Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 14-May-15 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Immudyne, Inc. | |
Entity Central Index Key | 948320 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -19 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 30,729,973 |
Balance_Sheet
Balance Sheet (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Current Assets | ||
Cash | $70,051 | $75,495 |
Trade accounts receivable | 73,450 | 14,970 |
Inventory, net | 43,460 | 41,008 |
Total Current Assets | 186,961 | 131,473 |
Furnishings and equipment, net | 29,505 | 43,748 |
Total Assets | 216,466 | 175,221 |
Current Liabilities | ||
Accounts payable and accrued expenses | 251,455 | 274,319 |
Notes payable | 91,943 | 27,200 |
Total Current Liabilities | 343,398 | 301,519 |
Deferred tax liability | 8,900 | 13,200 |
Total Liabilities | 352,298 | 314,719 |
Stockholders' (deficit) equity | ||
Common stock, $0.01 par value; 50,000,000 shares authorized, 30,729,973 shares issued and outstanding | 307,299 | 307,299 |
Additional paid-in capital | 8,079,549 | 8,077,549 |
Accumulated (deficit) | -8,522,680 | -8,524,346 |
Total Stockholders' (Deficit) Equity | -135,832 | -139,498 |
Total Liabilities and Stockholders' (Deficit) Equity | $216,466 | $175,221 |
Balance_Sheet_Parenthetical
Balance Sheet (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 30,729,973 | 30,729,973 |
Common stock, shares outstanding | 30,729,973 | 30,729,973 |
Statement_of_Operations_Unaudi
Statement of Operations (Unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Income Statement [Abstract] | ||
Sales | $288,277 | $192,429 |
Cost of sales | 74,216 | 49,090 |
Gross Profit | 214,061 | 143,339 |
Compensation and related expenses | -85,390 | -164,021 |
Professional fees | -35,508 | -54,593 |
General and administrative expenses | -85,329 | -102,363 |
Operating Income (Loss) | 7,834 | -177,638 |
License Fee | 25,000 | |
Other income | 7,877 | |
Interest (expense) | -10,468 | -478 |
Net (Loss) Before Taxes | -2,634 | -145,239 |
Deferred income tax benefit | 4,300 | 4,300 |
Net Income (Loss) | $1,666 | ($140,939) |
Basic and diluted income (loss) per share | $0 | $0 |
Average number of common shares outstanding | ||
Basic | 30,729,973 | 30,171,640 |
Diluted | 31,363,306 | 30,171,640 |
Statement_of_Stockholders_Defi
Statement of Stockholders' (Deficit) Equity (Unaudited) (USD $) | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated (Deficit) [Member] |
Balance at Dec. 31, 2014 | ($139,498) | $307,299 | $8,077,549 | ($8,524,346) |
Balance, (in shares) at Dec. 31, 2014 | 30,729,973 | |||
Stock compensation expense | 2,000 | 2,000 | ||
Net income | 1,666 | 1,666 | ||
Balance at Mar. 31, 2015 | ($135,832) | $307,299 | $8,079,549 | ($8,522,680) |
Balance (in shares) at Mar. 31, 2015 | 30,729,973 |
Statement_of_Cash_Flows_Unaudi
Statement of Cash Flows (Unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Income (Loss) | $1,666 | ($140,939) |
Adjustments to reconcile net income (loss) to net cash (used) by operating activities | ||
Depreciation | 14,243 | 14,244 |
Deferred tax benefit | -4,300 | -4,300 |
Stock compensation expense | 2,000 | 28,000 |
Changes in Assets And Liabilities | ||
Trade accounts receivable | -58,480 | -39,109 |
Legal settlement proceeds receivable | 132,000 | |
Inventory | -2,452 | -1,867 |
Accounts payable and accrued expenses | -22,864 | 5,324 |
Net cash (used) by operating activities | -70,187 | -6,647 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Investment in Adiuvo Investment S. A. | -100,000 | |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Increase in notes payable | 100,000 | |
Repayment of notes payable | -35,257 | -12,000 |
Net cash provided (used) by financing activities | 64,743 | -12,000 |
Net (decrease) in cash | -5,444 | -118,647 |
Cash at beginning of the period | 75,495 | 155,056 |
Cash at end of the period | 70,051 | 36,409 |
Supplemental Schedule of Non-Cash Activities | ||
Cash paid during the period for interest | $10,468 |
Organization_and_Going_Concern
Organization and Going Concern | 3 Months Ended | |
Mar. 31, 2015 | ||
Organization and Going Concern [Abstract] | ||
Organization and Going Concern | 1 | Organization and Going Concern |
Immudyne, Inc. (the “Company”) is a Delaware corporation established to develop, manufacture and sell natural immune support products. The Company has developed a proprietary approach to produce the purest particulate and soluble beta glucans derived from yeast. The Company’s core nutraceutical and cosmetic product lines consist of its pure yeast beta glucans in oral and topical applications to support the immune system. The Company concentrates its sales and marketing efforts on healthcare professionals, distributors for its all-natural raw material ingredient products and direct-to-consumer sales. | ||
The Company has funded operations in the past through the sales of its products, issuance of common stock and through loans and advances from officers and directors. The Company’s continued operations are dependent upon obtaining an increase in its sales volume and the continued financial support from officers and directors or the issuance of additional shares of common stock. | ||
The accompanying financial statements have been prepared on the basis that the Company will continue as a going concern, which assumes the realization of assets and the satisfaction of liabilities in the normal course of business. At March 31, 2015, the Company has an accumulated deficit approximating $8.5 million and has incurred negative cash flows. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. | ||
Based on the Company's cash balance at March 31, 2015, and projected cash needs for the remainder of 2015, management estimates that it will need to raise additional capital to cover operating and capital requirements for the 2015 year. Management plans on raising the additional needed funds through increased sales volume, issuing additional shares of common stock or other equity securities, or obtaining debt financing. Although management has been successful to date in raising necessary funding, there can be no assurance that required future financing can be successfully completed on a timely basis, or on terms acceptable to the Company. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Summary of Significant Accounting Policies [Abstract] | |||||||||
Summary of Significant Accounting Policies | 2 | Summary of Significant Accounting Policies | |||||||
Unaudited Financial Statements | |||||||||
The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for financial information and with the instructions to Form 10-Q. They do not include information and footnotes required by United States generally accepted accounting principles for complete financial statements. The unaudited financial statements should be read in conjunction with those financial statements included in the Company’s previously filed Form 10-K for the year ended December 31, 2014. In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three months ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. | |||||||||
Basis of Presentation and Use of Estimates | |||||||||
The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates required to be made by management include the valuation of inventory, and stockholders’ equity based transactions. Actual results could differ from those estimates. | |||||||||
Inventory | |||||||||
Inventory is valued at the lower of cost or market with cost determined on a first-in, first-out (“FIFO”) basis. Management compares the cost of inventory with the net realizable value and an allowance is made for writing down inventory to market value, if lower. At March 31, 2015 and December 31, 2014 the Company recorded an inventory reserve in the amount of $40,000. Inventory consists of the following: | |||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
Raw materials | $ | 411 | $ | 4,350 | |||||
Finished products | 43,049 | 36,658 | |||||||
$ | 43,460 | $ | 41,008 | ||||||
Revenue Recognition | |||||||||
The Company’s policy is to record revenue as earned when a firm commitment, indicating sales quantity and price exists, delivery has taken place and collectability is reasonably assured. The Company generally records sales once the product is shipped to the customer. If applicable, provisions for discounts, returns, allowances, customer rebates and other adjustments are netted with gross sales. The Company accounts for such provisions during the same period in which the related revenues are earned. Customer discounts, returns and rebates have not been significant. | |||||||||
Delivery is considered to have occurred when title and risk of loss have transferred to the customer. If title does not pass until the product reaches the customer’s delivery site, then recognition of revenue is deferred until that time. There are no formal sales incentives offered to any of the Company’s customers. Volume discounts may be offered from time to time to customers purchasing large quantities on a per transaction basis. There are no special post shipment obligations or acceptance provisions that exist with any sales arrangements. | |||||||||
Income Taxes | |||||||||
The Company records current and deferred taxes in accordance with Accounting Standards Codification (ASC) 740, “Accounting for Income Taxes.” This ASC requires recognition of deferred tax assets and liabilities for temporary differences between tax basis of assets and liabilities and the amounts at which they are carried in the financial statements, based upon the enacted rates in effect for the year in which the differences are expected to reverse. The Company establishes a valuation allowance when necessary to reduce deferred tax assets to the amount expected to be realized. The Company periodically assesses the value of its deferred tax asset, a majority of which has been generated by a history of net operating losses and determines the necessity for a valuation allowance. | |||||||||
ASC 740 also provides a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken or expected to be taken in a tax return. Using this guidance, a company may recognize the tax benefit from an uncertain tax position in its financial statements only if it is more likely-than-not (i.e., a likelihood of more than 50%) that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. | |||||||||
The Company’s tax returns for all years since December 31, 2011, remain open to most taxing authorities. | |||||||||
Stock-Based Compensation | |||||||||
The Company follows the provisions of ASC 718, “Share-Based Payment”. Under this guidance compensation cost generally is recognized at fair value on the date of the grant and amortized over the respective vesting periods. The fair value of options at the date of grant is estimated using the Black-Scholes option pricing model. The expected option life is derived from assumed exercise rates based upon historical exercise patterns and represents the period of time that options granted are expected to be outstanding. The expected volatility is based upon historical volatility of the Company’s shares using weekly price observations over an observation period that approximates the expected life of the options. The risk-free rate approximates the U.S. Treasury yield curve rate in effect at the time of grant for periods similar to the expected option life. The estimated forfeiture rate included in the option valuation was zero. | |||||||||
Many of the assumptions require significant judgment and any changes could have a material impact in the determination of stock-based compensation expense. | |||||||||
Earnings (Loss) Per Share | |||||||||
Basic earnings (loss) per common share is based on the weighted average number of shares outstanding during each period presented. Warrants and options to purchase common stock are included as common stock equivalents only when dilutive. Potential common stock equivalents are excluded from dilutive earnings per share when the effects would be antidilutive. | |||||||||
The average diluted common shares outstanding for the quarter ended March 31, 2015 excludes the dilutive effect of 13,474,387 options and warrants since such options and warrants have an exercise price in excess of the average market value for the Company’s common stock for the quarter ended March 31, 2015. Common stock equivalents comprising 13,772,720 shares underlying options and warrants at March 31, 2014 have not been included in the loss per share calculation as the effects are anti-dilutive. | |||||||||
Recent Accounting Pronouncements | |||||||||
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2014-09 "Revenue from Contracts with Customers" (Topic 606) ("ASU 2014-09"). ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. In adopting ASU 2014-09, companies may use either a full retrospective or a modified retrospective approach. ASU 2014-09 is effective for the first interim period within annual reporting periods beginning after December 15, 2016, and early adoption is not permitted. The Company will adopt ASU 2014-09 during the first quarter of fiscal 2017. Management is evaluating the provisions of this statement and has not determined what impact the adoption of ASU 2014-09 will have on the Company's financial position or results of operations. | |||||||||
In August 2014, the FASB issued ASU 2014-15, "Presentation of Financial Statements-Going Concern". This ASU is intended to define management's responsibility to evaluate whether there is substantial doubt about an organization's ability to continue as a going concern and to provide related footnote disclosures. It is effective for annual periods beginning after December 15, 2016, with early adoption permitted. The Company does not expect it to have a material effect on the Company's financial condition, results of operations, and cash flows. | |||||||||
All other accounting standards that have been issued or proposed by the FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. | |||||||||
Fair Value of Financial Instruments | |||||||||
The carrying value of the Company’s financial instruments, including cash, trade accounts receivable and accounts payable and accrued expenses and notes payable approximate fair value for all periods. | |||||||||
Concentration of Credit Risk | |||||||||
The Company grants credit in the normal course of business to its customers. The Company periodically performs credit analysis and monitors the financial condition of its customers to reduce credit risk. | |||||||||
The Company monitors its positions with, and the credit quality of, the financial institutions with which it invests. The Company, at times, maintains balances in various operating accounts in excess of federally insured limits. | |||||||||
One customer accounted for 84% and 92% of sales for the three month periods ended March 31, 2015 and 2014, respectively. This customer accounted for 100% of accounts receivable at March 31, 2015 and December 31, 2014. | |||||||||
A second customer accounted for 12% of sales for three month period ended March 31, 2015. |
Joint_Venture_Agreement
Joint Venture Agreement | 3 Months Ended | |
Mar. 31, 2015 | ||
Joint Venture Agreement [Abstract] | ||
Joint Venture Agreement | 3 | Joint Venture Agreement |
In December 2013 the Company entered into a memorandum of understanding (MOU) with Adiuvo Investment S.A. (AI), an investment company located in Poland, whereby AI paid the Company $100,000 for the option, which expired in September 2014, to purchase up to 10% of the outstanding stock in the Company at $0.25 per share. In January 2014 the Company invested $100,000 in AI in exchange for a minority interest of less than 1% in AI, and an option to acquire additional shares of AI up to an aggregate consideration of $1,500,000. Further, AI granted the Company the right to participate in any subsequent public offerings of AI and the option to buy up to 10% of AI. The Company’s investment in AI is accounted for at no value on the accompanying March 31, 2015 balance sheet. |
Notes_Payable
Notes Payable | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Notes Payable [Abstract] | ||||||||||||||
Notes Payable | 4 | Notes Payable | ||||||||||||
At March 31, 2015, notes payable are due to officers and directors and a commercial lender. A summary of activity is as follows: | ||||||||||||||
Officers and directors | Commercial lender | Total | ||||||||||||
Balance at December 31, 2014 | $ | 27,200 | $ | - | $ | 27,000 | ||||||||
Borrowing | - | 100,000 | 100,000 | |||||||||||
Repayments | (17,000 | ) | (18,257 | ) | (35,257 | ) | ||||||||
Balance at March 31, 2015 | $ | 10,200 | $ | 81,743 | $ | 91,743 | ||||||||
Notes payable due to officers and directors are payable on demand with interest at 5%. Interest expense for the three month period ended March 31, 2015 and 2014 amounted to $162 and $478, respectively. | ||||||||||||||
The loan payable to the commercial lender requires payment of principal and interest in 252 daily payments of $492 each commencing January 12, 2015. Interest expense for the three month period ended March 31, 2015 amounted to $10,306. | ||||||||||||||
Total interest expense on notes payable amounted to $10,468 and $478 for the three month periods ended March 31, 2015 and 2014, respectively. |
Income_Taxes
Income Taxes | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Income Taxes [Abstract] | |||||
Income Taxes | 5 | Income Taxes | |||
The Company is not expected to have taxable income in 2015 and incurred a loss for the year ended December 31, 2014 and accordingly, no provision for federal income tax has been made in the accompanying financial statements. At December 31, 2014, the Company had available net operating loss carryforwards of approximately $2,870,000, expiring during various years through 2034. | |||||
A summary of the deferred tax asset using an approximate 34% tax rate is as follows: | |||||
Net operating loss | $ | 975,000 | |||
Valuation allowance | (975,000 | ) | |||
Total | $ | - | |||
The net operating loss carryforwards could be subject to limitation in any given year in the event of a change in ownership as defined by IRC Section 382. | |||||
The deferred tax liability of $8,900 and $13,200 at March 31, 2015 and December 31, 2014, respectively, results from the difference in the carrying amount of furnishings and equipment between financial reporting and income tax reporting. | |||||
The deferred tax benefit included in the statement of operations represents the change in the deferred tax liability at each balance sheet date. | |||||
The difference between the statutory and the effective tax rate is primarily due to a change in valuation allowance on deferred taxes, as the Company has fully reserved the deferred tax asset resulting from available net operating loss carryforwards. |
Stockholders_Equity
Stockholders' Equity | 3 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
Stockholders' Equity [Abstract] | |||||||||||
Stockholders' Equity | 6 | Stockholders’ Equity | |||||||||
In January 2014 the Company issued 100,000 shares of restricted common stock, valued at $28,000 to a consultant. | |||||||||||
Service-Based Stock Options | |||||||||||
Service-based options issued by the Company to various employees and consultants amounted to 10,335,000 at December 31, 2014 and March 31, 2015. All outstanding options are exercisable and have a cashless exercise provision, and certain options provide for accelerated vesting provisions and modifications, as defined, if the Company is sold or acquired. The intrinsic value of options outstanding and exercisable at March 31, 2015 amounted to $80,000. | |||||||||||
The following is a summary of outstanding service-based options at March 31, 2015: | |||||||||||
Exercise Price | Number of | Weighted Average | |||||||||
Options | Remaining | ||||||||||
Contractual | |||||||||||
Life | |||||||||||
$0.10 | $ | 1,000,000 | 3 years | ||||||||
$0.20 - $0.25 | 8,185,000 | 7 years | |||||||||
$0.40 | 1,150,000 | 7 years | |||||||||
Total | $ | 10,335,000 | |||||||||
Performance-Based Stock Options | |||||||||||
In August 2014, the Company issued 300,000 options with an exercise price of $0.20 to a consultant. The options are contingent upon the completion of a clinical study as defined. Management has valued these options at $8,000 and is amortizing them over the implicit service period of one year. At March 31, 2015, $4,000 had been amortized and the balance of $4,000 remained to be amortized during the year ending December 31, 2015. | |||||||||||
As of March 31, 2015 in addition to the 300,000 options above, the Company had granted performance-based options to purchase 9,375,000 shares of common stock at exercise prices ranging from $0.20 to $5.00. The options expire at various dates between 2021 and 2024 and are exercisable upon the Company achieving annual sales revenue ranging from $2,000,000 and $100,000,000. The fair value of these performance-based options aggregated $340,000 and will be expensed over the implicit service period commencing once management believes the performance criteria will be met. Accordingly, at March 31, 2015, the unearned compensation for performance based options is $340,000. | |||||||||||
Stock based compensation expense amounted to $2,000 and $0 for the three months ended March 31, 2015 and 2014, respectively. Such amounts are included in compensation and related expenses in the accompanying statement of operations. | |||||||||||
Warrants | |||||||||||
Warrants outstanding and exercisable amounted to 3,772,720 at December 31, 2014 and March 31, 2015. The weighted average exercise price of warrants outstanding at March 31, 2015 is $0.29. The warrants expire in 2015 and 2016. |
Royalties
Royalties | 3 Months Ended | |
Mar. 31, 2015 | ||
Royalties [Abstract] | ||
Royalties | 7 | Royalties |
The Company is subject to a royalty agreement based upon sales of certain skin care products. The agreement requires the Company to pay a royalty based upon 8% of such sales, up to $227,175. Royalty expense approximated $19,000 and $14,000 for the three month periods ended March 31, 2015 and 2014, respectively. The remaining commitment at March 31, 2015, is approximately $1,000. The Company’s President has a 60% interest in the royalties. | ||
At March 31, 2015 and December 31, 2014, included in accounts payable and accrued expenses was $151,986 and $132,986, respectively, in regards to this agreement. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Commitments and Contingencies [Abstract] | |||||
Commitments and Contingencies | 8 | Commitments and Contingencies | |||
Leases | |||||
The Company leases a plant in Kentucky under an operating lease which expires May 31, 2016. Future minimum base rental payments required under the lease are as follows: | |||||
Year ending December 31 | |||||
2015 (9 months) | $ | 31,640 | |||
2016 | 17,578 | ||||
Total | $ | 49,218 | |||
Monthly base rental payments approximate $3,500. The lease agreement also provides for additional rents based on increases in building operating costs and real estate taxes. Rent expense for the three month periods ended March 31, 2015 and 2014, was $20,461 and $14,626, respectively. | |||||
Employment and Consulting Agreements | |||||
The Company has entered into various agreements with officers, directors, employees and consultants that expire in one to five years. The agreements provide for annual compensation of up to $145,000 and the issuance of stock options, at exercise prices ranging from $0.20 to $5.00, underlying 9,375,000 shares of common stock issuable upon the Company’s revenue exceeding amounts ranging from $2,000,000 to $100,000,000, as defined. In addition, the agreements provide for bonus compensation to these individuals aggregating up to 15% (with no individual having more than 5%) of the Company’s pretax income. | |||||
Legal Matters | |||||
In the normal course of business operations the Company may become involved in various legal matters. At March 31, 2015, the Company’s management does not believe that there are any potential legal matters that could have an adverse effect on the Company’s financial position. | |||||
In November 2009, the Company entered into a settlement agreement to resolve all aspects of litigation relating to a patent suit. As part of that settlement agreement, the Company received $440,000 as reimbursement for litigation costs. The Company also was awarded $200,000 in eight installments of $25,000 every six months beginning on January 15, 2011, in return for an exclusive patent license. The term of the license agreement is consistent with the term of the $25,000 semiannual payments. The $25,000 installments have been recorded as revenue upon receipt of the funds. The Company received the final installment during the three months ended March 31, 2014. |
Subsequent_Events
Subsequent Events | 3 Months Ended | |
Mar. 31, 2015 | ||
Subsequent Events [Abstract] | ||
Subsequent Events | 9 | Subsequent Events |
The Company has evaluated subsequent events through the date these financial statements were issued and has determined that there are no subsequent events or transactions requiring recognition or disclosure in the financial statements. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Summary of Significant Accounting Policies [Abstract] | |||||||||
Basis of Presentation and Use of Estimates | Basis of Presentation and Use of Estimates | ||||||||
The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates required to be made by management include the valuation of stockholders’ equity based transactions. Actual results could differ from those estimates. | |||||||||
Inventory | Inventory | ||||||||
Inventory is valued at the lower of cost or market with cost determined on a first-in, first-out (“FIFO”) basis. Management compares the cost of inventory with the net realizable value and an allowance is made for writing down inventory to market value, if lower. At March 31, 2015 and December 31, 2014 the Company recorded an inventory reserve in the amount of $40,000. Inventory consists of the following: | |||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
Raw materials | $ | 411 | $ | 4,350 | |||||
Finished products | 43,049 | 36,658 | |||||||
$ | 43,460 | $ | 41,008 | ||||||
Revenue Recognition | Revenue Recognition | ||||||||
The Company’s policy is to record revenue as earned when a firm commitment, indicating sales quantity and price exists, delivery has taken place and collectability is reasonably assured. The Company generally records sales once the product is shipped to the customer. If applicable, provisions for discounts, returns, allowances, customer rebates and other adjustments are netted with gross sales. The Company accounts for such provisions during the same period in which the related revenues are earned. Customer discounts, returns and rebates have not been significant. | |||||||||
Delivery is considered to have occurred when title and risk of loss have transferred to the customer. If title does not pass until the product reaches the customer’s delivery site, then recognition of revenue is deferred until that time. There are no formal sales incentives offered to any of the Company’s customers. Volume discounts may be offered from time to time to customers purchasing large quantities on a per transaction basis. There are no special post shipment obligations or acceptance provisions that exist with any sales arrangements. | |||||||||
Income Taxes | Income Taxes | ||||||||
The Company records current and deferred taxes in accordance with Accounting Standards Codification (ASC) 740, “Accounting for Income Taxes.” This ASC requires recognition of deferred tax assets and liabilities for temporary differences between tax basis of assets and liabilities and the amounts at which they are carried in the financial statements, based upon the enacted rates in effect for the year in which the differences are expected to reverse. The Company establishes a valuation allowance when necessary to reduce deferred tax assets to the amount expected to be realized. The Company periodically assesses the value of its deferred tax asset, a majority of which has been generated by a history of net operating losses and determines the necessity for a valuation allowance. | |||||||||
ASC 740 also provides a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken or expected to be taken in a tax return. Using this guidance, a company may recognize the tax benefit from an uncertain tax position in its financial statements only if it is more likely-than-not (i.e., a likelihood of more than 50%) that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. | |||||||||
The Company’s tax returns for all years since December 31, 2011, remain open to most taxing authorities. | |||||||||
Stock-Based Compensation | Stock-Based Compensation | ||||||||
The Company follows the provisions of ASC 718, “Share-Based Payment”. Under this guidance compensation cost generally is recognized at fair value on the date of the grant and amortized over the respective vesting periods. The fair value of options at the date of grant is estimated using the Black-Scholes option pricing model. The expected option life is derived from assumed exercise rates based upon historical exercise patterns and represents the period of time that options granted are expected to be outstanding. The expected volatility is based upon historical volatility of the Company’s shares using weekly price observations over an observation period that approximates the expected life of the options. The risk-free rate approximates the U.S. Treasury yield curve rate in effect at the time of grant for periods similar to the expected option life. The estimated forfeiture rate included in the option valuation was zero. | |||||||||
Many of the assumptions require significant judgment and any changes could have a material impact in the determination of stock-based compensation expense. | |||||||||
Earnings (Loss) Per Share | Earnings (Loss) Per Share | ||||||||
Basic earnings (loss) per common share is based on the weighted average number of shares outstanding during each period presented. Warrants and options to purchase common stock are included as common stock equivalents only when dilutive. Potential common stock equivalents are excluded from dilutive earnings per share when the effects would be antidilutive. | |||||||||
The average diluted common shares outstanding for the quarter ended March 31, 2015 excludes the dilutive effect of 13,774,382 options and warrants since such options and warrants have an exercise price in excess of the average market value fo the Company’s common stock for the quarter ended March 31, 2015. Common stock equivalents comprising 13,772,720 shares underlying options and warrants at March 31, 2014 have not been included in the loss per share calculation as the effects are anti-dilutive. | |||||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements | ||||||||
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2014-09 "Revenue from Contracts with Customers" (Topic 606) ("ASU 2014-09"). ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. In adopting ASU 2014-09, companies may use either a full retrospective or a modified retrospective approach. ASU 2014-09 is effective for the first interim period within annual reporting periods beginning after December 15, 2016, and early adoption is not permitted. The Company will adopt ASU 2014-09 during the first quarter of fiscal 2017. Management is evaluating the provisions of this statement and has not determined what impact the adoption of ASU 2014-09 will have on the Company's financial position or results of operations. | |||||||||
In August 2014, the FASB issued ASU 2014-15, "Presentation of Financial Statements-Going Concern". This ASU is intended to define management's responsibility to evaluate whether there is substantial doubt about an organization's ability to continue as a going concern and to provide related footnote disclosures. It is effective for annual periods beginning after December 15, 2016, with early adoption permitted. The Company does not expect it to have a material effect on the Company's financial condition, results of operations, and cash flows. | |||||||||
All other accounting standards that have been issued or proposed by the FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. | |||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments | ||||||||
The carrying value of the Company’s financial instruments, including cash, trade accounts receivable and accounts payable and accrued expenses and notes payable approximate fair value for all periods. | |||||||||
Concentration of Credit Risk | Concentration of Credit Risk | ||||||||
The Company grants credit in the normal course of business to its customers. The Company periodically performs credit analysis and monitors the financial condition of its customers to reduce credit risk. | |||||||||
The Company monitors its positions with, and the credit quality of, the financial institutions with which it invests. The Company, at times, maintains balances in various operating accounts in excess of federally insured limits. | |||||||||
One customer accounted for 84% and 92% of sales for the three month periods ended March 31, 2015 and 2014, respectively. This customer accounted for 100% of accounts receivable at March 31, 2015 and December 31, 2014. | |||||||||
A second customer accounted for 12% of sales for three month period ended March 31, 2015. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Summary of Significant Accounting Policies [Abstract] | |||||||||
Summary of inventory | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
Raw materials | $ | 411 | $ | 4,350 | |||||
Finished products | 43,049 | 36,658 | |||||||
$ | 43,460 | $ | 41,008 |
Notes_Payable_Tables
Notes Payable (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Notes Payable [Abstract] | ||||||||||||||
Summary of notes payable activity | ||||||||||||||
Officers and directors | Commercial lender | Total | ||||||||||||
Balance at December 31, 2014 | $ | 27,200 | $ | - | $ | 27,000 | ||||||||
Borrowing | - | 100,000 | 100,000 | |||||||||||
Repayments | (17,000 | ) | (18,257 | ) | (35,257 | ) | ||||||||
Balance at March 31, 2015 | $ | 10,200 | $ | 81,743 | $ | 91,743 |
Income_Taxes_Tables
Income Taxes (Tables) | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Income Taxes [Abstract] | |||||
Schedule of deferred tax assets | |||||
Net operating loss | $ | 975,000 | |||
Valuation allowance | (975,000 | ) | |||
Total | $ | - |
Stockholders_Equity_Tables
Stockholders' Equity (Tables) | 3 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
Stockholders' Equity [Abstract] | |||||||||||
Summary of outstanding service-based options | |||||||||||
Exercise Price | Number of | Weighted Average | |||||||||
Options | Remaining | ||||||||||
Contractual | |||||||||||
Life | |||||||||||
$0.10 | $ | 1,000,000 | 3 years | ||||||||
$0.20 - $0.25 | 8,185,000 | 7 years | |||||||||
$0.40 | 1,150,000 | 7 years | |||||||||
Total | $ | 10,335,000 | |||||||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Commitments and Contingencies [Abstract] | |||||
Summary of future minimum rental payments required under the lease | |||||
Year ending December 31 | |||||
2015 (9 months) | $ | 31,640 | |||
2016 | 17,578 | ||||
Total | $ | 49,218 |
Organization_and_Going_Concern1
Organization and Going Concern (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Organization and Going Concern (Textual) | ||
Accumulated deficit | ($8,522,680) | ($8,524,346) |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Summary of inventory | ||
Raw materials | $411 | $4,350 |
Finished products | 43,049 | 36,658 |
Inventory, net | $43,460 | $41,008 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details Textual) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Summary of Significant Accounting Policies (Textual) | |||
Inventory reserve | 40,000 | $40,000 | |
Sales [Member] | One Customer [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentration risk percentage | 84.00% | 92.00% | |
Sales [Member] | Second Customer [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentration risk percentage | 12.00% | ||
Accounts Receivable [Member] | One Customer [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentration risk percentage of accounts receivable | 100.00% | 100.00% | |
Warrant [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Antidilutive securities excluded from computation of earnings per share | 13,774,382 | 13,772,720 | |
Option [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Antidilutive securities excluded from computation of earnings per share | 13,474,387 | 13,772,720 |
Joint_Venture_Agreement_Detail
Joint Venture Agreement (Details) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2013 | |
Joint Venture Agreement (Textual) | ||
Options purchased amount paid | $100,000 | |
Percentage of interests acquired | 10.00% | |
Deposit payable | ||
Share price | $0.25 | |
Minority interest in joint ventures | 100,000 | |
Option to acquire additional shares amount | $1,500,000 | |
Percentage of equity interest in public offerings | Less than 1 | |
Minority interest rate | 10.00% |
Notes_Payable_Details
Notes Payable (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Notes Payable [Line Items] | ||
Beginning Balance | $27,200 | |
Borrowing | 100,000 | |
Repayment of notes payable | -35,257 | -12,000 |
Ending Balance | 91,743 | |
Consumer lender [Member] | ||
Notes Payable [Line Items] | ||
Beginning Balance | ||
Borrowing | 100,000 | |
Repayment of notes payable | -18,257 | |
Ending Balance | 81,743 | |
Officers and directors [Member] | ||
Notes Payable [Line Items] | ||
Beginning Balance | 27,200 | |
Borrowing | ||
Repayment of notes payable | -17,000 | |
Ending Balance | $10,200 |
Notes_Payable_Details_Textual
Notes Payable (Details Textual) (USD $) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2013 | |
Notes payable (Textual) | |||
Interest rate on notes payable | 5.00% | ||
Interest expense on notes payable | $162 | $3,000 | |
Loan payable to commercial lender, Description | Loan payable to the commercial lender requires payment of principal and interest in 252 daily payments of $492 each commencing January 12, 2015. | ||
Commercial lender | 492 | ||
Interest expense | $10,468 | $478 | $3,000 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | Mar. 31, 2015 |
Schedule of deferred tax assets | |
Net operating loss | $975,000 |
Valuation allowance | -975,000 |
Total |
Stockholders_Equity_Details
Stockholders' Equity (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Beginning of Period [Abstract] | ||
Number of Options | 10,335,000 | 3,772,720 |
$0.10 [Member] | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Beginning of Period [Abstract] | ||
Exercise Price | $0.10 | |
Number of Options | 1,000,000 | |
Weighted Average Remaining Contractual Life | 3 years | |
$0.20 - $0.25 [Member] | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Beginning of Period [Abstract] | ||
Number of Options | 8,185,000 | |
Weighted Average Remaining Contractual Life | 7 years | |
$0.20 - $0.25 [Member] | Minimum [Member] | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Beginning of Period [Abstract] | ||
Exercise Price | $0.20 | |
$0.20 - $0.25 [Member] | Maximum [Member] | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Beginning of Period [Abstract] | ||
Exercise Price | $0.25 | |
$0.40 [Member] | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Beginning of Period [Abstract] | ||
Exercise Price | $0.40 | |
Number of Options | 1,150,000 | |
Weighted Average Remaining Contractual Life | 7 years |
Stockholders_Equity_Details_Te
Stockholders' Equity (Details Textual) (USD $) | 1 Months Ended | 3 Months Ended | 1 Months Ended | ||
Jan. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Aug. 31, 2014 | Dec. 31, 2014 | |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||
Issuance of restricted common stock, shares | 100,000 | ||||
Issuance of restricted common stock | $28,000 | ||||
Number of Options | 10,335,000 | 3,772,720 | |||
Stock-based compensation expense | 2,000 | 28,000 | |||
Warrant [Member] | |||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||
Number of Options | 3,772,720 | ||||
Exercise Price | 0.29 | ||||
Minimum [Member] | |||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||
Annual sales revenue target | 2,000,000 | ||||
Maximum [Member] | |||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||
Annual sales revenue target | 100,000,000 | ||||
Performance Based Stock Options [Member] | |||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||
Number of options, Granted | 9,375,000 | 300,000 | |||
Weighted average exercise price, Granted | $0.20 | ||||
Number of options, Granted value | 8,000 | ||||
Number of Options | 300,000 | ||||
Stock-based compensation expense | 2,000 | 0 | |||
Unearned Share Based Compensation | 340,000 | ||||
Performance Based Stock Options [Member] | Minimum [Member] | |||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||
Weighted average exercise price, Granted | $0.20 | ||||
Annual sales revenue target | 2,000,000 | ||||
Performance Based Stock Options [Member] | Maximum [Member] | |||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||
Weighted average exercise price, Granted | $5 | ||||
Annual sales revenue target | 100,000,000 | ||||
Service Based Stock Options [Member] | |||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||
Options exercisable intrinsic value | $800,000 | ||||
Employees and Consultants [Member] | Service Based Stock Options [Member] | |||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |||||
Number of options exercisable | 10,335,000 | 10,335,000 |
Income_Taxes_Details_Textual
Income Taxes (Details Textual) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
Income Taxes (Textual) | ||
Net operating loss carryforwards | $2,870,000 | |
Operating loss carryforwards, expiration date | 31-Dec-34 | |
Percentage of federal statutory income tax rate | 34.00% | |
Deferred tax liabilities, furnishings and equipment | $8,900 | $13,200 |
Royalties_Details
Royalties (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Royalties (Textual) | |||
Royalty based upon sales amount | $227,175 | ||
Percentage of royalty based upon sales | 8.00% | ||
Royalty expense | 19,000 | 14,000 | |
Royalty commitment | 1,000 | ||
Accounts payable and accrued expenses | $151,986 | $132,986 | |
President [Member] | |||
Royalties (Textual) | |||
Interest in royalty | 60.00% |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | Mar. 31, 2015 |
Summary of future minimum base rental payments required under the lease | |
2015 (9 months) | $31,640 |
2016 | 17,578 |
Total | $49,218 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details Textual) (USD $) | 0 Months Ended | 3 Months Ended | |
Nov. 30, 2009 | Mar. 31, 2015 | Mar. 31, 2014 | |
Commitments and Contingencies (Textual) | |||
Lease expiration date | 31-May-16 | ||
Monthly lease rental payments | $3,500 | ||
Operating leases, rent expense | 20,461 | 14,626 | |
Salaries, wages and officers compensation | 145,000 | ||
Stock option exercise price lower range limit | $0.20 | ||
Stock option exercise price upper range limit | $5 | ||
Stock issued during period performance based options to purchase common stock | 9,375,000 | ||
Percentage of bonus compensation for pretax income | 15.00% | ||
Litigation amount in installments | 200,000 | ||
Number of installments | Eight installments | ||
Installments paid for every six months | 25,000 | ||
Litigation semiannual payments | 25,000 | ||
Revenue installments on receipt of funds | 25,000 | ||
Litigation costs receivable | 25,000 | ||
Legal settlement proceeds receivable | |||
Proceeds from litigation settlement | 440,000 | ||
Minimum [Member] | |||
Commitments and Contingencies (Textual) | |||
Employment and consulting agreements expiration period | 1 year | ||
Annual sales revenue target | 2,000,000 | ||
Maximum [Member] | |||
Commitments and Contingencies (Textual) | |||
Employment and consulting agreements expiration period | 5 years | ||
Annual sales revenue target | $100,000,000 |