Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 13, 2018 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | Xspand Products Lab, Inc. | |
Entity Central Index Key | 1,717,556 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | XSPL | |
Entity Common Stock, Shares Outstanding | 4,387,920 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 3,930,844 | $ 557,268 |
Accounts receivable, net | 1,654,502 | 1,430,236 |
Inventory | 227,630 | 240,061 |
Prepaid expenses and other current assets | 1,159,731 | 41,461 |
Loan held for investment | 500,000 | 0 |
Due from related party | 1,250,959 | 834,897 |
Total current assets | 8,723,666 | 3,103,923 |
Property and equipment, net | 915,104 | 966,904 |
Total assets | 9,638,770 | 4,070,827 |
Current liabilities: | ||
Accounts payable | 1,283,748 | 1,135,039 |
Accrued expenses and other current liabilities | 386,182 | 137,709 |
Current portion of notes payable - related parties | 264,896 | 225,553 |
Total current liabilities | 1,934,826 | 1,498,301 |
Notes payable - related parties, non-current | 2,653,011 | 2,770,947 |
Deferred tax liability | 34,209 | 34,209 |
Total liabilities | 4,622,046 | 4,303,457 |
Commitments and contingencies (Note 9) | ||
Stockholders' equity (deficit) | ||
Common stock, $0.001 par value, 250,000,000 shares authorized; 4,368,930 and 3,000,000 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively | 4,369 | 3,000 |
Additional paid-in capital | 7,551,951 | 0 |
Accumulated deficit | (2,539,596) | (235,630) |
Total stockholders' equity (deficit) | 5,016,724 | (232,630) |
Total liabilities and stockholders' equity (deficit) | $ 9,638,770 | $ 4,070,827 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 250,000,000 | 250,000,000 |
Common Stock, Shares, Issued | 4,368,930 | 3,000,000 |
Common Stock, Shares, Outstanding | 4,368,930 | 3,000,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues, net | $ 4,387,197 | $ 4,534,970 | $ 7,818,527 | $ 8,396,746 |
Cost of revenues | 3,124,221 | 3,285,443 | 5,453,215 | 6,083,115 |
Gross profit | 1,262,976 | 1,249,527 | 2,365,312 | 2,313,631 |
Operating expenses: | ||||
Selling, general and administrative | 1,352,438 | 655,224 | 2,183,925 | 1,163,043 |
Selling, general and administrative - stock-based compensation expense | 306,000 | 0 | 2,027,250 | 0 |
Total operating expenses | 1,658,438 | 655,224 | 4,211,175 | 1,163,043 |
Operating (loss) income | (395,462) | 594,303 | (1,845,863) | 1,150,588 |
Other (expense) income: | ||||
Rental income | 25,703 | 25,703 | 51,407 | 51,407 |
Interest (expense) income | (277,602) | 1,252 | (365,137) | 2,443 |
Total other (expense) income | (251,899) | 26,955 | (313,730) | 53,850 |
(Loss) income before income taxes | (647,361) | 621,258 | (2,159,593) | 1,204,438 |
Income tax expense | 79,300 | 47,486 | 144,373 | 91,225 |
Net (loss) income | $ (726,661) | $ 573,772 | $ (2,303,966) | $ 1,113,213 |
Net (loss) income per share | ||||
- Basic and Diluted | $ (0.18) | $ 0.19 | $ (0.66) | $ 0.37 |
Weighted Average Number of Common Shares Outstanding | ||||
- Basic and Diluted | 3,932,084 | 3,000,000 | 3,468,617 | 3,000,000 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - 6 months ended Jun. 30, 2018 - USD ($) | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] |
Balance at Dec. 31, 2017 | $ (232,630) | $ 3,000 | $ 0 | $ (235,630) |
Balance (in shares) at Dec. 31, 2017 | 3,000,000 | |||
Sale of common stock - investors in the IPO | 6,471,150 | $ 1,294 | 6,469,856 | |
Sale of common stock - investors in the IPO (in shares) | 1,294,230 | |||
Shares to be issued – investors in the IPO | 91,450 | 91,450 | ||
Offering costs – IPO | (1,204,030) | (1,204,030) | ||
Issuance of common stock – employees for services | 306,000 | $ 61 | 305,939 | |
Issuance of common stock – employees for services (in shares) | 61,200 | |||
Issuance of common stock – note holder | 67,500 | $ 14 | 67,486 | |
Issuance of common stock – note holder (in shares) | 13,500 | |||
Shares to be issued – note holder | 100,000 | 100,000 | ||
Stock-based compensation for assumption of consulting agreements | 1,721,250 | 1,721,250 | ||
Net loss | (2,303,966) | (2,303,966) | ||
Balance at Jun. 30, 2018 | $ 5,016,724 | $ 4,369 | $ 7,551,951 | $ (2,539,596) |
Balance (in shares) at Jun. 30, 2018 | 4,368,930 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash Flow from Operating Activities | ||
Net (loss) income | $ (2,303,966) | $ 1,113,213 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 79,262 | 102,934 |
Amortization of financing costs | 266,944 | 0 |
Stock-based compensation | 2,027,250 | 0 |
Changes in assets and liabilities: | ||
Accounts receivable | (224,266) | (299,011) |
Inventory | 12,431 | (16,049) |
Prepaid expenses and other current assets | (1,118,270) | 29,220 |
Accounts payable | 148,709 | 128,316 |
Accrued expenses and other current liabilities | 248,473 | 178,870 |
Due from related party | (416,062) | (396,418) |
Net cash (used in) provided by operating activities | (1,279,495) | 841,075 |
Cash Flows from Investing Activities | ||
Purchases of property and equipment | (27,462) | (44,264) |
Purchase of loan held for investment | (500,000) | 0 |
Net cash used in investing activities | (527,462) | (44,264) |
Cash Flows from Financing Activities | ||
Borrowings under notes payable | 645,000 | 0 |
Repayments under notes payable – related parties | (78,593) | 0 |
Repayments under notes payable | (645,000) | 0 |
Net proceeds from sale of common stock | 5,358,570 | 0 |
Fees paid for financing costs | (99,444) | 0 |
Dividends paid | 0 | (779,277) |
Net cash provided by (used in) financing activities | 5,180,533 | (779,277) |
Net increase in cash and cash equivalents | 3,373,576 | 17,534 |
Cash and cash equivalents - beginning of period | 557,268 | 2,534,753 |
Cash and cash equivalents - end of period | 3,930,844 | 2,552,287 |
Supplemental Disclosures of Cash Flow Information | ||
Interest | 62,623 | 0 |
Income taxes | 0 | 0 |
Shares issued to note holders | 67,500 | 0 |
Shares to be issued to note holders | $ 100,000 | $ 0 |
Business Organization and Natur
Business Organization and Nature of Operations | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | Note 1 — Business Organization and Nature of Operations Xspand Products Lab, Inc. (“Xspand”) was incorporated on July 18, 2017 under the laws of the State of Nevada as Idea Lab X Products, Inc. On October 26, 2017, Idea Lab X Products, Inc. changed its name to Xspand Products Lab, Inc. As of June 30, 2018, Xspand had three wholly-owned subsidiaries (collectively, the “Company”): S.R.M. Entertainment Limited (“SRM”), Ferguson Containers, Inc. (“Fergco”) and CBAV1, LLC (“CB”). SRM was incorporated in Hong Kong on January 14, 1981 and primarily designs, manufactures and sells a broad variety of innovative toy products directly to retailers or direct to consumers via ecommerce in North America, Asia and Europe. Fergco was incorporated on September 14, 1966 under the laws of the State of New Jersey. Fergco primarily designs, manufactures and sells packaging and packaging materials for industrial and pharmaceutical companies in North America. On September 30, 2017, SRM and Fergco were acquired by Xspand in exchange for an aggregate of 3,000,000 shares of Xspand common stock and notes payable aggregating $2,996,500. This transaction between entities under common control resulted in a change in reporting entity and required retrospective combination of the entities for all periods presented, as if the combination had been in effect since the inception of common control. Accordingly, the condensed consolidated financial statements of Xspand reflect the accounting of the combined acquired subsidiaries at historical carrying values, except that equity reflects the equity of Xspand. CB was formed on May 14, 2018 under laws of the State of Nevada. CB was formed for the purpose of purchasing a promissory note from a bank, at a discount from face value, of a company in financial difficulty. CB currently has no operations and only holds the note as a loan held for investment. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | Note 2 — Summary of Significant Accounting Policies Basis of Presentation The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and with Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission (the “SEC”) Accordingly, they do not contain all information and footnotes required by GAAP for annual financial statements. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of June 30, 2018 and the results of operations, changes in stockholders’ equity (deficit), and cash flows for the periods presented. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the operating results for the full fiscal year for any future period. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The Company’s accounting policies are described in the Notes to Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended December 31, 2017, and updated, as necessary, in this Quarterly Report on Form 10-Q. Principles of Consolidation The condensed consolidated financial statements include the accounts of Xspand and its wholly-owned subsidiaries, SRM, Fergco and CB. All intercompany transactions and balances have been eliminated in consolidation. Use of Estimates Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the financial statements. The Company’s significant estimates used in these financial statements include, but are not limited to, accounts receivable reserves, loan loss reserves, the valuation allowance related to the Company’s deferred tax assets and the recoverability and useful lives of long-lived assets. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates. Inventory Inventory is recorded at the lower of cost or net realizable value on a first-in, first-out basis. The Company reduces the carrying value of inventories for those items that are potentially excess, obsolete, or slow moving based on changes in customer demand, technology developments, or other economic factors. Loan Held for Investment Loan held for investment is reported on the balance sheet at the acquired cost which approximates the fair value, which resulted in a discount. The acquired loan had evidence of deterioration of credit quality and for which it was probable, at the time of our acquisition, that the Company would be unable to collect all contractually required payments. For these loans, the excess of the undiscounted contractual cash flows over the undiscounted cash flows estimated by us at the time of acquisition was not accreted into income (nonaccretable discount). The amount representing the excess of cash flows estimated by us at acquisition over the purchase price was accreted into purchase discount earned over the life of the applicable loans (accretable discount). The nonaccretable discount was not accreted into income. If cash flows could not be reasonably estimated for any loan, and collection was not probable, the cost recovery method of accounting was used. Under the cost recovery method, any amounts received were applied against the recorded amount of such loans. Subsequent to acquisition, if cash flow projections improved, and it was determined that the amount and timing of the cash flows related to the nonaccretable discount was reasonably estimable and collection was probable, the corresponding decrease in the nonaccretable discount was transferred to the accretable discount and was accreted into interest income over the remaining life of any such loan on the interest method. If cash flow projections deteriorated subsequent to acquisition, the decline was accounted for through the allowance for loan losses. Depending on the timing of an acquisition, the initial allocation of discount generally was made primarily to nonaccretable discount until the Company boarded all loans onto its servicing system; at that time, any cash flows expected to be collected over the purchase price were transferred to accretable discount. Generally, the allocation was finalized no later than ninety days from the date of purchase. Revenue Recognition Generally, the Company considers all revenues as arising from contracts with customers. Revenue is recognized based on the five step process outlined in the Accounting Standards Codification (“ASC”) 606: Step 1 – Identify the Contract with the Customer – A contract exists when (a) the parties to the contract have approved the contract and are committed to perform their respective obligations, (b) the entity can identify each party’s rights regarding the goods or services to be transferred, (c) the entity can identify the payment terms for the goods or services to be transferred, (d) the contract has commercial substance and it is probably that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. Step 2 – Identify Performance Obligations in the Contract – Upon execution of a contract, the Company identifies as performance obligations each promise to transfer to the customer either (a) goods or services that are distinct, or (b) a series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. To the extent a contract includes multiple promised goods or services, the Company must apply judgement to determine whether the goods or services are capable of being distinct within the context of the contract. If these criteria are not met, the goods or services are accounted for as a combined performance obligation. Step 3 – Determine the Transaction Price – When (or as) a performance obligation is satisfied, the Company shall recognize as revenue the amount of the transaction price that is allocated to the performance obligation. The contract terms are used to determine the transaction price. Generally, all contracts include fixed consideration. If a contract did include variable consideration, the Company would determine the amount of variable consideration that should be included in the transaction price based on expected value method. Variable consideration would be included in the transaction price, if in the Company’s judgement, it is probable that a significant future reversal of cumulative revenue under the contract would not occur. Step 4 – Allocate the Transaction Price – After the transaction price has been determined, the next step is to allocate the transaction price to each performance obligation in the contract. If the contract only has one performance obligation, the entire transaction price will be applied to that obligation. If the contract has multiple performance obligations, the transaction price is allocated to the performance obligations based on the relative standalone selling price (SSP) at contract inception. Step 5 – Satisfaction of the Performance Obligations (and Recognize Revenue) – Revenue is recognized when (or as) goods or services are transferred to a customer. The Company satisfies each of its performance obligations by transferring control of the promised good or service underlying that performance obligation to the customer. Control is the ability to direct the use of, and obtain substantially all of the remaining benefits from an asset. It includes the ability to prevent other entities from directing the use of, and obtaining the benefits from an asset. Indicators that control has passed to the customer include: a present obligation to pay; physical possession of the asset; legal title; risks and rewards of ownership; and acceptance of the asset(s). Performance obligations can be satisfied at a point in time or over time. Substantially all of the Company’s revenues continue to be recognized when control of the goods are transferred to the customer, which is upon shipment of the finished goods to the customer. All sales have fixed pricing and there are currently no variable components included in the Company’s revenue. Additionally, the Company will issue credits for defective merchandise, historically these credits for defective merchandise have not been material. Based on the Company’s analysis of the new revenue standards, revenue recognition from the sale of finished goods to customers, which represents substantially all of the Company’s revenues, was not impacted by the adoption of the new revenue standards. Disaggregation of Revenue The Company’s primary revenue streams include the sale of goods for innovative toy products (SRM) and packaging materials to industrial and pharmaceutical companies (Fergco). For a presentation of the Company’s revenues disaggregated by segment, see Note 11, Segment Reporting. Fair Value of Financial Instruments The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 defines fair value as 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. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 — quoted prices in active markets for identical assets or liabilities Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions) The carrying amounts of the Company’s financial instruments, such as cash, accounts receivable, accounts payable, accrued expenses and other current liabilities approximate fair values due to the short-term nature of these instruments. The carrying amount of the Company’s notes payable approximates fair value because the effective yields on these obligations, which include contractual interest rates, taken together with other features such as concurrent issuance of warrants, are comparable to rates of returns for instruments of similar credit risk. The loan held for investment was acquired at fair value, which resulted in a discount. As of June 30, 2018, the book value and estimated fair value of the Company’s loan held for investment was as follows: June 30, 2018 Book Value Estimated Fair Value Loan held for investment $ 500,000 $ 500,000 Financial instruments for which fair value is disclosed but not required to be recognized in the balance sheet on a recurring basis consisted of the following: June 30, 2018 Total Level 1 Level 2 Level 3 Loan held for investment $ 500,000 - - $ 500,000 The following changes in level 3 instruments for the three months ended June 30, 2018 are presented below: Level 3 Balance, April 1, 2018 - Purchases 500,000 Balance, June 30, 2018 500,000 The following changes in level 3 instruments for the six months ended June 30, 2018 are presented below: Level 3 Balance, January 1, 2018 - Purchases 500,000 Balance, June 30, 2018 500,000 Foreign Currency Translation The Company uses the United States dollar as its functional and reporting currency since the majority of the Company’s revenues, expenses, assets and liabilities are in the United States. Assets and liabilities in foreign currencies (HK dollars) are translated using the exchange rate at the balance sheet date, while revenue and expense accounts are translated at the average exchange rates prevailing during the year. Equity accounts are translated at historical exchange rates. Gains and losses from foreign currency transactions and translation for the three and six months ended June 30, 2018 and 2017 and the cumulative translation gains and losses as of June 30, 2018 and December 31, 2017 were not material. Income Taxes The Company accounts for income taxes under the provisions of the Financial Accounting Standards Board (“FASB”) ASC Topic 740 “Income Taxes” (“ASC Topic 740”). The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items that have been included or excluded in the financial statements or tax returns. Deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts (“temporary differences”) at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. The Company utilizes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Management has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company’s condensed consolidated financial statements as of June 30, 2018 and December 31, 2017. The Company does not expect any significant changes in its unrecognized tax benefits within twelve months of the reporting date. The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as general and administrative expenses in the statements of operations. On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”) was signed into law. This legislation significantly changes U.S. tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The TCJA permanently reduced the U.S. corporate income tax rate from 35% to 21%, effective January 1, 2018. The staff of the SEC issued Staff Accounting Bulletin No. 118 to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the TCJA. Although the Company is unable to make a reasonable estimate on the full effect on our income taxes as of the date of this report, the Company remeasured its deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. The remeasurement of the Company's deferred tax assets and liabilities was offset by a change in the valuation allowance. The Company is still in the process of analyzing the impact to the Company of the TCJA. Where the Company has been able to make reasonable estimates of the effects related to which its analysis is not yet complete, the Company has recorded provisional amounts. The ultimate impact to the Company’s condensed consolidated financial statements of the TCJA may differ from the provisional amounts due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the TCJA. The accounting is expected to be complete when the Company’s 2017 U.S. corporate income tax return is filed in 2018. Net Earnings or Loss per Share Basic net (loss) income per common share is computed by dividing net (loss) income by the weighted average number of vested common shares outstanding during the period, adjusted to give effect to the 1-for-3.333333 reverse stock split, which was effected on February 14, 2018. Diluted net income per common share is computed by dividing net income by the weighted average number vested of common shares, plus the net impact of common shares (computed using the treasury stock method), if dilutive, resulting from the exercise of dilutive securities. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. As of June 30, 2017, there were no common stock equivalents outstanding. As of June 30, 2018, the Company excluded the common stock equivalents summarized below, which entitle the holders thereof to ultimately acquire shares of common stock, from its calculation of earnings per share, as their effect would have been anti-dilutive. June 30, 2018 Selling Agent Warrants to be issued for the purchase of common stock 65,626 Shares to be issued, see Note 10 38,290 103,916 Concentrations Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivables and revenues. The Company has cash on deposits in several financial institutions which, at times, may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company has not experienced losses in such accounts and periodically evaluates the creditworthiness of its financial institutions. The Company reduces its credit risk by placing its cash and cash equivalents with major financial institutions. The Company had approximately $3,220,000 uninsured at June 30, 2018. The Company held cash of approximately $360,000 in foreign bank accounts as of June 30, 2018. For the three and six months ended June 30, 2018 and 2017, the following customers represented more than 10% of total net revenues: For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Customer A 23 % 30 % 25 % 28 % Customer B * 12 % * * Customer C * * 11 % * * Customer did not represent greater than 10% of total net revenue. As of June 30, 2018, the following customers represented more than 10% of total accounts receivable: June 30, 2018 Customer A 13 % Customer B 14 % For the three and six months ended June 30, 2018 and 2017, the following geographical regions represented more than 10% of total net revenues: For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 North America 82 % 81 % 80 % 82 % Asia-Pacific 15 % 14 % 17 % 12 % Deferred Financing Costs Deferred financing costs include debt discounts and debt issuance costs related to a recognized debt liability and are presented in the balance sheet as a direct deduction from the carrying value of the debt liability. Amortization of deferred financing costs are included as a component of interest expense. Deferred financing costs are amortized using the straight-line method over the term of the recognized debt liability which approximates the effective interest method. Offering Costs Costs directly attributable to the Company’s Regulation A initial public offering (“IPO”) of equity securities were deferred prior to the completion of the IPO and charged against the gross proceeds of the offering as a reduction of additional paid-in capital at the time of the IPO. These costs included legal fees to draft the Company’s offering statement and provide counsel related to the IPO, fees incurred by the independent registered public accounting firm directly related to the IPO, fees incurred by financial reporting advisors directly related to the IPO, SEC filing, printing and distribution expenses, roadshow expenses and exchange listing fees. Subsequent Events The Company has evaluated subsequent events through the date which the financial statements were issued. Based upon the evaluation, except for items described in Note 12, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements. Segment Reporting The Company uses “the management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operating decision maker is the Chairman and Chief Executive Officer (“CEO”) of the Company, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. The Company classified the reportable operating segments into (i) design, manufacture and sale of a broad variety of innovative toy products sold directly to retailers or direct to consumers via ecommerce in North America, Asia and Europe by SRM and (ii) the design, manufacture and sale of packaging and packaging materials to industrial and pharmaceutical companies in North America by Fergco. |
Inventory
Inventory | 6 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventory Disclosure [Text Block] | Note 3 — Inventory As of June 30, 2018 and December 31, 2017, inventory consisted of the following: June 30, December 31, 2018 2017 Raw materials $ 31,512 $ 30,410 Finished goods 196,118 209,651 Total inventory $ 227,630 $ 240,061 |
Prepaid expenses and other curr
Prepaid expenses and other current assets | 6 Months Ended |
Jun. 30, 2018 | |
Prepaid expenses and other current assets [Abstract] | |
Prepaid Expenses and Other Current Assets [Text Block] | Note 4 — Prepaid expenses and other current assets As of June 30, 2018 and December 31, 2017, prepaid expenses and other current assets consisted of the following: June 30, December 31, 2018 2017 Deposits for inventory $ 1,033,329 $ - Deposits - 22,814 Prepaid insurance 31,035 - Other 95,367 18,647 Total prepaid expenses and other current assets $ 1,159,731 $ 41,461 |
Loan held for investment
Loan held for investment | 6 Months Ended |
Jun. 30, 2018 | |
Loan held for investment [Abstract] | |
Loan Held for Investment [Text Block] | Note 5 — Loan held for investment On June 4, 2018 , the Company purchased a promissory note from a bank As of June 30, 2018 , the loan held-for-investment consisted of the following: June 30, 2018 Cloud b, Promissory note, past due, Wall Street Journal prime rate plus 3% interest $ 2,270,000 Non-accretable purchase discount (1,770,000 ) Total loan held-for-investment $ 500,000 The interest rate of the promissory note as of June 30, 2018 was 8%. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | Note 6 — Income Taxes United States and foreign components of (loss) income before income taxes were as follows: For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 United States $ (1,308,118 ) $ (63,474 ) $ (3,367,603 ) $ (11,891 ) Foreign 660,757 684,732 1,208,010 1,216,329 (Loss) income before income taxes $ (647,361 ) $ 621,258 $ (2,159,593 ) $ 1,204,438 Fergco was a Subchapter S pass-through entity for income tax purposes prior to its acquisition by Xspand on September 30, 2017. Accordingly, Fergco was not subject to income taxes prior to the acquisition and therefore the tax provision related to the United States income is only for the period from January 1, 2018 to June 30, 2018. The Company’s foreign entity is SRM, which is an entity subject to the Hong Kong, China tax regime. The Hong Kong tax returns remain subject to examination by local taxing authorities beginning with the tax year ended December 31, 2011. The tax effects of temporary differences that give rise to deferred tax assets or liabilities are presented below: June 30, December 31, 2018 2017 Deferred tax assets: Net operating loss carryforwards $ 796,320 $ 50,524 Less: valuation allowance (796,320 ) (50,524 ) Net deferred tax assets - - Deferred tax liabilities: Property and equipment 34,209 34,209 Deferred tax liabilities 34,209 34,209 Net deferred tax liabilities $ 34,209 $ 34,209 The income tax provision consists of the following: For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Current: Federal $ 20,053 $ - $ 38,794 $ - Foreign 49,557 47,486 90,601 91,225 State and local 9,690 - 14,978 - Income tax provision $ 79,300 $ 47,486 $ 144,373 $ 91,225 A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows: For the Six Months June 30, 2018 2017 Tax at federal rate 21.0 % 34.0 % U.S. income attributable to pass-through entity 0.0 % -3.0 % U.S. income subject to valuation allowance -34.7 % 0.0 % State and local income taxes -0.5 % 0.0 % Foreign income not subject to U.S. federal tax 11.7 % -31.0 % Foreign tax -4.2 % 7.5 % Effective income tax rate -6.7 % 7.5 % |
Notes Payable
Notes Payable | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Notes Payable [Text Block] | Note 7 — Notes Payable The Company borrowed funds under two separate notes in February 2018 and March 2018. As of June 30, 2018, both holders of the notes were paid in full. In addition, the Company was required to issue 20,000 and 13,500 shares under the notes payable, respectively. The fair value of the shares to be issued was $167,500 which and fully amortized through interest expense. In May 2018, the Company issued 13,500 shares to the one note holder and 20,000 shares were still required to be issued as of June 30, 2018. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | Note 8 — Related Party Transactions As of June 30, 2018 and December 31, 2017, due from related party consists of amounts due from SRM Entertainment Group LLC (“SRM LLC”), which was the parent of SRM prior to its acquisition by Xspand, related to operating expenses that were paid for on behalf of one related party to the other related party. As of June 30, 2018 and December 31, 2017, the net amount due from related parties was $1,250,959 and $834,897, respectively. Such amounts are due currently. In connection with the acquisition of SRM and Fergco, Xspand issued two notes payable aggregating $2,996,500. One note was issued to NL Penn Capital, L.P, in relation to the acquisition of SRM in the amount of $2,120,000 and the other note was issued to the stockholders of Fergco in the amount of $876,500. The notes bear interest at a rate of six percent (6%) per annum and have an effective interest rate of six percent (6%) per annum. Xspand is required to make monthly payments comprised of principal and interest beginning in January 2018 that are amortized over ten (10) years, with a balloon payment of all outstanding principal and interest due at the respective maturity dates ($677,698 due on December 1, 2020 and $1,249,043 due on December 1, 2022). Related party interest expense was $102,942 and $0 for the six months ended June 30, 2018 and 2017, respectively. The scheduled maturities of the notes payable for the next five years as of June 30, 2018, are as follows: For the Years Ended December 31, Amount 2018 $ 146,957 2019 239,461 2020 254,230 2021 857,069 2022 1,420,190 $ 2,917,907 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | Note 9 — Commitments and Contingencies Operating Lease On August 8, 2016, SRM entered into a lease for office space in Kowloon, Hong Kong that expired on July 22, 2018. Monthly lease payments are approximately $6,000 for a total of approximately $152,000 for the total term of the lease. On August 8, 2018 the Company extended the lease in Kowloon, Hong Kong. See Note 12, Subsequent Events. Total rent expense for the three months ended June 30, 2018 and 2017 was $82,510 and $83,218, respectively and total rent expense for the six months ended June 30, 2018 and 2017 was $146,536 and $126,328, respectively. Rent expense is included in general and administrative expense on the condensed consolidated statements of operations. Rental Income Fergco leases a portion of the building located in Washington, New Jersey that it owns under a month to month lease. Total rental income related to the leased space for both the three months ended June 30, 2018 and 2017 was $25,704, respectively, and $51,407 for both the six months ended June 30, 2018 and 2017, respectively and is included in other income on the condensed consolidated statements of operations. Legal Contingencies As of June 30, 2018, we were not a party to any material legal proceedings. However, the Company may be involved in claims and litigation in the ordinary course of business, some of which seek monetary damages, including claims for punitive damages, which are not covered by insurance. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Stockholders' Equity Note Disclosure [Text Block] | Note 10 — Stockholders’ Equity Reverse Stock Split On February 14, 2018, Xspand effected a one-for-3.333333 reverse stock split of its issued and outstanding shares of common stock. All share information has been retroactively restated to reflect the aforementioned reverse stock split. Common Stock The Company was authorized to issue 250,000,000 shares of common stock, $0.001 par value, as of June 30, 2018 and December 31, 2017. The Company issued 1,294,230 shares of common stock and will issue an additional 18,290 shares of common stock related to the IPO, at a public offering price of $5.00 per share in August 2018. The Company received gross proceeds of $6,562,600 and net proceeds of $5,358,570 after deducting underwriter commissions and expenses of $714,802, legal fees of $157,358, escrow closing fees of $4,000 and other direct offering expenses aggregating $1,204,030. Stock-Based Compensation On February 28, 2018, the Company agreed to assume certain consulting agreements entered into by SRM LLC, which was the parent of SRM prior to its acquisition by Xspand. Under these consulting agreements SRM LLC offered these consultants options to own stock if SRM LLC were ever sold for past considerations. As an accommodation to Xspand, the principal stockholder of SRM satisfied these agreements on behalf of the Company, by transferring 344,250 of his shares to the consultants. In accordance with SEC Staff Accounting Bulletin (SAB) 79 amended by SAB 5T, “Accounting for Expenses or Liabilities Paid by Principal Stockholder,” the Company recorded a noncash charge of $1,721,250 for the fair value of these shares. The Company issued 61,200 shares of common stock to employees in connection with the IPO. The Company recorded a charge of $306,000 for the fair value of the 61,200 shares of common stock issued to employees for services. Selling Agent Agreement In connection with the IPO, the Company agreed to issue to the selling agent in the IPO, warrants to purchase a number of shares of the common stock equal to 5.0% of the total shares of common stock sold in any closing of the IPO, excluding shares purchased by investors sourced via alternative funding platforms (the “Selling Agent Warrants”). The Selling Agent Warrants are exercisable commencing on the qualification date of the IPO and have a term of 5 years. The Selling Agent Warrants are not redeemable by the Company. The exercise price for the Selling Agent Warrants will be 20% greater than the offering price, or $6.00. The Company will grant 65,626 of Selling Agent Warrants earned in connection with the IPO. |
Segment Reporting
Segment Reporting | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Segment Reporting Disclosure [Text Block] | Note 11 — Segment Reporting The Company’s principal operating segments coincide with the types of products to be sold. The products from which revenues are derived are consistent with the reporting structure of the Company’s internal organization. The Company’s two reportable segments for the three and six months ended June 30, 2018 and 2017 were the SRM segment and the Fergco segment. Xspand incurs operating expenses related to the corporate level and these costs are not allocated to the segments. The Company’s chief operating decision-maker has been identified as the Chairman and CEO, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Segment information is presented based upon the Company’s management organization structure as of June 30, 2018 and the distinctive nature of each segment. Future changes to this internal financial structure may result in changes to the reportable segments disclosed. There are no inter-segment revenue transactions and, therefore, revenues are only to external customers. Segment operating profit is determined based upon internal performance measures used by the chief operating decision-maker. The Company derives the segment results from its internal management reporting system. The accounting policies the Company uses to derive reportable segment results are the same as those used for external reporting purposes. Management measures the performance of each reportable segment based upon several metrics, including net revenues, gross profit and operating loss. Management uses these results to evaluate the performance of, and to assign resources to, each of the reportable segments. The Company manages certain operating expenses separately at the corporate level and does not allocate such expenses to the segments. Segment income from operations excludes interest income/expense and other income or expenses and income taxes according to how a particular reportable segment’s management is measured. Management does not consider impairment charges, and unallocated costs in measuring the performance of the reportable segments. Segment information available with respect to these reportable business segments for the three and six months ended June 30, 2018 and 2017 was as follows: For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Revenues: Fergco $ 1,718,409 $ 1,378,061 $ 3,025,328 $ 2,676,832 SRM 2,668,788 3,156,909 4,793,199 5,719,914 Total segment and consolidated revenues $ 4,387,197 $ 4,534,970 $ 7,818,527 $ 8,396,746 Gross profit: Fergco $ 500,285 $ 352,295 $ 860,722 $ 705,441 SRM 762,691 897,232 1,504,590 1,608,190 Total segment and consolidated gross profit $ 1,262,976 $ 1,249,527 $ 2,365,312 $ 2,313,631 Income (loss) from operations: Fergco $ 83,664 $ (90,426 ) $ 141,258 $ (65,738 ) SRM 660,637 684,729 1,207,890 1,216,326 Corporate (1,139,763 ) - (3,195,011 ) - Total segment and consolidated (loss) income from operations $ (395,462 ) $ 594,303 $ (1,845,863 ) $ 1,150,588 Depreciation and amortization: Fergco $ 27,767 $ 34,086 $ 55,534 $ 68,172 SRM 11,864 17,381 23,728 34,762 Total segment depreciation and amortization $ 39,631 $ 51,467 $ 79,262 $ 102,934 June 30, December 31, 2018 2017 Segment total assets: Fergco $ 2,259,670 $ 1,853,273 SRM 3,359,352 2,217,296 Corporate 4,019,748 258 Total segment and consolidated assets $ 9,638,770 $ 4,070,827 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | Note 12 — Subsequent Events Edison Nation Transaction On June 29, 2018, Pursuant to the Purchase Agreement, the Company agreed to pay aggregate consideration 990,000 shares of the Company’s common stock that may be issued in exchange for the redemption of certain non-voting membership interests of EN that will be created specifically in connection with the transaction contemplated by the Purchase Agreement (which exchange obligations may be instead satisfied in cash instead of shares of common stock, in the Company’s sole discretion), and (iv) the issuance of approximately 550,346 shares of the Company’s common stock in satisfaction of the indebtedness represented by promissory notes payable by EN to Venture Six, LLC and Wesley Jones with a total principal balance of $4,127,601.94 as of the date of the Purchase Agreement. In addition, the Company agreed to use its best efforts to cause Louis Foreman, a Member, manager, and principal of EN, to be nominated for election to the Company’s board of directors at the Company’s next annual meeting. The terms of the Purchase Agreement are complex and only briefly summarized above. For further information, please refer to the descriptions of the Purchase Agreement and related agreements contained in the Company’s Current Report on Form 8-K filed with the SEC on July 6, 2018. The discussion herein is qualified in its entirety by reference to such filed documents. The Company’s management expects the transaction contemplated by the Purchase Agreement to close during the third quarter of 2018. Service Agreement On August 1, 2018, the Company entered into a one-year letter agreement with Enventys Partners, LLC, a North Carolina limited liability company (“Enventys”), whereby Enventys agreed to provide services to the Company as an independent contractor in the areas of product development and crowdfunding campaign marketing. During the term of the Enventys Agreement, the Company shall pay Enventys a fixed fee of $15,000 per month for product development assistance, including design research, mechanical engineering and quality control planning. In addition, the Company agreed to pay a commitment fee of $250,000 for Enventys’ assistance in marketing ten rewards-based crowdfunding campaigns for the Company’s products. Depending on the success of each campaign, the Company may also pay Enventys a commission of up to ten percent of the total funds raised in the applicable campaign. One of the members of EN, Louis Foreman, is also the Chief Executive Officer and largest equity holder of Enventys. Operating Lease On August 8, 2018, SRM extended its lease for office space in Kowloon, Hong Kong that expires on August 7, 2020. Monthly lease payments are approximately $6,400 for a total of approximately $154,000 for the total term of the lease. Common Stock On July 3, 2018, the Company issued the 18,290 shares of common stock to investors in the IPO. On July 11, 2018, the Company issued 700 shares of common stock to two employees for services performed. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Accounting, Policy [Policy Text Block] | Basis of Presentation The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and with Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission (the “SEC”) Accordingly, they do not contain all information and footnotes required by GAAP for annual financial statements. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of June 30, 2018 and the results of operations, changes in stockholders’ equity (deficit), and cash flows for the periods presented. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the operating results for the full fiscal year for any future period. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The Company’s accounting policies are described in the Notes to Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended December 31, 2017, and updated, as necessary, in this Quarterly Report on Form 10-Q. |
Consolidation, Policy [Policy Text Block] | Principles of Consolidation The condensed consolidated financial statements include the accounts of Xspand and its wholly-owned subsidiaries, SRM, Fergco and CB. All intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates, Policy [Policy Text Block] | Use of Estimates Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the financial statements. The Company’s significant estimates used in these financial statements include, but are not limited to, accounts receivable reserves, loan loss reserves, the valuation allowance related to the Company’s deferred tax assets and the recoverability and useful lives of long-lived assets. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates. |
Inventory, Policy [Policy Text Block] | Inventory Inventory is recorded at the lower of cost or net realizable value on a first-in, first-out basis. The Company reduces the carrying value of inventories for those items that are potentially excess, obsolete, or slow moving based on changes in customer demand, technology developments, or other economic factors. |
Finance, Loan and Lease Receivables, Held-for-investment, Policy [Policy Text Block] | Loan Held for Investment Loan held for investment is reported on the balance sheet at the acquired cost which approximates the fair value, which resulted in a discount. The acquired loan had evidence of deterioration of credit quality and for which it was probable, at the time of our acquisition, that the Company would be unable to collect all contractually required payments. For these loans, the excess of the undiscounted contractual cash flows over the undiscounted cash flows estimated by us at the time of acquisition was not accreted into income (nonaccretable discount). The amount representing the excess of cash flows estimated by us at acquisition over the purchase price was accreted into purchase discount earned over the life of the applicable loans (accretable discount). The nonaccretable discount was not accreted into income. If cash flows could not be reasonably estimated for any loan, and collection was not probable, the cost recovery method of accounting was used. Under the cost recovery method, any amounts received were applied against the recorded amount of such loans. Subsequent to acquisition, if cash flow projections improved, and it was determined that the amount and timing of the cash flows related to the nonaccretable discount was reasonably estimable and collection was probable, the corresponding decrease in the nonaccretable discount was transferred to the accretable discount and was accreted into interest income over the remaining life of any such loan on the interest method. If cash flow projections deteriorated subsequent to acquisition, the decline was accounted for through the allowance for loan losses. Depending on the timing of an acquisition, the initial allocation of discount generally was made primarily to nonaccretable discount until the Company boarded all loans onto its servicing system; at that time, any cash flows expected to be collected over the purchase price were transferred to accretable discount. Generally, the allocation was finalized no later than ninety days from the date of purchase. |
Revenue Recognition, Policy [Policy Text Block] | Revenue Recognition Generally, the Company considers all revenues as arising from contracts with customers. Revenue is recognized based on the five step process outlined in the Accounting Standards Codification (“ASC”) 606: Step 1 – Identify the Contract with the Customer – A contract exists when (a) the parties to the contract have approved the contract and are committed to perform their respective obligations, (b) the entity can identify each party’s rights regarding the goods or services to be transferred, (c) the entity can identify the payment terms for the goods or services to be transferred, (d) the contract has commercial substance and it is probably that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. Step 2 – Identify Performance Obligations in the Contract – Upon execution of a contract, the Company identifies as performance obligations each promise to transfer to the customer either (a) goods or services that are distinct, or (b) a series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. To the extent a contract includes multiple promised goods or services, the Company must apply judgement to determine whether the goods or services are capable of being distinct within the context of the contract. If these criteria are not met, the goods or services are accounted for as a combined performance obligation. Step 3 – Determine the Transaction Price – When (or as) a performance obligation is satisfied, the Company shall recognize as revenue the amount of the transaction price that is allocated to the performance obligation. The contract terms are used to determine the transaction price. Generally, all contracts include fixed consideration. If a contract did include variable consideration, the Company would determine the amount of variable consideration that should be included in the transaction price based on expected value method. Variable consideration would be included in the transaction price, if in the Company’s judgement, it is probable that a significant future reversal of cumulative revenue under the contract would not occur. Step 4 – Allocate the Transaction Price – After the transaction price has been determined, the next step is to allocate the transaction price to each performance obligation in the contract. If the contract only has one performance obligation, the entire transaction price will be applied to that obligation. If the contract has multiple performance obligations, the transaction price is allocated to the performance obligations based on the relative standalone selling price (SSP) at contract inception. Step 5 – Satisfaction of the Performance Obligations (and Recognize Revenue) – Revenue is recognized when (or as) goods or services are transferred to a customer. The Company satisfies each of its performance obligations by transferring control of the promised good or service underlying that performance obligation to the customer. Control is the ability to direct the use of, and obtain substantially all of the remaining benefits from an asset. It includes the ability to prevent other entities from directing the use of, and obtaining the benefits from an asset. Indicators that control has passed to the customer include: a present obligation to pay; physical possession of the asset; legal title; risks and rewards of ownership; and acceptance of the asset(s). Performance obligations can be satisfied at a point in time or over time. Substantially all of the Company’s revenues continue to be recognized when control of the goods are transferred to the customer, which is upon shipment of the finished goods to the customer. All sales have fixed pricing and there are currently no variable components included in the Company’s revenue. Additionally, the Company will issue credits for defective merchandise, historically these credits for defective merchandise have not been material. Based on the Company’s analysis of the new revenue standards, revenue recognition from the sale of finished goods to customers, which represents substantially all of the Company’s revenues, was not impacted by the adoption of the new revenue standards. |
Disaggregation of Revenue Policy [Policy Text Block] | Disaggregation of Revenue The Company’s primary revenue streams include the sale of goods for innovative toy products (SRM) and packaging materials to industrial and pharmaceutical companies (Fergco). For a presentation of the Company’s revenues disaggregated by segment, see Note 11, Segment Reporting. |
Fair Value Measurement, Policy [Policy Text Block] | Fair Value of Financial Instruments The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 defines fair value as 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. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 — quoted prices in active markets for identical assets or liabilities Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions) The carrying amounts of the Company’s financial instruments, such as cash, accounts receivable, accounts payable, accrued expenses and other current liabilities approximate fair values due to the short-term nature of these instruments. The carrying amount of the Company’s notes payable approximates fair value because the effective yields on these obligations, which include contractual interest rates, taken together with other features such as concurrent issuance of warrants, are comparable to rates of returns for instruments of similar credit risk. The loan held for investment was acquired at fair value, which resulted in a discount. As of June 30, 2018, the book value and estimated fair value of the Company’s loan held for investment was as follows: June 30, 2018 Book Value Estimated Fair Value Loan held for investment $ 500,000 $ 500,000 Financial instruments for which fair value is disclosed but not required to be recognized in the balance sheet on a recurring basis consisted of the following: June 30, 2018 Total Level 1 Level 2 Level 3 Loan held for investment $ 500,000 - - $ 500,000 The following changes in level 3 instruments for the three months ended June 30, 2018 are presented below: Level 3 Balance, April 1, 2018 - Purchases 500,000 Balance, June 30, 2018 500,000 The following changes in level 3 instruments for the six months ended June 30, 2018 are presented below: Level 3 Balance, January 1, 2018 - Purchases 500,000 Balance, June 30, 2018 500,000 |
Foreign Currency Transactions and Translations Policy [Policy Text Block] | Foreign Currency Translation The Company uses the United States dollar as its functional and reporting currency since the majority of the Company’s revenues, expenses, assets and liabilities are in the United States. Assets and liabilities in foreign currencies (HK dollars) are translated using the exchange rate at the balance sheet date, while revenue and expense accounts are translated at the average exchange rates prevailing during the year. Equity accounts are translated at historical exchange rates. Gains and losses from foreign currency transactions and translation for the three and six months ended June 30, 2018 and 2017 and the cumulative translation gains and losses as of June 30, 2018 and December 31, 2017 were not material. |
Income Tax, Policy [Policy Text Block] | Income Taxes The Company accounts for income taxes under the provisions of the Financial Accounting Standards Board (“FASB”) ASC Topic 740 “Income Taxes” (“ASC Topic 740”). The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items that have been included or excluded in the financial statements or tax returns. Deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts (“temporary differences”) at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. The Company utilizes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Management has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company’s condensed consolidated financial statements as of June 30, 2018 and December 31, 2017. The Company does not expect any significant changes in its unrecognized tax benefits within twelve months of the reporting date. The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as general and administrative expenses in the statements of operations. On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”) was signed into law. This legislation significantly changes U.S. tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The TCJA permanently reduced the U.S. corporate income tax rate from 35% to 21%, effective January 1, 2018. The staff of the SEC issued Staff Accounting Bulletin No. 118 to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the TCJA. Although the Company is unable to make a reasonable estimate on the full effect on our income taxes as of the date of this report, the Company remeasured its deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. The remeasurement of the Company's deferred tax assets and liabilities was offset by a change in the valuation allowance. The Company is still in the process of analyzing the impact to the Company of the TCJA. Where the Company has been able to make reasonable estimates of the effects related to which its analysis is not yet complete, the Company has recorded provisional amounts. The ultimate impact to the Company’s condensed consolidated financial statements of the TCJA may differ from the provisional amounts due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the TCJA. The accounting is expected to be complete when the Company’s 2017 U.S. corporate income tax return is filed in 2018. |
Earnings Per Share, Policy [Policy Text Block] | Net Earnings or Loss per Share Basic net (loss) income per common share is computed by dividing net (loss) income by the weighted average number of vested common shares outstanding during the period, adjusted to give effect to the 1-for-3.333333 reverse stock split, which was effected on February 14, 2018. Diluted net income per common share is computed by dividing net income by the weighted average number vested of common shares, plus the net impact of common shares (computed using the treasury stock method), if dilutive, resulting from the exercise of dilutive securities. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. As of June 30, 2017, there were no common stock equivalents outstanding. As of June 30, 2018, the Company excluded the common stock equivalents summarized below, which entitle the holders thereof to ultimately acquire shares of common stock, from its calculation of earnings per share, as their effect would have been anti-dilutive. June 30, 2018 Selling Agent Warrants to be issued for the purchase of common stock 65,626 Shares to be issued, see Note 10 38,290 103,916 |
Concentration Risk, Credit Risk, Policy [Policy Text Block] | Concentrations Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivables and revenues. The Company has cash on deposits in several financial institutions which, at times, may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company has not experienced losses in such accounts and periodically evaluates the creditworthiness of its financial institutions. The Company reduces its credit risk by placing its cash and cash equivalents with major financial institutions. The Company had approximately $3,220,000 uninsured at June 30, 2018. The Company held cash of approximately $360,000 in foreign bank accounts as of June 30, 2018. For the three and six months ended June 30, 2018 and 2017, the following customers represented more than 10% of total net revenues: For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Customer A 23 % 30 % 25 % 28 % Customer B * 12 % * * Customer C * * 11 % * * Customer did not represent greater than 10% of total net revenue. As of June 30, 2018, the following customers represented more than 10% of total accounts receivable: June 30, 2018 Customer A 13 % Customer B 14 % For the three and six months ended June 30, 2018 and 2017, the following geographical regions represented more than 10% of total net revenues: For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 North America 82 % 81 % 80 % 82 % Asia-Pacific 15 % 14 % 17 % 12 % |
Deferred Financing Costs [Policy Text Block] | Deferred Financing Costs Deferred financing costs include debt discounts and debt issuance costs related to a recognized debt liability and are presented in the balance sheet as a direct deduction from the carrying value of the debt liability. Amortization of deferred financing costs are included as a component of interest expense. Deferred financing costs are amortized using the straight-line method over the term of the recognized debt liability which approximates the effective interest method. |
Deferred Offering Costs [Policy Text Block] | Offering Costs Costs directly attributable to the Company’s Regulation A initial public offering (“IPO”) of equity securities were deferred prior to the completion of the IPO and charged against the gross proceeds of the offering as a reduction of additional paid-in capital at the time of the IPO. These costs included legal fees to draft the Company’s offering statement and provide counsel related to the IPO, fees incurred by the independent registered public accounting firm directly related to the IPO, fees incurred by financial reporting advisors directly related to the IPO, SEC filing, printing and distribution expenses, roadshow expenses and exchange listing fees. |
Subsequent Events, Policy [Policy Text Block] | Subsequent Events The Company has evaluated subsequent events through the date which the financial statements were issued. Based upon the evaluation, except for items described in Note 12, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements. |
Segment Reporting, Policy [Policy Text Block] | Segment Reporting The Company uses “the management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operating decision maker is the Chairman and Chief Executive Officer (“CEO”) of the Company, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. The Company classified the reportable operating segments into (i) design, manufacture and sale of a broad variety of innovative toy products sold directly to retailers or direct to consumers via ecommerce in North America, Asia and Europe by SRM and (ii) the design, manufacture and sale of packaging and packaging materials to industrial and pharmaceutical companies in North America by Fergco. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Fair Value, by Balance Sheet Grouping [Table Text Block] | As of June 30, 2018, the book value and estimated fair value of the Company’s loan held for investment was as follows: June 30, 2018 Book Value Estimated Fair Value Loan held for investment $ 500,000 $ 500,000 |
Fair Value Measurements, Recurring and Nonrecurring [Table Text Block] | Financial instruments for which fair value is disclosed but not required to be recognized in the balance sheet on a recurring basis consisted of the following: June 30, 2018 Total Level 1 Level 2 Level 3 Loan held for investment $ 500,000 - - $ 500,000 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | The following changes in level 3 instruments for the three months ended June 30, 2018 are presented below: Level 3 Balance, April 1, 2018 - Purchases 500,000 Balance, June 30, 2018 500,000 The following changes in level 3 instruments for the six months ended June 30, 2018 are presented below: Level 3 Balance, January 1, 2018 - Purchases 500,000 Balance, June 30, 2018 500,000 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] | June 30, 2018 Selling Agent Warrants to be issued for the purchase of common stock 65,626 Shares to be issued, see Note 10 38,290 103,916 |
Schedules of Concentration of Risk, by Risk Factor [Table Text Block] | For the three and six months ended June 30, 2018 and 2017, the following customers represented more than 10% of total net revenues: For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Customer A 23 % 30 % 25 % 28 % Customer B * 12 % * * Customer C * * 11 % * * Customer did not represent greater than 10% of total net revenue. As of June 30, 2018, the following customers represented more than 10% of total accounts receivable: June 30, 2018 Customer A 13 % Customer B 14 % |
Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block] | For the three and six months ended June 30, 2018 and 2017, the following geographical regions represented more than 10% of total net revenues: For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 North America 82 % 81 % 80 % 82 % Asia-Pacific 15 % 14 % 17 % 12 % |
Inventory (Tables)
Inventory (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current [Table Text Block] | As of June 30, 2018 and December 31, 2017, inventory consisted of the following: June 30, December 31, 2018 2017 Raw materials $ 31,512 $ 30,410 Finished goods 196,118 209,651 Total inventory $ 227,630 $ 240,061 |
Prepaid expenses and other cu22
Prepaid expenses and other current assets (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Prepaid expenses and other current assets [Abstract] | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Table Text Block] | As of June 30, 2018 and December 31, 2017, prepaid expenses and other current assets consisted of the following: June 30, December 31, 2018 2017 Deposits for inventory $ 1,033,329 $ - Deposits - 22,814 Prepaid insurance 31,035 - Other 95,367 18,647 Total prepaid expenses and other current assets $ 1,159,731 $ 41,461 |
Loan held for investment (Table
Loan held for investment (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Loan held for investment [Abstract] | |
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] | As of June 30, 2018 , the loan held-for-investment consisted of the following: June 30, 2018 Cloud b, Promissory note, past due, Wall Street Journal prime rate plus 3% interest $ 2,270,000 Non-accretable purchase discount (1,770,000 ) Total loan held-for-investment $ 500,000 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income before Income Tax, Domestic and Foreign [Table Text Block] | United States and foreign components of (loss) income before income taxes were as follows: For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 United States $ (1,308,118 ) $ (63,474 ) $ (3,367,603 ) $ (11,891 ) Foreign 660,757 684,732 1,208,010 1,216,329 (Loss) income before income taxes $ (647,361 ) $ 621,258 $ (2,159,593 ) $ 1,204,438 |
Schedule of Deferred Tax Assets and Liabilities [Table Text Block] | The tax effects of temporary differences that give rise to deferred tax assets or liabilities are presented below: June 30, December 31, 2018 2017 Deferred tax assets: Net operating loss carryforwards $ 796,320 $ 50,524 Less: valuation allowance (796,320 ) (50,524 ) Net deferred tax assets - - Deferred tax liabilities: Property and equipment 34,209 34,209 Deferred tax liabilities 34,209 34,209 Net deferred tax liabilities $ 34,209 $ 34,209 |
Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] | The income tax provision consists of the following: For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Current: Federal $ 20,053 $ - $ 38,794 $ - Foreign 49,557 47,486 90,601 91,225 State and local 9,690 - 14,978 - Income tax provision $ 79,300 $ 47,486 $ 144,373 $ 91,225 |
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] | A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows: For the Six Months June 30, 2018 2017 Tax at federal rate 21.0 % 34.0 % U.S. income attributable to pass-through entity 0.0 % -3.0 % U.S. income subject to valuation allowance -34.7 % 0.0 % State and local income taxes -0.5 % 0.0 % Foreign income not subject to U.S. federal tax 11.7 % -31.0 % Foreign tax -4.2 % 7.5 % Effective income tax rate -6.7 % 7.5 % |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Schedule of Maturities of Long-term Debt [Table Text Block] | The scheduled maturities of the notes payable for the next five years as of June 30, 2018, are as follows: For the Years Ended December 31, Amount 2018 $ 146,957 2019 239,461 2020 254,230 2021 857,069 2022 1,420,190 $ 2,917,907 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment [Table Text Block] | Segment information available with respect to these reportable business segments for the three and six months ended June 30, 2018 and 2017 was as follows: For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Revenues: Fergco $ 1,718,409 $ 1,378,061 $ 3,025,328 $ 2,676,832 SRM 2,668,788 3,156,909 4,793,199 5,719,914 Total segment and consolidated revenues $ 4,387,197 $ 4,534,970 $ 7,818,527 $ 8,396,746 Gross profit: Fergco $ 500,285 $ 352,295 $ 860,722 $ 705,441 SRM 762,691 897,232 1,504,590 1,608,190 Total segment and consolidated gross profit $ 1,262,976 $ 1,249,527 $ 2,365,312 $ 2,313,631 Income (loss) from operations: Fergco $ 83,664 $ (90,426 ) $ 141,258 $ (65,738 ) SRM 660,637 684,729 1,207,890 1,216,326 Corporate (1,139,763 ) - (3,195,011 ) - Total segment and consolidated (loss) income from operations $ (395,462 ) $ 594,303 $ (1,845,863 ) $ 1,150,588 Depreciation and amortization: Fergco $ 27,767 $ 34,086 $ 55,534 $ 68,172 SRM 11,864 17,381 23,728 34,762 Total segment depreciation and amortization $ 39,631 $ 51,467 $ 79,262 $ 102,934 June 30, December 31, 2018 2017 Segment total assets: Fergco $ 2,259,670 $ 1,853,273 SRM 3,359,352 2,217,296 Corporate 4,019,748 258 Total segment and consolidated assets $ 9,638,770 $ 4,070,827 |
Business Organization and Nat27
Business Organization and Nature of Operations (Details Textual) - USD ($) | 1 Months Ended | ||
Jun. 29, 2018 | Sep. 30, 2017 | Jun. 30, 2018 | |
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | 990,000 | ||
SRM and Fergco Acquisition [Member] | |||
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | 3,000,000 | ||
Business Combination, Consideration Transferred, Notes Payable Issued | $ 2,996,500 | $ 2,996,500 |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Details) | Jun. 30, 2018USD ($) |
Loan held for investment | $ 500,000 |
Reported Value Measurement [Member] | |
Loan held for investment | $ 500,000 |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Details 1) | Jun. 30, 2018USD ($) |
Loans Receivable, Fair Value Disclosure | $ 500,000 |
Fair Value, Inputs, Level 1 [Member] | |
Loans Receivable, Fair Value Disclosure | 0 |
Fair Value, Inputs, Level 2 [Member] | |
Loans Receivable, Fair Value Disclosure | 0 |
Fair Value, Inputs, Level 3 [Member] | |
Loans Receivable, Fair Value Disclosure | $ 500,000 |
Summary of Significant Accoun30
Summary of Significant Accounting Policies (Details 2) - Fair Value, Measurements, Recurring [Member] - Fair Value, Inputs, Level 3 [Member] - USD ($) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2018 | Jun. 30, 2018 | |
Balance | $ 0 | $ 0 |
Purchases | 500,000 | 500,000 |
Balance | $ 500,000 | $ 500,000 |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Details 3) | 6 Months Ended |
Jun. 30, 2018shares | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 103,916 |
Selling Agent Warrants to be issued for the purchase of common stock [Member] | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 65,626 |
Shares to be Issued [Member] | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 38,290 |
Summary of Significant Accoun32
Summary of Significant Accounting Policies (Details 4) | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |||||
Customer A [Member] | Sales Revenue, Net [Member] | ||||||||
Concentration Risk, Percentage | 23.00% | 30.00% | 25.00% | 28.00% | ||||
Customer A [Member] | Accounts Receivable [Member] | ||||||||
Concentration Risk, Percentage | 13.00% | |||||||
Customer B [Member] | Sales Revenue, Net [Member] | ||||||||
Concentration Risk, Percentage | [1] | 12.00% | [1] | [1] | ||||
Customer B [Member] | Accounts Receivable [Member] | ||||||||
Concentration Risk, Percentage | 14.00% | |||||||
Customer C [Member] | Sales Revenue, Net [Member] | ||||||||
Concentration Risk, Percentage | [1] | [1] | 11.00% | [1] | ||||
[1] | Customer did not represent greater than 10% of total net revenue. |
Summary of Significant Accoun33
Summary of Significant Accounting Policies (Details 5) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
North America [Member] | ||||
Concentration Risk, Percentage | 82.00% | 81.00% | 80.00% | 82.00% |
Asia Pacific [Member] | ||||
Concentration Risk, Percentage | 15.00% | 14.00% | 17.00% | 12.00% |
Summary of Significant Accoun34
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 1 Months Ended | 6 Months Ended | 12 Months Ended | ||
Feb. 14, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 34.00% | 35.00% | ||
Stockholders' Equity, Reverse Stock Split | one-for-3.333333 | 1-for-3.333333 | |||
Cash, Uninsured Amount | $ 3,220,000 | ||||
Foreign Bank Accounts [Member] | |||||
Cash | $ 360,000 | ||||
Sales Revenue, Net [Member] | Geographic Concentration Risk [Member] | |||||
Concentration Risk, Percentage | 10.00% | 10.00% | |||
Scenario, Plan [Member] | |||||
Concentration Risk, Percentage | 21.00% |
Inventory (Details)
Inventory (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Raw materials | $ 31,512 | $ 30,410 |
Finished goods | 196,118 | 209,651 |
Total inventory | $ 227,630 | $ 240,061 |
Prepaid expenses and other cu36
Prepaid expenses and other current assets (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Deposits for inventory | $ 1,033,329 | $ 0 |
Deposits | 0 | 22,814 |
Prepaid insurance | 31,035 | 0 |
Other | 95,367 | 18,647 |
Total prepaid expenses and other current assets | $ 1,159,731 | $ 41,461 |
Loan held for investment (Detai
Loan held for investment (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 04, 2018 | Dec. 31, 2017 | |
Cloud b, Inc., Promissory note, past due, Wall Street Journal prime rate plus 3% interest | $ 2,270,000 | ||
Non-accretable purchase discount | (1,770,000) | ||
Total loan held-for-investment | $ 500,000 | $ 500,000 | $ 0 |
Loan held for investment (Det38
Loan held for investment (Details Textual) - USD ($) | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 04, 2018 | Dec. 31, 2017 | |
Receivable with Imputed Interest, Effective Yield (Interest Rate) | 8.00% | ||
Notes, Loans and Financing Receivable, Net, Current | $ 500,000 | $ 500,000 | $ 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest | $ (647,361) | $ 621,258 | $ (2,159,593) | $ 1,204,438 |
United States | ||||
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest | (1,308,118) | (63,474) | (3,367,603) | (11,891) |
Foreign | ||||
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest | $ 660,757 | $ 684,732 | $ 1,208,010 | $ 1,216,329 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 796,320 | $ 50,524 |
Less: valuation allowance | (796,320) | (50,524) |
Net deferred tax assets | 0 | 0 |
Deferred tax liabilities: | ||
Property and equipment | 34,209 | 34,209 |
Deferred tax liabilities | 34,209 | 34,209 |
Net deferred tax liabilities | $ 34,209 | $ 34,209 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Current: | ||||
Federal | $ 20,053 | $ 0 | $ 38,794 | $ 0 |
Foreign | 49,557 | 47,486 | 90,601 | 91,225 |
State and local | 9,690 | 0 | 14,978 | 0 |
Income tax provision | $ 79,300 | $ 47,486 | $ 144,373 | $ 91,225 |
Income Taxes (Details 3)
Income Taxes (Details 3) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Tax at federal rate | 21.00% | 34.00% | 35.00% |
U.S. income attributable to pass-through entity | 0.00% | (3.00%) | |
U.S. income subject to valuation allowance | (34.70%) | 0.00% | |
State and local income taxes | (0.50%) | 0.00% | |
Foreign income not subject to U.S. federal tax | 11.70% | (31.00%) | |
Foreign tax | (4.20%) | 7.50% | |
Effective income tax rate | (6.70%) | 7.50% |
Notes Payable (Details Textual)
Notes Payable (Details Textual) | Jun. 30, 2018USD ($) | May 31, 2018shares | Jun. 30, 2018USD ($) |
Debt Conversion, Converted Instrument, Shares Issued | shares | 13,500 | ||
Debt Instrument, Convertible, Number of Equity Instruments | 20,000 | ||
Amortization of Debt Discount (Premium) | $ 167,500 | ||
February 2018 and March 2018 Notes [Member] | |||
Notes Payable | $ 645,000 | $ 645,000 |
Related Party Transactions (Det
Related Party Transactions (Details) | Jun. 30, 2018USD ($) |
2,018 | $ 146,957 |
2,019 | 239,461 |
2,020 | 254,230 |
2,021 | 857,069 |
2,022 | 1,420,190 |
Long-term Debt | $ 2,917,907 |
Related Party Transactions (D45
Related Party Transactions (Details Textual) - USD ($) | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Sep. 30, 2017 | |
Due from Related Parties, Current | $ 1,250,959 | $ 834,897 | ||
Interest Expense, Related Party | 102,942 | $ 0 | ||
NL Penn Capital, L.P [Member] | ||||
Debt Instrument, Face Amount | $ 2,120,000 | |||
Debt Instrument, Interest Rate, Effective Percentage | 6.00% | |||
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid | $ 677,698 | |||
Debt Instrument, Maturity Date | Dec. 1, 2020 | |||
Stockholders of Fergco [Member] | ||||
Debt Instrument, Face Amount | $ 876,500 | |||
Debt Instrument, Interest Rate, Effective Percentage | 6.00% | |||
Debt Instrument, Term | 10 years | |||
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid | $ 1,249,043 | |||
Debt Instrument, Maturity Date | Dec. 1, 2022 | |||
SRM and Fergco Acquisition [Member] | ||||
Business Combination, Consideration Transferred, Notes Payable Issued | $ 2,996,500 | $ 2,996,500 |
Commitments and Contingencies (
Commitments and Contingencies (Details Textual) - USD ($) | Aug. 08, 2016 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 |
Lease Expiration Date | Jul. 22, 2018 | ||||
Operating Leases, Rent Expense, Minimum Rentals | $ 6,000 | ||||
Operating Leases, Rent Expense, Net | $ 82,510 | $ 83,218 | $ 146,536 | $ 126,328 | |
Operating Leases, Future Minimum Payments Due | $ 152,000 | ||||
Operating Leases, Rent Expense, Sublease Rentals | $ 25,704 | $ 25,704 | $ 51,407 | $ 51,407 |
Stockholders' Equity (Details T
Stockholders' Equity (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||||
Aug. 31, 2018 | Jul. 31, 2018 | Feb. 28, 2018 | Feb. 14, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Stock Issued During Period, Shares, Issued for Services | 700 | 344,250 | |||||||
Share-based Compensation | $ 306,000 | $ 0 | $ 2,027,250 | $ 0 | |||||
Stockholders' Equity, Reverse Stock Split | one-for-3.333333 | 1-for-3.333333 | |||||||
Common Stock, Shares Authorized | 250,000,000 | 250,000,000 | 250,000,000 | ||||||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 | ||||||
Stock Issued During Period, Shares, New Issues | 18,290 | ||||||||
Stock Issued During Period, Value, New Issues | $ 6,471,150 | ||||||||
Proceeds from Issuance of Common Stock | 5,358,570 | $ 0 | |||||||
Stock Issued During Period, Value, Issued for Services | $ 306,000 | $ 306,000 | |||||||
Regulation A Offering [Member] | |||||||||
Stock Issued During Period, Shares, New Issues | 1,294,230 | ||||||||
Shares Issued, Price Per Share | $ 5 | ||||||||
Stock Issued During Period, Value, New Issues | $ 6,562,600 | ||||||||
Proceeds from Issuance of Common Stock | 5,358,570 | ||||||||
Legal Fees | 157,358 | ||||||||
Deferred Offering Costs | $ 1,204,030 | ||||||||
Common Stock Shares Yet to be Issued | 18,290 | ||||||||
Underwriter Commissions and Expenses | $ 714,802 | ||||||||
Escrow Closing Fees | $ 4,000 | ||||||||
Regulation A Offering [Member] | Selling Agent Warrants [Member] | |||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 6 | $ 6 | |||||||
Class of Warrant or Right, Outstanding | 65,626 | 65,626 | |||||||
Class of Warrant or Right Expiration Period | 5 years | ||||||||
Class of Warrant or Right Exercise Price Percentage Threshold | 20.00% |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Segment Reporting [Line items] | |||||
Total segment and consolidated revenues | $ 4,387,197 | $ 4,534,970 | $ 7,818,527 | $ 8,396,746 | |
Total segment and consolidated gross profit | 1,262,976 | 1,249,527 | 2,365,312 | 2,313,631 | |
Total segment and consolidated (loss) income from operations | (395,462) | 594,303 | (1,845,863) | 1,150,588 | |
Total segment depreciation and amortization | 39,631 | 51,467 | 79,262 | 102,934 | |
Total segment and consolidated assets | 9,638,770 | 9,638,770 | $ 4,070,827 | ||
Fergco [Member] | |||||
Segment Reporting [Line items] | |||||
Total segment and consolidated revenues | 1,718,409 | 1,378,061 | 3,025,328 | 2,676,832 | |
Total segment and consolidated gross profit | 500,285 | 352,295 | 860,722 | 705,441 | |
Total segment and consolidated (loss) income from operations | 83,664 | (90,426) | 141,258 | (65,738) | |
Total segment depreciation and amortization | 27,767 | 34,086 | 55,534 | 68,172 | |
Total segment and consolidated assets | 2,259,670 | 2,259,670 | 1,853,273 | ||
SRM [Member] | |||||
Segment Reporting [Line items] | |||||
Total segment and consolidated revenues | 2,668,788 | 3,156,909 | 4,793,199 | 5,719,914 | |
Total segment and consolidated gross profit | 762,691 | 897,232 | 1,504,590 | 1,608,190 | |
Total segment and consolidated (loss) income from operations | 660,637 | 684,729 | 1,207,890 | 1,216,326 | |
Total segment depreciation and amortization | 11,864 | 17,381 | 23,728 | 34,762 | |
Total segment and consolidated assets | 3,359,352 | 3,359,352 | 2,217,296 | ||
Corporate Segment [Member] | |||||
Segment Reporting [Line items] | |||||
Total segment and consolidated (loss) income from operations | (1,139,763) | $ 0 | (3,195,011) | $ 0 | |
Total segment and consolidated assets | $ 4,019,748 | $ 4,019,748 | $ 258 |
Subsequent Events (Details Text
Subsequent Events (Details Textual) - USD ($) | Aug. 08, 2018 | May 31, 2018 | Aug. 08, 2016 | Jul. 31, 2018 | Jun. 29, 2018 | Feb. 28, 2018 | Aug. 01, 2018 |
Stock Issued During Period, Shares, New Issues | 18,290 | ||||||
Operating Leases, Rent Expense, Minimum Rentals | $ 6,000 | ||||||
Operating Leases, Future Minimum Payments Due | $ 152,000 | ||||||
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | 990,000 | ||||||
Payments To Be Acquire Businesses Gross | $ 700,000 | ||||||
Purchase of Membership Interests for third Party | 550,000 | ||||||
Business Combination, Consideration Transferred, Liabilities Incurred | $ 250,000 | ||||||
Debt Conversion, Converted Instrument, Shares Issued | 13,500 | ||||||
Shares Issuance of Satisfaction of the Indebtedness | 550,346 | ||||||
Stock Issued During Period, Shares, Issued for Services | 700 | 344,250 | |||||
Convertible Debt Securities [Member] | |||||||
Debt Instrument, Interest Rate, Effective Percentage | 4.00% | ||||||
Debt Instrument, Face Amount | $ 1,406,352 | ||||||
Debt Conversion, Converted Instrument, Shares Issued | 281,270 | ||||||
Debt Instrument, Term | 5 years | ||||||
Promissory Notes [Member] | |||||||
Debt Instrument, Face Amount | $ 4,127,601.94 | ||||||
Subsequent Event [Member] | |||||||
Operating Leases, Rent Expense, Minimum Rentals | $ 6,400 | ||||||
Operating Leases, Future Minimum Payments Due | $ 154,000 | ||||||
Subsequent Event [Member] | Enventys Partners LLC [Member] | |||||||
Fixed Fee Payable Per Month For Product Development Assistance | $ 15,000 | ||||||
Commitment Fee Payable | $ 250,000 |