0001553350-19-000809.txt : 20190813 0001553350-19-000809.hdr.sgml : 20190813 20190813164635 ACCESSION NUMBER: 0001553350-19-000809 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 50 CONFORMED PERIOD OF REPORT: 20190630 FILED AS OF DATE: 20190813 DATE AS OF CHANGE: 20190813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GelTech Solutions, Inc. CENTRAL INDEX KEY: 0001403676 STANDARD INDUSTRIAL CLASSIFICATION: PLASTIC MATERIAL, SYNTH RESIN/RUBBER, CELLULOS (NO GLASS) [2820] IRS NUMBER: 562600575 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-52993 FILM NUMBER: 191021332 BUSINESS ADDRESS: STREET 1: 1460 PARK LANE SOUTH STREET 2: SUITE 1 CITY: JUPITER STATE: FL ZIP: 33458 BUSINESS PHONE: 561-427-6144 MAIL ADDRESS: STREET 1: 1460 PARK LANE SOUTH STREET 2: SUITE 1 CITY: JUPITER STATE: FL ZIP: 33458 10-Q 1 gltc_10q.htm QUARTERLY REPORT Quarterly Report

 



 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q


þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019


OR


o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________


Commission file number 0-52993


GelTech Solutions, Inc.

(Exact name of registrant as specified in its charter)


Delaware

  

56-2600575

(State or other jurisdiction of

  

(I.R.S. Employer

incorporation or organization)

  

Identification No.)

  

  

  

1460 Park Lane South, Suite 1, Jupiter, Florida

  

33458

(Address of principal executive offices)

  

(Zip Code)

 

Registrant’s telephone number, including area code: (561) 427-6144


____________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)


Securities registered pursuant to Section 12(b) of the Act: None


Title of each class

Trading Symbol(s)

Name of each exchange on which registered

 

 

 


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  þ    No  o

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  þ    No  o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer   ¨

Accelerated filer   ¨

Non-accelerated filer     þ

Smaller reporting company  þ

 

Emerging growth company  ¨


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o    No  þ



Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.

 

Class

  

Outstanding at August 13, 2019

Common Stock, $0.001 par value per share

  

112,941,589 shares

 

 




 



Table of Contents

 

 

PART I – FINANCIAL INFORMATION

 

                             

 

                             

ITEM 1.

CONSOLIDATED FINANCIAL STATEMENTS.

1

 

 

 

 

Consolidated Balance Sheets as of June 30, 2019 (Unaudited) and December 31, 2018

1

 

 

 

 

Consolidated Statements of Operations for the three and six months ended June 30, 2019 and 2018 (Unaudited)

2

 

 

 

 

Consolidated Statements of Changes in Stockholders’ Deficit for the three and six months ended June 30, 2019 and 2018

3

 

 

 

 

Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018 (Unaudited)

4

 

 

 

 

Condensed Notes to Consolidated Financial Statements (Unaudited)

6

 

 

 

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

15

 

 

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

21

 

 

 

ITEM 4.

CONTROLS AND PROCEDURES.

21

 

 

 

 

PART II – OTHER INFORMATION

 

 

 

 

ITEM 1.

LEGAL PROCEEDINGS.

22

 

 

 

ITEM 1A.

RISK FACTORS.

22

 

 

 

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

22

 

 

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

22

 

 

 

ITEM 4.

MINE SAFETY DISCLOSURES.

22

 

 

 

ITEM 5.

OTHER INFORMATION.

22

 

 

 

ITEM 6.

EXHIBITS.

22

 

 

 

SIGNATURES

 

23

 



  





 


 

PART I – FINANCIAL INFORMATION

 

ITEM 1. 

CONSOLIDATED FINANCIAL STATEMENTS.

 

GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


 

 

As of

June 30

 

 

As of

December 31,

 

 

 

2019

 

 

2018

 

 

 

(Unaudited)

 

 

 

 

ASSETS

  

                         

  

  

                         

  

 

 

 

 

 

 

 

Cash

 

$

382,778

 

 

$

69,809

 

Accounts receivable trade, net

 

 

118,845

 

 

 

112,816

 

Inventories

 

 

599,815

 

 

 

661,178

 

Prepaid expenses and other current assets

 

 

151,593

 

 

 

207,297

 

Total current assets

 

 

1,253,031

 

 

 

1,051,100

 

 

 

 

 

 

 

 

 

 

Furniture, fixtures and equipment, net

 

 

125,228

 

 

 

122,199

 

Operating lease right of use assets

 

 

16,771

 

 

 

29,349

 

Inventory not expected to be realized within one year

 

 

1,397,584

 

 

 

1,298,236

 

Deposits

 

 

18,336

 

 

 

18,336

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

2,810,950

 

 

$

2,519,220

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

213,335

 

 

$

176,257

 

Accrued expenses

 

 

367,761

 

 

 

276,465

 

Customer deposit

 

 

721

 

 

 

721

 

Operating lease liability – current portion

 

 

16,771

 

 

 

 

Insurance premium finance contract

 

 

12,891

 

 

 

63,249

 

Total current liabilities

 

 

611,479

 

 

 

516,692

 

Operating lease liability

 

 

 

 

 

30,071

 

Note payable – related party

 

 

500,000

 

 

 

 

 

Convertible notes - related party, net of discounts

 

 

984,537

 

 

 

979,448

 

Convertible line of credit – related party, net of discounts

 

 

3,189,873

 

 

 

3,122,367

 

Total liabilities

 

 

5,285,889

 

 

 

4,648,578

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ deficit

 

 

 

 

 

 

 

 

Preferred stock: $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding

 

 

 

 

 

 

Common stock: $0.001 par value; 200,000,000 shares authorized; 112,937,952 and 103,651,791 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively.

 

 

112,938

 

 

 

103,652

 

Additional paid in capital

 

 

55,577,157

 

 

 

53,900,638

 

Accumulated deficit

 

 

(58,165,034

)

 

 

(56,133,648

)

Total stockholders' deficit

 

 

(2,474,939

)

 

 

(2,129,358

)

 

 

 

 

 

 

 

 

 

 

 

$

2,810,950

 

 

$

2,519,220

 



The accompanying condensed notes are an integral part of these unaudited consolidated financial statements. 



1



 


GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


 

 

For the

Three Months Ended

June 30,

 

 

For the

Six Months Ended

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

     

                        

   

  

                        

   

  

                        

   

  

                        

 

Sales

 

$

315,570

 

 

$

397,557

 

 

$

489,774

 

 

$

660,436

 

Cost of goods sold

 

 

152,389

 

 

 

124,399

 

 

 

245,310

 

 

 

205,597

 

Gross profit

 

 

163,181

 

 

 

273,158

 

 

 

244,464

 

 

 

454,839

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

1,022,273

 

 

 

1,136,408

 

 

 

2,009,596

 

 

 

2,141,299

 

Research and development

 

 

62,487

 

 

 

17,735

 

 

 

82,481

 

 

 

33,561

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

1,084,760

 

 

 

1,154,143

 

 

 

2,092,077

 

 

 

2,174,860

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(921,579

)

 

 

(880,985

)

 

 

(1,847,613

)

 

 

(1,720,021

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

9

 

 

 

3

 

 

 

9

 

 

 

3

 

Interest expense

 

 

(91,907

)

 

 

(179,816

)

 

 

(183,782

)

 

 

(357,323

)

Total other income (expense)

 

 

(91,898

)

 

 

(179,813

)

 

 

(183,773

)

 

 

(357,320

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(1,013,477

)

 

$

(1,060,798

)

 

$

(2,031,386

)

 

$

(2,077,341

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share - basic and diluted

 

$

(0.01

)

 

$

(0.01

)

 

$

(0.02

)

 

$

(0.03

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic and diluted

 

 

110,995,929

 

 

 

85,388,588

 

 

 

108,404,319

 

 

 

81,803,910

 



The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.





2



 


GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

FOR THE ThSIX MONTHS ENDED JUNE 30, 2019 AND 2018

(Unaudited)


 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Paid In

 

 

Accumulated

 

 

 

 

 

 

Shares

 

 

Par Value

 

 

Capital

 

 

Deficit

 

 

Total

 

 

  

                       

  

  

                       

  

  

                       

  

  

                       

  

  

                       

  

Balance December 31, 2017

 

 

74,914,703

 

 

$

74,915

 

 

$

47,285,967

 

 

$

(52,119,691

)

 

$

(4,758,809

)

Common stock and warrants issued for cash

 

 

5,938,450

 

 

 

5,938

 

 

 

894,062

 

 

 

 

 

 

900,000

 

Common stock issued for cash

 

 

125,000

 

 

 

125

 

 

 

19,875

 

 

 

 

 

 

20,000

 

Common stock issued for services

 

 

16,767

 

 

 

17

 

 

 

2,883

 

 

 

 

 

 

2,900

 

Options issued for services

 

 

 

 

 

 

 

 

15,572

 

 

 

 

 

 

15,572

 

Options and warrants vested

 

 

 

 

 

 

 

 

48,108

 

 

 

 

 

 

48,108

 

Net loss for the three months ended March 31, 2018

 

 

 

 

 

 

 

 

 

 

 

(1,016,543

)

 

 

(1,016,543

)

Balance March 31, 2018

 

 

80,994,920

 

 

 

80,995

 

 

 

48,266,467

 

 

 

(53,136,234

)

 

 

(4,788,772

)

Common stock and warrants issued for cash

 

 

2,732,083

 

 

 

2,732

 

 

 

622,268

 

 

 

 

 

 

625,000

 

Common stock issued for cash

 

 

312,394

 

 

 

312

 

 

 

63,688

 

 

 

 

 

 

64,000

 

Common stock issued for services

 

 

5,945

 

 

 

6

 

 

 

894

 

 

 

 

 

 

900

 

Common stock issued for interest

 

 

3,249,348

 

 

 

3,249

 

 

 

716,382

 

 

 

 

 

 

719,631

 

Options and warrants vested

 

 

 

 

 

 

 

 

50,886

 

 

 

 

 

 

50,886

 

Net loss for the three months ended June 30, 2018

 

 

 

 

 

 

 

 

 

 

 

(1,060,798

)

 

 

(1,060,798

)

Balance June 30, 2018

 

 

87,294,690

 

 

$

87,295

 

 

$

49,720,584

 

 

$

(54,197,032

)

 

$

(4,389,153

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2018

 

 

103,651,791

 

 

$

103,652

 

 

$

53,900,638

 

 

$

(56,133,648

)

 

$

(2,129,358

)

Common stock and warrants issued for cash

 

 

4,896,466

 

 

 

4,896

 

 

 

895,104

 

 

 

 

 

 

900,000

 

Common stock issued for services and commissions

 

 

19,754

 

 

 

20

 

 

 

3,428

 

 

 

 

 

 

3,448

 

Options and warrants vesting

 

 

 

 

 

 

 

 

50,714

 

 

 

 

 

 

50,714

 

Options issued for services

 

 

 

 

 

 

 

 

17,614

 

 

 

 

 

 

17,614

 

Net loss for the three months ended March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

(1,017,909)

 

 

 

(1,017,909

)

Balance March 31, 2019

 

 

108,568,011

 

 

 

108,568

 

 

 

54,867,498

 

 

 

(57,151,557

)

 

 

(2,175,491

)

Common stock and warrants issued for cash

 

 

4,358,698

 

 

 

4,359

 

 

 

670,641

 

 

 

 

 

 

675,000

 

Common stock issued for services and commissions

 

 

11,243

 

 

 

11

 

 

 

1,958

 

 

 

 

 

 

1,969

 

Options and warrants vested

 

 

 

 

 

 

 

 

37,060

 

 

 

 

 

 

37,060

 

Net loss for the three months ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

(1,013,477

)

 

 

(1,013,477

)

Balance June 30, 2019

 

 

112,937,952

 

 

$

112,938

 

 

$

55,577,157

 

 

$

(58,165,034

)

 

$

(2,474,939

)


The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.




3



 


GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


 

 

For the Six Months Ended

June 30,

 

 

 

2019

 

 

2018

 

Cash Flows from Operating Activities

  

                         

  

  

                         

  

Reconciliation of net loss to net cash used in operating activities:

 

 

 

 

 

 

Net loss

 

$

(2,031,386

)

 

$

(2,077,341

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Bad debt expense

 

 

1,572

 

 

 

10,653

 

Depreciation

 

 

37,065

 

 

 

44,982

 

Amortization of right of use assets

 

 

 

 

 

8,385

 

Amortization of debt discounts

 

 

72,595

 

 

 

98,639

 

Stock issued for services and commissions

 

 

5,417

 

 

 

3,800

 

Options issued for services

 

 

17,614

 

 

 

15,572

 

Employee stock option compensation expense

 

 

87,774

 

 

 

98,994

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(7,601

)

 

 

(168,559

)

Inventories

 

 

(37,985

)

 

 

(33,117

)

Prepaid expenses and other current assets

 

 

55,704

 

 

 

70,513

 

Other assets

 

 

 

 

 

(2,250

)

Accounts payable

 

 

37,078

 

 

 

111,780

 

Accrued expenses

 

 

91,296

 

 

 

300,431

 

Operating lease liability

 

 

(722

)

 

 

(8,135

)

Customer deposits

 

 

 

 

 

721

 

Net cash used in operating activities

 

 

(1,671,579

)

 

 

(1,524,932

)

 

 

 

 

 

 

 

 

 

Cash flows from Investing Activities

 

 

 

 

 

 

 

 

Purchases of equipment

 

 

(40,094

)

 

 

(5,067

)

Net cash used in investing activities

 

 

(40,094

)

 

 

(5,067

)

 

 

 

 

 

 

 

 

 

Cash flows from Financing Activities

 

 

 

 

 

 

 

 

Proceeds from sale of stock and warrants

 

 

1,575,000

 

 

 

1,525,000

 

Proceeds from note payable – related party

 

 

500,000

 

 

 

 

Proceeds from sale of stock

 

 

 

 

 

84,000

 

Payments on insurance finance contract

 

 

(50,358

)

 

 

(53,398

)

Net cash provided by financing activities

 

 

2,024,642

 

 

 

1,555,602

 

 

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

 

312,969

 

 

 

25,603

 

Cash and cash equivalents - beginning

 

 

69,809

 

 

 

43,888

 

Cash and cash equivalents - ending

 

$

382,778

 

 

$

69,491

 



The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.


Continued



4



 


GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(UNAUDITED)


 

 

For the Six Months Ended

June 30,

 

 

 

2019

 

 

2018

 

Supplemental Disclosure of Cash Flow Information:

  

                         

  

  

                         

  

Cash paid for interest

 

$

1,753

 

 

$

1,382

 

Cash paid for income taxes

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

Supplementary Disclosure of Non-cash Investing and Financing Activities:

 

 

 

 

 

 

 

 

Operating lease right of use assets and lease obligation

 

$

 

 

$

50,313

 

Stock issued for accrued interest

 

$

 

 

$

719,631

 

Stock options granted for prepaid services

 

$

17,614

 

 

$

15,572

 



The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.





5



 


GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2019

(Unaudited)


NOTE 1 Organization and Basis of Presentation


Organization


GelTech Solutions, Inc., or GelTech or the Company, generates revenue primarily from marketing products based around the following four product categories (1) the FireIce® family of products including FireIce® Pro and FireIce® 561, water enhancing powders that can be utilized both as a fire suppressant in urban firefighting, including fires in underground utility structures, and in wildland firefighting and as a medium-term fire retardant to protect wildlands, structures and firefighters; FireIce® XT and FireIce® ST, wet mixed suppressants for extinguishers and fire suppression systems and our new addition, FireIce® Polar Eco-Foam, an environmentally friendly Class A foam (2) FireIce Shield®, a line of products used in industry by manufacturers, plumbers, and welders, and by police departments and first responders to protect assets from fire; (3) SoilDust Control, our application which is used for dust mitigation in the aggregate, road construction and mining SoilO® Soil Cap, a dust suppressant technology designed to stabilize stockpile dust and reduce soil erosion, and (4) SoilO®, a product which reduces the use of water and is primarily marketed to golf courses and commercial landscapers.


The Company also markets equipment that is used to apply these primary products including (1) Emergency Manhole FireIce Delivery System, or EMFIDS, an innovative system designed to deliver FireIce® into a manhole in the event of a fire or explosion, (2) FireIce® Home Defense Unit, a system for applying FireIce® to structures to protect them from wildfires and (3) the FireIce Shield CTP System, a mobile spray unit that can be used to protect communication tower electronics during hot work.


Our unaudited condensed consolidated financial statements have been prepared on a going concern basis, and we need to generate sufficient material revenues to support the ongoing business of GelTech (See Note 2).


The corporate office is located in Jupiter, Florida and we also have an office in Niwot, Colorado to support our Wildland operations.


Basis of Presentation and Principles of Consolidation


The accompanying unaudited consolidated financial statements include the accounts of the Company and its three wholly-owned subsidiaries: FireIce Gel, Inc., GelTech International, Inc. and Weather Tech Innovations, Inc. There has been no activity in FireIce Gel, Inc., Weather Tech Innovations, Inc. and GelTech International, Inc.  


These unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by "GAAP" for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The information included in these unaudited consolidated interim financial statements should be read in conjunction with Management’s Discussion and Analysis of Financial Conditions and Results of Operations contained in this report and the audited consolidated financial statements and accompanying notes included in the Company’s Report on Form 10-K for the year ended December 31, 2018 filed on March 28, 2019.


Inventories


Inventories as of June 30, 2019 consisted of raw materials and finished goods in the amounts of $1,368,652 and $628,747, respectively. As of June 30, 2019, the Company estimated that raw materials and finished goods in the amount $1,397,584 would most likely not be consumed in the next twelve months and therefore reclassified that amount to long term inventory in the unaudited consolidated balance sheet. As of June 30, 2019, the Company had approximately $61,399 of consignment inventory held by customers consisting primarily of FireIce 561, FireIce Pro, FireIce HVOF, HDU Wands and Eductors.





6



GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2019

(Unaudited)



Use of Estimates


The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management believes that the estimates utilized in preparing its consolidated financial statements are reasonable; however, actual results could differ materially from these estimates. Significant estimates for the six months ended June 30, 2019 include the allowance for doubtful accounts, depreciation and amortization, valuation and classification of inventories, valuation of options granted for services, valuation of common stock granted for services or debt conversion and the valuation of deferred tax assets.


Revenue Recognition


On January 1, 2018, we adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) Topic 605, Revenue Recognition. The Company used the modified prospective method upon adoption of the ASU. Our adoption of this ASU resulted in no cumulative effect adjustment.


The revenue that we recognize arises from purchase orders we receive from our customers. Our performance obligations under the purchase orders correspond to each shipment of product that we make to our customer under the purchase order. As a result, each purchase order generally contains more than one performance obligation based on the number of products ordered, the quantity of product to be shipped and the mode of shipment requested by the customer. Control of our products transfers to our customers when the customer is able to direct the use of, and obtain substantially all of the benefits from, our products, which generally occurs at the later of when the customer obtains title to our product or when the customer assumes risk of loss of our product. The transfer of control generally occurs at a point of shipment from either our warehouse or our third-party fulfillment centers. Once this occurs, we have satisfied our performance obligation and we recognize revenue.


When we receive a purchase order from a customer, we are obligated to provide the product during a mutually agreed upon time period. Depending on the terms of the purchase order, either we or the customer arranges delivery of the product to the customer’s intended destination. In situations where we have agreed to arrange delivery of the product to the customer’s intended destination and control of the product transfers upon loading of our product onto transportation equipment, we have elected to account for any freight income associated with the delivery of these products as freight revenue, since this activity fulfills our obligation to transfer the product to the customer.


Transaction Price


We agree with our customers on the selling price of each transaction. This transaction price is generally based on the product, market conditions, including supply and demand balances and freight. In our contracts with customers, we allocate the entire transaction price to the sale of product to the customer, which is the basis for the determination of the relative standalone selling price allocated to each performance obligation. Returns of our product by our customers are permitted only when the product is not to specification and were not material for the six months ended June 30, 2019. Any sales tax, value added tax, and other tax we collect concurrently with our revenue-producing activities are excluded from revenue. Our revenues for FireIce, SoilO and SoilO Dust Control are seasonal in nature with our peak seasons occurring in the second and third quarters. Revenues from the sales of FireIce Shield are less seasonal.


Leases


In connection with entering into a new lease agreement for our Wildland operations in Colorado in February 2018, the Company elected to early adopt the provisions of ASU 2016-02, Leases. As such, the Company recorded an operating lease right of use asset and an operating lease liability as of March 31, 2018. As of June 30, 2019, the entire balance of the lease liability has been reflected as a current liability.




7



GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2019

(Unaudited)



Net Earnings (Loss) per Share


The Company computes net earnings (loss) per share in accordance with ASC 260-10, “Earnings per Share.” ASC 260-10 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period. The Company’s diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. At June 30, 2019, there were options to purchase 14,581,696 shares of the Company’s common stock, warrants to purchase 17,837,782 shares of the Company’s common stock and 9,134,594 shares of the Company’s common stock are reserved for convertible notes which may dilute future earnings per share.


Stock-Based Compensation


The Company accounts for stock-based compensation in accordance with ASC 718-10 “Compensation – Stock Compensation” which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options, restricted stock units, and stock appreciation rights are based on estimated fair values. Given the absence of adequate historical data, the Company uses the Simplified Method to estimate the term of options granted to employees and directors.


Effective January 1, 2019, the Company adopted ASU 2018-07 “Compensation – Stock Compensation (Topic718), Improvements to Nonemployee Share-Based Payment Accounting” which modified the accounting for non-employee stock-based compensation. This standard requires the measurement and recognition of compensation expense for all share-based payment awards made to non-employees based on estimated fair values using the same method as for employees. The adoption resulted in no cumulative effect on the Company’s retained earnings on the adoption date.


Determining Fair Value Under ASC 718-10


The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing formula. This fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. The Company’s determination of fair value using an option-pricing model is affected by the stock price as well as assumptions regarding the number of highly subjective variables.


The Company estimates volatility based upon the historical stock price of the Company and estimates the expected term for employee stock options using the simplified method for employees and directors and the contractual term for non-employees. The risk-free rate is determined based upon the prevailing rate of United States Treasury securities with similar maturities.


The fair values of stock options and warrants granted during the period from January 1, 2019 to June 30, 2019 were estimated using the following assumptions:


Risk free interest rate

 

1.88% - 2.59%

Expected term (in years)

 

2.5 - 5.0

Dividend yield

 

––

Volatility of common stock

 

74.85% - 79.98%

Estimated annual forfeitures

 

––


New Accounting Pronouncements


No Accounting Standards Updates (ASUs) which were not effective until after June 30, 2019 are expected to have a significant effect on the Company's consolidated financial position or results of operations.

 



8



GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2019

(Unaudited)



NOTE 2 – Going Concern


These unaudited condensed consolidated financial statements have been prepared on a going concern basis, which assumes the Company will continue to realize it assets and discharge its liabilities in the normal course of business.  As of June 30, 2019, the Company had an accumulated deficit and stockholders’ deficit of $58,165,034 and $2,474,939, respectively, and incurred losses from operations and net losses of $1,847,613 and $2,031,386, respectively, for the six months ended June 30, 2019 and used cash in operations of $1,671,579 during the six months ended June 30, 2019.  In addition, the Company has not yet generated revenue sufficient to support ongoing operations. Management believes these factors raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of twelve months from the filing date of this report. These unaudited condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.


During the six months ended June 30, 2019, the Company received $1,575,000 from private placements with two accredited investors, including $675,000 from its chairman and principal shareholder and $900,000 from a director, an accredited investor who is also a significant shareholder.  In addition, the Company received $500,000 from its chairman and principal shareholder in exchange for promissory note.


Management believes that additional funding from its chairman and principal shareholder, our other significant shareholder and the revenue prospects from the Wildland industry provide the opportunity for the Company to continue as a going concern.  Ultimately, the continuation of the Company as a going concern is dependent upon the ability of the Company to generate sufficient revenue to attain profitable operations.


NOTE 3 – Secured Convertible Note Agreements – Related Party


The Company currently has three debt facilities outstanding, all of them held by its chairman and principal shareholder.


One convertible note in the amount of $1,000,000 dated July 11, 2013 related to a new funding on that date. The note bore annual interest of 7.5%, was convertible at $1.00 per share and was due July 10, 2018. In connection with the note, the Company issued five–year warrants to purchase 500,000 shares of common stock at an exercise price of $1.30 per share. On February 12, 2015, this note was modified by securing the note with all the assets of the Company, by extending the due date of the note from July 10, 2018 to December 31, 2020 and by reducing the conversion rate of the note from $1.00 to $0.35 per share. The modification was accounted for as a debt extinguishment in accordance with ASC 470. In connection with the modification, the Company recorded a note discount of $60,390, related to the relative fair value of the warrants attached to the note. For the six months ended June 30, 2019, the Company recorded interest expense of $5,089 related to the amortization of the note discounts related to the warrants. As of June 30, 2019, the balance of the unamortized discount related to the warrants was $15,463. As of June 30, 2019, the principal balance on this note is $1,000,000 and accrued interest amounted to $69,315.


In connection with the February 2015 debt modifications described above, the Company entered into a Secured Revolving Convertible Line of Credit Agreement (the “Notes”) for up to $4 million with its chairman and principal shareholder. On April 8, 2016, the Company and its chairman and principal shareholder entered into the First Amendment to Secured Revolving Convertible Promissory Note Agreement increasing the credit facility from $4 million to $5 million. On September 27, 2016, the Company and its chairman and principal shareholder entered into the Second Amendment to Secured Revolving Convertible Promissory Note Agreement increasing the credit facility from $5 million to $6 million. Under the agreements, the Company may, with the prior approval of its chairman and principal shareholder, receive advances under the secured convertible line of credit. Each advance bears an annual interest rate of 7.5%, is due December 31, 2020 and is convertible at the rate equal to the closing price of the Company’s common stock on the day prior to the date the parties agree to the advance. In addition, the Company will issue the Company’s chairman and principal shareholder two-year warrants to purchase shares of common stock at an exercise price of $2.00 per share. The number of warrants issued equals 50% of the number of shares issuable upon the conversion of the related advance.




9



GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2019

(Unaudited)



In July 2018, the Company issued 9,379,473 shares of common stock to its chairman and principal shareholder upon the conversion of $2.5 million of the Notes. The Notes were converted at prices ranging from $0.21 to $0.35 per share. No gain or loss was recorded relating to the fair value of the shares exchanged because the debt was converted based upon the contractual terms of the Notes. In addition to the conversion, the Company’s chairman, CEO and principal shareholder agreed to reduce the annual interest rate on the remaining Notes and a $1 million Secured Convertible Promissory Note from 7.5% to 5.0%. The remaining Notes are convertible at prices ranging from $0.35 to $0.82 per share.  Because the change in interest rates did not significantly affect the present value of the remaining debt it has been treated as a debt modification.


During the six months ended June 30, 2019, the Company has recognized interest expense of $67,506 related to the amortization of loan discounts. As of June 30, 2019, the principal balance of the advances was $3,395,000 and the balance of the unamortized discounts related to the warrants and the beneficial conversion feature was $102,564 and $102,564, respectively. Accrued interest on the advances amounted to $287,722 as of June 30, 2019.


On June 18, 2019, the Company received $500,000 from its Chairman and principal shareholder in exchange for a $500,000 secured promissory note bearing interest of LIBOR plus 2%, not to exceed 7%, payable quarterly with principal due June 30, 2022.  For the six months ended June 30, 2019, the Company recognized interest expense of $724 related to this note.  As of June 30, 2019, the principal balance of the note was $500,000 and the accrued interest was $724.


A summary of notes payable and related discounts as of June 30, 2019 is as follows:


 

 

Principal

 

 

Unamortized

Discount

 

 

Debt,

Net of Discount

 

 

 

 

 

 

 

 

 

 

 

Related parties

 

 

 

 

 

 

 

 

 

Secured Convertible notes payable

 

$

1,000,000

 

 

$

(15,463

)

 

$

984,537

 

Secured Convertible Line of Credit

 

 

3,395,000

 

 

 

(205,127

)

 

 

3,189,873

 

Secured promissory note payable

 

 

500,000

 

 

 

 

 

 

500,000

 

Less current portion

 

 

 

 

 

 

 

 

 

Secured convertible notes payable and line of credit, net of current portion

 

$

4,895,000

 

 

$

(220,590

)

 

$

4,674,410

 


NOTE 4 – Stockholders’ Deficit


Preferred Stock


The Company has authorized 5,000,000 shares of preferred stock, par value $0.001 per share with such rights, preferences and limitation as may be set from time to time by resolution of the board of directors and the filing of a certificate of designation as required by Delaware General Corporation Law.


Common Stock


The Company has authorized 200,000,000 shares of $0.001 par value common stock.


During the six months ended June 30, 2019, the Company issued 9,255,164 shares of common stock and two-year warrants to purchase 4,627,582 shares of common stock with an exercise price of $2.00 per share to two accredited investors in exchange for $1,575,000 including the issuance of 3,911,766 shares of common stock and 1,955,883 warrants to the Company’s chairman and principal shareholder in exchange for $675,000.


During the three months ended March 31, 2019, the Company issued 4,762 shares of common stock to consultants in exchange for consulting services rendered valued at $900, based upon the $0.189 quoted price per share of our common shares at the grant date.


During the six months ended June 30, 2019, the Company issued 22,598 shares of common stock in payment of commissions in the amount of $3,917, based upon the fair market value of the common shares.




10



GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2019

(Unaudited)



During the three months ended June 30, 2019, the Company issued 3,637 shares of common stock in connection with the exercise of options by a consultant with an exercise price of $0.165 per share.


Stock-Based Compensation


Stock-based compensation expense recognized under ASC 718-10 for the period January 1, 2019 to June 30, 2019, was $86,958 for stock options granted to employees and directors. This expense is included in selling, general and administrative expenses in the unaudited consolidated statements of operations. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. At June 30, 2019, the total compensation cost for stock options not yet recognized was approximately $8,015. This cost will be recognized over the remaining vesting term of the options of approximately one year.


Stock-based awards granted to non-employees, in the form of options to purchase the Company’s common stock, are valued at the grant date at fair value in accordance ASU 2018-07 “Compensation – Stock Compensation (Topic718), Improvements to Nonemployee Share-Based Payment Accounting” which modified the accounting for non-employee stock-based compensation in accordance with ASC 505-50-25, “Equity Based Payments to Non-Employees,” that requires the measurement and recognition of compensation expense for all share-based payment awards made to non-employees based on estimated fair values. Stock based compensation to non-employees recognized for the six months ended June 30, 2019 was $816.


During the three months ended March 31, 2019, the Company granted five-year options to purchase 150,000 shares of common stock at an exercise price of $0.18 per share to our Vice President of Industrial Services. The options were valued on the grant date with the Black-Scholes option pricing model using a volatility of 79.98% based upon the historical price of the company’s stock, a term of 2.5 years, using the simplified method, and a risk-free rate of 2.59%. The calculated fair value, $13,223 was included in the $86,958 expense noted above for the six months ended June 30, 2019.


During the three months ended March 31, 2019, the Company granted five-year options to purchase 150,000 shares of common stock at an exercise price of $0.18 per share in exchange for legal services.  The options were valued on the grant date with the Black-Scholes option pricing model using a volatility of 79.98% based upon the historical price of the Company’s stock, a term of five years, the term of the options and a risk-free rate of 2.59%. The calculated fair value, $17,614 was recorded as prepaid expense and will be amortized over twelve months. For the six months ended June 30, 2019, $7,341 was amortized to expense.


In June 2019, the Company granted five-year options to purchase 5,000 shares of common stock at an exercise price of $0.16 per share to a new employee.  The options were immediately vested and were valued on the grant date with the Black-Scholes option pricing model using a volatility of 74.85% based upon the historical price of the company’s stock, a term of 2.5 years, using the simplified method and a risk-free rate of 1.88%. The calculated fair value, $367 was included in the $86,958 expense noted above for the six months ended June 30, 2019


Warrants to Purchase Common Stock


Warrants Issued as Settlements


During the six months ended June 30, 2019, there were no warrants granted for settlements.


Warrants Issued for Cash or Services


During the six months ended June 30, 2019, the Company issued two-year warrants to purchase 4,627,582 shares of common stock with an exercise price of $2.00 per share to two accredited investors, including the issuance of 1,955,883 warrants to the Company’s chairman and principal shareholder in connection with the private placements described above.


During the six months ended June 30, 2019, two-year warrants to purchase 2,699,280 shares of common stock at $2.00 per share, held by four accredited investors, expired, of which 1,620,785 were held by our chairman and principal shareholder.




11



GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2019

(Unaudited)



NOTE 5 – Related Party Transactions


During the six months ended June 30, 2019, the Company issued stock and warrants to its chairman and principal shareholder in exchange for cash as more fully described in Note 4.


In August 2017, the Company and Warren Mosler (the “Investor”) entered into a Stock Purchase Agreement whereby the Investor committed to purchase up to $1,800,000 shares of the Company’s common stock until August 1, 2018, subject to the Company’s chairman, continuing to serve as an officer of the Company. The Investor and our chairman were partners in a prior business. The Company had the right to direct the Investor to purchase up to $150,000 of shares in any calendar month (although the parties could mutually agree to increase it in any calendar month). The price paid for the shares was the closing price of the Company’s common stock on the trading day immediately before the Company delivered its notice to the Investor. The Investor has purchased the full $1.8 million under the Agreement and is therefore not required to make any additional purchases.  In June 2019, unrelated to the Stock Purchase Agreement, the Investor was appointed to the Company’s Board of Directors.


During the six ended June 30, 2019, the Company issued 5,343,398 shares of common stock and two-year warrants to purchase 2,671,699 shares of common stock at an exercise price of $2.00 per share to the Investor in exchange for $900,000 in connection with private placements.


NOTE 6 – Commitments and Contingencies


In February 2018, the Company entered into a two-year operating lease agreement for an office in Niwot, Colorado to better serve our Wildland fire customers. The lease began on March 1, 2018 and calls for 24 monthly payments of $2,250. In accounting for this operating lease, the Company elected to early adopt ASU 2016-02, Leases. As such, the Company calculated the fair value of the operating lease right of use asset and the operating lease liability, $50,313, by calculating the present value of the lease payments, discounted at 7.5%, the Company’s then incremental borrowing rate.


On November 14, 2012, the Compensation Committee approved new employment agreements for the Company’s then Chief Executive Officer, then President, Chief Technology Officer and Chief Financial Officer. The employment agreements each provide for base salaries of $150,000 and 800,000 stock settled stock appreciation rights (“SARS”) of which (i) 200,000 vested immediately, (ii) 200,000 vest upon the Company generating $3,000,000 in revenue in any 12-month period, (iii) another 200,000 vest upon the Company generating $5,000,000 in revenue in any 12-month period and (iv) another 200,000 vest upon the Company generating $6,000,000 in revenue in any 12-month period. The SARs are exercisable at $0.45 per share over a 10-year period. The Company’s then Chief Executive Officer, then President and Chief Technology Officer agreed to cancel the 250,000 stock options granted to each of them in their prior employment agreements. These executives’ base salary will increase to: (i) $170,000 upon the Company generating $3,000,000 in revenue in any 12-month period, (ii) $190,000 upon the Company generating $5,000,000 in any 12-month period and (iii) $200,000 upon the Company generating $6,000,000 in any 12-month period. On September 30, 2016, the employment agreement for the Company’s Chief Financial Officer expired.


In January 2015, GelTech approved an amendment to the Employment Agreement of our Chief Technology Officer. In addition to his base salary, he will receive 5% of the first $2 million of revenue generated by GelTech. The Company paid the Chief Technology Officer $52,797 and $62,056, respectively, in 2017 and 2016 under this provision. The amendment was effective as of January 1, 2015. Additionally, in May 2015, GelTech approved an amendment to the Chief Technology Officer’s Employment Agreement to extend the term of the Agreement an additional four years (now expiring October 1, 2020).


On August 16, 2017, the Company entered into a new three-year Employment Agreement with the Company’s chief financial officer. The Employment Agreement provides for a base salary of $150,000 per year and a car allowance of $600 per month. The Company’s Compensation Committee will also have the discretion to award a discretionary bonus. In consideration for entering into the Employment Agreement, the Company granted 125,000 fully vested 10-year stock options exercisable at $0.1849 per share.






12



GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2019

(Unaudited)



NOTE 7 – Revenue Recognition


The revenue that we recognize arises from purchase orders we receive from our customers. Our performance obligations under the purchase orders correspond to each shipment of product that we make to our customer under the purchase order. As a result, each purchase order generally contains more than one performance obligation based on the number of products ordered, the quantity of product to be shipped and the mode of shipment requested by the customer. Control of our products transfers to our customers when the customer is able to direct the use of, and obtain substantially all of the benefits from, our products, which generally occurs at the later of when the customer obtains title to our product or when the customer assumes risk of loss of our product. The transfer of control generally occurs at a point of shipment from either our warehouse or our third-party fulfillment centers. Once this occurs, we have satisfied our performance obligation and we recognize revenue.


When we receive a purchase order from a customer, we are obligated to provide the product during a mutually agreed upon time period. Depending on the terms of the purchase order, either we or the customer arranges delivery of the product to the customer’s intended destination. In situations where we have agreed to arrange delivery of the product to the customer’s intended destination and control of the product transfers upon loading of our product onto transportation equipment, we have elected to account for any freight income associated with the delivery of these products as freight revenue, since this activity fulfills our obligation to transfer the product to the customer. For the six months ended June 30, 2019, the total amount of freight recognized as revenue was $32,027.


Transaction Price


We agree with our customers on the selling price of each transaction. This transaction price is generally based on the product, market conditions, including supply and demand balances and freight. In our contracts with customers, we allocate the entire transaction price to the sale of product to the customer, which is the basis for the determination of the relative standalone selling price allocated to each performance obligation. Returns of our product by our customers are permitted only when the product is not to specification and were not material for the six months ended June 30, 2019. Any sales tax, value added tax, and other tax we collect concurrently with our revenue-producing activities are excluded from revenue. Our revenues for FireIce, SoilO and SoilO Dust Control are seasonal in nature with our peak seasons occurring in the second and third quarters. Revenues from the sales of FireIce Shield are less seasonal.


Revenue Disaggregation


We track our revenue by product. The following table summarizes our revenue by product for the three and six months ended June 30, 2019:


 

 

 

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

 

 

 

 

2019

 

 

2019

 

FireIce

 

 

 

 

 

$

293,657

 

 

$

429,950

 

SoilO

 

 

 

 

 

 

11,939

 

 

 

31,745

 

FireIce Shield

 

 

 

 

 

 

9,883

 

 

 

27,717

 

Other

 

 

 

 

 

 

91

 

 

 

362

 

Total

 

 

 

 

 

$

315,570

 

 

$

489,774

 


NOTE 8 Concentrations


The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts through June 30, 2019. As of June 30, 2019, there were no cash balances held in depository accounts that are not insured.


At June 30, 2019, four customers accounted for 49.3%, 12.8%, 12.2% and 10.8% of accounts receivable.


For the 6 months ended June 30, 2019, three customers accounted for 14.8%, 12.4% and 12.1% of sales.




13



GELTECH SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2019

(Unaudited)



Approximately 25.9% of revenue was generated from customers outside the United States during the six months ended June 30, 2019.


During the six months ended June 30, 2019, sales primarily resulted from three product categories, FireIce®, SoilO® and FireIce Shield® which made up 87.8%, 6.5% and 5.7%, respectively, of total sales. Of the FireIce® sales, 47.3% related to the sale of FireIce® products, 21.9% related to sales of FireIce Polar Eco-Foam, 16.9% related to the sale of components and product for 15 stadium box suppression systems and 14.0% related to sales of FireIce extinguishers, eductors and other equipment. Of the SoilO® sales, 55.2% related to traditional sales of SoilO® and 44.8% related to sales of SoilO® Dust Control. Of the FireIce Shield® sales, 10.7% consisted sales of asset protection canisters and refills, 26.3% related to FireIce Shield® CTP units and products, and 62.1% consisted of sale of spray bottles for use by welders and plumbers.


Two vendors accounted for 24.7% and 11.0% of the Company’s approximately $259,000 in purchases of raw material, finished goods and packaging during the six months ended June 30, 2019.


NOTE 9 Subsequent Events


In accordance with the 2017 Equity Incentive Plan, on July 1, 2019 the non-employee directors were granted ten-year options to purchase 560,000 shares of common stock to non-employee directors at an exercise price of $0.166 per share. The options vest on June 30, 2020, subject to continued service as a director. The options were valued with the Black-Scholes option pricing model using an expected volatility of 72.89% based upon the historical price of the company’s stock, an expected term of 5.5 years using the simplified method, and a risk-free rate of 1.81%. The calculated fair value, $58,246, will be recorded as expense over the one-year vesting period.


In July 2019, a consultant exercised options to purchase 3,637 shares of common stock at an exercise price of $0.165 per share in exchange for $600 of consulting fees owed to the consultant.


On August 13, 2019, the Company’s Chairman and principal shareholder loaned the Company an additional $150,000 in consideration for amending the principal under its secured promissory note from $500,000 to $650,000. See Note 3 above. The remaining terms of the secured promissory note remained the same.






14



 


ITEM 2. 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

Certain statements in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are forward-looking statements that involve risks and uncertainties. Words such as may, will, should, would, anticipates, expects, intends, plans, believes, seeks, estimates and similar expressions identify such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting forward-looking statements. Factors that could cause or contribute to these differences include those discussed in the Risk Factors contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or the SEC, on March 28, 2019.


Overview


GelTech Solutions, Inc., (“GelTech” or the “Company”), generates revenue primarily from marketing products based around the following four product categories (1) the FireIce® family of products including FireIce® Pro and FireIce® 561, powdered products that enhance the power of water to suppress and retard fire,  can be utilized both as fire suppressants in urban firefighting, including fires in underground utility structures, and in wildland firefighting and as medium-term fire retardants to protect wildlands, structures and firefighters; FireIce® XT and FireIce® ST, wet mixed suppressants for extinguishers and fire suppression systems and our new addition, FireIce® Polar Eco-Foam, an environmentally friendly Class A foam (2) FireIce Shield®, a line of products used in industry by manufacturers, plumbers, and welders, and by police departments and first responders to protect assets from fire; (3) SoilDust Control, our application which is used for dust mitigation in the aggregate, road construction and mining SoilO® Soil Cap, a dust suppressant technology designed to stabilize stockpile dust and reduce soil erosion, and (4) SoilO®, a product which reduces the use of water and is primarily marketed to golf courses and commercial landscapers.


The Company also markets equipment that is used in the application of these primary products including (1) Emergency Manhole FireIce Delivery System (“EMFIDS”) an innovative system designed to deliver FireIce® into a manhole in the event of a fire or explosion (2) the FireIce Shield CTP System, a mobile spray unit that can be used to protect communication tower electronics during hot work and (3) FireIce® Home Defense Unit, a system for applying FireIce® to structures to protect them from wildfires.


2019 Highlights


In early 2019, the Company delivered major components and FireIce product for the construction of fire suppression systems in 15 portable modular stadium box units which were employed during a major sporting event in South Florida. These systems were an offshoot of the transformer room systems we installed last year for an electric utility.


The wildland team submitted a new colored formulation for evaluation by the United States Forest Service (“Forest Service”) for inclusion on the Qualified Products List (QPL). On July 9, 2019, after the successful completion of preliminary toxicity and corrosion testing, the new formulation, FireIce HVB-Fx, received interim approval for listing on the QPL and can now be used by federal and state firefighting agencies on state and federal lands.


The GelTech wildland team was successful in winning multiyear contracts to supply FireIce Polar Ecofoam to two large Canadian provinces, one of which has ordered and received two large shipments of product.  

 

We have engaged a new distributor in South Africa that intends to utilize our FireIce XT product in their vehicle suppression business as well as distribute extinguishers and our FireIce Shield products throughout sub-Saharan Africa.


Our unaudited consolidated financial statements have been prepared on a going concern basis, and we need to generate sufficient material revenues to support the ongoing business of the Company.




15



 


RESULTS OF OPERATIONS


FOR THE SIX MONTHS ENDED JUNE 30, 2019 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2018.


The following tables set forth, for the periods indicated, results of operations information from our interim unaudited consolidated financial statements.  We refer to the six months ended June 30, 2019 and 2018 as the “2019 Period” and the “2018 Period”, respectively.  

 

 

 

Six Months Ended

June 30,

 

 

Change

 

 

Change

 

 

 

2019

 

 

2018

 

 

(Dollars)

 

 

(Percentage)

 

Sales

 

$

489,774

 

 

$

660,436

 

 

$

(170,662

)

 

 

(25.8

%)

Cost of Goods Sold

 

 

245,310

 

 

 

205,597

 

 

 

39,713

 

 

 

19.3

%

Gross Profit

 

 

244,464

 

 

 

454,839

 

 

 

(210,375

)

 

 

(46.3

%)

Operating Expenses:

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     

Selling General and Administrative

 

 

2,009,596

 

 

 

2,141,299

 

 

 

(131,703

)

 

 

(6.2

%)

Research and Development

 

 

82,481

 

 

 

33,561

 

 

 

48,920

 

 

 

145.8

%

Loss from Operations

 

 

(1,847,613

)

 

 

(1,720,021

)

 

 

(127,592

)

 

 

(7.4

%)

Other Income (Expense)

 

 

(183,773

)

 

 

(357,320,

)

 

 

 (173,541

)

 

 

(48.6

%)

Net Loss

 

$

(2,031,386

)

 

$

(2,077,341

)

 

$

(45,955

)

 

 

(2.2

%)


Sales


Sales of product during the 2019 Period consisted primarily of $429,951 for FireIce® and related products, $31,745 for SoilO ® and $27,717 for FireIce Shield®. FireIce® sales primarily consisted of $72,250 related to the sales of equipment and FireIce product used to install fire suppression systems in 15 portable modular stadium box units, $205,540 of FireIce product sales, $94,031 for sales of our new FireIce Polar Ecofoam product and $60,129 for sales of eductors, extinguishers and other equipment. The SoilO ® sales consisted of sales of our new SoilO Golf product of $16,335 and sales of SoilO ® dust control of $14,213. Sales of FireIce Shield® consisted of sales FireIce Shield spray bottles of $17,199, FireIce Shield CTP units and product of $7,292 and sales of FireIce Shield Canisters and refills of $2,965. The decrease in 2019 sales as compared to 2018 sales is primarily related to two large offseason wildland agency orders in 2018.


Both FireIce® and SoilO ® dust control sales are seasonal in nature with both peak seasons lasting from March through October; we anticipate FireIce Shield® sales to be less seasonal. We expect additional agencies to join our growing roster of wildland agencies using FireIce and our existing agencies to begin purchase our new FireIce Polar Ecofoam product. In addition, the interim approval of our new blue wildland product for inclusion on the US Forest Service Qualified Products List (QPL) allows federal and state firefighting agencies to use the new blue product to fight wildland fire on federal lands. Our FireIce and SoilO Dust Control products are gaining acceptance from industrial agricultural organizations needing to protect crop stockpiles and to control dust on unpaved roadways. Based on these factors, we expect that our revenues will increase in the future.


Cost of Goods Sold


The increase in cost of goods sold was the direct result of the lower gross margin associated with sale of tanks and product for the 15 mobile stadium box suppression systems we sold in 2019 as well as a lower gross margin on our FireIce Polar Ecofoam products. Cost of sales as a percentage of sales was 50.1% for 2019 Period as compared to 31.1% for the 2018 Period. The future cost of sales as a percentage of sales is dependent on the sales mix but we expect it will be more consistent with the cost of sales percentage of 35% we experienced for the year ended December 31, 2018.


Selling, General and Administrative Expenses (SG&A)


SG&A expenses for the 2019 Period and 2018 Period were consistent. Minor increases in 2019 in facilities and sales and marketing were offset by decreases in professional fees, general and administrative and investor relations.




16



 


Research and Development Expenses


The research and development expenses for the 2019 Period primarily consisted of the application and testing costs related to getting our new blue FireIce HVB-Fx product listed on the QPL.  In 2018, research and development expenses related primarily to initial research into potential new product applications.


Loss from Operations


The increase in loss from operations in the 2019 Period as compared to the 2018 Period resulted from the lower sales and gross profit.


Other Income (Expense)


Other expense during the 2019 Period and 2018 Period consisted of interest expense. The decrease in interest expense is due to the reduction of our outstanding debt from the conversion of a secured convertible note in the amount of $2.5 million in July 2018 and the corresponding reduction in the interest rate from 7.5% to 5.0%.


Net Loss


The net loss for the 2019 Period was consistent with the net loss for the 2018 Period.  Net loss per common share was $0.02 and $0.03, respectively, for the 2019 Period and 2018 Period. The weighted average number of shares outstanding for the 2019 Period and 2018 Period were 108,404,319 and 81,803,910, respectively.


FOR THE THREE MONTHS ENDED JUNE 30, 2019 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2018.


The following tables set forth, for the periods indicated, results of operations information from our interim unaudited consolidated financial statements.  We refer to the three months ended June 30, 2019 and 2018 as the “2019 Quarter” and the “2018 Quarter”, respectively.

 

 

 

Three Months Ended

June 30,

 

 

Change

 

 

Change

 

 

 

2019

 

 

2018

 

 

(Dollars)

 

 

(Percentage)

 

Sales

 

$

315,570

 

 

$

397,557

 

 

$

(81,987

)

 

 

(20.6

%)

Cost of Goods Sold

 

 

152,389

 

 

 

124,399

 

 

 

27,990

 

 

 

22.5

%

Gross Profit

 

 

163,181

 

 

 

273,158

 

 

 

(109,977

)

 

 

(40.3

%)

Operating Expenses:

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     

Selling General and Administrative

 

 

1,022,273

 

 

 

1,136,408

 

 

 

(114,135

)

 

 

(10.0

%)

Research and Development

 

 

62,487

 

 

 

17,735

 

 

 

44,752

 

 

 

252.3

%

Loss from Operations

 

 

(921,579

)

 

 

(880,985

)

 

 

40,594

 

 

 

 4.6

%

Other Income (Expense)

 

 

(91,898

)

 

 

(179,813

)

 

 

(87,909

)

 

 

 (48.9

%)

Net Loss

 

$

(1,013,477

)

 

$

(1,060,798

)

 

$

(47,321

)

 

 

(4.5

%)


Sales


Sales of product during the 2019 Quarter consisted primarily of $282,452 for FireIce® and related products, $11,939 for SoilO ® and $9,883 for FireIce Shield®. FireIce® sales primarily consisted of $177,948 of FireIce product sales, $72,553 for sales of our new FireIce Polar Ecofoam product and $31,951 for sales of eductors, extinguishers and other equipment. The SoilO ® sales consisted of sales of our new SoilO Golf product of $5,620 and sales of SoilO ® dust control of $5,938. Sales of FireIce Shield® consisted of sales FireIce Shield spray bottles of $8,047 and sales of FireIce Shield Canisters and refills of $1,604. The decrease in 2019 sales as compared to 2018 sales is primarily related to a large offseason wildland agency order in 2018.




17



 


Both FireIce® and SoilO ® dust control sales are seasonal in nature with both peak seasons lasting from March through October; we anticipate FireIce Shield® sales to be less seasonal. We expect additional agencies to join our growing roster of wildland agencies using FireIce and our existing agencies to begin purchasing our new FireIce Polar Ecofoam product. In addition, the interim approval of our new blue wildland product for inclusion on the US Forest Service Qualified Products List (QPL) allows federal and state firefighting agencies to use the new blue product to fight wildland fire on federal lands. Our FireIce and SoilO Dust Control products are gaining acceptance from industrial agricultural organizations needing to protect crop stockpiles and to control dust on unpaved roadways.  Based on these factors, we expect that our revenues will increase in the future.


Cost of Goods Sold


The increase in cost of goods sold was the direct result of the lower gross margin associated certain equipment and sales of FireIce Polar Ecofoam, which as a distributed product has a lower gross margin. Cost of sales as a percentage of sales was 48.3% for the 2019 Quarter as compared to 31.3% for the 2018 Quarter. The future cost of sales as a percentage of sales is dependent on the sales mix but we expect it will be consistent with the cost of sales percentage of 35% we experienced for the year ended December 31, 2018.


Selling, General and Administrative Expenses (SG&A)


SG&A expenses for the 2019 Quarter were slightly lower than those for the 2018 Quarter.  Increases in facilities and professional fees were offset by decreases in general and administrative, compensation and benefits and travel.


Research and Development Expenses


The research and development expenses for the 2019 Quarter consisted of the application and testing costs related to getting our new blue FireIce HVB-Fx product listed on the QPL.  In the 2018 Quarter, research and development expenses related primarily to initial research into potential new product applications.


Loss from Operations


The increase in loss from operations in the 2019 Quarter as compared to the 2018 Quarter resulted from the lower sales and gross profit and the higher research and development costs.


Other Income (Expense)


Other expense during the 2019 Quarter and the 2018 Quarter consisted of interest expense.  The decrease in interest expense is due to the reduction of our outstanding debt from the conversion of a secured convertible note in the amount of $2.5 million in July 2018 and the corresponding reduction in the interest rate from 7.5% to 5.0%.

 

Net Loss


The net loss for the 2019 Quarter was slightly lower than the net loss for the 2018 Quarter as a result of the lower operating expenses and lower other expense which was partially offset by the lower gross profit.  Net loss per common share was $0.01 the both for the 2019 Quarter and the 2018 Quarter. The weighted average number of shares outstanding for the 2019 Quarter and 2018 Quarter were 110,995,929 and 85,388,588, respectively.


LIQUIDITY AND CAPITAL RESOURCES


A summary of our cash flows is as follows:


 

 

 

 

Six Months Ended

June 30,

 

 

 

 

 

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

   

Net cash used in operating activities

 

 

 

 

 

 

 

 

$

(1,671,579

)

 

$

(1,524,932

)

Net cash used in investing activities

 

 

 

 

 

 

 

 

 

(40,094

)

 

 

(5,067

)

Net cash provided by financing activities

 

 

 

 

 

 

 

 

 

2,024,642

 

 

 

1,555,602

 

Net increase (decrease) in cash

 

 

 

 

 

 

 

 

$

312,969

 

 

$

25,603

 




18



 


Net Cash Used in Operating Activities


Net cash used during the 2019 Period resulted primarily from the net loss of $2,031,386 and an increase in inventories of $37,985 and accounts receivable of $7,601.  These were partially offset by depreciation of $37,065, amortization of debt discount of $72,595, stock-based compensation of $87,774, increases in accounts payable and accrued liabilities of $37,078 and $91,426, respectively, and a decrease in prepaid expenses of $55,704.


Net cash used during the 2018 Period resulted primarily from the net loss of $2,077,341 and an increase in accounts receivable and inventory of $168,559 and $33,117, respectively, which were partially offset by increases in accounts payable and accrued expenses of $111,780 and $300,431, respectively, equity-based compensation of $98,994, amortization of debt discounts of $98,639 and a decrease in prepaid expenses of $70,513.


Net Cash Used in Investing Activities


Net cash used in investing activities for the 2019 Period consisted of vehicle purchases to support additional wildland activities. In the 2018 Period, these activities consisted of purchases of furniture for the new Colorado office.


Net Cash Provided By Financing Activities


During the 2019 Period, the Company received $1,575,000 in exchange for 9,255,164 shares of common stock and two-year warrants to purchase 4,627,582 shares of common stock at an exercise price of $2.00 per share in connection with private placements with two accredited investors, including $675,000 in exchange for 3,412,266 shares of common stock and 1,706,133 warrants from our chairman. In addition, the Company received $500,000 from Mr. Michael Reger, our Chairman of the Board, Chief Executive Officer and largest shareholder, (“Reger”) in exchange for a $500,000 secured promissory note, bearing interest of LIBOR plus 2%, not to exceed 7%, and with principal due June 30, 2022. The amounts received were used for working capital and to make payments on insurance premium finance contracts of $50,358.


During the six months ended June 30, 2018, the Company received $84,000 in exchange for the issuance of 437,394 shares of common stock in connection with private placements with four accredited investors. In addition, the Company issued 8,670,533 shares of common stock and two-year warrants to purchase 4,335,262 shares of common stock at an exercise price of $2.00 per share in exchange for $1,525,000 in connection with private placements with two accredited investors, including 3,530,432 shares and 1,765,216 warrants to Reger. The amounts received were used to make payments on insurance premium finance contracts of $53,398, as well as providing working capital.


Historical Financings


Since January 1, 2019, through the filing date of this report, the Company received $1,575,000 in exchange for 9,255,164 shares of common stock and two year warrants to purchase 4,627,582 shares of common stock at an exercise price of $2.00 per share in connection with private placements with two accredited investors, including $675,000 in exchange for 3,412,266 shares of common stock and 1,706,133 warrants from Reger. In addition, the Company received $500,000 from Reger in exchange for a $500,000 secured promissory note, bearing interest of LIBOR plus 2%, not to exceed 7%, and with principal due June 30, 2022. The note is secured by all of the Company’s assets and is not convertible into any of the Company’s capital stock. On August 13, 2019, Reger loaned the Company an additional $150,000 in consideration for amending the principal under its secured promissory note from $500,000 to $650,000. See Note 3 above. The remaining terms of the secured promissory note remained the same.


In August 2017, the Company and Warren Mosler, a large shareholder of the Company ( “Mosler”) entered into a Stock Purchase Agreement whereby Mosler committed to purchase up to $1,800,000 shares of the Company’s common stock until August 1, 2018. Prior to the full $1.8 million of shares being purchased under the Stock Purchase Agreement, the Company had the right to direct Mosler to purchase up to $150,000 of shares in any calendar month. Mosler has purchased the full $1.8 million under the Stock Purchase Agreement and therefore is no longer required to purchase shares of the Company’s common stock; although he has continued to do so. In June 2019, unrelated to the Stock Purchase Agreement, Mosler was appointed to the Company’s Board of Directors. Since August 1, 2017 to the filing date of this report, Mosler has purchased 20,779,447 shares and 10,389,726 warrants for $3,755,000 under the Agreement and outside of the Agreement, collectively. We can provide no assurances that Mosler will continue to make purchases of our securities.




19



 


Liquidity and Capital Resource Considerations


As of August 13, 2019, we had approximately $161,000 in available cash.


Until we generate sufficient revenue to sustain the business, our operations will continue to rely on Reger’s and Mosler’s investments. If either Reger or Mosler were to cease providing us with working capital or we are unable to generate substantial cash flows from sales of its products or complete financings, the Company may not be able to remain operational.


Although we do not anticipate the need to purchase any additional material capital assets in order to carry out our business, it may be necessary for us to purchase additional support vehicles or mixing base equipment in the future, depending on demand.


Related Person Transactions

 

For information on related party transactions and their financial impact, see Note 5 to the Unaudited Consolidated Financial Statements.


Principal Accounting Estimates

 

In response to the SEC’s financial reporting release, FR-60, Cautionary Advice Regarding Disclosure About Critical Accounting Policies, the Company has selected its most subjective accounting estimation processes for purposes of explaining the methodology used in calculating the estimate, in addition to the inherent uncertainties pertaining to the estimate and the possible effects on the Company’s financial condition. These estimates involve certain assumptions that if incorrect could create a material adverse impact on the Company’s results of operations and financial condition.  


Other than the classification of inventory discussed in Note 1, there were no material changes to our principal accounting estimates during the period covered by this report.


RECENT ACCOUNTING PRONOUNCEMENTS

 

For information on recent accounting pronouncements, see Note 1 to the Unaudited Consolidated Financial Statements.

 

Cautionary Note Regarding Forward-Looking Statements


This report contains forward-looking statements including our liquidity, anticipated capital asset requirements, expected results from adding additional distributors, increased revenues and expected increase in sales of our products (including additional agencies using FireIce). Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods.

 

Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the failure to receive material orders from the utility and mining companies, global and domestic economic conditions, budgetary pressures facing state and local governments, our failure to receive or the potential delay of anticipated orders for our products, failure to receive acceptance of FireIce® by State and Local governments, or our principal shareholder and/or the Investor suffering unanticipated liquidity issues or ceasing to fund our operations.


Further information on our risk factors is contained in our filings with the SEC, including our Form 10-K for the year ended December 31, 2018 filed on March 28, 2019.  Any forward-looking statement made by us speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.




20



 


ITEM 3. 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not applicable to smaller reporting companies

 

ITEM 4. 

CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures. Our management carried out an evaluation, with the participation of our Principal Executive Officer and Principal Financial Officer, required by Rule 13a-15 and Rule 15d-15 of the Securities Exchange Act of 1934 (the “Exchange Act”) of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act. Based on their evaluation, our management has concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.


Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.




21



 


PART II – OTHER INFORMATION

 

ITEM 1. 

LEGAL PROCEEDINGS.


From time to time, we are a party to, or otherwise involved in, legal proceedings arising in the normal and ordinary course of business.  During the period covered by this report, there were no new legal proceedings nor any material developments to any legal proceedings previously disclosed, if any.


ITEM 1A.

RISK FACTORS.

 

Not applicable to smaller reporting companies.


ITEM 2. 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.


In addition to those unregistered securities previously disclosed in reports filed with the SEC, we have sold securities without registration under the Securities Act of 1933, or the Securities Act, as described below.


Name or Class of Investor

  

Date of Sale

  

No. of Securities

  

Reason for Issuance

Consultant (1)

 

April 2019

 

3,637 shares of common stock

 

Shares issued upon exercise of options

Employee

 

April 2019

 

7,606 shares of common stock

 

Shares issued in lieu of cash payment for commissions

————————

(1)

Exempt under Section 4(a)(2) of the Securities Act and Regulation 506(b) thereunder. The securities were issued to accredited investors and there was no general solicitation.


ITEM 3. 

DEFAULTS UPON SENIOR SECURITIES.

 

None

 

ITEM 4. 

MINE SAFETY DISCLOSURES.


Not Applicable


ITEM 5. 

OTHER INFORMATION.


Not Applicable


ITEM 6. 

EXHIBITS.

 

The exhibits listed in the accompanying “Index to Exhibits” are filed or incorporated by reference as part of this Form 10-Q.



22



 


SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


 

 

GELTECH SOLUTIONS, INC.

 

 

 

 

 

August 13, 2019

 

/s/ Michael Reger

 

 

 

Michael Reger

 

 

 

Chief Executive Officer

(Principal Executive Officer)

 

 

 

 

 

August 13, 2019

 

/s/ Michael R. Hull

 

 

 

Michael R. Hull

 

 

 

Chief Financial Officer

(Principal Financial Officer)

 

 

 







23





INDEX TO EXHIBITS


 

  

  

  

Incorporated by Reference

  

Filed or

Furnished

No.

   

Exhibit Description

   

Form

   

Date

   

Number

   

Herewith

 

 

 

 

 

 

 

 

 

 

 

3.1

  

Certificate of Incorporation

  

Sb-2

  

7/20/07

  

3.1

  

  

3.1(a)

 

Certificate of Amendment to the Certificate of Incorporation – Increase of Authorized Capital to 100 million shares of common stock

 

10-Q

 

2/12/14

 

3.2

 

 

3.1(b)

 

Certificate of Amendment to the Certificate of Incorporation – Increase of Authorized Capital to 150 million shares of common stock

 

10-Q

 

2/16/16

 

3.1(b)

 

 

3.1(c)

 

Certificate of Amendment to the Certificate of Incorporation – Increase of Authorized Capital to 200 million shares of common stock

 

10-Q

 

8/14/18

 

3.1(c)

 

 

3.2

  

Amended and Restated Bylaws

  

Sb-2

  

7/20/07

  

3.2

  

  

3.2(a)

  

Amendment No. 1 to the Amended and Restated Bylaws

  

10-K

  

9/28/10

  

3.3

  

  

3.2(b)

 

Amendment No. 2 to the Amended and Restated Bylaws

 

8-K

 

9/26/11

 

3.1

 

 

3.2(c)

 

Amendment No. 3 to the Amended and Restated Bylaws

 

8-K

 

9/27/12

 

3.1

 

 

4.1

 

Promissory Note - Reger

 

 

 

 

 

 

 

Filed

10.1

 

Mosler Stock Purchase Agreement dated August 1, 2017

 

10-Q

 

11/8/17

 

10.4

 

 

10.2

 

Form of Stock Purchase Agreement - Reger

 

10-K

 

9/27/13

 

10.16

 

 

10.3

 

Secured Revolving Convertible Promissory Note Agreement – Reger

 

10-Q

 

5/8/15

 

10.1

 

 

10.4

 

Amendment to Secured Revolving Convertible Promissory Note Agreement – Reger

 

10-K

 

3/28/17

 

10.6(a)

 

 

10.5

 

Form of Director Option Agreement

 

 

 

 

 

 

 

Filed

10.6

 

Form of Warrant

 

10-K

 

9/21/15

 

10.5

 

 

31.1

  

Certification of Principal Executive Officer (Section 302)

  

 

 

 

 

 

 

Filed

31.2

  

Certification of Principal Financial Officer (Section 302)

  

  

  

  

  

  

  

Filed

32.1

  

Certification of Principal Executive Officer and Principal Financial Officer (Section 906)

  

  

  

  

  

  

  

Furnished*

101 INS

  

XBRL Instance Document

  

  

  

  

  

  

  

Filed

101 SCH

  

XBRL Taxonomy Extension Schema

  

  

  

  

  

  

  

Filed

101 CAL

  

XBRL Taxonomy Extension Calculation Linkbase

  

  

  

  

  

  

  

Filed

101 LAB

  

XBRL Taxonomy Extension Label Linkbase

  

  

  

  

  

  

  

Filed

101 PRE

 

XBRL Taxonomy Extension Presentation Linkbase

 

 

 

 

 

 

 

Filed

101 DEF

 

XBRL Taxonomy Extension Definition Linkbase

 

 

 

 

 

 

 

Filed

———————

*

This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.


Copies of this report (including the financial statements) and any of the exhibits referred to above will be furnished at no cost to our stockholders who make a written request to GelTech Solutions, Inc., 1460 Park Lane South, Suite 1, Jupiter, Florida 33458, Attention: Corporate Secretary.








EX-4.1 2 gltc_ex4z1.htm PROMISSORY NOTE - REGER Promissory Note - Reger

 


EXHIBIT 4.1

SECURED

PROMISSORY NOTE

 

US $500,000.00

FOR VALUE RECEIVED, GelTech Solutions, Inc.  ("Maker"), promises to pay to Michael L. Reger (together with its successors and permitted assigns, "Payee"), the principal sum of U.S.$500,000,00, together with interest as provided in this Note (such outstanding principal amount, the "Loan"), as follows:

1

Interest. Maker shall pay interest on the unpaid principal amount outstanding from time to time hereunder at a rate per annum equal to LIBOR (as determined for each Interest Period) plus two percent (2.00%) (the "Interest Rate").  As used herein, (a) "Interest Payment Date" means each September 30, December 31, March 31 and June 30, (b) "Interest Period" means, initially, the period commencing on the date hereof and ending on the next succeeding Interest Payment Date, and thereafter, each period commencing on the last day of the preceding Interest Period and ending on the next succeeding Interest Payment Date; provided that no Interest Period may end after the Final Maturity Date (and any Interest Period that would otherwise end after the Final Maturity Date will be adjusted to end on the Final Maturity Date), and (c) "LIBOR" means, for any Interest Period, the rate published by The Wall Street Journal (Western Edition) two (2) business days prior to the first day of such Interest Period under the heading "Money Rates" and "London Interbank Offered Rates (LIBOR)" for a term of three months (provided that, in the event that the "London Interbank Offered Rates" are not published in The Wall Street Journal on any date of determination hereunder, the Interest Rate for the applicable Interest Period shall be (x) the rate per annum determined by Payee as the rate of interest at which deposits for delivery on the first day of such Interest Period, in same day funds in the approximate amount of the unpaid principal amount outstanding at such time, and with a term of three months, would be offered by Bank of America, N.A.'s London Branch to major banks in the London or other offshore interbank market at their request at approximately 4:00 p.m. (London time) two business days prior to the first day of such Interest Period, plus (y) two percent (2.00%); provided further that in no event shall the Interest Rate exceed seven percent (7%)). The Interest Rate shall apply both before and after Payee obtains any judgment on this Note and shall be payable on each Interest Payment Date and upon the Final Maturity Date (or if any such day is not a business day, then the immediately preceding business day). Interest shall accrue from the date hereof and shall continue to accrue, on the basis of a 365 day year, on the outstanding principal through (but not including) the date upon which such principal is paid in full.

2.

Maturity and Acceleration. Maker shall repay the entire unpaid principal balance of this Note, together with all accrued and unpaid interest at the Interest Rate to (but not including) the date of payment and all costs, expenses, and other sums then due under this Note (collectively, the "Obligations"), upon the first to occur of: (i) June 30, 2022; or (ii) any default by Maker under this Note, after Payee, in accordance with Section 6 hereof, notifies Maker that the Loan has been accelerated (the "Final Maturity Date").



1



 


3.

Security.  As a condition for Payee to agree to lend Maker the funds contemplated herein, Maker grants to Payee, a security interest in its property, tangible and intangible, including but not limited to: all accounts, now existing or subsequently arising; all contract rights of Maker now existing or subsequently arising; all accounts receivable, now existing or subsequently arising; all chattel paper, documents, and instruments related to accounts; all intellectual property, inventory, furniture, fixtures, equipment, and supplies now owned or subsequently acquired; and the proceeds, products, and accessions of and to any and all of the foregoing  as further described pursuant to the Security Agreement of even date herewith (the "Collateral").

4.

Payments. Maker shall pay all Obligations in lawful money of the United States in immediately available funds, free and clear of, and without deduction or offset for, any present or future taxes, levies, imposts, charges, withholdings, or liabilities with respect thereto; or any other defenses, offsets, set-offs, claims, counterclaims, credits, or deductions of any kind.. Each payment under this Note shall first be credited against accrued and unpaid interest, and the remainder shall be credited against principal. Payments shall be made to Payee at the address for Payee set forth in the signature page hereto or at such other place and/or bank account as may be specified from time to time by Payee in a written notice delivered to Maker. Maker may at any time in whole or in part, without premium or penalty, prepay the outstanding principal amount of this Note plus all then accrued but unpaid interest thereon.

5.

Usury Savings. Nothing in this Note shall require Maker to pay or permit Payee to collect from Maker interest exceeding the maximum amount permitted by law in commercial loan transactions between parties of the character of the parties to this Note. Maker shall not be obligated to pay any interest in excess of such maximum amount. The interest payable under this Note by Maker shall in no event exceed such maximum amount.

6.

Default. In the event of default in payment of this Note, Maker shall pay all costs of collection, including all costs and reasonable attorneys' fees and expenses, whether or not suit is filed on this Note. Upon any default in the payment of interest on or principal of this Note, the Payee may accelerate the Obligations, which shall thereupon become immediately due and payable in full.

7.

Overdue Rate. If any payment required by this Note becomes more than five days overdue, then the Interest Rate shall, during the period of default, be 2% higher than the otherwise applicable rate.

8.

Notices. All notices, requests, instructions or consents required or permitted under this Note shall be in writing and will be deemed given: (a) when delivered personally; (b) when sent by confirmed facsimile; (c) ten (10) business days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) three (3) business days after deposit with an internationally recognized commercial overnight carrier specifying next-day delivery, with written verification of receipt. All communications will be sent to the addresses listed on the signature page hereto (or to such other address or facsimile number as may be designated by either Maker or Payee by giving the other written notice pursuant to this Section 8).



2



 


9

Waivers. Maker and any endorsers and guarantors of this Note, and all others who may become liable for all or any part of the obligations evidenced by this Note, severally waive presentment for payment, protest, notice of protest, dishonor, notice of dishonor, demand, notice of non-payment, and the benefit of all statutes, ordinances, judicial rulings, and other legal principles of any kind, now or hereafter enacted or in force, affording any right of cure or any right to a stay of execution or extension of time for payment or exempting any property of such person from levy and sale upon execution of any judgment obtained by the holder in respect of this Note. THE PARTIES WAIVE JURY TRIAL IN ANY ACTION TO ENFORCE OR INTERPRET, OR OTHERWISE ARISING FROM, THIS NOTE.

10.

GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA, AS APPLIED TO AGREEMENTS AMONG FLORIDA RESIDENTS ENTERED INTO AND WHOLLY TO BE PERFORMED WITHIN THE STATE OF FLORIDA (WITHOUT REFERENCE TO ANY CHOICE OR CONFLICTS OF LAWS RULES OR PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION).

11. 

Amendments and Waivers. This Note may not be modified or amended and no waiver shall be effective unless such modification, amendment or waiver is in writing and executed by Maker and Payee. No failure or delay by Payee in exercising any right, power or privilege under this Note shall operate as a waiver thereof nor shall any single or partial waiver or exercise thereof preclude the enforcement by Payee of any other right, power or privilege.

12.

Assignment. The Payee mass assign its rights under this Note; provided, however, the Maker may not assign any obligation under this Note and any purported assignment by Maker shall be in violation of the terms hereof and shall be void ab initio.

13.

Severability. If any provision in this Note is found or held to be invalid or unenforceable, then the meaning of said provision will be construed, to the extent feasible, so as to render the provision enforceable, and if no feasible interpretation would save such provision, it will be severed from the remainder of this Note which will remain in full force and effect unless the severed provision is essential and material to the rights or benefits received by the Payee. In such event, Maker and Payee shall use their respective best efforts to negotiate, in good faith, a substitute, valid and enforceable provision or agreement which most nearly affects their intent in with respect to this Note.

14.

Further Assurances. Maker shall execute, acknowledge, and deliver to Payee such additional documentation as Payee shall reasonably require to further evidence and confirm Maker's obligations under the Loan and this Note.






3



 


IN WITNESS WHEREOF, Maker by its duly authorized officer has executed this Promissory Note this ____ day of June, 2019.


PAYEE

 

 

Michael L. Reger

6001 Le Lac Rd

Boca Raton, Florida 33496

 

MAKER

 

GelTech Solutions, Inc.

 

By:

 

Michael Hull, CFO

1460 Park Lane South, Suite 1

Jupiter, FL 33458







4


EX-10.5 3 gltc_ex10z5.htm FORM OF DIRECTOR OPTION AGREEMENT Form of Director Option Agreement

 


EXHIBIT 10.5


NON-QUALIFIED STOCK OPTION AGREEMENT


THIS NON-QUALIFIED STOCK OPTION AGREEMENT (the “Agreement”) entered into as of July 1, 2019 (the “Grant Date”) between GelTech Solutions, Inc. (the “Company”) and [______________] (the “Optionee”).


WHEREAS, by action taken by the Board of Directors (the “Board”) it has adopted the 2017 Equity Incentive Plan (the “Plan”); and


WHEREAS, pursuant to the Plan, it has been determined that in order to enhance the ability of the Company to attract and retain qualified employees, consultants and directors, the Company has granted the Optionee the right to purchase the common stock of the Company pursuant to stock options.


NOW THEREFORE, in consideration of the mutual covenants and promises hereafter set forth and for other good and valuable consideration, receipt of which is acknowledged, the parties hereto agree as follows:


.

Grant of Non-Qualified Options.  The Company irrevocably granted to the right and option to purchase all or any part of [____________] shares of authorized but unissued or treasury common stock of the Company (the “Options”) on the terms and conditions herein set forth.  This Agreement replaces any stock option agreement or offer letter previously provided to the Optionee, if any, with respect to these Options.  The Optionee acknowledges receipt of a copy of the Plan, as amended.  The Optionee has read and understands the terms and provisions thereof, and accepts the Options subject to all of the terms and conditions of the Plan and this Agreement.  Capitalized terms used but not defined herein shall have the meaning ascribed to them in the Plan.  


.

Price.  The exercise price of the Options is $__________ per share.


.

Vesting - When Exercisable.  


(a)

The Options shall vest on June 30, 2020, subject to the Optionee’s Continous Service on the vesting date.


(b)

Subject to Sections 3(c) and 4 of this Agreement, the Options may be exercised until 6:00 p.m. New York time for 10 years from the Grant Date (the “Expiration Date”).


(c)

Notwithstanding any other provision of this Agreement, at the discretion of the Board or the Compensation Committee, all Options will be immediately forfeited if any of the following events occur:


(1)

The Continuous Service of the Optionee is terminated for Cause;


(2)

The Optionee purchases or sells securities of the Company in violation of the Company’s insider trading guidelines then in effect;


(3)

The Optionee breaches any duty of confidentiality including that required by the Company’s insider trading guidelines then in effect; or      


(4)

The Optionee fails to assign any invention, technology, or related intellectual property rights to the Company if such assignment is a condition of any agreement between the Company and the Optionee.


4.

Termination of Relationship.


(a)

If the Optionee’s Continuous Service terminates for any reason (other than death, Disability or removal or termination for Cause), the Optionee may exercise all vested Options at any time within 12 months following such termination, subject to Section 3(c) above.




1



 


(b)

If the Optionee’s Continuous Service terminates as a result of the Optionee’s death, the Optionee’s estate or any Transferee shall have the right to exercise the Optionee’s vested Options within the time provided in the Plan, subject to Section 3(c) above.  For the purpose of this Agreement, “Transferee” shall mean a person to whom such shares are transferred by will or by the laws of descent and distribution.  


(c)

If the Optionee’s Continuous Service terminates as a result of the Optionee’s Disability, the Optionee shall have the right to exercise the Optionee’s vested options within the time provided in the Plan, subject to Section 3(c) above.


(d)

If the Optionee is removed or terminated for Cause, the Options (whether vested or unvested) shall immediately terminate and cease to be exercisable.


(e)

Notwithstanding anything contained in this Section 4, the Options may not be exercised after the Expiration Date.


For purposes of this Section 4 “Company” shall include subsidiaries and/or affiliates of the Company.


5.

Profits on the Sale of Certain Shares; Redemption.  If any of the events specified in Section 3(c) of this Agreement occur within one year following the termination of the Continuous Service (the date of termination is the “Termination Date”) (or such longer period required by any written agreement), all profits earned from the sale of the Company’s securities, including the sale of shares of common stock underlying the Options, during the two-year period commencing one year prior to the Termination Date shall be forfeited and immediately paid by the Optionee to the Company.  Further, in such event, the Company may at its option redeem shares of common stock acquired upon exercise of this Option by payment of the exercise price to the Optionee.  To the extent that another written agreement with the Company extends the events in Section 3(c) beyond one year following the Termination Date, the two-year period shall be extended by an equal number of days.  The Company’s rights under this Section 5 do not lapse one year from the Termination Date but are a contract right subject to any appropriate statutory limitation period.


6.

Method of Exercise.  The Options shall be exercisable by a written notice which shall:


(a)  

state the election to exercise the Options, the number of shares to be exercised, the person in whose name the stock certificate or certificates for such shares of common stock is to be registered, address and social security number of such person (or if more than one, the names, addresses and social security numbers of such persons);


(b)  

if applicable, contain such representations and agreements as to the holder’s investment intent with respect to such shares of common stock as set forth in Section 11 hereof;


(c)  

be signed by the person or persons entitled to exercise the Options and, if the Options are being exercised by any person or persons other than the Optionee, be accompanied by proof, satisfactory to counsel for the Company, of the right of such person or persons to exercise the Options;


(d)

be accompanied by full payment of the exercise price by tender to the Company of an amount equal to the exercise price multiplied by the number of underlying shares being purchased either in cash, by wire transfer, or by certified check or bank cashier’s check, payable to the order of the Company; and  


(e)

be accompanied by payment of any amount that the Company, in its sole discretion, deems necessary to comply with any federal, state or local withholding requirements for income and employment tax purposes.  If the Optionee fails to make such payment in a timely manner, the Company may: (i) decline to permit exercise of the Options or (ii) withhold and set-off against compensation and any other amounts payable to the Optionee the amount of such required payment. Such withholding may be in the shares underlying the Options at the sole discretion of the Company.


The certificate or certificates for shares of common stock as to which the Options shall be exercised shall be registered in the name of the person or persons exercising the Options.


7.

Sale of Shares Acquired Upon Exercise of Options.  If the Optionee is an Officer or a Director of the Company, any shares of the Company’s common stock acquired pursuant to the Options cannot be sold by the Optionee until at least six months elapse from the Grant Date except in case of death or Disability or if the grant was exempt from the short-swing profit provisions of Section 16(b).



2



 


8.

Anti-Dilution Provisions.  The Options shall have the anti-dilution rights set forth in the Plan.


9.

Necessity to Become Holder of Record.  Neither the Optionee, the Optionee’s estate, nor any Transferee shall have any rights as a shareholder with respect to any of the shares underlying the Options until such person shall have become the holder of record of such shares.  No cash dividends or cash distributions, ordinary or extraordinary, shall be provided to the holder if the record date is prior to the date on which such person became the holder of record thereof.


10.  

Tax Liability and Withholding. Notwithstanding any action the Company takes with respect to any or all income tax, social insurance, payroll tax, or other tax-related withholding (“Tax-Related Items”), the ultimate liability for all Tax-Related Items is and remains the Optionee’s responsibility and the Company: (a) makes no representations or undertakings regarding the treatment of any Tax-Related Items in connection with the grant, vesting, or exercise of the Option or the subsequent sale of any shares acquired on exercise; and (b) does not commit to structure the Option to reduce or eliminate the Optionee’s liability for Tax-Related Items.    


11.  

Conditions to Exercise of Options.  If a Registration Statement on Form S-8 (or any other successor form) is not effective as to the shares of common stock issuable upon exercise of the Options, the remainder of this Section 11 is applicable as to federal law.  In order to enable the Company to comply with the Securities Act of 1933 (the “Securities Act”) and relevant state law, the Company may require the Optionee, the Optionee’s estate, or any Transferee as a condition of the exercising of the Options granted hereunder, to give written assurance satisfactory to the Company that the shares underlying the Options are being acquired for such person’s own account, for investment only, with no view to the distribution of same, and that any subsequent resale of any such shares either shall be made pursuant to a registration statement under the Securities Act and applicable state law which has become effective and is current with regard to the shares being sold, or shall be pursuant to an exemption from registration under the Securities Act and applicable state law.


The Options are subject to the requirement that, if at any time the Board shall determine, in its discretion, that the listing, registration, or qualification of the shares of common stock underlying the Options upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary as a condition of, or in connection with the issue or purchase of the shares underlying the Options, the Options may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected.  


12.  

Transfer.  No transfer of the Options by the Optionee by will or by the laws of descent and distribution shall be effective to bind the Company unless the Company shall have been furnished with written notice thereof and a copy of the letters testamentary or such other evidence as the Board may deem necessary to establish the authority of the estate and the acceptance by the Transferee or Transferees of the terms and conditions of the Options.


13.  

Duties of the Company.  The Company will at all times during the term of the Options:


(a)  

Reserve and keep available for issue such number of shares of its authorized and unissued common stock as will be sufficient to satisfy the requirements of this Agreement;


(b)  

Pay all original issue taxes with respect to the issuance of shares pursuant hereto and all other fees and expenses necessarily incurred by the Company in connection therewith;


(c)  

Use its best efforts to comply with all laws and regulations which, in the opinion of counsel for the Company, shall be applicable thereto.


14.

Parties Bound by Plan.  The Plan and each determination, interpretation or other action made or taken pursuant to the provisions of the Plan shall be final and shall be binding and conclusive for all purposes on the Company and the Optionee and the Optionee’s respective successors in interest.


15.

Severability.  In the event any parts of this Agreement are found to be void, the remaining provisions of this Agreement shall nevertheless be binding with the same effect as though the void parts were deleted.


16.

Arbitration.  Any controversy, dispute or claim arising out of or relating to this Agreement, or its interpretation, application, implementation, breach or enforcement which the parties are unable to resolve by mutual agreement, shall be settled by submission by either party of the controversy, claim or dispute to binding arbitration in



3



 


Palm Beach County, Florida (unless the parties agree in writing to a different location), before a single arbitrator in accordance with the rules of the American Arbitration Association then in effect.  The decision and award made by the arbitrator shall be final, binding and conclusive on all parties hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof.


17.

Benefit.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their legal representatives, successors and assigns.


18.

Notices and Addresses.  All notices, offers, acceptance and any other acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by FedEx or similar receipted delivery, or email (followed by receipted delivery) as follows:


 

The Optionee:

 

To the Optionee at the address on the signature page

 

 

 

of this Agreement

 

 

 

 

 

The Company:

 

GelTech Solutions, Inc.

 

 

 

1460 Park Lane South, Suite 1

 

 

 

Jupiter, FL 33458

  

 

 

Attention: Michael Hull

 

 

 

mhull@geltechsolutions.com


or to such other address as either of them, by notice to the other may designate from time to time.  


19.

Attorney’s Fees.  In the event that there is any controversy or claim arising out of or relating to this Agreement, or to the interpretation, breach or enforcement thereof, and any action or proceeding is commenced to enforce the provisions of this Agreement, the prevailing party shall be entitled to a reasonable attorney’s fee, costs and expenses.


20.

Governing Law.  This Agreement and any dispute, disagreement, or issue of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided herein or performance shall be governed or interpreted according to the laws of the State of Delaware without regard to choice of law considerations.  


21.

Oral Evidence.  This Agreement constitutes the entire Agreement between the parties and supersedes all prior oral and written agreements between the parties hereto with respect to the subject matter hereof.  Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally, except by a statement in writing signed by the party or parties against whom enforcement or the change, waiver discharge or termination is sought.


22.

Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.  The execution of this Agreement may be by actual, PDF, electronic or facsimile signature.


23.

Section or Paragraph Headings.  Section headings herein have been inserted for reference only and shall not be deemed to limit or otherwise affect, in any matter, or be deemed to interpret in whole or in part any of the terms or provisions of this Agreement.


24.

Stop-Transfer Orders.  


(a)

The Optionee agrees that, in order to ensure compliance with the restrictions set forth in the Plan and this Agreement, the Company may issue appropriate “stop transfer” instructions to its duly authorized transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.


(b)

The Company shall not be required (i) to transfer on its books any shares of the Company’s common stock that have been sold or otherwise transferred in violation of any of the provisions of the Plan or the Agreement or (ii) to treat the owner of such shares of common stock or to accord the right to vote or pay dividends to any purchaser or other Transferee to whom such shares of common stock shall have been so transferred.


[Signature Page to Follow]




4



 


IN WITNESS WHEREOF the parties hereto have set their hand and seals the day and year first above written.


GELTECH SOLUTIONS, INC.

 

 

 

By:

 

Michael Hull

Chief Financial Officer

 

 

OPTIONEE:

 

 

 

 

 

 

 

Address of the Optionee:

 

 

 

 

 

 

 

Email:

 











5



 


NOTICE OF EXERCISE


To:

__________________________

__________________________

__________________________

Attention _________, _______________

Facsimile: (____) _____-______


Please be advised that I hereby elect to exercise my option to purchase shares of ___________, pursuant to the Stock Option Agreement dated __________________.  


Number of Shares to Be Purchased:

_______________


Multiplied by: Purchase Price Per Share

$______________


Total Purchase Price

$_______________


Please check the payment method below:  


____

Enclosed is a check for the total purchase price above.  


____

Wire transfer sent on _____________, 20__.  


Please contact me as soon as possible to discuss the possible payment of withholding taxes and any other documents we may require.   



Name of Option Holder (Please Print): ________________________________


Address of Option Holder


________________________________________________________________



Telephone Number of Option Holder:

________________________________


Social Security Number of Option Holder:

________________________________



6



 



If the certificate is to be issued to person other than the Option Holder, please provide the following for such person:



________________________________

(Name)


________________________________

(Address)


________________________________


________________________________



________________________________

(Telephone Number)


________________________________

(Social Security Number)



In connection with the issuance of the Common Stock, if the Common Stock may not be immediately publicly sold, I hereby represent to the Company that I am acquiring the Common Stock for my own account for investment and not with a view to, or for resale in connection with, a distribution of the shares within the meaning of the Securities Act of 1933 (the “Securities Act”).


I am______ am not ______ [please initial one] an accredited investor for at least one of the reasons on the attached Exhibit A.  If the SEC has amended the rule defining the definition of accredited investor, I acknowledge that as a condition to exercise the Options, the Company may request updated information regarding the Holder’s status as an accredited investor.  My exercise of the Options shall be in compliance with the applicable exemptions under the Securities Act and applicable state law.




________________________________

Dated: _________________

Signature of Option Holder








7



 



Exhibit A

To Notice of Exercise of Stock Option Agreement


For Individual Investors Only:


1.

A person who has an individual net worth, or a person who with his or her spouse has a combined net worth, in excess of $1,000,000. For purposes of calculating net worth under this paragraph (1), (i) the primary residence shall not be included as an asset, (ii) to the extent that the indebtedness that is secured by the primary residence is in excess of the fair market value of the primary residence, the excess amount shall be included as a liability, and (iii) if the amount of outstanding indebtedness that is secured by the primary residence exceeds the amount outstanding 60 days prior to exercising the stock options, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability.


2a.

A person who had individual income (exclusive of any income attributable to the person’s spouse) of more than who has $200,000 in each of the two most recently completed years and who reasonably expects to have an individual income in excess of $200,000 this year.


2b.

Alternatively, a person, who with his or her spouse, has joint income in excess of $300,000 in each applicable year.


3.

A director or executive officer of the Company.


Other Investors:


4.

Any bank as defined in Section 3(a)(2) of the Securities Act of 1933 (“Securities Act”) whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; insurance company as defined in Section 2(13) of the Securities Act; investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000, or if a self-directed plan, with investment decisions made solely by persons that are accredited investors.


5.

A private business development company as defined in Section 202(a)(22) of the Investment Advisors Act of 1940.


6.

An organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000.  


7.

A trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of the Securities Act.


8.

An entity in which all of the equity owners are accredited investors.





8


EX-31.1 4 gltc_ex31z1.htm CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER Certification



Exhibit 31.1


CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER


I, Michael Reger, certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q of GelTech Solutions, Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 13, 2019

 

/s/ Michael Reger

Michael Reger

Chief Executive Officer

(Principal Executive Officer)






EX-31.2 5 gltc_ex31z2.htm CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER Certification



Exhibit 31.2

 

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

 

I, Michael Hull, certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q of GelTech Solutions, Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 13, 2019

 

/s/ Michael Hull

Michael Hull

Chief Financial Officer

(Principal Financial Officer)






EX-32.1 6 gltc_ex32z1.htm CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 Certification



Exhibit 32.1


CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002




In connection with the quarterly report of GelTech Solutions, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof, I, Michael Reger, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:


1.

The quarterly report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and


2.

The information contained in the quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.


/s/ Michael Reger

Michael Reger

Chief Executive Officer

(Principal Executive Officer)

Dated: August 13, 2019





In connection with the quarterly report of GelTech Solutions, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof, I, Michael Hull, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:


1.

The quarterly report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and


2.

The information contained in the quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.


/s/ Michael Hull

Michael Hull

Chief Financial Officer

(Principal Financial Officer)

Dated: August 13, 2019














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deficit of $58,165,034 and $2,474,939, respectively, and incurred losses from operations and net losses of $1,847,613 and $2,031,386, respectively, for the six months ended June 30, 2019 and used cash in operations of $1,671,579 during the six months ended June 30, 2019. &#160;In addition, the Company has not yet generated revenue sufficient to support ongoing operations. Management believes these factors raise substantial doubt regarding the Company&#146;s ability to continue as a going concern for a period of twelve months from the filing date of this report. These unaudited condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.</p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px; text-indent: 48px">During the six months ended June 30, 2019, the Company received $1,575,000 from private placements with two accredited investors, including $675,000 from its chairman and principal shareholder and $900,000 from a director, an accredited investor who is also a significant shareholder. &#160;In addition, the Company received $500,000 from its chairman and principal shareholder in exchange for promissory note.</p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px; text-indent: 48px">Management believes that additional funding from its chairman and principal shareholder, our other significant shareholder and the revenue prospects from the Wildland industry provide the opportunity for the Company to continue as a going concern. &#160;Ultimately, the continuation of the Company as a going concern is dependent upon the ability of the Company to generate sufficient revenue to attain profitable operations. </p> <p style="line-height: 11pt; margin: 0px"><b>NOTE 3 &#150; Secured Convertible Note Agreements &#150; Related Party</b></p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px; text-indent: 48px">The Company currently has three debt facilities outstanding, all of them held by its chairman and principal shareholder. </p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px; text-indent: 48px">One convertible note in the amount of $1,000,000 dated July 11, 2013 related to a new funding on that date. The note bore annual interest of 7.5%, was convertible at $1.00 per share and was due July 10, 2018. In connection with the note, the Company issued five&#150;year warrants to purchase 500,000 shares of common stock at an exercise price of $1.30 per share. On February 12, 2015, this note was modified by securing the note with all the assets of the Company, by extending the due date of the note from July 10, 2018 to December 31, 2020 and by reducing the conversion rate of the note from $1.00 to $0.35 per share. The modification was accounted for as a debt extinguishment in accordance with ASC 470. In connection with the modification, the Company recorded a note discount of $60,390, related to the relative fair value of the warrants attached to the note. For the six months ended June 30, 2019, the Company recorded interest expense of $5,089 related to the amortization of the note discounts related to the warrants. As of June 30, 2019, the balance of the unamortized discount related to the warrants was $15,463. As of June 30, 2019, the principal balance on this note is $1,000,000 and accrued interest amounted to $69,315.</p> <p style="margin: 0px"><br /></p> <p style="margin: 0px; text-indent: 48px">In connection with the February 2015 debt modifications described above, the Company entered into a Secured Revolving Convertible Line of Credit Agreement (the &#147;Notes&#148;) for up to $4 million with its chairman and principal shareholder. On April 8, 2016, the Company and its chairman and principal shareholder entered into the First Amendment to Secured Revolving Convertible Promissory Note Agreement increasing the credit facility from $4 million to $5 million. On September 27, 2016, the Company and its chairman and principal shareholder entered into the Second Amendment to Secured Revolving Convertible Promissory Note Agreement increasing the credit facility from $5 million to $6 million. 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At June 30, 2019, there were options to purchase 14,581,696 shares of the Company&#146;s common stock, warrants to purchase 17,837,782 shares of the Company&#146;s common stock and 9,134,594 shares of the Company&#146;s common stock are reserved for convertible notes which may dilute future earnings per share. </p> <p style="line-height: 11pt; margin: 0px"><b>Stock-Based Compensation</b></p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px; text-indent: 48px">The Company accounts for stock-based compensation in accordance with ASC 718-10 &#147;Compensation &#150; Stock Compensation&#148; which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options, restricted stock units, and stock appreciation rights are based on estimated fair values. 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vertical-align: top; width: 8.73px"><p style="margin: 0px; padding: 0px">&#160;</p></td><td style="margin-top: 0px; vertical-align: top; width: 113.93px"><p style="margin: 0px; padding-left: -18.06px; text-align: center">74.85% - 79.98%</p> </td></tr> <tr><td style="margin-top: 0px; background-color: #CCFFCC; vertical-align: top; width: 386.6px"><p style="margin: 0px">Estimated annual forfeitures</p> </td><td style="margin-top: 0px; background-color: #CCFFCC; vertical-align: top; width: 8.73px"><p style="margin: 0px; padding: 0px">&#160;</p></td><td style="margin-top: 0px; background-color: #CCFFCC; vertical-align: top; width: 113.93px"><p style="margin: 0px; text-align: center">&#150;&#150;</p></td></tr></table> <p style="margin: 0px"><b>New Accounting Pronouncements</b></p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px; text-indent: 48px">No Accounting Standards Updates (ASUs) which were not effective until after June 30, 2019 are expected to have a significant effect on the Company's consolidated financial position or results of operations. </p> <p style="margin: 0px; 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width: 6.8px"><p style="margin: 0px">$</p> </td><td style="margin-top: 0px; border-bottom: #000000 3px double; vertical-align: bottom; width: 68.13px"><p style="margin: 0px; text-align: right">(220,590</p> </td><td style="margin-top: 0px; border-bottom: #FFFFFF 3px double; vertical-align: bottom; width: 6.8px"><p style="margin: 0px">)</p> </td><td style="margin-top: 0px; vertical-align: bottom; width: 6.8px"><p style="margin: 0px">&#160;</p> </td><td style="margin-top: 0px; border-bottom: #000000 3px double; vertical-align: bottom; width: 6.8px"><p style="margin: 0px">$</p> </td><td style="margin-top: 0px; border-bottom: #000000 3px double; vertical-align: bottom; width: 68.13px"><p style="margin: 0px; text-align: right">4,674,410</p></td></tr></table> 0.0188 0.0259 0.7485 0.7998 60390 102564 900 4762 50313 3637 3637 0.165 0.165 500000 500000 LIBOR plus 2%, not to exceed 7%, payable 500000 2020-06-30 Yes Yes false 600 500000 984537 DE 0-52993 2250 52797 62056 0.05 600 P10Y <p style="margin: 0px; padding-left: 72px; text-indent: -72px"><b>NOTE 1 </b>&#150;<b> Organization and Basis of Presentation</b></p> <p style="line-height: 11pt; margin: 0px; text-align: justify"><br /></p> <p style="line-height: 11pt; margin: 0px; text-align: justify"><b>Organization</b></p> <p style="line-height: 11pt; margin: 0px; text-align: justify"><br /></p> <p style="line-height: 11pt; margin: 0px; text-indent: 48px">GelTech Solutions, Inc., or GelTech or the Company, generates revenue primarily from marketing products based around the following four product categories (1)&#160;the FireIce&#174; family of products including FireIce&#174; Pro and FireIce&#174; 561, water enhancing powders that can be utilized both as a fire suppressant in urban firefighting, including fires in underground utility structures, and in wildland firefighting and as a medium-term fire retardant to protect wildlands, structures and firefighters; FireIce&#174; XT and FireIce&#174; ST, wet mixed suppressants for extinguishers and fire suppression systems and our new addition, FireIce&#174; Polar Eco-Foam, an environmentally friendly Class A foam (2) FireIce Shield&#174;, a line of products used in industry by manufacturers, plumbers, and welders, and by police departments and first responders to protect assets from fire; (3) Soil<font style="font-family: Cambria Math,Times New Roman"><font style="font-family: Arial Unicode MS,Times New Roman">&#8322;</font></font>O&#174; <font style="font-family: Arial Unicode MS,Times New Roman">&#8220;</font>Dust Control<font style="font-family: Arial Unicode MS,Times New Roman">&#8221;</font>, our application which is used for dust mitigation in the aggregate, road construction and mining Soil<font style="font-family: Cambria Math,Times New Roman"><font style="font-family: Arial Unicode MS,Times New Roman">&#8322;</font></font>O&#174; Soil Cap, a dust suppressant technology designed to stabilize stockpile dust and reduce soil erosion, and (4) Soil<font style="font-family: Cambria Math,Times New Roman"><font style="font-family: Arial Unicode MS,Times New Roman">&#8322;</font></font>O&#174;, a product which reduces the use of water and is primarily marketed to golf courses and commercial landscapers.</p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px; text-indent: 48px">The Company also markets equipment that is used to apply these primary products including (1) Emergency Manhole FireIce Delivery System, or EMFIDS, an innovative system designed to deliver FireIce&#174; into a manhole in the event of a fire or explosion, (2) FireIce&#174; Home Defense Unit, a system for applying FireIce&#174; to structures to protect them from wildfires and (3) the FireIce Shield CTP System, a mobile spray unit that can be used to protect communication tower electronics during hot work.</p> <p style="line-height: 11pt; margin: 0px; text-align: justify"><br /></p> <p style="line-height: 11pt; margin: 0px; text-indent: 48px">Our unaudited condensed consolidated financial statements have been prepared on a going concern basis, and we need to generate sufficient material revenues to support the ongoing business of GelTech (See Note 2).</p> <p style="line-height: 11pt; margin: 0px; text-align: justify"><br /></p> <p style="line-height: 11pt; margin: 0px; text-indent: 48px">The corporate office is located in Jupiter, Florida and we also have an office in Niwot, Colorado to support our Wildland operations.</p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px"><b>Basis of Presentation and Principles of Consolidation</b></p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px; text-indent: 48px">The accompanying unaudited consolidated financial statements include the accounts of the Company and its three wholly-owned subsidiaries: FireIce Gel, Inc., GelTech International, Inc. and Weather Tech Innovations, Inc. There has been no activity in FireIce Gel, Inc., Weather Tech Innovations, Inc. and GelTech International, Inc. &#160;</p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px; text-indent: 48px">These unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (&#147;GAAP&#148;) in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (&#147;SEC&#148;) for interim financial information. Accordingly, they do not include all of the information and footnotes required by &#34;GAAP&#34; for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The information included in these unaudited consolidated interim financial statements should be read in conjunction with Management&#146;s Discussion and Analysis of Financial Conditions and Results of Operations contained in this report and the audited consolidated financial statements and accompanying notes included in the Company&#146;s Report on Form&#160;10-K for the year ended December 31, 2018 filed on March 28, 2019.</p> <p style="line-height: 11pt; margin: 0px"><br /></p> <a name="Toc371611066"></a><p style="line-height: 11pt; margin: 0px; text-align: justify"><b>Inventories</b></p> <p style="line-height: 11pt; margin: 0px"><br /></p> <a name="Toc245877346"></a><a name="Toc371611067"></a><p style="line-height: 11pt; margin: 0px; text-indent: 48px">Inventories as of June 30, 2019 consisted of raw materials and finished goods in the amounts of $1,368,652 and $628,747, respectively. As of June 30, 2019, the Company estimated that raw materials and finished goods in the amount $1,397,584 would most likely not be consumed in the next twelve months and therefore reclassified that amount to long term inventory in the unaudited consolidated balance sheet. As of June 30, 2019, the Company had approximately $61,399 of consignment inventory held by customers consisting primarily of FireIce 561, FireIce Pro, FireIce HVOF, HDU Wands and Eductors.</p> <p style="margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px; text-align: justify"><b>Use of Estimates</b></p> <p style="line-height: 8pt; margin: 0px"><br /></p> <a name="Toc245877350"></a><a name="Toc371611069"></a><p style="line-height: 11pt; margin: 0px; text-indent: 48px">The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management believes that the estimates utilized in preparing its consolidated financial statements are reasonable; however, actual results could differ materially from these estimates. Significant estimates for the six months ended June 30, 2019 include the allowance for doubtful accounts, depreciation and amortization, valuation and classification of inventories, valuation of options granted for services, valuation of common stock granted for services or debt conversion and the valuation of deferred tax assets.</p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px; text-align: justify"><b>Revenue Recognition</b></p> <p style="margin: 0px"><br /></p> <p style="margin: 0px; text-indent: 48px; font-family: inherit,Times New Roman">On January 1, 2018, we adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) Topic 605, Revenue Recognition. The Company used the modified prospective method upon adoption of the ASU. Our adoption of this ASU resulted in no cumulative effect adjustment.</p> <p style="margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px; text-indent: 48px">The revenue that we recognize arises from purchase orders we receive from our customers. Our performance obligations under the purchase orders correspond to each shipment of product that we make to our customer under the purchase order. As a result, each purchase order generally contains more than one performance obligation based on the number of products ordered, the quantity of product to be shipped and the mode of shipment requested by the customer. Control of our products transfers to our customers when the customer is able to direct the use of, and obtain substantially all of the benefits from, our products, which generally occurs at the later of when the customer obtains title to our product or when the customer assumes risk of loss of our product. The transfer of control generally occurs at a point of shipment from either our warehouse or our third-party fulfillment centers. Once this occurs, we have satisfied our performance obligation and we recognize revenue.</p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="margin: 0px; text-indent: 48px">When we receive a purchase order from a customer, we are obligated to provide the product during a mutually agreed upon time period. Depending on the terms of the purchase order, either we or the customer arranges delivery of the product to the customer&#146;s intended destination. In situations where we have agreed to arrange delivery of the product to the customer&#146;s intended destination and control of the product transfers upon loading of our product onto transportation equipment, we have elected to account for any freight income associated with the delivery of these products as freight revenue, since this activity fulfills our obligation to transfer the product to the customer.</p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px"><i>Transaction Price</i></p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px; text-indent: 48px">We agree with our customers on the selling price of each transaction. This transaction price is generally based on the product, market conditions, including supply and demand balances and freight. In our contracts with customers, we allocate the entire transaction price to the sale of product to the customer, which is the basis for the determination of the relative standalone selling price allocated to each performance obligation. Returns of our product by our customers are permitted only when the product is not to specification and were not material for the six months ended June 30, 2019. Any sales tax, value added tax, and other tax we collect concurrently with our revenue-producing activities are excluded from revenue. Our revenues for FireIce, Soil<font style="font-family: Cambria Math,Times New Roman"><font style="font-family: Arial Unicode MS,Times New Roman">&#8322;</font></font>O and Soil<font style="font-family: Cambria Math,Times New Roman"><font style="font-family: Arial Unicode MS,Times New Roman">&#8322;</font></font>O Dust Control are seasonal in nature with our peak seasons occurring in the second and third quarters. 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As of June 30, 2019, the entire balance of the lease liability has been reflected as a current liability.</p> <p style="margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px; text-align: justify"><b>Net Earnings (Loss) per Share</b></p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px; text-indent: 48px">The Company computes net earnings (loss) per share in accordance with ASC 260-10, &#147;<i>Earnings per Share</i>.&#148; ASC 260-10 requires presentation of both basic and diluted earnings per share (&#147;EPS&#148;) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period. The Company&#146;s diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. At June 30, 2019, there were options to purchase 14,581,696 shares of the Company&#146;s common stock, warrants to purchase 17,837,782 shares of the Company&#146;s common stock and 9,134,594 shares of the Company&#146;s common stock are reserved for convertible notes which may dilute future earnings per share. </p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px"><b>Stock-Based Compensation</b></p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px; text-indent: 48px">The Company accounts for stock-based compensation in accordance with ASC 718-10 &#147;Compensation &#150; Stock Compensation&#148; which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options, restricted stock units, and stock appreciation rights are based on estimated fair values. 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The adoption resulted in no cumulative effect on the Company&#146;s retained earnings on the adoption date.</p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px"><b><i>Determining Fair Value Under ASC 718-10</i></b> </p> <p style="line-height: 11pt; margin: 0px"><br /></p> <a name="Toc371611071"></a><p style="line-height: 11pt; margin: 0px; text-indent: 48px">The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing formula. This fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. 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The risk-free rate is determined based upon the prevailing rate of United States Treasury securities with similar maturities.</p> <p style="line-height: 8pt; margin: 0px"><br /></p> <p style="margin: 0px; text-indent: 48px">The fair values of stock options and warrants granted during the period from January 1, 2019 to June 30, 2019 were estimated using the following assumptions: </p> <p style="line-height: 8pt; margin: 0px"><br /></p> <table cellpadding="0" cellspacing="0" align="center" style="margin-top: 0px; font-size: 10pt"><tr style="height: 0px; font-size: 0"><td style="width: 386.6px"></td><td style="width: 8.73px"></td><td style="width: 113.93px"></td></tr> <tr><td style="margin-top: 0px; background-color: #CCFFCC; vertical-align: top; width: 386.6px"><p style="margin: 0px">Risk free interest rate</p> </td><td style="margin-top: 0px; background-color: #CCFFCC; vertical-align: top; width: 8.73px"><p style="margin: 0px; padding: 0px">&#160;</p></td><td style="margin-top: 0px; background-color: #CCFFCC; vertical-align: top; width: 113.93px"><p style="margin: 0px; text-align: center">1.88% - 2.59%</p> </td></tr> <tr><td style="margin-top: 0px; vertical-align: top; width: 386.6px"><p style="margin: 0px">Expected term (in years)</p> </td><td style="margin-top: 0px; vertical-align: top; width: 8.73px"><p style="margin: 0px; padding: 0px">&#160;</p></td><td style="margin-top: 0px; vertical-align: top; width: 113.93px"><p style="margin: 0px; text-align: center">2.5 - 5.0</p> </td></tr> <tr><td style="margin-top: 0px; background-color: #CCFFCC; vertical-align: top; width: 386.6px"><p style="margin: 0px">Dividend yield</p> </td><td style="margin-top: 0px; background-color: #CCFFCC; vertical-align: top; width: 8.73px"><p style="margin: 0px; padding: 0px">&#160;</p></td><td style="margin-top: 0px; background-color: #CCFFCC; vertical-align: top; width: 113.93px"><p style="margin: 0px; text-align: center">&#150;&#150;</p> </td></tr> <tr><td style="margin-top: 0px; vertical-align: top; width: 386.6px"><p style="margin: 0px">Volatility of common stock</p> </td><td style="margin-top: 0px; vertical-align: top; width: 8.73px"><p style="margin: 0px; padding: 0px">&#160;</p></td><td style="margin-top: 0px; vertical-align: top; width: 113.93px"><p style="margin: 0px; padding-left: -18.06px; text-align: center">74.85% - 79.98%</p> </td></tr> <tr><td style="margin-top: 0px; background-color: #CCFFCC; vertical-align: top; width: 386.6px"><p style="margin: 0px">Estimated annual forfeitures</p> </td><td style="margin-top: 0px; background-color: #CCFFCC; vertical-align: top; width: 8.73px"><p style="margin: 0px; padding: 0px">&#160;</p></td><td style="margin-top: 0px; background-color: #CCFFCC; vertical-align: top; width: 113.93px"><p style="margin: 0px; text-align: center">&#150;&#150;</p> </td></tr> </table> <p style="line-height: 8pt; margin: 0px"><br /></p> <p style="margin: 0px"><b>New Accounting Pronouncements</b></p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px; text-indent: 48px">No Accounting Standards Updates (ASUs) which were not effective until after June 30, 2019 are expected to have a significant effect on the Company's consolidated financial position or results of operations. </p> <p style="line-height: 11pt; margin: 0px"></p> <p style="line-height: 11pt; margin: 0px; text-align: justify"><b>Revenue Recognition</b></p> <p style="margin: 0px"><br /></p> <p style="margin: 0px; text-indent: 48px; font-family: inherit,Times New Roman">On January 1, 2018, we adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) Topic 605, Revenue Recognition. The Company used the modified prospective method upon adoption of the ASU. Our adoption of this ASU resulted in no cumulative effect adjustment.</p> <p style="margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px; text-indent: 48px">The revenue that we recognize arises from purchase orders we receive from our customers. Our performance obligations under the purchase orders correspond to each shipment of product that we make to our customer under the purchase order. As a result, each purchase order generally contains more than one performance obligation based on the number of products ordered, the quantity of product to be shipped and the mode of shipment requested by the customer. Control of our products transfers to our customers when the customer is able to direct the use of, and obtain substantially all of the benefits from, our products, which generally occurs at the later of when the customer obtains title to our product or when the customer assumes risk of loss of our product. The transfer of control generally occurs at a point of shipment from either our warehouse or our third-party fulfillment centers. Once this occurs, we have satisfied our performance obligation and we recognize revenue.</p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="margin: 0px; text-indent: 48px">When we receive a purchase order from a customer, we are obligated to provide the product during a mutually agreed upon time period. Depending on the terms of the purchase order, either we or the customer arranges delivery of the product to the customer&#146;s intended destination. In situations where we have agreed to arrange delivery of the product to the customer&#146;s intended destination and control of the product transfers upon loading of our product onto transportation equipment, we have elected to account for any freight income associated with the delivery of these products as freight revenue, since this activity fulfills our obligation to transfer the product to the customer.</p> <p style="margin: 0px"><b>NOTE 6 &#150; Commitments and Contingencies</b></p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px; text-indent: 48px">In February 2018, the Company entered into a two-year operating lease agreement for an office in Niwot, Colorado to better serve our Wildland fire customers. The lease began on March 1, 2018 and calls for 24 monthly payments of $2,250. In accounting for this operating lease, the Company elected to early adopt ASU 2016-02, <i>Leases. </i>As such, the Company calculated the fair value of the operating lease right of use asset and the operating lease liability, $50,313, by calculating the present value of the lease payments, discounted at 7.5%, the Company&#146;s then incremental borrowing rate. </p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px; text-indent: 48px">On November 14, 2012, the Compensation Committee approved new employment agreements for the Company&#146;s then Chief Executive Officer, then President, Chief Technology Officer and Chief Financial Officer. The employment agreements each provide for base salaries of $150,000 and 800,000 stock settled stock appreciation rights (&#147;SARS&#148;) of which (i) 200,000 vested immediately, (ii) 200,000 vest upon the Company generating $3,000,000 in revenue in any 12-month period, (iii) another 200,000 vest upon the Company generating $5,000,000 in revenue in any 12-month period and (iv) another 200,000 vest upon the Company generating $6,000,000 in revenue in any 12-month period. The SARs are exercisable at $0.45 per share over a 10-year period. The Company&#146;s then Chief Executive Officer, then President and Chief Technology Officer agreed to cancel the 250,000 stock options granted to each of them in their prior employment agreements. These executives&#146; base salary will increase to: (i) $170,000 upon the Company generating $3,000,000 in revenue in any 12-month period, (ii) $190,000 upon the Company generating $5,000,000 in any 12-month period and (iii) $200,000 upon the Company generating $6,000,000 in any 12-month period. On September 30, 2016, the employment agreement for the Company&#146;s Chief Financial Officer expired.</p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="margin: 0px; text-indent: 48px">In January 2015, GelTech approved an amendment to the Employment Agreement of our Chief Technology Officer. In addition to his base salary, he will receive 5% of the first $2 million of revenue generated by GelTech. The Company paid the Chief Technology Officer $52,797 and $62,056, respectively, in 2017 and 2016 under this provision. The amendment was effective as of January 1, 2015. Additionally, in May 2015, GelTech approved an amendment to the Chief Technology Officer&#146;s Employment Agreement to extend the term of the Agreement an additional four years (now expiring October 1, 2020).</p> <p style="margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px; text-indent: 48px">On August 16, 2017, the&#160;Company entered into a new three-year Employment Agreement with the Company&#146;s chief financial officer. The Employment Agreement provides for a base salary of $150,000 per year and a car allowance of $600 per month. The Company&#146;s Compensation Committee will also have the discretion to award a discretionary bonus. In consideration for entering into the Employment Agreement, the Company granted 125,000 fully vested 10-year stock options exercisable at $0.1849 per share.</p> <p style="margin: 0px"></p> <p style="line-height: 11pt; margin: 0px"><b>NOTE 7 &#150; Revenue Recognition</b></p> <p style="line-height: 11pt; margin: 0px"><br /></p> <a name="Hlk16491941"></a><p style="line-height: 11pt; margin: 0px; text-indent: 48px">The revenue that we recognize arises from purchase orders we receive from our customers. Our performance obligations under the purchase orders correspond to each shipment of product that we make to our customer under the purchase order. As a result, each purchase order generally contains more than one performance obligation based on the number of products ordered, the quantity of product to be shipped and the mode of shipment requested by the customer. Control of our products transfers to our customers when the customer is able to direct the use of, and obtain substantially all of the benefits from, our products, which generally occurs at the later of when the customer obtains title to our product or when the customer assumes risk of loss of our product. The transfer of control generally occurs at a point of shipment from either our warehouse or our third-party fulfillment centers. Once this occurs, we have satisfied our performance obligation and we recognize revenue.</p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px; text-indent: 48px">When we receive a purchase order from a customer, we are obligated to provide the product during a mutually agreed upon time period. Depending on the terms of the purchase order, either we or the customer arranges delivery of the product to the customer&#146;s intended destination. In situations where we have agreed to arrange delivery of the product to the customer&#146;s intended destination and control of the product transfers upon loading of our product onto transportation equipment, we have elected to account for any freight income associated with the delivery of these products as freight revenue, since this activity fulfills our obligation to transfer the product to the customer. For the&#160;six&#160;months ended&#160;June 30, 2019, the total amount of freight recognized as revenue was $32,027.</p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px"><i>Transaction Price</i></p> <p style="line-height: 11pt; margin: 0px"><br /></p> <p style="line-height: 11pt; margin: 0px; text-indent: 48px">We agree with our customers on the selling price of each transaction. This transaction price is generally based on the product, market conditions, including supply and demand balances and freight. In our contracts with customers, we allocate the entire transaction price to the sale of product to the customer, which is the basis for the determination of the relative standalone selling price allocated to each performance obligation. Returns of our product by our customers are permitted only when the product is not to specification and were not material for the six months ended June 30, 2019. Any sales tax, value added tax, and other tax we collect concurrently with our revenue-producing activities are excluded from revenue. Our revenues for FireIce, Soil<font style="font-family: Cambria Math,Times New Roman"><font style="font-family: Arial Unicode MS,Times New Roman">&#8322;</font></font>O and Soil<font style="font-family: Cambria Math,Times New Roman"><font style="font-family: Arial Unicode MS,Times New Roman">&#8322;</font></font>O Dust Control are seasonal in nature with our peak seasons occurring in the second and third quarters. 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entitled to Percentage to be received of first $2 million of revenue First revenue amount on which 5% is to be received Officer compensation Options term Disaggregation of Revenue [Table] Disaggregation of Revenue [Line Items] Revenue Net amount of freight Credit purchase Concentration Risk [Table] Concentration Risk [Line Items] Concentration Risk Benchmark [Axis] Concentration Risk Type [Axis] Supplier Three Concentration Risk [Member] Supplier Four Concentration Risk [Member] Number of customers in concentration Number of products in concentration Concentration risk, percentage Total purchases of raw material, finished goods and packaging made during the period Amount of return from distributor Subsequent Event [Table] Subsequent Event [Line Items] Proceeds from stock options exercised Options vesting term Proceeds from note payable, related party Accredited Investor [Member] Accredited Investors [Member] Advance One [Member] Advance Two [Member] Note discount. 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Additional interest expense Assets, Current Assets Liabilities, Current Liabilities Stockholders' Equity Attributable to Parent Liabilities and Equity Gross Profit Research and Development Expense Operating Expenses Operating Income (Loss) Interest Expense Nonoperating Income (Expense) Issuance of Stock and Warrants for Services or Claims Increase (Decrease) in Accounts Receivable Increase (Decrease) in Inventories Increase (Decrease) in Prepaid Expense and Other Assets Increase (Decrease) in Other Operating Assets Increase (Decrease) in Accounts Payable Increase (Decrease) in Accrued Liabilities IncreaseDecreaseInOperatingLeaseLiability Net Cash Provided by (Used in) Operating Activities Payments to Acquire Machinery and Equipment Net Cash Provided by (Used in) Investing Activities PaymentsOnInsuranceFinanceContract Net Cash Provided by (Used in) Financing Activities Cash and Cash Equivalents, Period Increase (Decrease) Cash and Cash Equivalents, at Carrying Value Inventory, Policy [Policy Text Block] Revenue [Policy Text Block] Gain (Loss) on Extinguishment of Debt Convertible Notes Payable Related Parties Current And Noncurrent Unamortized Discount Convertible Line of Credit, Related Parties, Current And Noncurrent Unamortized Discount Long-term Line of Credit Notes Payable, Related Parties Long-term Debt, Current Maturities Longterm Debt Current Net Convertible And Notes Payable Related Parties Long Term Unamortized Discount Notes Payable, Noncurrent Common stock issued for investor relation services, shares [Default Label] Operating Lease, Liability EX-101.PRE 12 gltc-20190630_pre.xml XBRL PRESENTATION FILE XML 13 R1.htm IDEA: XBRL DOCUMENT v3.19.2
Document and Entity Information - shares
6 Months Ended
Jun. 30, 2019
Aug. 13, 2019
Document And Entity Information    
Entity Registrant Name GelTech Solutions, Inc.  
Entity Central Index Key 0001403676  
Document Type 10-Q  
Document Period End Date Jun. 30, 2019  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Shell Company false  
Entity Emerging Growth Company false  
Entity Common Stock, Shares Outstanding   112,941,589
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2019  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Incorporation State Country Code DE  
Entity File Number 0-52993  
XML 14 R2.htm IDEA: XBRL DOCUMENT v3.19.2
CONSOLIDATED BALANCE SHEETS - USD ($)
Jun. 30, 2019
Dec. 31, 2018
ASSETS    
Cash $ 382,778 $ 69,809
Accounts receivable trade, net 118,845 112,816
Inventories 599,815 661,178
Prepaid expenses and other current assets 151,593 207,297
Total current assets 1,253,031 1,051,100
Furniture, fixtures and equipment, net 125,228 122,199
Operating lease right of use assets 16,771 29,349
Inventory not expected to be realized within one year 1,397,584 1,298,236
Deposits 18,336 18,336
Total assets 2,810,950 2,519,220
LIABILITIES AND STOCKHOLDERS' DEFICIT    
Accounts payable 213,335 176,257
Accrued expenses 367,761 276,465
Customer deposit 721 721
Operating lease liability - current portion 16,771
Insurance premium finance contract 12,891 63,249
Total current liabilities 611,479 516,692
Operating lease liability 30,071
Note payable - related party 500,000  
Convertible notes - related party, net of discounts 984,537 979,448
Convertible line of credit - related party, net of discounts 3,189,873 3,122,367
Total liabilities 5,285,889 4,648,578
Commitments and contingencies (Note 6)
Stockholders' deficit    
Preferred stock: $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding
Common stock: $0.001 par value; 200,000,000 shares authorized; 112,937,952 and 103,651,791 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively. 112,938 103,652
Additional paid in capital 55,577,157 53,900,638
Accumulated deficit (58,165,034) (56,133,648)
Total stockholders' deficit (2,474,939) (2,129,358)
Total liabilities and stockholders' deficit $ 2,810,950 $ 2,519,220
XML 15 R3.htm IDEA: XBRL DOCUMENT v3.19.2
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Jun. 30, 2019
Dec. 31, 2018
Statement of Financial Position [Abstract]    
Preferred stock, par value per share $ 0.001 $ 0.001
Preferred stock, shares authorized 5,000,000 5,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value per share $ 0.001 $ 0.001
Common stock, shares authorized 200,000,000 200,000,000
Common stock, shares issued 112,937,952 103,651,791
Common stock, shares outstanding 112,937,952 103,651,791
XML 16 R4.htm IDEA: XBRL DOCUMENT v3.19.2
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Income Statement [Abstract]        
Sales $ 315,570 $ 397,557 $ 489,774 $ 660,436
Cost of goods sold 152,389 124,399 245,310 205,597
Gross profit 163,181 273,158 244,464 454,839
Operating expenses:        
Selling, general and administrative expenses 1,022,273 1,136,408 2,009,596 2,141,299
Research and development 62,487 17,735 82,481 33,561
Total operating expenses 1,084,760 1,154,143 2,092,077 2,174,860
Loss from operations (921,579) (880,985) (1,847,613) (1,720,021)
Other income (expense)        
Interest income 9 3 9 3
Interest expense (91,907) (179,816) (183,782) (357,323)
Total other income (expense) (91,898) (179,813) (183,773) (357,320)
Net loss $ (1,013,477) $ (1,060,798) $ (2,031,386) $ (2,077,341)
Net loss per common share - basic and diluted $ (0.01) $ (0.01) $ (0.02) $ (0.03)
Weighted average shares outstanding - basic and diluted 110,995,929 85,388,588 108,404,319 81,803,910
XML 17 R5.htm IDEA: XBRL DOCUMENT v3.19.2
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT - USD ($)
Common Stock [Member]
Additional Paid In Capital [Member]
Accumulated Deficit [Member]
Total
Balance at Dec. 31, 2017 $ 74,915 $ 47,285,967 $ (52,119,691) $ (4,758,809)
Balance, shares at Dec. 31, 2017 74,914,703      
Common stock and warrants issued for cash $ 5,938 894,062 900,000
Common stock and warrants issued for cash, shares 5,938,450      
Common stock issued for cash $ 125 19,875 20,000
Common stock issued for cash, shares 125,000      
Common stock issued for services $ 17 2,883 2,900
Common stock issued for services, shares 16,767      
Options issued for services 15,572 15,572
Options and warrants vested 48,108 48,108
Net loss (1,016,543) (1,016,543)
Balance at Mar. 31, 2018 $ 80,995 48,266,467 (53,136,234) (4,788,772)
Balance, shares at Mar. 31, 2018 80,994,920      
Balance at Dec. 31, 2017 $ 74,915 47,285,967 (52,119,691) (4,758,809)
Balance, shares at Dec. 31, 2017 74,914,703      
Net loss       (2,077,341)
Balance at Jun. 30, 2018 $ 87,295 49,720,584 (54,197,032) (4,389,153)
Balance, shares at Jun. 30, 2018 87,294,690      
Balance at Mar. 31, 2018 $ 80,995 48,266,467 (53,136,234) (4,788,772)
Balance, shares at Mar. 31, 2018 80,994,920      
Common stock and warrants issued for cash $ 2,732 622,268 625,000
Common stock and warrants issued for cash, shares 2,732,083      
Common stock issued for cash $ 312 63,688 64,000
Common stock issued for cash, shares 312,394      
Common stock issued for services $ 6 894 900
Common stock issued for services, shares 5,945      
Common stock issued for interest $ 3,249 716,382 719,631
Common stock issued for interest, shares 3,249,348      
Options and warrants vested 50,886 50,886
Net loss (1,060,798) (1,060,798)
Balance at Jun. 30, 2018 $ 87,295 49,720,584 (54,197,032) (4,389,153)
Balance, shares at Jun. 30, 2018 87,294,690      
Balance at Dec. 31, 2018 $ 103,652 53,900,638 (56,133,648) $ (2,129,358)
Balance, shares at Dec. 31, 2018 103,651,791     103,651,791
Common stock and warrants issued for cash $ 4,896 895,104 $ 900,000
Common stock and warrants issued for cash, shares 4,896,466      
Common stock issued for services and commissions $ 20 3,428 3,448
Common stock issued for services and commissions, shares 19,754      
Options issued for services 17,614 17,614
Options and warrants vested 50,714 50,714
Net loss (1,017,909) (1,017,909)
Balance at Mar. 31, 2019 $ 108,568 54,867,498 (57,151,557) (2,175,491)
Balance, shares at Mar. 31, 2019 108,568,011      
Balance at Dec. 31, 2018 $ 103,652 53,900,638 (56,133,648) $ (2,129,358)
Balance, shares at Dec. 31, 2018 103,651,791     103,651,791
Net loss       $ (2,031,386)
Balance at Jun. 30, 2019 $ 112,938 55,577,157 (58,165,034) $ (2,474,939)
Balance, shares at Jun. 30, 2019 112,937,952     112,937,952
Balance at Mar. 31, 2019 $ 108,568 54,867,498 (57,151,557) $ (2,175,491)
Balance, shares at Mar. 31, 2019 108,568,011      
Common stock and warrants issued for cash $ 4,359 670,641 675,000
Common stock and warrants issued for cash, shares 4,358,698      
Common stock issued for services and commissions $ 11 1,958 1,969
Common stock issued for services and commissions, shares 11,243      
Options and warrants vested 37,060 37,060
Net loss (1,013,477) (1,013,477)
Balance at Jun. 30, 2019 $ 112,938 $ 55,577,157 $ (58,165,034) $ (2,474,939)
Balance, shares at Jun. 30, 2019 112,937,952     112,937,952
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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Reconciliation of net loss to net cash used in operating activities:    
Net loss $ (2,031,386) $ (2,077,341)
Adjustments to reconcile net loss to net cash used in operating activities:    
Bad debt expense 1,572 10,653
Depreciation 37,065 44,982
Amortization of right of use assets 8,385
Amortization of debt discounts 72,595 98,639
Stock issued for services and commissions 5,417 3,800
Options issued for services 17,614 15,572
Employee stock option compensation expense 87,774 98,994
Changes in assets and liabilities:    
Accounts receivable (7,601) (168,559)
Inventories (37,985) (33,117)
Prepaid expenses and other current assets 55,704 70,513
Other assets (2,250)
Accounts payable 37,078 111,780
Accrued expenses 91,296 300,431
Operating lease liability (722) (8,135)
Customer deposits 721
Net cash used in operating activities (1,671,579) (1,524,932)
Cash flows from Investing Activities    
Purchases of equipment (40,094) (5,067)
Net cash used in investing activities (40,094) (5,067)
Cash flows from Financing Activities    
Proceeds from sale of stock and warrants 1,575,000 1,525,000
Proceeds from note payable - related party 500,000
Proceeds from sale of stock 84,000
Payments on insurance finance contract (50,358) (53,398)
Net cash provided by financing activities 2,024,642 1,555,602
Net increase in cash and cash equivalents 312,969 25,603
Cash and cash equivalents - beginning 69,809 43,888
Cash and cash equivalents - ending 382,778 69,491
Supplemental Disclosure of Cash Flow Information:    
Cash paid for interest 1,753 1,382
Cash paid for income taxes
Supplementary Disclosure of Non-cash Investing and Financing Activities:    
Operating lease right of use assets and lease obligation 50,313
Stock issued for accrued interest 719,631
Stock options granted for prepaid services $ 17,614 $ 15,572
XML 19 R7.htm IDEA: XBRL DOCUMENT v3.19.2
Organization and Basis of Presentation
6 Months Ended
Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Basis of Presentation

NOTE 1 Organization and Basis of Presentation


Organization


GelTech Solutions, Inc., or GelTech or the Company, generates revenue primarily from marketing products based around the following four product categories (1) the FireIce® family of products including FireIce® Pro and FireIce® 561, water enhancing powders that can be utilized both as a fire suppressant in urban firefighting, including fires in underground utility structures, and in wildland firefighting and as a medium-term fire retardant to protect wildlands, structures and firefighters; FireIce® XT and FireIce® ST, wet mixed suppressants for extinguishers and fire suppression systems and our new addition, FireIce® Polar Eco-Foam, an environmentally friendly Class A foam (2) FireIce Shield®, a line of products used in industry by manufacturers, plumbers, and welders, and by police departments and first responders to protect assets from fire; (3) SoilDust Control, our application which is used for dust mitigation in the aggregate, road construction and mining SoilO® Soil Cap, a dust suppressant technology designed to stabilize stockpile dust and reduce soil erosion, and (4) SoilO®, a product which reduces the use of water and is primarily marketed to golf courses and commercial landscapers.


The Company also markets equipment that is used to apply these primary products including (1) Emergency Manhole FireIce Delivery System, or EMFIDS, an innovative system designed to deliver FireIce® into a manhole in the event of a fire or explosion, (2) FireIce® Home Defense Unit, a system for applying FireIce® to structures to protect them from wildfires and (3) the FireIce Shield CTP System, a mobile spray unit that can be used to protect communication tower electronics during hot work.


Our unaudited condensed consolidated financial statements have been prepared on a going concern basis, and we need to generate sufficient material revenues to support the ongoing business of GelTech (See Note 2).


The corporate office is located in Jupiter, Florida and we also have an office in Niwot, Colorado to support our Wildland operations.


Basis of Presentation and Principles of Consolidation


The accompanying unaudited consolidated financial statements include the accounts of the Company and its three wholly-owned subsidiaries: FireIce Gel, Inc., GelTech International, Inc. and Weather Tech Innovations, Inc. There has been no activity in FireIce Gel, Inc., Weather Tech Innovations, Inc. and GelTech International, Inc.  


These unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by "GAAP" for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The information included in these unaudited consolidated interim financial statements should be read in conjunction with Management’s Discussion and Analysis of Financial Conditions and Results of Operations contained in this report and the audited consolidated financial statements and accompanying notes included in the Company’s Report on Form 10-K for the year ended December 31, 2018 filed on March 28, 2019.


Inventories


Inventories as of June 30, 2019 consisted of raw materials and finished goods in the amounts of $1,368,652 and $628,747, respectively. As of June 30, 2019, the Company estimated that raw materials and finished goods in the amount $1,397,584 would most likely not be consumed in the next twelve months and therefore reclassified that amount to long term inventory in the unaudited consolidated balance sheet. As of June 30, 2019, the Company had approximately $61,399 of consignment inventory held by customers consisting primarily of FireIce 561, FireIce Pro, FireIce HVOF, HDU Wands and Eductors.


Use of Estimates


The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management believes that the estimates utilized in preparing its consolidated financial statements are reasonable; however, actual results could differ materially from these estimates. Significant estimates for the six months ended June 30, 2019 include the allowance for doubtful accounts, depreciation and amortization, valuation and classification of inventories, valuation of options granted for services, valuation of common stock granted for services or debt conversion and the valuation of deferred tax assets.


Revenue Recognition


On January 1, 2018, we adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) Topic 605, Revenue Recognition. The Company used the modified prospective method upon adoption of the ASU. Our adoption of this ASU resulted in no cumulative effect adjustment.


The revenue that we recognize arises from purchase orders we receive from our customers. Our performance obligations under the purchase orders correspond to each shipment of product that we make to our customer under the purchase order. As a result, each purchase order generally contains more than one performance obligation based on the number of products ordered, the quantity of product to be shipped and the mode of shipment requested by the customer. Control of our products transfers to our customers when the customer is able to direct the use of, and obtain substantially all of the benefits from, our products, which generally occurs at the later of when the customer obtains title to our product or when the customer assumes risk of loss of our product. The transfer of control generally occurs at a point of shipment from either our warehouse or our third-party fulfillment centers. Once this occurs, we have satisfied our performance obligation and we recognize revenue.


When we receive a purchase order from a customer, we are obligated to provide the product during a mutually agreed upon time period. Depending on the terms of the purchase order, either we or the customer arranges delivery of the product to the customer’s intended destination. In situations where we have agreed to arrange delivery of the product to the customer’s intended destination and control of the product transfers upon loading of our product onto transportation equipment, we have elected to account for any freight income associated with the delivery of these products as freight revenue, since this activity fulfills our obligation to transfer the product to the customer.


Transaction Price


We agree with our customers on the selling price of each transaction. This transaction price is generally based on the product, market conditions, including supply and demand balances and freight. In our contracts with customers, we allocate the entire transaction price to the sale of product to the customer, which is the basis for the determination of the relative standalone selling price allocated to each performance obligation. Returns of our product by our customers are permitted only when the product is not to specification and were not material for the six months ended June 30, 2019. Any sales tax, value added tax, and other tax we collect concurrently with our revenue-producing activities are excluded from revenue. Our revenues for FireIce, SoilO and SoilO Dust Control are seasonal in nature with our peak seasons occurring in the second and third quarters. Revenues from the sales of FireIce Shield are less seasonal.


Leases


In connection with entering into a new lease agreement for our Wildland operations in Colorado in February 2018, the Company elected to early adopt the provisions of ASU 2016-02, Leases. As such, the Company recorded an operating lease right of use asset and an operating lease liability as of March 31, 2018. As of June 30, 2019, the entire balance of the lease liability has been reflected as a current liability.


Net Earnings (Loss) per Share


The Company computes net earnings (loss) per share in accordance with ASC 260-10, “Earnings per Share.” ASC 260-10 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period. The Company’s diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. At June 30, 2019, there were options to purchase 14,581,696 shares of the Company’s common stock, warrants to purchase 17,837,782 shares of the Company’s common stock and 9,134,594 shares of the Company’s common stock are reserved for convertible notes which may dilute future earnings per share.


Stock-Based Compensation


The Company accounts for stock-based compensation in accordance with ASC 718-10 “Compensation – Stock Compensation” which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options, restricted stock units, and stock appreciation rights are based on estimated fair values. Given the absence of adequate historical data, the Company uses the Simplified Method to estimate the term of options granted to employees and directors.


Effective January 1, 2019, the Company adopted ASU 2018-07 “Compensation – Stock Compensation (Topic718), Improvements to Nonemployee Share-Based Payment Accounting” which modified the accounting for non-employee stock-based compensation. This standard requires the measurement and recognition of compensation expense for all share-based payment awards made to non-employees based on estimated fair values using the same method as for employees. The adoption resulted in no cumulative effect on the Company’s retained earnings on the adoption date.


Determining Fair Value Under ASC 718-10


The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing formula. This fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. The Company’s determination of fair value using an option-pricing model is affected by the stock price as well as assumptions regarding the number of highly subjective variables.


The Company estimates volatility based upon the historical stock price of the Company and estimates the expected term for employee stock options using the simplified method for employees and directors and the contractual term for non-employees. The risk-free rate is determined based upon the prevailing rate of United States Treasury securities with similar maturities.


The fair values of stock options and warrants granted during the period from January 1, 2019 to June 30, 2019 were estimated using the following assumptions:


Risk free interest rate

 

1.88% - 2.59%

Expected term (in years)

 

2.5 - 5.0

Dividend yield

 

––

Volatility of common stock

 

74.85% - 79.98%

Estimated annual forfeitures

 

––


New Accounting Pronouncements


No Accounting Standards Updates (ASUs) which were not effective until after June 30, 2019 are expected to have a significant effect on the Company's consolidated financial position or results of operations.

XML 20 R8.htm IDEA: XBRL DOCUMENT v3.19.2
Going Concern
6 Months Ended
Jun. 30, 2019
Going Concern [Abstract]  
Going Concern

NOTE 2 – Going Concern


These unaudited condensed consolidated financial statements have been prepared on a going concern basis, which assumes the Company will continue to realize it assets and discharge its liabilities in the normal course of business.  As of June 30, 2019, the Company had an accumulated deficit and stockholders’ deficit of $58,165,034 and $2,474,939, respectively, and incurred losses from operations and net losses of $1,847,613 and $2,031,386, respectively, for the six months ended June 30, 2019 and used cash in operations of $1,671,579 during the six months ended June 30, 2019.  In addition, the Company has not yet generated revenue sufficient to support ongoing operations. Management believes these factors raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of twelve months from the filing date of this report. These unaudited condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.


During the six months ended June 30, 2019, the Company received $1,575,000 from private placements with two accredited investors, including $675,000 from its chairman and principal shareholder and $900,000 from a director, an accredited investor who is also a significant shareholder.  In addition, the Company received $500,000 from its chairman and principal shareholder in exchange for promissory note.


Management believes that additional funding from its chairman and principal shareholder, our other significant shareholder and the revenue prospects from the Wildland industry provide the opportunity for the Company to continue as a going concern.  Ultimately, the continuation of the Company as a going concern is dependent upon the ability of the Company to generate sufficient revenue to attain profitable operations.

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Secured Convertible Note Agreements - Related Party
6 Months Ended
Jun. 30, 2019
Convertible Note Agreements - Related Party  
Secured Convertible Note Agreements - Related Party

NOTE 3 – Secured Convertible Note Agreements – Related Party


The Company currently has three debt facilities outstanding, all of them held by its chairman and principal shareholder.


One convertible note in the amount of $1,000,000 dated July 11, 2013 related to a new funding on that date. The note bore annual interest of 7.5%, was convertible at $1.00 per share and was due July 10, 2018. In connection with the note, the Company issued five–year warrants to purchase 500,000 shares of common stock at an exercise price of $1.30 per share. On February 12, 2015, this note was modified by securing the note with all the assets of the Company, by extending the due date of the note from July 10, 2018 to December 31, 2020 and by reducing the conversion rate of the note from $1.00 to $0.35 per share. The modification was accounted for as a debt extinguishment in accordance with ASC 470. In connection with the modification, the Company recorded a note discount of $60,390, related to the relative fair value of the warrants attached to the note. For the six months ended June 30, 2019, the Company recorded interest expense of $5,089 related to the amortization of the note discounts related to the warrants. As of June 30, 2019, the balance of the unamortized discount related to the warrants was $15,463. As of June 30, 2019, the principal balance on this note is $1,000,000 and accrued interest amounted to $69,315.


In connection with the February 2015 debt modifications described above, the Company entered into a Secured Revolving Convertible Line of Credit Agreement (the “Notes”) for up to $4 million with its chairman and principal shareholder. On April 8, 2016, the Company and its chairman and principal shareholder entered into the First Amendment to Secured Revolving Convertible Promissory Note Agreement increasing the credit facility from $4 million to $5 million. On September 27, 2016, the Company and its chairman and principal shareholder entered into the Second Amendment to Secured Revolving Convertible Promissory Note Agreement increasing the credit facility from $5 million to $6 million. Under the agreements, the Company may, with the prior approval of its chairman and principal shareholder, receive advances under the secured convertible line of credit. Each advance bears an annual interest rate of 7.5%, is due December 31, 2020 and is convertible at the rate equal to the closing price of the Company’s common stock on the day prior to the date the parties agree to the advance. In addition, the Company will issue the Company’s chairman and principal shareholder two-year warrants to purchase shares of common stock at an exercise price of $2.00 per share. The number of warrants issued equals 50% of the number of shares issuable upon the conversion of the related advance.


In July 2018, the Company issued 9,379,473 shares of common stock to its chairman and principal shareholder upon the conversion of $2.5 million of the Notes. The Notes were converted at prices ranging from $0.21 to $0.35 per share. No gain or loss was recorded relating to the fair value of the shares exchanged because the debt was converted based upon the contractual terms of the Notes. In addition to the conversion, the Company’s chairman, CEO and principal shareholder agreed to reduce the annual interest rate on the remaining Notes and a $1 million Secured Convertible Promissory Note from 7.5% to 5.0%. The remaining Notes are convertible at prices ranging from $0.35 to $0.82 per share.  Because the change in interest rates did not significantly affect the present value of the remaining debt it has been treated as a debt modification.


During the six months ended June 30, 2019, the Company has recognized interest expense of $67,506 related to the amortization of loan discounts. As of June 30, 2019, the principal balance of the advances was $3,395,000 and the balance of the unamortized discounts related to the warrants and the beneficial conversion feature was $102,564 and $102,564, respectively. Accrued interest on the advances amounted to $287,722 as of June 30, 2019.


On June 18, 2019, the Company received $500,000 from its Chairman and principal shareholder in exchange for a $500,000 secured promissory note bearing interest of LIBOR plus 2%, not to exceed 7%, payable quarterly with principal due June 30, 2022.  For the six months ended June 30, 2019, the Company recognized interest expense of $724 related to this note.  As of June 30, 2019, the principal balance of the note was $500,000 and the accrued interest was $724.


A summary of notes payable and related discounts as of June 30, 2019 is as follows:


 

 

Principal

 

 

Unamortized

Discount

 

 

Debt,

Net of Discount

 

 

 

 

 

 

 

 

 

 

 

Related parties

 

 

 

 

 

 

 

 

 

Secured Convertible notes payable

 

$

1,000,000

 

 

$

(15,463

)

 

$

984,537

 

Secured Convertible Line of Credit

 

 

3,395,000

 

 

 

(205,127

)

 

 

3,189,873

 

Secured promissory note payable

 

 

500,000

 

 

 

 

 

 

500,000

 

Less current portion

 

 

 

 

 

 

 

 

 

Secured convertible notes payable and line of credit, net of current portion

 

$

4,895,000

 

 

$

(220,590

)

 

$

4,674,410

XML 22 R10.htm IDEA: XBRL DOCUMENT v3.19.2
Stockholders' Deficit
6 Months Ended
Jun. 30, 2019
Stockholders' Equity Note [Abstract]  
Stockholders' Deficit

NOTE 4 – Stockholders’ Deficit


Preferred Stock


The Company has authorized 5,000,000 shares of preferred stock, par value $0.001 per share with such rights, preferences and limitation as may be set from time to time by resolution of the board of directors and the filing of a certificate of designation as required by Delaware General Corporation Law.


Common Stock


The Company has authorized 200,000,000 shares of $0.001 par value common stock.


During the six months ended June 30, 2019, the Company issued 9,255,164 shares of common stock and two-year warrants to purchase 4,627,582 shares of common stock with an exercise price of $2.00 per share to two accredited investors in exchange for $1,575,000 including the issuance of 3,911,766 shares of common stock and 1,955,883 warrants to the Company’s chairman and principal shareholder in exchange for $675,000.


During the three months ended March 31, 2019, the Company issued 4,762 shares of common stock to consultants in exchange for consulting services rendered valued at $900, based upon the $0.189 quoted price per share of our common shares at the grant date.


During the six months ended June 30, 2019, the Company issued 22,598 shares of common stock in payment of commissions in the amount of $3,917, based upon the fair market value of the common shares.


During the three months ended June 30, 2019, the Company issued 3,637 shares of common stock in connection with the exercise of options by a consultant with an exercise price of $0.165 per share.


Stock-Based Compensation


Stock-based compensation expense recognized under ASC 718-10 for the period January 1, 2019 to June 30, 2019, was $86,958 for stock options granted to employees and directors. This expense is included in selling, general and administrative expenses in the unaudited consolidated statements of operations. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. At June 30, 2019, the total compensation cost for stock options not yet recognized was approximately $8,015. This cost will be recognized over the remaining vesting term of the options of approximately one year.


Stock-based awards granted to non-employees, in the form of options to purchase the Company’s common stock, are valued at the grant date at fair value in accordance ASU 2018-07 “Compensation – Stock Compensation (Topic718), Improvements to Nonemployee Share-Based Payment Accounting” which modified the accounting for non-employee stock-based compensation in accordance with ASC 505-50-25, “Equity Based Payments to Non-Employees,” that requires the measurement and recognition of compensation expense for all share-based payment awards made to non-employees based on estimated fair values. Stock based compensation to non-employees recognized for the six months ended June 30, 2019 was $816.


During the three months ended March 31, 2019, the Company granted five-year options to purchase 150,000 shares of common stock at an exercise price of $0.18 per share to our Vice President of Industrial Services. The options were valued on the grant date with the Black-Scholes option pricing model using a volatility of 79.98% based upon the historical price of the company’s stock, a term of 2.5 years, using the simplified method, and a risk-free rate of 2.59%. The calculated fair value, $13,223 was included in the $86,958 expense noted above for the six months ended June 30, 2019.


During the three months ended March 31, 2019, the Company granted five-year options to purchase 150,000 shares of common stock at an exercise price of $0.18 per share in exchange for legal services.  The options were valued on the grant date with the Black-Scholes option pricing model using a volatility of 79.98% based upon the historical price of the Company’s stock, a term of five years, the term of the options and a risk-free rate of 2.59%. The calculated fair value, $17,614 was recorded as prepaid expense and will be amortized over twelve months. For the six months ended June 30, 2019, $7,341 was amortized to expense.


In June 2019, the Company granted five-year options to purchase 5,000 shares of common stock at an exercise price of $0.16 per share to a new employee.  The options were immediately vested and were valued on the grant date with the Black-Scholes option pricing model using a volatility of 74.85% based upon the historical price of the company’s stock, a term of 2.5 years, using the simplified method and a risk-free rate of 1.88%. The calculated fair value, $367 was included in the $86,958 expense noted above for the six months ended June 30, 2019


Warrants to Purchase Common Stock


Warrants Issued as Settlements


During the six months ended June 30, 2019, there were no warrants granted for settlements.


Warrants Issued for Cash or Services


During the six months ended June 30, 2019, the Company issued two-year warrants to purchase 4,627,582 shares of common stock with an exercise price of $2.00 per share to two accredited investors, including the issuance of 1,955,883 warrants to the Company’s chairman and principal shareholder in connection with the private placements described above.


During the six months ended June 30, 2019, two-year warrants to purchase 2,699,280 shares of common stock at $2.00 per share, held by four accredited investors, expired, of which 1,620,785 were held by our chairman and principal shareholder.

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Related Party Transactions
6 Months Ended
Jun. 30, 2019
Related Party Transactions [Abstract]  
Related Party Transactions

NOTE 5 – Related Party Transactions


During the six months ended June 30, 2019, the Company issued stock and warrants to its chairman and principal shareholder in exchange for cash as more fully described in Note 4.


In August 2017, the Company and Warren Mosler (the “Investor”) entered into a Stock Purchase Agreement whereby the Investor committed to purchase up to $1,800,000 shares of the Company’s common stock until August 1, 2018, subject to the Company’s chairman, continuing to serve as an officer of the Company. The Investor and our chairman were partners in a prior business. The Company had the right to direct the Investor to purchase up to $150,000 of shares in any calendar month (although the parties could mutually agree to increase it in any calendar month). The price paid for the shares was the closing price of the Company’s common stock on the trading day immediately before the Company delivered its notice to the Investor. The Investor has purchased the full $1.8 million under the Agreement and is therefore not required to make any additional purchases.  In June 2019, unrelated to the Stock Purchase Agreement, the Investor was appointed to the Company’s Board of Directors.


During the six ended June 30, 2019, the Company issued 5,343,398 shares of common stock and two-year warrants to purchase 2,671,699 shares of common stock at an exercise price of $2.00 per share to the Investor in exchange for $900,000 in connection with private placements.

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Commitments and Contingencies
6 Months Ended
Jun. 30, 2019
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

NOTE 6 – Commitments and Contingencies


In February 2018, the Company entered into a two-year operating lease agreement for an office in Niwot, Colorado to better serve our Wildland fire customers. The lease began on March 1, 2018 and calls for 24 monthly payments of $2,250. In accounting for this operating lease, the Company elected to early adopt ASU 2016-02, Leases. As such, the Company calculated the fair value of the operating lease right of use asset and the operating lease liability, $50,313, by calculating the present value of the lease payments, discounted at 7.5%, the Company’s then incremental borrowing rate.


On November 14, 2012, the Compensation Committee approved new employment agreements for the Company’s then Chief Executive Officer, then President, Chief Technology Officer and Chief Financial Officer. The employment agreements each provide for base salaries of $150,000 and 800,000 stock settled stock appreciation rights (“SARS”) of which (i) 200,000 vested immediately, (ii) 200,000 vest upon the Company generating $3,000,000 in revenue in any 12-month period, (iii) another 200,000 vest upon the Company generating $5,000,000 in revenue in any 12-month period and (iv) another 200,000 vest upon the Company generating $6,000,000 in revenue in any 12-month period. The SARs are exercisable at $0.45 per share over a 10-year period. The Company’s then Chief Executive Officer, then President and Chief Technology Officer agreed to cancel the 250,000 stock options granted to each of them in their prior employment agreements. These executives’ base salary will increase to: (i) $170,000 upon the Company generating $3,000,000 in revenue in any 12-month period, (ii) $190,000 upon the Company generating $5,000,000 in any 12-month period and (iii) $200,000 upon the Company generating $6,000,000 in any 12-month period. On September 30, 2016, the employment agreement for the Company’s Chief Financial Officer expired.


In January 2015, GelTech approved an amendment to the Employment Agreement of our Chief Technology Officer. In addition to his base salary, he will receive 5% of the first $2 million of revenue generated by GelTech. The Company paid the Chief Technology Officer $52,797 and $62,056, respectively, in 2017 and 2016 under this provision. The amendment was effective as of January 1, 2015. Additionally, in May 2015, GelTech approved an amendment to the Chief Technology Officer’s Employment Agreement to extend the term of the Agreement an additional four years (now expiring October 1, 2020).


On August 16, 2017, the Company entered into a new three-year Employment Agreement with the Company’s chief financial officer. The Employment Agreement provides for a base salary of $150,000 per year and a car allowance of $600 per month. The Company’s Compensation Committee will also have the discretion to award a discretionary bonus. In consideration for entering into the Employment Agreement, the Company granted 125,000 fully vested 10-year stock options exercisable at $0.1849 per share.

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Revenue Recognition
6 Months Ended
Jun. 30, 2019
Revenue from Contract with Customer [Abstract]  
Revenue Recognition

NOTE 7 – Revenue Recognition


The revenue that we recognize arises from purchase orders we receive from our customers. Our performance obligations under the purchase orders correspond to each shipment of product that we make to our customer under the purchase order. As a result, each purchase order generally contains more than one performance obligation based on the number of products ordered, the quantity of product to be shipped and the mode of shipment requested by the customer. Control of our products transfers to our customers when the customer is able to direct the use of, and obtain substantially all of the benefits from, our products, which generally occurs at the later of when the customer obtains title to our product or when the customer assumes risk of loss of our product. The transfer of control generally occurs at a point of shipment from either our warehouse or our third-party fulfillment centers. Once this occurs, we have satisfied our performance obligation and we recognize revenue.


When we receive a purchase order from a customer, we are obligated to provide the product during a mutually agreed upon time period. Depending on the terms of the purchase order, either we or the customer arranges delivery of the product to the customer’s intended destination. In situations where we have agreed to arrange delivery of the product to the customer’s intended destination and control of the product transfers upon loading of our product onto transportation equipment, we have elected to account for any freight income associated with the delivery of these products as freight revenue, since this activity fulfills our obligation to transfer the product to the customer. For the six months ended June 30, 2019, the total amount of freight recognized as revenue was $32,027.


Transaction Price


We agree with our customers on the selling price of each transaction. This transaction price is generally based on the product, market conditions, including supply and demand balances and freight. In our contracts with customers, we allocate the entire transaction price to the sale of product to the customer, which is the basis for the determination of the relative standalone selling price allocated to each performance obligation. Returns of our product by our customers are permitted only when the product is not to specification and were not material for the six months ended June 30, 2019. Any sales tax, value added tax, and other tax we collect concurrently with our revenue-producing activities are excluded from revenue. Our revenues for FireIce, SoilO and SoilO Dust Control are seasonal in nature with our peak seasons occurring in the second and third quarters. Revenues from the sales of FireIce Shield are less seasonal.


Revenue Disaggregation


We track our revenue by product. The following table summarizes our revenue by product for the three and six months ended June 30, 2019:


 

 

 

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

 

 

 

 

2019

 

 

2019

 

FireIce

 

 

 

 

 

$

293,657

 

 

$

429,950

 

SoilO

 

 

 

 

 

 

11,939

 

 

 

31,745

 

FireIce Shield

 

 

 

 

 

 

9,883

 

 

 

27,717

 

Other

 

 

 

 

 

 

91

 

 

 

362

 

Total

 

 

 

 

 

$

315,570

 

 

$

489,774

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Concentrations
6 Months Ended
Jun. 30, 2019
Risks and Uncertainties [Abstract]  
Concentrations

NOTE 8 Concentrations


The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts through June 30, 2019. As of June 30, 2019, there were no cash balances held in depository accounts that are not insured.


At June 30, 2019, four customers accounted for 49.3%, 12.8%, 12.2% and 10.8% of accounts receivable.


For the 6 months ended June 30, 2019, three customers accounted for 14.8%, 12.4% and 12.1% of sales.


Approximately 25.9% of revenue was generated from customers outside the United States during the six months ended June 30, 2019.


During the six months ended June 30, 2019, sales primarily resulted from three product categories, FireIce®, SoilO® and FireIce Shield® which made up 87.8%, 6.5% and 5.7%, respectively, of total sales. Of the FireIce® sales, 47.3% related to the sale of FireIce® products, 21.9% related to sales of FireIce Polar Eco-Foam, 16.9% related to the sale of components and product for 15 stadium box suppression systems and 14.0% related to sales of FireIce extinguishers, eductors and other equipment. Of the SoilO® sales, 55.2% related to traditional sales of SoilO® and 44.8% related to sales of SoilO® Dust Control. Of the FireIce Shield® sales, 10.7% consisted sales of asset protection canisters and refills, 26.3% related to FireIce Shield® CTP units and products, and 62.1% consisted of sale of spray bottles for use by welders and plumbers.


Two vendors accounted for 24.7% and 11.0% of the Company’s approximately $259,000 in purchases of raw material, finished goods and packaging during the six months ended June 30, 2019.

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Subsequent Events
6 Months Ended
Jun. 30, 2019
Subsequent Events [Abstract]  
Subsequent Events

NOTE 9 Subsequent Events


In accordance with the 2017 Equity Incentive Plan, on July 1, 2019 the non-employee directors were granted ten-year options to purchase 560,000 shares of common stock to non-employee directors at an exercise price of $0.166 per share. The options vest on June 30, 2020, subject to continued service as a director. The options were valued with the Black-Scholes option pricing model using an expected volatility of 72.89% based upon the historical price of the company’s stock, an expected term of 5.5 years using the simplified method, and a risk-free rate of 1.81%. The calculated fair value, $58,246, will be recorded as expense over the one-year vesting period.


In July 2019, a consultant exercised options to purchase 3,637 shares of common stock at an exercise price of $0.165 per share in exchange for $600 of consulting fees owed to the consultant.


On August 13, 2019, the Company’s Chairman and principal shareholder loaned the Company an additional $150,000 in consideration for amending the principal under its secured promissory note from $500,000 to $650,000. See Note 3 above. The remaining terms of the secured promissory note remained the same.

XML 28 R16.htm IDEA: XBRL DOCUMENT v3.19.2
Organization and Basis of Presentation (Policies)
6 Months Ended
Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization

Organization


GelTech Solutions, Inc., or GelTech or the Company, generates revenue primarily from marketing products based around the following four product categories (1) the FireIce® family of products including FireIce® Pro and FireIce® 561, water enhancing powders that can be utilized both as a fire suppressant in urban firefighting, including fires in underground utility structures, and in wildland firefighting and as a medium-term fire retardant to protect wildlands, structures and firefighters; FireIce® XT and FireIce® ST, wet mixed suppressants for extinguishers and fire suppression systems and our new addition, FireIce® Polar Eco-Foam, an environmentally friendly Class A foam (2) FireIce Shield®, a line of products used in industry by manufacturers, plumbers, and welders, and by police departments and first responders to protect assets from fire; (3) SoilDust Control, our application which is used for dust mitigation in the aggregate, road construction and mining SoilO® Soil Cap, a dust suppressant technology designed to stabilize stockpile dust and reduce soil erosion, and (4) SoilO®, a product which reduces the use of water and is primarily marketed to golf courses and commercial landscapers.


The Company also markets equipment that is used to apply these primary products including (1) Emergency Manhole FireIce Delivery System, or EMFIDS, an innovative system designed to deliver FireIce® into a manhole in the event of a fire or explosion, (2) FireIce® Home Defense Unit, a system for applying FireIce® to structures to protect them from wildfires and (3) the FireIce Shield CTP System, a mobile spray unit that can be used to protect communication tower electronics during hot work.


Our unaudited condensed consolidated financial statements have been prepared on a going concern basis, and we need to generate sufficient material revenues to support the ongoing business of GelTech (See Note 2).


The corporate office is located in Jupiter, Florida and we also have an office in Niwot, Colorado to support our Wildland operations.

Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation


The accompanying unaudited consolidated financial statements include the accounts of the Company and its three wholly-owned subsidiaries: FireIce Gel, Inc., GelTech International, Inc. and Weather Tech Innovations, Inc. There has been no activity in FireIce Gel, Inc., Weather Tech Innovations, Inc. and GelTech International, Inc.  


These unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by "GAAP" for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The information included in these unaudited consolidated interim financial statements should be read in conjunction with Management’s Discussion and Analysis of Financial Conditions and Results of Operations contained in this report and the audited consolidated financial statements and accompanying notes included in the Company’s Report on Form 10-K for the year ended December 31, 2018 filed on March 28, 2019.

Inventories

Inventories


Inventories as of June 30, 2019 consisted of raw materials and finished goods in the amounts of $1,368,652 and $628,747, respectively. As of June 30, 2019, the Company estimated that raw materials and finished goods in the amount $1,397,584 would most likely not be consumed in the next twelve months and therefore reclassified that amount to long term inventory in the unaudited consolidated balance sheet. As of June 30, 2019, the Company had approximately $61,399 of consignment inventory held by customers consisting primarily of FireIce 561, FireIce Pro, FireIce HVOF, HDU Wands and Eductors.

Use of Estimates

Use of Estimates


The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management believes that the estimates utilized in preparing its consolidated financial statements are reasonable; however, actual results could differ materially from these estimates. Significant estimates for the six months ended June 30, 2019 include the allowance for doubtful accounts, depreciation and amortization, valuation and classification of inventories, valuation of options granted for services, valuation of common stock granted for services or debt conversion and the valuation of deferred tax assets.

Revenue Recognition

Revenue Recognition


On January 1, 2018, we adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) Topic 605, Revenue Recognition. The Company used the modified prospective method upon adoption of the ASU. Our adoption of this ASU resulted in no cumulative effect adjustment.


The revenue that we recognize arises from purchase orders we receive from our customers. Our performance obligations under the purchase orders correspond to each shipment of product that we make to our customer under the purchase order. As a result, each purchase order generally contains more than one performance obligation based on the number of products ordered, the quantity of product to be shipped and the mode of shipment requested by the customer. Control of our products transfers to our customers when the customer is able to direct the use of, and obtain substantially all of the benefits from, our products, which generally occurs at the later of when the customer obtains title to our product or when the customer assumes risk of loss of our product. The transfer of control generally occurs at a point of shipment from either our warehouse or our third-party fulfillment centers. Once this occurs, we have satisfied our performance obligation and we recognize revenue.


When we receive a purchase order from a customer, we are obligated to provide the product during a mutually agreed upon time period. Depending on the terms of the purchase order, either we or the customer arranges delivery of the product to the customer’s intended destination. In situations where we have agreed to arrange delivery of the product to the customer’s intended destination and control of the product transfers upon loading of our product onto transportation equipment, we have elected to account for any freight income associated with the delivery of these products as freight revenue, since this activity fulfills our obligation to transfer the product to the customer.

Leases

Leases


In connection with entering into a new lease agreement for our Wildland operations in Colorado in February 2018, the Company elected to early adopt the provisions of ASU 2016-02, Leases. As such, the Company recorded an operating lease right of use asset and an operating lease liability as of March 31, 2018.  As of June 30, 2019, the entire balance of the lease liability has been reflected as a current liability.

Net Earnings (Loss) per Share

Net Earnings (Loss) per Share


The Company computes net earnings (loss) per share in accordance with ASC 260-10, “Earnings per Share.” ASC 260-10 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period. The Company’s diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. At June 30, 2019, there were options to purchase 14,581,696 shares of the Company’s common stock, warrants to purchase 17,837,782 shares of the Company’s common stock and 9,134,594 shares of the Company’s common stock are reserved for convertible notes which may dilute future earnings per share.

Stock-Based Compensation

Stock-Based Compensation


The Company accounts for stock-based compensation in accordance with ASC 718-10 “Compensation – Stock Compensation” which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options, restricted stock units, and stock appreciation rights are based on estimated fair values. Given the absence of adequate historical data, the Company uses the Simplified Method to estimate the term of options granted to employees and directors.


Effective January 1, 2019, the Company adopted ASU 2018-07 “Compensation – Stock Compensation (Topic718), Improvements to Nonemployee Share-Based Payment Accounting” which modified the accounting for non-employee stock-based compensation. This standard requires the measurement and recognition of compensation expense for all share-based payment awards made to non-employees based on estimated fair values using the same method as for employees. The adoption resulted in no cumulative effect on the Company’s retained earnings on the adoption date.


Determining Fair Value Under ASC 718-10


The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing formula. This fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. The Company’s determination of fair value using an option-pricing model is affected by the stock price as well as assumptions regarding the number of highly subjective variables.


The Company estimates volatility based upon the historical stock price of the Company and estimates the expected term for employee stock options using the simplified method for employees and directors and the contractual term for non-employees. The risk-free rate is determined based upon the prevailing rate of United States Treasury securities with similar maturities.


The fair values of stock options and warrants granted during the period from January 1, 2019 to June 30, 2019 were estimated using the following assumptions:


Risk free interest rate

 

1.88% - 2.59%

Expected term (in years)

 

2.5 - 5.0

Dividend yield

 

––

Volatility of common stock

 

74.85% - 79.98%

Estimated annual forfeitures

 

––

New Accounting Pronouncements

New Accounting Pronouncements


No Accounting Standards Updates (ASUs) which were not effective until after June 30, 2019 are expected to have a significant effect on the Company's consolidated financial position or results of operations.

XML 29 R17.htm IDEA: XBRL DOCUMENT v3.19.2
Organization and Basis of Presentation (Tables)
6 Months Ended
Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Schedule of Fair Value Assumptions for Stock Options

The fair values of stock options and warrants granted during the period from January 1, 2019 to June 30, 2019 were estimated using the following assumptions:


Risk free interest rate

 

1.88% - 2.59%

Expected term (in years)

 

2.5 - 5.0

Dividend yield

 

––

Volatility of common stock

 

74.85% - 79.98%

Estimated annual forfeitures

 

––

XML 30 R18.htm IDEA: XBRL DOCUMENT v3.19.2
Secured Convertible Note Agreements - Related Party (Tables)
6 Months Ended
Jun. 30, 2019
Convertible Note Agreements - Related Party  
Schedule of Secured Convertible Note Agreements

A summary of notes payable and related discounts as of June 30, 2019 is as follows:


 

 

Principal

 

 

Unamortized

Discount

 

 

Debt,

Net of Discount

 

 

 

 

 

 

 

 

 

 

 

Related parties

 

 

 

 

 

 

 

 

 

Secured Convertible notes payable

 

$

1,000,000

 

 

$

(15,463

)

 

$

984,537

 

Secured Convertible Line of Credit

 

 

3,395,000

 

 

 

(205,127

)

 

 

3,189,873

 

Secured promissory note payable

 

 

500,000

 

 

 

 

 

 

500,000

 

Less current portion

 

 

 

 

 

 

 

 

 

Secured convertible notes payable and line of credit, net of current portion

 

$

4,895,000

 

 

$

(220,590

)

 

$

4,674,410

XML 31 R19.htm IDEA: XBRL DOCUMENT v3.19.2
Revenue Recognition (Tables)
6 Months Ended
Jun. 30, 2019
Revenue from Contract with Customer [Abstract]  
Schedule of Revenue Disaggregation

We track our revenue by product. The following table summarizes our revenue by product for the three and six months ended June 30, 2019:


 

 

 

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

 

 

 

 

2019

 

 

2019

 

FireIce

 

 

 

 

 

$

293,657

 

 

$

429,950

 

SoilO

 

 

 

 

 

 

11,939

 

 

 

31,745

 

FireIce Shield

 

 

 

 

 

 

9,883

 

 

 

27,717

 

Other

 

 

 

 

 

 

91

 

 

 

362

 

Total

 

 

 

 

 

$

315,570

 

 

$

489,774

XML 32 R20.htm IDEA: XBRL DOCUMENT v3.19.2
Organization and Basis of Presentation (Details) - USD ($)
6 Months Ended
Jun. 30, 2019
Dec. 31, 2018
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Raw materials $ 1,368,652  
Finished goods 628,747  
Consignment inventory 61,399  
Long term inventory $ 1,397,584 $ 1,298,236
Employee Options and Stock Appreciation Rights [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Shares considered antidilutive 14,581,696  
Warrants [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Shares considered antidilutive 17,837,782  
Stock Options For Convertible Notes Reserved [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Shares considered antidilutive 9,134,594  
XML 33 R21.htm IDEA: XBRL DOCUMENT v3.19.2
Organization and Basis of Presentation (Fair Value Assumptions) (Details)
6 Months Ended
Jun. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Risk free interest rate, minimum 1.88%
Risk free interest rate, maximum 2.59%
Dividend yield
Volatility of common stock, minimum 74.85%
Volatility of common stock, maximum 79.98%
Estimated annual forfeitures
Minimum [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Expected term (in years) 2 years 6 months
Maximum [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Expected term (in years) 5 years
XML 34 R22.htm IDEA: XBRL DOCUMENT v3.19.2
Going Concern (Details) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2019
Mar. 31, 2019
Jun. 30, 2018
Mar. 31, 2018
Jun. 30, 2019
Jun. 30, 2018
Dec. 31, 2018
Dec. 31, 2017
Accumulated deficit $ 58,165,034       $ 58,165,034   $ 56,133,648  
Stockholders' deficit 2,474,939 $ 2,175,491 $ 4,389,153 $ 4,788,772 2,474,939 $ 4,389,153 $ 2,129,358 $ 4,758,809
Loss from operations 921,579   880,985   1,847,613 1,720,021    
Net loss $ 1,013,477 $ 1,017,909 $ 1,060,798 $ 1,016,543 2,031,386 2,077,341    
Net cash used in operating activities         1,671,579 $ 1,524,932    
Two Accredited Investors [Member]                
Advances from convertible line of credit         1,575,000      
Chairman and Principal Shareholder [Member]                
Advances from convertible line of credit         675,000      
Proceeds from secured promissory note         500,000      
Accredited Investor [Member]                
Proceeds from sale of stock under stock purchase agreement         $ 900,000      
XML 35 R23.htm IDEA: XBRL DOCUMENT v3.19.2
Secured Convertible Note Agreements - Related Party (Details) - USD ($)
1 Months Ended 6 Months Ended
Feb. 12, 2015
Jul. 11, 2013
Jun. 18, 2019
Jul. 31, 2018
Jun. 30, 2019
Sep. 27, 2016
Apr. 08, 2016
Chairman and principal shareholder [Member]              
Debt Instrument [Line Items]              
Debt issued         $ 500,000    
Maturity date     Jun. 30, 2022        
Accrued interest         724    
Proceeds from secured promissory note     $ 500,000        
LIBOR interest rate     LIBOR plus 2%, not to exceed 7%, payable        
Iinterest expense         724    
Remaining Convertible Note Payable [Member]              
Debt Instrument [Line Items]              
Convertible amount       $ 1,000,000      
Minimum [Member] | Remaining Convertible Note Payable [Member]              
Debt Instrument [Line Items]              
Debt, interest rate       5.00%      
Convertible note, conversion price       $ 0.35      
Maximum [Member] | Remaining Convertible Note Payable [Member]              
Debt Instrument [Line Items]              
Debt, interest rate       7.50%      
Convertible note, conversion price       $ 0.82      
President [Member] | Secured Convertible Line of Credit Agreement [Member]              
Debt Instrument [Line Items]              
Maximum borrowing capacity $ 4,000,000         $ 6,000,000 $ 5,000,000
Debt, interest rate 7.50%         7.50% 7.50%
Maturity date Dec. 31, 2020            
Term 2 years            
Exercise price of shares called by warrants $ 2.00            
Percentage of warrants issued equals of number of shares issuable upon the conversion 50.00%            
Chairman and Principal Shareholder [Member]              
Debt Instrument [Line Items]              
Shares issued upon conversion of convertible note       9,379,473      
Proceeds from secured promissory note         500,000    
Convertible amount       $ 2,500,000      
Chairman and Principal Shareholder [Member] | Minimum [Member]              
Debt Instrument [Line Items]              
Convertible note, conversion price       $ 0.21      
Chairman and Principal Shareholder [Member] | Maximum [Member]              
Debt Instrument [Line Items]              
Convertible note, conversion price       $ 0.35      
Convertible Note Payable Dated July 2013 [Member] | President [Member]              
Debt Instrument [Line Items]              
Debt issued   $ 1,000,000     1,000,000    
Debt, interest rate   7.50%          
Convertible note, conversion price $ 0.35 $ 1.00          
Maturity date Dec. 31, 2020 Jul. 10, 2018          
Term   5 years          
Number of shares callable by warrants   500,000          
Accrued interest         69,315    
Note discount         60,390    
Iinterest expense         5,089    
Unamortized discount         15,463    
Exercise price of shares called by warrants   $ 1.30          
Two advances totaling $200,000 [Member]              
Debt Instrument [Line Items]              
Debt issued         3,395,000    
Accrued interest         287,722    
Iinterest expense         67,506    
Unamortized discount         102,564    
Unamortized beneficial conversion feature         $ 102,564    
XML 36 R24.htm IDEA: XBRL DOCUMENT v3.19.2
Secured Convertible Note Agreements - Related Party (Schedule of Debt) (Details)
Jun. 30, 2019
USD ($)
Related parties  
Convertible notes payable, related, principal $ 1,000,000
Convertible notes payable, related, unamortized discount (15,463)
Convertible notes payable, related, net 984,537
Convertible line of credit, related, principal 3,395,000
Convertible line of credit, related, unamortized discount (205,127)
Convertible line of credit, related, net 3,189,873
Convertible promissory note payable, related, principal 500,000
Convertible promissory note payable, related, unamortized discount
Convertible promissory note payable, related, net 500,000
Less current portion, related, principal
Less current portion, related, unamortized portion
Less current portion, related, net
Convertible and nonconvertible note payable, net of current portion, principal 4,895,000
Convertible and nonconvertible note payable, net of current portion, unamortized discount (220,590)
Convertible and nonconvertible note payable, net of current portion, net $ 4,674,410
XML 37 R25.htm IDEA: XBRL DOCUMENT v3.19.2
Stockholders' Deficit (Preferred Stock) (Details) - $ / shares
Jun. 30, 2019
Dec. 31, 2018
Stockholders' Equity Note [Abstract]    
Preferred stock, shares authorized 5,000,000 5,000,000
Preferred stock, par value per share $ 0.001 $ 0.001
XML 38 R26.htm IDEA: XBRL DOCUMENT v3.19.2
Stockholders' Deficit (Common Stock) (Details) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2019
Mar. 31, 2019
Jun. 30, 2018
Mar. 31, 2018
Jun. 30, 2019
Dec. 31, 2018
Class of Stock [Line Items]            
Common stock, shares authorized 200,000,000       200,000,000 200,000,000
Common stock, par value per share $ 0.001       $ 0.001 $ 0.001
Common stock issued in private placement     $ 64,000 $ 20,000    
Convertible notes payable $ 984,537       $ 984,537  
Common stock issued for services     900 2,900    
Common Stock [Member]            
Class of Stock [Line Items]            
Common stock issued in private placement     $ 312 $ 125    
Common stock issued in private placement, shares     312,394 125,000    
Common stock issued for interest, shares     3,249,348      
Common stock issued for services     $ 6 $ 17    
Common stock and warrants issued for cash, shares 4,358,698 4,896,466 2,732,083 5,938,450    
Consultant [Member]            
Class of Stock [Line Items]            
Stock options exercised 3,637          
Issuance price per share $ 0.165       $ 0.165  
Consultant [Member]            
Class of Stock [Line Items]            
Common stock issued for investor relation services, shares          
Common stock issued for services          
Lincoln Park Capital Fund, LLC. [Member] | Common Stock [Member] | Common Stock Purchase Agreement [Member]            
Class of Stock [Line Items]            
Common stock issued for cash in connection with stock purchase agreement          
Common stock issued for cash in connection with stock purchase agreement, shares          
Accredited Investor [Member]            
Class of Stock [Line Items]            
Proceeds from the sale of stock and warrants through private placements         $ 1,575,000  
Number of shares callable by warrants 4,627,582       4,627,582  
Exercise price of shares called by warrants $ 2.00       $ 2.00  
Common stock and warrants issued for cash, shares         9,255,164  
Term of warrants         2 years  
Chairman and principal investor [Member]            
Class of Stock [Line Items]            
Common stock issued in private placement, shares         22,598  
Fair value         $ 3,917  
Proceeds from the sale of stock and warrants through private placements         $ 675,000  
Number of shares callable by warrants 1,955,883       1,955,883  
Common stock and warrants issued for cash, shares         3,911,766  
Chairman and principal investor [Member] | Common Stock [Member]            
Class of Stock [Line Items]            
Debt conversion shares issued for secured convertible note   $ 900        
Debt conversion shares issued for secured convertible note, shares   4,762        
Share price at grant date   $ 0.189        
XML 39 R27.htm IDEA: XBRL DOCUMENT v3.19.2
Stockholders' Deficit (Narrative) (Options) (Details) - USD ($)
3 Months Ended 6 Months Ended
Mar. 31, 2019
Jun. 30, 2019
Jun. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Share-based compensation expense   $ 87,774 $ 98,994
Share-based compensation expense not yet recognized   8,015  
Five Year Options [Member] | Legal Services [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Options granted 150,000    
Options granted, exercise price $ 0.18    
Fair value $ 17,614    
Options granted, vesting period 5 years    
Volatility 79.98%    
Expected term 5 years    
Risk free rate 2.59%    
Share-based compensation expense   7,341  
Non Employees [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Share-based compensation expense   $ 816  
New Employee [Member] | Five Year Options [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Options granted   5,000  
Options granted, exercise price   $ 0.16  
Fair value   $ 367  
Options granted, vesting period   5 years  
Volatility   74.85%  
Expected term   2 years 6 months  
Risk free rate   1.88%  
Accredited Investor [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Number of shares callable by warrants   4,627,582  
Exercise price of shares called by warrants   $ 2.00  
Chairman and principal investor [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Fair value   $ 3,917  
Number of shares callable by warrants   1,955,883  
Employees and Directors [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Share-based compensation expense   $ 86,958  
Share-based compensation expense period for recognition   1 year  
Vice President of Industrial Services [Member] | Five Year Options [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Options granted 150,000    
Options granted, exercise price $ 0.18    
Fair value   $ 13,223  
Options granted, vesting period 5 years    
Volatility 79.98%    
Expected term 2 years 6 months    
Risk free rate 2.59%    
Accredited Investor [Member] | Warrants [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Options granted   2,699,280  
Options granted, exercise price   $ 2.00  
Share-based compensation expense period for recognition   2 years  
Chairman and principal shareholder [Member] | Warrants [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Options granted   1,620,785  
XML 40 R28.htm IDEA: XBRL DOCUMENT v3.19.2
Related Party Transactions (Details) - USD ($)
1 Months Ended 6 Months Ended
Aug. 31, 2017
Jun. 30, 2019
Stock Purchase Agreement Related Party Investor [Member]    
Related Party Transaction [Line Items]    
Value of shares related party investor is committed to purchase per agreement $ 1,800,000  
Maximum value of shares company will have the right to direct related party investor to purchase during any calendar month 150,000  
Number of shares callable by warrants   5,343,398
Exercise price of shares called by warrants   $ 2.00
Proceeds from the sale of stock and warrants through private placements   $ 900,000
Term of warrants   2 years
Stock Purchase Agreement Related Party Investor [Member] | Warrants [Member]    
Related Party Transaction [Line Items]    
Number of shares callable by warrants   2,671,699
President and Principal Shareholder [Member]    
Related Party Transaction [Line Items]    
Amount purchased by related party under Stock Purchase Agreement $ 1,800,000  
XML 41 R29.htm IDEA: XBRL DOCUMENT v3.19.2
Commitments and Contingencies (Operating Lease Agreement) (Details)
6 Months Ended
Jun. 30, 2019
USD ($)
Lessee, Lease, Description [Line Items]  
Operating lease discount rate 7.50%
Accounting Standards Update 2016-02 [Member]  
Lessee, Lease, Description [Line Items]  
Operating lease liability $ 50,313
Wildland [Member]  
Lessee, Lease, Description [Line Items]  
Term of contract 2 years
Monthly lease payment $ 2,250
XML 42 R30.htm IDEA: XBRL DOCUMENT v3.19.2
Commitments and Contingencies (Employment Agreements) (Details) - USD ($)
1 Months Ended 12 Months Ended
Aug. 16, 2017
Nov. 14, 2012
Jan. 31, 2015
Nov. 30, 2012
Dec. 31, 2017
Dec. 31, 2016
Chief Financial Officer [Member]            
Other Commitments [Line Items]            
Annual base salary $ 150,000          
Monthly auto allowance $ 600          
Options granted, exercise price $ 0.1849          
Options granted 125,000          
Options term 10 years          
Chief Financial Officer [Member] | Stock Appreciation Rights (SARs) [Member]            
Other Commitments [Line Items]            
Immediately vested shares       200,000    
Vested shares upon generating $3,000,000 in revenue in any 12-month period       200,000    
Vested shares upon generating $5,000,000 in revenue in any 12-month period       200,000    
Vested shares upon generating $6,000,000 in revenue in any 12-month period       200,000    
Employment agreement term       10 years    
Options granted, exercise price       $ 0.45    
Chief Technology Officer [Member]            
Other Commitments [Line Items]            
Percentage to be received of first $2 million of revenue     5.00%      
Officer compensation         $ 52,797 $ 62,056
Executive Chairman [Member]            
Other Commitments [Line Items]            
Annual base salary   $ 150,000        
Chief Executive Officer And Chief Financial Officer And President And Chief Technology Officer [Member]            
Other Commitments [Line Items]            
Executive's base salary if company generates $3,000,000 in revenues in any 12 month period       $ 170,000    
Executive's base salary if company generates $5,000,000 in revenues in any 12 month period       190,000    
Executive's base salary if company generates $6,000,000 in revenues in any 12 month period       $ 200,000    
Chief Executive Officer And Chief Financial Officer And President And Chief Technology Officer [Member] | Stock Appreciation Rights (SARs) [Member]            
Other Commitments [Line Items]            
Immediately vested shares       800,000    
Cancelled options       250,000    
XML 43 R31.htm IDEA: XBRL DOCUMENT v3.19.2
Revenue Recognition (Details) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2019
Disaggregation of Revenue [Line Items]    
Revenue $ 315,570 $ 489,774
Net amount of freight   32,027
FireIce Products [Member]    
Disaggregation of Revenue [Line Items]    
Revenue 293,657 429,950
Soil 2 O Traditional Sales[Member]    
Disaggregation of Revenue [Line Items]    
Revenue 11,939 31,745
FireIce Shield [Member]    
Disaggregation of Revenue [Line Items]    
Revenue 9,883 27,717
Other [Member]    
Disaggregation of Revenue [Line Items]    
Revenue $ 91 $ 362
XML 44 R32.htm IDEA: XBRL DOCUMENT v3.19.2
Concentrations (Details)
6 Months Ended
Jun. 30, 2019
USD ($)
Concentration Risk [Line Items]  
Total purchases of raw material, finished goods and packaging made during the period $ 259,000
Accounts Receivable [Member]  
Concentration Risk [Line Items]  
Number of customers in concentration 3
Accounts Receivable [Member] | Customer One Concentration Risk [Member]  
Concentration Risk [Line Items]  
Concentration risk, percentage 49.30%
Accounts Receivable [Member] | Customer Two Concentration Risk [Member]  
Concentration Risk [Line Items]  
Concentration risk, percentage 12.80%
Accounts Receivable [Member] | Customer Three Concentration Risk [Member]  
Concentration Risk [Line Items]  
Concentration risk, percentage 12.20%
Accounts Receivable [Member] | Customer Four Concentration Risk [Member]  
Concentration Risk [Line Items]  
Concentration risk, percentage 10.80%
Sales Revenue [Member]  
Concentration Risk [Line Items]  
Number of customers in concentration 3
Sales Revenue [Member] | Non-US [Member]  
Concentration Risk [Line Items]  
Concentration risk, percentage 25.90%
Sales Revenue [Member] | Customer One Concentration Risk [Member]  
Concentration Risk [Line Items]  
Concentration risk, percentage 14.80%
Sales Revenue [Member] | Customer Two Concentration Risk [Member]  
Concentration Risk [Line Items]  
Concentration risk, percentage 12.40%
Sales Revenue [Member] | Customer Three Concentration Risk [Member]  
Concentration Risk [Line Items]  
Concentration risk, percentage 12.10%
Sales Revenue [Member] | Fire Ice [Member]  
Concentration Risk [Line Items]  
Concentration risk, percentage 87.80%
Sales Revenue [Member] | Soil 2 O [Member]  
Concentration Risk [Line Items]  
Concentration risk, percentage 6.50%
Sales Revenue [Member] | FireIce Shield [Member]  
Concentration Risk [Line Items]  
Concentration risk, percentage 5.70%
Sales Revenue [Member] | FireIce sales [Member]  
Concentration Risk [Line Items]  
Concentration risk, percentage 47.30%
Sales Revenue [Member] | FireIce Products [Member]  
Concentration Risk [Line Items]  
Concentration risk, percentage 21.90%
Sales Revenue [Member] | FireIce Polar Eco-Foam [Member]  
Concentration Risk [Line Items]  
Concentration risk, percentage 16.90%
Sales Revenue [Member] | FireIce Eductors, EMFIDS and extinguishers [Member]  
Concentration Risk [Line Items]  
Concentration risk, percentage 14.00%
Sales Revenue [Member] | Soil 2 O Traditional Sales[Member]  
Concentration Risk [Line Items]  
Concentration risk, percentage 55.20%
Sales Revenue [Member] | Soil 2 O Dust Control Products [Member]  
Concentration Risk [Line Items]  
Concentration risk, percentage 44.80%
Sales Revenue [Member] | Canisters and Refills [Member]  
Concentration Risk [Line Items]  
Concentration risk, percentage 10.70%
Sales Revenue [Member] | CTP units and products [Member]  
Concentration Risk [Line Items]  
Concentration risk, percentage 26.30%
Sales Revenue [Member] | Spray Bottles [Member]  
Concentration Risk [Line Items]  
Concentration risk, percentage 62.10%
Inventory purchases [Member]  
Concentration Risk [Line Items]  
Number of customers in concentration 2
Inventory purchases [Member] | Supplier One Concentration Risk [Member]  
Concentration Risk [Line Items]  
Concentration risk, percentage 24.70%
Inventory purchases [Member] | Supplier Two Concentration Risk [Member]  
Concentration Risk [Line Items]  
Concentration risk, percentage 11.00%
XML 45 R33.htm IDEA: XBRL DOCUMENT v3.19.2
Subsequent Events (Details) - USD ($)
1 Months Ended 3 Months Ended 6 Months Ended
Aug. 13, 2019
Jul. 31, 2019
Jun. 30, 2019
Jun. 30, 2019
Jun. 30, 2018
Subsequent Event [Line Items]          
Proceeds from note payable, related party       $ 500,000
Consultant [Member]          
Subsequent Event [Line Items]          
Stock options exercised     3,637    
Issuance price per share     $ 0.165 $ 0.165  
Consultant [Member] | Subsequent Event [Member]          
Subsequent Event [Line Items]          
Proceeds from stock options exercised   $ 600      
Stock options exercised   3,637      
Issuance price per share   $ 0.165      
Chairman and principal shareholder [Member] | Subsequent Event [Member]          
Subsequent Event [Line Items]          
Proceeds from note payable, related party $ 150,000        
2017 Equity Incentive Plan [Member] | Non-employee directors [Member] | Subsequent Event [Member]          
Subsequent Event [Line Items]          
Options granted   560,000      
Options granted, exercise price   $ 0.166      
Fair value   $ 58,246      
Options granted, vesting period   10 years      
Options vesting term   Jun. 30, 2020      
Volatility   72.89%      
Expected term   5 years 6 months      
Risk free rate   1.81%      
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