Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 08, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | BARFRESH FOOD GROUP INC. | |
Entity Central Index Key | 1,487,197 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 120,756,547 | |
Trading Symbol | BRFH | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,018 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash | $ 853,868 | $ 1,304,916 |
Accounts Receivable | 486,318 | 301,012 |
Inventory | 1,418,321 | 1,415,495 |
Prepaid expenses and other current assets | 42,895 | 24,496 |
Total current assets | 2,801,402 | 3,045,919 |
Property, plant and equipment, net of depreciation | 2,170,924 | 1,760,890 |
Intangible asset, net of amortization | 561,200 | 586,943 |
Deposits | 39,369 | 39,369 |
Total Assets | 5,572,895 | 5,433,121 |
Current liabilities: | ||
Accounts payable | 598,922 | 421,176 |
Accrued expenses | 1,105,110 | 849,529 |
Deferred rent liability | 495 | |
Notes Payable | 250,000 | |
Total current liabilities | 1,954,032 | 1,271,200 |
Long term liabilities: | ||
Accrued Interest | 78,672 | |
Convertible note - related party, net of discount | 590,665 | |
Convertible note, net of discount | 1,261,952 | |
Derivative Liabilities | 886,883 | |
Total liabilities | 4,772,204 | 1,271,200 |
Commitments and contingencies (Note 8) | ||
Stockholders' equity: | ||
Preferred stock, $0.000001 par value, 5,000,000 shares authorized, none issued or outstanding | ||
Common stock, $0.000001 par value; 300,000,000 shares authorized; 119,572,513 and 118,690,527 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively | 120 | 119 |
Additional paid in capital | 38,785,245 | 37,992,799 |
Accumulated deficit | (37,984,674) | (33,830,997) |
Total stockholders' equity | 800,691 | 4,161,921 |
Total Liabilities and Stockholders' Equity | $ 5,572,895 | $ 5,433,121 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.000001 | $ 0.000001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.000001 | $ 0.000001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 119,572,513 | 118,690,527 |
Common stock, shares outstanding | 119,572,513 | 118,690,527 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Statement [Abstract] | ||||
Revenue | $ 1,086,166 | $ 628,997 | $ 1,709,237 | $ 941,167 |
Cost of revenue | 519,688 | 306,877 | 798,154 | 488,526 |
Gross profit | 566,478 | 322,120 | 911,083 | 452,641 |
Operating expenses: | ||||
General and administrative | 2,229,262 | 2,403,293 | 4,323,925 | 4,836,823 |
Depreciation and Amortization | 149,623 | 76,570 | 262,090 | 132,601 |
Total operating expenses | 2,378,885 | 2,479,863 | 4,586,015 | 4,969,424 |
Operating loss | (1,812,407) | (2,157,743) | (3,674,932) | (4,516,783) |
Other (income)/expenses | ||||
(Gain)/loss from derivative liability | (196,841) | 247,896 | ||
Interest | 199,220 | 230,096 | ||
Total other expense | 2,379 | 477,992 | ||
Net (loss) | $ (1,814,786) | $ (2,157,743) | $ (4,152,924) | $ (4,516,783) |
Per share information - basic and fully diluted: | ||||
Weighted average shares outstanding | 119,009,293 | 117,732,465 | 118,845,319 | 117,493,592 |
Net (loss) per share | $ (0.02) | $ (0.02) | $ (0.03) | $ (0.04) |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Statement of Cash Flows [Abstract] | ||
Net Cash (used for) Operating Activities | $ (2,732,466) | $ (3,293,056) |
Investing Activities | ||
Purchase of property and equipment | (678,287) | (219,655) |
Proceeds from sale of equipment | 37,968 | |
Purchase of Intangibles | (6,062) | (5,434) |
Net Cash (used for) Investing Activities | (646,381) | (225,089) |
Financing Activities | ||
Exercise of Warrant | 35,400 | |
Issuance of short term notes | 250,000 | |
Issuance costs of convertible notes | (27,001) | |
Issuance of convertible notes | 2,704,800 | |
Repayment of long term debt | (1,920) | |
Net Cash from Financing Activities | 2,927,799 | 33,480 |
Net Change in Cash and Cash Equivalents | (451,048) | (3,484,665) |
Cash and Cash Equivalents, Beginning of Year | 1,304,916 | 9,180,947 |
Cash and Cash Equivalents, End of Year | 853,868 | 5,696,282 |
Non Cash | ||
Discount on convertible notes (warrants & derivative) | $ 966,989 |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Note 1. Basis of Presentation and Significant Accounting Policies Throughout this report, the terms “our”, “we”, “us” and the “Company” refer to Barfresh Food Group Inc., including its subsidiaries. The accompanying unaudited condensed consolidated financial statements of Barfresh Food Group Inc. at June 30, 2018 and December 31, 2017 have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial statements, instructions to Form 10-Q, and Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2017. In management’s opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation to make our financial statements not misleading have been included. The results of operations for the periods ended June 30, 2018 and 2017 presented are not necessarily indicative of the results to be expected for the full year. The December 31, 2017 balance sheet has been derived from our audited financial statements included in our annual report on Form 10-K for the year ended December 31, 2017. Basis of Consolidation The condensed consolidated financial statements include the financial statements of the Company and our wholly owned subsidiaries Barfresh Inc. and Barfresh Corporation, Inc. Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues and expenses during the years reported. Actual results may differ from these estimates. Concentration of Credit Risk The amount of cash on deposit with financial institutions exceeds the $250,000 federally insured limit at June 30, 2018 and December 31, 2017. However, we believe that the financial institution where the cash on deposit that exceeds $250,000 is financially sound and the risk of loss is minimal. Fair Value Measurement Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange. Level 2 - Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs. Level 3 - Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights. Our financial instruments consist of cash, accounts receivable, accounts payable, accrued expenses, notes payable, convertible notes and derivative liabilities. The carrying value of our financial instruments approximates fair value, except for the derivative liability in which carrying value is fair value. Inventory Inventory consists of finished goods and is carried at the lower of cost or net realizable value on a first in first out basis. Intangible Assets Intangible assets are comprised of patents, net of amortization, and trademarks. The patent costs are being amortized over the life of the patents, which is twenty years from the date of filing the patent applications. In accordance with ASC Topic 350 Intangibles - Goodwill and Other Property, Plant and Equipment Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment loss, if any. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements are being amortized over the shorter of the useful life of the asset or the lease term that includes any expected renewal periods deemed to be reasonably assured. The estimated useful lives used for financial statement purposes are: Furniture and fixtures: 5 years Equipment: 7 years Leasehold improvements: 2 years Vehicle: 5 years Revenue Recognition In accordance with ASC 606, Revenue from Contracts with Customers, revenue is recognized when a customer obtains ownership of promised goods. The Company adopted this standard at the beginning of fiscal year 2018, with no significant impact to its financial position or results of operations, using the modified retrospective method. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods. The Company applies the following five steps: 1) Identify the contract with a customer A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for goods or services that are transferred is probable. For the Company, the contract is the approved sales order, which may also be supplemented by other agreements that formalize various terms and conditions with customers. 2) Identify the performance obligation in the contract Performance obligations promised in a contract are identified based on the goods or that will be transferred to the customer. For the Company, this consists of the delivery of frozen beverages, which provide immediate benefit to the customer. 3) Determine the transaction price The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods, and is generally stated on the approved sales order. Variable consideration, which typically includes volume-based rebates or discounts, are estimated utilizing the most likely amount method. 4) Allocate the transaction price to performance obligations in the contract 5) Recognize Revenue when or as the Company satisfies a performance obligation The Company recognizes revenue from the sale of frozen beverages when title and risk of loss passes and the customer accepts the goods, which generally occurs at delivery. Customer sales incentives such as volume-based rebates or discounts are treated as a reduction of sales at the time the sale is recognized. Shipping and handling costs are treated as fulfillment costs and presented in distribution, selling and administrative costs. The company evaluated the requirement to disaggregate revenue, and concluded that substantially all of its revenue comes from a single product, frozen beverages. Earnings per Share We calculate net loss per share in accordance with ASC Topic 260, Earnings per Share Research and Development Expenditures for research activities relating to product development and improvement are charged to expense as incurred. We incurred $153,329 and $226,002 for the three-month periods ended June 30, 2018 and 2017, respectively, and $343,670 and $340,603 for the six-month periods ended June 30, 2018 and 2017, respectively. Rent Expense We recognize rent expense on a straight-line basis over the reasonably assured lease term as defined in ASC Topic 840, Leases Derivative Liability The Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.” The result of this accounting treatment is that the fair value of any derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as gain/loss from derivative liability. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. We analyzed the derivative financial instruments in accordance with ASC 815. The objective is to provide guidance for determining whether an equity-linked financial instrument is indexed to an entity’s own stock. This determination is needed for a scope exception which would enable a derivative instrument to be accounted for under the accrual method. The classification of a non-derivative instrument that falls within the scope of ASC 815-40-05 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” also hinges on whether the instrument is indexed to an entity’s own stock. A non-derivative instrument that is not indexed to an entity’s own stock cannot be classified as equity and must be accounted for as a liability. There is a two-step approach in determining whether an instrument or embedded feature is indexed to an entity’s own stock. First, the instrument’s contingent exercise provisions, if any, must be evaluated, followed by an evaluation of the instrument’s settlement provisions. The Company utilized the fair value standard set forth by the Financial Accounting Standards Board, defined as the amount at which the assets (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation sale. Recent pronouncements From time to time, new accounting pronouncements are issued that we adopt as of the specified effective date. We believe that the impact of recently issued standards not yet effective may have an impact on our results of operations and financial position. In February 2016, the FASB issued ASU No. 2016-02, Leases, to improve financial reporting about leasing transactions. This ASU will require organizations that lease assets (“lessees”) to recognize a lease liability and a right-of-use asset on its balance sheet for all leases with terms of more than twelve months. A lease liability is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis and a right-of-use asset represents the lessee’s right to use, or control use of, a specified asset for the lease term. The amendments in this ASU leaves the accounting for the organization that own the assets leased to the lessee (“lessor”) largely unchanged except for targeted improvements to align it with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. The Company is in the initial stages of evaluating the effect of the standard on our financial statements and continue to evaluate the available transition methods. However, based on our initial evaluation, we do not expect there to be material changes to both our current and long-term lease liabilities and our fixed assets of our limited number of operating leases that will be converted to financing leases under the new guidance. The Company does not plan to adopt the standard until the interim period ended March 31, 2019. |
Property Plant and Equipment
Property Plant and Equipment | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property Plant and Equipment | Note 2. Property Plant and Equipment Major classes of property and equipment at June 30, 2018 and December 31, 2017 consist of the following: 2018 2017 Furniture and fixtures $ 1,524 $ 1,524 Equipment 2,500,256 1,952,538 Leasehold Improvements 4,886 4,886 Vehicles 29,696 29,696 2,536,362 1,988,644 Less: accumulated depreciation (860,773 ) (665,657 ) 1,675,589 1,322,987 Equipment not yet placed in service 495,335 437,903 Property and equipment, net of depreciation $ 2,170,924 $ 1,760,890 We recorded depreciation expense related to these assets of $133,721 and $61,172 for the three-month periods ended June 30, 2018 and 2017, respectively and $230,285 and $101,804 for the six months ended June 30, 2018 and 2017, respectively. |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Note 3. Intangible Assets As of June 30, 2018, intangible assets consist of patent costs of $764,891, trademarks of $94,915 and accumulated amortization of $298,606. As of December 31, 2017, intangible assets consist of patent costs of $764,891, trademarks of $88,853 and accumulated amortization of $266,801. The amounts carried on the balance sheet represent cost to acquire, legal fees and similar costs relating to the patents incurred by the Company. Amortization is calculated through the expiration date of the patent, which is December 2025. The amount charged to expenses for amortization of the patent costs was $15,902 and $15,398 for the three months ended June 30, 2018 and 2017, respectively, and $31,805 and $30,797 for the six months ended June 30, 2018 and 2017, respectively. Estimated future amortization expense related to patents as of June 30, 2018, is as follows: Total Amortization Years ending December 31, 2018 31,805 2019 63,610 2020 63,610 2021 63,610 2022 63,610 Later years 180,040 $ 466,285 |
Related Parties
Related Parties | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Parties | Note 4. Related Parties As disclosed below in Note 6, members of management and directors invested in company’s convertible notes; and in Note 7, members of management and directors have received shares of stock and options in exchange for services. |
Short-Term Notes Payable
Short-Term Notes Payable | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Short-Term Notes Payable | Note 5. Short-Term Notes Payable In March 31, 2018, we closed an offering of $250,000 in a short-term note payable. The short-term note bear 12% interest per annum with an original maturity date in September 2018 which subsequent to June 30, 2018 was extended to December 31, 2018. |
Convertible Notes
Convertible Notes | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Convertible Notes | Note 6. Convertible Notes During the three months needed March 31, 2018, we closed an offering of $2,527,500 in convertible notes, of which, management, directors and significant shareholders have invested $810,000. The convertible notes bear 10% interest per annum and are due and payable on March 14, 2020. The notes are convertible at any time prior to the due date into our common stock at conversion price of $0.88 per share or 85% of the average closing price of the common stock over the twenty consecutive trading days immediately preceding the date of note holders’ election; but in no events lower than $0.60 per share. In addition, the interest is convertible at any time prior to the due dates into our common stock at conversion price of 85% of the average closing price of the common stock over the twenty consecutive trading days immediately preceding the date of note holders’ election; but in no event lower than $0.60 per share. There were 1,331,583 warrants issued, in conjunction with the convertible note offering. The fair value of the warrants, $0.17 per share ($220,548 in the aggregate), was calculated using the Black-Scholes option pricing model using the following assumptions. Expected life 3 Volatility 54.816 % Risk Fee interest rate 2.41 % Dividend yield (on common stock) - During the three months ended June 30, 2018, we offered investors in our March 2018 Convertible Note (“Series CN Notes”) the opportunity to accelerate the issuance of certain warrants associated with the CN Notes. Pursuant to the acceleration offer, Series CN Notes investors who invested an additional 10% to 20% of the Series CN Note amount, immediately received an additional 25% warrant coverage on their initial CN Note investment, which would otherwise have been issued after one year. During the current quarter we closed the CN Note acceleration offer in the amount of $177,300 in convertible notes, of which, management, directors and significant shareholders have invested $30,000. The CN Note acceleration offer convertible notes bear 10% interest per annum and are due and payable on March 14, 2020. The notes are convertible at any time prior to the due date into our common stock at conversion price of $0.88 per share or 85% of the average closing price of the common stock over the twenty consecutive trading days immediately preceding the date of note holders’ election; but in no events lower than $0.60 per share. In addition, the interest is convertible at any time prior to the due dates into our common stock at conversion price of 85% of the average closing price of the common stock over the twenty consecutive trading days immediately preceding the date of note holders’ election; but in no events lower than $0.60 per share. There were 937,373 warrants issued, in conjunction with the CN Note acceleration offer convertible note offering. The fair value of the warrants, $0.25 per share ($235,519 in the aggregate), was calculated using the Black-Scholes option pricing model using the following assumptions. Expected life 3 Volatility 55.49 % Risk Fee interest rate 2.45 % Dividend yield (on common stock) - The value of $105,199 was recorded as a debt discount related to the issuance of the warrants as using the fair value would cause the debt discount to exceed the gross proceeds received. June 30, 2018 Convertible notes $ 2,704,800 Less: Debt discount (warrant value) (325,747 ) Less: Debt discount (derivative value) (638,988 ) Less: Debt discount (issuance costs paid) (27,000 ) Add: Debt discount amortization 139,552 $ 1,852,617 |
Derivative Liabilities
Derivative Liabilities | 6 Months Ended |
Jun. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liabilities | Note 7. Derivative Liabilities As discussed in Note 6, Convertible Notes, during the current quarter the Company issued Series CN Note acceleration offer convertible notes payable that provide variable conversion provisions. The conversion terms of the convertible notes are variable based on certain factors, such as the future price of the Company’s common stock. The number of shares of common stock to be issued is based on the future price of the Company’s common stock, therefore the number of shares of common stock issuable upon conversion of the promissory note is indeterminate. The fair values of the Company’s derivative liabilities are estimated at the issuance date and are revalued at each subsequent reporting date. The Company recognized a current derivative liability of $569,587 at March 14, 2018 related to the Series CN Convertible notes and $69,400 at April 11, 2018 related to the Series CN Notes Warrant Acceleration. The derivative liability was revalued at June 30, 2018 with a value of $886,883. The change in fair value of the derivative liability resulted in a gain of $196,841 for the three months ended June 30, 2018, and a loss of $247,896 for the six months ended June 30, 2018, which has been reported as loss on fair value of derivative liability in the statements of operations. The fair value of the derivative liability was calculated using the Black-Scholes opt model using the following assumptions. 14-Mar-18 11-Apr-18 30-Jun-18 Expected life 2 1.96 1.71 Volatility 49 % 53.93 % 52.22 % Risk Fee interest rate 2.41 % 2.32 % 2.52 % Dividend yield (on common stock) - - - Reconciliation of the derivative liability measured at fair value on a recurring basis with the use of significant unobservable inputs (level 3) from December 31, 2017 to June 30, 2018: December 31, 2017 $ - Initial value - March 14, 2018 569,587 Initial value - April 11, 2018 69,400 Change in value 247,896 For the period ended June 30, 2018 $ 886,883 The following table presents the Company’s fair value hierarchy for applicable assets and liabilities measured at fair value as of June 30, 2018. Level 1 Level 2 Level 3 Total Derivative Liability $ - - 886,883 $ 886,883 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 8. Commitments and Contingencies We lease office space under non-cancelable operating leases, which expires on March 31, 2019. The aggregate minimum requirements are as follows: For years ending December 31, 2018 86,926 2019 43,462 $ 130,388 |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | Note 9. Stockholders’ Equity During the three months ended June 30, 2018, we issued 782,821 shares of common stock, of which 675,000 shares of common stock was issued in pursuant of executive employee contract, and 109,065 shares was issued related to employee stock options. The following is a summary of outstanding stock options issued to employees and directors as of June 30, 2018: Number of Options Exercise price per share $ Average remaining term in years Aggregate intrinsic value at date of grant $ Outstanding December 31, 2017 6,715,419 0.45 – 0.87 5.69 - Issued 109,065 0.50 – 0.50 7.80 Cancelled (743,516 ) 0.50 – 0.81 Exercised - Outstanding, June 30, 2018 6,080,968 0.45 – 0.87 5.51 - Exercisable, June 30, 2018 3,478,350 0.40 - 0.87 4.71 - |
Outstanding Warrants
Outstanding Warrants | 6 Months Ended |
Jun. 30, 2018 | |
Outstanding Warrants | |
Outstanding Warrants | Note 10. Outstanding Warrants The following is a summary of all outstanding warrants as of June 30, 2018: Number of warrants price per share remaining term in years intrinsic value at date of grant Warrants issued in connection with private placements of common stock 23,189,808 $ 0.50 - $1.00 2.33 $ - Warrants issued in connection with private placement of notes 2,626,667 $ 0.45 - $1.00 1.51 $ 64,583 Warrants issued in connection with convertible note 2,261,915 $ 0.60 - $0.88 2.71 $ - |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 11. Income Taxes We account for income taxes in interim periods in accordance with ASC Topic 740, Income Taxes (“ASC 740”). We have determined an estimated annual effective tax rate. The rate will be revised, if necessary, as of the end of each successive interim period during our fiscal year to our best current estimate. As of June 30, 2018, the estimated effective tax rate for the year will be zero. There are open statutes of limitations for taxing authorities in federal and state jurisdictions to audit our tax returns from 2009 through the current period. Our policy is to account for income tax related interest and penalties in income tax expense in the statement of operations. There have been no income tax related interest or penalties assessed or recorded. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This pronouncement also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. For the six-month periods ended June 30, 2018 and 2017, we did not have any interest and penalties associated with tax positions. As of June 30, 2018, we did not have any significant unrecognized uncertain tax positions. |
Liquidity
Liquidity | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Liquidity | Note 12. Liquidity We have a history of operating losses and negative cash flow. As our operations grow, we expect to experience significant increases in our working capital requirements. These conditions raise substantial doubt over the Company’s ability to meet all of its obligations over the twelve months following the filing of this Form 10-Q. Management has evaluated these conditions, and concluded that current plans will alleviate this concern. We have significantly reduced core operating costs beginning in 2016, including reducing the number of our employees from 44 to 28 over this time period. After the end of the second quarter of 2018, we eliminated an additional three full time sales positions. During the first six months of 2018, we have entered into numerous contracts in the educational and military channels, which will result in increased revenue over the coming quarters. In addition, we have addressed this concern by raising additional capital through a loan or loans, and by continuing to reduce core operating expenses as required. In addition, we plan to raise additional capital through additional loans, and to further reduce core operating expenses as required. While some of these plans have not yet been implemented, management has concluded that it is probable that all of these plans can be implemented within one year of the issuance of the financial statements, and that they will mitigate the substantial doubt of our ability to continue as a going concern. However, the Company cannot predict, with certainty, the outcome of its action to generate liquidity, including the availability of additional financing, or whether such actions would generate the expect liquidity as planned. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 13. Subsequent Events Management has evaluated all activity and concluded that no subsequent events have occurred that would require recognition in the financial statements or disclosure in the notes to the financial statements. After the close of the second quarter, we extended the exercise date on warrants that were scheduled to expire by July 26, 2018. As part of the warrant extension transaction, the company received a cash warrant exercise amount of $550,000, and the Company issued 1,100,000 shares of common stock to the warrant holder, at an exercise price of .50 cents a share. The Company extended the maturity date on the holder’s remaining 1,800,000 by three years, adjusted the exercise price of those warrants to .53 cents, and converted those warrants into cash only warrants. In addition, the Company used $50,000 of those proceeds to repay $50,000 of the short term note payable, and the note holder agreed to extend the maturity date of the note from September 12, 2018 to December 31 2018. |
Basis of Presentation and Sig19
Basis of Presentation and Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Consolidation | Basis of Consolidation The condensed consolidated financial statements include the financial statements of the Company and our wholly owned subsidiaries Barfresh Inc. and Barfresh Corporation, Inc. |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues and expenses during the years reported. Actual results may differ from these estimates. |
Concentration of Credit Risk | Concentration of Credit Risk The amount of cash on deposit with financial institutions exceeds the $250,000 federally insured limit at June 30, 2018 and December 31, 2017. However, we believe that the financial institution where the cash on deposit that exceeds $250,000 is financially sound and the risk of loss is minimal. |
Fair Value Measurement | Fair Value Measurement Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange. Level 2 - Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs. Level 3 - Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights. Our financial instruments consist of cash, accounts receivable, accounts payable, accrued expenses, notes payable, convertible notes and derivative liabilities. The carrying value of our financial instruments approximates fair value, except for the derivative liability in which carrying value is fair value. |
Inventory | Inventory Inventory consists of finished goods and is carried at the lower of cost or net realizable value on a first in first out basis. |
Intangible Assets | Intangible Assets Intangible assets are comprised of patents, net of amortization, and trademarks. The patent costs are being amortized over the life of the patents, which is twenty years from the date of filing the patent applications. In accordance with ASC Topic 350 Intangibles - Goodwill and Other |
Property, Plant, and Equipment | Property, Plant and Equipment Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment loss, if any. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements are being amortized over the shorter of the useful life of the asset or the lease term that includes any expected renewal periods deemed to be reasonably assured. The estimated useful lives used for financial statement purposes are: Furniture and fixtures: 5 years Equipment: 7 years Leasehold improvements: 2 years Vehicle: 5 years |
Revenue Recognition | Revenue Recognition In accordance with ASC 606, Revenue from Contracts with Customers, revenue is recognized when a customer obtains ownership of promised goods. The Company adopted this standard at the beginning of fiscal year 2018, with no significant impact to its financial position or results of operations, using the modified retrospective method. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods. The Company applies the following five steps: 1) Identify the contract with a customer A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for goods or services that are transferred is probable. For the Company, the contract is the approved sales order, which may also be supplemented by other agreements that formalize various terms and conditions with customers. 2) Identify the performance obligation in the contract Performance obligations promised in a contract are identified based on the goods or that will be transferred to the customer. For the Company, this consists of the delivery of frozen beverages, which provide immediate benefit to the customer. 3) Determine the transaction price The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods, and is generally stated on the approved sales order. Variable consideration, which typically includes volume-based rebates or discounts, are estimated utilizing the most likely amount method. 4) Allocate the transaction price to performance obligations in the contract 5) Recognize Revenue when or as the Company satisfies a performance obligation The Company recognizes revenue from the sale of frozen beverages when title and risk of loss passes and the customer accepts the goods, which generally occurs at delivery. Customer sales incentives such as volume-based rebates or discounts are treated as a reduction of sales at the time the sale is recognized. Shipping and handling costs are treated as fulfillment costs and presented in distribution, selling and administrative costs. The company evaluated the requirement to disaggregate revenue, and concluded that substantially all of its revenue comes from a single product, frozen beverages. |
Earnings Per Share | Earnings per Share We calculate net loss per share in accordance with ASC Topic 260, Earnings per Share |
Research and Development | Research and Development Expenditures for research activities relating to product development and improvement are charged to expense as incurred. We incurred $153,329 and $226,002 for the three-month periods ended June 30, 2018 and 2017, respectively, and $343,670 and $340,603 for the six-month periods ended June 30, 2018 and 2017, respectively. |
Rent Expense | Rent Expense We recognize rent expense on a straight-line basis over the reasonably assured lease term as defined in ASC Topic 840, Leases |
Derivative Liability | Derivative Liability The Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.” The result of this accounting treatment is that the fair value of any derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as gain/loss from derivative liability. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. We analyzed the derivative financial instruments in accordance with ASC 815. The objective is to provide guidance for determining whether an equity-linked financial instrument is indexed to an entity’s own stock. This determination is needed for a scope exception which would enable a derivative instrument to be accounted for under the accrual method. The classification of a non-derivative instrument that falls within the scope of ASC 815-40-05 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” also hinges on whether the instrument is indexed to an entity’s own stock. A non-derivative instrument that is not indexed to an entity’s own stock cannot be classified as equity and must be accounted for as a liability. There is a two-step approach in determining whether an instrument or embedded feature is indexed to an entity’s own stock. First, the instrument’s contingent exercise provisions, if any, must be evaluated, followed by an evaluation of the instrument’s settlement provisions. The Company utilized the fair value standard set forth by the Financial Accounting Standards Board, defined as the amount at which the assets (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation sale. |
Recent Pronouncements | Recent pronouncements From time to time, new accounting pronouncements are issued that we adopt as of the specified effective date. We believe that the impact of recently issued standards not yet effective may have an impact on our results of operations and financial position. In February 2016, the FASB issued ASU No. 2016-02, Leases, to improve financial reporting about leasing transactions. This ASU will require organizations that lease assets (“lessees”) to recognize a lease liability and a right-of-use asset on its balance sheet for all leases with terms of more than twelve months. A lease liability is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis and a right-of-use asset represents the lessee’s right to use, or control use of, a specified asset for the lease term. The amendments in this ASU leaves the accounting for the organization that own the assets leased to the lessee (“lessor”) largely unchanged except for targeted improvements to align it with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. The Company is in the initial stages of evaluating the effect of the standard on our financial statements and continue to evaluate the available transition methods. However, based on our initial evaluation, we do not expect there to be material changes to both our current and long-term lease liabilities and our fixed assets of our limited number of operating leases that will be converted to financing leases under the new guidance. The Company does not plan to adopt the standard until the interim period ended March 31, 2019. |
Basis of Presentation and Sig20
Basis of Presentation and Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Estimated Useful Lives of Assets | The estimated useful lives used for financial statement purposes are: Furniture and fixtures: 5 years Equipment: 7 years Leasehold improvements: 2 years Vehicle: 5 years |
Property Plant and Equipment (T
Property Plant and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Major Classes of Property and Equipment | Major classes of property and equipment at June 30, 2018 and December 31, 2017 consist of the following: 2018 2017 Furniture and fixtures $ 1,524 $ 1,524 Equipment 2,500,256 1,952,538 Leasehold Improvements 4,886 4,886 Vehicles 29,696 29,696 2,536,362 1,988,644 Less: accumulated depreciation (860,773 ) (665,657 ) 1,675,589 1,322,987 Equipment not yet placed in service 495,335 437,903 Property and equipment, net of depreciation $ 2,170,924 $ 1,760,890 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Estimated Future Amortization Expense Related to Intangible Property | Estimated future amortization expense related to patents as of June 30, 2018, is as follows: Total Amortization Years ending December 31, 2018 31,805 2019 63,610 2020 63,610 2021 63,610 2022 63,610 Later years 180,040 $ 466,285 |
Convertible Notes (Tables)
Convertible Notes (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Fair Value Assumptions Used | Expected life 3 Volatility 54.816 % Risk Fee interest rate 2.41 % Dividend yield (on common stock) - Expected life 3 Volatility 55.49 % Risk Fee interest rate 2.45 % Dividend yield (on common stock) - |
Schedule of Convertible Notes | June 30, 2018 Convertible notes $ 2,704,800 Less: Debt discount (warrant value) (325,747 ) Less: Debt discount (derivative value) (638,988 ) Less: Debt discount (issuance costs paid) (27,000 ) Add: Debt discount amortization 139,552 $ 1,852,617 |
Derivative Liabilities (Tables)
Derivative Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Banking and Thrift [Abstract] | |
Schedule of Fair Value of the Derivative Liability | The fair value of the derivative liability was calculated using the Black-Scholes opt model using the following assumptions. 14-Mar-18 11-Apr-18 30-Jun-18 Expected life 2 1.96 1.71 Volatility 49 % 53.93 % 52.22 % Risk Fee interest rate 2.41 % 2.32 % 2.52 % Dividend yield (on common stock) - - - |
Schedule of Derivative Liability Measured at Fair Value on a Recurring Basis | Reconciliation of the derivative liability measured at fair value on a recurring basis with the use of significant unobservable inputs (level 3) from December 31, 2017 to June 30, 2018: December 31, 2017 $ - Initial value - March 14, 2018 569,587 Initial value - April 11, 2018 69,400 Change in value 247,896 For the period ended June 30, 2018 $ 886,883 |
Schedule of Fair Value Hierarchy of Assets and Liabilities | The following table presents the Company’s fair value hierarchy for applicable assets and liabilities measured at fair value as of June 30, 2018. Level 1 Level 2 Level 3 Total Derivative Liability $ - - 886,883 $ 886,883 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Minimum Requirements Under Non-cancellable Leases | The aggregate minimum requirements are as follows: For years ending December 31, 2018 86,926 2019 43,462 $ 130,388 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Summary of Outstanding Stock Options Issued to Employees and Directors | The following is a summary of outstanding stock options issued to employees and directors as of June 30, 2018: Number of Options Exercise price per share $ Average remaining term in years Aggregate intrinsic value at date of grant $ Outstanding December 31, 2017 6,715,419 0.45 – 0.87 5.69 - Issued 109,065 0.50 – 0.50 7.80 Cancelled (743,516 ) 0.50 – 0.81 Exercised - Outstanding, June 30, 2018 6,080,968 0.45 – 0.87 5.51 - Exercisable, June 30, 2018 3,478,350 0.40 - 0.87 4.71 - |
Outstanding Warrants (Tables)
Outstanding Warrants (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Outstanding Warrants | |
Summary of Outstanding Warrants | The following is a summary of all outstanding warrants as of June 30, 2018: Number of warrants price per share remaining term in years intrinsic value at date of grant Warrants issued in connection with private placements of common stock 23,189,808 $ 0.50 - $1.00 2.33 $ - Warrants issued in connection with private placement of notes 2,626,667 $ 0.45 - $1.00 1.51 $ 64,583 Warrants issued in connection with convertible note 2,261,915 $ 0.60 - $0.88 2.71 $ - |
Basis of Presentation and Sig28
Basis of Presentation and Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | |||||
Cash federally insured limit value | $ 250,000 | $ 250,000 | $ 250,000 | ||
Cash on deposit exceeds | 250,000 | 250,000 | |||
Research and development expenses | $ 153,329 | $ 226,002 | $ 343,670 | $ 340,603 |
Basis of Presentation and Sig29
Basis of Presentation and Significant Accounting Policies - Summary of Estimated Useful Lives of Assets (Details) | 6 Months Ended |
Jun. 30, 2018 | |
Furniture and Fixtures [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 7 years |
Leasehold Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 2 years |
Vehicles [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Property Plant and Equipment (D
Property Plant and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 133,721 | $ 61,172 | $ 230,285 | $ 101,804 |
Property Plant and Equipment -
Property Plant and Equipment - Schedule of Major Classes of Property and Equipment (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 2,536,362 | $ 1,988,644 |
Less: accumulated depreciation | (860,773) | (665,657) |
Property and equipment | 1,675,589 | 1,322,987 |
Equipment not yet placed in service | 495,335 | 437,903 |
Property and equipment, net of depreciation | 2,170,924 | 1,760,890 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,524 | 1,524 |
Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 2,500,256 | 1,952,538 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 4,886 | 4,886 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 29,696 | $ 29,696 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Patent costs | $ 764,891 | $ 764,891 | $ 764,891 | ||
Trademarks costs | 94,915 | 94,915 | 88,853 | ||
Accumulated amortization on patents and trademarks | 298,606 | $ 298,606 | $ 266,801 | ||
Expiration date of patent | 2025-12 | ||||
Amortization of patent costs | $ 15,902 | $ 15,398 | $ 31,805 | $ 30,797 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Estimated Future Amortization Expense Related to Intangible Property (Details) | Jun. 30, 2018USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2,018 | $ 31,805 |
2,019 | 63,610 |
2,020 | 63,610 |
2,021 | 63,610 |
2,022 | 63,610 |
Later years | 180,040 |
Intangible asset, net of amortization | $ 466,285 |
Short-Term Notes Payable (Detai
Short-Term Notes Payable (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended |
Mar. 31, 2018 | Jun. 30, 2018 | |
Debt Disclosure [Abstract] | ||
Short-term notes payable | $ 250,000 | |
Debt interest rate | 12.00% | |
Debt maturity date | Sep. 30, 2018 | Sep. 12, 2018 |
Description on maturity date | Original maturity date in September 2018 which subsequent to June 30, 2018 was extended to December 31, 2018. | The note holder agreed to extend the maturity date of the note from September 12, 2018 to December 31 2018. |
Convertible Notes (Details Narr
Convertible Notes (Details Narrative) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |
Mar. 31, 2018USD ($)$ / sharesshares | Jun. 30, 2018USD ($)Segment$ / sharesshares | Mar. 31, 2018USD ($)Segment$ / sharesshares | Jun. 30, 2018USD ($)$ / sharesshares | |
Debt interest rate | 12.00% | 12.00% | ||
Debt maturity date | Sep. 30, 2018 | Sep. 12, 2018 | ||
Warrant [Member] | ||||
Warrant issued | shares | 1,331,583 | 937,373 | 1,331,583 | 937,373 |
Fair value of warrant per share | $ / shares | $ 0.17 | $ 0.25 | $ 0.17 | $ 0.25 |
Fair value aggregate amount | $ (220,548) | $ (235,519) | $ (220,548) | $ (235,519) |
Warrants [Member] | ||||
Amortization of debt discount | 105,199 | |||
Convertible Note [Member] | ||||
Convertible notes | 2,527,500 | 2,527,500 | ||
Notes purchased by significant shareholder | $ 810,000 | $ 810,000 | ||
Debt interest rate | 10.00% | 10.00% | ||
Debt maturity date | Mar. 14, 2020 | |||
Debt conversion price | $ / shares | $ 0.88 | $ 0.88 | ||
Closing price of the common stock, percentage | 85.00% | |||
Consecutive trading days | Segment | 20 | |||
Debt conversion, description | The notes are convertible at any time prior to the due date into our common stock at conversion price of $0.88 per share or 85% of the average closing price of the common stock over the twenty consecutive trading days immediately preceding the date of note holders election; but in no events lower than $0.60 per share. | |||
Convertible Notes One [Member] | ||||
Closing price of the common stock, percentage | 85.00% | |||
Consecutive trading days | Segment | 20 | |||
Debt conversion, description | In addition, the interest is convertible at any time prior to the due dates into our common stock at conversion price of 85% of the average closing price of the common stock over the twenty consecutive trading days immediately preceding the date of note holder's election; but in no event lower than $0.60 per share. | |||
March 2018 Convertible Note [Member] | ||||
Notes purchased by significant shareholder | $ 30,000 | $ 30,000 | ||
Debt interest rate | 10.00% | 10.00% | ||
Debt maturity date | Mar. 14, 2020 | |||
Debt conversion price | $ / shares | $ 0.88 | $ 0.88 | ||
Closing price of the common stock, percentage | 85.00% | |||
Consecutive trading days | Segment | 20 | |||
Debt conversion, description | The CN Note acceleration offer convertible notes bear 10% interest per annum and are due and payable on March 14, 2020. The notes are convertible at any time prior to the due date into our common stock at conversion price of $0.88 per share or 85% of the average closing price of the common stock over the twenty consecutive trading days immediately preceding the date of note holders' election; but in no events lower than $0.60 per share. | |||
Description on debt instrument | Pursuant to the acceleration offer, Series CN Notes investors who invested an additional 10% to 20% of the Series CN Note amount, immediately received an additional 25% warrant coverage on their initial CN Note investment, which would otherwise have been issued after one year. | |||
March 2018 Convertible Note One [Member] | ||||
Closing price of the common stock, percentage | 85.00% | |||
Consecutive trading days | Segment | 20 | |||
Debt conversion, description | In addition, the interest is convertible at any time prior to the due dates into our common stock at conversion price of 85% of the average closing price of the common stock over the twenty consecutive trading days immediately preceding the date of note holders' election; but in no events lower than $0.60 per share. |
Convertible Notes - Schedule of
Convertible Notes - Schedule of Fair Value Assumptions Used (Details) - Warrant [Member] | 3 Months Ended | 6 Months Ended |
Mar. 31, 2018 | Jun. 30, 2018 | |
Expected Life [Member] | ||
Expected life | 3 years | 3 years |
Volatility Price [Member] | ||
Volatility | 54.816% | 55.49% |
Risk Free Interest Rate [Member] | ||
Risk Fee interest rate | 2.41% | 2.45% |
Expected Dividend Rate [Member] | ||
Dividend yield (on common stock) | 0.00% | 0.00% |
Convertible Notes - Schedule 37
Convertible Notes - Schedule of Convertible Notes (Details) | Jun. 30, 2018USD ($) |
Debt Disclosure [Abstract] | |
Convertible notes | $ 2,704,800 |
Less: Debt discount (warrant value) | (325,747) |
Less: Debt discount (derivative value) | (638,988) |
Less: Debt discount (issuance costs paid) | (27,000) |
Add: Debt discount amortization | 139,552 |
Total convertible notes | $ 1,852,617 |
Derivative Liabilities (Details
Derivative Liabilities (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Apr. 11, 2018 | Mar. 14, 2018 | |
Current derivative liabilities | $ 886,883 | $ 886,883 | ||||
Gain loss on derivative liabilities | $ (196,841) | $ 247,896 | ||||
Series CN Convertible Notes [Member] | ||||||
Current derivative liabilities | $ 569,587 | |||||
Series CN Warrant Notes [Member] | ||||||
Current derivative liabilities | $ 69,400 |
Derivative Liabilities - Schedu
Derivative Liabilities - Schedule of Fair Value of the Derivative Liability (Details) - Derivative Liabilities [Member] | Apr. 11, 2018 | Mar. 14, 2018 | Jun. 30, 2018 |
Expected Life [Member] | |||
Expected life | 1 year 11 months 15 days | 2 years | 1 year 8 months 16 days |
Volatility Price [Member] | |||
Volatility | 53.93% | 49.00% | 52.22% |
Risk Free Interest Rate [Member] | |||
Risk Fee interest rate | 2.32% | 2.41% | 2.52% |
Expected Dividend Rate [Member] | |||
Dividend yield (on common stock) | 0.00% | 0.00% | 0.00% |
Derivative Liabilities - Sche40
Derivative Liabilities - Schedule of Derivative Liability Measured at Fair Value on a Recurring Basis (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Derivative liabilities, beginning balance | ||||
Change in value | $ (196,841) | 247,896 | ||
Derivative liabilities, ending balance | 886,883 | 886,883 | ||
Fair Value, Inputs, Level 3 [Member] | ||||
Derivative liabilities, beginning balance | ||||
Initial value - March 14, 2018 | 569,587 | |||
Initial value - April 11, 2018 | 69,400 | |||
Change in value | 247,896 | |||
Derivative liabilities, ending balance | $ 886,883 | $ 886,883 |
Derivative Liabilities - Sche41
Derivative Liabilities - Schedule of Fair Value Hierarchy of Assets and Liabilities (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Expected life | $ 886,883 | |
Fair Value, Inputs, Level 1 [Member] | ||
Expected life | ||
Fair Value, Inputs, Level 2 [Member] | ||
Expected life | ||
Fair Value, Inputs, Level 3 [Member] | ||
Expected life | $ 886,883 |
Commitments and Contingencies42
Commitments and Contingencies (Details Narrative) | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Operating lease expire date | Mar. 31, 2019 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Minimum Requirements Under Non-cancellable Leases (Details) | Jun. 30, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,018 | $ 86,926 |
2,019 | 43,462 |
Total | $ 130,388 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) | 3 Months Ended |
Jun. 30, 2018shares | |
Class of Stock [Line Items] | |
Number of common stock shares issued | 782,821 |
Executive Employee Contract [Member] | |
Class of Stock [Line Items] | |
Number of common stock shares issued | 675,000 |
Employee Stock Option [Member] | |
Class of Stock [Line Items] | |
Number of common stock shares issued | 109,065 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Outstanding Stock Options Issued to Employees and Directors (Details) - Employees and Directors [Member] | 6 Months Ended |
Jun. 30, 2018USD ($)$ / sharesshares | |
Number of Options, Outstanding, Beginning | shares | 6,715,419 |
Number of Options, Issued | shares | 109,065 |
Number of Options, Cancelled | shares | (743,516) |
Number of Options, Exercised | shares | |
Number of Options, Outstanding, Ending | shares | 6,080,968 |
Number of Options, Exercisable | shares | 3,478,350 |
Exercise price per share, Exercised | |
Average remaining term in years, Outstanding, Beginning | 5 years 8 months 9 days |
Average remaining term in years, Issued | 7 years 9 months 18 days |
Average remaining term in years, Outstanding, Ending | 5 years 6 months 3 days |
Average remaining term in years, Exercisable | 4 years 8 months 16 days |
Aggregate intrinsic value at date of grant, Outstanding, Beginning | $ | |
Aggregate intrinsic value at date of grant, Outstanding, Ending | $ | |
Aggregate intrinsic value at date of grant, Exercisable | $ | |
Minimum [Member] | |
Exercise price per share, Outstanding, Beginning | $ 0.45 |
Exercise price per share, Issued | 0.50 |
Exercise price per share, Cancelled | 0.50 |
Exercise price per share, Outstanding, Ending | 0.45 |
Exercise price per share, Exercisable | 0.40 |
Maximum [Member] | |
Exercise price per share, Outstanding, Beginning | 0.87 |
Exercise price per share, Issued | 0.50 |
Exercise price per share, Cancelled | 0.81 |
Exercise price per share, Outstanding, Ending | 0.87 |
Exercise price per share, Exercisable | $ 0.87 |
Outstanding Warrants - Summary
Outstanding Warrants - Summary of Outstanding Warrants (Details) - Warrant [Member] | 6 Months Ended |
Jun. 30, 2018USD ($)$ / sharesshares | |
Convertible Note [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Warrants | shares | 2,261,915 |
Average remaining term in years | 2 years 8 months 16 days |
Aggregate intrinsic value at date of grant | $ | |
Minimum [Member] | Convertible Note [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise price per share | $ 0.60 |
Maximum [Member] | Convertible Note [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise price per share | $ 0.88 |
Private Placements of Common Stock [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Warrants | shares | 23,189,808 |
Average remaining term in years | 2 years 3 months 29 days |
Aggregate intrinsic value at date of grant | $ | |
Private Placements of Common Stock [Member] | Minimum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise price per share | $ 0.50 |
Private Placements of Common Stock [Member] | Maximum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise price per share | $ 1 |
Private Placement Notes [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Warrants | shares | 2,626,667 |
Average remaining term in years | 1 year 6 months 3 days |
Aggregate intrinsic value at date of grant | $ | $ 64,583 |
Private Placement Notes [Member] | Minimum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise price per share | $ 0.45 |
Private Placement Notes [Member] | Maximum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise price per share | $ 1 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Income Tax Disclosure [Abstract] | |
Effective income tax rate | $ 0 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended |
Mar. 31, 2018 | Jun. 30, 2018 | |
Warrant expiration date | Jul. 26, 2018 | |
Proceeds from issuance of warrants | $ 50,000 | |
Repayment of debt | $ 50,000 | |
Debt maturity date | Sep. 30, 2018 | Sep. 12, 2018 |
Description on maturity date | Original maturity date in September 2018 which subsequent to June 30, 2018 was extended to December 31, 2018. | The note holder agreed to extend the maturity date of the note from September 12, 2018 to December 31 2018. |
Warrant Holder [Member] | Warrant [Member] | ||
Cash warrant exercise amount | $ 550,000 | |
Number of warrants to purchase common stock | 1,100,000 | |
Exercise price of warrants | $ 0.50 | |
Warrant Holder [Member] | Warrant One [Member] | ||
Number of warrants to purchase common stock | 1,800,000 | |
Exercise price of warrants | $ 0.53 | |
Warrant expiration term | 3 years |