Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2020shares | |
Document And Entity Information | |
Entity Registrant Name | Mojo Organics, Inc. |
Entity Central Index Key | 0001414953 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | false |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | Jun. 30, 2020 |
Document Fiscal Period Focus | Q2 |
Document Fiscal Year Focus | 2020 |
Entity Shell Company | false |
Entity Current Reporting Status | Yes |
Entity File Number | 000-55269 |
Entity Interactive Data Current | Yes |
Entity Incorporation, State Country Code | DE |
Entity Common Stock, Shares Outstanding | 29,924,544 |
Condensed Balance Sheets (Unaud
Condensed Balance Sheets (Unaudited) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Current Assets | ||
Cash and cash equivalents | $ 14,878 | $ 55,978 |
Accounts Receivable, net | 96,627 | 75,087 |
Inventory | 213,142 | 175,719 |
Supplier deposits | 39,000 | 11,539 |
Prepaid expenses | 18,487 | 14,767 |
Security deposit | 4,518 | 4,518 |
Total Current Assets | 386,652 | 337,608 |
CURRENT LIABILITIES: | ||
Accounts payable and accrued expenses | 125,413 | 140,854 |
Accrued Payroll to related parties | 14,135 | 25,394 |
SBA Loans | 35,508 | 0 |
Total Current Liabilities | 175,056 | 166,248 |
STOCKHOLDERS' EQUITY | ||
Common stock, 190,000,000 shares authorized at $0.001 par value, 29,924,544 and 29,351,294 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively | 29,924 | 29,352 |
Additional paid in capital | 23,580,192 | 23,488,626 |
Accumulated deficit | (23,398,521) | (23,346,618) |
Total Stockholders Equity | 211,596 | 171,360 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 386,652 | $ 337,608 |
Condensed Balance Sheets (Una_2
Condensed Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, authorized | 190,000,000 | 190,000,000 |
Common stock, issued | 29,924,544 | 29,351,294 |
Common stock, outstanding | 29,924,544 | 29,351,294 |
Condensed Statements of Operati
Condensed Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||||
Revenue | $ 437,878 | $ 434,738 | $ 877,867 | $ 843,235 |
Cost of Revenue | 209,412 | 229,480 | 446,462 | 430,113 |
Gross Profit | 228,465 | 205,257 | 431,505 | 413,122 |
Operating Expenses | ||||
Selling, general and administrative | 223,981 | 302,694 | 483,633 | 588,705 |
Income/(Loss) from Operations | 4,485 | (97,437) | (52,128) | (175,584) |
Other Income | 2,219 | 0 | 2,219 | 0 |
Income/(Loss) Before Provision for Income Taxes | 6,704 | (97,437) | (49,909) | (175,584) |
Provision for Income Taxes | (1,994) | 0 | (1,994) | 0 |
Net Income/(Loss) | $ 4,710 | $ (97,437) | $ (51,903) | $ (175,584) |
Net income/(loss) per common share, basic and diluted | $ 0 | $ 0 | $ 0 | $ (0.01) |
Weighted average number of common shares outstanding, basic and diluted | 29,889,203 | 28,699,846 | 29,690,570 | 28,565,224 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities | ||
Net Loss | $ (51,903) | $ (175,584) |
Adjustments to reconcile net loss to net cash provided by/(used in) operating activities: | ||
Stock and warrants issued to directors and employees | 97,389 | 154,390 |
Change in assets and liabilites: | ||
Increase in accounts receivable | (21,540) | (16,876) |
Increase in inventory | (37,424) | (34,280) |
Increase in supplier deposits | (27,461) | (20,000) |
Increase in prepaid expenses | (3,720) | (5,898) |
(Decrease)/Increase in accounts payable and accrued expenses | (17,435) | 80,257 |
(Decrease)/Increase in accrued payroll to related parties | (11,259) | 7,674 |
Net cash used in operating activities | (71,359) | (10,317) |
Net cash from financing activities: | ||
Proceeds from SBA Loan | 35,508 | 0 |
Shares repurchased for cancellation | (5,250) | (750) |
Net cash provided by/(used in) financing activities | 30,258 | (750) |
Net decrease in cash and cash equivalents | (41,101) | (11,067) |
Cash and cash equivalents at beginning of periods | 55,978 | 24,031 |
Cash and cash equivalents at end of periods | 14,878 | 12,963 |
Summary of non-cash investing and financing activity: | ||
Implied value, restricted and Non-Trading shares | $ 97,389 | $ 154,390 |
Condensed Statements of Changes
Condensed Statements of Changes in Stockholders' Equity (Unaudited) - 6 months ended Jun. 30, 2020 - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, Shares at Dec. 31, 2019 | 29,351,294 | |||
Beginning balance, Amount at Dec. 31, 2019 | $ 29,352 | $ 23,488,626 | $ (23,346,618) | $ 171,360 |
Stock and warrants issued to directors and employees, Shares | 598,250 | |||
Stock and warrants issued to directors and employees, Amount | $ 598 | 96,791 | 97,389 | |
Stock repurchased and cancelled, shares | (25,000) | |||
Stock repurchased and cancelled, Amount | $ (25) | (5,225) | (5,250) | |
Net loss | (51,903) | (51,903) | ||
Ending balance, Shares at Jun. 30, 2020 | 29,924,544 | |||
Ending balance, Amount at Jun. 30, 2020 | $ 29,924 | $ 23,580,192 | $ (23,398,521) | $ 211,596 |
Business
Business | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Business | NOTE 1 – BUSINESS Overview MOJO Organics, Inc. (“MOJO” or the “Company”) is a Delaware corporation headquartered in Jersey City, NJ. The Company engages in new product development, production, marketing, distribution and sales of beverage brands that are natural, Non-GMO Project verified, and USDA Organic. The Company’s flagship product is MOJO Pure Coconut Water. In addition to Pure Coconut Water, the Company produces Sparkling Coconut Water, Coconut Water + Mango Juice and Coconut Water + Pineapple Juice. We seek to grow the market share of our products by expanding our hybrid distribution network through the relationships and efforts of our management and third party partners and improved broker network, and new products and packaging in 2020, including pH7 water (pH is a scale of acidity) and energy beverages which are both major sectors of the beverage industry. The company predominantly packages its beverages in 100% recyclable, Eco-Friendly packaging that can be recycled infinite times and is not made from carbon oil based packaging. The packaging has a very low impact on the environment, and does not contribute to landfills and the pollution of our bodies of water. Interim Financial Statements The accompanying unaudited interim condensed financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q and article 10 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures included in these financial statements are adequate to make the information presented not misleading. The unaudited interim condensed financial statements included in this document have been prepared on the same basis as the annual audited financial statements, and in the Company’s opinion, reflect all adjustments necessary for a fair presentation in accordance with GAAP and SEC regulations for interim financial statements. The results for the three months ended March 31, 2020 are not necessarily indicative of the results that the Company will have for any subsequent period. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and the notes to those statements for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The financial statements are prepared in conformity with GAAP. Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents Cash equivalents include investment instruments and time deposits purchased with a maturity of three months or less. On June 30, 2020 and December 31, 2019, the Company did not have any cash equivalents. Accounts Receivable Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company provides for probable uncollectible amounts based upon its assessment of the current status of the individual receivables and after using reasonable collection efforts. The allowance for doubtful accounts as of June 30, 2020 and December 31, 2019 was zero. Inventories Inventories, consisting solely of finished goods, are stated at the lower of cost (first-in, first-out method) or net realizable value (“NRV”). If necessary, the Company provides allowances to adjust the carrying value of its inventories to NRV when NRV is below cost. Revenue Recognition Revenue from sales of products is recognized when the related performance obligation is satisfied. The Company’s performance obligation is satisfied upon the shipment or delivery of products to customers. The Company’s products are sold on cash and credit terms which are established in accordance with standardized industry practices and typically require payment within 30 days of delivery. Costs incurred for sales incentives and discounts are accounted for as reductions in revenue. Deductions from Revenue Costs incurred for sales incentives and discounts are accounted for as reductions in revenue. These costs include payments to customers for performing merchandising activities on our behalf, including in store displays, promotions for new items and obtaining optimum shelf space. Shipping and Handling Costs Shipping and handling costs incurred to move finished goods from our sales distribution centers to customer locations are included in the line Selling, General and Administrative Expenses in our Statements of Operations. Net Income/(Loss) Per Common Share The Company computes per share amounts in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 260, “Earnings per Share”. The following potentially dilutive securities have been excluded from the computation of weighted average shares outstanding as they would have had an anti-dilutive impact on the Company’s net income/(loss) per common share: As of June 30, Issued To Expiration Date No. of Days to Expiration Exercise Price 2020 2019 Shares underlying options outstanding GLENN SIMPSON Apr 6, 2022 645 $ 0.16 505,608 901,796 Shares underlying warrants outstanding WYATTS TORCH Aug 19, 2020 50 $ 0.40 1,500,000 1,500,000 Total 2,005,608 2,401,796 Income Taxes The Company provides for income taxes using the asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company recognizes interest and penalties related to income tax matters in income tax expense. As of June 30, 2020 and December 31, 2019, the Company had no accrued interest or penalties. The Company has had no Federal or State tax examinations in the past nor does it have any at the current time. As of June 30, 2020 and December 31, 2019, the Company had Net Operating Loss Carryforwards of approximately $4,660,000 and $4,700,000, respectively, and Deferred Tax Assets amounting to approximately $1,330,000 and $1,320,000, respectively, which have been fully reserved by valuation allowances. The Company does not expect any significant reversals in the valuation allowance within the next twelve months. Stock-Based Compensation The Company accounts for equity based transactions under the provisions of ASC Topic 718, “ Accounting for Stock-Based Compensation”. Share based payment awards are measured at the month-end volume weighted average price (VWAP) of the equity instrument that an entity is obligated to issue when the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied. Fair value of financial instruments The carrying amounts of financial instruments, which include cash, accounts receivable, accounts payable and accrued expense, approximate their fair values due to their short-term nature. Recent Accounting Pronouncements In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 3 – COMMITMENTS AND CONTINGENCIES The global coronavirus (COVID-19) pandemic has caused disruptions in supply chains, affecting production and sales across a range of industries. While this disruption is currently expected to be temporary, there is considerable uncertainty around the duration. The extent of the impact of COVID-19 on our operational and financial performance will depend on the effect on our customers and vendors – all of which are uncertain and cannot be predicted. The related financial impact cannot be reasonably estimated at this time. Employment Agreements On April 6, 2017, the Company entered into an Amended and Restated Employment Agreement with Mr. Glenn Simpson (the “Simpson Agreement”), the Company’s Chairman and Chief Executive Officer (the “CEO”). The Simpson Agreement was effective April 1, 2017 and has an eight year term. Pursuant to the Simpson Agreement dated April 6, 2017, Mr. Simpson will be paid a salary of $5,000 per month in cash and the right to receive 67,000 shares of restricted Common Stock per month. Pursuant to his employment agreement, Mr. Simpson is entitled to a salary of not less than $18,500 per month. Additionally, Mr. Simpson is entitled to an annual bonus comprised of cash and Common Stock based on the achievement of performance goals established by the Board of Directors of the Company and set forth in the Simpson Agreement. The cash bonus is established at $44,400 per year. The stock bonus is set at 200,000 shares of Common Stock per year through May 31, 2025 based upon achieving revenue performance goals. The revenue goals range from $900,000 to $19,200,000 per year. The bonus awards are accelerated when revenues exceed the annual target amounts. During the six months ended June 30, 2020, the CEO was issued 402,000 Restricted and Non-Trading shares of Common Stock under the terms of the Simpson Agreement for the stock portion of his first and second quarter compensation. During the first quarter of 2020 and for the first and second quarters of 2019, Mr. Simpson did not receive cash payments. Mr. Simpson received cash payments for the second quarter of 2020. He was owed $5,000 and $10,000 as of June 30, 2020 and December 31, 2019, respectively, for the cash portion of his salary. The “Simpson Agreement” is the only executive employment agreement in effect as of June 30, 2020. The Company has no other plans in place and has never maintained any plans that provide for the payment of retirement benefits or benefits that will be paid primarily following retirement including, but not limited to, tax qualified deferred benefit plans, supplemental executive retirement plans, tax-qualified deferred contribution plans and nonqualified deferred contribution plans. Lease Commitment The Company maintains office space in Jersey City, NJ. The initial lease agreement was for the period March 1, 2019 to February 29, 2020 and was renewed for one year under the same terms. In April 2020, the Company was given a 50% discount on the rent for April and May 2020 as well as an optional lease extension for an additional three months under the same terms. The base rent under this agreement is $2,343 per month, and expires May 31, 2021. Lease expense amounted to $4,686 and $6,912 for the six months ended June 30, 2020 and 2019 respectively. The security deposit for the lease agreement is $4,518 and the lease expires on May 31, 2021. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | NOTE 4 – STOCKHOLDERS’ EQUITY The Company has authorized 190,000,000 shares of Common Stock having a par value of $0.001. On February 4, 2019, the Company by a vote of its majority shareholders cancelled the authorization for the issuance of up to 10,000,000 shares of preferred stock. There were no shares of preferred stock issued or outstanding prior to this change. Common Stock outstanding at June 30, 2020 and December 31, 2019 includes a total of 367,204 restricted shares issued in certificate form to a former consultant which were ordered cancelled during 2014. Such shares cannot be cancelled until the physical shares are surrendered to the Company or the Company’s designee and are not otherwise transferable by the holder. Restricted Stock Issuances During the six months ended June 30, 2020, 598,250 shares of Restricted and Non-Trading Common Stock were issued to Directors and Officers of the Company. These shares have full voting rights but are restricted for sale or transfer. The CEO exercised options to purchase 156,250 shares at $0.16 per share for a total exercise price of $25,000 which reduced the accrued salary payable to the CEO by the same amount. The CEO was also issued 402,000 shares of Restricted and Non-Trading Common Stock for the stock portion of his salary for the first and second quarter. A Director was issued 40,000 shares of Common stock as an award for continuing to serve as a Director of the Company. The value of these shares was recorded as a component of compensation expense. Stock Warrants In connection with private placement offerings in March 2014 (the “2014 Offerings”), warrants to purchase 2,030,223 shares of Common Stock were issued at a price of $0.91 per share. These warrants expired on March 12, 2019. In connection with a private placement offering in August 2015 (the “2015 Offerings), warrants to purchase 1,500,000 shares of Common Stock were issued at a price of $0.40 per share. These warrants will expire on August 19, 2020. The following table summarizes warrant activity during the period: Issued To Expiration Date No. of Days to Expiration Exercise Price Options Issued August 19, 2015 WYATTS TORCH Aug 19, 2020 1,828 $ 0.40 1,500,000 Outstanding, June 30, 2020 WYATTS TORCH Aug 19, 2020 50 $ 0.40 1,500,000 Exercisable, June 30, 2020 WYATTS TORCH Aug 19, 2020 50 $ 0.40 1,500,000 Stock Purchased for Cancellation On January 23, 2020 the Company purchased 25,000 shares of its restricted common stock from one shareholder for cancellation. The Company paid $5,250 or $0.21 per share which was the average market price for its traded shares during the period. The shares were cancelled and are available for reissuance. |
Stock Options
Stock Options | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock Options | NOTE 5 – STOCK OPTIONS On April 6, 2017, the Company granted stock options to purchase 356,559 shares and 1,500,000 shares of Common Stock pursuant to the 2012 Incentive Plan and the 2015 Incentive Plan, respectively. The options were priced at the fair market value of the Common Stock and are immediately exercisable. 2012 Incentive Plan On February 18, 2019, the Company’s Board of Directors signed an unanimous consent to terminate the 2012 Incentive Plan, and it was resolved further that 70,000 options to purchase shares of Common Stock be converted into 70,000 shares of Common Stock. It also consented the CEO of the Company to exercise options to purchase 222,000 Restricted and Non-Trading shares of Common Stock at $0.255 per share. The total exercise price was $56,610 and this reduced the loan payable to the CEO by the same amount. The 2012 Incentive Plan was approved by our shareholders in March 2013. The 2012 Incentive Plan provided the Company with the ability to issue stock options, stock appreciation rights, restricted stock and/or other stock-based awards for up to an aggregate of 2,050,000 shares of common stock. In 2016, the Company issued 620,000 stock options to purchase shares of common stock that expire in August 2019, and issued 1,073,441, restricted common stock to its Directors and employees. In 2017, the Company granted stock options to purchase 356,559 shares that expire in April 2022. The options were priced at the fair market value of the Common Stock and are exercisable. In 2018, there were no issuances under the 2012 plan. As of December 31, 2018, issued stock options total 976,559. During 2018, 495,403 stock options had been cancelled due to termination of employment and were available for reissuance at that time. There are no options outstanding from this plan as of June 30, 2020 and December 31, 2019. 2015 Incentive Plan The 2015 Incentive Plan was terminated by the Board of Directors on January 24, 2019. The 2015 Incentive Plan provided the Company with the ability to issue stock options, stock awards and/or restricted stock purchase offers for up to an aggregate of 1,500,000 shares of Common Stock. The Company approved the 2015 Incentive Plan in October 2015. The 2015 Incentive Plan provided the Company with the ability to issue stock options, stock awards and/or restricted stock purchase offers for up to an aggregate of 1,500,000 shares of Common Stock. In April, 2017, the Company granted stock options to purchase 1,500,000 shares of Common Stock pursuant to the 2015 Plan. The options were priced at the fair market value of the Common Stock and were exercisable from the date of issuance. In 2018, there were no issuances under the 2015 plan. As of December 31, 2018, issued stock options total 1,500,000. During 2018, 693,610 stock options had been cancelled due to termination of employment and were available for reissuance at that time. There are 505,609 options outstanding from this plan as of June 30, 2020, and 661,858 options outstanding as of December 31, 2019. Stock Option Activity During February 2019, two of the Company’s Directors surrendered 70,000 stock options and were issued 70,000 shares of Common Stock in exchange. The CEO of the Company was also issued 222,000 Restricted and Non-Trading shares of Common Stock. On August 13, 2019, the Company’s Board of Directors consented the CEO to exercise options to purchase 93,750 Restricted and Non-Trading shares at $0.16 per share. The total exercise value of $15,000 was reduced the loan payable to the CEO to $0. On November 1, 2019, the Company’s Board of Directors consented the CEO to exercise options to purchase 239,938 Restricted and Non-Trading shares at $0.16 per share. The total exercise value of $38,390 was reduced the accrued salary payable to the CEO by the same amount. As of December 31, 2019, there are 661,858 options outstanding that were issued to Glenn Simpson. The exercise price is $0.16. On January 14, 2020 the Company’s Board of Directors consented the CEO to exercise options to purchase 93,750 Restricted and Non-trading shares at $0.16 per share. The total exercise value of $15,000 was reduced the accrued salary payable to the CEO by the same amount. On March 6, 2020 the Company’s Board of Directors consented the CEO to exercise options to purchase 62,500 Restricted and Non-Trading shares at $0.16 per share. The total exercise value was $10,000 and this reduced the accrued salary payable to the CEO to $0. The following table summarizes stock option activity under the Plans: Issued To Expiration Date No. of Days to Expiration Exercise Price Options Outstanding, December 31, 2019 GLENN SIMPSON 4/6/2022 827 $ 0.16 661,858 Exercised GLENN SIMPSON 4/6/2022 736 $ 0.16 (156,250 ) Outstanding, June 30, 2020 GLENN SIMPSON 4/6/2022 645 $ 0.16 505,608 Exercisable, June 30, 2020 GLENN SIMPSON 4/6/2022 645 $ 0.16 505,608 During the six months ended June 30, 2020 and 2019, compensation expense related to stock options was $0. As of June 30, 2020, there was no unrecognized compensation cost related to non-vested stock options. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 6 – RELATED PARTY TRANSACTIONS On January 14, 2020 the CEO of the Company exercised 93,750 stock options at an exercise price of $0.16. The Company issued 93,750 Restricted and Non-Trading shares of Common Stock, and the accrued payroll owed to him was reduced by $15,000. On March 12, 2020 the $10,000 accrued salary balance was used to pay for an option exercise made by the CEO of the Company. As a result of the transaction, the Company issued 62,500 Restricted and Non-Trading shares of Common Stock to the CEO and the accrued payroll then owed to the CEO was reduced to $0. As of June 30, 2020, accrued payroll of $14,135 was owed to the CEO and the Controller of the Company. |
Sba Loans Cares Act
Sba Loans Cares Act | 6 Months Ended |
Jun. 30, 2020 | |
Sba Loans Cares Act | |
Sba Loans Cares Act | NOTE 7 – SBA LOANS “CARES ACT” On May 5, 2020, the Company received loan proceeds in the amount of $35,508 under the Paycheck Protection Program (“PPP”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are forgivable after eight weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the eight-week period. If there were an unforgiven portion of the PPP loan, it would be payable over a period of up to two years at an interest rate of 1%, with a deferral of payments for the first six months. The Company’s use of the proceeds is consistent with the PPP. The Company believes that its use of the loan proceeds has met the criteria for forgiveness of the loan. The Company believes that the loan will be forgiven on November 1, 2020 or sooner in accordance with the guidance from the PPP. On May 27, 2020, the Company received grant proceeds in the amount of $2,000 under the Economic Injury Disaster Loan (“EIDL”) Program. The EIDL program was created to assist businesses, renters and homeowners located in regions affected by declared disasters. The Company applied for the EIDL Emergency Advance which provides $1,000 per employee up to a maximum of $10,000. The EIDL Advances are 100% forgivable as long as it is used for providing sick leave benefits to employees, maintaining payroll to retain employees, payments on mortgage, rent and utilities, increased costs to obtain materials from the applicants original source due to interrupted supply chains, and repaying obligations that cannot be met due to revenue losses. The Company’s use of the advance has met the criteria for forgiveness of the advance. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The financial statements are prepared in conformity with GAAP. Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash equivalents include investment instruments and time deposits purchased with a maturity of three months or less. On June 30, 2020 and December 31, 2019, the Company did not have any cash equivalents. |
Accounts Receivable | Accounts Receivable Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company provides for probable uncollectible amounts based upon its assessment of the current status of the individual receivables and after using reasonable collection efforts. The allowance for doubtful accounts as of June 30, 2020 and December 31, 2019 was zero. |
Inventories | Inventories Inventories, consisting solely of finished goods, are stated at the lower of cost (first-in, first-out method) or net realizable value (“NRV”). If necessary, the Company provides allowances to adjust the carrying value of its inventories to NRV when NRV is below cost. |
Revenue Recognition | Revenue Recognition Revenue from sales of products is recognized when the related performance obligation is satisfied. The Company’s performance obligation is satisfied upon the shipment or delivery of products to customers. The Company’s products are sold on cash and credit terms which are established in accordance with standardized industry practices and typically require payment within 30 days of delivery. Costs incurred for sales incentives and discounts are accounted for as reductions in revenue. |
Deductions from Revenue | Deductions from Revenue Costs incurred for sales incentives and discounts are accounted for as reductions in revenue. These costs include payments to customers for performing merchandising activities on our behalf, including in store displays, promotions for new items and obtaining optimum shelf space. |
Shipping and Handling Costs | Shipping and Handling Costs Shipping and handling costs incurred to move finished goods from our sales distribution centers to customer locations are included in the line Selling, General and Administrative Expenses in our Statements of Operations. |
Net Income/(Loss) Per Common Share | Net Income/(Loss) Per Common Share The Company computes per share amounts in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 260, “Earnings per Share”. The following potentially dilutive securities have been excluded from the computation of weighted average shares outstanding as they would have had an anti-dilutive impact on the Company’s net income/(loss) per common share: As of June 30, Issued To Expiration Date No. of Days to Expiration Exercise Price 2020 2019 Shares underlying options outstanding GLENN SIMPSON Apr 6, 2022 645 $ 0.16 505,608 901,796 Shares underlying warrants outstanding WYATTS TORCH Aug 19, 2020 50 $ 0.40 1,500,000 1,500,000 Total 2,005,608 2,401,796 |
Income Taxes | Income Taxes The Company provides for income taxes using the asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company recognizes interest and penalties related to income tax matters in income tax expense. As of June 30, 2020 and December 31, 2019, the Company had no accrued interest or penalties. The Company has had no Federal or State tax examinations in the past nor does it have any at the current time. As of June 30, 2020 and December 31, 2019, the Company had Net Operating Loss Carryforwards of approximately $4,660,000 and $4,700,000, respectively, and Deferred Tax Assets amounting to approximately $1,330,000 and $1,320,000, respectively, which have been fully reserved by valuation allowances. The Company does not expect any significant reversals in the valuation allowance within the next twelve months. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for equity based transactions under the provisions of ASC Topic 718, “ Accounting for Stock-Based Compensation”. Share based payment awards are measured at the month-end volume weighted average price (VWAP) of the equity instrument that an entity is obligated to issue when the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied. |
Fair value of financial instruments | Fair value of financial instruments The carrying amounts of financial instruments, which include cash, accounts receivable, accounts payable and accrued expense, approximate their fair values due to their short-term nature. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule Of Antidilutive Securities Excluded From Computation Of Earnings Per Share | The following potentially dilutive securities have been excluded from the computation of weighted average shares outstanding as they would have had an anti-dilutive impact on the Company’s net income/(loss) per common share: As of June 30, Issued To Expiration Date No. of Days to Expiration Exercise Price 2020 2019 Shares underlying options outstanding GLENN SIMPSON Apr 6, 2022 645 $ 0.16 505,608 901,796 Shares underlying warrants outstanding WYATTS TORCH Aug 19, 2020 50 $ 0.40 1,500,000 1,500,000 Total 2,005,608 2,401,796 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
Schedule Of Stockholders Equity Note Warrants Or Rights | The following table summarizes warrant activity during the period: Issued To Expiration Date No. of Days to Expiration Exercise Price Options Issued August 19, 2015 WYATTS TORCH Aug 19, 2020 1,828 $ 0.40 1,500,000 Outstanding, June 30, 2020 WYATTS TORCH Aug 19, 2020 50 $ 0.40 1,500,000 Exercisable, June 30, 2020 WYATTS TORCH Aug 19, 2020 50 $ 0.40 1,500,000 |
Stock Options (Tables)
Stock Options (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock Options Activity | The following table summarizes stock option activity under the Plans: Issued To Expiration Date No. of Days to Expiration Exercise Price Options Outstanding, December 31, 2019 GLENN SIMPSON 4/6/2022 827 $ 0.16 661,858 Exercised GLENN SIMPSON 4/6/2022 736 $ 0.16 (156,250 ) Outstanding, June 30, 2020 GLENN SIMPSON 4/6/2022 645 $ 0.16 505,608 Exercisable, June 30, 2020 GLENN SIMPSON 4/6/2022 645 $ 0.16 505,608 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Antidilutive Securities Excluded From Computation Of Earnings Per Share (Details) - $ / shares | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Number of securities | 2,005,608 | 2,401,796 |
Stock Options | Glenn Simpson | ||
Expiration Date | Apr. 6, 2022 | |
Number of securities | 901,796 | |
Stock Options | Glenin Simpson | ||
No. of Days to Expiration | 645 days | |
Exercise Price | $ 0.16 | |
Number of securities | 505,608 | |
Warrants | Wyatts Torch | ||
Expiration Date | Aug. 19, 2020 | |
No. of Days to Expiration | 50 days | |
Exercise Price | $ 0.40 | |
Number of securities | 1,500,000 | 1,500,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||
Cash equivalents | $ 0 | $ 0 |
Allowance for doubtful accounts | 0 | 0 |
Net Operating Loss Carryforward | 4,660,000 | 4,700,000 |
Allowance for Deferred Tax Assets | $ 1,330,000 | $ 1,320,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Mar. 12, 2020 | Dec. 31, 2019 | |
Monthly office fee | $ 2,343 | |||
Lease expense | 4,686 | $ 6,912 | ||
Security deposit | $ 4,518 | $ 4,518 | ||
Lease expiration date | May 31, 2021 | |||
Discount on rent | 50.00% | |||
CEO | ||||
Employment Agreement terms | Pursuant to the Simpson Agreement dated April 6, 2017, Mr. Simpson will be paid a salary of $5,000 per month in cash and the right to receive 67,000 shares of restricted Common Stock per month. Pursuant to his employment agreement, Mr. Simpson is entitled to a salary of not less than $18,500 per month. Additionally, Mr. Simpson is entitled to an annual bonus comprised of cash and Common Stock based on the achievement of performance goals established by the Board of Directors of the Company and set forth in the Simpson Agreement. The cash bonus is established at $44,400 per year. The stock bonus is set at 200,000 shares of Common Stock per year through May 31, 2025 based upon achieving revenue performance goals. The revenue goals range from $900,000 to $19,200,000 per year. The bonus awards are accelerated when revenues exceed the annual target amounts. | |||
Common stock issued | 402,000 | |||
Accrued salary | $ 5,000 | $ 10,000 | $ 10,000 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule Of Stockholders Equity Note Warrants Or Rights (Details) - Warrants - Wyatts Torch | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Warrnts issued Expiration Date | Aug. 19, 2020 |
Warrants Outstanding at end Expiration Date | Aug. 19, 2020 |
Warrants Exercisable Expiration Date | Aug. 19, 2020 |
Warrnts issued, No. of Days to Expiration | 1828 days |
Warrants Outstanding, No. of Days to Expiration | 50 days |
Warrants Exercisable, No. of Days to Expiration | 50 days |
Warrnts issued, Exercise Price | $ / shares | $ .40 |
Warrants Outstanding, Exercise Price | $ / shares | 0.40 |
Warrants Exercisable, Exercise Price | $ / shares | $ 0.40 |
Warrnts issued | shares | 1,500,000 |
Warrants Outstanding at end | shares | 1,500,000 |
Warrants Exercisable | shares | 1,500,000 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Mar. 12, 2020 | Jan. 14, 2020 | Nov. 01, 2019 | Aug. 13, 2019 | Jan. 23, 2020 | Feb. 18, 2019 | Jun. 30, 2020 | Dec. 31, 2019 |
Common Stock, Shares Authorized | 190,000,000 | 190,000,000 | ||||||
Common Stock, Par or Stated Value Per Share (in Dollars per share) | $ 0.001 | $ 0.001 | ||||||
Common stock description | Common Stock outstanding at June 30, 2020 and December 31, 2019 includes a total of 367,204 restricted shares issued in certificate form to a former consultant which were ordered cancelled during 2014. Such shares cannot be cancelled until the physical shares are surrendered to the Company or the Company’s designee and are not otherwise transferable by the holder | |||||||
Stock option exercised, value | $ 15,000 | |||||||
Stock repurchased and cancelled, shares | (25,000) | |||||||
Value of stock repurchased | $ 5,250 | |||||||
March 2014 Private Placement | ||||||||
Warrants issued | 2,030,223 | |||||||
Exercise price, per share | $ 0.91 | |||||||
Warrants expiration date | Mar. 12, 2019 | |||||||
August 2015 Private Placement | ||||||||
Warrants issued | 1,500,000 | |||||||
Exercise price, per share | $ 0.40 | |||||||
Warrants expiration date | Aug. 19, 2020 | |||||||
Directors | ||||||||
Common stock issued | 598,250 | |||||||
Stock option exercised, value | $ 38,390 | |||||||
CEO | ||||||||
Exercise price, per share | $ 0.16 | $ 0.16 | $ 0.255 | $ 0.16 | ||||
Common stock issued | 402,000 | |||||||
Stock option exercised, shares | 156,250 | |||||||
Stock option exercised, value | $ 10,000 | $ 15,000 | $ 56,610 | $ 25,000 | ||||
Stock issued for compensation | 40,000 |
Stock Options - Stock Option Ac
Stock Options - Stock Option Activity (Details) - Glenn Simpson - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Stock Optiones Exercisable. Weighted Average Exercise Price | $ 0.16 | |
Stock Optiones Exercisable | 661,858 | |
Stock Options | ||
Stock Options Outstanding, Expiration Date | Apr. 6, 2022 | |
Stock Options Exercised, Expiration Date | Apr. 6, 2022 | |
Stock Options Exercisable, Expiration Date | Apr. 6, 2022 | |
Stock Options Outstanding, Weighted Average Remaing Contractual Term | 645 days | 827 days |
Stock Optiones Exercised | 736 days | |
Stock Optiones Exercisable, Weighted Average Remaining Contractual Term | 645 days | |
Stock Options Exercised, Weighted Average Exercise Price | $ 0.16 | |
Stock Options Outstanding at end, Weighted Average Exercise Price | 0.16 | |
Stock Optiones Exercisable. Weighted Average Exercise Price | $ 0.16 | |
Stock Options Exercised | (156,250) | |
Stock Options Outstanding at beginning | 505,608 | |
Stock Optiones Exercisable | 505,608 |
Stock Options (Details Narrativ
Stock Options (Details Narrative) - USD ($) | Mar. 12, 2020 | Jan. 14, 2020 | Nov. 01, 2019 | Aug. 13, 2019 | Feb. 28, 2019 | Feb. 18, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2017 | Apr. 06, 2017 | Dec. 31, 2016 | Oct. 31, 2015 | Dec. 31, 2013 |
Compensation expense | $ 0 | $ 0 | |||||||||||||
Unrecognized compensation cost | $ 0 | ||||||||||||||
Options converted | 70,000 | ||||||||||||||
Common stock issued upon conversion of options | 70,000 | ||||||||||||||
Options exercised | 93,750 | ||||||||||||||
Stock option exercised, value | $ 15,000 | ||||||||||||||
Directors | |||||||||||||||
Warrants issued | 1,073,441 | ||||||||||||||
CEO | |||||||||||||||
Exercise price, per share | $ 0.16 | $ 0.16 | $ 0.255 | $ 0.16 | |||||||||||
Options exercised | 62,500 | 93,750 | 222,000 | ||||||||||||
Stock Options Exercisable | 222,000 | ||||||||||||||
Stock option exercised, value | $ 10,000 | $ 15,000 | $ 56,610 | $ 25,000 | |||||||||||
Reduction in accrued payroll | $ 0 | $ 15,000 | |||||||||||||
Directors | |||||||||||||||
Options converted | 70,000 | ||||||||||||||
Common stock issued upon conversion of options | 70,000 | ||||||||||||||
Options exercised | 239,938 | ||||||||||||||
Stock option exercised, value | $ 38,390 | ||||||||||||||
Stock Options Exercisable. Weighted Average Exercise Price | $ 0.1 | $ 0.16 | |||||||||||||
Glenn Simpson | |||||||||||||||
Stock Options Exercisable | 661,858 | ||||||||||||||
Stock Options Exercisable. Weighted Average Exercise Price | $ 0.16 | ||||||||||||||
Employee Stock Option | Long Term Incentive Equity Plan 2015 | |||||||||||||||
Stock Options granted | 1,500,000 | 1,500,000 | |||||||||||||
Stock options cancelled | 693,610 | ||||||||||||||
Stock options available to be issued | 693,610 | ||||||||||||||
Stock Options Outstanding | 505,609 | 661,858 | |||||||||||||
Employee Stock Option | Long Term Incentive Equity Plan 2012 | |||||||||||||||
Stock Options granted | 356,559 | 2,050,000 | |||||||||||||
Warrants issued | 976,559 | 356,559 | 620,000 | ||||||||||||
Stock options cancelled | 495,403 | ||||||||||||||
Stock options available to be issued | 495,403 | ||||||||||||||
Stock Options Outstanding | 0 | 0 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | Mar. 12, 2020 | Jan. 14, 2020 | Aug. 13, 2019 | Feb. 28, 2019 | Jun. 30, 2020 | Dec. 31, 2019 |
Options exercised | 93,750 | |||||
Accrued Payroll | $ 125,413 | $ 140,854 | ||||
CEO | ||||||
Options exercised | 62,500 | 93,750 | 222,000 | |||
Options exercised, par value | $ 0.16 | |||||
Reduction in accrued payroll | $ 0 | $ 15,000 | ||||
Accrued Payroll | 14,135 | |||||
Accrued salary | $ 10,000 | $ 5,000 | $ 10,000 |
Sba Loans Cares Act (Details Na
Sba Loans Cares Act (Details Narrative) - USD ($) | May 05, 2020 | May 27, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
Sba Loans Cares Act Details Narrative Abstract | ||||
SBA Loans under Paycheck Protection Program | $ 35,508 | $ 35,508 | $ 0 | |
Amount received under EDIL | $ 2,000 | |||
Emergency advance description | The Company applied for the EIDL Emergency Advance which provides $1,000 per employee up to a maximum of $10,000. | |||
Interest rate | 1.00% | |||
Term | 2 years |