Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 12, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | GlyEco, Inc. | |
Entity Central Index Key | 931,799 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 71,715,638 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets | ||
Cash | $ 1,059,220 | $ 494,847 |
Accounts receivable, net | 1,305,223 | 786,056 |
Prepaid expenses | 162,439 | 137,056 |
Inventories | 787,381 | 567,677 |
Total current assets | 3,314,263 | 1,985,636 |
Property, Plant and Equipment, net | 7,584,002 | 7,889,207 |
Other assets | ||
Deposits | 86,688 | 80,708 |
Goodwill | 835,295 | 835,295 |
Other intangible assets, net | 3,302,490 | 3,461,361 |
Total other assets | 4,224,473 | 4,377,364 |
Total assets | 15,122,738 | 14,252,207 |
Current liabilities | ||
Accounts payable and accrued expenses | 1,260,804 | 1,649,361 |
Due to related parties | 9,931 | 62,500 |
Notes payable | 119,737 | 121,905 |
Capital lease obligations | 345,294 | 326,656 |
Total current liabilities | $ 1,735,766 | 2,160,422 |
Non-current liabilities | ||
Note payable - non-current portion | 2,971 | |
Capital lease obligations - non-current portion | $ 636,551 | 896,422 |
Total non-current liabilities | 636,551 | 899,393 |
Total liabilities | $ 2,372,317 | $ 3,059,815 |
Stockholders' equity | ||
Preferred stock; 40,000,000 shares authorized; $0.0001 par value; no shares issued and outstanding as of September 30, 2015 and December 31, 2014 | ||
Common stock, 300,000,000 shares authorized; $0.0001 par value; 71,715,638 and 58,033,560 shares issued and outstanding as of September 30, 2015 and December 31, 2014, respectively | $ 7,172 | $ 5,804 |
Additional paid in capital | 37,631,738 | 33,284,831 |
Accumulated deficit | (24,888,489) | (22,098,243) |
Total stockholders' equity | 12,750,421 | 11,192,392 |
Total liabilities and stockholders' equity | $ 15,122,738 | $ 14,252,207 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2015 | Dec. 31, 2014 |
Condensed Consolidated Balance Sheets Parenthetical | ||
Preferred stock, shares authorized | 40,000,000 | 40,000,000 |
Preferred stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 71,715,638 | 58,033,560 |
Common stock, shares outstanding | 71,715,638 | 58,033,560 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Condensed Consolidated Statements Of Operations | ||||
Sales, net | $ 2,141,924 | $ 1,281,791 | $ 5,526,276 | $ 4,541,822 |
Cost of goods sold | 2,239,512 | 1,469,709 | 5,971,400 | 4,760,389 |
Gross loss | (97,588) | (187,918) | (445,124) | (218,567) |
Operating expenses | ||||
Consulting fees | 65,592 | 211,596 | 285,364 | 497,506 |
Share-based compensation | 168,128 | 787,373 | 798,227 | 1,498,905 |
Salaries and wages | 142,216 | 242,585 | 411,663 | 757,739 |
Legal and professional | 50,035 | 77,502 | 235,972 | 313,803 |
General and administrative | 170,443 | 233,097 | 488,473 | 663,780 |
Total operating expenses | 596,414 | 1,552,153 | 2,219,699 | 3,731,733 |
Loss from operations | (694,002) | (1,740,071) | (2,664,823) | (3,950,300) |
Other (income) and expenses | ||||
Interest income | (39) | (383) | (215) | (1,027) |
Interest expense | 39,645 | 46,348 | 123,552 | 136,791 |
Total other expenses, net | 39,606 | 45,965 | 123,337 | 135,764 |
Loss before provision for income taxes | (733,608) | (1,786,036) | (2,788,160) | (4,086,064) |
Provision for income taxes | (2,086) | (11,262) | (2,086) | (15,004) |
Net loss | $ (735,694) | $ (1,797,298) | $ (2,790,246) | (4,101,068) |
Premium on Series AA Preferred conversion to common shares | (2,243,410) | |||
Net loss available to common shareholders | $ (735,694) | $ (1,797,298) | $ (2,790,246) | $ (6,344,478) |
Basic and diluted loss per share | $ (0.01) | $ (0.03) | $ (0.04) | $ (0.12) |
Weighted average number of common shares outstanding (basic and diluted) | 71,021,497 | 58,030,627 | 68,213,880 | 53,175,353 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - 9 months ended Sep. 30, 2015 - USD ($) | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Beginning Balance at Dec. 31, 2014 | $ 5,804 | $ 33,284,831 | $ (22,098,243) | $ 11,192,392 |
Beginning Balance (in Shares) at Dec. 31, 2014 | 58,033,560 | |||
Common shares for cash, net | $ 1,102 | 3,545,946 | 3,547,048 | |
Common shares for cash, net (in Shares) | 11,021,170 | |||
Common shares issued for settlement of accrued expenses | $ 1 | 2,999 | 3,000 | |
Common shares issued for settlement of accrued expenses (in Shares) | 8,334 | |||
Share-based compensation | $ 165 | 798,062 | $ 798,227 | |
Share-based compensation (in Shares) | 1,652,907 | |||
Warrants exercised | $ 100 | (100) | ||
Warrants exercised (in shares) | 999,667 | |||
Net loss | $ (2,790,246) | $ (2,790,246) | ||
Ending Balance at Sep. 30, 2015 | $ 7,172 | $ 37,631,738 | $ (24,888,489) | $ 12,750,421 |
Ending Balance (in Shares) at Sep. 30, 2015 | 71,715,638 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Net cash flow from operating activities | ||
Net loss | $ (2,790,246) | $ (4,101,068) |
Adjustments to reconcile net loss to net cash used by operating activities | ||
Depreciation and amortization | 607,465 | 484,020 |
Share-based compensation expense | 798,227 | 1,498,905 |
(Increase) decrease in operating assets and liabilities: | ||
Accounts receivable | $ (519,167) | (190,911) |
Due from related party | 32,643 | |
Prepaid expenses | $ (25,383) | (124,213) |
Inventories | (219,704) | (310,661) |
Deposits | (5,980) | 80,708 |
Accounts payable and accrued expenses | (385,557) | (311,675) |
Due to related party | (52,569) | (479,508) |
Net cash used in operating activities | (2,592,914) | (3,421,760) |
Cash flows from investing activities | ||
Purchase of property, plant and equipment | (61,054) | (55,993) |
Construction in process | (82,335) | (2,465,276) |
Net cash used in investing activities | $ (143,389) | (2,521,269) |
Cash flows from financing activities | ||
Proceeds from notes payable | $ 110,159 | |
Repayment of notes payable | $ (5,139) | |
Repayment of capital lease obligations | (241,233) | $ (173,647) |
Proceeds from sale of common stock | 3,581,875 | |
Stock issuance costs | $ (34,827) | $ (62,143) |
Proceeds from warrant exercise | 3,134,314 | |
Net cash provided by financing activities | $ 3,300,676 | 3,008,683 |
Increase (decrease) in cash | 564,373 | (2,934,346) |
Cash at the beginning of the period | 494,847 | 4,393,299 |
Cash at end of the period | 1,059,220 | 1,458,953 |
Supplemental disclosure of cash flow information | ||
Interest paid during period | $ 123,552 | $ 136,791 |
Taxes paid during period | ||
Supplemental disclosure of non-cash items | ||
Premium on Series AA Preferred conversion to common shares | $ 3,414,785 | |
Common stock issued for acquisition | $ 210,893 | |
Common stock issued for settlement of accrued expenses | $ 3,000 |
Organization and Nature of Busi
Organization and Nature of Business | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 1 - Organization and Nature of Business | GlyEco, Inc. (the "Company", "we", or "our") collects and recycles waste glycol streams into reusable glycol products that are sold to third party customers in the automotive and industrial end-markets in the United States. Our proprietary technology allows us to recycle all five major types of waste glycol into high-quality products usable in any glycol application. We currently operate seven processing centers in the United States with our corporate offices located in Phoenix, Arizona. These processing centers are located in (1) Minneapolis, Minnesota, (2) Indianapolis, Indiana, (3) Lakeland, Florida, (4) Elizabeth, New Jersey, (5) Rock Hill, South Carolina, (6) Tea, South Dakota, and (7) Landover, Maryland. The Company was formed in the State of Nevada on October 21, 2011. We were formed to acquire the assets of companies in the business of recycling and processing waste glycol and to apply our proprietary technology to provide a higher quality of glycol to end-market users throughout North America. We are currently comprised of the parent corporation GlyEco, Inc., and the acquisition subsidiaries that were formed to acquire the seven processing centers listed above. These processing centers are held in seven subsidiaries under the names of GlyEco Acquisition Corp. #1 through GlyEco Acquisition Corp. #7. Going Concern The condensed consolidated financial statements as of September 30, 2015 and December 31, 2014 and for the three and nine months ended September 30, 2015 and 2014 have been prepared assuming that the Company will continue as a going concern. As of September 30, 2015, the Company has yet to achieve profitable operations and is dependent on its ability to raise capital from stockholders or other sources to sustain operations. Ultimately, we hope to achieve viable profitable operations when operating efficiencies can be realized from the facilities added in 2013. These factors raise substantial doubt about the Company's ability to continue as a going concern. In their report dated April 10, 2015, our independent registered public accounting firm included an emphasis-of-matter paragraph with respect to our consolidated financial statements for the fiscal year ended December 31, 2014, expressing uncertainty regarding the Company's assumption that we will continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. Management's plans to address these matters include raising additional financing through offering our shares of capital stock in private and/or public offerings of our securities and through debt financing, if available and needed. The Company plans to become profitable by upgrading the capacity and capabilities at its existing operating facilities, continuing to implement its patent-pending technology in international markets, and acquiring profitable glycol recycling companies, which may desire to take advantage of the Company's public company status and improve their profitability through a combined synergy. The Company intends to expand customer and supplier bases once operational capacity and capabilities have been upgraded. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 2 - Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation The condensed consolidated financial statements included herein have been prepared by us without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements for the year ended December 31, 2014. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted, as permitted by the SEC, although we believe the disclosures that are made are adequate to make the information presented herein not misleading. The accompanying condensed consolidated financial statements reflect, in our opinion, all normal recurring adjustments necessary to present fairly our financial position at September 30, 2015, and the results of our operations and cash flows for the periods presented. We derived the December 31, 2014, condensed consolidated balance sheet data from audited consolidated financial statements but did not include all disclosures required by GAAP. Interim results are subject to seasonal variations and the results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the results to be expected for the full year. Consolidation These condensed consolidated financial statements include the accounts of GlyEco, Inc., and its wholly-owned subsidiaries. All significant intercompany accounting transactions have been eliminated as a result of consolidation. The subsidiaries include: GlyEco Acquisition Corp #1 ("Acquisition Sub #1") located in Minneapolis, Minnesota; GlyEco Acquisition Corp #2 ("Acquisition Sub #2") located in Indianapolis, Indiana; GlyEco Acquisition Corp #3 ("Acquisition Sub #3") located in Lakeland, Florida; GlyEco Acquisition Corp #4 ("Acquisition Sub #4") located in Elizabeth, New Jersey; GlyEco Acquisition Corp #5 ("Acquisition Sub #5") located in Rock Hill, South Carolina; GlyEco Acquisition Corp #6 ("Acquisition Sub #6") located in Tea, South Dakota; and GlyEco Acquisition Corp. #7 ("Acquisition Sub #7") located in Landover, Maryland. Operating Segments Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing the performance of the segment. Operating segments may be aggregated into a single operating segment if the segments have similar economic characteristics, among other criteria. The Company operates as one segment. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting periods. Because of the use of estimates inherent within the financial reporting process, actual results may differ significantly from those estimates. Significant estimates include, but are not limited to, items such as, the allowance for doubtful accounts, the carrying value of inventories, the value of stock-based compensation and warrants, the allocation of the purchase price in the various acquisitions, the recoverability of property, plant and equipment, goodwill, other intangible assets and their estimated useful lives, contingent liabilities, and environmental and asset retirement obligations. Due to the uncertainties inherent in the formulation of accounting estimates, it is reasonable to expect that these estimates could be materially revised within the next year. Cash and Cash Equivalents All highly liquid investments with maturities of three months or less at the time of purchase are considered to be cash equivalents. Revenue Recognition The Company recognizes revenue when four basic criteria have been met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the fee is fixed and determinable; and (4) collectability is reasonably assured. Cost of products sold consists of direct and indirect costs of the purchased goods and labor related to the corresponding sales transaction. The Company recognizes revenue from services at the time the services are completed. Shipping costs passed to the customer are included in net sales. Costs Cost of goods sold includes all direct material and labor costs and those indirect costs of bringing raw materials to sale condition, including depreciation of equipment used in manufacturing and shipping and handling costs. Selling, general, and administrative costs are charged to operating expenses as incurred. Research and development costs are expensed as incurred and are included in operating expenses. Advertising costs are expensed as incurred. Accounts Receivable Accounts receivable are recognized and carried at the original invoice amount less an allowance for expected uncollectible amounts. Inherent in the assessment of the allowance for doubtful accounts are certain judgments and estimates including, among others, the customer's willingness or ability to pay, the Company's compliance with customer invoicing requirements, the effect of general economic conditions and the ongoing relationship with the customer. Accounts with outstanding balances longer than the payment terms are considered past due. We do not charge interest on past due balances. The Company writes off trade receivables when all reasonable collection efforts have been exhausted. Bad debt expense is reflected as a component of general and administrative expenses in the condensed consolidated statements of operations. The allowance for doubtful accounts totaled $74,070 and $62,249 as of September 30, 2015, and December 31, 2014, respectively. Inventories Inventories are reported at the lower of cost or market. The cost of raw materials, including feedstocks and additives, is determined on an average unit cost of the units in a production lot. Work-in-process represents labor, material and overhead costs associated with the manufacturing costs at an average unit cost of the units in the production lot. The Company periodically reviews its inventories for obsolete or unsalable items and adjusts its carrying value to reflect estimated realizable values. Property, Plant and Equipment Property, plant and equipment is stated at cost. The Company provides for depreciation on the cost of its equipment using the straight-line method over an estimated useful life, ranging from three to twenty-five years, and zero salvage value. Expenditures for repairs and maintenance are charged to expense as incurred. As of September 30, 2015, the Company had incurred and capitalized construction in process totaling $1,523,025. The upgrades relate to construction in process for our New Jersey processing center and are scheduled to be completed in 2016, pending resolution of the landlord dispute discussed in Note 10, at which time depreciation is expected to commence. For purposes of computing depreciation, the useful lives of property, plant and equipment are as follows: Leasehold improvements 5 years Machinery and equipment 3-25 years Fair Value of Financial Instruments The Company has adopted the framework for measuring fair value that establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurements). The three levels of inputs that may be used to measure fair value are as follows: · Level 1 · Level 2 · Level 3 Cash, accounts receivable, accounts payable, accrued expenses, amounts due to related parties, and the current portions of capital lease obligations and notes payable are reflected in the balance sheet at their estimated fair values primarily due to their short-term nature. Net Loss per Share Calculation The basic net loss per common share is computed by dividing the net loss by the weighted average number of shares outstanding during a period. Diluted income per common share is computed by dividing the net income, by the weighted average number of common shares outstanding plus potentially dilutive securities. The Company's potentially dilutive securities outstanding are not shown in a diluted net loss per share calculation because their effect in both 2015 and 2014 would be anti-dilutive. At September 30, 2015, these potentially dilutive securities included warrants of 16,567,326 and stock options of 11,724,585 for a total of 28,291,911. At September 30, 2014, these potentially dilutive securities included warrants of 18,667,326 and stock options of 10,699,428 for a total of 29,366,754. Income Taxes The Company accounts for its income taxes in accordance with Financial Accounting Standard Board ("FASB") Accounting Standards Codification ("ASC") 740, "Income Taxes," which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. An allowance for the deferred tax asset is established if it is more likely than not that the asset will not be realized. Share Based Compensation All share-based payments to employees, including grants of employee stock options, are expensed based on their estimated fair values at the grant date, in accordance with ASC 718. Compensation expense for stock options is recorded over the vesting period using the estimated fair value on the date of grant, as calculated by the Company using the Black-Scholes-Merton ("BSM") option-pricing model. For awards with only service conditions that have graded vesting schedules, compensation cost is recorded on a straight-line basis over the requisite service period for the entire award, unless vesting occurs earlier. Non-employee share-based compensation is accounted for based on the fair value of the related stock or options, using the BSM, or the fair value of the goods or services on the measurement date, whichever is more readily determinable. Reclassification of Prior Year Amounts Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications have not affected the net loss or net loss per share as previously reported. Recently Issued Accounting Pronouncements There have been no recent accounting pronouncements or changes in accounting pronouncements that are of significance, or potential significance to the Company, except as discussed below. In May 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers" ("ASU 2014-09"). ASU 2014-09 supersedes nearly all existing revenue recognition guidance under U.S. GAAP and requires revenue to be recognized when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This accounting guidance will become effective beginning in the first quarter of 2017 using one of two prescribed transition methods. In July 2015, the FASB voted to defer the effective date of the new revenue recognition standard by one year. The Company is currently evaluating the effect that the standard will have on the consolidated financial statements and related disclosures. In June 2014, the FASB issued ASU No. 2014-12, "Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period" ("ASU 2014-12"). ASU 2014-12 provides explicit guidance on whether to treat a performance target that could be achieved after the requisite service period as a performance condition that affects vesting, or as a non-vesting condition that affects the grant-date fair value of an award. The update requires that compensation costs are recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. This update is effective for the annual periods and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. The Company is currently evaluating the effect that the standard will have on the consolidated financial statements and related disclosures. In August 2014, the FASB issued ASU 2014-15, "Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern" ("ASU 2014-15"). ASU 2014-15 defines management's responsibility to evaluate whether there is substantial doubt about an organization's ability to continue as a going concern and provides related footnote disclosure requirements. Under GAAP, financial statements are prepared under the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. Financial reporting under this presumption is commonly referred to as the going concern basis of accounting. The going concern basis of accounting establishes the fundamental basis for measuring and classifying assets and liabilities. The update provides guidance on when there is substantial doubt about an organization's ability to continue as a going concern and how the underlying conditions and events should be disclosed in the footnotes. It is intended to reduce diversity that existed in footnote disclosures because of the lack of guidance about when substantial doubt existed. The amendments in this update are effective beginning in the first quarter of 2017. Early application is permitted. The Company is currently evaluating the effect that the standard will have on the consolidated financial statements and related disclosures. In April 2015, the FASB issued ASU 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03"). ASU 2015-03 simplifies the presentation of debt issuance costs, the amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from that debt liability, consistent with the presentation of a debt discount. This presentation is consistent with the guidance in Concepts Statement 6, which states that debt issuance costs are similar to a debt discount and in effect reduce the proceeds of borrowing, thereby increasing the effective interest rate. Concepts Statement 6 further states that debt issuance costs are not assets because they provide no future economic benefit. This presentation also improves consistency with IFRS, which requires that transaction costs be deducted from the carrying value of the financial liability and not recorded as separate assets. This update is effective for the annual periods and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. The Company is currently evaluating the effect that the standard will have on the consolidated financial statements and related disclosures. In July 2015, the FASB issued ASU NO. 2015-11, "Inventory" (Topic 330) ("ASU 2015-11"). The amendments in ASU 2015-11 require that an entity measure inventory within the scope at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transaction. The amendments in this update more closely align the measurement of inventory in GAAP with the measurement of inventory in International Financial Reporting. ASU 2015-11 is effective for annual and interim periods beginning on or after December 15, 2016. The amendments in this update should be applied prospectively with early application permitted as of the beginning of the interim or annual reporting period. The Company is currently assessing this guidance for future implementation. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 3 - Inventories | The Company's total inventories were as follows: September 30, December 31, 2015 2014 (unaudited) Raw materials $ 259,833 $ 232,611 Work in process 172,967 110,466 Finished goods 354,581 224,600 Total inventories $ 787,381 $ 567,677 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 4 - Income Taxes | As of September 30, 2015 and December 31, 2014, the Company had a net operating loss (NOL) carry forward of approximately $18,400,000 (unaudited) and $16,500,000, respectively, adjusted for share based compensation and certain other non-deductible items available to reduce future taxable income, if any. The NOL carry forward begins to expire in 2027, and fully expires in 2035. Because management is unable to determine that it is more likely than not that the Company will be able to realize the tax benefit related to the NOL carry forward, by having taxable income, a valuation allowance has been established as of September 30, 2015 and December 31, 2014 to reduce the net tax benefit asset value to zero. |
Property, Plant and Equipment
Property, Plant and Equipment | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 5 - Property, Plant and Equipment | The Company's property, plant and equipment were as follows: September 30, December 31, 2015 2014 (unaudited) Machinery and equipment $ 6,864,025 $ 6,802,971 Leasehold improvements 449,271 449,271 Accumulated depreciation (1,252,319 ) (803,725 ) 6,060,977 6,448,517 Construction in process 1,523,025 1,440,690 Total property, plant and equipment, net $ 7,584,002 $ 7,889,207 Depreciation expense related to property, plant, and equipment was $448,594 and $325,148 for the nine months ended September 30, 2015 and 2014, respectively. |
Equity Incentive Program
Equity Incentive Program | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 6 - Equity Incentive Program | On December 18, 2014, the Company's Board of Directors approved an Equity Incentive Program (the "Equity Incentive Program"), whereby the Company's employees may elect to receive equity in lieu of cash for all or part of their salary compensation. Pursuant to the Equity Incentive Program, each of the Company's employees may choose to forego all or part of their salary compensation in exchange for stock options or shares of restricted common stock. During the quarter ended March 31, 2015, for each dollar of compensation foregone, each employee was eligible to receive either four stock options or three and one-third shares of restricted common stock. During the quarter ended June 30, 2015, for each dollar of compensation foregone, each employee was eligible to receive either five stock options or four shares of restricted common stock. On July 10, 2015, the Company's Board of Directors extended the Equity Incentive Program through September 30, 2015. For the fiscal quarter ended September 30, 2015, for each dollar of compensation foregone, each employee was eligible to receive either six stock options or five shares of restricted common stock. Stock options issued pursuant to the program vested immediately upon issuance and have an exercise price of $0.19 per share, while restricted stock issued pursuant to the program shall also vest immediately and have a stock basis of $0.19 per share. The Company issued all stock options and restricted stock due to employees pursuant to the Equity Incentive Program on the last day of each calendar month. Stock options issued pursuant to the program vested immediately upon issuance and had an exercise price of $0.30, $0.24 and $0.19 per share during the quarters ended March 31, 2015, June 30, 2015, and September 30, 2015, respectively. Such stock options have a term of ten years and are otherwise subject to the terms of the Company's 2012 Equity Incentive Plan, including cashless exercise as an available form of payment. Restricted stock issued pursuant to the program also vested immediately and has a stock basis of $0.30, $0.24 and $0.19 per share for shares issued during the quarters ended March 31, 2015, June 30, 2015 and September 30, 2015, respectively. Upon the conclusion of the program, the Company will calculate its profitability for the quarter ended September 30, 2015 using an adjusted Earnings Before Interest Depreciation and Amortization ("EBITDA") calculation, and if the Company has achieved profitable operations, it shall proportionally distribute salary compensation back to all employees participating in the program from July 1, 2015 through September 30, 2015 in exchange for the equity granted. The Company did not achieve profitability for the quarter ended September 30, 2015. For the nine months ended September 30, 2015, the Company issued 464,955 shares of restricted Common Stock valued at $126,506 and granted 217,491 options valued at $42,211 pursuant to the Equity Incentive Program. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 7 - Stockholders' Equity | Preferred Stock The Company's articles of incorporation authorize the Company to issue up to 40,000,000 shares of $0.0001 par value, preferred shares having preferences to be determined by the board of directors for dividends, and liquidation of the Company's assets. Of the 40,000,000 preferred shares the Company is authorized by its articles of incorporation, the Board of Directors has designated up to 3,000,000 as Series AA preferred shares. As of September 30, 2015, the Company had no shares of Preferred Stock outstanding. Common Stock As of September 30, 2015, the Company has 71,715,638, $0.0001 par value, shares of common stock issued and outstanding. The Company's articles of incorporation authorize the Company to issue up to 300,000,000 shares of $0.0001 par value, common stock. The holders are entitled to one vote for each share on matters submitted to a vote to shareholders, and to share pro rata in all dividends payable on common stock after payment of dividends on any preferred shares having preference in payment of dividends. During the nine months ended September 30, 2015, the Company issued the following common stock: On January 1, 2015, the Company issued an aggregate of 120,000 shares of Common Stock to two consultants of the Company pursuant to the Company's Equity Incentive Program at a price of $0.30 per share. On January 31, 2015, the Company issued an aggregate of 44,526 shares of Common Stock to six employees of the Company pursuant to the Company's Equity Incentive Program at a price of $0.30 per share. On February 17, 2015, the Company issued an aggregate of 11,021,170 shares of Common Stock to eighteen accredited investors and one non-accredited investor for cash at a price of $0.325 per share, net of offering costs of $34,827, in connection with the completion of a private placement offering. On February 28, 2015, the Company issued an aggregate of 56,166 shares of Common Stock to five employees of the Company pursuant to the Company's Equity Incentive Program at a price of $0.30 per share. On February 28, 2015, the Company issued an aggregate of 24,404 shares of Common Stock to two former employees of the Company as severance pay at a price of $0.28 per share. On February 28, 2015, the Company issued an aggregate of 26,786 shares of Common Stock to the CEO of the Company pursuant to his consulting agreement at a price of $0.28 per share. On March 4, 2015, the Company retired 17 shares of Common Stock per a shareholder's request. On March 31, 2015, the Company issued an aggregate of 55,000 shares of Common Stock to five directors of the Company pursuant to the Company's FY2015 Director Compensation Plan at a price of $0.25 per share. On March 31, 2015, the Company issued an aggregate of 54,282 shares of Common Stock to five employees of the Company pursuant to the Company's Equity Incentive Program at a price of $0.30 per share. On March 31, 2015, the Company issued an aggregate of 30,000 shares of Common Stock to the CEO of the Company pursuant to his consulting agreement at a price of $0.25 per share. On April 9, 2015, the Company issued an aggregate of 999,667 shares of Common Stock to one accredited investor in connection with the cashless exercise of 1,000,000 warrants at an exercise price of $0.0001. On April 30, 2015, the Company issued an aggregate of 40,082 shares of Common Stock to six employees of the Company pursuant to the Company's Equity Incentive Program at a price of $0.24 per share. On April 30, 2015, the Company issued an aggregate of 32,609 shares of Common Stock to the CEO of the Company pursuant to his consulting agreement at a price of $0.23 per share. On May 31, 2015, the Company issued an aggregate of 40,174 shares of Common Stock to six employees of the Company pursuant to the Company's Equity Incentive Program at a price of $0.24 per share. On May 31, 2015, the Company issued an aggregate of 31,250 shares of Common Stock to the CEO of the Company pursuant to his consulting agreement at a price of $0.24 per share. On June 30, 2015, the Company issued an aggregate of 40,090 shares of Common Stock to six employees of the Company pursuant to the Company's Equity Incentive Program at a price of $0.24 per share. On June 30, 2015, the Company issued an aggregate of 87,662 shares of Common Stock to six directors of the Company pursuant to the Company's FY2015 Director Compensation Plan at a price of $0.18 per share. On June 30, 2015, the Company issued an aggregate of 39,474 shares of Common Stock to the CEO of the Company pursuant to his consulting agreement at a price of $0.19 per share. On July 16, 2015, the Company issued an aggregate of 8,334 shares of Common Stock to six directors of the Company in lieu of cash for compensation due to the directors for the fourth quarter of fiscal year 2014 at a price of $0.36 per share. These shares were issued for settlement of $3,000 of accrued expenses. On July 16, 2015, the Company issued 30,000 shares of Common Stock to the Company's former CFO in accordance with her employment and consultant agreement at a price of $0.15 per share. On July 31, 2015, the Company issued an aggregate of 19,870 shares of Common Stock to three employees of the Company pursuant to the Company's Equity Incentive Program at a price of $0.20 per share. On July 31, 2015, the Company issued of 50,000 shares of Common Stock to the CEO of the Company pursuant to his consulting agreement at a price of $0.15 per share. On August 31, 2015, the Company issued an aggregate of 24,941 shares of Common Stock to four employees of the Company pursuant to the Company's Equity Incentive Program at a price of $0.20 per share. On August 31, 2015, the Company issued 62,500 shares of Common Stock to the CEO of the Company pursuant to his consulting agreement at a price of $0.12 per share. On September 1, 2015, the Company issued 385,714 shares of Common Stock to the CEO of the Company at a price of $0.14 per share as a bonus pursuant to his consulting agreement. On September 11, 2015, the Company issued 80,000 shares of Common Stock to an outside consultant of the Company pursuant to his engagement agreement at a price of $0.10 per share. On September 30, 2015, the Company issued an aggregate of 24,824 shares of Common Stock to four employees of the Company pursuant to the Company's Equity Incentive Program at a price of $0.20 per share. On September 30, 2015, the Company issued an aggregate of 160,904 shares of Common Stock to seven directors of the Company pursuant to the Company's FY2015 Director Compensation Plan at a price of $0.10 per share. On September 30, 2015, the Company issued 91,667 shares of Common Stock to the CEO of the Company pursuant to his consulting agreement at a price of $0.10 per share. Summary: Number of Common Shares Issued Value of Common Shares and Vested Options Common shares issued for cash, net of offering costs 11,021,170 $ 3,547,048 Common shares for settlement of accrued expenses 8,334 $ 3,000 Share-based compensation 1,652,907 $ 798,227 Warrants exercised 999,667 $ - |
Options and Warrants
Options and Warrants | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 8 - Options and Warrants | The following are details related to options issued by the Company: Options Shares Weighted Average Exercise Price Outstanding as of December 31, 2014 11,096,428 $ 0.72 Granted 628,157 0.26 Exercised - - Forfeited - - Cancelled - - Expired - - Outstanding as of September 30, 2015 (unaudited) 11,724,585 $ 0.69 We account for all stock-based payment awards made to employees and directors based on estimated fair values. We estimate the fair value of share-based payment awards on the date of grant using the Black-Scholes option-pricing model and the value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service period. As of September 30, 2015, there was $72,065 of unrecognized compensation expenses related to share-based payment arrangements. These costs are expected to be recognized over a weighted-average period of approximately three years. The Company has sufficient shares to satisfy expected share-based payment arrangements in 2015. On April 8, 2015, the Board of Directors agreed to extend the expiration date on options granted to employees and directors that resign or are terminated from the Company without cause from 90 days to one year. All stock-based payment awards made to employees and directors are accounted for based on estimated fair values. The value assigned to the options that were modified through the Board resolution have an estimated value of $102,426, as determined by the BSM. The following are details related to warrants issued by the Company: Warrants Shares Weighted Average Exercise Price Outstanding as of December 31, 2014 17,567,326 $ 0.93 Granted - - Exercised (1,000,000 ) 0.0001 Forfeited - - Cancelled - - Expired - - Outstanding as of September 30, 2015 (Unaudited) 16,567,326 $ 1.02 The Company recorded expense of $388,676 (excludes $102,426 of option modification expense) and $1,136,031 for options and warrants during the nine months ended September 30, 2015 and 2014, respectively. As of September 30, 2015, the Company had 1,016,771 common shares reserved for future issuance under the Company's stock plans. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 9 - Related Party Transactions | Due to Related Party Chief Executive Officer The Chief Executive Officer is the sole owner of Rocco Advisors, which was paid for management consulting services provided to the Company. 2015 2014 Beginning Balance as of January 1, $ - $ - Monies owed 60,000 - Monies paid (60,000 ) - Ending Balance as of September 30, $ - $ - Chief Technical Officer The Chief Technical Officer is the sole owner of WEBA Technologies, which was paid for products sold to GlyEco, primarily consisting of additive packages for antifreeze. The Company also incurred expenses for consulting services provided by the Chief Technical Officer in the ordinary course of business, totaling $112,500 during the nine months ended September 30, 2015. These transactions are summarized below. 2015 2014 Beginning Balance as of January 1, $ 15,050 $ - Monies owed 137,624 - Monies paid (142,743 ) - Ending Balance as of September 30, $ 9,931 $ - Former Chief Executive Officer / Director The former Chief Executive Officer is the sole owner of Barcid Investment Group, which was owed $62,500 as of December 31, 2014, for management and consulting services provided to the Company. The former Chief Executive Officer is the sole owner of Picard Investment Group, which is paid for advisory consulting services provided to the Company. 2015 2014 Beginning Balance as of January 1, $ 62,500 $ 114,434 Monies owed 9,000 29,898 Monies paid (71,500 ) (44,332 ) Ending Balance as of September 30, $ - $ 100,000 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 10 - Commitments and Contingencies | The Company may be party to legal proceedings in the ordinary course of business. The Company believes, excluding the matters below, that the nature of these proceedings (collection actions, etc.) are typical for a Company of our size and scope of operations. Below is an overview of a recently resolved legal proceeding and two outstanding alleged claims. On April 28, 2015, the Passaic Valley Sewerage Commission (the "PVSC") filed a civil action against Acquisition Sub #4 in the Superior Court of New Jersey Chancery Division located in Essex County. The civil action related to two alleged exceedances of the limits in the wastewater permit held by the Company's New Jersey Processing Center. The Company was able to settle the civil action with PVSC on September 21, 2015, for a settlement amount of $1,000, and the action has since been disposed of. The Company is also aware of two matters that involve alleged claims against the Company, and it is at least reasonably possible that the claims will be pursued. Both of these claims are related to our New Jersey Processing Center. The smaller of the claims is related to construction management services provided for the ongoing improvements to the facility. The entity has billed the Company for amounts above their contract amount for services that the Company believes were, to some extent, either already paid for, or overbilled. The estimated range involved in this dispute is from $0 to $175,000. The second matter involves our contracts with our former director and his related entities that provide services, and is the landlord, for the processing facility. In this matter, the landlord of the Company's leased property claims back rent is due for property used by the Company outside of the scope of its lease agreement. The estimated range involved in this dispute is from $0 to $750,000. Management believes both of these claims are meritless, and the Company will defend itself to the extent it is economically justified. During the fiscal quarter ended March 31, 2015, the landlord denied the Company access to the New Jersey facility and prepared an eviction notice. The Company negotiated and made a payment in March 2015 in the amount of $250,000 to regain access to the facility, and reached an accord to negotiate with the landlord to resolve the outstanding issues by May 31, 2015. The Company is in ongoing discussions with the landlord regarding potential resolutions to the dispute. As of September 30, 2015, and December 31, 2014, the Company recorded an accrual in the amount of $275,000 and $525,000, respectively, to provide for potential costs to litigate or resolve these matters. Environmental Matters We are subject to federal, state, and local laws, regulations and ordinances relating to the protection of the environment, including those governing discharges to air and water, handling and disposal practices for solid and hazardous wastes, and occupational health and safety. It is management's opinion that the Company is not currently exposed to significant environmental remediation liabilities or asset retirement obligations. However, if a release of hazardous substances occurs, or is found on one of our properties from prior activity, we may be subject to liability arising out of such conditions and the amount of such liability could be material. The Company accrues for potential environmental liabilities in a manner consistent with accounting principles generally accepted in the United States; that is, when it is probable a liability has been incurred and the amount of the liability is reasonably estimable. The Company reviews the status of its environmental sites on a yearly basis and adjusts its reserves accordingly. Such potential liabilities accrued by the Company do not take into consideration possible recoveries of future insurance proceeds. The Company maintains insurance coverage for unintentional acts that result in environmental remediation liabilities up to $1 million per occurrence; $2 million aggregate, with an umbrella liability policy that doubles the coverage. They do, however, take into account the likely share other parties will bear at remediation sites. It would be difficult to estimate the Company's ultimate level of liability due to the number of other parties that may be involved, the complexity of determining the relative liability among those parties, the uncertainty as to the nature and scope of the investigations and remediation to be conducted, the uncertainty in the application of law and risk assessment, the various choices and costs associated with diverse technologies that may be used in corrective actions at the sites, and the often quite lengthy periods over which eventual remediation may occur. Nevertheless, the Company does not currently believe that any claims, penalties or costs in connection with known environmental matters will have a material adverse effect on the Company's financial position, results of operations or cash flows. The Company is aware of one environmental remediation issue related to our leased property in New Jersey, which is currently subject to a remediation stemming from the sale of property by the previous owner in 2008 to the current landlord. To management's knowledge, the landlord has engaged a licensed site remediation professional and has assumed responsibility for this remediation. In management's opinion the liability for this remediation is the responsibility of the landlord. However, the landlord has disputed this position and it is an open issue subject to negotiation and the ultimate transfer of the New Jersey business. Currently, we have no knowledge as to the scope of the landlord's remediation obligation. The Company acknowledges that there will need to be an asset retirement obligation recorded for environmental matters that are expected to be addressed at the eventual asset retirement of our facility in New Jersey. Currently, the landlord of the property maintains a letter of credit, in the approximate amount of $400,000, to the benefit of the state of New Jersey to support such asset retirement expenditures. The transfer of the business operations to GlyEco, which began with the transfer of the Class D permit in August 2014, is still in process. Upon completion of the transfer, we anticipate that the Company will record an asset retirement obligation of approximately $400,000. We will need to post the $400,000 letter of credit with the New Jersey Department of Environmental Protection to ensure the funds are available if the facility is closed. The resultant $400,000 asset retirement obligation will be expensed over the anticipated operating life of the project, which is estimated to be approximately 25 years. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTE 11 - Subsequent Events | We have evaluated subsequent events through the filing date of this Form 10-Q and have determined that no subsequent events have occurred that would require recognition in the condensed consolidated financial statements or disclosure in the notes thereto, other than as discussed in the accompanying notes. Appointment of Interim Chief Financial Officer On October 13, 2015, the Board of Directors of the Company appointed Maria Tellez to be the Interim Chief Financial Officer of the Company, effective immediately. Filing of Registration Statement on Form S-1 On October 26, 2015, the Company filed a Registration Statement on Form S-1 to begin the process of conducting a rights offering. The purpose of the rights offering is to raise equity capital in a cost-effective manner that allows all shareholders to participate. |
Basis of Presentation and Sum18
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Basis Of Presentation And Summary Of Significant Accounting Policies Policies | |
Basis of Presentation | The condensed consolidated financial statements included herein have been prepared by us without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements for the year ended December 31, 2014. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted, as permitted by the SEC, although we believe the disclosures that are made are adequate to make the information presented herein not misleading. The accompanying condensed consolidated financial statements reflect, in our opinion, all normal recurring adjustments necessary to present fairly our financial position at September 30, 2015, and the results of our operations and cash flows for the periods presented. We derived the December 31, 2014, condensed consolidated balance sheet data from audited consolidated financial statements but did not include all disclosures required by GAAP. Interim results are subject to seasonal variations and the results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the results to be expected for the full year. |
Consolidation | These condensed consolidated financial statements include the accounts of GlyEco, Inc., and its wholly-owned subsidiaries. All significant intercompany accounting transactions have been eliminated as a result of consolidation. The subsidiaries include: GlyEco Acquisition Corp #1 ("Acquisition Sub #1") located in Minneapolis, Minnesota; GlyEco Acquisition Corp #2 ("Acquisition Sub #2") located in Indianapolis, Indiana; GlyEco Acquisition Corp #3 ("Acquisition Sub #3") located in Lakeland, Florida; GlyEco Acquisition Corp #4 ("Acquisition Sub #4") located in Elizabeth, New Jersey; GlyEco Acquisition Corp #5 ("Acquisition Sub #5") located in Rock Hill, South Carolina; GlyEco Acquisition Corp #6 ("Acquisition Sub #6") located in Tea, South Dakota; and GlyEco Acquisition Corp. #7 ("Acquisition Sub #7") located in Landover, Maryland. |
Operating Segments | Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing the performance of the segment. Operating segments may be aggregated into a single operating segment if the segments have similar economic characteristics, among other criteria. The Company operates as one segment. |
Use of Estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting periods. Because of the use of estimates inherent within the financial reporting process, actual results may differ significantly from those estimates. Significant estimates include, but are not limited to, items such as, the allowance for doubtful accounts, the carrying value of inventories, the value of stock-based compensation and warrants, the allocation of the purchase price in the various acquisitions, the recoverability of property, plant and equipment, goodwill, other intangible assets and their estimated useful lives, contingent liabilities, and environmental and asset retirement obligations. Due to the uncertainties inherent in the formulation of accounting estimates, it is reasonable to expect that these estimates could be materially revised within the next yea |
Cash and Cash Equivalents | All highly liquid investments with maturities of three months or less at the time of purchase are considered to be cash equivalents. |
Revenue Recognition | The Company recognizes revenue when four basic criteria have been met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the fee is fixed and determinable; and (4) collectability is reasonably assured. Cost of products sold consists of direct and indirect costs of the purchased goods and labor related to the corresponding sales transaction. The Company recognizes revenue from services at the time the services are completed. Shipping costs passed to the customer are included in net sales. |
Cost | Cost of goods sold includes all direct material and labor costs and those indirect costs of bringing raw materials to sale condition, including depreciation of equipment used in manufacturing and shipping and handling costs. Selling, general, and administrative costs are charged to operating expenses as incurred. Research and development costs are expensed as incurred and are included in operating expenses. Advertising costs are expensed as incurred. |
Accounts Receivable | Accounts receivable are recognized and carried at the original invoice amount less an allowance for expected uncollectible amounts. Inherent in the assessment of the allowance for doubtful accounts are certain judgments and estimates including, among others, the customer's willingness or ability to pay, the Company's compliance with customer invoicing requirements, the effect of general economic conditions and the ongoing relationship with the customer. Accounts with outstanding balances longer than the payment terms are considered past due. We do not charge interest on past due balances. The Company writes off trade receivables when all reasonable collection efforts have been exhausted. Bad debt expense is reflected as a component of general and administrative expenses in the condensed consolidated statements of operations. The allowance for doubtful accounts totaled $74,070 and $62,249 as of September 30, 2015, and December 31, 2014, respectively. |
Inventories | Inventories are reported at the lower of cost or market. The cost of raw materials, including feedstocks and additives, is determined on an average unit cost of the units in a production lot. Work-in-process represents labor, material and overhead costs associated with the manufacturing costs at an average unit cost of the units in the production lot. The Company periodically reviews its inventories for obsolete or unsalable items and adjusts its carrying value to reflect estimated realizable values. |
Property, Plant and Equipment | Property, plant and equipment is stated at cost. The Company provides for depreciation on the cost of its equipment using the straight-line method over an estimated useful life, ranging from three to twenty-five years, and zero salvage value. Expenditures for repairs and maintenance are charged to expense as incurred. As of September 30, 2015, the Company had incurred and capitalized construction in process totaling $1,523,025. The upgrades relate to construction in process for our New Jersey processing center and are scheduled to be completed in 2016, pending resolution of the landlord dispute discussed in Note 10, at which time depreciation is expected to commence. For purposes of computing depreciation, the useful lives of property, plant and equipment are as follows: Leasehold improvements 5 years Machinery and equipment 3-25 years |
Fair Value of Financial Instruments | The Company has adopted the framework for measuring fair value that establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurements). The three levels of inputs that may be used to measure fair value are as follows: · Level 1 · Level 2 · Level 3 Cash, accounts receivable, accounts payable, accrued expenses, amounts due to related parties, and the current portions of capital lease obligations and notes payable are reflected in the balance sheet at their estimated fair values primarily due to their short-term nature. |
Net Loss per Share Calculation | The basic net loss per common share is computed by dividing the net loss by the weighted average number of shares outstanding during a period. Diluted income per common share is computed by dividing the net income, by the weighted average number of common shares outstanding plus potentially dilutive securities. The Company's potentially dilutive securities outstanding are not shown in a diluted net loss per share calculation because their effect in both 2015 and 2014 would be anti-dilutive. At September 30, 2015, these potentially dilutive securities included warrants of 16,567,326 and stock options of 11,724,585 for a total of 28,291,911. At September 30, 2014, these potentially dilutive securities included warrants of 18,667,326 and stock options of 10,699,428 for a total of 29,366,754. |
Income Taxes | The Company accounts for its income taxes in accordance with Financial Accounting Standard Board ("FASB") Accounting Standards Codification ("ASC") 740, "Income Taxes," which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. An allowance for the deferred tax asset is established if it is more likely than not that the asset will not be realized. |
Share Based Compensation | All share-based payments to employees, including grants of employee stock options, are expensed based on their estimated fair values at the grant date, in accordance with ASC 718. Compensation expense for stock options is recorded over the vesting period using the estimated fair value on the date of grant, as calculated by the Company using the Black-Scholes-Merton ("BSM") option-pricing model. For awards with only service conditions that have graded vesting schedules, compensation cost is recorded on a straight-line basis over the requisite service period for the entire award, unless vesting occurs earlier. |
Reclassification of Prior Year Amounts | Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications have not affected the net loss or net loss per share as previously reported. |
Recently Issued Accounting Pronouncements | There have been no recent accounting pronouncements or changes in accounting pronouncements that are of significance, or potential significance to the Company, except as discussed below. In May 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers" ("ASU 2014-09"). ASU 2014-09 supersedes nearly all existing revenue recognition guidance under U.S. GAAP and requires revenue to be recognized when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This accounting guidance will become effective beginning in the first quarter of 2017 using one of two prescribed transition methods. In July 2015, the FASB voted to defer the effective date of the new revenue recognition standard by one year. The Company is currently evaluating the effect that the standard will have on the consolidated financial statements and related disclosures. In June 2014, the FASB issued ASU No. 2014-12, "Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period" ("ASU 2014-12"). ASU 2014-12 provides explicit guidance on whether to treat a performance target that could be achieved after the requisite service period as a performance condition that affects vesting, or as a non-vesting condition that affects the grant-date fair value of an award. The update requires that compensation costs are recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. This update is effective for the annual periods and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. The Company is currently evaluating the effect that the standard will have on the consolidated financial statements and related disclosures. In August 2014, the FASB issued ASU 2014-15, "Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern" ("ASU 2014-15"). ASU 2014-15 defines management's responsibility to evaluate whether there is substantial doubt about an organization's ability to continue as a going concern and provides related footnote disclosure requirements. Under GAAP, financial statements are prepared under the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. Financial reporting under this presumption is commonly referred to as the going concern basis of accounting. The going concern basis of accounting establishes the fundamental basis for measuring and classifying assets and liabilities. The update provides guidance on when there is substantial doubt about an organization's ability to continue as a going concern and how the underlying conditions and events should be disclosed in the footnotes. It is intended to reduce diversity that existed in footnote disclosures because of the lack of guidance about when substantial doubt existed. The amendments in this update are effective beginning in the first quarter of 2017. Early application is permitted. The Company is currently evaluating the effect that the standard will have on the consolidated financial statements and related disclosures. In April 2015, the FASB issued ASU 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03"). ASU 2015-03 simplifies the presentation of debt issuance costs, the amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from that debt liability, consistent with the presentation of a debt discount. This presentation is consistent with the guidance in Concepts Statement 6, which states that debt issuance costs are similar to a debt discount and in effect reduce the proceeds of borrowing, thereby increasing the effective interest rate. Concepts Statement 6 further states that debt issuance costs are not assets because they provide no future economic benefit. This presentation also improves consistency with IFRS, which requires that transaction costs be deducted from the carrying value of the financial liability and not recorded as separate assets. This update is effective for the annual periods and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. The Company is currently evaluating the effect that the standard will have on the consolidated financial statements and related disclosures. In July 2015, the FASB issued ASU NO. 2015-11, "Inventory" (Topic 330) ("ASU 2015-11"). The amendments in ASU 2015-11 require that an entity measure inventory within the scope at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transaction. The amendments in this update more closely align the measurement of inventory in GAAP with the measurement of inventory in International Financial Reporting. ASU 2015-11 is effective for annual and interim periods beginning on or after December 15, 2016. The amendments in this update should be applied prospectively with early application permitted as of the beginning of the interim or annual reporting period. The Company is currently assessing this guidance for future implementation. |
Basis of Presentation and Sum19
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Basis Of Presentation And Summary Of Significant Accounting Policies Tables | |
Property and Equipment | For purposes of computing depreciation, the useful lives of property, plant and equipment are as follows: Leasehold improvements 5 years Machinery and equipment 3-25 years |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Inventories Tables | |
Schedule of Inventories | The Company's total inventories were as follows: September 30, December 31, 2015 2014 (unaudited) Raw materials $ 259,833 $ 232,611 Work in process 172,967 110,466 Finished goods 354,581 224,600 Total inventories $ 787,381 $ 567,677 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Property Plant And Equipment Tables | |
Property, Plant and Equipment | The Company's property, plant and equipment were as follows: September 30, December 31, 2015 2014 (unaudited) Machinery and equipment $ 6,864,025 $ 6,802,971 Leasehold improvements 449,271 449,271 Accumulated depreciation (1,252,319 ) (803,725 ) 6,060,977 6,448,517 Construction in process 1,523,025 1,440,690 Total property, plant and equipment, net $ 7,584,002 $ 7,889,207 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Stockholders Equity Tables | |
Schedule of Stockholders Equity | Summary: Number of Common Shares Issued Value of Common Shares and Vested Options Common shares issued for cash, net of offering costs 11,021,170 $ 3,547,048 Common shares for settlement of accrued expenses 8,334 $ 3,000 Share-based compensation 1,652,907 $ 798,227 Warrants exercised 999,667 $ - |
Options and Warrants (Tables)
Options and Warrants (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Options And Warrants Tables | |
Schedule of Stock Options | The following are details related to options issued by the Company: Options Shares Weighted Average Exercise Price Outstanding as of December 31, 2014 11,096,428 $ 0.72 Granted 628,157 0.26 Exercised - - Forfeited - - Cancelled - - Expired - - Outstanding as of September 30, 2015 (unaudited) 11,724,585 $ 0.69 |
Schedule of Stockholders' Equity Note, Warrants or Rights | The following are details related to warrants issued by the Company: Warrants Shares Weighted Average Exercise Price Outstanding as of December 31, 2014 17,567,326 $ 0.93 Granted - - Exercised (1,000,000 ) 0.0001 Forfeited - - Cancelled - - Expired - - Outstanding as of September 30, 2015 (Unaudited) 16,567,326 $ 1.02 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Chief Executive Officer [Member] | |
Schedule of Related Party Transactions | The Chief Executive Officer is the sole owner of Rocco Advisors, which was paid for management consulting services provided to the Company. 2015 2014 Beginning Balance as of January 1, $ - $ - Monies owed 60,000 - Monies paid (60,000 ) - Ending Balance as of September 30, $ - $ - |
Chief Technical Officer [Member] | |
Schedule of Related Party Transactions | The Chief Technical Officer is the sole owner of WEBA Technologies, which was paid for products sold to GlyEco, primarily consisting of additive packages for antifreeze. The Company also incurred expenses for consulting services provided by the Chief Technical Officer in the ordinary course of business, totaling $112,500 during the nine months ended September 30, 2015. These transactions are summarized below. 2015 2014 Beginning Balance as of January 1, $ 15,050 $ - Monies owed 137,624 - Monies paid (142,743 ) - Ending Balance as of September 30, $ 9,931 $ - |
Former Chief Executive Officer / Director [Member] | |
Schedule of Related Party Transactions | The former Chief Executive Officer is the sole owner of Barcid Investment Group, which was owed $62,500 as of December 31, 2014, for management and consulting services provided to the Company. The former Chief Executive Officer is the sole owner of Picard Investment Group, which is paid for advisory consulting services provided to the Company. 2015 2014 Beginning Balance as of January 1, $ 62,500 $ 114,434 Monies owed 9,000 29,898 Monies paid (71,500 ) (44,332 ) Ending Balance as of September 30, $ - $ 100,000 |
Basis of Presentation and Sum25
Basis of Presentation and Summary of Significant Accounting Policies (Details) | 9 Months Ended |
Sep. 30, 2015 | |
Leasehold Improvements [Member] | |
Property and Equipment, Useful lives | 5 years |
Machinery and Equipment [Member] | Minimum [Member] | |
Property and Equipment, Useful lives | 3 years |
Machinery and Equipment [Member] | Maximum [Member] | |
Property and Equipment, Useful lives | 25 years |
Basis of Presentation and Sum26
Basis of Presentation and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Estimated Cost to be Incurred to Complete Contstruction | $ 1,523,025 | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 28,291,911 | 29,366,754 | |
Allowance for doubtful accounts | $ 74,070 | $ 62,249 | |
Warrant [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 16,567,326 | 18,667,326 | |
Option [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 11,724,585 | 10,699,428 |
Inventories (Details)
Inventories (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Inventories Details | ||
Raw materials | $ 259,833 | $ 232,611 |
Work in process | 172,967 | 110,466 |
Finished goods | 354,581 | 224,600 |
Total inventories (unaudited) | $ 787,381 | $ 567,677 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Income Taxes Details Narrative | ||
Operating Loss Carryforwards | $ 18,400,000 | $ 16,500,000 |
Deferred Tax Assets, Net of Valuation Allowance | $ 0 | $ 0 |
Property, Plant and Equipment29
Property, Plant and Equipment (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Property Plant And Equipment Details | ||
Machinery and equipment | $ 6,864,025 | $ 6,802,971 |
Leasehold improvements | 449,271 | 449,271 |
Accumulated depreciation | (1,252,319) | (803,725) |
Property, plant and equipment, gross | 6,060,977 | 6,448,517 |
Construction in process | 1,523,025 | 1,440,690 |
Total property, plant and equipment, net | $ 7,584,002 | $ 7,889,207 |
Property, Plant and Equipment30
Property, Plant and Equipment (Details Narrative) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Property Plant And Equipment Details Narrative | ||
Depreciation expense related to property, plant, and equipment | $ 448,594 | $ 325,148 |
Equity Incentive Program (Detai
Equity Incentive Program (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Jun. 30, 2015 | Mar. 31, 2015 | |
Stock Issued During Period, Shares | 464,955 | |||||
Stock Issued During Period, Value | $ 126,506 | |||||
Share Issued During Period , Grants in Period | 217,491 | |||||
Share-based Compensation | $ 168,128 | $ 787,373 | $ 798,227 | $ 1,498,905 | ||
Employee Stock Option [Member] | ||||||
Shares Issued, Price Per Share | $ 0.19 | $ 0.19 | $ 0.24 | $ 0.30 | ||
Restricted Stock [Member] | ||||||
Shares Issued, Price Per Share | $ 0.19 | $ 0.19 | $ 0.24 | $ 0.30 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) | 9 Months Ended |
Sep. 30, 2015USD ($)shares | |
Stockholders Equity Details | |
Common Shares for Cash, net Number of common shares issued | 11,021,170 |
Common Shares for Cash,net Value of shares and vested option | $ | $ 3,547,048 |
Common shares for settlement of accrued expenses, Number of common shares issued | 8,334 |
Common shares for settlement of accrued expenses, Value of shares and vested option | $ | $ 3,000 |
Share-Based Compensation, Number of common shares issued | 1,652,907 |
Share-Based Compensation, Value of shares and vested option | $ | $ 798,227 |
Warrants Exercised, Number of common shares issued | 999,667 |
Warrants Exercised, Value of shares and vested option |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - $ / shares | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Common Stock, Shares, Outstanding | 71,715,638 | 58,033,560 |
Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 300,000,000 | 300,000,000 |
Four Employees [Member] | ||
Shares Issued | 24,824 | |
Stock Excercise price | $ 0.20 | |
Seven Directors [Member] | ||
Shares Issued | 160,904 | |
Stock Excercise price | $ 0.10 | |
Chief Executive Officer [Member] | ||
Shares Issued | 91,667 | |
Stock Excercise price | $ 0.10 |
Options and Warrants (Details)
Options and Warrants (Details) | 9 Months Ended |
Sep. 30, 2015$ / sharesshares | |
Granted | 217,491 |
Exercised | 999,667 |
Option [Member] | |
Outstanding as of December 31, 2014 | 11,096,428 |
Granted | 628,157 |
Exercised | |
Forfeited | |
Cancelled | |
Expired | |
Outstanding as of September 30, 2015 (unaudited) | 11,724,585 |
Weighted Average Exercise Price | |
Outstanding as of December 31, 2014 | $ / shares | $ 0.72 |
Granted | $ / shares | $ 0.26 |
Exercised | $ / shares | |
Forfeited | $ / shares | |
Cancelled | $ / shares | |
Expired | $ / shares | |
Outstanding as of September 30, 2015 (unaudited) | $ / shares | $ 0.69 |
Options and Warrants (Details 1
Options and Warrants (Details 1) | 9 Months Ended |
Sep. 30, 2015$ / sharesshares | |
Granted | 217,491 |
Exercised | 999,667 |
Warrant [Member] | |
Outstanding as of December 31, 2014 | 17,567,326 |
Granted | |
Exercised | (1,000,000) |
Forfeited | |
Cancelled | |
Expired | |
Outstanding as of September 30, 2015 (unaudited) | 16,567,326 |
Weighted Average Exercise Price | |
Outstanding as of December 31, 2014 | $ / shares | $ 0.93 |
Granted | $ / shares | |
Exercised | $ / shares | $ 0.0001 |
Forfeited | $ / shares | |
Cancelled | $ / shares | |
Expired | $ / shares | |
Outstanding as of September 30, 2015 (unaudited) | $ / shares | $ 1.02 |
Options and Warrants (Details N
Options and Warrants (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Employee Service Share-based Compensation | $ 72,065 | |
Shares reserved for future issuance | 1,016,771 | |
Option [Member] | ||
Expense | $ 388,676 | $ 388,676 |
Option modification expense | 102,426 | |
Warrant [Member] | ||
Expense | $ 1,136,031 | $ 1,136,031 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Beginning Balance as of January 1, | $ 62,500 | |
Ending Balance as of June 30, | $ 9,931 | |
Chief Executive Officer [Member] | ||
Beginning Balance as of January 1, | ||
Monies owed | $ 60,000 | |
Monies paid | (60,000) | |
Chief Technical Officer [Member] | ||
Beginning Balance as of January 1, | 15,050 | |
Monies owed | 137,624 | |
Monies paid | (142,743) | |
Ending Balance as of June 30, | 9,931 | |
Former Chief Executive Officer / Director [Member] | ||
Beginning Balance as of January 1, | 62,500 | $ 114,434 |
Monies owed | 9,000 | 29,898 |
Monies paid | $ (71,500) | (44,332) |
Ending Balance as of June 30, | $ 100,000 |
Related Party Transactions (D38
Related Party Transactions (Details Narrative) | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Chief Technical Officer [Member] | |
Officers' Compensation | $ 112,500 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Commitments And Contingencies Details Narrative | ||
Accrued Rent | $ 275,000 | $ 525,000 |