Document_and_Entity_Informatio
Document and Entity Information | 12 Months Ended |
Dec. 31, 2014 | |
Document And Entity Information | |
Entity Registrant Name | Nxt-ID, Inc. |
Entity Central Index Key | 1566826 |
Amendment Flag | FALSE |
Document Type | S-1 |
Document Period End Date | 31-Dec-14 |
Entity Filer Category | Smaller Reporting Company |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Current Assets | ||
Cash | $2,201,287 | $303,626 |
Restricted cash | 28,439 | |
Inventory | 359,544 | 6,533 |
Prepaid expenses and other current assets | 918,204 | 3,313 |
Total Current Assets | 3,507,474 | 313,472 |
Property and equipment, net of accumulated depreciation of $13,157 and $684 | 156,223 | 7,734 |
Total Assets | 3,663,697 | 321,206 |
Current Liabilities | ||
Accounts payable | 535,209 | 244,094 |
Accrued expenses | 254,545 | 135,017 |
Customer deposits | 138,599 | |
Convertible notes payable, net of discount of $0 and $26,755, respectively | 123,245 | |
Derivative liability - warrants | 1,531,303 | |
Conversion feature liability | 118,940 | |
Total Current Liabilities | 928,353 | 2,152,599 |
Commitments and Contingencies | ||
Stockholders' Equity (Deficiency) | ||
Preferred stock, $0.0001 par value: 10,000,000 shares authorized; none issued and outstanding | ||
Common stock, $0.0001 par value: 100,000,000 shares authorized; 24,762,360 and 21,937,822 issued and outstanding, respectively | 2,476 | 2,194 |
Additional paid-in capital (deficit) | 11,562,887 | -80,177 |
Accumulated deficit | -8,830,019 | -1,753,410 |
Total Stockholders' Equity (Deficiency) | 2,735,344 | -1,831,393 |
Total Liabilities and Stockholders' Equity (Deficiency) | $3,663,697 | $321,206 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Balance Sheets [Abstract] | ||
Accumulated Depreciation | $13,157 | $684 |
Net of discount of convertible notes payable | $0 | $26,755 |
Preferred Stock, Par Value | $0.00 | $0.00 |
Preferred Stock, Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Issued | ||
Preferred Stock, Outstanding | ||
Common Stock, Par Value | $0.00 | $0.00 |
Common Stock, Authorized | 100,000,000 | 100,000,000 |
Common Stock, Issued | 24,762,360 | 21,937,822 |
Common Stock, Outstanding | 24,762,360 | 21,937,822 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements Of Operations (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Statements of Operations [Abstract] | ||
Revenues | ||
Costs of goods sold | ||
Gross Profit | ||
Operating Expenses | ||
General and administrative | 2,432,660 | 835,162 |
Selling and marketing | 1,396,077 | 81,323 |
Research and development | 1,417,745 | 518,614 |
Total Operating Expenses | 5,246,482 | 1,435,099 |
Operating Loss | -5,246,482 | -1,435,099 |
Other Income and (Expense) | ||
Interest income | 1,235 | |
Interest expense | -30,744 | -35,461 |
Inducement expense | -2,212,538 | |
Unrealized gain (loss) on change in fair value of derivative liabilities | 412,763 | -73,974 |
Total Other Expense, Net | -1,829,284 | -109,435 |
Loss before Income Taxes | -7,075,766 | -1,544,534 |
Provision for Income Taxes | -843 | |
Net Loss | ($7,076,609) | ($1,544,534) |
Net Loss Per Share - Basic and Diluted | ($0.31) | ($0.07) |
Weighted Average Number of Common Shares Outstanding - Basic and Diluted | 22,849,010 | 21,409,369 |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Stockholders' Equity (Deficiency) (USD $) | Total | Common Stock | Additional Paid-in Capital (Deficit) | Accumulated Deficit |
Beginning balance at Dec. 31, 2012 | ($6,576) | $2,076 | $200,224 | ($208,876) |
Beginning balance, Shares at Dec. 31, 2012 | 20,752,000 | |||
Exercise of common stock purchase warrants | 300,000 | 30 | 299,970 | |
Exercise of common stock purchase warrants, Shares | 300,000 | |||
Issuance of common stock and warrants for cash, net of fees | 588,780 | 44 | 588,736 | |
Issuance of common stock and warrants for cash, net of fees, Shares | 443,063 | |||
Issuance of common stock for cash, net of fees | 51,000 | 20 | 50,980 | |
Issuance of common stock for cash, net of fees, Shares | 204,000 | |||
Issuance of common stock for services | 311,240 | 38 | 311,202 | |
Issuance of common stock for services, shares | 377,222 | |||
Retirement of common stock by officers | -14 | 14 | ||
Retirement of common stock by officers, shares | -138,463 | |||
Issuance of warrants in connection with offering (Note 8) | -1,531,303 | -1,531,303 | ||
Net Loss | -1,544,534 | -1,544,534 | ||
Ending balance at Dec. 31, 2013 | -1,831,393 | 2,194 | -80,177 | -1,753,410 |
Ending balance, Shares at Dec. 31, 2013 | 21,937,822 | |||
Exercise of common stock purchase warrants | 1,470,000 | 50 | 1,469,950 | |
Exercise of common stock purchase warrants, Shares | 500,000 | |||
Issuance of common stock and warrants for cash, net of fees | 5,759,035 | 240 | 5,758,795 | |
Issuance of common stock and warrants for cash, net of fees, Shares | 2,404,197 | |||
Issuance of common stock for services | 765,975 | 28 | 765,947 | |
Issuance of common stock for services, shares | 280,637 | |||
Issuance of restricted stock to employees | 26,833 | 26,833 | ||
Retirement of common stock by officers | -68 | 68 | ||
Retirement of common stock by officers, shares | -676,924 | |||
Issuance of warrants in connection with offering (Note 8) | 1,531,303 | 1,531,303 | ||
Unrealized gain on change in fair value of derivative liability | -412,763 | -412,763 | ||
Write-off of conversion feature liability | 118,940 | 118,940 | ||
Write-off of CI note and accrued interest | 171,485 | 6 | 171,479 | |
Write-off of CI note and accrued interest, Shares | 55,497 | |||
Inducement fees | 2,212,538 | 26 | 2,212,512 | |
Inducement fees, Shares | 261,131 | |||
Net Loss | -7,076,609 | -7,076,609 | ||
Ending balance at Dec. 31, 2014 | $2,735,344 | $2,476 | $11,562,887 | ($8,830,019) |
Ending balance, Shares at Dec. 31, 2014 | 24,762,360 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements Of Cash Flows (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Cash Flows from Operating Activities | ||
Net Loss | ($7,076,609) | ($1,544,534) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 12,473 | 585 |
Stock based compensation | 792,808 | 311,240 |
Amortization of debt discount | 26,755 | 18,211 |
Inducement fee | 2,212,538 | |
Unrealized (gain) loss on change in fair value of derivative liabilities | -412,763 | 73,974 |
Changes in operating assets and liabilities: | ||
Inventory | -353,011 | -6,533 |
Prepaids expenses and other current assets | -910,911 | -3,313 |
Accounts payable | 268,106 | 244,094 |
Accrued expenses | 141,013 | 65,738 |
Customer deposits | 138,599 | |
Total Adjustments | 1,915,607 | 703,996 |
Net Cash Used in Operating Activities | -5,161,002 | -840,538 |
Cash Flows from Investing Activities | ||
Restricted cash | -28,439 | |
Purchase of equipment | -137,953 | -6,436 |
Net Cash Used in Investing Activities | -166,392 | -6,436 |
Cash Flows from Financing Activities | ||
Proceeds received in connection with issuance of common stock and warrants, net | 5,754,035 | 588,780 |
Proceeds received in connection with issuance of common stock, net | 51,000 | |
Proceeds from convertible notes payable | 75,000 | |
Proceeds received in connection with exercise of warrants | 1,470,000 | 300,000 |
Proceeds received in connection with issuance of warrants | 1,020 | |
Proceeds from advances made by officer | 64,000 | |
Repayments of advances made by officer | -64,000 | |
Net Cash Provided by Financing Activities | 7,225,055 | 1,014,780 |
Net Increase/(Decrease) in Cash | 1,897,661 | 167,806 |
Cash - Beginning of Period | 303,626 | 135,820 |
Cash - End of Period | 2,201,287 | 303,626 |
Cash paid during the periods for: | ||
Interest | ||
Taxes | ||
Non-cash financing activities: | ||
Recognition of liability in connection with warrant issuance | 3,450,976 | |
Reclassification of warrant liability to additional paid-in capital in connection with warrant modification | 4,589,734 | |
Issuance of common stock in connection with conversion of note payable and accrued interest | 171,485 | |
Reclassification of conversion feature liability in connection with note conversion | 98,722 | 44,966 |
Retirement of common stock by officers | 68 | 14 |
Issuance of warrants in connection with offering (Note 8) | $1,531,303 |
Organization_and_Principal_Bus
Organization and Principal Business Activity | 12 Months Ended |
Dec. 31, 2014 | |
Organization And Principal Business Activity [Abstract] | |
ORGANIZATION AND PRINCIPAL BUSINESS ACTIVITY | NOTE 1 - ORGANIZATION AND PRINCIPAL BUSINESS ACTIVITY |
Nxt-ID, Inc. (“Nxt-ID” or the “Company”) was incorporated in the State of Delaware on February 8, 2012. Nxt-ID is a biometrics and authentication company focused on the growing m-commerce market with an innovative MobileBio™ suite of biometric solutions that secure mobile platforms. The Company also serves the access control and law enforcement facial recognition markets. | |
3D-ID, LLC (“3D-ID”) was organized and registered in the State of Florida on February 14, 2011. The Company is an early stage company engaged in the design, research and development, integration, analysis, modeling, system networking, sales and support of intelligent surveillance, three dimensional facial recognition and three dimensional imaging devices and systems primarily for identification and access control in the security industries. | |
On September 25, 2012, Nxt-ID, a company having similar ownership as 3D-ID, acquired 100% of the membership interests in 3D-ID (the “Acquisition”) in exchange for 20,000,000 shares of Nxt-ID common stock. Since this was a transaction between entities under common control, in accordance with Accounting Standards Codification (“ASC”) 805, “Business Combinations”, Nxt-ID recognized the net assets of 3D-ID at their carrying amounts in the accounts of Nxt-ID on the date that 3D-ID was organized. |
Going_Concern_and_Management_P
Going Concern and Management Plans | 12 Months Ended |
Dec. 31, 2014 | |
Going Concern and Management Plans [Abstract] | |
GOING CONCERN AND MANAGEMENT PLANS | NOTE 2 - GOING CONCERN AND MANAGEMENT PLANS |
The Company is an early stage entity and incurred net losses of $7,076,609 during the year ended December 31, 2014. As of December 31, 2014 the Company had working capital and stockholders’ equity of $2,579,121 and $2,735,344, respectively. In order to execute the Company's long-term strategic plan to develop and commercialize its core products, the Company will need to raise additional funds, through public or private equity offerings, debt financings, or other means. The Company can give no assurance that the cash raised subsequent to December 31, 2014 or any additional funds raised will be sufficient to execute its business plan. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company can give no assurance that additional funds will be available on reasonable terms, or available at all, or that it will generate sufficient revenue to alleviate these conditions. | |
The Company’s ability to execute its business plan is dependent upon its ability to raise additional equity, secure debt financing, and/or generate revenue. Should the Company not be successful in obtaining the necessary financing, or generate sufficient revenue to fund its operations, the Company would need to curtail certain of its operational activities. The accompanying financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended | ||
Dec. 31, 2014 | |||
Summary of Significant Accounting Policies [Abstract] | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
USE OF ESTIMATES IN THE FINANCIAL STATEMENTS | |||
The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||
PRINCIPLES OF CONSOLIDATION | |||
The consolidated financial statements include the accounts of Nxt-ID and its wholly-owned subsidiary, 3D-ID. Intercompany balances and transactions have been eliminated upon consolidation. | |||
CASH | |||
The Company considers all highly liquid securities with an original maturity date of three months or less when purchased to be cash equivalents. Due to their short-term nature, cash equivalents are carried at cost, which approximates fair value. At December 31, 2014 and 2013, the Company had no cash equivalents. | |||
CONCENTRATIONS OF CREDIT RISK | |||
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company maintains its cash balances in financial institutions located in the United States. At times, the Company’s cash balances may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. | |||
REVENUE RECOGNITION | |||
The Company’s 3D facial recognition and identification products are currently available for sale and the Company has begun accepting pre-orders on its Mobile Bio Wocket. The Company recognizes revenue in connection with the sale of these products when persuasive evidence of an arrangement exists, the service has been rendered or product delivery has occurred, the price is fixed or readily determinable and collectability of the sale is reasonably assured. As of December 31, 2014, the Company has received $138,599 in customer deposits in connection with pre-orders of its Mobile Bio Wocket. | |||
LONG-LIVED ASSETS | |||
Long-lived assets, such as property and equipment, are evaluated for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable in accordance with ASC 360-10-35-17 through 35-35 "Measurement of an Impairment Loss." The Company assesses the impairment of the assets based on the undiscounted future cash flow the assets are expected to generate compared to the carrying value of the assets. If the carrying amount of the assets is determined not to be recoverable, a write-down to fair value is recorded. Management estimates future cash flows using assumptions about expected future operating performance. Management's estimates of future cash flows may differ from actual cash flow due to, among other things, technological changes, economic conditions or changes to the Company's business operations. | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment consisting of furniture, fixtures and tooling is stated at cost. The costs of additions and improvements are generally capitalized and expenditures for repairs and maintenance are expensed in the period incurred. When items of property and equipment are sold or retired, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is included in income. Depreciation of property and equipment is provided utilizing the straight-line method over the estimated useful life of the respective asset as follows: | |||
Equipment | 5 years | ||
Furniture and fixtures | 3 to 5 years | ||
Tooling and molds | 2 to 3 years | ||
Depreciation expense for the year ended December 31, 2014 and 2013 was $12,473 and $585, respectively. | |||
INVENTORY | |||
Inventory at December 31, 2014 consists of raw materials and is valued at the lower of cost or market with cost determined using the first-in, first-out method and with market defined as the lower of replacement cost or realizable value. As of December 31, 2014 inventory is comprised of $359,544 in raw materials on hand. In addition, as an early stage entity, the Company is required to prepay for raw materials with certain vendors until credit terms can be established. As of December 31, 2014, $423,054 of prepayments made for inventory is included in prepaid expenses and other current assets on the consolidated balance sheet. | |||
CONVERTIBLE INSTRUMENTS | |||
The Company applies the accounting standards for derivatives and hedging and for distinguishing liabilities from equity when accounting for hybrid contracts that feature conversion options. The accounting standards require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (i) 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, (ii) 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 (iii) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. | |||
The derivative is subsequently marked to market at each reporting date based on current fair value, with the changes in fair value reported in the results of operations. | |||
Conversion options that contain variable settlement features such as provisions to adjust the conversion price upon subsequent issuances of equity or equity linked securities at exercise prices more favorable than that featured in the hybrid contract generally result in their bifurcation from the host instrument. | |||
The Company accounts for convertible debt instruments when the Company has determined that the embedded conversion options should not be bifurcated from their host instruments in accordance with ASC 470-20 “Debt with Conversion and Other Options”. The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt. See Note 5. | |||
DERIVATIVE FINANCIALS INSTRUMENTS | |||
The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, the Company uses the Black-Scholes option valuation model to value the derivative instruments at inception and on subsequent valuation dates. The conversion feature embedded within Company’s convertible note payable does not have fixed settlement provisions as the conversion price varies based on the trading price of the Company’s common stock and the potential number of common shares to be issued upon conversion is indeterminable up to a maximum of 120,000 shares of common stock. In addition, the warrants issued in connection with the Offering (as defined in Note 8) do not have fixed settlement provisions as their exercise prices may be lowered if the Company conducts an offering in the future at a price per share below the exercise price of the warrants. Accordingly, the conversion feature and warrants have been recognized as derivative instruments. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. (See Note 6.) | |||
DEBT DISCOUNT AND AMORTIZATION OF DEBT DISCOUNT | |||
Debt discount represents the fair value of embedded conversion options of various convertible debt instruments and attached convertible equity instruments issued in connection with debt instruments. The debt discount is amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt. The amortization of debt discount is included as a component of interest expense included in other income and expenses in the accompanying statements of operations. | |||
INCOME TAXES | |||
The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, "Income Taxes." Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity's financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. | |||
ASC Topic 740-10-30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740-10-40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company will classify as income tax expense any interest and penalties. The Company has no material uncertain tax positions for any of the reporting periods presented. Generally, the tax authorities may examine the partnership/corporate tax returns for three years from the date of filing. The Company has filed all of its tax returns for all prior periods through December 31, 2014. As a result, the Company’s net operating loss carryovers will now be available to offset any future taxable income. | |||
STOCK-BASED COMPENSATION | |||
The Company accounts for share-based awards exchanged for employee services at the estimated grant date fair value of the award. The Company accounts for equity instruments issued to non-employees at their fair value on the measurement date. The measurement of stock-based compensation is subject to periodic adjustment as the underlying equity instrument vests or becomes non-forfeitable. Non-employee stock-based compensation charges are amortized over the vesting period or as earned. | |||
NET LOSS PER SHARE | |||
Basic loss per share was computed using the weighted average number of common shares outstanding. Diluted loss per share includes the effect of diluted common stock equivalents. Potentially dilutive securities realizable from the exercise of 3,629,776 warrants as of December 31, 2014 were excluded from the computation of diluted net loss per share because the effect of their inclusion would have been anti-dilutive. As of December 31, 2013, potentially dilutive securities realizable from the exercise of 454,600 warrants and from the conversion of the Company’s then outstanding note payable into 50,000 shares of common stock as of December 31, 2013, respectively, were excluded from the computation of diluted net loss per share because the effect of their inclusion would have been anti-dilutive. | |||
RESEARCH AND DEVELOPMENT | |||
Research and development costs consist of expenditures incurred during the course of planned research and investigation aimed at the discovery of new knowledge, which will be useful in developing new products or processes. The Company expenses all research and development costs as incurred. | |||
RECENT ACCOUNTING PRONOUNCEMENTS | |||
The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force). The amendments in this ASU state that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The adoption of this standard did not have a material impact on the Company’s consolidated financial position and results of operations. | |||
In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which stipulates that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for such goods or services. To achieve this core principle, an entity should apply the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract(s); (3) determine the transaction price(s); (4) allocate the transaction price(s) to the performance obligations in the contract(s); and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The guidance also requires advanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016 with early adoption not permitted. The amendments may be applied retrospectively to each period presented or with the cumulative effect recognized as of the date of initial application. The Company is currently evaluating ASU 2014-09. | |||
In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”), amending FASB Accounting Standards Subtopic 205-40 to provide guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Specifically, the amendments (1) provide a definition of the term “substantial doubt,” (2) require an evaluation every reporting period, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that financial statements are issued. ASU 2014-15 is effective for fiscal years ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently evaluating ASU 2014-15 and does not anticipate a material impact on its consolidated financial statements. |
Accrued_Expenses
Accrued Expenses | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Accrued expenses [Abstract] | |||||||||
ACCRUED EXPENSES | NOTE 4 - ACCRUED EXPENSES | ||||||||
Accrued expenses consist of the following: | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Salaries and payroll taxes | $ | 35,239 | $ | 18,750 | |||||
Reimbursable expenses | 5,426 | 196 | |||||||
Consulting fees | 10,000 | 18,574 | |||||||
Audit fees | 50,000 | - | |||||||
Insurance | 136,349 | - | |||||||
Rent | 628 | - | |||||||
State income taxes | 843 | - | |||||||
Royalty fees | - | 35,000 | |||||||
Investment banking fees | - | 45,000 | |||||||
Interest expense - convertible note | - | 17,497 | |||||||
Other | 16,060 | - | |||||||
Totals | $ | 254,545 | $ | 135,017 |
Convertible_Notes_Payable
Convertible Notes Payable | 12 Months Ended |
Dec. 31, 2014 | |
Convertible Notes Payable [Abstract] | |
CONVERTIBLE NOTES PAYABLE | NOTE 5 - CONVERTIBLE NOTES PAYABLE |
On December 13, 2012, the Company received approval from Connecticut Innovations, Inc. (“CII”) for a Convertible Note (the “Note”) in the amount of $150,000 The Company received the first tranche of $75,000 on December 21, 2012, and the second tranche of $75,000 on January 31, 2013. As of December 31, 2013, the Company has accrued $17,497 in interest in connection with the Note. The Note’s maturity date is December 21, 2014. | |
The Company received notice on February 11, 2014 from CII regarding converting its outstanding convertible note of $150,000, along with accrued interest of $21,485, into common stock at a 25% discount to the Company’s closing stock price on February 17, 2014. Since February 17, 2014 was a holiday, the Company used its closing stock price on February 18, 2014 to determine the number of shares issued to CII resulting from the conversion. The Company issued 55,497 shares in full relief of its outstanding debt and accrued interest of $171,485. | |
Since the Note was converted on February 18, 2014, the Company re-measured the conversion feature liability associated with the convertible note payable on that date. The Company recorded an unrealized gain on the change in the fair value of the conversion feature liability of $20,218 for the nine months ended September 30, 2014 (see Note 6 below) and reclassified the re-measured conversion feature of $98,722 to additional paid-in capital. Since the Note was converted, the remaining unamortized portion of the debt discount of $26,755 was expensed during the first quarter of 2014. |
Derivative_Liabilities
Derivative Liabilities | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Derivative Liabilities [Abstract] | |||||||||||||||||
DERIVATIVE LIABILITIES | NOTE 6 - DERIVATIVE LIABILITIES | ||||||||||||||||
Fair value of financial instruments is defined as an exit price, which is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date. The degree of judgment utilized in measuring the fair value of assets and liabilities generally correlates to the level of pricing observability. Financial assets and liabilities with readily available, actively quoted prices or for which fair value can be measured from actively quoted prices in active markets generally have more pricing observability and require less judgment in measuring fair value. Conversely, financial assets and liabilities that are rarely traded or not quoted have less price observability and are generally measured at fair value using valuation models that require more judgment. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency of the asset, liability or market and the nature of the asset or liability. The Company has categorized its financial assets and liabilities measured at fair value into a three-level hierarchy. | |||||||||||||||||
The conversion feature embedded within the Company’s convertible notes payable and the warrants issued in connection with the Offering (as defined in Note 8) did not have fixed settlement provisions on the dates they were initially issued because the conversion and exercises prices could have been lowered if the Company issued securities at lower price before conversion. | |||||||||||||||||
During 2014, the derivative liabilities were valued using the Black-Scholes option valuation model and the following weighted average assumptions on the following dates: | |||||||||||||||||
February 21, | February 18, | January 13, | |||||||||||||||
2014 | 2014 | 2014 | |||||||||||||||
Embedded Conversion Feature and Warrant Liability: | |||||||||||||||||
Risk-free interest rate | 1.52 | % | 0.1 | % | 1.6 | % | |||||||||||
Expected volatility | 105.36 | % | 105.36 | % | 123.54 | % | |||||||||||
Expected life (in years) | 4.88 | 0.75 | 5 | ||||||||||||||
Expected dividend yield | - | - | - | ||||||||||||||
Number of shares | 1,391,539 | 55,497 | 941,539 | ||||||||||||||
Fair value | $ | 4,589,734 | $ | 98,722 | $ | 3,450,976 | |||||||||||
During 2013, the derivative liabilities were valued using the Black-Scholes option valuation model and the following weighted average assumptions on the following dates: | |||||||||||||||||
25-May-13 | 31-Dec-13 | ||||||||||||||||
Embedded Conversion Feature and Warrant Liability: | |||||||||||||||||
Risk-free interest rate | 0.3 | % | 0.3 | % | |||||||||||||
Expected volatility | 91.17 | % | 123.54 | % | |||||||||||||
Expected life (in years) | 1.6 | 4.59 | |||||||||||||||
Expected dividend yield | - | - | |||||||||||||||
Number of shares | 120,000 | 500,000 | |||||||||||||||
Fair value | $ | 44,966 | $ | 1,650,243 | |||||||||||||
The risk-free interest rate was based on rates established by the Federal Reserve. Since the Company’s stock has not been publicly traded for a sufficiently long period of time, the Company is utilizing an expected volatility figure based on a review of the historical volatilities, over a period of time, equivalent to the expected life of the instrument being valued, of similarly positioned public companies within its industry. The expected life of the conversion feature was determined by the maturity date of the Note and the expected life of the warrants was determined by their expiration dates. The expected dividend yield was based upon the fact that the Company has not historically paid dividends on its common stock, and does not expect to pay dividends on its common stock in the future. | |||||||||||||||||
Fair Value Measurement | |||||||||||||||||
Valuation Hierarchy | |||||||||||||||||
ASC 820, “Fair Value Measurements and Disclosures,” establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The Company had no liabilities carried at fair value that were measured on a recurring basis at December 31, 2014. | |||||||||||||||||
The following table provides the liabilities carried at fair value measured on a recurring basis as of December 31, 2013: | |||||||||||||||||
Fair Value Measurements at December 31, 2013 | |||||||||||||||||
Total | Quoted | Significant | Significant | ||||||||||||||
Carrying | prices in | other | unobservable | ||||||||||||||
Value at | active | observable | inputs | ||||||||||||||
31-Dec-13 | markets | inputs | (Level 3) | ||||||||||||||
(Level 1) | (Level 2) | ||||||||||||||||
Derivative liabilities | $ | 1,650,243 | $ | - | $ | - | $ | 1,650,243 | |||||||||
The carrying amounts of cash, inventory, prepaid expenses, accounts payable and accrued liabilities approximate their fair value due to their short maturities. The Company’s other financial instruments include its convertible notes payable obligations. The carrying value of these instruments approximate fair value, as they bear terms and conditions comparable to market, for obligations with similar terms and maturities. The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. | |||||||||||||||||
Level 3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the derivative liabilities. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company’s accounting department, who reports to the Principal Financial Officer, determines its valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s accounting department and are approved by the Principal Financial Officer. | |||||||||||||||||
Level 3 Valuation Techniques | |||||||||||||||||
Level 3 financial liabilities consist of the conversion feature liability and common stock purchase warrants for which there are no current market for these securities such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. A significant decrease in the volatility or a significant decrease in the Company’s stock price, in isolation, would result in a significantly lower fair value measurement. | |||||||||||||||||
As of December 31, 2014, there were no transfers in or out of level 3 from other levels in the fair value hierarchy. | |||||||||||||||||
The following table sets forth a summary of the changes in the fair value of our Level 3 financial liabilities that are measured at fair value on a recurring basis: | |||||||||||||||||
For the year ended December 31, 2014 | For the year ended | ||||||||||||||||
31-Dec-13 | |||||||||||||||||
Beginning liability balance | $ | 1,650,243 | $ | - | |||||||||||||
Recognition of derivative value in equity | 3,450,976 | 1,531,303 | |||||||||||||||
Recognition of conversion feature liability | - | 44,966 | |||||||||||||||
Net unrealized gain on derivative liabilities in equity | (392,545 | ) | - | ||||||||||||||
Net unrealized (gain) loss on conversion feature liabilities | (20,218 | ) | 73,974 | ||||||||||||||
Adjustment to additional paid-in capital upon conversion and modification | (4,688,456 | ) | - | ||||||||||||||
Ending balance | $ | - | $ | 1,650,243 | |||||||||||||
The Company held no Level 3 financial instruments at December 31, 2014. |
Advances_from_Officer
Advances from Officer | 12 Months Ended |
Dec. 31, 2014 | |
Advances from Officer [Abstract] | |
ADVANCES FROM OFFICER | NOTE 7 - ADVANCES FROM OFFICER |
During the year ended December 31, 2013, the Company received an aggregate of $64,000 of cash advances from an officer of the Company and made aggregate repayments of $64,000. The advances were non-interest bearing and short-term in nature. | |
Stockholders_Equity_Deficiency
Stockholders' Equity (Deficiency) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Stockholders Equity (Deficiency) [Abstract] | |||||||||||||||||
STOCKHOLDERS EQUITY (DEFICIENCY) | NOTE 8 - STOCKHOLDERS’ EQUITY (DEFICIENCY) | ||||||||||||||||
On January 13, 2014, the Company closed a “best efforts” private offering of $1,000,000 (the “Offering”) with a group of accredited investors (the “Purchasers”) and the Company exercised the oversubscription amount allowed in the Offering of $350,000, for total gross proceeds to the Company of $1,350,000 before deducting placement agent fees and other expenses. Pursuant to a securities purchase agreement with the Purchasers (the “Purchase Agreement”), the Company issued to the Purchasers (i) 415,387 shares of the Company’s common stock, par value $0.0001 and (ii) warrants (the “Warrants”) to purchase 1,350,000 shares (the “Warrant Shares”) of the Company’s common stock at an exercise price of $3.25 per share. In connection with the Offering, 138,463 units were sold at the end of December 2013 and 276,924 units were sold in January 2014, all at $3.25 per unit. As a result, the Company received aggregate gross proceeds of $450,000 in December 2013 from the issuance of 138,463 shares of common stock and 450,000 Warrants, and the Company received $900,000 in January 2014 from the issuance of 276,924 shares of common stock and 900,000 Warrants. Costs incurred associated with the Offering in December 2013 and January 2014 were $56,820 and $100,006, respectively. In January 2014, the placement agent received 41,539 Warrants to purchase 41,539 shares of the Company’s common stock as fees. | |||||||||||||||||
Pursuant to the Purchase Agreement, the Company’s founders who are members of management (the “Founders”) agreed to cancel a corresponding number of shares to those shares issued in the Offering and place in escrow a corresponding number of shares to be cancelled for each Warrant Share issued. As a result, the Founders retired 138,463 and 276,924 shares of common stock in December 2013 and January 2014, respectively. | |||||||||||||||||
The Warrants are exercisable for a period of five (5) years from the original issue date. The initial exercise price with respect to the Warrants was $3.25 per share. On the date of issuance, the Warrants were recognized as derivative liabilities as they did not have fixed settlement provisions because their exercise prices could be lowered if the Company was to issue securities at a lower price in the future. As a result, the Company recorded $3,450,976 as derivative liability warrants on the condensed consolidated balance sheet on January 13, 2014. | |||||||||||||||||
On February 21, 2014, the Company amended the terms of the 1,391,539 Warrants issued in the Offering as compensation to the placement agent to eliminate the anti-dilution provision and to lower the exercise price of the Warrants from $3.25 to $3.00. As a result of the Warrant modifications, the Company re-measured the Warrant liability on the modification date and recorded an unrealized gain on derivative liabilities of $448,072 and reclassified the aggregate re-measured value of the Warrants of $4,514,772 to additional paid-in capital. See Note 6 below. | |||||||||||||||||
On various dates, during the first nine months ended September 30, 2014, the Company received gross proceeds of $1,500,000 in connection with the exercise of 500,000 warrants into 500,000 shares of common stock at an exercise price of $3.00 per share, net of fees paid upon the exercise of the warrants issued in the Offering per the terms of the underwriter agreement of $30,000. Upon exercise, pursuant to the Purchase Agreement, the Company’s Founders cancelled a corresponding number of shares for each Warrant Share issued. As a result, the Founders retired 400,000 shares of common stock. | |||||||||||||||||
From June 12, 2014 to June 17, 2014, the Company conducted a private offering with a group of accredited investors (the “June Purchasers”) who had previously participated in the Offering that occurred between December 30, 2013 and January 13, 2014 (as discussed in this Note 5). Pursuant to a securities purchase agreement with the Purchasers, the Company issued to the June Purchasers warrants (the “June Warrants”) to purchase an aggregate of 400,000 shares (the “June Shares”) of the Company’s common stock at an exercise price of $3.00 per share. The June Warrants are exercisable for a period of five (5) years from the original issue date. The exercise price for the June Warrants is subject to adjustment upon certain events, such as stock splits, combinations, dividends, distributions, reclassifications, mergers or other corporate change and dilutive issuances. | |||||||||||||||||
In connection with the issuance of the June Warrants, the Company entered into a registration rights agreement with the June Purchasers pursuant to which the Company agreed to register the Shares and the shares of the common stock underlying the June Warrants (the “June Registrable Securities”) on a Form S-1 registration statement (the “June Registration Statement”) to be filed with the SEC ninety (90) days following the completion of an underwritten public offering (the “Filing Date”) and to cause the June Registration Statement to be declared effective under the Securities Act within ninety (90) days following the Filing Date (the “Required Effective Date”). | |||||||||||||||||
The Registration Statement was not filed by the Filing Date or declared effective by the Required Effective Date of December 15, 2014. Under the original terms of the arrangement, the Company was required to pay partial liquidated damages to each June Purchaser in the amount equal to two percent (2%) for the purchase price paid for the June Warrants then owned by such June Purchaser for each 30-day period for which the Company non-compliant. On January 30, 2015, the Company received signed documentation from all of the June Purchasers waiving their right to liquidated damages and terminating the registration rights agreement. | |||||||||||||||||
On August 21, 2014, pursuant to a securities purchase agreement with two (2) Purchasers (the “August Purchasers”) who had previously participated in the Offering that occurred between December 30, 2013 and January 13, 2014 (as discussed in this Note 5), the Company issued to the August Purchasers warrants (the “August Warrants”) to purchase an aggregate of 100,000 shares (the “August Shares”) of the Company’s common stock at an exercise price of $3.00 per share. The August Warrants are exercisable for a period of five (5) years from the original issue date. The exercise price for the August Warrants is subject to adjustment upon certain events, such as stock splits, combinations, dividends, distributions, reclassifications, mergers, or other corporate changes and dilutive issuances. | |||||||||||||||||
In connection with the issuance of the August Warrants, the Company entered into a registration rights agreement with the August Purchasers pursuant to which the Company agreed to register the August Shares and the shares of the common stock underlying the August Warrants (the “August Registrable Securities”) on a Form S-1 registration statement (the August Registration Statement”) to be filed with the SEC ninety (90) days following the Filing Date and to cause the August Registration Statement to be declared effective under the Securities Act by the Required Effective Date. | |||||||||||||||||
The August Registration Statement was not filed by the Filing Date or declared effective by the Required Effective Date. Under the original terms of the arrangement, the Company was required to pay partial liquidated damages to each August Purchaser in the amount equal to two percent (2%) for the purchase price paid for the August Warrants then owned by such August Purchaser for each 30-day period for which the Company is non-compliant. On January 30, 2015, the Company received signed documentation from all of the August Purchasers waiving their right to liquidated damages and terminating the registration rights agreement. | |||||||||||||||||
The Company determined that the effect of the issuance of the 500,000 warrants was to induce the Purchasers to exercise warrants previously issued to them in the Offering. As a result, the Company recorded inducement expense of $1,262,068 during the nine months ended September 30, 2014. | |||||||||||||||||
On September 15, 2014, the Company closed on an underwritten public offering of its common stock and warrants. The Company offered 2,127,273 shares of common stock and warrants to purchase 2,127,273 shares of common stock, at a combined price to the public of $2.75 per share and related warrant. The warrants are exercisable for a period of five (5) years beginning on September 15, 2014 at an exercisable price of $3.288 per share. The Company received net proceeds of $4,954,042 from the public offering, after deducting the underwriting discount and other offering related expenses. | |||||||||||||||||
In connection with the underwritten public offering of the Company’s common stock and warrants on September 15, 2014, the Company was required to obtain a waiver and consent from the investors in the January 13, 2014 private offering in order to conduct the public offering at a price of $2.75 per share and warrant. As a result, on September 10, 2014, the Company issued the majority investors in the January 13, 2014 private offering, 261,131 unregistered shares of common stock and reduced the exercise price on the outstanding Warrants, June Warrants, and August Warrants from $3.00 to $2.00 per share of common stock for all of the investors. During the three months ended September 30, 2014, the Company recorded additional inducement expense of $718,110 and $232,360 related to the issuance of unregistered shares of common stock to the majority investors and the modification of the warrant exercise price, respectively. | |||||||||||||||||
The following table summarizes the Company's warrants outstanding and exercisable at December 31, 2013 and 2014: | |||||||||||||||||
Weighted | |||||||||||||||||
Weighted | Average | ||||||||||||||||
Average | Remaining | ||||||||||||||||
Number of | Exercise | Life | Intrinsic | ||||||||||||||
Warrants | Price | In Years | Value | ||||||||||||||
Outstanding at January 1, 2013 | - | $ | - | - | $ | - | |||||||||||
Issued | 754,600 | 2.34 | - | - | |||||||||||||
Exercised | (300,000 | ) | 1 | - | - | ||||||||||||
Cancelled | - | - | - | - | |||||||||||||
Outstanding and Exercisable at December 31, 2013 | 454,600 | $ | 3.23 | 4.97 | $ | 351,300 | |||||||||||
Issued | 3,675,176 | 2.79 | 4.51 | - | |||||||||||||
Exercised | (500,000 | ) | 3 | - | - | ||||||||||||
Cancelled | - | - | - | - | |||||||||||||
Outstanding and Exercisable at December 31, 2014 | 3,629,776 | $ | 2.8 | 4.51 | $ | 283,828 | |||||||||||
Long-Term Stock Incentive Plan | |||||||||||||||||
On January 4, 2013, a majority of the Company’s stockholders approved by written consent the Company’s 2013 Long-Term Stock Incentive Plan (“LTIP”). The maximum aggregate number of shares of common stock that may be issued under the LTIP, including stock awards, stock issued to directors for serving on the Company’s board, and stock appreciation rights, is limited to 10% of the shares of common stock outstanding on the first business or trading day of any fiscal year, which is 2,476,236 at December 31, 2014. During the year ended December 31, 2014, the Company issued 31,397 shares under the plan to three non-executive directors for serving on the Company’s board. The aggregate fair value of the shares issued to the directors was $80,000. Also during the year ended December 31, 2014, the Company issued 112,500 shares with an aggregate fair value of $275,225 to one executive officer and five non-executive employees. These shares were issued with no Company imposed restrictions and as a result, the aggregate fair value of $275,225 was expensed entirely in 2014. On November 18, 2014 the Company granted 215,000 restricted shares with an aggregate fair value of $451,500 to six non-executive employees and one consultant. The vesting period for these restricted shares is twelve months with the exception of one award that vests over a thirty-six month period. During the year ended December 31, 2014, the Company expensed $26,833 related to these restricted stock awards. During the year ended December 31, 2013, the Company issued 48,833 restricted shares under the plan to two non-executive directors with an aggregate fair value $30,000. During the year ended December 31, 2013, the Company issued 100,000 shares with an aggregate fair value $100,000 to four non-executive employees. At December 31, 2014, a total of 292,730 shares have been issued from the Plan and 2,183,506 are available to be issued. |
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Income Tax Disclosure [Abstract] | |||||||||
INCOME TAXES | NOTE 9 - INCOME TAXES | ||||||||
As of December 31, 2014 and 2013, the Company had approximately $6,508,916 and $1,641,000, respectively, of US federal and state net operating loss (“NOLs”) carryovers available to offset future taxable income, which expire beginning in 2033. In addition, the Company had tax credit carryforwards of $75,337 at December 31, 2014 that will be available to reduce future tax liabilities. The tax credit carryforwards will begin to expire beginning in 2033. | |||||||||
In accordance with Section 382 of the Internal Revenue Code, deductibility of the Company’s NOLs may be subject to an annual limitation in the event of a change of control. The Company has determined that a change of control has not occurred as of December 31, 2014 and therefore none of the NOLs are limited under Section 382. The Company has no material uncertain tax positions for any of the reporting periods presented. The Company has filed all of its tax returns for all prior periods through December 31, 2014. As a result, the Company’s net operating loss carryovers will now be available to offset any future taxable income. | |||||||||
The income tax provision consists of the following: | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Current | |||||||||
Federal | $ | - | $ | - | |||||
State | 843 | - | |||||||
843 | - | ||||||||
Deferred | |||||||||
Federal | (1,744,445 | ) | (491,900 | ) | |||||
State | (314,699 | ) | (71,500 | ) | |||||
(2,059,144 | ) | (563,400 | ) | ||||||
Change in valuation allowance | 2,059,144 | 563,400 | |||||||
Total income tax provision | $ | 843 | $ | - | |||||
A reconciliation of the effective income tax rate and the statutory federal income tax rate is as follows: | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
U.S. federal statutory rate | 34 | % | (34.00 | )% | |||||
State income tax rate, net of federal benefit | 2.93 | (4.95 | ) | ||||||
Inducement expenses | (10.63 | ) | - | ||||||
Other permanent differences | 2.79 | 2.47 | |||||||
Less: valuation allowance | (29.10 | ) | 36.48 | ||||||
Provision for income taxes | (.01 | )% | - | % | |||||
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts became deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, Management believes that significant uncertainties exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. For the year ended December 31, 2014 and 2013, the change in valuation allowance was $2,059,144 and $563,400. | |||||||||
The tax effects of temporary differences that give rise to deferred tax assets and liabilities are presented below: | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Deferred tax assets: | |||||||||
Net operating loss carryforward | $ | 2,487,784 | $ | 639,100 | |||||
Tax credits | 75,337 | - | |||||||
Accruals and reserves | 23,023 | - | |||||||
Restricted stock | 114,712 | - | |||||||
Derivative liability | - | 10,421 | |||||||
Total deferred tax assets before valuation allowance: | $ | 2,700,856 | $ | 649,521 | |||||
Valuation allowance | (2,698,243 | ) | (639,100 | ) | |||||
Deferred tax assets, net of valuation allowance | 2,613 | 10,421 | |||||||
Deferred tax liabilities: | |||||||||
Fixed assets | $ | (2,613 | ) | $ | - | ||||
Convertible debt | - | (10,421 | ) | ||||||
Total deferred tax liabilities | (2,613 | ) | (10,421 | ) | |||||
Net deferred tax asset (liability) | $ | - | $ | - | |||||
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and Contingencies [Abstract] | |||||
COMMITMENTS AND CONTINGENCIES | NOTE 10 - COMMITMENTS AND CONTINGENCIES | ||||
LEGAL MATTERS | |||||
From time to time, the Company is subject to legal proceedings arising in the ordinary course of business. Such matters are subject to uncertainties and outcomes are not predictable with assurance. Management believes at this time, there are no ongoing matters that will have a material adverse effect on the Company's business, financial position, results of operations, or cash flows. | |||||
Subsequent to the acquisition of 3D-ID, the Company licensed sixteen (16) U.S. patents. The Company does not generally conduct exhaustive patent searches to determine whether the technology used in our products infringes patents held by third parties. The Company may face claims by third parties that its products or technology infringe their patents or other intellectual property rights in the future. Any claim of infringement could cause the Company to incur substantial costs defending against the claim, even if the claim is invalid, and could distract the attention of the Company’s management. If any of the Company’s products are found to violate third-party proprietary rights, it may be required to pay substantial damages. | |||||
COMMITMENTS | |||||
On August 19, 2011, the Company signed a licensing agreement with Technest Holdings, Inc. and Genex Technologies, Inc., which granted 3D-ID a perpetual sub-licensable, exclusive, worldwide license to use their intellectual property in U.S. Federal and State markets, and a non-exclusive license in all other markets. The Company’s Chief Executive Officer (“CEO”) is a stockholder of and was the former CEO of Technest Holdings, Inc. In consideration of the license of rights affected by this Agreement, 3D-ID is obligated to pay Technest a royalty equal to 5% of net sales with a minimum royalty of $15,000 during the first two years and $20,000 for each contract year thereafter. For the year ended December 31, 2013, the Company incurred $15,000 in connection with the agreement. As of December 31, 2013, $35,000 of minimum royalties are included in accrued expenses in the consolidated balance sheet in connection with the agreement. | |||||
In October 2012, the Company entered into an agreement with a consultant to provide public relations and marketing services to the Company for a period of three months. Pursuant to the agreement, the Company agreed to pay the consultant a monthly cash fee of $5,000 and to issue the consultant shares of common stock per month with a fair value of $10,000 as compensation for services provided. During the year, the Company and the consultant verbally extended the agreement until October 30, 2013, with the same terms and conditions. The Company entered into a new agreement on November 1, 2013 for a period of six months and agreed to pay the consultant a monthly cash fee of $5,000. | |||||
During the year ended December 31, 2013, the Company issued 165,744 shares of common stock with an aggregate fair value of $90,000 and paid $60,000 in cash as compensation for services provided from January 1, 2013 to December 31, 2013. In addition the consultant was paid $41,875 for additional marketing services. | |||||
In November 2012, the Company entered into an agreement with a technology consulting firm to provide strategic marketing and sales services to the Company with respect to developing business opportunities with the Federal Government through March 2013. Pursuant to the agreement, the Company agreed to pay the consultant a monthly cash fee of $5,500 and a sales commission of 5% on executed contracts. The agreement ended in May 2013. For the year ended December 31, 2013, the Company incurred expenses in connection with this agreement of $11,000. | |||||
In January 2013, the Company entered into an agreement with a consultant to provide business development services to the Company for a period of three months. Pursuant to the agreement, the Company issued the consultant 20,000 shares of common stock with an aggregate fair value of $5,000. The company also entered into an agreement with the same consultant for additional services ending December 31, 2013 in the amount of $65,000 in cash and 4,878 shares of common stock with a fair value of $20,000. | |||||
In January 2013, the Company entered into an agreement with a development and manufacturing company to provide samples of the Company’s smart card design for an aggregate of $150,000. Unless terminated early, the agreement will continue in full force and effect until the samples have been delivered to the Company. During the year ended December 31, 2013 the Company paid $125,000 and samples are currently in the process of being built. | |||||
In July 2013, the Company entered into an agreement with a consultant to provide public relations and marketing services to the Company for a period of six months. Pursuant to the agreement, the Company agreed to pay the consultant a monthly cash fee of $4,000 and to issue the consultant 4,000 shares of common stock per month as compensation for services provided. Commencing September 16, 2013, the agreement was amended to a monthly cash fee of $4,000 and to issue the consultant $4,000 in shares of common stock per month. During the year ended December 31, 2013, the consultant was issued 13,767 shares with an aggregate fair value of $42,240. | |||||
In August 2013, the Company entered into an agreement with a consultant to provide public relations and marketing services to the Company for a period of three months. Pursuant to the agreement, the Company issued the consultant 24,000 shares of common stock with an aggregate fair value of $24,000 as compensation for services provided. | |||||
On October 16, 2013, the Company entered into a lease agreement for office space in Palm Bay, Florida. The term of the lease is for three years with a monthly rent of $1,250 per month in the first year, increasing 3% annually thereafter. The Company’s rent expense in 2013 was not material, however, it is obligated to pay $15,000 in 2014, 15,450 in 2015 and 15,914 in 2016, for a total remaining lease commitment as of December 31, 2013 of $46,364. | |||||
On November 7, 2013, the Company entered into a three-year distribution and supply agreement with Voice of Big Data Solutions, Pvt. Ltd. (“VOBD”) for the distribution of the Company’s 3D facial recognition products in India and Sri Lanka on an exclusive basis and The Middle East and Singapore on a non-exclusive basis. The agreement is subject to termination at any time after the initial three-year term by either the Company or VOBD upon sixty (60) days written notice. | |||||
On July 3, 2014, the Company entered into a purchase commitment with a certain vendor for an aggregate amount of $696,500. The purchase commitment originally called for monthly deliveries through February 1, 2015. On December 16, 2014, the Company modified the purchase commitment by rescheduling certain of the original shipping dates to various dates later in 2015. As of December 31, 2014, the Company has paid $139,300 towards this purchase commitment. | |||||
On September 12, 2014, the Company entered into a lease agreement for office space in Oxford, Connecticut. The term of the lease is for two (2) years with a monthly rent of $2,300 in the first year, increasing to $2,450 per month in the second year. On October 3, 2014, the Company entered into a lease agreement for customer service and warehouse space in Melbourne, Florida. The lease term commences on January 1, 2015. The term of the lease is for three (3) years with a monthly rent amount of $6,395 which includes the base rent, an escrow for taxes and insurance, common area maintenance charges and applicable sale tax. The Company incurred rent expense of $28,071 for the year ended December 31, 2014, respectively. Minimum lease payments for non-cancelable operating leases are as follows: | |||||
Future Lease Obligations | |||||
2015 | $ | 125,058 | |||
2016 | 121,477 | ||||
2017 | 87,426 | ||||
Total future lease obligations | $ | 333,961 | |||
On September 24, 2014, the Company entered into a private label distribution agreement with a company specializing in facial recognition technology and the agreement is for five (5) years and is renewable by mutual consent. The Company has agreed to pay a royalty of twenty percent (20%) on the net sales incorporating this technology subject to a monthly minimum royalty of $5,000. | |||||
On October 13, 2014, the Company entered into an agreement with a sales and marketing group to provide consulting services including the development and execution of a strategic market plan for the Wocket™. The term of the agreement is for fifteen months and the fee for services is $250,000. The agreement calls for the total payment to be made in three installments. The Company paid $125,000 upon execution of the agreement. | |||||
EMPLOYMENT AGREEMENT | |||||
Effective October 1, 2012, Nxt-ID entered into an employment agreement with its Chief Executive Officer. The employment agreement provides for: | |||||
● | An initial term of 3 years beginning on October 1, 2012. | ||||
● | A base salary of $150,000 per year, increasing to $300,000 per year, which occurred effective January 1, 2014. | ||||
● | Payment of all necessary and reasonable out-of-pocket expenses incurred by the executive in the performance of his duties under the agreement. | ||||
● | Eligibility to participate in bonus or incentive compensation plans that may be established by the board of directors from time to time applicable to the executive's services. | ||||
● | Eligibility to receive equity awards as determined by the board of directors, or a committee of the board of directors, composed in compliance with the corporate governance standards of any applicable listing exchange. |
Subsequent_Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2014 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 11 - SUBSEQUENT EVENTS |
The Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued. | |
Effective January 1, 2015, the Company amended and renewed an existing contract with a public relations, media and marketing consulting firm. The term of the amended and renewed agreement shall be for twelve months and the agreement includes an option for renewal. The Company will pay the consulting firm $5,000 in cash and 6,000 restricted shares of the Company’s common stock on a monthly basis. | |
On January 15, 2015, the Company entered into an agreement with a strategic business consulting firm. The term of the agreement shall be for a period of twelve months and may be cancelled by either of the parties at any point after six months with thirty days advance notice. The Company will pay the consulting firm $5,000 in cash and 5,000 restricted shares of the Company’s common stock on a monthly basis. | |
On January 19, 2015, the Company entered into an agreement with a consulting firm whereby the consulting firm will provide marketing related services for the Company for a period of six months. Upon execution of this agreement, the Company paid the consulting firm $50,000 in cash compensation and also issued the consulting firm 25,000 shares of common stock valued at $68,750 on the date of issuance. | |
On January 28, 2015, the Company received proceeds of $100,000 in connection with the exercise of 50,000 warrants into 50,000 shares of common stock at an exercise price of $2.00 per share. | |
On January 30, 2015, the Company received signed documentation from all of the June and August Purchasers of warrants waiving their right to liquidated damages and terminating the registration rights agreement. | |
Effective March 5, 2015, the majority investors in the January 2014 offering waived a provision that required certain stockholders of the Company to surrender shares of common stock proportional to the number of warrants exercised. To date, these stockholders have retired 697,054 shares of common stock which will remain in treasury. | |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended | ||
Dec. 31, 2014 | |||
Summary of Significant Accounting Policies [Abstract] | |||
USE OF ESTIMATES IN THE FINANCIAL STATEMENTS | USE OF ESTIMATES IN THE FINANCIAL STATEMENTS | ||
The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||
PRINCIPLES OF CONSOLIDATION | PRINCIPLES OF CONSOLIDATION | ||
The consolidated financial statements include the accounts of Nxt-ID and its wholly-owned subsidiary, 3D-ID. Intercompany balances and transactions have been eliminated upon consolidation. | |||
CASH | CASH | ||
The Company considers all highly liquid securities with an original maturity date of three months or less when purchased to be cash equivalents. Due to their short-term nature, cash equivalents are carried at cost, which approximates fair value. At December 31, 2014 and 2013, the Company had no cash equivalents. | |||
CONCENTRATIONS OF CREDIT RISK | CONCENTRATIONS OF CREDIT RISK | ||
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company maintains its cash balances in financial institutions located in the United States. At times, the Company’s cash balances may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. | |||
REVENUE RECOGNITION | REVENUE RECOGNITION | ||
The Company’s 3D facial recognition and identification products are currently available for sale and the Company has begun accepting pre-orders on its Mobile Bio Wocket. The Company recognizes revenue in connection with the sale of these products when persuasive evidence of an arrangement exists, the service has been rendered or product delivery has occurred, the price is fixed or readily determinable and collectability of the sale is reasonably assured. As of December 31, 2014, the Company has received $138,599 in customer deposits in connection with pre-orders of its Mobile Bio Wocket. | |||
LONG-LIVED ASSETS | LONG-LIVED ASSETS | ||
Long-lived assets, such as property and equipment, are evaluated for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable in accordance with ASC 360-10-35-17 through 35-35 "Measurement of an Impairment Loss." The Company assesses the impairment of the assets based on the undiscounted future cash flow the assets are expected to generate compared to the carrying value of the assets. If the carrying amount of the assets is determined not to be recoverable, a write-down to fair value is recorded. Management estimates future cash flows using assumptions about expected future operating performance. Management's estimates of future cash flows may differ from actual cash flow due to, among other things, technological changes, economic conditions or changes to the Company's business operations. | |||
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT | ||
Property and equipment consisting of furniture, fixtures and tooling is stated at cost. The costs of additions and improvements are generally capitalized and expenditures for repairs and maintenance are expensed in the period incurred. When items of property and equipment are sold or retired, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is included in income. Depreciation of property and equipment is provided utilizing the straight-line method over the estimated useful life of the respective asset as follows: | |||
Equipment | 5 years | ||
Furniture and fixtures | 3 to 5 years | ||
Tooling and molds | 2 to 3 years | ||
Depreciation expense for the year ended December 31, 2014 and 2013 was $12,473 and $585, respectively. | |||
INVENTORY | INVENTORY | ||
Inventory at December 31, 2014 consists of raw materials and is valued at the lower of cost or market with cost determined using the first-in, first-out method and with market defined as the lower of replacement cost or realizable value. As of December 31, 2014 inventory is comprised of $359,544 in raw materials on hand. In addition, as an early stage entity, the Company is required to prepay for raw materials with certain vendors until credit terms can be established. As of December 31, 2014, $423,054 of prepayments made for inventory is included in prepaid expenses and other current assets on the consolidated balance sheet. | |||
CONVERTIBLE INSTRUMENTS | CONVERTIBLE INSTRUMENTS | ||
The Company applies the accounting standards for derivatives and hedging and for distinguishing liabilities from equity when accounting for hybrid contracts that feature conversion options. The accounting standards require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (i) 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, (ii) 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 (iii) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. | |||
The derivative is subsequently marked to market at each reporting date based on current fair value, with the changes in fair value reported in the results of operations. | |||
Conversion options that contain variable settlement features such as provisions to adjust the conversion price upon subsequent issuances of equity or equity linked securities at exercise prices more favorable than that featured in the hybrid contract generally result in their bifurcation from the host instrument. | |||
The Company accounts for convertible debt instruments when the Company has determined that the embedded conversion options should not be bifurcated from their host instruments in accordance with ASC 470-20 “Debt with Conversion and Other Options”. The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt. See Note 5. | |||
DERIVATIVE FINANCIALS INSTRUMENTS | DERIVATIVE FINANCIALS INSTRUMENTS | ||
The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, the Company uses the Black-Scholes option valuation model to value the derivative instruments at inception and on subsequent valuation dates. The conversion feature embedded within Company’s convertible note payable does not have fixed settlement provisions as the conversion price varies based on the trading price of the Company’s common stock and the potential number of common shares to be issued upon conversion is indeterminable up to a maximum of 120,000 shares of common stock. In addition, the warrants issued in connection with the Offering (as defined in Note 8) do not have fixed settlement provisions as their exercise prices may be lowered if the Company conducts an offering in the future at a price per share below the exercise price of the warrants. Accordingly, the conversion feature and warrants have been recognized as derivative instruments. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. (See Note 6.) | |||
DEBT DISCOUNT AND AMORTIZATION OF DEBT DISCOUNT | DEBT DISCOUNT AND AMORTIZATION OF DEBT DISCOUNT | ||
Debt discount represents the fair value of embedded conversion options of various convertible debt instruments and attached convertible equity instruments issued in connection with debt instruments. The debt discount is amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt. The amortization of debt discount is included as a component of interest expense included in other income and expenses in the accompanying statements of operations. | |||
INCOME TAXES | INCOME TAXES | ||
The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, "Income Taxes." Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity's financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. | |||
ASC Topic 740-10-30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740-10-40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company will classify as income tax expense any interest and penalties. The Company has no material uncertain tax positions for any of the reporting periods presented. Generally, the tax authorities may examine the partnership/corporate tax returns for three years from the date of filing. The Company has filed all of its tax returns for all prior periods through December 31, 2014. As a result, the Company’s net operating loss carryovers will now be available to offset any future taxable income. | |||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION | ||
The Company accounts for share-based awards exchanged for employee services at the estimated grant date fair value of the award. The Company accounts for equity instruments issued to non-employees at their fair value on the measurement date. The measurement of stock-based compensation is subject to periodic adjustment as the underlying equity instrument vests or becomes non-forfeitable. Non-employee stock-based compensation charges are amortized over the vesting period or as earned. | |||
NET LOSS PER SHARE | NET LOSS PER SHARE | ||
Basic loss per share was computed using the weighted average number of common shares outstanding. Diluted loss per share includes the effect of diluted common stock equivalents. Potentially dilutive securities realizable from the exercise of 3,629,776 warrants as of December 31, 2014 were excluded from the computation of diluted net loss per share because the effect of their inclusion would have been anti-dilutive. As of December 31, 2013, potentially dilutive securities realizable from the exercise of 454,600 warrants and from the conversion of the Company’s then outstanding note payable into 50,000 shares of common stock as of December 31, 2013, respectively, were excluded from the computation of diluted net loss per share because the effect of their inclusion would have been anti-dilutive. | |||
RESEARCH AND DEVELOPMENT | RESEARCH AND DEVELOPMENT | ||
Research and development costs consist of expenditures incurred during the course of planned research and investigation aimed at the discovery of new knowledge, which will be useful in developing new products or processes. The Company expenses all research and development costs as incurred. | |||
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS | ||
The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force). The amendments in this ASU state that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The adoption of this standard did not have a material impact on the Company’s consolidated financial position and results of operations. | |||
In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which stipulates that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for such goods or services. To achieve this core principle, an entity should apply the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract(s); (3) determine the transaction price(s); (4) allocate the transaction price(s) to the performance obligations in the contract(s); and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The guidance also requires advanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016 with early adoption not permitted. The amendments may be applied retrospectively to each period presented or with the cumulative effect recognized as of the date of initial application. The Company is currently evaluating ASU 2014-09. | |||
In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”), amending FASB Accounting Standards Subtopic 205-40 to provide guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Specifically, the amendments (1) provide a definition of the term “substantial doubt,” (2) require an evaluation every reporting period, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that financial statements are issued. ASU 2014-15 is effective for fiscal years ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently evaluating ASU 2014-15 and does not anticipate a material impact on its consolidated financial statements. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended | ||
Dec. 31, 2014 | |||
Summary of Significant Accounting Policies [Abstract] | |||
Schedule of estimated useful life of property and equipment | |||
Equipment | 5 years | ||
Furniture and fixtures | 3 to 5 years | ||
Tooling and molds | 2 to 3 years | ||
Accrued_Expenses_Tables
Accrued Expenses (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Accrued expenses [Abstract] | |||||||||
Schedule of accrued expenses | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Salaries and payroll taxes | $ | 35,239 | $ | 18,750 | |||||
Reimbursable expenses | 5,426 | 196 | |||||||
Consulting fees | 10,000 | 18,574 | |||||||
Audit fees | 50,000 | - | |||||||
Insurance | 136,349 | - | |||||||
Rent | 628 | - | |||||||
State income taxes | 843 | - | |||||||
Royalty fees | - | 35,000 | |||||||
Investment banking fees | - | 45,000 | |||||||
Interest expense - convertible note | - | 17,497 | |||||||
Other | 16,060 | - | |||||||
Totals | $ | 254,545 | $ | 135,017 |
Derivative_Liabilities_Tables
Derivative Liabilities (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Derivative Liabilities [Abstract] | |||||||||||||||||
Valuation of Derivative liabilities | February 21, | February 18, | January 13, | ||||||||||||||
2014 | 2014 | 2014 | |||||||||||||||
Embedded Conversion Feature and Warrant Liability: | |||||||||||||||||
Risk-free interest rate | 1.52 | % | 0.1 | % | 1.6 | % | |||||||||||
Expected volatility | 105.36 | % | 105.36 | % | 123.54 | % | |||||||||||
Expected life (in years) | 4.88 | 0.75 | 5 | ||||||||||||||
Expected dividend yield | - | - | - | ||||||||||||||
Number of shares | 1,391,539 | 55,497 | 941,539 | ||||||||||||||
Fair value | $ | 4,589,734 | $ | 98,722 | $ | 3,450,976 | |||||||||||
25-May-13 | 31-Dec-13 | ||||||||||||||||
Embedded Conversion Feature and Warrant Liability: | |||||||||||||||||
Risk-free interest rate | 0.3 | % | 0.3 | % | |||||||||||||
Expected volatility | 91.17 | % | 123.54 | % | |||||||||||||
Expected life (in years) | 1.6 | 4.59 | |||||||||||||||
Expected dividend yield | - | - | |||||||||||||||
Number of shares | 120,000 | 500,000 | |||||||||||||||
Fair value | $ | 44,966 | $ | 1,650,243 | |||||||||||||
Fair value of liabilities measured on a recurring basis | Fair Value Measurements at December 31, 2013 | ||||||||||||||||
Total | Quoted | Significant | Significant | ||||||||||||||
Carrying | prices in | other | unobservable | ||||||||||||||
Value at | active | observable | inputs | ||||||||||||||
31-Dec-13 | markets | inputs | (Level 3) | ||||||||||||||
(Level 1) | (Level 2) | ||||||||||||||||
Derivative liabilities | $ | 1,650,243 | $ | - | $ | - | $ | 1,650,243 | |||||||||
Changes in the fair value of Level 3 financial liabilities that are measured at fair value on a recurring basis | For the year ended December 31, 2014 | For the year ended | |||||||||||||||
31-Dec-13 | |||||||||||||||||
Beginning liability balance | $ | 1,650,243 | $ | - | |||||||||||||
Recognition of derivative value in equity | 3,450,976 | 1,531,303 | |||||||||||||||
Recognition of conversion feature liability | - | 44,966 | |||||||||||||||
Net unrealized gain on derivative liabilities in equity | (392,545 | ) | - | ||||||||||||||
Net unrealized (gain) loss on conversion feature liabilities | (20,218 | ) | 73,974 | ||||||||||||||
Adjustment to additional paid-in capital upon conversion and modification | (4,688,456 | ) | - | ||||||||||||||
Ending balance | $ | - | $ | 1,650,243 |
Stockholders_Equity_Deficiency1
Stockholders' Equity (Deficiency) (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Stockholders Equity (Deficiency) [Abstract] | |||||||||||||||||
Summary of warrants outstanding and exercisable | Weighted | ||||||||||||||||
Weighted | Average | ||||||||||||||||
Average | Remaining | ||||||||||||||||
Number of | Exercise | Life | Intrinsic | ||||||||||||||
Warrants | Price | In Years | Value | ||||||||||||||
Outstanding at January 1, 2013 | - | $ | - | - | $ | - | |||||||||||
Issued | 754,600 | 2.34 | - | - | |||||||||||||
Exercised | (300,000 | ) | 1 | - | - | ||||||||||||
Cancelled | - | - | - | - | |||||||||||||
Outstanding and Exercisable at December 31, 2013 | 454,600 | $ | 3.23 | 4.97 | $ | 351,300 | |||||||||||
Issued | 3,675,176 | 2.79 | 4.51 | - | |||||||||||||
Exercised | (500,000 | ) | 3 | - | - | ||||||||||||
Cancelled | - | - | - | - | |||||||||||||
Outstanding and Exercisable at December 31, 2014 | 3,629,776 | $ | 2.8 | 4.51 | $ | 283,828 | |||||||||||
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Income Tax Disclosure [Abstract] | |||||||||
Schedule of Components of income tax provision (benefit) | December 31, | ||||||||
2014 | 2013 | ||||||||
Current | |||||||||
Federal | $ | - | $ | - | |||||
State | 843 | - | |||||||
843 | - | ||||||||
Deferred | |||||||||
Federal | (1,744,445 | ) | (491,900 | ) | |||||
State | (314,699 | ) | (71,500 | ) | |||||
(2,059,144 | ) | (563,400 | ) | ||||||
Change in valuation allowance | 2,059,144 | 563,400 | |||||||
Total income tax provision | $ | 843 | $ | - | |||||
Schedule of the effective income tax rate and the statutory federal income tax rate | December 31, | ||||||||
2014 | 2013 | ||||||||
U.S. federal statutory rate | 34 | % | (34.00 | )% | |||||
State income tax rate, net of federal benefit | 2.93 | (4.95 | ) | ||||||
Inducement expenses | (10.63 | ) | - | ||||||
Other permanent differences | 2.79 | 2.47 | |||||||
Less: valuation allowance | (29.10 | ) | 36.48 | ||||||
Provision for income taxes | (.01 | )% | - | % | |||||
Schedule of deferred tax assets | December 31, | ||||||||
2014 | 2013 | ||||||||
Deferred tax assets: | |||||||||
Net operating loss carryforward | $ | 2,487,784 | $ | 639,100 | |||||
Tax credits | 75,337 | - | |||||||
Accruals and reserves | 23,023 | - | |||||||
Restricted stock | 114,712 | - | |||||||
Derivative liability | - | 10,421 | |||||||
Total deferred tax assets before valuation allowance: | $ | 2,700,856 | $ | 649,521 | |||||
Valuation allowance | (2,698,243 | ) | (639,100 | ) | |||||
Deferred tax assets, net of valuation allowance | 2,613 | 10,421 | |||||||
Deferred tax liabilities: | |||||||||
Fixed assets | $ | (2,613 | ) | $ | - | ||||
Convertible debt | - | (10,421 | ) | ||||||
Total deferred tax liabilities | (2,613 | ) | (10,421 | ) | |||||
Net deferred tax asset (liability) | $ | - | $ | - | |||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and Contingencies [Abstract] | |||||
Future Lease Obligation | Future Lease Obligations | ||||
2015 | $ | 125,058 | |||
2016 | 121,477 | ||||
2017 | 87,426 | ||||
Total future lease obligations | $ | 333,961 | |||
Organization_and_Principal_Bus1
Organization and Principal Business Activity (Details) | 1 Months Ended |
Sep. 25, 2012 | |
Organization And Principal Business Activity [Abstract] | |
Business acquisition, membership interests percentage | 100.00% |
Common stock acquired in exchange | 20,000,000 |
Going_Concern_and_Management_P1
Going Concern and Management Plans (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Going Concern and Management Plans [Abstract] | |||
Net Loss | ($7,076,609) | ($1,544,534) | |
Stockholders' Equity | 2,735,344 | -1,831,393 | -6,576 |
Working capital | $2,579,121 |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2014 | |
Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 5 years |
Furniture and Fixtures [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 5 years |
Furniture and Fixtures [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Tooling And Molds [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Tooling And Molds [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 2 years |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details Textual) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Customer deposits | $138,599 | |
Depreciation | 12,473 | 585 |
Inventory | 359,544 | 6,533 |
Prepayment for raw materials | $423,054 | |
Shares issued upon conversion | 120,000 | 500,000 |
Warrants [Member] | ||
Number of warrants | 3,629,776 | 454,600 |
Shares issued upon conversion | 50,000 |
Accrued_Expenses_Details
Accrued Expenses (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Accrued expenses [Abstract] | ||
Salaries and payroll taxes | $35,239 | $18,750 |
Reimbursable expenses | 5,426 | 196 |
Consulting fees | 10,000 | 18,574 |
Audit fees | 50,000 | |
Insurance | 136,349 | |
Rent | 628 | |
State income taxes | 843 | |
Royalty fees | 35,000 | |
Investment banking fees | 45,000 | |
Interest expense - convertible note | 17,497 | |
Other | 16,060 | |
Totals | $254,545 | $135,017 |
Convertible_Notes_Payable_Deta
Convertible Notes Payable (Details) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Feb. 11, 2014 | Dec. 13, 2012 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 21, 2012 | Jan. 31, 2013 | |
Convertible Notes Payable [Line Items] | ||||||||
Convertible notes payable | $150,000 | |||||||
Convertible notes payable - accrued interest | 21,485 | 17,497 | ||||||
Convertible notes payable, Maturity date | 21-Dec-14 | |||||||
Conversion of debt | 150,000 | |||||||
Debt conversion description | CII regarding converting its outstanding convertible note of $150,000, along with accrued interest of $21,485, into common stock at a 25% discount to the Company's closing stock price on February 17, 2014. | |||||||
Shares issued for debt relief | 55,497 | 100,000 | ||||||
Shares issued for debt relief, amount | 232,360 | 171,485 | 100,000 | |||||
Unrealized gain on change in fair value of conversion feature | 20,218 | |||||||
Conversion feature in additional paid-in capital | 98,722 | |||||||
Unamortized debt discount | 26,755 | 18,211 | ||||||
First Tranche [Member] | ||||||||
Convertible Notes Payable [Line Items] | ||||||||
Convertible notes payable | 75,000 | |||||||
Second Tranche [Member] | ||||||||
Convertible Notes Payable [Line Items] | ||||||||
Convertible notes payable | $75,000 |
Derivative_Liabilities_Details
Derivative Liabilities (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Embedded Conversion Feature and Warrant Liability: | ||
Risk-free interest rate | 0.30% | |
Expected volatility | 123.54% | |
Fair Value Assumptions, Expected Term | 4 years 7 months 2 days | |
Expected dividend yield | ||
Number of shares | 120,000 | 500,000 |
Fair value | $1,650,243 | |
February 21, 2014 [Member] | ||
Embedded Conversion Feature and Warrant Liability: | ||
Risk-free interest rate | 1.52% | |
Expected volatility | 105.36% | |
Fair Value Assumptions, Expected Term | 4 years 10 months 17 days | |
Expected dividend yield | ||
Number of shares | 1,391,539 | |
Fair value | 4,589,734 | |
February 18, 2014 [Member] | ||
Embedded Conversion Feature and Warrant Liability: | ||
Risk-free interest rate | 0.10% | |
Expected volatility | 105.36% | |
Fair Value Assumptions, Expected Term | 9 months | |
Expected dividend yield | ||
Number of shares | 55,497 | |
Fair value | 98,722 | |
January 13, 2014 [Member] | ||
Embedded Conversion Feature and Warrant Liability: | ||
Risk-free interest rate | 1.60% | |
Expected volatility | 123.54% | |
Fair Value Assumptions, Expected Term | 5 years | |
Expected dividend yield | ||
Number of shares | 941,539 | |
Fair value | 3,450,976 | |
May 25, 2013 [Member] | ||
Embedded Conversion Feature and Warrant Liability: | ||
Risk-free interest rate | 0.30% | |
Expected volatility | 91.17% | |
Fair Value Assumptions, Expected Term | 1 year 7 months 6 days | |
Expected dividend yield | ||
Number of shares | 120,000 | |
Fair value | $44,966 |
Derivative_Liabilities_Details1
Derivative Liabilities (Details 1) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Derivative Instruments, Gain (Loss) [Line Items] | |||
Derivative liabilities | $1,650,243 | ||
Quoted prices in active markets (Level 1) | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Derivative liabilities | |||
Significant other observable inputs (Level 2) | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Derivative liabilities | |||
Significant unobservable inputs (Level 3) | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Derivative liabilities | $1,650,243 |
Derivative_Liabilities_Details2
Derivative Liabilities (Details 2) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Ending balance | $1,650,243 | |
Fair Value, Inputs, Level 3 [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Beginning liability balance | 1,650,243 | |
Recognition of derivative value in equity | 3,450,976 | 1,531,303 |
Recognition of conversion feature liability | 44,966 | |
Net unrealized gain on derivative liabilities in equity | -392,545 | |
Net unrealized (gain) loss on conversion feature liabilities | -20,218 | 73,974 |
Adjustment to additional paid-in capital upon conversion and modification | -4,688,456 | |
Ending balance | $1,650,243 |
Advances_from_Officer_Details
Advances from Officer (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Advances from Officer [Abstract] | ||
Proceeds from advances made by officer | $64,000 | |
Repayments of advances made by officer | $64,000 |
Stockholders_Equity_Deficiency2
Stockholders' Equity (Deficiency) (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Feb. 27, 2015 | |
Weighted Average Exercise Price | |||
Weighted Average Exercise Price Outstanding and Exercisable, beginning | $3.29 | ||
Weighted Average Exercise Price Outstanding and Exercisable ending | $3.29 | ||
Warrants [Member] | |||
Number of Warrants | |||
Number of Warrants Outstanding and Exercisable beginning | 454,600 | ||
Number of Warrants Issued | 3,675,176 | 754,600 | |
Number of Warrants Exercised | -500,000 | -300,000 | |
Number of Warrants Cancelled | |||
Number of Warrants Outstanding and Exercisable ending | 3,629,776 | 454,600 | |
Weighted Average Exercise Price | |||
Weighted Average Exercise Price Outstanding and Exercisable, beginning | $3.23 | ||
Weighted Average Exercise Price Issued | $2.79 | $2.34 | |
Weighted Average Exercise Price Exercised | $3 | $1 | |
Weighted Average Exercise Price Cancelled | |||
Weighted Average Exercise Price Outstanding and Exercisable ending | $2.80 | $3.23 | |
Weighted Average Remaining Life In Years | |||
Weighted Average Remaining Life In Years Outstanding, beginning | 4 years 11 months 19 days | ||
Weighted Average Remaining Life In Years Issued | 4 years 6 months 4 days | ||
Weighted Average Remaining Life In Years Outstanding, ending | 4 years 6 months 4 days | ||
Weighted Average Remaining Life In Years Exercisable | 4 years 6 months 4 days | ||
Intrinsic Value | |||
Intrinsic Value Outstanding, beginning | $351,300 | ||
Intrinsic Value Outstanding, ending | 283,828 | 351,300 | |
Intrinsic Value Exercisable | $283,828 |
Stockholders_Equity_Deficiency3
Stockholders' Equity (Deficiency) (Details Textual) (USD $) | 1 Months Ended | 0 Months Ended | 1 Months Ended | 3 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | ||||
Nov. 18, 2014 | Sep. 15, 2014 | Jan. 13, 2014 | Jan. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Aug. 21, 2014 | Jun. 17, 2014 | Feb. 21, 2014 | Feb. 27, 2015 | |
employees | employees | employees | Purchasers | ||||||||
Consultant | |||||||||||
Proceeds from issuance of stock, value | $51,000 | ||||||||||
Common stock issued | 24,762,360 | 21,937,822 | |||||||||
Common stock, par value | $0.00 | $0.00 | |||||||||
Stock sold in private offering, warrant shares | 2,127,273 | ||||||||||
Common stock exercise price | $2.75 | ||||||||||
Gross proceeds from Issuance of common stock | 51,000 | ||||||||||
Proceeds from public offering | 4,954,042 | ||||||||||
Warrant received by private placement agent | 41,539 | ||||||||||
Warrants issued to purchase common stock | 2,127,273 | ||||||||||
Proceeds from Warrant Exercises | 1,470,000 | 300,000 | |||||||||
Warrant exercise price | $3.29 | ||||||||||
Warrant term | 5 years | ||||||||||
Inducement costs | 1,262,068 | ||||||||||
Stock issued under LTIP - shares | 2,476,236 | ||||||||||
Restricted shares issued | 215,000 | 261,131 | |||||||||
Restricted shares issued, fair value | 451,500 | ||||||||||
Number of non executive under plan | 6 | 5 | 4 | ||||||||
Number Of Consultant | 1 | ||||||||||
Long-term stock incentive plan description | The maximum aggregate number of shares of common stock that may be issued under the LTIP, including stock awards and stock appreciation rights, is limited to 10% of the shares of common stock outstanding on the first business or trading day of any fiscal year, which is 2,476,236 at December 31, 2014 | ||||||||||
Additional paid-in capital | 11,562,887 | -80,177 | |||||||||
Percentage of liquidated damage | 2.00% | ||||||||||
Additional inducement expense | 718,110 | ||||||||||
Stock issued during the plan | 232,360 | 171,485 | 100,000 | ||||||||
Stock issued during the plan, shares | 55,497 | 100,000 | |||||||||
Shares issued to executive and non-executive | 275,225 | ||||||||||
Shares issued to executive and non-executive, Shares | 112,500 | ||||||||||
Shares available to be issued | 2,183,506 | ||||||||||
Shares, Issued | 292,730 | ||||||||||
Expense on restricted stock awards | 26,833 | ||||||||||
Director [Member] | |||||||||||
Restricted shares issued | 48,833 | ||||||||||
Restricted shares issued, fair value | 30,000 | ||||||||||
Number of non executive under plan | 3 | 2 | |||||||||
Stock issued during the plan | 31,397 | ||||||||||
Stock issued during the plan, shares | 80,000 | ||||||||||
Officer [Member] | |||||||||||
Number of Executive | 1 | ||||||||||
Stock issued during the plan, shares | 55,497 | ||||||||||
Shares issued to executive and non-executive | 275,225 | ||||||||||
January 13, 2014 offering [Member] | |||||||||||
Closing balance of private offering | 1,000,000 | ||||||||||
Exercised oversubscription amount in offering | 350,000 | ||||||||||
Proceeds from issuance of stock, value | 1,350,000 | ||||||||||
Common stock issued | 415,387 | ||||||||||
Common stock, par value | $0.00 | ||||||||||
Proceeds from private offering | 450,000 | ||||||||||
Securities Purchase Agreement [Member] | |||||||||||
Stock sold in private offering, warrant shares | 1,350,000 | ||||||||||
Common stock exercise price | $3.25 | $3 | |||||||||
Warrant term | 5 years | ||||||||||
Number of warrants exercised | 100,000 | ||||||||||
Percentage of liquidated damage | 2.00% | ||||||||||
Number of purchasers | 2 | ||||||||||
December 2013 Offering [Member] | |||||||||||
Stock sold in private offering, warrant shares | 138,463 | ||||||||||
Common stock exercise price | $3.25 | ||||||||||
Common stock unit under public offering | 138,463 | ||||||||||
Gross proceeds from Issuance of common stock | 450,000 | ||||||||||
Offering costs | 56,820 | ||||||||||
Retirement of common stock by officers, shares | 138,463 | ||||||||||
January 2014 Offering [Member] | |||||||||||
Stock sold in private offering, warrant shares | 276,924 | ||||||||||
Common stock exercise price | $3.25 | ||||||||||
Common stock unit under public offering | 276,924 | ||||||||||
Gross proceeds from Issuance of common stock | 900,000 | ||||||||||
Offering costs | 100,006 | ||||||||||
Retirement of common stock by officers, shares | 276,924 | ||||||||||
Maximum [Member] | |||||||||||
Common stock exercise price | 3 | ||||||||||
Minimum [Member] | |||||||||||
Common stock exercise price | 2 | ||||||||||
Common Stock [Member] | |||||||||||
Proceeds from issuance of stock, value | 20 | ||||||||||
Common stock issued | 500,000 | ||||||||||
Common stock exercise price | $3 | $3 | |||||||||
Common stock unit under public offering | 138,463 | ||||||||||
Offering costs | 30,000 | ||||||||||
Public offering price per share | $2.75 | ||||||||||
Retirement of common stock by officers, shares | -676,924 | -138,463 | |||||||||
Proceeds from Warrant Exercises | 1,500,000 | ||||||||||
Warrant term | 5 years | ||||||||||
Number of warrants exercised | 400,000 | ||||||||||
Warrants [Member] | |||||||||||
Public offering price per share | $2.75 | ||||||||||
Retirement of common stock by officers, shares | 400,000 | ||||||||||
Unrealized gain on derivative liabilities | 448,072 | ||||||||||
Derivative liability | 3,450,976 | ||||||||||
Warrant exercise price | 3.25 | $2.80 | $3.23 | ||||||||
Warrant term | 5 years | ||||||||||
Number of warrants exercised | -500,000 | 1,391,539 | |||||||||
Additional paid-in capital | $4,514,772 | ||||||||||
Warrants [Member] | December 2013 Offering [Member] | |||||||||||
Common stock unit under public offering | 450,000 | ||||||||||
Warrants [Member] | January 2014 Offering [Member] | |||||||||||
Common stock unit under public offering | 900,000 | ||||||||||
Warrants [Member] | Maximum [Member] | |||||||||||
Warrant exercise price | $3.25 | ||||||||||
Warrants [Member] | Minimum [Member] | |||||||||||
Warrant exercise price | $3 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Current | ||
Federal | ||
State | 843 | |
Total | 843 | |
Deferred | ||
Federal | -1,744,445 | -491,900 |
State | -314,699 | -71,500 |
Total Deferred Income Tax Provision | -2,059,144 | -563,400 |
Change in valuation allowance | 2,059,144 | 563,400 |
Total income tax provision | $843 |
Income_Taxes_Details_1
Income Taxes (Details 1) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | ||
U.S. federal statutory rate | 34.00% | -34.00% |
State income tax rate, net of federal benefit | 2.93% | -4.95% |
Inducement expenses | -10.63% | |
Other permanent differences | 2.79% | 2.47% |
Less: valuation allowance | -29.10% | 36.48% |
Provision for income taxes | -0.01% |
Income_Taxes_Details_2
Income Taxes (Details 2) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Deferred tax assets: | ||
Net operating loss carryforward | $2,487,784 | $639,100 |
Tax credits | 75,337 | |
Accruals and reserves | 23,023 | |
Restricted stock | 114,712 | |
Derivative liability | 10,421 | |
Total deferred tax assets before valuation allowance: | 2,700,856 | 649,521 |
Valuation allowance | -2,698,243 | -639,100 |
Deferred tax assets, net of valuation allowance | 2,613 | 10,421 |
Deferred tax liabilities: | ||
Fixed assets | -2,613 | |
Convertible debt | -10,421 | |
Deferred Tax Liabilities, Net | -2,613 | -10,421 |
Net deferred tax asset (liability) |
Income_Taxes_Details_Textual
Income Taxes (Details Textual) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Taxes (Textual) | ||
Net operating loss carryovers | $6,508,916 | $1,641,000 |
Change in valuation allowance | 2,059,144 | 563,400 |
Operating loss carryforwards, expiration date | 31-Dec-33 | |
Tax credit carryforwards | $75,337 | |
Tax credit carryforward, expiration date | 31-Dec-33 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | Dec. 31, 2014 |
Commitments and Contingencies [Abstract] | |
2015 | $125,058 |
2016 | 121,477 |
2017 | 87,426 |
Total future lease obligation | $333,961 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details Textual) (USD $) | 0 Months Ended | 1 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | ||||||||
Aug. 19, 2011 | Jan. 31, 2013 | Nov. 30, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Oct. 16, 2013 | Oct. 13, 2014 | Sep. 16, 2013 | Aug. 31, 2013 | Jul. 31, 2013 | Oct. 31, 2012 | Nov. 01, 2013 | Sep. 12, 2014 | Jul. 03, 2014 | Sep. 24, 2014 | Oct. 01, 2012 | Jan. 31, 2014 | |
Commitments and Contingencies [Line Items] | |||||||||||||||||
Consultant fees paid in cash | $5,500 | ||||||||||||||||
Aggregate amount of purchase commitment | 150,000 | 125,000 | |||||||||||||||
Issuance of common stock for development services | 765,975 | 311,240 | |||||||||||||||
Rent expense year one | 125,058 | ||||||||||||||||
Rent expense year two | 121,477 | ||||||||||||||||
Rent expense year three | 87,426 | ||||||||||||||||
Lease commitment | 333,961 | ||||||||||||||||
Percentage on sales commission | 5.00% | 5.00% | |||||||||||||||
Minimum royalty payment two years | 15,000 | ||||||||||||||||
Minimum royalty payment there after | 20,000 | ||||||||||||||||
Royalty revenue | 15,000 | ||||||||||||||||
Royalties accrued | 35,000 | ||||||||||||||||
Agreement maturity date | May, 2013 | ||||||||||||||||
Incurred expenses | 5,246,482 | 1,435,099 | |||||||||||||||
Lease Agreements [Member] | |||||||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||||||
Term of the lease | 3 years | ||||||||||||||||
Monthly rent amount | 1,250 | ||||||||||||||||
Percentage of lease increase annually | 3 | ||||||||||||||||
Rent expense year one | 15,000 | ||||||||||||||||
Rent expense year two | 15,450 | ||||||||||||||||
Rent expense year three | 15,914 | ||||||||||||||||
Lease commitment | 46,364 | ||||||||||||||||
Consultant Agreement [Member] | |||||||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||||||
Consultant fees paid in cash | 250,000 | 4,000 | 4,000 | 5,000 | |||||||||||||
Prepaid fee for services | 125,000 | ||||||||||||||||
Term of agreement | 15 months | ||||||||||||||||
Issuance of common stock for development services | 20,000 | 20,000 | 10,000 | ||||||||||||||
Issuance of common stock for development services, shares | 5,000 | 4,878 | |||||||||||||||
Stock issued for services in cash | 65,000 | ||||||||||||||||
Stock issued for services for public relations and marketing | 42,240 | 24,000 | |||||||||||||||
Stock issued for services for public relations and marketing, shares | 13,767 | 4,000 | 24,000 | 4,000 | |||||||||||||
Incurred expenses | 11,000 | ||||||||||||||||
Consultant Agreement One [Member] | |||||||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||||||
Consultant fees paid in cash | 5,000 | ||||||||||||||||
Term of agreement | 6 months | ||||||||||||||||
Issuance of common stock for development services | 90,000 | ||||||||||||||||
Issuance of common stock for development services, shares | 165,744 | ||||||||||||||||
Compensation for services paid in cash | 60,000 | ||||||||||||||||
Payments for additional marketing services | 41,875 | ||||||||||||||||
Lease Agreement [Member] | |||||||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||||||
Term of the lease | 3 years | ||||||||||||||||
Rent expenses | 28,071 | ||||||||||||||||
Monthly rent amount | 6,395 | ||||||||||||||||
Lease Agreement One [Member] | |||||||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||||||
Term of the lease | 2 years | ||||||||||||||||
Lease and rental expense current year | 2,300 | ||||||||||||||||
Lease and rental expense next year | 2,450 | ||||||||||||||||
Purchase Commitment [Member] | |||||||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||||||
Aggregate amount of purchase commitment | 696,500 | ||||||||||||||||
Payment for purchase commitment | 139,300 | ||||||||||||||||
Purchase commitment, description | The purchase commitment calls for monthly deliveries through February 1, 2015 | ||||||||||||||||
Distribution agreement [Member] | |||||||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||||||
Term of agreement | 5 years | ||||||||||||||||
Royalty percentage | 20.00% | ||||||||||||||||
Monthly minimum royalty | 5,000 | ||||||||||||||||
Employment Agreement [Member] | Chief Executive Officer [Member] | |||||||||||||||||
Commitments and Contingencies [Line Items] | |||||||||||||||||
Term of agreement | 3 years | ||||||||||||||||
Initial base salary | 150,000 | ||||||||||||||||
Increased in salaries | $300,000 |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | 1 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | ||||||
Nov. 18, 2014 | Jan. 13, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Mar. 05, 2015 | Jan. 28, 2015 | Jan. 19, 2015 | Jan. 15, 2015 | Jan. 03, 2015 | Feb. 27, 2015 | |
Subsequent Event [Line Items] | ||||||||||
Restricted shares issued | 215,000 | 261,131 | ||||||||
Issuance of common stock value | $51,000 | |||||||||
Proceeds in connection with exercise of warrants | 1,470,000 | 300,000 | ||||||||
Warrant exercise price | $3.29 | |||||||||
Subsequent Event [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Cash compensation | 50,000 | 5,000 | 5,000 | |||||||
Restricted shares issued | 5,000 | 6,000 | ||||||||
Issuance of common stock for services, shares | 25,000 | |||||||||
Issuance of common stock value | 68,750 | |||||||||
Proceeds in connection with exercise of warrants | $100,000 | |||||||||
Issuance of warrants | 50,000 | |||||||||
Number of common stock called by warrants | 50,000 | |||||||||
Warrant exercise price | $2 | |||||||||
Retirement of common stock by executive officers, shares | 697,054 |