Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 13, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | GlyEco, Inc. | |
Entity Central Index Key | 931,799 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Trading Symbol | GLYE | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity a Well-known Seasoned Issuer | No | |
Entity a Voluntary Filer | No | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 111,561,629 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,016 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (unaudited) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Current Assets | ||
Cash | $ 3,804,690 | $ 1,276,687 |
Accounts receivable, net | 757,229 | 807,906 |
Prepaid expenses | 64,882 | 95,775 |
Inventories | 373,087 | 380,789 |
Total current assets | 4,999,888 | 2,561,157 |
Property, plant and equipment, net | 1,266,599 | 1,279,057 |
Other Assets | ||
Deposits | 32,036 | 26,688 |
Goodwill | 835,295 | 835,295 |
Other intangible assets, net | 151,575 | 169,533 |
Total other assets | 1,018,906 | 1,031,516 |
Total assets | 7,285,393 | 4,871,730 |
Current Liabilities | ||
Accounts payable and accrued expenses | 1,505,838 | 1,522,037 |
Due to related parties | 27,522 | 34,405 |
Notes payable - current portion | 124,308 | 117,972 |
Capital lease obligations - current portion | 6,838 | 9,752 |
Total current liabilities | 1,664,506 | $ 1,684,166 |
Non-Current Liabilities | ||
Note payable - non-current portion | 22,622 | |
Capital lease obligations - non-current portion | 9,266 | $ 10,211 |
Total non-current liabilities | 31,888 | 10,211 |
Total liabilities | $ 1,696,394 | $ 1,694,377 |
Commitments and Contingencies | ||
Stockholders' Equity | ||
Preferred stock; 40,000,000 shares authorized; $0.0001 par value; no shares issued and outstanding as of March 31, 2016 and December 31, 2015 | ||
Common stock, 300,000,000 shares authorized; $0.0001 par value; 111,496,754 and 72,472,412 shares issued and outstanding as of March 31, 2016 and December 31, 2015, respectively | $ 11,149 | $ 7,248 |
Additional paid-in capital | 40,934,263 | 37,720,608 |
Accumulated deficit | (35,356,413) | (34,550,503) |
Total stockholders' equity | 5,588,999 | 3,177,353 |
Total liabilities and stockholders' equity | $ 7,285,393 | $ 4,871,730 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (unaudited) (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock, authorized | 40,000,000 | 40,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, authorized | 300,000,000 | 300,000,000 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, issued | 111,496,754 | 72,472,412 |
Common stock, outstanding | 111,496,754 | 72,472,412 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Statement [Abstract] | ||
Net sales | $ 1,442,898 | $ 1,342,451 |
Cost of goods sold | 1,305,527 | 1,450,264 |
Gross profit (loss) | 137,371 | (107,813) |
Operating expenses | ||
Consulting fees | 42,560 | 97,310 |
Share-based compensation | 280,764 | 333,587 |
Salaries and wages | 256,450 | 140,945 |
Legal and professional | 98,773 | 121,902 |
General and administrative | 259,488 | 134,294 |
Total operating expenses | 938,035 | 828,038 |
Loss from operations | (800,664) | (935,851) |
Other (income) and expense | ||
Interest income | (53) | (81) |
Interest expense | 4,612 | 42,996 |
Total other expense, net | 4,559 | 42,915 |
Loss before provision for income taxes | (805,223) | $ (978,766) |
Provision for income taxes | 687 | |
Net loss | $ (805,910) | $ (978,766) |
Basic and diluted loss per share (in dollars per share) | $ (0.01) | $ (0.02) |
Weighted average number of common shares outstanding - basic and diluted (in shares) | 86,451,976 | 63,095,961 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Statement of Stockholders' Equity - 3 months ended Mar. 31, 2016 - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Total |
Balance, at beginning at Dec. 31, 2015 | $ 7,248 | $ 37,720,608 | $ (34,550,503) | $ 3,177,353 |
Balance, at beginning (in shares) at Dec. 31, 2015 | 72,472,412 | 72,472,412 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common shares for cash, net | $ 3,746 | 2,933,046 | $ 2,936,792 | |
Common shares for cash, net (in shares) | 37,115,620 | 37,475,620 | ||
Share-based compensation | $ 155 | $ 280,609 | $ 280,764 | |
Share-based compensation (in shares) | 1,548,722 | 1,548,722 | ||
Net loss | $ (805,910) | $ (805,910) | ||
Balance, at end at Mar. 31, 2016 | $ 11,149 | $ 40,934,263 | $ (35,356,413) | $ 5,588,999 |
Balance, at end (in shares) at Mar. 31, 2016 | 111,136,754 | 111,496,754 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Net cash flow from operating activities | ||
Net loss | $ (805,910) | $ (978,766) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 58,573 | 149,283 |
Amortization | 17,958 | 52,957 |
Share-based compensation expense | 280,764 | 333,587 |
Provision for bad debt | 63,189 | |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | $ (12,512) | $ (27,321) |
Due from related party | ||
Prepaid expenses | $ 30,893 | $ 13,778 |
Inventories | 7,702 | $ (384,843) |
Deposits | (5,348) | |
Accounts payable and accrued expenses | (16,197) | $ (459,165) |
Due to related party | (6,883) | (31,877) |
Net cash used in operating activities | (387,771) | (1,332,367) |
Cash flows from investing activities | ||
Purchase of property, plant and equipment | (13,605) | (95,893) |
Net cash used in investing activities | (13,605) | (95,893) |
Cash flows from financing activities | ||
Repayment of notes payable | (3,552) | (1,686) |
Repayment of capital lease obligations | (3,861) | (78,035) |
Proceeds from sale of common stock, net | 2,936,792 | 3,547,048 |
Net cash provided by financing activities | 2,929,379 | 3,467,327 |
Increase in cash | 2,528,003 | 2,039,067 |
Cash at beginning of the period | 1,276,687 | 494,847 |
Cash at end of the period | 3,804,690 | 2,533,914 |
Supplemental disclosure of cash flow information | ||
Interest paid during period | 2,312 | $ 42,996 |
Income taxes paid during period | 687 | |
Supplemental disclosure of non-cash items | ||
Acquisition of equipment with note payable | $ 32,510 |
Organization and Nature of Busi
Organization and Nature of Business | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Nature of Business | 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 six processing centers in the United States with our corporate offices located in Rock Hill, South Carolina. These processing centers are located in (1) Minneapolis, Minnesota, (2) Indianapolis, Indiana, (3) Lakeland, Florida, (4) Rock Hill, South Carolina, (5) Tea, South Dakota, and (6) Landover, Maryland. We also previously operated a processing center in Elizabeth, New Jersey. 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 March 31, 2016 and December 31, 2015 and for the three months ended March 31, 2016 and 2015, have been prepared assuming that the Company will continue as a going concern. As of March 31, 2016, 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 plan to achieve profitable operations through the implementation of operating efficiencies at our facilities and increased revenue through the offering of additional products and the expansion of our geographic footprint through acquisitions, broader distribution from our current facilities and/or the opening of additional facilities. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. These factors raise substantial doubt about the Companys ability to continue as a going concern. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | NOTE 2 Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The accompanying condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (GAAP), and pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments (consisting of normally recurring accruals) necessary for a fair presentation on an interim basis. The operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2016. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted; however, management believes that the disclosures are adequate to make the information presented not misleading. This report should be read in conjunction with the Companys Annual Report on Form 10-K for the year ended December 31, 2015, including the Companys audited consolidated financial statements and related notes. 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); 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 of doubtful accounts, the value of stock-based compensation and warrants, the allocation of the purchase price in the Companys acquisitions, the recoverability of property, plant and equipment, goodwill, other intangibles 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. Revenue Recognition The Company recognizes revenue when (1) delivery of product has occurred or services have been rendered, (2) there is persuasive evidence of a sale arrangement, (3) selling prices are fixed or determinable, and (4) collectability from the customer (individual customers and distributors) is reasonably assured. Revenue consists primarily of revenue generated from the sale of the Companys products. This generally occurs when the Companys products are shipped from its facility as title has passed. Revenue is recorded net of estimated cash discounts. The Company estimates and accrues an allowance for sales returns at the time the product is sold. To date, sales returns have not been material. 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. Such amounts were insignificant during the three months ended March 31, 2016 and 2015. 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 customers willingness or ability to pay, the Companys 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 $114,793 and $203,270 as of March 31, 2016 and December 31, 2015, 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. Finished goods represents work-in-process items with additive costs added. 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 years, and zero salvage value. Expenditures for repairs and maintenance are charged to expense as incurred. For purposes of computing depreciation, the useful lives of property, plant and equipment are as follows: Leasehold improvements Lesser of the remaining lease term or 5 years Machinery and equipment 3-20 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 and accrued expenses, amounts due to and from related parties and current portion of capital lease obligations and notes payable are reflected in the condensed consolidated balance sheets at their estimated fair values primarily due to their short-term nature. As to long-term capital lease obligations and notes payable, estimated fair values are based on borrowing rates currently available to the Company for loans with similar terms and maturities, which represent level 2 input levels. Net Loss per Share Calculation The basic net loss per common share is computed by dividing the net loss available to common shareholders by the weighted average number of shares outstanding during a period. Diluted loss per common share is computed by dividing the net loss available to common shareholders by the weighted average number of common shares outstanding plus potentially dilutive securities. The Companys potentially dilutive securities outstanding are not shown in a diluted net loss per share calculation because their effect in both 2016 and 2015 would be anti-dilutive. At March 31, 2016, these potentially dilutive securities included warrants of 8,366,137 and stock options of 11,499,400 for a total of 19,865,537. At March 31, 2015, these potentially dilutive securities included warrants of 17,567,326 and stock options of 11,421,833 for a total of 29,989,159. 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 and non-employee directors, 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 Certain prior period amounts have been reclassified to conform to the current period presentation. 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). This updated guidance supersedes the current revenue recognition guidance, including industry-specific guidance. The updated guidance introduces a five-step model to achieve its core principal of the entity recognizing revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The updated guidance is effective for interim and annual periods beginning after December 15, 2016, and early adoption is not permitted. In July 2015, the FASB decided to delay the effective date of ASU 2014-09 until December 15, 2017. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. The Company has not yet selected a transition method and is currently assessing the impact of the adoption of ASU 2014-09 will have on its condensed consolidated financial statements and 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. There was no impact from the adoption of this ASU. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern (ASU 2014-15). ASU 2014-15 defines managements responsibility to evaluate whether there is substantial doubt about an organizations 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 organizations 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 condensed 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. There was no impact from the adoption of this ASU. 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. In November 2015, the FASB issued ASU 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes, an update to accounting guidance to simplify the presentation of deferred income taxes. The guidance requires an entity to classify all deferred tax liabilities and assets, along with any valuation allowance, as noncurrent in the balance sheet. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2016, including interim periods within these reporting periods. Early adoption is permitted. The Company is currently assessing the impact of the adoption of ASU 2015-17 will have on its condensed consolidated financial statements and disclosures. In February 2016, the FASB issued ASU 2016-02, Leases, which requires the lease rights and obligations arising from lease contracts, including existing and new arrangements, to be recognized as assets and liabilities on the balance sheet. ASU 2016-02 is effective for reporting periods beginning after December 15, 2018 with early adoption permitted. While the Company is still evaluating ASU 2016-02, the Company expects the adoption of ASU 2016-02 to have a material effect on the Companys consolidated financial condition due to the recognition of the lease rights and obligations as assets and liabilities. The Company is currently assessing the impact of the adoption of ASU 2016-02 will have on its condensed consolidated financial statements and disclosures . In March 2016, the FASB issued ASU No. 2016-09, Compensation Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which simplified certain aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities and classification in the statement of cash flows. ASU 2016-09 will be effective for annual reporting periods beginning after December 15, 2016 and interim periods within those annual periods. The Company is currently evaluating the impact of adopting the new stock compensation standard on its condensed consolidated financial statements. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | NOTE 3 Inventories The Companys total inventories were as follows: March 31, December 31, 2016 2015 Raw materials $ 159,309 $ 217,165 Work in process 59,246 84,343 Finished goods 154,532 79,281 Total inventories $ 373,087 $ 380,789 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 4 Income Taxes As of March 31, 2016 and December 31, 2015, the Company had a net operating loss (NOL) carryforward available to reduce future taxable income, if any. The NOL carryforward 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 carryforward, by having taxable income, a valuation allowance has been established as of March 31, 2016 and December 31, 2015 to reduce the net tax benefit asset value to zero. |
Property, Plant and Equipment
Property, Plant and Equipment | 3 Months Ended |
Mar. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | NOTE 5 Property, Plant and Equipment The Companys property, plant and equipment were as follows: March 31, December 31, 2016 2015 Machinery and equipment $ 1,905,565 $ 1,863,322 Leasehold improvements 50,772 50,772 Accumulated depreciation (720,540 ) (661,930 ) 1,235,797 1,252,164 Construction in process 30,712 26,893 Total property, plant and equipment, net $ 1,266,599 $ 1,279,057 |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2016 | |
Stockholders' Equity | |
Stockholders' Equity | NOTE 6 Stockholders' Equity Preferred Stock The Companys 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 Companys 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 March 31, 2016, the Company had no shares of Preferred Stock outstanding. Common Stock As of March 31, 2016, the Company has 111,496,754, $0.0001 par value, shares of common stock 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. Equity Incentive Program On December 18, 2014, the Companys Board of Directors approved an Equity Incentive Program (the Equity Incentive Program), whereby the Companys employees may elect to receive equity in lieu of cash for all or part of their salary compensation. For the quarter ended March 31, 2016, employees could elect to receive twelve and a half shares of common stock per each dollar participated in the Equity Incentive Program. During the three months ended March 31, 2016, the Company issued the following shares of common stock in connection with financing activities: On February 26, 2016, the Company closed a rights offering. The rights offering was made pursuant to a registration statement on Form S-1 filed with the Securities and Exchange Commission and declared effective on January 20, 2016. Pursuant to the rights offering, the Company distributed to holders of its common stock non-transferable subscription rights to purchase up to 50,200,947 shares of the Companys common stock, par value $0.0001 per share. Each shareholder received one subscription right for every one share of common stock owned at 5:00 p.m. EST on October 30, 2015, the record date. Each subscription right entitled a shareholder to purchase 0.7 shares of the Companys common stock at a subscription price of $0.08 per share, which was referred to as the basic subscription privilege. If a shareholder fully exercised their basic subscription privilege and other shareholders did not fully exercise their basic subscription privileges, shareholders could also exercise an over-subscription privilege to purchase a portion of the unsubscribed shares at the same subscription price of $0.08 per share. During the rights offering, subscription rights to purchase a total of 37,475,620 shares of common stock, par value $0.0001, were exercised. The exercise of these subscription rights resulted in gross proceeds to the Company of approximately $2,998,050 before deducting expenses of the rights offering. During the three months ended March 31, 2016, the Company issued the following shares of common stock for compensation: On January 31, 2016, the Company issued an aggregate of 97,292 shares of Common Stock to five employees of the Company pursuant to the Company's Equity Incentive Program at a price of $0.08 per share. On February 28, 2016, the Company issued an aggregate of 97,292 shares of Common Stock to five employees of the Company pursuant to the Company's Equity Incentive Program at a price of $0.08 per share. On March 28, 2016, the Company issued an aggregate of 419,348 shares of Common Stock to four employees of the Company pursuant to certain performance incentive programs at a price of $0.11 per share. On March 31, 2016, the Company issued an aggregate of 837,498 shares of Common Stock to seven directors of the Company pursuant to the Company's FY2016 Director Compensation Plan at a price of $0.09 per share. On March 31, 2016, the Company issued an aggregate of 97,292 shares of Common Stock to five employees of the Company pursuant to the Company's Equity Incentive Program at a price of $0.08 per share. Summary: Number of Common Value of Common shares for cash, net of offering costs 37,475,620 $ 2,936,792 Share-based compensation 1,548,722 $ 280,764 Performance and/or market based stock awards In January 2015, the Board of Directors approved the issuance of 940,595 restricted shares of the Company. These shares will be issued to the then members of the Board of Directors upon vesting, which will be when the market price of the Companys common stock trades at or above $2 for a specified period. The initial value of the restricted stock grant was approximately $38,000, which will be amortized over the estimated service period. The Company recorded an expense of $1,586 from the amortization of the unvested restricted shares for the quarter ended March 31, 2016. The shares were valued using a Monte Carlo Simulation with a six year life, 88.0% volatility and a risk free interest rate of 1.79%. In September 2015, the Board of Directors approved the issuance of 1,524,245 restricted shares of the Company. These shares will be issued to the then Interim Chief Executive Officer and President upon vesting, which will be according to the following terms: · 50% if the Companys revenue for the first half of 2016 is at least 20% greater than revenue for the first half of 2015 and · 50% if the Company has positive EBITDA (a non GAAP measure) for the first half of 2016. The initial value of the restricted stock grant was approximately $92,000. The Company has not recorded any expense related to this grant as the applicable accounting guidance requires that if the performance condition must be met for the award to vest, compensation cost will be recognized only if the performance condition is satisfied and the above noted performance conditions have not been met. Further, the estimated quantity of awards for which it is probable that the performance conditions will be achieved must be reevaluated each reporting period and adjusted and management has estimated that the probability of achieving the performance conditions is minimal. In February 2016, the Board of Directors approved the issuance of 3,301,358 restricted shares of the Company. These shares will be issued to the then President (1,100,453 shares) and Chief Financial Officer (2,200,905 shares) upon vesting, which will be according to the following terms: - 20% when the market price of the Companys common stock trades at or above $0.30 for a specified period. - 30% when the market price of the Companys common stock trades at or above $0.40 for a specified period. - 30% when the market price of the Companys common stock trades at or above $0.50 for a specified period. - 20% when the market price of the Companys common stock trades at or above $0.60 for a specified period. The initial value of the restricted stock grant was approximately $198,000, which will be amortized over the estimated service period. The Company recorded an expense of $452 from the amortization of the unvested restricted shares for the quarter ended March 31, 2016. The shares were valued using a Monte Carlo Simulation with a six year life, 91.0% volatility and a risk free interest rate of 1.34%. In January 2016, the Board of Directors approved the issuance of 6,281,250 restricted shares of the Company. These shares will be issued to the then members of the Board of Directors upon vesting, which will be when the market price of the Companys common stock trades at or above $0.12 for a specified period or if the Company has positive EBITDA (a non GAAP measure) for one quarter in 2016. As of March 31, 2016, the Company has determined it is probable the Company will achieve the performance target. The initial value of the restricted stock grant was approximately $455,000, which will be amortized over the estimated performance period. The Company recorded an expense of $113,840 from the amortization of the unvested restricted shares for the quarter ended March 31, 2016. The shares were valued using a Monte Carlo Simulation with a one year life, 106.0% volatility and a risk free interest rate of 0.65%. The estimated value of the restricted stock grant based on the market target was approximately $281,000. If the performance target is not achieved, the Company will recognize this value over the service period. Options and warrants During the quarter ended March 31, 2016, the Company did not have any grants or exercises of stock options or warrants. The Company recognized $20,033 of expense related to the vesting of outstanding options during the quarter ended March 31, 2016. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 7 Related Party Transactions Former Interim Chief Executive Officer The former Interim Chief Executive Officer, who stepped down at the end of April 2016, is the sole owner of Rocco Advisors. Amounts due and payable to the Interim Chief Executive Officer for services performed were paid to Rocco Advisors, instead of directly to the Interim Chief Executive Officer. These services and fees were in the ordinary course of business and subject to an agreement approved by the Companys Board of Directors. 2016 2015 Beginning Balance as of January 1, $ - $ - Monies owed to related party for services performed 50,000 15,000 Monies paid (15,000 ) (7,500 ) Ending Balance as of March 31, $ 35,000 $ 7,500 Vice President of US Operations The Vice President of US Operations is the sole owner of BKB Holdings, LLC, which is the landlord of the property where GlyEco Acquisition Corp #5s processing center is located. The Vice President of US Operations also is the sole owner of Renew Resources, LLC, which provides services to the Company as a vendor. 2016 2015 Beginning Balance as of January 1, $ 2,791 $ (3,200 ) Monies owed to related party for services performed 21,106 17,742 Monies paid (18,718 ) (16,135 ) Ending Balance as of March 31, (receivable) $ 5,179 $ (1,593 ) Florida General Manager The General Manager of our Florida processing center, who joined the Company in December 2015, also manages the business of Brians On-Site Recycling, Inc., which is a competitor to the Company in the local Florida market. The Company sells finished goods to Brians On-Site Recycling, Inc. and buys raw materials from Brians On-Site Recycling, Inc. 2016 Beginning Balance as of January 1, $ 3,942 Monies owed to related party for services performed 3,257 Monies due from related party for services performed (15,841 ) Monies paid, net (1,959 ) Ending Balance as of March 31, (receivable) $ (10,601 ) Former Chief Technical Officer The former Chief Technical Officer, who left the Company in late 2015, is the sole owner of WEBA Technologies (WEBA), 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 former Chief Technical Officer in the ordinary course of business. The WEBA transactions are summarized below. 2015 Beginning Balance as of January 1, $ 8,024 Monies owed to related party for services performed 65,236 Monies paid (59,516 ) Ending Balance as of March 31, $ 13,744 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 8 Commitments and Contingencies Litigation The Company may be party to legal proceedings in the ordinary course of business. The Company believes that the nature of these proceedings (collection actions, etc.) are typical for a Company of our size and scope of operations. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. Below is an overview of two pending legal proceedings and one outstanding alleged claim. On January 8, 2016, Acquisition Sub. #4 filed a civil action against Onyxx Group LLC in the Circuit Court of Hillsborough County, Florida. This civil action relates to an outstanding balance due from Onyxx Group LLC to Acquisition Sub. #4. This civil action is still pending. Acquisition Sub. #4 is in the process of filing a civil action against Encore Petroleum, LLC in the Superior Court of New Jersey Law Division, Hudson County. This civil action relates to an outstanding balance due from Encore Petroleum to Acquisition Sub. #4. This civil action is still pending. The Company is also aware of one matter that involves an alleged claim against the Company, and it is at least reasonably possible that the claim will be pursued. The claim involves contracts with our former director and his related entities that provided services and was our landlord for the Companys former processing facility in New Jersey. In this matter, the landlord of the Companys formerly leased property claims back rent is due for property used by the Company outside of the scope of its lease agreement. During the quarter ended March 31, 2015, the former landlord denied the Company access to the New Jersey facility and prepared an eviction notice. The Company negotiated a payment 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. On December 28, 2015, the Company ultimately approved the termination of the lease agreements related to the New Jersey facility, thereby ceasing all operations at that particular facility. This termination was prompted by the former landlords demand for payment of approximately $2.3 million to maintain access to the facility. The Companys position is that the Company has sufficiently paid the former landlord for use of any such additional space. The estimated range involved in resolving this dispute is from $0 to $2,000,000. Management believes this claim is meritless, and the Company will defend itself to the extent it is economically justified. As of March 31, 2016 and December 31, 2015, the Company had recorded an accrual in the amount of $250,000 and $250,000, respectively to provide for estimated contract termination costs associated with its exit from the New Jersey facility. 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 managements 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 Companys 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 Companys consolidated financial position, results of operations or cash flows. The Company is aware of one environmental remediation issue related to our former 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 managements knowledge, the former landlord has engaged a licensed site remediation professional and had assumed responsibility for this remediation. In managements opinion the liability for this remediation is the responsibility of the former landlord. However, the former landlord has disputed this position and it is an open issue subject to negotiation. Currently, we have no knowledge as to the scope of the landlords former remediation obligation. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 9 Subsequent Events Recent Stock Issuances Since April 1, 2016, the Company has issued an aggregate of 64,875 shares of common stock pursuant to the Companys Equity Incentive Program. |
Basis of Presentation and Sum16
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (GAAP), and pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments (consisting of normally recurring accruals) necessary for a fair presentation on an interim basis. The operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2016. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted; however, management believes that the disclosures are adequate to make the information presented not misleading. This report should be read in conjunction with the Companys Annual Report on Form 10-K for the year ended December 31, 2015, including the Companys audited consolidated financial statements and related notes. |
Consolidation | 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); 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 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 | 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 of doubtful accounts, the value of stock-based compensation and warrants, the allocation of the purchase price in the Companys acquisitions, the recoverability of property, plant and equipment, goodwill, other intangibles 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. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue when (1) delivery of product has occurred or services have been rendered, (2) there is persuasive evidence of a sale arrangement, (3) selling prices are fixed or determinable, and (4) collectability from the customer (individual customers and distributors) is reasonably assured. Revenue consists primarily of revenue generated from the sale of the Companys products. This generally occurs when the Companys products are shipped from its facility as title has passed. Revenue is recorded net of estimated cash discounts. The Company estimates and accrues an allowance for sales returns at the time the product is sold. To date, sales returns have not been material. Shipping costs passed to the customer are included in net sales. |
Costs | 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. Such amounts were insignificant during the three months ended March 31, 2016 and 2015. Advertising costs are expensed as incurred. |
Accounts Receivable | 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 customers willingness or ability to pay, the Companys 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 $114,793 and $203,270 as of March 31, 2016, and December 31, 2015, respectively. |
Inventories | 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. Finished goods represents work-in-process items with additive costs added. The Company periodically reviews its inventories for obsolete or unsalable items and adjusts its carrying value to reflect estimated realizable values. |
Property and Equipment | 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 years, and zero salvage value. Expenditures for repairs and maintenance are charged to expense as incurred. For purposes of computing depreciation, the useful lives of property, plant and equipment are as follows: Leasehold improvements Lesser of the remaining lease term or 5 years Machinery and equipment 3-20 years |
Fair Value of Financial Instruments | 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 and accrued expenses, amounts due to and from related parties and current portion of capital lease obligations and notes payable are reflected in the condensed consolidated balance sheets at their estimated fair values primarily due to their short-term nature. As to long-term capital lease obligations and notes payable, estimated fair values are based on borrowing rates currently available to the Company for loans with similar terms and maturities, which represent level 2 input levels. |
Net Loss per Share Calculation | Net Loss per Share Calculation The basic net loss per common share is computed by dividing the net loss available to common shareholders by the weighted average number of shares outstanding during a period. Diluted loss per common share is computed by dividing the net loss available to common shareholders by the weighted average number of common shares outstanding plus potentially dilutive securities. The Companys potentially dilutive securities outstanding are not shown in a diluted net loss per share calculation because their effect in both 2016 and 2015 would be anti-dilutive. At March 31, 2016, these potentially dilutive securities included warrants of 8,366,137 and stock options of 11,499,400 for a total of 19,865,537. At March 31, 2015, these potentially dilutive securities included warrants of 17,567,326 and stock options of 11,421,833 for a total of 29,989,159. |
Income Taxes | 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 | Share-based Compensation All share-based payments to employees and non-employee directors, 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 | Reclassification Certain prior period amounts have been reclassified to conform to the current period presentation. |
Recently Issued Accounting Pronouncements | 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). This updated guidance supersedes the current revenue recognition guidance, including industry-specific guidance. The updated guidance introduces a five-step model to achieve its core principal of the entity recognizing revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The updated guidance is effective for interim and annual periods beginning after December 15, 2016, and early adoption is not permitted. In July 2015, the FASB decided to delay the effective date of ASU 2014-09 until December 15, 2017. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. The Company has not yet selected a transition method and is currently assessing the impact of the adoption of ASU 2014-09 will have on its condensed consolidated financial statements and 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. There was no impact from the adoption of this ASU. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern (ASU 2014-15). ASU 2014-15 defines managements responsibility to evaluate whether there is substantial doubt about an organizations 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 organizations 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 condensed 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. There was no impact from the adoption of this ASU. 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. In November 2015, the FASB issued ASU 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes, an update to accounting guidance to simplify the presentation of deferred income taxes. The guidance requires an entity to classify all deferred tax liabilities and assets, along with any valuation allowance, as noncurrent in the balance sheet. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2016, including interim periods within these reporting periods. Early adoption is permitted. The Company is currently assessing the impact of the adoption of ASU 2015-17 will have on its condensed consolidated financial statements and disclosures. In February 2016, the FASB issued ASU 2016-02, Leases, which requires the lease rights and obligations arising from lease contracts, including existing and new arrangements, to be recognized as assets and liabilities on the balance sheet. ASU 2016-02 is effective for reporting periods beginning after December 15, 2018 with early adoption permitted. While the Company is still evaluating ASU 2016-02, the Company expects the adoption of ASU 2016-02 to have a material effect on the Companys consolidated financial condition due to the recognition of the lease rights and obligations as assets and liabilities. The Company is currently assessing the impact of the adoption of ASU 2016-02 will have on its condensed consolidated financial statements and disclosures . In March 2016, the FASB issued ASU No. 2016-09, Compensation Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which simplified certain aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities and classification in the statement of cash flows. ASU 2016-09 will be effective for annual reporting periods beginning after December 15, 2016 and interim periods within those annual periods. The Company is currently evaluating the impact of adopting the new stock compensation standard on its condensed consolidated financial statements. |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | The Companys total inventories were as follows: March 31, December 31, 2016 2015 Raw materials $ 159,309 $ 217,165 Work in process 59,246 84,343 Finished goods 154,532 79,281 Total inventories $ 373,087 $ 380,789 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipment | The Companys property, plant and equipment were as follows: March 31, December 31, 2016 2015 Machinery and equipment $ 1,905,565 $ 1,863,322 Leasehold improvements 50,772 50,772 Accumulated depreciation (720,540 ) (661,930 ) 1,235,797 1,252,164 Construction in process 30,712 26,893 Total property, plant and equipment, net $ 1,266,599 $ 1,279,057 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Stockholders' Equity | |
Schedule of common stock issued | Summary: Number of Common Value of Common shares for cash, net of offering costs 37,475,620 $ 2,936,792 Share-based compensation 1,548,722 $ 280,764 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Former Interim Chief Executive Officer [Member] | |
Related Party Transaction [Line Items] | |
Schedule of related party transations | These services and fees were in the ordinary course of business and subject to an agreement approved by the Companys Board of Directors. 2016 2015 Beginning Balance as of January 1, $ - $ - Monies owed to related party for services performed 50,000 15,000 Monies paid (15,000 ) (7,500 ) Ending Balance as of March 31, $ 35,000 $ 7,500 |
Vice President of US Operations [Member] | |
Related Party Transaction [Line Items] | |
Schedule of related party transations | The Vice President of US Operations also is the sole owner of Renew Resources, LLC, which provides services to the Company as a vendor. 2016 2015 Beginning Balance as of January 1, $ 2,791 $ (3,200 ) Monies owed to related party for services performed 21,106 17,742 Monies paid (18,718 ) (16,135 ) Ending Balance as of March 31, (receivable) $ 5,179 $ (1,593 ) |
Florida General Manager [Member] | |
Related Party Transaction [Line Items] | |
Schedule of related party transations | The Company sells finished goods to Brians On-Site Recycling, Inc. and buys raw materials from Brians On-Site Recycling, Inc. 2016 Beginning Balance as of January 1, $ 3,942 Monies owed to related party for services performed 3,257 Monies due from related party for services performed (15,841 ) Monies paid, net (1,959 ) Ending Balance as of March 31, (receivable) $ (10,601 ) |
Former Chief Technical Officer [Member] | |
Related Party Transaction [Line Items] | |
Schedule of related party transations | The WEBA transactions are summarized below. 2015 Beginning Balance as of January 1, $ 8,024 Monies owed to related party for services performed 65,236 Monies paid (59,516 ) Ending Balance as of March 31, $ 13,744 |
Basis of Presentation and Sum21
Basis of Presentation and Summary of Significant Accounting Policies (Details) | 3 Months Ended |
Mar. 31, 2016 | |
Leasehold improvements [Member] | |
Useful life | 5 years |
Descripion of useful lives | Lesser of the remaining lease term or 5 years |
Machinery And Equipment [Member] | Minimum [Member] | |
Useful life | 3 years |
Machinery And Equipment [Member] | Maximum [Member] | |
Useful life | 20 years |
Basis of Presentation and Sum22
Basis of Presentation and Summary of Significant Accounting Policies (Details Narrative) | 3 Months Ended | ||
Mar. 31, 2016USD ($)Numbershares | Mar. 31, 2015shares | Dec. 31, 2015USD ($) | |
Number of operating segement | Number | 1 | ||
Allowance for doubtful accounts | $ | $ 114,793 | $ 203,270 | |
Number of potentially dilutive securities | 19,865,537 | 29,989,159 | |
Warrant [Member] | |||
Number of potentially dilutive securities | 8,366,137 | 17,567,326 | |
Employee Stock Option [Member] | |||
Number of potentially dilutive securities | 11,499,400 | 11,421,833 |
Inventories (Details)
Inventories (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 159,309 | $ 217,165 |
Work in process | 59,246 | 84,343 |
Finished goods | 154,532 | 79,281 |
Total inventories | $ 373,087 | $ 380,789 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | 3 Months Ended |
Mar. 31, 2016 | |
Description of operationg loss carry forwards | Net operating loss (NOL) carryforward available to reduce future taxable income, if any. |
Minimum [Member] | |
Expiration year | 2,027 |
Maximum [Member] | |
Expiration year | 2,035 |
Property, Plant and Equipment25
Property, Plant and Equipment (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Accumulated depreciation | $ (720,540) | $ (661,930) |
Property, plant and equipment before construction in process | 1,235,797 | 1,252,164 |
Construction in process | 30,712 | 26,893 |
Total property, plant and equipment | 1,266,599 | 1,279,057 |
Machinery And Equipment [Member] | ||
Property, plant and equipment before construction in process | 1,905,565 | 1,863,322 |
Leasehold improvements [Member] | ||
Property, plant and equipment before construction in process | $ 50,772 | $ 50,772 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) | 3 Months Ended |
Mar. 31, 2016USD ($)shares | |
Stockholders' Equity | |
Common shares issued for cash, net of offering costs (in shares) | shares | 37,475,620 |
Share-based compensation (in shares) | shares | 1,548,722 |
Common shares issued for cash, net of offering costs, value | $ | $ 2,936,792 |
Share-based compensation, value | $ | $ 280,764 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Mar. 31, 2016 | Mar. 28, 2016 | Feb. 28, 2016 | Jan. 31, 2016 | Jan. 20, 2016 | Feb. 26, 2016 | Mar. 31, 2016 | Dec. 31, 2015 |
Preferred stock, authorized | 40,000,000 | 40,000,000 | 40,000,000 | |||||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||
Preferred stock, shares issued | 0 | 0 | 0 | |||||
Preferred stock, shares outstanding | 0 | 0 | 0 | |||||
Common stock, outstanding | 111,496,754 | 111,496,754 | 72,472,412 | |||||
Common stock, authorized | 300,000,000 | 300,000,000 | 300,000,000 | |||||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||
Number of common stock issued | 37,475,620 | |||||||
Rights Offering [Member] | ||||||||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | ||||||
Number of shares purchased | 50,200,947 | 37,475,620 | ||||||
Description of offering | Each shareholder received one subscription right for every one share of common stock owned at 5:00 p.m. EST on October 30, 2015, the record date. | |||||||
Subscription price (in dollars per share) | $ 0.08 | |||||||
Each subscription right entitled a shareholder to purchase share price | 0.07 | |||||||
Unsubscribed shares subscription price (in dollars per share) | $ 0.08 | |||||||
Gross proceeds from subscription | $ 2,998,050 | |||||||
Equity Incentive Program [Member] | ||||||||
Description of award | E mployees could elect to receive twelve and a half shares of commons stock per each dollar participated. | |||||||
Equity Incentive Program [Member] | Five Employees [Member] | ||||||||
Number of common stock issued | 97,292 | 97,292 | 97,292 | |||||
Share price (in dollars per share) | $ 0.08 | $ 0.08 | $ 0.08 | $ 0.08 | ||||
Performance Incentive Programs [Member] | Four Employees [Member] | ||||||||
Number of common stock issued | 419,348 | |||||||
Share price (in dollars per share) | $ 0.11 | |||||||
FY2016 Director Compensation Plan [Member] | Seven Directors [Member] | ||||||||
Number of common stock issued | 837,498 | |||||||
Share price (in dollars per share) | $ 0.09 | $ 0.09 | ||||||
Series AA Preferred Stock [Member] | ||||||||
Preferred stock, authorized | 3,000,000 | 3,000,000 |
Stockholders' Equity (Details28
Stockholders' Equity (Details Narrative 1) - USD ($) | 1 Months Ended | 3 Months Ended | |||
Feb. 29, 2016 | Jan. 31, 2016 | Sep. 30, 2015 | Mar. 31, 2016 | Jan. 31, 2015 | |
Options and Warrants [Member] | |||||
Expense related to the vesting of outstanding | $ 20,033 | ||||
Restricted Shares [Member] | Director [Member] | |||||
Number of restricted shares issued, new issue | 940,595 | ||||
Share price (in dollars per share) | $ 2 | ||||
Restricted Shares [Member] | Former Interim Chief Executive Officer [Member] | |||||
Number of restricted shares issued, new issue | 1,524,245 | ||||
Performance Market Based Stock Awards [Member] | |||||
Value of restricted stock grant | $ 92,000 | 38,000 | |||
Share based compensation | $ 1,586 | ||||
Method used | Monte Carlo Simulation. | ||||
Expected term (in years) | 6 years | ||||
Volatility rate | 88.00% | ||||
Risk free interest rate | 1.79% | ||||
Description of vesting rights | The restricted shares will vest according to the following terms: · 50% if the Companys revenue for the first half of 2016 is at least 20% greater than revenue for the first half of 2015 and · 50% if the Company has positive EBITDA (a non GAAP measure) for the first half of 2016. | ||||
Performance Market Based Stock Awards Dated February 2016 [Member] | |||||
Number of restricted shares issued, new issue | 3,301,358 | ||||
Value of restricted stock grant | $ 198,000 | ||||
Share based compensation | $ 452 | ||||
Method used | Monte Carlo Simulation. | ||||
Expected term (in years) | 6 years | ||||
Volatility rate | 91.00% | ||||
Risk free interest rate | 1.34% | ||||
Description of vesting rights | The restricted shares will vest according to the following terms: - 20% when the market price of the Companys common stock trades at or above $0.30 for a specified period. - 30% when the market price of the Companys common stock trades at or above $0.40 for a specified period. - 30% when the market price of the Companys common stock trades at or above $0.50 for a specified period. - 20% when the market price of the Companys common stock trades at or above $0.60 for a specified period. | ||||
Performance Market Based Stock Awards Dated February 2016 [Member] | President [Member] | |||||
Number of restricted shares issued, new issue | 1,100,453 | ||||
Performance Market Based Stock Awards Dated February 2016 [Member] | Chief Financial Officer [Member] | |||||
Number of restricted shares issued, new issue | 2,200,905 | ||||
Performance Stock Awards January 2016 [Member] | |||||
Number of restricted shares issued, new issue | 6,281,250 | ||||
Share price (in dollars per share) | $ 455,000 | ||||
Value of restricted stock grant | $ 281,000 | ||||
Share based compensation | $ 113,840 | ||||
Method used | Monte Carlo Simulation. | ||||
Expected term (in years) | 1 year | ||||
Volatility rate | 106.00% | ||||
Risk free interest rate | 65.50% |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Chief Executive Officer [Member] | ||
Due to Related Parties, Current [Roll Forward] | ||
Beginning Balance | ||
Monies owed to related party for services performed | $ 50,000 | $ 15,000 |
Monies paid, net | (15,000) | (7,500) |
Ending Balance | 35,000 | 7,500 |
Vice President of US Operations [Member] | ||
Due to Related Parties, Current [Roll Forward] | ||
Beginning Balance | 2,791 | (3,200) |
Monies owed to related party for services performed | 21,106 | 17,742 |
Monies paid, net | (18,718) | (16,135) |
Ending Balance | 5,179 | (1,593) |
Florida General Manager [Member] | ||
Due to Related Parties, Current [Roll Forward] | ||
Beginning Balance | 3,942 | |
Monies owed to related party for services performed | 3,257 | |
Monies due from related party for services performed | (15,841) | |
Monies paid, net | (1,959) | |
Ending Balance | $ (10,601) | |
Former Chief Technical Officer [Member] | ||
Due to Related Parties, Current [Roll Forward] | ||
Beginning Balance | 8,024 | |
Monies owed to related party for services performed | 65,236 | |
Monies paid, net | (59,516) | |
Ending Balance | $ 13,744 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | Jan. 08, 2016 | Dec. 28, 2015 | Mar. 31, 2015 | Mar. 31, 2016 | Dec. 31, 2015 |
Negotiated payment | $ 250,000 | ||||
Demand for payment to maintain access to the facility | $ 2,300,000 | ||||
Estimated contract termination costs | $ 250,000 | $ 250,000 | |||
Maximum [Member] | |||||
Damages paid value | 0 | ||||
Environmental remediation liabilities | 2,000,000 | ||||
Minimum [Member] | |||||
Damages paid value | $ 2,000,000 | ||||
Environmental remediation liabilities | $ 1,000,000 | ||||
GlyEco Acquisition Corp. #4 [Member] | Litigation Case Significant Outstanding [Member] | |||||
Name of the plantiff | Onyxx Group LLC. | ||||
Domicile of litigation | Circuit Court of Hillsborough County, Florida. | ||||
GlyEco Acquisition Corp. #4 [Member] | Litigation Case Significant Outstanding [Member] | |||||
Name of the plantiff | Encore Petroleum, LLC. | ||||
Domicile of litigation | Superior Court of New Jersey Law Division, Hudson County. |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | Apr. 01, 2016shares |
Subsequent Event [Member] | Equity Incentive Program [Member] | |
Number of shares new issue | 64,875 |