Document and Entity Information
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Document and Entity Information (USD $)
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12 Months Ended | |
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Dec. 31, 2012
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Apr. 15, 2013
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| Document And Entity Information | ||
| Entity Registrant Name | MamaMancini's Holdings, Inc. | |
| Entity Central Index Key | 0001520358 | |
| Document Type | 10-K | |
| Document Period End Date | Dec. 31, 2012 | |
| Amendment Flag | false | |
| Current Fiscal Year End Date | --12-31 | |
| Entity Filer Category | Smaller Reporting Company | |
| Entity Well-known Seasoned Issuer | No | |
| Entity Voluntary Filers | No | |
| Entity Current Reporting Status | Yes | |
| Entity Public Float | $ 0 | |
| Entity Common Stock, Shares Outstanding | 20,854,000 | |
| Document Fiscal Period Focus | FY | |
| Document Fiscal Year Focus | 2012 |
Balance Sheets (Unaudited)
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Balance Sheets (Unaudited) (USD $)
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Dec. 31, 2012
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Dec. 31, 2011
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| Assets: | ||
| Cash | $ 2,008,161 | $ 16,505 |
| Accounts receivable, net | 463,565 | 581,479 |
| Inventories | 76,570 | 101,110 |
| Prepaid expenses and other current assets | 64,178 | 79,382 |
| Due from manufacturer - related party | 159,200 | |
| Deposit with manufacturer - related party | 192,956 | 102,860 |
| Total current assets | 2,964,630 | 881,336 |
| Property and equipment, net | 17,451 | 20,015 |
| Total assets | 2,982,081 | 901,351 |
| Liabilities: | ||
| Accounts payable and accrued expenses | 329,233 | 282,494 |
| Line of credit | 200,000 | 500,000 |
| Due to manufacturer - related party | 69,544 | |
| Total current liabilities | 529,233 | 852,038 |
| Stockholders' Equity | ||
| Common stock, $0.001 par value; 40,000,000 shares authorized; 20,054,000 and 15,000,000 shares issued and outstanding, respectively | 20,054 | 15,000 |
| Additional paid in capital | 5,784,827 | 1,386,723 |
| Accumulated deficit | (3,352,033) | (1,352,410) |
| Total Stockholders' Equity | 2,452,848 | 49,313 |
| Total Liabilities and Stockholders' Equity | $ 2,982,081 | $ 901,351 |
Balance Sheets (Parenthetical)
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Balance Sheets (Parenthetical) (USD $)
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Dec. 31, 2012
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Dec. 31, 2011
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| Statement of Financial Position [Abstract] | ||
| Common stock, par value | $ 0.001 | $ 0.001 |
| Common stock, shares authorized | 40,000,000 | 40,000,000 |
| Common stock, shares issued | 20,054,000 | 15,000,000 |
| Common stock, shares outstanding | 20,054,000 | 15,000,000 |
Statements of Operations
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Statements of Operations (USD $)
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12 Months Ended | |
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Dec. 31, 2012
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Dec. 31, 2011
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| Income Statement [Abstract] | ||
| Sales - net of slotting fees and discounts | $ 4,582,845 | $ 3,734,062 |
| Cost of sales | 3,230,589 | 2,496,538 |
| Gross profit | 1,352,256 | 1,237,524 |
| Operating expenses | ||
| Research and development | 68,372 | |
| General and administrative expenses | 3,271,160 | 1,885,084 |
| Total operating Expenses | 3,339,532 | 1,885,084 |
| Loss from operations | (1,987,276) | (647,560) |
| Other income (expenses) | ||
| Interest expense | (12,347) | (7,136) |
| Loss on investment | (27,032) | |
| Total other income (expense) | (12,347) | (34,168) |
| Net loss | $ (1,999,623) | $ (681,728) |
| Net loss per common share - basic and diluted | $ (0.12) | $ (0.05) |
| Weighted average common shares outstanding - basic and diluted | 17,358,333 | 14,818,086 |
Statement of Changes in Stockholders' Equity (Deficit)
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Statement of Changes in Stockholders' Equity (Deficit) (USD $)
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Common Stock [Member]
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Additional Paid-In Capital [Member]
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Accumulated Deficit [Member]
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Total
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| Balance at Dec. 31, 2010 | $ 14,362 | $ 1,187,361 | $ (670,682) | $ 531,041 |
| Balance, shares at Dec. 31, 2010 | 14,361,702 | |||
| Common stock issued for cash | 638 | 199,362 | 200,000 | |
| Common stock issued for cash, shares | 638,298 | 638,298 | ||
| Net loss | (681,728) | (681,728) | ||
| Balance at Dec. 31, 2011 | 15,000 | 1,386,723 | (1,352,410) | 49,313 |
| Balance, shares at Dec. 31, 2011 | 15,000,000 | |||
| Common stock issued for cash | 5,054 | 5,048,946 | 5,054,000 | |
| Common stock issued for cash, shares | 5,054,000 | 5,054,000 | ||
| Warrants issued for services | 438,122 | 438,122 | ||
| Stock issuance costs | (1,088,964) | (1,088,964) | ||
| Net loss | (1,999,623) | (1,999,623) | ||
| Balance at Dec. 31, 2012 | $ 20,054 | $ 5,784,827 | $ (3,352,033) | $ 2,452,848 |
| Balance, shares at Dec. 31, 2012 | 20,054,000 |
Statements of Cash Flows
Nature of Operations and Basis of Presentation
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Nature of Operations and Basis of Presentation
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12 Months Ended |
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Dec. 31, 2012
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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, Inc. (the “Company”) was organized on February 21, 2012 as a Delaware corporation.
On March 5, 2012, the Company entered into a share exchange (the “Reorganization”) with MamaMancini’s, LLC (the “LLC”) whereby the Unit holders of the LLC exchanged all 4,700 Ownership Units outstanding for 15,000,000 shares of Company common stock and 223,404 common stock options. All equity accounts have been retrospectively recast as a result of the Reorganization.
The Company will continue the existing business operations of the LLC. The historical financial statements of the Company are those of the LLC.
The Company is a manufacturer and distributor of a line of beef meatballs with sauce, turkey meatballs with sauce, Italian sausage with sauce and other similar Italian meats with sauces. The Company’s customers are located throughout the United States, with a large concentration in the Northeastern and Southeastern United States regions.
The financial statements presented for all periods through and including December 31, 2012 are those of the Company. As a result of the Reorganization, the equity sections of the LLC for all prior periods presented reflect the Reorganization described above and are consistent with the December 31, 2012 balance sheet presented for the Company.
Since the transaction is considered a Reorganization, the presentation of pro-forma financial information was not required.
Basis of Presentation
The accompanying financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). |
Summary of Significant Accounting Policies
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Summary of Significant Accounting Policies
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Dec. 31, 2012
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies |
Note 2 Summary of Significant Accounting Policies
Use of estimates
The preparation of 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 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 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.
Reclassifications
Certain amounts in the prior year have been reclassified to conform to the current year presentation.
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 December 31, 2012 and 2011.
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. At December 31, 2012 and 2011, no cash balances exceeded the federally insured limit.
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 December 31, 2012 and 2011, 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 December 31, 2012 and 2011:
Depreciation
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 years ended December 31, 2012 and 2011 were $1,088,964 and $0, respectively.
Research and Development
Research and development is expensed as incurred. Research and development expenses for the years ended December 31, 2012 and 2011 were $68,372 and $0, 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 and sales discounts 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 years ended December 31, 2012 and 2011 were $1,460,000 and $743,000, 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 Statement of Operations. For the years ended December 31, 2012 and 2011 share based compensation amounted to $438,122 and $0 respectively. The $438,122 recorded for the year ended December 31, 2012 was a direct cost of the stock offering and has been recorded as a reduction in additional paid in capital.
When computing fair value of share based payments, the Company has considered the following variables:
● The risk-free interest rate assumption is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. The risk free rate used had a range of 0.61%-1.01%.
● The Company has not paid any dividends on common stock since its inception and does not anticipate paying dividends on its common stock in the foreseeable future. Therefore the expected dividend rate was $0.
● The expected warrant term is the contractual term of the warrant.
● Given the Company is privately held, expected volatility was benchmarked against similar companies in a similar industry. The expected volatility had a range of 128%-147%.
Earnings 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 December 31, 2012:
The Company had no potential common stock equivalents at December 31, 2011.
Since the Company reflected a net loss in 2012 and 2011, 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 year 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.
Penalties and interest assessed by income taxing authorities are included in general and administrative expenses.
Recent accounting pronouncements
There are no recent accounting pronouncements that are expected to have an effect on the Company’s financial statements.
Subsequent Events Evaluation
The Company has evaluated for any subsequent events through March 29, 2013, which is the date these financial statements were available to be issued. |
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Going Concern
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Going Concern
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12 Months Ended |
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Dec. 31, 2012
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| Going Concern | |
| Going Concern |
Note 3 Going Concern
As reflected in the accompanying financial statements, the Company has a net loss and net cash used in operations of $1,999,623 and $2,093,214, respectively, for the year ended December 31, 2012.
The ability of the Company to continue its operations is dependent on Management’s plans, which include the raising of capital through debt and/or equity markets with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements. The Company may need to incur additional liabilities with certain related parties to sustain the Company’s existence.
The Company may require additional funding to finance the growth of its current and expected future operations as well as to achieve its strategic objectives. The Company believes its current available cash along with anticipated revenues may be insufficient to meet its cash needs for the near future if it does not receive the anticipated additional funding. There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all. These conditions raise substantial doubt about our ability to continue as a going concern. In that event, the Company would be required to change its growth strategy and seek funding on that basis, if at all.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern. |
Property Plant and Equipment
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Property Plant and Equipment
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Dec. 31, 2012
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| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||
| Property Plant and Equipment |
Note 4 – Property, Plant and Equipment:
Property, plant and equipment on December 31, 2012 and 2011 are as follows:
Depreciation expense charged to income for the years ended December 31, 2012 and 2011 amounted to $12,564 and $9,612 respectively. |
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Credit Line
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Credit Line
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12 Months Ended |
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Dec. 31, 2012
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| Debt Disclosure [Abstract] | |
| Credit Line |
Note 5 Credit Line
On October 13, 2010 the Company signed a revolving note (the “Note”) with The Provident Bank (the “Bank”). The outstanding balance of this Note is limited to $1,000,000 and expired August 31, 2012. On November 16, 2012, the maturity date of the Note was extended to January 1, 2013 and on January 7, 2013 was further extended to May 1, 2013. The outstanding balance accrues interest at a variable rate of 1.00% over the Wall Street Journal prime rate with a floor of 4.50% per annum. Interest is payable monthly and the rate as of December 31, 2012 and December 31, 2011 was 4.50% and 4.50%, respectively.
Advances are limited to 80% of eligible receivables (75 days from invoice) and 35% of finished goods inventory. Inventory advances shall be capped at $250,000. Concentrations from any one customer exceeding 30% of total accounts receivable will be excluded from the borrowing base availability. The note is secured by accounts receivable, inventory, financial instruments, equipment, general intangibles and investment property and personal and unconditional guarantees of two of the shareholders of the Company.
The balance outstanding on the revolving note at December 31, 2012 and 2011 was $200,000 and $500,000, respectively. |
Investment in LLC
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Investment in LLC
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Dec. 31, 2012
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| Investments in and Advances to Affiliates, Schedule of Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment in LLC |
Note 6 Investment in LLC
During 2010, the Company advanced $20,090 to an individual. There was an implied agreement that the advance would convert into an equity interest in a new entity.
During 2011 the Company acquired a 34.62% interest in Meatball Obsession, LLC (“MO”) for a total investment of $27,032, which includes the conversion of the $20,090 advance above. 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 brought down to $0 due to losses incurred by MO.
During 2012 the Company’s ownership interest in MO fell to 28% due to dilution.
During the years ending December 31, 2012 and 2011, sales to MO were $73,768 and 4,124, respectively. At December 31, 2012 and 2011 the accounts receivable balance from MO was $12,680 and $0.
Summarized financial information for Meatball Obsession, LLC is as follows:
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Related Party Transactions
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Related Party Transactions
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Dec. 31, 2012
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| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||
| Related Party Transactions |
Note 7 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. 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 2012 and 2011, the Company purchased substantially all of it’s inventory from the Manufacturer. At December 31, 2012 and December 31, 2011, the Company has a deposit on inventory in the amount of $192,956 and $102,860, respectfully, to this Manufacturer.
Due (to) from Manufacturer
During the years ending December 31, 2012 and 2011, 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. At December 31, 2012 and 2011 the amount due from the Manufacturer is as follows:
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Concentrations
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Concentrations
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Dec. 31, 2012
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| Risks and Uncertainties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Concentrations |
Note 8 Concentrations
Revenues
For the years ended December 31, 2012 and 2011, the Company had the following concentrations of revenues with customers:
Accounts Receivable
For the years ended December 31, 2012 and 2011, the Company had the following concentrations of accounts receivable with customers:
Cost of Sales
For the years ended December 31, 2012 and 2011, the Company had the following concentrations of purchases from vendors:
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Stockholders' Equity
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Stockholders' Equity
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Dec. 31, 2012
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| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' Equity |
Note 9 Stockholders’ Equity
On March 5, 2012, the Company entered into a share exchange (the “Reorganization”) with MamaMancini’s, LLC (the “LLC”) whereby the Unit holders of the LLC exchanged all 4,700 Ownership Units outstanding for 15,000,000 shares of Company common stock and 223,404 common stock options. The stock options have an exercise price of $1.00, vest immediately and have a five year expiration term. All equity accounts have been retrospectively recast as a result of the Reorganization.
(A) Common Stock Transactions
2011
The Company issued 638,298 shares for cash proceeds of $200,000 ($3.19/share).
2012
The Company issued 5,054,000 shares for cash proceeds of $5,054,000 ($1.00/share).
(B) Options
The following is a summary of the Company’s option activity:
At December 31, 2012 and 2011, the total intrinsic value of options outstanding and exercisable was $0.
(C) Warrants
The following is a summary of the Company’s warrant activity:
At December 31, 2012 and 2011, the total intrinsic value of warrants outstanding and exercisable was $0. |
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Commitments and Contingencies
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Commitments and Contingencies
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Dec. 31, 2012
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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. However, 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 affect 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, Italian sausage with sauce and other similar Italian meats with 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 this
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 $134,121 and $124,139 of royalty expenses for the years December 31, 2012 and 2011, respectively. Royalty expenses are included in general and administrative expenses on the Statement of Operations.
Agreements with Placement Agents and Finders
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.
Supply Agreement
On October 3, 2011, the Company entered into a five year agreement with a non-related party manufacturer. 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 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.
Under the terms of the agreement, the Company is required to acquire and install production equipment at the manufacturer’s facility to be used solely for the manufacturing of the Company’s products. The manufacturer will bear all costs of operating and maintaining the production equipment during the period in which the manufacturer is manufacturing products pursuant to the agreement. The production equipment shall be owned by the Company.
In March 2012, the agreement was terminated and production equipment held by the manufacturer was returned to the Company. |
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Income Tax Provision
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Income Tax Provision
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12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
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| Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Provision |
Note 11 – Income Tax Provision
Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carryforwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a full valuation allowance.
As of December 31, 2012, the Company has net operating loss carryforwards of approximately $1,762,202. Net operating loss carryforwards expires follows:
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Subsequent Event
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Subsequent Event
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12 Months Ended |
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Dec. 31, 2012
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| Subsequent Events [Abstract] | |
| Subsequent Event |
Note 12 Subsequent Event
Entry Into A Material Definitive Agreement
On January 24, 2013, Mascot Properties, Inc., a Nevada corporation (“Mascot”), Mascot Properties Acquisition Corp, a Delaware corporation and wholly-owned subsidiary of Mascot (“Merger Sub”), MamaMancini’s, Inc., (the “Company”) and David Dreslin, 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 the Company, with the Company surviving as a wholly-owned subsidiary of Mascot (the “Merger”). The transaction (the “Closing”) took place on January 24, 2013 (the “Closing Date”). The Company acquired, through a reverse triangular merger, all of the outstanding capital stock of the Company in exchange for issuing the Company’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 Mascot 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 of common stock, Mascot paid the Majority Shareholder in aggregate of $295,000 and released the other affiliates from certain liabilities. In addition, the Mascot has agreed to spinout to the Majority Shareholder of and all assets related to Mascot’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 Mascot. |
Summary of Significant Accounting Policies (Policies)
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Summary of Significant Accounting Policies (Policies)
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12 Months Ended | ||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||
| Use of Estimates |
Use of estimates
The preparation of 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 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 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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| Reclassifications |
Reclassifications
Certain amounts in the prior year have been reclassified to conform to the current year presentation. |
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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 December 31, 2012 and 2011.
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. At December 31, 2012 and 2011, no cash balances exceeded the federally insured limit. |
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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 December 31, 2012 and 2011, 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 December 31, 2012 and 2011:
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| Depreciation |
Depreciation
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 years ended December 31, 2012 and 2011 were $1,088,964 and $0, respectively. |
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| Research and Development |
Research and Development
Research and development is expensed as incurred. Research and development expenses for the years ended December 31, 2012 and 2011 were $68,372 and $0, 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 and sales discounts 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 years ended December 31, 2012 and 2011 were $1,460,000 and $743,000, 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 Statement of Operations. For the years ended December 31, 2012 and 2011 share based compensation amounted to $438,122 and $0 respectively. The $438,122 recorded for the year ended December 31, 2012 was a direct cost of the stock offering and has been recorded as a reduction in additional paid in capital.
When computing fair value of share based payments, the Company has considered the following variables:
● The risk-free interest rate assumption is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. The risk free rate used had a range of 0.61%-1.01%.
● The Company has not paid any dividends on common stock since its inception and does not anticipate paying dividends on its common stock in the foreseeable future. Therefore the expected dividend rate was $0.
● The expected warrant term is the contractual term of the warrant.
● Given the Company is privately held, expected volatility was benchmarked against similar companies in a similar industry. The expected volatility had a range of 128%-147%. |
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| Earnings Per Share |
Earnings 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 December 31, 2012:
The Company had no potential common stock equivalents at December 31, 2011.
Since the Company reflected a net loss in 2012 and 2011, 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 year 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.
Penalties and interest assessed by income taxing authorities are included in general and administrative expenses. |
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| Recent Accounting Pronouncements |
Recent accounting pronouncements
There are no recent accounting pronouncements that are expected to have an effect on the Company’s financial statements. |
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| Subsequent Events Evaluation |
Subsequent Events Evaluation
The Company has evaluated for any subsequent events through March 29, 2013, which is the date these financial statements were available to be issued. |
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Summary of Significant Accounting Policies (Tables)
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Summary of Significant Accounting Policies (Tables)
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12 Months Ended | ||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
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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 December 31, 2012 and 2011:
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| Schedule of Expenses of Slotting Fees and Sales Discount Accounted for Direct Revenue Reduction |
Expenses such as slotting fees and sales discounts 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 December 31, 2012:
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Property Plant and Equipment (Tables)
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Property Plant and Equipment (Tables)
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12 Months Ended | ||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
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| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||
| Schedule of Property, Plant and Equipment |
Property, plant and equipment on December 31, 2012 and 2011 are as follows:
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Investment in LLC (Tables)
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Investment in LLC (Tables)
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12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Dec. 31, 2012
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Method Investments and Joint Ventures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Financial Information |
Summarized financial information for Meatball Obsession, LLC is as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions (Tables)
|
Related Party Transactions (Tables)
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Dec. 31, 2012
|
|||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||
| Schedule of Amount Due from Manufacturer |
At December 31, 2012 and 2011 the amount due from the Manufacturer is as follows:
|
Concentrations (Tables)
|
Concentrations (Tables)
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Dec. 31, 2012
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risks and Uncertainties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of revenue |
For the years ended December 31, 2012 and 2011, the Company had the following concentrations of revenues with customers:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of accounts receivable |
For the years ended December 31, 2012 and 2011, the Company had the following concentrations of accounts receivable with customers:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of cost of sales |
For the years ended December 31, 2012 and 2011, the Company had the following concentrations of purchases from vendors:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity (Tables)
|
Stockholders' Equity (Tables)
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Dec. 31, 2012
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Option Activity |
The following is a summary of the Company’s option activity:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Option Outstanding and Exercisable |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Warrants Activity |
The following is a summary of the Company’s warrant activity:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Warrants Outstanding and Exercisable |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies (Tables)
|
Commitments and Contingencies (Tables)
|
12 Months Ended | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Dec. 31, 2012
|
|||||||||||||||||||||||||||||||
| 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:
|
||||||||||||||||||||||||||||||
Income Tax Provision (Tables)
|
Income Tax Provision (Tables)
|
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Dec. 31, 2012
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Deferred Tax Assets |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule Of Operating Loss Carryforward |
As of December 31, 2012, the Company has net operating loss carryforwards of approximately $1,762,202. Net operating loss carryforwards expires follows:
|
Nature of Operations and Basis of Presentation (Details Narrative)
|
Nature of Operations and Basis of Presentation (Details Narrative)
|
Dec. 31, 2012
|
Mar. 05, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
|---|---|---|---|---|
| Nature Of Operations And Basis Of Presentation | ||||
| Number of Ownership Units outstanding | 4,700 | |||
| Common stock, shares outstanding | 20,054,000 | 15,000,000 | 15,000,000 | |
| Common stock options outstanding | 223,404 | 223,404 |
Summary of Significant Accounting Policies (Details Narrative)
|
Summary of Significant Accounting Policies (Details Narrative) (USD $)
|
12 Months Ended | |
|---|---|---|
|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
| Accounts receivable reserves | $ 2,000 | $ 2,000 |
| Stock issuance offer cost recorded | 1,088,964 | 0 |
| Research and development expense | 68,372 | |
| Advertising expenses | 1,460,000 | 743,000 |
| Share based compensation | 438,122 | 0 |
| Direct cost of stock offering, reduction in additional paid in capital | 438,122 | |
| Assumption risk-free interest rate of option in effect at the time of the grant minimum | 0.61% | |
| Assumption risk-free interest rate of option in effect at the time of the grant maximum | 1.01% | |
| Expected common stock dividend rate | $ 0 | |
|
Minimum [Member]
|
||
| Machinery and equipment estimated useful lives | 2 years | |
| The expected volatility | 128.00% | |
|
Maximum [Member]
|
||
| Machinery and equipment estimated useful lives | 7 years | |
| The expected volatility | 147.00% | |
Summary of Significant Accounting Policies - Schedule of Inventories (Details)
|
Summary of Significant Accounting Policies - Schedule of Inventories (Details) (USD $)
|
Dec. 31, 2012
|
Dec. 31, 2011
|
|---|---|---|
| Accounting Policies [Abstract] | ||
| Finished goods | $ 76,570 | $ 101,110 |
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 $)
|
12 Months Ended | |
|---|---|---|
|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
| Accounting Policies [Abstract] | ||
| Gross Sales | $ 4,948,254 | $ 3,843,066 |
| Less: Slotting, Discounts, Allowances | 365,409 | 109,004 |
| Net Sales | $ 4,582,845 | $ 3,734,062 |
Summary of Significant Accounting Policies - Schedule of Common Stock Equivalents (Details)
|
Summary of Significant Accounting Policies - Schedule of Common Stock Equivalents (Details)
|
Dec. 31, 2012
|
Mar. 05, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
|---|---|---|---|---|
| Accounting Policies [Abstract] | ||||
| Common stock warrants, exercise price of $1.00 | 505,400 | |||
| Common stock options, exercise price of $1.00 | 223,404 | 223,404 | ||
| Total common stock equivalents | 728,804 |
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 $)
|
12 Months Ended |
|---|---|
|
Dec. 31, 2012
|
|
| Accounting Policies [Abstract] | |
| Common stock warrants, exercise price | $ 1.00 |
| Common stock options, exercise price | $ 1.00 |
Going Concern (Details)
|
Going Concern (Details) (USD $)
|
12 Months Ended | |
|---|---|---|
|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
| Going Concern | ||
| Net loss | $ 1,999,623 | $ 681,728 |
| Net cash used in operations | $ 2,093,214 | $ 945,313 |
Property Plant and Equipment (Details Narrative)
|
Property Plant and Equipment (Details Narrative) (USD $)
|
12 Months Ended | |
|---|---|---|
|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
| Property, Plant and Equipment [Abstract] | ||
| Depreciation expense | $ 12,564 | $ 9,612 |
Schedule of Property Plant and Equipment (Details)
|
Schedule of Property Plant and Equipment (Details) (USD $)
|
Dec. 31, 2012
|
Dec. 31, 2011
|
|---|---|---|
| Property, Plant and Equipment [Abstract] | ||
| Machinery and Equipment | $ 39,627 | $ 29,627 |
| Less: Accumulated Depreciation | 22,176 | 9,612 |
| Property and equipment, net | $ 17,451 | $ 20,015 |
Credit Line (Details Narrative)
|
Credit Line (Details Narrative) (USD $)
|
0 Months Ended | 12 Months Ended | |
|---|---|---|---|
|
Oct. 13, 2010
|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
| Debt Disclosure [Abstract] | |||
| Maximum limit of the notes outstanding balance | $ 1,000,000 | ||
| Expired date of the note | Aug. 31, 2012 | ||
| Extended maturity date of the note | May 01, 2013 | ||
| Variable rate of accrued interest on the outstanding balance | 1.00% | ||
| Interest rate of the debt | 4.50% | 4.50% | |
| Monthly payable interest rate | 4.50% | ||
| Percentage of eligible receivables for which advances are limited | 80.00% | ||
| Percentage of finished goods inventory for which advances are limited | 35.00% | ||
| Maximum limit for inventory advances | 250,000 | ||
| Customers exceeding thirty percent of the accounts receivables excluded from borrowing capacity | 30.00% | ||
| Line of credit, balance outstanding | $ 200,000 | $ 500,000 |
Investment in LLC (Details Narrative)
|
Investment in LLC (Details Narrative) (USD $)
|
0 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
|
Dec. 31, 2011
|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
|
| Advances made to an individual | $ 20,090 | |||
| Percentage of equity interest acquired in business combination | 34.62% | 34.62% | ||
| Total investment in Meatball Obsession, LLC | 27,032 | 27,032 | ||
| Reduction in investment due to losses in affiliates | 0 | |||
| Reduction in ownership interest in affiliates | 28.00% | |||
| Sales revenue | 4,582,845 | 3,734,062 | ||
|
Meatball Obsession, LLC [Member]
|
||||
| Sales revenue | 73,768 | 4,124 | ||
| Accounts receivable | $ 0 | $ 12,680 | $ 0 | |
Summary of Financial Information (Details)
|
Summary of Financial Information (Details) (USD $)
|
12 Months Ended | ||
|---|---|---|---|
|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
|
| Cash | $ 2,008,161 | $ 16,505 | $ 292,774 |
| Accounts receivable | 463,565 | 581,479 | |
| Inventory | 76,570 | 101,110 | |
| Property & equipment | 17,451 | 20,015 | |
| Total Assets | 2,982,081 | 901,351 | |
| Total Current Liabilities | 529,233 | 852,038 | |
| Members' Equity | 2,452,848 | 49,313 | 531,041 |
| Total Liabilities and Members' Equity | 2,982,081 | 901,351 | |
| Expenses | 3,339,532 | 1,885,084 | |
| Net operating loss | (1,987,276) | (647,560) | |
| Other income (expenses) | (12,347) | (34,168) | |
| Net loss | (1,999,623) | (681,728) | |
|
Meatball Obsession, LLC [Member]
|
|||
| Cash | 117,777 | 246,100 | |
| Accounts receivable | 5,234 | ||
| Inventory | 14,935 | ||
| Property & equipment | 75,861 | ||
| Other assets | 60,370 | 32,500 | |
| Total Assets | 274,177 | 278,600 | |
| Accounts payable | 25,731 | ||
| Other current liabilities | 8,354 | ||
| Total Current Liabilities | 34,085 | ||
| Members' Equity | 240,092 | 49,313 | |
| Total Liabilities and Members' Equity | 274,177 | 278,600 | |
| Revenues | 315,493 | ||
| Cost of goods sold | 129,571 | 4,950 | |
| Expenses | 534,961 | 143,772 | |
| Net operating loss | (349,039) | (148,721) | |
| Other income (expenses) | (1,988) | 289 | |
| Net loss | $ (351,027) | $ (148,432) | |
Related Party Transactions (Details Narrative)
|
Related Party Transactions (Details Narrative) (USD $)
|
Dec. 31, 2012
|
Dec. 31, 2011
|
|---|---|---|
| Related Party Transactions [Abstract] | ||
| Deposit in inventory with manufacturer | $ 192,956 | $ 102,860 |
Related Party Transactions - Schedule of Amount Due from Manufacturer (Details)
|
Related Party Transactions - Schedule of Amount Due from Manufacturer (Details) (USD $)
|
12 Months Ended | |
|---|---|---|
|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
| Related Party Transactions [Abstract] | ||
| Customer receipts collected by Manufacturer on behalf of Company | $ 301,447 | $ 42,092 |
| Shared expenses paid by Manufacturer on behalf of the Company | (142,247) | (111,636) |
| Due (to) from Manufacturer | $ 159,200 | $ 69,544 |
Concentrations - Schedule of Revenue (Details)
|
Concentrations - Schedule of Revenue (Details)
|
12 Months Ended | |
|---|---|---|
|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
|
Customer A [Member]
|
||
| Concentrations of Revenues | 15.00% | 10.00% |
|
Customer B [Member]
|
||
| Concentrations of Revenues | 11.00% | 15.00% |
|
Customer C [Member]
|
||
| Concentrations of Revenues | 35.00% | 26.00% |
|
Customer H [Member]
|
||
| Concentrations of Revenues | 14.00% | 16.00% |
Concentrations - Schedule of Accounts Receivable (Details)
|
Concentrations - Schedule of Accounts Receivable (Details)
|
12 Months Ended | |
|---|---|---|
|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
|
Customer A [Member]
|
||
| Concentration of Accounts Receivable | 13.00% | 13.00% |
|
Customer B [Member]
|
||
| Concentration of Accounts Receivable | 30.00% | 11.00% |
|
Customer C [Member]
|
||
| Concentration of Accounts Receivable | 20.00% | 17.00% |
|
Customer D [Member]
|
||
| Concentration of Accounts Receivable | 3.00% | 11.00% |
|
Customer E [Member]
|
||
| Concentration of Accounts Receivable | 0.00% | 11.00% |
|
Customer F [Member]
|
||
| Concentration of Accounts Receivable | 0.00% | 11.00% |
Concentrations - Schedule of Cost of Sales (Details)
|
Concentrations - Schedule of Cost of Sales (Details) (Vendor A [Member])
|
12 Months Ended | |
|---|---|---|
|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
|
Vendor A [Member]
|
||
| Concentration of Cost of Sales | 99.00% | 97.00% |
Stockholders' Equity (Details Narrative)
|
Stockholders' Equity (Details Narrative) (USD $)
|
0 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
|
Mar. 05, 2012
|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
|
| Equity [Abstract] | ||||
| Ownership Units outstanding | 4,700 | |||
| Common stock, shares outstanding | 15,000,000 | |||
| Common stock options outstanding | 223,404 | 223,404 | ||
| Stock options exercise price | $ 1.00 | $ 1.00 | ||
| Options expiration term | 5 years | |||
| Common stock issued for cash, shares | 5,054,000 | 638,298 | ||
| Proceeds from issuance of common stock | $ 5,054,000 | $ 200,000 | ||
| Common stock price per share | $ 1 | $ 3.19 | ||
| Total intrinsic value of options outstanding and exercisable | 0 | 0 | ||
| Total intrinsic value of warrants outstanding and exercisable | $ 0 | $ 0 | ||
Summary of Option Activity (Details)
|
Summary of Option Activity (Details) (USD $)
|
12 Months Ended | ||
|---|---|---|---|
|
Dec. 31, 2012
|
Dec. 31, 2011
|
Mar. 05, 2012
|
|
| Equity [Abstract] | |||
| Options Outstanding, Beginning balance | 223,404 | ||
| Options Exercisable, Begining balance | |||
| Options, Granted | 223,404 | ||
| Options, Exercised | |||
| Options, Forfeited/Cancelled | |||
| Options Outstanding, Ending balance | 223,404 | 223,404 | |
| Options Exercisable, Ending balance | 223,404 | ||
| Options Outstanding, Weighted Average Exercise Price, Beginning balance | |||
| Options Exercisable, Weighted Average Exercise Price, Beginning balance | $ 1.00 | ||
| Weighted Average Exercise Price, Granted | $ 1.00 | ||
| Weighted Average Exercise Price, Exercised | |||
| Weighted Average Exercise Price, Forfeited/Cancelled | |||
| Options Outstanding, Weighted Average Exercise Price, Ending balance | $ 1.00 | ||
| Options Exercisable, Weighted Average Exercise Price, Ending balance | $ 1.00 | $ 1.00 | |
Summary of Option Outstanding and Exercisable (Details)
|
Summary of Option Outstanding and Exercisable (Details) (USD $)
|
12 Months Ended | |||
|---|---|---|---|---|
|
Dec. 31, 2012
|
Mar. 05, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
|
| Equity [Abstract] | ||||
| Range of Exercise Price | $ 1.00 | |||
| Number of Options Outstanding | 223,404 | 223,404 | ||
| Weighted Average Remaining Contractual Life (in Years) | 4 years 2 months 5 days | |||
| Weighted Average Exercise Price, Options Outstanding | $ 1.00 | |||
| Number of Options Exercisable | 223,404 | |||
| Weighted Average Exercise Price, Options Exercisable | $ 1.00 | $ 1.00 |
Schedule of Warrants Activity (Details)
Schedule of Warrants Outstanding and Exercisable (Details)
|
Schedule of Warrants Outstanding and Exercisable (Details) (USD $)
|
12 Months Ended |
|---|---|
|
Dec. 31, 2012
|
|
| Equity [Abstract] | |
| Range of Exercise Price | $ 1.00 |
| Number of Warrants Outstanding | 505,400 |
| Weighted Average Remaining Contractual Life (in Years) | 4 years 6 months 15 days |
| Weighted Average Exercise Price, Warrants Outstanding | $ 1.00 |
| Number of Warrants Exercisable | 505,400 |
| Weighted Average Exercise Price, Warrants Exercisable | $ 1.00 |
Commitments and Contingencies (Details Narrative)
|
Commitments and Contingencies (Details Narrative) (USD $)
|
12 Months Ended | |
|---|---|---|
|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
| Royalty expenses | $ 134,121 | $ 124,139 |
| Proceeds form private placements | 6,000,000 | |
| Percentage of fee equal to aggregate gross proceeds | 10.00% | |
| Percentage of common stock issuable | 10.00% | |
| Payment of maximum amount paid for consideration of expenses incurred by Spartan | 40,000 | |
| Spartan fee paid amount | 505,400 | |
| Warrants Remaining Contractual Life | 5 years | |
| Warrants exercise price | $ 1.00 | |
|
Year 1 [Member]
|
||
| Percentage of royalty rate on net sales | 6.00% | |
| Royalty net sales | 500,000 | |
|
Year 2 [Member]
|
||
| Percentage of royalty rate on net sales | 4.00% | |
| Royalty net sales | 500,000 | |
|
Year 2 [Member] | Maximum [Member]
|
||
| Royalty net sales | 2,500,000 | |
|
Year 3 [Member]
|
||
| Percentage of royalty rate on net sales | 2.00% | |
| Royalty net sales | 2,500,000 | |
|
Year 3 [Member] | Maximum [Member]
|
||
| Royalty net sales | 20,000,000 | |
|
Year 4 [Member]
|
||
| Percentage of royalty rate on net sales | 1.00% | |
| Royalty net sales | $ 20,000,000 | |
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 $)
|
Dec. 31, 2012
|
|---|---|
|
Agreement Year 1st and 2nd [Member]
|
|
| Minimum Royalty to be Paid with Respect to Such Agreement Year | |
|
Agreement Year 3rd and 4th [Member]
|
|
| Minimum Royalty to be Paid with Respect to Such Agreement Year | 50,000 |
|
Agreement Year 5th, 6th and 7th [Member]
|
|
| Minimum Royalty to be Paid with Respect to Such Agreement Year | 75,000 |
|
Agreement Year 8th and 9th [Member]
|
|
| Minimum Royalty to be Paid with Respect to Such Agreement Year | 100,000 |
|
Agreement Year 10th and thereafter [Member]
|
|
| Minimum Royalty to be Paid with Respect to Such Agreement Year | $ 125,000 |
Income Tax Provision (Details Narrative)
|
Income Tax Provision (Details Narrative) (USD $)
|
Dec. 31, 2012
|
|---|---|
| Income Tax Disclosure [Abstract] | |
| Net operating loss carryforward | $ 1,762,202 |
Income Tax Provision - Schedule of Deferred Tax Assets (Details)
|
Income Tax Provision - Schedule of Deferred Tax Assets (Details) (USD $)
|
12 Months Ended | |
|---|---|---|
|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
| Income Tax Disclosure [Abstract] | ||
| Net operating tax carry forwards | $ 1,762,202 | $ 0 |
| Tax rate | 34.00% | 34.00% |
| Gross deferred tax assets | 599,149 | 0 |
| Valuation allowance | (599,149) | 0 |
| Net deferred tax assets | $ 0 | $ 0 |
Income Tax Provision - Schedule of Operating Loss Carryforward (Details)
|
Income Tax Provision - Schedule of Operating Loss Carryforward (Details) (USD $)
|
12 Months Ended |
|---|---|
|
Dec. 31, 2012
|
|
| Income Tax Disclosure [Abstract] | |
| Net operating loss expiration dates | December 31, 2032 |
| Net operating loss carryforward | $ 1,762,202 |
Subsequent Event (Details Narrative)
|
Subsequent Event (Details Narrative) (USD $)
|
0 Months Ended |
|---|---|
|
Jan. 24, 2013
|
|
| Subsequent Events [Abstract] | |
| Shares issued for acquisitions | 20,054,000 |
| Number of common stock cancelled | 103,408,000 |
| Stock repurchased value | $ 295,000 |