Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 15, 2019 | Jun. 30, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | REED'S, INC. | ||
Entity Central Index Key | 0001140215 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business Flag | true | ||
Entity Emerging Growth Company | false | ||
Entity Ex Transition Period | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 52,479,350 | ||
Entity Common Stock, Shares Outstanding | 33,496,297 | ||
Trading Symbol | REED | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2018 |
Balance Sheets
Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash | $ 624 | $ 12,127 |
Accounts receivable, net of allowance for doubtful accounts and returns and discounts of $623 and $601, respectively | 2,608 | 2,691 |
Receivable from related party | 195 | |
Inventory, net of reserve for obsolescence of $197 and $509, respectively | 7,380 | 5,931 |
Prepaid expenses and other current assets | 131 | 199 |
Total Current Assets | 10,938 | 20,948 |
Property and equipment, net of accumulated depreciation of $342 and $799, respectively | 896 | 174 |
Equipment held for sale, net of impairment reserves of $118 and $5,925, respectively | 82 | 2,549 |
Intangible assets | 576 | 805 |
Total assets | 12,492 | 24,476 |
Current Liabilities: | ||
Accounts payable | 5,721 | 7,480 |
Accrued expenses | 1,483 | 220 |
Advances from officers | 277 | |
Line of credit | 6,980 | 3,301 |
Current portion of leases payable | 51 | 198 |
Current portion of long term financing obligation | 222 | |
Current portion of bank notes | 6,947 | |
Total current liabilities | 14,235 | 18,645 |
Leases payable, less current portion | 801 | 236 |
Long term financing obligation, less current portion, net of discount of $714 at December 31, 2017 | 1,250 | |
Convertible note to a related party | 4,161 | 3,690 |
Warrant liability | 38 | 36 |
Other long term liabilities | 111 | |
Total Liabilities | 19,235 | 23,968 |
Stockholders' equity (deficit): | ||
Series A Convertible Preferred stock, $10 par value, 500,000 shares authorized, 9,411 shares issued and outstanding | 94 | 94 |
Common stock, $.0001 par value, 70,000,000 and 40,000,000 shares authorized, respectively; 25,729,461 and 24,619,591 shares issued and outstanding, respectively | 3 | 2 |
Common stock issuable, 400,000 shares at December 31, 2017 | 680 | |
Additional paid in capital | 53,591 | 49,833 |
Accumulated deficit | (60,431) | (50,101) |
Total stockholders' equity (deficit) | (6,743) | 508 |
Total liabilities and stockholders' equity (deficit) | $ 12,492 | $ 24,476 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts and returns and discounts | $ 623 | $ 601 |
Inventory, reserve for obsolescence net | 197 | 509 |
Property and equipment, accumulated depreciation | 342 | 799 |
Equipment, impairment reserves | 118 | 5,925 |
Long term financing obligation, discount | $ 714 | |
Series A convertible preferred stock, par value | $ 10 | $ 10 |
Series A convertible preferred stock, shares authorized | 500,000 | 500,000 |
Series A convertible preferred stock, shares issued | 9,411 | 9,411 |
Series A convertible preferred stock, shares outstanding | 9,411 | 9,411 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 70,000,000 | 40,000,000 |
Common stock, shares issued | 25,729,461 | 24,619,591 |
Common stock, shares outstanding | 25,729,461 | 24,619,591 |
Common stock issuable shares | 400,000 |
Statements of Operations
Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | ||
Net Sales | $ 38,102 | $ 37,714 |
Cost of goods sold | 27,424 | 30,821 |
Gross profit | 10,678 | 6,893 |
Operating expenses: | ||
Delivery and handling expense | 5,489 | 3,942 |
Selling and marketing expense | 4,879 | 3,021 |
General and administrative expense | 8,383 | 5,754 |
Impairment of assets | 229 | 5,925 |
Gain on sale of Los Angeles plant | (180) | |
Total operating expenses | 18,800 | 18,642 |
Loss from operations | (8,122) | (11,749) |
Interest expense | (2,201) | (3,491) |
Financing and warrant modification costs | (2,776) | |
Change in fair value of warrant liability | (2) | 3,275 |
Extinguishment of convertible note | (3,632) | |
Net loss | (10,325) | (18,373) |
Dividends on Series A Convertible Preferred Stock | (5) | (5) |
Net loss attributable to common stockholders | $ (10,330) | $ (18,378) |
Loss per share - basic and diluted | $ (0.41) | $ (1.24) |
Weighted average number of shares outstanding - basic and diluted | 25,357,566 | 14,775,828 |
Statements of Changes in Stockh
Statements of Changes in Stockholders' Equity (Deficit) - USD ($) $ in Thousands | Common Stock [Member] | Preferred Stock [Member] | Common Stock Issuable [Member] | Additional Paid In Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2016 | $ 1 | $ 94 | $ 29,971 | $ (31,723) | $ (1,657) | |
Balance, Shares at Dec. 31, 2016 | 13,982,230 | 9,411 | ||||
Fair value of vested options | 276 | 276 | ||||
Common shares issued to a Director of the Company for cash | 200 | 200 | ||||
Common shares issued to a Director of the Company for cash, shares | 117,647 | |||||
Common shares issued for cash pursuant to the Rights Offering, net of offering costs | $ 1 | 12,886 | 12,887 | |||
Common shares issued for cash pursuant to the Rights Offering, net of offering costs, shares | 9,333,333 | |||||
Common shares granted to Directors and Officers for services | 99 | 99 | ||||
Common shares granted to Directors and Officers for services, shares | 62,365 | |||||
Exercise of warrants | 1,650 | 1,650 | ||||
Exercise of warrants, shares | 1,122,376 | |||||
Common stock issuable to the Board | $ 680 | 680 | ||||
Common stock issuable to the Board, shares | 400,000 | |||||
Premium on convertible note | 1,423 | 1,423 | ||||
Extinguishment of warrant liability | 2,634 | 2,634 | ||||
Fair value of warrants issued for financing costs | 689 | 689 | ||||
Dividends on Series A Convertible Preferred Stock | 5 | (5) | ||||
Dividends on Series A Convertible Preferred Stock, shares | 1,640 | |||||
Net loss | (18,373) | (18,373) | ||||
Balance at Dec. 31, 2017 | $ 2 | $ 94 | $ 680 | 49,833 | (50,101) | 508 |
Balance, Shares at Dec. 31, 2017 | 24,619,591 | 9,411 | 400,000 | |||
Fair value of vested options | 1,161 | 1,161 | ||||
Exercise of warrants | $ 1 | 831 | 832 | |||
Exercise of warrants, shares | 414,857 | |||||
Premium on convertible note | ||||||
Extinguishment of warrant liability | ||||||
Dividends on Series A Convertible Preferred Stock | 5 | (5) | ||||
Dividends on Series A Convertible Preferred Stock, shares | 1,734 | |||||
Shares granted to Directors and Officers for services | 100 | 100 | ||||
Shares granted to Directors and Officers for services, shares | 37,057 | |||||
Vested restricted shares granted to Directors and Officers for services | 820 | 820 | ||||
Vested restricted shares granted to Directors and Officers for services, shares | 256,222 | |||||
Common shares issued to Directors and Officers pursuant to previous grants | $ (680) | 680 | ||||
Common shares issued to Directors and Officers pursuant to previous grants, shares | 400,000 | (400,000) | ||||
Cost of modification of outstanding warrants | 161 | 161 | ||||
Net loss | (10,325) | (10,325) | ||||
Balance at Dec. 31, 2018 | $ 3 | $ 94 | $ 53,591 | $ (60,431) | $ (6,743) | |
Balance, Shares at Dec. 31, 2018 | 25,729,461 | 9,411 | 0 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (10,325) | $ (18,373) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 86 | 551 |
Gain on sale of Los Angeles plant | (180) | |
Amortization of discount on Long-term financing obligation | 110 | 1,379 |
Amortization of capitalized financing costs | 75 | |
Amortization of right of use assets | 22 | |
Loss on cancellation of capital leases | 94 | |
Stock options issued to employees for services | 1,161 | 276 |
Common stock issuable for services | 820 | 680 |
Common stock issued for services | 100 | 99 |
Increase in allowance for doubtful accounts | 22 | 345 |
Reserve for impairment on equipment held for sale | 5,925 | |
(Decrease) increase in inventory reserve | (312) | 394 |
(Decrease) increase in fair value of warrant liability | 2 | (3,275) |
Fair value of warrants recorded as financing costs | 908 | |
Cost of warrant modification | 1,868 | |
Accrual of interest on Convertible note to a related party | 471 | 290 |
Loss on extinguishment of debt | 3,632 | |
Gain (loss) on sale or disposal of equipment | (5) | 63 |
Write off intangible asset | 229 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 61 | (551) |
Inventory | (1,157) | 560 |
Prepaid expenses and other assets | 68 | 301 |
Accounts payable | (1,762) | 1,521 |
Accrued expenses | 1,190 | 34 |
Other long term obligations | (28) | (49) |
Net cash used in operating activities | (9,258) | (3,422) |
Cash flows from investing activities: | ||
Cash proceeds from sale of Los Angeles plant | 1,050 | |
Proceeds from sale of property and equipment | 51 | |
Purchase of property and equipment | (159) | (813) |
Net cash provided by (used in) investing activities | 942 | (813) |
Cash flows from financing activities: | ||
Borrowings on line of credit | 47,560 | 38,355 |
Repayments of line of credit | (43,204) | (39,438) |
Capitalization of financing costs | (591) | |
Principal repayments on capital expansion loan | (3,947) | (725) |
Principal repayments on bank notes | (3,000) | |
Principal repayments on long term financial obligation | (253) | (191) |
Advances from officers | 200 | 277 |
Repayment of amounts due to officers | (472) | |
Principal repayments on capital lease obligation | (312) | (187) |
Exercise of warrants | 832 | 1,650 |
Proceeds from sale of common stock | 13,087 | |
Proceeds from issuance of convertible note | 3,083 | |
Net cash provided by (used in) financing activities | (3,187) | 15,911 |
Net increase (decrease) in cash | (11,503) | 11,676 |
Cash at beginning of period | 12,127 | 451 |
Cash at end of period | 624 | 12,127 |
Supplemental disclosures of cash flow information: | ||
Cash paid during the period for interest | 1,351 | 1,806 |
Non Cash Investing and Financing Activities: | ||
Debt discount on note recognized as warrant liability | 3,083 | |
Acquisition of lease asset and liability | 730 | |
Property and equipment acquired through capital expansion loan | 723 | |
Preferred Stock dividends paid in Common Stock | 5 | 5 |
Reclass of property to equipment held for sale | 4,370 | |
Extinguishment of warrant liability | 2,634 | |
Vendor credits issued for fixed asset purchase | 108 | |
Premium related to the issuance of convertible note | 1,423 | |
Fair value of warrant modification recorded as debt discount | $ 161 |
Operations and Liquidity
Operations and Liquidity | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Operations and Liquidity | (1) Operations and Liquidity A) Nature of Operations Reed’s Inc. (the “Company”) is the owner and maker of both Reed Craft Ginger Beer and Virgil’s Handcrafted Sodas. Established in 1989, Reed’s is America’s best-selling Ginger Beer brand and has been the leader and innovator in the ginger beer category for decades. Virgil’s is America’s best-selling independent, full line of natural craft sodas. The Reed’s Inc. portfolio is sold in over 30,000 retail doors nationwide. Reed’s Ginger Beers are unique due to the proprietary process of using fresh ginger root combined with a Jamaican inspired recipe of natural spices and fruit juices. The Company uses this same handcrafted approach in its award-winning Virgil’s line of great tasting, bold flavored craft sodas. In 2017, the Company performed a complete operational review and developed a detailed action plan to capture performance improvements, drive core brand growth, and become a premier “asset-light” sales and marketing organization. On December 31, 2018, this culminated in the sale of the Company’s Los Angeles manufacturing facility (see Note 3), marking a fundamental shift in the nature of the Company’s operations and the completion of all major initiatives under the action plan. B Cash and Liquidity For the year ended December 31, 2018, the Company recorded a net loss of $10,325 and used cash in operations of $9,258. As of December 31, 2018, we had a cash balance of $624, a stockholder’s deficit of $6,743 and a working capital shortfall of $3,297, compared to a cash balance of $12,127, stockholder’s equity of $508 and working capital of $2,303 at December 31, 2017. The accompanying financial statements have been prepared under the assumption that the Company will continue as a going concern. Such assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. During 2017, 2018 and subsequently, the Company has taken a number of steps to improve its cash and liquidity position. In September of 2018, the Company completed the relocation of its headquarters to Norwalk, Connecticut. The Company’s move is consistent with its focus on a streamlined sales and marketing organization that is better positioned for future growth and enhanced profitability. The new Norwalk office serves as headquarters for the Company’s operations, business development, sales and marketing, finance, supply chain, HR and other corporate functions. With key leadership already based in the Tri-State area, including support agencies leading the Company’s marketing, advertising and public relations efforts, this will ensure a seamless transition. On October 4, 2018, the Company entered into a financing agreement with Rosenthal & Rosenthal, Inc., which replaced its existing credit facility with PMC. See Note 7. The Company’s annual debt service requirements, on an annualized basis, were reduced by approximately $1,500 as a result of the refinancing. The new credit facility is for a term of 2.5 years, and provides for borrowings of up to $13,000. Concurrently with the execution of the financing agreement, all obligations to PMC under the Company’s existing credit facility were repaid in full in an aggregate amount of $8,758. As of December 31, 2018, the Company has $1,201 of unused borrowing capacity under the financing agreement. On December 31, 2018, we completed the sale of substantially all of the assets of our Los Angeles manufacturing facility (the “Plant Sale”). See Note 3. We received $1,250 in cash, and the buyer assumed our lease obligation on the California property, relieving us of annual lease payments of approximately $420. The Plant Sale also effectively eliminates our costs associated with excess manufacturing capacity. With the sale of our plant, all of the Company’s production is subcontracted to co-packers, which assemble our products and charge us a fee, generally by the case, for the products they produce. Management believes that we begin 2019 solidly positioned as an asset light Company, able to focus all of our attention and resources on driving accelerated growth and building our brands, with capital flexibility, a reduced need for capital expenditures, and an optimized operating model. On February 15, 2019, the Company entered into an agreement for an underwritten public offering of 7,733,750 shares of its common stock, at $2.10 per share, including an overallotment option for 1,008,750 shares that was exercised in full. Proceeds of the offering, net of the underwriting discount and other transaction costs, aggregated $14,905. The proceeds will be used to fund our sales and marketing efforts, to develop and launch new products, and for general working capital purposes. Historically, we have financed our operations through public and private sales of common stock, issuance of preferred and common stock, convertible debt instruments, term loans and credit lines from financial institutions, and cash generated from operations. If our sales goals do not materialize as planned, we believe the Company will be able to reduce its operating costs sufficiently to still achieve positive cash flow from operations. However, there can be no assurance that we will generate sufficient revenues from product sales in the future to achieve profitable operations. If we are not able to achieve profitable operations at some point in the future, we may have insufficient working capital to maintain our operations as we presently intend to conduct them or to fund our expansion, marketing, and product development plans. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | (2) Significant Accounting Policies A) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include estimates for reserves of uncollectible accounts, inventory obsolescence, depreciable lives of property and equipment, analysis of impairments of recorded long-term assets and intangibles, realization of deferred tax assets, accruals for potential liabilities and assumptions made in valuing stock instruments issued for services. B) Accounts Receivable The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s historical losses and an overall assessment of past due trade accounts receivable outstanding. The allowance for doubtful accounts and returns and discounts is established through a provision reducing the carrying value of receivables. At December 31, 2018 and 2017, the allowance for doubtful accounts and returns and discounts was $623 and $601, respectively. C) Inventory Inventory is stated at the lower of cost or the current estimated market value of the inventory. We regularly review our inventory quantities on hand and record a provision for excess and obsolete inventory based primarily on our estimated forecast of product demand and our ability to sell the product(s) concerned. Demand for our products can fluctuate significantly. Factors that could affect demand for our products include unanticipated changes in consumer preferences, general market conditions or other factors, which may result in cancellations of advance orders or a reduction in the rate of reorders placed by customers. Additionally, our management’s estimates of future product demand may be inaccurate, which could result in an understated or overstated provision required for excess and obsolete inventory. At December 31, 2018 and 2017, the reserve for inventory obsolescence aggregated $197 and $509, respectively. D) Property and Equipment and Related Depreciation Property and equipment is stated at cost. Expenditures for major renewals and improvements that extend the useful lives of property and equipment or increase production capacity are capitalized, and expenditures for repairs and maintenance are charged to expense as incurred. Depreciation is calculated using accelerated and straight-line methods over the estimated useful lives of the assets as follows: Property and Equipment Type Years of Depreciation Building 39 years Machinery and equipment 5-12 years Vehicles 5 years Office equipment 5-7 years Management assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. In anticipation of the sale of our Los Angeles facility (see Note 3), we reclassified all the assets of the facility to Equipment Held for Sale. During the year ended December 31, 2017, we recorded impairment charges aggregating $5,925 to reduce the carrying amount of our Los Angeles assets to the estimated amount we believed to be recoverable. E) Intangible Assets and Impairment Policy Intangible assets are comprised of indefinite-lived brand names acquired, so classified because we anticipate that these brand names will contribute cash flows to the Company perpetually. Indefinite-lived intangible assets are not amortized but are assessed for impairment annually and evaluated annually to determine whether the indefinite useful life is appropriate. As part of our impairment test, we first assess qualitative factors to determine whether it is more likely than not the asset is impaired. If further testing is necessary, we compare the estimated fair value of our asset with its book value. If the carrying amount of the asset exceeds its fair value, as determined by its discounted cash flows, an impairment loss is recognized in an amount equal to that excess. During our December 31, 2018 impairment testing, we determined that our Sonoma Sparkler trademark is unlikely to provide future benefit to the Company, because we do not currently offer Sonoma Sparkler products and we do not anticipate doing so in the foreseeable future. Accordingly, we reduced the book value of this asset to zero as of December 31, 2018, by recording an impairment charge of $229. No impairments were noted during the year ended December 31, 2017. F) Concentrations The Company’s cash balances on deposit with banks are guaranteed by the Federal Deposit Insurance Corporation up to $250. Generally, the Company’s policy is to minimize borrowing costs by immediately applying cash receipts to borrowings against its credit facility. From time to time, however, the Company may be exposed to risk for the amounts of funds held in bank accounts in excess of the insurance limit. To minimize the risk, the Company’s policy is to maintain cash balances with high quality financial institutions. During the year ended December 31, 2018, the Company had two customers that accounted for approximately 24% and 17% of its sales, respectively; and during the year ended December 31, 2017, the Company had two customers that accounted for 23% and 16% of its sales, respectively. No other customer accounted for more than 10% of sales in either year. As of December 31, 2018, the Company had accounts receivable from two customers that comprised 36% and 19% of total accounts receivable, respectively. As of December 31, 2017, the Company had accounts receivable from two customers that comprised 25% and 14% of its total accounts receivable, respectively. No other customer accounted for more than 10% of accounts receivable in either year. During the years ended December 31, 2018 and 2017, respectively, the Company utilized three separate co-packers for most its production and bottling of beverage products in the eastern United States. With the December 31, 2018 Plant Sale, the Company no longer conducts a manufacturing operation, accordingly it utilizes co-packers to produce 100% of its products as of that date. The Company has long-standing relationships with two different co-packers, and in conjunction with the Plant Sale we entered into a third co-packing agreement with California Custom Beverage LLC (“CCB”), the purchaser of the plant (see Note 3). CCB is 100% owned by Chris Reed, founder of the Company and current Chief Information Officer and director. Although there are other packers, a change in co-packers may cause a delay in the production process, which could ultimately affect operating results. During the years ended December 31, 2018, the Company’s two largest vendors accounted for 16% and 13% of its purchases, respectively. During the year ended December 31, 2017, the Company made 20%, of its purchases from a single vendor. At December 31, 2018 and 2017, accounts payable to the Company’s largest vendor comprised 24% and 20% of our total accounts payable, respectively. No other account was more than 10% of our accounts payable in either year. G) Fair Value of Financial Instruments The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Financial assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. Accounting Standards Codification Section 820 defines the following levels directly related to the amount of subjectivity associated with the inputs: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly. Level 3—Unobservable inputs based on the Company’s assumptions. The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, short-term bank loans, accounts payable, notes payable and other payables, approximate their fair values because of the short maturity of these instruments. The carrying values of lease obligations and long-term financing obligations approximate their fair values since the interest rates on these obligations are based on prevailing market interest rates. As of December 31, 2018, and December 31, 2017, the Company’s balance sheets included warrant liabilities aggregating $38 and $36 respectively, measured at fair value based on Level 2 inputs. H) Segments The Company operates in one segment for the manufacture and distribution of our products. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying financial statements I) Cost of Goods Sold Cost of goods sold is comprised of the costs of raw materials and packaging utilized in the manufacture of products, co-packing fees, repacking fees, in-bound freight charges, as well as certain internal transfer costs. Additionally, cost of goods sold includes direct production costs in excess of charges allocated to finished goods in production. Plant costs include labor costs, production supplies, repairs and maintenance, direct inventory write-off charges and adjustments to the inventory reserve. Charges for labor and overhead allocated to finished goods are determined on a market cost basis, which may be lower than the actual costs incurred. Plant costs in excess of production allocations are expensed in the period incurred rather than added to the cost of finished goods produced. Expenses not related to the production of our products are classified as operating expenses. The Company terminated its manufacturing operation effective with the December 31, 2018 Plant Sale. See Note 3. J) Delivery and Handling Expense Shipping and handling costs are comprised of purchasing and receiving, inspection, warehousing, transfer freight, and other costs associated with product distribution after manufacture and are included as part of operating expenses. K) Income Taxes The Company uses an asset and liability approach for accounting and reporting for income taxes that allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. L) Revenue Recognition In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), (“ASC 606”). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which include (1) identifying the contract or agreement with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company adopted ASC 606 effective January 1, 2018, and adoption of such standard had no effect on previously reported balances. The Company previously recognized and continues to recognize revenue when risk of loss transfers to our customers and collection of the receivable is reasonably assured, which generally occurs when product is shipped. A written order from the customer must be received and credit acceptance procedures performed prior to shipment of product. The Company does not have any significant contracts with customers requiring performance beyond delivery, and contracts with customers contain no incentives or discounts that could cause revenue to be allocated or adjusted over time. Shipping and handling activities are performed before the customer obtains control of the goods and therefore represent a fulfillment activity rather than a promised service to the customer. Revenue and costs of sales are recognized when control of the products transfers to our customer, which generally occurs upon shipment from our facilities. The Company’s performance obligations are satisfied at that time. All of the Company’s products are offered for sale as finished goods only, and there are no performance obligations required post-shipment for customers to derive the expected value from them. The Company does not allow for returns, except for damaged products when the damage occurred pre-fulfillment. Damaged product returns have historically been insignificant. Because of this, the stand-alone nature of our products, and our assessment of performance obligations and transaction pricing for our sales contracts, we do not currently maintain a contract asset or liability balance for obligations. We assess our contracts and the reasonableness of our conclusions on a quarterly basis. The Company accounts for certain sales incentives to customers, including slotting fees, as a reduction of gross sales. These sales incentives for the years ended December 31, 2018 and 2017 were approximately $3,872 and $4,004, respectively. M) Net Loss Per Share Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding during the year. Diluted earnings (loss) per share is computed by dividing the net income (loss) applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation if their effect is antidilutive. For the years ended December 31, 2018 and 2017, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an anti-dilutive effect. The potentially dilutive securities consisted of the following: December 31, 2018 December 31, 2017 Convertible note to a related party 2,266,667 2,266,667 Warrants 6,897,277 7,325,282 Common stock equivalent of Series A Convertible Preferred Stock 37,644 37,644 Unvested restricted common stock 598,370 - Options 3,744,404 677,500 Total 13,544,362 10,307,093 N) Advertising Costs Advertising costs are expensed as incurred and are included in selling and marketing expense. Advertising costs aggregated $300 and $285 for the years ended December 31, 2018 and 2017, respectively. O) Stock Compensation Expense The Company periodically issues stock options and restricted stock awards to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for such grants issued and vesting to employees based on ASC 718, whereby the value of the award is measured on the date of grant and recognized as compensation expense on the straight-line basis over the vesting period. Such grants issued and vesting to non-employees are valued on the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Awards granted to non-employees are revalued each reporting period to determine the amount to be recorded as an expense in the respective period. As the awards vest, they are valued on each vesting date and an adjustment is recorded for the difference between the value already recorded and the then current value on the date of vesting. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date. The fair value of the Company’s stock option and restricted stock grants is estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or restricted stock, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods. P) Warrant Liabilities Various stock sales made by the Company to finance operations have been accompanied by the issuance of warrants. Some of these warrant agreements contain fundamental transaction provisions which may give rise to an obligation of the Company to pay cash to the warrant holders. For accounting purposes, in accordance with ASC 480, Distinguishing Liabilities from Equity Fair value is estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or restricted stock, and future dividends. Expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect the amount of expense recorded in future periods. Q) Leases In February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than twelve months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for leases existing at, or entered into after, the beginning of the earliest period presented in the financial statements. The Company adopted ASU 2016-02 effective October 1, 2018. As a result, we recorded right-of-use assets aggregating $862, and lease liabilities of the same amount, as of that date. In accordance with ASU 2016-02, the right-of-use assets are being depreciated over the life of the underlying leases, and monthly lease payments are being recorded as reductions to the lease liability and imputed interest expense. See Note 9 for additional information. R) Recent Accounting Pronouncements In July 2017, the FASB issued ASU No. 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features; (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception” (“ASU 2017-11”). ASU 2017-11 allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock. As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted for as derivative liabilities. A company will recognize the value of a down round feature only when it is triggered, and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, an entity will treat the value of the effect of the down round as a dividend and a reduction of income available to common shareholders in computing basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The guidance in ASU 2017-11 can be applied using a full or modified retrospective approach. The adoption of ASU 2017-11 is not expected to have a material impact on the Company’s financial position, results of operations, and cash flows. In June 2018, the FASB issued ASU No. 2018-07, “Compensation – Stock Compensation (Topic 718); Improvements to Non-Employee Share-Based Payment Accounting” (“ASU 2018-07”). ASU 2018-07 generally aligns the measurement and classification of share-based awards to non-employees with that of share-based awards to employees. Non-employee equity awards will be measured at the fair value of the equity instruments to be issued, as of the grant date, and the resulting amount will be recognized as expense over the expected or contractual term of the award. The ASU applies to all share-based payments to nonemployees in exchange for goods or services used or consumed in an entity’s own operations. It does not apply to instruments issued to a lender or investor in a financing transaction, or to instruments granted when selling goods or services to customers. ASU 2018-07 is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures. In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 amends certain disclosure requirements pertaining to fair value measurement, and is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The adoption of ASU 2018-13 is not expected to have a material impact on the Company’s financial position, results of operations, and cash flows. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
Plant Sale to a Related Party
Plant Sale to a Related Party | 12 Months Ended |
Dec. 31, 2018 | |
Plant Sale To Related Party | |
Plant Sale to a Related Party | (3) Plant Sale to a Related Party On March 24, 2018, the Company received a letter of intent from California Custom Beverage, LLC, (“CCB”); an entity owned by Chris Reed, founder, CIO and board member of Reed’s; for the purchase of substantially all of the assets of the Company’s Los Angeles plant (the “Plant Sale”). Based on the terms of the offer, the Company recorded impairment charges totaling $5,925 in 2017, the difference between the offer terms and the net book value of the assets to be sold, reducing the assets to estimated net realizable value. On December 31, 2018, the Plant Sale was completed. The Plant Sale included substantially all machinery, equipment, furniture and fixtures of the facility, with a net book value of $2,300 after 2017 impairment charges. Additionally, all contracts, permits, intellectual property and inventory pertaining to our non-strategic private label business were included in the sale. These private label assets were internally developed by the Company and had nominal book value as of the date of sale. The sales price consisted of $1,250 in cash, and CCB assumed our lease obligation on the California real property, which aggregated $1,300 at December 31, 2018. The Company recognized a gain of $180 on the sale, net of transaction costs and other customary adjustments. By the terms of the sale CCB assumed the monthly payments on our lease obligation (see Note 8) effective immediately upon closing of the sale. Our release from the obligation by the lessor, however, is dependent upon CCB’s deposit of $1.2 million of security with the lessor no later than December 31, 2019. Mr. Reed has placed 800,000 of his shares of Reed’s stock in escrow, to be sold by him during 2019 for the purpose of funding the required security deposit. We will receive a 5% royalty on CCB’s private label sales to existing customers for three years and a 5% referral fee on CCB’s private label sales to referred customers for three years. Additionally, we have entered into a three year co-packing agreement with CCB, whereby it will produce Reed’s beverages in glass bottles at prevailing West Coast market rates. By the terms of the sale, CCB reimbursed the Company for certain costs such as sales tax arising from the transaction and prepayments as of December 31. Such costs aggregated $195, which is reflected as Receivable from Related Party on the accompanying balance sheet as of December 31, 2018. Additionally, we have agreed to provide at cost certain transitional services to CCB during the month of January 2019, including procurement of inventory, insurance coverage, and transitional services with respect to payroll. The cost of these services is expected to aggregate approximately $200. Mr. Reed has agreed to continue on as our Chief Innovation Officer and a member of our board of directors. In connection with the Plant Sale, we granted registration rights to a group of our current shareholders, including Chairman John Bello and certain institutional investors, with respect to an aggregate of 350,000 shares of our common stock. We agreed to use our commercially reasonable best efforts to register those 350,000 shares for resale with the SEC, and we have not yet done so. The shares may be sold pursuant to Rule 144 beginning July 1, 2019. |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventory | (4) Inventory Inventory is valued at the lower of cost (first-in, first-out) or market, and is comprised of the following (in thousands): December 31, 2018 December 31, 2017 Raw Materials and Packaging $ 3,053 $ 2,670 Finished Goods 4,327 3,261 Total $ 7,380 $ 5,931 The Company has recorded an obsolescence reserve for potentially slow moving and obsolete inventory. The reserve at December 31, 2018 and 2017, totaled $197 and $509, respectively. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | (5) Property and Equipment Property and equipment is comprised of the following (in thousands): December 31, 2018 December 31, 2017 Right-of-use assets under operating leases $ 934 $ 569 Computer hardware and software 304 404 Total cost 1,238 973 Accumulated depreciation (342 ) (799 ) Net book value $ 896 $ 174 Depreciation expense for the years ended December 31, 2018 and 2017 totaled $86 and $551, respectively. On December 31, 2018, the Company completed the sale of its Los Angeles manufacturing facility. See Note 3. The sale included substantially all machinery, equipment, furniture and fixtures of the facility. In anticipation of the sale, we reclassified all the assets of the facility to Equipment Held for Sale. During the year ended December 31, 2017, we recorded impairment charges aggregating $5,925 to reduce the carrying amount of these assets to the amount we estimated to be recoverable. Equipment held for sale consists of the following (in thousands): December 31, 2018 December 31, 2017 Equipment held for sale $ 200 $ 8,474 Reserve (118 ) (5,925 ) Net book value $ 82 $ 2,549 The balance as of December 31, 2018 consists of residual manufacturing equipment, at estimated net realizable value, which management anticipates selling during 2019. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | (6) Intangible Assets Intangible assets consist of trademarks for the Company’s brand names (in thousands): December 31, 2018 December 31, 2017 Virgil’s 576 $ 576 Sonoma Sparkler - 229 Brand names $ 576 $ 805 Our brand names are deemed to have indefinite lives and are not amortized, but are tested for impairment annually. During our December 31, 2018 impairment testing, we determined that our Sonoma Sparkler trademark is unlikely to provide future benefit to the Company, because we do not currently offer Sonoma Sparkler products and we do not anticipate doing so in the foreseeable future. Accordingly, we reduced the book value of this asset to zero as of December 31, 2018, by recording an impairment charge of $229. No impairments were noted during the year ended December 31, 2017. |
Lines of Credit
Lines of Credit | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Lines of Credit | (7) Lines of Credit Amounts outstanding under the Company’s credit facilities are as follows (in thousands): December 31, 2018 December 31, 2017 Rosenthal Line of Credit $ 7,657 $ - PMC Revolving Line of Credit - 3,301 Term Loans - 3,000 CAPEX loan - 3,947 7,657 10,248 Capitalized finance costs (677 ) - Net balance $ 6,980 $ 10,248 On October 4, 2018, the Company entered into a financing agreement with Rosenthal & Rosenthal, Inc. (“Rosenthal”), for a line of credit to replace its existing credit facility. The Rosenthal line of credit is for a term of 2.5 years and provides for borrowings of up to $13,000. Borrowings are based upon eligible accounts receivable and inventory, plus up to $4,000 of additional borrowing beyond those amounts (the “Over-Advance”). Borrowings under the Rosenthal financing agreement bear interest at the greater of prime or 4.75%, plus an additional 2% to 3.5% depending upon whether the borrowing is based upon receivables, inventory or is an Over-Advance. The effective interest rate as of December 31, 2018 on outstanding borrowings was 8.3%. Additionally, the line of credit is subject to monthly facility and administration fees, and aggregate minimum monthly fees (including interest) of $4. The Company incurred $752 of direct costs of the transaction, consisting primarily of broker, bank and legal fees, and the $161 cost of the warrant modification discussed below and in Note 10. These costs have been capitalized and are being amortized over the 2.5 year life of the Rosenthal agreement. Amortization was $75 for the year ended December 31, 2018. The line of credit is secured by substantially all of the assets of the Company. Additionally, the Over-Advance is guaranteed by an irrevocable stand-by letter of credit in the amount of $1,500, issued by Daniel J. Doherty III and the Daniel J. Doherty, III 2002 Family Trust, affiliates of Raptor/Harbor Reeds SPV LLC (“Raptor”). Raptor beneficially owns 27.1% of the Company’s outstanding common stock as of December 31, 2018. Mr. Doherty is a member of the Company’s Board of Directors. In the event of a default under the financing agreement, Raptor has a put option to purchase from Rosenthal the entire amount of any outstanding Over-Advance plus accrued interest, prior to Rosenthal declaring an event of default under the financing agreement. As part of the transaction, the Company issued an Amended and Restated Subordinated Convertible Non-Redeemable Secured Note to Raptor, to provide for additional advances of up to $4,000 in the event that Raptor exercises its put option described above. Consequently, the exercise price of 750,000 of Raptor’s outstanding warrants to purchase the Company’s common stock was reduced from $1.50 to $1.10, resulting in an increase in the fair value of the warrants of $161. This amount has been reflected as a capitalized finance cost, and is being amortized over the life of the financing agreement. See Note 10. The financing agreement with Rosenthal includes customary restrictions that limit our ability to engage in certain types of transactions, including our ability to utilize tangible and intangible assets as collateral for other indebtedness Prior to execution of the financing agreement with Rosenthal, the Company had a Loan and Security Agreement with PMC Financial Services Group, LLC (the “PMC Agreement”), which included a $6,000 Revolving Line of Credit, a $3,000 Term Loan, and a Capital Expansion Loan (“CAPEX Loan”). Upon execution of the financing agreement with Rosenthal, all obligations under the PMC Agreement were repaid in full in an aggregate amount of $8,758. Interest rates on borrowings under the PMC Agreement were generally calculated on a sliding scale based on our trailing six month EBITDA. If unused cash availability met pre-established thresholds, interest rates were generally reduced to a contractual base rate plus any increase in the prime rate. The Revolving Line of Credit also bore a monthly collateral monitoring fee of .45%. Interest expense on the Company’s credit facilities aggregated $1,153 and $1,458 for the years ended December 31, 2018 and 2017. |
Financing Obligation
Financing Obligation | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Financing Obligation | (8) Financing Obligation Our financing obligation is comprised of the following (in thousands): December 31, 2018 December 31, 2017 Financing obligation $ - $ 2,186 Unamortized valuation discount - (714 ) Net financing obligation $ - $ 1,472 Less current portion - (222 ) Long term financing obligation $ - $ 1,250 As the result of a 2009 sale-leaseback transaction, the Company leased two buildings and certain of its brewery equipment (the majority of the assets of our Los Angeles plant). The transaction was accounted for as a long-term financing arrangement, and the proceeds from the sale were recorded as a financing obligation in the initial amount of $3,056. Monthly payments of approximately $35 under the arrangement were recorded as a reduction in the financing obligation and as interest expense at an implicit rate of 9.9%. In connection with the financing obligation and subsequent amendments, the Company issued an aggregate of 600,000 warrants to purchase its common stock. The 600,000 warrants were valued at an initial aggregate amount of $1,336, which was recorded as a valuation discount at the date of issuance. The discount was being amortized over fifteen years, the term of the purchase option. The balance of the unamortized valuation discount at December 31, 2017 was $714. Amortization of valuation discount was $110 for each of the years ended December 31, 2018 and 2017. On December 31, 2018, the Company completed its Plant Sale (see Note 3). As part of the transaction the buyer assumed our financing obligation, which aggregated $1.3 million, net of unamortized valuation discount of $604, as of that date. By the terms of the sale CCB assumed the monthly payments on the obligation effective immediately upon closing of the sale. Our release from the obligation by the lessor, however, is dependent upon CCB’s deposit of $1.2 million of security with the lessor no later than December 31, 2019. Mr. Reed has placed 800,000 of his shares of Reed’s stock in escrow, to be sold by him during 2019 for the purpose of funding the required security deposit. |
Leases Payable
Leases Payable | 12 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
Leases Payable | (9) Leases Payable The Company adopted ASU 2016-02, Leases, effective October 1, 2018. The Standard requires a lessee to record a right-of-use asset and a corresponding lease liability at the inception of the lease, initially measured at the present value of the lease payments. As a result, we recorded right-of-use assets aggregating $862 as of October 1, 2018, utilizing a discount rate of 12.6%. That amount consists of new leases on the Company’s Norwalk office and certain office equipment of $730, and existing capitalized leases reclassified to right of use assets of $132. The amount of such reclassification as of December 31, 2017 was $569. ASU 2016-02 requires recognition in the statement of operations of a single lease cost, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis. Had ASU 2016-02 been adopted as of the beginning of the earliest period presented, such rent expense for the years ended December 31, 2018 and 2017 would have aggregated $45 and $82, respectively. In accordance with ASU 2016-02, the right-of-use assets are being amortized over the life of the underlying leases. Had ASU 2016-02 been adopted as of the beginning of the earliest period presented, amortization of right of use asset would have aggregated $49 and $182 during the years ended December 31, 2018 and 2017, respectively. Future minimum lease payments under the leases are as follows (in thousands): Years Ending December 31, 2019 $ 185 2020 169 2021 202 2022 229 2023 233 thereafter 248 Total payments 1,266 Less: Amount representing interest (414 ) Present value of net minimum lease payments 852 Less: Current portion 51 Non-current portion $ 801 |
Convertible Note to a Related P
Convertible Note to a Related Party | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Convertible Note to a Related Party | (10) Convertible Note to a Related Party The Convertible Note to a Related Party consists of the following (in thousands): December 31, 2018 December 31, 2017 12% Convertible Note Payable $ 3,400 $ 3,400 Accrued Interest 761 290 Total obligation $ 4,161 $ 3,690 On April 21, 2017, pursuant to a Securities Purchase Agreement, the Company issued to Raptor a Secured, Convertible, Subordinated, Non-Redeemable Note (the “Note”) in the original principal amount of $3,400 and warrants to purchase 1,416,667 shares of common stock. See Note 11 for further information regarding the warrants. The Note bears interest at a rate of 12% per annum, compounded monthly. It is secured by the Company’s assets, subordinate to the first priority security interest of Rosenthal (see Note 7). The Note may not be prepaid and matures on April 21, 2021. It may be converted, at any time and from time to time, into shares of common stock of the Company. Net of transaction costs, the Company received proceeds from the Note of $3,083. The principal balance of the Note was $3,400 at December 31, 2018 and 2017. The fair value of the warrants was initially determined to be $3,302 using the Black-Scholes-Merton option pricing model. Of this amount, $3,083 was recorded as a valuation discount, and the $219 excess of the fair value of the warrant liability at the issuance date over the amount allocated to valuation discount was accounted for as a financing cost. The Company recognized a total debt discount at issuance of $3,400 consisting of the fair value of the warrant liability of $3,083 and cash offering costs of $317. The debt discount was being amortized over the term of the note. Amortization of the note discount through December 12, 2017 was $1,191 and the unamortized debt discount at that date was $2,209. On December 12, 2017, in connection with the reduction of the offering price in the Rights Offering (see Note 12) to $1.50, the Company amended the Note, reducing the conversion price from $3.00 to $1.50. The Company determined that, under the provisions of ASC Topic 470-50, such modification resulted in a change of more than 10% of the fair value of the Note, and the transaction should be recorded as an extinguishment. Accordingly, we removed the $3,400 original Note and $2,209 of unamortized discount from our Balance Sheet, and recorded the new note at fair value. The Company retained an independent third-party valuation firm to calculate the fair value of the new note. Using discounted cash flow and Black-Scholes methods the fair value was determined to be $4,823. Accordingly, a new obligation in the amount of $3,400 was recorded and the corresponding premium of $1,423, representing the excess of the fair value over the face value of the Note, was reflected as an increase in additional paid in capital. A loss of $3,632 was realized in connection with the extinguishment and was included in the Statement of Operations. On October 4, 2018, in connection with the execution of the Rosenthal financing agreement (see Note 7), the Company issued an Amended and Restated Subordinated Convertible Non-Redeemable Secured Note to Raptor, to provide for additional advances of up to $4,000 (see Note 7). In consideration therefore, the exercise price of 750,000 of Raptor’s outstanding warrants was reduced from $1.50 to $1.10, resulting in an increase in the fair value of the warrants, determined in accordance with the Black-Scholes-Merton option pricing model, of $161. This amount will be amortized as interest expense over the life of the Rosenthal financing agreement. See Note 11 for further information regarding the warrants. |
Warrants and Warrant Liability
Warrants and Warrant Liability | 12 Months Ended |
Dec. 31, 2018 | |
Warrants And Warrant Liability | |
Warrants and Warrant Liability | (11) Warrants and Warrant Liability Warrant activity during the years ended December 31, 2018 and 2017 is as follows: Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Terms (Years) Aggregate Intrinsic Value Outstanding at December 31,2016 803,909 4.50 4.00 26 Granted 7,643,749 1.95 Exercised (1,122,376 ) 1.50 Forfeited or expired - - Outstanding at December 31,2017 7,325,282 $ 2.09 3.43 Granted Exercised 428,005 $ 2.03 Forfeited or expired 0 Outstanding at December 31, 2018 6,897,277 $ 2.06 2.42 $ 1,447 Exercisable at December 31, 2018 6,897,277 $ 2.06 2.42 $ 1,447 Warrants outstanding at December 31, 2018 and 2017, and their respective exercise price and expiration dates, are as follows: December 31, 2018 December 31, 2017 Number Price Expiration Dates Number Price Expiration Dates 200,000 $ 5.600 September 2019 200,000 $ 5.600 September 2019 125,000 $ 4.100 May 2021 125,000 $ 4.100 May 2021 10,000 $ 3.900 October 2021 10,000 $ 3.900 October 2021 50,000 $ 4.100 November 2021 50,000 $ 4.100 November 2021 72,703 $ 3.740 June 2021 72,703 $ 3.740 June 2021 66,059 $ 4.250 June 2021 66,059 $ 4.250 June 2021 784,549 $ 1.500 April 2022 784,549 $ 1.500 April 2022 87,745 $ 1.550 July 2022 87,745 $ 1.550 July 2022 512,560 $ 2.000 July 2022 512,560 $ 2.000 July 2022 4,238,661 $ 2.025 December 2020 4,666,666 $ 2.030 December 2020 750,000 $ 1.100 December 2022 750,000 $ 1.500 December 2022 6,897,277 7,325,282 Various financing transactions and stock sales made by the Company have been accompanied by the issuance of warrants. Generally, we record the fair market value of the warrants, as determined using the Black-Scholes-Merton option pricing model, as a financing cost at date of issuance. Such financing costs aggregated $0 and $1,480 during the years ended December 31, 2018 and 2017, respectively. Certain of our warrant agreements, however, contain fundamental transaction provisions which may give rise to an obligation of the Company to pay cash to the warrant holders. For accounting purposes, in accordance with ASC 480, Distinguishing Liabilities from Equity Warrant Liability Warrant Transactions The aggregate intrinsic value of outstanding and exercisable warrants is calculated as the difference between the exercise price of the warrant and the market price of the Company’s common stock as of December 31, 2018, which was $2.07. Warrants for which the exercise price is higher than $2.07 have no intrinsic value as of December 31, 2018. On April 21, 2017, in conjunction with the issuance of a Convertible Note to Related Party (see Note 10), the Company issued warrants for the purchase of 1,416,667 shares of common stock to Raptor. The warrants contain fundamental transaction provisions which may give rise to an obligation of the Company to pay cash to the warrant holders, accordingly these warrants are accounted for as liabilities. The fair value of the warrants was determined to be $3,302 using the Black-Scholes-Merton option pricing model. Of this amount, $3,083 was recorded as a debt valuation discount, and the $219 excess of the fair value of the warrant liability at the issuance date over the amount allocated to valuation discount was accounted for as a financing cost. On April 19 2017, in anticipation of the April 21 transaction, warrants to purchase an additional 210,111 shares of the Company’s common stock at the exercise price of $3.00 were granted to three accredited investors that are party to a Securities Purchase Agreement dated May 26, 2016 and hold participation rights in the Company’s financing transactions. The warrants contain customary anti-dilution provisions and include fundamental transaction provisions resulting in the fair value of $571 to be classified as an increase to the warrant liability. Fair value was determined using the Black-Scholes-Merton option pricing model. The three accredited investors referred to above agreed to waive their participation rights with regard to the April 21, 2017 financing. In consideration, these investors’ participation rights, expiring in May 2017, were extended for a period of two years. In addition, on April 21, 2017, the Company increased the terms of their outstanding 280,147 warrants by one year and reduced the exercise price from $4.25 to $3.00. The incremental change in the warrants’ fair value of $187 on the modification date was reported as an increase to the warrant liability and a cost of warrant modification. On July 13, 2017, the Company entered into warrant exercise agreements with Raptor and the three accredited investors, by which the Company repriced previously issued warrants as an inducement to exercise. A total of 1,906,925 warrants were repriced, including those issued in April 2017. The warrants’ exercise prices were lowered from $3.00 and $4.00 per share to $1.50 per share, and the incremental cost before and after the modification of the warrants resulted in a charge against earnings of $1,109. Upon modification, the investors exercised warrants for 1,122,376 shares of common stock at the repriced $1.50 per share, resulting in proceeds to the Company of $1,650. The fair value of the warrants at the date of exercise was $1,601, which was reclassified from the warrant liability to additional paid in capital as a result of the exercise. At the same time, the Company and the holders of the remaining 784,549 warrants agreed to modify the language of the fundamental transaction provision to require board approval, thus eliminating the need for the liability classification of the warrants. Accordingly, the fair value of these warrants, totaling $1,033, was reclassified from the warrant liability to additional paid in capital. Pursuant to the July 13 warrant exercise agreements, the Company issued to the investors, pro rata based on the number of shares each investor exercised, a second tranche of warrants to purchase 512,560 shares of our common stock and on July 19, 2017 a third tranche of warrants to purchase 87,745 shares of our common stock. The second tranche of warrants have a term of 5 years, may be exercised commencing six months after issuance and have an exercise price of $2.00. The third tranche of warrants were exercisable immediately upon issuance for a term of five years and have an exercise price of $1.55. The newly issued warrants contain customary anti-dilution provisions. The aggregate fair value of the new warrants totaling $689 was determined using the Black-Scholes-Merton option pricing model with a volatility of 53.75% an interest free rate of 1.65% and a stock price of $2.35. The fair value of the warrants was reported as a financing cost on their respective issuance dates. In December 2017, in accordance with a December 28, 2017 Rights Offering, the Company sold warrants to purchase 4,666,666 shares of common stock, at an exercise price of $2.025 per share. Additionally, as compensation for a definitive backstop commitment from Raptor, the Company issued to Raptor 750,000 five-year warrants. See Note 12 for additional information regarding the Rights Offering and backstop commitment. On October 4, 2018, in connection with the execution of the Rosenthal financing agreement (see Note 7), the Company issued an Amended and Restated Subordinated Convertible Non-Redeemable Secured Note to Raptor, to provide for additional advances of up to $4,000 (see Note 7). In consideration therefore, the exercise price of 750,000 of Raptor’s outstanding warrants was reduced from $1.50 to $1.10, resulting in an increase in the fair value of the warrants, determined in accordance with the Black-Scholes-Merton option pricing model, of $161. This amount will be amortized to financing cost over the life of the Rosenthal financing agreement. During the year ended December 31, 2018, a total of 428,005 warrants were exercised, including cashless exercises, resulting in the issuance of 414,857 shares of our common stock. Warrant Liability As stated above, certain of our warrant agreements contain fundamental transaction provisions which may give rise to an obligation of the Company to pay cash to the warrant holders. Such warrants are accounted for as liabilities at fair value. The fair value is remeasured at each reporting period, and the change in the fair value is recognized in earnings in the accompanying Statements of Operations. Following is a summary of the transactions described above that impacted our warrant liability. The fair value of the warrant liability was determined at the following reporting, issuance, and modification dates using the Black-Scholes-Merton option pricing model and the following assumptions: As of December 31, 2016 Upon Issuance April 21, 2017 Upon Modification April 21, 2017 Upon Modification July 13, 2017 As of December 31, 2017 As of December 31, 2018 (1) (2) (3) (4) (5) (6) Stock Price $ 4.10 $ 4.75 $ 4.75 $ 2.35 $ 1.55 $ 2.07 Risk free interest rate 1.58 % 1.51 % 1.51 % 1.65 % 1.74 % 2.69 % Expected Volatility 54.71 % 49.33 % 49.33 % 53.75 % 56.06 % 50.07 % Expected life in years 4.42 5.00 5.00 4.77 to 4.89 3.42 2.42 Expected dividend yield 0 % 0 % 0 % 0 % 0 % 2.69 % Number of Warrants 418,909 1,626,778 280,147 1,906,925 138,762 138,762 Fair Value of Warrants $ 775 $ 3,873 $ 187 $ 1,109 $ 36 $ 38 (1) Warrant valuation on December 31, 2016 for 418,909 warrants containing fundamental transaction provisions. (2) April 21, 2017 grant to Raptor of warrants to purchase 1,416,667 shares of the Company’s common stock in connection with the Company’s issuance of the Convertible Note to a Related Party (valued at $3,302) and April 19, 2017, grant of 210,111 warrants to three accredited investors that are party to a Securities Purchase Agreement dated May 26, 2016 and hold participation rights in the Company’s financing transactions (valued at $571). (3) April 19, 2017, the three accredited investors referred to above waived their participation rights with regard to the April 21, 2017 financing. The Company increased the terms of their outstanding 280,147 warrants by one year and reduced the exercise price from $4.25 to $3.00. The incremental change in the warrants’ fair value of $187 on the modification date was reported as an increase to the warrant liability and a cost of warrant modification. (4) July 13, 2017 warrant exercise agreements with Raptor and the three accredited investors to reprice warrants to purchase a total of 1,906,925 shares of our common stock. The incremental cost before and after the modification of the warrants resulted in a charge against earnings of $1,109. The warrants were also changed to modify language pertaining to a “fundamental transaction,” eliminating the need to classify the warrants as a warrant liability. Upon modification, the investors exercised warrants for 1,122,376 shares of common stock at the repriced $1.50 per share, resulting in proceeds to the Company of $1,650. The fair value of the warrant liability at the date of exercise was $1,601, which was reclassified from the warrant liability to additional paid in capital as a result of the exercise. At the same time, the Company and the holders of the remaining 784,549 warrants agreed to modify the language of the fundamental transaction clause to require board approval, thus eliminating the need for the liability classification of the warrants. Accordingly, the fair value of these warrants, totaling $1,033, was reclassified from the warrant liability to additional paid in capital. (5) Warrant valuation on December 31, 2017 for 138,762 warrants containing fundamental transaction provisions. The decrease in the fair value of the warrant liability was $3,275 for the year ended December 31, 2017. (6) Warrant valuation on December 31, 2018 for 138,762 warrants containing fundamental transaction provisions. The increase in the fair value of the warrant liability was $2 for the year ended December 31, 2018. The risk-free interest rate used in the valuation calculations was based on rates established by the Federal Reserve Bank. The Company used the historical volatility of its common stock to estimate the expected volatility. The expected life of the warrants was determined by the remaining contractual life of the warrant instrument. The expected dividend yield was determined to be zero since the Company has not paid dividends to its common stockholders in the past and does not expect to pay dividends to its common stockholders in the foreseeable future. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | (12) Stockholders’ Equity Series A Convertible Preferred Stock - Dividends are payable at the rate of 5% annually, pro-rata and non-cumulative. The dividend can be paid in cash or, at the discretion of our board of directors, in shares of common stock based on its then fair market value. The Company cannot declare or pay any dividend on shares of our securities common stock until the holders of the Preferred Stock have received their annual dividend. In addition, the holders of the Preferred Stock are entitled to receive pro rata distributions of dividends on an “as converted” basis with the holders of our common stock. In the event of any liquidation, dissolution or winding up of the Company, or if there is a change of control event as defined, the holders of the Preferred Stock are entitled to receive, prior to distributions to the holders of common stock, $10.00 per share plus all accrued and unpaid dividends. Thereafter, all remaining assets are distributed pro rata among all security holders. Since June 30, 2008, the Company has the right, but not the obligation, to redeem all or any portion of the Preferred Stock at $10.00 per share, the original issue price, plus all accrued and unpaid dividends. The Preferred Stock may be converted at any time, at the option of the holder, into four shares of common stock, subject to adjustment in the event of stock splits, reverse stock splits, stock dividends, recapitalization, reclassification, and similar transactions. The Company is obligated to reserve authorized but unissued shares of common stock sufficient to affect the conversion of all outstanding shares of Preferred Stock. Except as provided by law, the holders of the Preferred Stock do not have the right to vote on any matters, including the election of directors. However, so long as any shares of Preferred Stock are outstanding, the Company shall not, without the approval of a majority of the preferred stockholders, authorize or issue any equity security having a preference over the Preferred Stock with respect to dividends, liquidation, redemption or voting, including any other security convertible into or exercisable for any senior preferred stock. During the years ended December 31, 2018 and 2017, the Company paid dividends Common Stock - Common Stock Issued in Connection with a Rights Offering – On December 6, 2017, the Company entered into a definitive backstop commitment agreement (“Backstop Agreement”) with Raptor whereby Raptor agreed to purchase a minimum of $6 million of unregistered units not subscribed in the Rights Offering in a private placement, subject to customary terms and conditions. Raptor had the right to exercise its basic subscription right and over-subscription privilege as a rights holder in the Rights Offering (subject to pro-ration) but had no obligation to do so. As compensation for the backstop commitment the Company issued to Raptor five-year warrants to purchase a minimum of 750,000 shares of the Company’s common stock. The offering was oversubscribed; accordingly Raptor did not purchase any unregistered units in a private placement under the provisions of the Backstop Agreement. In connection with the offering, the Company also agreed to register the shares of common stock underlying the units (including shares of common stock underlying the warrants contained in the units) and shares of common stock underlying the backstop warrants. The Company registered the shares in February 2018. Private Sale to a Director - Common Stock Issued to Directors and Officers for Services Rendered – . During the year ended December 31, 2017, the Company issued 62,365 shares of its common stock to certain directors and officers of the Company as compensation for services rendered. The shares had an aggregate value of $90 at dates of issuance. Exercises of Warrants – Common Stock Issuable – On January 10, 2018, Mr. Stalowir was awarded 371,268 shares of restricted common stock with an aggregate fair value of $631, pursuant to his employment agreement with the Company. Half of the award, or 185,634 shares vested and were issued during 2018. The remaining 185,634 shares will vest in 2019. Also on January 10, 2018, the Company’s independent directors were awarded a total of 70,588 shares of restricted common stock, with an aggregate fair value of $120, as compensation for services rendered during 2018. The shares vested and were issued at the rate of 25% per quarter during each fiscal quarter of 2018. Effective December 31, 2017, the Company issued to its independent directors an aggregate of 400,000 shares of common stock valued at $1.70 per share, or $680 in total, for services provided in 2017. These shares were reflected as Common Stock Issuable at December 31, 2017, and were issued during 2018. Subsequent to December 31, 2018, the Company entered into an agreement for an underwritten public offering of its common stock. See Note 17. |
Share-Based Compensation
Share-Based Compensation | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | (13) Share-Based Compensation Management believes that the ability to issue equity compensation, in order to incentivize performance by employees, directors, and consultants, is essential to the Company’s growth strategy. On September 29, 2017, the 2017 Compensation Plan (the “Plan”) was approved by our shareholders. Initially it provided for the issuance of up to 3,000,000 shares. On December 13, 2018 our shareholders approved a 3,500,000 share increase in the number of shares issuable under the Plan. Options issued and forfeited under the 2017 plan contain an Evergreen provision and cannot be re-priced without shareholder approval. As of December 31, 2018, 1,947,715 shares are issuable under the Plan, and 27,500 shares remain issuable under the Company’s predecessor 2015 Compensation Plan. The plans permit the grant of options and stock awards to our employees, directors and consultants. The options may constitute either “incentive stock options” within the meaning of Section 422 of the Internal Revenue Code or “non-qualified stock options”. The Plan is currently administered by the board of directors. The exercise price of an option granted under the plan cannot be less than 100% of the fair market value per share of common stock on the date of the grant of the option. Options may not be granted under the plan on or after the tenth anniversary of the adoption of the plan. Incentive stock options granted to a person owning more than 10% of the combined voting power of the common stock cannot be exercisable for more than five years. When an option is exercised, the purchase price of the underlying stock is received in cash, except that the plan administrator may permit the exercise price to be paid in any combination of cash, shares of stock having a fair market value equal to the exercise price, or as otherwise determined by the plan administrator. Stock Options Stock option activity consists of the following: Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Terms (Years) Aggregate Intrinsic Value Outstanding at December 31, 2016 1,048,500 $ 4.68 Granted 60,000 2.20 Exercised - - Forfeited or expired (431,000 ) 4.88 Outstanding at December 31, 2017 677,500 $ 4.35 4.14 Granted 3,596,954 1.88 Exercised - - Unvested Forfeited or expired (406,300 ) 2.65 Vested Forfeited or expired (123,750 ) 4.26 Outstanding at December 31, 2018 3,744,404 $ 2.16 8.53 $ 1,026 Exercisable at December 31, 2018 678,059 $ 3.03 5.20 $ 116 The aggregate intrinsic value was calculated as the difference between the closing market price as of December 31, 2018, which was $2.07, and the exercise price of the outstanding stock options. On December 17, 2018, options to purchase 311,000 shares of common stock were issued to certain employees of the Company pursuant to the Plan. One half of these options vest annually over a four-year period; the other half of will vest based on performance criteria to be established by the Board at its discretion. The $386 fair value of the options is being amortized through December 31, 2022. On July 19, 2018, the Company issued options to purchase 748,000 shares of common stock to certain employees, officers and Directors pursuant to the Plan. One half of these options vest annually over a four-year period; the other half of these options will vest based on performance criteria to be established by the Board at its discretion. The $1,190 fair value of the options is being amortized through July 31, 2022. On March 28, 2018, the Compensation Committee granted options to purchase 1,653,950 shares of common stock to certain current employees, officers and Directors pursuant to the Plan. One half of these options vest annually over a four-year period; the other half of these options will vest based on performance criteria to be established by the Board at its discretion. The $1,540 fair value of the options is being amortized through March 31, 2022. Also, on March 28, 2018, the Compensation Committee approved the repricing of 100,000 options issued to former Chief Financial Officer Dan Miles pursuant to the 2015 Plan to the market price of $1.60, and extended the option period an additional four years. Also on March 28, 2018, pursuant to its employment agreement with Valentin Stalowir dated June 28, 2017, the Compensation Committee awarded Mr. Stalowir options to purchase 412,736 shares of common stock, which are subject to shareholder approval to increase the number of shares available under the Plan, and are not otherwise issuable until January 2019. One half of these options will vest annually over a four-year period; the other half of these options will vest based on performance criteria to be established by the Board. The fair value of these options of $389 is being amortized through March 31, 2022. On January 10, 2018, the Compensation Committee granted to Mr. Stalowir options to purchase 371,268 shares of stock, pursuant to the Plan and his employment agreement with the Company. The options have an exercise price of $1.70, vest over 18 months, and have a 10 year life. The $370 fair value of the options is being amortized through June 2019. During the year ended December 31, 2017, the Company granted 60,000 options, with a fair value of $39, to purchase the Company’s common stock at a weighted average exercise price of $2.20, to certain employees of the Company. The fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option pricing model using the assumptions noted in the following table. For purposes of determining the expected life of the option, an average of the estimated holding period is used. The risk-free rate for periods within the contractual life of the options is based on the U. S. Treasury yield in effect at the time of the grant. Year Ended December 31, 2018 2017 Expected volatility 62 % 52 % Expected dividends — — Expected average term (in years) 6.00 2.00 Risk free rate - average 2.37% - 2.77 % 1.47 % Forfeiture rate 0 0 Compensation cost resulting from option issuances aggregated $1,161 and $276 during the years ended December 31, 2018 and 2017, respectively. As of December 31, 2018, the aggregate value of unvested options was $2,691 which will be amortized to compensation expense as the options vest, over one to four years. Additional information regarding options outstanding and exercisable as of December 31, 2018, is as follows: Options Outstanding Options Exercisable Range of Exercise Price Number of Shares Outstanding Weighted Average Exercise Price Weighted Average Remaining Contractual Life (years) Number of Shares Exercisable Weighted Average Exercise Price $1.60-2.19 2,573,954 $ 1.67 9.15 285,609 $ 1.67 $2.20-$3.74 940,450 2.81 8.72 202,450 $ 3.22 $3.75 to $5.04 230,000 4.90 0.87 190,000 $ 4.88 3,744,404 $ 2.16 8.53 678,059 $ 3.03 Restricted Stock The following table summarizes restricted stock activity during the years ended December 31, 2018 and 2017: Unvested Shares Issuable Shares Fair Value at Date of Issuance Weighted Average Grant Date Fair Value Balance, December 31, 2016 - - $ - - Granted 400,000 - 680 1.70 Vested (400,000 ) 400,000 - 1.70 Issued - - - - Balance, December 31, 2017 - 400,000 $ 680 1.70 Granted 854,592 - 1,412 1.65 Vested (256,222 ) 256,222 - - Issued - (656,222 ) (1,500 ) - Balance, December 31, 2018 598,370 - $ 592 $ 1.63 On March 28, 2018, in accordance with his employment agreement with the Company, the Compensation Committee awarded Mr. Stalowir 412,736 shares of restricted common stock with a fair value of $660 pursuant to the Plan. The fair value of these shares is being amortized to compensation expense through June 2019 when the shares vest. On January 10, 2018, Mr. Stalowir was awarded 371,268 shares of restricted common stock with a fair value of $631, pursuant to the Plan and in accordance with his employment agreement with the Company. The award vests over eighteen months, and the fair value of the grant is being amortized to compensation expense through June 2019. During the year ended December 31, 2018, 185,634 shares of common stock with a fair value of $316 vested and were issued to Mr. Stalowir. In the first quarter of 2018, the Compensation Committee granted an aggregate of 70,588 shares of restricted common stock to the Company’s independent Directors pursuant to the Plan. The shares vested and were issued in four equal installments during 2018, and the $120 fair value of the shares was amortized to compensation expense ratably over that period. Restricted common stock issued pursuant to the Plan is subject to such restrictions as determined by the Compensation Committee of the Board, which may include restrictions on the sale of such shares or the right to receive dividends thereon. Additionally, the restricted common stock is subject to a risk of forfeiture, generally upon termination of employment or service during the vesting period. Vesting may be dependent upon the recipient’s continued relationship with the Company, or may depend upon the achievement of certain pre-established performance goals. During the year ended December 31, 2018, an aggregate of $820 was recognized as compensation expense relative to restricted stock awards. As of December 31, 2018, the amount of unvested compensation related to restricted stock awards was $592, which will be recognized as an expense in future periods as the shares vest. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 14) Income Taxes At December 31, 2018 and 2017, the Company had available Federal and state net operating loss carryforwards (“NOL”s) to reduce future taxable income. For Federal purposes the amounts available were approximately $42,000 million and $35,000, respectively. For state purposes approximately $18,000 was available at December 31, 2018 and 2017. The Federal carryforward expires on various dates through 2035 and the state carryforward expires in 2019. Given the Company’s history of net operating losses, management has determined that it is more likely than not that the Company will not be able to realize the tax benefit of the carryforwards. Accordingly, the Company has not recognized a deferred tax asset for this benefit. Due to the restrictions imposed by Internal Revenue Code Section 382 regarding substantial changes in ownership of companies with loss carryforwards, the utilization of the Company’s NOL may be limited as a result of recent change in stock ownership. NOLs incurred subsequent to the latest change in control are not subject to the limitation. The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position is measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. As of December 31, 2018 and 2017, the Company did not have a liability for unrecognized tax benefits. The Company recognizes as income tax expense, interest and penalties on uncertain tax provisions. As of December 31, 2018, and 2017, the Company has not accrued interest or penalties related to uncertain tax positions. Tax years 2011 through 2018 remain open to examination by the major taxing jurisdictions to which the Company is subject. Upon the attainment of taxable income by the Company, management will assess the likelihood of realizing the tax benefit associated with the use of the NOLs and will recognize the appropriate deferred tax asset at that time. Significant components of the Company’s deferred income tax assets are as follows (in thousands): December 31, 2018 December 31, 2017 Deferred income tax asset: Net operating loss carryforwards $ 10,429 $ 8,927 Accounts receivable allowances 162 227 Inventory reserves 51 148 Deferred finance costs (176 ) - Reserve for asset impairment 31 655 Total deferred tax asset 10,496 9,957 Valuation allowance (10,496 ) (9,957 ) Net book value $ - $ - Reconciliation of the effective income tax rate to the U.S. statutory rate is as follows: December 31, 2018 December 31, 2017 Federal statutory tax rate (21 )% (34 )% State rate, net of federal benefit (5 )% (5 )% (26 )% (39 )% Effect of change in tax rate - 10 % Valuation allowance 26 % 29 % Effective tax rate $ - $ - |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | (15) Commitments and Contingencies Customer Commitments The Company has entered into contracts with customers with clauses committing the Company to pay fees if the Company terminates the agreement early or without cause. The contracts call for the customer to have the right to distribute the Company’s products to a defined type of retailer within a defined geographic region. If the Company should terminate the contract or not automatically renew the agreements without cause, amounts would be due to the customer. As of December 31, 2018 and 2017, the Company has no plans to terminate or not renew any agreement with any of their customers; accordingly, no such fees have been accrued in the accompanying financial statements. Legal Proceedings From time to time, we are a party to claims and legal proceedings arising in the ordinary course of business. Our management evaluates our exposure to these claims and proceedings individually and in the aggregate and provides for potential losses on such litigation if the amount of the loss is estimable and the loss is probable. We believe there are no material litigation matters as of December 31, 2018. Although the results of such litigation matters and claims cannot be predicted with certainty, we believe the final outcome of such claims and proceedings will not have a material adverse impact on our financial position, liquidity, or results of operations. |
Related Party Activity
Related Party Activity | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Activity | (16) Related Party Activity The Company paid Judy Reed, who is the Corporate Secretary and the wife of Chris Reed, to document minutes for the Board of Directors’ meetings. Amounts paid for her services during each of the years ended December 31, 2018 and 2017 aggregated less than approximately $1 thousand. Winston Stalowir, son of Valentin Stalowir, Chief Executive Officer of the Company, was employed as a sales, merchandising and demo intern during the year ended December 31, 2018. He was paid approximately $2 thousand for his services. Lisa Cohane, wife of Neal Cohane, our Senior Vice President of Sales, performed administrative and office management services for the Company during the year ended December 31, 2018. She was paid approximately $34 thousand for her services. Lindsay Martin, daughter of a director of the Company, was employed as Vice President of Marketing during the year ended December 31, 2018. She was paid approximately $162 thousand for her services. In 2017, Chris Reed (the former Chief Executive Officer and current Chief Innovation Officer), Robert Reed (the brother of Chris Reed), and Dan Miles (former Chief Financial Officer), collectively advanced approximately $571 thousand to the Company for working capital uses. In 2017, the Company repaid approximately $240 thousand of this amount and the remaining balance was repaid in January of 2018. From time to time, the Company issues stock-based awards to employees, officers, and other related parties as compensation for services rendered. See Note 13 for information as to such transactions during the years ended December 31, 2018 and 2017. On December 31, 2018, the Company sold its Los Angeles manufacturing facility to California Custom Beverage, LLC (“CCB”), an entity 100% owned by Chris Reed, the Company’s founder and Chief Innovation Officer (the “Plant Sale”). See Note 3. During the years ended December 31, 2018 and 2017, the Company entered into the following transactions with Raptor: On April 21, 2017, pursuant to a securities purchase agreement, Reed’s issued a secured convertible subordinated non-redeemable note to Raptor in the principal amount of $3,400, and warrants to purchase 1,416,667 shares of common stock. See Note 10. The Note bears interest at a rate of 12% per annum, compounded monthly. It is secured by the Company’s assets, subordinate to the first priority security interest of Rosenthal (see Note 7). The Note may not be prepaid and matures on April 21, 2021. It may be converted, at any time and from time to time, into shares of common stock of the Company. Net of transaction costs, the Company received proceeds from the Note of $3,083. In connection with the issuance of the note, the Company reimbursed Raptor direct costs totaling $157 incurred to issue the note. On July 13, 2017, the Company entered into a warrant exercise agreement with Raptor to induce Raptor to purchase 766,667 shares of our common stock. The warrants’ exercise prices were lowered from $3.00 and $4.00 per share to $1.50 per share. Upon modification, Raptor exercised the warrants at the repriced $1.50 per share, resulting in proceeds to the Company of $1,150. The Company also issued to Raptor an additional second tranche of warrants to purchase up to 350,000 shares of our common stock and a third tranche of warrants to purchase up to 60,000 shares of our common stock. Second tranche warrants have a term of five years, may be exercised commencing six months from the date of issuance and have an exercise price equal to $2.00. The third tranche warrants were exercisable immediately upon issuance for a term of five-years, with an exercise price equal to $1.55. Raptor was also granted the right to appoint a non-voting observer to our board of directors for so long as Raptor or its affiliates is a beneficial owner of our stock. As of the date hereof, Raptor SPV LLC has not made such an appointment. Pursuant to a December 6, 2017 Rights Offering (see Note 12), Raptor exercised its rights to purchase 2,666,667 units, thereby acquiring 2,666,667 shares of common stock and warrants to purchase up to 1,333,333 shares of common stock for an aggregate purchase price of $4,000. On December 6, 2017, the Company entered into a definitive backstop commitment agreement (“Backstop Agreement”) with Raptor whereby Raptor agreed to purchase a minimum of $6 million of unregistered units not subscribed in the Rights Offering in a private placement, subject to customary terms and conditions. Raptor had the right to exercise its basic subscription right and over-subscription privilege as a rights holder in the Rights Offering (subject to pro-ration) but had no obligation to do so. As compensation for the backstop commitment the Company issued to Raptor five-year warrants to purchase a minimum of 750,000 shares of the Company’s common stock. The offering was oversubscribed; accordingly Raptor did not purchase any unregistered units in a private placement under the provisions of the Backstop Agreement. On October 4, 2018, in connection with the execution of the Rosenthal financing agreement (see Note 7), the Company issued an Amended and Restated Subordinated Convertible Non-Redeemable Secured Note to Raptor, to provide for additional advances of up to $4,000 (see Note 7). In consideration therefore, the exercise price of the 750,000 warrants issued to Raptor on December 6, 2017 was reduced from $1.50 to $1.10, resulting in an increase in the fair value of the warrants, determined in accordance with the Black-Scholes-Merton option pricing model, of $161. This amount will be amortized against earnings over the life of the Rosenthal financing agreement. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | (17) Subsequent Events During 2019, our independent directors will be issued restricted common stock valued at $30,000 pursuant to the 2017 plan, in quarterly installments. On February 15, 2019, the Company entered into an agreement for an underwritten public offering of 7,733,750 shares of its common stock, at $2.10 per share, including an overallotment option for 1,008,750 shares that was exercised in full. Proceeds of the offering, net of the underwriting discount and other transaction costs, aggregated $14,906. The proceeds will be used to fund our sales and marketing efforts, to develop and launch new products, and for general working capital purposes. The following table presents an unaudited pro forma balance sheet for Reed’s, Inc. assuming the public offering described above occurred on December 31, 2018 (in thousands): Actual December 31, 2018 Adjustment (1) Pro Forma December 31, 2018 (unaudited) ASSETS Current assets: Cash $ 624 7,926 $ 8,550 Accounts receivable, net 2,608 - 2,608 Inventory, net 195 - 195 Other current assets 7,511 - 7,511 Total Current Assets 10,938 7,926 18,864 Property and equipment, net 896 - 896 Equipment held for sale and intangible assets 658 - 658 Total assets $ 12,492 7,926 $ 20,418 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) Current Liabilities: Accounts payable $ 5,721 - $ 5,721 Accrued expenses 1,483 - 1,483 Line of credit 6,980 (6,980 ) - Current portion of leases payable 51 - 51 Total current liabilities 14,235 (6,980 ) 7,255 Leases payable, less current portion 801 - - Convertible note to a related party 4,161 - - Warrant liability and other long term liabilities 38 - - Total Liabilities 19,235 (6,980 ) 12,255 Stockholders’ equity (deficit): Series A Convertible Preferred stock 94 - 94 Common stock 3 1 4 Common stock issuable - - - Additional paid in capital 53,591 14,905 68,496 Accumulated deficit (60,431 ) - (60,431 ) Total stockholders’ equity (deficit) (6,743 ) 14,906 8,163 Total liabilities and stockholders’ equity (deficit) $ 12,492 7,926 $ 20,418 (1) Adjustment reflects the sale of 7,733,750 shares of the Company’s common stock for net proceeds of $14,906, of which $6,980 was used to repay the outstanding balance on the line of credit. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Use of Estimates | A) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include estimates for reserves of uncollectible accounts, inventory obsolescence, depreciable lives of property and equipment, analysis of impairments of recorded long-term assets and intangibles, realization of deferred tax assets, accruals for potential liabilities and assumptions made in valuing stock instruments issued for services. |
Accounts Receivable | B) Accounts Receivable The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s historical losses and an overall assessment of past due trade accounts receivable outstanding. The allowance for doubtful accounts and returns and discounts is established through a provision reducing the carrying value of receivables. At December 31, 2018 and 2017, the allowance for doubtful accounts and returns and discounts was $623 and $601, respectively. |
Inventory | C) Inventory Inventory is stated at the lower of cost or the current estimated market value of the inventory. We regularly review our inventory quantities on hand and record a provision for excess and obsolete inventory based primarily on our estimated forecast of product demand and our ability to sell the product(s) concerned. Demand for our products can fluctuate significantly. Factors that could affect demand for our products include unanticipated changes in consumer preferences, general market conditions or other factors, which may result in cancellations of advance orders or a reduction in the rate of reorders placed by customers. Additionally, our management’s estimates of future product demand may be inaccurate, which could result in an understated or overstated provision required for excess and obsolete inventory. At December 31, 2018 and 2017, the reserve for inventory obsolescence aggregated $197 and $509, respectively. |
Property and Equipment and Related Depreciation | D) Property and Equipment and Related Depreciation Property and equipment is stated at cost. Expenditures for major renewals and improvements that extend the useful lives of property and equipment or increase production capacity are capitalized, and expenditures for repairs and maintenance are charged to expense as incurred. Depreciation is calculated using accelerated and straight-line methods over the estimated useful lives of the assets as follows: Property and Equipment Type Years of Depreciation Building 39 years Machinery and equipment 5-12 years Vehicles 5 years Office equipment 5-7 years Management assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. In anticipation of the sale of our Los Angeles facility (see Note 3), we reclassified all the assets of the facility to Equipment Held for Sale. During the year ended December 31, 2017, we recorded impairment charges aggregating $5,925 to reduce the carrying amount of our Los Angeles assets to the estimated amount we believed to be recoverable. |
Intangible Assets and Impairment Policy | E) Intangible Assets and Impairment Policy Intangible assets are comprised of indefinite-lived brand names acquired, so classified because we anticipate that these brand names will contribute cash flows to the Company perpetually. Indefinite-lived intangible assets are not amortized but are assessed for impairment annually and evaluated annually to determine whether the indefinite useful life is appropriate. As part of our impairment test, we first assess qualitative factors to determine whether it is more likely than not the asset is impaired. If further testing is necessary, we compare the estimated fair value of our asset with its book value. If the carrying amount of the asset exceeds its fair value, as determined by its discounted cash flows, an impairment loss is recognized in an amount equal to that excess. During our December 31, 2018 impairment testing, we determined that our Sonoma Sparkler trademark is unlikely to provide future benefit to the Company, because we do not currently offer Sonoma Sparkler products and we do not anticipate doing so in the foreseeable future. Accordingly, we reduced the book value of this asset to zero as of December 31, 2018, by recording an impairment charge of $229. No impairments were noted during the year ended December 31, 2017. |
Concentrations | F) Concentrations The Company’s cash balances on deposit with banks are guaranteed by the Federal Deposit Insurance Corporation up to $250. Generally, the Company’s policy is to minimize borrowing costs by immediately applying cash receipts to borrowings against its credit facility. From time to time, however, the Company may be exposed to risk for the amounts of funds held in bank accounts in excess of the insurance limit. To minimize the risk, the Company’s policy is to maintain cash balances with high quality financial institutions. During the year ended December 31, 2018, the Company had two customers that accounted for approximately 24% and 17% of its sales, respectively; and during the year ended December 31, 2017, the Company had two customers that accounted for 23% and 16% of its sales, respectively. No other customer accounted for more than 10% of sales in either year. As of December 31, 2018, the Company had accounts receivable from two customers that comprised 36% and 19% of total accounts receivable, respectively. As of December 31, 2017, the Company had accounts receivable from two customers that comprised 25% and 14% of its total accounts receivable, respectively. No other customer accounted for more than 10% of accounts receivable in either year. During the years ended December 31, 2018 and 2017, respectively, the Company utilized three separate co-packers for most its production and bottling of beverage products in the eastern United States. With the December 31, 2018 Plant Sale, the Company no longer conducts a manufacturing operation, accordingly it utilizes co-packers to produce 100% of its products as of that date. The Company has long-standing relationships with two different co-packers, and in conjunction with the Plant Sale we entered into a third co-packing agreement with California Custom Beverage LLC (“CCB”), the purchaser of the plant (see Note 3). CCB is 100% owned by Chris Reed, founder of the Company and current Chief Information Officer and director. Although there are other packers, a change in co-packers may cause a delay in the production process, which could ultimately affect operating results. During the years ended December 31, 2018, the Company’s two largest vendors accounted for 16% and 13% of its purchases, respectively. During the year ended December 31, 2017, the Company made 20%, of its purchases from a single vendor. At December 31, 2018 and 2017, accounts payable to the Company’s largest vendor comprised 24% and 20% of our total accounts payable, respectively. No other account was more than 10% of our accounts payable in either year. |
Fair Value of Financial Instruments | G) Fair Value of Financial Instruments The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Financial assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. Accounting Standards Codification Section 820 defines the following levels directly related to the amount of subjectivity associated with the inputs: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly. Level 3—Unobservable inputs based on the Company’s assumptions. The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, short-term bank loans, accounts payable, notes payable and other payables, approximate their fair values because of the short maturity of these instruments. The carrying values of lease obligations and long-term financing obligations approximate their fair values since the interest rates on these obligations are based on prevailing market interest rates. As of December 31, 2018, and December 31, 2017, the Company’s balance sheets included warrant liabilities aggregating $38 and $36 respectively, measured at fair value based on Level 2 inputs. |
Segments | H) Segments The Company operates in one segment for the manufacture and distribution of our products. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying financial statements |
Cost of Goods Sold | I) Cost of Goods Sold Cost of goods sold is comprised of the costs of raw materials and packaging utilized in the manufacture of products, co-packing fees, repacking fees, in-bound freight charges, as well as certain internal transfer costs. Additionally, cost of goods sold includes direct production costs in excess of charges allocated to finished goods in production. Plant costs include labor costs, production supplies, repairs and maintenance, direct inventory write-off charges and adjustments to the inventory reserve. Charges for labor and overhead allocated to finished goods are determined on a market cost basis, which may be lower than the actual costs incurred. Plant costs in excess of production allocations are expensed in the period incurred rather than added to the cost of finished goods produced. Expenses not related to the production of our products are classified as operating expenses. The Company terminated its manufacturing operation effective with the December 31, 2018 Plant Sale. See Note 3. |
Delivery and Handling Expense | J) Delivery and Handling Expense Shipping and handling costs are comprised of purchasing and receiving, inspection, warehousing, transfer freight, and other costs associated with product distribution after manufacture and are included as part of operating expenses. |
Income Taxes | K) Income Taxes The Company uses an asset and liability approach for accounting and reporting for income taxes that allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. |
Revenue Recognition | L) Revenue Recognition In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), (“ASC 606”). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which include (1) identifying the contract or agreement with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company adopted ASC 606 effective January 1, 2018, and adoption of such standard had no effect on previously reported balances. The Company previously recognized and continues to recognize revenue when risk of loss transfers to our customers and collection of the receivable is reasonably assured, which generally occurs when product is shipped. A written order from the customer must be received and credit acceptance procedures performed prior to shipment of product. The Company does not have any significant contracts with customers requiring performance beyond delivery, and contracts with customers contain no incentives or discounts that could cause revenue to be allocated or adjusted over time. Shipping and handling activities are performed before the customer obtains control of the goods and therefore represent a fulfillment activity rather than a promised service to the customer. Revenue and costs of sales are recognized when control of the products transfers to our customer, which generally occurs upon shipment from our facilities. The Company’s performance obligations are satisfied at that time. All of the Company’s products are offered for sale as finished goods only, and there are no performance obligations required post-shipment for customers to derive the expected value from them. The Company does not allow for returns, except for damaged products when the damage occurred pre-fulfillment. Damaged product returns have historically been insignificant. Because of this, the stand-alone nature of our products, and our assessment of performance obligations and transaction pricing for our sales contracts, we do not currently maintain a contract asset or liability balance for obligations. We assess our contracts and the reasonableness of our conclusions on a quarterly basis. The Company accounts for certain sales incentives to customers, including slotting fees, as a reduction of gross sales. These sales incentives for the years ended December 31, 2018 and 2017 were approximately $3,872 and $4,004, respectively. |
Net Loss Per Share | M) Net Loss Per Share Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding during the year. Diluted earnings (loss) per share is computed by dividing the net income (loss) applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation if their effect is antidilutive. For the years ended December 31, 2018 and 2017, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an anti-dilutive effect. The potentially dilutive securities consisted of the following: December 31, 2018 December 31, 2017 Convertible note to a related party 2,266,667 2,266,667 Warrants 6,897,277 7,325,282 Common stock equivalent of Series A Convertible Preferred Stock 37,644 37,644 Unvested restricted common stock 598,370 - Options 3,744,404 677,500 Total 13,544,362 10,307,093 |
Advertising Costs | N) Advertising Costs Advertising costs are expensed as incurred and are included in selling and marketing expense. Advertising costs aggregated $300 and $285 for the years ended December 31, 2018 and 2017, respectively. |
Stock Compensation Expense | O) Stock Compensation Expense The Company periodically issues stock options and restricted stock awards to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for such grants issued and vesting to employees based on ASC 718, whereby the value of the award is measured on the date of grant and recognized as compensation expense on the straight-line basis over the vesting period. Such grants issued and vesting to non-employees are valued on the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Awards granted to non-employees are revalued each reporting period to determine the amount to be recorded as an expense in the respective period. As the awards vest, they are valued on each vesting date and an adjustment is recorded for the difference between the value already recorded and the then current value on the date of vesting. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date. The fair value of the Company’s stock option and restricted stock grants is estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or restricted stock, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods. |
Warrant Liabilities | P) Warrant Liabilities Various stock sales made by the Company to finance operations have been accompanied by the issuance of warrants. Some of these warrant agreements contain fundamental transaction provisions which may give rise to an obligation of the Company to pay cash to the warrant holders. For accounting purposes, in accordance with ASC 480, Distinguishing Liabilities from Equity Fair value is estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or restricted stock, and future dividends. Expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect the amount of expense recorded in future periods. |
Leases | Q) Leases In February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than twelve months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for leases existing at, or entered into after, the beginning of the earliest period presented in the financial statements. The Company adopted ASU 2016-02 effective October 1, 2018. As a result, we recorded right-of-use assets aggregating $862, and lease liabilities of the same amount, as of that date. In accordance with ASU 2016-02, the right-of-use assets are being depreciated over the life of the underlying leases, and monthly lease payments are being recorded as reductions to the lease liability and imputed interest expense. See Note 9 for additional information. |
Recent Accounting Pronouncements | R) Recent Accounting Pronouncements In July 2017, the FASB issued ASU No. 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features; (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception” (“ASU 2017-11”). ASU 2017-11 allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock. As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted for as derivative liabilities. A company will recognize the value of a down round feature only when it is triggered, and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, an entity will treat the value of the effect of the down round as a dividend and a reduction of income available to common shareholders in computing basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The guidance in ASU 2017-11 can be applied using a full or modified retrospective approach. The adoption of ASU 2017-11 is not expected to have a material impact on the Company’s financial position, results of operations, and cash flows. In June 2018, the FASB issued ASU No. 2018-07, “Compensation – Stock Compensation (Topic 718); Improvements to Non-Employee Share-Based Payment Accounting” (“ASU 2018-07”). ASU 2018-07 generally aligns the measurement and classification of share-based awards to non-employees with that of share-based awards to employees. Non-employee equity awards will be measured at the fair value of the equity instruments to be issued, as of the grant date, and the resulting amount will be recognized as expense over the expected or contractual term of the award. The ASU applies to all share-based payments to nonemployees in exchange for goods or services used or consumed in an entity’s own operations. It does not apply to instruments issued to a lender or investor in a financing transaction, or to instruments granted when selling goods or services to customers. ASU 2018-07 is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures. In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 amends certain disclosure requirements pertaining to fair value measurement, and is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The adoption of ASU 2018-13 is not expected to have a material impact on the Company’s financial position, results of operations, and cash flows. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Estimated Useful Lives of Property and Equipment and Related Depreciation | Depreciation is calculated using accelerated and straight-line methods over the estimated useful lives of the assets as follows: Property and Equipment Type Years of Depreciation Building 39 years Machinery and equipment 5-12 years Vehicles 5 years Office equipment 5-7 years |
Schedule of Potentially Dilutive Securities | The potentially dilutive securities consisted of the following: December 31, 2018 December 31, 2017 Convertible note to a related party 2,266,667 2,266,667 Warrants 6,897,277 7,325,282 Common stock equivalent of Series A Convertible Preferred Stock 37,644 37,644 Unvested restricted common stock 598,370 - Options 3,744,404 677,500 Total 13,544,362 10,307,093 |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory is valued at the lower of cost (first-in, first-out) or market, and is comprised of the following (in thousands): December 31, 2018 December 31, 2017 Raw Materials and Packaging $ 3,053 $ 2,670 Finished Goods 4,327 3,261 Total $ 7,380 $ 5,931 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment is comprised of the following (in thousands): December 31, 2018 December 31, 2017 Right-of-use assets under operating leases $ 934 $ 569 Computer hardware and software 304 404 Total cost 1,238 973 Accumulated depreciation (342 ) (799 ) Net book value $ 896 $ 174 |
Schedule of Equipment Held for Sale | Equipment held for sale consists of the following (in thousands): December 31, 2018 December 31, 2017 Equipment held for sale $ 200 $ 8,474 Reserve (118 ) (5,925 ) Net book value $ 82 $ 2,549 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets Trademarks | Intangible assets consist of trademarks for the Company’s brand names (in thousands): December 31, 2018 December 31, 2017 Virgil’s 576 $ 576 Sonoma Sparkler - 229 Brand names $ 576 $ 805 |
Lines of Credit (Tables)
Lines of Credit (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Amount Outstanding Under Credit Facilities | Amounts outstanding under the Company’s credit facilities are as follows (in thousands): December 31, 2018 December 31, 2017 Rosenthal Line of Credit $ 7,657 $ - PMC Revolving Line of Credit - 3,301 Term Loans - 3,000 CAPEX loan - 3,947 7,657 10,248 Capitalized finance costs (677 ) - Net balance $ 6,980 $ 10,248 |
Financing Obligation (Tables)
Financing Obligation (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Financing Obligation | Our financing obligation is comprised of the following (in thousands): December 31, 2018 December 31, 2017 Financing obligation $ - $ 2,186 Unamortized valuation discount - (714 ) Net financing obligation $ - $ 1,472 Less current portion - (222 ) Long term financing obligation $ - $ 1,250 |
Leases Payable (Tables)
Leases Payable (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
Schedule of Future Minimum Lease Payments Under Capital Leases | Future minimum lease payments under the leases are as follows (in thousands): Years Ending December 31, 2019 $ 185 2020 169 2021 202 2022 229 2023 233 thereafter 248 Total payments 1,266 Less: Amount representing interest (414 ) Present value of net minimum lease payments 852 Less: Current portion 51 Non-current portion $ 801 |
Convertible Note to a Related_2
Convertible Note to a Related Party (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Convertible Notes | The Convertible Note to a Related Party consists of the following (in thousands): December 31, 2018 December 31, 2017 12% Convertible Note Payable $ 3,400 $ 3,400 Accrued Interest 761 290 Total obligation $ 4,161 $ 3,690 |
Warrants and Warrant Liability
Warrants and Warrant Liability (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Warrants And Warrant Liability | |
Schedule of Warrant Activity | Warrant activity during the years ended December 31, 2018 and 2017 is as follows: Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Terms (Years) Aggregate Intrinsic Value Outstanding at December 31,2016 803,909 4.50 4.00 26 Granted 7,643,749 1.95 Exercised (1,122,376 ) 1.50 Forfeited or expired - - Outstanding at December 31,2017 7,325,282 $ 2.09 3.43 Granted Exercised 428,005 $ 2.03 Forfeited or expired 0 Outstanding at December 31, 2018 6,897,277 $ 2.06 2.42 $ 1,447 Exercisable at December 31, 2018 6,897,277 $ 2.06 2.42 $ 1,447 |
Schedule of Outstanding Warrants to Purchase Common Stock | Warrants outstanding at December 31, 2018 and 2017, and their respective exercise price and expiration dates, are as follows: December 31, 2018 December 31, 2017 Number Price Expiration Dates Number Price Expiration Dates 200,000 $ 5.600 September 2019 200,000 $ 5.600 September 2019 125,000 $ 4.100 May 2021 125,000 $ 4.100 May 2021 10,000 $ 3.900 October 2021 10,000 $ 3.900 October 2021 50,000 $ 4.100 November 2021 50,000 $ 4.100 November 2021 72,703 $ 3.740 June 2021 72,703 $ 3.740 June 2021 66,059 $ 4.250 June 2021 66,059 $ 4.250 June 2021 784,549 $ 1.500 April 2022 784,549 $ 1.500 April 2022 87,745 $ 1.550 July 2022 87,745 $ 1.550 July 2022 512,560 $ 2.000 July 2022 512,560 $ 2.000 July 2022 4,238,661 $ 2.025 December 2020 4,666,666 $ 2.030 December 2020 750,000 $ 1.100 December 2022 750,000 $ 1.500 December 2022 6,897,277 7,325,282 |
Schedule of Warrant Liability Using Assumptions | The fair value of the warrant liability was determined at the following reporting, issuance, and modification dates using the Black-Scholes-Merton option pricing model and the following assumptions: As of December 31, 2016 Upon Issuance April 21, 2017 Upon Modification April 21, 2017 Upon Modification July 13, 2017 As of December 31, 2017 As of December 31, 2018 (1) (2) (3) (4) (5) (6) Stock Price $ 4.10 $ 4.75 $ 4.75 $ 2.35 $ 1.55 $ 2.07 Risk free interest rate 1.58 % 1.51 % 1.51 % 1.65 % 1.74 % 2.69 % Expected Volatility 54.71 % 49.33 % 49.33 % 53.75 % 56.06 % 50.07 % Expected life in years 4.42 5.00 5.00 4.77 to 4.89 3.42 2.42 Expected dividend yield 0 % 0 % 0 % 0 % 0 % 2.69 % Number of Warrants 418,909 1,626,778 280,147 1,906,925 138,762 138,762 Fair Value of Warrants $ 775 $ 3,873 $ 187 $ 1,109 $ 36 $ 38 (1) Warrant valuation on December 31, 2016 for 418,909 warrants containing fundamental transaction provisions. (2) April 21, 2017 grant to Raptor of warrants to purchase 1,416,667 shares of the Company’s common stock in connection with the Company’s issuance of the Convertible Note to a Related Party (valued at $3,302) and April 19, 2017, grant of 210,111 warrants to three accredited investors that are party to a Securities Purchase Agreement dated May 26, 2016 and hold participation rights in the Company’s financing transactions (valued at $571). (3) April 19, 2017, the three accredited investors referred to above waived their participation rights with regard to the April 21, 2017 financing. The Company increased the terms of their outstanding 280,147 warrants by one year and reduced the exercise price from $4.25 to $3.00. The incremental change in the warrants’ fair value of $187 on the modification date was reported as an increase to the warrant liability and a cost of warrant modification. (4) July 13, 2017 warrant exercise agreements with Raptor and the three accredited investors to reprice warrants to purchase a total of 1,906,925 shares of our common stock. The incremental cost before and after the modification of the warrants resulted in a charge against earnings of $1,109. The warrants were also changed to modify language pertaining to a “fundamental transaction,” eliminating the need to classify the warrants as a warrant liability. Upon modification, the investors exercised warrants for 1,122,376 shares of common stock at the repriced $1.50 per share, resulting in proceeds to the Company of $1,650. The fair value of the warrant liability at the date of exercise was $1,601, which was reclassified from the warrant liability to additional paid in capital as a result of the exercise. At the same time, the Company and the holders of the remaining 784,549 warrants agreed to modify the language of the fundamental transaction clause to require board approval, thus eliminating the need for the liability classification of the warrants. Accordingly, the fair value of these warrants, totaling $1,033, was reclassified from the warrant liability to additional paid in capital. (5) Warrant valuation on December 31, 2017 for 138,762 warrants containing fundamental transaction provisions. The decrease in the fair value of the warrant liability was $3,275 for the year ended December 31, 2017. (6) Warrant valuation on December 31, 2018 for 138,762 warrants containing fundamental transaction provisions. The increase in the fair value of the warrant liability was $2 for the year ended December 31, 2018. |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock Option Activity | Stock option activity consists of the following: Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Terms (Years) Aggregate Intrinsic Value Outstanding at December 31, 2016 1,048,500 $ 4.68 Granted 60,000 2.20 Exercised - - Forfeited or expired (431,000 ) 4.88 Outstanding at December 31, 2017 677,500 $ 4.35 4.14 Granted 3,596,954 1.88 Exercised - - Unvested Forfeited or expired (406,300 ) 2.65 Vested Forfeited or expired (123,750 ) 4.26 Outstanding at December 31, 2018 3,744,404 $ 2.16 8.53 $ 1,026 Exercisable at December 31, 2018 678,059 $ 3.03 5.20 $ 116 |
Summary of Assumption Used to Estimate the Fair Value of Share Options Granted | The fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option pricing model using the assumptions noted in the following table. For purposes of determining the expected life of the option, an average of the estimated holding period is used. The risk-free rate for periods within the contractual life of the options is based on the U. S. Treasury yield in effect at the time of the grant. Year Ended December 31, 2018 2017 Expected volatility 62 % 52 % Expected dividends — — Expected average term (in years) 6.00 2.00 Risk free rate - average 2.37% - 2.77 % 1.47 % Forfeiture rate 0 0 |
Schedule of Information Regarding Stock Options | Additional information regarding options outstanding and exercisable as of December 31, 2018, is as follows: Options Outstanding Options Exercisable Range of Exercise Price Number of Shares Outstanding Weighted Average Exercise Price Weighted Average Remaining Contractual Life (years) Number of Shares Exercisable Weighted Average Exercise Price $1.60-2.19 2,573,954 $ 1.67 9.15 285,609 $ 1.67 $2.20-$3.74 940,450 2.81 8.72 202,450 $ 3.22 $3.75 to $5.04 230,000 4.90 0.87 190,000 $ 4.88 3,744,404 $ 2.16 8.53 678,059 $ 3.03 |
Summary Non-vested Restricted Stock Activity | The following table summarizes restricted stock activity during the years ended December 31, 2018 and 2017: Unvested Shares Issuable Shares Fair Value at Date of Issuance Weighted Average Grant Date Fair Value Balance, December 31, 2016 - - $ - - Granted 400,000 - 680 1.70 Vested (400,000 ) 400,000 - 1.70 Issued - - - - Balance, December 31, 2017 - 400,000 $ 680 1.70 Granted 854,592 - 1,412 1.65 Vested (256,222 ) 256,222 - - Issued - (656,222 ) (1,500 ) - Balance, December 31, 2018 598,370 - $ 592 $ 1.63 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Deferred Income Tax Assets | Significant components of the Company’s deferred income tax assets are as follows (in thousands): December 31, 2018 December 31, 2017 Deferred income tax asset: Net operating loss carryforwards $ 10,429 $ 8,927 Accounts receivable allowances 162 227 Inventory reserves 51 148 Deferred finance costs (176 ) - Reserve for asset impairment 31 655 Total deferred tax asset 10,496 9,957 Valuation allowance (10,496 ) (9,957 ) Net book value $ - $ - |
Schedule of Reconciliation of Effective Income Tax Rate to U.S. Statutory Rate | Reconciliation of the effective income tax rate to the U.S. statutory rate is as follows: December 31, 2018 December 31, 2017 Federal statutory tax rate (21 )% (34 )% State rate, net of federal benefit (5 )% (5 )% (26 )% (39 )% Effect of change in tax rate - 10 % Valuation allowance 26 % 29 % Effective tax rate $ - $ - |
Subsequent Events (Tables)
Subsequent Events (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events Tables Abstract | |
Schedule of Unaudited Pro Forma Balance Sheet | The following table presents an unaudited pro forma balance sheet for Reed’s, Inc. assuming the public offering described above occurred on December 31, 2018 (in thousands): Actual December 31, 2018 Adjustment (1) Pro Forma December 31, 2018 (unaudited) ASSETS Current assets: Cash $ 624 7,926 $ 8,550 Accounts receivable, net 2,608 - 2,608 Inventory, net 195 - 195 Other current assets 7,511 - 7,511 Total Current Assets 10,938 7,926 18,864 Property and equipment, net 896 - 896 Equipment held for sale and intangible assets 658 - 658 Total assets $ 12,492 7,926 $ 20,418 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) Current Liabilities: Accounts payable $ 5,721 - $ 5,721 Accrued expenses 1,483 - 1,483 Line of credit 6,980 (6,980 ) - Current portion of leases payable 51 - 51 Total current liabilities 14,235 (6,980 ) 7,255 Leases payable, less current portion 801 - - Convertible note to a related party 4,161 - - Warrant liability and other long term liabilities 38 - - Total Liabilities 19,235 (6,980 ) 12,255 Stockholders’ equity (deficit): Series A Convertible Preferred stock 94 - 94 Common stock 3 1 4 Common stock issuable - - - Additional paid in capital 53,591 14,905 68,496 Accumulated deficit (60,431 ) - (60,431 ) Total stockholders’ equity (deficit) (6,743 ) 14,906 8,163 Total liabilities and stockholders’ equity (deficit) $ 12,492 7,926 $ 20,418 (1) Adjustment reflects the sale of 7,733,750 shares of the Company’s common stock for net proceeds of $14,906, of which $6,980 was used to repay the outstanding balance on the line of credit. |
Operations and Liquidity (Detai
Operations and Liquidity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Oct. 04, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Net loss | $ (10,325) | $ (18,373) | ||
Net cash provided by (used in) operating activities | (9,258) | (3,422) | ||
Cash balance | 624 | 12,127 | $ 451 | |
Stock holders deficit | (6,743) | 508 | $ (1,657) | |
Working capital | 3,297 | 2,303 | ||
Line of credit facility repaid | 43,204 | $ 39,438 | ||
Sale of assets | 1,250 | |||
Annual lease payment | 420 | |||
Financing Agreement [Member] | Rosenthal and Rosenthal, Inc. [Member] | ||||
Amount of reduction in debt service requirement | $ 1,500 | |||
Debt instrument, term | 2 years 6 months | |||
Line of credit, borrowing capacity | $ 13,000 | |||
Line of credit facility repaid | $ 8,758 | |||
Line of credit facility unused borrowing | $ 1,201 | |||
Underwriters Agreement [Member] | February 15, 2019 [Member] | ||||
Issuance of common stock | 7,733,750 | |||
Common stock price per shares | $ 2.10 | |||
Proceeds from offering, net of underwriting discount and other transaction costs | $ 14,905 | |||
Underwriters Agreement [Member] | February 15, 2019 [Member] | Over-Allotment Option [Member] | ||||
Issuance of common stock | 1,008,750 |
Significant Accounting Polici_4
Significant Accounting Policies (Details Narrative) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018USD ($)Segment | Dec. 31, 2017USD ($) | Oct. 01, 2018USD ($) | |
Allowance for doubtful accounts and returns and discounts | $ 623 | $ 601 | |
Reserve for inventory obsolescence | 197 | 509 | |
Impairment of assets | 5,925 | ||
Impairment of intangible assets | 229 | ||
Maximum cash deposit guaranteed by FDIC | $ 250 | ||
Percentage of co-packers products | 100.00% | ||
Warrant liabilities | $ 38 | 36 | |
Number of operating segment | Segment | 1 | ||
Sales incentives | $ 3,872 | 4,004 | |
Advertising costs | 300 | $ 285 | |
Right-of-use assets | $ 862 | ||
Lease liabilities | $ 862 | ||
California Custom Beverage LLC [Member] | Chris Reed [Member] | |||
Ownership percentage | 100.00% | ||
Customer One [Member] | Sales Revenue, Net [Member] | |||
Percentage of sale accounted to customer | 24.00% | 23.00% | |
Customer One [Member] | Accounts Receivable [Member] | |||
Percentage of sale accounted to customer | 36.00% | 25.00% | |
Customer Two [Member] | Sales Revenue, Net [Member] | |||
Percentage of sale accounted to customer | 17.00% | 16.00% | |
Customer Two [Member] | Accounts Receivable [Member] | |||
Percentage of sale accounted to customer | 19.00% | 14.00% | |
Vendor One [Member] | |||
Percentage of sale accounted to customer | 16.00% | 20.00% | |
Vendor One [Member] | Accounts Payable [Member] | |||
Percentage of sale accounted to customer | 24.00% | 20.00% | |
Vendor Two [Member] | |||
Percentage of sale accounted to customer | 13.00% |
Significant Accounting Polici_5
Significant Accounting Policies - Schedule of Estimated Useful Lives of Property and Equipment and Related Depreciation (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Building [Member] | |
Expected useful life of assets | P39Y |
Machinery and Equipment [Member] | Minimum [Member] | |
Expected useful life of assets | P5Y |
Machinery and Equipment [Member] | Maximum [Member] | |
Expected useful life of assets | P12Y |
Vehicles [Member] | |
Expected useful life of assets | P5Y |
Office Equipment [Member] | Minimum [Member] | |
Expected useful life of assets | P5Y |
Office Equipment [Member] | Maximum [Member] | |
Expected useful life of assets | P7Y |
Significant Accounting Polici_6
Significant Accounting Policies - Schedule of Potentially Dilutive Securities (Details) - shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Potentially dilutive securities | 13,544,362 | 10,307,093 |
Convertible Note to a Related Party [Member] | ||
Potentially dilutive securities | 2,266,667 | 2,266,667 |
Warrants [Member] | ||
Potentially dilutive securities | 6,897,277 | 7,325,282 |
Common Stock Equivalent of Series A Convertible Preferred Stock [Member] | ||
Potentially dilutive securities | 37,644 | 37,644 |
Unvested Restricted Common Stock [Member] | ||
Potentially dilutive securities | 598,370 | |
Options [Member] | ||
Potentially dilutive securities | 3,744,404 | 677,500 |
Plant Sale to a Related Party (
Plant Sale to a Related Party (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Impairment of assets | $ 5,925 | |
Net book value | $ 896 | 174 |
Sales price of plant | 1,050 | |
Gain on sale of property plant and equipment | 180 | |
Total cost of goods sold | $ 27,424 | $ 30,821 |
California Custom Beverage, LLC [Member] | ||
Royalty percentage | 5.00% | |
Referral fee percentage | 5.00% | |
California Custom Beverage, LLC [Member] | Current Shareholders Chairman Institutional Investors [Member] | ||
Aggregate number of common stock shares granted in connection with sale of plant | 350,000 | |
California Custom Beverage, LLC [Member] | Machinery Equipment Furniture and Fixtures [Member] | ||
Net book value | $ 2,300 | |
Sales price of plant | 1,250 | |
Lease obligation assumed from sale of plant | 1,300 | |
Gain on sale of property plant and equipment | 180 | |
Deposit of security with lessor | $ 1,200 | |
Number of shares sold for escrow deposit | 800,000 | |
Aggregate costs reimbursed | $ 195 | |
Total cost of goods sold | $ 200 |
Inventory (Details Narrative)
Inventory (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Inventory, reserve for obsolescence net | $ 197 | $ 509 |
Inventory - Schedule of Invento
Inventory - Schedule of Inventory (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Raw Materials and Packaging | $ 3,053 | $ 2,670 |
Finished Goods | 4,327 | 3,261 |
Total | $ 7,380 | $ 5,931 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 86 | $ 551 |
Impairment charges | $ 5,925 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Property and equipment, total cost | $ 1,238 | $ 973 |
Accumulated depreciation | (342) | (799) |
Net book value | 896 | 174 |
Right-of-use Assets Under Operating Leases [Member] | ||
Property and equipment, total cost | 934 | 569 |
Computer Hardware and Software [Member] | ||
Property and equipment, total cost | $ 304 | $ 404 |
Property and Equipment - Sche_2
Property and Equipment - Schedule of Equipment Held for Sale (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Abstract] | ||
Equipment held for sale | $ 200 | $ 8,474 |
Reserve | (118) | (5,925) |
Net book value | $ 82 | $ 2,549 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Impairment of intangible assets | $ 229 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Intangible Assets Trademarks (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Brand names | $ 576 | $ 805 |
Virgil's [Member] | ||
Brand names | 576 | 576 |
Sonoma Sparkler [Member] | ||
Brand names | $ 229 |
Lines of Credit (Details Narrat
Lines of Credit (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Oct. 04, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Apr. 21, 2017 | Apr. 19, 2017 |
Cost of warrant modification | $ 1,868 | ||||
Warrant outstanding shares | 280,147 | ||||
Warrant exercise price | $ 4.25 | $ 2.025 | $ 3 | $ 3 | |
Term loan | $ 1,472 | ||||
Repayment of line of credit | 43,204 | $ 39,438 | |||
Monthly management fee percentage | 0.45% | ||||
October 4, 2018 [Member] | |||||
Repayment of line of credit | $ 8,758 | ||||
Daniel J. Doherty [Member] | |||||
Letter of credit | $ 1,500 | ||||
Daniel J. Doherty [Member] | Reeds Inc [Member] | |||||
Ownership percentage | 27.10% | ||||
Raptor/Harbor Reeds SPV LLC [Member] | |||||
Amount of reduction in debt service requirement | $ 4,000 | ||||
Warrant outstanding shares | 750,000 | ||||
Warrant exercise price | $ 1.50 | ||||
Warrant exercise price, amount reduced | $ 1.10 | ||||
Increase in fair value of warrants | $ 161 | ||||
Financing Agreement [Member] | Rosenthal and Rosenthal, Inc. [Member] | |||||
Debt instrument, term | 2 years 6 months | ||||
Line of credit, borrowing capacity | $ 13,000 | ||||
Minimum monthly fees | $ 4 | ||||
Line of credit, interest rate | 4.75% | 8.30% | |||
Direct costs for transaction | $ 752 | ||||
Cost of warrant modification | $ 161 | ||||
Amortization period | 2 years 6 months | ||||
Amortization | $ 75 | ||||
Amount of reduction in debt service requirement | $ 1,500 | ||||
Repayment of line of credit | $ 8,758 | ||||
Financing Agreement [Member] | Rosenthal and Rosenthal, Inc. [Member] | Minimum [Member] | |||||
Line of credit, interest rate | 2.00% | ||||
Financing Agreement [Member] | Rosenthal and Rosenthal, Inc. [Member] | Maximum [Member] | |||||
Line of credit, interest rate | 3.50% | ||||
New Financing Agreement [Member] | Rosenthal and Rosenthal, Inc. [Member] | |||||
Line of credit, borrowing capacity | $ 13,000 | ||||
Line of credit, additional borrowing capacity | $ 4,000 | ||||
Loan and Security Agreement [Member] | PMC Financial Services Group, LLC [Member] | |||||
Line of credit | 6,000 | ||||
Term loan | 3,000 | ||||
Interest expense | $ 1,153 | $ 1,458 |
Lines of Credit - Schedule of A
Lines of Credit - Schedule of Amount Outstanding Under Credit Facilities (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Net balance | $ 6,980 | $ 3,301 |
Bank Notes [Member] | ||
Term Loans | 3,000 | |
CAPEX loan | 3,947 | |
Net | 7,657 | 10,248 |
Capitalized finance costs | (677) | |
Net balance | 6,980 | 10,248 |
Bank Notes [Member] | Rosenthal Line of Credit [Member] | ||
Line of Credit | 7,657 | |
Bank Notes [Member] | PMC Revolving Line of Credit [Member] | ||
Line of Credit | $ 3,301 |
Financing Obligation (Details N
Financing Obligation (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Sale leaseback transaction, monthly rental payment | $ 35 | |
Percentage of interest expense and reduction in the financing obligation at implicit rate | 9.90% | |
Unamortized valuation discount | $ 714 | |
Amortization of valuation discount | $ 110 | $ 110 |
Machinery Equipment Furniture and Fixtures [Member] | California Custom Beverage, LLC [Member] | ||
Unamortized valuation discount | 604 | |
Financing obligation | 1,300 | |
Deposit of security with lessor | $ 1,200 | |
Number of shares sold for escrow deposit | 800,000 | |
Warrants [Member] | Financing Obligation [Member] | ||
Number of warrants to purchase of common stock | 600,000 | |
Actual fair value of warrant offered | $ 1,336 | |
Valuation of discount amortized period | 15 years | |
Los Angeles Plant [Member] | ||
Initial amount of financing obligation | $ 3,056 |
Financing Obligation - Schedule
Financing Obligation - Schedule of Financing Obligation (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Debt Disclosure [Abstract] | ||
Financing obligation | $ 2,186 | |
Unamortized valuation discount | (714) | |
Net financing obligation | 1,472 | |
Less current portion | (222) | |
Long term financing obligation | $ 1,250 |
Leases Payable (Details Narrati
Leases Payable (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Oct. 01, 2018 | |
Leases [Abstract] | |||
Right-of-use assets | $ 862 | ||
Discount rate, percent | 12.60% | ||
Office equipment value | $ 730 | ||
Capitalized leases reclassified to right of use assets | 132 | ||
Capitalized leases reclassification | $ 569 | ||
Rent expense | 45 | 82 | |
Aggregate amortization of right of use asset | $ 49 | $ 182 |
Leases Payable - Schedule of Fu
Leases Payable - Schedule of Future Minimum Lease Payments Under Capital Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Leases [Abstract] | ||
2019 | $ 185 | |
2020 | 169 | |
2021 | 202 | |
2022 | 229 | |
2023 | 233 | |
thereafter | 248 | |
Total payments | 1,266 | |
Less: Amount representing interest | (414) | |
Present value of net minimum lease payments | 852 | |
Less: Current portion | 51 | $ 198 |
Non-current portion | $ 801 | $ 236 |
Convertible Note to a Related_3
Convertible Note to a Related Party (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Oct. 04, 2018 | Dec. 12, 2017 | Apr. 21, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Apr. 19, 2017 |
Number of warrants to purchase of common stock | 1,416,667 | 4,666,666 | 210,111 | |||
Valuation discount | $ 3,083 | |||||
Excess of the fair value of the warrant liability accounted for as a financing cost | $ 219 | |||||
Debt discount at issuance | $ 714 | |||||
Amortization of valuation discount | $ 110 | $ 1,379 | ||||
Warrant outstanding shares | 280,147 | |||||
Warrant exercise price | $ 3 | $ 4.25 | $ 2.025 | $ 3 | ||
Raptor/Harbor Reeds SPV LLC [Member] | ||||||
Amount of reduction in debt service requirement | $ 4,000 | |||||
Warrant outstanding shares | 750,000 | |||||
Warrant exercise price | $ 1.50 | |||||
Warrant exercise price, amount reduced | $ 1.10 | |||||
Increase in fair value of warrants | $ 161 | |||||
Rights Offering [Member] | ||||||
Warrant exercise price | $ 1.50 | $ 2.025 | ||||
Convertible Notes [Member] | ||||||
Note bears interest rate | 12.00% | 12.00% | ||||
Fair value of new note | $ 4,823 | |||||
New obligation, amount | 3,400 | |||||
Excess of the fair value over the face value of the note | 1,423 | |||||
Loss realized in connection with extinguishment of debt | $ 3,632 | |||||
Convertible Notes [Member] | Minimum [Member] | ||||||
Warrant exercise price | $ 1.50 | |||||
Convertible Notes [Member] | Maximum [Member] | ||||||
Warrant exercise price | $ 3 | |||||
Securities Purchase Agreement [Member] | ||||||
Secured convertible debt principal amount | $ 3,400 | |||||
Number of warrants to purchase of common stock | 1,416,667 | |||||
Note bears interest rate | 12.00% | |||||
Debt maturity date | Apr. 21, 2021 | |||||
Proceeds from note | $ 3,083 | |||||
Note principal balance | $ 3,400 | $ 3,400 | ||||
Fair value of warrants | 3,302 | |||||
Valuation discount | 3,083 | |||||
Excess of the fair value of the warrant liability accounted for as a financing cost | 219 | |||||
Debt discount at issuance | $ 2,209 | 3,400 | ||||
Fair value of the warrant liability | 3,083 | |||||
Cash offering costs | $ 317 | |||||
Amortization of valuation discount | $ 1,191 |
Convertible Note to a Related_4
Convertible Note to a Related Party - Schedule of Convertible Notes (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Convertible Note Payable, Net | $ 4,161 | $ 3,690 |
Convertible Notes [Member] | ||
12% Convertible Note Payable | 3,400 | 3,400 |
Accrued Interest | 761 | 290 |
Convertible Note Payable, Net | $ 4,161 | $ 3,690 |
Convertible Note to a Related_5
Convertible Note to a Related Party - Schedule of Convertible Notes (Details) (Parenthetical) | Dec. 31, 2018 | Dec. 31, 2017 |
Convertible Notes [Member] | ||
Percentage of convertible note | 12.00% | 12.00% |
Warrants and Warrant Liabilit_2
Warrants and Warrant Liability (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Oct. 04, 2018 | Jul. 13, 2017 | Apr. 21, 2017 | Apr. 19, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Jul. 19, 2017 |
Warrant exercise price | $ 3 | $ 3 | $ 4.25 | $ 2.025 | |||
Warrant to purchase shares of common stock | 1,416,667 | 210,111 | 4,666,666 | ||||
Fair value of warrants | $ 3,302 | $ 2 | |||||
Valuation discount | 3,083 | ||||||
Excess of the fair value of the warrant liability accounted for as a financing cost | $ 219 | ||||||
Increase in fair value of warrant liability | $ 571 | ||||||
Warrant term description | Expiring in May 2017, were extended for a period of two years | ||||||
Warrants outstanding | 280,147 | ||||||
Warrant exercise price description | Reduced from $1.50 to $1.10 | The warrants' exercise prices were lowered from $3.00 and $4.00 per share to $1.50 per share. | Warrants by one year and reduced the exercise price from $4.25 to $3.00. | ||||
Cost of the modifications of warrants | $ 187 | ||||||
Proceeds from warrant exercise | 832 | $ 1,650 | |||||
Warrant liability to additional paid in capital | $ 1,033 | ||||||
Number of warrants exercised | 428,005 | ||||||
Warrant Exercise Agreements [Member] | |||||||
Warrant exercise price | $ 1.50 | ||||||
Warrant to purchase shares of common stock | 1,906,925 | ||||||
Charge against earnings | $ 1,109 | ||||||
Proceeds from warrant exercise | 1,650 | ||||||
Warrant liability to additional paid in capital | $ 1,601 | $ 1,033 | |||||
Modification of warrants | 784,549 | ||||||
Maximum [Member] | |||||||
Debt face amount | $ 4,000 | ||||||
Raptor SPV LLC [Member] | |||||||
Warrant to purchase shares of common stock | 750,000 | ||||||
Warrant term | 5 years | ||||||
Raptor/Harbor Reeds SPV LLC [Member] | |||||||
Warrant exercise price | $ 1.50 | ||||||
Warrant exercise price, amount reduced | $ 1.10 | ||||||
Fair value of warrants | $ 161 | ||||||
Warrants outstanding | 750,000 | ||||||
Second Tranche [Member] | |||||||
Warrant exercise price | $ 2 | ||||||
Warrant to purchase shares of common stock | 512,560 | ||||||
Warrant term | 5 years | ||||||
Third Tranche [Member] | |||||||
Warrant exercise price | $ 1.55 | ||||||
Warrant to purchase shares of common stock | 87,745 | ||||||
Warrant term | 5 years | ||||||
Warrant [Member] | |||||||
Aggregate financing costs | $ 0 | $ 1,480 | |||||
Warrant exercise price | $ 2.07 | ||||||
Market price of common stock | $ 2.07 | ||||||
Warrant intrinsic value | $ 0 | ||||||
Common Stock [Member] | |||||||
Exercise of warrants, shares | 414,857 | 1,122,376 | |||||
New Warrants [Member] | |||||||
Fair value of warrants | $ 689 | ||||||
Expected volatility | 53.75% | ||||||
Risk free interest rate | 1.65% | ||||||
Stock price | $ 2.35 |
Warrants and Warrant Liabilit_3
Warrants and Warrant Liability - Schedule of Warrant Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Shares Outstanding, Beginning Balance | 4,666,666 | |
Shares Outstanding, Ending Balance | 4,666,666 | |
Warrants [Member] | ||
Shares Outstanding, Beginning Balance | 7,325,282 | 803,909 |
Shares, Granted | 7,643,749 | |
Shares, Exercised | 428,005 | (1,122,376) |
Shares, Forfeited or expired | 0 | |
Shares Outstanding, Ending Balance | 6,897,277 | 7,325,282 |
Shares Exercisable, Ending Balance | 6,897,277 | |
Weighted-Average Exercise Price, Outstanding Beginning Balance | $ 2.09 | $ 4.50 |
Weighted-Average Exercise Price, Granted | 1.95 | |
Weighted-Average Exercise Price, Exercised | 2.03 | 1.50 |
Weighted-Average Exercise Price, Forfeited or expired | ||
Weighted-Average Exercise Price, Outstanding Ending Balance | 2.06 | $ 2.09 |
Weighted-Average Exercise Price, Exercisable Ending Balance | $ 2.06 | |
Weighted-Average Remaining Contractual Terms (Years), Outstanding Beginning Balance | 3 years 5 months 5 days | 4 years |
Weighted-Average Remaining Contractual Terms (Years), Outstanding Ending Balance | 2 years 5 months 1 day | 3 years 5 months 5 days |
Weighted-Average Remaining Contractual Terms (Years), Exercisable Ending Balance | 2 years 5 months 1 day | |
Aggregate Intrinsic Value Shares Outstanding Beginning | $ 26 | |
Aggregate Intrinsic Value Shares Outstanding Ending | $ 1,447 | |
Aggregate Intrinsic Value Shares Exercisable | $ 1,447 |
Warrants and Warrant Liabilit_4
Warrants and Warrant Liability - Schedule of Outstanding Warrants to Purchase Common Stock (Details) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 | Apr. 21, 2017 | Apr. 19, 2017 | Dec. 31, 2016 |
Number of Warrants | 4,666,666 | 1,416,667 | 210,111 | ||
Warrants Exercise Price | $ 4.25 | $ 2.025 | $ 3 | $ 3 | |
Warrants [Member] | |||||
Number of Warrants | 6,897,277 | 7,325,282 | 803,909 | ||
Warrants One [Member] | |||||
Number of Warrants | 200,000 | 200,000 | |||
Warrants Exercise Price | $ 5.600 | $ 5.600 | |||
Expiration Dates | Sep. 30, 2019 | Sep. 30, 2019 | |||
Warrants Two [Member] | |||||
Number of Warrants | 125,000 | 125,000 | |||
Warrants Exercise Price | $ 4.100 | $ 4.100 | |||
Expiration Dates | May 31, 2021 | May 31, 2021 | |||
Warrants Three [Member] | |||||
Number of Warrants | 10,000 | 10,000 | |||
Warrants Exercise Price | $ 3.900 | $ 3.900 | |||
Expiration Dates | Oct. 31, 2021 | Oct. 31, 2021 | |||
Warrants Four [Member] | |||||
Number of Warrants | 50,000 | 50,000 | |||
Warrants Exercise Price | $ 4.100 | $ 4.100 | |||
Expiration Dates | Nov. 30, 2021 | Nov. 30, 2021 | |||
Warrants Five [Member] | |||||
Number of Warrants | 72,703 | 72,703 | |||
Warrants Exercise Price | $ 3.740 | $ 3.740 | |||
Expiration Dates | Jun. 30, 2021 | Jun. 30, 2021 | |||
Warrants Six [Member] | |||||
Number of Warrants | 66,059 | 66,059 | |||
Warrants Exercise Price | $ 4.250 | $ 4.250 | |||
Expiration Dates | Jun. 30, 2021 | Jun. 30, 2021 | |||
Warrants Seven [Member] | |||||
Number of Warrants | 784,549 | 784,549 | |||
Warrants Exercise Price | $ 1.500 | $ 1.500 | |||
Expiration Dates | Apr. 30, 2022 | Apr. 30, 2022 | |||
Warrants Eight [Member] | |||||
Number of Warrants | 87,745 | 87,745 | |||
Warrants Exercise Price | $ 1.550 | $ 1.550 | |||
Expiration Dates | Jul. 31, 2022 | Jul. 31, 2022 | |||
Warrants Nine [Member] | |||||
Number of Warrants | 512,560 | 512,560 | |||
Warrants Exercise Price | $ 2 | $ 2 | |||
Expiration Dates | Jul. 31, 2022 | Jul. 31, 2022 | |||
Warrants Ten [Member] | |||||
Number of Warrants | 4,238,661 | 4,666,666 | |||
Warrants Exercise Price | $ 2.025 | $ 2.030 | |||
Expiration Dates | Dec. 31, 2020 | Dec. 31, 2020 | |||
Warrants Eleven [Member] | |||||
Number of Warrants | 750,000 | 750,000 | |||
Warrants Exercise Price | $ 1.100 | $ 1.500 | |||
Expiration Dates | Dec. 31, 2022 | Dec. 31, 2022 |
Warrant Liability - Schedule of
Warrant Liability - Schedule of Warrant Liability Using Assumptions (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 13, 2017 | Apr. 21, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | [6] | |||||
Number of warrants | 280,147 | ||||||||||
Fair Value - Warrants | $ 2 | $ (3,275) | |||||||||
Issuance Date [Member] | |||||||||||
Stock Price | [1] | $ 4.75 | |||||||||
Risk free interest rate | [1] | 1.51% | |||||||||
Expected Volatility | [1] | 49.33% | |||||||||
Expected life in years | [1] | 5 years | |||||||||
Expected dividend yield | [1] | 0.00% | |||||||||
Number of warrants | [1] | 1,626,778 | |||||||||
Fair Value - Warrants | [1] | $ 3,873 | |||||||||
Modification Date [Member] | |||||||||||
Stock Price | $ 2.35 | [2] | $ 4.75 | [3] | |||||||
Risk free interest rate | 1.65% | [2] | 1.51% | [3] | |||||||
Expected Volatility | 53.75% | [2] | 49.33% | [3] | |||||||
Expected life in years | [3] | 5 years | |||||||||
Expected dividend yield | 0.00% | [2] | 0.00% | [3] | |||||||
Number of warrants | 1,906,925 | [2] | 280,147 | [3] | |||||||
Fair Value - Warrants | $ 1,109 | [2] | $ 187 | [3] | |||||||
Modification Date [Member] | Minimum [Member] | |||||||||||
Expected life in years | [2] | 4 years 9 months 7 days | |||||||||
Modification Date [Member] | Maximum [Member] | |||||||||||
Expected life in years | [2] | 4 years 10 months 21 days | |||||||||
Warrants [Member] | |||||||||||
Stock Price | $ 2.07 | [4] | $ 1.55 | [5] | $ 4.10 | ||||||
Risk free interest rate | 2.69% | [4] | 1.74% | [5] | 1.58% | ||||||
Expected Volatility | 50.07% | [4] | 56.06% | [5] | 54.71% | ||||||
Expected life in years | 2 years 5 months 1 day | [4] | 3 years 5 months 1 day | [5] | 4 years 5 months 1 day | ||||||
Expected dividend yield | 2.69% | [4] | 0.00% | 0.00% | |||||||
Number of warrants | 138,762 | 138,762 | 418,909 | ||||||||
Fair Value - Warrants | $ 38 | [4] | $ 36 | [5] | $ 775 | ||||||
[1] | (2) April 21, 2017 grant to Raptor of warrants to purchase 1,416,667 shares of the Company's common stock in connection with the Company's issuance of the Convertible Note to a Related Party (valued at $3,302) and April 19, 2017, grant of 210,111 warrants to three accredited investors that are party to a Securities Purchase Agreement dated May 26, 2016 and hold participation rights in the Company's financing transactions (valued at $571). | ||||||||||
[2] | (4) July 13, 2017 warrant exercise agreements with Raptor and the three accredited investors to reprice warrants to purchase a total of 1,906,925 shares of our common stock. The incremental cost before and after the modification of the warrants resulted in a charge against earnings of $1,109. The warrants were also changed to modify language pertaining to a "fundamental transaction," eliminating the need to classify the warrants as a warrant liability. Upon modification, the investors exercised warrants for 1,122,376 shares of common stock at the repriced $1.50 per share, resulting in proceeds to the Company of $1,650. The fair value of the warrant liability at the date of exercise was $1,601, which was reclassified from the warrant liability to additional paid in capital as a result of the exercise. At the same time, the Company and the holders of the remaining 784,549 warrants agreed to modify the language of the fundamental transaction clause to require board approval, thus eliminating the need for the liability classification of the warrants. Accordingly, the fair value of these warrants, totaling $1,033, was reclassified from the warrant liability to additional paid in capital. | ||||||||||
[3] | (3) April 19, 2017, the three accredited investors referred to above waived their participation rights with regard to the April 21, 2017 financing. The Company increased the terms of their outstanding 280,147 warrants by one year and reduced the exercise price from $4.25 to $3.00. The incremental change in the warrants' fair value of $187 on the modification date was reported as an increase to the warrant liability and a cost of warrant modification. | ||||||||||
[4] | (6) Warrant valuation on December 31, 2018 for 138,762 warrants containing fundamental transaction provisions. The increase in the fair value of the warrant liability was $2 for the year ended December 31, 2018. | ||||||||||
[5] | (5) Warrant valuation on December 31, 2017 for 138,762 warrants containing fundamental transaction provisions. The decrease in the fair value of the warrant liability was $3,275 for the year ended December 31, 2017. | ||||||||||
[6] | (1) Warrant valuation on December 31, 2016 for 418,909 warrants containing fundamental transaction provisions. |
Warrant Liability - Schedule _2
Warrant Liability - Schedule of Warrant Liability Using Assumptions (Details) (Parenthetical) - USD ($) $ / shares in Units, $ in Thousands | Oct. 04, 2018 | Jul. 13, 2017 | Apr. 21, 2017 | Apr. 19, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Fair value of warrants | $ 3,302 | $ 2 | |||||
Warrant to purchase shares of common stock | 1,416,667 | 210,111 | 4,666,666 | ||||
Financing transactions | $ 571 | ||||||
Warrants outstanding | 280,147 | ||||||
Warrant exercise price description | Reduced from $1.50 to $1.10 | The warrants' exercise prices were lowered from $3.00 and $4.00 per share to $1.50 per share. | Warrants by one year and reduced the exercise price from $4.25 to $3.00. | ||||
Warrant exercise price | $ 3 | $ 3 | $ 4.25 | $ 2.025 | |||
Cost of the modifications of warrants | $ 187 | ||||||
Proceeds from warrant exercise | $ 832 | $ 1,650 | |||||
Warrant liability to additional paid in capital | $ 1,033 | ||||||
Common Stock [Member] | |||||||
Exercise of warrants, shares | 414,857 | 1,122,376 | |||||
Fundamental Transaction Provision [Member] | |||||||
Fair value of warrants | $ 418,909 | ||||||
Warrant to purchase shares of common stock | 138,762 | 138,762 | |||||
Fair value of warrant liability | $ 2 | $ 3,275 | |||||
Warrant Exercise Agreements [Member] | |||||||
Warrant to purchase shares of common stock | 1,906,925 | ||||||
Warrant exercise price | $ 1.50 | ||||||
Charge against earnings | $ 1,109 | ||||||
Proceeds from warrant exercise | 1,650 | ||||||
Warrant liability to additional paid in capital | $ 1,601 | $ 1,033 | |||||
Modification of warrants | 784,549 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Mar. 28, 2018 | Jan. 10, 2018 | Dec. 06, 2017 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 12, 2017 | Apr. 21, 2017 | Apr. 19, 2017 |
Preferred stock par value | $ 10 | $ 10 | |||||||
Liquidation preference | $ 10 | ||||||||
Percentage of noncumulative preferred stock | 5.00% | ||||||||
Preferred stock, shares authorized | 500,000 | 500,000 | |||||||
Preferred stock, shares outstanding | 9,411 | 9,411 | |||||||
Dividends payable rate | 5.00% | ||||||||
Number of Common shares issued for preferred stock dividend | 1,734 | 1,640 | |||||||
Preferred dividend expense | $ 5 | ||||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | |||||||
Common stock, shares authorized | 70,000,000 | 40,000,000 | |||||||
Common stock, shares outstanding | 25,729,461 | 24,619,591 | |||||||
Warrant exercise price | $ 4.25 | $ 2.025 | $ 3 | $ 3 | |||||
Common stock issued for services | $ 99 | ||||||||
Proceeds from warrant exercise | $ 832 | 1,650 | |||||||
Issuance of common stock, value | $ 200 | ||||||||
Restricted Stock [Member] | 2019 [Member] | |||||||||
Vested restricted shares | 206,368 | 185,634 | |||||||
Restricted Stock [Member] | 2020 [Member] | |||||||||
Vested restricted shares | 206,368 | ||||||||
Warrants [Member] | |||||||||
Number of shares issued for warrants exercise | 414,857 | 1,122,376 | |||||||
Proceeds from warrant exercise | $ 828 | $ 1,150 | |||||||
Board of Directors [Member] | |||||||||
Number of shares issuance and sale of common stock during period | 117,647 | ||||||||
Sale of stock price per share | $ 1.70 | ||||||||
Proceeds from sale of common stock | $ 200 | ||||||||
Directors and Officers [Member] | |||||||||
Common stock issued for services, shares | 37,057 | 62,365 | |||||||
Common stock issued for services | $ 100 | $ 90 | |||||||
Valentin Stalowir [Member] | Restricted Stock [Member] | |||||||||
Number of restricted stock awarded | 412,736 | 371,268 | |||||||
Fair value of restricted shares | $ 660 | $ 631 | $ 316 | ||||||
Vested restricted shares | 185,634 | ||||||||
Independent Directors [Member] | |||||||||
Issuance of common stock | 400,000 | ||||||||
Share issued price per share | $ 1.70 | ||||||||
Issuance of common stock, value | $ 680 | ||||||||
Independent Directors [Member] | Restricted Stock [Member] | |||||||||
Common stock issued for services, shares | 70,588 | ||||||||
Common stock issued for services | $ 120 | ||||||||
Number of restricted stock awarded | 70,588 | ||||||||
Fair value of restricted shares | $ 120 | ||||||||
Vesting percentage, per quarter | 25.00% | ||||||||
Raptor SPV LLC [Member] | |||||||||
Warrant term | 5 years | ||||||||
Backstop Agreement [Member] | Raptor SPV LLC [Member] | |||||||||
Warrant term | 5 years | ||||||||
Backstop Agreement [Member] | Raptor SPV LLC [Member] | Minimum [Member] | |||||||||
Purchase of distribution offering | $ 6,000 | ||||||||
Number of warrants to purchase of common stock | 750,000 | ||||||||
Rights Offering [Member] | |||||||||
Purchase of distribution offering | $ 14,000 | ||||||||
Sale of units description | Company conducted a public offering of rights to purchase up to $14 million of units, each unit consisting of one share of the Company's common stock and one-half warrant to purchase one share of common stock (the "Rights Offering"). Pursuant to the Rights Offering, the Company sold an aggregate of 9,333,333 units consisting of 9,333,333 shares of common stock and warrants to purchase 4,666,666 shares of common stock, with each warrant exercisable for one share of common stock at an exercise price of $2.025 per share | ||||||||
Number of shares issuance and sale of common stock during period | 9,333,333 | ||||||||
Number of warrants to purchase of common stock | 4,666,666 | ||||||||
Warrant exercise price | $ 2.025 | $ 1.50 | |||||||
Proceeds from offering | $ 12,887 | ||||||||
Dealer-manager fees | $ 830 |
Share-Based Compensation (Detai
Share-Based Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Dec. 17, 2018 | Dec. 13, 2018 | Jul. 19, 2018 | Mar. 28, 2018 | Jan. 10, 2018 | Sep. 29, 2017 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Stock option description | The exercise price of an option granted under the plan cannot be less than 100% of the fair market value per share of common stock on the date of the grant of the option. Options may not be granted under the plan on or after the tenth anniversary of the adoption of the plan. Incentive stock options granted to a person owning more than 10% of the combined voting power of the common stock cannot be exercisable for more than five years. | ||||||||
Market price per share | $ 2.07 | ||||||||
Stock option expected life | 8 years 6 months 10 days | ||||||||
Stock-based compensation | $ 1,161 | $ 276 | |||||||
Aggregate value of unvested options | 2,691 | ||||||||
Restricted Stock [Member] | |||||||||
Aggregate value of unvested options | $ 592 | ||||||||
Number of vested shares issued, shares | 256,222 | 400,000 | |||||||
Compensation cost of stock awards | $ 820 | ||||||||
Minimum [Member] | |||||||||
Option vesting period | 1 year | ||||||||
Maximum [Member] | |||||||||
Option vesting period | 4 years | ||||||||
Employees [Member] | |||||||||
Options to purchase shares of common stock | 311,000 | 60,000 | |||||||
Option vesting period | 4 years | ||||||||
Fair value of options granted | $ 386 | $ 39 | |||||||
Amortization period of option fair value | Dec. 31, 2022 | ||||||||
Number of option issued exercise price per share | $ 2.20 | ||||||||
Employees, Officers and Directors [Member] | |||||||||
Options to purchase shares of common stock | 748,000 | 1,653,950 | |||||||
Option vesting period | 4 years | 4 years | |||||||
Fair value of options granted | $ 1,190 | $ 1,540 | |||||||
Amortization period of option fair value | Jul. 31, 2022 | Mar. 31, 2022 | |||||||
Valentin Stalowir [Member] | |||||||||
Options to purchase shares of common stock | 412,736 | 371,268 | |||||||
Option vesting period | 4 years | ||||||||
Fair value of options granted | $ 389 | $ 370 | |||||||
Amortization period of option fair value | Mar. 31, 2022 | Jun. 30, 2019 | |||||||
Number of option issued exercise price per share | $ 1.70 | ||||||||
Stock option expected life | 10 years | ||||||||
Valentin Stalowir [Member] | Restricted Stock [Member] | |||||||||
Option vesting period | 18 months | ||||||||
Number of restricted common stock issued, shares | 412,736 | 371,268 | |||||||
Fair value of restricted shares | $ 660 | $ 631 | $ 316 | ||||||
Number of vested shares issued, shares | 185,634 | ||||||||
Independent Directors [Member] | Restricted Stock [Member] | |||||||||
Number of restricted common stock issued, shares | 70,588 | ||||||||
Fair value of restricted shares | $ 120 | ||||||||
2017 Compensation Plan [Member] | |||||||||
Shares issued for compensation | 3,500,000 | 3,000,000 | |||||||
Shares issuable for compensation | 1,947,715 | ||||||||
2015 Compensation Plan [Member] | |||||||||
Shares issuable for compensation | 27,500 | ||||||||
2015 Plan [Member] | Dan Miles [Member] | |||||||||
Market price per share | $ 1.60 | ||||||||
Options to purchase shares of common stock | 100,000 | ||||||||
Option vesting period | 4 years |
Share-Based Compensation - Sche
Share-Based Compensation - Schedule of Stock Option Activity (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Weighted-Average Remaining Contractual Terms (Years), Outstanding Ending | 8 years 6 months 10 days | |
Options [Member] | ||
Shares Outstanding, Beginning balance | 677,500 | 1,048,500 |
Shares, Granted | 3,596,954 | 60,000 |
Shares, Exercised | ||
Shares, Forfeited or expired | (431,000) | |
Unvested Forfeited or expired | (406,300) | |
Shares, Vested Forfeited or expired | (123,750) | |
Shares Outstanding, Ending balance | 3,744,404 | 677,500 |
Shares Exercisable | 678,059 | |
Weighted-Average Exercise Price, Outstanding, Beginning | $ 4.35 | $ 4.68 |
Weighted-Average Exercise Price, Granted | 1.88 | 2.20 |
Weighted-Average Exercise Price, Exercised | ||
Weighted-Average Exercise Price, Forfeited or expired | 4.88 | |
Weighted-Average Exercise Price, Unvested Forfeited or expired | 2.65 | |
Weighted-Average Exercise Price, Vested Forfeited or expired | 4.26 | |
Weighted-Average Exercise Price, Outstanding, Ending | 2.16 | $ 4.35 |
Weighted-Average Exercise Price, Exercisable | $ 3.03 | |
Weighted-Average Remaining Contractual Terms (Years), Outstanding Ending | 8 years 6 months 10 days | 4 years 1 month 20 days |
Weighted-Average Remaining Contractual Terms (Years), Exercisable | 5 years 2 months 12 days | |
Aggregate Intrinsic Value, Share Outstanding, Ending | $ 1,026 | |
Aggregate Intrinsic Value, Share Exercisable | $ 116 |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of Assumption Used to Estimate the Fair Value of Share Options Granted (Details) - Stock Options [Member] | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Expected volatility | 62.00% | 52.00% |
Expected dividends | 0.00% | 0.00% |
Expected average term (in years) | 6 years | 2 years |
Risk free rate - average | 1.47% | |
Forfeiture rate | 0.00% | 0.00% |
Minimum [Member] | ||
Risk free rate - average | 2.37% | |
Maximum [Member] | ||
Risk free rate - average | 2.77% |
Share-Based Compensation - Sc_2
Share-Based Compensation - Schedule of Information Regarding Stock Options (Details) | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Number of Shares Outstanding | shares | 3,744,404 |
Weighted Average Exercise Price | $ 2.16 |
Weighted Average Remaining Contractual Life (years) | 8 years 6 months 10 days |
Number of Shares Exercisable | shares | 678,059 |
Weighted Average Exercise Price | $ 3.03 |
Range One [Member] | |
Range of Exercise Price Lower Limit | 1.60 |
Range of Exercise Price Upper limit | $ 2.19 |
Number of Shares Outstanding | shares | 2,573,954 |
Weighted Average Exercise Price | $ 1.67 |
Weighted Average Remaining Contractual Life (years) | 9 years 1 month 24 days |
Number of Shares Exercisable | shares | 285,609 |
Weighted Average Exercise Price | $ 1.67 |
Range Two [Member] | |
Range of Exercise Price Lower Limit | 2.20 |
Range of Exercise Price Upper limit | $ 3.74 |
Number of Shares Outstanding | shares | 940,450 |
Weighted Average Exercise Price | $ 2.81 |
Weighted Average Remaining Contractual Life (years) | 8 years 8 months 19 days |
Number of Shares Exercisable | shares | 202,450 |
Weighted Average Exercise Price | $ 3.22 |
Range Three [Member] | |
Range of Exercise Price Lower Limit | 3.75 |
Range of Exercise Price Upper limit | $ 5.04 |
Number of Shares Outstanding | shares | 230,000 |
Weighted Average Exercise Price | $ 4.90 |
Weighted Average Remaining Contractual Life (years) | 10 months 14 days |
Number of Shares Exercisable | shares | 190,000 |
Weighted Average Exercise Price | $ 4.88 |
Share-Based Compensation - Su_2
Share-Based Compensation - Summary Non-vested Restricted Stock Activity (Details) - Restricted Stock [Member] - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Number of Shares Unvested, beginning balance | ||
Number of Shares, Granted | 854,592 | 400,000 |
Number of Shares, Vested | (256,222) | (400,000) |
Number of Shares, Issued | ||
Number of Shares Unvested, ending balance | 598,370 | |
Number of Issuable Shares, beginning balance | 400,000 | |
Number of Issuable Shares, Granted | ||
Number of Issuable Shares, Vested | 256,222 | 400,000 |
Number of Issuable Shares, Issued | (656,222) | |
Number of Issuable Shares, ending balance | 400,000 | |
Fair Value Unvested, beginning balance | $ 680 | |
Fair Value, Granted | 1,412 | 680 |
Fair Value, Vested | ||
Fair Value, Issued | (1,500) | |
Fair Value, Unvested, ending balance | $ 592 | $ 680 |
Weighted Average Grant Date Fair Value, Unvested beginning balance | $ 1.70 | |
Weighted Average Grant Date Fair Value, Granted | 1.65 | 1.70 |
Weighted Average Grant Date Fair Value, Vested | 1.70 | |
Weighted Average Grant Date Fair Value, Issued | ||
Weighted Average Grant Date Fair Value, Unvested ending balance | $ 1.63 | $ 1.70 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Federal net operating loss carryforwards | $ 42,000,000 | $ 35,000,000 |
State net operating loss carryforwards | $ 18,000,000 | $ 18,000,000 |
Federal carryforward loss expires year | 2035 | |
State carryforward loss expires year | 2019 |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Income Tax Assets (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carry forward | $ 10,429,000 | $ 8,927,000 |
Accounts receivable allowances | 162,000 | 227,000 |
Inventory reserves | 51,000 | 148,000 |
Deferred finance costs | (176,000) | |
Reserve on asset impairment | 31,000 | 655,000 |
Total deferred tax asset | 10,496,000 | |
Valuation allowance | (10,496,000) | |
Net deferred income tax asset |
Income Taxes - Schedule of Reco
Income Taxes - Schedule of Reconciliation of Effective Income Tax Rate to U.S. Statutory Rate (Details) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Federal Statutory tax rate | (21.00%) | (34.00%) |
State tax net of federal benefit | (5.00%) | (5.00%) |
Federal and state tax rate | (26.00%) | (39.00%) |
Effect of change in tax rate | 0.00% | 10.00% |
Valuation allowance | 26.00% | 29.00% |
Effective tax rate | 0.00% | 0.00% |
Related Party Activity (Details
Related Party Activity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Oct. 04, 2018 | Dec. 06, 2017 | Jul. 13, 2017 | Apr. 21, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Apr. 19, 2017 |
Repayments of related party | $ 472 | ||||||
Number of warrants to purchase of common stock | 1,416,667 | 4,666,666 | 210,111 | ||||
Proceeds from warrant exercised | 832 | $ 1,650 | |||||
Proceeds from convertible debt | 3,083 | ||||||
Raptor [Member] | Rights Offering [Member] | |||||||
Rights to purchse common stock exercised | 2,666,667 | ||||||
Aggregate common stock purchase price | $ 4,000 | ||||||
Raptor [Member] | Rights Offering [Member] | Warrant [Member] | |||||||
Rights to purchse common stock exercised | 1,333,333 | ||||||
Securities Purchase Agreement [Member] | |||||||
Secured convertible debt principal amount | $ 3,400 | ||||||
Number of warrants to purchase of common stock | 1,416,667 | ||||||
Note bears interest rate | 12.00% | ||||||
Maturity date | Apr. 21, 2021 | ||||||
Securities Purchase Agreement [Member] | Raptor [Member] | |||||||
Secured convertible debt principal amount | $ 3,400 | ||||||
Number of warrants to purchase of common stock | 1,416,667 | ||||||
Note bears interest rate | 12.00% | ||||||
Maturity date | Apr. 21, 2021 | ||||||
Proceeds from issuance of note | $ 3,083 | ||||||
Stock issuance cost | $ 157 | ||||||
Warrant Exercise Agreements [Member] | |||||||
Number of warrants to purchase of common stock | 1,906,925 | ||||||
Proceeds from warrant exercised | $ 1,650 | ||||||
Warrant Exercise Agreements [Member] | Raptor [Member] | |||||||
Number of warrants to purchase of common stock | 766,667 | ||||||
Note bears interest rate | 150.00% | ||||||
Warrants exercise price | $ 1.50 | ||||||
Proceeds from warrant exercised | $ 1,150 | ||||||
Warrant Exercise Agreements [Member] | Raptor [Member] | Second Tranche Warrants [Member] | |||||||
Number of warrants to purchase of common stock | 350,000 | ||||||
Warrants exercise price | $ 2 | ||||||
Warrant Exercise Agreements [Member] | Raptor [Member] | Third Tranche Warrants [Member] | |||||||
Number of warrants to purchase of common stock | 60,000 | ||||||
Warrants exercise price | $ 1.55 | ||||||
Warrant Exercise Agreements [Member] | Raptor/Harbor Reeds SPV LLC [Member] | Second Tranche Warrants [Member] | |||||||
Warrant term | 5 years | ||||||
Warrant Exercise Agreements [Member] | Raptor/Harbor Reeds SPV LLC [Member] | Third Tranche Warrants [Member] | |||||||
Warrant term | 5 years | ||||||
Backstop Agreement [Member] | Raptor [Member] | Minimum [Member] | |||||||
Number of warrants to purchase of common stock | 750,000 | ||||||
Warrant term | 5 years | ||||||
Purchase of distribution offering | $ 6,000 | ||||||
Rosenthal Financing Agreement [Member] | Raptor [Member] | Amended and Restated Subordinated Convertible Non-Redeemable Secured Note [Member] | |||||||
Rights to purchse common stock exercised | 750,000 | ||||||
Proceeds from convertible debt | $ 4,000 | ||||||
Fair value of warrants increase during period | $ 161 | ||||||
Rosenthal Financing Agreement [Member] | Raptor [Member] | Maximum [Member] | Amended and Restated Subordinated Convertible Non-Redeemable Secured Note [Member] | |||||||
Warrants exercise price | $ 1.10 | ||||||
Rosenthal Financing Agreement [Member] | Raptor [Member] | Minimum [Member] | Amended and Restated Subordinated Convertible Non-Redeemable Secured Note [Member] | |||||||
Warrants exercise price | $ 1.50 | ||||||
Warrants Exercise Price 1 [Member] | Warrant Exercise Agreements [Member] | Raptor [Member] | |||||||
Warrants exercise price | $ 3 | ||||||
Warrants Exercise Price 2 [Member] | Warrant Exercise Agreements [Member] | Raptor [Member] | |||||||
Warrants exercise price | $ 4 | ||||||
Chris Reed, Robert Reed & Dan Miles [Member] | |||||||
Advance to affiliate | 571 | ||||||
Repayments of related party | 240 | ||||||
California Custom Beverage, LLC [Member] | Sale of Los Angeles Manufacturing Facility to CCB [Member] | |||||||
Related party transaction percentage | 100.00% | ||||||
Judy Reed [Member] | Corporate Secretary [Member] | Maximum [Member] | |||||||
Amount paid for service | $ 1 | $ 1 | |||||
Winston Stalowir [Member] | Chief Executive Officer [Member] | Sales Merchandising and Demo Intern [Member] | |||||||
Amount paid for service | 2 | ||||||
Lisa Cohane [Member] | Senior Vice President [Member] | Administrative and Office Management Services [Member] | |||||||
Amount paid for service | 34 | ||||||
Lindsay Martin [Member] | Vice President [Member] | |||||||
Amount paid for service | $ 162 |
Subsequent Event - Financing Ag
Subsequent Event - Financing Agreement (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Feb. 15, 2019 | Dec. 31, 2018 |
Subsequent Event [Member] | Underwriters Agreement [Member] | ||
New issuance of common stock | 7,733,750 | |
Common stock price per shares | $ 2.10 | |
Stock Issuance cost | $ 14,906 | |
Subsequent Event [Member] | Underwriters Agreement [Member] | Overallotment Option [Member] | ||
New issuance of common stock | 1,008,750 | |
2017 Incentive Compensation Plan [Member] | During 2019 [Member] | ||
Stock issued during period, value, restricted stock | $ 30,000 |
Subsequent Event - Schedule of
Subsequent Event - Schedule of Unaudited Pro Forma Balance Sheet (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | |||
Cash | $ 624 | $ 12,127 | $ 451 |
Accounts receivable, net | 2,608 | 2,691 | |
Inventory, net | 195 | ||
Other current assets | 7,511 | ||
Total Current Assets | 10,938 | 20,948 | |
Property and equipment, net | 896 | 174 | |
Equipment held for sale and intangible assets | 658 | ||
Total assets | 12,492 | 24,476 | |
Current Liabilities: | |||
Accounts payable | 5,721 | 7,480 | |
Accrued expenses | 1,483 | 220 | |
Line of credit | 6,980 | 3,301 | |
Current portion of leases payable | 51 | 198 | |
Total current liabilities | 14,235 | 18,645 | |
Leases payable, less current portion | 801 | 236 | |
Convertible note to a related party | 4,161 | 3,690 | |
Warrant liability and other long term liabilities | 38 | ||
Total Liabilities | 19,235 | 23,968 | |
Stockholders' equity (deficit): | |||
Series A Convertible Preferred stock | 94 | 94 | |
Common stock | 3 | 2 | |
Common stock issuable | (680) | ||
Additional paid in capital | 53,591 | 49,833 | |
Accumulated deficit | (60,431) | (50,101) | |
Total stockholders' equity (deficit) | (6,743) | 508 | $ (1,657) |
Total liabilities and stockholders' equity (deficit) | 12,492 | $ 24,476 | |
Pro Forma [Member] | |||
Current assets: | |||
Cash | 8,550 | ||
Accounts receivable, net | 2,608 | ||
Inventory, net | 195 | ||
Other current assets | 7,511 | ||
Total Current Assets | 18,864 | ||
Property and equipment, net | 896 | ||
Equipment held for sale and intangible assets | 658 | ||
Total assets | 20,418 | ||
Current Liabilities: | |||
Accounts payable | 5,721 | ||
Accrued expenses | 1,483 | ||
Line of credit | |||
Current portion of leases payable | 51 | ||
Total current liabilities | 7,255 | ||
Total Liabilities | 12,255 | ||
Stockholders' equity (deficit): | |||
Series A Convertible Preferred stock | 94 | ||
Common stock | 4 | ||
Common stock issuable | |||
Additional paid in capital | 68,496 | ||
Accumulated deficit | (60,431) | ||
Total stockholders' equity (deficit) | 8,163 | ||
Total liabilities and stockholders' equity (deficit) | $ 20,418 |
Subsequent Event - Schedule o_2
Subsequent Event - Schedule of Unaudited Pro Forma Balance Sheet (Details) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Common stock issued | 25,729,461 | 24,619,591 |
Repayment of line of credit | $ 43,204 | $ 39,438 |
Pro Forma [Member] | ||
Common stock issued | 7,733,750 | |
Adjustment [Member] | ||
Proceeds from sale of common stock | $ 14,906 | |
Repayment of line of credit | $ 6,980 |