Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Mar. 27, 2015 | Jun. 30, 2014 | |
Document and Entity Information: | |||
Entity Registrant Name | N-Viro International Corporation | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | TRUE | ||
Amendment Description | re-transmit XBRL Data Files | ||
Entity Central Index Key | 904896 | ||
Current Fiscal Year End Date | -19 | ||
Entity Common Stock, Shares Outstanding | 8,550,411 | ||
Entity Public Float | $9,036,000 | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | No | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
CURRENT ASSETS | ||
Cash and Cash Equivalents - Unrestricted | $81,854 | $14,344 |
Cash and Cash Equivalents - Restricted | 65,529 | 66,592 |
Accounts Receivable, net | 140,070 | 299,992 |
Other Receivable, net | 51,912 | 10,918 |
Prepaid expenses and other assets | 79,719 | 57,571 |
Deferred costs - stock and warrants issued for services | 597,789 | 258,613 |
Total current assets | 1,016,873 | 708,030 |
Property and equipment, net | 998,852 | 873,542 |
Deferred costs - stock and warrants issued for services, long-term | 597,788 | 125,251 |
Intangible and other assets, net | 27,319 | 68,294 |
TOTAL ASSETS | 2,043,044 | 1,775,117 |
CURRENT LIABILITIES | ||
Accounts Payable | 716,680 | 850,702 |
Line of Credit | 218,000 | |
Current maturities of long-term debt | 63,186 | 92,249 |
Capital Lease Obligations, Current | 86,652 | |
Notes Payable, Related Parties, Current | 244,480 | 228,000 |
Convertible debentures, net of discount, in default | 455,000 | 455,000 |
Pension plan withdrawal liability, current | 68,917 | 404,672 |
Accrued liabilities | 320,207 | 130,608 |
Total current liabilities | 1,955,122 | 2,379,231 |
Long-term debt, less currrent maturities | 6,182 | 32,818 |
Capital lease liability - long-term, less current maturities, in default | 319,278 | 0 |
Pension plan withdrawal liability, long-term, in default | 320,472 | 0 |
TOTAL LIABILITIES | 2,601,054 | 2,412,049 |
STOCKHOLDERS' DEFICIT | ||
Common stock, value | 81,668 | 70,475 |
Additional paid in capital | 32,103,596 | 29,864,113 |
Accumulated Deficit | -32,565,813 | -29,886,630 |
Total Stockholders' equity before treasury stock | -380,549 | 47,958 |
Treasury stock, at cost | 177,461 | 684,890 |
Total Stockholders' Deficit | -558,010 | -636,932 |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $2,043,044 | $1,775,117 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS - Parenthetical (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Consolidated Balance Sheets | ||
Preferred Stock, Par Value | $0.01 | $0.01 |
Preferred Stock, Shares Authorized | 2,000,000 | 2,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Common Stock, Par Value | $0.01 | $0.01 |
Common Stock, Shares Authorized | 35,000,000 | 35,000,000 |
Common Stock, Shares Issued | 8,166,789 | 7,047,521 |
Treasury Stock, at cost - Shares | 32,000 | 123,500 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Consolidated Statements of Operations | ||
REVENUES | $1,330,583 | $3,379,602 |
COST OF REVENUE | 1,566,018 | 2,990,995 |
GROSS PROFIT (LOSS) | -235,435 | 388,607 |
OPERATING EXPENSES | ||
Selling, General and Administrative | 1,474,082 | 2,073,710 |
Impairment of intangible assets | 42,653 | |
Gain on disposal of assets | -141,197 | -28,599 |
Total Operating Expenses | 1,375,538 | 2,045,111 |
Operating Loss | -1,610,973 | -1,656,504 |
OTHER INCOME (EXPENSE) | ||
Gain on extinguishment of liabilities | 15,478 | 115,202 |
Interest income | 190 | 894 |
Amortization of discount on convertible debentures | -8,184 | |
Loss from Equity Method Investments | -10,000 | |
Interest expense | -155,059 | -98,385 |
TOTAL OTHER INCOME | -149,391 | 9,527 |
LOSS BEFORE INCOME TAXES | -1,760,364 | -1,646,977 |
NET LOSS | ($1,760,364) | ($1,646,977) |
Basic and diluted loss per share | ($0.24) | ($0.24) |
Weighted average common shares outstanding - basic and diluted | 7,318,480 | 6,840,060 |
CONSOLIDATED_STATEMENTS_OF_STO
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (USD $) | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Total |
Stockholders' Equity (Deficit) at Dec. 31, 2012 | $66,641 | $28,630,416 | ($28,061,453) | ($684,890) | ($49,286) |
Shares, Outstanding at Dec. 31, 2012 | 6,664,087 | ||||
Issuance of common stock, Value | 248 | 24,942 | 25,190 | ||
Issuance of common stock, Shares | 24,760 | ||||
Share-based compensation expense, Value | 2,301 | 875,502 | 877,803 | ||
Share-based compensatione expense, Shares | 230,135 | ||||
Exercise of stock warrants, Value | 1,285 | 122,653 | 123,938 | ||
Exercise of stock warrants, Shares | 128,539 | ||||
Deemed dividend on extension of stock warrants | 178,200 | -178,200 | |||
Warrants issued on loans | 32,400 | 32,400 | |||
Net Loss | -1,646,977 | -1,646,977 | |||
Stockholders' Equity (Deficit) at Dec. 31, 2013 | 70,475 | 29,864,113 | -29,886,630 | -684,890 | -636,932 |
Shares, Outstanding at Dec. 31, 2013 | 7,047,521 | ||||
Issuance of common stock, Value | 7,439 | 663,368 | 670,807 | ||
Issuance of common stock, Shares | 743,902 | ||||
Share-based compensation expense, Value | 1,254 | 948,798 | 950,052 | ||
Share-based compensatione expense, Shares | 125,357 | ||||
Exercise of stock warrants, Value | 2,500 | 119,677 | 122,177 | ||
Exercise of stock warrants, Shares | 250,009 | ||||
Deemed dividend on extension of stock warrants | 502,890 | -502,890 | |||
Sale of treasury stock | -415,929 | 507,429 | 91,500 | ||
Exercise of stock options, Value | 4,750 | 4,750 | |||
Net Loss | -1,760,364 | -1,760,364 | |||
Stockholders' Equity (Deficit) at Dec. 31, 2014 | $81,668 | $32,103,596 | ($32,565,813) | ($177,461) | ($558,010) |
Shares, Outstanding at Dec. 31, 2014 | 8,166,789 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Cash Flows From Operating Activities | ||
Net Loss | ($1,760,364) | ($1,646,977) |
Adjustments to reconcile net loss to cash used in operating activities | ||
Depreciation and amortization | 187,686 | 193,125 |
Amortization of debenture stock discount | 8,184 | |
Issuance of stock, stock options and warrants for sevices | 696,628 | 1,118,492 |
Loss on equity investment in affiliate | 10,000 | |
Provision for bad debts | 26,260 | |
Intangible assets impairment writedown | 42,653 | |
Gain on the sale of fixed assets | -141,197 | -28,599 |
Changes in Operating Assets and Liabilities | ||
Decrease (increase) in trade receivables | 170,708 | -27,872 |
Decrease (increase) in prepaid expenses and other assets | 22,975 | -32,117 |
Increase (decrease) in accounts payable and accrued liabilities | 121,430 | 302,591 |
Increase (decrease) in pension withdrawal liability | -15,284 | -6,622 |
Net cash used in operating activities | -664,765 | -93,535 |
Cash Flows From Investing Activities | ||
Purchases of property and equipment | -41,375 | -4,628 |
Proceeds from sale of Property and Equipment | 182,446 | 20,000 |
Decrease (increase) from restricted cash | 1,063 | 142,589 |
Decrease (increase) to notes receivable, net | 895 | 1,264 |
Net cash provided by investing activities | 143,029 | 159,225 |
Cash Flows From Financing Activities | ||
Net advances (repayments) on line of credit | -218,000 | -152,000 |
Borrowngs under long-term debt | 128,054 | 67,387 |
Principal payments on long-term obligations | -188,020 | -198,236 |
Borrowings from related parties - short-term | 44,480 | 55,000 |
Net cost from issuance of common stock in private placement | 696,030 | -30 |
Proceeds from stock options exercised | 4,750 | |
Proceeds from stock warrant transactions | 121,952 | 123,908 |
Net cash used in financing activities | 589,246 | -103,971 |
Net (Decrease) Increase in Cash and Cash Equivalents | 67,510 | -38,281 |
Cash and Cash Equivalents - Beginning | 14,344 | 52,625 |
Cash and Cash Equivalents - Ending | 81,854 | 14,344 |
Supplemental disclosure of cash flows information: | ||
Cash paid during the year for interest | $106,546 | $93,246 |
Note_1_Operations_and_Summary_
Note 1. Operations and Summary of Significant Accounting Policies | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Notes | ||||
Note 1. Operations and Summary of Significant Accounting Policies | Note 1. Operations and Summary of Significant Accounting Policies | |||
The following is a summary of certain accounting policies followed in the preparation of these financial statements. The policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements: | ||||
A. Nature of Business – The Company owns and licenses the N-Viro Process, a patented technology to treat and recycle wastewater sludges and other bio-organic wastes, utilizing certain alkaline by-products produced by the cement, lime, electric utilities and other industries. Revenue and the related accounts receivable are due from companies acting as independent agents or licensees, principally municipalities. | ||||
B. Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | ||||
C. Principles of Consolidation – The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. | ||||
D. Going Concern - The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has negative working capital of approximately $938,000 at December 31, 2014, and has incurred recurring losses and negative cash flow from operations for the years ended December 31, 2014 and 2013. Moreover, while the Company expects to arrange for financing with lending institutions, there is no borrowing availability and no line of credit at December 31, 2014. | ||||
The Company has borrowed money from third parties and related parties and expects to be able to generate future cash from the exercise of common stock warrants and new equity issuances, though there can be no assurance given that such issuances or exercises will be realized. The Company has slowed payments to trade vendors, and has renegotiated payment terms with several existing and prior vendors to lengthen the time and/or reduce the amount of cash to repay these trade payables. In 2013 and again in 2014 the Company modified all outstanding warrants to enhance their exercisability and realized approximately $122,000 and $124,000 in exercises in 2014 and 2013, respectively. Beginning in March 2014, the Company’s operations in Volusia County, Florida, which at the time represented substantially all revenue, were voluntarily delayed while the Company employed additional personnel and moved assets to the Company’s new site in Bradley, Florida. The Company considers its relationship with the landlord in Volusia County to be satisfactory overall as they work to finalize the termination of operations on their site. While operations resumed in Bradley in June 2014, this reduction in revenue materially reduced available cash to fund current or prior expenses incurred. These factors raise substantial doubt as to the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. | ||||
E. Cash and Cash Equivalents – The Company has cash on deposit primarily in one financial institution which, at times, may be in excess of FDIC insurance limits. | ||||
For purposes of the statements of cash flows, the Company considers all certificates of deposit with initial maturities of 90 days or less to be cash equivalents. | ||||
Restricted cash consists of: one certificate of deposit and corresponding accrued interest which was held as collateral on behalf of the Florida Department of Agriculture for the Company’s soil distribution license at December 31, 2013; one certificate of deposit and corresponding accrued interest which is held as collateral with a performance bond on behalf of one of the Company’s licensees at both December 31, 2014 and 2013. | ||||
F. Accounts Receivable – The Company extends unsecured credit to customers under normal trade agreements, which require payment within 30 days. Accounts greater than 90 days past due amounted to $99,179 and $104,025 of receivables for the years ended December 31, 2014 and 2013, respectively. The Company's policy is not to accrue and record interest income on past due trade receivables. The Company does bill the customer finance charges on past due accounts and records the interest income when collected. | ||||
Credit is generally granted on an unsecured basis. Periodic credit evaluations of customers are conducted and appropriate allowances are established. | ||||
Management estimates an allowance for doubtful accounts, which was $101,260 at both December 31, 2014 and 2013. The estimate is based upon management’s review of delinquent accounts and an assessment of the Company’s historical evidence of collections. | ||||
G. Property and Equipment – Property, machinery and equipment are stated at cost less accumulated depreciation. Depreciation has been computed primarily by the straight-line method over the estimated useful lives of the assets. Generally, useful lives are five to fifteen years. Leasehold improvements are capitalized and amortized over the lesser of the term of the lease or the estimated useful life of the asset. Depreciation expense amounted to $179,743 and $178,688 in 2014 and 2013, respectively. Management has reviewed property and equipment for impairment when events and circumstances indicate that the assets might be impaired and the carrying values of those assets may not be recoverable. Management believes the carrying amount is not impaired based upon estimated undiscounted future cash flows. | ||||
H. Intangible Assets – Intangible assets are comprised of patent costs, territory rights and customer licenses/contracts amortized on a straight line basis over their estimated useful lives (ranging from 18 months to 17 years). Weighted average amortization periods for patents/related intangibles and territory rights were 14.1 years at December 31, 2013. Amortization expense amounted to $7,941 in 2014 and $17,657 in 2013. | ||||
During the third quarter of 2014, the Company determined the fair value of the intangible assets were less than the amount reflected in the balance sheet, and recorded a non-cash impairment charge of $42,653 to reduce the carrying value of these assets to their estimated fair value of zero. The reason for the impairment of intangible assets in the third quarter of 2014 was primarily due to declines in revenue associated with these assets. The categorization of the framework used to price the assets is considered a level 3, due to the subjective nature of the unobservable inputs used to determine the fair value. | ||||
I. Equity Method Investment – During the year ended December 31, 2014, the Company entered into a subscription agreement with N-Viro Energy Limited representing an approximately 45% interest in the class C voting shares. The Company’s 2014 loss includes a loss of ($10,000) related to the operations of N-Viro Energy Limited. The loss reduced the Company’s investment in N-Viro Limited to zero and, as a result, the Company discontinued applying the equity method. The Company will resume application of the equity method only after its share of future earnings of N-Viro Energy Limited are sufficient to recover its share of unrecognized losses during the period the equity method was suspended. The Company has no obligation to fund future operations of N-Viro Energy Limited. | ||||
J. Revenue Recognition – Facility management revenue and royalty fees are recognized under contracts where the Company or licensees utilize the N Viro Process to treat sludge, either pursuant to a fixed-price contract or based on volumes of sludge processed. Revenue is recognized as services are performed. | ||||
Alkaline admixture sales, alkaline admixture management service revenue and N-Viro SoilTM revenue are recognized upon shipment. | ||||
License and territory fees are generated by selling the right to market or use the N-Viro Process in a specified territory. The Company's policy is to record revenue for the license agreements when all material services relating to the revenue have been substantially performed, conditions related to the contract have been met and no material contingencies exist. Research and development revenue is recognized as work is performed to the contracting entity in accordance with the contract. | ||||
K. Loss Per Common Share – Loss per common share has been computed on the basis of the weighted-average number of common shares outstanding during each period presented. For the years ended December 31, 2014 and 2013, the effects of 2,615,231 and 2,555,981 stock options outstanding, respectively, 2,649,142 and 1,849,585 warrants to purchase common stock, respectively, and, debentures that are convertible to 227,500 shares of common stock are excluded from the diluted per share calculation because they would be antidilutive. | ||||
L. Stock Options – The Company records share-based compensation expense using a fair-value based method of measurement that results in compensation costs for essentially all awards of stock-based compensation. Compensation costs are recognized over the requisite period or periods that services are rendered. | ||||
M. New Accounting Standards – There are no Accounting Standards Updates expected to have a significant effect on the Company’s consolidated financial position or results of operations. | ||||
N. Income Taxes – Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. | ||||
Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the current period plus or minus the change during the period in deferred tax assets and liabilities. | ||||
The accounting for uncertain tax positions requires the Company to evaluate each income tax position using a two step process which includes a determination as to whether it is more likely than not that the income tax position will be sustained, based upon technical merit and upon examination by the taxing authorities. | ||||
At December 31, 2014 and 2013, there were no uncertain tax positions that required accrual. None of the Company’s federal or state income tax returns are currently under examination by the Internal Revenue Service (“IRS”) or state authorities. However, fiscal years 2011 and later remain subject to examination by the IRS and respective states. | ||||
O. Supplemental Disclosure of Non-Cash Operating, Investing and Financing Activities: | ||||
2014 | 2013 | |||
Deemed dividend on extension of stock warrants | $ 502,890 | $ 178,200 | ||
Dynasty Wealth, Inc. - value of warrants issued on consulting agreement | 460,700 | 0 | ||
Bowling Green Holdings, LLC - capital lease | 420,346 | 0 | ||
Global IR Group - value of stock issued on consulting agreement | 165,000 | 0 | ||
Conversions of promissory note debt to common stock | 55,000 | 25,000 | ||
Proceeds from sale of property and equipment recorded as Receivable, net – Other | 51,889 | 10,000 | ||
Rakgear, Inc. - value of stock and warrants issued on consulting agreement | 0 | 487,900 | ||
Oregon Resource Innovations - value of stock issued on consulting agreement | 0 | 70,000 | ||
Catalyst Corner, LLC - value of stock issued on consulting agreement | 0 | 3,600 | ||
Totals | $1,655,825 | $ 774,700 | ||
P. Segment Information – During 2014, the Company determined that it currently operates in one segment based on the financial information upon which the chief operating decision maker regularly assesses performance and allocates resources. The chief operating decision maker is the Chief Executive Officer. | ||||
Note_2_Balance_Sheet_Data
Note 2. Balance Sheet Data | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Notes | ||||
Note 2. Balance Sheet Data | Note 2. Balance Sheet Data | |||
For 2013 through the first quarter of 2014, the Company did not take a charge for depreciation on certain assets located at its demo fuel site in Pennsylvania, because these assets were not producing or expected to produce revenue during that time. We resumed depreciation in the second quarter of 2014 when we received the US EPA approval letter in June which made the equipment available to be used for demonstration and testing. | ||||
Property and equipment (at cost): | ||||
2014 | 2013 | |||
Buildings and leasehold improvements | $ 452,362 | $ 119,445 | ||
Equipment | 2,280,636 | 2,118,863 | ||
Equipment - idle | 0 | 722,559 | ||
Furniture, fixtures and computers | 57,503 | 59,896 | ||
2,790,501 | 3,020,763 | |||
Less accumulated depreciation | 1,791,649 | 2,147,221 | ||
Totals | $ 998,852 | $ 873,542 | ||
Deferred costs: | ||||
In December 2010, the Company executed a Financial Public Relations Agreement with Strategic Asset Management, Inc., or SAMI. The Company engaged SAMI as its non-exclusive financial public relations counsel for a term of three years. For its services, the Company issued SAMI 150,000 shares of the Company's unregistered common stock. The Company recorded a non-cash charge to earnings of approximately $305,000 ratably over a 36-month period starting in December 2010. For the years ended December 31, 2014 and 2013, the charge to earnings was $-0- and $97,271, respectively. | ||||
In August 2011, the Company issued 100,000 shares of common stock and granted 100,000 fully vested stock warrants to SAMI for additional services performed in connection with the December 2010 Financial Public Relations Agreement. To reflect the entire value of the stock and warrants issued, the Company took a non-cash charge to earnings of $285,700 through December 2013, the ending date of the agreement. For the years ended December 31, 2014 and 2013, the charge to earnings was approximately $-0- and $91,300, respectively. | ||||
In August 2012, the Company issued 60,000 shares of unregistered common stock to Equiti-trend Advisors LLC/JT Trading, LLC for public relations and corporate communication services. To reflect the entire value of the stock issued, the Company recorded a non-cash charge to earnings of $75,000 ratably through January 2013, the ending date of the agreement. For the years ended December 31, 2014 and 2013, the charge to earnings was approximately $-0- and $14,500, respectively. | ||||
In October 2012, the Company issued 300,000 shares of common stock and granted 150,000 fully vested stock warrants to SAMI to extend the period of services performed in connection with the December 2010 Financial Public Relations Agreement for an additional two years, through December 2015. To reflect the entire value of the stock and warrants issued, the Company is taking a non-cash charge to earnings of $421,300 starting in 2013, over a 36 month period. For the years ended December 31, 2014 and 2013, the charge to earnings was approximately $136,600 and $125,300, respectively. | ||||
In January 2013, the Company issued 70,000 shares of unregistered common stock to Webracadabra Internet Works, LLC, dba Oregon Resource Innovations, for financial consulting services to be performed over a six month period. To reflect the entire value of the stock issued, the Company recorded a non-cash charge to earnings of $70,000 ratably through July 2013, the ending date of the agreement. For the years December 31, 2014 and 2013 the charge to earnings was $-0- and $70,000, respectively. | ||||
In April 2013, the Company executed a Consulting Agreement with Rakgear, Inc. The Company engaged Rakgear to provide financial consulting services for a term of one year. For its services, the Company issued Rakgear 150,000 shares of the Company's unregistered common stock and 150,000 fully vested warrants to purchase unregistered shares of common stock at a price of $1.49 per warrant. To reflect the entire value of the stock issued, the Company recorded a non-cash charge to earnings of $487,900 ratably through March 2014, the ending date of the agreement. For the years ended December 31, 2014 and 2013, the charge to earnings was approximately $122,000 and $365,900, respectively. | ||||
In September 2014, the Company executed a Financial Public Relations Agreement with Dynasty Wealth, Inc., for a one year term. For its services, the Company issued Dynasty Wealth 350,000 warrants to purchase the Company's unregistered common stock at an exercise price of $1.50 per share, and $10,000 per month, to be paid in either cash or shares of the Company’s unregistered common stock at the Company’s discretion. To reflect the entire value of the warrants issued, the Company is recording a non-cash charge to earnings of $460,700 ratably through September 14, 2015, the ending date of the agreement. For the year ended December 31, 2014 the charge to earnings for the entire agreement was approximately $169,400, of which the non-cash portion of the agreement was approximately $134,400. | ||||
In November 2014, the Company executed a Public Relations Agreement with Global IR Group, Inc., for a one year term. For its services, the Company issued Global IR 100,000 shares of the Company’s unregistered common stock. To reflect the entire value of the stock issued, the Company is recording a non-cash charge to earnings of $165,000 ratably through November 19, 2015, the ending date of the agreement. For the year ended December 31, 2014 the charge to earnings was approximately $18,800. | ||||
The following is a summary of Deferred costs – stock and warrants issued for services as of December 31: | ||||
2014 | 2013 | |||
Deferred costs - Rakgear, Inc., less accumulated amortization (2014 - $487,900; 2013 - $365,925) | $ 0 | $ 121,975 | ||
Deferred costs - SAMI, less accumulated amortization (2014 - $886,249; 2013 - $749,611) | 125,251 | 261,889 | ||
Deferred costs - Dynasty Wealth, Inc., less accumulated amortization (2014 - $134,371) | 326,329 | 0 | ||
Deferred costs - Global IR Group, Inc., less accumulated amortization (2014 - $18,792) | 146,208 | 0 | ||
Totals | $ 597,788 | $ 383,864 | ||
Intangible and Other Assets, Net: | ||||
The following is a summary of Intangible and Other Assets, Net as of December 31: | ||||
2014 | 2013 | |||
Deposits | $ 27,319 | $ 17,698 | ||
Patents and related intangibles, less accumulated amortization (2014 - $-0-; 2013 - $126,346) | 0 | 42,143 | ||
Customer list, less accumulated amortization (2014 - $-0-; 2013 - $61,803) | 0 | 8,453 | ||
Totals | $ 27,319 | $ 68,294 | ||
Accrued liabilities: | ||||
2014 | 2013 | |||
Accrued payroll and employee benefits | $ 157,456 | $ 35,112 | ||
Deferred compensation payable | 124,306 | 84,658 | ||
Interest payable | 38,445 | 10,838 | ||
Totals | $ 320,207 | $ 130,608 | ||
Note_3_Pledged_Assets_Line_of_
Note 3. Pledged Assets, Line of Credit and Long-term Debt | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Notes | ||||
Note 3. Pledged Assets, Line of Credit and Long-term Debt | Note 3. Pledged Assets, Line of Credit and Long-Term Debt | |||
Until August 2013, the Company had a Commercial Line of Credit Agreement, or the Line, with Monroe Bank + Trust, or the Bank, up to $400,000 bearing interest at the Wall Street Journal Prime Rate plus 0.75%, but in no event less than 5.00%, and secured by a first lien on substantially all assets (except equipment) of the Company. Two certificates of deposit totaling approximately $142,000 from the Bank were held as a condition of maintaining the Line. In August 2013, the Line was renewed with a new maturity date of October 2013 and a borrowing limit of $233,067. The Bank cashed in the two certificates of deposit held totaling approximately $142,000 and used them to pay down the Line, effectively reducing the borrowing capacity by $25,000. In October 2013, the Line was renewed again with a new maturity date of December 2013 and a borrowing limit of $218,067, further reducing the borrowing capacity by $15,000. In December 2013 the Company defaulted on the Line, and in April 2014 the Company signed a forbearance agreement with the Bank, temporarily restricting them from exercising certain rights and remedies available after the Company’s default. In addition to retaining certain rights and remedies, the Bank agreed to allow the Company to repay the Line over six months, with an immediate payment of approximately $39,000 including accrued interest, and successive monthly payments of $36,784 plus accrued interest at 5%, up to and including September 7, 2014 until a total of $218,000 in principal was repaid. On December 3, 2014, the Company paid the remaining balance owed the Bank on the Line, totaling nearly $99,000 with accrued interest. All agreements with the Bank have been satisfied in full, and all existing liens and security held in accordance with the agreements were immediately released. | ||||
In August 2011, the Company borrowed $200,000 with a Promissory Note payable to David and Edna Kasmoch, the parents of Timothy Kasmoch, the Company’s President and Chief Executive Officer, at 12% interest and prepaid for a period of three months, renewable for an additional three months by the prepayment of additional interest and secured by certain equipment. Timothy Kasmoch has personally guaranteed the repayment of this Note. The Company extended the Note on all four due dates during 2012 and 2013, and the January and April due dates in 2014, and as of December 31, 2014 the Note was due July 30, 2014, and the Company is in default. As of the date of this filing, the Company has made one additional payment of $6,000, moving the due date to October 30, 2014, but remaining in default. The Company expects to extend the Note in the near future and pay it in full in 2015, although there can be no assurance the Company will have adequate cash flow to allow for any additional payments or that the maturity date will be extended. | ||||
In December 2013, the Company borrowed a total of $28,000, net of debt discount of $27,000, from two existing stockholders to provide operating capital. Both notes payable were for a term of three months at an interest rate of 12%, and included warrants to purchase common stock of the Company. In the second quarter of 2014, both stockholders converted their respective note to common stock of the Company at the fair market value of the stock at the time of conversion. | ||||
During 2014, the Company borrowed a total of $128,055 from three lenders to purchase insurance policies for equipment, Florida workers compensation and directors & officers’ insurance coverage during the year. A total of three unsecured term notes were issued, ranging from 7% to 9.9% interest for terms ranging from six to ten months and monthly payments totaling $15,009. The total amount owed on these notes as of December 31, 2014 was approximately $35,900 and all notes are expected to be paid in full on the applicable maturity date, ranging from February to August 2015. | ||||
From the beginning of 2006 through 2014, the Company borrowed a total of $1,677,100 from ten lenders to purchase processing and automotive equipment. As of December 31, 2014, a total of two term notes are outstanding, ranging from 6.2% to 7.1% interest for terms ranging four to five years, monthly payments totaling approximately $5,100 and all secured by equipment. The total amount owed on all equipment-secured notes as of December 31, 2014 was approximately $33,500 and all notes are expected to be paid in full on the applicable maturity date, ranging from January 2015 to March 2016. | ||||
In November 2012, the Company received a Notice and Demand of Payment Withdrawal Liability from Central States Southeast and Southwest Areas Pension Fund (the “Notice”), the pension trustee that was funded by the Company for the benefit of its former employees at its City of Toledo operation. The Notice demanded a payment of $412,576, payable monthly over 20 years at $2,250 per month, or approximately $27,000 per year. Payments at the end of the 20 year period would total $540,065. In December 2013, the Company received a Notice of Default from Central States, and subsequently the Fund’s trustee served the Company with a summons in a civil matter, and together with the Notice demanded all amounts owed in withdrawal liability plus interest and penalties. In September 30 2014, the Company agreed to pay Central States a total of $415,000 on a financed settlement over 19 months, with principal and interest payments of $6,000 per month for the first twelve months and principal and interest payments of $10,000 per month for the following six months, with a balloon payment of approximately $312,000 due on or before February 1, 2016. Interest is charged at the PRIME rate plus 2% (effective rate of 5.25% at December 31, 2014). Concurrently a separate security agreement was agreed on, effectively securing all of the Company’s assets and future rights to assets. As of the date of this filing, the Company is in compliance with the new settlement agreement. | ||||
In 2009 the Company approved an offering of up to $1,000,000 of Convertible Debentures (the “Debentures”), convertible at any time into our unregistered common stock at $2.00 per share. The Debentures were issuable in $5,000 denominations, are unsecured and have a stated interest rate of 8%, payable quarterly to holders of record. The Company has timely paid all accrued interest due to all Debenture holders of record as of each quarter-end date starting in July 2009. At any time, the Company may redeem all or a part of the Debentures at face value plus unpaid interest. | ||||
As of June 30, 2013, the Company held $455,000 of Debentures, but defaulted and did not pay the holders the principal amount due, all of which currently remain outstanding. The Company continues to accrue interest on the principal amount at the rate set forth in the Debentures until the principal amount is paid in full. The Company expects to pay all accrued interest due and the principal amount to all outstanding holders of the Debentures after completing substitute financial arrangements, though there can be no assurance of the timing of receipt of these funds and amounts available from these substitute arrangements. | ||||
For periods subsequent to the second quarter of 2011, the Company is required under GAAP to record a discount for certain Debentures replaced, which totaled $32,737 and was recorded as a gain on debt modification during the quarter ended June 30, 2011. The discount was required to be amortized as a period expense over the next eight quarters the Debentures were scheduled to be outstanding. | ||||
Amortization expense for the years ended December 31, 2014 and 2013 was $-0- and $8,184, respectively. | ||||
Approximate aggregate maturities of long-term debt for the years ending December 31 are as follows: 2015 - $831,600; 2016 - $326,600; 2017 - $-0-; 2018 - $-0-; 2019 - $-0-. | ||||
Long-term debt at December 31, 2014 and 2013 is as follows: | ||||
2014 | 2013 | |||
Notes payable - banks | $ 36,550 | $ 31,632 | ||
Notes payable - equipment vendors | 32,818 | 93,435 | ||
Pension plan withdrawal liability | 389,389 | 404,672 | ||
Notes payable - related parties and stockholders, net of discount (2013 - $27,000) | 244,480 | 228,000 | ||
Convertible debentures | 455,000 | 455,000 | ||
Total Long-Term Debt | 1,158,237 | 1,212,739 | ||
Less current maturities | (831,583) | -1,179,921 | ||
Totals | $ 326,654 | $ 32,818 | ||
Note_4_Capital_Lease
Note 4. Capital Lease | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Notes | ||||
Note 4. Capital Lease | Note 4. Capital Lease | |||
In June 2014, Mulberry Processing, LLC, a wholly owned subsidiary of the Company, entered into a contract to lease certain real property and buildings in Bradley, Florida from Bowling Green Holdings, LLC (“BGH”), a company owned by David Kasmoch, the father of Timothy R. Kasmoch, the Company’s President and Chief Executive Officer. The lease term is for five years beginning June 1, 2014 and a monthly payment of $10,000. This lease is for the Company’s new operating facility which commenced operations in June 2014, and has been determined to be a capital lease. | ||||
The economic substance of the lease is the Company is financing the acquisition of the asset through the lease, and accordingly, it is recorded in the Company’s assets and liabilities. Assets and liabilities under capital leases initially are recorded at the lower of present value of the minimum lease payments or the fair value of the assets. The assets are depreciated over the shorter of the lease term or their estimated useful lives. | ||||
A liability and related asset of $420,346 was recorded in June 2014 concurrent with the start of the lease agreement. | ||||
The following is a summary of property held under capital leases at December 31, 2014 and 2013: | ||||
2014 | 2013 | |||
Leased real property at Bradley, Florida - BGH | $ 420,346 | $ 0 | ||
Less accumulated depreciation | 49,040 | 0 | ||
Totals | $ 371,306 | $ 0 | ||
Depreciation on assets under capital leases charged to expense for the years ended December 31, 2014 and 2013 was $49,040 and $-0-, respectively, recorded as cost of sales. Interest charged related to capital lease liabilities for the years ended December 31, 2014 and 2013 was $35,508 and $-0-, respectively, recorded as interest expense. At December 31, 2014, the Company was in default of its payments. | ||||
The following is a schedule by years of future minimum payments required under the lease together with their present value as of December 31, 2014: | ||||
amount | ||||
2015 | $ 160,000 | |||
2016 | 120,000 | |||
2017 | 120,000 | |||
2018 | 120,000 | |||
2019 | 50,000 | |||
Total minimum lease payments | 570,000 | |||
Less amount representing interest | -164,070 | |||
Present value of lease payments | $405,930 | |||
Current maturities | $ 86,652 | |||
Non-current maturities | $319,278 | |||
Note_5_Related_Party_Transacti
Note 5. Related Party Transactions | 12 Months Ended |
Dec. 31, 2014 | |
Notes | |
Note 5. Related Party Transactions | Note 5. Related Party Transactions |
In August 2011, the Company borrowed $200,000 with a Promissory Note payable to David and Edna Kasmoch, the parents of Timothy Kasmoch, the Company’s President and Chief Executive Officer. More details can be found in Note 3. | |
During 2012 the Company paid Terri Kasmoch, the spouse of Timothy Kasmoch, as an employee for business development, web site and company media marketing and stock promotion efforts for the Company, and she participated with the executives of the Company in reducing the salary paid to her by 10% and deferring this to a future date. Effective November 2012, Ms. Kasmoch resigned from employment from the Company, and her deferred salary of approximately $3,900 remains unpaid as of December 31, 2014. | |
During 2013, the Company sold used equipment to Tri-State Garden Supply dba Gardenscape, a company owned and managed by the extended family of the Company’s Chief Executive Officer, Timothy Kasmoch. Cash proceeds realized totaled $30,000 on the sale, of which $10,000 was classified as an Other Receivable at December 31, 2013. | |
During 2014, the Company also sold used equipment to Tri-State Garden Supply dba Gardenscape, and realized cash proceeds of $81,275 on the sale, of which $6,281 was classified as an Other Receivable at December 31, 2014. | |
During 2014, the Company leased two trucks from Tri-State Garden Supply dba Gardenscape, and in lieu of lease payments agreed to repair and maintain both trucks, reimburse Gardenscape for insurance, annual taxes and license fees. During 2014, this totaled of approximately $27,000. | |
Note_6_Equity_Transactions
Note 6. Equity Transactions | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Notes | ||||||
Note 6. Equity Transactions | Note 6. Equity Transactions | |||||
In January 2013, the Company issued 70,000 shares of unregistered common stock to Webracadabra Internet Works, LLC, dba Oregon Resource Innovations, for financial consulting services. More details of this agreement are contained in Note 2. | ||||||
In April 2013, the Company issued 150,000 shares of unregistered common stock and 150,000 warrants to purchase unregistered shares of common stock to Rakgear, Inc., for financial consulting services. More details of this agreement are contained in Note 2. | ||||||
In September 2014, the Company issued 350,000 warrants to purchase unregistered shares of common stock to Dynasty Wealth, Inc., for financial consulting services. Additional payments owed Dynasty Wealth can be paid in either cash or shares of the Company’s unregistered common stock. For the year ended December 31, 2014 the Company did not issue any shares of stock in additional payment owed per the agreement. More details of this agreement are contained in Note 2. | ||||||
In November 2014, the Company issued 100,000 shares of unregistered common stock to Global Group, Inc., for public relations services. More details of this agreement are contained in Note 2. | ||||||
In May 2013, the Company issued a total of 3,845 shares of unregistered common stock, valued at a total of $5,000, to five independent directors in lieu of cash owed for a board meeting attended. To reflect the value of the stock issued, the Company recorded a charge to earnings totaling $5,000 in the second quarter of 2013. | ||||||
In December 2013, the Company issued a total of 3,290 shares of unregistered common stock, valued at a total of $5,000, to five independent directors in lieu of cash owed for a board meeting attended. To reflect the value of the stock issued, the Company recorded a charge to earnings totaling $5,000 in the fourth quarter of 2013. | ||||||
In April 2014, the Company issued a total of 6,175 shares of unregistered common stock, valued at a total of $5,000, to five independent directors in lieu of cash owed for a board meeting attended. To reflect the value of the stock issued, the Company recorded a charge to earnings totaling $5,000 in the second quarter of 2014. | ||||||
In June 2014, the Company issued a total of 9,212 shares of unregistered common stock, valued at a total of $7,000, to seven independent directors in lieu of cash owed for a board meeting attended. To reflect the value of the stock issued, the Company recorded a charge to earnings totaling $7,000 in the second quarter of 2014. | ||||||
In August 2014, the Company issued a total of 4,760 shares of unregistered common stock, valued at a total of $7,000, to seven independent directors in lieu of cash owed for a board meeting attended. To reflect the value of the stock issued, the Company recorded a charge to earnings totaling $7,000 in the third quarter of 2014. | ||||||
In October 2014, the Company issued a total of 2,065 shares of unregistered common stock, valued at a total of $2,500, to five independent directors in lieu of cash owed for a board meeting attended. To reflect the value of the stock issued, the Company recorded a charge to earnings totaling $2,500 in the fourth quarter of 2014. | ||||||
In November 2014, the Company issued a total of 3,145 shares of unregistered common stock, valued at a total of $5,000, to five independent directors in lieu of cash owed for a board meeting attended. To reflect the value of the stock issued, the Company recorded a charge to earnings totaling $5,000 in the fourth quarter of 2014. | ||||||
In August 2014 the Company issued Deerpoint Development Company Ltd., the landlord of its administrative office, 16,200 shares of unregistered common stock at a price of $0.71 per share in exchange for three months rent, resulting in net additional expense of approximately $1,300 above the contracted amount, but saving us approximately $10,200 of cash. The stock price was calculated using the Black-Scholes valuation model, explained in further detail below. | ||||||
In December 2013, the Company borrowed a total of $55,000 from one of the Company’s board members and an existing stockholder to provide operating capital. Both Notes Payable were for a term of three months at an interest rate of 12% and included warrants to purchase unregistered common stock of the Company. During the second quarter of 2014, both individuals converted their respective Note to common stock at the fair market value of the stock at the time of each conversion, and each received warrants to purchase unregistered common stock of the Company. | ||||||
In April 2014, the Company entered into a share purchase agreement with one of the Company’s board members (“Purchaser”), pursuant to which the Company sold 71,429 shares of its common stock (the “Shares”) to the Purchaser for $50,000, or a purchase price of $0.70 per Share, and 71,429 warrants to purchase common stock. The Shares are restricted and the transaction was exempt from the registration requirements under the Securities Act pursuant to section 4(a)(2) as a transaction by an issuer not involving a public offering. | ||||||
In April 2014, the Company entered into a share purchase agreement with one of the Company’s board members (“Purchaser”), pursuant to which the Company sold 25,000 shares of its common stock (the “Shares”) to the Purchaser for $17,500, or a purchase price of $0.70 per Share, and 25,000 warrants to purchase common stock. The Shares are restricted and the transaction was exempt from the registration requirements under the Securities Act pursuant to section 4(a)(2) as a transaction by an issuer not involving a public offering. | ||||||
In May 2014, the Company entered into a share purchase agreement with one of the Company’s board members (“Purchaser”), pursuant to which the Company sold 37,313 shares of its common stock (the “Shares”) to the Purchaser for $25,000, or a purchase price of $0.67 per Share, and 37,313 warrants to purchase common stock. The Shares are restricted and the transaction was exempt from the registration requirements under the Securities Act pursuant to section 4(a)(2) as a transaction by an issuer not involving a public offering. | ||||||
During June through December 2014, the Company entered into share purchase agreements with a total of sixteen Purchasers pursuant to which the Company sold 604,650 shares of its common stock (the “Shares”) to the Purchasers for a total of $604,650, or a purchase price of $1.00 per share. All but 91,500 shares were restricted and have limited “piggy-back” registration rights in connection with certain registration statement filings of the Company under the Securities Act of 1933 as amended (the “Securities Act”). The Company sold 91,500 shares it held in its treasury, but the shares were not issued until early 2015. All of the transactions were exempt from the registration requirements under the Securities Act pursuant to section 4(a)(2) as a transaction by an issuer not involving a public offering. | ||||||
In addition to its first stock option plan approved in 1993, the Company has a stock option plan approved in May 2004, amended in June 2008 and again in August 2009 (the “2004 Plan”), for directors and key employees under which 2,500,000 shares of common stock may be issued. The Company also has a stock option plan approved in July 2010 (the “2010 Plan”), for directors and key employees under which 5,000,000 shares of common stock may be issued. Unless otherwise stated in the stock option agreement, options are 20% vested on the date of grant, with the balance vesting 20% per year over the next four years, except for directors whose options vest six months from the date of grant. Options were granted in 2012 and 2013 from both the 2004 and 2010 Plans at the approximate market value of the stock at date of grant, as defined in each of the plans. | ||||||
Pursuant to their respective five-year employment agreements, in March 2010 a total of 890,000 stock options were granted to the three executive officers of the Company. Twenty percent of the options vested immediately on the date of grant, with the balance of the options to vest in equal annual installments over the next four years on the anniversary date of the original grant. These options were granted pursuant to the 2004 Plan, are for a period of ten years and are intended as Incentive Stock Options. To reflect the value of the stock options granted for the employment services provided, the Company was taking a charge to earnings totaling approximately $2,358,000. For the years ended December 31, 2014 and 2013, this charge was $-0- and $176,800, respectively. | ||||||
In May 2013, in connection and effective with their respective Amendment to Employment Agreement, the Board approved both a return of previously granted options and a new grant of stock options to Messrs. Kasmoch, Bohmer and McHugh, which are immediately exercisable for shares of the Company's common stock. The grants were made pursuant to both the 2004 Plan and the 2010 Plan. | ||||||
All grants awarded were priced at $1.25, in accordance with both the 2004 Plan and 2010 Plan. Future grants required under each officer’s Amendment will be priced at the time of grant. The Company took a non-cash charge to earnings of approximately $6,500 in the second quarter of 2013 to reflect the grant awarded to Mr. McHugh only, to reflect the net increase to him of 5,000 options granted currently. More information on these equity transactions is contained in this Form 10-K under Item 11, “Executive Compensation”. | ||||||
During the year ended December 31, 2014, the Company granted stock options totaling 132,500 shares, for board meetings attended by outside directors in April, June, August, October and November of 2014. All options granted were for a period of ten years. The options became fully vested six months after the date of grant, and were priced, pursuant to the 2010 Plan, at ranges between $0.76 and $1.59, for a total expense of approximately $156,100, expensed ratably in 2014 and 2015 over each subsequent six-month period. More information on these equity transactions is contained in this Form 10-K under Item 10, “Directors, Executive Officers and Corporate Governance”. | ||||||
During the year ended December 31, 2013, the Company granted stock options totaling 50,000 shares, for 25,000 shares each in May and December, exclusive of the officers, to all outside directors. All options granted are for a period of ten years. The options became fully vested six months after the date of grant, and were priced, pursuant to the 2010 Plan, at $1.30 and $1.52, respectively, for a total expense of approximately $70,000, expensed ratably in 2013 and 2014 over each subsequent six-month period. More information on these equity transactions is contained in this Form 10-K under Item 10, “Directors, Executive Officers and Corporate Governance”. | ||||||
In May 2013, the Company appointed Michael Burton-Prateley as a special advisor to the Board of Directors for a term of one year. For his services, the Company issued Mr. Burton-Prateley 25,000 stock options under the Company’s 2004 Plan at a price of $1.28 per option that vested immediately. To reflect the entire value of the options issued, the Company recorded a non-cash charge to earnings of $31,240 during the second quarter of 2013. | ||||||
Also in May 2013, the Company granted 25,000 stock options to one employee. The options granted were for a period of ten years, are exercisable at $1.28 per share and vested immediately at the date of grant. These options were granted pursuant to the 2004 Plan and were intended as Incentive Stock Options. To reflect the entire value of the stock options granted, the Company recorded a charge to earnings of approximately $32,500 in the second quarter of 2013. | ||||||
During the year ended December 31, 2014, the Board of Directors approved a plan to offer to all Company warrants holders a 25% discount on the exercise price to any warrant holder who exercises warrants, and a second 25% discount on any subsequent warrant exercise, but within a specific “discount period” and only on a temporary basis. Any warrant holder who exercised within the discount period also received a “replacement warrant” on a 1.5 to 1 basis. All other terms and conditions of all outstanding warrants remain unchanged, and the discount offer was temporary. During the discount period, five warrant holders exercised a total of 250,009 warrants at various exercise prices and were issued a total of 250,009 shares of restricted common stock and 375,014 replacement warrants. As a condition of exercise, all of the $122,177 in cash proceeds from the exercises were restricted for future payment to specific creditors as agreed upon with the warrant holders, and subsequently used to pay these creditors. In all instances the shares and the warrants issued and sold were in a private offering transaction pursuant to an exemption under Section 4(2) of the Securities Act of 1933 for transactions by an issuer not involving a public offering. | ||||||
During the year ended December 31, 2013, a total of 127,264 warrants were exercised and shares of unregistered restricted stock were issued to one insider and four non-insider owners for total net cash proceeds of $127,264. These proceeds were all used for operating expenses. Simultaneously and subject to the same terms and conditions and as further inducement to exercise the warrants, the Company issued a total of 127,264 warrants to these same owners as “replacement warrants” to acquire shares of our common stock at $1.00 per share, a price which was below the closing price of the stock on the date of each transaction. In all instances the shares and the warrants issued and sold were in a private offering transaction pursuant to an exemption under Section 4(2) of the Securities Act of 1933 for transactions by an issuer not involving a public offering. | ||||||
For the 2014 and 2013 replacement warrants, the incremental fair value associated with these transactions has been determined using the Black-Scholes model and has been recorded as a deemed dividend to common stockholders in the accompanying Statement of Stockholders’ Equity (Deficit). For the years ended December 31, 2014 and 2013, the deemed dividend was $502,890 and $178,200, respectively. | ||||||
The following summarizes the stock options activity for the years ended December 31, 2014 and 2013: | ||||||
2014 | 2013 | |||||
Shares | Weighted Average Exercise Price | Shares | Weighted Average Exercise Price | |||
Outstanding, beginning of year | 2,210,981 | $ 2.10 | 2,905,981 | $ 2.42 | ||
Granted | 377,500 | $ 0.84 | 395,000 | $1.27 | ||
Exercised | 2,500 | $ 1.90 | 0 | $ 0 | ||
Forfeited/expired during the year | 70,750 | $ 2.33 | 1,090,000 | $ 2.66 | ||
Outstanding, end of year | 2,515,231 | $ 1.91 | 2,210,981 | $ 2.10 | ||
Eligible for exercise at end of year | 2,442,731 | $ 1.92 | 2,185,981 | $ 2.11 | ||
Weighted average fair value per option for options granted during the year | $ 0.84 | $ 1.27 | ||||
Options expected to vest over the life of the Plan | 2,515,231 | 2,210,981 | ||||
The Company records compensation expense for stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes valuation model. The Company uses historical data among other factors to estimate the expected price volatility, the expected term and the expected forfeiture rate of the option. The risk-free rate is based on the U.S. Treasury yield curve in effect at the date of grant for the expected term of the option. | ||||||
The following assumptions were used to estimate the fair value of options granted: | ||||||
Year Ended December 31, | ||||||
2014 | 2013 | |||||
Expected dividend yield | 0.0% | 0.0% | ||||
Weighted average volatility | 287.0% | 267.6% | ||||
Risk free interest rate | 2.2 - 2.8% | 1.8 - 2.9% | ||||
Expected term (in years) | 7 | 7 | ||||
Note_7_Revenue_and_Major_Custo
Note 7. Revenue and Major Customers | 12 Months Ended |
Dec. 31, 2014 | |
Notes | |
Note 7. Revenue and Major Customers | Note 7. Revenue and Major Customers |
For the years ended December 31, 2014 and 2013, the Company’s largest customer accounted for approximately 22% and 41% of our revenues, respectively. Our sludge processing agreement with Toho Water Authority, which was also our largest customer for the years 2011 through 2013, was not renewed at the beginning of 2014. Our failure to renew that agreement has had a material adverse effect on our business, financial conditions and results of operations. For the years ended December 31, 2014 and 2013, the top three customers accounted for approximately 50% and 68%, respectively, of the Company’s revenues. Florida operations accounted for approximately 96% and 97% of consolidated revenue during the years ended December 31, 2014 and 2013, respectively. The accounts receivable balance due (which are unsecured) for these three Florida customers at December 31, 2014 and 2013 was approximately $99,000 and $211,000, respectively. Beginning in March 2014, the Company’s operations in Florida were voluntarily delayed for a short time while the Company moved assets and personnel to a new site in Bradley, Florida. While operations resumed in Bradley in June 2014, this reduction in revenue, while temporary, has materially reduced available cash to fund current or prior expenses incurred. | |
The sludge processing agreement with the City of Toledo, Ohio, who was the Company’s largest customer for many years through 2010 and represented approximately 17% of the consolidated revenues in 2011, was not renewed at the end of 2011. The City of Toledo’s failure to renew that agreement has continued to have a material adverse effect on the Company’s business, financial conditions and results of operations. | |
Additionally, economic considerations have made the supply of admixtures used in our processes more difficult to acquire due to coal-burning facilities operating less or not at all, primarily from the decrease in natural gas prices in the commercial marketplace. | |
A substantial portion of the Company's revenue is derived from services provided under contracts and agreements with existing licensees. Some of these contracts, especially those contracts with large municipalities, provide for termination of the contract by the customer after giving relatively short notice (in some cases as little as ten days). In addition, some of these contracts contain liquidated damages clauses, which may or may not be enforceable in the event of early termination of the contracts. If one or more of these contracts are terminated prior to the expiration of its term, and the Company is not able to replace revenues from the terminated contract or receive liquidated damages pursuant to the terms of the contract, the lost revenue could have a material and adverse effect on its business and financial condition. | |
Note_8_Commitments_and_Conting
Note 8. Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2014 | |
Notes | |
Note 8. Commitments and Contingencies | Note 8. Commitments and Contingencies |
In 2010, the Company and Timothy R. Kasmoch, the President and Chief Executive Officer, entered into an Employment Agreement for a five-year term. Mr. Kasmoch is to receive an annual base salary of $150,000, subject to an annual discretionary increase. In addition, Mr. Kasmoch is eligible for an annual cash bonus and was granted stock options from the Company’s Second Amended and Restated 2004 Stock Option Plan. Generally, the Agreement may be terminated by the Company with or without cause or by the Employee for any reason. In March 2015, Mr. Kasmoch’s Employment Agreement automatically renewed for a one-year term. | |
In 2010, the Company and Robert W. Bohmer, the Executive Vice President and General Counsel, entered into an Employment Agreement for a five-year term. Mr. Bohmer is to receive an annual base salary of $150,000, subject to an annual discretionary increase. In addition, Mr. Bohmer is eligible for an annual cash bonus and was granted stock options from the Company’s Second Amended and Restated 2004 Stock Option Plan. Generally, the Agreement may be terminated by the Company with or without cause or by the Employee for any reason. In March 2015, Mr. Bohmer’s Employment Agreement automatically renewed for a one-year term. | |
In May 2014, the Company and Mr. Bohmer agreed to an adjustment to his employment contract, making him a part-time employee and adjusting his salary to $57,200. Additional information is available in “Item 11 Executive Compensation” in this Form 10-K. | |
In 2010, the Company and James K. McHugh, the Chief Financial Officer, Secretary and Treasurer, entered into an Employment Agreement for a five-year term. Mr. McHugh is to receive an annual base salary of $125,000, subject to an annual discretionary increase. In addition, Mr. McHugh is eligible for an annual cash bonus and was granted stock options from the Company’s Second Amended and Restated 2004 Stock Option Plan. Generally, the Agreement may be terminated by the Company with or without cause or by the Employee for any reason. In March 2015, Mr. McHugh’s Employment Agreement automatically renewed for a one-year term. | |
In May 2013, the Company’s Board of Directors approved an amendment to each of the Company’s executive officer’s respective employment agreement only as it applied to the stock option grant. Additional information is available in “Item 11 Executive Compensation” in this Form 10-K. | |
In February 2013, the Company received a letter from counsel on behalf of one of our stockholders (“Counsel letter”), demanding a review by the Board of option plan issuances in 2010 and 2011 to members of management. In response, the Board formed a Special Committee to evaluate the 2004 and 2010 Stock Option Plans for the issuances in 2010 pursuant to the multi-year employment agreements with Messrs. Kasmoch, Bohmer and McHugh under the 2004 Option Plan, and the 2011 award to Mr. Kasmoch under the 2010 Option Plan. In May 2013, the Special Committee and the Board finished reviewing the awards and sent a letter in reply to the Counsel letter. The Board also approved an amendment to each the executive officer’s respective employment agreement, and renegotiated their option grants such that (i) no grant in any single year exceeds the Plan Limits, and, (ii) each employee return to respective Option Plan the number of options by which his annual grant exceeded the Plan Limits for any single year. Additional information is available in Item 11 “Executive Compensation” of this Form 10-K. | |
As a result of these actions, and after additional negotiations, on July 14, 2014 the Company and the stockholder entered into a Confidential Settlement Agreement and General Release with the following terms: Without admitting liability in connection with any of the claims asserted but in order to avoid the expenses and uncertainty of potential litigation the Company agreed: (i) the Company will adopt certain procedures to monitor future issuances of options to management; (ii) the Company will make an installment payment of $20,000 ratably over ten months to counsel for the stockholder who asserted the claim, but none of these funds will be paid to the stockholder; (iii) the Company will issue warrants to counsel for the stockholder exercisable at a predetermined price. In exchange for the foregoing the parties exchanged general releases and this matter is resolved completely. Based on the terms of the settlement, the Company accrued an estimated expense of $86,500, recorded as a trade account payable, at December 31, 2013 and, due to an increase in the underlying valuation of the warrants, an additional accrual of $93,900 for the quarter ended March 31, 2014, for a total expense of $180,400 to recognize the cost of the final settlement. All but $20,000 of this expense is for the non-cash component. Certain of the settlement payments due under the settlement are in default, and as of December 31, 2014 the Company owed approximately $16,000 in cash installment payments. | |
The Company’s executive and administrative offices are located in Toledo, Ohio. In April 2011, the Company signed a 68 month lease with Deerpoint Development Co., Ltd. The total minimum rental commitment for the years 2014 through 2016 is $40,800 each year. The total rental expense included in the statements of operations for the year ended December 31, 2014 and 2013 is approximately $40,800 and $30,600, respectively. Additional information is available in “Item 2 Properties” in this Form 10-K. | |
In October 2010, the Company began to lease property in Emlenton, Pennsylvania under a lease with A-C Valley Industrial Park, for one year. After September 2011, the Company operated under a month-to-month lease agreement, for a reduced rate. The total rental expense included in the statements of operations for each of the years ended December 31, 2014 and 2013 is $12,000. | |
In June 2009, the Company began to maintain an office in West Unity, Ohio under a lease with D&B Colon Leasing, LLC, for one year. In June 2010, the Company renewed the lease for an additional year through May 2011, and operated under a month-to-month lease until the Company closed the office in September 2014. The total rental expense included in the statements of operations for the year ended December 31, 2014 and 2013 is approximately $22,500 and $30,000, respectively. | |
The Company maintained an office in Daytona Beach under a lease with the County of Volusia, Florida, from March 2009 through March 2014. Effective and subsequent to April 2014, the Company briefly operated on a month to month lease with Volusia County, to allow the removal of certain owned assets and finished product from the site as approved by the County. The total rental expense included in the statements of operations for each of the years ended December 31, 2014 and 2013 is $15,000 and $48,000, respectively. | |
In June 2014, Mulberry Processing, LLC, a wholly owned subsidiary of the Company, entered into a contract to lease certain real property and buildings in Bradley, Florida from Bowling Green Holdings, LLC, for a five year lease term beginning June 1, 2014 and a monthly payment of $10,000. More details can be found in Note 4 Capital Lease. | |
For the year ended December 31, 2014, the Company paid a total of $19,800 recorded as rent in selling, general and administrative expense on behalf of the Chief Executive Officer. No future commitment exists as the residential building lease is not in the name of the Company, however the Company expects to pay $22,000 in 2015 through the lease term maturing October 31, 2015. | |
In September 2014, the Company entered into an operating lease with Caterpillar Financial for operating equipment at its Bradley, Florida location. The lease term is for three years beginning October 2014 and a monthly payment of approximately $3,200. The total minimum rental commitment for each of the years ending December 31, 2015 through 2016 is $37,900 and for the year ending December 31, 2017 is $28,400. | |
Management believes that all of the Company’s properties are adequately covered by insurance. | |
The Company operates in an environment with many financial risks, including, but not limited to, major customer concentrations, customer contract termination provisions, competing technologies, infringement and/or misappropriation of intellectual property rights, the highly competitive and, at times, seasonal nature of the industry and worldwide economic conditions. Various federal, state and governmental agencies are considering, and some have adopted, laws and regulations regarding environmental protection which could adversely affect the business activities of the Company. The Company cannot predict what effect, if any, current and future regulations may have on the operations of the Company. | |
From time to time the Company is involved in legal proceedings and subject to claims which may arise in the ordinary course of business. Certain unsecured creditors have brought civil action against the Company related to nonpayment. The Company has not accrued any additional amount related to these charges, but continue to negotiate payment plans to satisfy these creditors. | |
Note_9_Income_Tax_Matters
Note 9. Income Tax Matters | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Notes | ||||
Note 9. Income Tax Matters | Note 9. Income Tax Matters | |||
The composition of the deferred tax assets and liabilities at December 31, 2014 and 2013 is as follows: | ||||
2014 | 2013 | |||
Gross deferred tax liabilities: | ||||
Property and equipment and intangible assets | -68,700 | -64,600 | ||
Gross deferred tax assets: | ||||
Loss carryforwards | 6,070,100 | 5,541,800 | ||
Pension plan withdrawal exp in excess of payments | 132,400 | 137,600 | ||
Subsidiary acquisition basis step up | 42,800 | 64,300 | ||
Allowance for doubtful accounts | 34,400 | 34,400 | ||
Deferred compensation | 42,300 | 28,800 | ||
Litigation settlement - non-cash portion | 54,500 | 22,600 | ||
Other | 400 | 500 | ||
Less valuation allowance | -6,308,200 | -5,765,400 | ||
Totals | $ - | $ - | ||
The income tax provisions differ from the amount of income tax determined by applying the U.S. Federal income tax rate to pre-tax income from continuing operations for the years ended December 31, 2014 and 2013 and are as follows: | ||||
2014 | 2013 | |||
Provision at statutory rate | -598,500 | -560,000 | ||
(Decrease) increase in income taxes resulting from: | ||||
Change in valuation allowance | 542,800 | 1,134,800 | ||
Nondeductible (return of) stock options and warrants | 44,700 | -582,700 | ||
Other | 11,000 | 7,900 | ||
Totals | $ 0 | $ 0 | ||
The net operating losses available at December 31, 2014 to offset future taxable income total approximately $17,850,000 and expire principally in years 2018 - 2034. | ||||
Note_10_Subsequent_Events
Note 10. Subsequent Events | 12 Months Ended |
Dec. 31, 2014 | |
Notes | |
Note 10. Subsequent Events | Note 10. Subsequent Events |
During the first quarter of 2015, the Company entered into share purchase agreements with a total of eleven Purchasers pursuant to which the Company sold 395,000 shares of its common stock (the “Shares”) to the Purchasers for a total of $395,000, or a purchase price of $1.00 per share, to provide operating capital. All but 30,000 shares were restricted and have limited “piggy-back” registration rights in connection with certain registration statement filings of the Company under the Securities Act of 1933 as amended (the “Securities Act”). The Company issued 121,500 shares in 2015 it held in its treasury, 91,500 of these were sold under agreements dated in late 2014. All of the transactions were exempt from the registration requirements under the Securities Act pursuant to section 4(a)(2) as a transaction by an issuer not involving a public offering. | |
In February 2015, the Company extended the $200,000 Promissory Note payable to David and Edna Kasmoch for an additional three months, now due October 30, 2014, and is currently still in default. Additional details of this Note are provided in Note 3, Pledged Assets, Line of Credit and Long-Term Debt. | |
In March and April 2015, two of the Company’s debenture holders converted a total of $91,260 in debt including accrued interest to 45,630 restricted shares of the Company’s common stock. Both of the transactions were exempt from the registration requirements under the Securities Act pursuant to section 4(a)(2) as a transaction by an issuer not involving a public offering. |
Note_1_Operations_and_Summary_1
Note 1. Operations and Summary of Significant Accounting Policies: Nature of Operations, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Nature of Operations, Policy | A. Nature of Business – The Company owns and licenses the N-Viro Process, a patented technology to treat and recycle wastewater sludges and other bio-organic wastes, utilizing certain alkaline by-products produced by the cement, lime, electric utilities and other industries. Revenue and the related accounts receivable are due from companies acting as independent agents or licensees, principally municipalities. |
Note_1_Operations_and_Summary_2
Note 1. Operations and Summary of Significant Accounting Policies: Use of Estimates, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Use of Estimates, Policy | B. Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Note_1_Operations_and_Summary_3
Note 1. Operations and Summary of Significant Accounting Policies: Principles of Consolidation, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Principles of Consolidation, Policy | C. Principles of Consolidation – The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Note_1_Operations_and_Summary_4
Note 1. Operations and Summary of Significant Accounting Policies: Liquidity Disclosure, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Liquidity Disclosure, Policy | D. Going Concern - The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has negative working capital of approximately $938,000 at December 31, 2014, and has incurred recurring losses and negative cash flow from operations for the years ended December 31, 2014 and 2013. Moreover, while the Company expects to arrange for financing with lending institutions, there is no borrowing availability and no line of credit at December 31, 2014. |
The Company has borrowed money from third parties and related parties and expects to be able to generate future cash from the exercise of common stock warrants and new equity issuances, though there can be no assurance given that such issuances or exercises will be realized. The Company has slowed payments to trade vendors, and has renegotiated payment terms with several existing and prior vendors to lengthen the time and/or reduce the amount of cash to repay these trade payables. In 2013 and again in 2014 the Company modified all outstanding warrants to enhance their exercisability and realized approximately $122,000 and $124,000 in exercises in 2014 and 2013, respectively. Beginning in March 2014, the Company’s operations in Volusia County, Florida, which at the time represented substantially all revenue, were voluntarily delayed while the Company employed additional personnel and moved assets to the Company’s new site in Bradley, Florida. The Company considers its relationship with the landlord in Volusia County to be satisfactory overall as they work to finalize the termination of operations on their site. While operations resumed in Bradley in June 2014, this reduction in revenue materially reduced available cash to fund current or prior expenses incurred. These factors raise substantial doubt as to the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
Note_1_Operations_and_Summary_5
Note 1. Operations and Summary of Significant Accounting Policies: E. Cash and Cash Equivalents Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
E. Cash and Cash Equivalents Policy | E. Cash and Cash Equivalents – The Company has cash on deposit primarily in one financial institution which, at times, may be in excess of FDIC insurance limits. |
For purposes of the statements of cash flows, the Company considers all certificates of deposit with initial maturities of 90 days or less to be cash equivalents. | |
Restricted cash consists of: one certificate of deposit and corresponding accrued interest which was held as collateral on behalf of the Florida Department of Agriculture for the Company’s soil distribution license at December 31, 2013; one certificate of deposit and corresponding accrued interest which is held as collateral with a performance bond on behalf of one of the Company’s licensees at both December 31, 2014 and 2013. |
Note_1_Operations_and_Summary_6
Note 1. Operations and Summary of Significant Accounting Policies: Trade and Other Accounts Receivable, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Trade and Other Accounts Receivable, Policy | F. Accounts Receivable – The Company extends unsecured credit to customers under normal trade agreements, which require payment within 30 days. Accounts greater than 90 days past due amounted to $99,179 and $104,025 of receivables for the years ended December 31, 2014 and 2013, respectively. The Company's policy is not to accrue and record interest income on past due trade receivables. The Company does bill the customer finance charges on past due accounts and records the interest income when collected. |
Credit is generally granted on an unsecured basis. Periodic credit evaluations of customers are conducted and appropriate allowances are established. | |
Management estimates an allowance for doubtful accounts, which was $101,260 at both December 31, 2014 and 2013. The estimate is based upon management’s review of delinquent accounts and an assessment of the Company’s historical evidence of collections. |
Note_1_Operations_and_Summary_7
Note 1. Operations and Summary of Significant Accounting Policies: Property, Plant and Equipment, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Property, Plant and Equipment, Policy | G. Property and Equipment – Property, machinery and equipment are stated at cost less accumulated depreciation. Depreciation has been computed primarily by the straight-line method over the estimated useful lives of the assets. Generally, useful lives are five to fifteen years. Leasehold improvements are capitalized and amortized over the lesser of the term of the lease or the estimated useful life of the asset. Depreciation expense amounted to $179,743 and $178,688 in 2014 and 2013, respectively. Management has reviewed property and equipment for impairment when events and circumstances indicate that the assets might be impaired and the carrying values of those assets may not be recoverable. Management believes the carrying amount is not impaired based upon estimated undiscounted future cash flows. |
Note_1_Operations_and_Summary_8
Note 1. Operations and Summary of Significant Accounting Policies: Intangible Assets, Finite-Lived, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Intangible Assets, Finite-Lived, Policy | H. Intangible Assets – Intangible assets are comprised of patent costs, territory rights and customer licenses/contracts amortized on a straight line basis over their estimated useful lives (ranging from 18 months to 17 years). Weighted average amortization periods for patents/related intangibles and territory rights were 14.1 years at December 31, 2013. Amortization expense amounted to $7,941 in 2014 and $17,657 in 2013. |
During the third quarter of 2014, the Company determined the fair value of the intangible assets were less than the amount reflected in the balance sheet, and recorded a non-cash impairment charge of $42,653 to reduce the carrying value of these assets to their estimated fair value of zero. The reason for the impairment of intangible assets in the third quarter of 2014 was primarily due to declines in revenue associated with these assets. The categorization of the framework used to price the assets is considered a level 3, due to the subjective nature of the unobservable inputs used to determine the fair value. |
Note_1_Operations_and_Summary_9
Note 1. Operations and Summary of Significant Accounting Policies: Equity Method Investments, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Equity Method Investments, Policy | I. Equity Method Investment – During the year ended December 31, 2014, the Company entered into a subscription agreement with N-Viro Energy Limited representing an approximately 45% interest in the class C voting shares. The Company’s 2014 loss includes a loss of ($10,000) related to the operations of N-Viro Energy Limited. The loss reduced the Company’s investment in N-Viro Limited to zero and, as a result, the Company discontinued applying the equity method. The Company will resume application of the equity method only after its share of future earnings of N-Viro Energy Limited are sufficient to recover its share of unrecognized losses during the period the equity method was suspended. The Company has no obligation to fund future operations of N-Viro Energy Limited. |
Recovered_Sheet1
Note 1. Operations and Summary of Significant Accounting Policies: Revenue Recognition, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Revenue Recognition, Policy | J. Revenue Recognition – Facility management revenue and royalty fees are recognized under contracts where the Company or licensees utilize the N Viro Process to treat sludge, either pursuant to a fixed-price contract or based on volumes of sludge processed. Revenue is recognized as services are performed. |
Alkaline admixture sales, alkaline admixture management service revenue and N-Viro SoilTM revenue are recognized upon shipment. | |
License and territory fees are generated by selling the right to market or use the N-Viro Process in a specified territory. The Company's policy is to record revenue for the license agreements when all material services relating to the revenue have been substantially performed, conditions related to the contract have been met and no material contingencies exist. Research and development revenue is recognized as work is performed to the contracting entity in accordance with the contract. |
Recovered_Sheet2
Note 1. Operations and Summary of Significant Accounting Policies: Earnings Per Share, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Earnings Per Share, Policy | K. Loss Per Common Share – Loss per common share has been computed on the basis of the weighted-average number of common shares outstanding during each period presented. For the years ended December 31, 2014 and 2013, the effects of 2,615,231 and 2,555,981 stock options outstanding, respectively, 2,649,142 and 1,849,585 warrants to purchase common stock, respectively, and, debentures that are convertible to 227,500 shares of common stock are excluded from the diluted per share calculation because they would be antidilutive. |
Recovered_Sheet3
Note 1. Operations and Summary of Significant Accounting Policies: Share-based Compensation, Option and Incentive Plans Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Share-based Compensation, Option and Incentive Plans Policy | L. Stock Options – The Company records share-based compensation expense using a fair-value based method of measurement that results in compensation costs for essentially all awards of stock-based compensation. Compensation costs are recognized over the requisite period or periods that services are rendered. |
Recovered_Sheet4
Note 1. Operations and Summary of Significant Accounting Policies: New Accounting Standards, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
New Accounting Standards, Policy | M. New Accounting Standards – There are no Accounting Standards Updates expected to have a significant effect on the Company’s consolidated financial position or results of operations. |
Recovered_Sheet5
Note 1. Operations and Summary of Significant Accounting Policies: Income Tax, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Income Tax, Policy | N. Income Taxes – Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. |
Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the current period plus or minus the change during the period in deferred tax assets and liabilities. | |
The accounting for uncertain tax positions requires the Company to evaluate each income tax position using a two step process which includes a determination as to whether it is more likely than not that the income tax position will be sustained, based upon technical merit and upon examination by the taxing authorities. | |
At December 31, 2014 and 2013, there were no uncertain tax positions that required accrual. None of the Company’s federal or state income tax returns are currently under examination by the Internal Revenue Service (“IRS”) or state authorities. However, fiscal years 2011 and later remain subject to examination by the IRS and respective states. |
Recovered_Sheet6
Note 1. Operations and Summary of Significant Accounting Policies: Supplemental Disclosure of Non-cash Operating, Investing and Financing Activities (Policies) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Policies | ||||
Supplemental Disclosure of Non-cash Operating, Investing and Financing Activities | O. Supplemental Disclosure of Non-Cash Operating, Investing and Financing Activities: | |||
2014 | 2013 | |||
Deemed dividend on extension of stock warrants | $ 502,890 | $ 178,200 | ||
Dynasty Wealth, Inc. - value of warrants issued on consulting agreement | 460,700 | 0 | ||
Bowling Green Holdings, LLC - capital lease | 420,346 | 0 | ||
Global IR Group - value of stock issued on consulting agreement | 165,000 | 0 | ||
Conversions of promissory note debt to common stock | 55,000 | 25,000 | ||
Proceeds from sale of property and equipment recorded as Receivable, net – Other | 51,889 | 10,000 | ||
Rakgear, Inc. - value of stock and warrants issued on consulting agreement | 0 | 487,900 | ||
Oregon Resource Innovations - value of stock issued on consulting agreement | 0 | 70,000 | ||
Catalyst Corner, LLC - value of stock issued on consulting agreement | 0 | 3,600 | ||
Totals | $1,655,825 | $ 774,700 | ||
Recovered_Sheet7
Note 1. Operations and Summary of Significant Accounting Policies: Segment Reporting, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Segment Reporting, Policy | P. Segment Information – During 2014, the Company determined that it currently operates in one segment based on the financial information upon which the chief operating decision maker regularly assesses performance and allocates resources. The chief operating decision maker is the Chief Executive Officer. |
Note_2_Balance_Sheet_Data_Impa
Note 2. Balance Sheet Data: Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy | For 2013 through the first quarter of 2014, the Company did not take a charge for depreciation on certain assets located at its demo fuel site in Pennsylvania, because these assets were not producing or expected to produce revenue during that time. We resumed depreciation in the second quarter of 2014 when we received the US EPA approval letter in June which made the equipment available to be used for demonstration and testing. |
Note_2_Balance_Sheet_Data_Defe
Note 2. Balance Sheet Data: Deferred Costs (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Deferred Costs: | Deferred costs: |
In December 2010, the Company executed a Financial Public Relations Agreement with Strategic Asset Management, Inc., or SAMI. The Company engaged SAMI as its non-exclusive financial public relations counsel for a term of three years. For its services, the Company issued SAMI 150,000 shares of the Company's unregistered common stock. The Company recorded a non-cash charge to earnings of approximately $305,000 ratably over a 36-month period starting in December 2010. For the years ended December 31, 2014 and 2013, the charge to earnings was $-0- and $97,271, respectively. | |
In August 2011, the Company issued 100,000 shares of common stock and granted 100,000 fully vested stock warrants to SAMI for additional services performed in connection with the December 2010 Financial Public Relations Agreement. To reflect the entire value of the stock and warrants issued, the Company took a non-cash charge to earnings of $285,700 through December 2013, the ending date of the agreement. For the years ended December 31, 2014 and 2013, the charge to earnings was approximately $-0- and $91,300, respectively. | |
In August 2012, the Company issued 60,000 shares of unregistered common stock to Equiti-trend Advisors LLC/JT Trading, LLC for public relations and corporate communication services. To reflect the entire value of the stock issued, the Company recorded a non-cash charge to earnings of $75,000 ratably through January 2013, the ending date of the agreement. For the years ended December 31, 2014 and 2013, the charge to earnings was approximately $-0- and $14,500, respectively. | |
In October 2012, the Company issued 300,000 shares of common stock and granted 150,000 fully vested stock warrants to SAMI to extend the period of services performed in connection with the December 2010 Financial Public Relations Agreement for an additional two years, through December 2015. To reflect the entire value of the stock and warrants issued, the Company is taking a non-cash charge to earnings of $421,300 starting in 2013, over a 36 month period. For the years ended December 31, 2014 and 2013, the charge to earnings was approximately $136,600 and $125,300, respectively. | |
In January 2013, the Company issued 70,000 shares of unregistered common stock to Webracadabra Internet Works, LLC, dba Oregon Resource Innovations, for financial consulting services to be performed over a six month period. To reflect the entire value of the stock issued, the Company recorded a non-cash charge to earnings of $70,000 ratably through July 2013, the ending date of the agreement. For the years December 31, 2014 and 2013 the charge to earnings was $-0- and $70,000, respectively. | |
In April 2013, the Company executed a Consulting Agreement with Rakgear, Inc. The Company engaged Rakgear to provide financial consulting services for a term of one year. For its services, the Company issued Rakgear 150,000 shares of the Company's unregistered common stock and 150,000 fully vested warrants to purchase unregistered shares of common stock at a price of $1.49 per warrant. To reflect the entire value of the stock issued, the Company recorded a non-cash charge to earnings of $487,900 ratably through March 2014, the ending date of the agreement. For the years ended December 31, 2014 and 2013, the charge to earnings was approximately $122,000 and $365,900, respectively. | |
In September 2014, the Company executed a Financial Public Relations Agreement with Dynasty Wealth, Inc., for a one year term. For its services, the Company issued Dynasty Wealth 350,000 warrants to purchase the Company's unregistered common stock at an exercise price of $1.50 per share, and $10,000 per month, to be paid in either cash or shares of the Company’s unregistered common stock at the Company’s discretion. To reflect the entire value of the warrants issued, the Company is recording a non-cash charge to earnings of $460,700 ratably through September 14, 2015, the ending date of the agreement. For the year ended December 31, 2014 the charge to earnings for the entire agreement was approximately $169,400, of which the non-cash portion of the agreement was approximately $134,400. | |
In November 2014, the Company executed a Public Relations Agreement with Global IR Group, Inc., for a one year term. For its services, the Company issued Global IR 100,000 shares of the Company’s unregistered common stock. To reflect the entire value of the stock issued, the Company is recording a non-cash charge to earnings of $165,000 ratably through November 19, 2015, the ending date of the agreement. For the year ended December 31, 2014 the charge to earnings was approximately $18,800. |
Note_3_Pledged_Assets_Line_of_1
Note 3. Pledged Assets, Line of Credit and Long-term Debt: Derivatives, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Derivatives, Policy | For periods subsequent to the second quarter of 2011, the Company is required under GAAP to record a discount for certain Debentures replaced, which totaled $32,737 and was recorded as a gain on debt modification during the quarter ended June 30, 2011. The discount was required to be amortized as a period expense over the next eight quarters the Debentures were scheduled to be outstanding. |
Note_4_Capital_Lease_Lease_Pol
Note 4. Capital Lease: Lease, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Lease, Policy | The economic substance of the lease is the Company is financing the acquisition of the asset through the lease, and accordingly, it is recorded in the Company’s assets and liabilities. Assets and liabilities under capital leases initially are recorded at the lower of present value of the minimum lease payments or the fair value of the assets. The assets are depreciated over the shorter of the lease term or their estimated useful lives. |
Note_6_Equity_Transactions_Sha
Note 6. Equity Transactions: Share-based Compensation Arrangement by Share-based Payment Award, Description (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Share-based Compensation Arrangement by Share-based Payment Award, Description | In addition to its first stock option plan approved in 1993, the Company has a stock option plan approved in May 2004, amended in June 2008 and again in August 2009 (the “2004 Plan”), for directors and key employees under which 2,500,000 shares of common stock may be issued. The Company also has a stock option plan approved in July 2010 (the “2010 Plan”), for directors and key employees under which 5,000,000 shares of common stock may be issued. Unless otherwise stated in the stock option agreement, options are 20% vested on the date of grant, with the balance vesting 20% per year over the next four years, except for directors whose options vest six months from the date of grant. Options were granted in 2012 and 2013 from both the 2004 and 2010 Plans at the approximate market value of the stock at date of grant, as defined in each of the plans. |
Note_6_Equity_Transactions_Cla
Note 6. Equity Transactions: Class of Warrant or Right, Reason for Issuing to Nonemployees (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Class of Warrant or Right, Reason for Issuing to Nonemployees | During the year ended December 31, 2014, the Board of Directors approved a plan to offer to all Company warrants holders a 25% discount on the exercise price to any warrant holder who exercises warrants, and a second 25% discount on any subsequent warrant exercise, but within a specific “discount period” and only on a temporary basis. Any warrant holder who exercised within the discount period also received a “replacement warrant” on a 1.5 to 1 basis. All other terms and conditions of all outstanding warrants remain unchanged, and the discount offer was temporary. During the discount period, five warrant holders exercised a total of 250,009 warrants at various exercise prices and were issued a total of 250,009 shares of restricted common stock and 375,014 replacement warrants. As a condition of exercise, all of the $122,177 in cash proceeds from the exercises were restricted for future payment to specific creditors as agreed upon with the warrant holders, and subsequently used to pay these creditors. In all instances the shares and the warrants issued and sold were in a private offering transaction pursuant to an exemption under Section 4(2) of the Securities Act of 1933 for transactions by an issuer not involving a public offering. |
During the year ended December 31, 2013, a total of 127,264 warrants were exercised and shares of unregistered restricted stock were issued to one insider and four non-insider owners for total net cash proceeds of $127,264. These proceeds were all used for operating expenses. Simultaneously and subject to the same terms and conditions and as further inducement to exercise the warrants, the Company issued a total of 127,264 warrants to these same owners as “replacement warrants” to acquire shares of our common stock at $1.00 per share, a price which was below the closing price of the stock on the date of each transaction. In all instances the shares and the warrants issued and sold were in a private offering transaction pursuant to an exemption under Section 4(2) of the Securities Act of 1933 for transactions by an issuer not involving a public offering. |
Note_6_Equity_Transactions_Sha1
Note 6. Equity Transactions: Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Method Used (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Method Used | The Company records compensation expense for stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes valuation model. The Company uses historical data among other factors to estimate the expected price volatility, the expected term and the expected forfeiture rate of the option. The risk-free rate is based on the U.S. Treasury yield curve in effect at the date of grant for the expected term of the option. |
Note_7_Revenue_and_Major_Custo1
Note 7. Revenue and Major Customers: Major Customers, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Major Customers, Policy | A substantial portion of the Company's revenue is derived from services provided under contracts and agreements with existing licensees. Some of these contracts, especially those contracts with large municipalities, provide for termination of the contract by the customer after giving relatively short notice (in some cases as little as ten days). In addition, some of these contracts contain liquidated damages clauses, which may or may not be enforceable in the event of early termination of the contracts. If one or more of these contracts are terminated prior to the expiration of its term, and the Company is not able to replace revenues from the terminated contract or receive liquidated damages pursuant to the terms of the contract, the lost revenue could have a material and adverse effect on its business and financial condition. |
Note_8_Commitments_and_Conting1
Note 8. Commitments and Contingencies: Commitments and Contingencies, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Commitments and Contingencies, Policy | The Company operates in an environment with many financial risks, including, but not limited to, major customer concentrations, customer contract termination provisions, competing technologies, infringement and/or misappropriation of intellectual property rights, the highly competitive and, at times, seasonal nature of the industry and worldwide economic conditions. Various federal, state and governmental agencies are considering, and some have adopted, laws and regulations regarding environmental protection which could adversely affect the business activities of the Company. The Company cannot predict what effect, if any, current and future regulations may have on the operations of the Company. |
From time to time the Company is involved in legal proceedings and subject to claims which may arise in the ordinary course of business. Certain unsecured creditors have brought civil action against the Company related to nonpayment. The Company has not accrued any additional amount related to these charges, but continue to negotiate payment plans to satisfy these creditors. |
Recovered_Sheet8
Note 1. Operations and Summary of Significant Accounting Policies: Supplemental Disclosure of Non-cash Operating, Investing and Financing Activities: Schedule of Other Significant Noncash Transactions (Tables) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Tables/Schedules | ||||
Schedule of Other Significant Noncash Transactions | ||||
2014 | 2013 | |||
Deemed dividend on extension of stock warrants | $ 502,890 | $ 178,200 | ||
Dynasty Wealth, Inc. - value of warrants issued on consulting agreement | 460,700 | 0 | ||
Bowling Green Holdings, LLC - capital lease | 420,346 | 0 | ||
Global IR Group - value of stock issued on consulting agreement | 165,000 | 0 | ||
Conversions of promissory note debt to common stock | 55,000 | 25,000 | ||
Proceeds from sale of property and equipment recorded as Receivable, net – Other | 51,889 | 10,000 | ||
Rakgear, Inc. - value of stock and warrants issued on consulting agreement | 0 | 487,900 | ||
Oregon Resource Innovations - value of stock issued on consulting agreement | 0 | 70,000 | ||
Catalyst Corner, LLC - value of stock issued on consulting agreement | 0 | 3,600 | ||
Totals | $1,655,825 | $ 774,700 |
Note_2_Balance_Sheet_Data_Prop
Note 2. Balance Sheet Data: Property, Plant and Equipment (Tables) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Tables/Schedules | ||||
Property, Plant and Equipment | ||||
2014 | 2013 | |||
Buildings and leasehold improvements | $ 452,362 | $ 119,445 | ||
Equipment | 2,280,636 | 2,118,863 | ||
Equipment - idle | 0 | 722,559 | ||
Furniture, fixtures and computers | 57,503 | 59,896 | ||
2,790,501 | 3,020,763 | |||
Less accumulated depreciation | 1,791,649 | 2,147,221 | ||
Totals | $ 998,852 | $ 873,542 |
Note_2_Balance_Sheet_Data_Defe1
Note 2. Balance Sheet Data: Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure (Tables) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Tables/Schedules | ||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure | ||||
2014 | 2013 | |||
Deferred costs - Rakgear, Inc., less accumulated amortization (2014 - $487,900; 2013 - $365,925) | $ 0 | $ 121,975 | ||
Deferred costs - SAMI, less accumulated amortization (2014 - $886,249; 2013 - $749,611) | 125,251 | 261,889 | ||
Deferred costs - Dynasty Wealth, Inc., less accumulated amortization (2014 - $134,371) | 326,329 | 0 | ||
Deferred costs - Global IR Group, Inc., less accumulated amortization (2014 - $18,792) | 146,208 | 0 | ||
Totals | $ 597,788 | $ 383,864 |
Note_2_Balance_Sheet_Data_Sche
Note 2. Balance Sheet Data: Schedule of Finite-Lived Intangible Assets (Tables) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Tables/Schedules | ||||
Schedule of Finite-Lived Intangible Assets | ||||
2014 | 2013 | |||
Deposits | $ 27,319 | $ 17,698 | ||
Patents and related intangibles, less accumulated amortization (2014 - $-0-; 2013 - $126,346) | 0 | 42,143 | ||
Customer list, less accumulated amortization (2014 - $-0-; 2013 - $61,803) | 0 | 8,453 | ||
Totals | $ 27,319 | $ 68,294 |
Note_2_Balance_Sheet_Data_Sche1
Note 2. Balance Sheet Data: Schedule of Accrued Liabilities (Tables) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Tables/Schedules | ||||
Schedule of Accrued Liabilities | ||||
2014 | 2013 | |||
Accrued payroll and employee benefits | $ 157,456 | $ 35,112 | ||
Deferred compensation payable | 124,306 | 84,658 | ||
Interest payable | 38,445 | 10,838 | ||
Totals | $ 320,207 | $ 130,608 |
Note_3_Pledged_Assets_Line_of_2
Note 3. Pledged Assets, Line of Credit and Long-term Debt: Schedule of Debt (Tables) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Tables/Schedules | ||||
Schedule of Debt | ||||
2014 | 2013 | |||
Notes payable - banks | $ 36,550 | $ 31,632 | ||
Notes payable - equipment vendors | 32,818 | 93,435 | ||
Pension plan withdrawal liability | 389,389 | 404,672 | ||
Notes payable - related parties and stockholders, net of discount (2013 - $27,000) | 244,480 | 228,000 | ||
Convertible debentures | 455,000 | 455,000 | ||
Total Long-Term Debt | 1,158,237 | 1,212,739 | ||
Less current maturities | (831,583) | -1,179,921 | ||
Totals | $ 326,654 | $ 32,818 |
Note_4_Capital_Lease_Schedule_
Note 4. Capital Lease: Schedule of Capital Leased Assets (Tables) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Tables/Schedules | ||||
Schedule of Capital Leased Assets | ||||
2014 | 2013 | |||
Leased real property at Bradley, Florida - BGH | $ 420,346 | $ 0 | ||
Less accumulated depreciation | 49,040 | 0 | ||
Totals | $ 371,306 | $ 0 |
Note_4_Capital_Lease_Schedule_1
Note 4. Capital Lease: Schedule of Future Minimum Lease Payments for Capital Leases (Tables) | 12 Months Ended | |
Dec. 31, 2014 | ||
Tables/Schedules | ||
Schedule of Future Minimum Lease Payments for Capital Leases | ||
amount | ||
2015 | $ 160,000 | |
2016 | 120,000 | |
2017 | 120,000 | |
2018 | 120,000 | |
2019 | 50,000 | |
Total minimum lease payments | 570,000 | |
Less amount representing interest | -164,070 | |
Present value of lease payments | $405,930 | |
Current maturities | $ 86,652 | |
Non-current maturities | $319,278 |
Note_6_Equity_Transactions_Sch
Note 6. Equity Transactions: Schedule of Share-based Compensation, Stock Options, Activity (Tables) | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Tables/Schedules | ||||||
Schedule of Share-based Compensation, Stock Options, Activity | ||||||
2014 | 2013 | |||||
Shares | Weighted Average Exercise Price | Shares | Weighted Average Exercise Price | |||
Outstanding, beginning of year | 2,210,981 | $ 2.10 | 2,905,981 | $ 2.42 | ||
Granted | 377,500 | $ 0.84 | 395,000 | $1.27 | ||
Exercised | 2,500 | $ 1.90 | 0 | $ 0 | ||
Forfeited/expired during the year | 70,750 | $ 2.33 | 1,090,000 | $ 2.66 | ||
Outstanding, end of year | 2,515,231 | $ 1.91 | 2,210,981 | $ 2.10 | ||
Eligible for exercise at end of year | 2,442,731 | $ 1.92 | 2,185,981 | $ 2.11 | ||
Weighted average fair value per option for options granted during the year | $ 0.84 | $ 1.27 | ||||
Options expected to vest over the life of the Plan | 2,515,231 | 2,210,981 |
Note_6_Equity_Transactions_Fai
Note 6. Equity Transactions: Fair Value, Option, Quantitative Disclosures (Tables) | 12 Months Ended | ||
Dec. 31, 2014 | |||
Tables/Schedules | |||
Fair Value, Option, Quantitative Disclosures | |||
Year Ended December 31, | |||
2014 | 2013 | ||
Expected dividend yield | 0.0% | 0.0% | |
Weighted average volatility | 287.0% | 267.6% | |
Risk free interest rate | 2.2 - 2.8% | 1.8 - 2.9% | |
Expected term (in years) | 7 | 7 |
Note_9_Income_Tax_Matters_Sche
Note 9. Income Tax Matters: Schedule of Deferred Tax Assets and Liabilities (Tables) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Tables/Schedules | ||||
Schedule of Deferred Tax Assets and Liabilities | ||||
2014 | 2013 | |||
Gross deferred tax liabilities: | ||||
Property and equipment and intangible assets | -68,700 | -64,600 | ||
Gross deferred tax assets: | ||||
Loss carryforwards | 6,070,100 | 5,541,800 | ||
Pension plan withdrawal exp in excess of payments | 132,400 | 137,600 | ||
Subsidiary acquisition basis step up | 42,800 | 64,300 | ||
Allowance for doubtful accounts | 34,400 | 34,400 | ||
Deferred compensation | 42,300 | 28,800 | ||
Litigation settlement - non-cash portion | 54,500 | 22,600 | ||
Other | 400 | 500 | ||
Less valuation allowance | -6,308,200 | -5,765,400 | ||
Totals | $ - | $ - |
Note_9_Income_Tax_Matters_Sche1
Note 9. Income Tax Matters: Schedule of Components of Income Tax Expense (Benefit) (Tables) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Tables/Schedules | ||||
Schedule of Components of Income Tax Expense (Benefit) | ||||
2014 | 2013 | |||
Provision at statutory rate | -598,500 | -560,000 | ||
(Decrease) increase in income taxes resulting from: | ||||
Change in valuation allowance | 542,800 | 1,134,800 | ||
Nondeductible (return of) stock options and warrants | 44,700 | -582,700 | ||
Other | 11,000 | 7,900 | ||
Totals | $ 0 | $ 0 |
Recovered_Sheet9
Note 1. Operations and Summary of Significant Accounting Policies: Property, Plant and Equipment, Policy (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Details | ||
Depreciation | $179,743 | $178,688 |
Recovered_Sheet10
Note 1. Operations and Summary of Significant Accounting Policies: Intangible Assets, Finite-Lived, Policy (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Details | ||
Amortization of Intangible Assets | $7,941 | $17,657 |
Impairment of Intangible Assets (Excluding Goodwill) | $42,653 |
Recovered_Sheet11
Note 1. Operations and Summary of Significant Accounting Policies: Equity Method Investments, Policy (Details) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Loss from Equity Method Investments | ($10,000) |
Recovered_Sheet12
Note 1. Operations and Summary of Significant Accounting Policies: Earnings Per Share, Policy (Details) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Details | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 2,615,231 | 2,555,981 |
Note_2_Balance_Sheet_Data_Prop1
Note 2. Balance Sheet Data: Property, Plant and Equipment (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Details | ||
Buildings and Improvements, Gross | $452,362 | $119,445 |
Machinery and Equipment, Gross | 2,280,636 | 2,118,863 |
Property, Plant and Equipment, Other, Gross | 0 | 722,559 |
Furniture and Fixtures, Gross | 57,503 | 59,896 |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | 1,791,649 | 2,147,221 |
Property, Plant and Equipment, Net | $998,852 | $873,542 |
Note_2_Balance_Sheet_Data_Defe2
Note 2. Balance Sheet Data: Deferred Costs (Details) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2014 | |
Oregon Resource Innovations | ||
Stock Issued During Period, Shares, Share-based Compensation, Gross | 70,000 | |
Rakgear, Inc | ||
Stock Issued During Period, Shares, Share-based Compensation, Gross | 150,000 | |
Dynasty Wealth, Inc | ||
Share-based Nonemployee Services Transaction, Quantity of Securities Issued | 350,000 | |
Global IR Group, Inc | ||
Stock Issued During Period, Shares, Share-based Compensation, Gross | 100,000 |
Note_2_Balance_Sheet_Data_Defe3
Note 2. Balance Sheet Data: Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Details | ||
Deferred costs - stock and warrants issued for services, long-term | $597,788 | $125,251 |
Note_2_Balance_Sheet_Data_Sche2
Note 2. Balance Sheet Data: Schedule of Finite-Lived Intangible Assets (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Details | ||
Deposit Assets | $27,319 | $17,698 |
Finite-Lived Patents, Gross | 0 | 42,143 |
Finite-Lived Customer Lists, Gross | 0 | 8,453 |
Intangible Assets, Net (Excluding Goodwill) | $27,319 | $68,294 |
Note_2_Balance_Sheet_Data_Sche3
Note 2. Balance Sheet Data: Schedule of Accrued Liabilities (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Details | ||
Accrued Salaries, Current | $157,456 | $35,112 |
Deferred Compensation Liability, Current | 124,306 | 84,658 |
Interest Payable, Current | 38,445 | 10,838 |
Accrued Liabilities, Current | $320,207 | $130,608 |
Note_3_Pledged_Assets_Line_of_3
Note 3. Pledged Assets, Line of Credit and Long-term Debt (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Notes Payable, Related Parties, Current | $244,480 | $228,000 |
Repayments of Unsecured Debt | 15,009 | |
Unsecured Debt | 35,900 | |
Repayments of Secured Debt | 5,100 | |
Secured Debt, Other | 33,500 | |
Debt Instrument, Convertible, Conversion Price | $2 | |
Debt Instrument, Convertible, Effective Interest Rate | 8.00% | |
Convertible debentures, net of discount, in default | 455,000 | 455,000 |
David And Edna Kasmoch | ||
Notes Payable, Related Parties, Current | $200,000 | |
Debt Instrument, Interest Rate, Stated Percentage | 12.00% |
Note_3_Pledged_Assets_Line_of_4
Note 3. Pledged Assets, Line of Credit and Long-term Debt: Schedule of Debt (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Details | ||
Notes Payable to Bank | $36,550 | $31,632 |
Other Notes Payable | 32,818 | 93,435 |
Pension and Other Postretirement and Postemployment Benefit Plans, Liabilities | 389,389 | 404,672 |
Notes Payable, Related Parties, Current | 244,480 | 228,000 |
Convertible debentures, net of discount, in default | 455,000 | 455,000 |
Long-term Debt | 1,158,237 | 1,212,739 |
Current maturities of long-term debt | 63,186 | 92,249 |
Notes Payable, Noncurrent | $326,654 | $32,818 |
Note_4_Capital_Lease_Details
Note 4. Capital Lease (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Capital Leases, Interest Expense | $35,508 | $0 |
Bowling Green Holdings LLC | ||
Capital Lease Obligations Incurred | $420,346 |
Note_4_Capital_Lease_Schedule_2
Note 4. Capital Lease: Schedule of Capital Leased Assets (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Details | ||
Capital Leased Assets, Gross | $420,346 | $0 |
Capital Leases, Lessee Balance Sheet, Assets by Major Class, Property, Plant, and Equipment Other, Accumulated Depreciation | 49,040 | 0 |
Ground Leases, Net | $371,306 | $0 |
Note_4_Capital_Lease_Schedule_3
Note 4. Capital Lease: Schedule of Future Minimum Lease Payments for Capital Leases (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Details | ||
Capital Leases, Future Minimum Payments Due, Next Twelve Months | $160,000 | |
Capital Leases, Future Minimum Payments, Due in Rolling Year Two | 120,000 | |
Capital Leases, Future Minimum Payments, Due in Rolling Year Three | 120,000 | |
Capital Leases, Future Minimum Payments, Due in Rolling Year Four | 120,000 | |
Capital Leases, Future Minimum Payments, Due in Rolling Year Five | 50,000 | |
Capital Leases, Future Minimum Payments Due | 570,000 | |
Capital Leases, Future Minimum Payments, Interest Included in Payments | -164,070 | |
Capital Lease Obligations | 405,930 | |
Capital Lease Obligations, Current | 86,652 | |
Capital lease liability - long-term, less current maturities, in default | $319,278 | $0 |
Note_5_Related_Party_Transacti1
Note 5. Related Party Transactions (Details) (Gardenscape, USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Gardenscape | ||
Proceeds from Sale of Other Property, Plant, and Equipment | $81,275 | $30,000 |
Direct Costs of Leased and Rented Property or Equipment | $27,000 |
Note_6_Equity_Transactions_Det
Note 6. Equity Transactions (Details) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Details | |
Stock Issued, Shares, Issued for Cash | 604,650 |
Sale of Stock, Price Per Share | $1 |
Note_6_Equity_Transactions_Cla1
Note 6. Equity Transactions: Class of Warrant or Right, Reason for Issuing to Nonemployees (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Details | ||
Proceeds from stock warrant transactions | $121,952 | $123,908 |
Note_6_Equity_Transactions_Sch1
Note 6. Equity Transactions: Schedule of Share-based Compensation, Stock Options, Activity (Details) (USD $) | 0 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
Details | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures | 377,500 | 395,000 | ||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $0.84 | $1.27 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 2,500 | 0 | ||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price | $1.90 | $0 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Forfeited | 70,750 | 1,090,000 | ||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Forfeitures in Period, Weighted Average Exercise Price | $2.33 | $2.66 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 2,515,231 | 2,210,981 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | $1.91 | $2.10 | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Exercisable Options | 2,442,731 | 2,185,981 | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Exercisable Options, Weighted Average Exercise Price | $1.92 | $2.11 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $0.84 | $1.27 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number | 2,515,231 | 2,210,981 |
Note_6_Equity_Transactions_Fai1
Note 6. Equity Transactions: Fair Value, Option, Quantitative Disclosures (Details) | 0 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Details | ||
Fair Value Assumptions, Expected Dividend Rate | 0.00% | 0.00% |
Fair Value Assumptions, Weighted Average Volatility Rate | 287.00% | 267.60% |
Fair Value Assumptions, Risk Free Interest Rate | 2.20% | 1.80% |
Fair Value Assumptions, Expected Term | 7 years | 7 years |
Note_9_Income_Tax_Matters_Sche2
Note 9. Income Tax Matters: Schedule of Deferred Tax Assets and Liabilities (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Details | ||
Deferred Tax Liabilities, Property, Plant and Equipment | ($68,700) | ($64,600) |
Deferred Tax Assets, Operating Loss Carryforwards | 6,070,100 | 5,541,800 |
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Pensions | 132,400 | 137,600 |
Deferred Tax Liabilities, Parent's Basis in Discontinued Operation | 42,800 | 64,300 |
Deferred Tax Assets, Tax Deferred Expense, Reserves and Accruals, Allowance for Doubtful Accounts | 34,400 | 34,400 |
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Employee Compensation | 42,300 | 28,800 |
Deferred Tax Assets, Tax Deferred Expense, Reserves and Accruals, Legal Settlements | 54,500 | 22,600 |
Deferred Tax Assets, Other | 400 | 500 |
Deferred Tax Assets, Valuation Allowance | ($6,308,200) | ($5,765,400) |
Note_9_Income_Tax_Matters_Sche3
Note 9. Income Tax Matters: Schedule of Components of Income Tax Expense (Benefit) (Details) (USD $) | 0 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Details | ||
Current Federal Tax Expense (Benefit) | ($598,500) | ($560,000) |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Amount | 542,800 | 1,134,800 |
Income Tax Effects Allocated Directly to Equity, Employee Stock Options | 44,700 | -582,700 |
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Other, Amount | 11,000 | 7,900 |
Current Income Tax Expense (Benefit) | $0 | $0 |
Note_9_Income_Tax_Matters_Deta
Note 9. Income Tax Matters (Details) (USD $) | Dec. 31, 2014 |
Details | |
Operating Loss Carryforwards | $17,850,000 |