Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 09, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | TOMI Environmental Solutions, Inc. | |
Entity Central Index Key | 314,227 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 122,049,958 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash and Cash Equivalents | $ 5,270,313 | $ 948,324 |
Accounts Receivable - net | 1,603,481 | 1,521,378 |
Inventories (Note 3) | 4,420,448 | 4,047,310 |
Deposits on Merchandise (Note 10) | 0 | 147,010 |
Prepaid Expenses | 278,701 | 104,448 |
Total Current Assets | 11,572,942 | 6,768,469 |
Property and Equipment - net (Note 4) | 653,656 | 611,807 |
Other Assets: | ||
Intangible Assets - net (Note 5) | 1,640,909 | 1,918,040 |
Security Deposits | 4,700 | 4,700 |
Total Other Assets | 1,645,609 | 1,922,740 |
Total Assets | 13,872,207 | 9,303,016 |
Current Liabilities: | ||
Accounts Payable | 1,349,648 | 735,879 |
Accrued Expenses and Other Current Liabilities (Note 11) | 227,058 | 278,413 |
Accrued Interest (Note 6) | 20,000 | 0 |
Customer Deposits | 7,487 | 30,120 |
Deferred Rent | 2,721 | 8,541 |
Convertible Notes Payable, net of discount of $54,730 at September 30, 2017 (Note 6) | 5,245,270 | 0 |
Total Current Liabilities | 6,852,185 | 1,052,953 |
Convertible Notes Payable, net of discount of 61,010 at June 30, 2017 (Note 6) | 695,408 | 0 |
Total Long-term Liabilities | 695,408 | 0 |
Total Liabilities | 7,547,593 | 1,052,953 |
Commitments and Contingencies | ||
Stockholders' Equity: | ||
Cumulative Convertible Series A Preferred Stock; par value $0.01, 1,000,000 shares authorized; 510,000 shares issued and outstanding at September 30, 2017 and December 31, 2016 | 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 September 30, 2017 and December 31, 2016 | 0 | 0 |
Common stock; par value 0.01, 200,000,000 shares authorized; 122,049,958 and 120,825,134 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively. | 1,220,499 | 1,208,251 |
Additional Paid-in Capital | 41,726,260 | 41,367,946 |
Accumulated Deficit | (36,627,244) | (34,331,234) |
Total Shareholders' Equity | 6,324,615 | 8,250,063 |
Total Liabilities and Shareholders' Equity | $ 13,872,207 | $ 9,303,016 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) (Parenthetical) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Condensed Consolidated Balance Sheet Parenthetical | ||
Convertible Notes Payable, net of discount | $ 54,730 | $ 4,592 |
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; Issued Shares | 510,000 | 510,000 |
Cumulative Convertible Preferred Stock Series A; Stock Outstanding | 510,000 | 510,000 |
Cumulative Convertible Preferred Stock Series B; Stated value | $ 1,000 | $ 1,000 |
Cumulative Convertible Preferred Stock Series B; Cumulative dividend | 7.50% | 7.50% |
Cumulative Convertible Preferred Stock Series B; Shares Authorized | 4,000 | 4,000 |
Cumulative Convertible Preferred Stock Series B; Issued Shares | 0 | 0 |
Cumulative Convertible Preferred Stock Series B; Stock Outstanding | 0 | 0 |
Common Stock; Par Value | $ 0.01 | $ 0.01 |
Common Stock; Shares Authorized | 200,000,000 | 200,000,000 |
Common Stock; Stock Issued | 122,049,958 | 120,825,134 |
Common Stock; Stock Outstanding | 122,049,958 | 120,825,134 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Condensed Consolidated Statement Of Operations | ||||
Sales, net | $ 1,030,095 | $ 1,092,332 | $ 3,508,748 | $ 4,527,840 |
Cost of Sales | 389,170 | 431,621 | 1,318,021 | 1,886,193 |
Gross Profit | 640,925 | 660,711 | 2,190,727 | 2,641,647 |
Operating Expenses: | ||||
Professional Fees | 72,197 | 101,428 | 738,918 | 374,609 |
Depreciation and Amortization | 145,760 | 148,347 | 453,834 | 427,377 |
Selling Expenses | 319,807 | 283,515 | 870,287 | 1,153,178 |
Research and Development | 79,747 | 92,847 | 128,512 | 120,345 |
Equity Compensation Expense (Note 7) | (20,597) | 85,322 | 223,300 | 542,291 |
Consulting fees | 63,293 | 49,734 | 180,405 | 280,795 |
General and Administrative | 696,028 | 834,872 | 2,078,252 | 2,506,456 |
Other | (319,388) | 0 | (319,388) | 0 |
Total Operating Expenses | 1,036,848 | 1,596,064 | 4,354,121 | 5,405,051 |
Loss from Operations | (395,923) | (935,353) | (2,163,394) | (2,763,404) |
Other Income (Expense): | ||||
Amortization of Debt Discounts | (1,688) | 0 | (2,582) | 0 |
Gain on Disposition of Property and Equipment | 0 | 0 | 0 | 12,000 |
Grant | 0 | 0 | 0 | 202,451 |
Interest Income | 585 | 0 | 1,221 | 0 |
Interest Expense | (60,000) | 0 | (131,256) | 0 |
Total Other Income (Expense) | (61,103) | 0 | (132,617) | 214,451 |
Net Loss | $ (457,025) | $ (935,353) | $ (2,296,010) | $ (2,548,953) |
Loss Per Common Share | ||||
Basic and Diluted | $ 0 | $ (0.01) | $ (0.02) | $ (0.02) |
Basic and Diluted Weighted Average Common Shares Outstanding | 121,567,328 | 120,763,449 | 121,144,339 | 120,467,106 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED) - 9 months ended Sep. 30, 2017 - USD ($) | Series A Preferred | Common Stock | Additional Paid in Capital | Accumulated Deficit | Total |
Beginning Balance, Shares at Dec. 31, 2016 | 510,000 | 120,825,134 | |||
Beginning Balance, Amount at Dec. 31, 2016 | $ 5,100 | $ 1,208,251 | $ 41,367,946 | $ (34,331,234) | $ 8,250,063 |
Equity based compensation, Amount | 221,808 | 221,808 | |||
Common stock issued for services provided, Shares | 249,824 | ||||
Common stock issued for services provided, Amount | $ 2,498 | 35,602 | 38,100 | ||
Warrants exercised, Shares | 975,000 | ||||
Warrants exercised, Amount | $ 9,750 | 39,000 | 48,750 | ||
Warrants issued as part of debt private placement | 61,904 | 61,904 | |||
Net Loss | (2,296,010) | (2,296,010) | |||
Ending Balance, Shares at Sep. 30, 2017 | 510,000 | 122,049,958 | |||
Ending Balance, Amount at Sep. 30, 2017 | $ 5,100 | $ 1,220,499 | $ 41,726,260 | $ (36,627,244) | $ 6,324,615 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash Flow From Operating Activities: | ||
Net Loss | $ (2,296,010) | $ (2,548,953) |
Adjustments to Reconcile Net loss to Net Cash Used In Operating Activities: | ||
Depreciation and Amortization | 453,834 | 427,377 |
Amortization of Debt Discount | 2,582 | 0 |
Equity Based Compensation | 221,808 | 542,291 |
Value of Equity Issued for Services | 38,100 | 369,653 |
Reserve for Bad Debts | 100,000 | 155,000 |
Gain on Disposition of Property and Equipment | 0 | (12,000) |
Decrease (increase) in: | ||
Accounts Receivable | (182,103) | (27,323) |
Inventory | (583,291) | (3,162,771) |
Prepaid Expenses | (174,253) | (55,421) |
Deposits on Merchandise | 147,010 | 273,628 |
Increase (Decrease) in: | ||
Accounts Payable | 613,769 | 82,952 |
Accrued Expenses | (51,355) | (7,484) |
Accrued Interest | 20,000 | 0 |
Deferred Rent | (5,820) | (4,653) |
Advances on Grant | 0 | (210,503) |
Customer Deposits | (22,632) | (1,339) |
Net Cash Used in Operating Activities | (1,718,362) | (4,179,544) |
Cash Flow From Investing Activities: | ||
Purchase of Property and Equipment | (8,398) | (460,540) |
Proceeds on Disposition of Property and Equipment | 0 | 12,000 |
Net Cash Used in Investing Activities | (8,398) | (448,540) |
Cash Flow From Financing Activities: | ||
Proceeds from Exercise of Warrants | 48,750 | 0 |
Proceeds from Convertible Notes | 6,000,000 | 0 |
Net Cash Provided by Financing Activities | 6,048,750 | 0 |
Increase (Decrease) In Cash and Cash Equivalents | 4,321,989 | (4,628,084) |
Cash and Cash Equivalents - Beginning | 948,324 | 5,916,068 |
Cash and Cash Equivalents - Ending | 5,270,313 | 1,287,984 |
Supplemental Cash Flow Information: | ||
Cash Paid For Interest | 111,256 | 0 |
Cash Paid For Income Taxes | 800 | 800 |
Non-Cash Investing and Financing Activities : | ||
Establishment of discount on convertible debt | 61,904 | 0 |
Reclassification of demo equipment from inventory to property and equipment | $ 210,154 | $ 0 |
1. DESCRIPTION OF BUSINESS
1. DESCRIPTION OF BUSINESS | 9 Months Ended |
Sep. 30, 2017 | |
Business Combination, Description [Abstract] | |
NOTE 1. DESCRIPTION OF BUSINESS | NOTE 1. DESCRIPTION OF BUSINESS TOMI Environmental Solutions, Inc. (“TOMI”, the “Company”, “we”, “our” and “us”) is a global provider of infection prevention and decontamination products and services, focused primarily on life sciences including healthcare, bio-safety, pharmaceutical, clean-room and research. TOMI provides environmental solutions for indoor and outdoor surface decontamination through the sale of equipment, services and licensing of its SteraMist™ Binary Ionization Technology® (“BIT™”), which is a hydrogen peroxide-based mist and fog registered with the U.S. Environmental Protection Agency (“EPA”). TOMI’s mission is to help its customers create a healthier world through its product line and its motto is “innovating for a safer world” for healthcare and life. |
2. SUMMARY OF SIGNIFICANT ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The interim unaudited condensed consolidated financial statements included herein, presented in accordance with generally accepted accounting principles utilized in the United States of America (“GAAP”), and stated in U.S. dollars, have been prepared by the Company, without an audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2016 and notes thereto which are included in the Annual Report on Form 10-K previously filed with the SEC on March 29, 2017. The Company follows the same accounting policies in the preparation of interim reports. The results of operations for the interim periods covered by this Form 10-Q may not necessarily be indicative of results of operations for the full fiscal year or any other interim period. Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of TOMI and its wholly-owned subsidiary, TOMI Environmental Solutions, Inc., a Nevada corporation. All significant intercompany accounts and transactions have been eliminated in consolidation. 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. Use of Estimates The preparation of condensed 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 condensed 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 accounts receivable, inventory, 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. 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. Our financial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and convertible debt. All these items were determined to be Level 1 fair value measurements. The carrying amounts of cash and cash equivalents, accounts receivable, and 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 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. At times, these deposits may be in excess of insured limits. Accounts Receivable Our accounts receivable are typically from credit worthy customers or, for certain international customers, are supported by pre-payments. For those customers to whom we extend credit, we perform periodic evaluations of them and maintain allowances for potential credit losses as deemed necessary. We have a policy of reserving for doubtful accounts based on our best estimate of the amount of potential credit losses in existing accounts receivable. We periodically review our accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are charged to the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Bad debt expense for the three and nine months ended September 30, 2017 was approximately $103,000 and $164,000, respectively. Bad debt expense for the three and nine months ended September 30, 2016 was approximately $50,000 and $155,000, respectively. At September 30, 2017 and December 31, 2016, the allowance for doubtful accounts was $400,000 and $300,000, respectively. As of September 30, 2017, one customer accounted for 13% of accounts receivable. Three customers accounted for 39% of net revenue for the three months ended September 30, 2017 and two customers accounted for 24% of net revenue for the nine months ended September 30, 2017. As of December 31, 2016, one customer accounted for 10% of accounts receivable. Three customers accounted for 32% of net revenue for the three months ended September 30, 2016 and two customers accounted for 26% of net revenue for the nine months ended September 30, 2016 . Inventories Inventories are valued at the lower of cost or market using the first-in, first-out (FIFO) method. Inventories consist primarily of finished goods and raw materials. At September 30, 2017 and December 31, 2016, we did not have a reserve for slow-moving or obsolete inventory. Deposits on Merchandise Deposits on merchandise primarily consist of amounts paid in advance of the receipt of inventory (see Note 10). 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. Accounts Payable As of September 30, 2017 and December 31, 2016, two vendors accounted for approximately 74% and 49% of total accounts payable, respectively. For the three and nine months ended September 30, 2017, one vendor accounted for 72% and 69% of cost of goods sold, respectively. Accrued Warranties Accrued warranties represent the estimated costs, if any, that will be incurred during the warranty period of our products. We make an estimate of expected costs that will be incurred by us during the warranty period and charge that expense to the consolidated statement of operations at the date of sale. Our manufacturer assumes warranty against product defects for one year, which we extend to our customers upon sale of the product. We assume responsibility for product reliability and results. As of September 30, 2017 and December 31, 2016, the Company did not establish a warranty reserve. 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 that are, on a more likely than not basis, not expected to be realized in accordance with Accounting Standards Codification (“ASC”) guidance for income taxes. Net deferred tax benefits have been fully reserved at September 30, 2017 and December 31, 2016. 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. Loss Per Share Basic loss per share is computed by dividing the Company’s net loss by the weighted average number of shares of common stock outstanding during the period presented. Diluted loss per share is based on the treasury stock method and includes the effect from potential issuance of shares of common stock, such as shares issuable pursuant to the exercise of options and warrants and conversions of preferred stock or debentures. Potentially dilutive securities as of September 30, 2017 consisted of 11,111,100 shares of common stock from convertible debentures, 35,691,411 shares of common stock issuable upon exercise of outstanding warrants, 200,000 shares of common stock issuable upon outstanding options and 510,000 shares of common stock issuable upon conversion of outstanding shares of Preferred A stock (“Convertible Series A Preferred Stock”). Diluted and basic weighted average shares are the same, as potentially dilutive shares are anti-dilutive. Potentially dilutive securities as of September 30, 2016, consisted of 36,826,413 shares of common stock from outstanding warrants, 200,000 shares of common stock from options and 510,000 shares of common stock from Convertible Series A Preferred Stock. Diluted and basic weighted average shares are the same, as potentially dilutive shares are anti-dilutive. Basic loss per share is computed by dividing net loss attributable to common shareholders by the weighted average number of common shares assumed to be outstanding during the period of computation. Diluted loss per share is computed similarly to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential shares had been issued and if the additional common shares were dilutive. Options, warrants, preferred stock and shares associated with the conversion of debt to purchase approximately 47.5 million and 37.5 shares of common stock were outstanding at September 30, 2017 and 2016, respectively, but were excluded from the computation of diluted loss per share due to the anti-dilutive effect on net loss per share. Three Months Ended September 30, 2017 2016 Net loss $ (457,025 ) $ (935,353 ) Adjustments for convertible debt - as converted Interest on convertible debt 60,000 - Amortization of debt discount on convertible debt 1,688 - Net loss attributable to common shareholders $ (395,337 ) $ (935,353 ) Weighted average number of common shares outstanding: Basic and diluted 121,567,328 120,763,449 Net loss attributable to common shareholders per share: Basic and diluted $ (0.00 ) $ (0.01 ) Nine Months Ended September 30, 2017 2016 Net loss $ (2,296,010 ) $ (2,548,953 ) Adjustments for convertible debt - as converted Interest on convertible debt 131,256 - Amortization of debt discount on convertible debt 2,582 - Net loss attributable to common shareholders $ (2,162,172 ) $ (2,548,953 ) Weighted average number of common shares outstanding: Basic and diluted 121,144,339 120,467,106 Net loss attributable to common shareholders per share: Basic and diluted $ (0.02 ) $ (0.02 ) Revenue Recognition Revenue is recognized when: (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 We account 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. On July 7, 2017, our shareholders approved the 2016 Equity Incentive Plan (the “2016 Plan”). The 2016 Plan authorizes the grant of stock options, stock appreciation rights, restricted stock, restricted stock units and performance units/shares. Up to 5,000,000 shares of common stock are authorized for issuance under the 2016 Plan. Shares issued under the 2016 Plan may be either authorized but unissued shares, treasury shares, or any combination thereof. Provisions in the 2016 Plan permit the reuse or reissuance by the 2016 Plan of shares of common stock for numerous reasons, including, but not limited to, shares of common stock underlying canceled, expired, or forfeited awards of stock-based compensation and stock appreciation rights paid out in the form of cash. Stock-based compensation will typically be awarded in consideration for the future performance of services to us. All recipients of awards under the 2016 Plan are required to enter into award agreements with the Company at the time of the award; awards under the 2016 Plan are expressly conditioned upon such agreements. For the year ended December 31, 2016, the Company issued options to purchase 100,000 shares of common stock out of the 2016 Plan. In addition, for the nine months ended September 30, 2017, the Company issued 200,000 shares of common stock out of the 2016 Plan. Concentrations of Credit Risk Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents. We maintain cash balances at financial institutions which exceed the current Federal Deposit Insurance Corporation limit of $250,000 at times during the year. Long-Lived Assets Including Acquired Intangible Assets We assess long-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, we measure recoverability of these assets by comparing the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If our 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. We base the calculations of the estimated fair value of our long-lived assets on the income approach. For the income approach, we use an internally developed discounted cash flow model that includes, 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 had no long-lived asset impairment charges for the three and nine months ended September 30, 2017 and 2016. Advertising and Promotional Expenses We expense advertising costs in the period in which they are incurred. Advertising and promotional expenses for the three and nine months ended September 30, 2017, were approximately $11,000 and $39,000, respectively. Advertising and promotional expenses for the three and nine months ended September 30, 2016, were approximately $22,000 and $109,000, respectively Research and Development Expenses We expense research and development expenses in the period in which they are incurred. Shipping and Handling Costs We include shipping and handling costs relating to the delivery of products directly from vendors to the Company in cost of sales. Other shipping and handling costs, including third-party delivery costs relating to the delivery of products to customers, are classified as a general and administrative expense. Shipping and handling costs included in general and administrative expense were approximately $32,000 and $84,000 for the three and nine months ended September 30, 2017, respectively. Shipping and handling costs included in general and administrative expense were approximately $33,000 and $105,000 for the three and nine months ended September 30, 2016, respectively. Business Segments We currently have one reportable business segment due to the fact that we derive our revenue primarily from one product. A breakdown of revenue is shown below: Net Revenue Product and Service Revenue Three Months Ended September 30, (Unaudited) 2017 2016 SteraMist Product $ 792,000 $ 850,000 Service & Training 238,000 242,000 Total $ 1,030,000 $ 1,092,000 Nine Months Ended September 30, (Unaudited) 2017 2016 SteraMist Product $ 2,713,000 $ 3,984,000 Service & Training 796,000 544,000 Total $ 3,509,000 $ 4,528,000 Revenue by Geographic Region Three Months Ended September 30, (Unaudited) 2017 2016 United States $ 755,000 $ 747,000 International 275,000 345,000 Total $ 1,030,000 $ 1,092,000 Nine Months Ended September 30, (Unaudited) 2017 2016 United States $ 2,497,000 $ 3,010,000 International 1,012,000 1,518,000 Total $ 3,509,000 $ 4,528,000 Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (ASU 2014-09) “Revenue from Contracts with Customers (Topic 606).” 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 reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. We are currently in the process of evaluating the impact of the adoption of ASU 2014-09 on our consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02) “Leases (Topic 842).” ASU 2016-02 provides new lease accounting guidance. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We are currently in the process of evaluating the impact of the adoption of ASU 2016-02 on our consolidated financial statements. In March 2016, the FASB issued Accounting Standards Update No. 2016-09 (ASU 2016-09) “Compensation – Stock Compensation (Topic 718).” ASU 2016-09 provides improvements to employee share-based payment accounting. ASU 2016-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment In May 2017, the FASB issued ASU No. 2017-09, Scope Of Modification Accounting |
3. INVENTORIES
3. INVENTORIES | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
NOTE 3. INVENTORIES | NOTE 3. INVENTORIES Inventories consist of the following: September 30, 2017 (Unaudited) December 31, 2016 Raw materials $ 573 $ 13,031 Finished goods 4,419,875 4,034,279 $ 4,420,448 $ 4,047,310 |
4. PROPERTY AND EQUIPMENT
4. PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
NOTE 4. PROPERTY AND EQUIPMENT | NOTE 4. PROPERTY AND EQUIPMENT Property and equipment consists of the following: September 30, 2017 (Unaudited) December 31, 2016 Furniture and fixtures $ 91,216 $ 91,216 Equipment 1,145,531 926,979 Vehicles 56,410 56,410 Software 39,999 39,999 Leasehold improvements 15,554 15,554 1,348,710 1,130,158 Less: Accumulated depreciation 695,054 518,350 $ 653,656 $ 611,808 For the three and nine months ended September 30, 2017, depreciation was $53,383 and $176,703, respectively. For the three and nine months ended September 30, 2016, depreciation was $55,970 and $150,246, respectively. |
5. INTANGIBLE ASSETS
5. INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
NOTE 5. INTANGIBLE ASSETS | NOTE 5. INTANGIBLE ASSETS Intangible assets consist of patents and trademarks related to our Binary Ionization Technology. We amortize the patents over the estimated remaining lives of the related patents. The trademarks have an indefinite life. Amortization expense was $92,377 and $277,131 for the three and nine months ended September 30, 2017 and 2016, respectively. Definite life intangible assets consist of the following: September 30, 2017 (Unaudited) December 31, 2016 Intellectual Property and Patents $ 2,848,300 $ 2,848,300 Less: Accumulated Amortization 1,647,391 1,370,260 Intangible Assets, net $ 1,200,909 $ 1,478,040 Indefinite life intangible assets consist of the following: Trademarks $ 440,000 $ 440,000 Total Intangible Assets, net $ 1,640,909 $ 1,918,040 Approximate amortization over the next five years is as follows: Twelve Month Period Ending September 30, Amount 2018 $ 370,000 2019 370,000 2020 370,000 2021 91,000 2022 - $ 1,201,000 |
6. CONVERTIBLE DEBT
6. CONVERTIBLE DEBT | 9 Months Ended |
Sep. 30, 2017 | |
Convertible Debt [Abstract] | |
NOTE 6. CONVERTIBLE DEBT | NOTE 6. CONVERTIBLE DEBT In March and May 2017, the Company closed a private placement transaction in which it issued to certain accredited investors unregistered senior callable convertible promissory notes (the “Notes”) and three-year warrants to purchase an aggregate of 999,998 shares of common stock at an exercise price of $0.69 per share in exchange for aggregate gross proceeds of $6,000,000. The Notes bear interest at a rate of 4% per annum. $5,300,000 in principal matures on August 31, 2018 and $700,000 in principal matures on November 8, 2018, unless earlier redeemed, repurchased or converted. The Notes are convertible at the option of the holder into common stock at a conversion price of $0.54 per share. Subsequent to September 1, 2017, we may redeem the Notes that are scheduled to mature on August 31, 2018 at any time prior to maturity at a price equal to 100% of the outstanding principal amount of the Notes to be redeemed, plus accrued and unpaid interest as of the redemption date. Prior to November 8, 2018, we may redeem the Notes that are scheduled to mature on such date at any time prior to maturity at a price equal to 100% of the outstanding principal amount of the Notes to be redeemed, plus accrued and unpaid interest as of the redemption date. Interest on the Notes is payable semi-annually in cash on February 28 and August 31 of each year, beginning on August 31, 2017. Interest expense related to the Notes for the three and nine months ended September 30, 2017 was $60,000 and $131,256, respectively. The warrants were valued at $62,559 using the Black-Scholes pricing model with the following assumptions: expected volatility: 104.06% -111.54%; expected dividend: $0; expected term: 3 years; and risk free rate: 1.49% - 1.59%. The estimated fair value of the warrants was calculated using the Black-Scholes valuation model. The Company recorded the warrants’ relative fair value of $61,904 as an increase to additional paid-in capital and a discount against the related debt. The debt discount is being amortized over the life of the Notes using the effective interest method. Amortization expense for the three and nine months ended September 30, 2017 was $1,688 and $2,582, respectively. Convertible notes consist of the following at September 30, 2017: Current: September 30, 2017 (Unaudited) Convertible notes $ 5,300,000 Initial discount (57,106 ) Accumulated amortization 2,376 Convertible notes, net $ 5,245,270 Long-term: September 30, 2017 (Unaudited) Convertible notes $ 700,000 Initial discount (4,798 ) Accumulated amortization 206 Convertible notes, net $ 695,408 |
7. STOCKHOLDERS' EQUITY
7. STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2017 | |
Statement of Stockholders' Equity [Abstract] | |
NOTE 7. STOCKHOLDERS' EQUITY | NOTE 7. SHAREHOLDERS’ EQUITY Our board of directors may, without further action by our shareholders, 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 Our authorized Convertible Series A Preferred Stock, $0.01 par value, consists of 1,000,000 shares. At September 30, 2017 and December 31, 2016, 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 Our authorized Convertible Series B Preferred Stock, $1,000 stated value, 7.5% Cumulative dividend, consists of 4,000 shares. At September 30, 2017 and December 31, 2016, there were no shares issued and outstanding, respectively. Each share of Convertible Series B Preferred Stock may be converted (at the holder’s election) into two hundred shares of our common stock. Common Stock During the nine months ended September 30, 2016, the Company issued 761,954 shares of common stock valued at $369,654 for professional services rendered. During the nine months ended September 30, 2017, the Company issued 249,824 shares of common stock valued at $38,100 for professional services rendered, of which the Company issued 200,000 shares that were valued at $32,000 and issued to our board of directors (See Note 10). In August 2017, warrants to purchase 375,000 and 600,000 shares of common stock were exercised, which resulted in gross proceeds to the Company of $18,750 and $30,000, respectively. Stock Options In February 2016, we issued options to purchase an aggregate of 100,000 shares of common stock to four directors, valued at $54,980 in total. The options have an exercise price of $0.55 per share and expire in February 2026. The options were valued using the Black-Scholes model using the following assumptions: volatility: 224%; dividend yield: 0%; zero coupon rate: 1.47%; and a life of 10 years. The following table summarizes stock options outstanding as of September 30, 2017 and December 31, 2016: September 30, 2017 (Unaudited) December 31, 2016 Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price Outstanding, beginning of period 200,000 $ 0.76 100,000 $ 0.96 Granted — — 100,000 0.55 Exercised — — — — Outstanding, end of period 200,000 $ 0.76 200,000 $ 0.76 Options outstanding and exercisable by price range as of September 30, 2017 were as follows: Outstanding Options Average Weighted Exercisable Options Range Number Remaining Contractual Life in Years Number Weighted Average Exercise Price $ 2.10 40,000 2.26 40,000 $ 2.10 $ 0.05 20,000 3.27 20,000 $ 0.05 $ 0.27 40,000 7.26 40,000 $ 0.27 $ 0.55 100,000 8.35 100,000 $ 0.55 200,000 6.41 200,000 $ 0.76 Stock Warrants For the nine months ended September 30, 2016, the Company recognized total equity based compensation of approximately $333,000 on warrants issued to the CEO in connection with his current and previous employment agreements. For the nine months ended September 30, 2016, the Company recognized $39,000 in stock compensation expense for the warrants issued to the CEO in February 2014 that vested in February 2016. In addition, on March 31, 2016, the Company issued a warrant to purchase up to 250,000 shares of common stock to the CEO with a term of five years that vested upon issuance and has an exercise price of $0.50 per share. The Company utilized the Black-Scholes method to fair value the warrant to purchase up to 250,000 shares of common stock received by the CEO as approximately $129,000 with the following assumptions: volatility, 162%; expected dividend yield, 0%; risk free interest rate, 1.47%; and a life of 5 years. The grant date fair value of each share of common stock underlying the warrant was $0.51. On June 30, 2016, the Company issued a warrant to purchase up to 250,000 shares of common stock to the CEO with a term of five years that vested upon issuance and has an exercise price of $0.42 per share. The Company utilized the Black-Scholes method to fair value the warrants to purchase up to 250,000 shares of common stock received by the CEO as approximately $99,000 with the following assumptions: volatility, 157%; expected dividend yield, 0%; risk free interest rate, 1.17%; and a life of 5 years. The grant date fair value of each share of common stock underlying the warrant was $0.40. On September 30, 2016, , the Company issued a warrant to purchase up to 250,000 shares of common stock to the CEO with a term of five years that vested upon issuance and has an exercise price of $0.32 per share. The Company utilized the Black-Scholes method to fair value the warrant to purchase up to 250,000 shares of common stock received by the CEO as approximately $66,000 with the following assumptions: volatility, 155%; expected dividend yield, 0%; risk free interest rate, 1.27%; and a life of 5 years. The grant date fair value of each share of common stock underlying the warrant was $0.27. For the nine months ended September 30, 2016, the Company recognized total equity based compensation of approximately $73,000 on warrants issued to the CFO in connection with his current and previous employment agreements. For the nine months ended September 30, 2016, the Company recognized $22,000 in stock compensation expense for the accrued but unvested portion of the warrants issued to the CFO under his previous agreement with the Company. In addition, on January 26, 2016, the Company issued a warrant to purchase up to 100,000 shares of common stock to the CFO with a term of five years that vested upon issuance and has an exercise price of $0.55 per share. The Company utilized the Black-Scholes method to fair value the warrants to purchase up to 100,000 shares of common stock received by the CFO as approximately $51,000 with the following assumptions: volatility, 164%; expected dividend yield, 0%; risk free interest rate, 1.47%; and a life of 5 years. The grant date fair value of each share of common stock underlying the warrant was $0.51. For the nine months ended September 30, 2016, the Company recognized equity compensation expense of approximately $81,000 related to the vested and accrual of the unvested portion of a warrant issued in April 2016 to a former employee pursuant to his employment agreement with the Company. The Company utilized the Black-Scholes method to fair value the warrant to purchase 300,000 shares of common stock received by the employee as approximately $139,000 with the following assumptions: volatility, 159%; expected dividend yield, 0%; risk free interest rate, 1.47%; and a life of 5 years. The grant date fair value of each share of common stock underlying the warrant was $0.46. In March and May of 2017, in connection with the issuance of the Notes, we issued three-year warrants to purchase up to an aggregate of 999,998 shares of common stock at an exercise price of $0.69 per share (see Note 6). On June 30, 2017, we issued warrants to purchase up to 15,000 shares of common stock at an exercise price of $0.10 per share to the members of the Scientific Advisory Board with a term of five years, which vested upon issuance. The Company utilized the Black-Scholes method to fair value the warrants received by the members of the Scientific Advisory Board at $1,400 with the following assumptions: volatility, 150%; expected dividend yield, 0%; risk free interest rate, 1.83%; and a life of 5 years. The grant date fair value of each share underlying the warrant was $0.09. During the first and second quarter of 2017, we recognized approximately $23,000 in equity compensation expense for the vested and unvested portion of a warrant issued to a former employee pursuant to his agreement with the Company. In September 2017, the employee resigned from his position with the Company and the unvested portion of his warrant was terminated. For the three months ended September 30, 2017, we reversed the equity compensation expense for the accrued but unvested portion of his warrant of $22,000. In June 2017, we modified the terms of outstanding warrants to purchase 4,000,000 shares of common stock. Pursuant to a settlement agreement, the term of the warrants was increased by 2 years and the exercise price was modified to $0.12 per share (decrease of $0.03 per share). Pursuant to ASC 718, the modified terms of the warrants resulted in approximately $196,000 in incremental equity compensation expense for the nine months ended September 30, 2017. We utilized the Black-Scholes method to fair value the warrants under the original and modified terms with the following range of assumptions: volatility, 81%-97%; expected dividend yield, 0%; risk free interest rate, 1.28%; and a life of 0.33 - 2.33 years, respectively. The grant date fair value of each share of common stock underlying the warrant was $0.01 and $0.06, respectively. In July 2017 we issued a warrant to purchase 250,000 shares of common stock to the CEO at an exercise price of $0.10 per share pursuant to his employment agreement with the Company. The warrant was valued at approximately $23,000 and has a term of 5 years. We utilized the Black-Scholes method to fair value the warrant received by the CEO with the following assumptions: volatility, 153%; expected dividend yield, 0%; risk free interest rate, 1.90%; and a life of 5 years. The grant date fair value of each share of common stock underlying the warrant was $0.09. The following table summarizes the outstanding common stock warrants as of September 30, 2017 and December 31, 2016: September 30, 2017 (Unaudited) December 31, 2016 Number of Warrants Weighted Average Exercise Price Number of Warrants Weighted Average Exercise Price Outstanding, beginning of period 37,076,413 $ 0.31 35,676,413 $ 0.30 Granted 1,264,998 0.57 1,400,000 0.42 Exercised (975,000 ) 0.05 — — Expired (1,675,000 ) 0.04 — — Outstanding, end of period 35,691,411 $ 0.33 37,076,413 $ 0.31 Warrants outstanding and exercisable by price range as of September 30, 2017 were as follows: Outstanding Warrants Exercisable Warrants Range Number Average Weighted Remaining Contractual Life in Years Number Weighted Average Exercise Price $ 0.10 265,000 4.79 265,000 $ 0.10 $ 0.12 4,000,000 2.04 4,000,000 $ 0.12 $ 0.15 3,750,000 0.05 3,750,000 $ 0.15 $ 0.26 100,000 0.74 100,000 $ 0.26 $ 0.27 250,000 4.25 250,000 $ 0.27 $ 0.29 10,125,613 3.06 10,125,613 $ 0.29 $ 0.30 11,925,800 1.00 11,925,800 $ 0.30 $ 0.32 250,000 4.00 250,000 $ 0.32 $ 0.33 75,000 1.00 75,000 $ 0.33 $ 0.42 250,000 3.75 250,000 $ 0.42 $ 0.50 525,000 1.83 525,000 $ 0.50 $ 0.55 100,000 3.33 100,000 $ 0.55 $ 0.62 75,000 0.80 75,000 $ 0.62 $ 0.69 999,998 2.46 999,998 $ 0.69 $ 1.00 3,000,000 2.59 3,000,000 $ 1.00 35,691,411 1.88 35,691,411 $ 0.33 There were no unvested warrants outstanding as of September 30, 2017. |
8. RELATED PARTY TRANSACTIONS
8. RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
NOTE 8. RELATED PARTY TRANSACTIONS | NOTE 8. RELATED PARTY TRANSACTIONS For each of the three and nine months ended September 30, 2017 and 2016, we incurred fees for legal services rendered by Harold Paul in the amount of $15,000 and $45,000, respectively. Mr. Paul is also a director of the Company. In January 2016, we entered into a distributor agreement with TOMI Asia to facilitate growth in Asia. Wee Ah Kee, one of our significant shareholders, is the Chief Executive Officer of TOMI Asia. We amended the distributor agreement in August 2016, at which time TOMI Asia changed its name to SteraMist Asia. The initial term of our new agreement is three years and the agreement sets revenue targets of $5.5 million, $8.5 million and $12 million of our products during 2016, 2017 and 2018, respectively. Our new agreement includes mainland China and Indochina and excludes South Korea, Japan, Australia and New Zealand. Approximately $49,000 and $56,000 in sales were made under the distributor agreement for the three and nine months ended September 30, 2017, respectively. No sales were made under the distributor agreement for the three and nine months ended 30, 2016. In May 2017, we entered into an agreement with 41 North International LLC to provide consulting services in the areas of sales management and business development. The term of the agreement is for six months and provides for automatic monthly renewals. Either party can terminate the agreement after 6 months with 30 days written notice. The agreement provides for a $20,000 monthly fee as an advance against commissions. Mr. Ainsworth is a principal of 41 North International, LLC and director of the Company. The agreement was terminated on October 31, 2017. (see Note 10). |
9. COMMITMENTS AND CONTINGENCIE
9. COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
NOTE 9. COMMITMENTS AND CONTINGENCIES | NOTE 9. COMMITMENTS AND CONTINGENCIES Lease Commitments In September 2014, we entered into a lease agreement for office and warehouse space in Frederick, Maryland. As part of the lease agreement, we received a rent holiday in the first 5 months of the lease. The lease also provides for an escalation clause pursuant to which 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 $11,427 and $34,281 in rent expense for the three and nine months ended September 30, 2017 and 2016, respectively. Approximate minimum annual rents under the lease are as follows: Period Ending January 31, Amount 2018 $ 18,000 $ 18,000 Legal Contingencies We may become a party to litigation in the normal course of business. In the opinion of management, there are no legal matters involving us that would have a material adverse effect upon our financial condition, results of operations or cash flows. In addition, from time to time, we may have to file claims against parties that infringe on our intellectual property. Product Liability As of September 30, 2017, and December 31, 2016, there were no claims against us for product liability. |
10. CONTRACTS AND AGREEMENTS
10. CONTRACTS AND AGREEMENTS | 9 Months Ended |
Sep. 30, 2017 | |
Contracts And Agreements | |
NOTE 10. CONTRACTS AND AGREEMENTS | NOTE 10. CONTRACTS AND AGREEMENTS Manufacturing Agreement In November 2016, we entered into a new manufacturing and development agreement with RG Group Inc. The agreement does not provide for any minimum purchase commitments and is for a term of two years with provisions to extend. The agreement also provides for a warranty against product defects for one year. As of September 30, 2017, and December 31, 2016, balances due to RG Group, Inc. accounted for approximately 61% and 31% of total accounts payable, respectively. At September 30, 2017 and December 31, 2016, we maintained required deposits with RG Group, Inc. in the amounts of $0 and $147,010, respectively. 30, 2017, RG Group, Inc. accounted for 72% and 69% of cost of goods sold, respectively. For the three and nine months ended 30, 2016, RG Group, Inc. accounted for 63% and 76% of cost of goods sold, respectively. Agreements with Directors In March 2017, we increased the annual board fee to directors to $30,000, to be paid on a quarterly basis, with the exception of the audit committee chairperson, whose annual fee we increased to $35,000, also to be paid on a quarterly basis. In addition, we issued to each of our four board members 50,000 shares of common stock in April 2017. The 200,000 shares of common stock were valued at $32,000 for the nine months ended September 30, 2017. At our 2017 Annual Meeting of Shareholders, our shareholders elected Mr. Ronald E. Ainsworth to our board of directors, to serve as a Class I director. Other Agreements In June 2015, we launched the TOMI Service Network (“TSN”). The TSN is a national service network composed of existing full service restoration industry specialists that have entered into licensing agreements with us to become Primary Service Providers (“PSP’s”). The licensing agreements grant protected territories to PSP’s to perform services using our SteraMist™ platform of products and also provide for potential job referrals to PSP’s whereby we are entitled to referral fees. Additionally, the agreement provides for commissions due to PSP’s for equipment and solution sales they facilitate to other service providers in their respective territories. As part of these agreements, we are obligated to provide to the PSP’s various training, ongoing support and facilitate a referral network call center. As of September 30, 2017, we had entered into 64 licensing agreements in connection with the launch of the TSN. The licensing agreements contain fixed price minimum equipment and solution orders based on the population of the territories granted pursuant to the licensing agreements. |
11. ACCRUED EXPENSES AND OTHER
11. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (USD $) | 9 Months Ended |
Sep. 30, 2017 | |
Accrued Expenses And Other Current Liabilities Usd | |
11. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | NOTE 11. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consisted of the following at: September 30, 2017 (unaudited) December 31, 2016 Commissions $ 79,445 $ 172,735 Payroll and related costs 41,264 40,264 Director fees 35,250 19,000 Other accrued expenses 71,099 46,414 Total $ 227,058 $ 278,413 |
12. CUSTOMER CONCENTRATION
12. CUSTOMER CONCENTRATION | 9 Months Ended |
Sep. 30, 2017 | |
Risks and Uncertainties [Abstract] | |
NOTE 12. CUSTOMER CONCENTRATION | NOTE 12. CUSTOMER CONCENTRATION The Company had certain customers whose revenue individually represented 10% of more of the CompanyÂ’s total revenue, or whose accounts receivable balances individually represented 10% of more of the CompanyÂ’s accounts receivable. Three customers accounted for 39% of net revenues for the three months ended September 30, 2017 and two customers accounted for 24% of net revenues for the nine months ended September 30, 2017. Three customers accounted for 32% of net revenues for the three months ended September 30, 2016 and two customers accounted for 26% of net revenues for the nine months ended September 30, 2016. At September 30, 2017 and December 31, 2016, one customer accounted for 13% and 10% of accounts receivable, respectively. |
13. LITIGATION SETTLEMENT
13. LITIGATION SETTLEMENT | 9 Months Ended |
Sep. 30, 2017 | |
Litigation Settlement | |
NOTE 14. LITIGATION SETTLEMENT | NOTE 13. LITIGATION SETTLEMENT In July 2017, we settled our litigation with Astro Pak Corporation (“Astro Pak”) relating to our patents and intellectual property rights. Astro Pak has agreed that we are the sole owner of ionized hydrogen peroxide decontamination and sterilization technology, patents, and products, which we market under the brands Binary Ionization Technology® (BIT™) and SteraMist™. We sued Astro Pak and its wholly owned subsidiary SixLog Corporation (“SixLog”) in California federal court for infringing our United States Patent Nos. 6,969,487 and 7,008,592 and violating our intellectual property rights by, among other things, indicating that our technology and patents were proprietary to SixLog and marketing our patented equipment with SixLog labels. Astro Pak and SixLog agreed to cease this conduct and pay us a cash settlement. Astro Pak also agreed to assign its iHP mark to us, complementing our existing trademark and trade name protection. Finally, Astro Pak and SixLog agreed to remove from the web or take steps to remove any assertions or suggestions that they own or developed ionized hydrogen peroxide technology or patents, or that they provide any ionized hydrogen peroxide products or services. |
14. SUBSEQUENT EVENTS
14. SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2017 | |
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 SEC. |
2. SUMMARY OF SIGNIFICANT ACC21
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The interim unaudited condensed consolidated financial statements included herein, presented in accordance with generally accepted accounting principles utilized in the United States of America (“GAAP”), and stated in U.S. dollars, have been prepared by the Company, without an audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2016 and notes thereto which are included in the Annual Report on Form 10-K previously filed with the SEC on March 29, 2017. The Company follows the same accounting policies in the preparation of interim reports. The results of operations for the interim periods covered by this Form 10-Q may not necessarily be indicative of results of operations for the full fiscal year or any other interim period. |
Principles of Consolidation | Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of TOMI and its wholly-owned subsidiary, TOMI Environmental Solutions, Inc., a Nevada corporation. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Reclassification of Accounts | 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. |
Use of Estimates | Use of Estimates The preparation of condensed 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 condensed 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 accounts receivable, inventory, 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. |
Fair Value Measurements | 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. Our financial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and convertible debt. All these items were determined to be Level 1 fair value measurements. The carrying amounts of cash and cash equivalents, accounts receivable, and 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 Note 6). |
Cash and Cash Equivalents | 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. At times, these deposits may be in excess of insured limits. |
Accounts Receivable | Accounts Receivable Our accounts receivable are typically from credit worthy customers or, for certain international customers, are supported by pre-payments. For those customers to whom we extend credit, we perform periodic evaluations of them and maintain allowances for potential credit losses as deemed necessary. We have a policy of reserving for doubtful accounts based on our best estimate of the amount of potential credit losses in existing accounts receivable. We periodically review our accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are charged to the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Bad debt expense for the three and nine months ended September 30, 2017 was approximately $103,000 and $164,000, respectively. Bad debt expense for the three and nine months ended September 30, 2016 was approximately $50,000 and $155,000, respectively. At September 30, 2017 and December 31, 2016, the allowance for doubtful accounts was $400,000 and $300,000, respectively. As of September 30, 2017, one customer accounted for 13% of accounts receivable. Three customers accounted for 39% of net revenue for the three months ended September 30, 2017 and two customers accounted for 24% of net revenue for the nine months ended September 30, 2017. As of December 31, 2016, one customer accounted for 10% of accounts receivable. Three customers accounted for 32% of net revenue for the three months ended September 30, 2016 and two customers accounted for 26% of net revenue for the nine months ended September 30, 2016 . |
Inventories | Inventories Inventories are valued at the lower of cost or market using the first-in, first-out (FIFO) method. Inventories consist primarily of finished goods and raw materials. At September 30, 2017 and December 31, 2016, we did not have a reserve for slow-moving or obsolete inventory. |
Deposits on Merchandise | Deposits on Merchandise Deposits on merchandise primarily consist of amounts paid in advance of the receipt of inventory (see Note 10). |
Property and Equipment | 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. |
Accounts Payable | Accounts Payable As of September 30, 2017 and December 31, 2016, two vendors accounted for approximately 74% and 49% of total accounts payable, respectively. For the three and nine months ended September 30, 2017, one vendor accounted for 72% and 69% of cost of goods sold, respectively. |
Accrued Warranties | Accrued Warranties Accrued warranties represent the estimated costs, if any, that will be incurred during the warranty period of our products. We make an estimate of expected costs that will be incurred by us during the warranty period and charge that expense to the consolidated statement of operations at the date of sale. Our manufacturer assumes warranty against product defects for one year, which we extend to our customers upon sale of the product. We assume responsibility for product reliability and results. As of September 30, 2017 and December 31, 2016, the Company did not establish a warranty reserve. |
Income taxes | 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 that are, on a more likely than not basis, not expected to be realized in accordance with Accounting Standards Codification (“ASC”) guidance for income taxes. Net deferred tax benefits have been fully reserved at September 30, 2017 and December 31, 2016. 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. |
Loss Per Share | Loss Per Share Basic loss per share is computed by dividing the Company’s net loss by the weighted average number of shares of common stock outstanding during the period presented. Diluted loss per share is based on the treasury stock method and includes the effect from potential issuance of shares of common stock, such as shares issuable pursuant to the exercise of options and warrants and conversions of preferred stock or debentures. Potentially dilutive securities as of September 30, 2017 consisted of 11,111,100 shares of common stock from convertible debentures, 35,691,411 shares of common stock issuable upon exercise of outstanding warrants, 200,000 shares of common stock issuable upon outstanding options and 510,000 shares of common stock issuable upon conversion of outstanding shares of Preferred A stock (“Convertible Series A Preferred Stock”). Diluted and basic weighted average shares are the same, as potentially dilutive shares are anti-dilutive. Potentially dilutive securities as of September 30, 2016, consisted of 36,826,413 shares of common stock from outstanding warrants, 200,000 shares of common stock from options and 510,000 shares of common stock from Convertible Series A Preferred Stock. Diluted and basic weighted average shares are the same, as potentially dilutive shares are anti-dilutive. Basic loss per share is computed by dividing net loss attributable to common shareholders by the weighted average number of common shares assumed to be outstanding during the period of computation. Diluted loss per share is computed similarly to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential shares had been issued and if the additional common shares were dilutive. Options, warrants, preferred stock and shares associated with the conversion of debt to purchase approximately 47.5 million and 37.5 shares of common stock were outstanding at September 30, 2017 and 2016, respectively, but were excluded from the computation of diluted loss per share due to the anti-dilutive effect on net loss per share. Three Months Ended September 30, 2017 2016 Net loss $ (457,025 ) $ (935,353 ) Adjustments for convertible debt - as converted Interest on convertible debt 60,000 - Amortization of debt discount on convertible debt 1,688 - Net loss attributable to common shareholders $ (395,337 ) $ (935,353 ) Weighted average number of common shares outstanding: Basic and diluted 121,567,328 120,763,449 Net loss attributable to common shareholders per share: Basic and diluted $ (0.00 ) $ (0.01 ) Nine Months Ended September 30, 2017 2016 Net loss $ (2,296,010 ) $ (2,548,953 ) Adjustments for convertible debt - as converted Interest on convertible debt 131,256 - Amortization of debt discount on convertible debt 2,582 - Net loss attributable to common shareholders $ (2,162,172 ) $ (2,548,953 ) Weighted average number of common shares outstanding: Basic and diluted 121,144,339 120,467,106 Net loss attributable to common shareholders per share: Basic and diluted $ (0.02 ) $ (0.02 ) |
Revenue Recognition | Revenue Recognition Revenue is recognized when: (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 managementÂ’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 | Stock-Based Compensation We account 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. On July 7, 2017, our shareholders approved the 2016 Equity Incentive Plan (the “2016 Plan”). The 2016 Plan authorizes the grant of stock options, stock appreciation rights, restricted stock, restricted stock units and performance units/shares. Up to 5,000,000 shares of common stock are authorized for issuance under the 2016 Plan. Shares issued under the 2016 Plan may be either authorized but unissued shares, treasury shares, or any combination thereof. Provisions in the 2016 Plan permit the reuse or reissuance by the 2016 Plan of shares of common stock for numerous reasons, including, but not limited to, shares of common stock underlying canceled, expired, or forfeited awards of stock-based compensation and stock appreciation rights paid out in the form of cash. Stock-based compensation will typically be awarded in consideration for the future performance of services to us. All recipients of awards under the 2016 Plan are required to enter into award agreements with the Company at the time of the award; awards under the 2016 Plan are expressly conditioned upon such agreements. For the year ended December 31, 2016, the Company issued options to purchase 100,000 shares of common stock out of the 2016 Plan. In addition, for the nine months ended September 30, 2017, the Company issued 200,000 shares of common stock out of the 2016 Plan. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents. We maintain cash balances at financial institutions which exceed the current Federal Deposit Insurance Corporation limit of $250,000 at times during the year. |
Long-Lived Assets Including Acquired Intangible Assets | Long-Lived Assets Including Acquired Intangible Assets We assess long-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, we measure recoverability of these assets by comparing the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If our 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. We base the calculations of the estimated fair value of our long-lived assets on the income approach. For the income approach, we use an internally developed discounted cash flow model that includes, 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 had no long-lived asset impairment charges for the three and nine months ended September 30, 2017 and 2016. |
Advertising and Promotional Expenses | Advertising and Promotional Expenses We expense advertising costs in the period in which they are incurred. Advertising and promotional expenses for the three and nine months ended September 30, 2017, were approximately $11,000 and $39,000, respectively. Advertising and promotional expenses for the three and nine months ended September 30, 2016, were approximately $22,000 and $109,000, respectively |
Research and Development Expenses | Research and Development Expenses We expense research and development expenses in the period in which they are incurred. For the three and nine months ended September 30, 2017, research and development expenses were approximately $80,000 and $129,000, respectively. For the three and nine months ended September 30, 2016, research and development expenses were approximately $93,000 and $120,000, respectively. |
Shipping and Handling Costs | Shipping and Handling Costs We include shipping and handling costs relating to the delivery of products directly from vendors to the Company in cost of sales. Other shipping and handling costs, including third-party delivery costs relating to the delivery of products to customers, are classified as a general and administrative expense. Shipping and handling costs included in general and administrative expense were approximately $32,000 and $84,000 for the three and nine months ended September 30, 2017, respectively. Shipping and handling costs included in general and administrative expense were approximately $33,000 and $105,000 for the three and nine months ended September 30, 2016, respectively. |
Business Segments | Business Segments We currently have one reportable business segment due to the fact that we derive our revenue primarily from one product. A breakdown of revenue is shown below: |
Net Revenue | Net Revenue Product and Service Revenue Three Months Ended September 30, (Unaudited) 2017 2016 SteraMist Product $ 792,000 $ 850,000 Service & Training 238,000 242,000 Total $ 1,030,000 $ 1,092,000 Nine Months Ended September 30, (Unaudited) 2017 2016 SteraMist Product $ 2,713,000 $ 3,984,000 Service & Training 796,000 544,000 Total $ 3,509,000 $ 4,528,000 Revenue by Geographic Region Three Months Ended September 30, (Unaudited) 2017 2016 United States $ 755,000 $ 747,000 International 275,000 345,000 Total $ 1,030,000 $ 1,092,000 Nine Months Ended September 30, (Unaudited) 2017 2016 United States $ 2,497,000 $ 3,010,000 International 1,012,000 1,518,000 Total $ 3,509,000 $ 4,528,000 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (ASU 2014-09) “Revenue from Contracts with Customers (Topic 606).” 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 reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. We are currently in the process of evaluating the impact of the adoption of ASU 2014-09 on our consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02) “Leases (Topic 842).” ASU 2016-02 provides new lease accounting guidance. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We are currently in the process of evaluating the impact of the adoption of ASU 2016-02 on our consolidated financial statements. In March 2016, the FASB issued Accounting Standards Update No. 2016-09 (ASU 2016-09) “Compensation – Stock Compensation (Topic 718).” ASU 2016-09 provides improvements to employee share-based payment accounting. ASU 2016-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment In May 2017, the FASB issued ASU No. 2017-09, Scope Of Modification Accounting |
2. SUMMARY OF SIGNIFICANT ACC22
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Loss Per Share | Three Months Ended September 30, 2017 2016 Net loss $ (457,025 ) $ (935,353 ) Adjustments for convertible debt - as converted Interest on convertible debt 60,000 - Amortization of debt discount on convertible debt 1,688 - Net loss attributable to common shareholders $ (395,337 ) $ (935,353 ) Weighted average number of common shares outstanding: Basic and diluted 121,567,328 120,763,449 Net loss attributable to common shareholders per share: Basic and diluted $ (0.00 ) $ (0.01 ) Nine Months Ended September 30, 2017 2016 Net loss $ (2,296,010 ) $ (2,548,953 ) Adjustments for convertible debt - as converted Interest on convertible debt 131,256 - Amortization of debt discount on convertible debt 2,582 - Net loss attributable to common shareholders $ (2,162,172 ) $ (2,548,953 ) Weighted average number of common shares outstanding: Basic and diluted 121,144,339 120,467,106 Net loss attributable to common shareholders per share: Basic and diluted $ (0.02 ) $ (0.02 ) |
Reportable business segment | Three Months Ended September 30, (Unaudited) 2017 2016 SteraMist Product $ 792,000 $ 850,000 Service & Training 238,000 242,000 Total $ 1,030,000 $ 1,092,000 Nine Months Ended September 30, (Unaudited) 2017 2016 SteraMist Product $ 2,713,000 $ 3,984,000 Service & Training 796,000 544,000 Total $ 3,509,000 $ 4,528,000 Revenue by Geographic Region Three Months Ended September 30, (Unaudited) 2017 2016 United States $ 755,000 $ 747,000 International 275,000 345,000 Total $ 1,030,000 $ 1,092,000 Nine Months Ended September 30, (Unaudited) 2017 2016 United States $ 2,497,000 $ 3,010,000 International 1,012,000 1,518,000 Total $ 3,509,000 $ 4,528,000 |
3. INVENTORIES (Tables)
3. INVENTORIES (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | September 30, 2017 (Unaudited) December 31, 2016 Raw materials $ 573 $ 13,031 Finished goods 4,419,875 4,034,279 $ 4,420,448 $ 4,047,310 |
4. PROPERTY AND EQUIPMENT (Tabl
4. PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | September 30, 2017 (Unaudited) December 31, 2016 Furniture and fixtures $ 91,216 $ 91,216 Equipment 1,145,531 926,979 Vehicles 56,410 56,410 Software 39,999 39,999 Leasehold improvements 15,554 15,554 1,348,710 1,130,158 Less: Accumulated depreciation 695,054 518,350 $ 653,656 $ 611,808 |
5. INTANGIBLE ASSETS (Tables)
5. INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Definite life intangible assets | September 30, 2017 (Unaudited) December 31, 2016 Intellectual Property and Patents $ 2,848,300 $ 2,848,300 Less: Accumulated Amortization 1,647,391 1,370,260 Intangible Assets, net $ 1,200,909 $ 1,478,040 |
Indefinite life intangible assets | Indefinite life intangible assets consist of the following: Trademarks $ 440,000 $ 440,000 Total Intangible Assets, net $ 1,640,909 $ 1,918,040 |
Approximate amortization over the next five years | Twelve Month Period Ending September 30, Amount 2018 $ 370,000 2019 370,000 2020 370,000 2021 91,000 2022 - $ 1,201,000 |
6. CONVERTIBLE DEBT (Tables)
6. CONVERTIBLE DEBT (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Convertible Debt [Abstract] | |
Convertible Notes potential future financing and fundamental transactions | Current: September 30, 2017 (Unaudited) Convertible notes $ 5,300,000 Initial discount (57,106 ) Accumulated amortization 2,376 Convertible notes, net $ 5,245,270 Long-term: September 30, 2017 (Unaudited) Convertible notes $ 700,000 Initial discount (4,798 ) Accumulated amortization 206 Convertible notes, net $ 695,408 |
7. STOCKHOLDERS' EQUITY (Tables
7. STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Statement of Stockholders' Equity [Abstract] | |
Summary of stock options outstanding | September 30, 2017 (Unaudited) December 31, 2016 Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price Outstanding, beginning of period 200,000 $ 0.76 100,000 $ 0.96 Granted — — 100,000 0.55 Exercised — — — — Outstanding, end of period 200,000 $ 0.76 200,000 $ 0.76 |
Options outstanding and exercisable by price range | Outstanding Options Average Weighted Exercisable Options Range Number Remaining Contractual Life in Years Number Weighted Average Exercise Price $ 2.10 40,000 2.26 40,000 $ 2.10 $ 0.05 20,000 3.27 20,000 $ 0.05 $ 0.27 40,000 7.26 40,000 $ 0.27 $ 0.55 100,000 8.35 100,000 $ 0.55 200,000 6.41 200,000 $ 0.76 |
Summary of stock warrants outstanding | September 30, 2017 (Unaudited) December 31, 2016 Number of Warrants Weighted Average Exercise Price Number of Warrants Weighted Average Exercise Price Outstanding, beginning of period 37,076,413 $ 0.31 35,676,413 $ 0.30 Granted 1,264,998 0.57 1,400,000 0.42 Exercised (975,000 ) 0.05 — — Expired (1,675,000 ) 0.04 — — Outstanding, end of period 35,691,411 $ 0.33 37,076,413 $ 0.31 |
Warrants outstanding and exercisable by price range | Outstanding Warrants Exercisable Warrants Range Number Average Weighted Remaining Contractual Life in Years Number Weighted Average Exercise Price $ 0.10 265,000 4.79 265,000 $ 0.10 $ 0.12 4,000,000 2.04 4,000,000 $ 0.12 $ 0.15 3,750,000 0.05 3,750,000 $ 0.15 $ 0.26 100,000 0.74 100,000 $ 0.26 $ 0.27 250,000 4.25 250,000 $ 0.27 $ 0.29 10,125,613 3.06 10,125,613 $ 0.29 $ 0.30 11,925,800 1.00 11,925,800 $ 0.30 $ 0.32 250,000 4.00 250,000 $ 0.32 $ 0.33 75,000 1.00 75,000 $ 0.33 $ 0.42 250,000 3.75 250,000 $ 0.42 $ 0.50 525,000 1.83 525,000 $ 0.50 $ 0.55 100,000 3.33 100,000 $ 0.55 $ 0.62 75,000 0.80 75,000 $ 0.62 $ 0.69 999,998 2.46 999,998 $ 0.69 $ 1.00 3,000,000 2.59 3,000,000 $ 1.00 35,691,411 1.88 35,691,411 $ 0.33 |
9. COMMITMENTS AND CONTINGENC28
9. COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Minimum annual rents | Period Ending January 31, Amount 2018 $ 18,000 $ 18,000 |
11. ACCRUED EXPENSES AND OTHE29
11. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accrued Expenses And Other Current Liabilities Tables | |
Schedule Of Accrued expenses and other current liabilities | Accrued expenses and other current liabilities consisted of the following at: September 30, 2017 (unaudited) December 31, 2016 Commissions $ 79,445 $ 172,735 Payroll and related costs 41,264 40,264 Director fees 35,250 19,000 Other accrued expenses 71,099 46,414 Total $ 227,058 $ 278,413 |
2. SUMMARY OF SIGNIFICANT ACC30
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Summary Of Significant Accounting Policies Details | ||||
Net loss | $ (457,025) | $ (935,353) | $ (2,296,010) | $ (2,548,953) |
Interest on convertible debt | 60,000 | 0 | 131,256 | 0 |
Amortization of debt discount on convertible debt | 1,688 | 0 | 2,582 | 0 |
Net loss attributable to common shareholders | $ (395,337) | $ (935,353) | $ (2,162,172) | $ (2,548,953) |
Weighted average number of common shares outstanding: | ||||
Basic and diluted | 121,567,328 | 120,763,449 | 121,144,339 | 120,467,106 |
Net loss attributable to common shareholders per share: | ||||
Basic and diluted | $ 0 | $ (0.01) | $ (0.02) | $ (0.02) |
2. SUMMARY OF SIGNIFICANT ACC31
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Net Revenue | $ 1,030,000 | $ 1,092,000 | $ 3,509,000 | $ 4,528,000 |
SteraMist Product [Member] | ||||
Net Revenue | 792,000 | 850,000 | 2,713,000 | 3,984,000 |
Service & Training [Member] | ||||
Net Revenue | 238,000 | 242,000 | 796,000 | 544,000 |
United States [Member] | ||||
Net Revenue | 755,000 | 747,000 | 2,497,000 | 3,010,000 |
International [Member] | ||||
Net Revenue | $ 275,000 | $ 345,000 | $ 1,012,000 | $ 1,518,000 |
2. SUMMARY OF SIGNIFICANT ACC32
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Bad Debt Expense | $ 103,000 | $ 50,000 | $ 164,000 | $ 155,000 | |
Allowance for doubtful accounts | $ 400,000 | $ 400,000 | $ 300,000 | ||
Potentially dilutive securities, convertible debentures | 11,111,100 | 11,111,100 | 36,826,413 | ||
Potentially dilutive securities, outstanding warrants | 35,691,411 | 35,691,411 | 200,000 | ||
Potentially dilutive securities, outstanding options | 200,000 | 200,000 | |||
Potentially dilutive securities, convertible Series A preferred stock | 510,000 | 510,000 | 510,000 | ||
Advertising and promotional expenses | $ 11,000 | 22,000 | $ 39,000 | 109,000 | |
Research and Development Expenses | 79,747 | 92,847 | 128,512 | 120,345 | |
Shipping and Handling Costs | $ 32,000 | $ 33,000 | $ 84,000 | $ 105,000 | |
Revenue, Net [Member] | Three Customer [Member] | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Concentration Risk, Percentage | 32.00% | ||||
Revenue, Net [Member] | One Customer [Member] | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Concentration Risk, Percentage | 39.00% | ||||
Revenue, Net [Member] | Two Customers [Member] | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Concentration Risk, Percentage | 24.00% | 26.00% | |||
Accounts Receivable [Member] | One Customer [Member] | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Concentration Risk, Percentage | 13.00% | 10.00% | |||
Accounts Payable [Member] | Two Customers [Member] | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Concentration Risk, Percentage | 74.00% | 49.00% | |||
Cost of Goods Sold [Member] | One Customer [Member] | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Concentration Risk, Percentage | 72.00% | 63.00% | 69.00% | 76.00% |
3. INVENTORIES (Details)
3. INVENTORIES (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 573 | $ 13,031 |
Finished goods | 4,419,875 | 4,034,279 |
Inventory, end of period | $ 4,420,448 | $ 4,047,310 |
4. PROPERTY AND EQUIPMENT (Deta
4. PROPERTY AND EQUIPMENT (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Abstract] | ||
Furniture and fixtures | $ 91,216 | $ 91,216 |
Equipment | 1,145,531 | 926,979 |
Vehicles | 56,410 | 56,410 |
Software | 39,999 | 39,999 |
Leasehold Improvements | 15,554 | 15,554 |
Property and Equipment Gross | 1,348,710 | 1,130,158 |
Less: Accumulated depreciation | 695,054 | 518,350 |
Property and Equipment Net | $ 653,656 | $ 611,807 |
4. PROPERTY AND EQUIPMENT (De35
4. PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Property and Equipment | ||||
Depreciation | $ 53,383 | $ 55,970 | $ 176,703 | $ 150,246 |
5. INTANGIBLE ASSETS (Details)
5. INTANGIBLE ASSETS (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Intellectual Property and Patents | $ 2,848,300 | $ 2,848,300 |
Less: Accumulated Amortization | 1,647,391 | 1,370,260 |
Intangible Assets, net | $ 1,200,909 | $ 1,478,040 |
5. INTANGIBLE ASSETS (Details 1
5. INTANGIBLE ASSETS (Details 1) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Trademarks | $ 440,000 | $ 440,000 |
Total Intangible Assets, net | $ 1,640,909 | $ 1,918,040 |
5. INTANGIBLE ASSETS (Details 2
5. INTANGIBLE ASSETS (Details 2) | Sep. 30, 2017USD ($) |
Amortization | |
2,018 | $ 370,000 |
2,019 | 370,000 |
2,020 | 370,000 |
2,021 | 91,000 |
2,022 | 0 |
Total | $ 1,201,000 |
5. INTANGIBLE ASSETS (Details N
5. INTANGIBLE ASSETS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 92,377 | $ 277,131 | $ 92,377 | $ 277,131 |
6. CONVERTIBLE DEBT (Details)
6. CONVERTIBLE DEBT (Details) | Sep. 30, 2017USD ($) |
Convertible Debt Details | |
Convertible notes | $ 5,300,000 |
Initial discount | (57,106) |
Accumulated Amortization | 2,376 |
Convertible notes, net | $ 5,245,270 |
6. CONVERTIBLE DEBT (Details 1)
6. CONVERTIBLE DEBT (Details 1) | Sep. 30, 2017USD ($) |
Convertible Debt Details 1 | |
Convertible notes | $ 700,000 |
Initial discount | (4,798) |
Accumulated amortization | 206 |
Convertible notes, net | $ 695,408 |
6. CONVERTIBLE DEBT (Details Na
6. CONVERTIBLE DEBT (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Expected volatility | 104.06% | 104.06% | ||
Remaining term (years) | 3 years | |||
Risk-free rate | 1.59% | 1.59% | ||
Expected dividend yield | 111.54% | 111.54% | ||
Amortization expense | $ 1,688 | $ 2,582 | ||
Interest expense | $ 60,000 | $ 0 | $ 131,256 | $ 0 |
7. STOCKHOLDERS' EQUITY (Detail
7. STOCKHOLDERS' EQUITY (Details) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Number of Options | ||
Outstanding option, Beginning balance | 200,000 | 100,000 |
Granted, Options | 0 | 100,000 |
Exercised, Options | 0 | 0 |
Outstanding option, Ending balance | 200,000 | 200,000 |
Weighted Average Exercise Price | ||
Outstanding Weighted Average Exercise Price, Beginning balance | $ 0.76 | $ 0.96 |
Granted, Weighted Average Exercise Price | 0 | 0.55 |
Exercised, Weighted Average Exercise Price | 0 | 0 |
Outstanding Weighted Average Exercise Price, Ending balance | $ 0.76 | $ 0.76 |
7. STOCKHOLDERS' EQUITY (Deta44
7. STOCKHOLDERS' EQUITY (Details 1) - $ / shares | 9 Months Ended | ||
Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Options outstanding and exercisable by price range | |||
Outstanding option, Number | 200,000 | 200,000 | 100,000 |
Average Weighted Remaining Contractual Life in Years, option | 6 years 7 months 28 days | ||
Exercisable Options, Number | 200,000 | ||
Weighted Average Exercise Price, Exercisable Options | $ 0.76 | ||
2.10 Range [Member] | |||
Options outstanding and exercisable by price range | |||
Outstanding option, Number | 40,000 | ||
Average Weighted Remaining Contractual Life in Years, option | 2 years 6 months 4 days | ||
Exercisable Options, Number | 40,000 | ||
Weighted Average Exercise Price, Exercisable Options | $ 2.10 | ||
0.05 Range [Member] | |||
Options outstanding and exercisable by price range | |||
Outstanding option, Number | 20,000 | ||
Average Weighted Remaining Contractual Life in Years, option | 3 years 6 months 7 days | ||
Exercisable Options, Number | 20,000 | ||
Weighted Average Exercise Price, Exercisable Options | $ 0.05 | ||
0.27 Range [Member] | |||
Options outstanding and exercisable by price range | |||
Outstanding option, Number | 40,000 | ||
Average Weighted Remaining Contractual Life in Years, option | 7 years 6 months 4 days | ||
Exercisable Options, Number | 40,000 | ||
Weighted Average Exercise Price, Exercisable Options | $ 0.27 | ||
0.55 Range [Member] | |||
Options outstanding and exercisable by price range | |||
Outstanding option, Number | 100,000 | ||
Average Weighted Remaining Contractual Life in Years, option | 8 years 7 months 6 days | ||
Exercisable Options, Number | 100,000 | ||
Weighted Average Exercise Price, Exercisable Options | $ 0.55 |
7. STOCKHOLDERS' EQUITY (Deta45
7. STOCKHOLDERS' EQUITY (Details 2) - Warrant [Member] - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding Warrants, Beginning Balance | 37,076,413 | 35,676,413 |
Granted, Warrants | 1,264,998 | 1,400,000 |
Exercised, Warrants | (975,000) | 0 |
Expired, Warrants | (1,675,000) | 0 |
Outstanding Warrants, Ending Balance | 35,691,411 | 37,076,413 |
Outstanding Weighted Average Exercise Price, Beginning balance | $ 0.31 | $ 0.30 |
Granted, Weighted Average Exercise Price | 0.57 | 0.42 |
Exercised, Weighted Average Exercise Price | .05 | 0 |
Expired, Weighted Average Exercise Price | .04 | 0 |
Outstanding Weighted Average Exercise Price, Ending balance | $ 0.33 | $ 0.31 |
7. STOCKHOLDERS' EQUITY (Deta46
7. STOCKHOLDERS' EQUITY (Details 3) - $ / shares | 9 Months Ended | |
Sep. 30, 2017 | Jun. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding warrants, Number | 35,691,411 | |
Average Weighted Remaining Contractual Life in Years, Warrant | 1 year 10 months 17 days | |
Exercisable Warrants, Number | 35,691,411 | |
Weighted Average Exercise Price, Exercisable Warrants | $ 0.33 | |
0.10 Range [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding warrants, Number | 265,000 | |
Average Weighted Remaining Contractual Life in Years, Warrant | 4 years 9 months 15 days | |
Exercisable Warrants, Number | 265,000 | |
Weighted Average Exercise Price, Exercisable Warrants | $ .10 | |
0.12 Range [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding warrants, Number | 4,000,000 | |
Average Weighted Remaining Contractual Life in Years, Warrant | 2 years 14 days | |
Exercisable Warrants, Number | 4,000,000 | |
Weighted Average Exercise Price, Exercisable Warrants | $ 0.12 | |
0.15 Range [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding warrants, Number | 3,750,000 | |
Average Weighted Remaining Contractual Life in Years, Warrant | 18 days | |
Exercisable Warrants, Number | 3,750,000 | |
Weighted Average Exercise Price, Exercisable Warrants | $ 0.15 | |
0.26 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 | 8 months 27 days | |
Exercisable Warrants, Number | 100,000 | |
Weighted Average Exercise Price, Exercisable Warrants | $ 0.26 | |
0.27 Range [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding warrants, Number | 250,000 | |
Average Weighted Remaining Contractual Life in Years, Warrant | 4 years 3 months | |
Exercisable Warrants, Number | 250,000 | |
Weighted Average Exercise Price, Exercisable Warrants | $ 0.27 | |
0.29 Range [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding warrants, Number | 10,125,613 | |
Average Weighted Remaining Contractual Life in Years, Warrant | 3 years 22 days | |
Exercisable Warrants, Number | 10,125,613 | |
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 | 1 year | |
Exercisable Warrants, Number | 11,925,800 | |
Weighted Average Exercise Price, Exercisable Warrants | $ .30 | |
0.32 Range [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding warrants, Number | 250,000 | |
Average Weighted Remaining Contractual Life in Years, Warrant | 4 years | |
Exercisable Warrants, Number | 250,000 | |
Weighted Average Exercise Price, Exercisable Warrants | $ 0.32 | |
0.33 Range [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding warrants, Number | 75,000 | |
Average Weighted Remaining Contractual Life in Years, Warrant | 1 year | |
Exercisable Warrants, Number | 75,000 | |
Weighted Average Exercise Price, Exercisable Warrants | $ 0.33 | |
0.42 Range [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding warrants, Number | 250,000 | |
Average Weighted Remaining Contractual Life in Years, Warrant | 3 years 9 months | |
Exercisable Warrants, Number | 250,000 | |
Weighted Average Exercise Price, Exercisable Warrants | $ 0.42 | |
0.50 Range [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding warrants, Number | 525,000 | |
Average Weighted Remaining Contractual Life in Years, Warrant | 1 year 9 months 29 days | |
Exercisable Warrants, Number | 525,000 | |
Weighted Average Exercise Price, Exercisable Warrants | $ .50 | |
0.55 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 3 months 29 days | |
Exercisable Warrants, Number | 100,000 | |
Weighted Average Exercise Price, Exercisable Warrants | $ 0.55 | |
0.62 Range [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding warrants, Number | 75,000 | |
Average Weighted Remaining Contractual Life in Years, Warrant | 9 months 18 days | |
Exercisable Warrants, Number | 75,000 | |
Weighted Average Exercise Price, Exercisable Warrants | $ 0.62 | |
0.69 Range [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding warrants, Number | 999,998 | |
Average Weighted Remaining Contractual Life in Years, Warrant | 2 years 5 months 16 days | |
Exercisable Warrants, Number | 999,998 | |
Weighted Average Exercise Price, Exercisable Warrants | $ 0.69 | |
1.00 Range [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding warrants, Number | 3,000,000 | |
Average Weighted Remaining Contractual Life in Years, Warrant | 2 years 7 months 2 days | |
Exercisable Warrants, Number | 3,000,000 | |
Weighted Average Exercise Price, Exercisable Warrants | $ 1 |
7. STOCKHOLDERS' EQUITY (Deta47
7. STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Jun. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Preferred Stock Authorized | 1,000,000 | 1,000,000 | 1,000,000 | |||
Preferred Stock Issued | 510,000 | 510,000 | 510,000 | |||
Preferred Stock Outstanding | 510,000 | 510,000 | 510,000 | |||
Preferred Stock par value | $ 0.01 | $ 0.01 | $ 0.01 | |||
Cumulative Convertible Preferred Stock Series B Cumulative dividend | 7.50% | 7.50% | 7.50% | |||
Common Stock issued for professional services, shares, Shares | 761,954 | 249,824 | ||||
Common Stock issued for professional services, Amount, Amount | $ 4,369,654 | $ 38,100 | $ 369,654 | |||
Equity based compensation | $ (20,597) | $ 85,322 | $ 223,300 | 542,291 | ||
CFO [Member] | ||||||
Common Stock issued for professional services, Amount, Amount | $ 51,000 | $ 73,000 | ||||
Common stock issued as consideration for payment of compensation, shares | 100,000 | 22,000 | ||||
CEO [Member] | ||||||
Exercise price of warrant | $ 0.50 | $ .32 | ||||
Equity based compensation | $ 267,000 | $ 333,000 | ||||
Stock compensation expense | $ 39,000 | $ 39,000 | ||||
Stock issued to warrant purchase | 250,000 | 250,000 | ||||
Series B Preferred Stock [Member] | ||||||
Preferred Stock Authorized | 1,000 | 1,000 | 1,000 | |||
Preferred Stock Issued | 0 | 0 | 0 | |||
Preferred Stock Outstanding | 0 | 0 | 0 | |||
Series A Preferred Stock | ||||||
Preferred Stock Authorized | 1,000,000 | 1,000,000 | 1,000,000 | |||
Preferred Stock Issued | 510,000 | 510,000 | 510,000 | |||
Preferred Stock Outstanding | 510,000 | 510,000 | 510,000 | |||
Preferred Stock par value | $ 0.01 | $ 0.01 | $ 0.01 |
8. RELATED PARTY TRANSACTIONS (
8. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Mr. Paul | ||||
Fees for legal services | $ 15,000 | $ 45,000 | $ 15,000 | $ 45,000 |
9. COMMITMENTS AND CONTINGENC49
9. COMMITMENTS AND CONTINGENCIES (Details) | Sep. 30, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,018 | $ 18,000 |
Total | $ 18,000 |
9. COMMITMENTS AND CONTINGENC50
9. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Rent expense | $ 11,427 | $ 34,281 | $ 11,427 | $ 34,281 |
10. CONTRACTS AND AGREEMENTS (D
10. CONTRACTS AND AGREEMENTS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Accounts payable | 61.00% | 61.00% | 31.00% | ||
Deposits | $ 0 | $ 0 | $ 147,010 | ||
Cost of goods sold | 72.00% | 63.00% | 69.00% | 76.00% | |
Common stock valued accrued | $ 32,000 | ||||
Mr. Ainsworth | |||||
Common stock valued accrued | 8,000 | ||||
Mr. Paul | |||||
Common stock valued accrued | 8,000 | ||||
Mr. Johnsen | |||||
Common stock valued accrued | 8,000 | ||||
Ms. Anderson | |||||
Common stock valued accrued | $ 8,000 |
11. ACCRUED EXPENSES AND OTHE52
11. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Accrued Expenses And Other Current Liabilities Details | ||
Commissions | $ 79,445 | $ 172,735 |
Payroll and related costs | 41,264 | 40,264 |
Director fees | 35,250 | 19,000 |
Other accrued expenses | 71,099 | 46,414 |
Total | $ 227,058 | $ 278,413 |
12. CUSTOMER CONCENTRATION (Det
12. CUSTOMER CONCENTRATION (Details Narrative) - Revenue, Net [Member] | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Three customers [Member] | |||||
Concentration risk percentage1 | 39.00% | 32.00% | |||
Two Customers [Member] | |||||
Concentration risk percentage1 | 24.00% | 26.00% | |||
One customers [Member] | |||||
Concentration risk percentage1 | 13.00% | 10.00% |