Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 13, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | Fuse Medical, Inc. | |
Entity Central Index Key | 319,016 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
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 | 6,890,808 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,015 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 57,160 | $ 67,555 |
Accounts receivable, net of allowance of $3,704 and $220, respectively | 173,323 | 196,236 |
Inventories | 67,581 | 131,382 |
Prepaid expenses and other receivables | $ 43,229 | 49,250 |
Other receivables - related parties | 50,000 | |
Total current assets | $ 341,293 | 494,423 |
Property and equipment, net | 23,513 | 48,961 |
Security deposit | 3,822 | 2,489 |
Total assets | 368,628 | 545,873 |
Current liabilities: | ||
Accounts payable | 199,904 | 276,619 |
Accounts payable - related parties | 21,109 | 43,134 |
Accrued expenses | $ 56,645 | 10,366 |
Notes payable, current portion | 17,250 | |
Total current liabilities | $ 277,658 | $ 347,369 |
Note payable - related party | 100,000 | |
Total liabilities | $ 377,658 | $ 347,369 |
Commitments and contingencies | ||
Stockholders' equity (deficit): | ||
Preferred stock, $0.01 par value; 20,000,000 shares authorized, no shares issued and outstanding | ||
Common stock, $0.01 par value; 500,000,000 shares authorized, 6,890,808 and 5,510,808 issued and outstanding, respectively | $ 68,908 | $ 55,108 |
Additional paid-in capital | 2,251,093 | 1,656,893 |
Accumulated deficit | (2,329,031) | (1,513,497) |
Total stockholders' equity (deficit) | (9,030) | 198,504 |
Total liabilities and stockholders' equity (deficit) | $ 368,628 | $ 545,873 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Condensed Consolidated Balance Sheets Parenthetical | ||
Net of allowance, accounts receivable | $ 3,704 | $ 220 |
Preferred Stock Par Value | $ 0.01 | $ 0.01 |
Preferred Stock Shares Authorized | 20,000,000 | 20,000,000 |
Preferred Stock Shares Issued | 0 | 0 |
Preferred Stock Shares Outstanding | 0 | 0 |
Common Stock Par Value | $ 0.01 | $ 0.01 |
Common Stock Shares Authorized | 500,000,000 | 500,000,000 |
Common Stock Shares Issued | 6,890,808 | 5,510,808 |
Common Stock Shares Outstanding | 6,890,808 | 5,510,808 |
Condensed Consolidated Statemen
Condensed Consolidated Statements Of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Condensed Consolidated Statements Of Operations | ||||
Revenues | $ 442,857 | $ 207,105 | $ 1,192,718 | $ 631,975 |
Cost of revenues | 165,268 | 72,696 | 436,913 | 236,200 |
Gross profit | 277,589 | 134,409 | 755,805 | 395,775 |
Operating expenses: | ||||
General, administrative and other | $ 755,367 | 529,482 | $ 1,565,012 | 1,070,943 |
Merger costs | 50,955 | 320,448 | ||
Total operating expenses | $ 755,367 | 580,437 | $ 1,565,012 | 1,391,391 |
Operating loss | $ (477,778) | $ (446,028) | $ (809,207) | (995,616) |
Other income (expense): | ||||
Interest income | 1,177 | |||
Interest expense | $ (1,885) | $ (27,392) | $ (5,348) | $ (58,488) |
Loss on disposal of property and equipment | (979) | (979) | ||
Total other income (expense) | (2,864) | $ (27,392) | (6,327) | $ (57,311) |
Net loss | $ (480,642) | $ (473,420) | $ (815,534) | $ (1,052,927) |
Net loss per common share - basic and diluted | $ (0.08) | $ (0.12) | $ (0.14) | $ (0.28) |
Weighted average number of common shares outstanding - basic and diluted | 6,260,373 | 3,983,699 | 5,952,933 | 3,723,464 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - 9 months ended Sep. 30, 2015 - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance, Amount at Dec. 31, 2014 | $ 55,108 | $ 1,656,893 | $ (1,513,497) | $ 198,504 |
Beginning Balance, Shares at Dec. 31, 2014 | 5,510,808 | |||
Common stock issued for cash, Amount | $ 3,800 | 186,200 | 190,000 | |
Common stock issued for cash, Shares | 380,000 | |||
Fair value of vested stock options | 168,000 | 168,000 | ||
Common stock issued for services rendered, Amount | $ 10,000 | $ 240,000 | 250,000 | |
Common stock issued for services rendered, Shares | 1,000,000 | |||
Net loss | $ (815,534) | (815,534) | ||
Ending Balance, Amount at Sep. 30, 2015 | $ 68,908 | $ 2,251,093 | $ (2,329,031) | $ (9,030) |
Ending Balance, Shares at Sep. 30, 2015 | 6,890,808 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements Of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows from operating activities: | ||
Net loss | $ (815,534) | $ (1,052,927) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Bad debt expense | 3,704 | 7,715 |
Depreciation | 21,888 | $ 9,481 |
Loss on disposal of property and equipment | 979 | |
Transfer of property and equipment as part of expense reimbursement | 6,000 | |
Stock-based compensation | $ 418,000 | |
Advances to Golf Rounds.com, Inc. expensed to merger costs | $ 105,000 | |
Changes in operating assets and liabilities, net of effects of acquisition: | ||
Accounts receivable | $ 19,209 | 29,811 |
Accounts receivable - related parties | 2,538 | |
Inventories | $ 63,801 | (29,957) |
Prepaid expenses and other receivables | 6,021 | (13,686) |
Security deposit | (3,822) | (2,489) |
Accounts payable | (76,715) | 88,834 |
Accounts payable - related parties | (22,025) | (6,265) |
Accrued expenses | 46,279 | (3,013) |
Net cash used in operating activities | (332,215) | (864,958) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (1,580) | $ (59,755) |
Proceeds from the disposal of property and equipment | $ 650 | |
Advances to Golf Rounds.com, Inc. | $ (10,000) | |
Cash acquired in reverse merger | 641 | |
Net cash used in investing activities | $ (930) | (69,114) |
Cash flows from financing activities: | ||
Advances to related parties | (43,240) | (42,611) |
Repayments received from related parties | $ 93,240 | 74,993 |
Proceeds from issuance of promissory notes | $ 727,776 | |
Repayments of promissory notes | $ (17,250) | |
Proceeds from issuance of promissory notes to related parties | 100,000 | $ 724,238 |
Proceeds from sale of common stock | $ 190,000 | |
Proceeds from subscriptions receivable | $ 500 | |
Distributions prior to the merger | (40,583) | |
Net cash provided by financing activities | $ 322,750 | 1,444,313 |
Net increase (decrease) in cash and cash equivalents | (10,395) | 510,241 |
Cash and cash equivalents - beginning of period | 67,555 | 12,339 |
Cash and cash equivalents - end of period | 57,160 | 522,580 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 1,588 | $ 1,713 |
Non-cash investing and financing activities: | ||
Transfer security deposit as part of expense reimbursement | $ 2,489 | |
Assumption of net liabilities in reverse merger | $ 28,411 | |
Reclassification of undistributed earnings of Fuse Medical, LLC to Additional paid-in capital upon its transition from a nontaxable entity to a taxable entity | $ 26,494 |
Nature of Operations and Liquid
Nature of Operations and Liquidity | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 1. Nature of Operations and Liquidity | Overview Fuse Medical, Inc. (together with its subsidiaries, the "Company" or "Fuse Medical") was formed in Delaware on July 18, 2012 as Fuse Medical, LLC. Fuse Medical V, LP was formed in Texas on November 15, 2012 and upon formation was owned 59% by Fuse Medical, LLC. Fuse Medical VI, LP was formed in Texas on January 31, 2013 and upon formation was owned 59% by Fuse Medical, LLC. On February 12, 2015, Certificates of Termination were filed for Fuse Medical V, LP and Fuse Medical VI, LP. On February 20, 2015, a Certificate of Cancellation was filed in Delaware, and on August 5, 2015, a Certificate of Withdrawal was filed in Texas, for Fuse Medical, LLC. On December 18, 2013, Fuse Medical, LLC entered into an Agreement and Plan of Merger (the "Merger Agreement") with Golf Rounds.com, Inc. (the "Registrant"), Project Fuse LLC (a wholly-owned subsidiary of Golf Rounds.com, Inc.) ("Merger Sub"), and D. Alan Meeker, solely in his capacity as the representative of the members of Fuse Medical, LLC (the "Representative"). Effective as of May 28, 2014, prior to the consummation of the Merger, Golf Rounds.com, Inc. amended its certificate of incorporation to change its name from "Golf Rounds.com, Inc." to "Fuse Medical, Inc." On May 28, 2014, the transactions contemplated by the Merger Agreement closed wherein Merger Sub merged with and into Fuse Medical, LLC, with Fuse Medical, LLC surviving as a wholly-owned subsidiary of Fuse Medical, Inc. (the "Merger"). Accordingly, on May 28, 2014, the Company was recapitalized in a reverse merger. All references to the Company or Fuse Medical before May 28, 2014 are to Fuse Medical, LLC. Fuse Medical distributes diversified healthcare products and supplies, including biologics, internal fixation products and bone substitute materials in several states. The Company strives to provide cost savings and clinical outcomes to its customers, which include physicians and medical facilities. Basis of Presentation The interim condensed consolidated financial statements included herein reflect all material adjustments (consisting of normal recurring adjustments and reclassifications and non-recurring adjustments) which, in the opinion of management, are ordinary and necessary for a fair presentation of results for the interim periods. Certain information and footnote disclosures required under generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). The Company believes that the disclosures are adequate to make the information presented not misleading. The condensed consolidated balance sheet information as of December 31, 2014 was derived from the audited consolidated financial statements included in the Company's Report on Form 10-K filed with the Securities and Exchange Commission on April 15, 2015. These condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2014 and notes thereto included in the Company's Report on Form 10-K for the year ended December 31, 2014. The results of operations for the three and nine months ended September 30, 2015 and 2014 are not necessarily indicative of the results to be expected for the entire fiscal year or for any other period. Going Concern The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. As shown in the accompanying financial statements, we have incurred a net loss of $815,534 and used $332,215 of cash in our operating activities during the nine months ended September 30, 2015. As of September 30, 2015, we had $57,160 of cash and cash equivalents on hand, stockholders' deficit of $9,030 and working capital of $63,635. While management expects operating trends to improve over the course of 2015, the Company's ability to continue as a going concern is contingent on securing additional debt or equity financing from outside investors. As a result, the Company's independent registered public accounting firm, in its report on the Company's 2014 consolidated financial statements, has raised substantial doubt about the Company's ability to continue as a going concern. Management plans to continue to implement its business plan and to fund operations by raising additional capital through the issuance of debt and equity securities. Commencing with the second quarter of 2015, we began to refocus our efforts to increase revenues derived from the sale of biologics, which will increase the amount of gross profits from operations. Since the beginning of 2015, we have received proceeds of: (i) $100,000 from a loan from a significant stockholder; (ii) $100,000 from the sale of common shares to a related party; and (iii) $90,000 from the sale of common shares in private offerings. The Company is seeking to raise additional funds from future private offerings. No assurance can be given that such financing will be available, or if available, at rates favorable to the Company or its stockholders. The estimated costs of operations while we ramp up our revenues is substantially greater than the amount of funds we had available on September 30, 2015. The Company's existence is dependent upon management's ability to implement its business plan and/or obtain additional funding. There can be no assurance that the Company's financing efforts will result in profitable operations or the resolution of the Company's liquidity problems. Even if the Company is able to obtain additional financing, it may include undue restrictions on our operations in the case of debt, or cause substantial dilution for our stockholders in the case of equity financing. The accompanying financial statements do not include any adjustments that might result should the Company be unable to continue as a going concern. |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 2. Significant Accounting Policies | Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements. Actual results could differ from those estimates. Significant estimates in the accompanying consolidated financial statements include the allowance for doubtful accounts, valuation of inventories, the estimates of depreciable lives and valuation of property and equipment, and the valuation allowance on deferred tax assets. Earnings (Loss) Per Share The Company's computation of earnings (loss) per share (EPS) includes basic and diluted EPS. Basic EPS is calculated by dividing the Company's net income (loss) by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that would have occurred if securities or other contracts to issue common shares (e.g. warrants and options) had been exercised or converted into common shares at the beginning of the period, or issuance date, if later, and had shared in the net income (loss) of the Company. Diluted EPS is computed using the treasury stock method, which assumes that outstanding options and warrants are exercised and the proceeds are used to purchase common shares at the average market price during the period. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. The weighted average number of common shares outstanding has been retroactively restated for: (i) the equivalent number of shares received by the accounting acquirer as a result of the reverse merger as if these shares had been outstanding as of the beginning of the earliest period presented; and (ii) the 14.62 to 1 reverse stock split that occurred May 28, 2014. As of September 30, 2015 and 2014, common stock equivalents included options to purchase 609,576 and 11,628 common shares, respectively. These instruments are not considered in the calculation of diluted loss per share because the effect would be anti-dilutive. Fair Value Measurements Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The Company classifies assets and liabilities recorded at fair value under the fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. The fair value measurements are classified under the following hierarchy: Level 1Observable inputs that reflect quoted market prices (unadjusted) for identical assets and liabilities in active markets; Level 2Observable inputs, other than quoted market prices, that are either directly or indirectly observable in the marketplace for identical or similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities; and Level 3Unobservable inputs that are supported by little or no market activity that are significant to the fair value of assets or liabilities. The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The recorded value of notes payable approximates their fair value based upon their effective interest rates. Income Taxes The Company uses the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will be realized. The Company has deferred tax assets and liabilities that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets are subject to periodic recoverability assessments. Realization of the deferred tax assets, net of deferred tax liabilities, is principally dependent upon achievement of projected future taxable income. The Company records a liability for uncertain tax positions when it is probable that a loss has been incurred and the amount can be reasonably estimated. As of September 30, 2015, the Company had no liabilities for uncertain tax positions. The Company's policy is to recognize interest and penalties related to income tax matters as a component of income tax expense. The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. Stock-Based Compensation Stock-based compensation expense is measured at the grant date fair value of the award and is expensed over the requisite service period. For employee stock-based awards, the Company calculates the fair value of the award on the date of grant using the Black-Scholes option pricing model. Determining the fair value of stock-based awards at the grant date under this model requires judgment, including estimating volatility, employee stock option exercise behaviors and forfeiture rates. The assumptions used in calculating the fair value of stock-based awards represent the Company's best estimates, but these estimates involve inherent uncertainties and the application of management judgment. For non-employee stock-based awards, the Company calculates the fair value of the award on the date of grant in the same manner as employee awards, however, the awards are revalued at the end of each reporting period and the prorata compensation expense is adjusted accordingly until such time the non-employee award is fully vested, at which time the total compensation recognized to date shall equal the fair value of the stock-based award as calculated on the measurement date, which is the date at which the award recipient's performance is complete. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers". ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company is in the process of evaluating the impact of ASU 2014-09 on the Company's financial statements and disclosures. In June 2014, the FASB issued Accounting Standards Update No. 2014-12, "Compensation Stock Compensation (Topic 718)". The ASU was issued to clarify the accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. ASU 2014-12 is effective for reporting periods beginning after December 15, 2015. The adoption of ASU 2014-12 is not expected to have a significant impact on the Company's consolidated financial position or results of operations. In August 2014, the FASB issued Accounting Standards Update No. 2014-15, "Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern", which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. ASU 2014-15 requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity's ability to continue as a going concern. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company is currently evaluating the impact of the adoption of ASU 2014-15 on the Company's financial statements and disclosures. In November 2014, the FASB issued Accounting Standards Update No. 2014-16, "Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity". The amendments in ASU 2014-16 do not change the current criteria in U.S. GAAP for determining when separation of certain embedded derivative features in a hybrid financial instrument is required. The amendments clarify that an entity should consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation, in evaluating the nature of the host contract. ASU 2014-16 applies to all entities that are issuers of, or investors in, hybrid financial instruments that are issued in the form of a share and is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2014-16 on the Company's financial statements and disclosures. In February 2015, the FASB issued Accounting Standards Update No. 2015-02, "Consolidation (Topic 810): Amendments to the Consolidation Analysis". ASU 2015-02 provides guidance on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). ASU 2015-02 is effective for periods beginning after December 15, 2015. Early adoption is permitted. The adoption of ASU 2015-02 is not expected to have a material effect on the Company's consolidated financial statements. In April 2015, the FASB issued Accounting Standards Update No. 2015-03, "InterestImputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs". ASU 2015-03 requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. Prior to the issuance of ASU 2015-03, debt issuance costs were required to be presented in the balance sheet as an asset. ASU 2015-03 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. The Company is currently evaluating the impact of the adoption of ASU 2015-03 on the Company's financial statements and disclosures. In July 2015, the FASB issued Accounting Standards Update 2015-11, "Simplifying the Measurement of Inventory", which requires that inventory within the scope of ASU 2015-11 be measured at the lower of cost and net realizable value. Inventory measured using last-in, first-out ("LIFO") and the retail inventory method are not impacted by the new guidance. ASU 2015-11 applies to all other inventory, which includes inventory that is measured using first-in, first-out ("FIFO") or average cost. An entity should measure inventory within the scope of ASU 2015-11 at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU 2015-11 is effective for public business entities in fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2015-11 on the Company's financial statements and disclosures. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 3. Property and Equipment | Property and equipment consisted of the following at September 30, 2015 and December 31, 2014: September 30, 2015 December 31, 2014 Computer equipment $ 31,053 $ 36,240 Furniture and fixtures 12,284 15,977 Office equipment 1,580 - Software 10,500 10,500 55,417 62,717 Less: accumulated depreciation (31,904 ) (13,756 ) Property and equipment, net $ 23,513 $ 48,961 On September 1, 2015, the Company transferred a security deposit of $2,489 and property and equipment having a net book value of $3,062 in order to settle $6,000 of expense reimbursement to an individual that was a former director and Chief Executive Officer of the Company, resulting in a gain on disposition of $449 (See Notes 5 and 8). On September 29, 2015, the Company sold furniture and fixtures having a net book value of $2,078 for cash proceeds of $650, resulting in a loss on disposition of $1,428. Depreciation expense for the three and nine months ended September 30, 2015 and 2014 was $8,563, $3,759, $21,888 and $9,481, respectively. |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 4. Notes Payable | Notes payable consisted of the following at September 30, 2015 and December 31, 2014: September 30, 2015 December 31, 2014 Note payable - originating July 30, 2013; monthly interest payments required; bearing interest at 3.25%; maturing at July 29, 2015 $ - $ 6,000 Note payable - originating August 29, 2013; monthly interest payments required; bearing interest at 3.25%; maturing at August 28, 2015 - 11,250 Note payable - related party originating January 15, 2015; monthly interest payments required commencing in month 7; bearing interest at 7%; maturing at January 15, 2017 [A] 100,000 - Total 100,000 17,250 Less: Current maturities - (17,250 ) Amount due after one year $ 100,000 $ - [A] - On January 15, 2015, the Company issued a two-year promissory note in exchange for cash proceeds of $100,000 from an entity that is controlled by an individual that was a former director and Chief Executive Officer of the Company. The note is unsecured, bears interest at 7.0% and requires 18 monthly payments of interest only commencing at the beginning of month seven. The note includes a provision that in the event of default the interest rate would increase to the default interest rate of 18%. The first six months of interest is deferred until maturity. The outstanding principal balance along with all accrued and unpaid interest is due at maturity (See Note 8). During the three and nine months ended September 30, 2015 and 2014, interest expense of $1,885, $27,392, $5,348 and $58,488, respectively, was recognized on outstanding notes payable. As of September 30, 2015 and December 31, 2014, accrued interest payable was $3,781 and $21, respectively, which is included in accrued expenses on the accompanying condensed consolidated balance sheet. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 5. Commitments and Contingencies | Legal Matters On January 27, 2014, M. Richard Cutler and Cutler Law Group, P.C. (the "Plaintiffs") filed a complaint in the District Court of Harris County, Texas, 2014-03355, against Fuse, Alan Meeker, Rusty Shelton, Jonathan Brown, Robert H. Donehew and Golf Rounds.com, Inc. (the "Defendants"). On April 21, 2014, the complaint was dismissed for "want of prosecution." The Plaintiffs had 30 days from April 21, 2014 to file a motion to reinstate the case and no timely action was taken by the Plaintiffs. However, the Plaintiffs did file a motion to reinstate on May 22, 2014 and it was granted. The Defendants argued a Motion to Dismiss before the court on July 25, 2014 and, on July 28, 2014, the court granted the motion and dismissed the Plaintiffs' (i) breach of fiduciary duty claim against all Defendants, (ii) suit on sworn account claim against all Defendants except Fuse, and (iii) quantum meruit claim against all Defendants except Fuse. The Defendants were also awarded attorneys' fees in the amount of $4,343. Discovery in the case ended on March 25, 2015 and Plaintiffs failed to file any discovery requests during the period or seek an extension of the period. On April 27, 2015, Defendants filed a motion for summary judgment in this matter for failure to prosecute and on the grounds that the claims were not legally viable. On April 28, 2015, Plaintiffs filed a Notice of Non-Suit, which effectively withdrew the lawsuit against the Defendants without prejudice to Plaintiffs' right to refile the lawsuit at any time subject to the applicable statute of limitations. On September 18, 2015, Plaintiffs refiled a complaint in the District Court of Harris County, Texas, Cause No. 2015-55652 and added Craig Longhurst and PH Squared, LLC as additional Plaintiffs. The new complaint asserts essentially the same claims as the original nonsuited complaint: (i) suit on sworn account against Fuse; (ii) fraud against all defendants; and (iii) breach of contract against all defendants for allegedly violating a non-circumvention/non-disclosure agreement. Richard Cutler is the sole principal of Cutler Law Group, P.C., which provided legal representation to its clients, Craig Longhurst and PH Squared, LLC d/b/a PharmHouse Pharmacy ("Cutler's Client"), during a failed merger attempt between Fuse and Golf Rounds.com, Inc. (the "Failed Transaction"). The Plaintiffs have alleged that the Failed Transaction failed to materialize notwithstanding the efforts of Mr. Cutler and his law firm to document the transaction. The Plaintiffs have further alleged that the Defendants continued to pursue a similar transaction without Cutler's Client or the Plaintiffs. The Plaintiffs claim that the Defendants are responsible for damages in the amount of $46,465 plus interest for the breach of contract claim because Plaintiffs were not paid their legal fees by Cutler's Client and Plaintiffs did not receive equity in the merged company that would have resulted from the Failed Transaction. Plaintiffs are also asking for undisclosed damages related to the fraud and breach of contract claims, and are asking for exemplary damages as a result of allegedly intentional fraud that some or all of the Defendants allegedly committed. Plaintiffs also seek their attorneys' fees and costs for having brought the action. Defendants' Answer is due on November 16, 2015. The Defendants continue to believe that the lawsuit is completely without merit and will vigorously contest it and protect their interests. However, the outcome of this legal action cannot be predicted. Operating Leases On September 1, 2015, the Company entered into an Assignment and Assumption of Lease Agreement (the "Agreement") whereby the Company assigned the operating lease for its corporate headquarters to an entity controlled by an individual that was a former director and Chief Executive Officer of the Company. Under the Agreement, which was cosigned by the landlord, the entity to which the lease was assigned assumed all further obligations under the lease (See Notes 3 and 8). Effective September 1, 2015, the Company began occupying space at its new corporate headquarters in Fort Worth, Texas on a month-to-month basis. The new lease requires rent payments of $3,822 per month plus common area maintenance. |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 6. Stockholders' Equity (Deficit) | Common Stock On January 12, 2015, the Company sold 200,000 common shares for $100,000, or $0.50 per share, to an entity controlled by certain officers and directors of the Company. In March 2015, the Company began selling shares of its common stock at $0.50 per share in private offerings with the intent of raising up to $2,000,000 from these private offerings. As of September 30, 2015, the Company sold an aggregate of 180,000 common shares for aggregate proceeds of $90,000, or $0.50 per share, through these private offerings. On August 27, 2015, the Company awarded the following common shares to four employees for services rendered: (i) 450,000 common shares to the Chief Executive Officer; (ii) 250,000 common shares to the Chief Operating Officer; (iii) 150,000 common shares to the Chief Financial Officer; and (iv) 150,000 common shares to the Vice President of Sales. The closing price of the Company's common stock on the trading day immediately preceding the awarding of the common shares was $0.25. Accordingly, an aggregate of $250,000 of expense was recognized in association with the issuance of these common shares. Stock Options On July 17, 2015, Ross Eichberg, the General Counsel for the Company resigned. In connection with Mr. Eichberg's resignation, the Company granted Mr. Eichberg options to purchase 600,000 shares of the Company's common stock at $0.26 per share, which was equal to 90% of the 30-day trading average of the Company's common stock prior to the grant date of July 17, 2015. The options have a term of five years from the grant date. The options vested immediately, but become exercisable as follows: 100,000 (1/6) of the options shall become exercisable 13 months after the grant date and an additional 100,000 options (1/6) shall become exercisable each of the following five months thereafter so that all of the options shall become exercisable as of 18 months after the grant date. The fair value of the stock options issued was $168,000, all of which was recognized immediately as an expense because the stock options were fully vested as of the grant date. The Company estimates the fair value of share-based compensation utilizing the Black-Scholes option pricing model, which is dependent upon several variables such as the expected option term, expected volatility of the Company's stock price over the expected option term, expected risk-free interest rate over the expected option term, expected dividend yield rate over the expected option term, and an estimate of expected forfeiture rates. The Company believes this valuation methodology is appropriate for estimating the fair value of stock options granted to employees and directors which are subject to ASC Topic 718 requirements. These amounts are estimates and thus may not be reflective of actual future results, nor amounts ultimately realized by recipients of these grants. The Company recognizes compensation on a straight-line basis over the requisite service period for each award. The following table summarizes the assumptions the Company utilized to record compensation expense for stock options granted to employees during the nine months ended September 30, 2015 and 2014: Assumptions For the Nine Months Ended September 30, 2015 For the Nine Months Ended September 30, 2014 Expected life (years) 3.2 n/a Expected volatility 223 % n/a Weighted-average volatility 223 % n/a Risk-free interest rate 1.05 % n/a Dividend yield 0.0 % n/a Expected forfeiture rate n/a n/a The Company utilized the simplified method to estimate the expected life for stock options granted to employees. The simplified method was used as the Company does not have sufficient historical data regarding stock option exercises. The expected volatility is based on historical volatility of the Company's common stock subsequent to the closing of the merger on May 28, 2014. The risk-free interest rate is based on the U.S. Treasury yields with terms equivalent to the expected life of the related option at the time of the grant. Dividend yield is based on historical trends. While the Company believes these estimates are reasonable, the compensation expense recorded would increase if the expected life was increased, a higher expected volatility was used, or if the expected dividend yield increased. A summary of the Company's stock option activity during the nine months ended September 30, 2015 is presented below: No. of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Balance outstanding at December 31, 2014 11,628 $ 9.98 Granted 600,000 $ 0.26 Exercised - Forfeited - Expired (2,052 ) $ 8.77 Balance outstanding at September 30, 2015 609,576 $ 0.42 4.8 $ - Exercisable at September 30, 2015 9,576 $ 10.23 1.5 $ - The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2015 was $0.28. |
Concentrations
Concentrations | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 7. Concentrations | Concentration of Credit Risk The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts through September 30, 2015. On January 1, 2013, the standard insurance amount of $250,000 per depositor, per bank, became effective. As of September 30, 2015, the Company's bank balances did not exceed FDIC insured amounts. Concentration of Revenues, Accounts Receivable and Suppliers For the three and nine months ended September 30, 2015 and 2014, the Company had significant customers with individual percentage of total revenues equaling 10% or greater as follows: For the Three For the Three For the Nine For the Nine Months Ended Months Ended Months Ended Months Ended September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 Customer 1 66.2 % 51.0 % 71.2 % 46.1 % Customer 2 20.6 % - 13.6 % - Customer 3 - 20.7 % - 25.7 % Customer 4 - 11.6 % - 11.4 % Totals 86.8 % 83.3 % 84.8 % 83.2 % At September 30, 2015 and December 31, 2014, concentration of accounts receivable with significant customers representing 10% or greater of accounts receivable was as follows: September 30, 2015 December 31, 2014 Customer 1 40.4 % 47.6 % Customer 2 27.8 % - Customer 3 16.2 % 26.7 % Totals 84.4 % 74.3 % For the three and nine months ended September 30, 2015 and 2014, the Company had significant suppliers representing 10% or greater of goods purchased as follows: For the Three For the Three For the Nine For the Nine Months Ended Months Ended Months Ended Months Ended September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 Supplier 1 71.8 % 100.0 % 75.1 % 77.0 % Supplier 2 28.2 % - 24.9 % - Supplier 3 - - - 23.0 % Totals 100.0 % 100.0 % 100.0 % 100.0 % |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 8. Related Party Transactions | During the three months ended March 31, 2015, the Company allocated an aggregate of $43,240 of compensation paid to the Company's General Counsel to an entity that is owned partially by certain officers and directors of the Company. During the nine months ended September 30, 2015, the Company was reimbursed the entire amount of compensation of the Company's eneral Counsel that had been allocated to the entity that is owned partially by certain officers and directors of the Company in the amount of $93,240. The balance due from the entity was $0 and $50,000 as of September 30, 2015 and December 31, 2014, respectively. On September 1, 2015, the Company transferred a security deposit of $2,489 and property and equipment having a net book value of $3,062 in order to settle $6,000 of expense reimbursement to an individual that was a former director and Chief Executive Officer of the Company, resulting in a gain on disposition of $449. On September 1, 2015, the Company entered into an Assignment and Assumption of Lease Agreement (the "Agreement") whereby the Company assigned the operating lease for its corporate headquarters to an entity controlled by an individual that was a former director and Chief Executive Officer of the Company. Under the Agreement, which was cosigned by the landlord, the entity to which the lease was assigned assumed all further obligations under the lease (See Notes 3 and 5). As of September 30, 2015 and December 31, 2014, $21,109 and $43,134, respectively, is owed to officers and directors of the Company or entities controlled by these individuals. This amount is included in accounts payable related parties on the accompanying condensed consolidated balance sheet. On January 15, 2015, the Company issued a two-year promissory note in exchange for cash proceeds of $100,000 from an entity that is controlled by an individual that was a former director and Chief Executive Officer of the Company. The note is unsecured, bears interest at 7.0% and requires 18 monthly payments of interest only commencing at the beginning of month seven. The note includes a provision that in the event of default the interest rate would increase to the default interest rate of 18%. The first six months of interest is deferred until maturity. The outstanding principal balance along with all accrued and unpaid interest is due at maturity (See Note 4). Commencing January 1, 2013 through January 31, 2014, the Company occupied office space on a month-to-month basis for its corporate headquarters for $500 a month from Crestview Farm, an entity controlled by an individual that was a former director and Chief Executive Officer of the Company. The individual serves as the Manager of Crestview Farm. Rent expense for these facilities was $0 and $500 for the nine months ended September 30, 2015 and 2014, respectively. During the period from inception through September 30, 2015, several members of the Company's management provided services at no charge to the Company. The financial statements do not include an estimate of the fair value of these services. |
Significant Accounting Polici15
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Significant Accounting Policies Policies | |
Use of Estimates | The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements. Actual results could differ from those estimates. Significant estimates in the accompanying consolidated financial statements include the allowance for doubtful accounts, valuation of inventories, the estimates of depreciable lives and valuation of property and equipment, and the valuation allowance on deferred tax assets. |
Earnings (Loss) Per Share | The Company's computation of earnings (loss) per share (EPS) includes basic and diluted EPS. Basic EPS is calculated by dividing the Company's net income (loss) by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that would have occurred if securities or other contracts to issue common shares (e.g. warrants and options) had been exercised or converted into common shares at the beginning of the period, or issuance date, if later, and had shared in the net income (loss) of the Company. Diluted EPS is computed using the treasury stock method, which assumes that outstanding options and warrants are exercised and the proceeds are used to purchase common shares at the average market price during the period. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. The weighted average number of common shares outstanding has been retroactively restated for: (i) the equivalent number of shares received by the accounting acquirer as a result of the reverse merger as if these shares had been outstanding as of the beginning of the earliest period presented; and (ii) the 14.62 to 1 reverse stock split that occurred May 28, 2014. As of September 30, 2015 and 2014, common stock equivalents included options to purchase 609,576 and 11,628 common shares, respectively. These instruments are not considered in the calculation of diluted loss per share because the effect would be anti-dilutive. |
Fair Value Measurements | Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The Company classifies assets and liabilities recorded at fair value under the fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. The fair value measurements are classified under the following hierarchy: Level 1Observable inputs that reflect quoted market prices (unadjusted) for identical assets and liabilities in active markets; Level 2Observable inputs, other than quoted market prices, that are either directly or indirectly observable in the marketplace for identical or similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities; and Level 3Unobservable inputs that are supported by little or no market activity that are significant to the fair value of assets or liabilities. The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The recorded value of notes payable approximates their fair value based upon their effective interest rates. |
Income Taxes | The Company uses the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will be realized. The Company has deferred tax assets and liabilities that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets are subject to periodic recoverability assessments. Realization of the deferred tax assets, net of deferred tax liabilities, is principally dependent upon achievement of projected future taxable income. The Company records a liability for uncertain tax positions when it is probable that a loss has been incurred and the amount can be reasonably estimated. As of September 30, 2015, the Company had no liabilities for uncertain tax positions. The Company's policy is to recognize interest and penalties related to income tax matters as a component of income tax expense. The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. |
Stock-Based Compensation | Stock-based compensation expense is measured at the grant date fair value of the award and is expensed over the requisite service period. For employee stock-based awards, the Company calculates the fair value of the award on the date of grant using the Black-Scholes option pricing model. Determining the fair value of stock-based awards at the grant date under this model requires judgment, including estimating volatility, employee stock option exercise behaviors and forfeiture rates. The assumptions used in calculating the fair value of stock-based awards represent the Company's best estimates, but these estimates involve inherent uncertainties and the application of management judgment. For non-employee stock-based awards, the Company calculates the fair value of the award on the date of grant in the same manner as employee awards, however, the awards are revalued at the end of each reporting period and the prorata compensation expense is adjusted accordingly until such time the non-employee award is fully vested, at which time the total compensation recognized to date shall equal the fair value of the stock-based award as calculated on the measurement date, which is the date at which the award recipient's performance is complete. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. |
Recent Accounting Pronouncements | In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers". ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company is in the process of evaluating the impact of ASU 2014-09 on the Company's financial statements and disclosures. In June 2014, the FASB issued Accounting Standards Update No. 2014-12, "Compensation Stock Compensation (Topic 718)". The ASU was issued to clarify the accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. ASU 2014-12 is effective for reporting periods beginning after December 15, 2015. The adoption of ASU 2014-12 is not expected to have a significant impact on the Company's consolidated financial position or results of operations. In August 2014, the FASB issued Accounting Standards Update No. 2014-15, "Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern", which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. ASU 2014-15 requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity's ability to continue as a going concern. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company is currently evaluating the impact of the adoption of ASU 2014-15 on the Company's financial statements and disclosures. In November 2014, the FASB issued Accounting Standards Update No. 2014-16, "Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity". The amendments in ASU 2014-16 do not change the current criteria in U.S. GAAP for determining when separation of certain embedded derivative features in a hybrid financial instrument is required. The amendments clarify that an entity should consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation, in evaluating the nature of the host contract. ASU 2014-16 applies to all entities that are issuers of, or investors in, hybrid financial instruments that are issued in the form of a share and is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2014-16 on the Company's financial statements and disclosures. In February 2015, the FASB issued Accounting Standards Update No. 2015-02, "Consolidation (Topic 810): Amendments to the Consolidation Analysis". ASU 2015-02 provides guidance on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). ASU 2015-02 is effective for periods beginning after December 15, 2015. Early adoption is permitted. The adoption of ASU 2015-02 is not expected to have a material effect on the Company's consolidated financial statements. In April 2015, the FASB issued Accounting Standards Update No. 2015-03, "InterestImputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs". ASU 2015-03 requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. Prior to the issuance of ASU 2015-03, debt issuance costs were required to be presented in the balance sheet as an asset. ASU 2015-03 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. The Company is currently evaluating the impact of the adoption of ASU 2015-03 on the Company's financial statements and disclosures. In July 2015, the FASB issued Accounting Standards Update 2015-11, "Simplifying the Measurement of Inventory", which requires that inventory within the scope of ASU 2015-11 be measured at the lower of cost and net realizable value. Inventory measured using last-in, first-out ("LIFO") and the retail inventory method are not impacted by the new guidance. ASU 2015-11 applies to all other inventory, which includes inventory that is measured using first-in, first-out ("FIFO") or average cost. An entity should measure inventory within the scope of ASU 2015-11 at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU 2015-11 is effective for public business entities in fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2015-11 on the Company's financial statements and disclosures. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Property And Equipment Tables | |
Property and Equipment | September 30, 2015 December 31, 2014 Computer equipment $ 31,053 $ 36,240 Furniture and fixtures 12,284 15,977 Office equipment 1,580 - Software 10,500 10,500 55,417 62,717 Less: accumulated depreciation (31,904 ) (13,756 ) Property and equipment, net $ 23,513 $ 48,961 |
Notes Payable (Tables)
Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Notes Payable Tables | |
Schedule of notes payable | September 30, 2015 December 31, 2014 Note payable - originating July 30, 2013; monthly interest payments required; bearing interest at 3.25%; maturing at July 29, 2015 $ - $ 6,000 Note payable - originating August 29, 2013; monthly interest payments required; bearing interest at 3.25%; maturing at August 28, 2015 - 11,250 Note payable - related party originating January 15, 2015; monthly interest payments required commencing in month 7; bearing interest at 7%; maturing at January 15, 2017 [A] 100,000 - Total 100,000 17,250 Less: Current maturities - (17,250 ) Amount due after one year $ 100,000 $ - |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Stockholders Equity Tables | |
Summary of assumptions | Assumptions For the Nine Months Ended September 30, 2015 For the Nine Months Ended September 30, 2014 Expected life (years) 3.2 n/a Expected volatility 223 % n/a Weighted-average volatility 223 % n/a Risk-free interest rate 1.05 % n/a Dividend yield 0.0 % n/a Expected forfeiture rate n/a n/a |
Summary of the stock option activity | A summary of the Company's stock option activity during the nine months ended September 30, 2015 is presented below: No. of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Balance outstanding at December 31, 2014 11,628 $ 9.98 Granted 600,000 $ 0.26 Exercised - Forfeited - Expired (2,052 ) $ 8.77 Balance outstanding at September 30, 2015 609,576 $ 0.42 4.8 $ - Exercisable at September 30, 2015 9,576 $ 10.23 1.5 $ - |
Concentrations (Tables)
Concentrations (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Revenues [Member] | |
Concentration of Revenues, Accounts Receivable and Supplier | For the Three For the Three For the Nine For the Nine Months Ended Months Ended Months Ended Months Ended September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 Customer 1 66.2 % 51.0 % 71.2 % 46.1 % Customer 2 20.6 % - 13.6 % - Customer 3 - 20.7 % - 25.7 % Customer 4 - 11.6 % - 11.4 % Totals 86.8 % 83.3 % 84.8 % 83.2 % |
Accounts Receivable [Member] | |
Concentration of Revenues, Accounts Receivable and Supplier | September 30, 2015 December 31, 2014 Customer 1 40.4 % 47.6 % Customer 2 27.8 % - Customer 3 16.2 % 26.7 % Totals 84.4 % 74.3 % |
Accounts Payable [Member] | |
Concentration of Revenues, Accounts Receivable and Supplier | For the Three For the Three For the Nine For the Nine Months Ended Months Ended Months Ended Months Ended September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 Supplier 1 71.8 % 100.0 % 75.1 % 77.0 % Supplier 2 28.2 % - 24.9 % - Supplier 3 - - - 23.0 % Totals 100.0 % 100.0 % 100.0 % 100.0 % |
Nature of Operations and Liqu20
Nature of Operations and Liquidity (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | |
Nature Of Operations And Liquidity Details Narrative | ||||||
Net loss | $ (480,642) | $ (473,420) | $ (815,534) | $ (1,052,927) | ||
Net cash provided by (used in) operating activities | (332,215) | (864,958) | ||||
Cash and cash equivalents | 57,160 | $ 522,580 | 57,160 | $ 522,580 | $ 67,555 | $ 12,339 |
Stockholders' equity (deficit) | (9,030) | (9,030) | $ 198,504 | |||
Working capital | $ 63,635 | $ 63,635 |
Significant Accounting Polici21
Significant Accounting Policies (Details Narrative) - shares | Sep. 30, 2015 | Sep. 30, 2014 |
Significant Accounting Policies Details Narrative | ||
Options to purchase included in common stock equivalents | 609,576 | 11,628 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Property and equipment, gross | $ 55,417 | $ 62,717 |
Less: accumulated depreciation | (31,904) | (13,756) |
Property and equipment, net | 23,513 | 48,961 |
Computer equipment [Member] | ||
Property and equipment, gross | 31,053 | 36,240 |
Furniture and fixtures [Member] | ||
Property and equipment, gross | 12,284 | $ 15,977 |
Office equipment [Member] | ||
Property and equipment, gross | 1,580 | |
Software [Member] | ||
Property and equipment, gross | $ 10,500 | $ 10,500 |
Property and Equipment (Detai23
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Property And Equipment Details Narrative | ||||
Depreciation expense | $ 8,563 | $ 3,759 | $ 21,888 | $ 9,481 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Total notes payble | $ 100,000 | $ 17,250 |
Less: Current maturities | $ (17,250) | |
Amount due after one year | $ 100,000 | |
Notes Payable [Member] | ||
Total notes payble | $ 6,000 | |
Notes Payable 1 [Member] | ||
Total notes payble | $ 11,250 | |
Notes Payable 2 [Member] | ||
Total notes payble | $ 100,000 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Notes Payable Details Narrative | |||||
Interest expense on notes payable | $ 1,885 | $ 27,392 | $ 5,348 | $ 58,488 | |
Accrued interest payable | $ 3,781 | $ 3,781 | $ 21 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) (Details) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Stockholders Equity Deficit Details | ||
Expected life (years) | 3 years 2 months 12 days | |
Expected volatility | 223.00% | |
Weighted-average volatility | 223.00% | |
Risk-free interest rate | 1.05% | |
Dividend yield | 0.00% | |
Expected forfeiture rate |
Stockholders' Equity (Deficit27
Stockholders' Equity (Deficit) (Details 1) | 9 Months Ended |
Sep. 30, 2015USD ($)$ / sharesshares | |
Stockholders Equity Deficit Details 1 | |
No. of Shares, Beginning Balance | 11,628 |
Granted, No. Of Shares | 600,000 |
Exercised, No. Of Shares | |
Forfeited, No. Of Shares | |
Expired, No. Of Shares | (2,052) |
No. of Shares, Ending Balance | 609,576 |
Exercisable at June 30, 2015 | 9,576 |
Weighted Average Exercise Price, Beginning Balance | $ / shares | $ 9.98 |
Granted, Weighted Average Exercise Price | $ / shares | 0.26 |
Expired, Weighted Average Exercise Price | $ / shares | 8.77 |
Weighted Average Exercise Price, Ending Balance | $ / shares | 0.42 |
Exercisable, Weighted Average Exercise Price | $ / shares | $ 10.23 |
Weighted Average Remaining Contractual Term, Balance outstanding | 4 years 9 months 18 days |
Weighted Average Remaining Contractual Term, Exercisable | 1 year 6 months |
Aggregate Intrinsic Value, Balance outstanding | $ | |
Aggregate Intrinsic Value, Exercisable | $ |
Stockholders' Equity (Deficit28
Stockholders' Equity (Deficit) (Details Narrative) | 9 Months Ended |
Sep. 30, 2015USD ($)$ / sharesshares | |
Stockholders Equity Deficit Details Narrative | |
Common stock sold by private offerings | shares | 180,000 |
Value of common stock sold | $ | $ 90,000 |
Common stock shares sold per share | $ 0.50 |
Fair value of options granted | $ 0.28 |
Concentrations (Details)
Concentrations (Details) - Revenues [Member] | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Concentration of Revenues | 86.80% | 83.30% | 84.80% | 83.20% |
Customer 1 [Member] | ||||
Concentration of Revenues | 66.20% | 51.00% | 71.20% | 46.10% |
Customer 2 [Member] | ||||
Concentration of Revenues | 20.60% | 13.60% | ||
Customer 3 [Member] | ||||
Concentration of Revenues | 20.70% | 25.70% | ||
Customer 4 [Member] | ||||
Concentration of Revenues | 11.60% | 11.40% |
Concentrations (Details 1)
Concentrations (Details 1) - Accounts Receivable [Member] | Sep. 30, 2015 | Dec. 31, 2014 |
Concentration of accounts receivable | 84.40% | 74.30% |
Customer 1 [Member] | ||
Concentration of accounts receivable | 40.40% | 47.60% |
Customer 2 [Member] | ||
Concentration of accounts receivable | 27.80% | |
Customer 3 [Member] | ||
Concentration of accounts receivable | 16.20% | 26.70% |
Concentrations (Details 2)
Concentrations (Details 2) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Concentrations Supplier | 100.00% | 100.00% | 100.00% | 100.00% |
Supplier 1 [Member] | ||||
Concentrations Supplier | 71.80% | 100.00% | 75.10% | 77.00% |
Supplier 2 [Member] | ||||
Concentrations Supplier | 28.20% | 24.90% | ||
Supplier 3 [Member] | ||||
Concentrations Supplier | 23.00% |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Related Party Transactions Details Narrative | |||
Repayments received from related parties | $ 93,240 | $ 74,993 | |
Other receivables - related parties | 0 | $ 50,000 | |
Accounts payable - related parties | 21,109 | $ 43,134 | |
Rent expense | $ 0 | $ 500 |