☒
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ANNUAL REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2016.
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OR
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☐
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TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from _______ to _______.
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Nevada
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26-0561199
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(State or other jurisdiction
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(IRS Employer
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of incorporation or organization)
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Identification No.)
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company ☒
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Emerging growth company ☐
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Page
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PART I
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5
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Item 1.
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5
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Item 1A.
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12
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Item 1B.
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20
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Item 2.
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20
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Item 3.
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20
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Item 4.
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20
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PART II
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21
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Item 5.
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21
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Item 6.
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23
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Item 7.
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23
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Item 7A.
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26
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Item 8.
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27
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Item 9.
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46
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Item 9A.
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46
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Item 9B.
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47
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PART III
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48
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Item 10.
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48
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Item 11.
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51
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Item 12.
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54
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Item 13.
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55
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Item 14.
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56
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PART IV
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57
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Item 15.
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57
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59
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1.
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The product is intended to supplement a person's diet, despite it not being usable as a meal replacement.
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2.
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The product is or contains a vitamin, dietary element, herb used for herbalism or botanical used as a medicinal plant, amino acid, any substance which contributes to other food eaten, or any concentrate, metabolite, ingredient, extract, or combination of these things.
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3.
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The product is labeled as a dietary supplement.
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• |
It is a specially formulated and processed product (as opposed to a naturally occurring foodstuff used in its natural state) for the partial or exclusive feeding of a patient by means of oral intake or enteral feeding by tube;
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• |
It is intended for the dietary management of a patient who, because of therapeutic or chronic medical needs, has limited or impaired capacity to ingest, digest, absorb, or metabolize ordinary foodstuffs or certain nutrients, or who has other special medically determined nutrient requirements, the dietary management of which cannot be achieved by the modification of the normal diet alone;
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• |
It provides nutritional support specifically modified for the management of the unique nutrient needs that result from the specific disease or condition, as determined by medical evaluation;
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• |
It is intended to be used under medical supervision; and
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• |
It is intended only for a patient receiving active and ongoing medical supervision wherein the patient requires medical care on a recurring basis for, among other things, instructions on the use of the medical food.
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· |
U.S. patent application No. 61/277,150, filed September 21, 2009, entitled “Vitamin Fortified Mushrooms and Fungi for Increasing Survivability and Longevity."
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U.S. patent application No. 61/280,578, filed November 5, 2009, entitled “Vitamin Fortified Mushrooms and Fungi for Increasing Resistance to Oxidative Stress."
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U.S. patent application No. 61/335,394, filed January 6, 2010, entitled “Vitamin D Enriched Mushrooms and Fungi for Treating Alzheimer’s Disease, Taupathies, and Other Disease States Associated with Amyloid Precursor Protein.”
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· |
U.S. patent application No. 12/887,276, PCT US10/49684, filed on September 21, 2010, entitled: “Vitamin D2 Enriched Mushrooms and Fungi for Treatment of Oxidative Stress, Alzheimer’s Disease and Associated Disease States.”
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U.S. patent application No. 61/496,321, filed on June 13, 2011, entitled “A Nutritional Approach to the Control of Anemia and Prevention of Associated Comorbid States with the Use of Ergothioneine.”
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International application published on December 20,2012, PCT/US2012/042131; Entitled: “A Nutritional Approach to the Control of Anemia, Diabetes and Other Diseases or Conditions and Prevention of Associated Comorbid States with the Use of Ergothioneine.”
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U.S. patent application No. 61/581,480, filed on December 29, 2011, entitled “A Nutritional Approach to the use of Ergothioneine for Hair and Nail Growth.”
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International application filed December 21,2012, PCT/U.S.12/71170; Entitled: “A Nutritional Approach to the Use of Ergothioneine and Vitamin D2 for Hair, Nail and Skin Growth.”
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PCT/U.S. 2008/056234, Serial number 12/529,859, entitled “Use of Ergothioneine as a Preservative in Foods and Beverages,” issued in Canada in 2011.
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U.S. patent application No. 13/363,579, filed on February 1, 2012, entitled “Anti-inflammatory Approach to Prevention and Suppression of Post-Traumatic Stress Disorder, Traumatic Brain Injury, Depression, and Associated Disease States.”
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PCT/U.S. 13/47853, filed on June 26,2013, entitled “A Nutritional Approach to Improving Athletic Performance and Reducing Injury with L-Ergothioneine and/or Vitamin D2.”
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proper new selection and product development;
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availability of raw materials;
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pricing of raw materials;
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timely delivery of new products;
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regulatory allowance of the products; and
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appropriate pricing and customer acceptance of new products
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a statement of identity that contains the words "dietary supplement." The word "dietary" may be replaced by the name of the dietary ingredient (e.g., "ginseng supplement");
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net quantity of contents (for example, "60 capsules");
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nutrition information in the form of a "Supplement Facts" panel, including the product serving size, the amount, and percent daily value, if established, of each dietary ingredient;
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if a supplement contains a proprietary blend, the net weight of the blend as well as a listing of each ingredient in descending order of weight must be identified;
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the part of the plant used, if an herb or botanical;
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the name and place of business of the manufacturer, packer, or distributor;
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a complete list of ingredients by their common or usual names, either in descending order of prominence or with the source of the dietary ingredient in the "Supplement Facts" panel, following the name of the dietary ingredient;
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safety information that is considered "material" to the consequences that may result from the use of the supplement;
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the disclaimer "This statement has not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure, or prevent any disease" if the supplement bears a claim to affect the structure or function of the body (structure/function claim), a claim of general well-being, or a claim of a benefit related to a classical nutrient deficiency disease; and
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·
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At their discretion, manufacturers may add additional information on labels (such as claims and statements of quality assurance), and may decide on the placement of that information on their labels.
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It is a specially formulated and processed product (as opposed to a naturally occurring foodstuff used in its natural state) for the partial or exclusive feeding of a patient by means of oral intake or enteral feeding by tube;
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·
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It is intended for the dietary management of a patient who, because of therapeutic or chronic medical needs, has limited or impaired capacity to ingest, digest, absorb, or metabolize ordinary foodstuffs or certain nutrients, or who has other special medically determined nutrient requirements, the dietary management of which cannot be achieved by the modification of the normal diet alone;
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·
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It provides nutritional support specifically modified for the management of the unique nutrient needs that result from the specific disease or condition, as determined by medical evaluation;
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·
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It is intended to be used under medical supervision; and
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It is intended only for a patient receiving active and ongoing medical supervision wherein the patient requires medical care on a recurring basis for, among other things, instructions on the use of the medical food.
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limited visibility into and difficulty predicting the level of activity in individual health care providers’ practices from quarter to quarter;
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weakness in consumer spending as a result of the slowdown in the United States economy and global economies;
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changes in relationships with distributors;
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changes in the timing of receipt of product orders during a given quarter which, given our cycle time and the delay between case receipts and case shipments, could have an impact on which quarter revenue can be recognized;
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fluctuations in currency exchange rates against the U.S. dollar;
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changes in product mix;
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our inability to predict from period to period the number of healthcare professionals recommending or otherwise depending on our products as part of a treatment regimen, which may impact the timing of when revenue is recognized;
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seasonal fluctuations in the number of doctors in their offices and their availability to take appointments;
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success of or changes to our marketing programs from quarter to quarter;
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timing of industry tradeshows;
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changes in the timing of when revenue is recognized, including as a result of the introduction of new products or promotions or as a result of changes to critical accounting estimates or new accounting pronouncements;
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changes to our effective tax rate;
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unanticipated delays in production caused by insufficient capacity or availability of raw materials;
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any disruptions in the manufacturing process (external to us), including unexpected turnover in the labor force or the introduction of new production processes, power outages or natural or other disasters beyond our control;
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the development and marketing of directly competitive products by existing and new competitors;
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major changes in available technology or the preferences of customers may cause our current product offerings to become less competitive or obsolete;
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aggressive price competition from competitors;
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costs and expenditures in connection with litigation;
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the timing of new product introductions by us and our competitors, as well as customer order deferrals in anticipation of enhancements or new products;
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disruptions to our business due to political, economic or other social instability, including the impact of an epidemic any of which results in changes in consumer spending habits, consumers unable or unwilling to visit health care professionals, as well as any impact on workforce absenteeism;
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inaccurate forecasting of net revenues, production and other operating costs; and
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investments in research and development to develop new products and enhancements.
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correctly identify customer needs and preferences and predict future needs and preferences;
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include functionality and features that address customer requirements;
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allocate our research and development funding to products with higher growth prospects;
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anticipate and respond to our competitors’ development of new products and technological innovations;
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effectively differentiate our product offerings from our competitors’ product offerings;
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innovate and develop new technologies and applications;
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if and when applicable, effectively communicate the availability of third-party reimbursement of procedures using our products;
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obtain adequate intellectual property rights; and
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encourage customers to adopt new product technologies.
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·
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election of our board of directors;
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removal of any of our directors;
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significant corporate transactions;
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·
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amendment of our Articles of Incorporation or bylaws; and
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adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination involving us.
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Rights and privileges of the preferred class, including anti-dilution provisions; and
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Existence of the class itself, in the case of mandatory or forced conversion to our common shares.
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·
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Periodic variations in our results of operations and liquidity;
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Speculation in the press or investment community concerning our business and results of operations;
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Strategic actions by our competitors, such as product announcements or acquisitions;
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Announcements of technological innovations or new products by us, our customers or competitors; and
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General economic market conditions.
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OTC Bulletin Board (Symbol "ERGO")
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||||||||
Period
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High
(U.S. $)
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Low
(U.S. $)
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||||||
First Quarter 2015
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0.22
|
0.05
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||||||
Second Quarter 2015
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0.25
|
0.13
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||||||
Third Quarter 2015
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0.22
|
0.04
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||||||
Fourth Quarter 2015
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0.10
|
0.07
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||||||
First Quarter 2016
|
0.09
|
0.04
|
||||||
Second Quarter 2016
|
0.08
|
0.02
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||||||
Third Quarter 2016
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0.07
|
0.02
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||||||
Fourth Quarter 2016
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0.16
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0.03
|
||||||
These bid prices are estimates only.
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(a)
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(b)
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(c)
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|||||||||
Plan Category
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Number of securities to be issued upon exercise of outstanding options
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Weighted-average exercise price of outstanding options
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Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
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|||||||||
Equity compensation plan approved by security holders
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2,822,970
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$
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0.42
|
1,927,030
|
|
For the Years
Ended December 31,
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Change
|
||||||||||||||
|
2016
|
2015
|
$
|
%
|
||||||||||||
Revenues
|
$
|
265,466
|
$
|
346,910
|
$
|
(81,444
|
)
|
-23.5
|
% | |||||||
Cost of Goods Sold
|
91,499
|
131,007
|
(39,508
|
)
|
-30.2
|
% | ||||||||||
|
For the Years Ended
December 31,
|
Change
|
||||||||||||||
|
2016
|
2015
|
$
|
%
|
||||||||||||
Advertising & promotion expenses
|
$
|
90,143
|
$
|
127,127
|
$
|
(36,984
|
)
|
-29.1
|
%
|
|||||||
Professional fees
|
222,203
|
231,125
|
(8,922
|
)
|
-3.9
|
%
|
||||||||||
Consulting fees
|
68,965
|
344,112
|
(275,147
|
)
|
-80.0
|
%
|
||||||||||
General and Administrative expenses (including impairment of intangible assets)
|
1,009,930
|
1,539,495
|
(529,565
|
)
|
-34.4
|
%
|
|
For the Years Ended,
December 31,
|
Change
|
||||||||||||||
|
2016
|
2015
|
$ |
%
|
||||||||||||
Net cash provided by (used in)
|
||||||||||||||||
Operating activities
|
$
|
(715
|
)
|
$
|
(537
|
)
|
$
|
(178
|
)
|
33.1
|
%
|
|||||
Investing activities
|
(7
|
)
|
(21
|
)
|
14
|
-66.7
|
%
|
|||||||||
Financing activities
|
774
|
483
|
291
|
60.2
|
%
|
Contents
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Page(s)
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28
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29
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30
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31
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32
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33
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December 31, 2016
|
December 31, 2015
|
||||||
|
||||||||
Assets
|
||||||||
Current Assets:
|
||||||||
Cash
|
$
|
76,050
|
$
|
24,133
|
||||
Accounts receivable, net
|
7,973
|
7,098
|
||||||
Inventory, net
|
69,759
|
40,323
|
||||||
Prepaid expenses
|
80,565
|
56,782
|
||||||
|
||||||||
Total Current Assets
|
234,347
|
128,336
|
||||||
|
||||||||
Property and Equipment, net
|
18,285
|
32,686
|
||||||
|
||||||||
Patents and Licenses, net
|
186,509
|
232,584
|
||||||
|
||||||||
Long-Term Inventory
|
-
|
55,000
|
||||||
|
||||||||
Total Assets
|
$
|
439,141
|
$
|
448,606
|
||||
|
||||||||
|
||||||||
Liabilities and Stockholders' Equity (Deficit)
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable and accrued expenses
|
$
|
1,359,702
|
$
|
960,557
|
||||
Line of credit
|
59,945
|
58,195
|
||||||
Short-term notes payable, related-party
|
10,000
|
-
|
||||||
Short-term convertible notes payable, net of discount
|
605,436
|
181,981
|
||||||
Short-term convertible notes payable, net of discount, related party
|
8,322
|
-
|
||||||
Notes payable
|
62,219
|
39,061
|
||||||
|
||||||||
Total Current Liabilities
|
2,105,624
|
1,239,794
|
||||||
|
||||||||
Long Term Liabilities:
|
||||||||
|
||||||||
Convertible notes payable, net of discount and current portion-related party
|
24,028
|
-
|
||||||
Convertible notes payable, net of discount
|
276,050
|
-
|
||||||
|
||||||||
Total Long Term Liabilities
|
300,078
|
-
|
||||||
|
||||||||
Total Liabilities
|
2,405,702
|
1,239,794
|
||||||
|
||||||||
Stockholders' Equity (Deficit):
|
||||||||
Preferred stock, $0.001 par value, 5,000,000 shares authorized,
Series A preferred stock, 350,000 shares designated,
188,563 and 191,307 shares issued and outstanding,
respectively, aggregate liquidation value of $942,815
and $956,535 respectively
|
188
|
191
|
||||||
Common stock, $0.001 par value, 150,000,000 shares authorized,
28,149,777 and 28,107,337 shares issued and outstanding, respectively
|
28,150
|
28,108
|
||||||
Additional paid-in capital
|
12,486,728
|
12,309,450
|
||||||
Deferred compensation
|
(8,853
|
)
|
(51,945
|
)
|
||||
Accumulated deficit
|
(14,472,774
|
)
|
(13,076,992
|
)
|
||||
|
||||||||
Total Stockholders' Equity (Deficit)
|
(1,966,561
|
)
|
(791,188
|
)
|
||||
|
||||||||
Total Liabilities and Stockholders' Equity (Deficit)
|
$
|
439,141
|
$
|
448,606
|
|
For the Year
|
For the Year
|
||||||
|
Ended
|
Ended
|
||||||
|
December 31, 2016
|
December 31, 2015
|
||||||
|
||||||||
|
||||||||
REVENUES
|
$
|
265,466
|
$
|
346,910
|
||||
|
||||||||
COST OF GOODS SOLD
|
91,499
|
131,007
|
||||||
|
||||||||
GROSS PROFIT
|
173,967
|
215,903
|
||||||
|
||||||||
OPERATING EXPENSES
|
||||||||
Advertising and promotion
|
90,143
|
127,127
|
||||||
Professional fees
|
222,203
|
231,125
|
||||||
Consulting fees
|
68,965
|
344,112
|
||||||
Impairment of licenses
|
49,895
|
110,000
|
||||||
Loss on litigation
|
93,074
|
-
|
||||||
General and administrative
|
960,035
|
1,429,495
|
||||||
|
||||||||
Total Operating Expenses
|
1,484,315
|
2,241,859
|
||||||
|
||||||||
LOSS FROM OPERATIONS
|
(1,310,348
|
)
|
(2,025,956
|
)
|
||||
|
||||||||
OTHER INCOME (EXPENSES)
|
||||||||
Interest expense
|
(83,512
|
)
|
(149,284
|
)
|
||||
Other expense
|
(6,630
|
)
|
(35,895
|
)
|
||||
Loss on settlement/conversion of notes payable
|
-
|
(32,500
|
)
|
|||||
Loss on write-off of debt discount
|
-
|
(23,321
|
)
|
|||||
Gain on extinguishment of debt
|
4,708
|
-
|
||||||
Gain on settlement of accounts payable
|
-
|
6,906
|
||||||
|
||||||||
NET LOSS
|
$
|
(1,395,782
|
)
|
$
|
(2,260,050
|
)
|
||
|
||||||||
NET LOSS PER COMMON SHARE
- BASIC AND DILUTED:
|
$
|
(0.05
|
)
|
$
|
(0.09
|
)
|
||
|
||||||||
Weighted common shares outstanding
- basic and diluted
|
28,136,527
|
24,289,381
|
|
|
Total
|
||||||||||||||||||||||||||||||
|
Preferred Stock
|
Common Stock
|
Additional
Paid |
Deferred
|
Accumulated
|
Stockholders'
Equity
|
||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
In Capital
|
Compensation
|
Deficit
|
(Deficit)
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Balance - December 31, 2014
|
200,807
|
$
|
201
|
15,512,927
|
$
|
15,514
|
$
|
10,771,035
|
$
|
(86,344
|
)
|
$
|
(10,816,942
|
)
|
$
|
(116,536
|
)
|
|||||||||||||||
|
||||||||||||||||||||||||||||||||
Issuance of warrants in connection with convertible notes payable
|
-
|
-
|
-
|
-
|
10,000
|
-
|
-
|
10,000
|
||||||||||||||||||||||||
Issuance of common stock for cash
|
-
|
-
|
5,347,901
|
5,348
|
554,825
|
-
|
-
|
560,173
|
||||||||||||||||||||||||
Issuance of common stock for conversion of preferred stock
|
(9,500
|
)
|
(10
|
)
|
95,000
|
95
|
(85
|
)
|
-
|
-
|
-
|
|||||||||||||||||||||
Issuance of common stock for conversion of convertible debt
|
-
|
-
|
3,068,882
|
3,069
|
318,632
|
-
|
-
|
321,701
|
||||||||||||||||||||||||
Issuance of common stock for conversion of accounts payable
|
-
|
-
|
554,521
|
554
|
130,054
|
-
|
-
|
130,608
|
||||||||||||||||||||||||
Issuance of common stock for cashless exercise of warrants
|
-
|
-
|
2,050,923
|
2,051
|
(2,051
|
)
|
-
|
-
|
-
|
|||||||||||||||||||||||
Stock compensation
|
-
|
-
|
1,550,000
|
1,550
|
555,394
|
-
|
-
|
556,944
|
||||||||||||||||||||||||
Cancellation of shares issued to executives as compensation
|
-
|
-
|
(1,000,000
|
)
|
(1,000
|
)
|
(199,000
|
)
|
(200,000
|
)
|
||||||||||||||||||||||
Issuance of common stock for services
|
-
|
-
|
927,183
|
927
|
121,566
|
-
|
-
|
122,493
|
||||||||||||||||||||||||
Issuance of warrants for services
|
-
|
-
|
-
|
-
|
67,889
|
(67,889
|
)
|
-
|
-
|
|||||||||||||||||||||||
Issuance of warrants in connection with sales agreement
|
-
|
-
|
-
|
-
|
7,891
|
-
|
-
|
7,891
|
||||||||||||||||||||||||
Amortization of deferred compensation
|
-
|
-
|
-
|
-
|
-
|
102,288
|
-
|
102,288
|
||||||||||||||||||||||||
Deferral of offering fees
|
(26,700
|
)
|
(26,700
|
)
|
||||||||||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
-
|
(2,260,050
|
)
|
(2,260,050
|
)
|
||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Balance - December 31, 2015
|
191,307
|
$
|
191
|
28,107,337
|
$
|
28,108
|
$
|
12,309,450
|
$
|
(51,945
|
)
|
$
|
(13,076,992
|
)
|
$
|
(791,188
|
)
|
|||||||||||||||
|
||||||||||||||||||||||||||||||||
Issuance of warrants in connection with convertible notes payable
|
-
|
-
|
-
|
-
|
110,393
|
-
|
-
|
110,393
|
||||||||||||||||||||||||
Issuance of common stock for conversion of preferred stock
|
(2,744
|
)
|
(3
|
)
|
27,440
|
27
|
(24
|
)
|
-
|
-
|
-
|
|||||||||||||||||||||
Stock Compensation
|
-
|
-
|
-
|
-
|
57,774
|
-
|
-
|
57,774
|
||||||||||||||||||||||||
Issuance of common stock for services
|
-
|
-
|
15,000
|
15
|
9,135
|
-
|
-
|
9,150
|
||||||||||||||||||||||||
Amortization of deferred compensation
|
-
|
-
|
-
|
-
|
-
|
43,092
|
-
|
43,092
|
||||||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,395,782
|
)
|
(1,395,782
|
)
|
||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Balance - December 31, 2016
|
188,563
|
$
|
188
|
28,149,777
|
$
|
28,150
|
$
|
12,486,728
|
$
|
(8,853
|
)
|
$
|
(14,472,774
|
)
|
$
|
(1,966,561
|
)
|
|
For the Year
|
For the Year
|
||||||
|
Ended
|
Ended
|
||||||
|
December 31, 2016
|
December 31, 2015
|
||||||
|
||||||||
CASH FLOWS USED IN OPERATING ACTIVITIES:
|
||||||||
Net loss
|
$
|
(1,395,782
|
)
|
$
|
(2,260,050
|
)
|
||
|
||||||||
Adjustments to reconcile net loss to net cash
used in operating activities:
|
||||||||
Depreciation/amortization
|
17,697
|
31,996
|
||||||
Gain on settlement of accounts payable
|
-
|
(6,906
|
)
|
|||||
Impairment of licenses
|
49,895
|
110,000
|
||||||
Gain on extinguishment of debt
|
(4,708
|
)
|
-
|
|||||
Loss on write-off of debt discount
|
-
|
23,321
|
||||||
Amortization of discount on convertible notes
|
25,514
|
113,937
|
||||||
Loss on conversion of notes payable
|
-
|
32,500
|
||||||
Stock-based compensation
|
110,013
|
589,616
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(875
|
)
|
236,684
|
|||||
Inventory
|
25,564
|
53
|
||||||
Prepaid expenses
|
44,643
|
38,507
|
||||||
Accounts payable and accrued expenses
|
412,941
|
553,777
|
||||||
|
||||||||
NET CASH USED IN OPERATING ACTIVITIES
|
(715,098
|
)
|
(536,565
|
)
|
||||
|
||||||||
CASH FLOWS USED IN INVESTING ACTIVITIES:
|
||||||||
Purchase of property and equipment
|
-
|
(8,051
|
)
|
|||||
Acquisition of patents
|
(7,117
|
)
|
(13,235
|
)
|
||||
|
||||||||
NET CASH USED IN INVESTING ACTIVITIES
|
(7,117
|
)
|
(21,286
|
)
|
||||
|
||||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds from issuance of common stock
|
-
|
560,173
|
||||||
Proceeds from convertible notes payable and notes payable
|
829,400
|
100,000
|
||||||
Payment on convertible notes payable and notes payable
|
(55,268
|
)
|
-
|
|||||
Payment on notes payable
|
-
|
(177,651
|
)
|
|||||
|
||||||||
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
774,132
|
482,522
|
||||||
|
||||||||
NET CHANGE IN CASH
|
51,917
|
(75,329
|
)
|
|||||
|
||||||||
Cash at beginning of period
|
24,133
|
99,462
|
||||||
|
||||||||
Cash at end of period
|
$
|
76,050
|
$
|
24,133
|
||||
|
||||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
|
||||||||
Interest paid
|
$
|
6,749
|
$
|
37,834
|
||||
|
||||||||
SUPPLEMENTAL DISCLOSURE OF NONCASH FLOWS FINANCING AND INVESTING ACTIVITIES:
|
||||||||
Stock issued for accounts payable
|
$
|
-
|
$
|
130,608
|
||||
Common stock issued for services
|
$
|
9,150
|
$
|
122,493
|
||||
Warrants issued in connection with convertible notes payable
|
$
|
110,393
|
$
|
10,000
|
||||
Conversion of convertible notes payable, accounts payable and accrued interest to preferred and common stock
|
$
|
-
|
$
|
321,707
|
Office equipment
|
3 years
|
Production equipment
|
5 to 7 years
|
Leasehold improvements
|
Lesser of lease term or useful life of improvement
|
Level 1
|
|
Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
|
|
|
|
Level 2
|
|
Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
|
|
|
|
Level 3
|
|
Unobservable inputs where there is little or no market data, which require the reporting entity to develop its own assumptions.
|
-
|
The expected life of warrants issued represents the period of time the warrants are expected to be outstanding.
|
|
|
-
|
The expected volatility is generally based on the historical volatility of comparable companies’ stock over the contractual life of the warrant.
|
|
|
-
|
The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the contractual life of the warrant.
|
|
|
-
|
The expected dividend yield is based on our current dividend yield as the best estimate of projected dividend yield for periods within the contractual life of the warrant.
|
|
For the Years Ended
|
|||||||
|
2016
|
2015
|
||||||
Numerator:
|
||||||||
Net loss allocable to common stockholders
|
$
|
(1,395,782
|
)
|
$
|
(2,260,050
|
)
|
||
|
||||||||
Denominator:
|
||||||||
Weighted-average common shares outstanding
|
28,136,527
|
24,289,381
|
||||||
|
||||||||
Basic and diluted net loss per share
|
$
|
(0.05
|
)
|
$
|
(0.09
|
)
|
||
|
||||||||
Common stock warrants
|
21,122,633
|
18,495,578
|
||||||
Series A convertible preferred stock
|
9,428,150
|
9,565,350
|
||||||
Stock options
|
2,822,970
|
2,898,220
|
||||||
Convertible debt including interest
|
3,845,525
|
601,775
|
||||||
Excluded dilutive securities
|
37,219,278
|
31,560,923
|
|
December 31, 2016
|
December 31, 2015
|
||||||
Raw materials
|
$
|
195,230
|
$
|
219,074
|
||||
Finished goods
|
25,593
|
27,313
|
||||||
|
220,823
|
246,387
|
||||||
Less reserve for excess and obsolete inventory
|
(151,064
|
)
|
(151,064
|
)
|
||||
|
69,759
|
95,323
|
||||||
Less current portion
|
(69,759
|
) |
(40,323
|
)
|
||||
|
$
|
-
|
$
|
55,000
|
|
December 31, 2016
|
December 31, 2015
|
||||||
Office equipment
|
$
|
31,658
|
$
|
31,658
|
||||
Production equipment
|
90,899
|
90,899
|
||||||
Leasehold improvements
|
16,328
|
16,328
|
||||||
|
138,885
|
138,885
|
||||||
Less: accumulated depreciation
|
(120,600
|
)
|
(106,199
|
)
|
||||
|
$
|
18,285
|
$
|
32,686
|
|
December 31, 2016
|
December 31, 2015
|
||||||
Licenses and amortizable patents
|
$
|
97,244
|
$
|
97,244
|
||||
Unamortized patents
|
186,509
|
179,393
|
||||||
Accumulated amortization
|
(97,244
|
)
|
(44,053
|
)
|
||||
Patents and Licenses, net
|
$
|
186,509
|
$
|
232,584
|
|
December 31, 2016
|
December 31, 2015
|
||||||
Executive compensation
|
$
|
676,450
|
$
|
327,285
|
||||
Other accruals
|
30,600
|
38,022
|
||||||
|
$
|
707,050
|
$
|
365,307
|
|
December 31, 2016
|
December 31, 2015
|
||||||
Notes payable - current
|
||||||||
5.86% unsecured, $781 due monthly
|
$ |
-
|
$ |
2,687
|
||||
4.15% unsecured, $3,436 due monthly
|
-
|
36,374
|
||||||
8.95% unsecured, $314 due monthly
|
306
|
-
|
||||||
8.95% unsecured, $748 due monthly
|
710
|
-
|
||||||
10% unsecured, due August 2017
|
10,000
|
-
|
||||||
3.9% unsecured, $4,417 due monthly
|
51,203
|
-
|
||||||
|
$
|
62,219
|
$
|
39,061
|
Convertible notes payable, net
|
||||||||
$59,400, 0% unsecured was due in April 2017, net of discount related to warrants, convertible into common stock at $0.10 per share. Existing note of $55,000 was converted into the new note during first quarter 2016 with $4,400 of accrued interest being added to principal. This note has been extended until April 2018 at 8% interest. In exchange for extending the note, a five-year warrant to purchase 100,000 shares of common stock at $0.10 per share was granted.
|
$
|
59,400
|
$
|
50,000
|
||||
6% unsecured, convertible into common stock at $2.00 per share, due on demand
|
50,000
|
50,000
|
||||||
$11,333, 8% unsecured due December 2018, net of discount related to warrant, convertible into common stock at $0.10 per share. Existing note of $10,000 was converted into the new note during first quarter 2016 with $1,333 of accrued interest being added to principal.
|
10,857
|
10,000
|
||||||
$11,000, 8% unsecured due October 2018, net of discount related to warrant, convertible into common stock at $0.10 per share. Existing note of $10,000 was converted into the new note during first quarter 2016 with $1,000 of accrued interest being added to principal. Remaining $208 in accrued interest was forgiven and reported as a gain on extinguishment of debt on the statement of operations.
|
10,538
|
10,000
|
||||||
$50,000, 8% unsecured due November 2018, net of discount related to warrant, convertible into common stock at $0.10 per share.
|
48,031
|
46,981
|
||||||
$15,000, 8% unsecured due November 2018, net of discount related to warrant, convertible into common stock at $0.10 per share. Existing 0% note of $15,000 exchanged into new note during first quarter 2016.
|
14,370
|
15,000
|
||||||
$50,000, 8% unsecured due March 2019, net of discount related to warrant, convertible into common stock at $0.10 per share.
|
47,725
|
-
|
||||||
$25,000, 8% unsecured due March 2019, net of discount related to warrant, convertible into common stock at $0.10 per share.
|
23,862
|
-
|
||||||
$100,000, 8% unsecured due April 2019, net of discount related to warrant, convertible into common stock at $0.10 per share.
|
96,250
|
-
|
||||||
$50,000, 10% unsecured due August 2017, net of discount related to warrant, convertible into common stock at a price to be determined.
|
47,933
|
-
|
||||||
$15,000, 10% unsecured due September 2017, net of discount related to warrants, convertible into common stock at a price to be determined.
|
12,910
|
-
|
||||||
$10,000, 10% unsecured due September 2017, net of discount related to warrant, convertible into common stock at a price to be determined.
|
8,815
|
-
|
||||||
$25,000, 8% unsecured due June 2019, net of discount related to warrant, convertible into common stock at $0.10 per share.
|
24,417
|
-
|
||||||
$250,000, 10% unsecured due October 2017, net of discount related to warrant, convertible into common stock at a price to be determined.
|
220,937
|
-
|
||||||
$50,000, 10% unsecured due October 2017, net of discount related to warrant, convertible into common stock at a price to be determined.
|
44,188
|
-
|
||||||
$50,000, 10% unsecured due October 2017, net of discount related to warrant, convertible into common stock at a price to be determined.
|
44,188
|
-
|
||||||
$25,000, 10% unsecured due October 2017, net of discount related to warrant, convertible into common stock at a price to be determined.
|
20,646
|
-
|
||||||
$50,000, 10% unsecured due December 2017, net of discount related to warrant, convertible into common stock at a price to be determined.
|
37,829
|
-
|
||||||
$50,000, 10% unsecured due December 2017, net of discount related to warrant, convertible into common stock at a price to be determined.
|
42,250
|
-
|
||||||
$20,000, 10% unsecured due December 2017, net of discount related to warrant, convertible into common stock at a price to be determined.
|
16,340
|
-
|
||||||
Total Convertible Notes Payable
|
881,486
|
181,981
|
||||||
Less: Current Portion
|
(605,436
|
)
|
(181,981
|
)
|
||||
|
||||||||
|
$
|
276,050
|
$
|
-
|
Convertible notes payable, net, related party
|
||||||||
$10,000, 10% unsecured due December 2017, net of discount related to warrant, convertible into common stock at a price to be determined.
|
$
|
8,322
|
$
|
-
|
||||
$25,000, 8% unsecured due May 2019, net of discount related to warrant, convertible into common stock at $0.10 per share.
|
$
|
24,028
|
$
|
-
|
||||
Total Convertible Notes Payable, net, related party
|
$
|
32,350
|
$
|
-
|
||||
Less: Current Portion
|
(8,322
|
)
|
-
|
|||||
|
$
|
24,028
|
$
|
-
|
Notes payable, related party
|
||||||||
$10,000, 10% unsecured due in August 2017
|
$
|
10,000.00
|
$
|
-
|
||||
|
$
|
10,000.00
|
$
|
-
|
· |
Marvin Hausman, former CEO and director, 600,000 shares valued at $120,000
|
· |
Devin Andres, former COO, 550,000 shares valued at $110,000
|
· |
Philip Sobol, former director, 200,000 shares valued at $40,000, and
|
· |
Elliott Shelton, director, 200,000 shares valued at $40,000.
|
Weighted
|
||||||||||||||||||||
Weighted
|
Average
|
|||||||||||||||||||
Average
|
Remaining
|
Aggregate
|
||||||||||||||||||
Number of
|
Exercise Price
|
Exercise
|
Contractual Term
|
Intrinsic
|
||||||||||||||||
Shares
|
Range
|
Price
|
(Years)
|
Value
|
||||||||||||||||
Outstanding, December 31, 2014
|
2,866,470
|
$
|
0.30 - $1.00
|
$
|
0.48
|
8.96
|
-
|
|||||||||||||
Exercisable, December 31, 2014
|
2,321,001
|
$
|
0.38 - $1.00
|
$
|
0.47
|
9.50
|
-
|
|||||||||||||
Granted
|
50,000
|
$
|
0.09 - $0.20
|
$
|
0.16
|
5.00
|
-
|
|||||||||||||
Exercised
|
-
|
-
|
$
|
-
|
-
|
-
|
||||||||||||||
Expired/Forfeited
|
18,250
|
$
|
0.40 - $0.50
|
$
|
0.49
|
8.73
|
-
|
|||||||||||||
Outstanding, December 31, 2015
|
2,898,220
|
$
|
.0.09 - $1.00
|
$
|
0.43
|
11.25
|
-
|
|||||||||||||
Exercisable, December 31, 2015
|
2,661,493
|
$
|
0.20 - $1.00
|
$
|
0.42
|
11.66
|
-
|
|||||||||||||
Granted
|
-
|
-
|
$
|
-
|
-
|
-
|
||||||||||||||
Exercised
|
-
|
-
|
$
|
-
|
-
|
-
|
||||||||||||||
Expired/Forfeited
|
75,250
|
$
|
0.40 - $1.00
|
$
|
0.60
|
-
|
-
|
|||||||||||||
Outstanding, December 31, 2016
|
2,822,970
|
$
|
0.09 - $0.81
|
$
|
0.42
|
11.42
|
-
|
|||||||||||||
Exercisable, December 31, 2016
|
2,703,184
|
$
|
0.09 - $0.81
|
$
|
0.41
|
11.66
|
-
|
Number of
|
Exercise
|
|||||
shares
|
Price
|
|||||
20,000
|
$
|
0.09
|
||||
190,000
|
$
|
0.20
|
||||
300,000
|
$
|
0.30
|
||||
55,000
|
$
|
0.38
|
||||
1,386,670
|
$
|
0.40
|
||||
10,000
|
$
|
0.45
|
||||
576,300
|
$
|
0.50
|
||||
160,000
|
$
|
0.60
|
||||
15,000
|
$
|
0.62
|
||||
100,000
|
$
|
0.75
|
||||
10,000
|
$
|
0.81
|
||||
2,822,970
|
Date of Issue
|
Number of shares
purchasable |
Exercise Price
|
Expiration
|
|||||||||
As of December 2015
|
18,515,300
|
$
|
0.001 - $2.50
|
04/2017 - 10/2029
|
||||||||
January-16
|
237,333
|
$
|
0.125
|
01/2019
|
||||||||
April-16
|
100,000
|
$
|
0.125
|
04/2019
|
||||||||
May-16
|
25,000
|
$
|
0.125
|
05/2019
|
||||||||
June-16
|
25,000
|
$
|
0.125
|
06/2019
|
||||||||
August-16
|
50.000
|
$
|
0.10
|
08/2021
|
||||||||
September-16
|
100,000
|
$
|
0.10
|
09/2021
|
||||||||
October-16
|
1,500,000
|
$
|
0.10
|
10/2021
|
||||||||
December-16
|
570,000
|
$
|
0.10
|
12/2021
|
||||||||
Total as of December 31, 2016
|
21,122,633
|
|
December 31, 2016
|
December 31, 2015
|
|||||
Risk-Free interest rate
|
0.64% - 1.47
|
%
|
0.28% - 1.72
|
%
|
|||
Expected dividend yield
|
0
|
%
|
0
|
%
|
|||
Volatility
|
125.15% - 176.62
|
%
|
166.1% - 204.66
|
%
|
|||
Expected life
|
3 - 5 years
|
3 - 7 years
|
|
2016
|
2015
|
||||||
Deferred tax assets:
|
||||||||
Reserves and accruals
|
$
|
169,000
|
$
|
168,000
|
||||
Net operating loss carryforwards
|
2,233,000
|
1,943,000
|
||||||
Total deferred tax assets:
|
2,402,000
|
2,111,000
|
||||||
Deferred tax liabilities:
|
||||||||
Depreciation and amortization
|
20,000
|
6,000
|
||||||
Net deferred tax assets before valuation allowance
|
2,382,000
|
2,105,000
|
||||||
Less: Valuation allowance
|
(2,382,000
|
)
|
(2,105,000
|
)
|
||||
Net deferred tax assets | $ | - | $ | - |
2016
|
2015
|
|||||||
Federal Statutory Rate
|
$
|
(475,000
|
)
|
$
|
(768,000
|
)
|
||
Nondeductible expenses
|
198,000
|
241,000
|
||||||
Change in allowance on deferred tax assets
|
(277,000
|
)
|
(527,000
|
)
|
||||
$
|
-
|
$
|
-
|
·
|
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;
|
·
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
|
·
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.
|
Name
|
Age
|
Position
|
||
|
|
|||
Marvin S. Hausman, MD
|
76
|
Chief Science and Technology Officer as of August 12, 2015 and former Chief Executive Officer and Chief Financial Officer from August 28, 2008 through August 12, 2015.
|
||
|
|
|||
Elliot L. Shelton, Esq.
|
68
|
Secretary, Director since August 28, 2008.
|
||
|
|
|||
Timothy A. Timmins
|
60
|
Executive Vice Present, Chief Operating and Financial Officer since October 1, 2015.
|
||
|
|
|||
Carl J Johnson
|
68
|
President, Chief Executive Officer, Director since August 12, 2015.
|
|
1.
|
any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
|
|
|
|
|
2.
|
any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
|
|
|
|
|
3.
|
being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or
|
|
|
|
|
4.
|
being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
|
|
|
Non-
|
||||||||||||||||||||||||||||||||||
|
|
Qualified
|
||||||||||||||||||||||||||||||||||
|
|
Non-Equity
|
Deferred
|
|||||||||||||||||||||||||||||||||
Name and
|
|
Stock
|
Option
|
Incentive Plan
|
Compensation
|
All other
|
||||||||||||||||||||||||||||||
Principal
|
|
Salary
|
Bonus
|
Awards
|
Awards
|
Compensation
|
Earnings
|
Compensation
|
||||||||||||||||||||||||||||
Position
|
Year
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|||||||||||||||||||||||||||
Marvin
|
|
|||||||||||||||||||||||||||||||||||
Hausman
|
|
|||||||||||||||||||||||||||||||||||
CSO, Dir
|
2016
|
$
|
150,000
|
1
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
24,000
|
2
|
$
|
174,000
|
|||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||
Marvin
|
|
|||||||||||||||||||||||||||||||||||
Hausman
|
|
|||||||||||||||||||||||||||||||||||
CEO, Dir
|
2015
|
$
|
272,746
|
3
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
23,100
|
4
|
$
|
295,846
|
|||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||
Timothy
|
|
|||||||||||||||||||||||||||||||||||
Timmins
|
|
|||||||||||||||||||||||||||||||||||
COO, Pres
|
2016
|
$
|
135,000
|
5
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
6,524
|
6
|
$
|
141,524
|
|||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||
Timothy
|
|
|||||||||||||||||||||||||||||||||||
Timmins
|
|
|||||||||||||||||||||||||||||||||||
COO, Pres
|
2015
|
$
|
11,250
|
7
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
26,461
|
8
|
$
|
37,711
|
|||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||
Carl
|
|
|||||||||||||||||||||||||||||||||||
Johnson
|
|
|||||||||||||||||||||||||||||||||||
CEO, Dir
|
2016
|
$
|
150,000
|
9
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
22,500
|
10
|
$
|
172,500
|
|||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||
Carl
|
|
|||||||||||||||||||||||||||||||||||
Johnson
|
|
|||||||||||||||||||||||||||||||||||
CEO, Dir
|
2015
|
$
|
-
|
11
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
16,500
|
12
|
$
|
16,500
|
|
Options Awards
|
Stock Awards
|
|||||||||||||||||||||||||||||||
Name
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
Equity
Incentive
Plan Awards
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
Option
Exercise
Price$
|
Option
Expiration
Date
|
Number of
Shares or
Units
Stock
That Have
Not Vested
|
Market
Value
of Shares
Or Units that
Have Not Vested (#)
|
Equity
Incentive
Plan
Awards:
Number of
Unearned Shares,
Units or
Other Rights
That Have
Not Vested (#)
|
Equity
Incentive
Plan
Awards: Market
or Payout Value
of Unearned
Shares, Units,
Or Other Rights
That Have Not
Vested ($)
|
||||||||||||||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
Dr. Marvin S. Hausman
|
138,900
|
-
|
-
|
$
|
0.40
|
10/27/2029
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
Dr. Marvin S. Hausman
|
200,000
|
-
|
-
|
$
|
0.40
|
6/20/2028
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
Dr. Marvin S Hausman
|
175,000
|
-
|
-
|
$
|
0.40
|
9/28/2026
|
-
|
-
|
-
|
-
|
Name and Address of
Beneficial Owner |
Amount and Nature of
Beneficial Ownership |
Percentage
of Class (1) |
|||||||
Marvin S. Hausman, M.D., CSO & Dir. (2)(3)(7)
|
10,328,900
|
shares
|
28.5
|
%
|
|||||
Carl J. Johnson, President, CEO, Dir. (3)
|
1,130,200
|
shares
|
3.3
|
%
|
|||||
Timothy A. Timmins, EVP, COO, CFO
|
800,000
|
shares
|
2.4
|
%
|
|||||
Elliot L. Shelton, Esq. Secretary, Director (4)(7)
|
976,250
|
shares
|
2.9
|
%
|
|||||
Delta Group Investments Limited (5)
|
3,042,455
|
shares
|
9.0
|
%
|
|||||
Devin Andres (6)
|
1,872,514
|
shares
|
5.4
|
%
|
|||||
Total officers and directors
|
13,235,350
|
shares
|
35.9
|
%
|
|
For the Years Ended
December 31,
|
|||||||
|
2016
|
2015
|
||||||
Fee Category
|
||||||||
Audit fees
|
$
|
56,139
|
$
|
50,906
|
||||
Tax Fees
|
-
|
-
|
||||||
All other fees
|
-
|
-
|
||||||
Total Fees
|
$
|
56,139
|
$
|
50,906
|
Consolidated Balance Sheets at December 31, 2016 and December 31, 2015
|
29
|
Consolidated Statements of Operations for the Years ended December 31, 2016 and 2015
|
30
|
Consolidated Statement of Stockholders’ Equity (Deficit) for the Years ended December 31, 2016 and 2015
|
31
|
Consolidated Statements of Cash Flows for the for the Year ended December 31, 2016 and 2015
|
32
|
Exhibit Number
|
Description of Exhibit
|
Filed Herewith
|
Form
|
Exhibit
|
Filing Date
|
|||||
|
|
|
||||||||
3.1
|
Amended and Restated Articles of Incorporation of Registrant and Certificate of Validation
|
10-K
|
3.1
|
4/14/2016
|
||||||
|
|
|
||||||||
3.2
|
Amended and Restated Bylaws of Registrant
|
|
8-K
|
3.2
|
09/22/2010
|
|||||
|
|
|
||||||||
3.3
|
Amended Articles of Merger Incorporation as currently in effect
|
|
8-K
|
3.3
|
10/13/2008
|
|||||
|
|
|
||||||||
10.1
|
Exclusive Option Agreement dated May 1, 2006, between The Penn State Research Foundation and Northwest Medical Research Inc.
|
|
8-K
|
10.1
|
09/04/2008
|
|||||
|
|
|
||||||||
10.2
|
Assignment Agreement to the Option Agreement, dated July 31, 2008, among The Penn State Research Foundation, Northwest Medical Research Inc. and Generic Marketing Services, Inc.
|
|
8-K
|
10.2
|
09/04/2008
|
|||||
|
|
|
||||||||
10.3
|
Assignment and Assumption Agreement, dated July 31, 2008, between Northwest Medical Research Inc. and Generic Marketing Services, Inc.
|
|
8-K
|
10.3
|
09/04/2008
|
|||||
|
|
|
||||||||
10.4
|
Form of Common Stock and Warrant Purchase Agreement
|
|
8-K
|
10.1
|
06/12/2009
|
|||||
|
|
|
||||||||
10.5
|
Form of Securities Purchase Agreement
|
|
8-K
|
10.1
|
09/21/2009
|
|||||
|
|
|
||||||||
10.6
|
$50,000 Promissory Note between Entia and Marvin S. Hausman, M.D. and Philip Sobol dated December 30, 2009
|
|
8-K
|
10.1
|
12/31/2010
|
|||||
|
|
|
||||||||
10.9
|
$50,000 Promissory Note between Entia and Mark C. Wolf dated February 18, 2010
|
|
10-K
|
10.9
|
4/15/2010
|
|||||
|
|
|
||||||||
10.10
|
Profit Sharing Agreement between Entia, American Charter & Marketing LLC, and Delta Group Investments, Limited dated March 26, 2010
|
|
10-K
|
10.10
|
4/15/2010
|
10.11
|
Form of Common Stock and Warrant Agreement 2010
|
8-K
|
10.1
|
12/20/2010
|
||||||
|
|
|||||||||
10.12
|
$312,500 Promissory Note between Entia and Delta Group Investments Limited dated January 21, 2011
|
8-K
|
10.2
|
2/22/2010
|
||||||
|
|
|||||||||
10.13
|
Termination of Profit Sharing Agreement dated February 21, 2011
|
8-K
|
10.1
|
2/22/2011
|
||||||
|
|
|||||||||
10.14
|
Lease Agreement between Entia and Sherwood Venture LLC dated March 15, 2011
|
8-K
|
10.1
|
4/6/2011
|
||||||
|
|
|||||||||
10.15
|
Form of Warrant A Agreement 2010
|
8-K
|
10.2
|
12/22/2010
|
||||||
|
|
|||||||||
10.16
|
Form of Warrant B Agreement 2010
|
8-K
|
10.3
|
12/22/2010
|
||||||
|
|
|||||||||
31.1
|
X
|
|
||||||||
|
|
|||||||||
31.2
|
X
|
|
|
|||||||
|
|
|||||||||
32.1
|
X
|
|
|
|||||||
|
|
|||||||||
32.2
|
X
|
|
|
|
|
|
|
ENTIA BIOSCIENCES, INC.
|
|
|
|
|
|
By:
|
/s/ Carl J. Johnson
|
|
Carl J. Johnson
President
Chief Executive Officer,
(Principal Executive Officer)
|
|
|
|
|
|
By:
|
/s/ Timothy A. Timmins
|
|
Timothy A. Timmins
Executive Vice President
Chief Operating and Financial Officer,
(Principal Finance and Accounting Officer)
|
Signature
|
|
Title
|
|
|
|
|
|
|
/s/ Marvin S. Hausman, M.D.
|
|
Chairman of the Board, Director
|
Marvin Hausman, M.D.
|
|
|
|
|
|
|
|
|
/s/ Carl J. Johnson
|
|
Director
|
Carl J. Johnson
|
|
|
|
|
|
|
|
|
/s/ Elliot L. Shelton, Esq.
|
|
Director
|
Elliot A. Shelton, Esq.
|
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of Entia Biosciences, 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 officers 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 my 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 my 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 my 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 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 officers 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 have identified for the registrant’s auditors any material weaknesses in internal controls; 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.
|
6.
|
The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|
1.
|
I have reviewed this Annual Report on Form 10-K of Entia Biosciences, 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 officers 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 my 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 my 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 my 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 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 officers 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 have identified for the registrant’s auditors any material weaknesses in internal controls; 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.
|
6.
|
The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|
Document And Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
May 19, 2017 |
Jun. 30, 2016 |
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Entia Biosciences, Inc. | ||
Document Type | 10-K | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Common Stock, Shares Outstanding | 33,660,947 | ||
Entity Public Float | $ 1,223,982 | ||
Amendment Flag | false | ||
Entity Central Index Key | 0001408299 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Well-known Seasoned Issuer | No | ||
Document Period End Date | Dec. 31, 2016 | ||
Document Fiscal Year Focus | 2016 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Preferred stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Common stock par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 28,149,777 | 28,107,337 |
Common stock, shares outstanding | 28,149,777 | 28,107,337 |
Series A Preferred Stock [Member] | ||
Preferred stock, shares authorized | 350,000 | 350,000 |
Preferred stock, shares issued | 188,563 | 191,307 |
Preferred stock, shares outstanding | 188,563 | 191,307 |
Preferred stock, aggregate liquidation value (in Dollars) | $ 942,815 | $ 956,535 |
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) |
Conversion of Convertible Debt [Member]
Common Stock [Member]
|
Conversion of Convertible Debt [Member]
Additional Paid-in Capital [Member]
|
Conversion of Convertible Debt [Member] |
Conversion of Preferred Stock [Member]
Preferred Stock [Member]
|
Conversion of Preferred Stock [Member]
Common Stock [Member]
|
Conversion of Preferred Stock [Member]
Additional Paid-in Capital [Member]
|
Preferred Stock [Member] |
Common Stock [Member]
Conversion of Accounts Payable [Member]
|
Common Stock [Member]
Conversion of Warrants [Member]
|
Common Stock [Member] |
Additional Paid-in Capital [Member]
Warrants Issued for Convertible Notes [Member]
|
Additional Paid-in Capital [Member]
Conversion of Accounts Payable [Member]
|
Additional Paid-in Capital [Member]
Conversion of Warrants [Member]
|
Additional Paid-in Capital [Member]
Warrants Issued for Services [Member]
|
Additional Paid-in Capital [Member] |
Deferred Compensation, Share-based Payments [Member]
Warrants Issued for Services [Member]
|
Deferred Compensation, Share-based Payments [Member] |
Retained Earnings [Member] |
Warrants Issued for Convertible Notes [Member] |
Conversion of Accounts Payable [Member] |
Total |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at Dec. 31, 2014 | $ 201 | $ 15,514 | $ 10,771,035 | $ (86,344) | $ (10,816,942) | $ (116,536) | |||||||||||||||
Balance (in Shares) at Dec. 31, 2014 | 200,807 | 15,512,927 | |||||||||||||||||||
Issuance of warrants | $ 10,000 | $ 67,889 | 7,891 | $ (67,889) | $ 10,000 | 7,891 | |||||||||||||||
Amortization of deferred compensation | 102,288 | 102,288 | |||||||||||||||||||
Deferral of offering fees | (26,700) | (26,700) | |||||||||||||||||||
Net loss | (2,260,050) | (2,260,050) | |||||||||||||||||||
Issuance of common stock for cash | $ 5,348 | 554,825 | 560,173 | ||||||||||||||||||
Issuance of common stock for cash (in Shares) | 5,347,901 | ||||||||||||||||||||
Issuance of common stock for conversion of securities | $ 3,069 | $ 318,632 | $ 321,701 | $ (10) | $ 95 | $ (85) | $ 554 | $ 2,051 | $ 130,054 | $ (2,051) | $ 130,608 | ||||||||||
Issuance of common stock for conversion of securities (in Shares) | 3,068,882 | (9,500) | 95,000 | 554,521 | 2,050,923 | ||||||||||||||||
Stock compensation | $ 1,550 | 555,394 | 556,944 | ||||||||||||||||||
Stock compensation (in Shares) | 1,550,000 | ||||||||||||||||||||
Cancellation of shares issued to executives as compensation | $ (1,000) | (199,000) | (200,000) | ||||||||||||||||||
Cancellation of shares issued to executives as compensation (in Shares) | (1,000,000) | ||||||||||||||||||||
Issuance of common stock for services | $ 927 | 121,566 | 122,493 | ||||||||||||||||||
Issuance of common stock for services (in Shares) | 927,183 | ||||||||||||||||||||
Balance at Dec. 31, 2015 | $ 191 | $ 28,108 | 12,309,450 | (51,945) | (13,076,992) | (791,188) | |||||||||||||||
Balance (in Shares) at Dec. 31, 2015 | 191,307 | 28,107,337 | |||||||||||||||||||
Issuance of warrants | 110,393 | 110,393 | |||||||||||||||||||
Amortization of deferred compensation | 43,092 | 43,092 | |||||||||||||||||||
Net loss | (1,395,782) | (1,395,782) | |||||||||||||||||||
Issuance of common stock for conversion of securities | $ (3) | $ 27 | (24) | ||||||||||||||||||
Issuance of common stock for conversion of securities (in Shares) | (2,744) | 27,440 | |||||||||||||||||||
Stock compensation | 57,774 | 57,774 | |||||||||||||||||||
Issuance of common stock for services | $ 15 | 9,135 | 9,150 | ||||||||||||||||||
Issuance of common stock for services (in Shares) | 15,000 | ||||||||||||||||||||
Balance at Dec. 31, 2016 | $ 188 | $ 28,150 | $ 12,486,728 | $ (8,853) | $ (14,472,774) | $ (1,966,561) | |||||||||||||||
Balance (in Shares) at Dec. 31, 2016 | 188,563 | 28,149,777 |
NOTE 1 - BUSINESS |
12 Months Ended |
---|---|
Dec. 31, 2016 | |
Disclosure Text Block [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | NOTE 1 – BUSINESS We engage in the development, production and distribution of dietary supplements, nutraceuticals and medical foods products, principally in the United States of America. We are also engaged in the discovery, scientific evaluation and marketing of natural formulations that can be used in medical foods, nutraceuticals, cosmetics and other products developed and sold by Entia and by third parties. We have a history of incurring net losses and net operating cash flow deficits. At December 31, 2016, we had cash and cash equivalents of $76,050. These conditions raise substantial doubt about our ability to continue as a going concern. Based on our cash on hand, planned financings, and results from future operations, we believe that we will have sufficient funds to continue operations through 2017. In order for us to continue as a going concern beyond this point and ultimately to achieve profitability, we will likely be required to obtain capital from external sources, and/or increase revenues and/or reduce operating costs. The issuance of equity securities will cause dilution to our shareholders. If external sources of financing are not available or are inadequate to fund our operations, we may be required to reduce operating costs including personnel costs, which could jeopardize our future strategic initiatives and business plans. The accompanying consolidated financial statements have been prepared assuming the Company continues as a going concern. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the matters discussed herein. |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies [Text Block] | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation and principles of consolidation The accompanying consolidated financial statements and related notes have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). Material intercompany transactions and balances have been eliminated in consolidation. The consolidated financial statements include the accounts of Entia and Total Nutraceutical Solutions, a wholly-owned subsidiary, as of December 31, 2016 and 2015. Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash We consider all highly liquid, short-term investments with original maturities of three months or less when purchased to be cash equivalents. Accounts receivable Accounts receivable are recorded at the invoiced amount, net of allowance for doubtful accounts. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses based on specific identification of accounts in our existing accounts receivable. Outstanding account balances are reviewed individually for collectibility. We determine the allowance based on historical write-off experience, customer specific facts and economic conditions. Bad debt expense is included in general and administrative expenses, if any. We generally consider accounts greater than 30 days old to be past due. Account balances are charged off against allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The allowance for doubtful accounts was $5,736 at December 31, 2016 and 2015. Inventory Inventory consists of finished goods and raw materials to be used in the production of our dietary supplement products, is stated at the lower of cost or market using the average cost method. We regularly review our inventory on hand and, when necessary, record a provision for excess or obsolete inventory. The portion of inventory that is not expected to be used in production of our products for more than 12 months is a long-term asset. Property and equipment Property and equipment are recorded at cost. Additions and improvements that increase the value or extend the life of an asset are capitalized. Maintenance and repairs are expensed as incurred. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statement of operations. Depreciation is computed on a straight-line basis over the following estimated useful lives of the assets:
Patents Patents, once issued or purchased, are amortized using the straight-line method over their economic remaining useful lives. All internally-developed process costs incurred to the point when a patent application is to be filed are expensed as incurred and classified as research and development costs and reported in the consolidated statements of operations as general and administrative costs. Patent application costs and general legal costs are capitalized pending disposition of the individual patent application, and are subsequently either amortized based on the initial patent life granted, generally 15 to 20 years for domestic patents and 5 to 20 years for foreign patents, or expensed if the patent application is rejected. The costs of defending and maintaining patents are expensed as incurred. Upon becoming fully amortized, the related cost and accumulated amortization are removed from the accounts. Licenses Licenses that allow us to use certain technology in the production of our products are amortized on a straight-line basis over their remaining useful life (typically 15-17 years). Long-lived assets, including licenses, property and equipment and patents are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We assess the recoverability of our long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives. We have recorded an impairment on our licenses in the amount of $49,895 and $110,000 on December 31, 2016 and 2015, respectively. As of December 31, 2016, the carrying value of our licenses are $0. Discount on convertible notes payable We allocate the proceeds received from convertible notes between convertible notes payable and warrants, if applicable. The resulting discount for warrants is amortized using the effective interest method over the life of the debt instrument. After allocating a portion of the proceeds to the warrants, the effective conversion price of the convertible note payable can be determined. If the effective conversion price is lower than the market price at the date of issuance, a beneficial conversion feature is recorded as an additional discount to the convertible note payable. The beneficial conversion feature discount is amortized using the effective interest method over the life of the debt instrument. The amortization is recorded as interest expense on the consolidated statements of operations. Fair value of financial instruments The carrying amounts of our financial assets and liabilities, such as cash, accounts receivable and accounts payable approximate their fair values determined based on level 1 inputs in the fair value hierarchy because of the short maturity of these instruments. Due to conversion features and other terms, it is not practical to estimate the fair value of notes payable and convertible notes. Fair value measurements We measure fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. Where reliable, reputable third-party appraisals are available, these are used to determine value or aid in determining value. We utilize a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
We do not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis. Consequently, we did not have any fair value adjustments for assets and liabilities measured at fair value at December 31, 2016 or 2015, nor any gains or losses reported in the consolidated statement of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date for the years ended December 31, 2016 and 2015. Revenue recognition We recognize revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been performed, (iii) amounts are fixed or determinable and (iv) collectibility of amounts is reasonably assured. Revenues from the sale of products, including shipping and handling fees but excluding statutory taxes collected from customers, as applicable, are recognized when shipment has occurred. We sell our products directly to customers and distributors. Persuasive evidence of an arrangement is demonstrated via order and invoice, product delivery is evidenced by a bill of lading from the third-party carrier and title transfers upon shipment, the sales price to the customer is fixed upon acceptance of the order and there is no separate sales rebate, discount, or volume incentive. Allowances for product returns, primarily in connection with one distribution agreement, are provided at the time the sale is recorded. This allowance is based upon historical return rates for the Company and relevant industry patterns, which reflects anticipated returns of unopened product in its original packaging to be received over a period of 120 days following the original sale. Shipping and handling costs Amounts charged to customers for shipping products are included in revenues and the related costs are classified in cost of goods sold as incurred. In 2016 and 2015, we incurred $14,904 and $27,848, respectively, in shipping costs included in cost of goods sold. Advertising costs Costs associated with the advertising of our products are expensed as incurred. Research and development Research and development costs are charged to expense as incurred. Research and development costs consist primarily of material and testing costs for research and development as well as research and development arrangements with unrelated third party research and development institutions. These research and development arrangements usually involve one specific research and development project. We may make non-refundable advances upon signing of these arrangements. Non-refundable advance payments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized. Such amounts are recognized as an expense as the related goods are delivered or as the related services are performed. Management periodically evaluates whether the goods will be delivered or services will be rendered. If management does not expect the goods to be delivered or services to be rendered, the capitalized advance payment is charged to expense. Research and development expense was $37,750 and $73,394 in 2016 and 2015, respectively and are classified as general and administrative on the consolidated statement of operations. Equity instruments issued to parties other than employees for acquiring goods or services We account for all transactions in which goods or services are the consideration received for the issuance of equity instruments based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur. However, where reliable, reputable third-party appraisals are available, these are used to determine value or aid in determining value. Such transactions have included both common stock or awards of warrants to purchase common stock. The fair value of each warrant award is estimated on the date of grant using a Black-Scholes option-pricing valuation model. The assumptions used to determine the fair value of our warrants are as follows:
Income taxes We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in our consolidated statements of income in the period that includes the enactment date. We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in our consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Should they occur, our policy is to classify interest and penalties related to tax positions as income tax expense. The tax years that are open to examination are 2013, 2014, 2015 and 2016. Net loss per common share Basic and diluted net loss per share has been computed by dividing our net loss by the weighted average number of common shares issued and outstanding. Convertible preferred stock, options and warrants to purchase our common stock as well as debt which are convertible into common stock are anti-dilutive and therefore are not included in the determination of the diluted net loss per share for 2016 and 2015. The following table presents a reconciliation of basic loss per share and excluded dilutive securities:
Reclassifications Certain reclassifications have been made to prior period financial statements and footnotes in order to conform to the current period's presentation. Segments We have determined that we operate in one segment for financial reporting purposes. Recently issued accounting pronouncements In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory: Topic 330 (ASU 2015-11). Topic 330 currently requires an entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. ASU 2015-11 requires that inventory measured using either the first-in, first-out (FIFO) or average cost method be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Adoption of ASU 2015-11 is required for fiscal reporting periods beginning after December 15, 2016, including interim reporting periods within those fiscal years. The Company does not expect adoption of ASU 2015-11 to have a material impact on its consolidated financial statements. In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU-2016-09). The updated guidance simplifies and changes how companies account for certain aspects of share-based payment awards to employees, including accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification of certain items in the statement of cash flows. Adoption of ASU 2016-09 is required for fiscal reporting periods beginning after December 15, 2016, including interim reporting periods within those fiscal years with early adoption being permitted. The Company does not expect the adoption of ASU 2016-09 to have a material impact on its consolidated financial statements. In May 2014, the FASB issued new accounting guidance related to revenue recognition. This new standard will replace all current U.S. GAAP guidance on this topic and eliminate all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. This guidance will be effective for Entia in the first quarter of 2018, and can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. We are evaluating the impact of adopting this new accounting standard on our financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update requires organizations to recognize lease assets and lease liabilities on the balance sheet and to disclose key information about leasing arrangements. This ASU is effective for annual reporting periods beginning on or after December 15, 2018, and interim periods within those annual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual period. We are currently evaluating the impact the adoption of this ASU will have on our consolidated financial statements. |
NOTE 3 - INVENTORY |
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Text Block] | NOTE 3 – INVENTORY Inventory consists of the following at:
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NOTE 4 - PROPERTY AND EQUIPMENT |
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment Disclosure [Text Block] | NOTE 4 – PROPERTY AND EQUIPMENT Property and equipment, stated at cost, consists of the following at:
Depreciation expense was $14,401 and $18,512 for the years ended December 31, 2016 and 2015, respectively. |
NOTE 5 - PATENTS AND LICENSES, NET |
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||
Disclosure Text Block [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets Disclosure [Text Block] | NOTE 5 – PATENTS AND LICENSES, NET Our identifiable long-lived intangible assets are patents and licenses. During 2016 and 2015, management analyzed our intangibles for possible impairment. We have recorded for 2016 and 2015 an impairment in the amount of $49,895 and $110,000, respectively. We have no amortizable licenses on the financial statements at December 31, 2016. Prior to being fully impaired, the licenses were being amortized over an economic useful life of 15-17 years. The gross carrying amounts and accumulated amortization related to these intangible assets consist of the following at:
Amortization expense for licenses and amortizable patents were $3,296 and $13,484 for the years ended December 31, 2016 and 2015, respectively. |
NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES |
12 Months Ended | ||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Liabilities Disclosure [Text Block] | NOTE 6 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accrued expenses (included with accounts payable) consisted of the following at:
Executive compensation accrued above includes $327,285 of unpaid wages from 2014 and 2015 that have subsequently been forgiven by our Chairman. See Note 13 – Subsequent Events. |
NOTE 7 - NOTES PAYABLE |
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Debt Disclosure [Text Block] | NOTE 7 – NOTES PAYABLE Notes payable comprise the following at the dates indicated:
Line of Credit On March 25, 2014, we entered into an unsecured line of credit arrangement that renews annually unless terminated by either party. The line of credit is $60,000 with an interest rate of prime plus 3.00%, resulting in an interest rate of 6.5% at December 31, 2016. There are no loan covenants applicable to this line of credit and the amounts outstanding are $59,945 and $58,195 as of December 31, 2016 and 2015, respectively. |
NOTE 8 - RELATED PARTY TRANSACTIONS |
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Related Party Transactions Disclosure [Text Block] | NOTE 8 – RELATED PARTY TRANSACTIONS Investments and loans from officers or board members On February 18, 2016, our Chairman and Chief Science and Technology Officer lent us $10,000 in the form of a 10% unsecured note, the due date of which has been extended to August 2017. On May 20, 2016, our Chief Executive Officer invested $25,000 in our 8% convertible note payable (with an attached warrant), due May 2019. On December 5, 2016, our Chairman and Chief Science and Technology Officer invested $10,000 in our 10% convertible promissory note (with an attached warrant), due December 2017. Common stock issued On April 17, 2015, the board of directors authorized and granted to its executives and board or directors for the year end 2015, restricted common stock bonuses as follows:
During December 2015, Messrs. Hausman, Sobol and Shelton surrendered their stock certificates in the amounts detailed above with the understanding that equity securities in some form would be granted in the future to replace the aforementioned grants. That replacement took place during the first quarter 2017. See Note 13 – Subsequent Events. As of third quarter 2015, Mr. Andres was no longer an officer of the company and, as of fourth quarter 2015, Mr. Sobol was no longer a director. |
NOTE 9 - STOCKHOLDERS' EQUITY (DEFICIT) |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note Disclosure [Text Block] | NOTE 9 – STOCKHOLDERS’ EQUITY (DEFICIT) Preferred Stock On May 26, 2011, our board of directors designated 350,000 shares of preferred stock as Series A preferred stock, $0.001 par value. The Series A preferred stock is entitled to a liquidation preference in the amount of $5 per share, votes on an as converted basis with the common stock on all matters as to which holders of common stock shall be entitled to vote, and due to an anti-dilution right, is convertible into common stock on a one-for-fifty basis. Common stock The Company is authorized to issue 150,000,000 shares of common stock at $0.001 par value. Stock incentive plan The Entia Biosciences, Inc. 2010 Stock Incentive Plan was adopted by the board of directors on September 17, 2010 and approved by the stockholders on October 21, 2010. Initially 15 million shares were reserved for issuance under the Plan. On January 1, 2012, 500,000 additional shares were automatically added to the shares reserved for issuance under the Plan, pursuant to an evergreen provision in the Plan. On February 15, 2012, pursuant to a 1:10 reverse stock split the number of shares reserved for issuance under the Plan was reduced from 15,500,000 shares to 1,550,000 shares. Between 2013 and 2015, in addition to the 150,000 shares that were automatically added, on two separate occasions shareholders approved an additional 1.5 million shares each to be added bringing the total shares reserved to 4,700,000 shares. On January 1, 2016, another 50,000 shares were automatically added to the shares reserved for issuance bringing the total to 4,750,000 shares. Generally, stock options have been granted at or below the last sale price of our common stock on the date of grant for terms ranging from four to fifteen years and vesting over five-years. The fair value of the option grants was calculated at the date of the grants using the Black-Scholes option pricing model with the following assumptions:
The range of exercise prices for options outstanding under the 2010 Stock Incentive Plan at December 31, 2016 are as follows:
At December 31, 2016, the Company had 1,927,030 unissued shares available under the Plan. Also, at December 31, 2016, the Company had $49,363 of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted average period of 5.24 years. The Company issues new shares of common stock to satisfy exercises and vesting of awards granted. Warrants Outstanding warrants to purchase common stock are as follows:
We use the Black-Scholes option-pricing model to determine the fair value of warrants on the date of grant. In determining the fair value of warrants, we employed the following key assumptions:
At December 31, 2016 and 2015, the weighted-average Black-Scholes value of warrants granted was $0.05 and $0.14, respectively. |
NOTE 10 - INCOME TAXES |
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Income Tax Disclosure [Text Block] | NOTE 10 – INCOME TAXES For the years ended December 31, 2016, and 2015, we incurred net operating losses and, accordingly, no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. At December 31, 2016, we had approximately $5,715,364 of net operating losses. The net operating loss carryforwards, if not utilized, will begin to expire in 2026. The components of our deferred tax assets/liabilities as of December 31, are as follows:
For financial reporting purposes, we have incurred a loss in each period since inception. Based on the available objective evidence, including our history of losses, we believe it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, we provided for a full valuation allowance against our net deferred tax assets at December 31, 2016, and 2015. A reconciliation between the amount of income tax benefit determined by applying the applicable U.S. statutory income tax rate to pre-tax loss for the years ended December 31, is as follows:
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NOTE 11 - COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | NOTE 11 – COMMITMENTS AND CONTINGENCIES Leases The Company has a lease agreement with on its headquarters facilities that expires in August 2018. The lease terms include a base monthly rental rate of $3,343 per month, increasing to $3,410 in August 2016, and then $3,478 in August 2017. The Company has analyzed the requirement to straight-line the full value of the lease agreement over the life of the lease and has determined that there is no need to book a deferred rent liability as the amount is immaterial. Future minimum lease payments for all of our facilities amount to $58,298 for 2017 and $37,974 through August 2018. Rent expense for the years ended December 31, 2016 and 2015 was $56,670 and $55,464, respectively. Employment Agreements During 2015, the Company entered into employment agreements with its CEO, COO/CFO and CSO. Commencement of payment of the base salaries under these employment agreements was, and continues to be, conditional on fundraising results. Management determined that no base salary for the CEO or CSO would be accrued or paid for 2015, based primarily upon the financial needs of the Company through the end of that year. Payment of base salary commenced for the COO/CFO in December 2015. We commenced accrual for payment of base salaries commenced for the CEO and CSO on January 1, 2016. Litigation During 2016, we were involved in arbitration with a former employee who had made claims against us in connection with his Separation and Release Agreement, along with other potential allegations seeking approximately $93,000, plus punitive damages. The Company was notified on August 21, 2016 that the Company failed to prove that the employee/claimant’s actions would allow the arbitrator to reach the conclusion that such actions constituted a breach of the employee’s Separation and Release Agreement and, accordingly, the Company paid the former employee $93,074 plus accrued interest of 9% per annum, totaling $6,283 through September 30, 2016. This amount is shown in the financial statements as a loss on litigation. Although we were not party to litigation at December 31, 2016, during the first quarter 2017, we became a party to litigation with respect to a particular note payable, with a face amount of $50,000 and the accrued interest thereon. We had previously been party to litigation with respect to this note, but with a different plaintiff who dropped that lawsuit without prejudice. The Company will defend itself vigorously and reserves the right to make counter claims against the adversarial parties. Although we believe that this situation will be settled in due time, without material effect to the Company or its future operations, we can offer no assurance to that effect. |
NOTE 12 - CONCENTRATIONS AND CREDIT RISK |
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Risks and Uncertainties [Abstract] | |
Concentration Risk Disclosure [Text Block] | NOTE 12 – CONCENTRATIONS AND CREDIT RISK Customers and Credit Concentrations During 2016 and 2015 approximately 48% and 42%, respectively, of our sales were to 5 customers. Accounts receivable for the top 5 customers accounted for 62% and 57% of total accounts receivable at December 31, 2016 and 2015, respectively. Vendor Concentrations During 2016, approximately 78% of our purchases were made from 5 vendors as compared to 64% during 2015. Accounts payable for these vendors accounted for 0.16% and 0.5% of total accounts payable at December 31, 2016 and 2015, respectively. |
NOTE 13 - SUBSEQUENT EVENTS |
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Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | NOTE 13 – SUBSEQUENT EVENTS In February 2017, 600,000, 200,000 and 200,000 shares, respectively, were re-issued to our Chairman, Dr. Marvin Hausman, a director, Elliot Shelton and a former director, Philip Sobol, to replace shares previously surrendered to the Company. In February 2017, 500,000, 600,000, and 550,000 shares were issued to Hausman, Johnson and Timmins, respectively, as compensation pursuant to their 2015 employment contracts, as adjusted by the board of directors. In February 2017, 1,861,170 shares were issued to Dr. Hausman in conjunction with his forgiveness of $327,285 of unpaid wages from 2014 and 2015. A five-year warrant to purchase 100,000 shares of our restricted Common Stock, exercisable at $0.10 per share was also granted to him as consideration from the disinterested directors. The shares were valued at $18,612 and will be expensed during 2017. In February 2017, 250,000 shares were awarded to Mr. Shelton for his service as the sole outside director during 2016 and 250,000 shares each were awarded to Messrs. Hausman, Johnson and Timmins in conjunction with replacement employment contracts being drafted in order to strengthen, to the benefit of the Company and its shareholders, the non-competition clauses between these individuals and the Company and, further, to remove the "evergreen" aspects of the existing contracts, instead replacing them with a finite, fixed terms. In February 2017, we entered into an executed, definitive licensing agreement with GROH Beauty Corp, a newly-formed subsidiary of an established beauty industry company, under which we granted certain exclusive worldwide rights to manufacture and distribute our GROH beauty products. The license called for a front-end license fee, half of which is non-refundable and the other half of which is subject to a number of factors during a due diligence period, as well as royalties over a period of years, also subject to the completion of the due diligence period, until the license is paid in full and thereby becomes an exclusive perpetual license of the Licensee. The total value of the license fees and royalties to us was $1,150,000. The License called for and was accompanied by a separate executed agreement under which we will manufacture and sell our ErgoD2 compound exclusively to the licensee for its use in the cosmetic and beauty care markets. As this manufacturing agreement provided for price adjustments and is expected to run for a number of future years concurrent with the License, its positive value to us presently continues to be inestimable. Additionally, the License called for a separate agreement with Entia, through which our Chief Science and Technology Officer will provide consulting services to the licensee. |
Accounting Policies, by Policy (Policies) |
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Basis of Accounting, Policy [Policy Text Block] | Basis of presentation and principles of consolidation The accompanying consolidated financial statements and related notes have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). Material intercompany transactions and balances have been eliminated in consolidation. The consolidated financial statements include the accounts of Entia and Total Nutraceutical Solutions, a wholly-owned subsidiary, as of December 31, 2016 and 2015. |
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Use of Estimates, Policy [Policy Text Block] | Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
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Cash and Cash Equivalents, Policy [Policy Text Block] | Cash We consider all highly liquid, short-term investments with original maturities of three months or less when purchased to be cash equivalents. |
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Receivables, Policy [Policy Text Block] | Accounts receivable Accounts receivable are recorded at the invoiced amount, net of allowance for doubtful accounts. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses based on specific identification of accounts in our existing accounts receivable. Outstanding account balances are reviewed individually for collectibility. We determine the allowance based on historical write-off experience, customer specific facts and economic conditions. Bad debt expense is included in general and administrative expenses, if any. We generally consider accounts greater than 30 days old to be past due. Account balances are charged off against allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The allowance for doubtful accounts was $5,736 at December 31, 2016 and 2015. |
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Inventory, Policy [Policy Text Block] | Inventory Inventory consists of finished goods and raw materials to be used in the production of our dietary supplement products, is stated at the lower of cost or market using the average cost method. We regularly review our inventory on hand and, when necessary, record a provision for excess or obsolete inventory. The portion of inventory that is not expected to be used in production of our products for more than 12 months is a long-term asset. |
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Property, Plant and Equipment, Policy [Policy Text Block] | Property and equipment Property and equipment are recorded at cost. Additions and improvements that increase the value or extend the life of an asset are capitalized. Maintenance and repairs are expensed as incurred. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statement of operations. Depreciation is computed on a straight-line basis over the following estimated useful lives of the assets:
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Intangible Assets, Finite-Lived, Policy [Policy Text Block] | Patents Patents, once issued or purchased, are amortized using the straight-line method over their economic remaining useful lives. All internally-developed process costs incurred to the point when a patent application is to be filed are expensed as incurred and classified as research and development costs and reported in the consolidated statements of operations as general and administrative costs. Patent application costs and general legal costs are capitalized pending disposition of the individual patent application, and are subsequently either amortized based on the initial patent life granted, generally 15 to 20 years for domestic patents and 5 to 20 years for foreign patents, or expensed if the patent application is rejected. The costs of defending and maintaining patents are expensed as incurred. Upon becoming fully amortized, the related cost and accumulated amortization are removed from the accounts. |
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Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block] | Licenses Licenses that allow us to use certain technology in the production of our products are amortized on a straight-line basis over their remaining useful life (typically 15-17 years). Long-lived assets, including licenses, property and equipment and patents are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We assess the recoverability of our long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives. We have recorded an impairment on our licenses in the amount of $49,895 and $110,000 on December 31, 2016 and 2015, respectively. As of December 31, 2016, the carrying value of our licenses are $0. |
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Debt, Policy [Policy Text Block] | Discount on convertible notes payable We allocate the proceeds received from convertible notes between convertible notes payable and warrants, if applicable. The resulting discount for warrants is amortized using the effective interest method over the life of the debt instrument. After allocating a portion of the proceeds to the warrants, the effective conversion price of the convertible note payable can be determined. If the effective conversion price is lower than the market price at the date of issuance, a beneficial conversion feature is recorded as an additional discount to the convertible note payable. The beneficial conversion feature discount is amortized using the effective interest method over the life of the debt instrument. The amortization is recorded as interest expense on the consolidated statements of operations. |
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Fair Value of Financial Instruments, Policy [Policy Text Block] | Fair value of financial instruments The carrying amounts of our financial assets and liabilities, such as cash, accounts receivable and accounts payable approximate their fair values determined based on level 1 inputs in the fair value hierarchy because of the short maturity of these instruments. Due to conversion features and other terms, it is not practical to estimate the fair value of notes payable and convertible notes. |
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Fair Value Measurement, Policy [Policy Text Block] | Fair value measurements We measure fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. Where reliable, reputable third-party appraisals are available, these are used to determine value or aid in determining value. We utilize a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
We do not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis. Consequently, we did not have any fair value adjustments for assets and liabilities measured at fair value at December 31, 2016 or 2015, nor any gains or losses reported in the consolidated statement of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date for the years ended December 31, 2016 and 2015. |
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Revenue Recognition, Policy [Policy Text Block] | Revenue recognition We recognize revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been performed, (iii) amounts are fixed or determinable and (iv) collectibility of amounts is reasonably assured. Revenues from the sale of products, including shipping and handling fees but excluding statutory taxes collected from customers, as applicable, are recognized when shipment has occurred. We sell our products directly to customers and distributors. Persuasive evidence of an arrangement is demonstrated via order and invoice, product delivery is evidenced by a bill of lading from the third-party carrier and title transfers upon shipment, the sales price to the customer is fixed upon acceptance of the order and there is no separate sales rebate, discount, or volume incentive. Allowances for product returns, primarily in connection with one distribution agreement, are provided at the time the sale is recorded. This allowance is based upon historical return rates for the Company and relevant industry patterns, which reflects anticipated returns of unopened product in its original packaging to be received over a period of 120 days following the original sale. |
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Shipping and Handling Cost, Policy [Policy Text Block] | Shipping and handling costs Amounts charged to customers for shipping products are included in revenues and the related costs are classified in cost of goods sold as incurred. In 2016 and 2015, we incurred $14,904 and $27,848, respectively, in shipping costs included in cost of goods sold. |
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Advertising Costs, Policy [Policy Text Block] | Advertising costs Costs associated with the advertising of our products are expensed as incurred. |
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Research and Development Expense, Policy [Policy Text Block] | Research and development Research and development costs are charged to expense as incurred. Research and development costs consist primarily of material and testing costs for research and development as well as research and development arrangements with unrelated third party research and development institutions. These research and development arrangements usually involve one specific research and development project. We may make non-refundable advances upon signing of these arrangements. Non-refundable advance payments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized. Such amounts are recognized as an expense as the related goods are delivered or as the related services are performed. Management periodically evaluates whether the goods will be delivered or services will be rendered. If management does not expect the goods to be delivered or services to be rendered, the capitalized advance payment is charged to expense. Research and development expense was $37,750 and $73,394 in 2016 and 2015, respectively and are classified as general and administrative on the consolidated statement of operations. |
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Stockholders' Equity, Policy [Policy Text Block] | Equity instruments issued to parties other than employees for acquiring goods or services We account for all transactions in which goods or services are the consideration received for the issuance of equity instruments based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur. However, where reliable, reputable third-party appraisals are available, these are used to determine value or aid in determining value. Such transactions have included both common stock or awards of warrants to purchase common stock. The fair value of each warrant award is estimated on the date of grant using a Black-Scholes option-pricing valuation model. The assumptions used to determine the fair value of our warrants are as follows:
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Income Tax, Policy [Policy Text Block] | Income taxes We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in our consolidated statements of income in the period that includes the enactment date. We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in our consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Should they occur, our policy is to classify interest and penalties related to tax positions as income tax expense. The tax years that are open to examination are 2013, 2014, 2015 and 2016. |
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Earnings Per Share, Policy [Policy Text Block] | Net loss per common share Basic and diluted net loss per share has been computed by dividing our net loss by the weighted average number of common shares issued and outstanding. Convertible preferred stock, options and warrants to purchase our common stock as well as debt which are convertible into common stock are anti-dilutive and therefore are not included in the determination of the diluted net loss per share for 2016 and 2015. The following table presents a reconciliation of basic loss per share and excluded dilutive securities:
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Reclassification, Policy [Policy Text Block] | Reclassifications Certain reclassifications have been made to prior period financial statements and footnotes in order to conform to the current period's presentation. |
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Segment Reporting, Policy [Policy Text Block] | Segments We have determined that we operate in one segment for financial reporting purposes. |
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New Accounting Pronouncements, Policy [Policy Text Block] | Recently issued accounting pronouncements In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory: Topic 330 (ASU 2015-11). Topic 330 currently requires an entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. ASU 2015-11 requires that inventory measured using either the first-in, first-out (FIFO) or average cost method be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Adoption of ASU 2015-11 is required for fiscal reporting periods beginning after December 15, 2016, including interim reporting periods within those fiscal years. The Company does not expect adoption of ASU 2015-11 to have a material impact on its consolidated financial statements. In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU-2016-09). The updated guidance simplifies and changes how companies account for certain aspects of share-based payment awards to employees, including accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification of certain items in the statement of cash flows. Adoption of ASU 2016-09 is required for fiscal reporting periods beginning after December 15, 2016, including interim reporting periods within those fiscal years with early adoption being permitted. The Company does not expect the adoption of ASU 2016-09 to have a material impact on its consolidated financial statements. In May 2014, the FASB issued new accounting guidance related to revenue recognition. This new standard will replace all current U.S. GAAP guidance on this topic and eliminate all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. This guidance will be effective for Entia in the first quarter of 2018, and can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. We are evaluating the impact of adopting this new accounting standard on our financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update requires organizations to recognize lease assets and lease liabilities on the balance sheet and to disclose key information about leasing arrangements. This ASU is effective for annual reporting periods beginning on or after December 15, 2018, and interim periods within those annual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual period. We are currently evaluating the impact the adoption of this ASU will have on our consolidated financial statements. |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] |
The following table presents a reconciliation of basic loss per share and excluded dilutive securities:
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Property, Plant and Equipment [Table Text Block] |
Depreciation is computed on a straight-line basis over the following estimated useful lives of the assets:
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NOTE 3 - INVENTORY (Tables) |
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Schedule of Inventory, Current [Table Text Block] |
Inventory consists of the following at:
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NOTE 4 - PROPERTY AND EQUIPMENT (Tables) |
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Property, Plant and Equipment [Table Text Block] |
Property and equipment, stated at cost, consists of the following at:
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NOTE 5 - PATENTS AND LICENSES, NET (Tables) |
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Schedule of Finite-Lived Intangible Assets [Table Text Block] |
The gross carrying amounts and accumulated amortization related to these intangible assets consist of the following at:
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NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) |
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Schedule of Accrued Liabilities [Table Text Block] |
Accrued expenses (included with accounts payable) consisted of the following at:
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NOTE 7 - NOTES PAYABLE (Tables) |
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Schedule of Debt [Table Text Block] |
Notes payable comprise the following at the dates indicated:
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Convertible Debt [Table Text Block] |
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NOTE 9 - STOCKHOLDERS' EQUITY (DEFICIT) (Tables) |
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Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] |
Generally, stock options have been granted at or below the last sale price of our common stock on the date of grant for terms ranging from four to fifteen years and vesting over five-years. The fair value of the option grants was calculated at the date of the grants using the Black-Scholes option pricing model with the following assumptions:
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Schedule of Share-based Compensation, Shares Outstanding under Stock Option Plans, by Exercise Price Range [Table Text Block] |
The range of exercise prices for options outstanding under the 2010 Stock Incentive Plan at December 31, 2016 are as follows:
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Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block] |
Outstanding warrants to purchase common stock are as follows:
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Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Table Text Block] |
In determining the fair value of warrants, we employed the following key assumptions:
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NOTE 10 - INCOME TAXES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Deferred Tax Assets and Liabilities [Table Text Block] |
The components of our deferred tax assets/liabilities as of December 31, are as follows:
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Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] |
A reconciliation between the amount of income tax benefit determined by applying the applicable U.S. statutory income tax rate to pre-tax loss for the years ended December 31, is as follows:
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NOTE 1 - BUSINESS (Details) - USD ($) |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|---|
Disclosure Text Block [Abstract] | |||
Cash and Cash Equivalents, at Carrying Value | $ 76,050 | $ 24,133 | $ 99,462 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Property, Plant and Equipment, Estimated Useful Lives |
12 Months Ended |
---|---|
Dec. 31, 2016 | |
Office Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 3 years |
Leasehold Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Leasehold improvements, useful life | Lesser of lease term or useful life of improvement |
Minimum [Member] | Machinery and Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 5 years |
Maximum [Member] | Machinery and Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 7 years |
NOTE 3 - INVENTORY (Details) - Schedule of Inventory - USD ($) |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Schedule of Inventory [Abstract] | ||
Raw materials | $ 195,230 | $ 219,074 |
Finished goods | 25,593 | 27,313 |
220,823 | 246,387 | |
Less reserve for excess and obsolete inventory | (151,064) | (151,064) |
69,759 | 95,323 | |
Less current portion | $ (69,759) | (40,323) |
$ 55,000 |
NOTE 4 - PROPERTY AND EQUIPMENT (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 14,401 | $ 18,512 |
NOTE 4 - PROPERTY AND EQUIPMENT (Details) - Schedule of Property, Plant and Equipment - USD ($) |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 138,885 | $ 138,885 |
Less: accumulated depreciation | (120,600) | (106,199) |
Property, plant and equipment, net | 18,285 | 32,686 |
Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 31,658 | 31,658 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 90,899 | 90,899 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 16,328 | $ 16,328 |
NOTE 5 - PATENTS AND LICENSES, NET (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
NOTE 5 - PATENTS AND LICENSES, NET (Details) [Line Items] | ||
Impairment of Intangible Assets, Indefinite-lived (Excluding Goodwill) | $ 49,895 | $ 110,000 |
Amortization of Intangible Assets | $ 3,296 | $ 13,484 |
Licensing Agreements [Member] | Minimum [Member] | ||
NOTE 5 - PATENTS AND LICENSES, NET (Details) [Line Items] | ||
Finite-Lived Intangible Asset, Useful Life | 15 years | |
Licensing Agreements [Member] | Maximum [Member] | ||
NOTE 5 - PATENTS AND LICENSES, NET (Details) [Line Items] | ||
Finite-Lived Intangible Asset, Useful Life | 17 years |
NOTE 5 - PATENTS AND LICENSES, NET (Details) - Schedule of Finite-Lived Intangible Assets - USD ($) |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Accumulated amortization | $ (97,244) | $ (44,053) |
Patents and Licenses, net | 186,509 | 232,584 |
Licensing Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangilble assets, gross | 97,244 | 97,244 |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangilble assets, gross | $ 186,509 | $ 179,393 |
NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) [Line Items] | ||
Accrued Salaries, Current | $ 676,450 | $ 327,285 |
Unpaid Executive Wages from 2014 and 2015 [Member] | ||
NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) [Line Items] | ||
Accrued Salaries, Current | $ 327,285 |
NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - Schedule of Accrued Liabilities - USD ($) |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Schedule of Accrued Liabilities [Abstract] | ||
Executive compensation | $ 676,450 | $ 327,285 |
Other accruals | 30,600 | 38,022 |
$ 707,050 | $ 365,307 |
NOTE 7 - NOTES PAYABLE (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
NOTE 7 - NOTES PAYABLE (Details) [Line Items] | ||
Line of Credit, Current | $ 59,945 | $ 58,195 |
Line of Credit [Member] | ||
NOTE 7 - NOTES PAYABLE (Details) [Line Items] | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 60,000 | |
Line of Credit Facility, Interest Rate at Period End | 6.50% | |
Prime Rate [Member] | Line of Credit [Member] | ||
NOTE 7 - NOTES PAYABLE (Details) [Line Items] | ||
Debt Instrument, Basis Spread on Variable Rate | 3.00% |
NOTE 7 - NOTES PAYABLE (Details) - Schedule of Debt - USD ($) |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Notes payable - current | ||
Notes payable, current | $ 62,219 | $ 39,061 |
Related party notes payable | 10,000.00 | 0 |
Note Payable 1 [Member] | Loans Payable [Member] | ||
Notes payable - current | ||
Notes payable, current | 0 | 2,687 |
Note Payable 2 [Member] | Loans Payable [Member] | ||
Notes payable - current | ||
Notes payable, current | 0 | 36,374 |
Note Payable 3 [Member] | Loans Payable [Member] | ||
Notes payable - current | ||
Notes payable, current | 306 | 0 |
Note Payable 4 [Member] | Loans Payable [Member] | ||
Notes payable - current | ||
Notes payable, current | 710 | 0 |
Note Payable 6 [Member] | Loans Payable [Member] | ||
Notes payable - current | ||
Notes payable, current | $ 51,203 | $ 0 |
NOTE 7 - NOTES PAYABLE (Details) - Schedule of Debt (Parentheticals) - Loans Payable [Member] - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Note Payable 1 [Member] | ||
NOTE 7 - NOTES PAYABLE (Details) - Schedule of Debt (Parentheticals) [Line Items] | ||
% | 5.86% | 5.86% |
Due monthly | $ 781 | $ 781 |
Note Payable 2 [Member] | ||
NOTE 7 - NOTES PAYABLE (Details) - Schedule of Debt (Parentheticals) [Line Items] | ||
% | 4.15% | 4.15% |
Due monthly | $ 3,436 | $ 3,436 |
Note Payable 3 [Member] | ||
NOTE 7 - NOTES PAYABLE (Details) - Schedule of Debt (Parentheticals) [Line Items] | ||
% | 8.95% | 8.95% |
Due monthly | $ 314 | $ 314 |
Note Payable 4 [Member] | ||
NOTE 7 - NOTES PAYABLE (Details) - Schedule of Debt (Parentheticals) [Line Items] | ||
% | 8.95% | |
Due monthly | $ 748 | |
Note Payable 6 [Member] | ||
NOTE 7 - NOTES PAYABLE (Details) - Schedule of Debt (Parentheticals) [Line Items] | ||
% | 3.90% | |
Due monthly | $ 4,417 |
NOTE 9 - STOCKHOLDERS' EQUITY (DEFICIT) (Details) - Fair Value Measurements, Warrants, Valuation Assumptions |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Expected dividend yield | 0.00% | 0.00% |
Minimum [Member] | ||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Risk-Free interest rate | 0.64% | 0.28% |
Volatility | 125.15% | 166.10% |
Expected life | 3 years | 3 years |
Maximum [Member] | ||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Risk-Free interest rate | 1.47% | 1.72% |
Volatility | 176.62% | 204.66% |
Expected life | 5 years | 7 years |
NOTE 10 - INCOME TAXES (Details) |
12 Months Ended |
---|---|
Dec. 31, 2016
USD ($)
| |
Income Tax Disclosure [Abstract] | |
Operating Loss Carryforwards | $ 5,715,364 |
Operating Loss Carryforwards, Expiration Date | 2026 |
NOTE 10 - INCOME TAXES (Details) - Schedule of Deferred Tax Assets and Liabilities - USD ($) |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Deferred tax assets: | ||
Reserves and accruals | $ 169,000 | $ 168,000 |
Net operating loss carryforwards | 2,233,000 | 1,943,000 |
Total deferred tax assets: | 2,402,000 | 2,111,000 |
Depreciation and amortization | 20,000 | 6,000 |
Net deferred tax assets before valuation allowance | 2,382,000 | 2,105,000 |
Less: Valuation allowance | (2,382,000) | (2,105,000) |
Net deferred tax assets | $ 0 | $ 0 |
NOTE 10 - INCOME TAXES (Details) - Schedule of Effective Income Tax Rate Reconciliation - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Schedule of Effective Income Tax Rate Reconciliation [Abstract] | ||
Federal Statutory Rate | $ (475,000) | $ (768,000) |
Nondeductible expenses | 198,000 | 241,000 |
Change in allowance on deferred tax assets | (277,000) | (527,000) |
$ 0 | $ 0 |
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