Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Jun. 30, 2014 | |
Document and Entity Information | ||
Entity Registrant Name | Heatwurx, Inc. | |
Document Type | 10-K | |
Document Period End Date | 31-Dec-14 | |
Amendment Flag | FALSE | |
Entity Central Index Key | 1533743 | |
Current Fiscal Year End Date | -19 | |
Entity Common Stock, Shares Outstanding | 9,495,045 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2014 | |
Document Fiscal Period Focus | FY | |
Entity Public Float | $7,757,683 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Current assets: | ||
Cash and cash equivalents | $21,234 | $186,864 |
Accounts receivable | 4,095 | 19,200 |
Prepaid expenses and other current assets | 131,862 | 80,386 |
Inventory | 222,018 | 228,256 |
Total current assets | 379,209 | 514,706 |
Other assets: | ||
Equipment, net of depreciation | 466,413 | 369,775 |
Intangible assets, net of amortization | 1,696,430 | 2,053,572 |
Total other assets | 2,162,843 | 2,423,347 |
Total assets | 2,542,052 | 2,938,053 |
Current liabilities: | ||
Accounts payable | 190,168 | 77,028 |
Accrued liabilities | 105,613 | 256,094 |
Advance payment | 155,497 | |
Deferred revenue | 58,165 | |
Interest payable | 19,541 | 1,812 |
Income taxes payable | 100 | 100 |
Loan payable, current | 56,486 | 41,186 |
Current portion of senior secured notes payable | 160,000 | |
Current portion of senior subordinated notes payable | 500,000 | |
Revolving line of credit | 229,980 | |
Current portion of unsecured notes payable | 20,000 | 90,000 |
Total current liabilities | 840,053 | 1,121,717 |
Long-term liabilities: | ||
Loan payable | 133,834 | 145,458 |
Unsecured notes payable | 360,232 | |
Total long-term liabilities | 494,066 | 145,458 |
Total liabilities | 1,334,119 | 1,267,175 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock value | 18 | 101 |
Common stock value | 1,095 | 808 |
Additional paid-in capital | 14,111,944 | 8,483,727 |
Accumulated deficit | -12,905,124 | -6,813,758 |
Total stockholders' equity | 1,207,933 | 1,670,878 |
Total liabilities and stockholders' equity | $2,542,052 | $2,938,053 |
BALANCE_SHEETS_Parenthetical
BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Preferred Stock, Par Value | $0.00 | $0.00 |
Preferred Stock, Shares Authorized | 4,500,000 | 4,500,000 |
Preferred Stock, Issued | 178,924 | 1,005,648 |
Common Stock, Par Value | $0.00 | $0.00 |
Common Stock, Shares Authorized | 20,000,000 | 20,000,000 |
Common Stock, Issued | 9,495,045 | 8,082,000 |
Common Stock, Outstanding | 10,952,356 | 8,082,000 |
Preferred Series B | ||
Preferred Stock, Par Value | $0.00 | $0.00 |
Preferred Stock, Shares Authorized | 1,500,000 | 1,500,000 |
Preferred Stock, Issued | 0 | 177,000 |
Liquidation preference | $0 | $416,227 |
Preferred Series C | ||
Preferred Stock, Par Value | $0.00 | $0.00 |
Preferred Stock, Shares Authorized | 760,000 | 760,000 |
Preferred Stock, Issued | 0 | 101,000 |
Liquidation preference | 0 | 224,668 |
Preferred Series D | ||
Preferred Stock, Par Value | $0.00 | $0.00 |
Preferred Stock, Shares Authorized | 1,500,000 | 1,500,000 |
Preferred Stock, Issued | 178,924 | 727,648 |
Liquidation preference | $810,216 | $2,403,691 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Statement | ||
Equipment sales | $101,119 | $253,463 |
Service revenue | 92,962 | 25,000 |
Other revenue | 6,120 | 34,017 |
Total revenue | 200,201 | 312,480 |
Costs of goods sold | 113,251 | 188,002 |
Gross profit | 86,950 | 124,478 |
Expenses: | ||
Selling, general and administrative | 2,844,784 | 2,818,736 |
Research and development | 189,745 | 267,062 |
Loss on extinguishment of debt | 822,205 | |
Impairment of goodwill | 390,659 | |
Total expenses | 4,247,393 | 3,085,798 |
Loss from operations | -4,160,443 | -2,961,320 |
Other Income and Expense: | ||
Interest income | 249 | 2,394 |
Interest expense | -365,956 | -109,725 |
Total other income and expense | -365,707 | -107,331 |
Loss before income taxes | -4,526,150 | -3,068,651 |
Income taxes | -100 | -50 |
Net loss | -4,526,250 | -3,068,701 |
Preferred stock cumulative dividend and deemed dividend | 1,502,891 | 21,302 |
Net loss available to common stockholders | ($6,029,141) | ($3,090,003) |
Net loss per common share basic and diluted | ($0.68) | ($0.61) |
Weighted average shares outstanding basic and diluted | 8,857,815 | 5,037,405 |
STATEMENTS_OF_STOCKHOLDERS_EQU
STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) | Series A Preferred Stock | Series B Preferred Stock | Series C Preferred Stock | Series D Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders' Equity |
Beginning Balance, amount at Dec. 31, 2012 | $60 | $150 | $76 | $190 | $5,992,636 | ($3,430,807) | $2,562,305 | |
Beginning Balance, shares at Dec. 31, 2012 | 600,000 | 1,500,000 | 760,000 | 1,900,000 | ||||
Preferred stock conversion to common, shares | -600,000 | -1,323,000 | -659,000 | 6,182,000 | ||||
Preferred stock conversion to common, value | -60 | -132 | -66 | 618 | -360 | |||
Stock issued in private placement, shares | 727,648 | |||||||
Stock issued in private placement, value | 73 | 2,182,871 | 2,182,944 | |||||
Share issuance costs | -84,232 | -84,232 | ||||||
Stock-based compensation | 216,083 | 216,083 | ||||||
Dividends accrued on Series C shares | -69,096 | -69,096 | ||||||
Dividends accrued on Series D shares | -68,425 | -68,425 | ||||||
Beneficial conversion feature on Series D issuance | 176,729 | -176,729 | ||||||
Net loss for the period | -3,068,701 | -3,068,701 | ||||||
Ending Balance, amount at Dec. 31, 2013 | 18 | 10 | 73 | 808 | 8,483,727 | -6,813,758 | 1,670,878 | |
Ending Balance, shares at Dec. 31, 2013 | 177,000 | 101,000 | 727,648 | 8,082,000 | ||||
Preferred stock conversion to common, shares | -177,000 | -101,000 | -16,332 | 294,332 | ||||
Preferred stock conversion to common, value | -18 | -10 | -2 | 29 | ||||
Stock issued in private placement, shares | 171,987 | |||||||
Stock issued in private placement, value | 17 | 515,946 | 515,963 | |||||
Share issuance costs | -6,000 | -6,000 | ||||||
Stock issued for acquisitions, shares | 58,333 | |||||||
Stock issued for acquisitions, value | 6 | 174,994 | 175,000 | |||||
Preferred stock conversion to common in private placement, shares | -704,379 | 1,207,491 | ||||||
Preferred stock conversion to common in private placement, value | -70 | 121 | -50 | |||||
Inducement premium on preferred stock conversion to common | 1,332,376 | -1,332,376 | ||||||
Debt conversion in private placement, shares | 1,100,876 | |||||||
Debt conversion in private placement, value | 110 | 2,506,872 | 2,506,982 | |||||
Issuance of common stock and warrants, shares | 209,324 | |||||||
Issuance of common stock and warrants, value | 21 | 366,303 | 366,324 | |||||
Stock-based compensation | 231,524 | 231,524 | ||||||
Dividends accrued on Series C shares | -2,200 | -2,200 | ||||||
Dividends accrued on Series D shares | -179,430 | -179,430 | ||||||
Beneficial conversion feature on Series D issuance | 51,110 | -51,110 | ||||||
Warrants issued in conjunction with debt offering | 455,142 | 455,142 | ||||||
Net loss for the period | -4,526,250 | -4,526,250 | ||||||
Ending Balance, amount at Dec. 31, 2014 | $18 | $1,095 | $14,111,944 | ($12,905,124) | $1,207,933 | |||
Ending Balance, shares at Dec. 31, 2014 | 178,924 | 10,952,356 |
CONSOLIDATED_STATEMENT_OF_CASH
CONSOLIDATED STATEMENT OF CASH FLOWS (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | ($4,526,250) | ($3,068,701) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation expense | 104,118 | 57,763 |
Amortization of intangible asset | 357,142 | 357,143 |
Amortization of debt discount | 153,617 | |
Loss on extinguishment of debt | 822,205 | |
Impairment of goodwill | 390,659 | |
Stock-based compensation | 231,524 | 216,083 |
Changes in operating assets and liabilities | ||
(Increase) decrease in receivables | 15,105 | 11,751 |
(Increase) decrease in prepaid and other current assets | -26,984 | -24,518 |
(Increase) decrease in inventory | -77,474 | -97,369 |
Increase (decrease) in income taxes payable | 50 | |
Increase (decrease) in accounts payable | 84,399 | 3,856 |
Increase (decrease) in accrued liabilities | -331,937 | 6,091 |
Increase (decrease) in deferred revenue | 58,165 | |
Increase (decrease) in interest payable | 50,263 | -818 |
Cash used in operating activities | -2,695,448 | -2,538,769 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | 48,299 | 27,674 |
Cash from acquisition of business | 3,355 | |
Cash used in investing activities | -44,944 | -27,674 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from advance payment | 73,359 | |
Proceeds from issuance of unsecured notes payable | 2,244,003 | 90,000 |
Proceeds from issuance of senior secured notes payable | 1,000,000 | |
Repayment of senior secured notes payable | 250,018 | |
Repayment of senior subordinated notes payable | 500,000 | 500,000 |
Proceeds from issuance of common shares, net | 366,324 | |
Proceeds from issuance of preferred shares, net | 509,963 | 1,348,730 |
Repayment of loan payable | 45,528 | 30,239 |
Cash provided by (used in) financing activities | 2,574,762 | 1,731,832 |
Net change in cash and cash equivalents | -165,630 | -834,611 |
Cash and cash equivalents, beginning of period | 186,864 | 1,021,475 |
Cash and cash equivalents, end of period | $21,234 | $186,864 |
Principal_Business_Activities
Principal Business Activities | 12 Months Ended |
Dec. 31, 2014 | |
Notes | |
Principal Business Activities | 1. PRINCIPAL BUSINESS ACTIVITIES: |
Organization and Business - Heatwurx, Inc. (“Heatwurx,” the “Company”) is an asphalt repair equipment and technology company. Heatwurx was incorporated on March 29, 2011 as Heatwurxaq, Inc. and subsequently changed its name to Heatwurx, Inc. on April 15, 2011. On January 1, 2014, Heatwurx acquired Dr. Pave, LLC, a service company offering asphalt repair and restoration. On July 22, 2014 Dr. Pave Worldwide, LLC was organized to offer franchises for the operation of businesses that use the Heatwurx branded equipment and Heatwurx repair process to repair, maintain and preserve roadways. (Note 5) |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2014 | |
Notes | |
Summary of Significant Accounting Policies: | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: |
Basis of Presentation - These consolidated financial statements and related notes are presented in accordance with the accounting principles generally accepted in the United States (“U.S. GAAP”) and are expressed in U.S. dollars. The Company’s consolidated financial statements include Dr. Pave, LLC and Dr. Pave Worldwide, LLC; both wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in the consolidated financial statements. | |
The Company’s financial statements are prepared using U.S. GAAP applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. Certain prior year balances have been reclassified to conform to the current year’s presentation. Such reclassifications had no effect on the net loss. | |
The Company also faces certain risks and uncertainties which are present in many emerging companies regarding product development, future profitability, ability to obtain future capital, protection of patents and property rights, competition, rapid technological change, government regulations, recruiting and retaining key personnel, and third party manufacturing organizations. | |
To date we have relied exclusively on private placements with a small group of investors to finance our business and operations. We have had little revenue since our inception. For the year ended December 31, 2014, the Company incurred a net loss of approximately $4,526,000 and utilized approximately $2,695,000 in cash flows from operating activities. The Company had cash on hand of approximately $21,000 as of December 31, 2014. Successful completion of the Company’s marketing program and its transition to profitable operations is dependent upon obtaining additional financing adequate to fulfill its commercialization activities, and achieve a level of revenues adequate to support the Company’s cost structure. Many of the Company’s objectives to establish profitable business operations rely upon the occurrence of events outside its control; there is no assurance that the Company will be successful in accomplishing these objectives. The Company cannot assure that additional debt, equity or other funding will be available to it on acceptable terms, if at all. If the Company fails to obtain additional funding when needed, it would be forced to scale back, or terminate its operations, or seek to merge with or be acquired by another company. | |
Management anticipates that the Company will require significant additional funds to continue operations. As of December 31, 2014, we had approximately $21,000 cash on hand and were spending approximately $290,000 per month, of which only a minor amount was satisfied by gross proceeds from operations. Hence, the amount of cash on hand is not adequate to meet our operating expenses over the next twelve months. As of April 8, 2015 the Company raised $450,000 in relation to a $2,000,000 senior secured debt offering issued in February. | |
The issues described above raise substantial doubt about the Company’s ability to continue as a going concern. Although the Company has commenced a new $2,000,000 secured debt offering, it cannot guarantee it will be able to raise the entire offering amount, if any. The Company is solely reliant on raising additional debt and capital in order to maintain its current operations. To date the Company, has been able to raise debt and equity financing through the assistance of a small number of our investors who have been substantial participants in its debt and equity offerings since the Company’s formation. If these investors choose not to assist the Company with its capital raising initiatives in the future, the Company does not expect that it would be able to obtain any alternative forms of financing at this time and the Company would not be able to continue to satisfy its current or long term obligations. Based upon the Company’s current monthly spend the Company anticipates the need to raise at least $3,500,000 to meet its cash flow requirements for the next twelve months. If the Company successfully raise $2,000,000 in the private debt offering, the proceeds the Company will receive and anticipated revenues from equipment sales and service performed may not be sufficient to fund the Company’s operations, including the Company’s expected capital expenditures, through the next twelve months. Without additional funds, the Company will be required to reduce operations, curtail any future growth opportunities, cease operations all together, or seek to merge with or be acquired by another company. | |
The accompanying audited financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be different should the Company be unable to continue as a going concern. | |
Use of Estimates - The preparation of financial statements in conformity with U.S. GAAP requires the use of estimates and assumptions by management that affect reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions are continuously evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances. While management believes the estimates to be reasonable, actual results could differ materially from those estimates and could impact future results of operations and cash flows. | |
Cash and Cash Equivalents - The Company considers all highly liquid investments with a maturity at the date of purchase of three months or less to be cash equivalents. The Company had no cash equivalents at December 31, 2014. At times, the Company may have cash balances in excess of the Federal Deposit Insurance Corporation (“FDIC”) insured limits of up to $250,000. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk. As of December 31, 2014, none of the Company’s accounts exceeded the FDIC insured limits. | |
Accounts Receivable and Bad Debt Expense - Management reviews individual accounts receivable balances that exceed 90 days from the invoice date. Based on an assessment of current creditworthiness of the customer, the Company estimates the portion, if any, of the balance that will not be collected. All accounts deemed to be uncollectible are written off to operation expense. There was no allowance for uncollectible accounts for the years ended December 31, 2014 and 2013. | |
Inventories - The Company’s finished goods and materials and supplies inventories are recorded at lower of cost or net realizable value. Cost is determined by using the FIFO (first-in, first-out) inventory method. | |
Equipment - Equipment is stated at cost and consists of office and computer equipment depreciated on a straight line basis over an estimated useful life of three years, and process demonstration equipment (demo equipment) depreciated on a straight line basis over an estimated useful life of seven years. Maintenance and repairs are charged to expense as incurred. | |
Impairment of Long-lived Assets - The Company periodically reviews its long-lived assets to determine potential impairment by comparing the carrying value of the long-lived assets with the estimated future net undiscounted cash flows expected to result from the use of the assets, including cash flows from disposition, at least annually or more frequently if events or changes in circumstances indicate a potential impairment may exist. Should the sum of the expected future net cash flows be less than the carrying value, the Company would recognize an impairment loss at that date. An impairment loss would be measured by comparing the amount by which the carrying value exceeds the fair value (estimated discounted future cash flows) of the long-lived assets. The Company performs its impairment analysis in October of each year. There were no impairment charges for the years ended December 31, 2014 and 2013. | |
Goodwill - The Company recognizes goodwill as the excess purchase price paid after allocation to the identifiable assets and liabilities based on their estimated fair value. The Company assesses the carrying amount of goodwill for impairment annually, or more frequent if an event occurs or circumstances changes that would more likely than not reduce the fair value below its carrying value. The Company recognized an immediate impairment on the goodwill acquired in the purchase of Dr. Pave, LLC, based on the lack of service revenue during the prior year. | |
Intangible Assets - Intangible assets consist of developed technology acquired as part of an acquisition, which was deemed in-process research and development upon acquisition. During development, in-process research and development is not subject to amortization and is tested for impairment. In October 2012, the in-process research and development was reclassified as developed technology. The Company’s developed technology is amortized over its estimated useful life of seven years. | |
Debt Discount - The Company recognizes the fair value of detachable warrants issued in conjunction with a debt instrument as debt discount. The discount is amortized using the interest method over the life of the notes. The amortization of the discount was $153,617 for the year ended December 31, 2014. | |
Extinguishment of Debt - The Company recognizes any difference between the reacquisition price of debt and the net carrying amount of the extinguished debt in income of the period of the extinguishment as gains or losses. The Company recognized a loss of $822,205 on the extinguishment of unsecured notes payable during the year ended December 31, 2014. | |
Stock-Based Compensation - The Company accounts for the cost of employee services received in exchange for the award of equity instruments based on the fair value of the award, determined on the date of grant. The expense is to be recognized over the period during which an employee is required to provide services in exchange for the award. The Company estimates forfeitures at the time of grant and makes revisions, if necessary, at each reporting period if actual forfeitures differ from those estimates. The Company estimated future unvested forfeitures at 0% for the year ended December 31, 2014. | |
Advertising Expense - The Company charges advertising costs to expense as incurred. Advertising costs were $90,109 and $247,500 for the year ended December 31, 2014 and 2013, respectively. | |
Income Taxes - The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. | |
The provision for income taxes includes federal and state income taxes currently payable and deferred taxes resulting from temporary differences between the financial statement and tax basis of assets and liabilities. Valuation allowances are recorded to reduce deferred tax assets when it is more-likely-than-not that a tax benefit will not be realized. | |
With respect to uncertain tax positions, the Company would recognize the tax benefit from an uncertain tax position only if it is more-likely-than-not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. The Company had no unrecognized tax benefits or uncertain tax positions at December 31, 2014 or 2013. | |
Compensated absences - At December 31, 2014 and 2013, the Company recorded a liability for paid time off earned by permanent employees but not taken, in accordance with human resource policies. | |
Research and development - Research and development costs are expensed as incurred and consist of direct and overhead-related expenses. Expenditures to acquire technologies, including licenses, which are utilized in research and development and that have no alternative future use are expensed when incurred. Technology the Company develop for use in its products is expensed as incurred until technological feasibility has been established after which it is capitalized and depreciated. | |
Revenue Recognition - The Company sells its equipment (HWX-30 heater, HWX-30S mobile heater and HWX-AP-40 asphalt processor), as well as certain consumables to third parties. Equipment sales revenue is recognized when all of the following criteria are satisfied: (a) persuasive evidence of a sales arrangement exists; (b) price is fixed and determinable; (c) collectability is reasonably assured; and (d) delivery has occurred. Persuasive evidence of an arrangement and a fixed or determinable price exist once the Company receives an order or contract from a customer. The Company assesses collectability at the time of the sale and if collectability is not reasonably assured, the sale is deferred and not recognized until collectability is probable or payment is received. Typically, title and risk of ownership transfer when the equipment is shipped. | |
Other revenue represents consumable revenue. | |
Interest income is recognized as earned, over the term of the investment. | |
Fair Value of Financial Instruments - The Company measures its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. Additionally, the Company is required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. The fair value hierarchy is defined as follows: | |
· Level 1 - quoted prices in active markets for identical assets or liabilities, | |
· Level 2 - other significant observable inputs for the assets or liabilities through corroboration with market data at the measurement date, | |
· Level 3 - significant unobservable inputs that reflect management’s best estimate of what market participants would use to price the assets or liabilities at the measurement date. | |
The carrying amount of certain financial instruments, including cash and cash equivalents and interest payable approximates fair value due to the relatively short maturity of such instruments. The senior secured, unsecured and senior subordinated notes payable approximates the fair value of such instrument based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangement at December 31, 2014 and 2013. The Company does not have any fair value instruments for assets and liabilities measured at fair value on a recurring or non-recurring basis, consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value at December 31, 2014, nor gains or losses reported in the statement of operations. | |
Concentration of Supplier and Customer Risk - During the year ended December 31, 2014, the Company’s asphalt repair equipment, including major components, were purchased from two primary suppliers providing an aggregate of 95% of total equipment purchases. During the same period, two customers were responsible for an aggregate of 53% of total revenues. | |
Recent Accounting Pronouncements | |
The Financial Accounting Standards Board recently issued Accounting Standards Update (ASU) 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. | |
The Financial Accounting Standards Board recently issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation, which eliminates the financial reporting distinction of being a development stage entity within U.S. generally accepted accounting principles. Accordingly, the ASU eliminates the incremental requirements for development stage entities to (a) present inception-to-date information in the statements of income, cash flows and shareholder’s equity, (b) label the financial statements as those of a development stage entity, (c) disclose a description of the development stage activities in which the entity is engaged and (d) disclose in the first year in which the development stage entity that in prior years it had been in the development stage. The amendments related to the elimination of inception-to-date information should be applied retrospectively. For public business entities, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early application of each of these amendments is permitted for any annual reporting period or interim period for which the entity’s financials statements has not yet been issued. The Company has elected early application of these amendments beginning with the quarterly report filed for September 30, 2014. | |
The Financial Accounting Standards Board recently issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), was issued in three parts: (a) "Summary and Amendments That Create Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs - Contracts with Customers (Subtopic 340-40)," (b) "Conforming Amendments to Other Topics and Subtopics in the Codification and Status Tables," and (c) "Background Information and Basis for Conclusions." The new presentation guidance is effective for interim and annual periods beginning after December 15, 2016. The Company is considering the impact of the adoption of ASU 2014-09 on its results of operations, financial condition and cash flows. |
Property_and_Equipment_Disclos
Property and Equipment Disclosure | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Notes | |||||||
Property and Equipment Disclosure | 3. PROPERTY AND EQUIPMENT: | ||||||
A summary of the cost of property and equipment, by component, and the related accumulated depreciation is as follows: | |||||||
December 31, | December 31, | ||||||
2014 | 2013 | ||||||
Computer equipment & software | $ | 30,152 | $ | 20,562 | |||
Demo equipment | 599,432 | 426,336 | |||||
Leasehold improvements | 22,580 | - | |||||
652,164 | 446,898 | ||||||
Accumulated depreciation | -185,751 | -77,123 | |||||
$ | 466,413 | $ | 369,775 | ||||
Depreciation expense was $104,118 and $57,763 for the years ended December 31, 2014 and 2013, respectively. |
Asset_Purchase_Agreement_Discl
Asset Purchase Agreement Disclosure | 12 Months Ended | |
Dec. 31, 2014 | ||
Notes | ||
Asset Purchase Agreement Disclosure | 4. ASSET PURCHASE AGREEMENT: | |
On April 15, 2011, the Company entered into an Asset Purchase Agreement with an individual who is a founder and a current stockholder. Pursuant to the agreement, the Company purchased the related business and activities of the design, manufacture and distribution of asphalt repair machinery under the Heatwurx brand. The total purchase price was $2,500,000. The purchase price was paid in a $1,500,000 cash payment and the issuance of a senior subordinated note to the seller in the amount of $1,000,000. (Note 6) | ||
The business essentially consisted of the investment in research and development of the technology, the patents applied for as a result of the research and development activities and certain distribution relationships that were in process, but not finalized as of the acquisition date. Collectively, these investments constitute the in-process research and development the Company refers to as the “asphalt preservation and repair solution.” The Company capitalized $2,500,000 of in-process research and development related to this asphalt preservation and repair solution. As of October 1, 2012, in-process research and development is now classified as developed technology and amortized over its estimated useful life of seven years. The initial estimated fair value of the in-process research and development was determined using the income approach. Under the income approach, the expected future cash flows from the asset are estimated and discounted to its net present value at an appropriate risk-adjusted rate of return. As of December 31, 2014, the Company’s developed technology intangible asset had a value of $1,696,430, net of accumulated amortization of $803,570. Amortization expense for the years ended December 31, 2014 and 2013 was $357,142 and $357,143; respectively. | ||
Expected amortization expense for our developed technology for the next five years is as follows: | ||
2015 | $357,143 | |
2016 | 357,143 | |
2017 | 357,143 | |
2018 | 357,143 | |
2019 | 267,858 | |
$1,696,430 | ||
In conjunction with the Asset Purchase Agreement, the Company granted 200,000 performance stock options to a founder of the Company with an exercise price of $0.40 per share and a term of seven years. Following the effectiveness of the seven for one stock split that was completed in October 2011, the 200,000 performance stock options were exchanged for 1,400,000 performance stock options with an exercise price of $0.057 per share. As of December 31, 2014 there is no expectation that these performance stock options will vest. |
Acquisition_Disclosure
Acquisition Disclosure | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Notes | ||||||
Acquisition Disclosure | 5. ACQUISITION | |||||
On January 7, 2014, the Company entered into an Agreement and Plan of Reorganization (the “Acquisition Agreement”) dated January 8, 2014 with Dr. Pave, LLC, a California limited liability company (“Dr. Pave”). Dr. Pave was controlled by David Dworsky, the Chief Executive Officer of the Company. The acquisition of Dr. Pave gave the Company the immediate ability to provide service work to municipalities and other end purchasers of Heatwurx equipment. The Company acquired all of the outstanding membership interests in Dr. Pave for 58,333 shares of common stock of the Company at a value of $3.00 per share for consideration in the amount of $175,000. The consideration included the issuance of 41,668 shares to Dworsky Partners, LLC, an entity in which David Dworsky owned 80% of the ownership interest, and 3,333 shares to Reginald Greenslade, one of the Company’s directors. As a result of the acquisition, which closed on January 8, 2014, Dr. Pave became a wholly owned subsidiary of the Company. The parties to the Acquisition Agreement established the effective date of the closing of the transaction for tax and accounting purposes as of January 1, 2014. | ||||||
As of January 1, 2014, Dr. Pave had net liabilities of $215,659 assumed by the Company; in addition to the consideration of 58,333 shares of common stock valued at $175,000. The total consideration paid in the acquisition of Dr. Pave resulted in goodwill in the amount of $390,659. The Company determined that the goodwill was immediately impaired as of the acquisition date based on the lack of service revenue for the prior year. An impairment of goodwill from the acquisition in the amount of $390,659, was recorded as an operating expense in the income statement for the year ended December 31, 2014. | ||||||
Below are the results of operations of Heatwurx, Inc., the consolidated entity, as though the acquisition had occurred as of the beginning of the 2013 reporting period. | ||||||
For the Years Ended | ||||||
December 31, | ||||||
2014 | 2013 | |||||
REVENUES | ||||||
Equipment sales | $ | 101,119 | $ | 253,463 | ||
Service revenue | 92,962 | 25,000 | ||||
Other revenue | 6,120 | 34,017 | ||||
Total revenues | 200,201 | 312,480 | ||||
COST OF GOODS SOLD | 113,251 | 188,002 | ||||
GROSS PROFIT | 86,950 | 124,478 | ||||
EXPENSES: | ||||||
Selling, general and administrative | 2,844,784 | 3,072,383 | ||||
Research and development | 189,745 | 267,062 | ||||
Loss on extinguishment of debt | 822,205 | - | ||||
Impairment of goodwill | 390,659 | - | ||||
Total expenses | 4,247,393 | 3,339,445 | ||||
LOSS FROM OPERATIONS | -4,160,443 | -3,214,967 | ||||
OTHER INCOME AND EXPENSE: | ||||||
Interest income | 249 | 2,394 | ||||
Interest expense | -365,956 | -121,737 | ||||
Total other income and expense | -365,707 | -119,343 | ||||
LOSS BEFORE INCOME TAXES | -4,526,150 | -3,334,310 | ||||
Income taxes | -100 | -50 | ||||
NET LOSS | $ | -4,526,250 | $ | -3,334,360 | ||
Preferred stock cumulative dividend and deemed dividend | 1,502,891 | 21,302 | ||||
Net loss attributable to common stockholders | $ | -6,029,141 | $ | -3,355,662 | ||
Net loss per common share basic and diluted | $ | -0.68 | $ | -0.67 | ||
Weighted average shares outstanding used in calculating net loss per common share | 8,857,815 | 5,037,405 |
Notes_Payable_Disclosure
Notes Payable Disclosure | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Notes | |||||||
Notes Payable Disclosure | 6. NOTES PAYABLE: | ||||||
Unsecured Notes Payable - The Company issued senior unsecured notes payable totaling $90,000 on December 11, 2013. The notes bear interest at a rate of 12% per annum. Interest was payable monthly on the first day of each month. On October 15, 2014, full principal amount of $90,000 and accrued interest in the amount of $1,332 was converted to one share of common stock plus one-half warrant for each $1.75 of the outstanding principal and accrued interest. The Company issued 52,189 common shares and 26,095 warrants in the private equity offering dated October 1, 2014, see Note 8. | |||||||
On January 6, 2014, the Company commenced a non-public offering of notes and warrants of up to $1,000,000. The promissory notes bear interest at 12% per annum payable monthly, with principal and unpaid interest due and payable on January 6, 2016. As additional consideration for a lender to enter into the Loan Agreement, the Company has agreed to issue to each lender one common stock purchase warrant for each $3.00 loaned to the Company. The warrants expire three years following the date of issuance and may not be offered for sale, sold, transferred or assigned without the consent of the Company. The three-year warrants will be exercisable immediately at $3.00 per share. The Company issued notes in the aggregate principal amount of $850,000 and issued an aggregate of 283,329 warrants to the investors. The Company allocated the fair value of the warrants in the amount of $248,129 as a discount on notes payable which will be amortized over the term of the notes to interest expense in the income statement. The Company recognized amortization of discount on notes payable in interest expense of $100,999 for the year ended December 31, 2014. On October 15, 2014, principal in the amount of $500,000 and accrued interest in the amount of $7,397 was converted to one share of common stock plus one-half warrant for each $1.75 of the outstanding principal and accrued interest. The Company issued 289,941 common shares and 144,970 warrants in the private equity offering dated October 1, 2014, see Note 8. As of December 31, 2014 there were notes outstanding with a carrying amount of $297,794, net of $52,206 debt discount. | |||||||
On March 1, 2014, the Company commenced a similar non-public offering of notes and warrants up to $3,000,000 which closed December 31, 2014. The promissory notes bear interest at 12% per annum payable monthly, with principal and unpaid interest due and payable on January 6, 2016. Each lender in the offering received one warrant for each $3.00 loaned. The three-year warrants are exercisable immediately at $3.00 per share. During 2014, the Company issued notes in the aggregate principal amount of $1,299,003 and were issued with an aggregate of 432,995 warrants to the investors. The Company allocated the fair value of the warrants in the amount of $207,014 as a discount on notes payable which will be amortized over the term of the notes to interest expense in the income statement. The Company recognized amortization of discount on notes payable in interest expense of $52,618 for the year ended December 31, 2014. On October 15, 2014, principal in the amount of $1,229,003 and accrued interest in the amount of $21,758 was converted to one share of common stock plus one-half warrant for each $1.75 of the outstanding principal and accrued interest. The Company issued 714,720 common shares and 357,360 warrants in the private equity offering dated October 1, 2014, see Note 8. As of December 31, 2014 there were notes outstanding with a carrying amount of $62,438, net of $7,562 debt discount. | |||||||
On October 9, 2014, the Company received $75,000 in short-term unsecured debt. The note bears interest at 12% per annum payable monthly, with principal and unpaid interest due and payable on November 15, 2014. The note was extended to a maturity date of February 15, 2015. On December 31, 2014, the full principal amount of $75,000 and accrued interest in the amount of $2,047 was converted to one share of common stock plus one-half warrant for each $1.75 of the outstanding principal and accrued interest. The Company issued 44,026 common shares and 22,013 warrants in the private equity offering dated October 1, 2014, see Note 8. | |||||||
On December 11, 2014 the Company received $20,000 in short-term unsecured debt. The note bears interest at 12% per annum payable monthly, with principal and unpaid interest due and payable on February 15, 2015. As of December 31, 2014; principal in the amount of $20,000 was outstanding. On February 23, 2015, the note was converted into a senior secured note payable under a $2 million loan agreement with JMW Fund, Richland Fund, and San Gabriel Fund. | |||||||
The following table shows the difference between the reacquisition price of debt and the net carrying amount of the extinguished debt. The Company recognized a loss of $822,205 on the extinguishment of unsecured notes payable during the year ended December 31, 2014. | |||||||
Principal | Discounts | Accrued | Net | Fair value | Loss on | ||
on notes | interest | carrying | of the | the | |||
payable | value of the | common | extinguishment | ||||
debt | stock and | of debt | |||||
warrants | |||||||
Unsecured note Issued December 2013 | $90,000 | $ -- | $1,332 | $91,332 | $118,225 | $26,893 | |
Issued under the $1M loan agreement | 500,000 | 94,924 | 7,397 | 412,473 | 656,807 | 244,334 | |
Issued under the $3M loan agreement | 1,229,003 | 146,834 | 21,758 | 1,103,927 | 1,619,064 | 515,137 | |
October 9, 2014 Short-term | 75,000 | - | 2,047 | 77,047 | 112,886 | 35,841 | |
Total | $1,894,003 | $241,758 | $ 32,534 | $1,684,779 | $2,506,982 | $822,205 | |
Revolving line of credit - The Company assumed a revolving line of credit entered into by Dr. Pave at its inception in July 2013 in the amount of $229,980. The balance on the line of credit bears interest at a rate of 12% per annum. Interest is payable monthly on the first day of each month. The principal amount and all then-accrued and unpaid interest is payable on August 15, 2015. Interest on the line of credit totaling $7,079 was outstanding at December 31, 2014. | |||||||
Secured Notes Payable - The Company assumed secured notes payable issued by Dr. Pave on December 11, 2013 totaling $160,000. The notes bear interest at a rate of 12% per annum. Interest is payable monthly on the first day of each month. The principal amount and all then accrued and unpaid interest is payable on June 30, 2015. Interest on the secured notes payable totaling $4,641 was outstanding at December 31, 2014. | |||||||
In May 2013 the company issued senior secured notes payable totaling $1,000,000. The notes bear interest at a rate of 12% per annum and was payable monthly on the first day of each month. The entire principal balance and all accrued interest were due September 15, 2013. In August 2013, principal in the amount of $749,982 was retired through the issuance of Series D preferred shares. On September 15, 2013 the remaining principal in the amount of $250,018 and accrued interest was paid in full. | |||||||
Senior Subordinated Note Payable - The Company issued a senior subordinated note payable in the amount of $1,000,000 on April 15, 2011 to Richard Giles, a founder, stockholder and former director of the Company. The note bears interest at a rate of 6% per annum and matured on April 15, 2014. The holder of the senior subordinated note agreed to subordinate to the lenders of the senior secured notes his security interest in the Company’s assets granted under the Subordinated Security Agreement dated April 15, 2011. Mandatory principal payments of $500,000 were made in 2013 and the Company made the final required principal payments totaling $500,000 during the first half of 2014. | |||||||
Loan Payable | |||||||
In September 2012, the Company financed the purchase of equipment used for transportation and service work performed. The note, in the original amount of $142,290, bears interest at a rate of 2.6% per annum and matures on September 4, 2017. | |||||||
In August 2013, the Company financed the purchase of a truck to transport our equipment used in service and demonstrations. The loan, in the amount of $83,507, bears interest at a rate of 6.1% per annum and matures on December 1, 2018. | |||||||
In September 2014, the Company financed the purchase of equipment used in connection with the Heatwurx equipment to facilitate demonstrations and repairs. The loan, in the amount of $49,204; matures on October 15, 2018. | |||||||
As of December 31, 2014, the loans are subject to mandatory principal payments as follows: | |||||||
Year ending December 31, | Payments | ||||||
2015 | $ | 466,466 | |||||
2016 | 478,214 | ||||||
2017 | 49,856 | ||||||
2018 | 25,764 | ||||||
2019 | -- | ||||||
Total principal payments | $ | 1,020,300 | |||||
Income_Taxes_Disclosure
Income Taxes Disclosure | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Notes | ||||||
Income Taxes Disclosure | 7. INCOME TAXES: | |||||
The Company and its predecessor file income tax returns in the U.S. federal jurisdiction and in the states of Colorado, Utah, North Dakota and California. There are currently no income tax examinations underway for these jurisdictions. The Company filed its initial tax returns for the nine months ended December 31, 2011 with federal and Utah and December 31, 2012 is the initial tax filing period for Colorado, and December 31, 2013 is the initial tax filing period for North Dakota and California. | ||||||
The Company provides deferred income taxes for differences between the tax reporting bases and the financial reporting bases of assets and liabilities. The Company had no unrecognized income tax benefits. Should the Company incur interest and penalties relating to tax uncertainties, such amounts would be classified as a component of interest expense and operating expense, respectively. Unrecognized tax benefits are not expected to increase or decrease within the next twelve months. | ||||||
As of December 31, 2014, the Company’s tax year for 2011, 2012 and 2013 are subject to examination by the tax authorities. | ||||||
Deferred Income Taxes - The Company does not recognize the deferred income tax asset at this time because the realization of the asset is less likely than not. As of December 31, 2014, the Company has net operating losses for federal and state income tax purposes of approximately $8,386,743 and $7,717,262, respectively, which are available for application against future taxable income and which will start expiring in 2031 and 2026, respectively. The benefit associated with the net operating loss carry forward will more likely than not go unrealized unless future operations are successful. Since the success of future operations is indeterminable, the potential benefits resulting from these net operating losses have not been recorded in the financial statements. | ||||||
December 31, | December 31, | |||||
2014 | 2013 | |||||
Deferred Tax Assets: | ||||||
Net operating loss carry forward - Federal | $ | 2,851,493 | $ | 1,876,666 | ||
Net operating loss carry forward - State | 343,854 | 191,386 | ||||
Contribution carry forward | 199 | 188 | ||||
Stock-based compensation | 196,495 | 126,245 | ||||
Accrued liabilities and deferred rent | 15,139 | 7,707 | ||||
Amortization | 272,507 | 42,380 | ||||
Total | 3,679,687 | 2,244,572 | ||||
Valuation allowance for deferred tax asset | -3,562,412 | -2,177,939 | ||||
Total deferred tax assets | 117,275 | 66,633 | ||||
Deferred Tax Liabilities: | ||||||
Deferred state taxes | -- | -- | ||||
Depreciation | 117,275 | 66,633 | ||||
Amortization | - | -- | ||||
Total deferred tax liability | 117,275 | 66,633 | ||||
Net deferred tax asset | $ | -- | $ | -- | ||
A reconciliation between the statutory federal income tax rate of 34% and our effective tax rate for the year ended December 31, 2014, the period from January 1, 2013 through December 31, 2013, are as follows: | ||||||
Year ended | Year ended | |||||
31-Dec-14 | 31-Dec-13 | |||||
Federal statutory income tax rate | 34.00% | 34.00% | ||||
Permanent differences | -6.80% | -0.60% | ||||
Deferred tax asset valuation allowance | -30.60% | -36.80% | ||||
Other | 3.40% | 3.40% | ||||
Effective income tax rate | -- | -- | ||||
Stockholders_Equity_Disclosure
Stockholders' Equity Disclosure | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Notes | ||||
Stockholders' Equity Disclosure | 8. STOCKHOLDERS’ EQUITY: | |||
Common Stock - The Company has authorized 20,000,000 common shares with a $0.0001 par value. There were 9,495,045 shares issued and 10,952,356 outstanding at December 31, 2014 and 8,082,000 shares issued and outstanding at December 31, 2013. | ||||
On October 1, 2014, the Company commenced a non-public equity offering of up to 3,650,807 units at $1.75 per unit (the “Units”). Each Unit consists of one common share and one-half warrant, with each whole warrant exercisable at $2.00 per share. The purchase price for the Units is payable in either cash, conversion of outstanding Series D preferred shares or certain outstanding promissory notes. As of December 31, 2014 the Company raised $366,324 and issued 209,324 shares of common stock and warrants to purchase 104,659 shares of common stock as part of the private equity offering. The Company issued 1,207,491 shares of common stock and warrants to purchase 603,742 shares of common stock as part of the conversion of 704,379 Series D preferred shares. The Company issued 1,100,876 shares of common stock and warrants to purchase 550,438 shares of common stock as part of the conversion of $1,926,537 principal and accrued interest in certain outstanding promissory notes. | ||||
Preferred Stock - The Company has authorized 4,500,000 shares of Preferred Stock with a $0.0001 par value. As holders of any series of preferred stock convert into common shares the preferred shares are no longer outstanding and become available for reissuance. As of December 31, 2014 and 2013, there were 178,924 and 1,005,648 preferred shares outstanding, respectively. | ||||
Series A Preferred Stock - As of December 31, 2014 and 2013 there were no shares of Series A preferred stock outstanding. | ||||
There was no activity during the year ended December 31, 2014 and 600,000 Series A preferred shares were converted to common shares at a ratio of seven to one during the year ended December 31, 2013. The Series A preferred stock ranked senior in liquidation and dividend preferences to the Company’s common stock. Holders of Series A preferred stock accrued dividends at the rate per annum of $0.066664. Dividends on Series A preferred shares are paid only upon liquidation, therefore the conversion of Series A preferred shares to common shares resulted in a full release of the accumulated dividends as of December 31, 2013. | ||||
Series B Preferred Stock - As of December 31, 2014 there were no shares outstanding and 177,000 shares of Series B preferred stock outstanding as of December 31, 2013. | ||||
During the years ended December 31, 2014 and 2013; 177,000 and 1,323,000 Series B preferred shares were converted to common shares, respectively. The Series B preferred stock ranks senior in liquidation and dividend preferences to the Company’s common stock. Holders of Series B preferred stock accrue dividends at the rate per annum of $0.16 per share. Dividends on Series B preferred shares are paid only upon liquidation, therefore the conversion of Series B preferred shares to common shares resulted in a release of $40,529 and $361,426 in accumulated dividends during the years ended December 31, 2014 and 2013, respectively. | ||||
Series C Preferred Stock - As of December 31, 2014 there were no shares outstanding and 101,000 shares of Series C preferred stock outstanding as of December 31, 2013. | ||||
During the years ended December 31, 2014 and 2013; 101,000 and 659,000 Series C preferred shares were converted to common shares, respectively. The Series C preferred stock ranks senior in liquidation and dividend preferences to the Company’s common stock. Holders of Series C preferred stock accrue dividends at the rate per annum of $0.16 per share. Dividends of $24,869 and $95,600 were paid upon the conversion of Series C preferred shares to common shares during 2014 and 2013, respectively. | ||||
Series D Preferred Stock - As of December 31, 2014 and 2013 there were 178,924 and 727,648 shares of Series D preferred stock outstanding, respectively. | ||||
On June 21, 2013, the Company offered 1,500,000 units at $3.00 per unit for potential total proceeds of $4,500,000. On August 30, 2013, the Company completed its offering with a total of 727,648 units sold at $3.00 per unit for gross proceeds of $2,182,944, which consisted of $1,432,962 in cash and $749,982 in a non-cash conversion of senior secured notes payable. The Company paid share issuance costs in the amount of $84,232. Each unit consisted of one share of Series D preferred Stock and one-half warrant, with each whole warrant exercisable at $3.00 per share. | ||||
In October 2013, the Company initiated a follow-on Series D preferred stock offering to sell the remaining 772,352 units at $3.00 per unit for up to $2,317,056 gross proceeds. The offering includes an over-allotment of 1,000,000 units for an additional $3,000,000 in potential gross proceeds. The offering term was extended and ended May 30, 2014. The terms of the follow-on Series D preferred stock offering are the same as the original Series D preferred stock offering. | ||||
In January 2014, the Company issued 53,332 units sold at $3.00 per unit for gross proceeds of $159,996. The Company paid share issuance costs in the amount of $6,000. Each unit in this offering consists of one share of the Company’s Series D preferred stock and one-half warrant, with each whole warrant exercisable at $3.00 per share. The Company issued warrants to purchase 26,666 shares of common stock outstanding. The warrants will be exercisable by the holders at any time on or after the issuance date of the warrants through October 1, 2015. | ||||
In May 2014, the Company issued 118,655 units sold at $3.00 per unit for gross proceeds of $355,967. Each unit consisted of one share of the Company’s Series D preferred stock and one-half warrant, with each whole warrant exercisable at $3.00 per share. The Company issued warrants to purchase 59,327 shares of common stock. The warrants will be exercisable by the holders at any time through October 1, 2015. | ||||
Holders of Series D preferred stock accrue dividends at the rate per annum of $0.24 per share, payable on a quarterly basis. As dividends are accrued and payable quarterly on the Series D preferred stock, the Company paid dividends of $177,846 and $24,407 during the years ended December 31, 2014 and 2013, respectively. As of December 31, 2014 the Company has dividends payable in accrued expenses of $45,590. | ||||
The holders of the Series D preferred stock have conversion rights equivalent to such number of fully paid and non-assessable shares of common stock as is determined by dividing the Series D original issue price of $3.00 by the then applicable conversion price. Each Series D Share will convert into one share of our common stock at any time at the option of the holder of the Series D Shares or will be converted at the option of the Company at any time the trading price of our common stock is at least $4.50 per share for ten consecutive trading days. The conversion ratio is subject to anti-dilution adjustments, including in the event that the Company issues equity securities at a price equivalent to or less than the conversion price in effect immediately prior to such issue. The Company determined that there is a beneficial conversion feature (“BCF”). The calculated value as of the commitment date of the BCF was $176,729, which represents the difference between the effective conversion price and the stated conversion price multiplied by the total number of shares which may be converted. We have recorded this amount as a deemed dividend as of the date of issuance, August 30, 2013, as the Series D preferred stock is immediately convertible. During 2014 the Company extended the warrant expiration date one year which created a modification to the original unit offering. The Company calculated additional value to the BCF of $24,279 and recorded this amount as a deemed dividend as of the date of extension. The above mentioned amounts were recorded as a charge against our accumulated deficit in our accompanying balance sheet. | ||||
During the year ended December 31, 2014, shareholders owning 16,332 shares of Series D preferred stock converted the preferred shares into 16,332 shares of common stock pursuant to the conversion provision in the Certificate of Designations of Series D preferred stock. | ||||
In October 2014 the Company induced conversion of the Series D preferred stock into the private equity offering dated October 1, 2014. Each holder of the Series D preferred shares was offered common stock as determined by the dividing the original issue price of $3.00 by the private equity offering unit price of $1.75, times the number of Series D preferred shares being converted. The holders of the Series D preferred shares received the calculated number of common shares and one-half warrant per common share. The Company converted 704,379 Series D preferred shares into 1,207,491 common shares and 603,742 warrants exercisable at $2.00 per share, each warrant grants the right to purchase a share of the Company’s common stock. The Company determined that there is an inducement premium associated with the conversion of the Series D preferred into the private equity offering dated October 1, 2014. The calculated value of the inducement premium was $1,332,376, which represents the additional number of common shares issued as a result of the lower conversion price multiplied by the stock’s trading price on the day of conversion price plus the fair value of the warrants. The Company recorded this amount as a deemed dividend as of December 31, 2014. | ||||
The holders of Series D preferred stock have a liquidation preference over the holders of the Company’s common stock equivalent to the purchase price per share of the Series D preferred stock plus any accrued and unpaid dividends, whether or not declared, on the Series D preferred stock. A liquidation would be deemed to occur upon the happening of customary events, including transfer of all or substantially all of the Company’s common stock or assets or a merger, or consolidation. The Company believes that such liquidation events are within its control and therefore the Company has classified the Series D preferred stock in stockholders’ equity. | ||||
The holders of Series D preferred stock vote together as a single class with the holders of the Company’s common stock on all action to be taken by the Company’s stockholders. Each share of Series D preferred stock entitles the holder to the number of votes equal to the number of shares of common stock into which the shares of the Series D preferred stock are convertible as of the record date for determining stockholders entitled to vote on such matter. | ||||
The Company agreed to use its best efforts to register the shares underlying the warrants issued in the Series D preferred stock offering and the Private equity offering dated October 1, 2014. | ||||
Stock Options | ||||
Number of Options | Weighted | Weighted | ||
Average | Average | |||
Exercise | Remaining | |||
Price | Life (Years) | |||
Balance, December 31, 2012 | 1,022,000 | $2.00 | 4.3 | |
Granted | 410,000 | $2.76 | ||
Exercised | -- | $ -- | ||
Cancelled | -112,000 | $2.00 | ||
Balance, December 31, 2013 | 1,320,000 | $2.23 | 3.44 | |
Granted | 298,000 | $3.00 | ||
Exercised | -- | -- | ||
Cancelled | -371,500 | $2.46 | ||
Balance, December 31, 2014 | 1,246,500 | $2.35 | 2.83 | |
Exercisable, December 31, 2013 | 845,000 | $2.04 | ||
Exercisable, December 31, 2014 | 882,583 | $2.20 | ||
On January 13, 2014, the Board of Directors approved the grant of 94,000 options to employees of the Company, in accordance with the terms of the 2011 Equity Incentive Plan, as amended. One-third of the options vest immediately, with the remaining vesting over a 2 year period. The options have an exercise price of $3.00 per share, with an expiration date of five years from the grant date. | ||||
On January 16, 2014, the Board of Directors approved the grant of 40,000 options to the Company’s Directors for their 2013 service, in accordance with the terms of the 2011 Equity Incentive Plan, as amended. The options vest immediately and have an exercise price of $3.00 per share, with an expiration date of five years from the grant date. | ||||
On February 1, 2014, the Board of Directors approved the grant of 50,000 options to an employee of the Company, in accordance with the terms of the 2011 Equity Incentive Plan, as amended. The options vest ratably over a four year period. The options have an exercise price of $3.00 per share, with an expiration date of five years from the grant date. | ||||
On April 4, 2014, the Board of Directors approved the grant of 4,000 options to employees of the Company, in accordance with the terms of the 2011 Equity Incentive Plan, as amended. One-third of the options vest immediately, with the remaining vesting over a two year period. The options have an exercise price of $3.00 per share, with an expiration date of five years from the grant date. | ||||
On June 19, 2014, the Board of Directors approved the grant of 10,000 options to the new Secretary of the Board. The options vest immediately. The options have an exercise price of $3.00 per share, with an expiration date of five years from the grant date. | ||||
On June 19, 2014, the Board of Directors approved the grant of 100,000 options to an employee of the Company, in accordance with the terms of the 2011 Equity Incentive Plan, as amended. The options vest ratably over a three-year period. The options have an exercise price of $3.00 per share, with an expiration date of five years from the grant date. | ||||
The fair value of each stock option granted was estimated on the date of grant using the Black Scholes option pricing model with the following assumptions: | ||||
31-Dec-14 | 31-Dec-13 | |||
Risk-free interest rate range | 1.49%-1.71% | 0.11% - 1.55% | ||
Expected life | 5.0 Years | 5.0 Years | ||
Vesting period | 0 - Years | 0 - 4 Years | ||
Expected volatility | 42% | 39% | ||
Expected dividend | - | - | ||
Fair value range of options at grant date | $0.671 - $1.167 | $1.008 - $1.089 | ||
Significant assumptions utilized in determining the fair value of our stock options included the volatility rate, estimated term of the options, risk-free interest rate and forfeiture rate. In order to estimate the volatility rate at each issuance date, given that the Company has not established a historical volatility rate as it has minimal trading volume since we began trading in October 2013, management reviewed volatility rates for a number of companies with similar manufacturing operations to arrive at an estimated volatility rate for each option grant. The term of the options was assumed to be five years, which is the contractual term of the options. The risk-free interest rate was determined utilizing the treasury rate with a maturity equal to the estimated term of the option grant. Finally, management assumed a zero forfeiture rate as the options granted were either fully-vested upon the date of grant or had relatively short vesting periods. As such, management does not currently believe that any of the options granted will be forfeited. We will monitor actual forfeiture rates, if any, and make any appropriate adjustments necessary to our forfeiture rate in the future. | ||||
For the years ended December 31, 2014 and 2013, the Company recorded stock-based compensation expense of $231,524 and $216,083, respectively. | ||||
As of December 31, 2014 and 2013 there was $308,041 and $404,006, respectively, of unrecognized compensation expense related to the issuance of the stock options. | ||||
Performance Stock Options | ||||
There were no performance stock options granted during the year ended December 31, 2014. | ||||
Number of Options | Weighted | |||
Average | ||||
Exercise | ||||
Price | ||||
Balance, December 31, 2012 | 1,440,000 | $0.06 | ||
Granted | -- | $ -- | ||
Exercised | -- | $ -- | ||
Cancelled | -- | $ -- | ||
Balance, December 31, 2013 and 2014 | 1,440,000 | $0.11 | ||
Exercisable, December 31, 2013 and 2014 | 40,000 | $2.00 | ||
See Note 4 for further discussion of the performance options. | ||||
Warrants | ||||
The Company issued 85,993 warrants during the year ended December 31, 2014 and 363,824 warrants during the year ended December 31, 2013 in connection with the Series D unit offering discussed above. Each unit consisted of one share of Series D preferred stock and one-half warrant, with each whole warrant exercisable at $3.00 per share and grants the right to purchase a share of the Company’s common stock. The warrants are exercisable by the holders through and including October 1, 2015. | ||||
The Company issued 283,329 warrants in connection with the non-public offering of notes and warrant up to $1,000,000. The warrants expire three years from the date of issuance and are exercisable immediately at $3.00 per share. | ||||
The Company issued 432,995 warrants in connection with the non-public offering of notes and warrants up to $3,000,000. The warrants expire three years from the date of issuance and are exercisable immediately at $3.00 per share. | ||||
The Company issued 104,659 warrants in connection with the private equity offering dated October 1, 2014 discussed above. Each unit consisted of one share of Common stock and one-half warrant, with each whole warrant exercisable at $2.00 per share and grants the right to purchase a share of the Company’s common stock. The warrants expire three years from the date of issuance and are exercisable immediately. | ||||
The Company issued 550,438 warrants in connection with the conversion of unsecured notes payable into the private equity offering dated October 1, 2014. The unsecured notes payable converted into one share of common stock plus one-half warrant for each $1.75 of the outstanding principal and accrued interest. The warrants expire three years from the date of issuance and are exercisable immediately at $2.00 per share. | ||||
The Company issued 603,742 warrants in connection with the conversion of Series D preferred shares into the private equity offering dated October 1, 2014. The Series D preferred shares converted into one share of common stock plus one-half warrant for each $1.75 of the original purchase price. The warrants expire three years from the date of issuance and are exercisable immediately at $2.00 per share. | ||||
Number of | Weighted | Weighted | ||
Warrants | Average | Average | ||
Exercise | Remaining | |||
Price | Life (Years) | |||
Balance, December 31, 2012 | -- | $ -- | ||
Granted | 363,824 | $3.00 | ||
Exercised | -- | $ -- | ||
Cancelled | -- | $ -- | ||
Balance, December 31, 2013 | 363,824 | $3.00 | 1.88 | |
Granted | 2,061,156 | $2.39 | ||
Exercised | -- | -- | ||
Cancelled | -- | -- | ||
Balance, December 31, 2014 | 2,424,980 | $2.48 | 2.28 | |
Net_Loss_Per_Common_Share_Disc
Net Loss Per Common Share Disclosure | 12 Months Ended | ||
Dec. 31, 2014 | |||
Notes | |||
Net Loss Per Common Share Disclosure | 9. NET LOSS PER COMMON SHARE: | ||
The Company computes loss per share of common stock using the two-class method required for participating securities. The Company’s participating securities include all series of its convertible preferred stock. Undistributed earnings allocated to these participating securities are added to net loss in determining net loss applicable to common stockholders. Basic and Diluted loss per share are computed by dividing net loss applicable to common stockholder by the weighted-average number of shares of common stock outstanding. | |||
Outstanding options and warrants underlying 3,671,480 shares were not included in the computation of diluted loss per share because the exercise price was greater than the average market price of the common shares and, therefore, the effect would be anti-dilutive. | |||
The calculation of the numerator and denominator for basic and diluted net loss per common share is as follows: | |||
For the year | For the year | ||
ended | ended | ||
December 31, | December 31, | ||
2014 | 2013 | ||
Net Loss | ($4,526,250) | ($3,068,701) | |
Basic and diluted: | |||
Preferred stock cumulative dividend - Series A (1) | -- | -68,490 | |
Preferred stock cumulative dividend - Series B (1) | -62,227 | -224,458 | |
Preferred stock cumulative dividend - Series C | 2,200 | 69,096 | |
Preferred stock cumulative dividend - Series D | 230,542 | 245,154 | |
Deemed dividend - inducement premium | 1,332,376 | -- | |
Income applicable to preferred stockholders | 1,502,891 | 21,302 | |
Net loss applicable to common stockholders | ($6,029,141) | ($3,090,003) | |
(1) Upon conversion of the Series B preferred stock into common stock, the holders of the Series B preferred stock were no longer entitled to the dividends recorded in the adjustment to net loss applicable to common shareholders in prior periods. As a result, current year reported dividends were adjusted downward to reflect this release of accumulated dividends. | |||
Commitments_and_Contingencies_
Commitments and Contingencies Disclosure | 12 Months Ended |
Dec. 31, 2014 | |
Notes | |
Commitments and Contingencies Disclosure | 10. COMMITMENTS AND CONTINGENCIES: |
Lease Commitments - On July 18, 2012, the Company entered into a thirteen month lease for office space for its corporate headquarters located in Greenwood Village, Colorado. Under the terms of the lease agreement, the Company leased approximately 2,244 square feet of general office space. The lease term commenced on July 23, 2012 and ended June 30, 2014. | |
Upon movement of the Company’s corporate headquarters to California, the Company assumed a lease of warehouse and office space for the equipment and operations located in Gardena, CA. The lease term continues through July 2015. | |
Total rent expense for the year ended December 31, 2014 and 2013 was $55,744 and $36,404, respectively. | |
The Company’s remaining commitment under its current lease term for 2015 is approximately $20,000. | |
Purchase Commitments - During the year ended December 31, 2014, the Company had a commitment to its manufacturer to purchase equipment and parts totaling approximately $70,000. In December 2014, the Company paid the existing commitment in full. No future commitment exists at this time. |
Related_Party_Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2014 | |
Notes | |
Related Party Transactions | 11. RELATED PARTY TRANSACTIONS: |
Consulting arrangements | |
On July 15, 2014, the Company terminated the Consulting Agreement with Mr. Richard Giles, a founder, stockholder, and former director of the Company. The Company paid consulting fees of $69,800 to Mr. Giles during the year ended December 31, 2014; and $189,600 during the year ended December 31, 2013. The Company had a Senior Subordinated note payable with Mr. Richard Giles, during the year ended December 31, 2014, the Company made the final required principal payments totaling $500,000 and paid interest of $7,500. The Company paid principal payments totaling $500,000 and interest of $57,500 on the Senior Subordinated note payable during the year ended December 31, 2013. | |
In November 2014 the Company entered into an arrangement with Heather Kearns, the Interim Chief Financial officer and paid consulting fees of $18,000. | |
Share activity | |
Justin Yorke is the manager of the JMW Fund, the San Gabriel Fund and the Richland Fund; and was a director from April 2011 until June 2012. During the year ended 2014 Mr. Yorke, as the manager, was issued 83,330 Series D preferred shares and warrants to purchase 41,665 common shares. Mr. Yorke, as the manager, converted 166,660 Series D preferred shares into 285,700 common shares and warrants to purchase 142,850 common shares as part of the Private equity offering dated October 1, 2014. Mr. Yorke, as the manager, accrued dividends from preferred stock in 2014 totaling $27,725. During 2014, Mr. Yorke, as the manager, was issued unsecured notes payable in the aggregate principal amount of $1,729,003, bearing interest at 12% per annum and granted warrants to purchase 576,327 common shares in connection with the Company’s $1 million and $3 million note offerings. In October 2014, Mr. Yorke, as the manager, was issued a short-term unsecured loan in the amount of $75,000, bearing interest at 12% per annum. Mr. Yorke, as the manager, converted an aggregate amount or $1,926,537 unsecured notes payable and accrued interest into 1,100,876 common shares and was granted warrants to purchase 550,438 common shares in the Private equity offering dated October 1, 2014. As of December 31, 2014 the Company has an unsecured note payable with Mr. Yorke, as the manager, in the amount of $20,000; a secured note payable in the amount of $160,000, and an outstanding balance of $138,000 on the revolving line of credit. Mr. Yorke, as the manager, received or has accrued interest payments from loans payable in 2014 totaling $105,275. See Note 14 for additional disclosure. | |
During the year ended December 31, 2014, Mr. Gus Blass III, a member of our board of directors and a stockholder, was issued 16,666 Series D preferred shares and warrants to purchase 8,333 common shares. Mr. Blass III received or has accrued dividends from preferred stock in 2014 totaling $22,355. In addition, Mr. Gus Blass II, a former member of our board of directors and father to Mr. Gus Blass III, a member of our board of directors, was issued an unsecured note payable in the amount of $250,000 during 2014, paying interest at 12% per annum, with a maturity date of January 6, 2016. Mr. Gus Blass II was granted warrants to purchase 83,333 common shares in connection with the unsecured note payable. Mr. Blass II, received or has accrued interest payments in 2014 totaling $29,507. | |
During the year ended December 31, 2014, Reginald Greenslade, a member of our board of directors and a stockholder, was issued 16,659 Series D preferred shares and warrants to purchase 8,329 common shares. Mr. Greenslade converted 16,659 Series D preferred shares into 28,487 common shares and warrants to purchase 14,279 common shares in the Private equity offering dated October 1, 2014. Mr. Greenslade received or has accrued dividends from preferred stock in 2014 totaling $2,180. On January 1, 2014 as part of the Dr. Pave, LLC acquisition, the Company assumed an outstanding balance of $45,980 on the revolving line of credit to Mr. Greenslade. Mr. Greenslade received or has accrued interest in 2014 totaling $5,518. | |
During the year ended 2014, the Company issued 1,500 Series D preferred shares and warrants to purchase 750 common shares to David Dworsky, the Chief Executive Officer of the Company. Mr. Dworsky received or has accrued dividends in 2014 totaling $213. | |
During the year ended December 31,2013, Mr. Yorke, as the manager, of JMW Fund, San Gabriel Fund and Richland Fund; held $400,000 of the senior secured notes payable, $250,000 of the notes were converted into 83,330 Series D preferred shares and warrants to purchase 41,665 common shares. Mr. Yorke, as the manager, received dividends from preferred stock in 2013 totaling $6,794. As of December 31, 2013 the Company had an unsecured note payable with Mr. Yorke, as the manager, in the amount of $90,000. Mr. Yorke, as the manager, received interest payments in the amount of $8,617 during 2013. | |
During the year ended December 31, 2013, Mr. Gus Blass III, a member of our board of directors and a stockholder, held $125,000 of the senior secured notes payable in an individual capacity and $125,000 through an entity in which he is a managing member. The principal amount of the senior secured notes payable was converted into 83,332 Series D preferred shares and warrants to purchase 41,666 common shares. Mr. Blass III received dividends from preferred stock in 2013 totaling $6,685. In addition, Mr. Gus Blass II, a former member of our board of directors and father to Mr. Gus Blass III, a member of our board of directors, held a senior secured note payable in the amount of $250,000 during 2013, the senior secured note payable, principal and interest, was paid in full to Mr. Blass II on September 15, 2013. Mr. Blass II, received interest payments in 2013 totaling $9,452. | |
Dr. Pave Acquisition | |
On January 7, 2014, the Company entered into an Agreement and Plan of Reorganization (the “Acquisition Agreement”) dated January 8, 2014 with Dr. Pave, LLC, a California limited liability company. Dr. Pave, LLC was controlled by David Dworsky, the Chief Executive Officer of the Company. The Company acquired all of the outstanding membership interests in Dr. Pave for 58,333 shares of common stock of the Company at a value of $3.00 per share for total consideration in the amount of $175,000. The consideration included the issuance of 41,668 shares to Dworsky Partners, LLC, an entity in which David Dworsky owned 80% of the ownership interest, and 3,333 shares to Reginald Greenslade, a member of our board of directors. |
Supplemental_Cash_Flow_Informa
Supplemental Cash Flow Information | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Notes | ||||||
Supplemental Cash Flow Information | 12. SUPPLEMENTAL CASH FLOW INFORMATION | |||||
For the year | For the year | |||||
ended | ended | |||||
December 31, | December 31, | |||||
2014 | 2013 | |||||
Cash paid for interest | $ | 194,447 | $ | 107,913 | ||
Cash paid for income taxes | $ | 132 | $ | 100 | ||
Series C Dividend payable in accrued expenses | $ | -- | $ | 22,668 | ||
Series D Dividend payable in accrued expenses | $ | 45,590 | $ | 44,018 | ||
Non-Cash investing and financing transactions | ||||||
Repayment of unsecured notes payable and accrued interest with issuance of common shares | $ | 2,506,982 | $ | -- | ||
Repayment of senior secured notes payable with issuance of Series D preferred shares | $ | -- | $ | 749,982 | ||
Financing the purchase of equipment under a 4 year loan agreement | $ | 49,204 | $ | -- | ||
Financing the purchase of equipment under a 5 year loan agreement | $ | -- | $ | 83,507 | ||
Deemed dividend and inducement premium on conversion of Series D preferred shares to common shares | $ | 1,332,376 | $ | -- | ||
Beneficial conversion feature on warrants issued in conjunction with Series D preferred shares | $ | 51,110 | $ | 176,729 | ||
Supplementary_Financial_Inform
Supplementary Financial Information (unaudited) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Notes | |||||||||
Supplementary Financial Information (unaudited) | 13. SUPPLEMENTARY FINANCIAL INFORMATION (UNAUDITED) | ||||||||
The following summarizes the Company’s quarterly results of operations for 2014 and 2013: | |||||||||
2014 | 31-Mar | 30-Jun | 30-Sep | 31-Dec | |||||
Total revenue | $ | 20,345 | $ | 112,835 | $ | 52,621 | $ | 14,400 | |
Net loss | -1,344,276 | -851,216 | -791,954 | -1,538,804 | |||||
Net loss applicable to common stockholders | -1,382,824 | -912,351 | -871,840 | -2,862,126 | |||||
Net loss per common share | $ | -0.17 | $ | -0.11 | $ | -0.1 | $ | -0.32 | |
basic and diluted | |||||||||
2013 | 31-Mar | 30-Jun | 30-Sep | 31-Dec | |||||
Total revenue | $ | 19,200 | $ | 97,280 | $ | 125,910 | $ | 70,090 | |
Net loss | -816,365 | -726,571 | -718,840 | -806,925 | |||||
Net loss applicable to common stockholders | -915,307 | -768,358 | -932,600 | -473,738 | |||||
Net loss per common share | $ | -0.48 | $ | -0.34 | $ | -0.12 | $ | -0.06 | |
basic and diluted | |||||||||
Subsequent_Events
Subsequent Events | 12 Months Ended | ||
Dec. 31, 2014 | |||
Notes | |||
Subsequent Events | 14. SUBSEQUENT EVENTS | ||
On March 17, 2015, Stephen Garland resigned from his position as director of the Company. | |||
Share offering | |||
The Company raised an additional $88,000 and issued 50,284 shares of common stock and warrants to purchase 25,141 shares of common stock through the close of the Private equity offering on March 1, 2015. | |||
In March 2015, the Company issued 15,000 common shares to consultants for services. | |||
Debt offerings | |||
On February 16, 2015, the Company entered into a Senior secured loan agreement with JMW Fund, Richland Fund, and San Gabriel Fund (collectively called the lenders) whereby the lenders agreed to loan to the Company up to an aggregate of $2,000,000. The interest rate on the notes is 12% per annum and monthly interest payments are due the first day each month beginning March 1, 2015. The notes mature six months from the date of issuance. If any interest payment remains unpaid in excess of 90 days, and the lender has not declared the entire principal and unpaid accrued interest due and payable, the interest rate on that amount only will be increased to 18% per annum, until the past due interest amount is paid in full. The notes and any future notes under the loan agreement are secured by all of the assets of the Company, including intellectual property rights. Upon the occurrence of an event of default the lenders have the right to foreclose on the assets of the Company. | |||
On February 23, 2015 the Company converted the December 11, 2014 short-term unsecured note payable into a senior secured promissory note in the amount of $20,000 under the $2 million Loan agreement. | |||
As of April 8, 2015 the following lists the senior secured notes outstanding: | |||
Date loan proceeds received | Loan maturity date | Funding received | |
JMW Fund | |||
2/5/15 | 8/15/15 | $40,000 | |
2/23/15 | 8/23/15 | $40,000 | |
2/24/15 | 8/24/15 | $50,000 | |
3/3/15 | 9/15/15 | $40,000 | |
3/11/15 | 9/15/15 | $30,000 | |
San Gabriel Fund | |||
2/5/15 | 8/15/15 | $40,000 | |
2/23/15 | 8/23/15 | $40,000 | |
2/24/15 | 8/24/15 | $50,000 | |
3/13/15 | 9/15/15 | $30,000 | |
Richland Fund | |||
2/5/15 | 8/15/15 | $10,000 | |
2/23/15 | 8/23/15 | $20,000 | |
2/26/15 | 8/26/15 | $50,000 | |
3/11/15 | 9/15/15 | $30,000 | |
TOTAL | $470,000 | ||
Summary_of_Significant_Account1
Summary of Significant Accounting Policies: Basis of Presentation (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Basis of Presentation | Basis of Presentation - These consolidated financial statements and related notes are presented in accordance with the accounting principles generally accepted in the United States (“U.S. GAAP”) and are expressed in U.S. dollars. The Company’s consolidated financial statements include Dr. Pave, LLC and Dr. Pave Worldwide, LLC; both wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in the consolidated financial statements. |
The Company’s financial statements are prepared using U.S. GAAP applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. Certain prior year balances have been reclassified to conform to the current year’s presentation. Such reclassifications had no effect on the net loss. | |
The Company also faces certain risks and uncertainties which are present in many emerging companies regarding product development, future profitability, ability to obtain future capital, protection of patents and property rights, competition, rapid technological change, government regulations, recruiting and retaining key personnel, and third party manufacturing organizations. | |
To date we have relied exclusively on private placements with a small group of investors to finance our business and operations. We have had little revenue since our inception. For the year ended December 31, 2014, the Company incurred a net loss of approximately $4,526,000 and utilized approximately $2,695,000 in cash flows from operating activities. The Company had cash on hand of approximately $21,000 as of December 31, 2014. Successful completion of the Company’s marketing program and its transition to profitable operations is dependent upon obtaining additional financing adequate to fulfill its commercialization activities, and achieve a level of revenues adequate to support the Company’s cost structure. Many of the Company’s objectives to establish profitable business operations rely upon the occurrence of events outside its control; there is no assurance that the Company will be successful in accomplishing these objectives. The Company cannot assure that additional debt, equity or other funding will be available to it on acceptable terms, if at all. If the Company fails to obtain additional funding when needed, it would be forced to scale back, or terminate its operations, or seek to merge with or be acquired by another company. | |
Management anticipates that the Company will require significant additional funds to continue operations. As of December 31, 2014, we had approximately $21,000 cash on hand and were spending approximately $290,000 per month, of which only a minor amount was satisfied by gross proceeds from operations. Hence, the amount of cash on hand is not adequate to meet our operating expenses over the next twelve months. As of April 8, 2015 the Company raised $450,000 in relation to a $2,000,000 senior secured debt offering issued in February. | |
The issues described above raise substantial doubt about the Company’s ability to continue as a going concern. Although the Company has commenced a new $2,000,000 secured debt offering, it cannot guarantee it will be able to raise the entire offering amount, if any. The Company is solely reliant on raising additional debt and capital in order to maintain its current operations. To date the Company, has been able to raise debt and equity financing through the assistance of a small number of our investors who have been substantial participants in its debt and equity offerings since the Company’s formation. If these investors choose not to assist the Company with its capital raising initiatives in the future, the Company does not expect that it would be able to obtain any alternative forms of financing at this time and the Company would not be able to continue to satisfy its current or long term obligations. Based upon the Company’s current monthly spend the Company anticipates the need to raise at least $3,500,000 to meet its cash flow requirements for the next twelve months. If the Company successfully raise $2,000,000 in the private debt offering, the proceeds the Company will receive and anticipated revenues from equipment sales and service performed may not be sufficient to fund the Company’s operations, including the Company’s expected capital expenditures, through the next twelve months. Without additional funds, the Company will be required to reduce operations, curtail any future growth opportunities, cease operations all together, or seek to merge with or be acquired by another company. | |
The accompanying audited financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be different should the Company be unable to continue as a going concern. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies: Use of Estimates, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Use of Estimates, Policy | Use of Estimates - The preparation of financial statements in conformity with U.S. GAAP requires the use of estimates and assumptions by management that affect reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions are continuously evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances. While management believes the estimates to be reasonable, actual results could differ materially from those estimates and could impact future results of operations and cash flows. |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies: Cash and Cash Equivalents, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Cash and Cash Equivalents, Policy | Cash and Cash Equivalents - The Company considers all highly liquid investments with a maturity at the date of purchase of three months or less to be cash equivalents. The Company had no cash equivalents at December 31, 2014. At times, the Company may have cash balances in excess of the Federal Deposit Insurance Corporation (“FDIC”) insured limits of up to $250,000. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk. As of December 31, 2014, none of the Company’s accounts exceeded the FDIC insured limits. |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies: Accounts Receivable and Bad Debt Expense (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Accounts Receivable and Bad Debt Expense | Accounts Receivable and Bad Debt Expense - Management reviews individual accounts receivable balances that exceed 90 days from the invoice date. Based on an assessment of current creditworthiness of the customer, the Company estimates the portion, if any, of the balance that will not be collected. All accounts deemed to be uncollectible are written off to operation expense. There was no allowance for uncollectible accounts for the years ended December 31, 2014 and 2013. |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies: Inventories, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Inventories, Policy | Inventories - The Company’s finished goods and materials and supplies inventories are recorded at lower of cost or net realizable value. Cost is determined by using the FIFO (first-in, first-out) inventory method. |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies: Equipment, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Equipment, Policy | Equipment - Equipment is stated at cost and consists of office and computer equipment depreciated on a straight line basis over an estimated useful life of three years, and process demonstration equipment (demo equipment) depreciated on a straight line basis over an estimated useful life of seven years. Maintenance and repairs are charged to expense as incurred. |
Summary_of_Significant_Account7
Summary of Significant Accounting Policies: Impairment of Long-Lived Assets, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Impairment of Long-Lived Assets, Policy | Impairment of Long-lived Assets - The Company periodically reviews its long-lived assets to determine potential impairment by comparing the carrying value of the long-lived assets with the estimated future net undiscounted cash flows expected to result from the use of the assets, including cash flows from disposition, at least annually or more frequently if events or changes in circumstances indicate a potential impairment may exist. Should the sum of the expected future net cash flows be less than the carrying value, the Company would recognize an impairment loss at that date. An impairment loss would be measured by comparing the amount by which the carrying value exceeds the fair value (estimated discounted future cash flows) of the long-lived assets. The Company performs its impairment analysis in October of each year. There were no impairment charges for the years ended December 31, 2014 and 2013. |
Summary_of_Significant_Account8
Summary of Significant Accounting Policies: Goodwill Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Goodwill Policy | Goodwill - The Company recognizes goodwill as the excess purchase price paid after allocation to the identifiable assets and liabilities based on their estimated fair value. The Company assesses the carrying amount of goodwill for impairment annually, or more frequent if an event occurs or circumstances changes that would more likely than not reduce the fair value below its carrying value. The Company recognized an immediate impairment on the goodwill acquired in the purchase of Dr. Pave, LLC, based on the lack of service revenue during the prior year. |
Summary_of_Significant_Account9
Summary of Significant Accounting Policies: Intangible Assets, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Intangible Assets, Policy | Intangible Assets - Intangible assets consist of developed technology acquired as part of an acquisition, which was deemed in-process research and development upon acquisition. During development, in-process research and development is not subject to amortization and is tested for impairment. In October 2012, the in-process research and development was reclassified as developed technology. The Company’s developed technology is amortized over its estimated useful life of seven years. |
Recovered_Sheet1
Summary of Significant Accounting Policies: Debt Discount Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Debt Discount Policy | Debt Discount - The Company recognizes the fair value of detachable warrants issued in conjunction with a debt instrument as debt discount. The discount is amortized using the interest method over the life of the notes. The amortization of the discount was $153,617 for the year ended December 31, 2014. |
Recovered_Sheet2
Summary of Significant Accounting Policies: Extinguishment of Debt Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Extinguishment of Debt Policy | Extinguishment of Debt - The Company recognizes any difference between the reacquisition price of debt and the net carrying amount of the extinguished debt in income of the period of the extinguishment as gains or losses. The Company recognized a loss of $822,205 on the extinguishment of unsecured notes payable during the year ended December 31, 2014. |
Recovered_Sheet3
Summary of Significant Accounting Policies: Stock-based Compensation, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Stock-based Compensation, Policy | Stock-Based Compensation - The Company accounts for the cost of employee services received in exchange for the award of equity instruments based on the fair value of the award, determined on the date of grant. The expense is to be recognized over the period during which an employee is required to provide services in exchange for the award. The Company estimates forfeitures at the time of grant and makes revisions, if necessary, at each reporting period if actual forfeitures differ from those estimates. The Company estimated future unvested forfeitures at 0% for the year ended December 31, 2014. |
Recovered_Sheet4
Summary of Significant Accounting Policies: Advertising Expense, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Advertising Expense, Policy | Advertising Expense - The Company charges advertising costs to expense as incurred. Advertising costs were $90,109 and $247,500 for the year ended December 31, 2014 and 2013, respectively. |
Recovered_Sheet5
Summary of Significant Accounting Policies: Income Taxes, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Income Taxes, Policy | Income Taxes - The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. |
The provision for income taxes includes federal and state income taxes currently payable and deferred taxes resulting from temporary differences between the financial statement and tax basis of assets and liabilities. Valuation allowances are recorded to reduce deferred tax assets when it is more-likely-than-not that a tax benefit will not be realized. | |
With respect to uncertain tax positions, the Company would recognize the tax benefit from an uncertain tax position only if it is more-likely-than-not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. The Company had no unrecognized tax benefits or uncertain tax positions at December 31, 2014 or 2013. |
Recovered_Sheet6
Summary of Significant Accounting Policies: Compensated Absences, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Compensated Absences, Policy | Compensated absences - At December 31, 2014 and 2013, the Company recorded a liability for paid time off earned by permanent employees but not taken, in accordance with human resource policies. |
Recovered_Sheet7
Summary of Significant Accounting Policies: Research and Development, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Research and Development, Policy | Research and development - Research and development costs are expensed as incurred and consist of direct and overhead-related expenses. Expenditures to acquire technologies, including licenses, which are utilized in research and development and that have no alternative future use are expensed when incurred. Technology the Company develop for use in its products is expensed as incurred until technological feasibility has been established after which it is capitalized and depreciated. |
Recovered_Sheet8
Summary of Significant Accounting Policies: Revenue Recognition, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Revenue Recognition, Policy | Revenue Recognition - The Company sells its equipment (HWX-30 heater, HWX-30S mobile heater and HWX-AP-40 asphalt processor), as well as certain consumables to third parties. Equipment sales revenue is recognized when all of the following criteria are satisfied: (a) persuasive evidence of a sales arrangement exists; (b) price is fixed and determinable; (c) collectability is reasonably assured; and (d) delivery has occurred. Persuasive evidence of an arrangement and a fixed or determinable price exist once the Company receives an order or contract from a customer. The Company assesses collectability at the time of the sale and if collectability is not reasonably assured, the sale is deferred and not recognized until collectability is probable or payment is received. Typically, title and risk of ownership transfer when the equipment is shipped. |
Other revenue represents consumable revenue. | |
Interest income is recognized as earned, over the term of the investment. |
Recovered_Sheet9
Summary of Significant Accounting Policies: Fair Value of Financial Instruments, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Fair Value of Financial Instruments, Policy | Fair Value of Financial Instruments - The Company measures its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. Additionally, the Company is required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. The fair value hierarchy is defined as follows: |
· Level 1 - quoted prices in active markets for identical assets or liabilities, | |
· Level 2 - other significant observable inputs for the assets or liabilities through corroboration with market data at the measurement date, | |
· Level 3 - significant unobservable inputs that reflect management’s best estimate of what market participants would use to price the assets or liabilities at the measurement date. | |
The carrying amount of certain financial instruments, including cash and cash equivalents and interest payable approximates fair value due to the relatively short maturity of such instruments. The senior secured, unsecured and senior subordinated notes payable approximates the fair value of such instrument based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangement at December 31, 2014 and 2013. The Company does not have any fair value instruments for assets and liabilities measured at fair value on a recurring or non-recurring basis, consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value at December 31, 2014, nor gains or losses reported in the statement of operations. |
Recovered_Sheet10
Summary of Significant Accounting Policies: Concentration of Supplier and Customer Risk, Policy (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Concentration of Supplier and Customer Risk, Policy | Concentration of Supplier and Customer Risk - During the year ended December 31, 2014, the Company’s asphalt repair equipment, including major components, were purchased from two primary suppliers providing an aggregate of 95% of total equipment purchases. During the same period, two customers were responsible for an aggregate of 53% of total revenues. |
Recovered_Sheet11
Summary of Significant Accounting Policies: Recent Accounting Pronouncements (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements |
The Financial Accounting Standards Board recently issued Accounting Standards Update (ASU) 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. | |
The Financial Accounting Standards Board recently issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation, which eliminates the financial reporting distinction of being a development stage entity within U.S. generally accepted accounting principles. Accordingly, the ASU eliminates the incremental requirements for development stage entities to (a) present inception-to-date information in the statements of income, cash flows and shareholder’s equity, (b) label the financial statements as those of a development stage entity, (c) disclose a description of the development stage activities in which the entity is engaged and (d) disclose in the first year in which the development stage entity that in prior years it had been in the development stage. The amendments related to the elimination of inception-to-date information should be applied retrospectively. For public business entities, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early application of each of these amendments is permitted for any annual reporting period or interim period for which the entity’s financials statements has not yet been issued. The Company has elected early application of these amendments beginning with the quarterly report filed for September 30, 2014. | |
The Financial Accounting Standards Board recently issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), was issued in three parts: (a) "Summary and Amendments That Create Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs - Contracts with Customers (Subtopic 340-40)," (b) "Conforming Amendments to Other Topics and Subtopics in the Codification and Status Tables," and (c) "Background Information and Basis for Conclusions." The new presentation guidance is effective for interim and annual periods beginning after December 15, 2016. The Company is considering the impact of the adoption of ASU 2014-09 on its results of operations, financial condition and cash flows. |
Income_Taxes_Disclosure_Schedu
Income Taxes Disclosure: Schedule of Deferred Tax Assets and Liabilities (Policies) | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Policies | ||||||
Schedule of Deferred Tax Assets and Liabilities | ||||||
December 31, | December 31, | |||||
2014 | 2013 | |||||
Deferred Tax Assets: | ||||||
Net operating loss carry forward - Federal | $ | 2,851,493 | $ | 1,876,666 | ||
Net operating loss carry forward - State | 343,854 | 191,386 | ||||
Contribution carry forward | 199 | 188 | ||||
Stock-based compensation | 196,495 | 126,245 | ||||
Accrued liabilities and deferred rent | 15,139 | 7,707 | ||||
Amortization | 272,507 | 42,380 | ||||
Total | 3,679,687 | 2,244,572 | ||||
Valuation allowance for deferred tax asset | -3,562,412 | -2,177,939 | ||||
Total deferred tax assets | 117,275 | 66,633 | ||||
Deferred Tax Liabilities: | ||||||
Deferred state taxes | -- | -- | ||||
Depreciation | 117,275 | 66,633 | ||||
Amortization | - | -- | ||||
Total deferred tax liability | 117,275 | 66,633 | ||||
Net deferred tax asset | $ | -- | $ | -- |
Property_and_Equipment_Disclos1
Property and Equipment Disclosure: Summary of the cost of property and equipment (Tables) | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Tables/Schedules | |||||||
Summary of the cost of property and equipment | |||||||
December 31, | December 31, | ||||||
2014 | 2013 | ||||||
Computer equipment & software | $ | 30,152 | $ | 20,562 | |||
Demo equipment | 599,432 | 426,336 | |||||
Leasehold improvements | 22,580 | - | |||||
652,164 | 446,898 | ||||||
Accumulated depreciation | -185,751 | -77,123 | |||||
$ | 466,413 | $ | 369,775 |
Asset_Purchase_Agreement_Discl1
Asset Purchase Agreement Disclosure: Schedule of Expected Amortization Expense (Tables) | 12 Months Ended | |
Dec. 31, 2014 | ||
Tables/Schedules | ||
Schedule of Expected Amortization Expense | ||
2015 | $357,143 | |
2016 | 357,143 | |
2017 | 357,143 | |
2018 | 357,143 | |
2019 | 267,858 | |
$1,696,430 |
Acquisition_Disclosure_Busines
Acquisition Disclosure: Business Acquisition, Statement of Operations Information (Tables) | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Tables/Schedules | ||||||
Business Acquisition, Statement of Operations Information | ||||||
For the Years Ended | ||||||
December 31, | ||||||
2014 | 2013 | |||||
REVENUES | ||||||
Equipment sales | $ | 101,119 | $ | 253,463 | ||
Service revenue | 92,962 | 25,000 | ||||
Other revenue | 6,120 | 34,017 | ||||
Total revenues | 200,201 | 312,480 | ||||
COST OF GOODS SOLD | 113,251 | 188,002 | ||||
GROSS PROFIT | 86,950 | 124,478 | ||||
EXPENSES: | ||||||
Selling, general and administrative | 2,844,784 | 3,072,383 | ||||
Research and development | 189,745 | 267,062 | ||||
Loss on extinguishment of debt | 822,205 | - | ||||
Impairment of goodwill | 390,659 | - | ||||
Total expenses | 4,247,393 | 3,339,445 | ||||
LOSS FROM OPERATIONS | -4,160,443 | -3,214,967 | ||||
OTHER INCOME AND EXPENSE: | ||||||
Interest income | 249 | 2,394 | ||||
Interest expense | -365,956 | -121,737 | ||||
Total other income and expense | -365,707 | -119,343 | ||||
LOSS BEFORE INCOME TAXES | -4,526,150 | -3,334,310 | ||||
Income taxes | -100 | -50 | ||||
NET LOSS | $ | -4,526,250 | $ | -3,334,360 | ||
Preferred stock cumulative dividend and deemed dividend | 1,502,891 | 21,302 | ||||
Net loss attributable to common stockholders | $ | -6,029,141 | $ | -3,355,662 | ||
Net loss per common share basic and diluted | $ | -0.68 | $ | -0.67 | ||
Weighted average shares outstanding used in calculating net loss per common share | 8,857,815 | 5,037,405 |
Notes_Payable_Disclosure_Sched
Notes Payable Disclosure: Schedule of Difference between Reacquisition Price of Debt and Carrying Amount of Extinguished Debt (Tables) | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Tables/Schedules | |||||||
Schedule of Difference between Reacquisition Price of Debt and Carrying Amount of Extinguished Debt | |||||||
Principal | Discounts | Accrued | Net | Fair value | Loss on | ||
on notes | interest | carrying | of the | the | |||
payable | value of the | common | extinguishment | ||||
debt | stock and | of debt | |||||
warrants | |||||||
Unsecured note Issued December 2013 | $90,000 | $ -- | $1,332 | $91,332 | $118,225 | $26,893 | |
Issued under the $1M loan agreement | 500,000 | 94,924 | 7,397 | 412,473 | 656,807 | 244,334 | |
Issued under the $3M loan agreement | 1,229,003 | 146,834 | 21,758 | 1,103,927 | 1,619,064 | 515,137 | |
October 9, 2014 Short-term | 75,000 | - | 2,047 | 77,047 | 112,886 | 35,841 | |
Total | $1,894,003 | $241,758 | $ 32,534 | $1,684,779 | $2,506,982 | $822,205 |
Notes_Payable_Disclosure_Sched1
Notes Payable Disclosure: Schedule of Loan Payable (Tables) | 12 Months Ended | ||
Dec. 31, 2014 | |||
Tables/Schedules | |||
Schedule of Loan Payable | |||
Year ending December 31, | Payments | ||
2015 | $ | 466,466 | |
2016 | 478,214 | ||
2017 | 49,856 | ||
2018 | 25,764 | ||
2019 | -- | ||
Total principal payments | $ | 1,020,300 |
Income_Taxes_Disclosure_Schedu1
Income Taxes Disclosure: Schedule of Effective Income Tax Rate Reconciliation (Tables) | 12 Months Ended | ||
Dec. 31, 2014 | |||
Tables/Schedules | |||
Schedule of Effective Income Tax Rate Reconciliation | |||
Year ended | Year ended | ||
31-Dec-14 | 31-Dec-13 | ||
Federal statutory income tax rate | 34.00% | 34.00% | |
Permanent differences | -6.80% | -0.60% | |
Deferred tax asset valuation allowance | -30.60% | -36.80% | |
Other | 3.40% | 3.40% | |
Effective income tax rate | -- | -- |
Stockholders_Equity_Disclosure1
Stockholders' Equity Disclosure: Schedule of Stock Option Activity (Tables) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Tables/Schedules | ||||
Schedule of Stock Option Activity | ||||
Number of Options | Weighted | Weighted | ||
Average | Average | |||
Exercise | Remaining | |||
Price | Life (Years) | |||
Balance, December 31, 2012 | 1,022,000 | $2.00 | 4.3 | |
Granted | 410,000 | $2.76 | ||
Exercised | -- | $ -- | ||
Cancelled | -112,000 | $2.00 | ||
Balance, December 31, 2013 | 1,320,000 | $2.23 | 3.44 | |
Granted | 298,000 | $3.00 | ||
Exercised | -- | -- | ||
Cancelled | -371,500 | $2.46 | ||
Balance, December 31, 2014 | 1,246,500 | $2.35 | 2.83 | |
Exercisable, December 31, 2013 | 845,000 | $2.04 | ||
Exercisable, December 31, 2014 | 882,583 | $2.20 |
Stockholders_Equity_Disclosure2
Stockholders' Equity Disclosure: Schedule of Stock Option Valuation Assumptions (Tables) | 12 Months Ended | ||
Dec. 31, 2014 | |||
Tables/Schedules | |||
Schedule of Stock Option Valuation Assumptions | |||
31-Dec-14 | 31-Dec-13 | ||
Risk-free interest rate range | 1.49%-1.71% | 0.11% - 1.55% | |
Expected life | 5.0 Years | 5.0 Years | |
Vesting period | 0 - Years | 0 - 4 Years | |
Expected volatility | 42% | 39% | |
Expected dividend | - | - | |
Fair value range of options at grant date | $0.671 - $1.167 | $1.008 - $1.089 |
Stockholders_Equity_Disclosure3
Stockholders' Equity Disclosure: Schedule of Performance Stock Options (Tables) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Tables/Schedules | ||||
Schedule of Performance Stock Options | ||||
Number of Options | Weighted | |||
Average | ||||
Exercise | ||||
Price | ||||
Balance, December 31, 2012 | 1,440,000 | $0.06 | ||
Granted | -- | $ -- | ||
Exercised | -- | $ -- | ||
Cancelled | -- | $ -- | ||
Balance, December 31, 2013 and 2014 | 1,440,000 | $0.11 | ||
Exercisable, December 31, 2013 and 2014 | 40,000 | $2.00 |
Stockholders_Equity_Disclosure4
Stockholders' Equity Disclosure: Schedule of Stockholders' Equity Note, Warrants (Tables) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Tables/Schedules | ||||
Schedule of Stockholders' Equity Note, Warrants | ||||
Number of | Weighted | Weighted | ||
Warrants | Average | Average | ||
Exercise | Remaining | |||
Price | Life (Years) | |||
Balance, December 31, 2012 | -- | $ -- | ||
Granted | 363,824 | $3.00 | ||
Exercised | -- | $ -- | ||
Cancelled | -- | $ -- | ||
Balance, December 31, 2013 | 363,824 | $3.00 | 1.88 | |
Granted | 2,061,156 | $2.39 | ||
Exercised | -- | -- | ||
Cancelled | -- | -- | ||
Balance, December 31, 2014 | 2,424,980 | $2.48 | 2.28 |
Net_Loss_Per_Common_Share_Disc1
Net Loss Per Common Share Disclosure: Schedule of Earnings Per Share (Tables) | 12 Months Ended | ||
Dec. 31, 2014 | |||
Tables/Schedules | |||
Schedule of Earnings Per Share | |||
For the year | For the year | ||
ended | ended | ||
December 31, | December 31, | ||
2014 | 2013 | ||
Net Loss | ($4,526,250) | ($3,068,701) | |
Basic and diluted: | |||
Preferred stock cumulative dividend - Series A (1) | -- | -68,490 | |
Preferred stock cumulative dividend - Series B (1) | -62,227 | -224,458 | |
Preferred stock cumulative dividend - Series C | 2,200 | 69,096 | |
Preferred stock cumulative dividend - Series D | 230,542 | 245,154 | |
Deemed dividend - inducement premium | 1,332,376 | -- | |
Income applicable to preferred stockholders | 1,502,891 | 21,302 | |
Net loss applicable to common stockholders | ($6,029,141) | ($3,090,003) |
Supplemental_Cash_Flow_Informa1
Supplemental Cash Flow Information: Schedule of Cash Flow, Supplemental Disclosures (Tables) | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Tables/Schedules | ||||||
Schedule of Cash Flow, Supplemental Disclosures | ||||||
For the year | For the year | |||||
ended | ended | |||||
December 31, | December 31, | |||||
2014 | 2013 | |||||
Cash paid for interest | $ | 194,447 | $ | 107,913 | ||
Cash paid for income taxes | $ | 132 | $ | 100 | ||
Series C Dividend payable in accrued expenses | $ | -- | $ | 22,668 | ||
Series D Dividend payable in accrued expenses | $ | 45,590 | $ | 44,018 | ||
Non-Cash investing and financing transactions | ||||||
Repayment of unsecured notes payable and accrued interest with issuance of common shares | $ | 2,506,982 | $ | -- | ||
Repayment of senior secured notes payable with issuance of Series D preferred shares | $ | -- | $ | 749,982 | ||
Financing the purchase of equipment under a 4 year loan agreement | $ | 49,204 | $ | -- | ||
Financing the purchase of equipment under a 5 year loan agreement | $ | -- | $ | 83,507 | ||
Deemed dividend and inducement premium on conversion of Series D preferred shares to common shares | $ | 1,332,376 | $ | -- | ||
Beneficial conversion feature on warrants issued in conjunction with Series D preferred shares | $ | 51,110 | $ | 176,729 |
Supplementary_Financial_Inform1
Supplementary Financial Information (unaudited): Schedule of Quarterly Financial Information (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Tables/Schedules | |||||||||
Schedule of Quarterly Financial Information | |||||||||
2014 | 31-Mar | 30-Jun | 30-Sep | 31-Dec | |||||
Total revenue | $ | 20,345 | $ | 112,835 | $ | 52,621 | $ | 14,400 | |
Net loss | -1,344,276 | -851,216 | -791,954 | -1,538,804 | |||||
Net loss applicable to common stockholders | -1,382,824 | -912,351 | -871,840 | -2,862,126 | |||||
Net loss per common share | $ | -0.17 | $ | -0.11 | $ | -0.1 | $ | -0.32 | |
basic and diluted | |||||||||
2013 | 31-Mar | 30-Jun | 30-Sep | 31-Dec | |||||
Total revenue | $ | 19,200 | $ | 97,280 | $ | 125,910 | $ | 70,090 | |
Net loss | -816,365 | -726,571 | -718,840 | -806,925 | |||||
Net loss applicable to common stockholders | -915,307 | -768,358 | -932,600 | -473,738 | |||||
Net loss per common share | $ | -0.48 | $ | -0.34 | $ | -0.12 | $ | -0.06 | |
basic and diluted |
Subsequent_Events_Schedule_of_
Subsequent Events: Schedule of Subsequent Events (Tables) | 12 Months Ended | ||
Dec. 31, 2014 | |||
Tables/Schedules | |||
Schedule of Subsequent Events | |||
Date loan proceeds received | Loan maturity date | Funding received | |
JMW Fund | |||
2/5/15 | 8/15/15 | $40,000 | |
2/23/15 | 8/23/15 | $40,000 | |
2/24/15 | 8/24/15 | $50,000 | |
3/3/15 | 9/15/15 | $40,000 | |
3/11/15 | 9/15/15 | $30,000 | |
San Gabriel Fund | |||
2/5/15 | 8/15/15 | $40,000 | |
2/23/15 | 8/23/15 | $40,000 | |
2/24/15 | 8/24/15 | $50,000 | |
3/13/15 | 9/15/15 | $30,000 | |
Richland Fund | |||
2/5/15 | 8/15/15 | $10,000 | |
2/23/15 | 8/23/15 | $20,000 | |
2/26/15 | 8/26/15 | $50,000 | |
3/11/15 | 9/15/15 | $30,000 | |
TOTAL | $470,000 |
Recovered_Sheet12
Summary of Significant Accounting Policies: Basis of Presentation (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Details | ||
Net loss during period | $4,526,250 | $3,068,701 |
Cash flows utilized in operating activities | 2,695,000 | |
Cash on hand | $21,000 |
Recovered_Sheet13
Summary of Significant Accounting Policies: Debt Discount Policy (Details) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Details | |
Amortization of debt discount | $153,617 |
Recovered_Sheet14
Summary of Significant Accounting Policies: Extinguishment of Debt Policy (Details) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Details | |
Loss on extinguishment of debt | $822,205 |
Recovered_Sheet15
Summary of Significant Accounting Policies: Advertising Expense, Policy (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Details | ||
Advertising costs | $90,109 | $247,500 |
Recovered_Sheet16
Summary of Significant Accounting Policies: Concentration of Supplier and Customer Risk, Policy (Details) | 12 Months Ended |
Dec. 31, 2014 | |
Details | |
Total revenues from two customers | 53.00% |
Property_and_Equipment_Disclos2
Property and Equipment Disclosure: Summary of the cost of property and equipment (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Property, Plant and Equipment, Gross | $652,164 | $446,898 |
Accumulated depreciation | -185,751 | -77,123 |
Equipment, net of depreciation | 466,413 | 369,775 |
Computer Equipment | ||
Property, Plant and Equipment, Gross | 30,152 | 20,562 |
Equipment | ||
Property, Plant and Equipment, Gross | 599,432 | 426,336 |
Leasehold Improvements | ||
Property, Plant and Equipment, Gross | $22,580 |
Property_and_Equipment_Disclos3
Property and Equipment Disclosure (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Details | ||
Depreciation expense | $104,118 | $57,763 |
Asset_Purchase_Agreement_Discl2
Asset Purchase Agreement Disclosure (Details) (Asset Purchase Agreement, USD $) | 6 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Apr. 15, 2011 | |
Asset Purchase Agreement | |||
Total purchase price | $2,500,000 | ||
Cash payment | 1,500,000 | ||
Issuance of senior subordinated note (value) | 1,000,000 | ||
Developed technology intangible asset (value) | 1,696,430 | ||
Developed technology intangible asset (accumulated amortizaton) | 803,570 | ||
Developed technology intangible asset (amortization expense) | $357,142 | $357,143 | |
Performance stock options granted | 1,400,000 | ||
Performance stock options, exercise price | $0.06 |
Asset_Purchase_Agreement_Discl3
Asset Purchase Agreement Disclosure: Schedule of Expected Amortization Expense (Details) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Details | |
Expected amortization expense , 2015 | $357,143 |
Expected amortization expense, 2016 | 357,143 |
Expected amortization expense, 2017 | 357,143 |
Expected amortization expense, 2018 | 357,143 |
Expected amortization expense, 2019 | 267,858 |
Expected amortization expense, total | $1,696,430 |
Acquisition_Disclosure_Details
Acquisition Disclosure (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Jan. 02, 2014 | |
Impairment of goodwill, operating expense | $390,659 | |
Agreement and Plan of Reorganization | ||
Common stock issued for acquisition | 58,333 | |
Consideration for common stock issued for acquisition | 175,000 | |
Net liabilities assumed in acquisition | 215,659 | |
Total consideration in acquisition resulting in goodwill | 390,659 | |
Impairment of goodwill, operating expense | $390,659 |
Notes_Payable_Disclosure_Detai
Notes Payable Disclosure (Details) (USD $) | 12 Months Ended | 1 Months Ended | 6 Months Ended | 1 Months Ended | |||||||||||
Dec. 31, 2014 | Dec. 31, 2013 | Aug. 30, 2013 | Sep. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2012 | Dec. 11, 2013 | Feb. 28, 2014 | Jan. 06, 2014 | Mar. 01, 2014 | Oct. 09, 2014 | Dec. 11, 2014 | 31-May-13 | Apr. 15, 2011 | |
Loss on extinguishment of debt | $822,205 | ||||||||||||||
Lin of credit | 229,980 | 229,980 | |||||||||||||
Repayment of senior secured notes payable | 250,018 | ||||||||||||||
Repayment of senior subordinated notes payable | 500,000 | 500,000 | |||||||||||||
Loan Payable Due | |||||||||||||||
Total amount of notes outstanding | 142,290 | ||||||||||||||
Note interest rate | 2.60% | ||||||||||||||
Loan payable due - purchase of truck | |||||||||||||||
Loan payable assumed | 83,507 | ||||||||||||||
Loan payable due - purchase of equipment | |||||||||||||||
Loan payable assumed | 49,204 | ||||||||||||||
Senior unsecured Notes Payable | |||||||||||||||
Total amount of notes outstanding | 90,000 | ||||||||||||||
Note interest rate | 12.00% | ||||||||||||||
Amount of debt converted for equity | 90,000 | ||||||||||||||
Amount of interest converted for equity | 1,332 | ||||||||||||||
Notes and warrants | |||||||||||||||
Total amount of notes outstanding | 850,000 | ||||||||||||||
Note interest rate | 12.00% | ||||||||||||||
Amount of debt converted for equity | 500,000 | ||||||||||||||
Amount of interest converted for equity | 7,397 | ||||||||||||||
Offering amount of notes and warrants | 1,000,000 | ||||||||||||||
Amortization of discount on notes payable | 100,999 | ||||||||||||||
Notes and warrants(2) | |||||||||||||||
Total amount of notes outstanding | 1,299,003 | 1,299,003 | |||||||||||||
Note interest rate | 12.00% | ||||||||||||||
Amount of debt converted for equity | 1,229,003 | ||||||||||||||
Amount of interest converted for equity | 21,758 | ||||||||||||||
Offering amount of notes and warrants | 3,000,000 | ||||||||||||||
Amortization of discount on notes payable | 52,618 | ||||||||||||||
Discount on notes payable | 207,014 | 207,014 | |||||||||||||
Short-term unsecured debt | |||||||||||||||
Total amount of notes outstanding | 75,000 | ||||||||||||||
Note interest rate | 12.00% | ||||||||||||||
Amount of debt converted for equity | 75,000 | ||||||||||||||
Amount of interest converted for equity | 2,047 | ||||||||||||||
Short-term unsecured debt(2) | |||||||||||||||
Total amount of notes outstanding | 20,000 | 20,000 | 20,000 | ||||||||||||
Note interest rate | 12.00% | ||||||||||||||
Revolving line of credit | |||||||||||||||
Lin of credit | 229,980 | 229,980 | |||||||||||||
Interest payable | 7,079 | 7,079 | |||||||||||||
Secured Notes Payable | |||||||||||||||
Total amount of notes outstanding | 1,000,000 | ||||||||||||||
Note interest rate | 12.00% | 12.00% | |||||||||||||
Interest payable | 4,641 | 4,641 | |||||||||||||
Notes payable assumed | 160,000 | ||||||||||||||
Amount of debt retired | 749,982 | 749,982 | |||||||||||||
Senior Subordinated Note Payable | |||||||||||||||
Total amount of notes outstanding | $1,000,000 | ||||||||||||||
Note interest rate | 6.00% |
Notes_Payable_Disclosure_Sched2
Notes Payable Disclosure: Schedule of Loan Payable (Details) (Loan Payable Due, USD $) | Dec. 31, 2014 | Sep. 30, 2014 |
Loan Payable Due | ||
Mandatory principal loan payments (2015) | $466,466 | |
Mandatory principal loan payments (2016) | 478,214 | |
Mandatory principal loan payments (2017) | 49,856 | |
Mandatory principal loan payments (2018) | 25,764 | |
Total principal payments | $1,020,300 |
Income_Taxes_Disclosure_Detail
Income Taxes Disclosure (Details) (USD $) | Dec. 31, 2014 |
Federal | |
Operating losses for income tax purposes | $8,386,743 |
State | |
Operating losses for income tax purposes | $7,717,262 |
Income_Taxes_Disclosure_Schedu2
Income Taxes Disclosure: Schedule of Deferred Tax Assets and Liabilities (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Details | ||
Net operating loss carry forward - Federal | $2,851,493 | $1,876,666 |
Net operating loss carry forward - State | 343,854 | 191,386 |
Contribution carry forward | 199 | 188 |
Stock-based compensation carry forward | 196,495 | 126,245 |
Accrued liabilities and deferred rent carry forward | 15,139 | 7,707 |
Amortization carry forward | 272,507 | 42,380 |
Deferred tax assets, gross | 3,679,687 | 2,244,572 |
Valuation allowance for deferred tax asset | -3,562,412 | -2,177,939 |
Deferred tax assets, net | 117,275 | 66,633 |
Deferred tax liabilities, Depreciation | 117,275 | 66,633 |
Total deferred tax liability | $117,275 | $66,633 |
Income_Taxes_Disclosure_Schedu3
Income Taxes Disclosure: Schedule of Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Details | ||
Federal statutory income tax rate | 34.00% | 34.00% |
Permanent differences | -6.80% | -0.60% |
Deferred tax asset valuation allowance | -30.60% | -36.80% |
Other adjustments | 3.40% | 3.40% |
Stockholders_Equity_Disclosure5
Stockholders' Equity Disclosure (Details) (USD $) | 12 Months Ended | 1 Months Ended | 9 Months Ended | ||||||
Dec. 31, 2014 | Dec. 31, 2013 | 31-May-14 | Jan. 31, 2014 | Aug. 30, 2013 | Sep. 30, 2014 | Oct. 02, 2014 | Oct. 31, 2013 | Jun. 21, 2013 | |
Common stock authorized | 20,000,000 | 20,000,000 | |||||||
Common shares issued | 9,495,045 | 8,082,000 | |||||||
Common shares outstanding | 10,952,356 | 8,082,000 | |||||||
Proceeds from common stock issuance | $366,324 | ||||||||
Common stock issued | 209,324 | ||||||||
Common stock issued for Preferred stock conversion | 1,207,491 | ||||||||
Common stock issued for debt conversion | 1,100,876 | ||||||||
Preferred stock authorized | 4,500,000 | 4,500,000 | |||||||
Preferred stock outstanding | 178,924 | 1,005,648 | |||||||
Number of options granted | 298,000 | 410,000 | |||||||
Stock-based compensation expense | 231,524 | 216,083 | |||||||
Unrecognized compensation expense | 308,041 | 404,006 | |||||||
Common Stock Equity | |||||||||
Units offered (Common Stock and Warrants) | 3,650,807 | ||||||||
Units offered (Common Stock and Warrants), price per unit | $1.75 | ||||||||
Series A Preferred Stock | |||||||||
Preferred shares converted to common shares | 600,000 | ||||||||
Annual dividend rate | $0.07 | ||||||||
Series B Preferred Stock | |||||||||
Preferred shares converted to common shares | 177,000 | 1,323,000 | |||||||
Annual dividend rate | $0.16 | ||||||||
Accumulated dividends released | 40,529 | 361,426 | |||||||
Series C Preferred Stock | |||||||||
Preferred shares converted to common shares | 101,000 | 659,000 | |||||||
Preferred Series C | |||||||||
Preferred stock authorized | 760,000 | 760,000 | |||||||
Accumulated dividends released | 24,869 | 95,600 | |||||||
Series D Preferred Stock | |||||||||
Units offered (Common Stock and Warrants) | 772,352 | 1,500,000 | |||||||
Units offered (Common Stock and Warrants), price per unit | $3 | $3 | |||||||
Annual dividend rate | $0.24 | ||||||||
Shares outstanding | 178,924 | 727,648 | |||||||
Units offered (Common Stock and Warrants), potential proceeds | 2,317,056 | 4,500,000 | |||||||
Units sold during offering | 118,655 | 53,332 | 727,648 | ||||||
Gross proceeds from units sold in offering | 355,967 | 159,996 | 2,182,944 | ||||||
Units offered (Common Stock and Warrants), additional over-allotment | 1,000,000 | ||||||||
Units offered (Common Stock and Warrants), potential proceeds for additional over-allotment | 3,000,000 | ||||||||
Dividends paid | 177,846 | 24,407 | |||||||
Dividends payable | 45,590 | ||||||||
Original issue price per share | $3 | ||||||||
Beneficial conversion feature (BCF) | $24,279 | $176,729 | |||||||
2011 Equity Incentive Plan, January 13, 2014 | |||||||||
Number of options granted | 94,000 | ||||||||
2011 Equity Incentive Plan, January 16, 2014 | |||||||||
Number of options granted | 40,000 | ||||||||
2011 Equity Incentive Plan, February 1, 2014 | |||||||||
Number of options granted | 50,000 | ||||||||
2011 Equity Incentive Plan, April 4, 2014 | |||||||||
Number of options granted | 4,000 | ||||||||
2011 Equity Incentive Plan, June 19, 2014 | |||||||||
Number of options granted | 10,000 | ||||||||
2011 Equity Incentive Plan, June 19, 2014 (2) | |||||||||
Number of options granted | 100,000 | ||||||||
Series D Unit offering | |||||||||
Number of warrants issued | 85,993 | ||||||||
Non-public offering of notes and warrants | |||||||||
Number of warrants issued | 283,329 | ||||||||
Non-public offering of notes and warrants(2) | |||||||||
Number of warrants issued | 432,995 | ||||||||
Private equity offering | |||||||||
Number of warrants issued | 104,659 | ||||||||
Conversion of unsecured notes payable | |||||||||
Number of warrants issued | 550,438 | ||||||||
Conversion of Series D preferred shares | |||||||||
Number of warrants issued | 603,742 |
Stockholders_Equity_Disclosure6
Stockholders' Equity Disclosure: Schedule of Stock Option Activity (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Details | |||
Number of options outstanding | 1,246,500 | 1,320,000 | 1,022,000 |
Weighted average exercise price, options outstanding | $2.35 | $2.23 | $2 |
Weighted average remaining life (in years), options outstanding | 2.83 | 3.44 | 4.3 |
Number of options granted | 298,000 | 410,000 | |
Weighted average exercise price, options granted | $3 | $2.76 | |
Number of options cancelled | 371,500 | 112,000 | |
Weighted average exercise price, options cancelled | $2.46 | $2 | |
Number of options exercisable | 882,583 | 845,000 | |
Weighted average exercise price, options exercisable | $2.20 | $2.04 |
Stockholders_Equity_Disclosure7
Stockholders' Equity Disclosure: Schedule of Performance Stock Options (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2012 |
Details | ||
Performance Stock options outstanding | 1,440,000 | 1,440,000 |
Weighted average exercise price, performance stock options outstanding | $0.11 | $0.06 |
Performance Stock options exercisable | 40,000 | |
Weighted average exercise price, performance stock options exercisable | $2 |
Stockholders_Equity_Disclosure8
Stockholders' Equity Disclosure: Schedule of Stockholders' Equity Note, Warrants (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Details | ||
Warrants granted | 2,061,156 | 363,824 |
Warrants outstanding | 2,424,980 | 363,824 |
Weighted average exercise price, warrants | $2.48 | $3 |
Net_Loss_Per_Common_Share_Disc2
Net Loss Per Common Share Disclosure (Details) | 12 Months Ended |
Dec. 31, 2014 | |
Details | |
Shares not included in the computation of diluted loss per share | 3,671,480 |
Net_Loss_Per_Common_Share_Disc3
Net Loss Per Common Share Disclosure: Schedule of Earnings Per Share (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Net income (loss) | ($4,526,250) | ($3,068,701) |
Deemed dividend related to warrant extension | 1,332,376 | |
Net income (loss) available to preferred stockholders | 1,502,891 | 21,302 |
Net income (loss) applicable to common stockholders | -6,029,141 | -3,090,003 |
Series A Dividend | ||
Cumulative dividend | -68,490 | |
Series B Dividend | ||
Cumulative dividend | -62,227 | -224,458 |
Series C Dividend | ||
Cumulative dividend | 2,200 | 69,096 |
Series D Dividend | ||
Cumulative dividend | $230,542 | $245,154 |
Commitments_and_Contingencies_1
Commitments and Contingencies Disclosure (Details) (USD $) | 12 Months Ended | 23 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | |
Details | |||
Lease commitment, terms | Company assumed a lease of warehouse and office space for the equipment and operations located in Gardena, CA | Company leased approximately 2,244 square feet of general office space | |
Total rent expense | $55,744 | $36,404 | |
Commitment to purchase equipment | $70,000 |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Richard Giles | ||
Related party consulting fees | $69,800 | $189,600 |
Heather Kearns | ||
Related party consulting fees | $18,000 |
Supplemental_Cash_Flow_Informa2
Supplemental Cash Flow Information: Schedule of Cash Flow, Supplemental Disclosures (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Cash paid for interest | $194,447 | $107,913 |
Cash paid for income taxes | 132 | 100 |
Series C Dividend payable in accounts payable | 22,668 | |
Series D Dividend payable in accrued expenses | 45,590 | 44,018 |
Deemed dividend and inducement premium | 1,332,376 | |
Beneficial conversion feature on warrants | 51,110 | 176,729 |
Unsecured notes payable and accrued interest with issuance of common shares | ||
Repayment of notes and loans payable with stock | 2,506,982 | |
Senior secured notes payable with issuance of Series D preferred shares | ||
Repayment of notes and loans payable with stock | 749,982 | |
Equipment under a 4 year loan agreement | ||
Financing the purchase | 49,204 | |
Equipment under a 5 year loan agreement | ||
Financing the purchase | $83,507 |
Supplementary_Financial_Inform2
Supplementary Financial Information (unaudited): Schedule of Quarterly Financial Information (Details) (USD $) | 12 Months Ended | 3 Months Ended | ||||||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | |
Total revenue | $200,201 | $312,480 | ||||||||
Net loss applicable to common stockholders | -6,029,141 | -3,090,003 | ||||||||
Net loss per common share basic and diluted | ($0.68) | ($0.61) | ||||||||
N2013Member | ||||||||||
Total revenue | 14,400 | 52,621 | 112,835 | 20,345 | 70,090 | 125,910 | 97,280 | 19,200 | ||
Net (loss) | -1,538,804 | -791,954 | -851,216 | -1,344,276 | -806,925 | -718,840 | -726,571 | -816,365 | ||
Net loss applicable to common stockholders | ($2,862,126) | ($871,840) | ($912,351) | ($1,382,824) | ($473,738) | ($932,600) | ($768,358) | ($915,307) | ||
Net loss per common share basic and diluted | ($0.32) | ($0.10) | ($0.11) | ($0.17) | ($0.06) | ($0.12) | ($0.34) | ($0.48) |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | 1 Months Ended | ||
Mar. 31, 2015 | Feb. 16, 2015 | Feb. 23, 2015 | |
Proceeds from sale of common stock in private placement | $88,000 | ||
Common stock issued in private placement | 50,284 | ||
Common stock issued for services | 15,000 | ||
Senior secured loan agreement with JMW Fund | |||
Debt offerings | 2,000,000 | ||
Conversion of short-term unsecured note payable into a senior secured promissory note | |||
Debt offerings | $20,000 |