Document and Entity Information
Document and Entity Information - Jun. 30, 2015 - shares | Total |
Document and Entity Information | |
Entity Registrant Name | Heatwurx, Inc. |
Document Type | 10-Q |
Document Period End Date | Jun. 30, 2015 |
Amendment Flag | false |
Entity Central Index Key | 1,533,743 |
Current Fiscal Year End Date | --12-31 |
Entity Common Stock, Shares Outstanding | 11,017,388 |
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 | 2,015 |
Document Fiscal Period Focus | Q2 |
Trading Symbol | hwx |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 15,193 | $ 21,234 |
Accounts receivable | 15,060 | 4,095 |
Prepaid expenses and other current assets | 32,501 | 131,862 |
Inventory | 203,230 | 222,018 |
Consigned inventory | 124,448 | |
Note receivable | 88,763 | |
Total current assets | 479,195 | 379,209 |
Other assets: | ||
Equipment, net of depreciation | 398,519 | 466,413 |
Intangible assets, net of amortization | 1,696,430 | |
Total other assets | 398,519 | 2,162,843 |
Total assets | 877,714 | 2,542,052 |
Current liabilities: | ||
Accounts payable | 218,791 | 190,168 |
Accrued liabilities | 72,462 | 105,613 |
Deferred revenue | 165,629 | 58,165 |
Interest payable | 51,161 | 19,541 |
Income taxes payable | 150 | 100 |
Loan payable, current | 57,340 | 56,486 |
Senior secured notes payable | 908,361 | 160,000 |
Revolving line of credit | 229,980 | 229,980 |
Current portion of unsecured notes payable | 389,391 | 20,000 |
Total current liabilities | 2,093,265 | 840,053 |
Long-term liabilities: | ||
Loan payable | 104,948 | 133,834 |
Unsecured notes payable | 360,232 | |
Total long-term liabilities | 104,948 | 494,066 |
Total liabilities | $ 2,198,213 | $ 1,334,119 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock value | $ 18 | $ 18 |
Common stock value | 1,102 | 1,095 |
Additional paid-in capital | 14,300,514 | 14,111,944 |
Accumulated deficit | (15,622,133) | (12,905,124) |
Total stockholders' equity | (1,320,499) | 1,207,933 |
Total liabilities and stockholders' equity | $ 877,714 | $ 2,542,052 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Debt discount, unsecured notes payable | $ 30,609 | $ 59,768 |
Preferred Stock, Par Value | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 4,500,000 | 4,500,000 |
Preferred Stock, Issued | 178,924 | 178,924 |
Common Stock, Par Value | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 20,000,000 | 20,000,000 |
Common Stock, Issued | 11,061,114 | 9,495,045 |
Common Stock, Outstanding | 11,017,388 | 10,952,356 |
Preferred Series B | ||
Preferred Stock, Par Value | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 1,500,000 | 1,500,000 |
Preferred Stock, Issued | 0 | 0 |
Liquidation preference | $ 0 | $ 0 |
Preferred Series C | ||
Preferred Stock, Par Value | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 760,000 | 760,000 |
Preferred Stock, Issued | 0 | 0 |
Liquidation preference | $ 0 | $ 0 |
Preferred Series D | ||
Preferred Stock, Par Value | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 1,500,000 | 1,500,000 |
Preferred Stock, Issued | 178,924 | 178,924 |
Liquidation preference | $ 800,036 | $ 810,216 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Statement | ||||
Equipment sales | $ 77,000 | $ 32,760 | $ 84,445 | |
Service revenue | $ 20,040 | 30,975 | 28,870 | 43,875 |
Other revenue | 4,860 | 5,000 | 4,860 | |
Total revenue | 20,040 | 112,835 | 66,630 | 133,180 |
Costs of goods sold | 11,007 | 70,192 | 40,276 | 79,332 |
Gross profit | 9,033 | 42,643 | 26,354 | 53,848 |
Expenses: | ||||
Selling, general and administrative | 467,035 | 712,406 | 1,068,929 | 1,517,412 |
Research and development | 10,982 | 68,495 | 25,432 | 168,264 |
Impairment of intangible asset | 1,517,859 | 1,517,859 | ||
Impairment of goodwill | 390,659 | |||
Total expenses | 1,995,876 | 780,901 | 2,612,220 | 2,076,335 |
Loss from operations | (1,986,843) | (738,258) | (2,585,866) | (2,022,487) |
Other Income and Expense: | ||||
Gain (loss) on disposal of assets | (7,377) | (7,377) | (7,377) | |
Interest income | 2,549 | 2 | 3,801 | 74 |
Interest expense | 59,412 | 112,935 | 106,223 | 173,032 |
Total other income and expense | (64,240) | (112,933) | (109,799) | (172,958) |
Loss before income taxes | (2,051,083) | (851,191) | (2,695,665) | (2,195,445) |
Income taxes | (25) | (25) | (50) | (50) |
Net loss | (2,051,108) | (851,216) | (2,695,715) | (2,195,495) |
Preferred stock cumulative dividend and deemed dividend | 10,706 | 61,135 | 21,295 | 59,154 |
Net loss available to common stockholders | $ (2,061,814) | $ (912,351) | $ (2,717,010) | $ (2,254,649) |
Net loss per common share basic and diluted | $ (0.19) | $ (0.11) | $ (0.25) | $ (0.27) |
Weighted average shares outstanding basic and diluted | 11,017,640 | 8,397,442 | 11,007,405 | 8,331,583 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (2,695,715) | $ (2,195,495) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation expense | 57,717 | 45,133 |
Amortization of intangible asset | 178,571 | 178,570 |
Amortization of debt discount | 29,159 | 72,357 |
Impairment of intangible asset | 1,517,859 | |
Impairment of goodwill | 390,659 | |
Gain (loss) on disposal of assets | (7,377) | (7,377) |
Non-cash expenses exchanged for services | 25,500 | |
Stock-based compensation | 75,077 | 163,721 |
Changes in operating assets and liabilities | ||
(Increase) decrease in receivables | (99,728) | (79,830) |
(Increase) decrease in prepaid and other current assets | 99,361 | (15,944) |
(Increase) decrease in inventory | 22,988 | (61,733) |
(Increase) decrease in consigned inventory | (124,448) | |
Increase (decrease) in income taxes payable | 50 | 50 |
Increase (decrease) in accounts payable | 28,622 | 6,194 |
Increase (decrease) in accrued liabilities | (54,445) | (197,899) |
Increase (decrease) in deferred revenue | 107,464 | |
Increase (decrease) in interest payable | 45,981 | (1,609) |
Cash used in operating activities | (778,610) | (1,695,826) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | 1,399 | 15,772 |
Cash from acquisition of business | 3,355 | |
Cash used in investing activities | (1,399) | (12,417) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of unsecured notes payable | 1,570,000 | |
Proceeds from issuance of senior secured notes payable | 714,000 | |
Repayment of senior subordinated notes payable | 500,000 | |
Proceeds from issuance of common shares, net | 88,000 | |
Proceeds from issuance of preferred shares, net | 509,963 | |
Repayment of loan payable | 28,032 | 18,685 |
Cash provided by (used in) financing activities | 773,968 | 1,561,278 |
Net change in cash and cash equivalents | (6,041) | (146,965) |
Cash and cash equivalents, beginning of period | 21,234 | 186,864 |
Cash and cash equivalents, end of period | $ 15,193 | $ 39,899 |
Principal Business Activities
Principal Business Activities | 6 Months Ended |
Jun. 30, 2015 | |
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) |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2015 | |
Notes | |
Basis of Presentation and Summary of Significant Accounting Policies | 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation These financial statements should be read in conjunction with the audited financial statements and accompanying notes for the year ended December 31, 2014, and have been prepared on a consistent basis with the accounting policies described in Note 2 - Summary of Significant Accounting Policies of the Notes to Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2014. The Companys accounting policies did not change in the first half of 2015. Operating results for the three and six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015 or any future period. The Companys 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 Companys 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. However, as described below, certain factors raise substantial doubt about the Companys ability to continue as a going concern. 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. The Company has previously relied exclusively on private placements with a small group of investors to finance its business and operations. The Company has had little revenue since inception. For the six months ended June 30, 2015, the Company incurred a net loss of approximately $2,696,000 and utilized approximately $779,000 in cash flows from operating activities. The Company had cash on hand of approximately $15,000 as of June 30, 2015. The Company is not able to obtain additional financing adequate to fulfill its commercialization activities, nor achieve a level of revenues adequate to support the Companys cost structure. The Company does not currently have any revenue under contract nor does it have any immediate sales prospects. The Company has moved to list the asphalt paving assets and the intellectual property inclusive of patents and trademarks for sale. The Company is also interested in potential merger candidates within the asphalt industry. The Company has scaled back operations during this time and will evaluate proposals received to determine if there is a viable option to re-strategize the Company. If the Company fails to identify a purchaser for the asphalt paving assets and intellectual property or fails to merge or be acquired by another company it will be required to terminate its operations. As of June 30, 2015, the Company had approximately $15,000 cash on hand and was spending approximately $170,000 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 the Companys operating expenses. As of June 30, 2015, the Company received cash in the aggregate of $714,000 and converted a $160,000 secured note plus accrued interest and a $20,000 unsecured note into the $2,000,000 senior secured debt offering commenced in February 2015. Based upon the Companys current financial position and inability to obtain additional financing, the Company does not believe it will be able to satisfy the mandatory principal payments in 2015 under the $2,000,000 senior secured debt. The Company will work with the lenders to explore extension or conversion options, but there is no guarantee the lenders will agree to modify the repayment terms of the notes under conditions that will allow the Company to continue to repay the notes, if at all. As these notes are secured by all of the assets of the Company, including intellectual property rights. The Company is in default in regards to interest payments on the notes, the lenders may call the notes and foreclose on the Companys assets. The issues described above raise substantial doubt about the Companys ability to continue as a going concern. Although the Company commenced a $2,000,000 secured debt offering, the Company does not believe it will be able to raise additional amounts under the offering. The Company is solely reliant on raising debt and capital in order to maintain its operations. Previously the Company, has been able to raise debt and equity financing through the assistance of a small number of investors who have been substantial participants in its debt and equity offerings since the Companys formation. These investors have chosen not to further assist the Company with its capital raising initiatives and, at this time, the Company is not able to obtain any alternative forms of financing and the Company will not be able to continue to satisfy its current or long term obligations. The Company needs to merge with, be acquired by another company, or identify a purchaser of its assets including intellectual property. If a candidate is not identified the Company will be forced to cease operations all together. The accompanying 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. Revenue Recognition Other revenue represents license fees and franchise fees. Recent Accounting Pronouncements The Financial Accounting Standards Board recently issued Accounting Standards Update (ASU) 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory 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 Entitys Ability to Continue as a Going Concern substantial doubt, 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 CostsContracts 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, 2017. The Company is considering the impact of the adoption of ASU 2014-09 on its results of operations, financial condition and cash flows. |
Note Receivable Disclosure
Note Receivable Disclosure | 6 Months Ended |
Jun. 30, 2015 | |
Notes | |
Note Receivable Disclosure | 3. NOTE RECEIVABLE The Company entered into an Equipment Purchase and License Agreement, in which the Company financed $89,964 with a note bearing 12% interest per annum payable monthly. Interest only payments are due monthly with principal and unpaid interest due on February 28, 2016. The Company has the option to extend the financing for an additional twelve months, if the licensee is in good standing. Interest of $3,799 is included in the Note receivable balance of $88,763 as of June 30, 2015. Revenues under this agreement are recorded in deferred revenue and will be recognized in accordance with the Companys revenue recognition policy. |
Property and Equipment Disclosu
Property and Equipment Disclosure | 6 Months Ended |
Jun. 30, 2015 | |
Notes | |
Property and Equipment Disclosure | 4. PROPERTY AND EQUIPMENT A summary of the cost of property and equipment, by component, and the related accumulated depreciation is as follows: June 30, 2015 December 31, 2014 Computer equipment & software $ 28,225 $ 30,152 Demo equipment 591,182 599,432 Leasehold improvements 22,580 22,580 641,987 652,164 Accumulated depreciation (243,468) (185,751) $ 398,519 $ 466,413 Depreciation expense was $28,628 and $57,717 for the three and six months ended June 30, 2015; and was $23,358 and $45,133 for the three and six months ended June 30, 2014. The Company recognized a loss on disposal of assets during the three and six months ended June 30, 2015 of $7,377. |
Asset Purchase Agreement Disclo
Asset Purchase Agreement Disclosure | 6 Months Ended |
Jun. 30, 2015 | |
Notes | |
Asset Purchase Agreement Disclosure | 5. 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 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. Based on the Companys financial position and substantial doubt about the Companys ability to continue as a going concern, the Company has chosen to estimate future cash flows at zero. The Company recognized an impairment of $1,517,859 during the three and six months ended June 30, 2015. As of June 30, 2015, the Companys developed technology intangible asset had no value. Amortization expense prior to the impairment for the three and six months ended June 30, 2015 was $89,285 and $178,571, respectively. The amortization expense for the three and six months ended June 30, 2014 was $89,285 and $178,570, respectively. 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. On February 10, 2015, the founder of the Company elected to cancel the 1,400,000 performance stock options. |
Notes Payable Disclosure
Notes Payable Disclosure | 6 Months Ended |
Jun. 30, 2015 | |
Notes | |
Notes Payable Disclosure | 6. NOTES PAYABLE Unsecured Notes Payable On January 6, 2014, the Company commenced a non-public offering of notes and warrants of up to $1,000,000. The promissory notes will 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. As of June 30, 2015, the Company has total notes outstanding from the non-public offering in the aggregate principal amount of $350,000 and were issued with an aggregate of 116,665 warrants to the investors. The warrants are detachable and exercisable immediately. The Company allocated the fair value of the warrants in the amount of $102,357 as a discount on notes payable which is 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 $12,805 and $25,469 during the three and six months ended June 30, 2015, respectively. The Company recognized amortization of discount on notes payable in interest expense of $32,086 and $52,436 during the three and six months ended June 30, 2014, respectively. As of June 30, 2015 there were notes outstanding with a carrying amount of $323,264, net of $26,736 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 will be exercisable immediately at $3.00 per share. As of June 30, 2015, the Company has total notes outstanding in the aggregate principal amount of $70,000 and were issued with an aggregate of 23,332 warrants to the investors. The warrants are detachable and exercisable immediately. The Company allocated the fair value of the warrants in the amount of $12,801 as a discount on notes payable which is 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 $1,855 and $3,690 during the three and six months ended June 30, 2015, respectively. The Company recognized amortization of discount on notes payable in interest expense of $1,488 for the three and six months ended June 30, 2014, respectively. As of June 30, 2015 there were notes outstanding with a carrying amount of $66,127, net of $3,873 debt discount. Interest on the unsecured notes payable totaling $11,832 was outstanding at June 30, 2015. Revolving line of credit - Interest on the revolving line of credit totaling $16,030 was outstanding at June 30, 2015. Secured Notes Payable On February 16, 2015, the Company entered into a Senior secured loan agreement with JMW Fund, Richland Fund, and San Gabriel Fund (collectively, 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. As of June 30, 2015 there were notes outstanding with an aggregate principal amount of $908,361. Interest on the secured notes payable totaling $23,299 was outstanding at June 30, 2015. The Company has not paid the interest on the notes timely and is therefore in default on the senior secured loan agreement. The lenders may call the notes or foreclose upon the assets of the Company. As of August 16, 2015; all senior secured notes were extended to a maturity date of February 15, 2016. 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. As of June 30, 2015 the Company has three months of payments totaling $7,586 in payables. If payments are not made to bring the account current, the lender may begin repossession procedures of the equipment. 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 June 30, 2015 the Company has two months of payments totaling $2,068 in payables. As of June 30, 2015, the loans are subject to mandatory principal payments as follows: Year Payments 2015 $ 1,166,795 2016 478,214 2017 49,856 2018 25,764 2019 -- Total principal payments $ 1,720,629 Based upon the Companys current financial position, the Company does not believe it will be able to satisfy the mandatory principal payments in 2015. The Company will work with the lenders to explore extension or conversion options. There is no guarantee the lenders will accommodate our requests. As of August 19, 2015; principal in the amount of $947,361 is outstanding and payable within six months under the secured notes. These notes are secured by all of the assets of the Company, including intellectual property rights. The Company is in default in regards to interest payments on the notes, the Companys assets may be foreclosed upon. |
Stockholders' Equity Disclosure
Stockholders' Equity Disclosure | 6 Months Ended |
Jun. 30, 2015 | |
Notes | |
Stockholders' Equity Disclosure | 7. STOCKHOLDERS EQUITY Common Stock On October 1, 2014, the Company commenced a non-public equity offering of 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. During the first half of 2015 the Company issued 50,285 shares of common stock and warrants to purchase 25,141 shares of common stock for cash proceeds of $88,000. On March 13, 2015 the Company issued 15,000 common shares in exchange for consulting services. Preferred Stock Series D Preferred Stock 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 $31,475 during the three and six months ended June 30, 2015. The Company paid dividends of $45,665 and $89,683 during the three and six months ended June 30, 2014, respectively. As of June 30, 2015 the Company has dividends payable in accrued expenses of $26,555. 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 holders of Series D preferred stock have a liquidation preference over the holders of the Companys 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 Companys 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 Companys common stock on all action to be taken by the Companys 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. Stock Options Number of Options Weighted Average Exercise Price Weighted Average Remaining Life (Years) 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 Granted 425,000 $ 1.50 Exercised - - Cancelled (898,000) $ 2.35 Balance, June 30, 2015 773,500 $ 1.87 3.74 Exercisable, December 31, 2014 882,583 $ 2.20 Exercisable, June 30, 2015 645,333 $1.88 On April 30, 2015, the Board of Directors approved the grant of 125,000 options to the former CEO of the Company, David Dworsky, in accordance with the terms of the 2011 Equity Incentive Plan, as amended. The options vest immediately and have an exercise price of $1.50 per share, with an expiration date of five years from the grant date. Mr. Dworsky forfeited his vested options of 93,750 and unvested options of 206,250 with an exercise price of $3.00 per share. On April 30, 2015, the Board of Directors approved the grant of 100,000 options to an employee for continued consulting services, in accordance with the terms of the 2011 Equity Incentive Plan, as amended. The options vest immediately and have an exercise price of $1.50 per share, with an expiration date of five years from the grant date. The employee forfeited his vested options of 100,000 and unvested options of 100,000 with an exercise price of $2.00 per share. On April 30, 2015, the Board of Directors approved the grant of 200,000 options to employees of the Company, in accordance with the terms of the 2011 Equity Incentive Plan, as amended. One-half of the options vest immediately, with the remaining vesting on the one year anniversary of the grant date. The options have an exercise price of $1.50 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: June 30, 2015 Risk-free interest rate range 1.43% Expected life 5.0 Years Vesting period 0 - 1Year Expected volatility 42% Expected dividend - Estimated forfeiture rate 25% Fair value range of options at grant date $0.259 The Company recorded stock-based compensation expense of $39,525 and $75,077 during the three and six months ended June 30, 2015, respectively. The Company recorded stock-based compensation expense of $34,313 and $163,721 during the three and six months ended June 30, 2014, respectively. As of June 30, 2015 there was $31,965 of unrecognized compensation expense related to the issuance of the stock options. Performance Stock Options There were no performance stock options granted during the three and six months ended June 30, 2015. Number of Options Weighted Average Exercise Price Balance, December 31, 2013 1,440,000 $ 0.11 Granted - - Exercised - - Cancelled - - Balance, December 31, 2014 1,440,000 $ 0.11 Granted - - Exercised - - Cancelled (1,400,000) $ 0.06 Balance, June 30, 2015 40,000 $2.00 Exercisable, December 31, 2014 and June 30, 2015 40,000 $ 2.00 See Note 5 for further discussion of the performance options. Warrants The Company issued 25,141 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 Companys common stock. The warrants expire three years from the date of issuance and are exercisable immediately. Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Life (Years) 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 Granted 25,141 $2.00 Exercised - - Cancelled - - Balance, June 30, 2015 2,450,121 $2.48 1.79 |
Net Loss Per Common Share Discl
Net Loss Per Common Share Disclosure | 6 Months Ended |
Jun. 30, 2015 | |
Notes | |
Net Loss Per Common Share Disclosure | 8. NET LOSS PER COMMON SHARE The Company computes loss per share of common stock using the two-class method required for participating securities. The Companys 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 3,263,621 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 three months ended June 30, For the six months ended June 30, 2015 2014 2015 2014 Net Loss $ (2,051,108) $ (851,216) $ (2,695,715) $ (2,195,495) Basic and diluted: Preferred stock cumulative dividend - Series B (1) -- 670 -- (62,227) Preferred stock cumulative dividend - Series C -- 296 -- 2,200 Preferred stock cumulative dividend - Series D 10,706 60,169 21,295 119,181 Income applicable to preferred stockholders 10,706 61,135 21,295 59,154 Net loss applicable to common stockholders $ (2,061,814) $ (912,351) $ (2,717,010) $ (2,254,649) (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 D
Commitments and Contingencies Disclosure | 6 Months Ended |
Jun. 30, 2015 | |
Notes | |
Commitments and Contingencies Disclosure | 9. COMMITMENTS AND CONTINGENCIES Lease Commitments Total rent expense for the three and six months ended June 30, 2015 was $15,057 and $30,114, respectively. The rent expense for the three and six months ended June 30, 2014 was $19,305 and $38,404, respectively. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2015 | |
Notes | |
Related Party Transactions | 10. RELATED PARTY TRANSACTIONS Consulting arrangements The Company has a consulting arrangement with Heather Kearns, the Interim Chief Financial officer and paid consulting fees of $18,000 and $45,000 during the three and six months ended June 30, 2015, and has $3,600 in current liabilities as of June 30, 2015. Dividend and Interest activity As of June 30, 2015 the Company has secured notes payable with JMW Fund, LLC, The Richland Fund, LLC and The San Gabriel Fund, LLC in the aggregate amount of $873,361; 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 2015 totaling $32,080. See Note 12 for additional disclosure. During the three and six months ended June 30, 2015, Mr. Gus Blass III, a member of our board of directors and a stockholder, received or has accrued dividends from preferred stock totaling $5,918. 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. Blass II, received or has accrued interest payments in 2015 totaling $14,877. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 6 Months Ended |
Jun. 30, 2015 | |
Notes | |
Supplemental Cash Flow Information | 11. SUPPLEMENTAL CASH FLOW INFORMATION Six months ended June 30, 2015 2014 Cash paid for interest $ 25,356 $ 152,813 Series C Dividend payable in accrued expenses $ -- $ 17,870 Series D Dividend payable in accrued expenses $ 26,555 $ 49,237 Non-Cash investing and financing transactions Shares issued for consulting services $ 25,500 $ -- Beneficial conversion feature on warrants issued in conjunction with Series D preferred shares $ -- $ 24,279 Shares issued in acquisition of Dr. Pave $ -- $ 175,000 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2015 | |
Notes | |
Subsequent Events | 12. SUBSEQUENT EVENTS On July 7, 2015, the Company issued a press release disclosing the listing of the Companys intellectual property inclusive of patents and trademarks of the company for sale, as well as the asphalt paving assets, or in the alternative seek a potential merger candidate in the asphalt industry. The Company significantly scaled down operations during July and through the date of this report to receive and evaluate proposals for purchasing the intellectual property or interested candidates in merging or acquiring the Company. The Company is still negotiating with prospective parties. If the Company does not reach an agreement, it will be required to cease all operations. On August 1, 2015 the Company is no longer under a rental lease agreement for the office and warehouse space in Gardena, CA. The Company is now on a month-to-month agreement and will be required to exit the premises if the landlord identifies a new tenant. The Company has missed the first principal payment in regards to the Dr. Pave revolving line of credit. The revolving line of credit is secured by the assets of Dr. Pave, LLC a wholly owned subsidiary of the Company with a book value of $83,895. The Company is in default and the lender may at any time foreclose upon the Dr. Pave assets. Heather Kearns has tendered her resignation as Interim Chief Executive Officer and Interim Chief Financial Officer with an effective 11:59 pm on August 19, 2015. Debt offerings On August 16, 2015 the Company extended all Secured Notes issued under the Senior Secured Loan Agreement to February 15, 2016, in the aggregate amount of $947,361. In addition, interest has accrued and continues to accrue under the terms of the Notes. The Company shall pay interest and continue to accrue monthly interest under the terms of the Notes until February 15, 2016. The Company entered into notes under the senior secured loan agreement with JMW Fund, Richland Fund, and San Gabriel Fund in an aggregate principal amount of $39,000, included in the total loan amount extended as stated above, subsequent to the quarter-end. The interest rate on the notes is 12% per annum and monthly interest payments are due the first day each month. 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. The Company is in default on interest payments related to the secured notes, the lenders have the right to call the notes or to foreclose on the assets of the Company. |
Basis of Presentation and Sum18
Basis of Presentation and Summary of Significant Accounting Policies: Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Policies | |
Basis of Presentation | Basis of Presentation These financial statements should be read in conjunction with the audited financial statements and accompanying notes for the year ended December 31, 2014, and have been prepared on a consistent basis with the accounting policies described in Note 2 - Summary of Significant Accounting Policies of the Notes to Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2014. The Companys accounting policies did not change in the first half of 2015. Operating results for the three and six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015 or any future period. The Companys 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 Companys 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. However, as described below, certain factors raise substantial doubt about the Companys ability to continue as a going concern. 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. The Company has previously relied exclusively on private placements with a small group of investors to finance its business and operations. The Company has had little revenue since inception. For the six months ended June 30, 2015, the Company incurred a net loss of approximately $2,696,000 and utilized approximately $779,000 in cash flows from operating activities. The Company had cash on hand of approximately $15,000 as of June 30, 2015. The Company is not able to obtain additional financing adequate to fulfill its commercialization activities, nor achieve a level of revenues adequate to support the Companys cost structure. The Company does not currently have any revenue under contract nor does it have any immediate sales prospects. The Company has moved to list the asphalt paving assets and the intellectual property inclusive of patents and trademarks for sale. The Company is also interested in potential merger candidates within the asphalt industry. The Company has scaled back operations during this time and will evaluate proposals received to determine if there is a viable option to re-strategize the Company. If the Company fails to identify a purchaser for the asphalt paving assets and intellectual property or fails to merge or be acquired by another company it will be required to terminate its operations. As of June 30, 2015, the Company had approximately $15,000 cash on hand and was spending approximately $170,000 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 the Companys operating expenses. As of June 30, 2015, the Company received cash in the aggregate of $714,000 and converted a $160,000 secured note plus accrued interest and a $20,000 unsecured note into the $2,000,000 senior secured debt offering commenced in February 2015. Based upon the Companys current financial position and inability to obtain additional financing, the Company does not believe it will be able to satisfy the mandatory principal payments in 2015 under the $2,000,000 senior secured debt. The Company will work with the lenders to explore extension or conversion options, but there is no guarantee the lenders will agree to modify the repayment terms of the notes under conditions that will allow the Company to continue to repay the notes, if at all. As these notes are secured by all of the assets of the Company, including intellectual property rights. The Company is in default in regards to interest payments on the notes, the lenders may call the notes and foreclose on the Companys assets. The issues described above raise substantial doubt about the Companys ability to continue as a going concern. Although the Company commenced a $2,000,000 secured debt offering, the Company does not believe it will be able to raise additional amounts under the offering. The Company is solely reliant on raising debt and capital in order to maintain its operations. Previously the Company, has been able to raise debt and equity financing through the assistance of a small number of investors who have been substantial participants in its debt and equity offerings since the Companys formation. These investors have chosen not to further assist the Company with its capital raising initiatives and, at this time, the Company is not able to obtain any alternative forms of financing and the Company will not be able to continue to satisfy its current or long term obligations. The Company needs to merge with, be acquired by another company, or identify a purchaser of its assets including intellectual property. If a candidate is not identified the Company will be forced to cease operations all together. The accompanying 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. |
Basis of Presentation and Sum19
Basis of Presentation and Summary of Significant Accounting Policies: Revenue Recognition, Policy (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Policies | |
Revenue Recognition, Policy | Revenue Recognition Other revenue represents license fees and franchise fees. |
Basis of Presentation and Sum20
Basis of Presentation and Summary of Significant Accounting Policies: Recent Accounting Pronouncements (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Policies | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Financial Accounting Standards Board recently issued Accounting Standards Update (ASU) 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory 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 Entitys Ability to Continue as a Going Concern substantial doubt, 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 CostsContracts 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, 2017. 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 Disclo21
Property and Equipment Disclosure: Summary of the cost of property and equipment (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Tables/Schedules | |
Summary of the cost of property and equipment | June 30, 2015 December 31, 2014 Computer equipment & software $ 28,225 $ 30,152 Demo equipment 591,182 599,432 Leasehold improvements 22,580 22,580 641,987 652,164 Accumulated depreciation (243,468) (185,751) $ 398,519 $ 466,413 |
Notes Payable Disclosure_ Sched
Notes Payable Disclosure: Schedule of Loan Payable (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Tables/Schedules | |
Schedule of Loan Payable | Year Payments 2015 $ 1,166,795 2016 478,214 2017 49,856 2018 25,764 2019 -- Total principal payments $ 1,720,629 |
Stockholders' Equity Disclosu23
Stockholders' Equity Disclosure: Schedule of Stock Option Activity (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Tables/Schedules | |
Schedule of Stock Option Activity | Number of Options Weighted Average Exercise Price Weighted Average Remaining Life (Years) 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 Granted 425,000 $ 1.50 Exercised - - Cancelled (898,000) $ 2.35 Balance, June 30, 2015 773,500 $ 1.87 3.74 Exercisable, December 31, 2014 882,583 $ 2.20 Exercisable, June 30, 2015 645,333 $1.88 |
Stockholders' Equity Disclosu24
Stockholders' Equity Disclosure: Schedule of Stock Option Valuation Assumptions (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Tables/Schedules | |
Schedule of Stock Option Valuation Assumptions | June 30, 2015 Risk-free interest rate range 1.43% Expected life 5.0 Years Vesting period 0 - 1Year Expected volatility 42% Expected dividend - Estimated forfeiture rate 25% Fair value range of options at grant date $0.259 |
Stockholders' Equity Disclosu25
Stockholders' Equity Disclosure: Schedule of Performance Stock Options (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Tables/Schedules | |
Schedule of Performance Stock Options | Number of Options Weighted Average Exercise Price Balance, December 31, 2013 1,440,000 $ 0.11 Granted - - Exercised - - Cancelled - - Balance, December 31, 2014 1,440,000 $ 0.11 Granted - - Exercised - - Cancelled (1,400,000) $ 0.06 Balance, June 30, 2015 40,000 $2.00 Exercisable, December 31, 2014 and June 30, 2015 40,000 $ 2.00 |
Stockholders' Equity Disclosu26
Stockholders' Equity Disclosure: Schedule of Stockholders' Equity Note, Warrants (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Tables/Schedules | |
Schedule of Stockholders' Equity Note, Warrants | Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Life (Years) 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 Granted 25,141 $2.00 Exercised - - Cancelled - - Balance, June 30, 2015 2,450,121 $2.48 1.79 |
Net Loss Per Common Share Dis27
Net Loss Per Common Share Disclosure: Schedule of Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Tables/Schedules | |
Schedule of Earnings Per Share | For the three months ended June 30, For the six months ended June 30, 2015 2014 2015 2014 Net Loss $ (2,051,108) $ (851,216) $ (2,695,715) $ (2,195,495) Basic and diluted: Preferred stock cumulative dividend - Series B (1) -- 670 -- (62,227) Preferred stock cumulative dividend - Series C -- 296 -- 2,200 Preferred stock cumulative dividend - Series D 10,706 60,169 21,295 119,181 Income applicable to preferred stockholders 10,706 61,135 21,295 59,154 Net loss applicable to common stockholders $ (2,061,814) $ (912,351) $ (2,717,010) $ (2,254,649) |
Supplemental Cash Flow Inform28
Supplemental Cash Flow Information: Schedule of Cash Flow, Supplemental Disclosures (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Tables/Schedules | |
Schedule of Cash Flow, Supplemental Disclosures | Six months ended June 30, 2015 2014 Cash paid for interest $ 25,356 $ 152,813 Series C Dividend payable in accrued expenses $ -- $ 17,870 Series D Dividend payable in accrued expenses $ 26,555 $ 49,237 Non-Cash investing and financing transactions Shares issued for consulting services $ 25,500 $ -- Beneficial conversion feature on warrants issued in conjunction with Series D preferred shares $ -- $ 24,279 Shares issued in acquisition of Dr. Pave $ -- $ 175,000 |
Basis of Presentation and Sum29
Basis of Presentation and Summary of Significant Accounting Policies: Basis of Presentation (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Details | ||||
Net loss during period | $ 2,051,108 | $ 851,216 | $ 2,695,715 | $ 2,195,495 |
Cash flows utilized in operating activities | 779,000 | |||
Cash on hand | $ 15,000 | $ 15,000 |
Note Receivable Disclosure (Det
Note Receivable Disclosure (Details) | Jun. 30, 2015USD ($) |
Details | |
Interest included in the note receivable | $ 3,799 |
Note receivable | $ 88,763 |
Property and Equipment Disclo31
Property and Equipment Disclosure: Summary of the cost of property and equipment (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment, Gross | $ 641,987 | $ 652,164 |
Accumulated depreciation | (243,468) | (185,751) |
Equipment, net of depreciation | 398,519 | 466,413 |
Computer Equipment | ||
Property, Plant and Equipment, Gross | 28,225 | 30,152 |
Demo equipment | ||
Property, Plant and Equipment, Gross | 591,182 | 599,432 |
Leasehold Improvements | ||
Property, Plant and Equipment, Gross | $ 22,580 | $ 22,580 |
Property and Equipment Disclo32
Property and Equipment Disclosure (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Details | ||||
Depreciation expense | $ 28,628 | $ 23,358 | $ 57,717 | $ 45,133 |
Gain (loss) on disposal of assets | $ 7,377 | $ 7,377 | $ 7,377 |
Asset Purchase Agreement Disc33
Asset Purchase Agreement Disclosure (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Feb. 10, 2015 | Apr. 15, 2011 | |
Impairment of intangible asset | $ 1,517,859 | $ 1,517,859 | |||
Amortization of intangible asset | $ 89,285 | $ 178,571 | $ 178,570 | ||
Asset Purchase Agreement | |||||
Total purchase price | $ 2,500,000 | ||||
Performance stock options granted | 1,400,000 | ||||
Performance stock options, exercise price | $ 0.057 | ||||
Performance stock options granted cancelled | 1,400,000 |
Notes Payable Disclosure (Detai
Notes Payable Disclosure (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||||||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Aug. 19, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Dec. 11, 2014 | Mar. 01, 2014 | Jan. 06, 2014 | |
Unsecured notes outstanding, current | $ 389,391 | $ 389,391 | $ 20,000 | |||||||
Interest payable | 51,161 | 51,161 | 19,541 | |||||||
Revolving line of credit | 229,980 | 229,980 | 229,980 | |||||||
Senior secured notes payable | 908,361 | 908,361 | 160,000 | |||||||
Purchase of equipment | ||||||||||
Loans payable | 142,290 | 142,290 | ||||||||
Payments payable | 7,586 | 7,586 | ||||||||
Purchase of a truck | ||||||||||
Loans payable | 83,507 | 83,507 | ||||||||
Purchase of equipment 2 | ||||||||||
Loans payable | 49,204 | 49,204 | ||||||||
Payments payable | 2,068 | 2,068 | ||||||||
Unsecured Notes Payable | ||||||||||
Total amount of notes outstanding | $ 20,000 | $ 20,000 | ||||||||
Unsecured notes outstanding, current | $ 323,264 | $ 323,264 | ||||||||
Debt discount | 26,736 | 26,736 | ||||||||
Notes and warrants | ||||||||||
Total amount of notes outstanding | 350,000 | 350,000 | ||||||||
Offering amount of notes and warrants | $ 1,000,000 | |||||||||
Amortization of discount on notes payable | 12,805 | 32,086 | 25,469 | 52,436 | ||||||
Notes and warrants(2) | ||||||||||
Total amount of notes outstanding | 70,000 | 70,000 | ||||||||
Offering amount of notes and warrants | $ 3,000,000 | |||||||||
Amortization of discount on notes payable | 1,855 | 3,690 | 1,488 | |||||||
Unsecured Notes Payable (2) | ||||||||||
Unsecured notes outstanding, current | 66,127 | 66,127 | ||||||||
Debt discount | $ 3,873 | $ 3,873 | ||||||||
Unsecured Notes | ||||||||||
Interest payable | 11,832 | 11,832 | ||||||||
Revolving line of credit | ||||||||||
Interest payable | 16,030 | 16,030 | ||||||||
Revolving line of credit | 229,980 | 229,980 | ||||||||
Secured Notes Payable | ||||||||||
Total amount of notes outstanding | $ 947,361 | |||||||||
Interest payable | $ 23,299 | $ 23,299 | ||||||||
Senior secured notes payable | $ 908,361 |
Notes Payable Disclosure_ Sch35
Notes Payable Disclosure: Schedule of Loan Payable (Details) - Loan Payable Due | Jun. 30, 2015USD ($) |
Mandatory principal loan payments (2015) | $ 1,166,795 |
Mandatory principal loan payments (2016) | 478,214 |
Mandatory principal loan payments (2017) | 49,856 |
Mandatory principal loan payments (2018) | 25,764 |
Total principal payments | $ 1,720,629 |
Stockholders' Equity Disclosu36
Stockholders' Equity Disclosure (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Common stock authorized | 20,000,000 | 20,000,000 | 20,000,000 | ||
Common shares issued | 11,061,114 | 11,061,114 | 9,495,045 | ||
Common shares outstanding | 11,017,388 | 11,017,388 | 10,952,356 | ||
Common stock issued | 50,285 | ||||
Proceeds from common stock issuance | $ 88,000 | ||||
Common stock issued for services | 15,000 | ||||
Preferred stock authorized | 4,500,000 | 4,500,000 | 4,500,000 | ||
Preferred stock outstanding | 178,924 | 178,924 | |||
Number of options granted | 425,000 | 298,000 | |||
Stock-based compensation expense | $ 39,525 | $ 34,313 | $ 75,077 | $ 163,721 | |
Unrecognized compensation expense | $ 31,965 | $ 31,965 | |||
Former CEO | |||||
Number of options granted | 125,000 | ||||
Employee for continued consulting services | |||||
Number of options granted | 100,000 | ||||
Employees of the Company | |||||
Number of options granted | 200,000 | ||||
Series D Preferred Stock | |||||
Shares outstanding | 178,924 | 178,924 | |||
Dividends paid | $ 45,665 | $ 31,475 | $ 89,683 | ||
Dividends payable | $ 26,555 | $ 26,555 | |||
Original issue price per share | $ 3 | $ 3 |
Stockholders' Equity Disclosu37
Stockholders' Equity Disclosure: Schedule of Stock Option Activity (Details) - $ / shares | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Details | |||
Number of options outstanding | 773,500 | 1,246,500 | 1,320,000 |
Weighted average exercise price, options outstanding | $ 1.87 | $ 2.35 | $ 2.23 |
Number of options granted | 425,000 | 298,000 | |
Weighted average exercise price, options granted | $ 1.50 | $ 3 | |
Number of options cancelled | (898,000) | (371,500) | |
Weighted average exercise price, options cancelled | $ 2.35 | $ 2.46 | |
Number of options exercisable | 645,333 | 882,583 | |
Weighted average exercise price, options exercisable | $ 1.88 | $ 2.20 |
Stockholders' Equity Disclosu38
Stockholders' Equity Disclosure: Schedule of Performance Stock Options (Details) - $ / shares | 6 Months Ended | ||
Jun. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Details | |||
Performance Stock options outstanding | 40,000 | 1,440,000 | 1,440,000 |
Weighted average exercise price, performance stock options outstanding | $ 2 | $ 0.11 | $ 0.11 |
Performance Stock options cancelled | (1,400,000) | ||
Performance Stock options exercisable | 40,000 | ||
Weighted average exercise price, performance stock options exercisable | $ 2 |
Stockholders' Equity Disclosu39
Stockholders' Equity Disclosure: Schedule of Stockholders' Equity Note, Warrants (Details) - $ / shares | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Details | |||
Warrants outstanding | 2,450,121 | 2,424,980 | 363,824 |
Weighted average exercise price, warrants | $ 2.48 | $ 2.48 | $ 3 |
Warrants granted | 25,141 | 2,061,156 |
Net Loss Per Common Share Dis40
Net Loss Per Common Share Disclosure: Schedule of Earnings Per Share (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Net income (loss) | $ (2,051,108) | $ (851,216) | $ (2,695,715) | $ (2,195,495) |
Net income (loss) available to preferred stockholders | 10,706 | 61,135 | 21,295 | 59,154 |
Net income (loss) applicable to common stockholders | (2,061,814) | (912,351) | (2,717,010) | (2,254,649) |
Series B Dividend | ||||
Cumulative dividend | 670 | (62,227) | ||
Series C Dividend | ||||
Cumulative dividend | 296 | 2,200 | ||
Series D Dividend | ||||
Cumulative dividend | $ 10,706 | $ 60,169 | $ 21,295 | $ 119,181 |
Commitments and Contingencies41
Commitments and Contingencies Disclosure (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Details | ||||
Total rent expense | $ 15,057 | $ 19,305 | $ 30,114 | $ 38,404 |
Related Party Transactions (Det
Related Party Transactions (Details) - Jun. 30, 2015 - USD ($) | Total | Total |
Heather Kearns | ||
Related party consulting fees | $ 18,000 | $ 45,000 |
Due to related party | 3,600 | 3,600 |
Secured Note - Mr. Yorke | ||
Due to related party | 873,361 | 873,361 |
Revolving line of credit - Mr. Yorke | ||
Due to related party | 138,000 | 138,000 |
Mr. Yorke | ||
Paid or accrued interest | 32,080 | |
Mr. Gus Blass III | ||
Due to related party | $ 250,000 | 250,000 |
Paid or accrued interest | 14,877 | |
Paid or accrued dividends | $ 5,918 |
Supplemental Cash Flow Inform43
Supplemental Cash Flow Information: Schedule of Cash Flow, Supplemental Disclosures (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Details | ||
Cash paid for interest | $ 25,356 | $ 152,813 |
Series C Dividend payable in accounts payable | 17,870 | |
Series D Dividend payable in accrued expenses | 26,555 | 49,237 |
Shares issued for consulting services | $ 25,500 | |
Beneficial conversion feature on warrants | 24,279 | |
Shares issued in acquisition | $ 175,000 |
Subsequent Events (Details)
Subsequent Events (Details) | 1 Months Ended |
Aug. 16, 2015USD ($) | |
JMW Fund, Richland Fund, and San Gabriel Fund | |
Notes under the senior secured loan agreement | $ 39,000 |