Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 07, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | TOMI Environmental Solutions, Inc. | |
Entity Central Index Key | 314,227 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 122,412,458 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,018 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash and Cash Equivalents | $ 3,867,420 | $ 4,550,003 |
Accounts Receivable - net | 2,230,402 | 1,835,949 |
Inventories (Note 3) | 3,273,613 | 3,518,884 |
Deposits on Merchandise (Note 9) | 15,714 | 0 |
Prepaid Expenses | 276,685 | 270,419 |
Total Current Assets | 9,663,834 | 10,175,255 |
Property and Equipment - net (Note 4) | 642,461 | 712,822 |
Other Assets: | ||
Intangible Assets - net (Note 5) | 1,456,155 | 1,548,532 |
Security Deposits | 4,700 | 4,700 |
Total Other Assets | 1,460,855 | 1,553,232 |
Total Assets | 11,767,150 | 12,441,309 |
Current Liabilities: | ||
Accounts Payable | 634,803 | 751,730 |
Accrued Expenses and Other Current Liabilities (Note 10) | 287,861 | 267,136 |
Accrued Interest (Note 6) | 16,000 | 80,000 |
Customer Deposits | 1,578 | 3,062 |
Deferred Rent | 0 | 781 |
Total Current Liabilities | 940,242 | 1,102,709 |
Convertible Notes Payable, net of discount of $47,588 and 55,625 at March 31, 2018 and December 31, 2017, respectively (Note 6) | 5,952,412 | 5,944,375 |
Total Long-term Liabilities | 5,952,412 | 5,944,375 |
Total Liabilities | 6,892,654 | 7,047,084 |
Commitments and Contingencies | 0 | 0 |
Stockholders' Equity: | ||
Cumulative Convertible Series A Preferred Stock; par value $0.01 per share, 1,000,000 shares authorized; 510,000 shares issued and outstanding at March 31, 2018 and December 31, 2017 | 5,100 | 5,100 |
Cumulative Convertible Series B Preferred Stock; $1,000 stated value; 7.5% cumulative dividend; 4,000 shares authorized; none issued and outstanding at March 31, 2018 and December 31, 2017 | 0 | 0 |
Common Stock; par value $0.01 per share, 200,000,000 shares authorized; 122,349,958 and 122,049,958 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively | 1,223,499 | 1,220,499 |
Additional Paid-in Capital | 42,180,265 | 42,139,675 |
Accumulated Deficit | (38,534,368) | (37,971,049) |
Total Shareholders' Equity | 4,874,496 | 5,394,225 |
Total Liabilities and Shareholders' Equity | $ 11,767,150 | $ 12,441,309 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) (Parenthetical) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Condensed Consolidated Balance Sheet Parenthetical | ||
Convertible Notes Payable, net of discount | $ 47,588 | $ 55,625 |
Stockholders' Equity ( Deficiency): | ||
Cumulative Convertible Preferred Stock Series A; Par Value | $ 0.01 | $ 0.01 |
Cumulative Convertible Preferred Stock Series A; Shares Authorized | 1,000,000 | 1,000,000 |
Cumulative Convertible Preferred Stock Series A; Issued Shares | 510,000 | 510,000 |
Cumulative Convertible Preferred Stock Series A; Stock Outstanding | 510,000 | 510,000 |
Cumulative Convertible Preferred Stock Series B; Stated value | $ 1,000 | $ 1,000 |
Cumulative Convertible Preferred Stock Series B; Cumulative dividend | 7.50% | 7.50% |
Cumulative Convertible Preferred Stock Series B; Shares Authorized | 4,000 | 4,000 |
Cumulative Convertible Preferred Stock Series B; Issued Shares | 0 | 0 |
Cumulative Convertible Preferred Stock Series B; Stock Outstanding | 0 | 0 |
Common Stock; Par Value | $ 0.01 | $ 0.01 |
Common Stock; Shares Authorized | 200,000,000 | 200,000,000 |
Common Stock; Stock Issued | 122,349,958 | 122,049,958 |
Common Stock; Stock Outstanding | 122,349,958 | 122,049,958 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Condensed Consolidated Statement Of Operations | ||
Sales, net | $ 1,312,466 | $ 1,098,883 |
Cost of Sales | 491,659 | 416,357 |
Gross Profit | 820,807 | 682,526 |
Operating Expenses: | ||
Professional Fees | 106,458 | 272,011 |
Depreciation and Amortization | 162,738 | 159,151 |
Selling Expenses | 204,005 | 179,384 |
Research and Development | 132,487 | 30,647 |
Equity Compensation Expense (Note 7) | 12,685 | 11,553 |
Consulting fees | 35,026 | 31,052 |
General and Administrative | 663,887 | 610,355 |
Total Operating Expenses | 1,317,287 | 1,294,153 |
Loss from Operations | (496,480) | (611,627) |
Other Income (Expense): | ||
Amortization of Debt Discounts | (8,037) | (137) |
Interest Income | 1,198 | 0 |
Interest Expense | (60,000) | (14,133) |
Total Other Income (Expense) | (66,839) | (14,270) |
Net Loss | $ (563,319) | $ (625,897) |
Net Loss Per Common Share | ||
Basic and Diluted | $ 0 | $ (0.01) |
Basic and Diluted Weighted Average Common Shares Outstanding | 122,229,959 | 120,825,134 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED) - 3 months ended Mar. 31, 2018 - USD ($) | Series A Preferred | Common Stock | Additional Paid in Capital | Accumulated Deficit | Total |
Beginning Balance, Shares at Dec. 31, 2017 | 510,000 | 122,049,958 | |||
Beginning Balance, Amount at Dec. 31, 2017 | $ 5,100 | $ 1,220,499 | $ 42,139,675 | $ (37,971,049) | $ 5,394,225 |
Equity based compensation, Amount | 13,590 | 13,590 | |||
Common stock issued for services provided, Shares | 300,000 | ||||
Common stock issued for services provided, Amount | $ 3,000 | 27,000 | 30,000 | ||
Net Loss | (563,319) | (563,319) | |||
Ending Balance, Shares at Mar. 31, 2018 | 510,000 | 122,349,958 | |||
Ending Balance, Amount at Mar. 31, 2018 | $ 5,100 | $ 1,223,499 | $ 42,180,265 | $ (38,534,368) | $ 4,874,496 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash Flow From Operating Activities: | ||
Net Loss | $ (563,319) | $ (625,897) |
Adjustments to Reconcile Net loss to Net Cash Used In Operating Activities: | ||
Depreciation and Amortization | 162,738 | 159,151 |
Amortization of Debt Discount | 8,037 | 137 |
Equity Based Compensation | 13,590 | 11,553 |
Value of Equity Issued for Services | 30,000 | 0 |
Decrease (increase) in: | ||
Accounts Receivable | (394,453) | 110,250 |
Inventory | 245,271 | (453,144) |
Prepaid Expenses | (6,266) | (18,951) |
Deposits on Merchandise | (15,714) | 67,890 |
Increase (Decrease) in: | ||
Accounts Payable | (116,927) | 541,012 |
Accrued Expenses | 20,725 | (49,024) |
Accrued Interest | (64,000) | 14,133 |
Deferred Rent | (781) | (1,940) |
Customer Deposits | (1,484) | (2,695) |
Net Cash Used in Operating Activities | (682,583) | (247,525) |
Cash Flow From Investing Activities: | ||
Purchase of Property and Equipment | 0 | (4,768) |
Net Cash Used in Investing Activities | 0 | (4,768) |
Cash Flow From Financing Activities: | ||
Proceeds from Convertible Notes | 0 | 5,300,000 |
Net Cash Provided by Financing Activities | 0 | 5,300,000 |
Increase (Decrease) In Cash and Cash Equivalents | (682,583) | 5,047,707 |
Cash and Cash Equivalents - Beginning | 4,550,003 | 948,324 |
Cash and Cash Equivalents - Ending | 3,867,420 | 5,996,031 |
Supplemental Cash Flow Information: | ||
Cash Paid For Interest | 124,000 | 0 |
Cash Paid For Income Taxes | 800 | 800 |
Non-Cash Investing and Financing Activities : | ||
Establishment of discount on convertible debt | $ 0 | $ 57,106 |
1. DESCRIPTION OF BUSINESS
1. DESCRIPTION OF BUSINESS | 3 Months Ended |
Mar. 31, 2018 | |
Business Combination, Description [Abstract] | |
NOTE 1. DESCRIPTION OF BUSINESS | TOMITM Environmental Solutions, Inc. (“TOMI”, the “Company”, “we”, “our” and “us”) is a global decontamination and infection prevention company, providing environmental solutions for indoor surface and air disinfection through manufacturing, sales and licensing of its premier Binary Ionization Technology® (BIT™) platform. Invented under a defense grant in association with the Defense Advanced Research Projects Agency (DARPA) of the U.S. Department of Defense. BIT™ is registered with the U.S. Environmental Protection Agency (“EPA”) and uses a low percentage Hydrogen Peroxide as its only active ingredient to produce a fog composed mostly of a hydroxyl radical ( . Our products are designed to service a broad spectrum of commercial structures, including, but not limited to, hospitals and medical facilities, bio-safety labs, pharmaceutical facilities, universities and research facilities, vivarium labs, all service industries including cruise ships, office buildings, hotel and motel rooms, schools, restaurants, meat and produce processing facilities, military barracks, police and fire departments, and athletic facilities. TOMI products are also used in single-family homes and multi-unit residences. Our mission is to help its customers create a healthier world through its product line in our divisions (Healthcare, Life Sciences, TSN or TOMI Service Network and Food Safety) our motto is “innovating for a safer world” for healthcare and life. |
2. SUMMARY OF SIGNIFICANT ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Basis of Presentation The interim unaudited condensed consolidated financial statements included herein, presented in accordance with generally accepted accounting principles utilized in the United States of America (“GAAP”), and stated in U.S. dollars, have been prepared by the Company, without an audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2017 and notes thereto which are included in the Annual Report on Form 10-K previously filed with the SEC on March 29, 2018. The Company follows the same accounting policies in the preparation of interim reports. The results of operations for the interim periods covered by this Form 10-Q may not necessarily be indicative of results of operations for the full fiscal year or any other interim period. Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of TOMI and its wholly-owned subsidiary, TOMI Environmental Solutions, Inc., a Nevada corporation. All significant intercompany accounts and transactions have been eliminated in consolidation. Reclassification of Accounts Certain reclassifications have been made to prior-year comparative financial statements to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations or financial position. Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the accompanying condensed consolidated financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, including those related to accounts receivable, inventory, fair values of financial instruments, intangible assets, useful lives of intangible assets and property and equipment, fair values of stock-based awards, income taxes, and contingent liabilities, among others. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of our assets and liabilities. Fair Value Measurements The authoritative guidance for fair value measurements defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or the most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and (iv) willing to transact. The guidance describes a fair value hierarchy based on the levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, which are the following: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or corroborated by observable market data or substantially the full term of the assets or liabilities. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the value of the assets or liabilities. Our financial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and convertible debt. All these items were determined to be Level 1 fair value measurements. The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable and accrued expenses approximated fair value because of the short maturity of these instruments. The recorded value of convertible debt approximates its fair value as the terms and rates approximate market rates (See Note 6). Cash and Cash Equivalents For purposes of the statement of cash flows, cash and cash equivalents includes cash on hand held at financial institutions and other liquid investments with original maturities of three months or less. At times, these deposits may be in excess of insured limits. Accounts Receivable Our accounts receivable are typically from credit worthy customers or, for certain international customers, are supported by pre-payments. For those customers to whom we extend credit, we perform periodic evaluations of them and maintain allowances for potential credit losses as deemed necessary. We have a policy of reserving for doubtful accounts based on our best estimate of the amount of potential credit losses in existing accounts receivable. We periodically review our accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are charged to the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Bad debt expense for the three months ended March 31, 2018 and 2017 was $0. At March 31, 2018 and December 31, 2017, the allowance for doubtful accounts was $500,000. Three customers accounted for 33% of net revenue for the three months ended March 31, 2018 and three customers accounted for 43% of net revenue for the three months ended March 31, 2017. At March 31, 2018 and December 31, 2017, two customers accounted for 25% and 24% of accounts receivable, respectively. Inventories Inventories are valued at the lower of cost or market using the first-in, first-out (FIFO) method. Inventories consist primarily of finished goods. At March 31, 2018 and December 31, 2017, we did not have a reserve for slow-moving or obsolete inventory. Deposits on Merchandise Deposits on merchandise primarily consist of amounts paid in advance of the receipt of inventory (see Note 9). Property and Equipment We account for property and equipment at cost less accumulated depreciation. We compute depreciation using the straight-line method over the estimated useful lives of the assets, generally three to five years. Depreciation for equipment, furniture and fixtures and vehicles commences once placed in service for its intended use. Leasehold improvements are amortized using the straight-line method over the lives of the respective leases or service lives of the improvements, whichever is shorter. Accounts Payable As of March 31, 2018 and December 31, 2017, one vendor accounted for approximately 35% and 45% of total accounts payable, respectively. For the three months ended March 31, 2018 and 2017, one vendor accounted for 70% and 67% of cost of goods sold, respectively. Accrued Warranties Accrued warranties represent the estimated costs, if any, that will be incurred during the warranty period of our products. We make an estimate of expected costs that will be incurred by us during the warranty period and charge that expense to the consolidated statement of operations at the date of sale. Our manufacturer assumes the warranty against product defects for one year from date of sale, which we extend to our customers upon sale of the product. We assume responsibility for product reliability and results. As of March 31, 2018 and December 31, 2017, our warranty reserve was $5,000. Income Taxes Deferred income tax assets and liabilities are determined based on differences between the financial statement reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws in effect when the differences are expected to reverse. The measurement of deferred income tax assets is reduced, if necessary, by a valuation allowance for any tax benefits that are, on a more likely than not basis, not expected to be realized in accordance with Accounting Standards Codification (“ASC”) guidance for income taxes. Net deferred tax benefits have been fully reserved at March 31, 2018 and December 31, 2017. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. Net Loss Per Share Basic net loss per share is computed by dividing the Company’s net loss by the weighted average number of shares of common stock outstanding during the period presented. Diluted loss per share is based on the treasury stock method and includes the effect from potential issuance of shares of common stock, such as shares issuable pursuant to the exercise of options and warrants and conversions of preferred stock or debentures. Potentially dilutive securities as of March 31, 2018 consisted of 11,111,100 shares of common stock from convertible debentures, 35,251,411 shares of common stock issuable upon exercise of outstanding warrants, 320,000 shares of common stock issuable upon outstanding options and 510,000 shares of common stock issuable upon conversion of outstanding shares of Preferred A stock (“Convertible Series A Preferred Stock”). Diluted and basic weighted average shares are the same, as potentially dilutive shares are anti-dilutive. Potentially dilutive securities as of March 31, 2017 consisted of 9,814,805 shares of common stock from convertible debentures, 37,959,745 shares of common stock issuable upon exercise of outstanding warrants, 200,000 shares of common stock issuable upon outstanding options and 510,000 shares of common stock issuable upon conversion of outstanding shares of Convertible Series A Preferred Stock. Diluted and basic weighted average shares are the same, as potentially dilutive shares are anti-dilutive. Diluted net loss per share is computed similarly to basic net loss per share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential shares of common stock had been issued and if such additional shares were dilutive. Options, warrants, preferred stock and shares associated with the conversion of debt to purchase approximately 47.2 million and 48.5 shares of common stock were outstanding at March 31, 2018 and 2017, respectively, but were excluded from the computation of diluted net loss per share due to the anti-dilutive effect on net loss per share. Three Months Ended March 31, 2018 (Unaudited) 2017 Net loss $ (563,319 ) $ (625,897 ) Adjustments for convertible debt - as converted Interest on convertible debt 60,000 14,133 Amortization of debt discount on convertible debt 8,037 137 Net loss attributable to common shareholders $ (495,282 ) $ (611,627 ) Weighted average number of common shares outstanding: Basic and diluted 122,229,959 120,825,134 Net loss attributable to common shareholders per share: Basic and diluted $ (0.00 ) $ (0.01 ) Revenue Recognition We recognize revenue in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue Recognition,” when there is persuasive evidence that an arrangement exists, title and risk of loss have passed, delivery has occurred, or the services have been rendered, the sales price is fixed or determinable and collection of the related receivable is reasonably assured. Title and risk of loss generally pass to our customers upon shipment. Disaggregation of Revenue The following table presents our revenues disaggregated by revenue source. Net Revenue Product and Service Revenue Three Months Ended March 31, (Unaudited) 2018 2017 SteraMist Product $ 1,092,000 $ 821,000 Service and Training 220,000 278,000 Total $ 1,312,000 $ 1,099,000 Revenue by Geographic Region Three Months Ended March 31, (Unaudited) 2018 2017 United States $ 945,000 $ 848,000 International 367,000 251,000 Total $ 1,312,000 $ 1,099,000 Product revenue includes sales from our standard and customized equipment, solution and accessories sold with our equipment. Revenue is recognized upon transfer of control of promised products to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. Service and training revenue includes sales from our high-level decontamination and service engagements, validation of our equipment and technology and customer training. Service revenue is recognized as the agreed upon services are rendered to our customers in an amount that reflects the consideration we expect to receive in exchange for those services. Costs to Obtain a Contract with a Customer We apply a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within sales and marketing expenses. These costs include our internal sales force compensation program and certain partner sales incentive programs as we have determined annual compensation is commensurate with annual sales activities. Contract Balances As of March 31, 2018 and December 31, 2017 we did not have any unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. Arrangements with Multiple Performance Obligations Our contracts with customers may include multiple performance obligations. We enter into contracts that can include various combinations of products and services, which are primarily distinct and accounted for as separate performance obligations. Significant Judgments Our contracts with customers for products and services often dictate the terms and conditions of when the control of the promised products or services is transferred to the customer and the amount of consideration to be received in exchange for the products and services. Stock-Based Compensation We account for stock-based compensation in accordance with Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”) 718, “Compensation—Stock Compensation.” Under the provisions of FASB ASC 718, stock-based compensation cost is estimated at the grant date based on the award’s fair value and is recognized as expense over the requisite service period. On July 7, 2017, our shareholders approved the 2016 Equity Incentive Plan (the “2016 Plan”). The 2016 Plan authorizes the grant of stock options, stock appreciation rights, restricted stock, restricted stock units and performance units/shares. Up to 5,000,000 shares of common stock are authorized for issuance under the 2016 Plan. Shares issued under the 2016 Plan may be either authorized but unissued shares, treasury shares, or any combination thereof. Provisions in the 2016 Plan permit the reuse or reissuance by the 2016 Plan of shares of common stock for numerous reasons, including, but not limited to, shares of common stock underlying canceled, expired, or forfeited awards of stock-based compensation and stock appreciation rights paid out in the form of cash. Stock-based compensation will typically be awarded in consideration for the future performance of services to us. All recipients of awards under the 2016 Plan are required to enter into award agreements with the Company at the time of the award; awards under the 2016 Plan are expressly conditioned upon such agreements. For the year ended December 31, 2017, the Company issued 200,000 shares of common stock out of the 2016 Plan. In addition, for the three months ended March 31, 2018, we issued 300,000 shares of common stock out of the 2016 Plan. Concentrations of Credit Risk Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents. We maintain cash balances at financial institutions which exceed the current Federal Deposit Insurance Corporation limit of $250,000 at times during the year. Long-Lived Assets Including Acquired Intangible Assets We assess long-lived assets for potential impairments at the end of each year, or during the year if an event or other circumstance indicates that we may not be able to recover the carrying amount of the asset. In evaluating long-lived assets for impairment, we measure recoverability of these assets by comparing the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If our long-lived assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair market value. We base the calculations of the estimated fair value of our long-lived assets on the income approach. For the income approach, we use an internally developed discounted cash flow model that includes, among others, the following assumptions: projections of revenues and expenses and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates. We base these assumptions on our historical data and experience, industry projections, micro and macro general economic condition projections, and our expectations. We had no long-lived asset impairment charges for the three months ended March 31, 2018 and 2017. Advertising and Promotional Expenses We expense advertising costs in the period in which they are incurred. Advertising and promotional expenses for the three months ended March 31, 2018 and 2017 were approximately $54,000 and $9,000, respectively. Research and Development Expenses We expense research and development expenses in the period in which they are incurred. For the three months ended March 31, 2018 and 2017, research and development expenses were approximately $132,000 and $31,000, respectively. Shipping and Handling Costs We include shipping and handling costs relating to the delivery of products directly from vendors to the Company in cost of sales. Other shipping and handling costs, including third-party delivery costs relating to the delivery of products to customers, are classified as a general and administrative expense. Shipping and handling costs included in general and administrative expense were approximately $51,000 and $21,000 for the three months ended March 31, 2018 and 2017, respectively. Business Segments We currently have one reportable business segment due to the fact that we derive our revenue primarily from one product. A breakdown of revenue is presented in “Revenue Recognition” in Note 2 above. Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers Deferral of the Effective Date In February 2016, the FASB issued ASU No. 2016-02, Leases In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting |
3. INVENTORIES
3. INVENTORIES | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
NOTE 3. INVENTORIES | Inventories consist of the following: March 31, 2018 (Unaudited) December 31, 2017 Raw materials $ - $ - Finished goods 3,273,613 3,518,884 $ 3,273,613 $ 3,518,884 |
4. PROPERTY AND EQUIPMENT
4. PROPERTY AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
NOTE 4. PROPERTY AND EQUIPMENT | Property and equipment consists of the following at: March 31, 2018 (Unaudited) December 31, 2017 Furniture and fixtures $ 91,216 $ 91,216 Equipment 1,192,293 1,192,293 Vehicles 56,410 56,410 Computer and Software 113,319 113,319 Leasehold Improvements 15,554 15,554 1,468,792 1,468,792 Less: Accumulated depreciation 826,331 755,969 $ 642,461 $ 712,822 For the three months ended March 31, 2018 and 2017, depreciation was $70,361 and $66,775, respectively. |
5. INTANGIBLE ASSETS
5. INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
NOTE 5. INTANGIBLE ASSETS | Intangible assets consist of patents and trademarks related to our Binary Ionization Technology. We amortize the patents over the estimated remaining lives of the related patents. The trademarks have an indefinite life. Amortization expense was $92,377 and $92,377 for the three months ended March 31, 2018 and 2017, respectively. Definite life intangible assets consist of the following: March 31, 2018 (Unaudited) December 31, 2017 Intellectual Property and Patents $ 2,848,300 $ 2,848,300 Less: Accumulated Amortization 1,832,145 1,739,768 Intangible Assets, net $ 1,016,155 $ 1,108,532 Indefinite life intangible assets consist of the following: Trademarks $ 440,000 $ 440,000 Total Intangible Assets, net $ 1,456,155 $ 1,548,532 Approximate amortization over the next five years is as follows: Twelve Month Period Ending March 31, Amount 2019 $ 370,000 2020 370,000 2021 276,000 2022 - 2023 - $ 1,016,000 |
6. CONVERTIBLE DEBT
6. CONVERTIBLE DEBT | 3 Months Ended |
Mar. 31, 2018 | |
Convertible Debt [Abstract] | |
NOTE 6. CONVERTIBLE DEBT | In March and May 2017, the Company closed a private placement transaction in which it issued to certain accredited investors unregistered senior callable convertible promissory notes (the “Notes”) and three-year warrants to purchase an aggregate of 999,998 shares of common stock at an exercise price of $0.69 per share in exchange for aggregate gross proceeds of $6,000,000. The Notes bear interest at a rate of 4% per annum. $5,300,000 in principal was originally scheduled to mature on August 31, 2018 and $700,000 in principal was originally scheduled to mature on November 8, 2018, unless earlier redeemed, repurchased or converted. The Notes are convertible at the option of the holder into common stock at a conversion price of $0.54 per share. Subsequent to September 1, 2017, we may redeem the Notes that are scheduled to mature on August 31, 2018 at any time prior to maturity at a price equal to 100% of the outstanding principal amount of the Notes to be redeemed, plus accrued and unpaid interest as of the redemption date. Prior to November 8, 2018, we may redeem the Notes that are scheduled to mature on such date at any time prior to maturity at a price equal to 100% of the outstanding principal amount of the Notes to be redeemed, plus accrued and unpaid interest as of the redemption date. Interest on the Notes is payable semi-annually in cash on February 28 and August 31 of each year, beginning on August 31, 2017. Interest expense related to the Notes for the three months ended March 31, 2018 and 2017 was $60,000 and $14,133, respectively. The warrants were valued at $62,559 using the Black-Scholes pricing model with the following assumptions: expected volatility: 104.06% –111.54%; expected dividend: $0; expected term: 3 years; and risk-free rate: 1.49%–1.59%. The Company recorded the warrants’ relative fair value of $61,904 as an increase to additional paid-in capital and a discount against the related Notes. The debt discount is being amortized over the life of the Notes using the effective interest method. Amortization expense for the three months ended March 31, 2018 and 2017 was $8,037 and $137, respectively. In February and March 2018, we extended the maturity date of the Notes—we extended the maturity dates for $5,300,000 of principal on the Notes to April 1, 2019 and $700,000 in principal of the Notes to June 8, 2019. No additional consideration was paid or accrued by the Company. The stated rate of the Notes was unchanged and the estimated fair value of the new debt approximates its carrying amount (principal plus accrued interest at the date of the modification). We determined that the modification of these Notes is not a substantial modification in accordance with ASC 470-50, “Modifications and Extinguishments”. Convertible notes consist of the following at: March 31, 2018 December 31, (Unaudited) 2017 Convertible notes $ 6,000,000 $ 6,000,000 Initial discount (61,904 ) (61,904 ) Accumulated amortization 14,316 6,279 Convertible notes, net $ 5,952,412 $ 5,944,375 |
7. STOCKHOLDERS' EQUITY
7. STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2018 | |
Statement of Stockholders' Equity [Abstract] | |
NOTE 7. STOCKHOLDERS' EQUITY | Our board of directors may, without further action by our shareholders, from time to time, direct the issuance of any authorized but unissued or unreserved shares of preferred stock in series and at the time of issuance, determine the rights, preferences and limitations of each series. The holders of such preferred stock may be entitled to receive a preference payment in the event of any liquidation, dissolution or winding-up of the Company before any payment is made to the holders of our common stock. Furthermore, the board of directors could issue preferred stock with voting and other rights that could adversely affect the voting power of the holders of our common stock. Convertible Series A Preferred Stock Our authorized Convertible Series A Preferred Stock, $0.01 par value, consists of 1,000,000 shares. At March 31, 2018 and December 31, 2017, there were 510,000 shares issued and outstanding. The Convertible Series A Preferred Stock is convertible at the rate of one share of common stock for one share of Convertible Series A Preferred Stock. Convertible Series B Preferred Stock Our authorized Convertible Series B Preferred Stock, $1,000 stated value, 7.5% cumulative dividend, consists of 4,000 shares. At March 31, 2018 and December 31, 2017, there were no shares issued and outstanding, respectively. Each share of Convertible Series B Preferred Stock may be converted (at the holder’s election) into two hundred shares of our common stock. Common Stock During the three months ended March 31, 2017, we did not issue any shares of common stock. During the three months ended March 31, 2018, we issued 300,000 shares of common stock valued at $30,000 to members of our board of directors (see Note 9). Stock Options In January 2018, we issued options to purchase an aggregate of 100,000 shares of common stock to our Chief Operating Officer, valued at $11,780. The options have an exercise price of $0.12 per share and expire in January 2023. The options were valued using the Black-Scholes model using the following assumptions: volatility: 146%; dividend yield: 0%; zero coupon rate: 2.27%; and a life of 5 years. In January 2018, we issued options to purchase an aggregate of 20,000 shares of common stock to our scientific advisory board members, valued at $1,810 in total. The options have an exercise price of $0.10 per share and expire in January 2028. The options were valued using the Black-Scholes model using the following assumptions: volatility: 147%; dividend yield: 0%; zero coupon rate: 2.41%; and a life of 10 years. The following table summarizes stock options outstanding as of March 31, 2018 and December 31, 2017: March 31, 2018 (Unaudited) December 31, 2017 Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price Outstanding, beginning of period 200,000 $ 0.76 200,000 $ 0.76 Granted 120,000 $ 0.12 — — Exercised — — — — Outstanding, end of period 320,000 $ 0.52 200,000 $ 0.76 Options outstanding and exercisable by price range as of March 31, 2018 were as follows: Outstanding Options Average Weighted Exercisable Options Range Number Remaining Contractual Life in Years Number Weighted Average Exercise Price $ 0.05 20,000 2.78 20,000 $ 0.05 $ 0.10 20,000 9.83 20,000 $ 0.10 $ 0.12 100,000 4.77 100,000 $ 0.12 $ 0.27 40,000 6.76 40,000 $ 0.27 $ 0.55 100,000 7.85 100,000 $ 0.55 $ 2.10 40,000 1.76 40,000 $ 2.10 320,000 5.80 320,000 $ 0.52 Stock Warrants For the three months ended March 31, 2017, we recognized approximately $12,000 in equity compensation expense for the accrued but unvested portion of certain warrants issued to a former employee pursuant to his agreement with the Company. In March and May 2017, in connection with the issuance of the Notes, we issued three-year warrants to purchase up to an aggregate of 999,998 shares of common stock at an exercise price of $0.69 per share (see Note 6). We did not issue any warrants during the three months ended March 31, 2018. The following table summarizes the outstanding common stock warrants as of March 31, 2018 and December 31, 2017: March 31, 2018 (Unaudited) December 31, 2017 Number of Warrants Weighted Average Exercise Price Number of Warrants Weighted Average Exercise Price Outstanding, beginning of period 35,501,411 $ 0.33 37,076,413 $ 0.31 Granted - - 4,774,998 0.24 Exercised - - (975,000 ) 0.05 Expired (250,000 ) (0.15 ) (5,375,000 ) 0.13 Outstanding, end of period 35,251,411 $ 0.33 35,501,411 $ 0.33 Warrants outstanding and exercisable by price range as of March 31, 2018 were as follows: Outstanding Warrants Exercisable Warrants Exercise Price Number Average Weighted Remaining Contractual Life in Years Number Weighted Average Exercise Price $ 0.10 265,000 4.29 265,000 $ 0.10 $ 0.12 7,500,000 3.03 7,500,000 $ 0.12 $ 0.17 10,000 4.57 10,000 $ 0.17 $ 0.26 100,000 0.24 100,000 $ 0.26 $ 0.27 250,000 3.75 250,000 $ 0.27 $ 0.29 10,125,613 2.55 10,125,613 $ 0.29 $ 0.30 11,925,800 0.50 11,925,800 $ 0.30 $ 0.32 250,000 3.50 250,000 $ 0.32 $ 0.33 75,000 0.50 75,000 $ 0.33 $ 0.42 250,000 3.25 250,000 $ 0.42 $ 0.50 325,000 2.32 325,000 $ 0.50 $ 0.55 100,000 2.83 100,000 $ 0.55 $ 0.62 75,000 0.30 75,000 $ 0.62 $ 0.69 999,998 1.96 999,998 $ 0.69 $ 1.00 3,000,000 2.09 3,000,000 $ 1.00 35,251,411 1.99 35,251,411 $ 0.33 There were no unvested warrants outstanding as of March 31, 2018. |
8. COMMITMENTS AND CONTINGENCIE
8. COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
NOTE 8. COMMITMENTS AND CONTINGENCIES | Lease Commitments In September 2014, we entered into a lease agreement for office and warehouse space in Frederick, Maryland. As part of the lease agreement, we received a rent holiday in the first 5 months of the lease. The lease also provided for an escalation clause pursuant to which the Company was subject to an annual rent increase of 3%, year over year. The term of the lease expired on January 31, 2018 and has been extended on a month-to-month basis. We account for the lease using the straight line method and recorded $12,927 and $11,427 in rent expense for the three months ended March 31, 2018 and 2017, respectively Legal Contingencies We may become a party to litigation in the normal course of business. In the opinion of management, there are no legal matters involving us that would have a material adverse effect upon our financial condition, results of operations or cash flows. In addition, from time to time, we may have to file claims against parties that infringe on our intellectual property. Product Liability As of March 31, 2018, and December 31, 2017, there were no claims against us for product liability. |
9. CONTRACTS AND AGREEMENTS
9. CONTRACTS AND AGREEMENTS | 3 Months Ended |
Mar. 31, 2018 | |
Contracts And Agreements | |
NOTE 9. CONTRACTS AND AGREEMENTS | Manufacturing Agreement In November 2016, we entered into a manufacturing and development agreement with RG Group Inc. The agreement does not provide for any minimum purchase commitments and is for a term of two years with provisions to extend. The agreement also provides for a warranty against product defects for one year. As of March 31, 2018 and December 31, 2017, balances due to RG Group, Inc. accounted for approximately 35% and 45% of total accounts payable, respectively. At March 31, 2018 and December 31, 2017, we maintained required deposits with RG Group, Inc. in the amounts of $15,714 and $0, respectively. Agreements with Directors In December 2017, we increased the annual board fee to directors to $40,000, to be paid in cash on a quarterly basis, with the exception of the audit committee chairperson, whose annual fee we increased to $45,000, also to be paid in cash on a quarterly basis. The board fee also includes the issuance of 75,000 shares of common stock on an annual basis. For the three months ended March 31, 2018, we issued an aggregate of 300,000 shares of common stock that were valued at $30,000 to members of our board of directors. Other Agreements In June 2015, we launched the TOMI Service Network (“TSN”). The TSN is a national service network composed of existing full service restoration industry specialists that have entered into licensing agreements with us to become Primary Service Providers (“PSP’s”). The licensing agreements grant protected territories to PSP’s to perform services using our SteraMist™ platform of products and also provide for potential job referrals to PSP’s whereby we are entitled to referral fees. Additionally, the agreement provides for commissions due to PSP’s for equipment and solution sales they facilitate to other service providers in their respective territories. As part of these agreements, we are obligated to provide to the PSP’s various training, ongoing support and facilitate a referral network call center. As of March 31, 2018, we had entered into 71 licensing agreements in connection with the launch of the TSN. The licensing agreements contain fixed price minimum equipment and solution orders based on the population of the territories granted pursuant to the licensing agreements. The nature and terms of our TSN agreements may represent multiple deliverable arrangements. Each of the deliverables in these arrangements typically represent a separate unit of accounting. |
10. ACCRUED EXPENSES AND OTHER
10. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (USD $) | 3 Months Ended |
Mar. 31, 2018 | |
Accrued Expenses And Other Current Liabilities Usd | |
NOTE 10. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | Accrued expenses and other current liabilities consisted of the following at: March 31, 2018 (Unaudited) December 31, 2017 Commissions $ 109,770 $ 115,506 Payroll and related costs 62,484 43,484 Director fees 55,250 27,750 Accrued warranty 5,000 5,000 Other accrued expenses 55,356 75,396 Total $ 287,861 $ 267,136 |
11. ACCRUED WARRANTY
11. ACCRUED WARRANTY | 3 Months Ended |
Mar. 31, 2018 | |
Accrued Warranty | |
NOTE 11. ACCRUED WARRANTY | Our manufacturer assumes warranty against product defects for one year from the sale to customers, which we extend to our customers upon sale of the product. We assume responsibility for product reliability and results. The warranty is generally limited to a refund of the original purchase price of the product or a replacement part. We estimate warranty costs based on historical warranty claim experience. The following table presents warranty reserve activities at: March 31, 2018 (Unaudited) December 31, 2017 Beginning accrued warranty costs $ 5,000 $ - Cost of warranty claims 1,644 5,731 Settlement of warranty claims (1,644 ) (5,731 ) Provision for product warranty costs - 5,000 Ending accrued warranty costs $ 5,000 $ 5,000 |
12. CUSTOMER CONCENTRATION
12. CUSTOMER CONCENTRATION | 3 Months Ended |
Mar. 31, 2018 | |
Risks and Uncertainties [Abstract] | |
NOTE 12. CUSTOMER CONCENTRATION | The Company had certain customers whose revenue individually represented 10% of more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% of more of the Company’s accounts receivable. Three customers accounted for 33% of net revenue for the three months ended March 31, 2018 and three customers accounted for 43% of net revenue for the three months ended March 31, 2017. At March 31, 2018 and December 31, 2017, two customers accounted for 25% and 24% of accounts receivable, respectively. |
13. SUBSEQUENT EVENTS
13. SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE 13. SUBSEQUENT EVENTS | The Company has evaluated subsequent events through the date the financial statements were issued and up to the time of filing of the financial statements with the SEC. In April 2018, we entered into a 10 year lease agreement for a new 9,000 square foot facility that contains office, warehouse, lab and research and development space in Frederick, Maryland. The lease agreement commences on December 1, 2018 and provides for annual rent of $143,460, contains an escalation clause that increases the rent 3%, year over year and a landlord tenant improvement allowance of $405,000. In May 2018, one of the noteholders with a principal balance of $700,000 agreed to convert its Note into shares of common stock at a reduced conversion price of $0.46 per share. |
2. SUMMARY OF SIGNIFICANT ACC20
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The interim unaudited condensed consolidated financial statements included herein, presented in accordance with generally accepted accounting principles utilized in the United States of America (“GAAP”), and stated in U.S. dollars, have been prepared by the Company, without an audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2017 and notes thereto which are included in the Annual Report on Form 10-K previously filed with the SEC on March 29, 2018. The Company follows the same accounting policies in the preparation of interim reports. The results of operations for the interim periods covered by this Form 10-Q may not necessarily be indicative of results of operations for the full fiscal year or any other interim period. |
Principles of Consolidation | The accompanying condensed consolidated financial statements include the accounts of TOMI and its wholly-owned subsidiary, TOMI Environmental Solutions, Inc., a Nevada corporation. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Reclassification of Accounts | Certain reclassifications have been made to prior-year comparative financial statements to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations or financial position. |
Use of Estimates | The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the accompanying condensed consolidated financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, including those related to accounts receivable, inventory, fair values of financial instruments, intangible assets, useful lives of intangible assets and property and equipment, fair values of stock-based awards, income taxes, and contingent liabilities, among others. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of our assets and liabilities. |
Fair Value Measurements | The authoritative guidance for fair value measurements defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or the most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and (iv) willing to transact. The guidance describes a fair value hierarchy based on the levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, which are the following: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or corroborated by observable market data or substantially the full term of the assets or liabilities. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the value of the assets or liabilities. Our financial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and convertible debt. All these items were determined to be Level 1 fair value measurements. The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable and accrued expenses approximated fair value because of the short maturity of these instruments. The recorded value of convertible debt approximates its fair value as the terms and rates approximate market rates (See Note 6). |
Cash and Cash Equivalents | For purposes of the statement of cash flows, cash and cash equivalents includes cash on hand held at financial institutions and other liquid investments with original maturities of three months or less. At times, these deposits may be in excess of insured limits. |
Accounts Receivable | Our accounts receivable are typically from credit worthy customers or, for certain international customers, are supported by pre-payments. For those customers to whom we extend credit, we perform periodic evaluations of them and maintain allowances for potential credit losses as deemed necessary. We have a policy of reserving for doubtful accounts based on our best estimate of the amount of potential credit losses in existing accounts receivable. We periodically review our accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are charged to the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Bad debt expense for the three months ended March 31, 2018 and 2017 was $0. At March 31, 2018 and December 31, 2017, the allowance for doubtful accounts was $500,000. Three customers accounted for 33% of net revenue for the three months ended March 31, 2018 and three customers accounted for 43% of net revenue for the three months ended March 31, 2017. At March 31, 2018 and December 31, 2017, two customers accounted for 25% and 24% of accounts receivable, respectively. |
Inventories | Inventories are valued at the lower of cost or market using the first-in, first-out (FIFO) method. Inventories consist primarily of finished goods. At March 31, 2018 and December 31, 2017, we did not have a reserve for slow-moving or obsolete inventory. |
Deposits on Merchandise | Deposits on merchandise primarily consist of amounts paid in advance of the receipt of inventory (see Note 9). |
Property and Equipment | We account for property and equipment at cost less accumulated depreciation. We compute depreciation using the straight-line method over the estimated useful lives of the assets, generally three to five years. Depreciation for equipment, furniture and fixtures and vehicles commences once placed in service for its intended use. Leasehold improvements are amortized using the straight-line method over the lives of the respective leases or service lives of the improvements, whichever is shorter. |
Accounts Payable | As of March 31, 2018 and December 31, 2017, one vendor accounted for approximately 35% and 45% of total accounts payable, respectively. For the three months ended March 31, 2018 and 2017, one vendor accounted for 70% and 67% of cost of goods sold, respectively. |
Accrued Warranties | Accrued warranties represent the estimated costs, if any, that will be incurred during the warranty period of our products. We make an estimate of expected costs that will be incurred by us during the warranty period and charge that expense to the consolidated statement of operations at the date of sale. Our manufacturer assumes the warranty against product defects for one year from date of sale, which we extend to our customers upon sale of the product. We assume responsibility for product reliability and results. As of March 31, 2018 and December 31, 2017, our warranty reserve was $5,000. |
Income taxes | Deferred income tax assets and liabilities are determined based on differences between the financial statement reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws in effect when the differences are expected to reverse. The measurement of deferred income tax assets is reduced, if necessary, by a valuation allowance for any tax benefits that are, on a more likely than not basis, not expected to be realized in accordance with Accounting Standards Codification (“ASC”) guidance for income taxes. Net deferred tax benefits have been fully reserved at March 31, 2018 and December 31, 2017. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. |
Net Loss Per Share | Basic net loss per share is computed by dividing the Company’s net loss by the weighted average number of shares of common stock outstanding during the period presented. Diluted loss per share is based on the treasury stock method and includes the effect from potential issuance of shares of common stock, such as shares issuable pursuant to the exercise of options and warrants and conversions of preferred stock or debentures. Potentially dilutive securities as of March 31, 2018 consisted of 11,111,100 shares of common stock from convertible debentures, 35,251,411 shares of common stock issuable upon exercise of outstanding warrants, 320,000 shares of common stock issuable upon outstanding options and 510,000 shares of common stock issuable upon conversion of outstanding shares of Preferred A stock (“Convertible Series A Preferred Stock”). Diluted and basic weighted average shares are the same, as potentially dilutive shares are anti-dilutive. Potentially dilutive securities as of March 31, 2017 consisted of 9,814,805 shares of common stock from convertible debentures, 37,959,745 shares of common stock issuable upon exercise of outstanding warrants, 200,000 shares of common stock issuable upon outstanding options and 510,000 shares of common stock issuable upon conversion of outstanding shares of Convertible Series A Preferred Stock. Diluted and basic weighted average shares are the same, as potentially dilutive shares are anti-dilutive. Diluted net loss per share is computed similarly to basic net loss per share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential shares of common stock had been issued and if such additional shares were dilutive. Options, warrants, preferred stock and shares associated with the conversion of debt to purchase approximately 47.2 million and 48.5 shares of common stock were outstanding at March 31, 2018 and 2017, respectively, but were excluded from the computation of diluted net loss per share due to the anti-dilutive effect on net loss per share. Three Months Ended March 31, 2018 (Unaudited) 2017 Net loss $ (563,319 ) $ (625,897 ) Adjustments for convertible debt - as converted Interest on convertible debt 60,000 14,133 Amortization of debt discount on convertible debt 8,037 137 Net loss attributable to common shareholders $ (495,282 ) $ (611,627 ) Weighted average number of common shares outstanding: Basic and diluted 122,229,959 120,825,134 Net loss attributable to common shareholders per share: Basic and diluted $ (0.00 ) $ (0.01 ) |
Revenue Recognition | We recognize revenue in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue Recognition,” when there is persuasive evidence that an arrangement exists, title and risk of loss have passed, delivery has occurred, or the services have been rendered, the sales price is fixed or determinable and collection of the related receivable is reasonably assured. Title and risk of loss generally pass to our customers upon shipment. Disaggregation of Revenue The following table presents our revenues disaggregated by revenue source. Net Revenue Product and Service Revenue Three Months Ended March 31, (Unaudited) 2018 2017 SteraMist Product $ 1,092,000 $ 821,000 Service and Training 220,000 278,000 Total $ 1,312,000 $ 1,099,000 Revenue by Geographic Region Three Months Ended March 31, (Unaudited) 2018 2017 United States $ 945,000 $ 848,000 International 367,000 251,000 Total $ 1,312,000 $ 1,099,000 Product revenue includes sales from our standard and customized equipment, solution and accessories sold with our equipment. Revenue is recognized upon transfer of control of promised products to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. Service and training revenue includes sales from our high-level decontamination and service engagements, validation of our equipment and technology and customer training. Service revenue is recognized as the agreed upon services are rendered to our customers in an amount that reflects the consideration we expect to receive in exchange for those services. Costs to Obtain a Contract with a Customer We apply a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within sales and marketing expenses. These costs include our internal sales force compensation program and certain partner sales incentive programs as we have determined annual compensation is commensurate with annual sales activities. Contract Balances As of March 31, 2018 and December 31, 2017 we did not have any unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. Arrangements with Multiple Performance Obligations Our contracts with customers may include multiple performance obligations. We enter into contracts that can include various combinations of products and services, which are primarily distinct and accounted for as separate performance obligations. Significant Judgments Our contracts with customers for products and services often dictate the terms and conditions of when the control of the promised products or services is transferred to the customer and the amount of consideration to be received in exchange for the products and services. |
Stock-Based Compensation | We account for stock-based compensation in accordance with Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”) 718, “Compensation—Stock Compensation.” Under the provisions of FASB ASC 718, stock-based compensation cost is estimated at the grant date based on the award’s fair value and is recognized as expense over the requisite service period. On July 7, 2017, our shareholders approved the 2016 Equity Incentive Plan (the “2016 Plan”). The 2016 Plan authorizes the grant of stock options, stock appreciation rights, restricted stock, restricted stock units and performance units/shares. Up to 5,000,000 shares of common stock are authorized for issuance under the 2016 Plan. Shares issued under the 2016 Plan may be either authorized but unissued shares, treasury shares, or any combination thereof. Provisions in the 2016 Plan permit the reuse or reissuance by the 2016 Plan of shares of common stock for numerous reasons, including, but not limited to, shares of common stock underlying canceled, expired, or forfeited awards of stock-based compensation and stock appreciation rights paid out in the form of cash. Stock-based compensation will typically be awarded in consideration for the future performance of services to us. All recipients of awards under the 2016 Plan are required to enter into award agreements with the Company at the time of the award; awards under the 2016 Plan are expressly conditioned upon such agreements. For the year ended December 31, 2017, the Company issued 200,000 shares of common stock out of the 2016 Plan. In addition, for the three months ended March 31, 2018, we issued 300,000 shares of common stock out of the 2016 Plan. |
Concentrations of Credit Risk | Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents. We maintain cash balances at financial institutions which exceed the current Federal Deposit Insurance Corporation limit of $250,000 at times during the year. |
Long-Lived Assets Including Acquired Intangible Assets | We assess long-lived assets for potential impairments at the end of each year, or during the year if an event or other circumstance indicates that we may not be able to recover the carrying amount of the asset. In evaluating long-lived assets for impairment, we measure recoverability of these assets by comparing the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If our long-lived assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair market value. We base the calculations of the estimated fair value of our long-lived assets on the income approach. For the income approach, we use an internally developed discounted cash flow model that includes, among others, the following assumptions: projections of revenues and expenses and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates. We base these assumptions on our historical data and experience, industry projections, micro and macro general economic condition projections, and our expectations. We had no long-lived asset impairment charges for the three months ended March 31, 2018 and 2017. |
Advertising and Promotional Expenses | We expense advertising costs in the period in which they are incurred. Advertising and promotional expenses for the three months ended March 31, 2018 and 2017 were approximately $54,000 and $9,000, respectively. |
Research and Development Expenses | We expense research and development expenses in the period in which they are incurred. For the three months ended March 31, 2018 and 2017, research and development expenses were approximately $132,000 and $31,000, respectively. |
Shipping and Handling Costs | We include shipping and handling costs relating to the delivery of products directly from vendors to the Company in cost of sales. Other shipping and handling costs, including third-party delivery costs relating to the delivery of products to customers, are classified as a general and administrative expense. Shipping and handling costs included in general and administrative expense were approximately $51,000 and $21,000 for the three months ended March 31, 2018 and 2017, respectively. |
Business Segments | We currently have one reportable business segment due to the fact that we derive our revenue primarily from one product. A breakdown of revenue is presented in “Revenue Recognition” in Note 2 above. |
Recent Accounting Pronouncements | In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers Deferral of the Effective Date In February 2016, the FASB issued ASU No. 2016-02, Leases In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting |
2. SUMMARY OF SIGNIFICANT ACC21
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Net Loss Per Share | Three Months Ended March 31, 2018 (Unaudited) 2017 Net loss $ (563,319 ) $ (625,897 ) Adjustments for convertible debt - as converted Interest on convertible debt 60,000 14,133 Amortization of debt discount on convertible debt 8,037 137 Net loss attributable to common shareholders $ (495,282 ) $ (611,627 ) Weighted average number of common shares outstanding: Basic and diluted 122,229,959 120,825,134 Net loss attributable to common shareholders per share: Basic and diluted $ (0.00 ) $ (0.01 ) |
Reportable business segment | Product and Service Revenue Three Months Ended March 31, (Unaudited) 2018 2017 SteraMist Product $ 1,092,000 $ 821,000 Service and Training 220,000 278,000 Total $ 1,312,000 $ 1,099,000 Revenue by Geographic Region Three Months Ended March 31, (Unaudited) 2018 2017 United States $ 945,000 $ 848,000 International 367,000 251,000 Total $ 1,312,000 $ 1,099,000 |
3. INVENTORIES (Tables)
3. INVENTORIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | March 31, 2018 (Unaudited) December 31, 2017 Raw materials $ - $ - Finished goods 3,273,613 3,518,884 $ 3,273,613 $ 3,518,884 |
4. PROPERTY AND EQUIPMENT (Tabl
4. PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | March 31, 2018 (Unaudited) December 31, 2017 Furniture and fixtures $ 91,216 $ 91,216 Equipment 1,192,293 1,192,293 Vehicles 56,410 56,410 Computer and Software 113,319 113,319 Leasehold Improvements 15,554 15,554 1,468,792 1,468,792 Less: Accumulated depreciation 826,331 755,969 $ 642,461 $ 712,822 |
5. INTANGIBLE ASSETS (Tables)
5. INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Definite life intangible assets | March 31, 2018 (Unaudited) December 31, 2017 Intellectual Property and Patents $ 2,848,300 $ 2,848,300 Less: Accumulated Amortization 1,832,145 1,739,768 Intangible Assets, net $ 1,016,155 $ 1,108,532 |
Indefinite life intangible assets | Trademarks $ 440,000 $ 440,000 Total Intangible Assets, net $ 1,456,155 $ 1,548,532 |
Approximate amortization over the next five years | Twelve Month Period Ending March 31, Amount 2019 $ 370,000 2020 370,000 2021 276,000 2022 - 2023 - $ 1,016,000 |
6. CONVERTIBLE DEBT (Tables)
6. CONVERTIBLE DEBT (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Convertible Debt [Abstract] | |
Convertible Notes potential future financing and fundamental transactions | March 31, 2018 December 31, (Unaudited) 2017 Convertible notes $ 6,000,000 $ 6,000,000 Initial discount (61,904 ) (61,904 ) Accumulated amortization 14,316 6,279 Convertible notes, net $ 5,952,412 $ 5,944,375 |
7. STOCKHOLDERS' EQUITY (Tables
7. STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Statement of Stockholders' Equity [Abstract] | |
Summary of stock options outstanding | March 31, 2018 (Unaudited) December 31, 2017 Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price Outstanding, beginning of period 200,000 $ 0.76 200,000 $ 0.76 Granted 120,000 $ 0.12 — — Exercised — — — — Outstanding, end of period 320,000 $ 0.52 200,000 $ 0.76 |
Options outstanding and exercisable by price range | Outstanding Options Average Weighted Exercisable Options Range Number Remaining Contractual Life in Years Number Weighted Average Exercise Price $ 0.05 20,000 2.78 20,000 $ 0.05 $ 0.10 20,000 9.83 20,000 $ 0.10 $ 0.12 100,000 4.77 100,000 $ 0.12 $ 0.27 40,000 6.76 40,000 $ 0.27 $ 0.55 100,000 7.85 100,000 $ 0.55 $ 2.10 40,000 1.76 40,000 $ 2.10 320,000 5.80 320,000 $ 0.52 |
Summary of stock warrants outstanding | March 31, 2018 (Unaudited) December 31, 2017 Number of Warrants Weighted Average Exercise Price Number of Warrants Weighted Average Exercise Price Outstanding, beginning of period 35,501,411 $ 0.33 37,076,413 $ 0.31 Granted - - 4,774,998 0.24 Exercised - - (975,000 ) 0.05 Expired (250,000 ) (0.15 ) (5,375,000 ) 0.13 Outstanding, end of period 35,251,411 $ 0.33 35,501,411 $ 0.33 |
Warrants outstanding and exercisable by price range | Outstanding Warrants Exercisable Warrants Exercise Price Number Average Weighted Remaining Contractual Life in Years Number Weighted Average Exercise Price $ 0.10 265,000 4.29 265,000 $ 0.10 $ 0.12 7,500,000 3.03 7,500,000 $ 0.12 $ 0.17 10,000 4.57 10,000 $ 0.17 $ 0.26 100,000 0.24 100,000 $ 0.26 $ 0.27 250,000 3.75 250,000 $ 0.27 $ 0.29 10,125,613 2.55 10,125,613 $ 0.29 $ 0.30 11,925,800 0.50 11,925,800 $ 0.30 $ 0.32 250,000 3.50 250,000 $ 0.32 $ 0.33 75,000 0.50 75,000 $ 0.33 $ 0.42 250,000 3.25 250,000 $ 0.42 $ 0.50 325,000 2.32 325,000 $ 0.50 $ 0.55 100,000 2.83 100,000 $ 0.55 $ 0.62 75,000 0.30 75,000 $ 0.62 $ 0.69 999,998 1.96 999,998 $ 0.69 $ 1.00 3,000,000 2.09 3,000,000 $ 1.00 35,251,411 1.99 35,251,411 $ 0.33 |
10. ACCRUED EXPENSES AND OTHE27
10. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Accrued Expenses And Other Current Liabilities Tables | |
Schedule Of Accrued expenses and other current liabilities | March 31, 2018 (Unaudited) December 31, 2017 Commissions $ 109,770 $ 115,506 Payroll and related costs 62,484 43,484 Director fees 55,250 27,750 Accrued warranty 5,000 5,000 Other accrued expenses 55,356 75,396 Total $ 287,861 $ 267,136 |
11. ACCRUED WARRANTY (Tables)
11. ACCRUED WARRANTY (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Accrued Warranty Tables | |
Warranty reserve activity | March 31, 2018 (Unaudited) December 31, 2017 Beginning accrued warranty costs $ 5,000 $ - Cost of warranty claims 1,644 5,731 Settlement of warranty claims (1,644 ) (5,731 ) Provision for product warranty costs - 5,000 Ending accrued warranty costs $ 5,000 $ 5,000 |
2. SUMMARY OF SIGNIFICANT ACC29
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Summary Of Significant Accounting Policies Details | ||
Net loss | $ (563,319) | $ (625,897) |
Interest on convertible debt | 60,000 | 14,133 |
Amortization of debt discount on convertible debt | 8,037 | 137 |
Net loss attributable to common shareholders | $ (495,282) | $ (611,627) |
Weighted average number of common shares outstanding: | ||
Basic and diluted | 122,229,959 | 120,825,134 |
Net loss attributable to common shareholders per share: | ||
Basic and diluted | $ 0 | $ (0.01) |
2. SUMMARY OF SIGNIFICANT ACC30
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Net Revenue | $ 1,312,000 | $ 1,099,000 |
SteraMist Product [Member] | ||
Net Revenue | 1,092,000 | 821,000 |
Service & Training [Member] | ||
Net Revenue | 220,000 | 278,000 |
United States [Member] | ||
Net Revenue | 945,000 | 848,000 |
International [Member] | ||
Net Revenue | $ 367,000 | $ 251,000 |
2. SUMMARY OF SIGNIFICANT ACC31
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Bad Debt Expense | $ 0 | $ 0 | |
Allowance for doubtful accounts | $ 500,000 | $ 500,000 | |
Potentially dilutive securities, convertible debentures | 11,111,100 | 9,814,805 | |
Potentially dilutive securities, outstanding warrants | 32,251,411 | 37,959,745 | |
Potentially dilutive securities, outstanding options | 320,000 | 200,000 | |
Potentially dilutive securities, convertible Series A preferred stock | 510,000 | 510,000 | |
Advertising and promotional expenses | $ 54,000 | $ 9,000 | |
Research and Development Expenses | 132,487 | 30,647 | |
Shipping and Handling Costs | $ 51,000 | $ 21,000 | |
Revenue, Net [Member] | Three Customer [Member] | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Concentration Risk, Percentage | 33.00% | 43.00% | |
Accounts Receivable [Member] | Two Customers [Member] | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Concentration Risk, Percentage | 25.00% | 24.00% | |
Accounts Payable [Member] | One Customer [Member] | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Concentration Risk, Percentage | 35.00% | 45.00% | |
Cost of Goods Sold [Member] | One Customer [Member] | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Concentration Risk, Percentage | 70.00% | 67.00% |
3. INVENTORIES (Details)
3. INVENTORIES (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 0 | $ 0 |
Finished goods | 3,273,613 | 3,518,884 |
Inventory, end of period | $ 3,273,613 | $ 3,518,884 |
4. PROPERTY AND EQUIPMENT (Deta
4. PROPERTY AND EQUIPMENT (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Abstract] | ||
Furniture and fixtures | $ 91,216 | $ 91,216 |
Equipment | 1,192,293 | 1,192,293 |
Vehicles | 56,410 | 56,410 |
Software | 113,319 | 113,319 |
Leasehold Improvements | 15,554 | 15,554 |
Property and Equipment Gross | 1,468,792 | 1,468,792 |
Less: Accumulated depreciation | 826,331 | 755,969 |
Property and Equipment Net | $ 642,461 | $ 712,822 |
4. PROPERTY AND EQUIPMENT (De34
4. PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Property and Equipment | ||
Depreciation | $ 70,361 | $ 66,775 |
5. INTANGIBLE ASSETS (Details)
5. INTANGIBLE ASSETS (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Intellectual Property and Patents | $ 2,848,300 | $ 2,848,300 |
Less: Accumulated Amortization | 1,832,145 | 1,739,768 |
Intangible Assets, net | $ 1,016,155 | $ 1,108,532 |
5. INTANGIBLE ASSETS (Details 1
5. INTANGIBLE ASSETS (Details 1) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Trademarks | $ 440,000 | $ 440,000 |
Total Intangible Assets, net | $ 1,456,155 | $ 1,548,532 |
5. INTANGIBLE ASSETS (Details 2
5. INTANGIBLE ASSETS (Details 2) | Mar. 31, 2018USD ($) |
Amortization | |
2,019 | $ 370,000 |
2,020 | 370,000 |
2,021 | 276,000 |
2,022 | 0 |
2,023 | 0 |
Total | $ 1,016,000 |
5. INTANGIBLE ASSETS (Details N
5. INTANGIBLE ASSETS (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 92,377 | $ 92,377 |
6. CONVERTIBLE DEBT (Details)
6. CONVERTIBLE DEBT (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Convertible Debt Details | ||
Convertible notes | $ 6,000,000 | $ 6,000,000 |
Initial discount | (61,904) | (61,904) |
Accumulated Amortization | 14,316 | 6,279 |
Convertible notes, net | $ 5,952,412 | $ 5,944,375 |
6. CONVERTIBLE DEBT (Details Na
6. CONVERTIBLE DEBT (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Remaining term (years) | 3 years | |
Expected dividend yield | 0.00% | |
Amortization expense | $ 8,037 | $ 137 |
Interest expense | $ 60,000 | $ 14,133 |
Minimum | ||
Expected volatility | 104.06% | |
Risk-free rate | 1.49% | |
Maximum | ||
Expected volatility | 111.54% | |
Risk-free rate | 1.59% |
7. STOCKHOLDERS' EQUITY (Detail
7. STOCKHOLDERS' EQUITY (Details) - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Number of Options | ||
Outstanding option, Beginning balance | 200,000 | 200,000 |
Granted, Options | 120,000 | 0 |
Exercised, Options | 0 | 0 |
Outstanding option, Ending balance | 320,000 | 200,000 |
Weighted Average Exercise Price | ||
Outstanding Weighted Average Exercise Price, Beginning balance | $ 0.76 | $ 0.76 |
Granted, Weighted Average Exercise Price | 0.12 | 0 |
Exercised, Weighted Average Exercise Price | 0 | 0 |
Outstanding Weighted Average Exercise Price, Ending balance | $ 0.52 | $ 0.76 |
7. STOCKHOLDERS' EQUITY (Deta42
7. STOCKHOLDERS' EQUITY (Details 1) - $ / shares | 3 Months Ended | ||
Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Options outstanding and exercisable by price range | |||
Outstanding option, Number | 320,000 | 200,000 | 200,000 |
Average Weighted Remaining Contractual Life in Years, option | 5 years 9 months 18 days | ||
Exercisable Options, Number | 320,000 | ||
Weighted Average Exercise Price, Exercisable Options | $ 0.52 | ||
0.05 Range [Member] | |||
Options outstanding and exercisable by price range | |||
Outstanding option, Number | 20,000 | ||
Average Weighted Remaining Contractual Life in Years, option | 279 months 11 days | ||
Exercisable Options, Number | 20,000 | ||
Weighted Average Exercise Price, Exercisable Options | $ 0.05 | ||
0.10 Range [Member] | |||
Options outstanding and exercisable by price range | |||
Outstanding option, Number | 20,000 | ||
Average Weighted Remaining Contractual Life in Years, option | 9 years 9 months 29 days | ||
Exercisable Options, Number | 20,000 | ||
Weighted Average Exercise Price, Exercisable Options | $ 0.1 | ||
0.12 Range [Member] | |||
Options outstanding and exercisable by price range | |||
Outstanding option, Number | 100,000 | ||
Average Weighted Remaining Contractual Life in Years, option | 4 years 9 months 7 days | ||
Exercisable Options, Number | 100,000 | ||
Weighted Average Exercise Price, Exercisable Options | $ 0.12 | ||
0.27 Range [Member] | |||
Options outstanding and exercisable by price range | |||
Outstanding option, Number | 40,000 | ||
Average Weighted Remaining Contractual Life in Years, option | 6 years 9 months 4 days | ||
Exercisable Options, Number | 40,000 | ||
Weighted Average Exercise Price, Exercisable Options | $ 0.27 | ||
0.55 Range [Member] | |||
Options outstanding and exercisable by price range | |||
Outstanding option, Number | 100,000 | ||
Average Weighted Remaining Contractual Life in Years, option | 7 years 10 months 6 days | ||
Exercisable Options, Number | 100,000 | ||
Weighted Average Exercise Price, Exercisable Options | $ 0.55 | ||
2.10 Range [Member] | |||
Options outstanding and exercisable by price range | |||
Outstanding option, Number | 40,000 | ||
Average Weighted Remaining Contractual Life in Years, option | 1 year 9 months 4 days | ||
Exercisable Options, Number | 40,000 | ||
Weighted Average Exercise Price, Exercisable Options | $ 2.1 |
7. STOCKHOLDERS' EQUITY (Deta43
7. STOCKHOLDERS' EQUITY (Details 2) - Warrant [Member] - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding Warrants, Beginning Balance | 35,501,411 | 37,076,413 |
Granted, Warrants | 0 | 4,774,998 |
Exercised, Warrants | 0 | (975,000) |
Expired, Warrants | (250,000) | (5,375,000) |
Outstanding Warrants, Ending Balance | 35,251,411 | 35,501,411 |
Outstanding Weighted Average Exercise Price, Beginning balance | $ 0.33 | $ 0.31 |
Granted, Weighted Average Exercise Price | 0 | 0.24 |
Exercised, Weighted Average Exercise Price | 0 | 0.05 |
Expired, Weighted Average Exercise Price | (0.15) | 0.13 |
Outstanding Weighted Average Exercise Price, Ending balance | $ 0.33 | $ 0.33 |
7. STOCKHOLDERS' EQUITY (Deta44
7. STOCKHOLDERS' EQUITY (Details 3) | 3 Months Ended |
Mar. 31, 2018$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding warrants, Number | 35,251,411 |
Average Weighted Remaining Contractual Life in Years, Warrant | 1 year 11 months 26 days |
Exercisable Warrants, Number | 35,251,411 |
Weighted Average Exercise Price, Exercisable Warrants | $ / shares | $ 0.33 |
0.10 Range [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding warrants, Number | 265,000 |
Average Weighted Remaining Contractual Life in Years, Warrant | 4 years 3 months 14 days |
Exercisable Warrants, Number | 265,000 |
Weighted Average Exercise Price, Exercisable Warrants | $ / shares | $ 0.1 |
0.12 Range [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding warrants, Number | 7,500,000 |
Average Weighted Remaining Contractual Life in Years, Warrant | 3 years 11 days |
Exercisable Warrants, Number | 7,500,000 |
Weighted Average Exercise Price, Exercisable Warrants | $ / shares | $ 0.12 |
0.17 Range [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding warrants, Number | 10,000 |
Average Weighted Remaining Contractual Life in Years, Warrant | 4 years 6 months 25 days |
Exercisable Warrants, Number | 10,000 |
Weighted Average Exercise Price, Exercisable Warrants | $ / shares | $ 0.17 |
0.26 Range [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding warrants, Number | 100,000 |
Average Weighted Remaining Contractual Life in Years, Warrant | 2 months 26 days |
Exercisable Warrants, Number | 100,000 |
Weighted Average Exercise Price, Exercisable Warrants | $ / shares | $ 0.26 |
0.27 Range [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding warrants, Number | 250,000 |
Average Weighted Remaining Contractual Life in Years, Warrant | 3 years 9 months |
Exercisable Warrants, Number | 250,000 |
Weighted Average Exercise Price, Exercisable Warrants | $ / shares | $ 0.27 |
0.29 Range [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding warrants, Number | 10,125,613 |
Average Weighted Remaining Contractual Life in Years, Warrant | 2 years 6 months 18 days |
Exercisable Warrants, Number | 10,125,613 |
Weighted Average Exercise Price, Exercisable Warrants | $ / shares | $ 0.29 |
0.30 Range [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding warrants, Number | 11,925,800 |
Average Weighted Remaining Contractual Life in Years, Warrant | 6 months |
Exercisable Warrants, Number | 11,925,800 |
Weighted Average Exercise Price, Exercisable Warrants | $ / shares | $ 0.3 |
0.32 Range [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding warrants, Number | 250,000 |
Average Weighted Remaining Contractual Life in Years, Warrant | 3 years 6 months |
Exercisable Warrants, Number | 250,000 |
Weighted Average Exercise Price, Exercisable Warrants | $ / shares | $ 0.32 |
0.33 Range [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding warrants, Number | 75,000 |
Average Weighted Remaining Contractual Life in Years, Warrant | 6 months |
Exercisable Warrants, Number | 75,000 |
Weighted Average Exercise Price, Exercisable Warrants | $ / shares | $ 0.33 |
0.42 Range [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding warrants, Number | 250,000 |
Average Weighted Remaining Contractual Life in Years, Warrant | 3 years 3 months |
Exercisable Warrants, Number | 250,000 |
Weighted Average Exercise Price, Exercisable Warrants | $ / shares | $ 0.42 |
0.50 Range [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding warrants, Number | 325,000 |
Average Weighted Remaining Contractual Life in Years, Warrant | 2 years 3 months 25 days |
Exercisable Warrants, Number | 325,000 |
Weighted Average Exercise Price, Exercisable Warrants | $ / shares | $ 0.5 |
0.55 Range [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding warrants, Number | 100,000 |
Average Weighted Remaining Contractual Life in Years, Warrant | 2 years 9 months 29 days |
Exercisable Warrants, Number | 100,000 |
Weighted Average Exercise Price, Exercisable Warrants | $ / shares | $ 0.55 |
0.62 Range [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding warrants, Number | 75,000 |
Average Weighted Remaining Contractual Life in Years, Warrant | 3 months 18 days |
Exercisable Warrants, Number | 75,000 |
Weighted Average Exercise Price, Exercisable Warrants | $ / shares | $ 0.62 |
0.69 Range [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding warrants, Number | 999,998 |
Average Weighted Remaining Contractual Life in Years, Warrant | 1 year 11 months 16 days |
Exercisable Warrants, Number | 999,998 |
Weighted Average Exercise Price, Exercisable Warrants | $ / shares | $ 0.69 |
1.00 Range [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding warrants, Number | 3,000,000 |
Average Weighted Remaining Contractual Life in Years, Warrant | 2 years 1 month 2 days |
Exercisable Warrants, Number | 3,000,000 |
Weighted Average Exercise Price, Exercisable Warrants | $ / shares | $ 1 |
7. STOCKHOLDERS' EQUITY (Deta45
7. STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Preferred Stock Authorized | 1,000,000 | 1,000,000 | |
Preferred Stock Issued | 510,000 | 510,000 | |
Preferred Stock Outstanding | 510,000 | 510,000 | |
Preferred Stock par value | $ 0.01 | $ 0.01 | |
Cumulative Convertible Preferred Stock Series B Cumulative dividend | 7.50% | 7.50% | |
Common Stock issued for professional services, shares, Shares | 300,000 | ||
Common Stock issued for professional services, Amount, Amount | $ 30,000 | ||
Equity based compensation | $ 12,685 | $ 11,553 |
8. COMMITMENTS AND CONTINGENC46
8. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense | $ 12,927 | $ 11,427 |
9. CONTRACTS AND AGREEMENTS (De
9. CONTRACTS AND AGREEMENTS (Details Narrative) - RG Group - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Accounts payable | 35.00% | 45.00% | |
Deposits | $ 15,714 | $ 0 | |
Cost of goods sold | 70.00% | 67.00% |
10. ACCRUED EXPENSES AND OTHE48
10. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Accrued Expenses And Other Current Liabilities Details | ||
Commissions | $ 109,770 | $ 115,506 |
Payroll and related costs | 62,484 | 43,484 |
Director fees | 55,250 | 27,750 |
Acrrued warranty | 5,000 | 5,000 |
Other accrued expenses | 55,356 | 75,396 |
Total | $ 287,861 | $ 267,136 |
11. ACCRUED WARRANTY (Details)
11. ACCRUED WARRANTY (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Accrued Warranty Details | ||
Beginning accrued warranty costs | $ 5,000 | $ 0 |
Cost of warranty claims | 1,644 | 5,731 |
Settlement of warranty claims | (1,644) | (5,731) |
Provision for product warranty costs | 0 | 5,000 |
Ending accrued warranty costs | $ 5,000 | $ 5,000 |
12. CUSTOMER CONCENTRATION (Det
12. CUSTOMER CONCENTRATION (Details Narrative) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Revenue, Net [Member] | Three customers [Member] | |||
Concentration risk percentage1 | 33.00% | 43.00% | |
Accounts Receivable [Member] | Two Customers [Member] | |||
Concentration risk percentage1 | 25.00% | 24.00% |