Document and Entity Information
Document and Entity Information
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9 Months Ended | |
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Oct. 31, 2014
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Dec. 22, 2014
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Document And Entity Information | ||
Entity Registrant Name | MamaMancini's Holdings, Inc. | |
Entity Central Index Key | 0001520358 | |
Document Type | 10-Q | |
Document Period End Date | Oct. 31, 2014 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --01-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 25,807,376 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2015 |
Condensed Consolidated Balance Sheets
Condensed Consolidated Balance Sheets (Parenthetical)
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
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Oct. 31, 2014
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Jan. 31, 2014
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Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 25,861,376 | 24,187,375 |
Common stock, shares outstanding | 25,861,376 | 24,187,375 |
Common stock subscribed, par value | $ 0.00001 | $ 0.00001 |
Common stock subscribed, shares | 66,667 | 833,333 |
Condensed Consolidated Statements of Operations
Condensed Consolidated Statements of Operations (USD $)
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1 Months Ended | 3 Months Ended | 9 Months Ended | ||
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Jan. 31, 2014
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Oct. 31, 2014
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Sep. 30, 2013
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Oct. 31, 2014
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Sep. 30, 2013
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Income Statement [Abstract] | |||||
Sales - net of slotting fees and discounts | $ 775,252 | $ 3,759,698 | $ 2,167,517 | $ 8,592,615 | $ 5,640,069 |
Cost of sales | 535,870 | 2,705,436 | 1,543,029 | 6,076,565 | 4,011,017 |
Gross profit | 239,382 | 1,054,262 | 624,488 | 2,516,050 | 1,629,052 |
Operating expenses | |||||
Research and development | 8,477 | 28,967 | 5,212 | 71,959 | 12,350 |
General and administrative expenses | 472,023 | 1,773,678 | 1,108,072 | 4,643,417 | 3,466,183 |
Total operating expenses | 480,500 | 1,802,645 | 1,113,284 | 4,715,376 | 3,478,533 |
Loss from operations | (241,118) | (748,383) | (488,796) | (2,199,326) | (1,849,481) |
Other income (expense) | |||||
Interest expense | (2,526) | (25,426) | (4,772) | (68,770) | (8,547) |
Total other income (expense) | (2,526) | (25,426) | (4,772) | (68,770) | (8,547) |
Net loss | $ (243,644) | $ (773,809) | $ (493,568) | $ (2,268,096) | $ (1,858,028) |
Net loss per common share - basic and diluted | $ (0.01) | $ (0.03) | $ (0.02) | $ (0.09) | $ (0.09) |
Weighted average common shares outstanding - basic and diluted | 24,187,375 | 25,815,200 | 22,424,957 | 25,331,766 | 21,313,077 |
Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited)
Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) (USD $)
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Common Stock [Member]
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Additional Paid-In Capital [Member]
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Common Stock Subscribed [Member]
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Accumulated Deficit [Member]
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Total
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Balance at Jan. 31, 2014 | $ 242 | $ 10,993,973 | $ 8 | $ (6,543,285) | $ 4,450,938 |
Balance, shares at Jan. 31, 2014 | 24,187,375 | ||||
Stock options issued for services | 92,760 | 92,760 | |||
Warrants issued for services | 171,981 | 171,981 | |||
Common stock issued for services | 171,587 | 171,587 | |||
Common stock issued for services, Shares | 54,000 | ||||
Common stock issued | 16 | 1,179,995 | (8) | 1,180,003 | |
Common stock issued, shares | 1,620,001 | ||||
Common stock subscribed , 66,667 shares | 99,999 | 1 | 100,000 | ||
Stock issuance costs | (334,571) | (334,571) | |||
Net loss | (2,268,096) | (2,268,096) | |||
Balance at Oct. 31, 2014 | $ 258 | $ 12,375,724 | $ 1 | $ (8,811,381) | $ 3,564,602 |
Balance, shares at Oct. 31, 2014 | 25,861,376 |
Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) (Parenthetical)
Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) (Parenthetical)
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Oct. 31, 2014
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Jan. 31, 2014
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Sep. 30, 2013
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Statement of Stockholders' Equity [Abstract] | |||
Common stock subscribed, shares | 66,667 | 833,333 |
Condensed Consolidated Statements of Cash Flows
Nature of Operations and Basis of Presentation
Nature of Operations and Basis of Presentation
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9 Months Ended |
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Oct. 31, 2014
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Nature Of Operations And Basis Of Presentation | |
Nature of Operations and Basis of Presentation |
Note 1 - Nature of Operations and Basis of Presentation
Nature of Operations
MamaMancini’s Holdings, Inc. (the “Company”), (formerly known as Mascot Properties, Inc.) was organized on July 22, 2009 as a Nevada corporation.
Current Business of the Company
The Company is a manufacturer and distributor of beef meatballs with sauce, turkey meatballs with sauce, and other similar meats and sauces. The Company’s customers are located throughout the United States, with a large concentration in the Northeast and Southeast.
Mergers
On January 24, 2013, the Company, Mascot Properties Acquisition Corp, a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), MamaMancini’s, Inc., a privately-held Delaware Corporation headquartered in New Jersey (“MamaMancini’s”) and an individual (the “Majority Shareholder”), entered into an Acquisition Agreement and Plan of Merger (the “Agreement”) pursuant to which the Merger Sub was merged with and into MamaMancini’s, with MamaMancini’s surviving as a wholly-owned subsidiary of the Company (the “Merger”). The Company acquired, through a reverse triangular merger, all of the outstanding capital stock of MamaMancini’s in exchange for issuing MamaMancini’s shareholders (the “MamaMancini’s Shareholders”), pro-rata, a total of 20,054,000 shares of the Company’s common stock. Immediately after the Merger was consummated, and further to the Agreement, the majority shareholders and certain affiliates of the Company cancelled a total of 103,408,000 shares of the Company’s common stock held by them (the “Cancellation”). In consideration of the Cancellation of such common stock, the Company paid the Majority Shareholder in aggregate of $295,000 and 800,000 shares of common stock and released the other affiliates from certain liabilities. In addition, the Company has agreed to spinout to the Majority Shareholder all assets related to the Company’s real estate management business within 30 days after the closing. As a result of the Merger and the Cancellation, the MamaMancini’s Shareholders became the majority shareholders of the Company.
The condensed consolidated financial statements presented for all periods through and including October 31, 2014 are those of MamaMancini’s. As a result of this Merger, the equity sections of MamaMancini’s for all prior periods presented reflect the recapitalization described above and are consistent with the October 31, 2014 balance sheet presented for the Company.
Since the transaction is considered a reverse acquisition and recapitalization, the presentation of pro-forma financial information was not required.
Basis of Presentation
The condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.
The unaudited financial information furnished herein reflects all adjustments, consisting solely of normal recurring items, which in the opinion of management are necessary to fairly state the financial position of the Company and the results of its operations for the periods presented. This report should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2013 filed on March 20, 2014 and the Form 10-KT as of January 31, 2014 and for the one month period then ended filed on September 19, 2014. The Company assumes that the users of the interim financial information herein have read or have access to the audited financial statements for the preceding fiscal year and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. Accordingly, footnote disclosure, which would substantially duplicate the disclosure contained in the Company’s Form 10-K for the year ended December 31, 2013 and Form 10-KT for the period ended January 31, 2014 have been omitted. The results of operations for the interim periods presented are not necessarily indicative of results for the entire year ending January 31, 2015. |
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
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Oct. 31, 2014
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies |
Note 2 - Summary of Significant Accounting Policies
Change of Year End
Effective January 13, 2014, MamaMancini’s Holdings, Inc. (the “Company”) changed its fiscal year-end date to January 31. The Company’s 2014 fiscal year commenced on February 1, 2014 and concludes on January 31, 2015. The Company changed its year end to be consistent with a significant number of its retail customers that have a fiscal year end on or near January 31. This allows the Company to more accurately account for accrued discounts and promotions to these retailers. The Company determined that recasting the prior year comparable period ended January 31, 2013 would not be material.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Such estimates and assumptions impact, among others, the following: allowance for bad debt, inventory obsolescence, the fair value of share-based payments.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the condensed consolidated financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from our estimates.
Risks and Uncertainties
The Company operates in an industry that is subject to intense competition and change in consumer demand. The Company’s operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure.
The Company has experienced, and in the future expects to continue to experience, variability in sales and earnings. The factors expected to contribute to this variability include, among others, (i) the cyclical nature of the grocery industry, (ii) general economic conditions in the various local markets in which the Company competes, including the general downturn in the economy, and (iii) the volatility of prices pertaining to food and beverages in connection with the Company’s distribution of the product. These factors, among others, make it difficult to project the Company’s operating results on a consistent basis.
Cash
The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. The Company held no cash equivalents at October 31, 2014 or January 31, 2014.
The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company generally does not require collateral to support customer receivables. The Company provides an allowance for doubtful accounts based upon a review of the outstanding accounts receivable, historical collection information and existing economic conditions. The Company determines if receivables are past due based on days outstanding, and amounts are written off when determined to be uncollectible by management. The maximum accounting loss from the credit risk associated with accounts receivable is the amount of the receivable recorded, which is the face amount of the receivable net of the allowance for doubtful accounts. As of October 31, 2014 and January 31, 2014, the Company had reserves of $2,000.
Inventories
Inventories are stated at average cost using the first-in, first-out (FIFO) valuation method. Inventory was comprised of the following at October 31, 2014 and January 31, 2014:
Property and Equipment
Property and equipment are recorded at cost. Depreciation expense is computed using straight-line methods over the estimated useful lives.
Asset lives for financial statement reporting of depreciation are:
Fair Value of Financial Instruments
For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amount of the Company’s short term financial instruments approximates fair value due to the relatively short period to maturity for these instruments.
Stock Issuance Costs
Stock issuance costs are capitalized as incurred. Upon the completion of the offering, the stock issuance costs are reclassified to equity. Offering costs recorded to equity for the nine months ended October 31, 2014 and September 30, 2013 and the one month ended January 31, 2014 were $334,571, $1,123,498 and $102,166, respectively.
Research and Development
Research and development is expensed as incurred. Research and development expenses for three months ended October 31, 2014 and September 30, 2013 were $28,967 and $5,212, respectively. Research and development expenses for nine months ended October 31, 2014 and September 30, 2013 and the one month ended January 31, 2014 were $71,959, $12,350 and $8,477, respectively.
Shipping and Handling Costs
The Company classifies freight billed to customers as sales revenue and the related freight costs as cost of sales.
Revenue Recognition
The Company records revenue for products when all of the following have occurred: (1) persuasive evidence of an arrangement exists, (2) the product is delivered, (3) the sales price to the customer is fixed or determinable, and (4) collectability of the related customer receivable is reasonably assured. There is no stated right of return for products.
The Company meets these criteria upon shipment.
Expenses such as slotting fees, sales discounts, and allowances are accounted for as a direct reduction of revenues as follows:
Cost of Sales
Cost of sales represents costs directly related to the production and manufacturing of the Company’s products. Costs include product development, freight, packaging, and print production costs.
Advertising
Costs incurred for producing and communicating advertising for the Company are charged to operations as incurred. Producing and communicating advertising expenses for the three months ended October 31, 2014 and September 30, 2013 were $693,688 and $456,313, respectively. Producing and communicating advertising expenses for the nine months ended October 31, 2014 and September 30, 2013 and the one month ended January 31, 2014 were $1,959,547, $1,267,035 and $232,481, respectively.
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with ASC Topic 718, “Accounting for Stock-Based Compensation” (“ASC 718”) which establishes financial accounting and reporting standards for stock-based employee compensation. It defines a fair value based method of accounting for an employee stock option or similar equity instrument. The Company accounts for compensation cost for stock option plans in accordance with ASC 718. The Company accounts for share-based payments to non-employees in accordance with ASC 505-50 “Accounting for Equity Instruments Issued to Non-Employees for Acquiring, or in Conjunction with Selling Goods or Services”.
The Company recognizes all forms of share-based payments, including stock option grants, warrants and restricted stock grants, at their fair value on the grant date, which are based on the estimated number of awards that are ultimately expected to vest.
Share-based payments, excluding restricted stock, are valued using a Black-Scholes option pricing model. Grants of share-based payment awards issued to non-employees for services rendered have been recorded at the fair value of the share-based payment, which is the more readily determinable value. The grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. If an award is granted, but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the termination of service. Stock-based compensation expenses are included in cost of goods sold or selling, general and administrative expenses, depending on the nature of the services provided, in the Condensed Consolidated Statement of Operations. Share-based payments issued to placement agents are classified as a direct cost of a stock offering and are recorded as a reduction in additional paid in capital.
For the three months ended October 31, 2014 and September 30, 2013 share-based compensation, including stock offering costs and restricted stock, amounted to $88,247 and $292,431, respectively. For the nine months ended October 31, 2014 and September 30, 2013 and the one month ended January 31, 2014 share-based compensation amounted to $436,328, $662,506 and $45,681, respectively. Of the $436,328 recorded for the nine months ended October 31, 2014, $171,981 was a direct cost of a stock offering and has been recorded as a reduction in additional paid in capital.
For the nine months ended October 31, 2014, when computing fair value of share-based payments, the Company has considered the following variables:
Earnings (Loss) Per Share
Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss), adjusted for changes in income or loss that resulted from the assumed conversion of convertible shares, by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.
The Company had the following potential common stock equivalents at October 31, 2014:
The Company had the following potential common stock equivalents at September 30, 2013:
Since the Company reflected a net loss during the three and nine months ended October 31, 2014 and September 30, 2013, the effect of considering any common stock equivalents, would have been anti-dilutive. A separate computation of diluted earnings (loss) per share is not presented.
Income Taxes
Income taxes are provided in accordance with ASC No. 740, “Accounting for Income Taxes”. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards. Deferred tax expense (benefit) results from the net change during the period of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Recent Accounting Pronouncements
The U.S. Financial Accounting Standards Board issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers, in May 2014. The amendments in this Update supersede the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. In addition, the amendments supersede the cost guidance in Subtopic 605-35, Revenue Recognition—Construction-Type and Production-Type Contracts, and create new Subtopic 340-40, Other Assets and Deferred Costs—Contracts with Customers. In summary, the core principle of Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2011-230—Revenue Recognition (Topic 605) and Proposed Accounting Standards Update 2011–250—Revenue Recognition (Topic 605): Codification Amendments, both of which have been deleted. Accounting Standards Update 2014-09. The amendments in this Update are effectively for the Company for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently evaluating the effects of ASU 2014-09 on the condensed consolidated financial statements.
In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014-12, Compensation- Stock Compensation. The amendments in this update apply to reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target can be achieved after the requisite service period. This Accounting Standards Update is the final version of Proposed Accounting Standards Update EITF-13D—Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period, which has been deleted. The proposed amendments would apply to reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target could be achieved after the requisite service period. This Accounting Standards Update is the final version of Proposed Accounting Standards Update EITF-13D—Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period, which has been deleted. The amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015, and early adoption is permitted. The Company is currently evaluating the effects of ASU 2014-12 on the condensed consolidated financial statements. |
Property and Equipment
Property and Equipment
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Oct. 31, 2014
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment |
Note 3 - Property and Equipment:
Property and equipment on October 31, 2014 and January 31, 2014 are as follows:
At October 31, 2014 and January 31, 2014, fixed assets in the amount of $0 and $826,340, respectively, were not in service.
Depreciation expense charged to income for the three months ended October 31, 2014 and September 30, 2013 amounted to $42,068 and $10,910, respectively. Depreciation expense charged to income for the nine months ended October 31, 2014 and September 30, 2013 and the one month ended January 31, 2014 amounted to $101,541, $20,662 and $4,141, respectively. |
Investment in Meatball Obsession, LLC
Investment in Meatball Obsession, LLC
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Oct. 31, 2014
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Investments in and Advances to Affiliates, Schedule of Investments [Abstract] | |
Investment in Meatball Obsession, LLC |
Note 4 - Investment in Meatball Obsession, LLC
During 2011 the Company acquired a 34.62% interest in Meatball Obsession, LLC (“MO”) for a total investment of $27,032. This investment is accounted for using the equity method of accounting. Accordingly, investments are recorded at acquisition cost plus the Company’s equity in the undistributed earnings or losses of the entity.
At December 31, 2011 the investment was written down to $0 due to losses incurred by MO.
During 2013 the Company’s ownership interest in MO fell to 24% due to dilution.
During the nine months ended October 31, 2014 the Company’s ownership interest in MO fell to 13% due to dilution.
During the three months ended October 31, 2014 and September 30, 2013, the Company had sales of $44,831 and $24,793, respectively.
During the nine months ended October 31, 2014 and September 30, 2013, the Company had sales of $88,874 and $85,895, respectively.
Accounts receivable due to the Company from MO were $29,963 and $1,457 as of October 31, 2014 and January 31, 2014, respectively. |
Related Party Transactions
Related Party Transactions
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Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions |
Note 5 - Related Party Transactions
Supply Agreement
On March 1, 2010, the Company entered into a five year agreement with a Manufacturer (the “Manufacturer”) who is a related party. The Manufacturer is owned by the CEO and President of the Company. The Company analyzed the relationship with the Manufacturer to determine if the Manufacturer is a variable interest entity as defined by FASB ASC 810 “Consolidation”. Based on this analysis, the Company has determined that the Manufacturer is a variable interest but the Company is not the primary beneficiary of the variable interest entity and therefore consolidation is not required. Under the terms of the agreement, the Company grants to the Manufacturer a revocable license to use the Company’s recipes, formulas, methods and ingredients for the preparation and production of Company’s products, for manufacturing the Company’s product and all future improvements, modifications, substitutions and replacements developed by the Company. The Manufacturer in turn grants the Company the exclusive right to purchase the product. Under the terms of the agreement the Manufacturer agrees to manufacture, package, and store the Company’s products and the Company has the right to purchase products from one or more other manufacturers, distributors or suppliers. The agreement contains a perpetual automatic renewal clause for a period of one year after the expiration of the initial term. During the renewal period either party may cancel the contract with written notice nine months prior to the termination date.
Under the terms of the agreement if the Company specifies any change in packaging or shipping materials which results in the manufacturer incurring increased expense for packaging and shipping materials or in the Manufacturer being unable to utilize obsolete packaging or shipping materials in ordinary packaging or shipping, the Company agrees to pay as additional product cost the additional cost for packaging and shipping materials and to purchase at cost such obsolete packaging and shipping materials. If the Company requests any repackaging of the product, other than due to defects in the original packaging, the Company will reimburse the Manufacturer for any labor costs incurred in repackaging. Per the agreement, all product delivery shipping costs are the expense of the Company.
During the three and nine months ended October 31, 2014 and September 30, 2013, the Company purchased substantially all of its inventory from the Manufacturer. At October 31, 2014 and January 31, 2014, the Company has a deposit on inventory in the amount of $1,285,549 and $598,987, respectfully, to this Manufacturer.
Meatball Obsession, LLC
A current director of the Company is the chairman of the board and shareholder of Meatball Obsession LLC.
Due from Manufacturer – Related Party
During the three and nine months ended October 31, 2014 and September 30, 2013, the Manufacturer received payments on behalf of the Company for the Company’s customer invoices and the Manufacturer incurred expenses on behalf of the Company for shared administrative expenses and salary expenses. In addition, the Company made several unsecured loans to the Manufacturer during 2013. The loan to the Manufacturer is unsecured, does not bear interest and is due on demand. At October 31, 2014 and January 31, 2014 the amount due from the Manufacturer is as follows:
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Line of Credit
Line of Credit
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Oct. 31, 2014
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Debt Disclosure [Abstract] | |
Line of Credit |
Note 6 - Line of Credit
Effective January 3, 2014, the Company entered into a Sale and Security Agreement (the “Sale and Security Agreement”) with Faunus Group International, Inc. (“FGI”) to provide for a $1.5 million secured demand credit facility backed by its receivables and inventory (the “FGI Facility”). The Sale and Security Agreement has an initial three year term (the “Original Term”) and shall be extended automatically for an additional one year for each succeeding term unless written notice of termination is given by either party at least sixty days prior to the end of the Original Term or any extension thereof. The Company and certain of its affiliates also entered into guarantees to guarantee the performance of the obligations under the Sale and Security Agreement (the “Guaranty Agreements”). The Company also granted FGI a security interest in and lien upon all of the Company’s right, title and interest in and to all of its assets (as defined in the Sale and Security Agreement).
Pursuant to the FGI Facility, FGI can elect to purchase eligible accounts receivables (“Purchased Accounts”) up to 70% of the value of such receivables (retaining a 30% reserve). At FGI’s election, FGI may advance the Company up to 70% of the value of any Purchased Accounts, subject to the FGI Facility. Reserves retained by FGI on any Purchased Accounts are expected to be refunded to the Company net of interest and fees on advances once the receivables are collected from customers. The interest rate on advances or borrowings under the FGI Facility will be the greater of (i) 6.75% per annum and (ii) 2.50% above the prime rate. Any advances or borrowings under the FGI Facility are due on demand.
The Company also agreed to pay to FGI monthly collateral management fees of 0.42% of the average monthly balance of Purchased Accounts. The minimum monthly net funds employed during each contract year hereof shall be $500,000. Additionally, the Company paid FGI a one-time facility fee equal to 1% of the FGI Facility upon entry into the Sale and Security Agreement.
During the period ended October 31, 2014, the Company terminated its agreement with FGI and paid off all obligations due at the payoff date. Upon termination, additional fees and accrued interest of approximately $48,600 were paid. |
Loan and Security Agreement
Loan and Security Agreement
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Loan And Security Agreement | |||||||||||||||||||||||||
Loan and Security Agreement |
Note 7 - Loan and Security Agreement
On September 3, 2014, the Company entered into a Loan and Security Agreement (“Loan and Security Agreement”) with Entrepreneur Growth Capital, LLC (“EGC”). The total facility is for an aggregate principal amount of up to $3,100,000. The facility consists of the following:
EGC may from time to time make loans in an aggregate amount not to exceed the Accounts Revolving Line of Credit up to 85% of the net amount of Eligible Accounts (as defined in the Loan and Security Agreement). EGC may from time to time make loans in an aggregate amount not to exceed the Inventory Revolving Line of Credit against Eligible Inventory (as defined in the Loan and Security Agreement) in an amount up to 50% of finished goods and in an amount up to 20% of raw material.
The revolving interest rates is equal to the highest prime rate in effect during each month as generally reported by Citibank, N.A. plus (a) 2.5% on loans and advances made against eligible accounts and (b) 4.0% on loans made against eligible inventory. The term loan bears interest at a rate of the highest prime rate in effect during each month as generally reported by Citibank, N.A. plus 4.0%. The Company is required to pay a one-time facility fee equal to 2.25% of the total $3,100,000 facility. In the event of default, the Company shall pay 10% above the stated rates of interest per the Agreement. The drawdowns are secured by all of the assets of the Company.
On September 3, 2014, the Company also entered into a 5 year $600,000 Secured Promissory Note (“EGC Note”) with EGC. The EGC Note is payable in 60 monthly installments of $10,000. The EGC Note bears interest at the highest prime rate in effect during each month as generally reported by Citibank, N.A. plus 4.0% and is payable monthly, in arrears. In the event of default, the Company shall pay 10% above the stated rates of interest per the Loan and Security Agreement. The EGC Note is secured by all of the assets of the Company.
Additionally, in connection with the Loan and Security Agreement, Carl Wolf, the Company’s Chief Executive Officer entered into a Guarantee Agreement with EGC, personally guaranteeing all the amounts borrowed on behalf of the Company under the Loan and Security Agreement. |
Concentrations
Concentrations
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9 Months Ended |
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Oct. 31, 2014
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Risks and Uncertainties [Abstract] | |
Concentrations |
Note 8 - Concentrations
Revenues
During the three months ended October 31, 2014, the Company earned revenues from three customers representing approximately 19%, 16% and 12% of gross sales. During the three months ended September 30, 2013, the Company earned revenues from three customers representing approximately 26%, 13%, and 12% of gross sales.
During the nine months ended October 31, 2014, the Company earned revenues from three customers representing approximately 18%, 14% and 12% of gross sales. During the nine months ended September 30, 2013, the Company earned revenues from four customers representing approximately 19%, 19%, 15%, and 13% of gross sales. During the one month ended January 31, 2014, three customers represented 18%, 15% and 10% of gross sales.
Cost of Sales
For the nine months ended October 31, 2014 and September 30, 2013 and the one month ended January 31, 2014, one vendor (a related party) represented 100% of the Company’s purchases.
Accounts Receivable
As of October 31, 2014, two customers represented approximately 19% and 18% of total gross accounts receivable. As of January 31, 2014, one customer represented approximately 24% of total gross accounts receivable. |
Stockholders' Equity
Stockholders' Equity
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Oct. 31, 2014
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity |
Note 9 - Stockholders’ Equity
(A) Common Stock Transactions
During January 2014, the Company sold 300,000 shares of common stock to investors in exchange for $450,000 in proceeds in connection with the private placement of the Company’s stock. The shares were issued in March 2014.
In connection with the private placement the Company incurred fees of $102,166 consisting of $58,500 in cash and 30,000 warrants with a fair value of $43,666.
During March 2014, the Company sold 236,667 shares of common stock to investors in exchange for $355,000 in proceeds in connection with the private placement of the Company’s stock. The shares were issued in June 2014.
In connection with the private placement the Company incurred fees of $80,536 consisting of $46,150 in cash and 23,667 warrants with a fair value of $34,386.
During April 2014, the Company sold 416,668 shares of common stock to investors in exchange for $625,001 in proceeds in connection with the private placement of the Company’s stock. The shares were issued in June 2014.
In connection with the private placement the Company incurred fees of $141,791 consisting of $81,250 in cash and 41,667 warrants with a fair value of $60,541.
During May 2014, the Company sold 133,333 shares of common stock to investors in exchange for $200,000 in proceeds in connection with the private placement of the Company’s stock. The shares were issued in June 2014.
In connection with the private placement the Company incurred fees of $82,796 consisting of $26,000 in cash and 17,333 warrants with a fair value of $56,796.
During the quarter ended October 31, 2014, the Company granted 14,000 restricted shares to a consultant upon termination of the original agreement. The shares were valued at grant date and the Company recorded $35,000 as share-based compensation on the Condensed Consolidated Statement of Operations. These shares were not issued as of October 31, 2014.
In October 2014, the Board agreed to amend a previously issued stock option grant awarded to the Board members. Instead of the 50,000 options (10,000 per member), the Company issued each member 8,000 shares of restricted stock. The options were originally granted on April 23, 2014 with a grant date fair value of $136,587. The Company reclassified this amount from stock-based compensation to common stock issued for services on the Condensed Consolidated Statements of Equity. The shares were not issued as of October 31, 2014.
Common Stock Subscribed
During June 2014, the Company sold 66,668 shares of common stock to investors in exchange for $100,000 in proceeds in connection with the private placement of the Company’s stock. The shares were not issued as of October 31, 2014.
In connection with the private placement the Company incurred fees of $33,258 consisting of $13,000 in cash and 8,667 warrants with a fair value of $20,258.
(B) Options
The following is a summary of the Company’s option activity:
At October 31, 2014 and January 31, 2014, the total intrinsic value of options outstanding and exercisable was $549,344 and $1,082,808, respectively.
As of October 31, 2014, the Company has $8,186 in stock-based compensation related to stock options that is yet to be vested. The weighted average expensing period of the unvested options is 0.98 years.
(C) Warrants
The following is a summary of the Company’s warrant activity:
At October 31, 2014 and January 31, 2014, the total intrinsic value of warrants outstanding and exercisable was $860,741 and $1,635,801, respectively. |
Commitments and Contingencies
Commitments and Contingencies
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Oct. 31, 2014
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||
Commitments and Contingencies |
Note 10 - Commitments and Contingencies
Litigations, Claims and Assessments
From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business. The Company is currently not aware of any such legal proceedings or claims that they believe will have, individually or in the aggregate, a material adverse effect on its business, financial condition or operating results.
Licensing and Royalty Agreements
On March 1, 2010, the Company was assigned a Development and License agreement (the “Agreement”). Under the terms of the Agreement the Licensor shall develop for the Company a line of beef meatballs with sauce, turkey meatballs with sauce and other similar meats and sauces for commercial manufacture, distribution and sale (each a “Licensor Product” and collectively the “Licensor Products”). Licensor shall work with Licensee to develop Licensor Products that are acceptable to Licensee. Upon acceptance of a Licensor Product by Licensee, Licensor’s trade secret recipes, formulas methods and ingredients for the preparation and production of such Licensor Products (the “Recipes”) shall be subject to this Development and License Agreement.
The term of the Agreement (the “Term”) shall consist of the Exclusive Term and the Non-Exclusive Term. The 12-month period beginning on each January 1 and ending on each December 31 is referred to herein as an “Agreement Year.”
The Exclusive Term began on January 1, 2009 (the “Effective Date”) and ends on the 50th anniversary of the Effective Date, unless terminated or extended as provided herein. Licensor, at its option, may terminate the Exclusive Term by notice in writing to Licensee, delivered between the 60th and the 90th day following the end of any Agreement Year if, on or before the 60th day following the end of such Agreement Year, Licensee has not paid Licensor Royalties with respect to such Agreement Year at least equal to the minimum royalty (the “Minimum Royalty”) for such Agreement Year. Subject to the foregoing sentence, and provided Licensee has not breached this Agreement and failed to cure such breach in accordance herewith, Licensee may extend the Exclusive Term for an additional twenty five (25) years, by notice in writing to Licensor, delivered on or before the 50th anniversary of the Effective Date.
The Non-Exclusive Term begins upon expiration of the Exclusive Term and continues indefinitely thereafter, until terminated by Licensor due to a material breach hereof by Licensee that remains uncured after notice and opportunity to cure in accordance herewith, or until terminated by Licensee.
Either party may terminate this Agreement in the event that the other party materially breaches its obligations and fails to cure such material breach within sixty (60) days following written notice from the non-breaching party specifying the nature of the breach. The following termination rights are in addition to the termination rights provided elsewhere in the agreement.
Under the terms of the Agreement the Company is required to pay quarterly royalty fees as follows:
During the Exclusive Term and the Non-Exclusive Term the Company will pay a royalty equal to the royalty rate (the “Royalty Rate”), multiplied by Company’s “Net Sales”. As used herein, “Net Sales” means gross invoiced sales of Products, directly or indirectly to unrelated third parties, less (a) discounts (including cash discounts), and retroactive price reductions or allowances actually allowed or granted from the billed amount (collectively “Discounts”); (b) credits, rebates, and allowances actually granted upon claims, rejections or returns, including recalls (voluntary or otherwise) (collectively, “Credits”); (c) freight, postage, shipping and insurance charges; (d) taxes, duties or other governmental charges levied on or measured by the billing amount, when included in billing, as adjusted for rebates and refunds; and (e) provisions for uncollectible accounts determined in accordance with reasonable accounting methods, consistently applied.
The Royalty Rate shall be: 6% of net sales up to $500,000 of net sales for each Agreement year; 4% of Net Sales from $500,000 up to $2,500,000 of Net Sales for each Agreement year; 2% of Net Sales from $2,500,000 up to $20,000,000 of Net Sales for each Agreement year; and 1% of Net Sales in excess of $20,000,000 of Net Sales for each Agreement year.
In order to continue the Exclusive term, the Company shall pay a minimum royalty with respect to the preceding Agreement year as follows:
The Company incurred $66,915 and $38,621 of royalty expenses for the three months ended October 31, 2014 and September 30, 2013. The Company incurred $182,641, $156,743 and $35,551 of royalty expenses for the nine months ended October 31, 2014 and September 30, 2013 and the one month ended January 31, 2014. Royalty expenses are included in general and administrative expenses on the Condensed Consolidated Statement of Operations.
Agreements with Placement Agents and Finders
(A) December 1, 2011
The Company entered into a Financial Advisory and Investment Banking Agreement with Spartan Capital Securities, LLC (“Spartan”) effective December 1, 2011 (the “Spartan Advisory Agreement”). Pursuant to the Spartan Advisory Agreement, Spartan will act as the Company’s exclusive financial advisor and placement agent to assist the Company in connection with a best efforts private placement (the “Financing”) of up to $6 million of the Company’s equity and/or debt securities and/or convertible instruments (the “Securities”).
The Company upon closing of the Financing shall pay consideration to Spartan, in cash, a fee in an amount equal to 10% of the aggregate gross proceeds raised in the Financing. The Company shall grant and deliver to Spartan at the closing of the Financing, for nominal consideration, five year warrants (the “Warrants”) to purchase a number of shares of the Company’s Common Stock equal to 10% of the number of shares of Common Stock (and/or shares of Common Stock issuable upon exercise of securities or upon conversion or exchange of convertible or exchangeable securities) sold at such closing. The Warrants shall be exercisable at any time during the five year period commencing on the closing to which they relate at an exercise price equal to the purchase price per share of Common Stock paid by investors in the Financing or, in the case of exercisable, convertible, or exchangeable securities, the exercise, conversion or exchange price thereof. If the Financing is consummated by means of more than one closing, Spartan shall be entitled to the fees provided herein with respect to each such closing.
Along with the above fees, the Company shall pay up to $40,000 for expenses incurred by Spartan in connection with this Financing, together with cost of background checks on the officers and directors of the Company.
During the year ended 2012 the Company paid to Spartan fees of $505,400 and issued Spartan 505,400 five year warrants with an exercise price of $1.00.
(B) May 2, 2013
The Company entered into a second Financial Advisory and Investment Banking Agreement with Spartan Capital Securities, LLC (“Spartan”) effective May 2, 2013 (the “Spartan Advisory Agreement”). Pursuant to the Spartan Advisory Agreement, Spartan will act as the Company’s exclusive financial advisor and placement agent to assist the Company in connection with a best efforts private placement (the “Financing”) of up to $5 million of the Company’s equity and/or debt securities and/or convertible instruments (the “Securities”).
The Company upon closing of the Financing shall pay consideration to Spartan, in cash, a fee in an amount equal to 10% of the aggregate gross proceeds raised in the Financing and up to 3% of the aggregate gross proceeds raised in the Financing for expenses incurred by Spartan. The Company shall grant and deliver to Spartan at the closing of the Financing, for nominal consideration, five year warrants (the “Warrants”) to purchase a number of shares of the Company’s Common Stock equal to 10% of the number of shares of Common Stock (and/or shares of Common Stock issuable upon exercise of securities or upon conversion or exchange of convertible or exchangeable securities) sold at such closing. The Warrants shall be exercisable at any time during the five year period commencing on the closing to which they relate at an exercise price equal to the purchase price per share of Common Stock paid by investors in the Financing or, in the case of exercisable, convertible, or exchangeable securities, the exercise, conversion or exchange price thereof. If the Financing is consummated by means of more than one closing, Spartan shall be entitled to the fees provided herein with respect to each such closing.
The Company shall pay to Spartan a non-refundable monthly fee of $10,000 over a twelve to twenty four month period upon Spartan’s satisfaction of certain thresholds (raising of aggregate gross proceeds of $4.0mil-$5.0mil) outlined in the Spartan Advisory Agreement. On October 29, 2013 the Company entered into an amendment to the Agreement and the $10,000 monthly fee was cancelled.
During the year ended December 31, 2013 the Company paid to Spartan fees of $650,000 and issued Spartan 333,333 five year warrants with an exercise price of $1.50.
(C) October 22, 2013
The Company entered into a third Financial Advisory and Investment Banking Agreement with Spartan Capital Securities, LLC (“Spartan”) effective October 22, 2013 (the “Spartan Advisory Agreement”). Pursuant to the Spartan Advisory Agreement, Spartan will act, for a minimum of twenty-four months from the date of the agreement, as the Company’s exclusive financial advisor and placement agent to assist the Company in connection with a best efforts private placement (the “Financing”) of up to $2.5 million of the Company’s equity and/or debt securities and/or convertible instruments (the “Securities”).
The Company upon closing of the Financing shall pay consideration to Spartan, in cash, a fee in an amount equal to 10% of the aggregate gross proceeds raised in the Financing and 3% of the aggregate gross proceeds raised in the Financing for expenses incurred by Spartan. The Company shall grant and deliver to Spartan at the closing of the Financing, for nominal consideration, five year warrants (the “Warrants”) to purchase a number of shares of the Company’s Common Stock equal to 10% of the number of shares of Common Stock (and/or shares of Common Stock issuable upon exercise of securities or upon conversion or exchange of convertible or exchangeable securities) sold at such closing. The Warrants shall be exercisable at any time during the five year period commencing on the closing to which they relate at an exercise price equal to the purchase price per share of Common Stock paid by investors in the Financing or, in the case of exercisable, convertible, or exchangeable securities, the exercise, conversion or exchange price thereof. If the Financing is consummated by means of more than one closing, Spartan shall be entitled to the fees provided herein with respect to each such closing.
The Company shall pay to Spartan a non-refundable monthly fee of $10,000 for the term of the agreement. Such monthly fee shall survive any termination of the Agreement.
During the year ended December 31, 2013 the Company paid to Spartan financing fees of $104,000 and issued Spartan 53,333 five year warrants with an exercise price of $1.50.
During the month ended January 31, 2014 the Company paid to Spartan financing fees of $58,500 and issued Spartan 30,000 five year warrants with an exercise price of $1.50.
During the nine months ended October 31, 2014, the Company paid to Spartan financing fees of $166,400 and issued Spartan 91,333 five year warrants with an exercise price of $1.50. |
Subsequent Events
Subsequent Events
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9 Months Ended |
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Oct. 31, 2014
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Subsequent Events [Abstract] | |
Subsequent Events |
Note 11 - Subsequent Events
On December 19, 2014, the Company entered into a securities purchase agreement (the “Manatuck Purchase Agreement”) with Manatuck Hill Partners, LLC (“Manatuck”) whereby the Company issued a convertible redeemable debenture (the “Manatuck Debenture”) in favor of Manatuck. The Manatuck Debenture is for $2,000,000 bearing interest at a rate of 14% and matures in February 2016. Upon issuance of the Manatuck Debenture, the Company shall issue Manatuck 200,000 shares of the Company's restricted common stock.
Optional conversion to convertible preferred stock is available upon completion of a qualified offering (as defined in the Manatuck Purchase Agreement) while the Manatuck Debenture is outstanding. Upon conversion of the Manatuck Debenture, the Company shall issue Manatuck shares of common stock as defined in the Manatuck Purchase Agreement. |
Summary of Significant Accounting Policies (Policies)
Summary of Significant Accounting Policies (Policies)
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Oct. 31, 2014
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Change of Year End |
Change of Year End
Effective January 13, 2014, MamaMancini’s Holdings, Inc. (the “Company”) changed its fiscal year-end date to January 31. The Company’s 2014 fiscal year commenced on February 1, 2014 and concludes on January 31, 2015. The Company changed its year end to be consistent with a significant number of its retail customers that have a fiscal year end on or near January 31. This allows the Company to more accurately account for accrued discounts and promotions to these retailers. The Company determined that recasting the prior year comparable period ended January 31, 2013 would not be material. |
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Use of Estimates |
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Such estimates and assumptions impact, among others, the following: allowance for bad debt, inventory obsolescence, the fair value of share-based payments.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the condensed consolidated financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from our estimates. |
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Risks and Uncertainties |
Risks and Uncertainties
The Company operates in an industry that is subject to intense competition and change in consumer demand. The Company’s operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure.
The Company has experienced, and in the future expects to continue to experience, variability in sales and earnings. The factors expected to contribute to this variability include, among others, (i) the cyclical nature of the grocery industry, (ii) general economic conditions in the various local markets in which the Company competes, including the general downturn in the economy, and (iii) the volatility of prices pertaining to food and beverages in connection with the Company’s distribution of the product. These factors, among others, make it difficult to project the Company’s operating results on a consistent basis. |
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Cash |
Cash
The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. The Company held no cash equivalents at October 31, 2014 or January 31, 2014.
The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. |
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Accounts Receivable and Allowance for Doubtful Accounts |
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company generally does not require collateral to support customer receivables. The Company provides an allowance for doubtful accounts based upon a review of the outstanding accounts receivable, historical collection information and existing economic conditions. The Company determines if receivables are past due based on days outstanding, and amounts are written off when determined to be uncollectible by management. The maximum accounting loss from the credit risk associated with accounts receivable is the amount of the receivable recorded, which is the face amount of the receivable net of the allowance for doubtful accounts. As of October 31, 2014 and January 31, 2014, the Company had reserves of $2,000. |
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Inventories |
Inventories
Inventories are stated at average cost using the first-in, first-out (FIFO) valuation method. Inventory was comprised of the following at October 31, 2014 and January 31, 2014:
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Property and Equipment |
Property and Equipment
Property and equipment are recorded at cost. Depreciation expense is computed using straight-line methods over the estimated useful lives.
Asset lives for financial statement reporting of depreciation are:
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Fair Value of Financial Instruments |
Fair Value of Financial Instruments
For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amount of the Company’s short term financial instruments approximates fair value due to the relatively short period to maturity for these instruments. |
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Stock Issuance Costs |
Stock Issuance Costs
Stock issuance costs are capitalized as incurred. Upon the completion of the offering, the stock issuance costs are reclassified to equity. Offering costs recorded to equity for the nine months ended October 31, 2014 and September 30, 2013 and the one month ended January 31, 2014 were $334,571, $1,123,498 and $102,166, respectively. |
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Research and Development |
Research and Development
Research and development is expensed as incurred. Research and development expenses for three months ended October 31, 2014 and September 30, 2013 were $28,967 and $5,212, respectively. Research and development expenses for nine months ended October 31, 2014 and September 30, 2013 and the one month ended January 31, 2014 were $71,959, $12,350 and $8,477, respectively. |
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Shipping and Handling Costs |
Shipping and Handling Costs
The Company classifies freight billed to customers as sales revenue and the related freight costs as cost of sales. |
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Revenue Recognition |
Revenue Recognition
The Company records revenue for products when all of the following have occurred: (1) persuasive evidence of an arrangement exists, (2) the product is delivered, (3) the sales price to the customer is fixed or determinable, and (4) collectability of the related customer receivable is reasonably assured. There is no stated right of return for products.
The Company meets these criteria upon shipment.
Expenses such as slotting fees, sales discounts, and allowances are accounted for as a direct reduction of revenues as follows:
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Cost of Sales |
Cost of Sales
Cost of sales represents costs directly related to the production and manufacturing of the Company’s products. Costs include product development, freight, packaging, and print production costs. |
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Advertising |
Advertising
Costs incurred for producing and communicating advertising for the Company are charged to operations as incurred. Producing and communicating advertising expenses for the three months ended October 31, 2014 and September 30, 2013 were $693,688 and $456,313, respectively. Producing and communicating advertising expenses for the nine months ended October 31, 2014 and September 30, 2013 and the one month ended January 31, 2014 were $1,959,547, $1,267,035 and $232,481, respectively. |
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Stock-based Compensation |
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with ASC Topic 718, “Accounting for Stock-Based Compensation” (“ASC 718”) which establishes financial accounting and reporting standards for stock-based employee compensation. It defines a fair value based method of accounting for an employee stock option or similar equity instrument. The Company accounts for compensation cost for stock option plans in accordance with ASC 718. The Company accounts for share-based payments to non-employees in accordance with ASC 505-50 “Accounting for Equity Instruments Issued to Non-Employees for Acquiring, or in Conjunction with Selling Goods or Services”.
The Company recognizes all forms of share-based payments, including stock option grants, warrants and restricted stock grants, at their fair value on the grant date, which are based on the estimated number of awards that are ultimately expected to vest.
Share-based payments, excluding restricted stock, are valued using a Black-Scholes option pricing model. Grants of share-based payment awards issued to non-employees for services rendered have been recorded at the fair value of the share-based payment, which is the more readily determinable value. The grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. If an award is granted, but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the termination of service. Stock-based compensation expenses are included in cost of goods sold or selling, general and administrative expenses, depending on the nature of the services provided, in the Condensed Consolidated Statement of Operations. Share-based payments issued to placement agents are classified as a direct cost of a stock offering and are recorded as a reduction in additional paid in capital.
For the three months ended October 31, 2014 and September 30, 2013 share-based compensation, including stock offering costs and restricted stock, amounted to $88,247 and $292,431, respectively. For the nine months ended October 31, 2014 and September 30, 2013 and the one month ended January 31, 2014 share-based compensation amounted to $436,328, $662,506 and $45,681, respectively. Of the $436,328 recorded for the nine months ended October 31, 2014, $171,981 was a direct cost of a stock offering and has been recorded as a reduction in additional paid in capital.
For the nine months ended October 31, 2014, when computing fair value of share-based payments, the Company has considered the following variables:
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Earnings (Loss) Per Share |
Earnings (Loss) Per Share
Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss), adjusted for changes in income or loss that resulted from the assumed conversion of convertible shares, by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.
The Company had the following potential common stock equivalents at October 31, 2014:
The Company had the following potential common stock equivalents at September 30, 2013:
Since the Company reflected a net loss during the three and nine months ended October 31, 2014 and September 30, 2013, the effect of considering any common stock equivalents, would have been anti-dilutive. A separate computation of diluted earnings (loss) per share is not presented. |
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Income Taxes |
Income Taxes
Income taxes are provided in accordance with ASC No. 740, “Accounting for Income Taxes”. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards. Deferred tax expense (benefit) results from the net change during the period of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. |
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Recent Accounting Pronouncements |
Recent Accounting Pronouncements
The U.S. Financial Accounting Standards Board issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers, in May 2014. The amendments in this Update supersede the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. In addition, the amendments supersede the cost guidance in Subtopic 605-35, Revenue Recognition—Construction-Type and Production-Type Contracts, and create new Subtopic 340-40, Other Assets and Deferred Costs—Contracts with Customers. In summary, the core principle of Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2011-230—Revenue Recognition (Topic 605) and Proposed Accounting Standards Update 2011–250—Revenue Recognition (Topic 605): Codification Amendments, both of which have been deleted. Accounting Standards Update 2014-09. The amendments in this Update are effectively for the Company for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently evaluating the effects of ASU 2014-09 on the condensed consolidated financial statements.
In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014-12, Compensation- Stock Compensation. The amendments in this update apply to reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target can be achieved after the requisite service period. This Accounting Standards Update is the final version of Proposed Accounting Standards Update EITF-13D—Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period, which has been deleted. The proposed amendments would apply to reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target could be achieved after the requisite service period. This Accounting Standards Update is the final version of Proposed Accounting Standards Update EITF-13D—Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period, which has been deleted. The amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015, and early adoption is permitted. The Company is currently evaluating the effects of ASU 2014-12 on the condensed consolidated financial statements. |
Summary of Significant Accounting Policies (Tables)
Summary of Significant Accounting Policies (Tables)
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 31, 2014
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventories |
Inventories are stated at average cost using the first-in, first-out (FIFO) valuation method. Inventory was comprised of the following at October 31, 2014 and January 31, 2014:
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Schedule of Property and Equipment Estimated Useful Lives |
Asset lives for financial statement reporting of depreciation are:
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Schedule of Expenses of Slotting Fees and Sales Discount Accounted for Direct Revenue Reduction |
Expenses such as slotting fees, sales discounts, and allowances are accounted for as a direct reduction of revenues as follows:
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Schedule of Common Stock Equivalents |
The Company had the following potential common stock equivalents at October 31, 2014:
The Company had the following potential common stock equivalents at September 30, 2013:
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Property and Equipment (Tables)
Property and Equipment (Tables)
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9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 31, 2014
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property, Plant and Equipment |
Property and equipment on October 31, 2014 and January 31, 2014 are as follows:
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Related Party Transactions (Tables)
Related Party Transactions (Tables)
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9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Oct. 31, 2014
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Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Amount Due from Manufacturer |
At October 31, 2014 and January 31, 2014 the amount due from the Manufacturer is as follows:
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Loan and Security Agreement (Tables)
Loan and Security Agreement (Tables)
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9 Months Ended | ||||||||||||||||||||||||
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Oct. 31, 2014
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Loan And Security Agreement | |||||||||||||||||||||||||
Schedule of Line of Credit |
The facility consists of the following:
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Stockholders' Equity (Tables)
Stockholders' Equity (Tables)
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 31, 2014
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Option Activity |
The following is a summary of the Company’s option activity:
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Summary of Option Outstanding and Exercisable |
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Schedule of Warrants Activity |
The following is a summary of the Company’s warrant activity:
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Schedule of Warrants Outstanding and Exercisable |
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Commitments and Contingencies (Tables)
Commitments and Contingencies (Tables)
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9 Months Ended | ||||||||||||||||||||||||||||||
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Oct. 31, 2014
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||
Schedule of Royalty Minimum Payment by Preceding Agreement Year |
In order to continue the Exclusive term, the Company shall pay a minimum royalty with respect to the preceding Agreement year as follows:
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Nature of Operations and Basis of Presentation (Details Narrative)
Nature of Operations and Basis of Presentation (Details Narrative) (USD $)
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0 Months Ended |
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Jan. 24, 2013
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Nature Of Operations And Basis Of Presentation | |
Number of shares issued in exchange for acquisition | 20,054,000 |
Number of shares cancelled | 103,408,000 |
Aggregate amount paid in cancellation to majority shareholders | $ 295,000 |
Stock issued for consideration of common stock cancellation for majority shareholders | 800,000 |
Summary of Significant Accounting Policies (Details Narrative)
Summary of Significant Accounting Policies (Details Narrative) (USD $)
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1 Months Ended | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|
Jan. 31, 2014
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Oct. 31, 2014
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Sep. 30, 2013
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Oct. 31, 2014
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Sep. 30, 2013
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Accounting Policies [Abstract] | |||||
Cash equivalents | $ 0 | $ 0 | $ 0 | ||
Accounts receivable reserves | 2,000 | 2,000 | 2,000 | ||
Stock offering cost recorded | 102,166 | 334,571 | 1,123,498 | ||
Research and development expense | 8,477 | 28,967 | 5,212 | 71,959 | 12,350 |
Advertising expenses | 232,481 | 693,688 | 456,313 | 1,959,547 | 1,267,035 |
Share based compensation | 45,681 | 88,247 | 292,431 | 436,328 | 662,506 |
Reduction in additional paid in capital | $ 436,328 | $ 171,981 | |||
Assumption risk-free interest rate of option in effect at the time of the grant minimum | 0.26% | ||||
Assumption risk-free interest rate of option in effect at the time of the grant maximum | 1.76% | ||||
Expected common stock dividend rate | 0.00% | ||||
Expected volatility rate, minimum | 144.00% | ||||
Expected volatility rate, maximum | 193.00% | ||||
Historical forfeiture rate for unvested stock option | 0.00% |
Summary of Significant Accounting Policies - Schedule of Inventories (Details)
Summary of Significant Accounting Policies - Schedule of Inventories (Details) (USD $)
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Oct. 31, 2014
|
Jan. 31, 2014
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Accounting Policies [Abstract] | ||
Finished goods | $ 213,455 | $ 159,829 |
Summary of Significant Accounting Policies - Schedule of Property and Equipment Estimated Useful Lives (Details)
Summary of Significant Accounting Policies - Schedule of Property and Equipment Estimated Useful Lives (Details)
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9 Months Ended |
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Oct. 31, 2014
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Minimum [Member] | Machinery And Equipment [Member]
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Property and equipment estimated useful lives | 2 years |
Minimum [Member] | Furniture And Fixtures [Member]
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Property and equipment estimated useful lives | 3 years |
Minimum [Member] | Leasehold Improvements [Member]
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Property and equipment estimated useful lives | 3 years |
Maximum [Member] | Machinery And Equipment [Member]
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Property and equipment estimated useful lives | 7 years |
Maximum [Member] | Furniture And Fixtures [Member]
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Property and equipment estimated useful lives | 5 years |
Maximum [Member] | Leasehold Improvements [Member]
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Property and equipment estimated useful lives | 10 years |
Summary of Significant Accounting Policies - Schedule of Expenses of Slotting Fees and Sales Discount Accounted for Direct Revenue Reduction (Details)
Summary of Significant Accounting Policies - Schedule of Expenses of Slotting Fees and Sales Discount Accounted for Direct Revenue Reduction (Details) (USD $)
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1 Months Ended | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|
Jan. 31, 2014
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Oct. 31, 2014
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Sep. 30, 2013
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Oct. 31, 2014
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Sep. 30, 2013
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Accounting Policies [Abstract] | |||||
Gross Sales | $ 796,177 | $ 8,903,100 | $ 6,033,622 | ||
Less: Slotting, Discounts, Allowances | 20,925 | 310,485 | 393,553 | ||
Net Sales | $ 775,252 | $ 3,759,698 | $ 2,167,517 | $ 8,592,615 | $ 5,640,069 |
Summary of Significant Accounting Policies - Schedule of Common Stock Equivalents (Details)
Summary of Significant Accounting Policies - Schedule of Common Stock Equivalents (Details)
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Oct. 31, 2014
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Jan. 31, 2014
|
Sep. 30, 2013
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Accounting Policies [Abstract] | |||
Common stock subscribed, shares | 66,667 | 833,333 | |
Common stock warrants | 1,013,401 | 782,534 | |
Common stock options | 508,404 | 420,923 | |
Total common stock equivalents | 1,558,472 | 1,203,457 |
Summary of Significant Accounting Policies - Schedule of Common Stock Equivalents (Details) (Parenthetical)
Summary of Significant Accounting Policies - Schedule of Common Stock Equivalents (Details) (Parenthetical) (USD $)
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1 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Jan. 31, 2014
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Oct. 31, 2014
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Sep. 30, 2013
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Dec. 31, 2013
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Common stock warrants, exercise price range | $ 1.00 | |||
Common stock options, exercise price | $ 2.95 | $ 1.00 | $ 1.00 | |
Minimum [Member]
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Common stock warrants, exercise price range | $ 1.00 | |||
Common stock options, exercise price | $ 1.00 | |||
Maximum [Member]
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Common stock warrants, exercise price range | $ 2.50 | |||
Common stock options, exercise price | $ 2.97 |
Property and Equipment (Details Narrative)
Property and Equipment (Details Narrative) (USD $)
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1 Months Ended | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|
Jan. 31, 2014
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Oct. 31, 2014
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Sep. 30, 2013
|
Oct. 31, 2014
|
Sep. 30, 2013
|
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Property, Plant and Equipment [Abstract] | |||||
Fixed assets amount | $ 826,340 | $ 0 | $ 0 | ||
Depreciation expense | $ 4,141 | $ 42,068 | $ 10,910 | $ 101,541 | $ 20,662 |
Property and Equipment - Schedule of Property Plant and Equipment (Details)
Property and Equipment - Schedule of Property Plant and Equipment (Details) (USD $)
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Oct. 31, 2014
|
Jan. 31, 2014
|
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Property, Plant and Equipment [Abstract] | ||
Machinery and Equipment | $ 1,057,304 | $ 1,027,431 |
Furniture and Fixtures | 16,887 | 4,525 |
Leasehold Improvements | 225,168 | 2,733 |
Property Plant And Equipment, Gross | 1,299,359 | 1,034,689 |
Less: Accumulated Depreciation | 158,203 | 56,662 |
Property, plant and equipment, net | $ 1,141,156 | $ 978,027 |
Investment in Meatball Obsession, LLC (Details Narrative)
Investment in Meatball Obsession, LLC (Details Narrative) (USD $)
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0 Months Ended | 1 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | |||||||
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Dec. 31, 2011
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Jan. 31, 2014
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Oct. 31, 2014
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Sep. 30, 2013
|
Oct. 31, 2014
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Sep. 30, 2013
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Oct. 31, 2014
Meatball Obsession, LLC [Member]
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Sep. 30, 2013
Meatball Obsession, LLC [Member]
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Oct. 31, 2014
Meatball Obsession, LLC [Member]
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Sep. 30, 2013
Meatball Obsession, LLC [Member]
|
Jan. 31, 2014
Meatball Obsession, LLC [Member]
|
Dec. 31, 2013
Meatball Obsession, LLC [Member]
|
Dec. 31, 2011
Meatball Obsession, LLC [Member]
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Percentage of equity interest acquired in business combination | 34.62% | ||||||||||||
Total investment in Meatball Obsession, LLC | $ 27,032 | ||||||||||||
Reduction in investment due to losses in affiliates | 0 | ||||||||||||
Reduction in ownership percentage | 13.00% | 13.00% | 24.00% | ||||||||||
Sales revenue net | 775,252 | 3,759,698 | 2,167,517 | 8,592,615 | 5,640,069 | 44,831 | 24,793 | 88,874 | 85,895 | ||||
Accounts receivable | $ 29,963 | $ 29,963 | $ 1,457 |
Related Party Transactions (Details Narrative)
Related Party Transactions (Details Narrative) (USD $)
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Oct. 31, 2014
|
Jan. 31, 2014
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Related Party Transactions [Abstract] | ||
Deposit in inventory with manufacturer | $ 1,285,549 | $ 598,987 |
Related Party Transactions - Schedule of Amount Due from Manufacturer (Details)
Related Party Transactions - Schedule of Amount Due from Manufacturer (Details) (USD $)
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Oct. 31, 2014
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Jan. 31, 2014
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Related Party Transactions [Abstract] | ||
Customer receipts collected by Manufacturer on behalf of Company | $ 575,255 | $ 575,255 |
Loan to Manufacturer | 450,000 | 450,000 |
Shared expenses paid by Manufacturer on behalf of the Company | (302,616) | (251,206) |
Due from Manufacturer | $ 722,639 | $ 774,049 |
Line of Credit (Details Narrative)
Line of Credit (Details Narrative) (USD $)
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1 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Jan. 31, 2014
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Oct. 31, 2014
|
Sep. 30, 2013
|
Oct. 31, 2014
Secured Demand Credit Facility Backed By Receivables and Inventory [Member]
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Jan. 03, 2014
Secured Demand Credit Facility Backed By Receivables and Inventory [Member]
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Secured demand credit facility backed by its receivables and inventory | $ 1,500,000 | ||||
Purchased eligible accounts receivables, percentage | 70.00% | ||||
Percentage of reserve on purchased eligible accounts receivables | 30.00% | ||||
Interest rate on advances or borrowings under the FGI Facility |
The greater of (i) 6.75% per annum and (ii) 2.50% above the prime rate. |
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Collateral management fees, percentage of average monthly balance of Purchased Accounts | 0.42% | ||||
Minimum monthly net funds employed during each contract year | 500,000 | ||||
One-time facility fee, percentage of credit facility upon entry into Sale and Security Agreement | 1.00% | ||||
Additional fees and accrued interest paid | $ 8,640 | $ 43,344 | $ 8,547 | $ 48,600 |
Loan and Security Agreement (Details Narrative)
Loan and Security Agreement (Details Narrative) (USD $)
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0 Months Ended |
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Sep. 03, 2014
|
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Line of credit aggregate value | $ 600,000 |
Loan And Security Agreement One [Member] | Entrepreneur Growth Capital LLC [Member]
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Line of credit aggregate value | 3,100,000 |
Percentage of accounts revolving line of credit maximum | 85.00% |
Percentage of finished goods amount | 50.00% |
Percentage of raw material amount | 20.00% |
Line of credit interest rate description |
Generally reported by Citibank, N.A. plus (a) 2.5% on loans and advances made against eligible accounts and (b) 4.0% on loans made against eligible inventory. The term loan bears interest at a rate of the highest prime rate in effect during each month as generally reported by Citibank, N.A. plus 4.0%. |
Line of credit annual facility percentage | 2.25% |
Line of credit default stated rates of interest | 10.00% |
Loan And Security Agreement Two [Member] | Entrepreneur Growth Capital LLC [Member]
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Line of credit aggregate value | 600,000 |
Line of credit interest rate description |
The Note bears interest at highest prime rate in effect during each month as generally reported by Citibank, N.A. plus 4.0% and is payable monthly. |
Line of credit default stated rates of interest | 10.00% |
Term of loan | 5 years |
Repayment of secured debt, monthly installment basis | $ 10,000 |
Note payable, duration | 60 months |
Loan and Security Agreement - Schedule of Line of Credit (Details)
Loan and Security Agreement - Schedule of Line of Credit (Details) (USD $)
|
Sep. 03, 2014
|
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Loan And Security Agreement | |
Accounts Revolving Line of Credit: | $ 2,150,000 |
Inventory Revolving Line of Credit: | 350,000 |
Term Loan: | $ 600,000 |
Concentrations (Details Narrative)
Concentrations (Details Narrative)
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1 Months Ended | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|
Jan. 31, 2014
|
Oct. 31, 2014
|
Sep. 30, 2013
|
Oct. 31, 2014
|
Sep. 30, 2013
|
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Customer A [Member]
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Concentrations of Revenues | 18.00% | 19.00% | 26.00% | 18.00% | 19.00% |
Percentage of accounts receivables | 24.00% | 19.00% | |||
Customer B [Member]
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Concentrations of Revenues | 15.00% | 16.00% | 13.00% | 14.00% | 19.00% |
Percentage of accounts receivables | 18.00% | ||||
Customer C [Member]
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Concentrations of Revenues | 10.00% | 12.00% | 12.00% | 12.00% | 15.00% |
Customer D [Member]
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Concentrations of Revenues | 13.00% | ||||
Vendor One [Member]
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Percentage of cost of sales during period | 100.00% | 100.00% | 100.00% |
Stockholders' Equity (Details Narrative)
Stockholders' Equity (Details Narrative) (USD $)
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1 Months Ended | 9 Months Ended | 12 Months Ended | 1 Months Ended | 3 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | ||||
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Jan. 31, 2014
|
Oct. 31, 2014
|
Dec. 31, 2013
|
Oct. 31, 2014
Board [Member]
|
Oct. 31, 2014
Restricted Stock [Member]
|
Oct. 31, 2014
Restricted Stock [Member]
Per Board [Member]
|
Apr. 23, 2014
Equity Option [Member]
|
Jun. 30, 2014
Investors [Member]
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May 31, 2014
Investors [Member]
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Apr. 30, 2014
Investors [Member]
|
Jan. 31, 2014
Investors [Member]
|
Mar. 31, 2013
Investors [Member]
|
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Sold common shares | 66,668 | 133,333 | 416,668 | 300,000 | 236,667 | |||||||
Common stock to investors in exchange | $ (1,180,003) | $ 100,000 | $ 200,000 | $ 625,001 | $ 450,000 | $ 355,000 | ||||||
Stock issuance costs relating to private placement | 33,258 | 82,796 | 141,791 | 102,166 | 80,536 | |||||||
Stock issuance consisting cash | 13,000 | 26,000 | 81,250 | 58,500 | 46,150 | |||||||
Number of warrants issued | 8,667 | 17,333 | 41,667 | 30,000 | 23,667 | |||||||
Warrants issued for services | 20,258 | 56,796 | 60,541 | 43,666 | 34,386 | |||||||
Number of restricted shares issued during period | 14,000 | 8,000 | ||||||||||
Number of restricted shares issued during period, amount | 35,000 | |||||||||||
Options, Granted | 59,000 | 318,000 | 50,000 | 10,000 | ||||||||
Option granted fair value amount | 136,587 | |||||||||||
Total intrinsic value of options outstanding and exercisable | 1,082,808 | 549,344 | ||||||||||
Stock based compensation related to stock option unvested | 8,186 | |||||||||||
Weighted average expensing period of the unvested options | 11 months 23 days | |||||||||||
Total intrinsic value of warrants outstanding and exercisable | $ 1,635,801 | $ 860,741 |
Stockholders' Equity - Summary of Option Activity (Details)
Stockholders' Equity - Summary of Option Outstanding and Exercisable (Details)
Stockholders' Equity - Summary of Option Outstanding and Exercisable (Details) (USD $)
|
9 Months Ended | |||||
---|---|---|---|---|---|---|
Oct. 31, 2014
|
Jan. 31, 2014
|
Dec. 31, 2013
|
Dec. 31, 2012
|
Oct. 31, 2014
Range Of Exercise Price One [Member]
|
Oct. 31, 2014
Range Of Exercise Price Two [Member]
|
|
Range of exercise price | $ 1.00 | $ 2.97 | ||||
Number of Options Outstanding | 508,404 | 541,404 | 541,404 | 223,404 | 499,404 | 9,000 |
Weighted Average Remaining Contractual Life (in years), Options Outstanding | 2 years 11 months 23 days | 4 years 6 months | ||||
Weighted Average Exercise Price, Options Outstanding | $ 1.03 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 2.97 |
Number of Options Exercisable | 416,404 | 434,177 | 428,845 | 411,904 | 4,500 | |
Weighted Average Exercise Price, Options Exercisable | $ 1.02 | $ 1.00 | $ 1.00 | $ 1.00 | $ 2.97 |
Stockholders' Equity - Schedule of Warrants Activity (Details)
Stockholders' Equity - Schedule of Warrants Outstanding and Exercisable (Details)
Stockholders' Equity - Schedule of Warrants Outstanding and Exercisable (Details) (USD $)
|
9 Months Ended | |||
---|---|---|---|---|
Oct. 31, 2014
|
Jan. 31, 2014
|
Dec. 31, 2013
|
Dec. 31, 2012
|
|
Equity [Abstract] | ||||
Range of exercise price, lower limit | $ 1.00 | |||
Range of exercise price, higher limit | $ 2.50 | |||
Number of Warrants Outstanding | 1,013,401 | |||
Weighted Average Remaining Contractual Life (in Years) | 3 years 4 months 6 days | |||
Weighted Average Exercise Price, Warrants Outstanding | $ 1.25 | |||
Number of Warrants Exercisable | 1,013,401 | 922,067 | 892,067 | |
Weighted Average Exercise Price, Warrants Exercisable | $ 1.25 | $ 1.22 | $ 1.22 |
Commitments and Contingencies (Details Narrative)
Commitments and Contingencies (Details Narrative) (USD $)
|
1 Months Ended | 3 Months Ended | 9 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 1 Months Ended | 9 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2014
|
Oct. 31, 2014
|
Sep. 30, 2013
|
Oct. 31, 2014
|
Sep. 30, 2013
|
Dec. 01, 2011
Advisory Agreement One [Member]
|
Dec. 31, 2012
Advisory Agreement One [Member]
Spartan Capital Securities, LLC [Member]
|
May 02, 2013
Advisory Agreement Two [Member]
|
Dec. 31, 2013
Advisory Agreement Two [Member]
Spartan Capital Securities, LLC [Member]
|
Oct. 22, 2013
Advisory Agreement Three [Member]
|
Dec. 31, 2013
Advisory Agreement Three [Member]
Spartan Capital Securities, LLC [Member]
|
Jan. 31, 2014
Advisory Agreement Four [Member]
Spartan Capital Securities, LLC [Member]
|
Oct. 31, 2014
Advisory Agreement Five [Member]
Spartan Capital Securities, LLC [Member]
|
Oct. 31, 2014
Minimum [Member]
Advisory Agreement [Member]
Spartan Capital Securities, LLC [Member]
|
Oct. 31, 2014
Maximum [Member]
Advisory Agreement [Member]
Spartan Capital Securities, LLC [Member]
|
Oct. 31, 2014
Year 1 [Member]
|
Oct. 31, 2014
Year 2 [Member]
|
Oct. 31, 2014
Year 2 [Member]
Minimum [Member]
|
Oct. 31, 2014
Year 2 [Member]
Maximum [Member]
|
Oct. 31, 2014
Year 3 [Member]
|
Oct. 31, 2014
Year 3 [Member]
Minimum [Member]
|
Oct. 31, 2014
Year 3 [Member]
Maximum [Member]
|
Oct. 31, 2014
Year 4 [Member]
|
|
Percentage of royalty rate on net sales | 6.00% | 4.00% | 2.00% | 1.00% | |||||||||||||||||||
Royalty net sales | $ 500,000 | $ 500,000 | $ 2,500,000 | $ 2,500,000 | $ 20,000,000 | $ 20,000,000 | |||||||||||||||||
Royalty expenses | 35,551 | 66,915 | 38,621 | 182,641 | 156,743 | ||||||||||||||||||
Proceeds from private placements | 6,000,000 | 5,000,000 | 2,500,000 | ||||||||||||||||||||
Percentage of fee equal to aggregate gross proceeds | 10.00% | 10.00% | 3.00% | 10.00% | 3.00% | ||||||||||||||||||
Non refundable monthly fee period | 12 months | 24 months | |||||||||||||||||||||
Aggregate gross proceeds fee | 4,000,000 | 5,000,000 | |||||||||||||||||||||
Percentage of common stock issuable | 10.00% | 10.00% | 10.00% | ||||||||||||||||||||
Payment of maximum amount paid for consideration of expenses | 40,000 | 10,000 | 10,000 | ||||||||||||||||||||
Fee paid amount | 505,400 | 650,000 | 104,000 | 58,500 | 166,400 | ||||||||||||||||||
Number of warrants issued | 505,400 | 333,333 | 53,333 | 30,000 | 91,333 | ||||||||||||||||||
Warrants Remaining Contractual Life | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | |||||||||||||||||
Warrants exercise price | $ 1.00 | $ 1.50 | $ 1.50 | $ 1.50 | $ 1.50 | ||||||||||||||||||
Advisory agreement description | The Company shall pay to Spartan a non-refundable monthly fee of $10,000 over a twelve to twenty four month period upon Spartan’s satisfaction of certain thresholds (raising of aggregate gross proceeds of $4.0 mil- $5.0 mil) outlined in the Spartan Advisory Agreement. |
||||||||||||||||||||||
Fees cancellation on agreement amendment | $ 10,000 |
Commitments and Contingencies - Schedule of Royalty Minimum Payment by Preceding Agreement Year (Details)
Commitments and Contingencies - Schedule of Royalty Minimum Payment by Preceding Agreement Year (Details) (USD $)
|
1 Months Ended | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|
Jan. 31, 2014
|
Oct. 31, 2014
|
Sep. 30, 2013
|
Oct. 31, 2014
|
Sep. 30, 2013
|
|
Minimum Royalty to be Paid | $ 35,551 | $ 66,915 | $ 38,621 | $ 182,641 | $ 156,743 |
Agreement Year 1st and 2nd [Member]
|
|||||
Minimum Royalty to be Paid | |||||
Agreement Year 3rd and 4th [Member]
|
|||||
Minimum Royalty to be Paid | 50,000 | ||||
Agreement Year 5th, 6th and 7th [Member]
|
|||||
Minimum Royalty to be Paid | 75,000 | ||||
Agreement Year 8th and 9th [Member]
|
|||||
Minimum Royalty to be Paid | 100,000 | ||||
Agreement Year 10th and thereafter [Member]
|
|||||
Minimum Royalty to be Paid | $ 125,000 |
Subsequent Events (Details Narrative)
Subsequent Events (Details Narrative) (Subsequent Event [Member], Manatuck Hill Partners LLC [Member], USD $)
|
0 Months Ended |
---|---|
Dec. 19, 2014
|
|
Subsequent Event [Member] | Manatuck Hill Partners LLC [Member]
|
|
Debenture value | $ 2,000,000 |
Percentage of interest rate | 14.00% |
Maturity date | Feb. 28, 2016 |
During period issued restricted common stock | 200,000 |
During period issued common stock value | $ 100,000 |