounts that at times may be in excess of the federally insured limit of $250,000 per bank. The Company minimizes this risk by placing its cash deposits with major financial institutions. At March 31, 2016, the uninsured balance amounted to $3,501,952. |
Capitalization of Fixed Assets | Capitalization of Fixed Assets The Company capitalizes expenditures related to property and equipment, subject to a minimum rule, that have a useful life greater than one year for: (1) assets purchased; (2) existing assets that are replaced, improved or the useful lives have been extended; or (3) all land, regardless of cost. Acquisitions of new assets, additions, replacements and improvements (other than land) costing less than the minimum rule in addition to maintenance and repair costs, including any planned major maintenance activities, are expensed as incurred. |
Intangible Assets | Intangible Assets We evaluate the recoverability of intangible assets periodically and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that Impairment exists. All of our intangible assets are subject to amortization. Intangible assets are amortized on a straight line basis over the useful lives. |
Long-lived Assets | Long-lived Assets Long-lived assets include equipment and intangible assets other than those with indefinite lives. We assess the carrying value of our long-lived asset groups when indicators of impairment exist and recognize an impairment loss when the carrying amount of a long-lived asset is not recoverable when compared to undiscounted cash flows expected to result from the use and eventual disposition of the asset. Indicators of impairment include significant underperformance relative to historical or projected future operating results, significant changes in our use of the assets or in our business strategy, loss of or changes in customer relationships and significant negative industry or economic trends. When indications of impairment arise for a particular asset or group of assets, we assess the future recoverability of the carrying value of the asset (or asset group) based on an undiscounted cash flow analysis. If carrying value exceeds projected, net, undiscounted cash flows, an additional analysis is performed to determine the fair value of the asset (or asset group), typically a discounted cash flow analysis, and an impairment charge is recorded for the excess of carrying value over fair value. As of March 31, 2016, our qualitative analysis of long-lived assets did not indicate any impairment. |
Goodwill | Goodwill An asset purchase is accounted for under the purchase method of accounting. Under that method, assets and liabilities of the business acquired are recorded at their estimated fair values as of the date of the acquisition, with any excess of the cost of the acquisition over the estimated fair value of the net tangible and intangible assets acquired recorded as goodwill. As of March 31, 2016, our qualitative analysis of goodwill did not indicate any impairment. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with the Financial Accounting Standards Boards (FASB), Accounting Standards Codification (ASC) 605, Revenue Recognition (ASC 605). ASC 605 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred and/or service has been performed; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. The Company believes that these criteria are satisfied upon shipment from its fulfillment centers. Certain of our distributors may also perform a separate function as a co-packer on our behalf. In such cases, ownership of and title to our products that are co-packed on our behalf by those co-packers who are also distributors, passes to such distributors when we are notified by them that they have taken transfer or possession of the relevant portion of our finished goods. Freight billed to customers is presented as revenues, and the related freight costs are presented as cost of goods sold. Cancelled orders are refunded if not already dispatched, refunds are only paid if stock is damaged in transit, discounts are only offered with specific promotions and orders will be refilled if lost in transit. |
Accounts Receivable | Accounts receivable Accounts receivable are generally unsecured. The Company establishes an allowance for doubtful accounts receivable based on the age of outstanding invoices and managements evaluation of collectability. Accounts are written off after all reasonable collection efforts have been exhausted and management concludes that likelihood of collection is remote. Any future recoveries are applied against the allowance for doubtful accounts. |
Advertising Expense | Advertising Expense The Company expenses marketing, promotions and advertising costs as incurred. Such costs are included in general and administrative expense in the accompanying unaudited condensed consolidated statements of operations. |
Research and Development | Research and Development Costs incurred in connection with the development of new products and processing methods are charged to general and administrative expenses as incurred. |
Income Taxes | Income Taxes The Company utilizes FASB ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recorded when it is more likely-than-not that a deferred tax asset will not be realized. The Company generated a deferred tax asset through net operating loss carry-forward. However, a valuation allowance of 100% has been established due to the uncertainty of the Companys realization of the net operating loss carry forward prior to its expiration. NomadChoice Pty Ltd, the Companys wholly-owned foreign subsidiary, is subject to income taxes in the jurisdictions in which it operates. Significant judgment is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The company recognizes liabilities for anticipated tax audit issues based on the Companys current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made. |
Net Earnings (Loss) Per Common Share | Net Earnings (Loss) Per Common Share The Company computes earnings per share under ASC subtopic 260-10, Earnings Per Share. Basic earnings (loss) per share is computed by dividing the net income (loss) attributable to the common stockholders (the numerator) by the weighted average number of shares of common stock outstanding (the denominator) during the reporting periods. Diluted earnings per share is computed by increasing the denominator by the weighted average number of additional shares that could have been outstanding from securities convertible into common stock (using the treasury stock method), unless their effect on net loss per share is anti-dilutive. As of March 31, 2016, options to purchase 5,000,000 shares of common stock and warrants to purchase 9,132,002 shares of common stock were outstanding. These potential shares were included in the shares used to calculate diluted earnings per share. |
Going Concern | Going Concern The Companys unaudited condensed consolidated financial statements are prepared using U.S. GAAP applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company had accumulated deficit at March 31, 2016 of $5,759,365. The Company had a working capital deficit of $4,290,701 as of March 31, 2016. Due to acquisitions during 2015 of revenue-producing products, the Company believes it has established an ongoing source of revenue that is sufficient to cover its operating costs. Managements plans to continue as a going concern include raising additional capital through borrowing and sales of common stock. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
Fair Value Measurements | Fair Value Measurements The Company measures and discloses the fair value of assets and liabilities required to be carried at fair value in accordance with ASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value, establishes a framework for measuring fair value, and enhances fair value measurement disclosure. ASC 825 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825 establishes three levels of inputs that may be used to measure fair value: Level 1 - Quoted prices for identical assets or liabilities in active markets to which we have access at the measurement date. Level 2 - Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 - Unobservable inputs for the asset or liability. The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement. As of March 31, 2016, the Company has determined that there were no assets or liabilities measured at fair value, except for the warrant derivative liability. |
Inventory | Inventory Inventory consists of raw materials, components and finished goods. The Companys inventory is stated at the lower of cost (FIFO cost basis) or market. Finished goods include the cost of labor to assemble the items. |
Stock-Based Compensation | Stock-Based Compensation The Company adopted the provisions of ASC 718. We estimate the fair value of stock options using a binomial model, consistent with the provisions of ASC 718 and SEC Staff Accounting Bulletin No. 107, Share-Based Payment. Option-pricing models require the input of highly subjective assumptions, including the price volatility of the underlying stock. We determined that the use of implied volatility is expected to be more reflective of market conditions and, therefore, could reasonably be expected to be a better indicator of our expected volatility than historical volatility. The expected term assumption used in calculating the estimated fair value of our stock-based compensation awards using the Black-Scholes-Merton (BSM) model is based on detailed historical data about employees exercise behavior, vesting schedules, and death and disability probabilities. In addition, we are required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. We estimate the forfeiture rate based on historical experience of our stock-based awards that are granted, exercised and cancelled. We believe the resulting BSM calculation provides a more refined estimate of the fair value of our employee stock options. |
Foreign Currency Translation | Foreign Currency Translation The functional currency of the Companys foreign subsidiary (Nomadchoice Pty Ltd.) is the U.S. Dollar. The Companys foreign subsidiary maintains its record using local currency (Australian Dollar). All monetary assets and liabilities of the foreign subsidiary were translated into U.S. Dollars at quarter end exchange rates, non-monetary assets and liabilities of the foreign subsidiary were translated into U.S. Dollars at transaction day exchange rates. Income and expense items related to non-monetary items were translated at exchange rates prevailing during the transaction date and other incomes and expenses were translated using average exchange rate for the period. The resulting translation adjustments, net of income taxes, were recorded in statements of operations as Remeasurement gain or loss on translation of foreign subsidiary. |
Concentrations of Credit Risk | Concentrations of Credit Risk In the normal course of business, the Company provides credit terms to its customers; however, collateral is not required. Accordingly, the Company performs credit evaluations of its customers and maintains allowances for possible losses which, when realized, were within the range of managements expectations. From time to time, a higher concentration of credit risk exist on outstanding accounts receivable for a select number of customers due to individual buying patterns. |
Warehousing costs | Warehousing costs Warehouse costs include all third party warehouse rent fees and any additional costs relating to assembly or special pack-outs of the Company products are charged to general and administrative expenses as incurred. |
Product display costs | Product display costs All displays manufactured and purchased by the Company are for placement of product in retail stores. This also includes all costs for display execution and setup and retail services are charged to general and administrative expenses as incurred. |
Warrant Derivative Liabilities | Warrant Derivative Liabilities ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to the requirements of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed to be conventional, as described. A Black-Scholes-Merton option-pricing model, with dilution effects, was utilized to estimate the fair value of the Warrant Derivative Liabilities as of March 31, 2016. This model is subject to the significant assumptions discussed below and requires the following key inputs with respect to the Company and/or instrument: Input March 31, 2016 Stock Price $ 0.45 Exercise Price $ 0.49 Expected Life (in years) 9.0 Stock Volatility 156.96 % Risk-Free Rate 1.78 % Dividend Rate 0 % Outstanding Shares of Common Stock 4,547,243 |
Cost of Sales | Cost of Sales Cost of sales includes the purchase cost of products sold and all costs associated with getting the products into the retail stores including buying and transportation costs. |
Debt Issuance Costs | Debt Issuance Costs Debt issuance costs consist primarily of arrangement fees, professional fees and legal fees. These costs are netted off with the related loan and are being amortized to interest expense over the term of the related debt facilities. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets When facts and circumstances indicate that the carrying values of long-lived assets, including fixed assets, may be impaired, an evaluation of recoverability is performed by comparing the carrying value of the assets to projected future cash flows in addition to other quantitative and qualitative analyses. Upon indication that the carrying value of such assets may not be recoverable, the Company recognizes an impairment loss as a charge against current operations. Long-lived assets to be disposed of are reported at the lower of the carrying amount or fair value, less estimated costs to sell. The Company makes judgments related to the expected useful lives of long-lived assets and its ability to realize undiscounted cash flows in excess of the carrying amounts of such assets which are affected by factors such as the ongoing maintenance and improvements of the assets, changes in economic conditions and changes in operating performance. As the Company assesses the ongoing expected cash flows and carrying amounts of its long-lived assets, these factors could cause the Company to realize a material impairment charge. |
Shipping Costs | Shipping Costs Shipping and handling costs billed to customers are recorded in sales. Shipping costs incurred by the company are recorded in selling and marketing expenses. |
Related parties | Related parties Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and 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. All transactions with related parties shall be recorded at fair value of the goods or services exchanged. Property purchased from a related party is recorded at the cost to the related party and any payment to or on behalf of the related party in excess of the cost is reflected as a distribution to the related party. |
Segment Reporting | Segment Reporting Segment identification and selection is consistent with the management structure used by the Companys chief operating decision maker to evaluate performance and make decisions regarding resource allocation, as well as the materiality of financial results consistent with that structure. Based on the Companys management structure and method of internal reporting, the Company has one operating segment. The Companys chief operating decision maker does not review operating results on a disaggregated basis; rather, the chief operating decision maker reviews operating results on an aggregate basis. |
Reclassification of Prior Period Presentation | Reclassification of Prior Period Presentation Certain reclassifications have been made to conform the prior period data to the current presentations. These reclassifications had no effect on the reported results. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements ASU 2016-01 In January 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-01, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company is currently evaluating the impact of adopting this guidance. ASU 2015-17 In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. Currently deferred taxes for each tax jurisdiction are presented as a net current asset or liability and net noncurrent asset or liability on the balance sheet. To simplify the presentation, the new guidance requires that deferred tax liabilities and assets for all jurisdictions along with any related valuation allowances be classified as noncurrent in a classified statement of financial position. This guidance is effective for interim and annual reporting periods beginning after December 15, 2016, and early adoption is permitted. The Company has adopted this guidance in the fourth quarter of the year ended December 31, 2015 on a retrospective basis. The adoption of this guidance did not have a material impact on the Companys financial position, results of operations or cash flows, and did not have any effect on prior periods due to the full valuation allowance against the Companys net deferred tax assets. ASU 2015-16 In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement Period Adjustments. Changes to the accounting for measurement-period adjustments relate to business combinations. Currently, an acquiring entity is required to retrospectively adjust the balance sheet amounts of the acquiree recognized at the acquisition date with a corresponding adjustment to goodwill as a result of changes made to the balance sheet amounts of the acquiree. The measurement period is the period after the acquisition date during which the acquirer may adjust the balance sheet amounts recognized for a business combination (generally up to one year from the date of acquisition). The changes eliminate the requirement to make such retrospective adjustments, and, instead require the acquiring entity to record these adjustments in the reporting period they are determined. The new standard is effective for both public and private companies for periods beginning after December 15, 2015. Adoption of this new standard did not have any impact on the Companys financial position, results of operations or cash flows. ASU 2015-14 In August 2015, the FASB issued ASU No. 2015-14, Revenue From Contracts With Customers (Topic 606). The amendments in this ASU defer the effective date of ASU 2014-09. Public business entities should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. We are still evaluating the effect of the adoption of ASU 2014-09. ASU 2015-11 In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory (Topic 330). ASU 2015-11 simplifies the accounting for the valuation of all inventory not accounted for using the last-in, first-out (LIFO) method by prescribing that inventory be valued at the lower of cost and net realizable value. ASU 2015-11 is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 on a prospective basis. We do not expect the adoption of ASU 2015-11 to have a material effect on our financial position, results of operations or cash flows. ASU 2015-05 In April 2015, the FASB issued ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40). ASU 2015-05 provides guidance regarding the accounting for a customers fees paid in a cloud computing arrangement; specifically about whether a cloud computing arrangement includes a software license, and if so, how to account for the software license. ASU 2015-05 is effective for public companies annual periods, including interim periods within those fiscal years, beginning after December 15, 2015 on either a prospective or retrospective basis. Early adoption is permitted. Adoption of this new standard did not have any impact on the Companys financial position, results of operations or cash flows. ASU 2015-07 In May 2015, the FASB issued ASU No. 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) This guidance eliminates the requirement to categorize investments within the fair value hierarchy if their fair value is measured using the net asset value (NAV) per share practical expedient in the FASBs fair value measurement guidance. The new standard is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2015. Adoption of this new standard did not have any impact on the Companys financial position, results of operations or cash flows. ASU 2015-03 In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments are effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The amendments are to be applied on a retrospective basis, wherein the balance sheet of each individual period presented is adjusted to reflect the period-specific effects of applying the new guidance. The Company reclassified debt issuance cost of $312,812 and $378,852 from other assets to liabilities and netted off with the related loans in the liabilities as of March 31, 2016 and December 31, 2015, respectively. ASU 2015-02 In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which is intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). The ASU focuses on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. In addition to reducing the number of consolidation models from four to two, the new standard simplifies the FASB Accounting Standards Codification and improves current U.S. GAAP by placing more emphasis on risk of loss when determining a controlling financial interest, reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity (VIE), and changing consolidation conclusions for companies in several industries that typically make use of limited partnerships or VIEs. The ASU will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. Adoption of this new standard did not have any impact on the Companys financial position, results of operations or cash flows. ASU 2015-01 In January 2015, the FASB issued ASU No. 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. This ASU eliminates from U.S. GAAP the concept of extraordinary items. ASU 2015-01 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. Adoption of this new standard did not have any impact on the Companys financial position, results of operations or cash flows. ASU 2014-17 In November 2014, the FASB issued ASU No. 2014-17, Business Combinations (Topic 805): Pushdown Accounting. This ASU provides an acquired entity with an option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity. An acquired entity may elect the option to apply pushdown accounting in the reporting period in which the change-in-control event occurs. If pushdown accounting is applied to an individual change-in-control event, that election is irrevocable. ASU 2014-17 was effective on November 18, 2014. The adoption of ASU 2014-17 did not have any effect on our financial position, results of operations or cash flows. ASU 2014-16 In November 2014, the FASB issued ASU 2014-16, Derivatives and Hedging (Topic 815). ASU 2014-16 addresses whether the host contract in a hybrid financial instrument issued in the form of a share should be accounted for as debt or equity. ASU 2014-16 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. We do not currently have issued, nor are we investors in, hybrid financial instruments. Adoption of this new standard did not have any impact on the Companys financial position, results of operations or cash flows. ASU 2014-15 In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40). ASU 2014-15 provides guidance related to managements responsibility to evaluate whether there is substantial doubt about an entitys ability to continue as a going concern and to provide related footnote disclosure. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and for interim and annual periods thereafter. Early application is permitted. We do not expect the adoption of ASU 2014-15 to have a material effect on our financial position, results of operations or cash flows. ASU 2014-12 In June 2014, the FASB issued ASU No. 2014-12, Compensation Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. ASU 2014-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Adoption of this new standard did not have any impact on the Companys financial position, results of operations or cash flows. ASU 2014-09 In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 affects any entity using U.S. GAAP that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). ASU 2014-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. We are still evaluating the effect of the adoption of ASU 2014-09. In August 2015, the FASB issued ASU 2015-14, which defers the effective date of ASU 2014-09 by one year for all entities and permits early adoption on a limited basis. ASU 2014-09 will be effective for the Company in the first quarter of 2018, and early adoption is permitted in the first quarter of 2017. The Company does not believe the adoption of this ASU will have a material impact on its consolidated financial statements. ASU 2014-08 In April 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360) and Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. ASU 2014-08 amends the definition for what types of asset disposals are to be considered discontinued operations, as well as amending the required disclosures for discontinued operations and assets held for sale. ASU 2014-08 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2014. The adoption of ASU 2014-08 did not have any effect on our financial position, results of operations or cash flows. There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Companys condensed financial position, results of operations or cash flows. |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Schedule of Assumptions Used for Fair Value of Warrant Derivative Liabilities | This model is subject to the significant assumptions discussed below and requires the following key inputs with respect to the Company and/or instrument: Input March 31, 2016 Stock Price $ 0.45 Exercise Price $ 0.49 Expected Life (in years) 9.0 Stock Volatility 156.96 % Risk-Free Rate 1.78 % Dividend Rate 0 % Outstanding Shares of Common Stock 4,547,243 |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of Carrying Value of Inventory | The carrying value of inventory consisted of the following: March 31, 2016 December 31, 2015 Finished goods $ 513,536 $ 535,908 Components 127,897 115,340 Raw Materials 35,406 35,406 Total inventory $ 676,839 $ 686,654 |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Receivables [Abstract] | |
Accounts Receivable, Net of Allowances | March 31, 2016 December 31, 2015 Trade accounts receivable $ 1,715,349 $ 4,101,148 Less allowances (96,699 ) (121,291 ) Total accounts receivable, net $ 1,618,650 $ 3,979,857 |
Prepaid Expenses (Tables)
Prepaid Expenses (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Prepaid Expense and Other Assets [Abstract] | |
Summary of Prepaid Expenses | Prepaid expenses consisted of the following: March 31, 2016 December 31, 2015 Advances for inventory $ 266,388 $ 171,494 Media production 70,587 55,849 Insurance 42,078 54,519 Trade shows 28,800 45,700 Deposits 41,228 41,228 Consultants 4,000 24,000 Rent 10,786 16,216 Media 20,650 - Miscellaneous 18,350 13,428 Total $ 502,867 $ 422,434 |
Concentration of Credit Risk (T
Concentration of Credit Risk (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Risks and Uncertainties [Abstract] | |
Summary of Major Suppliers | For the period ended March 31, 2016 and the year ended December 31, 2015, our products were made by the following suppliers: FOCUSfactor Pittsburgh, PA Tustin, CA Flat Tummy Tea Highland, NY - Neuragen Linthicum Heights, MD - UrgentRx Ogden, UT - |
Fixed Assets and Intangible A31
Fixed Assets and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Assets | |
Summary of Fixed and Intangible Assets | As of March 31, 2016 and December 31, 2015, fixed assets and intangible assets consisted of the following: March 31, 2016 December 31, 2015 Property and equipment $ 24,395 $ 18,187 Less accumulated depreciation (8,397 ) (6,170 ) Construction in progress 56,499 - Fixed assets, net $ 72,497 $ 12,017 March 31, 2016 December 31, 2015 FOCUSfactor intellectual property $ 1,450,000 $ 1,000,000 Intangible assets subject to amortization 5,523,017 5,521,751 Less accumulated amortization (883,950 ) (606,489 ) Intangible assets, net $ 6,089,067 $ 5,915,262 |
Accounts Payable and Accrued 32
Accounts Payable and Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Liabilities | As of March 31, 2016 and December 31, 2015, accounts payable and accrued liabilities consisted of the following: March 31, 2016 December 31, 2015 Accrued payroll $ 35,099 $ 128,237 Accrued legal fees 50,955 38,752 Accounting fees 67,248 - Manufacturers 1,082,696 1,527,333 Inventory 34,548 - Promotions 353,050 1,213,021 Returns allowance 883,668 1,128,133 Customers 411,033 411,033 Interest 45,206 110,754 Royalties 46,323 71,573 Warehousing 7,298 31,748 Others 158,057 371,518 Total $ 3,175,181 $ 5,032,102 |
Notes Payable (Tables)
Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Loan Payable | The Companys loans payable at March 31, 2016 and December 31, 2015 are as follows: March 31, 2016 December 31, 2015 Loans payable $ 11,288,103 $ 12,406,589 Unamortized debt discount (2,060,819 ) (2,536,418 ) Unamortized debt issuance cost (312,812) (378,852) Total 8,914,472 9,491,319 Less: Current portion (4,812,639 ) (3,775,669 ) Long-term portion $ 4,101,833 $ 5,715,650 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Schedule of Future Minimum Rental Payments For Operating Leases | The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of March 31, 2016: Year ending December 31: 2016 remaining nine months $ 163,407 2017 26,769 Total $ 190,176 |
Subsidiary [Member] | |
Schedule of Future Minimum Rental Payments For Operating Leases | The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of March 31, 2016: Year ending December 31: 2016 remaining nine months $ 8,046 2017 9,834 Total $ 17,880 |
Stock Options (Tables)
Stock Options (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Options Outstanding by Price Range | The following table summarizes the changes in options outstanding and the related prices for the shares of the Companys common stock issued to employees and consultants under a stock option plan at March 31, 2016: Options Outstanding Options Exercisable Exercise Prices ($) Number Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price ($) Number Exercisable Weighted Average Exercise Price ($) $ 0.25 - $0.65 5,000,000 8.4 $ 0.41 3,000,000 $ 0.25 |
Schedule of Stock Options Activity | The stock option activity for the three months ended March 31, 2016 is as follows: Options Outstanding Weighted Average Exercise Price Outstanding at December 31, 2015 5,000,000 $ 0.41 Granted - - Exercised - - Expired or canceled - - Outstanding at March 31, 2016 5,000,000 $ 0.41 |
Stock Warrants (Tables)
Stock Warrants (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Stock Warrants | |
Summary of Warrants Outstanding by Price Range | The following table summarizes the changes in warrants outstanding and the related prices for the shares of the Companys common stock at March 31, 2016: Warrants Outstanding Warrants Exercisable Exercise Prices ($) Number Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price ($) Number Exercisable Weighted Average Exercise Price ($) $ 0.34 3,584,759 8.85 $ 0.34 3,584,759 $ 0.34 0.49 4,547,243 9.65 0.49 4,547,243 0.49 5.00 1,000,000 2.75 5.00 1,000,000 5.00 |
Schedule of Stock Warrants Activity | The warrant activity for the three months ended March 31, 2016 is as follows: Options Outstanding Weighted Average Exercise Price Outstanding at December 31, 2015 $ 9,132,002 $ 0.92 Granted - - Exercised - - Expired or canceled - - Outstanding at March 31, 2016 $ 9,132,002 $ 0.92 |
Derivatives (Tables)
Derivatives (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Assumptions Used For Fair Value of Derivative | The fair value of the embedded derivative was determined using the Black-Scholes Model based on the following assumptions: November 12, 2015 Risk-free interest rate 2.32 % Expected remaining term 10 Years Expected volatility 157.56 % Dividend yield 0 % Fair value at December 31, 2015 was estimated to be $3,096,179 and based on the following assumptions: December 31, 2015 Risk-free interest rate 2.27 % Expected remaining term 9.75 Years Expected volatility 152.07 % Dividend yield 0 % Fair value at March 31, 2016 was estimated to be $2,009,681 and based on the following assumptions: March 31, 2016 Risk-free interest rate 1.78 % Expected remaining term 9.5 Years Expected volatility 156.96 % Dividend yield 0 % |
Segments (Tables)
Segments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Summary of Net Sales Attributed to Customers Geographical Segment | Net sales attributed to customers in the United States and foreign countries for the period ended March 31, 2016 and 2015 were as follows: March 31, 2016 March 31, 2015 United States $ 8,198,083 $ 1,600,249 Foreign countries 69,668 - $ 8,267,751 $ 1,600,249 |
Summary of Net Sales Attributed to Customers Product Group | The Companys net sales by product group for the period ended March 31, 2016 and 2015 were as follows: March 31, 2016 March 31, 2015 Nutraceuticals $ 7,865,915 $ 1,600,249 Over the Counter (OTC) 377,063 - Cosmeceuticals 24,773 - $ 8,267,751 $ 1,600,249 (1) Net sales for any other product group of similar products are less than 10% of consolidated net sales. |
Summary of Long-lived Assets (Net) Attributable to Operations Geographical Segment | Long-lived assets (net) attributable to operations in the United States and foreign countries as of March 31, 2016 and December 31, 2015 were as follows: March 31, 2016 December 31, 2015 United States $ 17,191,578 $ 17,411,598 Foreign countries 16,385 12,081 $ 17,207,963 $ 17,423,679 |
Summary of Significant Accoun39
Summary of Significant Accounting Policies (Details Narrative) | 3 Months Ended | ||
Mar. 31, 2016USD ($)Segmentshares | Mar. 31, 2015USD ($) | Dec. 31, 2015USD ($) | |
Cash federally insured limit per bank | $ 250,000 | ||
Cash uninsured amount | $ 3,501,952 | $ 3,453,290 | |
Percentage of valuation allowance | 100.00% | ||
Accumulated deficit | $ 5,759,365 | $ 8,569,841 | |
Working capital deficit | $ 4,290,701 | ||
Number of operating segment | Segment | 1 | ||
Debt issuance cost | $ 312,812 | $ 378,852 | |
Options To Purchase Of Common Stock [Member] | |||
Anti-dilutive securities | shares | 5,000,000 | ||
Warrants To Purchase Of Common Stock Outstaanding [Member] | |||
Anti-dilutive securities | shares | 9,132,002 |
Summary of Significant Accoun40
Summary of Significant Accounting Policies - Schedule of Assumptions Used for Fair Value of Warrant Derivative Liabilities (Details) | 3 Months Ended |
Mar. 31, 2016$ / sharesshares | |
Exercise Price | $ 0.74 |
Expected Life (in years) | 10 years |
Stock Volatility | 154.00% |
Risk-Free Rate | 2.23% |
Dividend Rate | 0.00% |
Warrant Derivative Liabilities [Member] | |
Stock Price | $ 0.45 |
Exercise Price | $ 0.49 |
Expected Life (in years) | 9 years |
Stock Volatility | 156.96% |
Risk-Free Rate | 1.78% |
Dividend Rate | 0.00% |
Outstanding Shares of Common Stock | shares | 4,547,243 |
Inventory - Schedule of Carryin
Inventory - Schedule of Carrying Value of Inventory (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 513,536 | $ 535,908 |
Components | 127,897 | 115,340 |
Raw Materials | 35,406 | 35,406 |
Total inventory | $ 676,839 | $ 686,655 |
Accounts Receivable (Details Na
Accounts Receivable (Details Narrative) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Receivables [Abstract] | |
Bad debt expense | $ 50,000 |
Accounts Receivable - Accounts
Accounts Receivable - Accounts Receivable, Net of Allowances (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Receivables [Abstract] | ||
Trade accounts receivable | $ 1,715,349 | $ 4,101,148 |
Less allowances | (96,699) | (121,291) |
Total accounts receivable, net | $ 1,618,650 | $ 3,979,857 |
Prepaid Expenses - Summary of P
Prepaid Expenses - Summary of Prepaid Expenses (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Prepaid Expense and Other Assets [Abstract] | ||
Advances for inventory | $ 266,388 | $ 171,494 |
Media production | 70,587 | 55,849 |
Insurance | 42,078 | 54,519 |
Trade shows | 28,800 | 45,700 |
Deposits | 41,228 | 41,228 |
Consultants | 4,000 | 24,000 |
Rent | 10,786 | $ 16,216 |
Media | 20,650 | |
Miscellaneous | 18,350 | $ 13,428 |
Total | $ 502,867 | $ 422,434 |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Cash federally insured limit per bank | $ 250,000 | |
Cash uninsured amount | $ 3,501,952 | $ 3,453,290 |
Four Customers [Member] | Accounts Receivable [Member] | ||
Concentration risk percentage | 77.00% | |
One Customer [Member] | Accounts Receivable [Member] | ||
Concentration risk percentage | 78.00% | |
Two Customer [Member] | Sales Revenue, Net [Member] | ||
Concentration risk percentage | 26.00% | 71.00% |
Concentration of Credit Risk -
Concentration of Credit Risk - Summary of Major Suppliers (Details) | 3 Months Ended |
Mar. 31, 2016 | |
Suppliers One [Member] | |
Name of the Product | FOCUSfactor |
Address of the suppliers | Pittsburgh, PA |
City of suppliers | Tustin, CA |
Suppliers Two [Member] | |
Name of the Product | Flat Tummy Tea |
Address of the suppliers | Highland, NY |
City of suppliers | - |
Suppliers Three [Member] | |
Name of the Product | Neuragen |
Address of the suppliers | Linthicum Heights, MD |
City of suppliers | - |
Suppliers Four [Member] | |
Name of the Product | UrgentRx |
Address of the suppliers | Ogden, UT |
City of suppliers | - |
Fixed Assets and Intangible A47
Fixed Assets and Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Assets | ||
Depreciation expenes | $ 2,227 | $ 75 |
Amortization expense | $ 276,410 | $ 77,167 |
Fixed Assets and Intangible A48
Fixed Assets and Intangible Assets - Summary of Fixed and Intangible Assets (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Assets | ||
Property and equipment | $ 24,395 | $ 18,187 |
Less accumulated depreciation | (8,397) | $ (6,170) |
Construction in progress | 56,499 | |
Fixed assets, net | 72,497 | $ 12,017 |
FOCUSfactor intellectual property | 1,450,000 | 1,000,000 |
Intangible assets subject to amortization | 5,523,017 | 5,521,751 |
Less accumulated amortization | (883,950) | (606,489) |
Intangible assets, net | $ 6,089,067 | $ 5,915,262 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Nov. 12, 2015 | Aug. 18, 2015 | |
Hand MD LLC [Member] | |||
Percentage of ownership interest | 50.00% | ||
Payroll expense | $ 30,000 | ||
Accrued payroll amount | 0 | ||
Loan Agreement [Member] | Knight Therapeutics Inc [Member] | |||
Amount owed to related party | 4,110,521 | ||
Knight Therapeutics Inc [Member] | Loan Agreement [Member] | |||
Amount owed to related party | $ 3,828,660 | ||
Knight Therapeutics Inc [Member] | Security Agreement [Member] | |||
Amount owed to related party | 538,102 | ||
Knight Therapeutics Inc [Member] | Royalty Distribution Agreement [Member] | |||
Amount owed to related party | 46,323 | ||
Mr. Jack Ross [Member] | |||
Consulting fees per month | 25,000 | ||
Accrued consulting fees | $ 0 | ||
Ms. Harshbarger [Member] | Consulting Agreement [Member] | |||
Due to related party | $ 10,000 |
Accounts Payable and Accrued 50
Accounts Payable and Accrued Liabilities - Schedule of Accounts Payable and Accrued Liabilities (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Payables and Accruals [Abstract] | ||
Accrued payroll | $ 35,099 | $ 128,237 |
Accrued legal fees | 50,955 | $ 38,752 |
Accounting fees | 67,248 | |
Manufacturers | 1,082,696 | $ 1,527,333 |
Inventory | 34,548 | |
Promotions | 353,050 | $ 1,213,021 |
Returns allowance | 883,668 | 1,128,133 |
Customers | 411,033 | 411,033 |
Interest | 45,206 | 110,754 |
Royalties | 46,323 | 71,573 |
Warehousing | 7,298 | 31,748 |
Others | 158,057 | 371,518 |
Total | $ 3,175,181 | $ 5,032,102 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | Nov. 12, 2015 | Jun. 26, 2015 | Jan. 22, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 |
Expences associated with loan | $ 312,812 | $ 378,852 | ||||
Amount of loan obligation | 8,914,472 | $ 9,491,319 | ||||
Amortization of debt discount | $ 2,067,258 | 475,600 | 2,089,005 | |||
Unamortized debt discount | 2,060,819 | 2,536,418 | ||||
Recognized amortization of deferred financing costs | 66,039 | 27,321 | ||||
Interest expense paid | 431,264 | $ 171,393 | ||||
Loan payable | (4,812,639) | (3,775,669) | ||||
Fair value of derivative liability | 2,067,258 | 2,009,681 | 3,096,179 | |||
Asset Purchase Agreement [Member] | January 22, 2015 Loan Two [Member] | ||||||
Debt instrument interest rate percentage | 0.00% | |||||
Note issued as part of asset purchase agreement | $ 1,500,000 | |||||
Note maturity date | Jan. 20, 2017 | |||||
Note payable | 1,500,000 | |||||
Loan payable | 750,000 | |||||
Asset Purchase Agreement [Member] | January 22, 2015 Loan Two [Member] | January 20, 2016 [Member] | ||||||
Note payable | $ 750,000 | |||||
Asset Purchase Agreement [Member] | January 22, 2015 Loan Two [Member] | January 20, 2017 [Member] | ||||||
Note payable | 750,000 | |||||
Security Agreement [Member] | June 26, 2015 Security Agreement [Member] | ||||||
Deferred financing costs | 10,486 | |||||
Recognized amortization of deferred financing costs | 1,293 | |||||
Present value of future payments | 538,102 | 515,854 | ||||
Interest expense paid | 19,013 | |||||
Security Agreement [Member] | June 26, 2015 Security Agreement [Member] | U.S [Member] | ||||||
Percentage of sale revenue net | 5.00% | |||||
Security Agreement [Member] | June 26, 2015 Security Agreement [Member] | Quarter Ending September 30, 2015 [Member] | ||||||
Note payable | $ 250,000 | |||||
Security Agreement [Member] | June 26, 2015 Security Agreement [Member] | June 30, 2016 [Member] | ||||||
Note payable | 700,000 | |||||
Security Agreement [Member] | June 26, 2015 Security Agreement [Member] | June 30, 2016 [Member] | Minimum [Member] | ||||||
Note payable | $ 12,500 | |||||
Knight Therapeutics Inc [Member] | Loan Agreement [Member] | ||||||
Loan amount | 5,500,000 | 6,000,000 | ||||
Expences associated with loan | $ 24,000 | $ 40,000 | ||||
Debt instrument interest rate percentage | 15.00% | 15.00% | ||||
Convertible equity offering | $ 1,000,000 | |||||
Change in loan interest rate | 13.00% | 13.00% | ||||
Revenue | $ 13,000,000 | |||||
Net income (loss) | $ 2,000,000 | |||||
Amount of loan obligation | 4,500,000 | |||||
Number of warrants to purchase common stock | 5,550,625 | |||||
Common stock price per share | $ 0.49 | |||||
Percentage of shares purchaseable under warrants | 6.50% | |||||
Deferred financing costs | 289,045 | |||||
Recognized amortization of deferred financing costs | 35,636 | |||||
Interest expense paid | 181,814 | |||||
Accrued interest expense | 0 | $ 0 | ||||
Note maturity date | Nov. 11, 2017 | |||||
Knight Therapeutics Inc [Member] | Loan Agreement [Member] | Maximum [Member] | ||||||
Number of warrants to purchase common stock | 4,547,243 | |||||
Knight Therapeutics Inc [Member] | Loan Agreement [Member] | ST Warrant [Member] | ||||||
Number of warrants to purchase common stock | 4,595,187 | |||||
Warrants exercise price | $ 1 | |||||
Beneficial conversion feature of warrants | $ 1,952,953 | |||||
Knight Therapeutics Inc [Member] | Loan Agreement [Member] | LT Warrant [Member] | ||||||
Number of warrants to purchase common stock | 3,584,759 | |||||
Warrants exercise price | $ 0.34 | |||||
Common stock price per share | $ 1 | |||||
Percentage of shares purchaseable under warrants | 25.00% | |||||
Beneficial conversion feature of warrants | $ 1,462,560 | |||||
Amortization of debt discount | 218,253 | |||||
Unamortized debt discount | $ 389,479 | |||||
Knight Therapeutics Inc [Member] | Loan Agreement [Member] | January 22, 2015 Loan One [Member] | ||||||
Debt instrument interest rate percentage | 5.00% | |||||
Amount of loan obligation | $ 300,000 | |||||
Aggregate consideration to be paid | 100,000 | |||||
Capital expenditures | 100,000 | |||||
Knight Therapeutics Inc [Member] | Loan Agreement [Member] | Knight Warrants [Member] | ||||||
Beneficial conversion feature of warrants | $ 2,553,287 | |||||
Number of warrants outstanding | 5,550,625 | 257,347 | ||||
Amortization of debt discount | $ 2,553,287 | |||||
Unamortized debt discount | 1,671,339 | |||||
Deferred financing costs | 233,847 | |||||
Recognized amortization of deferred financing costs | 29,111 | |||||
Interest expense paid | 45,206 | |||||
Accrued interest expense | $ 206,250 | |||||
Fair value of derivative liability | $ 4,547,243 | |||||
Knight Therapeutics Inc [Member] | Loan Agreement [Member] | Knight Warrants One [Member] | ||||||
Beneficial conversion feature of warrants | $ 2,067,258 | |||||
Number of warrants outstanding | 4,547,243 | 4,547,243 | ||||
Accrued interest expense | $ 5,500,000 | |||||
Knight Therapeutics Inc [Member] | Loan Agreement [Member] | Origination Fee [Member] | ||||||
Expences associated with loan | $ 110,000 | 120,000 | ||||
Knight Therapeutics Inc [Member] | Loan Agreement [Member] | Work Fee [Member] | ||||||
Expences associated with loan | $ 55,000 | $ 60,000 | ||||
Neuragen Corp [Member] | Security Agreement [Member] | June 26, 2015 Security Agreement [Member] | ||||||
Debt instrument interest rate percentage | 0.00% | |||||
Note issued as part of asset purchase agreement | $ 950,000 | |||||
Total payments of acquire assets | $ 1,200,000 | |||||
Neuragen Corp [Member] | Security Agreement [Member] | June 26, 2015 Security Agreement [Member] | U.S [Member] | ||||||
Percentage of sale revenue net | 2.00% |
Notes Payable - Schedule of Loa
Notes Payable - Schedule of Loan Payable (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Debt Disclosure [Abstract] | ||
Loans payable | $ 11,288,103 | $ 12,406,589 |
Unamortized debt discount | (2,060,819) | (2,536,418) |
Unamortized debt issuance cost | (312,812) | (378,852) |
Total | 8,914,472 | 9,491,319 |
Less: Current portion | (4,812,639) | (3,775,669) |
Long-term portion | $ 4,101,833 | $ 5,715,650 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
Equity [Abstract] | ||
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, shares issued | 81,692,954 | 81,692,954 |
Common stock, shares outstanding | 81,692,954 | 81,692,954 |
Commitments and Contingencies54
Commitments and Contingencies (Details Narrative) | Dec. 08, 2014USD ($) | Apr. 30, 2014USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2015AUD |
Operating lease expiration date | Mar. 31, 2017 | |||
Rent expense | $ 8,923 | $ 4,200 | ||
Sublease rent | $ 3,010 | |||
Subsidiary [Member] | ||||
Rent expense | $ 894 | |||
Lease term | 36 months | |||
AUD [Member] | ||||
Rent expense | AUD | AUD 5,500 | |||
December 2016 [Member] | ||||
Rent expense | $ 5,500 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Future Minimum Rental Payments For Operating Leases (Details) | Mar. 31, 2016USD ($) |
2016 - remaining nine months | $ 163,407 |
2,017 | 26,769 |
Total | 190,176 |
Subsidiary [Member] | |
2016 - remaining nine months | 8,046 |
2,017 | 9,834 |
Total | $ 17,880 |
Stock Options (Details Narrativ
Stock Options (Details Narrative) - USD ($) | Dec. 14, 2015 | Apr. 02, 2014 | Mar. 31, 2016 | Jul. 30, 2014 |
Stock-based compensation expense | $ 302,641 | |||
Estimated fair value of Company's common stock | $ 0.74 | |||
Risk-free interest rate | 2.23% | |||
Volatility rate | 154.00% | |||
Expected lives | 10 years | |||
Dividend yield | 0.00% | |||
Stock options outstanding intrinsic value | $ 600,000 | |||
Mr. Jack Ross [Member] | ||||
Options Outstanding, Granted | 1,000,000 | |||
Stock options exercise price per share | $ 0.25 | |||
Two Board Members [Member] | ||||
Options Outstanding, Granted | 1,000,000 | |||
Stock options exercise price per share | $ 0.25 | |||
Two Employees Members [Member] | ||||
Options Outstanding, Granted | 1,000,000 | |||
Stock options exercise price per share | $ 0.65 | |||
2014 Equity Incentive Plan [Member] | ||||
Common stock shares reserved for issuance | 15,525,000 |
Stock Options - Summary of Opti
Stock Options - Summary of Options Outstanding by Price Range (Details) - Stock Option Plan [Member] | 3 Months Ended |
Mar. 31, 2016$ / sharesshares | |
Options Outstanding, exercise price Lower limit | $ 0.25 |
Options Outstanding, exercise price Upper limit | $ 0.65 |
Options Outstanding, Number Outstanding | shares | 5,000,000 |
Options Outstanding, Remaining Average Contractual Life | 8 years 4 months 24 days |
Options Outstanding, Weighted Average Exercise Price | $ 0.41 |
Options Exercisable, Number Exercisable | shares | 3,000,000 |
Options Exercisable, Weighted Average Exercise Price | $ 0.25 |
Stock Options - Summary of Stoc
Stock Options - Summary of Stock Options Activity (Details) - Stock Option Plan [Member] | 3 Months Ended |
Mar. 31, 2016$ / sharesshares | |
Options Outstanding, Outstanding at Beginning balance | shares | 5,000,000 |
Options Outstanding, Granted | shares | |
Options Outstanding, Exercised | shares | |
Options Outstanding, Expired or canceled | shares | |
Options Outstanding, Outstanding at Ending balance | shares | 5,000,000 |
Weighted Average Exercise Price, Outstanding at Beginning balance | $ / shares | $ 0.41 |
Weighted Average Exercise Price, Granted | $ / shares | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Exercise Price, Expired or canceled | $ / shares | |
Weighted Average Exercise Price, Outstanding at Ending balance | $ / shares | $ 0.41 |
Stock Warrants - Summary of War
Stock Warrants - Summary of Warrants Outstanding by Price Range (Details) - Warrant [Member] | 3 Months Ended |
Mar. 31, 2016$ / sharesshares | |
Exercise Price Range One [Member] | |
Warrants Outstanding, exercise prices | $ 0.34 |
Warrants Outstanding, Number Outstanding | shares | 3,584,759 |
Warrants Outstanding, Remaining Average Contractual Life | 8 years 10 months 6 days |
Warrants Outstanding, Weighted Average Exercise Price | $ 0.34 |
Warrants Exercisable, Number Exercisable | shares | 3,584,759 |
Warrants Exercisable, Weighted Average Exercise Price | $ 0.34 |
Exercise Price Range Two [Member] | |
Warrants Outstanding, exercise prices | $ 0.49 |
Warrants Outstanding, Number Outstanding | shares | 4,547,243 |
Warrants Outstanding, Remaining Average Contractual Life | 9 years 7 months 24 days |
Warrants Outstanding, Weighted Average Exercise Price | $ 0.49 |
Warrants Exercisable, Number Exercisable | shares | 4,547,243 |
Warrants Exercisable, Weighted Average Exercise Price | $ 0.49 |
Exercise Price Range Three [Member] | |
Warrants Outstanding, exercise prices | $ 5 |
Warrants Outstanding, Number Outstanding | shares | 1,000,000 |
Warrants Outstanding, Remaining Average Contractual Life | 2 years 9 months |
Warrants Outstanding, Weighted Average Exercise Price | $ 5 |
Warrants Exercisable, Number Exercisable | shares | 1,000,000 |
Warrants Exercisable, Weighted Average Exercise Price | $ 5 |
Stock Warrants - Summary of Sto
Stock Warrants - Summary of Stock Warrants Activity (Details) - Warrant [Member] | 3 Months Ended |
Mar. 31, 2016$ / sharesshares | |
Warrants Outstanding, Beginning balance | shares | 9,132,002 |
Warrants, Granted | shares | |
Warrants, Exercised | shares | |
Warrants, Expired or canceled | shares | |
Warrants Outstanding, Ending balance | shares | 9,132,002 |
Warrants Outstanding, Weighted Average Exercise Price, Beginning balance | $ / shares | $ 0.92 |
Weighted Average Exercise Price, Granted | $ / shares | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Exercise Price, Expired or canceled | $ / shares | |
Warrants Outstanding, Weighted Average Exercise Price, Ending balance | $ / shares | $ 0.92 |
Derivatives (Details Narrative)
Derivatives (Details Narrative) - USD ($) | Nov. 12, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Fair value of derivative liability | $ 2,067,258 | $ 2,009,681 | $ 3,096,179 | |
Amortization of debt discount | 2,067,258 | 475,600 | $ 2,089,005 | |
Fair values of embedded derivative | $ 2,067,258 | |||
Loss (gain) on change in fair value of derivative liability | $ 1,086,498 | $ 1,028,921 |
Derivatives - Schedule of Assum
Derivatives - Schedule of Assumptions Used For Fair Value of Derivative (Details) | Nov. 12, 2015 | Mar. 31, 2016 | Dec. 31, 2015 |
Risk-free interest rate | 2.23% | ||
Expected remaining term | 10 years | ||
Expected volatility | 154.00% | ||
Dividend yield | 0.00% | ||
Derivative [Member] | |||
Risk-free interest rate | 2.32% | 1.78% | 2.27% |
Expected remaining term | 10 years | 9 years 6 months | 9 years 9 months |
Expected volatility | 157.56% | 156.96% | 152.07% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Segments - Summary of Net Sales
Segments - Summary of Net Sales Attributed to Customers Geographical Segment (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenue | $ 8,267,751 | $ 1,600,249 |
United States [Member] | ||
Revenue | 8,198,083 | $ 1,600,249 |
Foreign Countries [Member] | ||
Revenue | $ 69,668 |
Segments - Summary of Net Sal64
Segments - Summary of Net Sales Attributed to Customers Product Group (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | ||
Revenue | $ 8,267,751 | $ 1,600,249 | |
Nutraceuticals [Member] | |||
Revenue | [1] | 7,865,915 | $ 1,600,249 |
Over the Counter (OTC) [Member] | |||
Revenue | [1] | 377,063 | |
Cosmeceuticals [Member] | |||
Revenue | [1] | $ 24,773 | |
[1] | Net sales for any other product group of similar products are less than 10% of consolidated net sales. |
Segments - Summary of Net Sal65
Segments - Summary of Net Sales Attributed to Customers Product Group (Details) (Parenthetical) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Other [Member] | Sales Revenue, Net [Member] | ||
Concentration risk percentage | 10.00% | 10.00% |
Segments - Summary of Long-live
Segments - Summary of Long-lived Assets (Net) Attributable to Operations Geographical Segment (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Long-lived assets net | $ 17,207,963 | $ 17,423,679 |
United States [Member] | ||
Long-lived assets net | 17,191,578 | 17,411,598 |
Foreign Countries [Member] | ||
Long-lived assets net | $ 16,385 | $ 12,081 |
Acquisitions (Details Narrative
Acquisitions (Details Narrative) - Focus Factor Business [Member] | Jan. 22, 2015USD ($) |
Increased in indefinite-lived brand and patent | $ 450,000 |
Fair value of brand and patent | $ 1,450,000 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Inventory Disclosure [Abstract] | ||
Income tax expense | $ 183,905 | $ 0 |
Percentage of deferred tax asset | 34.00% | |
Operating loss carryforwards expiration year | 2,035 | |
Percentage of deferred tax assets related NOL carryforwards valuation reserve | 100.00% |