Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 29, 2016 | Jun. 30, 2015 | |
Document And Entity Information [Abstract] | |||
Entity Registrant Name | SCOTTS LIQUID GOLD INC | ||
Entity Central Index Key | 88,000 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | SLGD | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 3,359,303 | ||
Entity Common Stock, Shares Outstanding | 11,710,745 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | ||
Net sales | $ 29,188,400 | $ 24,343,600 |
Operating costs and expenses: | ||
Cost of sales | 16,808,600 | 13,691,700 |
Advertising | 1,532,600 | 812,700 |
Selling | 5,311,200 | 4,848,900 |
General and administrative | 3,258,200 | 2,876,000 |
Total operating costs and expenses | 26,910,600 | 22,229,300 |
Income from operations | 2,277,800 | 2,114,300 |
Other income | 26,900 | 52,200 |
Interest expense | (29,300) | (29,200) |
Income before income taxes | 2,275,400 | 2,137,300 |
Income tax benefit (expense) | 2,504,500 | (43,900) |
Net income | $ 4,779,900 | $ 2,093,400 |
Net income per common share : | ||
Basic | $ 0.41 | $ 0.18 |
Diluted | $ 0.40 | $ 0.18 |
Weighted average shares outstanding: | ||
Basic | 11,634,515 | 11,507,944 |
Diluted | 11,916,038 | 11,781,839 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 7,165,100 | $ 5,896,600 |
Trade receivables, net | 1,014,700 | 1,041,100 |
Inventories, net | 4,698,600 | 2,689,700 |
Income taxes receivable | 0 | 3,700 |
Prepaid expenses | 227,200 | 346,000 |
Total current assets | 13,105,600 | 9,977,100 |
Property, plant and equipment, net | 430,000 | 400,800 |
Deferred tax asset | 2,556,200 | 0 |
Other assets | 51,000 | 51,000 |
Total assets | 16,142,800 | 10,428,900 |
Current liabilities: | ||
Accounts payable | 1,238,000 | 616,300 |
Accrued payroll and benefits | 780,300 | 665,900 |
Income taxes payable | 5,300 | 0 |
Accrued property taxes | 23,400 | 34,200 |
Total current liabilities | 2,047,000 | 1,316,400 |
Total liabilities | 2,047,000 | 1,316,400 |
Shareholders’ equity: | ||
Common stock; $0.10 par value, authorized 50,000,000 shares; issued and outstanding 11,710,745 shares (2015) and 11,549,789 shares (2014) | 1,171,100 | 1,155,000 |
Capital in excess of par | 5,901,100 | 5,713,800 |
Retained earnings | 7,023,600 | 2,243,700 |
Total shareholders’ equity | 14,095,800 | 9,112,500 |
Total liabilities and shareholders’ equity | $ 16,142,800 | $ 10,428,900 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Statement Of Financial Position [Abstract] | ||
Common stock par value | $ 0.10 | $ 0.10 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 11,710,745 | 11,549,789 |
Common stock, shares outstanding | 11,710,745 | 11,549,789 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) | Total | Common Stock | Capital in Excess of Par | Retained Earnings |
Beginning Balance, Value at Dec. 31, 2013 | $ 6,910,500 | $ 1,144,700 | $ 5,615,500 | $ 150,300 |
Beginning Balance, Shares at Dec. 31, 2013 | 11,446,800 | 11,446,800 | ||
Stock-based compensation, Value | $ 66,700 | $ 0 | 66,700 | 0 |
Stock-based compensation, Shares | 0 | |||
Stock options exercised, Value | 41,900 | $ 10,300 | 31,600 | 0 |
Stock options exercised, Shares | 102,989 | |||
Net income | 2,093,400 | $ 0 | 0 | 2,093,400 |
Ending Balance, Value at Dec. 31, 2014 | $ 9,112,500 | $ 1,155,000 | 5,713,800 | 2,243,700 |
Ending Balance, Shares at Dec. 31, 2014 | 11,549,789 | 11,549,789 | ||
Stock-based compensation, Value | $ 162,200 | $ 0 | 162,200 | 0 |
Stock-based compensation, Shares | 0 | |||
Stock options exercised, Value | 41,200 | $ 16,100 | 25,100 | 0 |
Stock options exercised, Shares | 160,956 | |||
Net income | 4,779,900 | $ 0 | 0 | 4,779,900 |
Ending Balance, Value at Dec. 31, 2015 | $ 14,095,800 | $ 1,171,100 | $ 5,901,100 | $ 7,023,600 |
Ending Balance, Shares at Dec. 31, 2015 | 11,710,745 | 11,710,745 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | ||
Net income | $ 4,779,900 | $ 2,093,400 |
Adjustment to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 160,800 | 173,600 |
Stock-based compensation | 162,200 | 66,700 |
Loss on disposal of assets | 0 | 800 |
Deferred income taxes | (2,556,200) | 0 |
Change in operating assets and liabilities: | ||
Trade receivables | 26,400 | 141,200 |
Inventories | (2,008,900) | 521,500 |
Prepaid expenses and other assets | 118,800 | (76,800) |
Income taxes payable (receivable) | 9,000 | (3,700) |
Accounts payable and accrued expenses | 725,300 | (131,200) |
Total adjustments to net income | (3,362,600) | 692,100 |
Net Cash Provided by Operating Activities | 1,417,300 | 2,785,500 |
Cash flows from investing activities: | ||
Purchase of property, plant and equipment | (190,000) | (57,000) |
Net Cash Used by Investing Activities | (190,000) | (57,000) |
Cash flows from financing activities: | ||
Proceeds from exercise of stock options | 41,200 | 41,900 |
Net Cash Provided by Financing Activities | 41,200 | 41,900 |
Net Increase in Cash and Cash Equivalents | 1,268,500 | 2,770,400 |
Cash and Cash Equivalents, beginning of year | 5,896,600 | 3,126,200 |
Cash and Cash Equivalents, end of year | 7,165,100 | 5,896,600 |
Supplemental disclosures: | ||
Cash paid during the period for interest | $ 29,300 | $ 29,200 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Organization and Summary of Significant Accounting Policies | Note 1. Organization and Summary of Significant Accounting Policies (a) Company Background Scott’s Liquid Gold-Inc. (a Colorado corporation) was incorporated on February 15, 1954. Scott’s Liquid Gold-Inc. and its wholly-owned subsidiaries (collectively, the “Company”, “we”, “our”, or “us”) develop, manufacture, market and sell quality household and skin and hair care products. We are also a distributor in the United States of Montagne Jeunesse skin sachets and Batiste Dry Shampoo manufactured by two other companies. Our business is comprised of two segments, household products and skin and hair care products. (b) Principles of Consolidation Our consolidated financial statements include our accounts and those of our wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. (c) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts in our financial statements of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, but are not limited to, the realization of deferred tax assets, reserves for slow moving and obsolete inventory, customer returns and allowances, coupon redemptions and stock-based compensation. Actual results could differ from our estimates. (d) Cash Equivalents We consider all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. (e) Sale of Accounts Receivable On November 3, 2008, effective as of October 31, 2008, we entered into a financing agreement with Summit for the purpose of providing working capital. The financing agreement with Summit was amended on March 12, 2009, March 16, 2011 (effective March 1, 2011) and on June 29, 2012 (effective July 1, 2012). The agreement has a term that expires on January 1, 2017, but it may be renewed for additional 12 month periods unless either party elects to cancel in writing at least 60 days prior to January 1, 2017 and thereafter on the anniversary date of each 12 month period. The agreement provides for a factoring line up to $1.5 million and is secured primarily by accounts receivables, inventory, any lease in which we are a lessor and all investment property and guarantees by our active subsidiaries. Under the agreement, Summit will make loans at our request and in its discretion based on: (i) its purchases of our receivables, with recourse against us, at an advance rate of 85% (or such other percentage determined by Summit in its discretion) and (ii) our inventory not to exceed certain amounts, including an aggregate maximum of $500,000. Advances under the agreement have an interest rate of 1.0% over the prime rate (as published in The Wall Street Journal) for the accounts receivables portion of the advances and 2.5% over the prime rate for the inventory portion of the borrowings. At December 31, 2015, the prime rate was 3.5%. There is also an administrative fee of 0.85% per month on the average monthly outstanding loan on the receivable portion of any advance if the average quarterly loan in the prior quarter was less than or equal to $1,000,000, and 0.75% per month if the average quarterly loan in the prior quarter was greater than $1,000,000 and of 1.0% per month on the average monthly outstanding loan on the inventory portion of any advance. The agreement provides that neither we nor our active subsidiaries may engage in a change in control transaction without the prior written consent of Summit. Events of default include, but are not limited to, our failure to make a payment when due or a default occurring on any of our other indebtedness. In 2015 and 2014, we did not sell any of our accounts receivables to Summit. At December 31, 2015 and December 31, 2014 the entire credit line of $1.5 million was available for future factoring of accounts receivable invoices and borrowings secured by our inventory. We report these transactions as a secured borrowing rather than as a sale. As a result, affected accounts receivables, if any, are reported under the “Current Assets” section within our Consolidated Balance Sheets as “Trade receivables, net.” Similarly, the net liability owing to Summit, if any, appears as “Obligations collateralized by receivables and inventory” within the “Current Liabilities” section of our Consolidated Balance Sheets. Net proceeds received on obligations collateralized by receivables and inventory, if any, appear as “net cash (used) provided by operating activities” within the “Adjustment to reconcile net income to net cash used by operating activities” section of our Consolidated Statements of Cash Flow. On March 16, 2011, with the consent of Summit, we entered into a financing agreement with Wells Fargo for the purpose of further lowering the cost of borrowing associated with the financing of our accounts receivables and on January 29, 2016 we terminated our agreement with Wells Fargo due to Walmart changing its accounts payable policy. Pursuant to this agreement, we were able to sell accounts receivables to Wal-Mart at a discount to Wells Fargo; provided, however, that Wells Fargo could reject offers to purchase such receivables in its discretion. These receivables could be purchased by Wells Fargo at a cost to us equal to LIBOR plus 1.15% per annum. The LIBOR rate used depends on the days to maturity of the receivables sold, typically ranging from 102 to 105 days. At December 31, 2015, Wells Fargo used the 105-day LIBOR rate of 0.69%. In 2015, we sold approximately $4,672,888 of our relevant accounts receivables to Wells Fargo for approximately $4,652,359. In 2014, we sold approximately $4,516,100 of our relevant accounts receivables to Wells Fargo for approximately $4,497,700. The difference between the invoiced amount of the receivables and the cash that we received from Wells Fargo was a cost to us. This cost was in lieu of any cash discount our customer would have been allowed and, thus, is treated in a manner consistent with standard trade discounts granted to our customers. The reporting of the sale of accounts receivables to Wells Fargo is treated as a sale rather than as a secured borrowing. As a result, affected accounts receivables are relieved from the Company’s financial statements upon receipt of the cash proceeds. (f) Inventories Inventories consist of raw materials and finished goods and are stated at the lower of cost (first-in, first-out method) or market. We record a reserve for slow moving and obsolete products and raw materials. We estimate this reserve based upon historical and anticipated sales. Amounts are stated in Note 2. (g) Property, Plant and Equipment Property, plant and equipment are recorded at historical cost. Depreciation is provided using the straight-line method over the estimated useful lives of the assets ranging from three to 20 years. Production equipment and production support equipment are estimated to have useful lives of 15 to 20 years and three to 10 years, respectively. Office furniture and office machines are estimated to have useful lives of 10 to 20 and three to five years, respectively. Carpets, drapes and company vehicles are estimated to have useful lives of five to 10 years. Maintenance and repairs are expensed as incurred. Improvements that extend the useful lives of the asset or provide improved efficiency are capitalized. (h) Financial Instruments Financial instruments which potentially subject us to concentrations of credit risk include cash and cash equivalents and trade receivables. We maintain our cash balances in the form of bank demand deposits with financial institutions that we believe are creditworthy. As of December 31, 2015, and periodically throughout the year, we have maintained balances in various operating accounts in excess of federally insured limits. We establish an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. We have no significant financial instruments with off-balance sheet risk of accounting loss, such as foreign exchange contracts, option contracts or other foreign currency hedging arrangements. The recorded amounts for cash and cash equivalents, receivables, other current assets, accounts payable and accrued expenses approximate fair value due to the short-term nature of these financial instruments. As of December 31, 2015 and December 31, 2014, we had no long-term debt. ( i ) Income Taxes Deferred income tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which related temporary differences become deductible. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Taxes are reported based on tax positions that meet a more-likely-than-not standard and that are measured at the amount that is more-likely-than-not to be realized. Differences between financial and tax reporting which do not meet this threshold are required to be recorded as unrecognized tax benefits. We classify penalty and interest expense related to income tax liabilities as an income tax expense. There are no significant interest and penalties recognized in the statement of operations or accrued on the balance sheet. (j) Revenue Recognition Our revenue recognition policy is significant because the amount and timing of revenue is a key component of our results of operations. Certain criteria are required to be met in order to recognize revenue. If these criteria are not met, then the associated revenue is deferred until it is met. In our case, the criteria generally are met when we have an arrangement to sell a product, we have delivered the product in accordance with that arrangement, the sales price of the product is determinable and we believe that we will be paid for the sale. We establish reserves for customer returns of our products and customer allowances. We estimate these reserves based upon, among other things, an assessment of historical trends, information from customers and anticipated returns related to current sales activity. These reserves are established in the period of sale and reduce our revenue in that period. Our reserve for customer allowances includes primarily reserves for trade promotions to support price features, displays, slotting fees and other merchandising of our products to our customers. The actual level of returns and customer allowances are influenced by several factors, including the promotional efforts of our customers, changes in the mix of our customers, changes in the mix of the products we sell and the maturity of the product. We may change our estimates based on actual results and consideration of other factors that cause returns and allowances. In the event that actual results differ from our estimates, the results of future periods may be impacted. We also establish reserves for coupons, rebates and certain other promotional programs for consumers. We estimate these reserves based upon, among other things, an assessment of historical trends and current sales activity. These reserves are recorded as a reduction of revenue at the later of the date at which the revenue is recognized or the date at which the sale incentive is offered. We have also established an allowance for doubtful accounts. We estimate this allowance based upon, among other things, an assessment of the credit risk of specific customers and historical trends. We believe our allowance for doubtful accounts is adequate to absorb any losses which may arise. In the event that actual losses differ from our estimates, the results of future periods may be impacted. At December 31, 2015 and December 31, 2014 approximately $1,179,700 and $795,300, respectively, had been reserved for as a reduction of accounts receivables. Trade promotions to our customers and incentives such as coupons and rebates to the consumer are deducted from gross sales and totaled $2,517,500 and $2,056,300 for the years ended December 31, 2015 and 2014, respectively. ( k ) Advertising Costs Advertising costs are expensed as incurred. ( l ) Stock-based Compensation During 2015, we granted options to acquire: (1) 326,500 shares of our common stock to 40 of our management and administrative personnel at a price of $1.25 per share, which vest ratably over 48 months, or upon a change in control under certain circumstances, and which expire after 10 years; (2) 200,000 shares of our common stock to one of our executive officers at a price of $1.25 per share, which vest ratably over 60 months, or upon a change in control under certain circumstances, and which expire after 10 years; and (3) 90,000 shares of our common stock to our three non-employee board members at a price of $1.25 per share, half of which vested on the date of grant and the other half of which will vest on the first anniversary of the date of grant, or upon a change in control under certain circumstances, and which expire after five years. All of the foregoing options were granted at the market value as of the date of grant. We also granted options to acquire 100,000 shares of our common stock to one of our executive officers at a price of $1.375 per share, which vest ratably over 48 months, or upon a change in control under certain circumstances, and which expire after five years. Such options were granted at 110% of the market value as of the date of grant. During 2014, we granted options to acquire: (1) 250,000 shares of our common stock to one of our executive officers at a price of $0.864 per share, which vest ratably over 60 months, or upon a change in control, and which expire after 10 years; (2) 35,000 shares of our common stock to our vice president of marketing at a price of $0.78 per share, which vest ratably over 48 months, or upon a change in control, and which expire after five years; (3) 2,500 shares of our common stock to an administrative employee at a price of $0.78 per share, which vest ratably over 48 months, or upon a change in control, and which expire after five years; and (4) 60,000 shares of our common stock to two of our non-employee board members at a price of $0.792 per share, which vest ratably over 48 months, or upon a change in control, and which expire after five years. Such options were granted at 120% of the market value as of the date of grant. We also granted options to acquire 30,000 shares of our common stock to one of our non-employee board members at a price of $0.792 per share, which vested upon the date of grant, and expire after five years. Such options were also granted at 120% of the market value as of the date of grant. The weighted average fair market value of the options granted in the years ended December 31, 2015 and 2014 were estimated on the date of grant, using a Black-Scholes option pricing model with the following assumptions: 2015 2014 Expected life of options (using the “simplified method”) 5.3 years 4.5 – 5.5years Average risk-free interest rate 1.4 % 1.6%- 1.7 % Average expected volatility of stock 133 % 121%-128 % Expected dividend rate None None Fair value of options granted $ 755,105 $ 210,527 Compensation cost related to stock options recognized in operating results (included in general and administrative expenses) was $162,200 and $66,700 for the years ended December 31, 2015 and 2014, respectively. Approximately $835,500 of total unrecognized compensation costs related to non-vested stock options is expected to be recognized over the next 12-60 months, depending on the vesting provisions of the options. There was no tax benefit from recording the non-cash expense as it relates to the options granted to our employees, as these were qualified stock options which are not normally tax deductible. With respect to the non-cash expense associated with the options granted to our non-employee directors, no tax benefit was recognized due to the existence of as yet unutilized net operating losses. At such time as these operating losses have been utilized and a tax benefit is realized from the issuance of non-qualified stock options, a corresponding tax benefit may be recognized. ( m ) Operating Costs and Expenses Classification Cost of sales includes costs associated with manufacturing and distribution including labor, materials, freight-in, purchasing and receiving, quality control, internal transfer costs, repairs, maintenance and other indirect costs, as well as warehousing and distribution costs. We classify shipping and handling costs comprised primarily of freight-out as selling expenses. Other selling expenses consist primarily of wages and benefits for sales and sales support personnel, travel, brokerage commissions and promotional costs, as well as certain other indirect costs. Shipping and handling costs totaled $1,462,600 and $1,517,500, for the years ended December 31, 2015 and 2014, respectively. General and administrative expenses consist primarily of wages and benefits associated with management and administrative support departments, business insurance costs, professional fees, office facility rent and related expenses and other general support costs. ( n ) Recently Issued Accounting Standards In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” In July 2015, the FASB issued ASU 2015-11, “ Simplifying the Measurement of Inventory In November 2015, the FASB issued ASU No. 2015-17, “ Balance Sheet Classification of Deferred Taxes 17 will be effective for interim and annual periods beginning after December 15, 2016 (January 1, 2017 for the Company) and may be applied prospectively or retrospectively. Early adoption of the standard is permitted. The Company early adopted this standard retrospectively on December 31, 2015. The adoption of this standard had no effect on the Company’s results of operations, financial condition or cash flows. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2015 | |
Inventory Disclosure [Abstract] | |
Inventories | Note 2: Inventories Inventories, consisting of materials, labor and overhead at December 31 were comprised of the following: 2015 2014 Finished goods $ 2,101,300 $ 1,626,300 Raw materials 2,717,300 1,117,800 Inventory reserve for obsolescence (120,000 ) (54,400 ) $ 4,698,600 $ 2,689,700 |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Dec. 31, 2015 | |
Property Plant And Equipment [Abstract] | |
Property, Plant and Equipment | Note 3: Property, Plant and Equipment Property, plant and equipment at December 31 were comprised of the following: 2015 2014 Production equipment $ 4,726,200 $ 5,039,900 Office furniture and equipment 674,600 778,700 Other 188,200 188,200 5,589,000 6,006,800 Less accumulated depreciation (5,159,000 ) (5,606,000 ) $ 430,000 $ 400,800 Depreciation expense for the years ended December 31, 2015 and 2014 was $160,800 and $173,600, respectively. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Debt | Note 4: Debt Please see Note 1(e) for information on our financing agreements with Summit and Wells Fargo. Note 1(e) also includes a discussion of the accounting treatment of the funds borrowed pursuant to these agreements. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 5: Income Taxes The provision for income tax for the years ended December 31 is as follows: 2015 2014 Current provision (benefit): Federal $ 60,300 $ 33,900 State (8,600 ) 10,000 Total current provision (benefit) 51,700 43,900 Deferred provision (benefit): Federal 741,700 724,700 State 81,200 61,800 Valuation allowance (3,379,100 ) (786,500 ) Total deferred provision (benefit) (2,556,200 ) 0 Provision (benefit): Federal (2,115,700 ) 33,900 State (388,800 ) 10,000 Total provision (benefit) $ (2,504,500 ) $ 43,900 Income tax expense (benefit) at the statutory tax rate is reconciled to the overall income tax expense (benefit) as follows: 2015 2014 Federal income tax at statutory rates $ 773,700 $ 726,700 State income taxes, net of federal tax effect 69,300 61,900 Change in unrecognized benefit 0 (17,600 ) Permanent differences 54,800 34,800 Other (23,200 ) 24,600 Total 874,600 830,400 Change in valuation allowance (3,379,100 ) (786,500 ) Provision (benefit) for income taxes $ (2,504,500 ) $ 43,900 Deferred income taxes are based on estimated future tax effects of differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes given the provision of enacted tax laws. The net deferred tax assets and liabilities as of December 31, 2015 and 2014 are comprised of the following: 2015 2014 Deferred tax assets: Net operating loss carryforwards $ 1,833,100 $ 2,840,800 Tax credit and other carryforwards 413,800 344,800 Trade receivables 205,200 178,000 Inventories 70,600 28,200 Accrued vacation 38,800 35,400 Other 20,800 10,300 Total deferred taxes 2,582,300 3,437,500 Deferred tax liability: Accumulated depreciation for tax purposes (26,100 ) (58,400 ) Total deferred tax liabilities (26,100 ) (58,400 ) Net deferred tax asset, before allowance 2,556,200 3,379,100 Valuation allowance 0 (3,379,100 ) Net deferred tax asset $ 2,556,200 $ 0 At December 31, 2015, we had federal net operating loss carryforwards of approximately $4,377,900 for federal income tax purposes and approximately $4,348,400 for financial reporting purposes. The difference between the federal income tax net operating loss carryforwards of $29,500 relates to tax deductions for compensation expense for financial reporting purposes for which the benefit will not be recognized until the related deductions reduce income taxes payable. The Company also had federal tax credit carryforwards related to research and development efforts of approximately $286,700. The net operating loss carryforwards and the research and development credits will expire over a period ending in 2032 and 2035 respectively. At December 31, 2015, there was approximately $127,000 of alternative minimum tax credits which have no expiration period. State tax loss carryforwards at December 31, 2015 are approximately $11,640,000 expiring over a period ending in 2032. As of December 31, 2014 the Company placed a full valuation allowance against deferred income tax assets. During the year ended December 31, 2015, the Company has determined in its judgement, based upon all available evidence (both positive and negative), that it is more likely than not that the net deferred tax assets will be realized. Hence, all deferred tax benefits will be recognized and the full valuation allowance removed as part of the effective tax rate. We adhere to the authoritative guidance with respect to accounting for uncertainty in income taxes. This guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It requires that we recognize in our consolidated financial statements, only those tax positions that are “more-likely-than-not” of being sustained as of the adoption date, based on the technical merits of the position. Each year we perform a comprehensive review of our material tax positions. In prior years, as a result of this review, we identified certain deferred tax assets that need to be adjusted. As of December 31, 2014 following the acceptance of an accounting method change by the IRS, the Company has removed any liabilities associated with previously identified tax positions and no longer identifies any income tax positions that are not "more-likely-than-not" to be sustained. 2015 2014 Balance at January 1, $ 0 $ 395,100 Additions based on tax positions related to current year 0 0 Reductions for tax positions of prior years or change in valuation 0 (395,100 ) Balance at December 31, $ 0 $ 0 Our policy is to recognize interest and penalties related to uncertain tax benefits in income tax expense. As there are currently no uncertain tax benefits, we have no accrued interest or penalties related to uncertain tax positions as of December 31, 2015. As a result of our net operating loss carryforward position, we have no accrued interest or penalties related to uncertain tax positions for the year ended December 31, 2014. We and our subsidiaries are subject to the following material taxing jurisdictions: United States and Colorado. The tax years that remain open to examination by the Internal Revenue Service are 2012 and years thereafter. However, due to our net operating loss carryforwards from prior periods, the Internal Revenue Service could potentially review the losses back to 2000. The tax years that remain open to examination by the State of Colorado are 2011 and years thereafter. |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Shareholders' Equity | Note 6: Shareholders’ Equity In 2005, we adopted a stock option plan for our employees, officers and directors (the “2005 Plan”). At the Annual Shareholders’ Meeting in May 2011, shareholders approved an amendment to the 2005 Plan to increase the number of shares issuable under the plan from 1,500,000 shares to a total of 3,000,000 shares. Options granted before May 2011 are granted at not less than current market price of the stock on the date of grant and are exercisable from five to ten years from the grant date. Options granted after May 2011, pursuant to the plan amendment in May 2011, are required to be granted at not less than the higher of (1) 120% of current market price on the date of grant or (2) the average of market price over the prior 30 trading days. Except for the grant of 30,000 options to one of our board members in 2014 and the grant of 90,000 options to three of our board members in 2013 that vested upon the date of grant, the options granted in 2015 and 2014 vest each month over 48-60 months or upon a change in control. In 2015, we adopted a stock option plan for our employees, officers and directors (the “2015 Plan”) to replace the 2005 Plan, which expired on March 31, 2015. At the Annual Shareholders’ Meeting in June 2015, shareholders approved the adoption of the 2015 Plan. Stock option activity under the 2005 and 2015 Plans are as follows: Number of Weighted Average Weighted Average Remaining Contractual Aggregate Intrinsic Value 2005 Plan Maximum number of shares under the plan 3,000,000 Outstanding, December 31, 2013 694,520 $ 0.35 3.1 years $ 211,100 Granted in 2014 377,500 0.84 Exercised in 2014 (102,958 ) 0.41 Cancelled/Expired in 2014 (50,093 ) 0.51 Outstanding, December 31, 2014 918,969 $ 0.53 4.4 years $ 374,600 Granted in 2015 0 0.00 Exercised in 2015 (160,956 ) 0.26 Cancelled/Expired in 2015 (81,500 ) 0.24 Outstanding, December 31, 2015 676,513 $ 0.63 4.7 years $ 525,300 Exercisable, December 31, 2015 351,832 $ 0.51 3.3 years $ 317,000 Available for issuance, December 31, 2015 0 2015 Plan Maximum number of shares under the plan 2,000,000 Outstanding, December 31, 2014 0 $ 0.00 Granted in 2015 716,500 1.27 Exercised in 2015 0 0.00 Cancelled/Expired in 2015 0 0.00 Outstanding, December 31, 2015 716,500 $ 1.27 8.4 years $ 102,140 Exercisable, December 31, 2015 93,972 $ 1.26 6.8 years $ 13,994 Available for issuance, December 31, 2015 1,283,500 A summary of additional information related to the options outstanding as of December 31, 2015 under the 2005 and 2015 Plans are as follows: 2005 Plan Range of Exercise Prices Number of Options Weighted Average Remaining Contractual Weighted Average Exercise $0.17-$0.39 126,875 1.3 years 1.2 years $ 0.23 $0.40-$0.62 152,138 2.4 years $ 0.45 $0.63-$0.86 397,500 6.7 years $ 0.83 Total 676,513 4.7 years $ 0.63 2015 Plan Range of Exercise Prices $1.25 616,500 8.9 years $ 1.25 $1.38 100,000 4.7 years $ 1.38 Total 716,500 8.3 years $ 1.27 We have an Employee Stock Ownership Plan (“Plan”) to provide retirement benefits for our employees. The Plan is designed to invest primarily in our common stock and is non-contributory on the part of our employees. Contributions to the Plan are discretionary as determined by our Board of Directors. We expense the cost of contributions to the Plan. No contributions were made to the Plan in 2015 or 2014. At December 31, 2015 and 2014, a total of 670,675 and 830,682 shares of our common stock, respectively, have been allocated and earned by our employees. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 7: Earnings per Share Per share data is determined by using the weighted average number of common shares outstanding. Common equivalent shares are considered only for diluted earnings per share, unless considered anti-dilutive. Common equivalent shares, determined using the treasury stock method, result from stock options with exercise prices that are below the average market price of the common stock. Basic earnings per share include no dilution and are computed by dividing income available to common shareholders by the weighted-average number of shares outstanding during the period. Diluted earnings per share reflect the potential of securities that could share in our earnings. There were common stock equivalents of 1,064,000 and 427,500 shares outstanding at December 31, 2015 and 2014, respectively, consisting of stock options that were not included in the calculation of earnings per share because they would have been anti-dilutive. A reconciliation of the weighted average number of common shares outstanding for the years ended December 31 is as follows: 2015 2014 Common shares outstanding, beginning of the year 11,549,789 11,446,800 Weighted average common shares issued 84,726 61,144 Weighted average number of common shares outstanding 11,634,515 11,507,944 Dilutive effect of common share equivalents 281,523 273,895 Diluted weighted average number of common shares outstanding 11,916,038 11,781,839 We have authorized 20,000,000 shares of preferred stock issuable in one or more series, none of which are issued or outstanding as of December 31, 2015. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | Note 8: Segment Information We operate in two different segments: household products and skin and hair care products. Our products are sold nationally and internationally (primarily Canada), directly through our sales force and indirectly through independent brokers and manufacturer’s representatives, to mass merchandisers, drugstores, supermarkets, hardware stores and other retail outlets and to wholesale distributors. Management has chosen to organize our business around these segments based on differences in the products sold. Accounting policies for our segments are the same as those described in Note 1. We evaluate segment performance based on segment income or loss before income taxes. The following provides information on our segments as of and for the years ended December 31: 2015 2014 Household Skin and Hair Household Skin and Hair Net sales to external customers $ 6,359,100 $ 22,829,300 $ 5,890,200 $ 18,453,400 Cost of Sales 2,988,500 13,820,100 3,119,600 10,572,100 Advertising expenses 1,004,300 528,300 678,100 134,600 Selling expenses 1,650,000 3,661,200 1,509,500 3,339,400 General and administrative expenses 1,435,400 1,822,800 1,278,500 1,597,500 Total operating expenses 7,078,200 19,832,400 6,585,700 15,643,600 (Loss) income from operations (719,100 ) 2,996,900 (695,500 ) 2,809,800 Other income 5,000 21,900 36,100 16,100 Interest expense (6,400 ) (22,900 ) (6,800 ) (22,400) (Loss) income before income taxes $ (720,500 ) 2,995,900 $ (666,200 ) $ 2,803,500 Identifiable assets $ 7,585,800 5,073,200 $ 4,119,400 $ 3,471,800 The following is a reconciliation of segment information to consolidated information: 2015 2014 Net sales to external customers $ 29,188,400 $ 24,343,600 Consolidated income before income taxes $ 2,275,400 $ 2,137,300 Identifiable assets $ 12,659,000 $ 7,591,200 Corporate assets 3,483,800 2,837,700 Consolidated total assets $ 16,142,800 $ 10,428,900 Corporate assets noted above are comprised primarily of our cash and property and equipment not directly associated with manufacturing, warehousing, shipping and receiving activities. In 2015 and 2014, Ulta accounted for approximately $6,956,500 and $4,741,400, respectively, of our consolidated net sales, Wal-Mart accounted for approximately $4,494,800 and $4,409,600, respectively, of our consolidated net sales and TJ Maxx accounted for approximately $4,769,000 and $930,600, respectively, of our consolidated net sales. We sell both household products and skin and hair care products to Wal-Mart, but we sell only skin and hair care products to Ulta and TJ Maxx. These customers are not related to us. The outstanding trade receivables from Ulta accounted for 1.8% and 19.5% of our total trade receivables at December 31, 2015 and 2014, respectively. The outstanding trade receivables from Wal-Mart accounted for 9.8% and 14.0% of our total trade receivables at December 31, 2015 and 2014, respectively. The outstanding trade receivables from TJ Maxx accounted for 30.5% and 19.0% of our total trade receivables at December 31, 2015 and 2014, respectively. The outstanding trade receivables from Marshals accounted for 39.8% and 10.9% of our total trade receivables at December 31, 2015 and 2014 respectively. A loss of one or any of these customers could have a material adverse effect on us because it is uncertain whether our consumer base served by these customers would purchase our products at other retail outlets. No long-term contracts exist between us and these customers or any other customer. |
Retirement Plans
Retirement Plans | 12 Months Ended |
Dec. 31, 2015 | |
Compensation And Retirement Disclosure [Abstract] | |
Retirement Plans | Note 9: Retirement Plans We have a 401(k) Profit Sharing Plan (“401(k) Plan”) covering our full-time employees who have completed four months of service as defined in the 401(k) Plan, and are age 18 or older. Participants may defer up to 75% of their compensation up to the maximum limit determined by law. We may make discretionary “matching” contributions up to a maximum of 6% of each participant’s compensation, but only for those employees earning no more than $50,000 annually. Additionally, we can make discretionary “profit sharing” contributions to eligible employees. Participants are always fully vested in their contributions, matching contributions and allocated earnings thereon. Vesting in our profit sharing contribution is based on years of service, with a participant fully vested after five years. Our Company matching contributions totaled $3,700 and $4,300, in 2015 and 2014, respectively. We made no discretionary profit sharing contributions in 2015 or 2014. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 10. Commitments and Contingencies Leases On February 1, 2013, we entered into a lease with an unrelated third party for approximately 16,078 square feet of office space (the “Office Lease”) and approximately 113,620 square feet of manufacturing and warehouse space (the “Warehouse Lease”). Each of the Office Lease and the Warehouse Lease has an initial term of three years, with options to extend the term for two additional terms of three years each. Effective February 1, 2016, we exercised our first option to extend the term of the Office Lease and Warehouse Lease for three years. The initial rent for the Office Lease was $13.00 per square foot per annum, with annual 3% increases. The initial rent for the Warehouse Lease was $3.25 per square foot per annum, with annual 3% increases, and we will pay an additional $1.25 per square foot per annum as our share of the purchaser’s operating expenses under the Warehouse Lease (including taxes, insurance and common area maintenance charges). If certain uncontrollable operating expenses increase by more than 5% per year, our share of operating expenses under the Warehouse Lease may be increased. On March 25, 2016, we entered into a lease with an unrelated third party for approximately 53,440 square feet of warehouse space that connects to our current warehouse space (the “Expansion Lease”). The initial rent for Expansion Lease is $4.90 per square foot per annum, with annual increases ranging from 7% in the second year of the lease to 3% in the last two years of the lease. The term of the Expansion Lease will be co-terminous with the Warehouse Lease and will be subject to all of the terms and conditions for the Warehouse Lease. Annual rental expense under the Office Lease and Warehouse Lease for 2015 was $221,200 and $390,800, respectively. Annual rental expense under the Office Lease and Warehouse Lease for 2014 was $214,800 and $379,400, respectively. Minimum annual rental payments under the Office Lease are approximately $227,800, $234,700, $241,700 and $20,200 for the years ending December 31, 2016, 2017, 2018 and 2019, respectively. Minimum annual rental payments under the Warehouse Lease are approximately $598,900, $693,600 , $719,800 and $60,200 for the years ending December 31, 2016, 2017, 2018, and 2019, respectively. We have entered into various operating lease agreements, primarily for office equipment. Annual rental expense under these leases totaled $47,200 and $50,300 in 2015 and 2014, respectively. Minimum annual rental payments under noncancellable operating leases are approximately $34,900 and $14,500 for the years ending December 31, 2016 and 2017, respectively. Presently we have no lease commitments beyond 2018. Contingencies We are subject to lawsuits from time to time in the ordinary course of business. While we expect those lawsuits not to have a material effect on us, an adverse development in any such lawsuit or the insurance coverage for a lawsuit could materially and adversely affect our financial condition and cash flow. We regularly review all pending litigation matters in which we might be involved and establish accruals deemed appropriate by us for these litigation matters when a probable loss estimate can be made. As of December 31, 2015 there were no pending litigation matters that required an accrual. |
Organization and Summary of S17
Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | (b) Principles of Consolidation Our consolidated financial statements include our accounts and those of our wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. |
Use of Estimates | (c) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts in our financial statements of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, but are not limited to, the realization of deferred tax assets, reserves for slow moving and obsolete inventory, customer returns and allowances, coupon redemptions and stock-based compensation. Actual results could differ from our estimates. |
Cash Equivalents | (d) Cash Equivalents We consider all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. |
Sale of Accounts Receivable | (e) Sale of Accounts Receivable On November 3, 2008, effective as of October 31, 2008, we entered into a financing agreement with Summit for the purpose of providing working capital. The financing agreement with Summit was amended on March 12, 2009, March 16, 2011 (effective March 1, 2011) and on June 29, 2012 (effective July 1, 2012). The agreement has a term that expires on January 1, 2017, but it may be renewed for additional 12 month periods unless either party elects to cancel in writing at least 60 days prior to January 1, 2017 and thereafter on the anniversary date of each 12 month period. The agreement provides for a factoring line up to $1.5 million and is secured primarily by accounts receivables, inventory, any lease in which we are a lessor and all investment property and guarantees by our active subsidiaries. Under the agreement, Summit will make loans at our request and in its discretion based on: (i) its purchases of our receivables, with recourse against us, at an advance rate of 85% (or such other percentage determined by Summit in its discretion) and (ii) our inventory not to exceed certain amounts, including an aggregate maximum of $500,000. Advances under the agreement have an interest rate of 1.0% over the prime rate (as published in The Wall Street Journal) for the accounts receivables portion of the advances and 2.5% over the prime rate for the inventory portion of the borrowings. At December 31, 2015, the prime rate was 3.5%. There is also an administrative fee of 0.85% per month on the average monthly outstanding loan on the receivable portion of any advance if the average quarterly loan in the prior quarter was less than or equal to $1,000,000, and 0.75% per month if the average quarterly loan in the prior quarter was greater than $1,000,000 and of 1.0% per month on the average monthly outstanding loan on the inventory portion of any advance. The agreement provides that neither we nor our active subsidiaries may engage in a change in control transaction without the prior written consent of Summit. Events of default include, but are not limited to, our failure to make a payment when due or a default occurring on any of our other indebtedness. In 2015 and 2014, we did not sell any of our accounts receivables to Summit. At December 31, 2015 and December 31, 2014 the entire credit line of $1.5 million was available for future factoring of accounts receivable invoices and borrowings secured by our inventory. We report these transactions as a secured borrowing rather than as a sale. As a result, affected accounts receivables, if any, are reported under the “Current Assets” section within our Consolidated Balance Sheets as “Trade receivables, net.” Similarly, the net liability owing to Summit, if any, appears as “Obligations collateralized by receivables and inventory” within the “Current Liabilities” section of our Consolidated Balance Sheets. Net proceeds received on obligations collateralized by receivables and inventory, if any, appear as “net cash (used) provided by operating activities” within the “Adjustment to reconcile net income to net cash used by operating activities” section of our Consolidated Statements of Cash Flow. On March 16, 2011, with the consent of Summit, we entered into a financing agreement with Wells Fargo for the purpose of further lowering the cost of borrowing associated with the financing of our accounts receivables and on January 29, 2016 we terminated our agreement with Wells Fargo due to Walmart changing its accounts payable policy. Pursuant to this agreement, we were able to sell accounts receivables to Wal-Mart at a discount to Wells Fargo; provided, however, that Wells Fargo could reject offers to purchase such receivables in its discretion. These receivables could be purchased by Wells Fargo at a cost to us equal to LIBOR plus 1.15% per annum. The LIBOR rate used depends on the days to maturity of the receivables sold, typically ranging from 102 to 105 days. At December 31, 2015, Wells Fargo used the 105-day LIBOR rate of 0.69%. In 2015, we sold approximately $4,672,888 of our relevant accounts receivables to Wells Fargo for approximately $4,652,359. In 2014, we sold approximately $4,516,100 of our relevant accounts receivables to Wells Fargo for approximately $4,497,700. The difference between the invoiced amount of the receivables and the cash that we received from Wells Fargo was a cost to us. This cost was in lieu of any cash discount our customer would have been allowed and, thus, is treated in a manner consistent with standard trade discounts granted to our customers. The reporting of the sale of accounts receivables to Wells Fargo is treated as a sale rather than as a secured borrowing. As a result, affected accounts receivables are relieved from the Company’s financial statements upon receipt of the cash proceeds. |
Inventories | (f) Inventories Inventories consist of raw materials and finished goods and are stated at the lower of cost (first-in, first-out method) or market. We record a reserve for slow moving and obsolete products and raw materials. We estimate this reserve based upon historical and anticipated sales. Amounts are stated in Note 2. |
Property, Plant and Equipment | (g) Property, Plant and Equipment Property, plant and equipment are recorded at historical cost. Depreciation is provided using the straight-line method over the estimated useful lives of the assets ranging from three to 20 years. Production equipment and production support equipment are estimated to have useful lives of 15 to 20 years and three to 10 years, respectively. Office furniture and office machines are estimated to have useful lives of 10 to 20 and three to five years, respectively. Carpets, drapes and company vehicles are estimated to have useful lives of five to 10 years. Maintenance and repairs are expensed as incurred. Improvements that extend the useful lives of the asset or provide improved efficiency are capitalized. |
Financial Instruments | (h) Financial Instruments Financial instruments which potentially subject us to concentrations of credit risk include cash and cash equivalents and trade receivables. We maintain our cash balances in the form of bank demand deposits with financial institutions that we believe are creditworthy. As of December 31, 2015, and periodically throughout the year, we have maintained balances in various operating accounts in excess of federally insured limits. We establish an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. We have no significant financial instruments with off-balance sheet risk of accounting loss, such as foreign exchange contracts, option contracts or other foreign currency hedging arrangements. The recorded amounts for cash and cash equivalents, receivables, other current assets, accounts payable and accrued expenses approximate fair value due to the short-term nature of these financial instruments. As of December 31, 2015 and December 31, 2014, we had no long-term debt. |
Income Taxes | ( i ) Income Taxes Deferred income tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which related temporary differences become deductible. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Taxes are reported based on tax positions that meet a more-likely-than-not standard and that are measured at the amount that is more-likely-than-not to be realized. Differences between financial and tax reporting which do not meet this threshold are required to be recorded as unrecognized tax benefits. We classify penalty and interest expense related to income tax liabilities as an income tax expense. There are no significant interest and penalties recognized in the statement of operations or accrued on the balance sheet. |
Revenue Recognition | (j) Revenue Recognition Our revenue recognition policy is significant because the amount and timing of revenue is a key component of our results of operations. Certain criteria are required to be met in order to recognize revenue. If these criteria are not met, then the associated revenue is deferred until it is met. In our case, the criteria generally are met when we have an arrangement to sell a product, we have delivered the product in accordance with that arrangement, the sales price of the product is determinable and we believe that we will be paid for the sale. We establish reserves for customer returns of our products and customer allowances. We estimate these reserves based upon, among other things, an assessment of historical trends, information from customers and anticipated returns related to current sales activity. These reserves are established in the period of sale and reduce our revenue in that period. Our reserve for customer allowances includes primarily reserves for trade promotions to support price features, displays, slotting fees and other merchandising of our products to our customers. The actual level of returns and customer allowances are influenced by several factors, including the promotional efforts of our customers, changes in the mix of our customers, changes in the mix of the products we sell and the maturity of the product. We may change our estimates based on actual results and consideration of other factors that cause returns and allowances. In the event that actual results differ from our estimates, the results of future periods may be impacted. We also establish reserves for coupons, rebates and certain other promotional programs for consumers. We estimate these reserves based upon, among other things, an assessment of historical trends and current sales activity. These reserves are recorded as a reduction of revenue at the later of the date at which the revenue is recognized or the date at which the sale incentive is offered. We have also established an allowance for doubtful accounts. We estimate this allowance based upon, among other things, an assessment of the credit risk of specific customers and historical trends. We believe our allowance for doubtful accounts is adequate to absorb any losses which may arise. In the event that actual losses differ from our estimates, the results of future periods may be impacted. At December 31, 2015 and December 31, 2014 approximately $1,179,700 and $795,300, respectively, had been reserved for as a reduction of accounts receivables. Trade promotions to our customers and incentives such as coupons and rebates to the consumer are deducted from gross sales and totaled $2,517,500 and $2,056,300 for the years ended December 31, 2015 and 2014, respectively. |
Advertising Costs | ( k ) Advertising Costs Advertising costs are expensed as incurred. |
Stock-based Compensation | ( l ) Stock-based Compensation During 2015, we granted options to acquire: (1) 326,500 shares of our common stock to 40 of our management and administrative personnel at a price of $1.25 per share, which vest ratably over 48 months, or upon a change in control under certain circumstances, and which expire after 10 years; (2) 200,000 shares of our common stock to one of our executive officers at a price of $1.25 per share, which vest ratably over 60 months, or upon a change in control under certain circumstances, and which expire after 10 years; and (3) 90,000 shares of our common stock to our three non-employee board members at a price of $1.25 per share, half of which vested on the date of grant and the other half of which will vest on the first anniversary of the date of grant, or upon a change in control under certain circumstances, and which expire after five years. All of the foregoing options were granted at the market value as of the date of grant. We also granted options to acquire 100,000 shares of our common stock to one of our executive officers at a price of $1.375 per share, which vest ratably over 48 months, or upon a change in control under certain circumstances, and which expire after five years. Such options were granted at 110% of the market value as of the date of grant. During 2014, we granted options to acquire: (1) 250,000 shares of our common stock to one of our executive officers at a price of $0.864 per share, which vest ratably over 60 months, or upon a change in control, and which expire after 10 years; (2) 35,000 shares of our common stock to our vice president of marketing at a price of $0.78 per share, which vest ratably over 48 months, or upon a change in control, and which expire after five years; (3) 2,500 shares of our common stock to an administrative employee at a price of $0.78 per share, which vest ratably over 48 months, or upon a change in control, and which expire after five years; and (4) 60,000 shares of our common stock to two of our non-employee board members at a price of $0.792 per share, which vest ratably over 48 months, or upon a change in control, and which expire after five years. Such options were granted at 120% of the market value as of the date of grant. We also granted options to acquire 30,000 shares of our common stock to one of our non-employee board members at a price of $0.792 per share, which vested upon the date of grant, and expire after five years. Such options were also granted at 120% of the market value as of the date of grant. The weighted average fair market value of the options granted in the years ended December 31, 2015 and 2014 were estimated on the date of grant, using a Black-Scholes option pricing model with the following assumptions: 2015 2014 Expected life of options (using the “simplified method”) 5.3 years 4.5 – 5.5years Average risk-free interest rate 1.4 % 1.6%- 1.7 % Average expected volatility of stock 133 % 121%-128 % Expected dividend rate None None Fair value of options granted $ 755,105 $ 210,527 Compensation cost related to stock options recognized in operating results (included in general and administrative expenses) was $162,200 and $66,700 for the years ended December 31, 2015 and 2014, respectively. Approximately $835,500 of total unrecognized compensation costs related to non-vested stock options is expected to be recognized over the next 12-60 months, depending on the vesting provisions of the options. There was no tax benefit from recording the non-cash expense as it relates to the options granted to our employees, as these were qualified stock options which are not normally tax deductible. With respect to the non-cash expense associated with the options granted to our non-employee directors, no tax benefit was recognized due to the existence of as yet unutilized net operating losses. At such time as these operating losses have been utilized and a tax benefit is realized from the issuance of non-qualified stock options, a corresponding tax benefit may be recognized. |
Operating Costs and Expenses Classification | ( m ) Operating Costs and Expenses Classification Cost of sales includes costs associated with manufacturing and distribution including labor, materials, freight-in, purchasing and receiving, quality control, internal transfer costs, repairs, maintenance and other indirect costs, as well as warehousing and distribution costs. We classify shipping and handling costs comprised primarily of freight-out as selling expenses. Other selling expenses consist primarily of wages and benefits for sales and sales support personnel, travel, brokerage commissions and promotional costs, as well as certain other indirect costs. Shipping and handling costs totaled $1,462,600 and $1,517,500, for the years ended December 31, 2015 and 2014, respectively. General and administrative expenses consist primarily of wages and benefits associated with management and administrative support departments, business insurance costs, professional fees, office facility rent and related expenses and other general support costs. |
Recently Issued Accounting Standards | ( n ) Recently Issued Accounting Standards In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” In July 2015, the FASB issued ASU 2015-11, “ Simplifying the Measurement of Inventory In November 2015, the FASB issued ASU No. 2015-17, “ Balance Sheet Classification of Deferred Taxes 17 will be effective for interim and annual periods beginning after December 15, 2016 (January 1, 2017 for the Company) and may be applied prospectively or retrospectively. Early adoption of the standard is permitted. The Company early adopted this standard retrospectively on December 31, 2015. The adoption of this standard had no effect on the Company’s results of operations, financial condition or cash flows. |
Organization and Summary of S18
Organization and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Weighted Average Fair Market Value of the Options Granted Estimated on the Date of Grant Assumptions | The weighted average fair market value of the options granted in the years ended December 31, 2015 and 2014 were estimated on the date of grant, using a Black-Scholes option pricing model with the following assumptions: 2015 2014 Expected life of options (using the “simplified method”) 5.3 years 4.5 – 5.5years Average risk-free interest rate 1.4 % 1.6%- 1.7 % Average expected volatility of stock 133 % 121%-128 % Expected dividend rate None None Fair value of options granted $ 755,105 $ 210,527 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Inventory Disclosure [Abstract] | |
Composition of Inventory | Inventories, consisting of materials, labor and overhead at December 31 were comprised of the following: 2015 2014 Finished goods $ 2,101,300 $ 1,626,300 Raw materials 2,717,300 1,117,800 Inventory reserve for obsolescence (120,000 ) (54,400 ) $ 4,698,600 $ 2,689,700 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property Plant And Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Property, plant and equipment at December 31 were comprised of the following: 2015 2014 Production equipment $ 4,726,200 $ 5,039,900 Office furniture and equipment 674,600 778,700 Other 188,200 188,200 5,589,000 6,006,800 Less accumulated depreciation (5,159,000 ) (5,606,000 ) $ 430,000 $ 400,800 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Schedule of Provision for Income Tax | The provision for income tax for the years ended December 31 is as follows: 2015 2014 Current provision (benefit): Federal $ 60,300 $ 33,900 State (8,600 ) 10,000 Total current provision (benefit) 51,700 43,900 Deferred provision (benefit): Federal 741,700 724,700 State 81,200 61,800 Valuation allowance (3,379,100 ) (786,500 ) Total deferred provision (benefit) (2,556,200 ) 0 Provision (benefit): Federal (2,115,700 ) 33,900 State (388,800 ) 10,000 Total provision (benefit) $ (2,504,500 ) $ 43,900 |
Schedule of Income Tax Expense (Benefit) at the Statutory Tax Rate | Income tax expense (benefit) at the statutory tax rate is reconciled to the overall income tax expense (benefit) as follows: 2015 2014 Federal income tax at statutory rates $ 773,700 $ 726,700 State income taxes, net of federal tax effect 69,300 61,900 Change in unrecognized benefit 0 (17,600 ) Permanent differences 54,800 34,800 Other (23,200 ) 24,600 Total 874,600 830,400 Change in valuation allowance (3,379,100 ) (786,500 ) Provision (benefit) for income taxes $ (2,504,500 ) $ 43,900 |
Schedule of Net Deferred Tax Assets and Liabilities | Deferred income taxes are based on estimated future tax effects of differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes given the provision of enacted tax laws. The net deferred tax assets and liabilities as of December 31, 2015 and 2014 are comprised of the following: 2015 2014 Deferred tax assets: Net operating loss carryforwards $ 1,833,100 $ 2,840,800 Tax credit and other carryforwards 413,800 344,800 Trade receivables 205,200 178,000 Inventories 70,600 28,200 Accrued vacation 38,800 35,400 Other 20,800 10,300 Total deferred taxes 2,582,300 3,437,500 Deferred tax liability: Accumulated depreciation for tax purposes (26,100 ) (58,400 ) Total deferred tax liabilities (26,100 ) (58,400 ) Net deferred tax asset, before allowance 2,556,200 3,379,100 Valuation allowance 0 (3,379,100 ) Net deferred tax asset $ 2,556,200 $ 0 |
Schedule of Deferred Tax Assets | 2015 2014 Balance at January 1, $ 0 $ 395,100 Additions based on tax positions related to current year 0 0 Reductions for tax positions of prior years or change in valuation 0 (395,100 ) Balance at December 31, $ 0 $ 0 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Schedule of Options Granted | Stock option activity under the 2005 and 2015 Plans are as follows: Number of Weighted Average Weighted Average Remaining Contractual Aggregate Intrinsic Value 2005 Plan Maximum number of shares under the plan 3,000,000 Outstanding, December 31, 2013 694,520 $ 0.35 3.1 years $ 211,100 Granted in 2014 377,500 0.84 Exercised in 2014 (102,958 ) 0.41 Cancelled/Expired in 2014 (50,093 ) 0.51 Outstanding, December 31, 2014 918,969 $ 0.53 4.4 years $ 374,600 Granted in 2015 0 0.00 Exercised in 2015 (160,956 ) 0.26 Cancelled/Expired in 2015 (81,500 ) 0.24 Outstanding, December 31, 2015 676,513 $ 0.63 4.7 years $ 525,300 Exercisable, December 31, 2015 351,832 $ 0.51 3.3 years $ 317,000 Available for issuance, December 31, 2015 0 2015 Plan Maximum number of shares under the plan 2,000,000 Outstanding, December 31, 2014 0 $ 0.00 Granted in 2015 716,500 1.27 Exercised in 2015 0 0.00 Cancelled/Expired in 2015 0 0.00 Outstanding, December 31, 2015 716,500 $ 1.27 8.4 years $ 102,140 Exercisable, December 31, 2015 93,972 $ 1.26 6.8 years $ 13,994 Available for issuance, December 31, 2015 1,283,500 |
Summary of Additional Information Related to the Options Outstanding | A summary of additional information related to the options outstanding as of December 31, 2015 under the 2005 and 2015 Plans are as follows: 2005 Plan Range of Exercise Prices Number of Options Weighted Average Remaining Contractual Weighted Average Exercise $0.17-$0.39 126,875 1.3 years 1.2 years $ 0.23 $0.40-$0.62 152,138 2.4 years $ 0.45 $0.63-$0.86 397,500 6.7 years $ 0.83 Total 676,513 4.7 years $ 0.63 2015 Plan Range of Exercise Prices $1.25 616,500 8.9 years $ 1.25 $1.38 100,000 4.7 years $ 1.38 Total 716,500 8.3 years $ 1.27 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |
Reconciliation of the Weighted Average Number of Common Shares Outstanding | A reconciliation of the weighted average number of common shares outstanding for the years ended December 31 is as follows: 2015 2014 Common shares outstanding, beginning of the year 11,549,789 11,446,800 Weighted average common shares issued 84,726 61,144 Weighted average number of common shares outstanding 11,634,515 11,507,944 Dilutive effect of common share equivalents 281,523 273,895 Diluted weighted average number of common shares outstanding 11,916,038 11,781,839 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
Information on Segments | The following provides information on our segments as of and for the years ended December 31: 2015 2014 Household Skin and Hair Household Skin and Hair Net sales to external customers $ 6,359,100 $ 22,829,300 $ 5,890,200 $ 18,453,400 Cost of Sales 2,988,500 13,820,100 3,119,600 10,572,100 Advertising expenses 1,004,300 528,300 678,100 134,600 Selling expenses 1,650,000 3,661,200 1,509,500 3,339,400 General and administrative expenses 1,435,400 1,822,800 1,278,500 1,597,500 Total operating expenses 7,078,200 19,832,400 6,585,700 15,643,600 (Loss) income from operations (719,100 ) 2,996,900 (695,500 ) 2,809,800 Other income 5,000 21,900 36,100 16,100 Interest expense (6,400 ) (22,900 ) (6,800 ) (22,400) (Loss) income before income taxes $ (720,500 ) 2,995,900 $ (666,200 ) $ 2,803,500 Identifiable assets $ 7,585,800 5,073,200 $ 4,119,400 $ 3,471,800 |
Reconciliation of Segment Information | The following is a reconciliation of segment information to consolidated information: 2015 2014 Net sales to external customers $ 29,188,400 $ 24,343,600 Consolidated income before income taxes $ 2,275,400 $ 2,137,300 Identifiable assets $ 12,659,000 $ 7,591,200 Corporate assets 3,483,800 2,837,700 Consolidated total assets $ 16,142,800 $ 10,428,900 |
Organization and Summary of S25
Organization and Summary of Significant Accounting Policies (Details Textual) | Mar. 16, 2011 | Mar. 31, 2011 | Dec. 31, 2015USD ($)Segment | Dec. 31, 2014USD ($) |
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||||
Number of business segment | Segment | 2 | |||
Expiration date of financing agreement | Jan. 1, 2017 | |||
Renewal period of agreement | 12 months | |||
Additional renewal Period of agreement | 12 months | |||
Cancelation period of agreement | at least 60 days | |||
Account receivables | $ 1,500,000 | |||
Aggregate amount of inventory | $ 500,000 | |||
Percentage of administrative fees on inventory portion | 1.00% | |||
Percentage of administrative fees on receivable portion, Less Than or equal to $1000000 | 0.85% | |||
Percentage of administrative fees on receivable portion, More Than $1000000 | 0.75% | |||
Computation of administrative fees on receivable portion, Specified Amount for different rates | $ 1,000,000 | |||
Credit line available for future factoring of accounts receivables and borrowings secured by inventory | 1,500,000 | $ 1,500,000 | ||
Minimum | ||||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||||
Period to maturity of receivables sold | 102 days | |||
Maximum | ||||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||||
Period to maturity of receivables sold | 105 days | |||
Wells Fargo Bank | ||||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||||
Sale of account receivables | $ 4,672,888 | 4,516,100 | ||
Period of LIBOR rate used | 105 days | |||
Proceeds from sale of account receivables | $ 4,652,359 | 4,497,700 | ||
Summit | ||||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||||
Percentage of advance rate of loan after March 1, 2011 | 85.00% | |||
Sale of account receivables | $ 0 | $ 0 | ||
Prime Rate | ||||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||||
Interest rate of agreement amount | 3.50% | |||
Prime Rate | Accounts Receivables | ||||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||||
Interest rate of agreement amount | 1.00% | |||
Prime Rate | Inventories | ||||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||||
Interest rate of agreement amount | 2.50% | |||
LIBOR | Wells Fargo Bank | ||||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||||
Interest rate of agreement amount | 1.15% | 0.69% |
Organization and Summary of S26
Organization and Summary of Significant Accounting Policies (Details Textual 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Organization and summary of significant accounting policies (Textual) [Abstract] | ||
Significant financial instruments with off-balance sheet risk | $ 0 | |
Long-term debt | 0 | $ 0 |
Interest and penalties recognized in statement of operations | 0 | |
Accrued interest or penalties related to uncertain tax positions | 0 | 0 |
Reserve for reduction in account receivables | 1,179,700 | 795,300 |
Trade promotions to customers | $ 2,517,500 | $ 2,056,300 |
Minimum | ||
Organization and summary of significant accounting policies (Textual) [Abstract] | ||
Useful life of property, plant and equipment | 3 years | |
Maximum | ||
Organization and summary of significant accounting policies (Textual) [Abstract] | ||
Useful life of property, plant and equipment | 20 years | |
Production Equipment | Minimum | ||
Organization and summary of significant accounting policies (Textual) [Abstract] | ||
Useful life of property, plant and equipment | 15 years | |
Production Equipment | Maximum | ||
Organization and summary of significant accounting policies (Textual) [Abstract] | ||
Useful life of property, plant and equipment | 20 years | |
Production Support Equipment | Minimum | ||
Organization and summary of significant accounting policies (Textual) [Abstract] | ||
Useful life of property, plant and equipment | 3 years | |
Production Support Equipment | Maximum | ||
Organization and summary of significant accounting policies (Textual) [Abstract] | ||
Useful life of property, plant and equipment | 10 years | |
Office Furniture and Equipment | Minimum | ||
Organization and summary of significant accounting policies (Textual) [Abstract] | ||
Useful life of property, plant and equipment | 10 years | |
Office Furniture and Equipment | Maximum | ||
Organization and summary of significant accounting policies (Textual) [Abstract] | ||
Useful life of property, plant and equipment | 20 years | |
Office Equipment | Minimum | ||
Organization and summary of significant accounting policies (Textual) [Abstract] | ||
Useful life of property, plant and equipment | 3 years | |
Office Equipment | Maximum | ||
Organization and summary of significant accounting policies (Textual) [Abstract] | ||
Useful life of property, plant and equipment | 5 years | |
Carpet, Drapes and Company Vehicles | Minimum | ||
Organization and summary of significant accounting policies (Textual) [Abstract] | ||
Useful life of property, plant and equipment | 5 years | |
Carpet, Drapes and Company Vehicles | Maximum | ||
Organization and summary of significant accounting policies (Textual) [Abstract] | ||
Useful life of property, plant and equipment | 10 years |
Organization and Summary of S27
Organization and Summary of Significant Accounting Policies (Details Textual 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Organization and Summary of Significant Accounting Policies (Additional Textual) [Abstract] | ||
Price of option with maximum maturity | 110.00% | 120.00% |
Stock-based compensation | $ 162,200 | $ 66,700 |
Unrecognized compensation costs related to non-vested stock options | 835,500 | |
Tax benefit from recording non-cash expense relates to options granted to employees | 0 | |
Shipping and handling costs | $ 1,462,600 | 1,517,500 |
Minimum | ||
Organization and Summary of Significant Accounting Policies (Additional Textual) [Abstract] | ||
Period over which compensation costs related to non-vested stock options recognize | 12 months | |
Maximum | ||
Organization and Summary of Significant Accounting Policies (Additional Textual) [Abstract] | ||
Period over which compensation costs related to non-vested stock options recognize | 60 months | |
General and Administrative Expense | ||
Organization and Summary of Significant Accounting Policies (Additional Textual) [Abstract] | ||
Stock-based compensation | $ 162,200 | $ 66,700 |
40 of Management and Administrative Personnel | ||
Organization and Summary of Significant Accounting Policies (Additional Textual) [Abstract] | ||
Number of Shares Granted | 326,500 | |
Weighted Average Exercise Price Granted | $ 1.25 | |
Options vesting period | 48 months | |
Expiry of options | 10 years | |
Executive Officer | ||
Organization and Summary of Significant Accounting Policies (Additional Textual) [Abstract] | ||
Number of Shares Granted | 200,000 | 250,000 |
Weighted Average Exercise Price Granted | $ 1.25 | $ 0.864 |
Options vesting period | 60 months | 60 months |
Expiry of options | 10 years | 10 years |
Three Non-Employee Board Member | ||
Organization and Summary of Significant Accounting Policies (Additional Textual) [Abstract] | ||
Number of Shares Granted | 90,000 | |
Weighted Average Exercise Price Granted | $ 1.25 | |
Expiry of options | 5 years | |
Vesting description of options | 90,000 shares of our common stock to our three non-employee board members at a price of $1.25 per share, half of which vested on the date of grant and the other half of which will vest on the first anniversary of the date of grant, or upon a change in control under certain circumstances, and which expire after five years. | |
Executive Officer One | ||
Organization and Summary of Significant Accounting Policies (Additional Textual) [Abstract] | ||
Number of Shares Granted | 100,000 | |
Weighted Average Exercise Price Granted | $ 1.375 | |
Options vesting period | 48 months | |
Expiry of options | 5 years | |
Vice President | ||
Organization and Summary of Significant Accounting Policies (Additional Textual) [Abstract] | ||
Number of Shares Granted | 35,000 | |
Weighted Average Exercise Price Granted | $ 0.78 | |
Options vesting period | 48 months | |
Expiry of options | 5 years | |
Administrative Employee | ||
Organization and Summary of Significant Accounting Policies (Additional Textual) [Abstract] | ||
Number of Shares Granted | 2,500 | |
Weighted Average Exercise Price Granted | $ 0.78 | |
Options vesting period | 48 months | |
Expiry of options | 5 years | |
Two Non-Employee Board Members | ||
Organization and Summary of Significant Accounting Policies (Additional Textual) [Abstract] | ||
Number of Shares Granted | 60,000 | |
Weighted Average Exercise Price Granted | $ 0.792 | |
Options vesting period | 48 months | |
Expiry of options | 5 years | |
One Non-Employee Board Member | ||
Organization and Summary of Significant Accounting Policies (Additional Textual) [Abstract] | ||
Number of Shares Granted | 30,000 | |
Weighted Average Exercise Price Granted | $ 0.792 | |
Expiry of options | 5 years |
Organization and Summary of S28
Organization and Summary of Significant Accounting Policies - Assumptions Used in Determining Fair Value of Options Granted (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Expected life of options (using the “simplified method”) | 5 years 3 months 18 days | |
Average risk-free interest rate | 1.40% | |
Average risk-free interest rate, Minimum | 1.60% | |
Average risk-free interest rate, Maximum | 1.70% | |
Average expected volatility of stock | 133.00% | |
Average expected volatility of stock, Minimum | 121.00% | |
Average expected volatility of stock, Maximum | 128.00% | |
Expected dividend rate | 0.00% | 0.00% |
Fair value of options granted | $ 755,105 | $ 210,527 |
Minimum | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Expected life of options (using the “simplified method”) | 4 years 6 months | |
Maximum | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Expected life of options (using the “simplified method”) | 5 years 6 months |
Inventories (Details)
Inventories (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 2,101,300 | $ 1,626,300 |
Raw materials | 2,717,300 | 1,117,800 |
Inventory reserve for obsolescence | (120,000) | (54,400) |
Inventories, net | $ 4,698,600 | $ 2,689,700 |
Property, Plant and Equipment30
Property, Plant and Equipment (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Schedule of Property, Plant and Equipment | ||
Property, Plant and Equipment, gross | $ 5,589,000 | $ 6,006,800 |
Less accumulated depreciation | (5,159,000) | (5,606,000) |
Property, Plant and Equipment, Total | 430,000 | 400,800 |
Production Equipment | ||
Schedule of Property, Plant and Equipment | ||
Property, Plant and Equipment, gross | 4,726,200 | 5,039,900 |
Office Furniture and Equipment | ||
Schedule of Property, Plant and Equipment | ||
Property, Plant and Equipment, gross | 674,600 | 778,700 |
Other | ||
Schedule of Property, Plant and Equipment | ||
Property, Plant and Equipment, gross | $ 188,200 | $ 188,200 |
Property, Plant and Equipment31
Property, Plant and Equipment (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Property Plant And Equipment [Abstract] | ||
Depreciation and amortization | $ 160,800 | $ 173,600 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Current provision (benefit): | ||
Federal | $ 60,300 | $ 33,900 |
State | (8,600) | 10,000 |
Total current provision (benefit) | 51,700 | 43,900 |
Deferred provision (benefit): | ||
Federal | 741,700 | 724,700 |
State | 81,200 | 61,800 |
Change in valuation allowance | (3,379,100) | (786,500) |
Total deferred provision (benefit) | (2,556,200) | 0 |
Provision (benefit): | ||
Federal | (2,115,700) | 33,900 |
State | (388,800) | 10,000 |
Total provision (benefit) | $ (2,504,500) | $ 43,900 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Schedule of income tax expense (benefit) at the statutory tax rate | ||
Federal income tax at statutory rates | $ 773,700 | $ 726,700 |
State income taxes, net of federal tax effect | 69,300 | 61,900 |
Change in unrecognized benefit | 0 | (17,600) |
Permanent differences | 54,800 | 34,800 |
Other | (23,200) | 24,600 |
Total | 874,600 | 830,400 |
Change in valuation allowance | (3,379,100) | (786,500) |
Total provision (benefit) | $ (2,504,500) | $ 43,900 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 1,833,100 | $ 2,840,800 |
Tax credit and other carryforwards | 413,800 | 344,800 |
Trade receivables | 205,200 | 178,000 |
Inventories | 70,600 | 28,200 |
Accrued vacation | 38,800 | 35,400 |
Other | 20,800 | 10,300 |
Total deferred taxes | 2,582,300 | 3,437,500 |
Deferred tax liability: | ||
Accumulated depreciation for tax purposes | (26,100) | (58,400) |
Total deferred tax liabilities | (26,100) | (58,400) |
Net deferred tax asset, before allowance | 2,556,200 | 3,379,100 |
Valuation allowance | 0 | (3,379,100) |
Net deferred tax asset | $ 2,556,200 | $ 0 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Taxes (Textual) [Abstract] | |||
Operating loss carryforwards for financial reporting purposes | $ 4,348,400 | ||
Tax deduction for compensation expense | 29,500 | ||
Deferred tax assets, tax credit carryforwards, alternative minimum tax | 127,000 | ||
Income Taxes (Additional Textual) [Abstract] | |||
Uncertain tax benefits | 0 | $ 0 | $ 395,100 |
Accrued interest or penalties related to uncertain tax positions | 0 | $ 0 | |
State and Local Jurisdiction | |||
Income Taxes (Textual) [Abstract] | |||
Operating loss carryforwards | $ 11,640,000 | ||
Federal new operating loss carryforwards expiration date | Dec. 31, 2032 | ||
Income Taxes (Additional Textual) [Abstract] | |||
Income tax year open to examination | 2,011 | ||
Domestic Tax Authority | |||
Income Taxes (Additional Textual) [Abstract] | |||
Income tax year open to examination | 2,012 | ||
Internal Revenue Service (IRS) | |||
Income Taxes (Textual) [Abstract] | |||
Operating loss carryforwards | $ 4,377,900 | ||
Federal new operating loss carryforwards expiration date | Dec. 31, 2032 | ||
Research and Development Expense | Internal Revenue Service (IRS) | |||
Income Taxes (Textual) [Abstract] | |||
Tax credit carryforward, amount | $ 286,700 | ||
Expiration date for tax credit carryforwards | Dec. 31, 2035 |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Schedule of deferred tax assets | ||
Balance at January 1, | $ 0 | $ 395,100 |
Additions based on tax positions related to current year | 0 | 0 |
Reductions for tax positions of prior years or change in valuation | 0 | (395,100) |
Balance at December 31, | $ 0 | $ 0 |
Shareholders' Equity (Details T
Shareholders' Equity (Details Textual) - USD ($) | 12 Months Ended | |||||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2011 | May. 31, 2011 | Dec. 31, 2005 | |
Shareholders' Equity (Textual) [Abstract] | ||||||
Number of shares issuable under 2005 Plan | 3,000,000 | |||||
Percentage of current market price for grant value calculation | 110.00% | 120.00% | ||||
Shareholders' Equity (Additional Textual) [Abstract] | ||||||
Options grant value calculation description | Options granted after May 2011, pursuant to the plan amendment in May 2011, are required to be granted at not less than the higher of (1) 120% of current market price on the date of grant or (2) the average of market price over the prior 30 trading days | |||||
Employer discretionary contribution to defined plan | $ 0 | $ 0 | ||||
Shares Held in Employee Stock Option Plan, Allocated | 670,675 | 830,682 | ||||
2005 Plan | ||||||
Shareholders' Equity (Textual) [Abstract] | ||||||
Number of shares issuable under 2005 Plan | 3,000,000 | 1,500,000 | ||||
Percentage of current market price for grant value calculation | 120.00% | |||||
Number of trading days for calculation of average market price | 30 days | |||||
Shareholders' Equity (Additional Textual) [Abstract] | ||||||
Number of Shares Granted | 0 | 377,500 | ||||
Stock option plan expiry date | Mar. 31, 2015 | |||||
2005 Plan | Minimum | ||||||
Shareholders' Equity (Textual) [Abstract] | ||||||
Stock exercisable period | 5 years | |||||
Options vesting period | 48 months | |||||
2005 Plan | Maximum | ||||||
Shareholders' Equity (Textual) [Abstract] | ||||||
Stock exercisable period | 10 years | |||||
Options vesting period | 60 months | |||||
2005 Plan | Board Members | ||||||
Shareholders' Equity (Additional Textual) [Abstract] | ||||||
Number of Shares Granted | 30,000 | 90,000 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | May. 31, 2011 | Dec. 31, 2005 | |
Schedule of options granted | |||||
Maximum number of shares under the plan | 3,000,000 | ||||
2005 Plan | |||||
Schedule of options granted | |||||
Maximum number of shares under the plan | 3,000,000 | 1,500,000 | |||
Outstanding Number of Options Beginning Balance | 918,969 | 694,520 | |||
Number of Options Granted | 0 | 377,500 | |||
Number of Options Exercised | (160,956) | (102,958) | |||
Number of Options Cancelled/Expired | (81,500) | (50,093) | |||
Outstanding Number of Options Ending Balance | 676,513 | 918,969 | 694,520 | ||
Exercisable Number of Options Ending Balance | 351,832 | ||||
Available for Issuance Number of Options Ending Balance | 0 | ||||
Weighted Average Exercise Price | |||||
Outstanding Weighted Average Exercise Price Beginning Balance | $ 0.53 | $ 0.35 | |||
Weighted Average Exercise Price Granted | 0 | 0.84 | |||
Weighted Average Exercise Price Exercised | 0.26 | 0.41 | |||
Weighted Average Exercise Price Cancelled/Expired | 0.24 | 0.51 | |||
Outstanding Weighted Average Exercise Price Ending Balance | 0.63 | $ 0.53 | $ 0.35 | ||
Weighted Average Exercise Price Exercisable Ending Balance | $ 0.51 | ||||
Weighted Average Remaining Contractual Life | |||||
Weighted Average Remaining Contractual Life Options Outstanding | 4 years 8 months 12 days | 4 years 4 months 24 days | 3 years 1 month 6 days | ||
Weighted Average Remaining Contractual Life Options Exercisable | 3 years 3 months 18 days | ||||
Aggregate Intrinsic Value | |||||
Outstanding Aggregate Intrinsic Value | $ 525,300 | $ 374,600 | $ 211,100 | ||
Aggregate Intrinsic Value Exercisable | $ 317,000 | ||||
2015 Plan | |||||
Schedule of options granted | |||||
Maximum number of shares under the plan | 2,000,000 | ||||
Outstanding Number of Options Beginning Balance | 0 | ||||
Number of Options Granted | 716,500 | ||||
Number of Options Exercised | 0 | ||||
Number of Options Cancelled/Expired | 0 | ||||
Outstanding Number of Options Ending Balance | 716,500 | 0 | |||
Exercisable Number of Options Ending Balance | 93,972 | ||||
Available for Issuance Number of Options Ending Balance | 1,283,500 | ||||
Weighted Average Exercise Price | |||||
Outstanding Weighted Average Exercise Price Beginning Balance | $ 0 | ||||
Weighted Average Exercise Price Granted | 1.27 | ||||
Weighted Average Exercise Price Exercised | 0 | ||||
Weighted Average Exercise Price Cancelled/Expired | 0 | ||||
Outstanding Weighted Average Exercise Price Ending Balance | 1.27 | $ 0 | |||
Weighted Average Exercise Price Exercisable Ending Balance | $ 1.26 | ||||
Weighted Average Remaining Contractual Life | |||||
Weighted Average Remaining Contractual Life Options Outstanding | 8 years 4 months 24 days | ||||
Weighted Average Remaining Contractual Life Options Exercisable | 6 years 9 months 18 days | ||||
Aggregate Intrinsic Value | |||||
Outstanding Aggregate Intrinsic Value | $ 102,140 | ||||
Aggregate Intrinsic Value Exercisable | $ 13,994 |
Shareholders' Equity (Details1)
Shareholders' Equity (Details1) | 12 Months Ended |
Dec. 31, 2015$ / sharesshares | |
2005 Plan | |
Summary of additional information related to the options outstanding | |
Exercisable Weighted Average Number of Option Outstanding | shares | 676,513 |
Average Option Price Per share Exercised | 4 years 8 months 12 days |
Options Outstanding and Exercisable Weighted Average Exercise Price | $ 0.63 |
2005 Plan | Range One | |
Summary of additional information related to the options outstanding | |
Upper range of Exercise prices | 0.39 |
Lower range of Exercise prices | $ 0.17 |
Exercisable Weighted Average Number of Option Outstanding | shares | 126,875 |
Average Option Price Per share Exercised | 1 year 3 months 18 days |
Options Outstanding and Exercisable Weighted Average Exercise Price | $ 0.23 |
2005 Plan | Range Two | |
Summary of additional information related to the options outstanding | |
Upper range of Exercise prices | 0.62 |
Lower range of Exercise prices | $ 0.40 |
Exercisable Weighted Average Number of Option Outstanding | shares | 152,138 |
Average Option Price Per share Exercised | 2 years 4 months 24 days |
Options Outstanding and Exercisable Weighted Average Exercise Price | $ 0.45 |
2005 Plan | Range Three | |
Summary of additional information related to the options outstanding | |
Upper range of Exercise prices | 0.86 |
Lower range of Exercise prices | $ 0.63 |
Exercisable Weighted Average Number of Option Outstanding | shares | 397,500 |
Average Option Price Per share Exercised | 6 years 8 months 12 days |
Options Outstanding and Exercisable Weighted Average Exercise Price | $ 0.83 |
2015 Plan | |
Summary of additional information related to the options outstanding | |
Exercisable Weighted Average Number of Option Outstanding | shares | 716,500 |
Average Option Price Per share Exercised | 8 years 3 months 18 days |
Options Outstanding and Exercisable Weighted Average Exercise Price | $ 1.27 |
2015 Plan | Exercise Price One | |
Summary of additional information related to the options outstanding | |
Exercise price | $ 1.25 |
Exercisable Weighted Average Number of Option Outstanding | shares | 616,500 |
Average Option Price Per share Exercised | 8 years 10 months 24 days |
Options Outstanding and Exercisable Weighted Average Exercise Price | $ 1.25 |
2015 Plan | Exercise Price Two | |
Summary of additional information related to the options outstanding | |
Exercise price | $ 1.38 |
Exercisable Weighted Average Number of Option Outstanding | shares | 100,000 |
Average Option Price Per share Exercised | 4 years 8 months 12 days |
Options Outstanding and Exercisable Weighted Average Exercise Price | $ 1.38 |
Earnings Per Share (Details Tex
Earnings Per Share (Details Textual) - shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Earnings Per Share Additional Textual [Abstract] | ||
Preferred stock issuable | 20,000,000 | |
Preferred stock issued | 0 | |
Preferred stock outstanding | 0 | |
Stock Options | ||
Earnings Per Share Textual [Abstract] | ||
Anti-dilutive securities comprised of outstanding stock options | 1,064,000 | 427,500 |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Earnings Per Share [Abstract] | ||
Beginning Balance, Shares | 11,549,789 | 11,446,800 |
Weighted average common shares issued | 84,726 | 61,144 |
Weighted average number of common shares outstanding | 11,634,515 | 11,507,944 |
Dilutive effect of common share equivalents | 281,523 | 273,895 |
Diluted weighted average number of common shares outstanding | 11,916,038 | 11,781,839 |
Segment Information (Details Te
Segment Information (Details Textual) | 12 Months Ended | |
Dec. 31, 2015USD ($)Segment | Dec. 31, 2014USD ($) | |
Segment Reporting Information [Line Items] | ||
Number of business segment | Segment | 2 | |
Wal-Mart | ||
Segment Reporting Information [Line Items] | ||
Entity wide revenue, net sales from major customer | $ 4,494,800 | $ 4,409,600 |
Wal-Mart | Customer Concentration Risk | Accounts Receivables | ||
Segment Reporting Information [Line Items] | ||
Entity wide outstanding trade receivable percentage from major customer | 9.80% | 14.00% |
Ulta | ||
Segment Reporting Information [Line Items] | ||
Entity wide revenue, net sales from major customer | $ 6,956,500 | $ 4,741,400 |
Ulta | Customer Concentration Risk | Accounts Receivables | ||
Segment Reporting Information [Line Items] | ||
Entity wide outstanding trade receivable percentage from major customer | 1.80% | 19.50% |
TJ Maxx | ||
Segment Reporting Information [Line Items] | ||
Entity wide revenue, net sales from major customer | $ 4,769,000 | $ 930,600 |
TJ Maxx | Customer Concentration Risk | Accounts Receivables | ||
Segment Reporting Information [Line Items] | ||
Entity wide outstanding trade receivable percentage from major customer | 30.50% | 19.00% |
Marshals | Customer Concentration Risk | Accounts Receivables | ||
Segment Reporting Information [Line Items] | ||
Entity wide outstanding trade receivable percentage from major customer | 39.80% | 10.90% |
Segment Information (Details)
Segment Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Segment Reporting Information [Line Items] | ||
Net sales to external customers | $ 29,188,400 | $ 24,343,600 |
Cost of Sales | 16,808,600 | 13,691,700 |
Advertising expenses | 1,532,600 | 812,700 |
Selling expenses | 5,311,200 | 4,848,900 |
General and administrative expenses | 3,258,200 | 2,876,000 |
Total operating costs and expenses | 26,910,600 | 22,229,300 |
Income from operations | 2,277,800 | 2,114,300 |
Other income | 26,900 | 52,200 |
Interest expense | (29,300) | (29,200) |
Income before income taxes | 2,275,400 | 2,137,300 |
Total assets | 16,142,800 | 10,428,900 |
Household Products | ||
Segment Reporting Information [Line Items] | ||
Net sales to external customers | 6,359,100 | 5,890,200 |
Cost of Sales | 2,988,500 | 3,119,600 |
Advertising expenses | 1,004,300 | 678,100 |
Selling expenses | 1,650,000 | 1,509,500 |
General and administrative expenses | 1,435,400 | 1,278,500 |
Total operating costs and expenses | 7,078,200 | 6,585,700 |
Income from operations | (719,100) | (695,500) |
Other income | 5,000 | 36,100 |
Interest expense | (6,400) | (6,800) |
Income before income taxes | (720,500) | (666,200) |
Total assets | 7,585,800 | 4,119,400 |
Skin And Hair Care Products | ||
Segment Reporting Information [Line Items] | ||
Net sales to external customers | 22,829,300 | 18,453,400 |
Cost of Sales | 13,820,100 | 10,572,100 |
Advertising expenses | 528,300 | 134,600 |
Selling expenses | 3,661,200 | 3,339,400 |
General and administrative expenses | 1,822,800 | 1,597,500 |
Total operating costs and expenses | 19,832,400 | 15,643,600 |
Income from operations | 2,996,900 | 2,809,800 |
Other income | 21,900 | 16,100 |
Interest expense | (22,900) | (22,400) |
Income before income taxes | 2,995,900 | 2,803,500 |
Total assets | $ 5,073,200 | $ 3,471,800 |
Segment Information (Details 1)
Segment Information (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of segment information | ||
Net sales to external customers | $ 29,188,400 | $ 24,343,600 |
Consolidated income before income taxes | 2,275,400 | 2,137,300 |
Total assets | 16,142,800 | 10,428,900 |
Operating Segments | ||
Reconciliation of segment information | ||
Total assets | 12,659,000 | 7,591,200 |
Corporate, Non-Segment | ||
Reconciliation of segment information | ||
Total assets | $ 3,483,800 | $ 2,837,700 |
Retirement Plans (Details)
Retirement Plans (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Retirement Plans (Textual) [Abstract] | ||
Minimum Completed years of service for eligible in plan | 4 months | |
Minimum age of employee for becoming eligible in plan | 18 years | |
Maximum limit of Employee Compensation Defer percentage | 75.00% | |
Percentage of discretionary contributions | 6.00% | |
Maximum Annual earnings limit for employer contribution | $ 50,000 | |
Vesting period of service to employee for profit sharing contribution | 5 years | |
Amount of matching contribution | $ 3,700 | $ 4,300 |
Discretionary profit sharing contribution | $ 0 | $ 0 |
Commitments and Contingencies (
Commitments and Contingencies (Details Textual) | Feb. 01, 2013ft²Extension$ / ft² | Dec. 31, 2015USD ($)Litigation | Dec. 31, 2014USD ($) | Mar. 25, 2016ft²$ / ft² |
Commitments and Contingencies (Additional Textual) [Abstract] | ||||
Term of operating lease, additional rent per square foot criteria for uncontrolled operating expenses increase minimum percentage | 5.00% | |||
Minimum annual rental payments under operating lease for next year | $ 34,900 | |||
Minimum annual rental payments under operating lease for 2nd year | 14,500 | |||
Annual rental expense under operating lease agreements | 47,200 | $ 50,300 | ||
Minimum annual rental payments under noncancellable operating leases afterwards | $ 0 | |||
Number of pending litigation | Litigation | 0 | |||
Office Lease | ||||
Commitments and Contingencies (Additional Textual) [Abstract] | ||||
Area of lease | ft² | 16,078 | |||
Operating leases term of contract | 3 years | |||
Operating lease term, number of additional extensions allowed | Extension | 2 | |||
Operating lease extension period | 3 years | |||
Operating lease initial rent per square foot per annum | $ / ft² | 13 | |||
Operating lease incremental rent percentage per annum | 3.00% | |||
Annual rent expenses under operation lease | $ 221,200 | 214,800 | ||
Minimum annual rental payments under operating lease for next year | 227,800 | |||
Minimum annual rental payments under operating lease for 2nd year | 234,700 | |||
Minimum annual rental payments under operating lease for 3rd year | 241,700 | |||
Minimum annual rental payments under operating lease for 4th year | 20,200 | |||
Warehouse Lease | ||||
Commitments and Contingencies (Additional Textual) [Abstract] | ||||
Area of lease | ft² | 113,620 | |||
Operating leases term of contract | 3 years | |||
Operating lease term, number of additional extensions allowed | Extension | 2 | |||
Operating lease extension period | 3 years | |||
Operating lease initial rent per square foot per annum | $ / ft² | 3.25 | |||
Operating lease incremental rent percentage per annum | 3.00% | |||
Additional rent per square foot related to operating expenses | $ / ft² | 1.25 | |||
Annual rent expenses under operation lease | 390,800 | $ 379,400 | ||
Minimum annual rental payments under operating lease for next year | 598,900 | |||
Minimum annual rental payments under operating lease for 2nd year | 693,600 | |||
Minimum annual rental payments under operating lease for 3rd year | 719,800 | |||
Minimum annual rental payments under operating lease for 4th year | $ 60,200 | |||
Warehouse Lease | Subsequent Event | ||||
Commitments and Contingencies (Additional Textual) [Abstract] | ||||
Area of lease | ft² | 53,440 | |||
Operating lease initial rent per square foot per annum | $ / ft² | 4.90 | |||
Percentage of operating lease annual increase from second year | 7.00% | |||
Percentage of operating lease annual increase in last two years | 3.00% |