2.4.0.80010 - Disclosure - Significant Accounting Policiestruefalsefalse1false falsefalseFrom2013-01-01to2013-06-30http://www.sec.gov/CIK0001125699duration2013-01-01T00:00:002013-06-30T00:00:001true 1DLYT_NotesToFinancialStatementsAbstractDLYT_falsenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsexbrli:stringItemTypestringfalse0Notes to Financial Statements2false 2us-gaap_SignificantAccountingPoliciesTextBlockus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00In the opinion of management, all adjustments necessary for a fair statement of (a) the results of operations for the three and six month periods ended June 30, 2013 and 2012, (b) the financial position at June 30, 2013 and December 31, 2012, and (c) cash flows for the six month periods ended June 30, 2013 and 2012, have been made.   The significant accounting policies followed are:   Use of estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.   Cash and cash equivalents - Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits. The Company has never experienced any losses related to these balances. All non-interest bearing cash balances were fully insured at December 31, 2012 due to a temporary federal program in effect from December 31, 2010 through December 31, 2012. Under the program, there is no limit to the amount of insurance for eligible accounts. Beginning 2013, insurance coverage reverted to $250,000 per depositor at each financial institution. The Company's non-interest bearing cash balances were fully insured at June 30, 2013.   Accounts receivable - Accounts receivable consist primarily of receivables from the sale of our ERV products. The Company regularly reviews accounts receivable for any bad debts based on an analysis of the Companys collection experience, customer credit worthiness, and current economic trends. Based on managements review of accounts receivable, we have recorded an allowance for doubtful accounts of $11,274 and $2,576 at June 30, 2013 and December 31, 2012, respectively. At June 30, 2013, three customers accounted for approximately 90% of the balance of accounts receivable.   Inventory - Inventory consists primarily of raw materials and is stated at the lower of cost, determined by first-in, first-out method, or market. Market is determined based on the net realizable value, with appropriate consideration given to obsolescence, excessive levels, deterioration and other factors.   Property and equipment - Property and equipment are recorded at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets ranging from 5 to 7 years. Gains and losses upon disposition are reflected in the statement of operations in the period of disposition. Maintenance and repair expenditures are charged to expense as incurred. Property and equipment are evaluated for impairment when events change or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.   Intangible assets - Identified intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Companys existing intangible assets consist solely of patents. Patents are amortized over their estimated useful or economic lives of 15 years. Patent amortization expense was approximately $5,300 and $7,400 for the three months ended June 30, 2013 and 2012, respectively. Patent amortization expense was approximately $11,300 and $11,800 for the six months ended June 30, 2013 and 2012, respectively. Total patent amortization expense for the next five years is estimated to be approximately $24,000 per year.   Long-lived assets - Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the book value of the asset may not be recoverable. The Company periodically evaluates whether events and circumstances have occurred that indicate possible impairment. When impairment indicators exist, the Company uses market quotes, if available or an estimate of the future undiscounted net cash flows of the related asset or asset group over the remaining life in measuring whether or not the asset values are recoverable. There have been no significant impairments of long-lived assets during the three and six month periods ended June 30, 2013.   Revenue recognition - Generally, the Company recognizes revenue for its products upon shipment to customers, provided no significant obligations remain and collection is probable. During the six months ended June 30, 2013 and 2012, four customers accounted for approximately 90% (73% of revenue is from a related party) and 61% of revenues, respectively.   In certain instances, our ConsERV product carries a warranty for two years for all parts contained therein with the exception of the energy recovery ventilator core which, in such circumstances, may carry a 10 year warranty. The warranty includes replacement of defective parts. The Company has recorded an accrual of approximately $93,000 for future warranty expenses at June 30, 2013 and December 31, 2012.   Revenue derived from the sale of licenses is deferred and recognized as revenue on a straight-line basis over the life of the license, or until the license arrangement is terminated. The Company recognized revenue of approximately $50,400 and $20,500 from license agreements for the three months ended June 30, 2013 and 2012, respectively. The Company recognized revenue of $100,800 and $41,000 from license agreements for the six months ended June 30, 2013 and 2012, respectively.   The Company accounts for revenue arrangements with multiple elements under the provisions of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 605-25, "Revenue RecognitionMultiple-Element Arrangements," In order to account for these agreements, the Company must identify the deliverables included within the agreement and evaluate which deliverables represent separate units of accounting based on if certain criteria are met, including whether the delivered element has stand-alone value to the licensee. The consideration received is allocated among the separate units of accounting, and the applicable revenue recognition criteria are applied to each of the separate units.   Employee stock based compensation - The Company recognizes all share-based awards to employees, including grants of employee stock options, as compensation expense in the financial statements based on their fair values. That expense will be recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).   The value of each award is estimated at the grant date using the Black-Scholes option model with the following assumptions for awards granted during the six months ended June 30, 2013. There were no awards granted during the six months ended June 30, 2012.   <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Six Months Ended June 30, 2013</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 86%">Dividend rate</td> <td style="width: 1%"> </td> <td style="width: 4%"> </td> <td style="width: 8%; text-align: right">0</td> <td style="width: 1%">%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Risk free interest rate</td> <td> </td> <td> </td> <td nowrap="nowrap" style="text-align: right">2.03% 2.20</td> <td>%</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Expected term</td> <td> </td> <td colspan="2" style="text-align: right">10 years</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Expected volatility</td> <td> </td> <td> </td> <td style="text-align: right">177</td> <td>%</td></tr> </table>   The basis for the above assumptions are as follows: the dividend rate is based upon the Companys history of dividends; the risk-free interest rate for periods within the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant; the expected term was calculated based on the Companys historical pattern of options granted and the period of time they are expected to be outstanding; and expected volatility was calculated by review of the Companys and a peer Companys historical activity.   Non-employee stock-based compensation - The Companys accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of ASC 505-50, Equity-Based Payments to Non-Employees. Stock based compensation related to non-employees is accounted for based on the fair value of the related stock or options or the fair value of the services, whichever is more readily determinable. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendors performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement. During the six months ended June 30, 2013 the Company issued 168,000 options valued at $19,105 for consulting services rendered. During the six months ended June 30, 2012, the Company did not issue any non-employee stock based compensation.   The fair value of stock options issued to consultants during the six months ended June 30, 2013 was calculated using the Black-Scholes model with the following assumptions: Expected life in years: 2 years; Estimated volatility 165%; Risk-free interest rate: 0.26%; Dividend yield: 0%.   Research and development expenses and grant proceeds - Expenditures for research, development and engineering of products are expensed as incurred. For the three and six months ended June 30, 2013, the Company incurred research and development costs of approximately $206,800 and $326,700 respectively. For the three and six months ended June 30, 2012, the Company incurred research and development costs of approximately $143,400 and $302,200, respectively. The Company accounts for proceeds received from government grants for research as a reduction in research and development costs. For the three and six months ended June 30, 2012, the Company recorded approximately $0 and $67,200, respectively, in grant proceeds against research and development expenses on the statement of operations. For the three and six months ended June 30, 2013, the Company did not receive any grant proceeds.   Government grants - Grants are recognized when there is reasonable assurance that the grant will be received and that any conditions associated with the grant will be met. When grants are received related to property and equipment, the Company reduces the basis of the assets resulting in lower depreciation expense over the life of the associated asset. Grants received related to expenses are reflected as a reduction of the associated expense in the period in which the expense is incurred.   Financial instruments - Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entitys own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:   <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 8%; text-align: center"> </td> <td style="width: 92%; text-align: justify">Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.</td></tr> </table>   <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 8%; text-align: center"></td> <td style="width: 92%; text-align: justify">Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.</td></tr> </table>   <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 8%; text-align: center"> </td> <td style="width: 92%; text-align: justify">Level 3 - Inputs that are both significant to the fair value measurement and unobservable.</td></tr> </table>   Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2013. The Company uses the market approach to measure fair value for its Level 1 financial assets and liabilities, which include cash equivalents of $300 at June 30, 2013. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities.   The respective carrying value of certain on-balance sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash, accounts receivable, accounts payable, accrued compensation and accrued expenses.   Income taxes - Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are computed on the basis of differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based upon enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.   The Company identifies and evaluates uncertain tax positions, if any, and recognizes the impact of uncertain tax positions for which there is a less than more-likely-than-not probability of the position being upheld when reviewed by the relevant taxing authority. Such positions are deemed to be unrecognized tax benefits and a corresponding liability is established on the balance sheet. The Company has not recognized a liability for uncertain tax positions. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Companys remaining open tax years subject to examination by the Internal Revenue Service include the years ended December 31, 2009 through 2012.   Earnings (loss) per share - Basic income (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted average common shares outstanding for the period. Diluted income (loss) per share is computed giving effect to all potentially dilutive common shares. Potentially dilutive common shares may consist of incremental shares issuable upon the exercise of stock options and warrants and the conversion of notes payable to common stock. In periods in which a net loss has been incurred, all potentially dilutive common shares are considered anti-dilutive and thus are excluded from the calculation. For each of the three and six months ended June 30, 2013, the Company had 36,881,319 potentially dilutive common shares that were not included in the computation of income (loss) per share. For the three and six months ended June 30, 2012, the Company had 53,864,169 and 55,463,847 potentially dilutive common shares that were not included in the computation of income (loss) per share.   The following sets forth the computation of basic and diluted net (loss) earnings per common share for the three and six months ended June 30, 2013 and 2012:   <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="6" style="border-bottom: black 1.5pt solid"> For the Three Months Ended June 30,</td> <td> </td> <td> </td> <td colspan="6" style="border-bottom: black 1.5pt solid"> For the Six Months Ended June 30,</td> <td> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 52%"> </td> <td style="width: 1%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid"> </td> <td style="width: 9%; border-bottom: black 1.5pt solid; text-align: center">2013</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid"> </td> <td style="width: 9%; border-bottom: black 1.5pt solid; text-align: center">2012</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid"> </td> <td style="width: 9%; border-bottom: black 1.5pt solid; text-align: center">2013</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid"> </td> <td style="width: 9%; border-bottom: black 1.5pt solid; text-align: center">2012</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td>Numerator:</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Net (loss) income</td> <td> </td> <td>$</td> <td style="text-align: right">(1,083,506</td> <td>)</td> <td> </td> <td>$</td> <td style="text-align: right">299,497</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">(1,389,654</td> <td>)</td> <td> </td> <td>$</td> <td style="text-align: right">281,114</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Denominator:</td> <td colspan="4"> </td> <td colspan="4"> </td> <td colspan="4"> </td> <td colspan="4"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Weighted average basic shares outstanding</td> <td> </td> <td> </td> <td style="text-align: right">55,767,097</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">37,774,817</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">55,595,757</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">37,774,817</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Stock options</td> <td> </td> <td> </td> <td style="text-align: right"></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">626,734</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">972,944</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Weighted average fully diluted shares outstanding</td> <td> </td> <td> </td> <td style="text-align: right">55,767,097</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">38,401,551</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">55,595,757</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">38,747,761</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Net (loss) income per common share - basic</td> <td> </td> <td>$</td> <td style="text-align: right">(0.02</td> <td>)</td> <td> </td> <td>$</td> <td style="text-align: right">0.01</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">(0.02</td> <td>)</td> <td> </td> <td>$</td> <td style="text-align: right">0.01</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Net (loss) income per common share - diluted</td> <td> </td> <td>$</td> <td style="text-align: right">(0.02</td> <td>)</td> <td> </td> <td>$</td> <td style="text-align: right">0.01</td> <td> </td> <td> </td> <td>$</td> <td style="text-align: right">(0.02</td> <td>)</td> <td> </td> <td>$</td> <td style="text-align: right">0.01</td> <td> </td></tr> </table>   Derivative financial instruments - The Company does not use derivative instruments to hedge exposure to cash flow, market or foreign currency risk. Terms of convertible promissory note instruments are reviewed to determine whether or not they contain embedded derivative instruments that are required under ASC 815 Derivative and Hedging (ASC 815) to be accounted for separately from the host contract, and recorded on the balance sheet at fair value. The fair value of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results.   Freestanding warrants issued by the Company in connection with the issuance or sale of debt and equity instruments may be considered to be derivative instruments and are evaluated and accounted for in accordance with the provisions of ASC 815. Pursuant to ASC 815, an evaluation of specifically identified conditions is made to determine whether fair value of warrants issued is required to be classified as equity or as a derivative liability.   Recent accounting pronouncements - Recent accounting pronouncements issued by FASB, the AICPA and the SEC did not or are not believed by management to have a material impact on the Companys present or future financial statements.  falsefalsefalsenonnum:textBlockItemTypenaThe entire disclosure for all significant accounting policies of the reporting entity.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18780-107790 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18726-107790 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 22 -Paragraph 8 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18861-107790 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18743-107790 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18854-107790 false0Note 3 - Significant Accounting PoliciesfalseSignificant Accounting PoliciesUnKnownUnKnownUnKnownUnKnowntruefalsefalseSheethttp://daisanalytic.com/role/SignificantAccountingPolicies12