Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Mar. 20, 2015 | Jun. 30, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | TOMI Environmental Solutions, Inc. | ||
Entity Central Index Key | 314227 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | Yes | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Common Stock, Shares Outstanding | 85,266,521 | ||
Entity Public Float | $14,121,109 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2014 |
CONSOLIDATED_BALANCE_SHEET
CONSOLIDATED BALANCE SHEET (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Current Assets: | ||
Cash and Cash Equivalents | $160,560 | $706,350 |
Cash - Restricted (Note 6) | 105,776 | 70,124 |
Accounts Receivable, net | 441,153 | 805,809 |
Inventories (Note 3) | 772,833 | 407,549 |
Prepaid Expenses | 35,404 | 7,980 |
Other Assets | 36,644 | |
Deferred Financing Costs - net (Note 6) | 199,625 | |
Total Current Assets | 1,751,995 | 1,997,812 |
Property & Equipment - net (Note 4) | 288,159 | 164,068 |
Other Assets: | ||
Intangible Assets - net (Note 5) | 2,657,056 | 3,026,564 |
Deferred Financing Costs - net (Note 6) | 542,116 | |
Security Deposits | 6,552 | 2,543 |
Total Other Assets | 2,663,608 | 3,571,223 |
TOTAL ASSETS | 4,703,762 | 5,733,103 |
Current Liabilities: | ||
Accounts Payable and Accrued Expenses | 448,064 | 383,349 |
Accrued Interest on Convertible Notes (Note 6) | 211,417 | 211,194 |
Accrued Officers Compensation (Note 9) | 41,000 | 25,000 |
Common Stock to be Issued (Note 13) | 35,925 | 150,871 |
Customer Deposits | 19,716 | 14,105 |
Deferred Rent | 15,236 | |
Derivative Liability (Note 7) | 1,728,883 | 7,665,502 |
Convertible Notes Payable, net of discount at December 31, 2014 of $3,996,033 (Note 6) | 1,077,967 | |
Total Current Liabilities | 3,578,207 | 8,450,021 |
Convertible Notes Payable, net of discount at December 31, 2013 of $5,003,558 (Note 6) | 70,442 | |
Total Long-term Liabilities | 70,442 | |
Total Liabilities | 3,578,207 | 8,520,463 |
Commitments and Contingencies | ||
Stockholders' Equity ( Deficiency): | ||
Cumulative Convertible Series A Preferred Stock; par value $0.01, 1,000,000 shares authorized; 510,000 shares issued and outstanding at December 31, 2014 and 2013 | 5,100 | 5,100 |
Cumulative Convertible Series B Preferred Stock; $1,000 stated value; 7.5% Cumulative dividend; 4,000 shares authorized; none issued and outstanding at December 31, 2014 and 2013 | ||
Common stock; par value $0.01, 200,000,000 shares authorized; 83,646,275 and 79,867,217 shares issued and outstanding at December 31, 2014 and December 31, 2013, respectively. | 836,463 | 798,672 |
Additional Paid-in Capital | 19,281,647 | 15,674,958 |
Accumulated Deficit | -18,997,655 | -19,266,090 |
Total Stockholders' Equity (Deficiency) | 1,125,555 | -2,787,360 |
Total Liabilities and Stockholders' Equity (Deficiency) | $4,703,762 | $5,733,103 |
CONSOLIDATED_BALANCE_SHEET_Par
CONSOLIDATED BALANCE SHEET (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Stockholders' Equity ( Deficiency): | ||
Cumulative Convertible Preferred Stock Series A, Par Value | $0.01 | $0.01 |
Cumulative Convertible Preferred Stock Series A, Shares Authorized | 1,000,000 | 1,000,000 |
Cumulative Convertible Preferred Stock Series A, Shares Issued | 510,000 | 510,000 |
Cumulative Convertible Preferred Stock Series A, Shares Outstanding | 510,000 | 510,000 |
Cumulative Convertible Preferred Stock Series B, Stated Value | $1,000 | $1,000 |
Cumulative Convertible Preferred Stock Series B, Shares Authorized | 4,000 | 4,000 |
Cumulative Convertible Preferred Stock Series B, Shares Issued | 0 | 0 |
Cumulative Convertible Preferred Stock Series B, Shares Outstanding | 0 | 0 |
Cumulative Convertible Preferred Stock Series B, Dividend Percentage | 7.50% | 7.50% |
Common Stock; Par Value | $0.01 | $0.01 |
Common Stock; Shares Authorized | 200,000,000 | 200,000,000 |
Common Stock; Stock Issued | 83,646,275 | 79,867,217 |
Common Stock; Stock Outstanding | 83,646,275 | 79,867,217 |
CONSOLIDATED_STATEMENT_OF_OPER
CONSOLIDATED STATEMENT OF OPERATIONS (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Statement [Abstract] | ||
Sales, net | $2,248,341 | $1,166,457 |
Cost of Sales | 873,990 | 480,678 |
Gross Profit | 1,374,350 | 685,779 |
Costs and Expenses: | ||
Professional Fees | 349,546 | 336,116 |
Depreciation and Amortization | 470,327 | 318,265 |
Selling Expenses | 380,303 | 225,954 |
Research and Development | 155,984 | 127,547 |
Consulting fees (Note 9) | 179,809 | 551,565 |
Equity Compensation Expense (Note 8) | 2,564,707 | 148,794 |
General and Administrative | 1,083,885 | 425,711 |
Total Costs and Expenses | 5,184,561 | 2,133,952 |
Loss From Operations | -3,810,211 | -1,448,173 |
Other Income (Expense): | ||
Amortization of Deferred Financing Costs | -342,492 | -234,370 |
Amortization of Debt Discounts | -1,007,525 | -70,442 |
Fair Value Adjustment of Derivative Liability | 5,936,619 | -349,410 |
Financing Costs (Note 6) | 0 | -3,198,803 |
Interest expense | -507,956 | -357,114 |
Total Other Income (Expense) | 4,078,646 | -4,210,139 |
Net Income (Loss) | $268,435 | ($5,658,312) |
Income (Loss) Per Common Share | ||
Basic | $0 | ($0.07) |
Diluted | $0 | ($0.07) |
Basic Weighted Average Common Shares Outstanding | 81,281,030 | 77,474,329 |
Diluted Weighted Average Common Shares Outstanding | 127,398,990 | 77,474,329 |
CONSOLIDATED_STATEMENTS_OF_STO
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIENCY) (USD $) | Series A Preferred | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance, Amount at Dec. 31, 2012 | $5,100 | $754,555 | $12,956,535 | ($13,607,778) | $108,412 |
Beginning Balance, Shares at Dec. 31, 2012 | 510,000 | 75,455,585 | |||
Equity based compensation | 148,794 | 148,794 | |||
Common stock issued for services provided, Shares | 977,028 | ||||
Common stock issued for services provided, Amount | 9,770 | 470,984 | 480,754 | ||
Exercise of stock options as payment for legal services, Shares | 20,000 | ||||
Exercise of stock options as payment for legal services, Amount | 200 | -200 | |||
Private placements, net, Shares | 3,414,604 | ||||
Private placements, net, Amount | 34,147 | 976,953 | 1,011,100 | ||
Warrants issued as part of debt private placement | 956,711 | 956,711 | |||
Warrants issued as Deferred financing costs | 165,181 | 165,181 | |||
Net Income (Loss) | -5,658,312 | -5,658,312 | |||
Ending Balance, Amount at Dec. 31, 2013 | 5,100 | 798,672 | 15,674,958 | -19,266,090 | -2,787,360 |
Ending Balance, Shares at Dec. 31, 2013 | 510,000 | 79,867,217 | |||
Options and warrants issued to executives for services | 2,564,707 | 2,564,707 | |||
Common stock issued for services provided, Shares | 901,580 | ||||
Common stock issued for services provided, Amount | 9,016 | 340,827 | 349,843 | ||
Common stock issued for executive compensation, Shares | 178,125 | ||||
Common stock issued for executive compensation, Amount | 1,781 | 52,219 | 54,000 | ||
Exercise of stock options as payment for legal services, Shares | 20,000 | ||||
Exercise of stock options as payment for legal services, Amount | 200 | -200 | |||
Proceeds from issuance of common stock, net, Shares | 377,778 | ||||
Proceeds from issuance of common stock, net, Amount | 3,778 | 95,162 | 98,940 | ||
Proceeds from issuance of common stock and warrants, net, Shares | 2,290,243 | ||||
Proceeds from issuance of common stock and warrants, net, Amount | 22,902 | 574,013 | 596,915 | ||
Issuance of common stock as finder's fee, Shares | 11,332 | 11,332 | |||
Issuance of common stock as finder's fee, Amount | 113 | -113 | |||
Value of common stock to be issued as finder's fee | -19,925 | -19,925 | |||
Net Income (Loss) | 268,435 | 268,435 | |||
Ending Balance, Amount at Dec. 31, 2014 | $5,100 | $836,462 | $19,281,647 | ($18,997,655) | $1,125,555 |
Ending Balance, Shares at Dec. 31, 2014 | 510,000 | 83,646,275 |
CONSOLIDATED_STATEMENT_OF_CASH
CONSOLIDATED STATEMENT OF CASH FLOWS (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Cash Flow From Operating Activities: | ||
Net Income (Loss) | $268,435 | ($5,658,312) |
Adjustments to Reconcile Net Income (loss) to Net Cash Used In Operating Activities: | ||
Depreciation and Amortization | 470,328 | 318,264 |
Amortization of Deferred Financing Costs | 342,492 | 234,371 |
Amortization of Debt Discount | 1,007,525 | 70,442 |
Finance Charges in connection with Convertible Debt | 3,198,804 | |
Fair Value Adjustment of Derivative Liability | -5,936,619 | 349,410 |
Equity Based Compensation | 2,564,707 | 148,794 |
Value of Equity Issued for Services | 403,843 | 480,754 |
Reserve for Bad Debts | 37,500 | |
Decrease (increase) in: | ||
Accounts Receivable | 327,156 | -590,152 |
Inventory | -508,200 | -407,547 |
Prepaid Expenses | -27,424 | -2,580 |
Other Assets | -36,644 | |
Deposits | -4,010 | -2,043 |
Increase (Decrease) in: | ||
Accounts Payable and Accrued Expenses | 61,655 | 157,861 |
Accrued Interest | 222 | 211,194 |
Accrued Officers Compensation | 16,000 | 20,000 |
Common Stock to be Issued | -134,872 | 150,871 |
Deferred Rent | 15,236 | |
Customer Deposits | 5,611 | 14,105 |
Net Cash Used in Operating Activities | -1,127,059 | -1,305,764 |
Cash Flow From Investing Activities: | ||
Purchase of Intangibles | -3,288,300 | |
Purchase of Property and Equipment | -81,994 | -172,691 |
Net Cash Used in Investing Activities | -81,994 | -3,460,991 |
Cash Flow From Financing Activities: | ||
Proceeds from Convertible Notes Payable | 5,074,000 | |
Repayment of Loan Payable to Officer | -3,988 | |
Deferred Debt Costs | -611,306 | |
Proceeds From Issuance of Common Stock and Warrants | 765,262 | 1,041,099 |
(Increase) in Bond Sinking Fund | -35,653 | -70,124 |
Payment of Finder's Fee | -66,347 | -30,000 |
Net Cash Provided by Financing Activities | 663,262 | 5,399,681 |
Increase (Decrease) In Cash and Cash Equivalents | -545,792 | 632,926 |
Cash and Cash Equivalents - Beginning | 706,350 | 73,424 |
Cash and Cash Equivalents - Ending | 160,560 | 706,350 |
Supplemental Cash Flow Information: | ||
Cash Paid For Interest | 507,956 | 145,920 |
Cash Paid For Income Taxes | 933 | |
Non-Cash Investing and Finance Activities: | ||
Reclassification of demo equipment from inventory to property and equipment | 142,916 | 0 |
Discount on convertible debt | 5,074,000 | |
Common Stock Warrants Issued As Deferred Finance Costs | 165,181 | |
Cash Finder's Fee Accrual | 3,060 | |
Common Stock Finder's Fee Accrual | 19,925 | |
Establishment of derivative liability | $7,316,092 |
1_DESCRIPTION_OF_BUSINESS
1. DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
NOTE 1. DESCRIPTION OF BUSINESS | TOMI Environmental Solutions, Inc. is a global decontamination and infectious disease control company, providing environmental solutions for indoor and outdoor surface decontamination through the sale of equipment, services and licensing of our SteraMistTM Binary Ionization Technology® (“BIT™”) hydrogen peroxide based mist and fogs. |
2_SUMMARY_OF_SIGNIFICANT_ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Notes to Financial Statements | |||||||
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Going Concern | ||||||
The Company incurred losses from operations of approximately $3,810,000 and $1,448,000 for the years ended December 31, 2014 and 2013, respectively. In addition, the Company had a working capital deficiency of approximately $1,826,000 at December 31, 2014. Cash and cash equivalents was approximately $161,000 as of December 31, 2014. In addition, the Company has not been able to generate positive cash from operations for the years ended December 31, 2014 and 2013. These factors raise substantial doubt about the Company's ability to continue as a going concern. | |||||||
The Company plans on funding operations and liquidity needs from the sales of its products and services, licensing arrangements, debt financing and/or sales of its common stock and notes convertible into common stock. There can be no assurance that additional funds required for continued operations during the next year or thereafter will be generated from our operations. | |||||||
Should the Company seek additional funds from external sources such as debt or additional equity financings or other potential sources, there can be no assurance that such funds will be available on terms acceptable to the Company or that they will not have a significant dilutive effect on the Company's existing stockholders. The inability to generate cash flow from operations or to raise sufficient capital from external sources would force the Company to substantially curtail or cease operations and would, therefore, have a material adverse effect on its business. | |||||||
During the year ended December 31, 2014 the Company raised gross proceeds of $765,262 through the sale of 2,668,021 shares of common stock and equity units (see note 8 for additional details). | |||||||
Accordingly, the Company's existence is dependent on management's ability to develop profitable operations and resolve its liquidity problems. The accompanying consolidated financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern. | |||||||
Principles of Consolidation | |||||||
The accompanying consolidated financial statements include the accounts of TOMI Environmental Solutions, Inc. (a Florida Corporation) (TOMI-Florida), and its wholly-owned subsidiary, TOMI Environmental Solutions, Inc. (a Nevada Corporation) (TOMI-Nevada). The Company’s 55% owned subsidiary, TOMI Environmental-China (TOMI-China), has been dormant since its formation in April 2011. All significant intercompany accounts and transactions have been eliminated in consolidation. | |||||||
Use of Estimates | |||||||
The preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the accompanying consolidated financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, including those related to the accounts receivable, fair values of financial instruments, intangible assets, useful lives of intangible assets and property and equipment, fair values of stock-based awards, income taxes, and contingent liabilities, among others. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of our assets and liabilities. | |||||||
Reclassification of Accounts | |||||||
Certain reclassifications have been made to prior-year comparative financial statements to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations or financial position. | |||||||
Fair Value Measurements | |||||||
The authoritative guidance for fair value measurements 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 the most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and (iv)willing to transact. The guidance describes a fair value hierarchy based on the levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, which are the following: | |||||||
Level 1: | Quoted prices in active markets for identical assets or liabilities. | ||||||
Level 2: | Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or corroborated by observable market data or substantially the full term of the assets or liabilities. | ||||||
Level 3: | Unobservable inputs that are supported by little or no market activity and that are significant to the value of the assets or liabilities. | ||||||
The Company’s financial instruments include cash and equivalents, accounts receivable, accounts payable and accrued expenses. All these items were determined to be Level 1 fair value measurements. | |||||||
The carrying amounts of cash and equivalents, accounts receivable, accounts payable and accrued expenses, approximated fair value because of the short maturity of these instruments. The recorded value of convertible debt approximates its fair value as the terms and rates approximate market rates (See also Note 6) | |||||||
Cash and Cash Equivalents | |||||||
For purposes of the statement of cash flows, cash and cash equivalents includes cash on hand held at financial institutions and other liquid investments with original maturities of three months or less. | |||||||
Inventories | |||||||
Inventories are valued at the lower of cost or market using the first-in, first-out (”FIFO”) method. Inventories consist primarily of raw materials and finished goods. | |||||||
Property and Equipment | |||||||
We account for property and equipment at cost less accumulated depreciation. We compute depreciation using the straight-line method over the estimated useful lives of the assets, generally three to five years. Depreciation for equipment, furniture and fixtures and vehicles commences once placed in service for its intended use. Leasehold improvements are amortized using the straight-line method over the lives of the respective leases or service lives of the improvements, whichever is shorter. | |||||||
Deferred Financing Costs | |||||||
The Company follows authoritative guidance for accounting for financing costs as it relates to convertible debt issuance cost. These costs are deferred and amortized over the term of the debt period or until redemption of the convertible debentures. Amortization of deferred financing costs amounted to approximately $342,000and $234,000 for the years ended December 31, 2014 and 2013, respectively. | |||||||
Income taxes | |||||||
Deferred income tax assets and liabilities are determined based on differences between the financial statement reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws in effect when the differences are expected to reverse. The measurement of deferred income tax assets is reduced, if necessary, by a valuation allowance for any tax benefits, which are, on a more likely than not basis, not expected to be realized; in accordance with ASC guidance for income taxes. Net deferred tax benefits have been fully reserved at December 31, 2014 and 2013. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. | |||||||
Income (Loss) Per Share | |||||||
Basic income (loss) per share is computed by dividing the Company’s net income (loss) by the weighted average number of common shares outstanding during the period presented. Diluted loss per share is based on the treasury stock method and includes the effect from potential issuance of common stock such as shares issuable pursuant to the exercise of warrants and conversions of debentures. | |||||||
Potentially dilutive securities as of December 31, 2014, consisted of 17,496,552 common shares from convertible debentures, 28,051,408 common shares from outstanding warrants (including 7,611,000 warrants issued in conjunction with the above convertible notes), 60,000 common shares from options and 510,000 common shares from convertible Series A preferred stock. | |||||||
Potentially dilutive securities as of December 31, 2013, consisted of 17,496,552 common shares from convertible debentures, 19,325,800 common shares from outstanding warrants (including 7,611,000 warrants issued in conjunction with the above convertible notes), 60,000 common shares from options and 510,000 common shares from convertible Series A preferred stock. Diluted and basic weighted average shares are the same, as potentially dilutive shares are anti-dilutive. | |||||||
The following provides a reconciliation of the shares used in calculating the per share amounts for the periods presented: | |||||||
For the years | |||||||
Ended December 31, | |||||||
2014 | 2013 | ||||||
Numerator: | |||||||
Net Income (Loss) | $ | 268,435 | $ | -5,658,312 | |||
Denominator: | |||||||
Basic weighted-average shares | 81,281,030 | 77,474,329 | |||||
Effect of dilutive securities | |||||||
Warrants | 28,051,408 | - | |||||
Convertible Debt | 17,496,552 | - | |||||
Options | 60,000 | - | |||||
Preferred Stock | 510,000 | - | |||||
Diluted Weighted Average Shares | 127,398,990 | 77,474,329 | |||||
Net Income (Loss) | |||||||
Basic | $ | 0 | $ | -0.07 | |||
Diluted | $ | 0 | $ | -0.07 | |||
Note: Warrants, Convertible Debt, Options, and Preferred Stock for the year ended December 31, 2013, are not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive. | |||||||
Loss from Operations Data: | |||||||
Loss from Operations | $(3,810,211) | ($1,448,173) | |||||
Basic and Diluted Weighted | |||||||
Average Shares | 81,281,030 | 77,474,329 | |||||
Basic and Diluted Loss per Share | ($0.05) | ($0.02) | |||||
Revenue Recognition | |||||||
For revenue from services and product sales, the Company recognized revenue in accordance with Staff Accounting Bulletin No. 104, “Revenue Recognition” (SAB No. 104), which superseded Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements” (SAB No. 101). SAB No. 104 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) service has been rendered or delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgment regarding the fixed nature of the selling prices of the services rendered or products delivered and the collectability of those amounts. Provisions for discounts to customers, and allowance, and other adjustments will be provided for in the same period the related sales are recorded. | |||||||
Stock-Based Compensation | |||||||
The Company accounts for stock-based compensation in accordance with Financial Accounting Standards Board (“FASB”), ASC 718, Compensation- “Stock Compensation.” Under the provisions of FASB ASC 718, stock-based compensation cost is estimated at the grant date based on the award’s fair value and is recognized as expense over the requisite service period. The Company currently has one active stock-based compensation plan, TOMI Environmental Solutions, Inc. Stock Option and Restricted Stock Plan (the “Plan”). The Plan calls for the Company, through a committee of its Board of Directors, to issue up to 2,500,000 shares of restricted common stock or stock options. The Company generally issues grants to its employees, consultants, and board members. Stock options are granted with an exercise price equal to the closing price of its common stock on the date of the grant with a term no greater than 10 years. Generally, stock options vest over two to four years. Incentive stock options granted to shareholders who own 10% or more of the Company’s outstanding equity securities are granted at an exercise price that may not be less than 110% of the closing price of the Company’s common stock on the date of grant and have a term no greater than five years. On the date of a grant, the Company determines the fair value of the stock option award and recognizes compensation expense over the requisite service period, which is generally the vesting period of the award. The fair value of the stock option award is calculated using the Black-Scholes option-pricing model. As of December 31, 2014, the Company had 712,291 shares available to be issued under the Plan. | |||||||
On February 11, 2014, the Company’s Board of Directors adopted the 2014 Stock Option Plan (the “Plan”), subject to shareholder approval, intended to attract and retain individuals of experience and ability, to provide incentive to our employees, consultants, and non-employee directors, to encourage employee and director proprietary interests in us, and to encourage employees to remain in our employ. Each of the named executive officers is eligible for annual equity awards, which are granted pursuant to the Plan. The Plan authorizes the grant of non-qualified and incentive stock options, stock appreciation rights and restricted stock awards (each, an “Award”). A maximum of 5,000,000 shares of common stock are reserved for potential issuance pursuant to Awards under the Plan. As of December 31, 2014, no shares have been issued under the 2014 Stock Option Plan. | |||||||
Concentrations of Credit Risk | |||||||
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents. The Company maintains cash balances at financial institutions which exceed the current Federal Deposit Insurance Corporation (“FDIC”) limit of $250,000 at times during the year. | |||||||
Long-Lived Assets Including Acquired Intangible Assets | |||||||
The Company assesseslong-lived assets for potential impairments at the end of each year, or during the year if an event or other circumstance indicates that we may not be able to recover the carrying amount of the asset. In evaluating long-lived assets for impairment, the Company measures recoverability of these assets by comparing the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If the Company’s long-lived assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair market value. The Company bases its calculations of the estimated fair value of its long-lived assets on the income approach. For the income approach, The Company usesan internally developed discounted cash flow model that include, among others, the following assumptions: projections of revenues and expenses and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates. We base these assumptions on our historical data and experience, industry projections, micro and macro general economic condition projections, and our expectations. | |||||||
We have had no long-lived asset impairment charges for the years ended December 31, 2014 and 2013. The Company’s most recent detailed test disclosed an estimated fair value of its patents and trademarks that exceeded its’ respective carrying amount based on our model and assumptions. | |||||||
Advertising and Promotional Expenses | |||||||
The Company expenses advertising costs in the period in which they are incurred. For the year ended December 31, 2014 and 2013, advertising and promotional expenses were approximately $11,000 and $6,000, respectively. | |||||||
Recent Accounting Pronouncements | |||||||
In May of 2014, the FASB issued Accounting Standards Update No. 2014-09 (ASU 2014-09) “Revenue from Contracts with Customers.” ASU 2014-09 supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605)”, and requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflect the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. We are currently in the process of evaluating the impact of the adoption of ASU 2014-09 on our consolidated financial statements. |
3_INVENTORIES
3. INVENTORIES | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Inventory Disclosure [Abstract] | ||||||||
NOTE 3: INVENTORIES | Inventories consist of the following: | |||||||
December 31, | December 31, | |||||||
2014 | 2013 | |||||||
Raw materials | $ | 159,807 | $ | 1,500 | ||||
Finished goods | 613,026 | 406,049 | ||||||
Inventory, end of period | $ | 772,833 | $ | 407,549 |
4_PROPERTY_AND_EQUIPMENT
4. PROPERTY AND EQUIPMENT | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Notes to Financial Statements | |||||
NOTE 4. PROPERTY AND EQUIPMENT | Property and equipment consists of the following: | ||||
December 31, | December 31, | ||||
2014 | 2013 | ||||
Furniture and fixture | $ 69,555 | $ 22,390 | |||
Equipment | 374,620 | 217,672 | |||
Vehicles | 44,344 | 44,344 | |||
Software | 12,167 | - | |||
Leasehold Improvements | 8,630 | - | |||
509,316 | 284,406 | ||||
Less: Accumulated depreciation | 221,157 | 120,338 | |||
$ 288,159 | $ 164,068 | ||||
Depreciation was $100,819 and $56,529 for the years ended December 31, 2014 and 2013, respectively. |
5_INTANGIBLE_ASSETS_AND_ASSET_
5. INTANGIBLE ASSETS AND ASSET ACQUISITION | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Notes to Financial Statements | |||||
NOTE 5. INTANGIBLE ASSETS AND ASSET ACQUISITION | On April 15, 2013 the Company completed the acquisition of binary ionization technology and related patents and other assets consisting of personal property and inventory related to implementation of the Binary Ionization Technology related to these patents from L-3 Applied Technologies, Inc. ("L-3"). All of these assets are pledged as collateral for the convertible notes issued as described below in Note 6. | ||||
The purchase price allocation was obtained from an independent valuation firm. The following sets forth the components of the final purchase price allocation: | |||||
Purchase Price | |||||
Cash payment | $ | 3,500,000 | |||
Warranty expense | 10,000 | ||||
Total purchase price | $ | 3,510,000 | |||
Assets Purchased | |||||
Inventory | $ | 71,700 | |||
Fixed assets | 150,000 | ||||
Patents | 2,848,300 | ||||
Trademarks | 440,000 | ||||
Total Assets Acquired | $ | 3,510,000 | |||
The intangible assets purchased consist of Patents and Trademarks. The patents are being amortized over the estimated remaining lives of the related patents, which is 7.7 years. The trademarks have an indefinite life. Amortization expense was $369,508 and $261,736 for the years ended December 31, 2014 and 2013. | |||||
Definite life intangible assets consist of the following: | |||||
December 31, | December 31, | ||||
2014 | 2013 | ||||
Intellectual property and patents | $ 2,848,300 | $ 2,848,300 | |||
Less: Accumulated Amortization | 631,244 | 261,736 | |||
Intangible Assets, net | $ 2,217,056 | $ 2,586,564 | |||
Indefinite life intangible assets consist of the following: | |||||
December 31, | December 31, | ||||
2014 | 2013 | ||||
Trademarks | $ 440,000 | $ 440,000 | |||
December 31, | December 31, | ||||
2014 | 2013 | ||||
Total Intangible Assets | $ 2,657,056 | $ 3,026,564 | |||
Approximate amortization over the next five years is as follows: | |||||
Year Ending December 31, | Amount | ||||
2015 | $370,000 | ||||
2016 | 370,000 | ||||
2017 | 370,000 | ||||
2018 | 370,000 | ||||
2019 | 370,000 | ||||
Thereafter | 367,000 | ||||
$2,217,000 |
6_CONVERTIBLE_DEBT
6. CONVERTIBLE DEBT | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Notes to Financial Statements | |||||||
NOTE 6. CONVERTIBLE DEBT | In November 2012, the Company initiated a Private Placement offering a maximum of 240 Units of the Company’s securities at a price of $25,000 per Unit or $6,000,000. The initial closing of the offering occurred in April 2013 as the bulk of the net proceeds of the offering were to be allocated for the asset purchase from L-3 Applied Technologies, Inc., which agreement was not finalized until April 2013. Each Unit consists of $25,000 par amount of a 10% Senior Secured Callable Convertible Promissory Note due and payable on July 31, 2015 and 37,500 warrants each of which allows the investor to purchase one share of common stock and expires on July 31, 2018. Interest is payable on the Notes at a rate of 10% per annum, and payable on July 31st and January 31st. The Notes are secured by the Company's intellectual property such as the Patents, royalties, receivables of the Company and all equipment except for the new equipment acquired with the proceeds from any future financing that is initially secured by this new equipment. The Notes call for the establishment of a sinking fund. Within 45 days of each calendar quarter 15% of the Company’s reported revenue will be deposited into the Company’s escrowed sinking fund account. During the fourth quarter and subsequent to December 31, 2014, the Company funded approximately $157,000 or 15% of the fourth quarter revenue into the sinking fund account. | ||||||
The Company sold 202.96 Units for gross proceeds of $5,074,000 and issued 7,611,000 warrants in connection with the Units. Net proceeds amounted to $4,462,693 after expenses of offering totaling $611,307. In addition, the placement agent received 1,014,800 warrants valued at $165,180. | |||||||
The convertible notes are convertible, at the option of the note holder, into shares of our common stock at an initial conversion price of $.29 (which conversion price is subject to adjustment upon the occurrence of events specified in the Convertible Notes, including stock dividends, stock splits, certain fundamental corporate transactions, and certain issuances of common stock by the Company). | |||||||
The Warrants are exercisable into shares of Common Stock (the "Warrant Shares") at an initial exercise price of $0.30 (which may be subject to certain adjustments as set forth in the Warrants). | |||||||
The Company evaluated the warrants under ASC 815-40-15 due to the exercise price being adjustable upon certain events occurring. The company determined that the warrants are considered indexed to the Company’s own stock and thus meet the scope exception under FASB ASC 815-10-15-74 and are therefore not considered a derivative. The estimated fair value of the warrants, which contain reset provisions, were calculated using the Monte Carlo valuation model. The Company recorded the warrant’s relative fair value of $956,712 as an increase to additional paid in capital and a discount against the related debt. | |||||||
The Convertible Notes contain a provision whereby the conversion price is adjustable upon the occurrence of certain events, including the issuance of common stock or common stock equivalents at a price which is lower than the current conversion price. Under FASB ASC 815-40-15-5, the embedded conversion feature is not considered indexed to the Company’s own stock and, therefore, does not meet the scope exception in FASB ASC 815-10-15 and thus needs to be accounted for as a derivative liability. The initial fair value of the embedded conversion feature was estimated at $7,316,092 and recorded as a derivative liability, resulting in an additional discount of $4,117,288 to the convertible notes and a finance charge of $3,198,804 included in the statement of operations for the year ended December 31, 2013. The fair value of the embedded conversion feature is estimated at the end of each quarterly reporting period using the Monte Carlo model. | |||||||
The debt discount is being amortized over the life of the convertible note using the effective interest method. | |||||||
Inherent in the Monte Carlo Valuation model are assumptions related to expected volatility, remaining life, risk-free rate and expected dividend yield. For the Convertible Notes using a Monte Carlo model, we estimate the probability and timing of potential future financing and fundamental transactions as applicable. The assumptions used by the Company are summarized below: | |||||||
Convertible Notes | |||||||
December 31, | December 31, | ||||||
2014 | 2013 | Inception | |||||
Closing stock price | $ 0.27 | $ 0.42 | 0.13-0.55 | ||||
Conversion price | $ 0.29 | $ 0.29 | 0.29 | ||||
Expected volatility | 114% | 175% | 185%-190% | ||||
Remaining term (years) | 0.58 | 1.58 | 2.30-2.07 | ||||
Risk-free rate | 0.13% | 0.28% | .25%-.43% | ||||
Expected dividend yield | 0% | 0% | 0% | ||||
Warrant | |||||||
Inception | |||||||
Closing stock price | 0.13-0.55 | ||||||
Conversion price | 0.3 | ||||||
Expected volatility | 250% | ||||||
Remaining term (years) | 5.30-5.09 | ||||||
Risk-free rate | .76% - (1.61%) | ||||||
Expected dividend yield | 0% | ||||||
Convertible notes consist of the following at December 31, 2014 and December 31, 2013: | |||||||
December 31, | 31-Dec-13 | ||||||
2014 | |||||||
Convertible notes | $ | 5,074,000 | $ | 5,074,000 | |||
Initial Discount on convertible notes | -5,074,000 | (5,074,000) | |||||
Accumulated amortization of discount | 1,077,967 | 70,442 | |||||
Total convertible notes, net | $ | 1,077,967 | $ | 70,442 |
7_FAIR_VALUE
7. FAIR VALUE | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Notes to Financial Statements | ||||||
NOTE 7. FAIR VALUE | In accordance with FASB ASC 820, “Fair Value Measurements and Disclosures”, the following table represents the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2014 and December 31, 2013: | |||||
December 31, 2014: | Level 3 | Total | ||||
Derivative Instruments | $ | 1,728,883 | $ | 1,728,883 | ||
December 31, 2013: | Level 3 | Total | ||||
Derivative Instruments | $ | 7,665,502 | $ | 7,665,502 | ||
Level 3 financial instruments consist of certain embedded conversion features. The fair value of these embedded conversion features that have exercise reset features are estimated using a Monte Carlo valuation model. The Company adopted the disclosure requirements of ASU 2011-04, “Fair Value Measurements.”(See note 6) The unobservable input used by the Company was the estimation of the likelihood of a reset occurring on the embedded conversion feature of the Convertible Notes. These estimates of the likelihood of completing an equity raise that would meet the criteria to trigger the reset provisions are based on numerous factors, including the remaining term of the financial instruments and the Company’s overall financial condition. | ||||||
The following table summarizes the changes in fair value of the Company’s Level 3 financial instruments for the period ended December 31, 2014 and 2013. | ||||||
December 31, | December 31, | |||||
2014 | 2013 | |||||
Beginning Balance | $ | 7,665,502 | $ | 7,316,092 | ||
Change in fair value | -5,936,619 | 349,410 | ||||
Ending Balance | $ | 1,728,883 | $ | 7,665,502 | ||
Changes in the unobservable input values would likely cause material changes in the fair value of the Company’s Level 3 financial instruments. The significant unobservable input used in the fair value measurement is the estimation of the likelihood of the occurrence of a change to the conversion price based on the contractual terms of the financial instruments. A significant increase (decrease) in this likelihood would result in a higher (lower) fair value measurement. |
8_STOCKHOLDERS_EQUITY_DEFICIEN
8. STOCKHOLDERS' EQUITY (DEFICIENCY) | 12 Months Ended | ||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||
NOTE 8. STOCKHOLDERS' EQUITY (DEFICIENCY) | The Company’s Board of Directors may, without further action by the Company’s stockholders, from time to time, direct the issuance of any authorized but unissued or unreserved shares of preferred stock in series and at the time of issuance, determine the rights, preferences and limitations of each series. The holders of such preferred stock may be entitled to receive a preference payment in the event of any liquidation, dissolution or winding-up of the Company before any payment is made to the holders of our common stock. Furthermore, the Board of Directors could issue preferred stock with voting and other rights that could adversely affect the voting power of the holders of our common stock. | ||||||||||||||||||
Convertible Series A Preferred Stock | |||||||||||||||||||
The Company has authorized 1,000,000 shares of Convertible Series A Preferred Stock, $0.01 par value. At December 31, 2014and 2013, there were 510,000 shares issued and outstanding, respectively. The Convertible Series A Preferred Stock is convertible at the rate of one share of common stock for one share of Convertible Series A Preferred Stock. | |||||||||||||||||||
Convertible Series B Preferred Stock | |||||||||||||||||||
The Company has authorized 4,000 shares of Convertible Series B Preferred Stock,$1,000 stated value,7.5% Cumulative dividend. At December 31, 2014 and 2013, there were no shares issued and outstanding, respectively. | |||||||||||||||||||
Common Stock | |||||||||||||||||||
During the year ended December 31, 2013, the Company issued 977,028 shares of common stock valued at $480,754 for services rendered and issued an aggregate of 3,414,604 shares of common stock for gross proceeds of $1,011,100. | |||||||||||||||||||
During the year ended December 31, 2014, the Company issued 326,035 shares of common stock valued at approximately $105,893 for professional services rendered. | |||||||||||||||||||
During the year ended December 31, 2014, the Company issued 44,319 shares of common stock valued at $15,000 to Harold Paul, Director, as payment for legal services rendered. | |||||||||||||||||||
During the year ended December 31, 2014, the Company issued 455,000 shares to the Rolyn Companies, Inc. (“Rolyn”) for labor and services support valued at $203,950 of which 230,000 shares valued at $128,800 were recorded as common stock to be issued at December 31, 2013. (See Note 9). | |||||||||||||||||||
In addition, the Company issued 76,226 shares valued at $25,000 to a consultant for services rendered for the year ended December 31, 2014. | |||||||||||||||||||
During the year ended December 31, 2014, the Company issued 78,125 shares as consideration for payment of accrued compensation to the CEO amounting to $25,000. The Company also issued 100,000 shares to the COO amounting to $29,000 as part of his employment agreement (see note 11). | |||||||||||||||||||
During the year ended December 31, 2014, the Company sold 377,778 shares of common stock at $.27 per share for gross proceeds of $102,000. In connection with the sale, the Company incurred a cash finder fee in the amount of $3,060 in addition to a finder’s fee paid in common stock of 11,332 shares valued at $3,060. | |||||||||||||||||||
During the year ended December 31, 2014, the Company sold 2,290,243 equity units. Each unit consisted of 1 share of common stock and 2.5 warrants. The warrants have an exercise price of $.29 per share and a term of five years. Gross proceeds to the Company amounted to $663,262. In connection with the sale, the Company incurred a cash finder’s fee in the amount of $66,347 in addition to a finder’s fee to be paid in common stock of 68,707 shares valued at $19,925. | |||||||||||||||||||
Stock Options | |||||||||||||||||||
The Company issued 20,000 options valued at $3,000 to a director in January 2013. The options have an exercise price of $0.15 per share. The options expire in January 2023. The options were valued using the Black-Scholes model using the following assumptions: volatility: 343%; dividend yield: 0%; zero coupon rate: 0.25%; and a life of 10 years. | |||||||||||||||||||
The Company issued 20,000 options valued at $8,723 to a director in January 2014. The options have an exercise price of $0.44 per share. The options expire in January 2024. The options were valued using the Black-Scholes model using the following assumptions: volatility: 233%; dividend yield: 0%; zero coupon rate: 1.72%; and a life of 10 years. | |||||||||||||||||||
The following table summarizes stock options outstanding as of December 31, 2014 and 2013: | |||||||||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||||||||
Number of Warrants | Weighted Average Exercise Price | Number of Warrants | Weighted Average Exercise Price | ||||||||||||||||
Outstanding, beginning of year | 60,000 | $1.42 | 60,000 | $1.42 | |||||||||||||||
Granted | 20,000 | 0.44 | 20,000 | 0.15 | |||||||||||||||
Exercised | -20,000 | 0.44 | -20,000 | 0.15 | |||||||||||||||
Outstanding, end of year | 60,000 | $1.42 | 60,000 | $1.42 | |||||||||||||||
Options outstanding and exercisable by price range as of December 31, 2014 were as follows: | |||||||||||||||||||
Average | Exercisable Options | ||||||||||||||||||
Weighted | |||||||||||||||||||
Range | Number | Remaining | Number | Weighted | |||||||||||||||
Contractual | Average | ||||||||||||||||||
Life in Years | Exercise Price | ||||||||||||||||||
$ | 2.1 | 40,000 | 5.01 | 40,000 | $ | 2.1 | |||||||||||||
$ | 0.05 | 20,000 | 6.02 | 20,000 | $ | 0.05 | |||||||||||||
60,000 | 60,000 | ||||||||||||||||||
Stock Warrants | |||||||||||||||||||
The Company issued 250,000 warrants valued at $37,495 to a consultant in January 2013. The warrants have an exercise price of $0.15 and expire in January 2018. The warrants were valued using the Black-Scholes model with the following assumptions: volatility: 343%; dividend yield: 0%; zero coupon rate: 0.25%; and a life of 5 years. | |||||||||||||||||||
During the year ended December 31, 2013, the Company issued 7,611,000 warrants in connection with convertible debt units and 1,014,800 warrants to the placement agent (see Note 6). These warrants have an initial exercise price of $0.30 per share and expire July 31, 2018. | |||||||||||||||||||
In June 2013, the Company issued 100,000 warrants with an exercise price of $.261 per share to a consultant for services. The warrants were valued at $54,767 using the Black-Scholes model with the following assumptions: volatility, 245%; dividend yield, 0%; zero coupon rate, 0.25%; and a life of 5 years. | |||||||||||||||||||
On September 26, 2013, the Company’s Chief Financial Officer, Christopher Chipman, was granted 300,000 warrants. The warrants had a term of five years and vest 100,000 upon the grant date, 100,000 on September 26, 2014 and 100,000 on September 26, 2015. The exercise price of the warrant is $0.77 per share based on the volume weighted average price of the Company’s common stock for the five days prior to the grant date. If employment is terminated, the terms of any then outstanding warrant held by the holder shall extend for a period ending on the earlier of the date on which such warrant would otherwise expire or three months after such termination of employment and the warrant shall be exercisable to the extent it was exercisable as of the date of termination of employment. Any unvested warrants shall be deemed null and void. The Company utilized the Black-Scholes method to fair value the 300,000 warrants received by this individual totaling $208,022 with the following assumptions: volatility, 179%; expected dividend yield, 0%; risk free interest rate, 1.43%; and a life of 5 years. Effective July 18, 2014, Chris Chipman resigned from his position of Chief Financial Officer of the Company and accordingly, his unvested share of warrants were deemed to be null and void. The vested portion of the warrants expired prior to December 31, 2014. For the year ended December 31, 2014, the Company reversed out the equity based compensation attributable to the accrued but not vested portion of the warrants. | |||||||||||||||||||
On February 11, 2014, as part of the employment agreements entered into with its three executive officers (CEO, President and COO), the Board of Directors approved the grant of 3,000,000 stock warrants to each of them as executive compensation. The warrants have a term of five years and vest as follows: 1,000,000 warrants will vest upon issuance; 1,000,000 warrants will vest as of February 11, 2015, and 1,000,000 warrants will vest as of February 11, 2016. The exercise price of the warrants is $0.30 per share based on the closing price of the Company’s common stock on the grant date of $0.32. If employment is terminated, the terms of any then outstanding warrant held by the holder shall extend for a period ending on the earlier of the date on which such warrant would otherwise expire or three months after such termination of employment and the warrant shall be exercisable to the extent it was exercisable as of the date of termination of employment. Any unvested warrants shall immediately vest on termination. The Company utilized the Black-Scholes method to fair value the 3,000,000 warrants received by these individuals totaling approximately $952,000 for each executive with the following assumptions: volatility, 233%; expected dividend yield, 0%; risk free interest rate, 1.54%; and a life of 5 years. The grant date fair value of each warrant was $0.32. Effective September 25, 2014, the President and COO resigned from their positions with the Company and accordingly, the remaining unvested warrants immediately vested. The Company recognized equity based compensation of approximately $1,904,000 in connection with the vested warrants for the President and COO for the year ended December 31, 2014. As of December 31, 2014, their warrants expired. In addition, the Company recognized equity based compensation for the CEO for approximately $596,000 on the vested warrants and accrual of unvested warrants. | |||||||||||||||||||
On February 11, 2014, the Company’s Board of Directors approved the granting of 300,000 stock warrants to its CFO as incentive compensation. The warrants have a term of five years and vest as follows: 100,000 warrants will vest upon issuance; 100,000 warrants will vest as of February 11, 2015, and 100,000 warrants will vest as of February 11, 2016. The exercise price of the warrants is $0.30 per share based on the closing price of the Company’s common stock on the grant date of $0.32. If employment is terminated, the terms of any then outstanding warrant held by the holder shall extend for a period ending on the earlier of the date on which such warrant would otherwise expire or three months after such termination of employment and the warrant shall be exercisable to the extent it was exercisable as of the date of termination of employment. Any unvested warrants shall be deemed null and void. The Company utilized the Black-Scholes method to fair value the 300,000 warrants received by the Company’s executive totaling approximately $95,000 with the following assumptions: volatility, 233%; expected dividend yield, 0%; risk free interest rate, 1.54%; and a life of 5 years. The grant date fair value of each warrant was $0.32. Effective July 18, 2014, Chris Chipman resigned from his position of Chief Financial Officer of the Company and accordingly, his unvested share of warrants were deemed to be null and void. For the year ended December 31, 2014, the Company recognized approximately $32,000 in equity based compensation for the vested portion of the warrants. | |||||||||||||||||||
On October 1, 2014, the Company’s Board of Directors approved the granting of 300,000 stock warrants to its new CFO as incentive compensation. The warrants have a term of five years and vest as follows: 100,000 warrants will vest upon issuance; 100,000 warrants will vest as of October 1, 2015, and 100,000 warrants will vest as of October 1, 2016. The exercise price of the warrant is $0.30 per share based on the volume weighted average price of the Company’s common stock for the five days prior to the grant date. If employment is terminated, the terms of any then outstanding warrant held by the holder shall extend for a period ending on the earlier of the date on which such warrant would otherwise expire or three months after such termination of employment and the warrant shall be exercisable to the extent it was exercisable as of the date of termination of employment. Any unvested warrants shall be deemed null and void. The Company utilized the Black-Scholes method to fair value the 300,000 warrants received by the Company’s executive totaling approximately $89,000 with the following assumptions: volatility, 221%; expected dividend yield, 0%; risk free interest rate, 1.80%; and a life of 5 years. The grant date fair value of each warrant was $0.30. For the year ended December 31, 2014, the Company recognized approximately $37,000 in equity based compensation on the vested warrants and accrual of unvested warrants. | |||||||||||||||||||
The following table summarizes the outstanding common stock warrants as of December 31, 2014 and 2013: | |||||||||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||||||||
Number of Warrants | Weighted Average Exercise Price | Number of Warrants | Weighted Average Exercise Price | ||||||||||||||||
Outstanding, beginning of year | 19,325,800 | $0.21 | 10,050,000 | $0.12 | |||||||||||||||
Granted | 15,325,608 | 0.3 | 9,275,800 | 0.31 | |||||||||||||||
Expired | -300,000 | 0.77 | - | - | |||||||||||||||
Expired | -6,300,000 | 0.3 | - | - | |||||||||||||||
Exercised | - | - | - | - | |||||||||||||||
Outstanding, end of year | 28,051,408 | $0.23 | 19,325,800 | $0.21 | |||||||||||||||
Warrants outstanding and exercisable by price range as of December 31, 2014 were as follows: | |||||||||||||||||||
Outstanding Warrants | Exercisable Warrants | ||||||||||||||||||
Range | Number | Average | Number | Weighted | |||||||||||||||
Weighted | Average | ||||||||||||||||||
Remaining | Exercise Price | ||||||||||||||||||
Contractual | |||||||||||||||||||
Life in Years | |||||||||||||||||||
$0.01 | 1,575,000 | 2.53 | 1,575,000 | $0.01 | |||||||||||||||
$0.05 | 975,000 | 2.62 | 975,000 | $0.05 | |||||||||||||||
$0.15 | 7,750,000 | 2.8 | 7,750,000 | $0.15 | |||||||||||||||
$0.26 | 100,000 | 3.49 | 100,000 | $0.26 | |||||||||||||||
$0.29 | 5,725,608 | 4.67 | 5,725,608 | $0.29 | |||||||||||||||
$0.30 | 11,925,800 | 3.75 | 9,725,800 | $0.30 | |||||||||||||||
28,051,408 | 25,851,408 | ||||||||||||||||||
Unvested warrants outstanding as of December 31, 2014 were as follows: | |||||||||||||||||||
Unvested Warrants | |||||||||||||||||||
Weighted | Number | Average | |||||||||||||||||
Average | Weighted | ||||||||||||||||||
Exercise Price | Remaining | ||||||||||||||||||
Contractual | |||||||||||||||||||
Life in Years | |||||||||||||||||||
$0.30 | 2,200,000 | 4.2 |
9_RELATED_PARTY
9. RELATED PARTY | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
NOTE 9. RELATED PARTY | Employment Agreement |
On February 11, 2014, the Company entered into an amended employment agreement with its CEO as well as new employment agreements with its President and COO that provide each with a base salary of $36,000 per year. The agreements provided for an increase in the base salary to $120,000 if annual gross revenue exceeds five million and $175,000 if annual gross revenue were to exceed ten million on a calendar year basis. Any bonuses awarded will be based upon the Company’s performance and be made at the discretion of the Board of Directors. The CEO, President and COO will also have the right to receive expense reimbursements and certain employee benefits. The terms of the employment agreements will be three years terminating on December 31, 2016. Effective September 24, 2014, the president and COO resigned from the Company and their employments contracts were terminated. | |
The Company appointed Nick Jennings as its Principal Financial Officer effective September 25, 2014. Mr. Jennings employment with the Company commenced on October 1, 2014. The employment agreement between Mr. Jennings and the Company provides for an annual base salary of $60,000 to be paid in the form of cash and $24,000 to be paid in the form of the Company’s restricted stock. As part of Mr. Jennings’s agreement, 300,000 warrants were issued with a term of five years vesting 100,000 upon the grant date (October 1, 2014), 100,000 on October 1, 2015 and 100,000 on October 1, 2016. The exercise price of the warrant is $0.30 per share based on the volume weighted average price of the Company’s common stock for the five days prior to the grant date. | |
Support and Service Agreement | |
Effective April 1, 2013 the Company entered into a Support and Service Agreement (“the Agreement”) with Rolyn Companies, Inc. (“Rolyn”) under the terms of which Rolyn will provide labor and services support. The Agreement called for payment to Rolyn of 76,666 shares of the Company’s common stock per month as well as payment of out of pocket expenses. This agreement was amended, effective January 1, 2014, to reduce the payment to Rolyn to 25,000 shares of the Company’s common stock per month. All other terms and conditions of the agreement remained the same. Either party can terminate the Agreement within 30 days written notice. The Company has recorded approximately $75,000 and $203,000 support and service expense for the year ended December 31, 2014 and 2013, respectively. Certain officers of Rolyn were appointed officers of the Company in June and July 2013 and have since resigned. The service agreement was terminated effective October 7, 2014. | |
Distribution and Licensing Agreement | |
On March 21, 2014, the Company entered into a distribution and licensing agreement with Plascencia Universal, S. de R.L. de C.V. (“Plascencia Universal”), a Mexican company that will act as the exclusive distributor of TOMI’s products and services in Mexico. The principal of Plascencia Universal is also the broker for the Company’s insurance policies and was appointed a director of the Company. For the year ended December 31, 2014, revenues of approximately $301,000 were recognized with regards to Plascencia Universal. Included in the revenue was a license fee for approximately $26,000. |
10_COMMITMENTS_AND_CONTINGENCI
10. COMMITMENTS AND CONTINGENCIES | 12 Months Ended | ||
Dec. 31, 2014 | |||
Notes to Financial Statements | |||
NOTE 10. COMMITMENTS AND CONTINGENCIES | Lease Commitments | ||
The Company leased 1,611 square feet of office/warehouse space in San Diego, CA for research and development purposes. The lease payments amounted to approximately $2,000 per month. This lease expired in May of 2014 and the Company continued to rent the space on a month-to-month basis. The Company vacated the office/warehouse in July of 2014 and has moved the lab to its new facility in Fredrick, Maryland. | |||
In September of 2014 the Company entered into a lease agreement for office and warehouse space in Fredrick Maryland. As part of the lease agreement, the Company is to receive a rent holiday in the first 5 months of the lease. The lease also provides for an escalation clause where the Company will be subject to an annual rent increase of 3%, year over year. The lease expires on January 31, 2018. The Company accounts for the lease using the straight line method and recorded $15,236 in rent expense for the year ended December 31, 2014. Approximate minimum annual rents under lease are as follows: | |||
Year Ending December 31, | Amount | ||
2015 | $42,000 | ||
2016 | 52,000 | ||
2017 | 53,000 | ||
2018 | 4,000 | ||
$151,000 |
11_CONTRACTS_AND_AGREEMENTS
11. CONTRACTS AND AGREEMENTS | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
11. CONTRACTS AND AGREEMENTS | In September 2014, the Company entered into a Sales and Distribution Agreement, superseding previous agreements, with TOMI Panama covering Panama, El Salvador, Guatemala, Nicaragua, Columbia, Honduras, Costa Rica and Ecuador. TOMI Panama is its exclusive distributor of the Company’s products and services within the country of Panama. For the year ended December 31, 2014, revenues of approximately $400,000 were recognized with regards to TOMI Panama. |
On September 25, 2014, the Company appointed Norris Gearhart as Principal Operating Officer of the Company and entered into an employment agreement with him. The agreement provides for a base salary of $126,000 per year and bonus in the form of 100,000 shares of the Company’s restricted stock valued at $29,000. The restricted shares were issued in October of 2014. | |
On October 15, 2014, the Company entered into a manufacturing and development agreement with RG Group, Inc. The agreement does not provide for any minimum purchase agreements and is for a term of 2 years. For the year ended December 31, 2014, RG Group, Inc. manufactured substantially all of the Company’s equipment. |
12_INCOME_TAXES
12. INCOME TAXES | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
Note 12. INCOME TAXES | At December 31, 2014 the Company had available net-operating loss carryforwards for federal income tax purposes of approximately $7,516,000, which may be applied against future taxable income, if any, from 2015 through 2034. Certain significant changes in ownership of the Company may restrict the utilization of these tax loss carryforwards. |
At December 31, 2014 the Company had a deferred tax asset of approximately $3,042,000 representing the benefit of its net operating loss carryforwards. The Company has not recognized any tax benefit or tax asset from these loss carryforwards due to the fact that realization of the tax benefit is uncertain and therefore, a valuation allowance equal to 100% of the tax benefit has been applied against the value of any tax assets arising from these losses. The difference between the federal statutory tax rate of 34% and the Company’s effective tax rate of 0% is due to an increase in the valuation allowance and various permanent differences in the amount of approximately $855,000 |
13_COMMON_STOCK_TO_BE_ISSUED
13. COMMON STOCK TO BE ISSUED | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
13. COMMON STOCK TO BE ISSUED | As of December 31, 2014, the Company was obligated to issue 155,619 shares of common stock valued at approximately $36,000 primarily to certain vendors and consultants. |
As of December 31, 2013, the Company was obligated to issue 322,845 shares of common stock valued at approximately $151,000 primarily to certain vendors and consultants. |
14_SUBSEQUENT_EVENTS
14. SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
NOTE 14. SUBSEQUENT EVENTS | The Company has evaluated subsequent events through the date the financial statements were issued and up to the time of filing of the financial statements with the Securities and Exchange Commission. |
In January 2015, as per the Company’s directors’ compensation plan adopted on September 18, 2009, the Company granted 40,000 stock options to two directors. The options have an exercise price of $0.27 per share and expire January 2, 2025. | |
During the first quarter of 2015, the Company sold 1,500,002 equity units, each unit consisting of 1 share of common stock and 2.5 warrants for gross proceeds of $435,000. Expenses in connection with the sale of these equity units was approximately $56,500. | |
On January 31, 2015, the Company made its bi-annual interest payment in connection with the convertible notes in the amount of $253,700. |
2_SUMMARY_OF_SIGNIFICANT_ACCOU1
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Summary Of Significant Accounting Policies Policies | |||||||
Going Concern | The Company incurred losses from operations of approximately $3,810,000 and $1,448,000 for the years ended December 31, 2014 and 2013, respectively. In addition, the Company had a working capital deficiency of approximately $1,826,000 at December 31, 2014. Cash and cash equivalents was approximately $161,000 as of December 31, 2014. In addition, the Company has not been able to generate positive cash from operations for the years ended December 31, 2014 and 2013. These factors raise substantial doubt about the Company's ability to continue as a going concern. | ||||||
The Company plans on funding operations and liquidity needs from the sales of its products and services, licensing arrangements, debt financing and/or sales of its common stock and notes convertible into common stock. There can be no assurance that additional funds required for continued operations during the next year or thereafter will be generated from our operations. | |||||||
Should the Company seek additional funds from external sources such as debt or additional equity financings or other potential sources, there can be no assurance that such funds will be available on terms acceptable to the Company or that they will not have a significant dilutive effect on the Company's existing stockholders. The inability to generate cash flow from operations or to raise sufficient capital from external sources would force the Company to substantially curtail or cease operations and would, therefore, have a material adverse effect on its business. | |||||||
During the year ended December 31, 2014 the Company raised gross proceeds of $765,262 through the sale of 2,668,021 shares of common stock and equity units (see note 8 for additional details). | |||||||
Accordingly, the Company's existence is dependent on management's ability to develop profitable operations and resolve its liquidity problems. The accompanying consolidated financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern. | |||||||
Principles of Consolidation | The accompanying consolidated financial statements include the accounts of TOMI Environmental Solutions, Inc. (a Florida Corporation) (TOMI-Florida), and its wholly-owned subsidiary, TOMI Environmental Solutions, Inc. (a Nevada Corporation) (TOMI-Nevada). The Company’s 55% owned subsidiary, TOMI Environmental-China (TOMI-China), has been dormant since its formation in April 2011. All significant intercompany accounts and transactions have been eliminated in consolidation. | ||||||
Use of Estimates | The preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the accompanying consolidated financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, including those related to the accounts receivable, fair values of financial instruments, intangible assets, useful lives of intangible assets and property and equipment, fair values of stock-based awards, income taxes, and contingent liabilities, among others. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of our assets and liabilities. | ||||||
Reclassification of Accounts | Certain reclassifications have been made to prior-year comparative financial statements to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations or financial position. | ||||||
Fair Value Measurements | The authoritative guidance for fair value measurements 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 the most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and (iv)willing to transact. The guidance describes a fair value hierarchy based on the levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, which are the following: | ||||||
Level 1: | Quoted prices in active markets for identical assets or liabilities. | ||||||
Level 2: | Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or corroborated by observable market data or substantially the full term of the assets or liabilities. | ||||||
Level 3: | Unobservable inputs that are supported by little or no market activity and that are significant to the value of the assets or liabilities. | ||||||
The Company’s financial instruments include cash and equivalents, accounts receivable, accounts payable and accrued expenses. All these items were determined to be Level 1 fair value measurements. | |||||||
The carrying amounts of cash and equivalents, accounts receivable, accounts payable and accrued expenses, approximated fair value because of the short maturity of these instruments. The recorded value of convertible debt approximates its fair value as the terms and rates approximate market rates (See also Note 6) | |||||||
Cash and Cash Equivalents | For purposes of the statement of cash flows, cash and cash equivalents includes cash on hand held at financial institutions and other liquid investments with original maturities of three months or less. | ||||||
Inventories | Inventories are valued at the lower of cost or market using the first-in, first-out (”FIFO”) method. Inventories consist primarily of raw materials and finished goods. | ||||||
Property and Equipment | We account for property and equipment at cost less accumulated depreciation. We compute depreciation using the straight-line method over the estimated useful lives of the assets, generally three to five years. Depreciation for equipment, furniture and fixtures and vehicles commences once placed in service for its intended use. Leasehold improvements are amortized using the straight-line method over the lives of the respective leases or service lives of the improvements, whichever is shorter. | ||||||
Deferred Financing Costs | The Company follows authoritative guidance for accounting for financing costs as it relates to convertible debt issuance cost. These costs are deferred and amortized over the term of the debt period or until redemption of the convertible debentures. Amortization of deferred financing costs amounted to approximately $342,000 and $234,000 for the years ended December 31, 2014 and 2013, respectively. | ||||||
Income taxes | Deferred income tax assets and liabilities are determined based on differences between the financial statement reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws in effect when the differences are expected to reverse. The measurement of deferred income tax assets is reduced, if necessary, by a valuation allowance for any tax benefits, which are, on a more likely than not basis, not expected to be realized; in accordance with ASC guidance for income taxes. Net deferred tax benefits have been fully reserved at December 31, 2014 and 2013. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. | ||||||
Income (Loss) Per Share | Basic income (loss) per share is computed by dividing the Company’s net income (loss) by the weighted average number of common shares outstanding during the period presented. Diluted loss per share is based on the treasury stock method and includes the effect from potential issuance of common stock such as shares issuable pursuant to the exercise of warrants and conversions of debentures. | ||||||
Potentially dilutive securities as of December 31, 2014, consisted of 17,496,552 common shares from convertible debentures, 28,051,408 common shares from outstanding warrants (including 7,611,000 warrants issued in conjunction with the above convertible notes), 60,000 common shares from options and 510,000 common shares from convertible Series A preferred stock. | |||||||
Potentially dilutive securities as of December 31, 2013, consisted of 17,496,552 common shares from convertible debentures, 19,325,800 common shares from outstanding warrants (including 7,611,000 warrants issued in conjunction with the above convertible notes), 60,000 common shares from options and 510,000 common shares from convertible Series A preferred stock. Diluted and basic weighted average shares are the same, as potentially dilutive shares are anti-dilutive. | |||||||
The following provides a reconciliation of the shares used in calculating the per share amounts for the periods presented: | |||||||
For the years | |||||||
Ended December 31, | |||||||
2014 | 2013 | ||||||
Numerator: | |||||||
Net Income (Loss) | $ | 268,435 | $ | -5,658,312 | |||
Denominator: | |||||||
Basic weighted-average shares | 81,281,030 | 77,474,329 | |||||
Effect of dilutive securities | |||||||
Warrants | 28,051,408 | - | |||||
Convertible Debt | 17,496,552 | - | |||||
Options | 60,000 | - | |||||
Preferred Stock | 510,000 | - | |||||
Diluted Weighted Average Shares | 127,398,990 | 77,474,329 | |||||
Net Income (Loss) | |||||||
Basic | $ | 0 | $ | -0.07 | |||
Diluted | $ | 0 | $ | -0.07 | |||
Note: Warrants, Convertible Debt, Options, and Preferred Stock for the year ended December 31, 2013, are not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive. | |||||||
Loss from Operations Data: | |||||||
Loss from Operations | $(3,810,211) | ($1,448,173) | |||||
Basic and Diluted Weighted | |||||||
Average Shares | 81,281,030 | 77,474,329 | |||||
Basic and Diluted Loss per Share | ($0.05) | ($0.02) | |||||
Revenue Recognition | For revenue from services and product sales, the Company recognized revenue in accordance with Staff Accounting Bulletin No. 104, “Revenue Recognition” (SAB No. 104), which superseded Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements” (SAB No. 101). SAB No. 104 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) service has been rendered or delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgment regarding the fixed nature of the selling prices of the services rendered or products delivered and the collectability of those amounts. Provisions for discounts to customers, and allowance, and other adjustments will be provided for in the same period the related sales are recorded. | ||||||
Stock-Based Compensation | The Company accounts for stock-based compensation in accordance with Financial Accounting Standards Board (“FASB”), ASC 718, Compensation- “Stock Compensation.” Under the provisions of FASB ASC 718, stock-based compensation cost is estimated at the grant date based on the award’s fair value and is recognized as expense over the requisite service period. The Company currently has one active stock-based compensation plan, TOMI Environmental Solutions, Inc. Stock Option and Restricted Stock Plan (the “Plan”). The Plan calls for the Company, through a committee of its Board of Directors, to issue up to 2,500,000 shares of restricted common stock or stock options. The Company generally issues grants to its employees, consultants, and board members. Stock options are granted with an exercise price equal to the closing price of its common stock on the date of the grant with a term no greater than 10 years. Generally, stock options vest over two to four years. Incentive stock options granted to shareholders who own 10% or more of the Company’s outstanding equity securities are granted at an exercise price that may not be less than 110% of the closing price of the Company’s common stock on the date of grant and have a term no greater than five years. On the date of a grant, the Company determines the fair value of the stock option award and recognizes compensation expense over the requisite service period, which is generally the vesting period of the award. The fair value of the stock option award is calculated using the Black-Scholes option-pricing model. As of December 31, 2014, the Company had 712,291 shares available to be issued under the Plan. | ||||||
On February 11, 2014, the Company’s Board of Directors adopted the 2014 Stock Option Plan (the “Plan”), subject to shareholder approval, intended to attract and retain individuals of experience and ability, to provide incentive to our employees, consultants, and non-employee directors, to encourage employee and director proprietary interests in us, and to encourage employees to remain in our employ. Each of the named executive officers is eligible for annual equity awards, which are granted pursuant to the Plan. The Plan authorizes the grant of non-qualified and incentive stock options, stock appreciation rights and restricted stock awards (each, an “Award”). A maximum of 5,000,000 shares of common stock are reserved for potential issuance pursuant to Awards under the Plan. As of December 31, 2014, no shares have been issued under the 2014 Stock Option Plan. | |||||||
Concentrations of Credit Risk | Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents. The Company maintains cash balances at financial institutions which exceed the current Federal Deposit Insurance Corporation (“FDIC”) limit of $250,000 at times during the year. | ||||||
Long-Lived Assets Including Acquired Intangible Assets | The Company assesseslong-lived assets for potential impairments at the end of each year, or during the year if an event or other circumstance indicates that we may not be able to recover the carrying amount of the asset. In evaluating long-lived assets for impairment, the Company measures recoverability of these assets by comparing the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If the Company’s long-lived assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair market value.The Company bases its calculations of the estimated fair value of its long-lived assets on the income approach. For the income approach, The Company usesan internally developed discounted cash flow model that include, among others, the following assumptions: projections of revenues and expenses and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates. We base these assumptions on our historical data and experience, industry projections, micro and macro general economic condition projections, and our expectations. | ||||||
We have had no long-lived asset impairment charges for the years ended December 31, 2014 and 2013. The Company’s most recent detailed test disclosed an estimated fair value of its patents and trademarks that exceeded its’ respective carrying amount based on our model and assumptions. | |||||||
Advertising and Promotional Expenses | The Company expenses advertising costs in the period in which they are incurred. For the year ended December 31, 2014 and 2013, advertising and promotional expenses were approximately $11,000 and $6,000, respectively. | ||||||
Recent Accounting Pronouncements | In May of 2014, the FASB issued Accounting Standards Update No. 2014-09 (ASU 2014-09) “Revenue from Contracts with Customers.” ASU 2014-09 supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605)”, and requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflect the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. We are currently in the process of evaluating the impact of the adoption of ASU 2014-09 on our consolidated financial statements. |
2_SUMMARY_OF_SIGNIFICANT_ACCOU2
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Summary Of Significant Accounting Policies Tables | |||||||
Schedule of earning per share | For the years | ||||||
Ended December 31, | |||||||
2014 | 2013 | ||||||
Numerator: | |||||||
Net Income (Loss) | $ | 268,435 | $ | -5,658,312 | |||
Denominator: | |||||||
Basic weighted-average shares | 81,281,030 | 77,474,329 | |||||
Effect of dilutive securities | |||||||
Warrants | 28,051,408 | - | |||||
Convertible Debt | 17,496,552 | - | |||||
Options | 60,000 | - | |||||
Preferred Stock | 510,000 | - | |||||
Diluted Weighted Average Shares | 127,398,990 | 77,474,329 | |||||
Net Income (Loss) | |||||||
Basic | $ | 0 | $ | -0.07 | |||
Diluted | $ | 0 | $ | -0.07 | |||
Schedule of weighted average shares | Loss from Operations Data: | ||||||
Loss from Operations | $(3,810,211) | ($1,448,173) | |||||
Basic and Diluted Weighted | |||||||
Average Shares | 81,281,030 | 77,474,329 | |||||
Basic and Diluted Loss per Share | ($0.05) | ($0.02) |
3_INVENTORIES_Tables
3. INVENTORIES (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Inventory Disclosure [Abstract] | ||||||||
INVENTORIES | Inventories consist of the following: | |||||||
December 31, | December 31, | |||||||
2014 | 2013 | |||||||
Raw materials | $ | 159,807 | $ | 1,500 | ||||
Finished goods | 613,026 | 406,049 | ||||||
Inventory, end of period | $ | 772,833 | $ | 407,549 |
4_PROPERTY_AND_EQUIPMENT_Table
4. PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Property And Equipment Tables | |||||
PROPERTY AND EQUIPMENT | December 31, | December 31, | |||
2014 | 2013 | ||||
Furniture and fixture | $ 69,555 | $ 22,390 | |||
Equipment | 374,620 | 217,672 | |||
Vehicles | 44,344 | 44,344 | |||
Software | 12,167 | - | |||
Leasehold Improvements | 8,630 | - | |||
509,316 | 284,406 | ||||
Less: Accumulated depreciation | 221,157 | 120,338 | |||
$ 288,159 | $ 164,068 |
5_INTANGIBLE_ASSETS_AND_ASSET_1
5. INTANGIBLE ASSETS AND ASSET ACQUISITION (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Intangible Assets And Asset Acquisition Tables | |||||
Final purchase price | Purchase Price | ||||
Cash payment | $ | 3,500,000 | |||
Warranty expense | 10,000 | ||||
Total purchase price | $ | 3,510,000 | |||
Assets Purchased | |||||
Inventory | $ | 71,700 | |||
Fixed assets | 150,000 | ||||
Patents | 2,848,300 | ||||
Trademarks | 440,000 | ||||
Total Assets Acquired | $ | 3,510,000 | |||
Definite life intangible assets | December 31, | December 31, | |||
2014 | 2013 | ||||
Intellectual property and patents | $ 2,848,300 | $ 2,848,300 | |||
Less: Accumulated Amortization | 631,244 | 261,736 | |||
Intangible Assets, net | $ 2,217,056 | $ 2,586,564 | |||
Indefinite life intangible assets | December 31, | December 31, | |||
2014 | 2013 | ||||
Trademarks | $ 440,000 | $ 440,000 | |||
December 31, | December 31, | ||||
2014 | 2013 | ||||
Total Intangible Assets | $ 2,657,056 | $ 3,026,564 | |||
Approximate amortization over the next five years | Approximate amortization over the next five years is as follows: | ||||
Year Ending December 31, | Amount | ||||
2015 | $370,000 | ||||
2016 | 370,000 | ||||
2017 | 370,000 | ||||
2018 | 370,000 | ||||
2019 | 370,000 | ||||
Thereafter | 367,000 | ||||
$2,217,000 |
6_CONVERTIBLE_DEBT_Tables
6. CONVERTIBLE DEBT (Tables) | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Convertible Debt Tables | |||||||
Convertible Notes and Warrants potential future financing and fundamental transactions | December 31, | December 31, | |||||
2014 | 2013 | Inception | |||||
Closing stock price | $ 0.27 | $ 0.42 | 0.13-0.55 | ||||
Conversion price | $ 0.29 | $ 0.29 | 0.29 | ||||
Expected volatility | 114% | 175% | 185%-190% | ||||
Remaining term (years) | 0.58 | 1.58 | 2.30-2.07 | ||||
Risk-free rate | 0.13% | 0.28% | .25%-.43% | ||||
Expected dividend yield | 0% | 0% | 0% | ||||
Warrant | |||||||
Inception | |||||||
Closing stock price | 0.13-0.55 | ||||||
Conversion price | 0.3 | ||||||
Expected volatility | 250% | ||||||
Remaining term (years) | 5.30-5.09 | ||||||
Risk-free rate | .76% - (1.61%) | ||||||
Expected dividend yield | 0% | ||||||
Convertible notes | December 31, | December 31, | |||||
2014 | 2013 | ||||||
Convertible notes | $ | 5,074,000 | $ | 5,074,000 | |||
Initial Discount on convertible notes | -5,074,000 | (5,074,000) | |||||
Accumulated amortization of discount | 1,077,967 | 70,442 | |||||
Total convertible notes, net | $ | 1,077,967 | $ | 70,442 |
7_FAIR_VALUE_Tables
7. FAIR VALUE (Tables) | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Fair Value Tables | ||||||
Fair Value Measurements and Disclosures | December 31, 2014: | Level 3 | Total | |||
Derivative Instruments | $ | 1,728,883 | $ | 1,728,883 | ||
December 31, 2013: | Level 3 | Total | ||||
Derivative Instruments | $ | 7,665,502 | $ | 7,665,502 | ||
Financial instruments | December 31, | December 31, | ||||
2014 | 2013 | |||||
Beginning Balance | $ | 7,665,502 | $ | 7,316,092 | ||
Change in fair value | -5,936,619 | 349,410 | ||||
Ending Balance | $ | 1,728,883 | $ | 7,665,502 |
8_STOCKHOLDERS_EQUITY_DEFICIEN1
8. STOCKHOLDERS' EQUITY (DEFICIENCY) (Tables) | 12 Months Ended | ||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||
Options [Member] | |||||||||||||||||||
Options outstanding and exercisable by price range | Average | Exercisable Options | |||||||||||||||||
Weighted | |||||||||||||||||||
Range | Number | Remaining | Number | Weighted | |||||||||||||||
Contractual | Average | ||||||||||||||||||
Life in Years | Exercise Price | ||||||||||||||||||
$ | 2.1 | 40,000 | 5.01 | 40,000 | $ | 2.1 | |||||||||||||
$ | 0.05 | 20,000 | 6.02 | 20,000 | $ | 0.05 | |||||||||||||
60,000 | 60,000 | ||||||||||||||||||
Warrant [Member] | |||||||||||||||||||
Summary of stock options outstanding | 31-Dec-14 | 31-Dec-13 | |||||||||||||||||
Number of Warrants | Weighted Average Exercise Price | Number of Warrants | Weighted Average Exercise Price | ||||||||||||||||
Outstanding, beginning of year | 60,000 | $1.42 | 60,000 | $1.42 | |||||||||||||||
Granted | 20,000 | 0.44 | 20,000 | 0.15 | |||||||||||||||
Exercised | -20,000 | 0.44 | -20,000 | 0.15 | |||||||||||||||
Outstanding, end of year | 60,000 | $1.42 | 60,000 | $1.42 | |||||||||||||||
Summary of outstanding common stock warrants | 31-Dec-14 | 31-Dec-13 | |||||||||||||||||
Number of Warrants | Weighted Average Exercise Price | Number of Warrants | Weighted Average Exercise Price | ||||||||||||||||
Outstanding, beginning of year | 19,325,800 | $0.21 | 10,050,000 | $0.12 | |||||||||||||||
Granted | 15,325,608 | 0.3 | 9,275,800 | 0.31 | |||||||||||||||
Expired | -300,000 | 0.77 | - | - | |||||||||||||||
Expired | -6,300,000 | 0.3 | - | - | |||||||||||||||
Exercised | - | - | - | - | |||||||||||||||
Outstanding, end of year | 28,051,408 | $0.23 | 19,325,800 | $0.21 | |||||||||||||||
Warrants outstanding and exercisable by price range | Outstanding Warrants | Exercisable Warrants | |||||||||||||||||
Range | Number | Average | Number | Weighted | |||||||||||||||
Weighted | Average | ||||||||||||||||||
Remaining | Exercise Price | ||||||||||||||||||
Contractual | |||||||||||||||||||
Life in Years | |||||||||||||||||||
$0.01 | 1,575,000 | 2.53 | 1,575,000 | $0.01 | |||||||||||||||
$0.05 | 975,000 | 2.62 | 975,000 | $0.05 | |||||||||||||||
$0.15 | 7,750,000 | 2.8 | 7,750,000 | $0.15 | |||||||||||||||
$0.26 | 100,000 | 3.49 | 100,000 | $0.26 | |||||||||||||||
$0.29 | 5,725,608 | 4.67 | 5,725,608 | $0.29 | |||||||||||||||
$0.30 | 11,925,800 | 3.75 | 9,725,800 | $0.30 | |||||||||||||||
28,051,408 | 25,851,408 | ||||||||||||||||||
Unvested warrants outstanding | Unvested Warrants | ||||||||||||||||||
Weighted | Number | Average | |||||||||||||||||
Average | Weighted | ||||||||||||||||||
Exercise Price | Remaining | ||||||||||||||||||
Contractual | |||||||||||||||||||
Life in Years | |||||||||||||||||||
$0.30 | 2,200,000 | 4.2 |
10_COMMITMENTS_AND_CONTINGENCI1
10. COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended | ||
Dec. 31, 2014 | |||
Notes to Financial Statements | |||
Minimum annual rents | Year Ending December 31, | Amount | |
2015 | $42,000 | ||
2016 | 52,000 | ||
2017 | 53,000 | ||
2018 | 4,000 | ||
$151,000 |
2_SUMMARY_OF_SIGNIFICANT_ACCOU3
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Numerator: | ||
Net Income (Loss) | $268,435 | ($5,658,312) |
Denominator: | ||
Basic weighted-average shares | 81,281,030 | 77,474,329 |
Effect of dilutive securities | ||
Warrants | 28,051,408 | |
Convertible Debt | 17,496,552 | |
Options | 60,000 | |
Preferred Stock | 510,000 | |
Diluted Weighted Average Shares | 127,398,990 | 77,474,329 |
Net Income (Loss) | ||
Basic | $0 | ($0.07) |
Diluted | $0 | ($0.07) |
2_SUMMARY_OF_SIGNIFICANT_ACCOU4
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Summary Of Significant Accounting Policies Details 1 | ||
Loss from Operations | ($3,810,211) | ($1,448,173) |
Basic and Diluted Weighted Average Shares | 81,281,030 | 77,474,329 |
Basic and Diluted Loss per Share | ($0.05) | ($0.02) |
2_SUMMARY_OF_SIGNIFICANT_ACCOU5
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Summary Of Significant Accounting Policies Details Narrative | |||
Loss from operation | ($3,810,211) | ($1,448,173) | |
Working capital deficiency | 1,826,000 | ||
Cash and cash equivalents | 160,560 | 706,350 | 73,424 |
Proceeds From Sale of Common Stock and equity units | 765,262 | 1,041,099 | |
Sale of Common Stock and equity units | 2,668,021 | ||
Amortization of deferred financing cost | 342,000 | 234,000 | |
Advertising and promotional expenses | 11,000 | 6,000 | |
Potentially dilutive securities, convertible debentures | 17,496,552 | 17,496,552 | |
Potentially dilutive securities, outstanding warrants | 28,051,408 | 19,325,800 | |
Warrants issued in conjunction with the above convertible notes | 7,611,000 | 7,611,000 | |
Potentially dilutive securities, outstanding options | 60,000 | 60,000 | |
Potentially dilutive securities, convertible Series A preferred stock | 510,000 | 510,000 | |
Common shares available to be issued under the "Plan" | 712,291 | ||
FDIC Expense | $250,000 |
3_INVENTORIES_Details
3. INVENTORIES (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Inventory Disclosure [Abstract] | ||
Raw materials | $159,807 | $1,500 |
Finished goods | 613,026 | 406,049 |
Inventory, end of period | $772,833 | $407,549 |
4_PROPERTY_AND_EQUIPMENT_Detai
4. PROPERTY AND EQUIPMENT (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Property And Equipment Details | ||
Furniture and fixtures | $69,555 | $22,390 |
Equipment | 374,620 | 217,672 |
Vehicles | 44,344 | 44,344 |
Software | 12,167 | |
Leasehold Improvements | 8,630 | |
Property and Equipment Gross | 509,316 | 284,406 |
Less: Accumulated depreciation | 221,157 | 120,338 |
Property and Equipment Net | $288,159 | $164,068 |
4_PROPERTY_AND_EQUIPMENT_Detai1
4. PROPERTY AND EQUIPMENT (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Property And Equipment Details Narrative | ||
Depreciation | $100,819 | $56,529 |
5_INTANGIBLE_ASSETS_AND_ASSET_2
5. INTANGIBLE ASSETS AND ASSET ACQUISITION (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Purchase Price | ||
Cash payment | $3,500,000 | |
Warranty expense | 10,000 | |
Total purchase price | 3,510,000 | |
Assets Purchased | ||
Inventory | 71,700 | |
Fixed assets | 150,000 | |
Patents | 2,848,300 | |
Trademarks | 440,000 | 440,000 |
Total Assets Acquired | $3,510,000 |
5_INTANGIBLE_ASSETS_AND_ASSET_3
5. INTANGIBLE ASSETS AND ASSET ACQUISITION (Details 1) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Intangible Assets And Asset Acquisition Details 1 | ||
Intellectual property and patents | $2,848,300 | $2,848,300 |
Less: Accumulated Amortization | 631,244 | 261,736 |
Intangible Assets, net | $2,217,056 | $2,586,564 |
5_INTANGIBLE_ASSETS_AND_ASSET_4
5. INTANGIBLE ASSETS AND ASSET ACQUISITION (Details 2) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Intangible Assets And Asset Acquisition Details 2 | ||
Trademarks | $440,000 | $440,000 |
Total Intangible Assets | $2,657,056 | $3,026,564 |
5_INTANGIBLE_ASSETS_AND_ASSET_5
5. INTANGIBLE ASSETS AND ASSET ACQUISITION (Details 3) (USD $) | Dec. 31, 2014 |
Intangible Assets And Asset Acquisition Details 3 | |
2015 | $370,000 |
2016 | 370,000 |
2017 | 370,000 |
2018 | 370,000 |
2019 | 370,000 |
Thereafter | 367,000 |
Total | $2,217,000 |
5_INTANGIBLE_ASSETS_AND_ASSET_6
5. INTANGIBLE ASSETS AND ASSET ACQUISITION (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
INTANGIBLE ASSETS | ||
Estimated useful lives of intangible assets | 7 years 8 months 12 days | |
Amortization expense | $369,508 | $261,736 |
6_CONVERTIBLE_DEBT_Details
6. CONVERTIBLE DEBT (Details) (USD $) | 12 Months Ended | 21 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Apr. 12, 2013 | |
Convertible Notes [Member] | ||||
Closing stock price | $0.27 | $0.42 | $0.27 | |
Conversion price | $0.29 | $0.29 | $0.29 | $0.29 |
Expected volatility | 114.00% | 175.00% | 114.00% | |
Remaining term (years) | 6 months 29 days | 1 year 6 months 29 days | ||
Risk-free rate | 0.13% | 0.28% | 0.13% | |
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Convertible Notes [Member] | Minimum [Member] | ||||
Closing stock price | $0.13 | |||
Expected volatility | 185.00% | |||
Remaining term (years) | 2 years 3 months 18 days | |||
Risk-free rate | 0.25% | |||
Convertible Notes [Member] | Maximum [Member] | ||||
Closing stock price | $0.55 | |||
Expected volatility | 190.00% | |||
Remaining term (years) | 2 years 26 days | |||
Risk-free rate | 0.43% | |||
Warrant 1 [Member] | ||||
Conversion price | $0.30 | |||
Expected volatility | 250.00% | |||
Expected dividend yield | 0.00% | |||
Warrant 1 [Member] | Minimum [Member] | ||||
Closing stock price | $0.13 | |||
Remaining term (years) | 5 years 3 months 18 days | |||
Risk-free rate | 0.76% | |||
Warrant 1 [Member] | Maximum [Member] | ||||
Closing stock price | $0.55 | |||
Remaining term (years) | 5 years 1 month 2 days | |||
Risk-free rate | -1.61% |
6_CONVERTIBLE_DEBT_Details_1
6. CONVERTIBLE DEBT (Details 1) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Convertible Debt Details 1 | ||
Convertible notes | $5,074,000 | $5,074,000 |
Initial discount on convertible notes | -5,074,000 | -5,074,000 |
Accumulated amortization of discount | 1,077,967 | 70,442 |
Total convertible notes | $1,077,967 | $70,442 |
6_CONVERTIBLE_DEBT_Details_Nar
6. CONVERTIBLE DEBT (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Convertible Debt Details Narrative | ||
Warrants issued | 7,611,000 | |
Proceeds with convertible debt | $5,074,000 | |
Net proceeds amount of convertible debt | 4,462,693 | |
Total offering expenses | 611,307 | |
Agent received warrants | 1,014,800 | |
Agent received warrants value | 165,180 | |
Fair value of the embedded conversion feature derivative liability | 7,316,092 | |
Additional discount on convertible notes | 956,712 | 4,117,288 |
Finance charge | $3,198,804 |
7_FAIR_VALUE_Details
7. FAIR VALUE (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Derivative Instruments | $1,728,883 | $7,665,502 |
Level 3 | ||
Derivative Instruments | $1,728,883 | $7,665,502 |
7_FAIR_VALUE_Details_1
7. FAIR VALUE (Details 1) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Fair Value Details 1 | ||
Beginning Balance | $7,665,502 | $7,316,092 |
Change in fair value | -5,936,619 | 349,410 |
Ending Balance | $1,728,883 | $7,665,502 |
8_STOCKHOLDERS_EQUITY_DEFICIEN2
8. STOCKHOLDERS' EQUITY (DEFICIENCY) (Details) (Warrant [Member], USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Warrant [Member] | ||
Number of Warrants | ||
Outstanding, beginning of year | 60,000 | 60,000 |
Granted | 20,000 | 20,000 |
Exercised | -20,000 | -20,000 |
Outstanding, end of year | 60,000 | 60,000 |
Weighted Average Exercise Price | ||
Outstanding, beginning of year | $1.42 | $1.42 |
Granted | $0.44 | $0.15 |
Exercised | $0.44 | $0.15 |
Outstanding, end of year | $1.42 | $1.42 |
8_STOCKHOLDERS_EQUITY_DEFICIEN3
8. STOCKHOLDERS' EQUITY (DEFICIENCY) (Details 1) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
2.10 Range [Member] | |
Schedule of Trading Securities and Other Trading Assets [Line Items] | |
Number | 40,000 |
Average Weighted Remaining Contractual Life in Years | 5 years 4 days |
Exercisable Options, Number | 40,000 |
Weighted Average Exercise Price, Exercisable Options | $2.10 |
0.05 Range [Member] | |
Schedule of Trading Securities and Other Trading Assets [Line Items] | |
Number | 20,000 |
Average Weighted Remaining Contractual Life in Years | 6 years 7 days |
Exercisable Options, Number | 20,000 |
Weighted Average Exercise Price, Exercisable Options | $0.05 |
Option Member | |
Schedule of Trading Securities and Other Trading Assets [Line Items] | |
Number | 60,000 |
Exercisable Options, Number | 60,000 |
8_STOCKHOLDERS_EQUITY_DEFICIEN4
8. STOCKHOLDERS' EQUITY (DEFICIENCY) (Details 2) (Common Stock Warrant [Member], USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Common Stock Warrant [Member] | ||
Number of Warrants | ||
Outstanding, beginning of year | 19,325,800 | 10,050,000 |
Granted | 15,325,608 | 9,275,800 |
Expired | -300,000 | 0 |
Expired | -6,300,000 | 0 |
Exercised | 0 | 0 |
Outstanding, end of year | 28,051,408 | 19,325,800 |
Weighted Average Exercise Price | ||
Outstanding, beginning of year | $0.21 | $0.12 |
Granted | $0.30 | $0.31 |
Expired | $0.77 | $0 |
Expired | $0.30 | $0 |
Exercised | $0 | $0 |
Outstanding, end of year | $0.23 | $0.21 |
8_STOCKHOLDERS_EQUITY_DEFICIEN5
8. STOCKHOLDERS' EQUITY (DEFICIENCY) (Details 3) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding warrants, Number | 28,051,408 |
Exercisable Warrants, Number | 25,851,408 |
0.01 Range [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding warrants, Number | 1,575,000 |
Average Weighted Remaining Contractual Life in Years, Warrant | 2 years 6 months 11 days |
Exercisable Warrants, Number | 1,575,000 |
Weighted Average Exercise Price, Exercisable Warrants | $0.01 |
0.05 Range [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding warrants, Number | 975,000 |
Average Weighted Remaining Contractual Life in Years, Warrant | 2 years 7 months 13 days |
Exercisable Warrants, Number | 975,000 |
Weighted Average Exercise Price, Exercisable Warrants | $0.05 |
0.15 Range [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding warrants, Number | 7,750,000 |
Average Weighted Remaining Contractual Life in Years, Warrant | 2 years 9 months 18 days |
Exercisable Warrants, Number | 7,750,000 |
Weighted Average Exercise Price, Exercisable Warrants | $0.15 |
0.261 Range [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding warrants, Number | 100,000 |
Average Weighted Remaining Contractual Life in Years, Warrant | 3 years 5 months 27 days |
Exercisable Warrants, Number | 100,000 |
Weighted Average Exercise Price, Exercisable Warrants | $0.26 |
0.29 Range [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding warrants, Number | 5,725,608 |
Average Weighted Remaining Contractual Life in Years, Warrant | 4 years 8 months 1 day |
Exercisable Warrants, Number | 5,725,608 |
Weighted Average Exercise Price, Exercisable Warrants | $0.29 |
0.30 Range [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding warrants, Number | 11,925,800 |
Average Weighted Remaining Contractual Life in Years, Warrant | 3 years 9 months |
Exercisable Warrants, Number | 9,725,800 |
Weighted Average Exercise Price, Exercisable Warrants | $0.30 |
8_STOCKHOLDERS_EQUITY_DEFICIEN6
8. STOCKHOLDERS' EQUITY (DEFICIENCY) (Details 4) (Unvested Warrants [Member], USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Unvested Warrants [Member] | |
Weighted Average Exercise Price, Unvested Warrants | $0.30 |
Unvested Warrants, Number | 2,200,000 |
Average Weighted Remaining Contractual Life in Years, Unvested Warrants | 4 years 2 months 12 days |
8_STOCKHOLDERS_EQUITY_DEFICIEN7
8. STOCKHOLDERS' EQUITY (DEFICIENCY) (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Cumulative Convertible Preferred Stock Series A, Par Value | $0.01 | $0.01 |
Cumulative Convertible Preferred Stock Series A, Shares Authorized | 1,000,000 | 1,000,000 |
Cumulative Convertible Preferred Stock Series A, Shares Issued | 510,000 | 510,000 |
Cumulative Convertible Preferred Stock Series A, Shares Outstanding | 510,000 | 510,000 |
Convertible Preferred Stock Series B, Stated Value | $1,000 | $1,000 |
Convertible Preferred Stock Series B, Shares Authorized | 4,000 | 4,000 |
Convertible Preferred Stock Series B, Shares Issued | 0 | 0 |
Convertible Preferred Stock Series B, Shares Outstanding | 0 | 0 |
Convertible Preferred Stock, Dividend Percentage | 7.50% | 7.50% |
Common stock issued, shares | 977,028 | |
Common stock issued, value | $480,754 | |
Issuance of common stock as finder's fee, Shares | 11,332 | |
Cash Finder's Fee Accrual | 3,060 | |
Value of common stock to be issued as finder's fee | -19,925 | |
Payments of Accrued Finder's Fee | 66,347 | 30,000 |
Finder's fee to be paid in common stock, Shares | 68,707 | |
Warrants issued | 7,611,000 | |
Warrants to agent | 1,014,800 | |
Exercise price | $0.30 | |
Common Stock Issuance for Services, Amount | 3,414,604 | |
Common Stock Issuance for Services, Shares | 1,011,100 | |
Common stock sold | 377,778 | |
Common stock sold, amount | 102,000 | |
Equity units sold | 2,290,243 | |
Exercise price of warrant | $0.29 | |
Term of warrant | 5 years | |
Gross proceeds net of expenses | 663,262 | |
Common stock issued for professional and other services, Shares | 326,035 | |
Common stock issued for professional and other services, Amount | 105,893 | |
Common stock issued for legal services, Shares | 44,319 | |
Common stock issued for legal services, Amount | 15,000 | |
Common Stock issued for legal services to Rolyn Companies, Inc., Shares | 455,000 | 230,000 |
Common Stock issued for legal services to Rolyn Companies, Inc., Amount | 203,950 | 128,800 |
Compensation expense related to consultant, Amount | 25,000 | |
Compensation expense related to consultant, Shares | 76,226 | |
Compensation expense related to CEO, Amount | 25,000 | |
Compensation expense related to CEO, Shares | 78,125 | |
Stock based compensation expense on the vested portion of the warrants | 37,000 | |
COO [Member] | ||
Common stock issued, shares | 100,000 | |
Common stock issued, value | 29,000 | |
Board of Directors [Member] | ||
Stock based compensation expense on the vested portion of the warrants | 1,904,000 | |
Stock based compensation expense on the uvested portion of the warrants | 596,000 | |
CFO [Member] | ||
Stock based compensation expense on the vested portion of the warrants | $32,000 |
9_RELATED_PARTY_Details_Narrat
9. RELATED PARTY (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Support and service expense | $75,000 | $203,000 |
Plascencia Universal [Member] | ||
Revenues | 301,000 | |
License fees | $26,000 |
10_COMMITMENTS_AND_CONTINGENCI2
10. COMMITMENTS AND CONTINGENCIES (Details) (USD $) | Dec. 31, 2014 |
Notes to Financial Statements | |
2015 | $42,000 |
2016 | 52,000 |
2017 | 53,000 |
2018 | 4,000 |
Total | $151,000 |
10_COMMITMENTS_AND_CONTINGENCI3
10. COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Commitments And Contingencies Details Narrative | |
Rent expense | $15,236 |
12_INCOME_TAXES_Details_Narrat
12. INCOME TAXES (Details Narrative) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Income Taxes Details Narrative | |
Net operating loss carryforwards | $7,516,000 |
Deferred tax asset | 3,042,000 |
Valuation Allowance, Percentage | 100.00% |
Federal statutory tax rate | 34.00% |
Company's effective tax rate | 0.00% |
Increase in the valuation allowance and various permanent differences | $855,000 |
13_COMMON_STOCK_TO_BE_ISSUED_D
13. COMMON STOCK TO BE ISSUED (Details Narrative) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Common Stock To Be Issued Details Narrative | ||
Common stock shares issued | 155,619 | 322,845 |
Common stock value | $36,000 | $151,000 |