Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Apr. 10, 2015 | Jun. 30, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | U-Vend, Inc. | ||
Entity Central Index Key | 1487718 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $1,303,475 | ||
Entity Common Stock, Shares Outstanding | 13,590,733 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2014 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Current assets: | ||
Cash | $73,396 | $14,620 |
Inventory (net) | 28,732 | |
Prepaid expenses and other assets | 130,081 | 4,114 |
Receivable from U-Vend, Canada, Inc. | 162,536 | |
Total current assets | 232,209 | 181,270 |
Noncurrent assets: | ||
Property and equipment (net) | 675,772 | |
Security deposits | 7,171 | |
Deferred financing costs (net) | 73,139 | 16,333 |
Intangible asset (net) | 347,201 | |
Goodwill | 642,340 | |
Total noncurrent assets | 1,745,623 | 16,333 |
Total assets | 1,977,832 | 197,603 |
Current liabilities: | ||
Accounts payable | 187,460 | 35,192 |
Accrued expenses | 124,676 | 24,598 |
Accrued interest | 90,797 | 3,434 |
Current liability for contingent consideration | 226,866 | |
Registration rights liability | 22,156 | |
Amounts due to officers | 380,442 | 142,608 |
Senior convertible notes, net of discount | 319,014 | 56,249 |
Promissory notes payable | 304,277 | |
Convertible notes payable, net of discount | 303,074 | |
Current capital lease obligation | 116,000 | |
Note payable - director | 50,000 | |
Total current liabilities | 2,074,762 | 312,081 |
Noncurrent liabilities: | ||
Liability for contingent consideration | 246,423 | |
Capital Lease obligation, net of discount | 280,959 | |
Warrant liabilities | 309,993 | 214,609 |
Total noncurrent liabilities | 837,375 | 214,609 |
Total liabilities | 2,912,137 | 526,690 |
Commitments and contingencies (Note 10) | ||
Stockholders' deficiency | ||
Common stock, $.001 par value, 600,000,000 shares authorized, 10,151,390 shares issued and outstanding (2,446,276 - 2013) | 10,151 | 2,446 |
Additional paid-in capital | 2,832,392 | 1,442,729 |
Accumulated deficit | -3,776,848 | -1,774,262 |
Total stockholders' deficiency | -934,305 | -329,087 |
Total liabilities and stockholders' deficiency | $1,977,832 | $197,603 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 600,000,000 | 600,000,000 |
Common stock, shares issued | 10,151,390 | 2,446,276 |
Common stock, shares outstanding | 10,151,390 | 2,446,276 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Statement [Abstract] | ||
Revenue | $268,804 | |
Cost of revenue | 177,839 | |
Gross profit | 90,965 | |
Operating expenses: | ||
Selling | 414,148 | |
General and administrative | 1,271,840 | 339,885 |
[OperatingExpenses] | 1,685,988 | 339,885 |
Operating loss | -1,595,023 | -339,885 |
Other (income) expense: | ||
Amortization of debt discount and deferred financing costs | 535,328 | 63,417 |
Interest expense | 156,740 | 35,882 |
Gain on extinguishment of debt, net | -114,266 | -31,090 |
(Income) loss on the change in fair value of debt and warrant liabilities | -101,028 | |
Registration rights penalty | 22,156 | |
Unrealized gain on foreign currency | -18,461 | |
Other Expenses | 480,469 | 68,209 |
Loss from continuing operations before income taxes | -2,075,492 | -408,094 |
Income tax (benefit) expense | -72,906 | 2,200 |
Loss from continuing operations | -2,002,586 | -410,294 |
Discontinued operations: | ||
Gain from disposal of discontinued operations | 3,839 | |
Net income from discontinued operations | 19,174 | |
Income from discontinued operations | 23,013 | |
Net loss | ($2,002,586) | ($387,281) |
Net loss from continuing operations per share - basic and diluted (in dollars per share) | ($0.23) | ($1.15) |
Net income from discontinued operations per share - basic and diluted (in dollars per share) | $0.06 | |
Net loss per share - basic and diluted (in dollars per share) | ($0.23) | ($1.09) |
Weighted average common shares outstanding - basic and diluted (in shares) | 8,571,934 | 356,869 |
CONSOLIDATED_STATEMENTS_OF_STO
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning balance | ($329,087) | ($591,557) |
Beginning balance, shares | 2,446,276 | |
Issuance of common stock and warrants for cash | ||
Issuance of common stock and warrants for cash, shares | ||
Stock-based compensation expense | 144,613 | 23,496 |
Stock-based compensation expense, shares | ||
Shares issued for advisor fees | 189,575 | |
Shares issued for advisor fees, shares | ||
Shares issued in satisfaction of interest expense | 500 | |
Shares issued in satisfaction of interest expense, shares | ||
Shares issued for conversion and settlement of debt with director | 150,062 | |
Shares issued for conversion and settlement of debt with director, shares | ||
Shares issued for services | 56,350 | |
Shares issued for services, shares | ||
Shares issued for lease obligation | 67,245 | |
Shares issued for lease obligation, shares | ||
Shares issued on debt conversion | 150,062 | |
Shares issued on debt conversion, shares | ||
Warrants exercised | 71,660 | |
Warrants exercised, shares | ||
Debt discount related to beneficial conversion | 106,842 | |
Warrant liability reclassed to equity upon reverse stock split-adequate authorized shares available | 52,833 | |
Debt discount related to warrants granted with capital lease obligation | 21,947 | |
Warrants granted for services | 181,841 | |
Elimination of beneficial conversion feature with debt extinguishment | -90,000 | |
Shares issued in acquisition | ||
Shares issued in acquisition, shares | ||
Fractional shares issued in reverse stock split | ||
Fractional shares issued in reverse stock split, shares | ||
Shares issued upon conversion of convertible notes and accrued interest | 595,150 | |
Beneficial conversion feature on senior convertible notes | 31,105 | |
Net loss | -2,002,586 | -387,281 |
Beginning balance | -934,305 | -329,087 |
Beginning balance, shares | 10,151,390 | 2,446,276 |
Common Stock [Member] | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning balance | 2,446 | 123 |
Beginning balance, shares | 2,446,276 | 123,189 |
Stock-based compensation expense | 389 | |
Stock-based compensation expense, shares | 389,520 | |
Shares issued for advisor fees | 1,354 | |
Shares issued for advisor fees, shares | 1,354,111 | |
Shares issued in satisfaction of interest expense | 9 | |
Shares issued in satisfaction of interest expense, shares | 8,621 | |
Shares issued for conversion and settlement of debt with director | 625 | |
Shares issued for conversion and settlement of debt with director, shares | 625,006 | |
Shares issued for services | 232 | |
Shares issued for services, shares | 231,667 | |
Shares issued for lease obligation | 347 | |
Shares issued for lease obligation, shares | 346,961 | |
Shares issued on debt conversion | 450 | |
Shares issued on debt conversion, shares | 450,000 | |
Warrants exercised | 797 | |
Warrants exercised, shares | 797,000 | |
Debt discount related to warrants granted with capital lease obligation | ||
Fractional shares issued in reverse stock split | 2 | |
Fractional shares issued in reverse stock split, shares | 2,228 | |
Shares issued upon conversion of convertible notes and accrued interest | 2,323 | |
Shares issued upon conversion of convertible notes and accrued interest, shares | 2,323,087 | |
Beneficial conversion feature on senior convertible notes | ||
Net loss | ||
Beginning balance | 10,151 | 2,446 |
Beginning balance, shares | 10,151,390 | 2,446,276 |
Additional Paid-In Capital [Member] | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning balance | 1,442,729 | 795,301 |
Stock-based compensation expense | 144,224 | 23,496 |
Stock-based compensation expense, shares | ||
Shares issued for advisor fees | 188,221 | |
Shares issued for advisor fees, shares | ||
Shares issued in satisfaction of interest expense | 491 | |
Shares issued in satisfaction of interest expense, shares | ||
Shares issued for conversion and settlement of debt with director | 149,437 | |
Shares issued for conversion and settlement of debt with director, shares | ||
Shares issued for services | 56,118 | |
Shares issued for lease obligation | 66,898 | |
Shares issued for lease obligation, shares | ||
Shares issued on debt conversion | 22,050 | |
Shares issued on debt conversion, shares | ||
Warrants exercised | 70,863 | |
Warrants exercised, shares | ||
Debt discount related to beneficial conversion | 106,842 | |
Warrant liability reclassed to equity upon reverse stock split-adequate authorized shares available | 52,833 | |
Debt discount related to warrants granted with capital lease obligation | 21,947 | |
Warrants granted for services | 181,741 | |
Elimination of beneficial conversion feature with debt extinguishment | -90,000 | |
Shares issued in acquisition | ||
Fractional shares issued in reverse stock split | -2 | |
Shares issued upon conversion of convertible notes and accrued interest | 592,827 | |
Beneficial conversion feature on senior convertible notes | 31,105 | |
Beginning balance | 2,832,292 | 1,442,729 |
Accumulated Deficit [Member] | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning balance | -1,774,262 | -1,386,981 |
Stock-based compensation expense | ||
Stock-based compensation expense, shares | ||
Shares issued for advisor fees | ||
Shares issued for advisor fees, shares | ||
Shares issued in satisfaction of interest expense | ||
Shares issued in satisfaction of interest expense, shares | ||
Shares issued for conversion and settlement of debt with director | ||
Shares issued for conversion and settlement of debt with director, shares | ||
Shares issued for services | ||
Shares issued for lease obligation | ||
Shares issued for lease obligation, shares | ||
Shares issued on debt conversion | ||
Warrants exercised | ||
Warrants exercised, shares | ||
Debt discount related to warrants granted with capital lease obligation | ||
Shares issued upon conversion of convertible notes and accrued interest | ||
Beneficial conversion feature on senior convertible notes | ||
Net loss | -2,832,392 | -387,281 |
Beginning balance | ($3,776,848) | ($1,774,262) |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities: | ||
Net loss | ($2,002,586) | ($387,281) |
(Income) from discontinued operations | -23,013 | |
Adjustments to reconcile net loss to net cash used by operating activities: | ||
Gain on extinguishment of debt | -114,266 | -31,090 |
Stock based compensation | 144,613 | 23,496 |
Deferred income tax benefit | -75,000 | |
Income loss on fair value of warrant liabilities | -99,190 | |
Income on fair value of convertible debt | -1,838 | |
Common shares and warrants issued for services | 290,833 | |
Common shares issued as payment on lease obligation | 17,658 | |
Common stock issued for conversion of accrued interest | 500 | |
Depreciation | 67,703 | |
Amortization of intangible assets | 86,799 | |
Amortization of debt discount and deferred financing costs | 535,328 | 63,417 |
Accretion and fair value adjustment of liability for contingent consideration | 261,241 | |
Unrealized gain on foreign currency | -18,461 | |
Increase in reserve for inventory | 7,500 | |
(Increase) decrease in assets: | ||
Inventory | 5,599 | |
Prepaid expenses and other assets | 4,779 | 6,055 |
Increase in liabilities: | ||
Accounts payable and accrued expenses | 109,927 | 48,851 |
Accrued interest | 87,363 | |
Amounts due to officers | 178,176 | 142,608 |
Registration rights liability | 22,156 | |
Net cash used by continuing operations | -502,365 | -156,957 |
Net cash provided by discontinued operations | 7,653 | |
Net cash used by operating activities | -502,365 | -149,304 |
Net cash used by investing activities | ||
Purchase of property and equipment | -7,550 | |
Advances to U-Vend Canada, Inc. prior to acquisition | -116,822 | |
Acquisition of business | 11,332 | 74,000 |
Net cash provided from (used by) investing activities | 3,582 | -42,822 |
Cash flows from financing activities: | ||
Proceeds from exercise of common stock warrants | 71,660 | |
Proceeds from senior convertible notes, net of financing costs | 198,500 | 176,500 |
Proceeds from convertible notes, net of financing costs | 191,687 | |
Proceeds from promissory notes | 50,000 | |
Proceeds from notes payable - director | 50,000 | 50,000 |
Net (repayments) from related party | -4,288 | -21,016 |
Net cash provided from financing activities | 557,559 | 205,484 |
Net increase in cash | 58,776 | 13,358 |
Cash - beginning of period | 14,620 | 1,262 |
Cash - end of period | 73,396 | 14,620 |
Cash paid for: | ||
Income taxes | 2,094 | 2,200 |
Interest | 23,208 | 1,711 |
Non-cash investing and financing activities: | ||
Acquisition of U-Vend Canada, Inc. for issuance of shares and effective settlement of inter-company | 808,349 | |
Equipment,inventory and coin financed with debt | 250,000 | |
Property and equipment financed by capital leases | 271,572 | |
Debt discount related to warrant liability and beneficial conversion feature | 399,062 | 200,000 |
Settlement and conversion of notes payable-director in common stock and warrants | 150,062 | |
Financing cost in accrued expenses and additional paid-in capital | 111,495 | |
Issuance of common stock and warrants for services | 126,596 | |
Issuance of common shares for notes payable and accrued interest | 599,051 | |
Issuance of promissory notes offsetting accrued expense | 57,807 | |
Reclass of warrant liability to additional paid-in capital: adequate authorized shares available | 52,833 | |
Conversion of senior convertible notes into common stock | 22,500 | |
Warrants issued for equipment leasing and debt with lessor | 21,947 | 45,714 |
Settlement of capital lease obligation with common shares | $49,586 |
NATURE_OF_BUSINESS_AND_SUMMARY
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | |
Dec. 31, 2014 | ||
Accounting Policies [Abstract] | ||
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
The Company entered the business of developing, marketing and distributing various self-serve electronic kiosks and mall/airport co-branded islands throughout North America with the merger with U-Vend Canada, Inc. on January 7, 2014. The Company seeks to place its kiosks in high-traffic host locations such as big box stores, restaurants, malls, airports, casinos, universities, and colleges. Currently, the Company leases, owns and operates their kiosks but intends to also provide the kiosks, through a distributor relationship, to the entrepreneur wanting to own their own business. | ||
The Company’s vending kiosks incorporate advanced wireless technology, creative concepts, and ease of management. Our kiosks have been designed to be tech-savvy and can be managed on line 24 hours a day/7 days a week, accepting traditional cash input as well as credit and debit cards. Host locations and suppliers have been drawn to this distribution concept of product vending based on the advantages of reduced labor and lower product theft as compared to non-kiosk merchandising platforms. The Company takes a solutions development approach for the marketing of products through a variety of kiosk offerings. Our approach to the market includes the addition of digital LCD monitors to most makes and models of their kiosk program. This would allow us to offer digital advertising as a national and/or local loop basis and a corresponding additional revenue stream for the Company. | ||
Management's plans | ||
The accompanying consolidated financial statements have been prepared on a going concern basis. As shown in the accompanying consolidated financial statements, the Company incurred a loss of approximately $2,003,000 during the year ended December 31, 2014, has incurred accumulated losses totaling approximately $3,777,000, has a stockholders’ deficiency of approximately $934,000 and has a working capital deficit of approximately $1,843,000 at December 31, 2014. These factors, among others, indicate that there is substantial doubt that the Company may be unable to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. | ||
The Company needs to raise additional financing to fund the Company’s operations for year 2015, to allow the Company to continue the development of its business plans and satisfy its obligations on a timely basis. Should additional financing not be available, the Company will have to negotiate with its lenders to extend the repayment dates of its indebtedness. There can be no assurance, however, that the Company will be able to successfully restructure its debt obligations in the event it fails to obtain additional financing. | ||
As discussed in Note 2, on January 7, 2014, the Company entered into an Exchange of Securities Agreement with U-Vend Canada, Inc., and the shareholders of U-Vend. The Company believes the merger with U-Vend will provide it with business operations and also necessary working capital. The Company is in discussion for raising additional capital to execute on its current business plans. There is no assurance that future financing arrangements will be successful or that the operating results will yield sufficient cash flow to execute the Company’s business plans or satisfy its obligations. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty | ||
Principles of Consolidation - The consolidated financial statements include the accounts of U-Vend, Inc. (formerly Internet Media Services, Inc.), and the operations of U-Vend America, Inc., U-Vend Canada, Inc. and its wholly owned subsidiary, U-Vend USA LLC. All intercompany balances and transactions have been eliminated in consolidation. | ||
Use of Estimates - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates and be based on events different from those assumptions. Future events and their effects cannot be predicted with certainty; estimating, therefore, requires the exercise of judgment. Thus, accounting estimates change as new events occur, as more experience is acquired or as additional information is obtained. | ||
Inventory - Inventories are stated at the lower of cost or market and cost is determined by the average cost method. Inventory is made up of finished goods ice cream. The Company records inventory reserves for spoilage and product losses. The reserve for spoilage and product losses amounted to $7,500 as of December 31. 2014. No such reserve was necessary at December 31, 2013. | ||
Property and Equipment - Property and equipment are stated at cost. Expenditures for repairs and maintenance are charged to expense as incurred. Depreciation is provided using the straight line method over the estimated useful life of the assets. Electronic kiosks and related equipment have estimated useful lives between five and seven years. Depreciation expense amounted to approximately $68,000 during the year ended December 31, 2014. There was no depreciation expense during the year ended December 31, 2013. | ||
Long lived assets, Identifiable Intangible Assets and Goodwill - Long lived assets, identifiable intangibles assets and goodwill are reviewed periodically for impairment or when events or changes in circumstances indicate that full recoverability of net asset balances through future cash flows is in question. With respect to goodwill, the Company tests for impairment on an annual basis or in interim periods if an event occurs or circumstances change that may indicate the fair value is below its carrying amount. Factors that could trigger an impairment review, include the following: (a) significant underperformance relative to expected historical or projected future operating results; (b) significant changes in the manner of our use of the acquired assets or the strategy for our overall business; and (c) significant negative industry or economic trends. | ||
Assessment for possible impairment is based on the Company’s ability to recover the carrying value of the long-lived asset from the expected future pre-tax cash flows. The expected future pre-tax cash flows are estimated based on historical experience, knowledge and market data. Estimates of future cash flows require the Company to make assumptions and to apply judgment, including forecasting future sales, capital investments and expenses and estimating the useful lives of assets. If the expected future cash flows related to the long-lived assets are less than the assets’ carrying value, an impairment charge is recognized for the difference between estimated fair value and carrying value. | ||
When performing our evaluation of goodwill for impairment, if we conclude qualitatively that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then the two-step impairment test is not required. If we are unable to reach this conclusion, then we would perform the two-step impairment test. Initially, the fair value of the reporting unit is compared to its carrying amount. To the extent the carrying amount of a reporting unit exceeds the fair value of the reporting unit; we are required to perform a second step, as this is an indication that the reporting unit goodwill may be impaired. In this step, we compare the implied fair value of the reporting unit goodwill with the carrying amount of the reporting unit goodwill and recognize a charge for impairment to the extent the carrying value exceeds the implied fair value. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit to all of the assets (recognized and unrecognized) and liabilities of the reporting unit in a manner similar to a purchase price allocation. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill. | ||
There are inherent assumptions and estimates used in developing future cash flows requiring management judgment in applying these assumptions and estimates to the analysis of identifiable intangibles and asset impairment including projecting revenues, interest rates and the cost of capital. Many of the factors used in assessing fair value are outside our control and it is reasonably likely that assumptions and estimates will change in future periods. These changes can result in future impairments. In the event our planning assumptions were modified resulting in impairment to our assets, the associated expense would be included in the consolidated statements of operations, which could materially impact our business, financial condition and results of operations. | ||
Management's forecasts of future earnings are largely dependent on future cash infusion or incremental borrowing to fund our projected growth as well as current operations. If our business plans result in significant delays in implementation and sales of our products are not in alignment with our projections, a future impairment charge could result for a portion or all of the goodwill noted previously. The amount of any impairment is dependent on the performance of the business which is dependent upon a number of variables which cannot be predicted with certainty. | ||
Common Shares Issued and Earnings Per Share - Common shares issued are recorded based on the value of the shares issued or consideration received, including cash, services rendered or other non-monetary assets, whichever is more readily determinable. The Company presents basic and diluted earnings per share. Basic earnings per share reflect the actual weighted average of shares issued and outstanding during the period. Diluted earnings per share are computed including the number of additional shares that would have been outstanding if dilutive potential shares had been issued. In a loss year, the calculation for basic and diluted earnings per share is considered to be the same, as the impact of potential common shares is anti-dilutive. | ||
As of December 31, 2014, there were approximately 43 million (8 million at December 31, 2013) shares potentially issuable under convertible debt agreements, options, warrants and contingent shares that could dilute basic earnings per share in the future that were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive to the Company’s losses during the periods presented. | ||
Subsequent to December 31, 2014, the Company issued: 100,000 shares at $0.05 per share for conversion of $5,000 principal on outstanding debt, 625,000 shares in connection with warrant exercises at prices ranging from $0.05 - $0.12 per share, 70,000 shares for $11,350 in services provided by two consultants, 382,917 shares in settlement of $82,282 of lease obligations at share prices ranging from $0.21 to $0.22 per share and 2,261,425 shares in connection with earn out provision to two former shareholders of U-Vend Canada (see Note 2.) | ||
Preferred Stock Authorized - The Company has authorization for “blank check” preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to common stock. As of December 31, 2014 and 2013, there are 10,000,000 shares of preferred stock authorized, and no shares issued or outstanding. | ||
Fair Value of Financial Instruments- Financial instruments include cash, accounts receivable, accounts payable, accrued expenses, derivative warrant liabilities, promissory notes payable, capital lease obligation, contingent consideration liability, revolving note from related party, convertible notes payables, and senior convertible notes payable. Fair values were assumed to approximate carrying values for these financial instruments, except for derivative warrant liabilities, contingent consideration liability, convertible notes payable and senior convertible notes payable, since they are short term in nature or they are payable on demand. The senior convertible notes and the convertible notes payable are recorded at face value net of any unamortized discounts, based upon the the number of underlying convertible shares. The fair value was estimated using the trading price on December 31, 2014 since the underlying shares are trading in an active observable market, the fair value measurement qualifies as a level 1 input. Certain convertible notes payable are recorded at fair value at December 31, 2014. (See Note 4). The determination of the fair value of the derivative warrant liabilities and contingent consideration liability include unobservable inputs and is therefore categorized as a Level 3 measurement. | ||
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. FASB ASC 820 “Fair Value Measurement” establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include: | ||
· | Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; | |
· | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and | |
· | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. | |
Revenue Recognition - The Company has 104 electronic kiosks installed as of December 31, 2014; 76 in the greater Chicago, Illinois area and 28 in the southern California area. The kiosks in California were installed during the fourth quarter of 2014. Revenue is recognized at the time each vending transaction occurs, the payment method is approved and the product is disbursed from the machine. | ||
Income Taxes - The Company accounts for income taxes with the recognition of estimated income taxes payable or refundable on income tax returns for the current year and for the estimated future tax effect attributable to temporary differences and carryforwards. Measurement of deferred income items is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available tax benefits not expected to be realized in the immediate future. | ||
The Company reviews tax positions taken to determine if it is more likely than not that the position would be sustained upon examination resulting in an uncertain tax position. The Company did not have any material unrecognized tax benefit at December 31, 2014 or 2013. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in tax expense. During the years ended December 31, 2014 and 2013, the Company recognized no interest and penalties. | ||
1 for 200 Stock Split and Change in trading symbol effective May 16, 2014 - On January 7, 2014, the holders of a majority of the outstanding shares of the Company’s common stock voted in favor of a corporate resolution authorizing the reverse split of its common stock (“Reverse Split”) on the basis of one share of common stock for each 200 shares of common stock. On April 10, 2014 our Board of Directors approved the one for 200 reverse stock split, the change of our corporate name to U-Vend, Inc. and the new trading symbol of UVND. We received the authorization from FINRA to effect these events as of May 16, 2014. We have prepared the financial, share and per share information included in this annual report on a post-split basis. There were no changes to the authorized amount of shares or par value as a result of this reverse split. | ||
Derivative Financial Instruments - The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. Certain warrants the Company has issued have a “down round provision.” As a result, the warrants are classified as derivative liabilities for accounting purposes. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair market value and then is revalued at each reporting date, with changes in fair value reported in the consolidated statement of operations. | ||
Share-Based Compensation Expense - The Company accounts for stock-based compensation under the provisions of FASB ASC 718 “Stock Compensation.” This statement requires the Company to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost is recognized over the period in which the employee is required to provide service in exchange for the award, which is usually the vesting period. | ||
In accordance with FASB ASC 505 “Equity”, the measurement date for non-forfeitable awards to nonemployees that vest immediately, is the date the award is issued. | ||
Reclassifications - Certain prior period amounts in the accompanying consolidated financial statements have been reclassified to current period presentation. These classifications had no effect on the results of operations or cash flows for the periods presented. | ||
Accounting Pronouncement - In July 2013, the FASB issued Accounting Standards Update (“ASU”) 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” The amendments in this ASU state that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this standard in 2014 did not have a material impact on the Company’s consolidated financial position and results of operations. | ||
In May 2014, the FASB issued ASU 2014-09,”Revenue from Contracts with Customers”, which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). The Company is evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard in 2018. | ||
In August 2014, the FASB issued ASU 2014-15, ”Presentation of Financial Statements – Going Concern”, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity will be required to provide certain disclosures if conditions of events raise substantial doubt about the entity’s ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company is evaluating the impact of the adoption of ASU 2014-15 on our consolidated financial statements and have not yet determined when we will adopt the standard. | ||
Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted, would have a material effect on the accompanying financial statements |
MERGER_WITH_UVEND_CANADA_INC
MERGER WITH U-VEND CANADA, INC. | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Business Combinations [Abstract] | |||||||||
MERGER WITH U-VEND CANADA, INC. | NOTE 2. MERGER WITH U-VEND CANADA, INC. | ||||||||
On January 7, 2014, the Company entered into an Exchange of Securities Agreement with U-Vend Canada, Inc. (“U-Vend Canada”). Pursuant to the agreement, which was amended on April 30, 2014 effective as of January 7, 2014, the Company acquired all the outstanding shares of U-Vend Canada in exchange for 3,500,000 newly issued shares of the Company’s common stock with a par value of $0.001 per share. Certain shareholders of U-Vend Canada will also have the ability to earn up to an additional 4,522,850 shares of the Company’s common stock subject to certain earn-out provisions based on targeted revenue achievement in 2014 and 2015. In addition, the Company issued an aggregate of 1,354,111 shares of Common Stock as compensation to the Chief Executive Officer and advisors for their services in connection with the transaction contemplated by the merger agreement. The Company issued 389,520 shares of common stock to its Chief Executive Officer. The Company incurred approximately $264,000 in broker, advisory and professional fees associated with the merger. | |||||||||
U.S. GAAP, requires that for each business combination, one of the combining entities shall be identified as the acquirer and the existence of a controlling financial interest shall be used to identify the acquirer in a business combination. In a business combination effected primarily by exchanging equity interests, the acquirer is usually the entity that issues its equity interests. In accordance with FASB ASC 805 “Business Combinations”, if a business combination has occurred, but it is not clear which of the combining entities is the acquirer, U.S. GAAP requires considering additional factors in making that determination. These factors include the relative voting rights of the combined entity, the composition of the governing body of the combined entity, the composition of senior management in the combined entity and the relative size of the combining entities, among other factors. | |||||||||
Based on the aforementioned and after taking in consideration all the relevant facts and circumstances, management came to the conclusion that U-Vend, Inc. (formerly Internet Media Services, Inc.), as the legal acquirer was also the accounting acquirer in the transaction. As a result, the merger will be accounted for as a business combination in accordance with the FASB ASC 805. Under the guidance, consideration, including contingent consideration and the assets and liabilities of U-Vend Canada are recorded at their estimated fair value on the date of the acquisition. The excess of the purchase price over the estimated fair values is recorded as goodwill, if any. If the fair value of the assets acquired exceeds the purchase price and the liabilities assumed, then a bargain purchase gain on acquisition is recorded. | |||||||||
U-Vend Canada is in the business of developing, marketing and distributing self-serve electronic kiosks throughout North America. U-Vend Canada has several market concentrations; Retail, Service and Mall/Airport Islands with a primary focus on Retail. U-Vend Canada seeks to place its kiosks in high-traffic host locations such as big box stores, restaurants, malls, airports, casinos, universities, and colleges. | |||||||||
Purchase Price - The consideration for the merger consisted of 3,500,000 shares of U-Vend, Inc. common stock valued at $490,000 plus estimated contingent consideration valued at $246,568 which were reduced for a discount on restrictions as described below and effective settlement of intercompany payable from U-Vend Canada, Inc. to U-Vend, Inc. The shares of U-Vend, Inc. common stock were valued at $0.14 per share which represents the split adjusted market price of the shares on January 6, 2014. | |||||||||
Contingent Consideration - The Agreement allows for an earn-out based on 2014 and 2015 gross revenue targets. In the event that consolidated gross revenue during the calendar year 2014 exceeds $1,000,000 then the Company shall issue to Paul Neelin and Diane Hope, allocated to them on an equal basis and no other U-Vend Canada shareholders, an additional 2,261,425 shares of common stock. In addition, in the event that consolidated gross revenue exceeds $2,000,000 during the calendar year 2015, the Company shall issue to Paul Neelin and Diane Hope, allocated to them on an equal basis and no other U-Vend Canada shareholders, an additional 2,261,425 shares of common stock. These conditional shares are issued solely to Paul Neelin and Diane Hope in order to restore their ownership of the total shares issued for consideration to their approximate pre-merger ownership in U-Vend Canada. In the event that consolidated gross revenue equals not less than 80% nor more than 99% of the $1,000,000 and $2,000,000 gross amounts described above, then the Company shall issue to Paul Neelin and Diane Hope and no other U-Vend Canada shareholders, allocated to them on an equal basis, additional shares of common stock computed by determining the percentage of gross revenue achieved relative to the target revenues described above. Any shortfall or overage of shares measured in 2014 can be combined to the actual revenue earned in 2015 to earn the maximum shares in the earn-out provision. The issuance of the earn-out shares is conditional on U-Vend, Inc. providing access to a minimum level of financing needed to achieve the earn-out gross revenues. In the event that the gross revenue targets are not obtained and the minimum level of financing was not provided during the respective period, then at the end of each period Paul Neelin and Diane Hope shall receive the additional shares described above. At December 31, 2014 the consolidated balance sheet reflects a liability estimated in the amount of $473,289 (of which $226,866 is reflected in current liabilities and $246,423 is reflected in noncurrent liabilities) in regard to this contingent consideration. During the period from merger date to December 31, 2014, the Company recognized approximately $261,000 expense related to the fair value adjustment and accretion of contingent consideration, which is included in general and administrative expenses in the consolidated statement of operations. | |||||||||
Subsequent to December 31, 2014, the Company’s board of directors recommended that the first year earn-out of 2,261,425 shares of common stock be paid equally between Paul Neelin and Diane Hope as the Company did not receive the anticipated level of financing. | |||||||||
Allocation of Purchase Price - The purchase price was determined in accordance with the accounting treatment of the merger as a business combination in accordance with the Business Combination Topic of the FASB ASC 805. Under the guidance, the fair value of the consideration was determined and the assets and liabilities of the acquired business, U-Vend Canada, have been recorded at their fair values at the date of the acquisition. The excess of the purchase price over the estimated fair values has been recorded as goodwill. | |||||||||
The fair value of the common stock issued to the former shareholders of U-Vend Canada is based on the adjusted split price of $0.14 share price of the Company's common stock as of the close of business on January 6, 2014. The contingent consideration represented by the earn-out shares were also measured using a split adjusted price of $0.14 per share, discounted for the probability that the shares will be issued in the future upon achievement of the revenue targets defined. | |||||||||
Consideration: | |||||||||
Fair value of 3,500,000 shares of common stock issued at $0.14 on January 7, 2014 | $ | 490,000 | |||||||
Fair value of 4,522,850 shares of common stock measured at $0.14, discounted for the probability of achievement | 246,568 | ||||||||
736,568 | |||||||||
Discount for restrictions | (103,118 | ) | |||||||
Effective settlement of intercompany payable due to U-Vend, Inc. | 174,899 | ||||||||
Total purchase price | $ | 808,349 | |||||||
The allocation of purchase price to the assets acquired and liabilities assumed as the date of the acquisition is presented in the table below. This allocation is based upon valuations using management’s estimates and assumptions. During the first quarter of 2014, the Company estimated the valuation of identifiable intangible assets that resulted from the merger. The Company allocated $434,000 of the purchase price to intangible assets relating to the operating agreement with Mini Melts USA, which management estimates has a life of five years. Amortization expense is estimated to be $86,800 in 2014 and in each of the succeeding years until fully amortized in December 2018. The Company initially recognized a $164,920 deferred tax liability associated with the increase in book basis of the acquired tangible and intangible assets. During the final accounting for the merger, it was determined that the deferred tax liability reflecting the book and tax basis of the acquired assets would be $75,000. As a result the deferred tax liability and the related goodwill were adjusted by $89,920 during the measurement period. The following table summarizes the allocation of the purchase price for the acquisition of U-Vend Canada. | |||||||||
Cash | $ | 11,132 | |||||||
Inventory | 15,253 | ||||||||
Prepaid expense | 350 | ||||||||
Property and equipment | 232,835 | ||||||||
Security deposits | 6,631 | ||||||||
Intangible assets- Operating Agreement | 434,000 | ||||||||
Goodwill | 642,340 | ||||||||
Accounts payable and accrued expenses | (135,634 | ) | |||||||
Notes payable | (170,517 | ) | |||||||
Capital lease obligations | (153,041 | ) | |||||||
Deferred tax liability | (75,000 | ) | |||||||
Total purchase price | $ | 808,349 | |||||||
Unaudited Pro Forma Results – The unaudited pro forma supplemental information is based on estimates and assumptions which management believes are reasonable but are not necessarily indicative of the consolidated financial position or results of future periods or the results that actually would have been realized had we been a combined company as of January 1, 2013. The unaudited pro forma supplemental information includes incremental executive compensation and intangible asset amortization charges as a result of the acquisition, net of the related tax effects. | |||||||||
For the year ended | For the year ended | ||||||||
Unaudited Pro Forma Results | December 31, 2014 | December 31, 2013 | |||||||
Revenues | $ | 268,804 | $ | 14,300 | |||||
Gross profit | $ | 90,965 | $ | 2,600 | |||||
Net loss | $ | (2,002,586 | ) | $ | (563,100 | ) | |||
Basic and fully diluted loss per share | $ | (0.23 | ) | $ | (0.07 | ) |
SENIOR_CONVERTIBLE_NOTES
SENIOR CONVERTIBLE NOTES | 12 Months Ended |
Dec. 31, 2014 | |
Debt Disclosure [Abstract] | |
SENIOR CONVERTIBLE NOTES | NOTE 3. SENIOR CONVERTIBLE NOTES |
In August 2013, the Company entered into a Securities Purchase Agreement ("SPA") dated June 18, 2013 with Cobrador Multi-Strategy Partners, LP (“Investor” or "Cobrador") pursuant to which Cobrador will provide an aggregate of $400,000 financing through senior convertible notes and warrants. The financing and the related terms were dependent on several conditions including the Company's merger with U-Vend Canada, which was completed on January 7, 2014, and the Company effecting certain changes in its capital structure (see Note 1 regarding 1 for 200 reverse stock split). | |
On June 17, 2014 the Company and Cobrador entered into an agreement to extend the maturity of certain of the notes issued in 2013 at which time Cobrador consented to the extension of the maturity dates of the notes dated June 18, 2013 and August 21, 2013 to December 26, 2013. Also, during the second quarter of 2014, certain of the terms of certain of the Cobrador notes were modified. The notes issued on June 18, 2013, August 21, 2013 and October 17, 2013 each of which had a conversion price of $0.20 per share and were convertible into 750,000 shares of common stock were amended and reissued as notes convertible into 3,000,000 shares of the Company's common stock at a conversion price of $0.05 per share, subject to an adjustment with a minimum adjusted conversion price of $0.03 per share. In connection with the reissued notes, the Company amended the warrants that had been granted in connection with the originally issued note agreements dated June 18, 2013, August 21, 2013 and October 17, 2013. Series A warrants totaling 1.125 million with an exercise price of $0.20 per share and Series B warrants totaling 1.125 million with an exercise price of $0.24 per shares were amended and reissued. The 4.5 million reissued Series A warrants have an exercise price of $0.05 per share and the 4.5 million reissued Series B warrants have an exercise price of $0.06 per share. For all 2013 and 2014 Cobrador notes the Series A warrants were amended to increase the term from 15 months to 24 months. The Series B term remained at 5 years. The amendment and reissuance of the three notes and warrants has been accounted for as an extinguishment of the original notes and warrants and the reissuance of the replacement notes and warrants. The extinguishment of the original notes amounted to $121,898 which is reflected in gain on extinguishment of debt in the consolidated statement of operations. | |
On December 31, 2014, the Company and Cobrador entered into a modification to the Senior Convertible Notes and the associated Series A warrants issued with the Cobrador Notes dated June 18, 2013 through December 2, 2014. The Company and Cobrador agreed to extend the maturity dates of the underlying principal on the Cobrador Notes aggregating $400,000 in outstanding principal to December 31, 2015. The parties agree that the interest earned on the Notes will continue at 7% per annum through December 31, 2015. The expiration date for each of the Series A warrants granted in connection with the Cobrador Notes (during the period from June 18, 2013 through December 2, 2014) have been extended by twelve (12) months to dates ranging from June 18, 2016 through December 2, 2017. The effective date of this modification to the Cobrador Notes and Series A warrants shall be October 17, 2014. The remaining terms and conditions of the Cobrador Stock Purchase Agreement, Convertible Notes and the warrants are not modified and remain the same. | |
As of December 31, 2014, total outstanding Senior Convertible Notes had a face value of $377,500 and is presented net of unamortized debt discounts of $58,486, resulting in a carrying amount of $319,014 ($56,249 in 2013). During the years ended December 31, 2014 and 2013, approximately $385,000 and $56,000, respectively, was amortized and recorded as amortization of debt discount. During the fourth quarter of 2014, the Company issued two senior convertible notes in the aggregate principal amount of $30,000 along with Series A and B warrants to acquire common shares under the SPA terms. | |
The Company and the Investor entered into a registration rights agreement covering the registration of common stock underlying the Senior Convertible Notes and the Warrants. The Company was required to file a registration statement within 120 days after completion of the acquisition of U-Vend Canada and meet an effectiveness deadline of 165 days after the closing date of the acquisition, 195 days if the Securities and Exchange Commission provides comment. If the Company failed to comply with the terms of the registration rights agreement, the Investor would be entitled to an amount in cash equal to one percent (1%) of the Investor’s original principal amount stated in each Senior Convertible Note on the date of the failure and monthly thereafter until failure is cured and all registration rights have been paid. The terms of this registration rights agreement do not limit the maximum potential consideration (including shares) to be transferred. The Company met the filing and effectiveness criteria, (as extended by the Investor on April 8, 2014), on November 21, 2014 which resulted in a penalty of $14,234 recorded by the Company at December 31, 2014. The Investor has extended the due day for this payment until June 30, 2015. The Company believes no additional liability will be incurred under this agreement as the underlying shares are now eligible for sale in accordance with Rule 144. | |
The debt conversion price is subject to certain anti-dilution protection; for example, if the Company issues shares for a consideration less than the applicable conversion price, the conversion price is reduced to such amount. The lender agreed to restrict its ability to convert the Senior Convertible Note and receive shares of the Company if the number of shares of common stock beneficially held by the lender and its affiliates in the aggregate after such conversion exceeds 4.99% of the then outstanding shares of common stock. However, this limitation does not preclude the lender from converting notes payable into common stock after selling shares owned into the market. | |
The Warrants issued have a “down round provision” and as a result, warrants issued in connection with the senior convertible notes are classified as derivative liabilities for accounting purposes. The derivative warrant liabilities are marked to market at each balance sheet date. The fair value of all outstanding warrants issued in connection with this Cobrador SPA aggregate $303,648 as of December 31, 2014. The fair value of the warrants was determined based on the consideration of the enterprise value of the Company, the limited market of the shares issuable under the agreement and the Monte Carlo modeling valuations using volatility assumptions. Due to certain unobservable inputs in the fair value calculations of the warrants, derivative warrant liabilities are classified as Level 3. | |
Financing costs associated with the Senior Convertible Notes and $50,000 of the Subordinated Convertible Note payable (see Note 4) are included in deferred financing costs on the consolidated balance sheet at December 31, 2014 and 2013. These costs are amortized to interest expense over the term of the respective notes. Amortization of financing costs in the years ended December 31, 2014 and 2013 was $61,369 and $7,167 respectively. |
CONVERTIBLE_NOTES_PAYABLE_AND_
CONVERTIBLE NOTES PAYABLE AND PROMISSORY NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2014 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES PAYABLE AND PROMISSORY NOTES PAYABLE | NOTE 4. CONVERTIBLE NOTES PAYABLE AND PROMISSORY NOTES PAYABLE |
2014 Stock Purchase Agreement with 10% Convertible Notes and Warrants | |
During 2014, the Company issued four 10% subordinated convertible promissory notes: $75,000 is due and payable on August 25, 2015, $50,000 is due and payable on August 13, 2015, $10,000 is due and payable on October 30, 2015 and $11,000 is due and payable on December 12, 2015. The principal on these notes is convertible into common shares at the rate of $0.30 per share. In connection with these borrowings the Company granted a total of 243,334 warrants with an exercise price of $0.35 per share and 5 year terms. The Company allocated $46,592 of the proceeds received to debt discount based on the computed fair value of the notes and the warrants issued. The warrants issued have a “down round provision” and as a result, are classified as derivative liabilities for accounting purposes and valued at $4,481, reflecting debt discount and warrant liability. The resulting fair value allocated to the debt components was used to measure the intrinsic value of the embedded conversion option of the subordinated convertible notes. This resulted in a beneficial conversion feature of $42,111 recorded to additional paid in capital. Amortization on debt discount of $17,315 was recognized in the year ended December 31, 2014. The carrying value of these subordinated convertible notes was $118,723 net of $22,277 debt discount as of December 31, 2014. The fair value of the warrant liability aggregates $3,874 as of December 31, 2014. | |
The debt conversion price on the subordinated convertible notes issued in 2014 are subject to certain anti-dilution protection; for example, if the Company issues shares for a consideration less than the applicable conversion price, the conversion price is reduced to such amount. The lenders agreed to restrict their ability to convert the subordinated convertible note and receive shares of the Company if the number of shares of common stock beneficially held by the lenders and its affiliates in the aggregate after such conversion exceeds 4.99% of the then outstanding shares of common stock. However, this limitation does not preclude the lenders from converting notes payable into common stock after selling shares owned into the market. The Company has provided for piggy-back registration rights on any registration statement covering 110% of the maximum number of shares underlying these notes and warrants. The subordinated convertible promissory notes are secured by substantially all assets of the Company with the exception of lease equipment obligations and is subordinate to indebtedness with institutions or non-commercial lenders. | |
KBM Worldwide, Inc. Securities Purchase Agreement | |
On December 30, 2014, the Company received net proceeds of $50,000 as a result of the Securities Purchase Agreement with KBM Worldwide Inc. (“KBM”) for the sale of a Convertible Note (the “Note”) in the principal amount of $54,000. The principal advanced under the Note includes $4,000 in fees incurred by KBM related to the transaction. The KBM Securities Purchase Agreement, dated December 19, 2014 (“the SPA”), bears interest at the rate of 8% per annum. In connection with the SPA the Company is required to reserve a sufficient number of shares of its common stock (“the Common Stock”) for issuance upon full conversion of the Note in accordance with the terms thereof. The initial amount of shares reserved in connection with the SPA and underlying Note was 2,500,000 shares. | |
The Note has a maturity date of September 23, 2015 and includes penalty prepayments ranging from 15 - 40% of the principal amount if the Note is repaid from 30 to 180 days following the issuance date of the Note. KBM has the right to convert the principal amount of $54,000 after 180 days following the date of the Note and ending on the complete satisfaction by payment or conversion. The conversion price for the Note shall be determined based on 58% of the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period ending one trading day prior to the date of conversion. KBM agreed to restrict its ability to convert the Note and receive shares of the Company if the number of shares of common stock beneficially held by KBM and its affiliates in the aggregate after such conversion exceeds 4.99% of the then outstanding shares of common stock. In the Event of Default the Note is immediately due and payable. The minimum amount due under the default conditions is 150% times the principal and unpaid interest at the date of default. The Note contains default events which, if triggered and not timely cured (if curable), will result in a default interest rate of 22% per annum. KBM may request the payment in shares. | |
Under FASB ASC 480 “Distinguishing Liabilities from Equity,” the Company determined the Notes are liabilities reported at fair value because the Notes may be settled by conversion into a variable number of common shares at fixed monetary amount, known at inception. The Notes are to be subsequently measured at fair value at each reporting period, with changes in fair value being recognized in earnings. The fair value of the Notes is measured by calculating possible outcomes of conversion to common shares and repayment of the Notes, then weighting the probability of each possible outcome according to management’s estimates. Management has determined that the most likely outcome will be conversion during the prepayment period and the fair value of the Notes is equal to the estimated fair value of equity securities the Company will issue upon conversion. The fair value measurement is classified as a Level 3 in the valuation hierarchy. During the year ended December 31, 2014, the Company recorded a $22,600 loss on change in fair value for a total fair value in the amount of $75,600 at December 31, 2014. | |
U-Vend Canada Convertible Notes | |
The Company acquired two convertible 18% notes payable in Canadian dollars with a fair value of $148,438 (U.S. dollars) in connection with the U-Vend Canada merger on January 7, 2014. As of December 31, 2014 these convertible notes have a carrying value of $108,750. These convertible promissory notes reached maturity on July 26, 2014 and September 14, 2014. The note holders have the option of debt conversion at the lesser of 80% of the market price of the Company’s common stock on the date of maturity, conversion at $1.00 per share or cash repayment. The note holders are currently evaluating these options, as defined in the debt agreement, including extension of the debt maturity date. The fair value of the two convertible notes is measured by calculating possible outcomes of conversion to common shares and repayment of the Notes, then weighting the probability of each possible outcome according to management’s estimates. The Company recognized a gain of $23,438 upon maturity of two convertible notes during the year ended December 31, 2014 when it was determined that the most likely outcome will be cash repayment. During the period from the date of the merger through December 31, 2014, the Company recorded an $18,461 unrealized gain on foreign currency. | |
Promissory Notes Payable | |
During the first quarter of 2014, the Company issued an unsecured promissory note to former employee of U-Vend Canada. The original amount of this note was $10,512 has a term of 3 years and accrues interest at 17% per annum. The total debt outstanding on this promissory note at December 31, 2014 was $6,232. During the fourth quarter of 2014, the Company issued a 10% promissory note for $40,000 with a 12 month maturity due in December 2015. | |
During the second quarter of 2014, the Company issued a $10,000 unsecured promissory note due and originally payable on November 30, 2014. In connection with this borrowing the Company granted 41,667 warrants with an exercise price of $0.24 per share and a 2 year term. The Company valued the warrants at fair value of $1,970 after reflecting a debt discount on the promissory note. The carrying value of this note at December 31, 2014 was $10,000. The Company and the lender agreed to a revised maturity date on this promissory note and has extended the maturity to June 30, 2015. In connection with this new repayment date, the interest rate on the promissory note have been modified to 9.5%. | |
During the fourth quarter of 2014, the Company issued a $40,000 unsecured promissory note with a 10% interest rate and maturity of December 19, 2015. | |
2014 Perkin Industries, LLC Equipment Financing | |
On October 23, 2014, the Company entered into a 24 month equipment financing agreement with Perkin Industries, LLC (“the Lender”) for equipment and working capital in the amount of $250,000 with an annual interest rate of 15%. The assets financed consisted of self-service electronic kiosks, freezers, coin and inventory were placed in service in the Company’s southern California region. The Company is obligated to pay interest only in accordance with the agreement on a monthly basis over the term of the agreement. The agreement includes a put/call option that allows the Lender to put 50% of the equipment back or the Company to call for $125,000 at the end of year one. If the year one put and/or call is exercised, the monthly interest-only payment under the agreement is reduced by 50%. At the end of year two, the Lender shall have the option to put the remaining 50% of the equipment back to the Company or the Company to call for $125,000. If the year one put /or call is not exercised by either party, the Lender shall be permitted to put 100% of the equipment back to the Company for $250,000. The Lender received 200,000 warrants with an exercise price of $0.35 per share and a term of three years in connection with this financing which was recorded as a debt discount and derivative warrant liability due to the “down round provision” in the amount of $2,471. The amount outstanding on this financing is $248,044, net of $1,956 debt discount at December 31, 2014. | |
Promissory and Convertible Notes Payable– Director | |
During the third quarter of 2014, the director exercised his rights to convert the principal on two convertible notes with a combined principal balance of $100,000 in to 416,666 shares of the Company’s common stock. As a result of the conversion, the remaining $7,632 unamortized debt discount was expensed and is included within the (gain) on extinguishment of debt for the year ended December 31, 2014. The director also agreed to accept 208,340 shares of the Company’s common stock and 312,500 common stock warrants in exchange for full payment of $50,000 of outstanding principal on a promissory note which was due and payable in August of 2014. As of December 31, 2014 all principal on notes to this director had been satisfied. Unpaid accrued interest of $8,965 is reflected in accrued interest at December 31, 2014. |
REVOLVING_NOTE_FROM_RELATED_PA
REVOLVING NOTE FROM RELATED PARTY | 12 Months Ended |
Dec. 31, 2014 | |
Related Party Transactions [Abstract] | |
REVOLVING NOTE FROM RELATED PARTY | NOTE 5. REVOLVING NOTE FROM RELATED PARTY |
Revolving Credit Agreement | |
The Company had a revolving credit agreement with Mr. Raymond Meyers, a stockholder and chief executive officer of the Company. This credit agreement allowed borrowings up to $282,000, and expired on June 30, 2014. There was no outstanding balance on the credit agreement as of December 31, 2014 or December 31, 2013. This borrowing had an annual interest of 6% above one year LIBOR (6.6% as of December 31, 2013), and was secured by all of the assets of the Company. | |
In September 2013, Mr. Meyers requested payment of $86,591 of the outstanding revolving credit balance in newly issued common stock of the Company, which the Company’s Board of Director’s approved. The terms of the conversion were established and approved by the Company’s Board of Directors to be the average lowest bid price of the Company’s common stock on the prior ten business days. On September 17, 2013, the repayment amount of $86,591was converted to 181,303 shares. On December 16 and December 30, 2013, Mr. Meyers converted $80,746 and $145,980, respectively of principal and accrued interest outstanding to shares of the Company’s common stock in accordance with the revolving credit agreement. The outstanding interest and principal at these dates were converted at $0.16 per share, which reflected the average lowest bid price of the Company’s common stock for the prior ten days as prescribed in the agreement. As a result, an aggregate of 1,402,375 common shares were issued to Mr. Meyers in connection with these conversions. | |
Amounts due to Officers | |
As of December 31, 2014, the Company had $380,442 in unpaid salary, commissions and benefits payable to its three executive officers. This amount also includes a promissory note payable to Paul Neelin (the Company’s Chief Operating Officer) which has an outstanding balance of $45,257 as of December 31, 2014, a term of 4 years and accrues interest at 20% per annum. |
STOCKHOLDERS_DEFICIENCY
STOCKHOLDERS' DEFICIENCY | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Equity [Abstract] | ||||||||||
STOCKHOLDERS' DEFICIENCY | NOTE 6. STOCKHOLDERS’ DEFICIENCY | |||||||||
On September 12, 2013 and December 19, 2013, the majority of the stockholders of the Company approved in two written consents, an amendment to the Company’s Certificate of Incorporation, increasing the number of authorized shares of common stock from 100,000,000 to 300,000,000, then from 300,000,000 to 600,000,000, respectively. The increase in authorized shares was affected pursuant to a Certificate of Amendment to the Certificate of Incorporation filed with the Secretary of State of the State of Delaware. | ||||||||||
As of December 31, 2013, there were not adequate authorized shares to satisfy the current obligations upon conversion or exercise of all equity instruments issued by the Company. As a result, the warrants were measured at fair market value and presented in the consolidated balance sheet as liabilities. Warrants issued in and prior to 2012 are significantly out of the money and diluted therefore, management has deemed the fair value of these to be de minimis. The fair value of warrants issued in 2014 and 2013 were determined based on the consideration of the enterprise value of the Company, the limited market of the shares issuable under the agreement and modeling of the Monte Carlo simulation in 2014 and Black Scholes valuations in 2013 using multiple volatility assumptions. Due to certain unobservable inputs in the fair value calculations of the warrants, derivative warrant liabilities are classified as Level 3. | ||||||||||
During the year ended December 31, 2014 and 2013, the Company issued 18,750,000 and 5,250,000 warrants, respectively, to the Senior Convertible Notes holder (see Note 3.) During the year ended December 31, 2014 and 2013, the Company issued 730,452 and 986,250 warrants, respectively, to the Lessor in connection with an equipment lease financing line with the Company. | ||||||||||
Fair Value of Financial Instruments | ||||||||||
The following table provides a summary of changes in derivative warrant liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended December 31, 2014. | ||||||||||
Balance at January 1, 2014 | $ | 214,609 | ||||||||
Allocation of proceeds related to senior convertible notes as derivative liabilities due to “down round” provision | 285,269 | |||||||||
Allocation of proceeds related to subordinated convertible notes and equipment financing obligation as derivative liabilities due to “down round” provision | 6,951 | |||||||||
Extinguishment of June 18, 2013, August 21, 2013 and October 17, 2013 senior convertible notes | (87,921 | ) | ||||||||
Warrants classified as derivative liabilities due to inadequate shares authorized to accommodate the exercise of all outstanding equity instruments | 43,108 | |||||||||
Adjustment of warrants classified as derivative liabilities to additional paid-in capital as a result adequate shares authorized due to reverse stock split on May 16, 2014 | (52,833 | ) | ||||||||
Unrealized gain on fair market value adjustment | (99,190 | ) | ||||||||
Balance at December 31, 2014 | $ | 309,993 | ||||||||
The fair value of warrants outstanding at December 31, 2014 has been determined based on the consideration of the enterprise value of the Company, the limited market of the shares issuable under the agreement and modeling of the Monte Carlo simulation using multiple volatility assumptions. Warrants issued in and prior to 2012 are significantly out of the money and diluted therefore, management has deemed the fair value of these to be de minimis. Due to certain unobservable inputs in the fair value calculations of the warrants, derivative warrant liabilities are classified as Level 3. There were $214,609 derivative warrant liabilities issued during the year ended December 31, 2013. | ||||||||||
Warrants | ||||||||||
Outstanding warrant securities consist of the following at December 31, 2014: | ||||||||||
Warrants | Exercise Price | Expiration | ||||||||
2011 Private placement warrants | 12,500 | $60.00 | Mar-18 | |||||||
2012 Private placement warrants | 750 | $30.00 | Apr-15 | |||||||
2013 Series A warrants Senior convertible notes | 6,000,000 | $0.05 | June 2016-December 2016 | |||||||
2013 Series B warrants Senior convertible notes | 6,000,000 | $0.06 | June 2018-December 2018 | |||||||
2013 issued with lease obligation | 986,250 | $0.12 | Oct-16 | |||||||
2014 acquired in U-Vend Canada merger | 1,142,336 | $0.24 | September 2015-January 2016 | |||||||
2014 Series A warrants Senior convertible notes | 6,000,000 | $0.05 | January 2017-November 2017 | |||||||
2014 Series B warrants Senior convertible notes | 6,000,000 | $0.06 | January 2019-November 2019 | |||||||
2014 warrants for services | 18,480 | $0.01 | Jan-16 | |||||||
2014 warrants for services | 420,000 | $0.35 | August 2019-December 2019 | |||||||
2014 warrants for services | 35,000 | $0.24 | Jan-16 | |||||||
2014 warrants for services | 994,000 | $0.05 | June 2015-December 2015 | |||||||
2014 warrants for services | 1,184,000 | $0.06 | June 2018-December 2018 | |||||||
2014 Issued to Director for debt | 729,166 | $0.24 | November 2016-July 2017 | |||||||
2014 Issued with convertible debt | 243,334 | $0.35 | August 2019-December 2019 | |||||||
2014 Issued with equipment financing obligation | 200,000 | $0.35 | Oct-17 | |||||||
2014 issued with lease obligation | 246,563 | $0.20 | Mar-17 | |||||||
2014 issued with lease obligation | 483,889 | $0.24 | May-16 | |||||||
2014 Issued with promissory note | 41,667 | $0.18 | May-17 | |||||||
30,737,935 | ||||||||||
During the second quarter of 2014 and in connection with the reissued Cobrador Notes, the Company amended the warrants that had been granted in connection with the originally issued note agreements dated June 18, 2013, August 21, 2013 and October 17, 2013. Series A warrants totaling 1.125 million with an exercise price of $0.20 per share and Series B warrants totaling 1.125 million with an exercise price of $0.24 per shares were amended and reissued. The 4.5 million reissued Series A warrants have an exercise price of $0.05 per share and the 4.5 million reissued Series B warrants have an exercise price of $0.06 per share. For all 2013 and 2014 Cobrador notes the Series A warrants were amended to increase the term from 15 months to 24 months. The Series B term remained at 5 years. | ||||||||||
Outstanding warrant securities consist of the following at December 31, 2013: | ||||||||||
Warrants | Exercise Price | Expiration | ||||||||
2011 Issued with Convertible Notes | 83 | $ | 60 | Jun-14 | ||||||
2011 Common share private placement warrants | 12,500 | $ | 60 | Mar-18 | ||||||
2012 Private placement warrants | 750 | $ | 30 | March-April 2015 | ||||||
2013 Issued with lease obligation | 986,250 | $ | 0.12 | Nov-16 | ||||||
2013 Series A Senior Convertible Notes | 1,125,000 | $ | 0.05 | October-November 2014 | ||||||
2013 Series A Senior Convertible Notes | 1,500,000 | $ | 0.24 | January 2014-March 2015 | ||||||
2013 Series B Senior Convertible Notes | 1,125,000 | $ | 0.06 | June-August 2018 | ||||||
2013 Series B Senior Convertible Notes | 1,500,000 | $ | 1.2 | October- December 2018 | ||||||
6,249,583 |
EQUITY_INCENTIVE_PLAN
EQUITY INCENTIVE PLAN | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||
EQUITY INCENTIVE PLAN | NOTE 7. EQUITY INCENTIVE PLAN | |||||||||||||
On July 22, 2011, the Board of Directors of the Company approved the Company’s 2011 Equity Incentive Plan (the “Plan”) and on July 26, 2011, stockholders holding a majority of shares of the Company approved, by written consent, the Plan. The total number of shares of common stock available for issuance under the Plan is 5,000,000 shares. Awards may be granted to employees, officers, directors, consultants, agents, advisors and independent contractors of the Company and its related companies. Such options may be designated at the time of grant as either incentive stock options or nonqualified stock options. Stock based compensation includes expense charges related to all stock-based awards. Such awards include options, warrants and stock grants. Generally, the Company issues stock options that vest over three years and expire in 5 to 10 years. | ||||||||||||||
The Company records shares based payments under the provisions of FASB ASC 718 "Compensation - Stock Compensation." Stock based compensation expense is recognized over the requisite service period based on the grant date fair value of the awards. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. | ||||||||||||||
The Company estimated the expected volatility based on data used by its peer group of public companies. The expected term was estimated using the simplified method. The risk-free interest rate assumption was determined using the equivalent U.S. Treasury bonds yield over the expected term. The Company has never paid any cash dividends and does not anticipate paying any cash dividends in the foreseeable future. Therefore, the Company assumed an expected dividend yield of zero. | ||||||||||||||
The following shows the significant assumptions used to compute the share-based compensation expense for stock options and non-derivative warrants (see Note 6) granted during the year ended December 31, 2014: | ||||||||||||||
Volatility | 65% | |||||||||||||
Expected term | 2-5 years | |||||||||||||
Risk-free interest rate | 1.53% | |||||||||||||
Expected dividend yield | 0% | |||||||||||||
A summary of all stock option activity for the years ended December 31, 2014 and 2013 is as follows: | ||||||||||||||
Options | Weighted | Weighted | Aggregate | |||||||||||
Average | Average | Intrinsic | ||||||||||||
Exercise | Remaining | Value | ||||||||||||
Price | Life | |||||||||||||
Outstanding at December 31, 2013 | 13,300 | $ | 58 | 5.7 years | - | |||||||||
Issued in 2014 | 350,000 | $ | 0.3 | - | ||||||||||
Cancelled in 2014 | (3,150 | ) | $ | 60 | - | |||||||||
Outstanding at December 31, 2014 | 360,150 | $ | 1.99 | 4.3 years | - | |||||||||
Exercisable at December 31, 2014 | 260,150 | $ | 1.99 | 4.4 years | - | |||||||||
The Company granted 350,000 options during the year ended December 31, 2014 and 0 options in the year ended December 31, 2013. No options were exercised during the years ended December 31, 2014 or 2013. The fair value of options that vested during the year ended December 31, 2014 and 2013 amounted to approximately $ 89,200 and $23,400, respectively. The Company recorded stock compensation expense for options vesting during the years ended December 31, 2014 and 2013 of $89,207 and $23,496, respectively. | ||||||||||||||
At December 31, 2014, there was approximately $32,000 of unrecognized compensation cost related to non-vested options. This cost is expected to be recognized over a weighted average period of approximately 4.7 years. |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Income Tax Disclosure [Abstract] | |||||||||
INCOME TAXES | NOTE 8. INCOME TAXES | ||||||||
Income (loss) from continuing operations before provision (benefit) for income taxes and non-controlling interest is summarized in the following table. | |||||||||
2014 | 2013 | ||||||||
Domestic | $ | (1,234,293 | ) | $ | (409,094 | ) | |||
Foreign | (841,199 | ) | - | ||||||
$ | (2,075,492 | ) | $ | (409,094 | ) | ||||
The income tax provision (benefit) is summarized in the following table. | |||||||||
2014 | 2013 | ||||||||
Current: | |||||||||
Federal | $ | - | $ | - | |||||
State | 2,094 | 2,200 | |||||||
Foreign | - | - | |||||||
Total current | $ | 2,094 | $ | 2,200 | |||||
Deferred: | |||||||||
Federal | $ | (390,026 | ) | $ | (128,472 | ) | |||
State | (1,777 | ) | (15,983 | ) | |||||
Foreign | (134,000 | ) | - | ||||||
Total deferred | (526,503 | ) | (144,455 | ) | |||||
Less increase in allowance | 451,503 | 144,455 | |||||||
Net deferred | $ | (75,000 | ) | $ | - | ||||
Total income tax provision (benefit) | $ | (72,906 | ) | $ | 2,200 | ||||
The significant components of the deferred tax assets and liabilities are summarized below. | |||||||||
2014 | 2013 | ||||||||
Deferred tax assets (liabilities): | |||||||||
Net operating loss carryforwards | $ | 1,055,408 | $ | 499,696 | |||||
Depreciable and amortizable assets | (8,252 | ) | - | ||||||
Prepaid expense | (253 | ) | 888 | ||||||
Intangible asset | (174,003 | ) | - | ||||||
Stock based compensation | 38,617 | 15,769 | |||||||
Beneficial conversion feature | (13,309 | ) | (8,623 | ) | |||||
Loss reserve | 3,239 | - | |||||||
Accrued compensation | 86,194 | 54,519 | |||||||
Other | (4,564 | ) | - | ||||||
Total | 983,077 | 560,473 | |||||||
Less valuation allowance | (983,077 | ) | (560,473 | ) | |||||
Net deferred assets (liabilities) | $ | - | $ | - | |||||
The Company has approximately $2,475,000 and $886,000 in federal U.S. and Canadian net operating loss carryforwards (“NOLs”), respectively, as well as $1,163,000 in U.S. state and $886,000 in Canadian provincial NOLs available to reduce future taxable income. These carryforwards begin to expire in year 2030. Due to the uncertainty as to the Company’s ability to generate sufficient taxable income in the future and utilize the NOLs before they expire, the Company has recorded a valuation allowance to fully offset the NOLs, and the total net deferred tax assets, as well. | |||||||||
Internal Revenue Code Section 382 ("Section 382") imposes limitations on the availability of a company's net operating losses and other corporate tax attributes as certain significant ownership changes occur. As a result of the historical equity instrument issuances by the Company, a Section 382 ownership change may have occurred and a study will be required to determine the date of the ownership change, if any. The amount of the Company's net operating losses and other tax attributes incurred prior to any ownership change may be limited based on the Company's value. In addition, as a result of the Company’s acquisition of the shares of U-Vend Canada, the amount of U-Vend Canada’s NOLs incurred prior to the ownership change and those of its wholly-owned limited liability company, U-Vend USA LLC may be limited based on U-Vend Canada’s value at the date of acquisition. A full valuation allowance has been established for the Company's deferred tax assets, including net operating losses and any other corporate tax attributes. | |||||||||
During the years ended December 31, 2014 and 2013 the Company had no unrecognized tax benefits. The Company’s policy is to recognize interest accrued and penalties related to unrecognized tax benefits in tax expense. | |||||||||
The Company files income tax returns in the U.S. and Canada federal jurisdictions, the states of California, Florida, Illinois and New York, as well as the province of Ontario. The tax years 2011-2014 generally remain open to examination by the U.S. federal and state taxing authorities. In addition, the 2010 tax year is still open for the state of California, Canadian federal and province of Ontario taxing authorities. | |||||||||
A reconciliation of the income tax provision using the statutory U.S. income tax rate compared with the actual income tax provision reported on the consolidated statements of operations is summarized in the following table. | |||||||||
2014 | 2013 | ||||||||
Statutory United States federal rate | 34 | % | 34 | % | |||||
United States federal tax on foreign branch operations | 7.54 | - | |||||||
State income tax, net of federal benefit | 3.95 | 2.2 | |||||||
Other foreign income tax, net of federal benefit | 3.99 | - | |||||||
Change in valuation reserves | (21.75 | ) | (36.20 | ) | |||||
Permanent differences | (4.80 | ) | (.060 | ) | |||||
Tax rate differential between jurisdictions | (16.76 | ) | - | ||||||
State income tax law changes | (2.66 | ) | - | ||||||
Effective tax rate benefit (provision) | 3.51 | % | (0.60 | ) % |
DISCONTINUED_OPERATIONS
DISCONTINUED OPERATIONS | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Discontinued Operations and Disposal Groups [Abstract] | |||||
DISCONTINUED OPERATIONS | NOTE 9. DISCONTINUED OPERATIONS | ||||
On March 13, 2013, the Company entered into a stock sale agreement (“Agreement”) dated March 8, 2013 with Western Principal Partners LLC (“WPP”), a California Limited Liability Company. Pursuant to the Agreement, WPP purchased from the Company all the outstanding capital stock of the Company’s wholly-owned subsidiary, LegalStore.com, a Delaware Corporation. LegalStore.com was operating the Company’s e-commerce business. The Agreement was approved by a written consent by the majority of the Company's stockholders. In consideration of the sale, WPP paid the Company $95,000 at close and assumed certain operating liabilities. Operating liabilities included, but are not limited to existing operating agreements, trade payables and certain tax obligations. At December 31, 2012, the fair value of consideration received for the stock of LegalStore.com was less than the carrying value of the assets. As a result, an impairment charge was recorded in 2012 in the amount of $35,000, net of income tax effect. The Company used the proceeds for payment of its payables and for working capital purposes. | |||||
As a result of the board of directors committing to a plan to sell LegalStore.com, the related assets and liabilities were considered to be held for sale and were presented as discontinued operations on the balance sheets as December 31, 2012. In accordance with ASC 205-20 “Discontinued Operations” the Company presented the results of LegalStore.com operations as discontinued operations in the accompanying condensed consolidated statements of operations and statements of cash flows as of and for the year ended December 31, 2013. | |||||
The following table presents information regarding calculation of gain from the sale of LegalStore.com: | |||||
Net cash proceeds after brokerage fee of $21,000 | $ | 74,000 | |||
LegalStore.com liabilities assumed | 136,241 | ||||
Total purchase price | 210,241 | ||||
LegalStore.com assets | 206,402 | ||||
Gain on sale | $ | 3,839 |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and Contingencies Disclosure [Abstract] | |||||
COMMITMENTS AND CONTINGENCIES | NOTE 10. COMMITMENTS AND CONTINGENCIES | ||||
Operating Lease Obligations | |||||
The Company has two operating lease agreements, two agreements are for warehouse space, one in the greater Chicago, Illinois area and one in southern California. The Chicago warehouse lease is for a term of 65 months commencing in November 2013 and requires a monthly rent of $1,875 with annual scheduled rent increases. The California warehouse lease is for a term of 12 months commencing in January 2015 and requires a monthly rent of $2,464 and 2.7% share of common area operating charges. The Company also has a vehicle lease in the Chicago area for use in product distribution and sales efforts. The Chicago vehicle lease is for a term of 48 months commencing in October 2013 and requires a monthly payment of $670. | |||||
Capital Lease Obligations | |||||
In connection with the merger on January 7, 2014, the Company acquired the capital assets and outstanding lease obligations of U-Vend Canada. In 2013, the Company and U-Vend Canada jointly entered into a term sheet dated October 15, 2013 with a financing company (“Lessor”) to provide for equipment lease financing in the aggregate amount of $1 million. All amounts borrowed under the lease financing agreement are secured by the leased equipment. The Company will use this financing to acquire certain equipment to be used in direct income producing activities. Since the inception of this lease financing agreement, the Company has acquired leased equipment for $465,500 pursuant to financing by the Lessor. As per the terms of the agreement with the Lessor, the Company is obligated to pay annual lease payments as summarized below and also buy the equipment from the Lessor at the lease maturity in 2016 and 2017. Accordingly, the lease has been treated as a capital lease. | |||||
The following schedule provides minimum future rental payments required as of December 31, 2014, under capital leases which have a remaining non-cancelable lease term in excess of one year: | |||||
2015 | $ | 204,533 | |||
2016 | 126,822 | ||||
2017 | 25,831 | ||||
Total minimum lease payments | 357,186 | ||||
Guaranteed residual value | 206,833 | ||||
564,019 | |||||
Less: amount represented by interest | (123,322 | ) | |||
Present value of minimum lease payments and guaranteed residual value | 440,687 | ||||
Less: current portion of capital lease obligations | (116,000 | ) | |||
Long term capital lease obligations and guaranteed residual value | 324,687 | ||||
Less: unamortized debt discount on capital leases | (43,728 | ) | |||
Long term capital lease obligation and guaranteed residual value, net | $ | 280,959 | |||
Equipment held under capital leases at December 31, 2014 had a cost of $465,500 and accumulated depreciation of $55,406. Total depreciation expense during the year ended December 31, 2014 and 2013 amounted to $67,703 and $0 respectively, including equipment held under capital leases. | |||||
The Lessor was induced to extend the equipment lease line with a grant of 986,250, 246,563 and 483,889 common stock warrants with a term of three years and an exercise price of $0.12, $0.20, and $0.24 per share during October 2013, March 2014 and May 2014, respectively. The warrants related to the October 2013 and March 2014 grants were determined to have a fair value of $68,190, which was recorded as a discount to the capital lease obligation. The warrants were initially recorded as derivative warrant liabilities due to inadequate shares authorized to accommodate the exercise, however were reclassified to additional paid-in capital when adequate shares were authorized due to the reverse split on May 16, 2014. | |||||
The Company and the Lessor entered into a registration rights agreement covering the registration of 110% of common stock underlying the Warrants. The Company was required to file a registration statement within 45 days after completion of the acquisition of U-Vend Canada and meet an effectiveness deadline of 90 days after the closing date of the acquisition, 120 days if the Securities and Exchange Commission provides comment. The Company met the filing and effectiveness criteria, as extended by the Lessor on April 2014, on November 21, 2014 which resulted in a penalty of $7,922 recorded by the Company at December 31, 2014. The Lessor has extended the due day for this payment until June 30, 2015. The Company believes no additional liability will be incurred under this agreement as the underlying shares are now eligible for sale in accordance with Rule 144. |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2014 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 11. SUBSEQUENT EVENTS |
National Hockey League Retail License and Sponsorship Agreement | |
On February 27, 2015 U-Vend, Inc. announced a multi-year, Corporate Marketing Letter Agreement (the “Agreement”) with the National Hockey League. The Agreement includes the usage of NHL® team branded marks on the Company’s ‘Puck Premium Ice Cream™ for the period commencing March 1, 2015 through June 30, 2020 in retail distributions including mass merchants, specialty shops, convenience stores and in the Company’s specialty kiosks in North America. | |
The Company entered into the Agreement with NHL Enterprises, L.P, NHL Enterprises Canada, L.P. and NHL Interactive CyberEnterprises, LLC (collectively referred to as the “NHL” and the “Licensors”) and includes a retail license agreement, a corporate sponsorship and a marketing agreement. In connection with the Agreement, the Company shall pay to the NHL a royalty payment of five percent (5%) on net sales as well as fees attributable to national advertising, promotion and corporate marketing and branding events. The Agreement also provides for customary representations, warranties, and indemnification from the parties. | |
10% Convertible Note and Warrants | |
Subsequent to December 31, 2014, the Company issued four subordinated convertible note aggregating $70,000 which mature in the first quarter of 2016. The principal on these notes are convertible into common shares at the rate of $0.30 per share. In connection with this borrowing the Company granted 116,667 warrants with an exercise price of $0.35 per share, a 5 year term, and a "down round provision". The debt conversion price on the subordinated convertible notes are subject to certain anti-dilution protection; for example, if the Company issues shares for a consideration less than the applicable conversion price, the conversion price is reduced to such amount. The lenders agreed to restrict their ability to convert the subordinated convertible note and receive shares of the Company if the number of shares of common stock beneficially held by the lender and its affiliates in the aggregate after such conversion exceeds 4.99% of the then outstanding shares of common stock. However, this limitation does not preclude the lender from converting notes payable into common stock after selling shares owned into the market. The Company has provided for piggy-back registration rights on any registration statement covering 110% of the maximum number of shares underlying these notes and warrants. | |
2015 Perkin Industries, LLC Equipment Financing | |
On January 28, 2015, the Company entered into a 24 month equipment financing agreement with Perkin Industries, LLC (“the Lender”) for equipment in the amount of $65,750 with an annual interest rate of 15%. The assets financed consisted of self-service electronic kiosks were placed in service in the Company’s southern California region. The Company is obligated to pay interest only in accordance with the agreement on a monthly basis over the term of the agreement. The agreement includes a put/call option that allows the Lender at the end of year one to put 50% of the equipment back to the Company or the Company to call for $32,875. If the year one put and/or call is exercised, the monthly interest-only payment under the agreement is reduced by 50%. At the end of year two, the Lender shall have the option to put the remaining 50% of the equipment back to the Company or the Company to put for $32,875. If the year one put /or call is not exercised by either party, the Lender shall be permitted to put 100% of the equipment back to the Company for $65,750. The Lender received 52,600 warrants with an exercise price of $0.35 per share and a term of three years in connection with this financing. | |
First Quarter 2015 Promissory Note | |
During the first quarter of 2015, the Company issued a $10% promissory note for $25,000 with a June 30, 2015 maturity date. | |
Common Shares issued | |
During the first quarter of 2015, the Company issued an aggregate of 70,000 common shares (at share prices ranging from $0.16 to $0.18 per share) to two firms that provided business development and design services. | |
Shares issued for Earn-Out - The U-Vend Canada merger agreement (see Note 2 above) provided for an earn-out based on 2014 and 2015 gross revenue targets. Subsequent to December 31, 2014, the Company’s board of directors recommended that the first year aggregate earn-out of 2,261,425 shares of common stock be paid to Paul Neelin and Diane Hope (in equal amounts) as the Company did not receive the anticipated level of financing. On April 7, 2015 the Company issued 1,130,712 common shares to Paul Neelin and 1,130,712 shares to Diane Hope in connection with the earn-out provision of the merger agreement. | |
Debt conversions | |
On February 28, 2015, the Company received a notice of debt conversion for principal of $5,000 of Senior Convertible notes held by Cobrador at $0.05 per share resulting in the issuance of 100,000 common shares. | |
Warrants Exercises | |
On February 3, 2015 Cobrador converted 150,000 of their Series A warrants into common shares at $0.05 per share resulting in cash proceeds of $7,500 to the Company. The warrant securities were registered for resale in the Company’s Form S-1 that was effective in November 2014. | |
On March 6, 2015 Automated Retail Leasing Partners converted 125,000 of their warrants into common shares at $0.12 per share resulting in cash proceeds of $15,000 to the Company. The warrant securities were registered for resale in the Company’s Form S-1 that was effective in November 2014. | |
On March 23, 2015 Cobrador converted 350,000 of their Series A warrants at $0.05 per share resulting in cash proceeds of $17,500 to the Company. The warrant securities were registered for resale in the Company’s Form S-1 that was effective in November 2014. |
NATURE_OF_BUSINESS_AND_SUMMARY1
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | |
Dec. 31, 2014 | ||
Accounting Policies [Abstract] | ||
Management's Plans | Management's plans | |
The accompanying consolidated financial statements have been prepared on a going concern basis. As shown in the accompanying consolidated financial statements, the Company incurred a loss of approximately $2,003,000 during the year ended December 31, 2014, has incurred accumulated losses totaling approximately $3,777,000, has a stockholders’ deficiency of approximately $934,000 and has a working capital deficit of approximately $1,843,000 at December 31, 2014. These factors, among others, indicate that there is substantial doubt that the Company may be unable to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. | ||
The Company needs to raise additional financing to fund the Company’s operations for fiscal year 2015, to allow the Company to continue the development of its business plans and satisfy its obligations on a timely basis. Should additional financing not be available, the Company will have to negotiate with its lenders to extend the repayment dates of its indebtedness. There can be no assurance, however, that the Company will be able to successfully restructure its debt obligations in the event it fails to obtain additional financing. | ||
As discussed in Note 2, on January 7, 2014, the Company entered into an Exchange of Securities Agreement with U-Vend Canada, Inc., and the shareholders of U-Vend. The Company believes the merger with U-Vend will provide it with business operations and also necessary working capital. The Company is in discussion for raising additional capital to execute on its current business plans. There is no assurance that future financing arrangements will be successful or that the operating results will yield sufficient cash flow to execute the Company’s business plans or satisfy its obligations. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty | ||
Principles of Consolidation | Principles of Consolidation - The consolidated financial statements include the accounts of U-Vend, Inc. (formerly Internet Media Services, Inc.), and the operations of U-Vend America, Inc., U-Vend Canada, Inc. and its wholly owned subsidiary, U-Vend USA LLC. All intercompany balances and transactions have been eliminated in consolidation. | |
Use of Estimates | Use of Estimates - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates and be based on events different from those assumptions. Future events and their effects cannot be predicted with certainty; estimating, therefore, requires the exercise of judgment. Thus, accounting estimates change as new events occur, as more experience is acquired or as additional information is obtained. | |
Inventory | Inventory - Inventories are stated at the lower of cost or market and cost is determined by the average cost method. Inventory is made up of finished goods ice cream. The Company records inventory reserves for spoilage and product losses. The reserve for spoilage and product losses amounted to $7,500 as of December 31. 2014. No such reserve was necessary at December 31, 2013. | |
Property and Equipment | Property and Equipment - Property and equipment are stated at cost. Expenditures for repairs and maintenance are charged to expense as incurred. Depreciation is provided using the straight line method over the estimated useful life of the assets. Electronic kiosks and related equipment have estimated useful lives between five and seven years. Depreciation expense amounted to approximately $68,000 during the year ended December 31, 2014. There was no depreciation expense during the year ended December 31, 2013. | |
Long lived assets, Identifiable Intangible Assets and Goodwill | Long lived assets, Identifiable Intangible Assets and Goodwill - Long lived assets, identifiable intangibles assets and goodwill are reviewed periodically for impairment or when events or changes in circumstances indicate that full recoverability of net asset balances through future cash flows is in question. With respect to goodwill, the Company tests for impairment on an annual basis or in interim periods if an event occurs or circumstances change that may indicate the fair value is below its carrying amount. Factors that could trigger an impairment review, include the following: (a) significant underperformance relative to expected historical or projected future operating results; (b) significant changes in the manner of our use of the acquired assets or the strategy for our overall business; and (c) significant negative industry or economic trends. | |
Assessment for possible impairment is based on the Company’s ability to recover the carrying value of the long-lived asset from the expected future pre-tax cash flows. The expected future pre-tax cash flows are estimated based on historical experience, knowledge and market data. Estimates of future cash flows require the Company to make assumptions and to apply judgment, including forecasting future sales, capital investments and expenses and estimating the useful lives of assets. If the expected future cash flows related to the long-lived assets are less than the assets’ carrying value, an impairment charge is recognized for the difference between estimated fair value and carrying value. | ||
When performing our evaluation of goodwill for impairment, if we conclude qualitatively that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then the two-step impairment test is not required. If we are unable to reach this conclusion, then we would perform the two-step impairment test. Initially, the fair value of the reporting unit is compared to its carrying amount. To the extent the carrying amount of a reporting unit exceeds the fair value of the reporting unit; we are required to perform a second step, as this is an indication that the reporting unit goodwill may be impaired. In this step, we compare the implied fair value of the reporting unit goodwill with the carrying amount of the reporting unit goodwill and recognize a charge for impairment to the extent the carrying value exceeds the implied fair value. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit to all of the assets (recognized and unrecognized) and liabilities of the reporting unit in a manner similar to a purchase price allocation. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill. | ||
There are inherent assumptions and estimates used in developing future cash flows requiring management judgment in applying these assumptions and estimates to the analysis of identifiable intangibles and asset impairment including projecting revenues, interest rates and the cost of capital. Many of the factors used in assessing fair value are outside our control and it is reasonably likely that assumptions and estimates will change in future periods. These changes can result in future impairments. In the event our planning assumptions were modified resulting in impairment to our assets, the associated expense would be included in the consolidated statements of operations, which could materially impact our business, financial condition and results of operations. | ||
Management's forecasts of future earnings are largely dependent on future cash infusion or incremental borrowing to fund our projected growth as well as current operations. If our business plans result in significant delays in implementation and sales of our products are not in alignment with our projections, a future impairment charge could result for a portion or all of the goodwill noted previously. The amount of any impairment is dependent on the performance of the business which is dependent upon a number of variables which cannot be predicted with certainty. | ||
Common Shares Issued and Earnings Per Common Share | Common Shares Issued and Earnings Per Share - Common shares issued are recorded based on the value of the shares issued or consideration received, including cash, services rendered or other non-monetary assets, whichever is more readily determinable. The Company presents basic and diluted earnings per share. Basic earnings per share reflect the actual weighted average of shares issued and outstanding during the period. Diluted earnings per share are computed including the number of additional shares that would have been outstanding if dilutive potential shares had been issued. In a loss year, the calculation for basic and diluted earnings per share is considered to be the same, as the impact of potential common shares is anti-dilutive. | |
As of December 31, 2014, there were approximately 43 million (8 million at December 31, 2013) shares potentially issuable under convertible debt agreements, options, warrants and contingent shares that could dilute basic earnings per share in the future that were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive to the Company’s losses during the periods presented. | ||
Subsequent to December 31, 2014, the Company issued: 100,000 shares at $0.05 per share for conversion of $5,000 principal on outstanding debt, 625,000 shares in connection with warrant exercises at prices ranging from $0.05 - $0.12 per share, 70,000 shares for $11,350 in services provided by two consultants, 382,917 shares in settlement of $82,282 of lease obligations at share prices ranging from $0.21 to $0.22 per share and 2,261,425 shares in connection with earn out provision to two former shareholders of U-Vend Canada (see Note 2.) | ||
Preferred Stock Authorized | Preferred Stock Authorized - The Company has authorization for “blank check” preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to common stock. As of December 31, 2014 and 2013, there are 10,000,000 shares of preferred stock authorized, and no shares issued or outstanding. | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments- Financial instruments include cash, accounts receivable, accounts payable, accrued expenses, derivative warrant liabilities, promissory notes payable, capital lease obligation, contingent consideration liability, revolving note from related party, convertible notes payables, and senior convertible notes payable. Fair values were assumed to approximate carrying values for these financial instruments, except for derivative warrant liabilities, contingent consideration liability, convertible notes payable and senior convertible notes payable, since they are short term in nature or they are payable on demand. The senior convertible notes and the convertible notes payable are recorded at face value net of any unamortized discounts, based upon the the number of underlying convertible shares. The fair value was estimated using the trading price on December 31, 2014 since the underlying shares are trading in an active observable market, the fair value measurement qualifies as a level 1 input. Certain convertible notes payable are recorded at fair value at December 31, 2014. (See Note 4). The determination of the fair value of the derivative warrant liabilities and contingent consideration liability include unobservable inputs and is therefore categorized as a Level 3 measurement. | |
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. FASB ASC 820 “Fair Value Measurement” establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include: | ||
· | Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; | |
· | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and | |
· | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. | |
Revenue Recognition | Revenue Recognition - The Company has 104 electronic kiosks installed as of December 31, 2014; 76 in the greater Chicago, Illinois area and 28 in the southern California area. The kiosks in California were installed during the fourth quarter of 2014. Revenue is recognized at the time each vending transaction occurs, the payment method is approved and the product is disbursed from the machine. | |
Income Taxes | Income Taxes - The Company accounts for income taxes with the recognition of estimated income taxes payable or refundable on income tax returns for the current year and for the estimated future tax effect attributable to temporary differences and carryforwards. Measurement of deferred income items is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available tax benefits not expected to be realized in the immediate future. | |
The Company reviews tax positions taken to determine if it is more likely than not that the position would be sustained upon examination resulting in an uncertain tax position. The Company did not have any material unrecognized tax benefit at December 31, 2014 or 2013. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in tax expense. During the years ended December 31, 2014 and 2013, the Company recognized no interest and penalties. | ||
1 for 200 Stock Split and Change in trading symbol effective May 16, 2014 | 1 for 200 Stock Split and Change in trading symbol effective May 16, 2014 - On January 7, 2014, the holders of a majority of the outstanding shares of the Company’s common stock voted in favor of a corporate resolution authorizing the reverse split of its common stock (“Reverse Split”) on the basis of one share of common stock for each 200 shares of common stock. On April 10, 2014 our Board of Directors approved the one for 200 reverse stock split, the change of our corporate name to U-Vend, Inc. and the new trading symbol of UVND. We received the authorization from FINRA to effect these events as of May 16, 2014. We have prepared the financial, share and per share information included in this annual report on a post-split basis. There were no changes to the authorized amount of shares or par value as a result of this reverse split. | |
Derivative Financial Instruments | Derivative Financial Instruments - The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. Certain warrants the Company has issued have a “down round provision.” As a result, the warrants are classified as derivative liabilities for accounting purposes. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair market value and then is revalued at each reporting date, with changes in fair value reported in the consolidated statement of operations. | |
Share-Based Compensation Expense | Share-Based Compensation Expense - The Company accounts for stock-based compensation under the provisions of FASB ASC 718 “Stock Compensation.” This statement requires the Company to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost is recognized over the period in which the employee is required to provide service in exchange for the award, which is usually the vesting period. | |
In accordance with FASB ASC 505 “Equity”, the measurement date for non-forfeitable awards to nonemployees that vest immediately, is the date the award is issued. | ||
Reclassifications | Reclassifications - Certain prior period amounts in the accompanying consolidated financial statements have been reclassified to current period presentation. These classifications had no effect on the results of operations or cash flows for the periods presented. | |
Accounting Pronouncements | Accounting Pronouncement - In July 2013, the FASB issued Accounting Standards Update (“ASU”) 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” The amendments in this ASU state that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this standard in 2014 did not have a material impact on the Company’s consolidated financial position and results of operations. | |
In May 2014, the FASB issued ASU 2014-09,”Revenue from Contracts with Customers”, which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). The Company is evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard in 2018. | ||
In August 2014, the FASB issued ASU 2014-15, ”Presentation of Financial Statements – Going Concern”, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity will be required to provide certain disclosures if conditions of events raise substantial doubt about the entity’s ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company is evaluating the impact of the adoption of ASU 2014-15 on our consolidated financial statements and have not yet determined when we will adopt the standard. | ||
Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted, would have a material effect on the accompanying financial statements. |
MERGER_WITH_UVEND_CANADA_INC_T
MERGER WITH U-VEND CANADA, INC. (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Business Combinations [Abstract] | |||||||||
Schedule of purchase price consideration | The contingent consideration represented by the earn-out shares were also measured using a split adjusted price of $0.14 per share, discounted for the probability that the shares will be issued in the future upon achievement of the revenue targets defined. | ||||||||
Consideration: | |||||||||
Fair value of 3,500,000 shares of common stock issued at $0.14 on January 7, 2014 | $ | 490,000 | |||||||
Fair value of 4,522,850 shares of common stock measured at $0.14, discounted for the probability of achievement | 246,568 | ||||||||
736,568 | |||||||||
Discount for restrictions | (103,118 | ) | |||||||
Effective settlement of intercompany payable due to U-Vend, Inc. | 174,899 | ||||||||
Total purchase price | $ | 808,349 | |||||||
Schedule of allocation of purchase price | The following table summarizes the allocation of the purchase price for the acquisition of U-Vend Canada. | ||||||||
Cash | $ | 11,132 | |||||||
Inventory | 15,253 | ||||||||
Prepaid expense | 350 | ||||||||
Property and equipment | 232,835 | ||||||||
Security deposits | 6,631 | ||||||||
Intangible assets- Operating Agreement | 434,000 | ||||||||
Goodwill | 642,340 | ||||||||
Accounts payable and accrued expenses | (135,634 | ) | |||||||
Notes payable | (170,517 | ) | |||||||
Capital lease obligations | (153,041 | ) | |||||||
Deferred tax liability | (75,000 | ) | |||||||
Total purchase price | $ | 808,349 | |||||||
Schedule of unaudited pro forma supplemental information | The unaudited pro forma supplemental information includes incremental executive compensation and intangible asset amortization charges as a result of the acquisition, net of the related tax effects. | ||||||||
For the year ended | For the year ended | ||||||||
Unaudited Pro Forma Results | December 31, 2014 | December 31, 2013 | |||||||
Revenues | $ | 268,804 | $ | 14,300 | |||||
Gross profit | $ | 90,965 | $ | 2,600 | |||||
Net loss | $ | (2,002,586 | ) | $ | (563,100 | ) | |||
Basic and fully diluted loss per share | $ | (0.23 | ) | $ | (0.07 | ) |
STOCKHOLDERS_DEFICIENCY_Tables
STOCKHOLDERS' DEFICIENCY (Tables) | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Stockholders' Equity Note [Abstract] | ||||||||||
Schedule of fair value of derivative warrant liabilities | Fair Value of Financial Instruments | |||||||||
The following table provides a summary of changes in derivative warrant liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended December 31, 2014. | ||||||||||
Balance at January 1, 2014 | $ | 214,609 | ||||||||
Allocation of proceeds related to senior convertible notes as derivative liabilities due to “down round” provision | 285,269 | |||||||||
Allocation of proceeds related to subordinated convertible notes and equipment financing obligation as derivative liabilities due to “down round” provision | 6,951 | |||||||||
Extinguishment of June 18, 2013, August 21, 2013 and October 17, 2013 senior convertible notes | (87,921 | ) | ||||||||
Warrants classified as derivative liabilities due to inadequate shares authorized to accommodate the exercise of all outstanding equity instruments | 43,108 | |||||||||
Adjustment of warrants classified as derivative liabilities to additional paid-in capital as a result adequate shares authorized due to reverse stock split on May 16, 2014 | (52,833 | ) | ||||||||
Unrealized gain on fair market value adjustment | (99,190 | ) | ||||||||
Balance at December 31, 2014 | $ | 309,993 | ||||||||
Schedule of outstanding warrant securities | Warrants | |||||||||
Outstanding warrant securities consist of the following at December 31, 2014: | ||||||||||
Warrants | Exercise Price | Expiration | ||||||||
2011 Private placement warrants | 12,500 | $60.00 | Mar-18 | |||||||
2012 Private placement warrants | 750 | $30.00 | Apr-15 | |||||||
2013 Series A warrants Senior convertible notes | 6,000,000 | $0.05 | June 2016-December 2016 | |||||||
2013 Series B warrants Senior convertible notes | 6,000,000 | $0.06 | June 2018-December 2018 | |||||||
2013 issued with lease obligation | 986,250 | $0.12 | Oct-16 | |||||||
2014 acquired in U-Vend Canada merger | 1,142,336 | $0.24 | September 2015-January 2016 | |||||||
2014 Series A warrants Senior convertible notes | 6,000,000 | $0.05 | January 2017-November 2017 | |||||||
2014 Series B warrants Senior convertible notes | 6,000,000 | $0.06 | January 2019-November 2019 | |||||||
2014 warrants for services | 18,480 | $0.01 | Jan-16 | |||||||
2014 warrants for services | 420,000 | $0.35 | August 2019-December 2019 | |||||||
2014 warrants for services | 35,000 | $0.24 | Jan-16 | |||||||
2014 warrants for services | 994,000 | $0.05 | June 2015-December 2015 | |||||||
2014 warrants for services | 1,184,000 | $0.06 | June 2018-December 2018 | |||||||
2014 Issued to Director for debt | 729,166 | $0.24 | November 2016-July 2017 | |||||||
2014 Issued with convertible debt | 243,334 | $0.35 | August 2019-December 2019 | |||||||
2014 Issued with equipment financing obligation | 200,000 | $0.35 | Oct-17 | |||||||
2014 issued with lease obligation | 246,563 | $0.20 | Mar-17 | |||||||
2014 issued with lease obligation | 483,889 | $0.24 | May-16 | |||||||
2014 Issued with promissory note | 41,667 | $0.18 | May-17 | |||||||
30,737,935 | ||||||||||
During the second quarter of 2014 and in connection with the reissued Cobrador Notes, the Company amended the warrants that had been granted in connection with the originally issued note agreements dated June 18, 2013, August 21, 2013 and October 17, 2013. Series A warrants totaling 1.125 million with an exercise price of $0.20 per share and Series B warrants totaling 1.125 million with an exercise price of $0.24 per shares were amended and reissued. The 4.5 million reissued Series A warrants have an exercise price of $0.05 per share and the 4.5 million reissued Series B warrants have an exercise price of $0.06 per share. For all 2013 and 2014 Cobrador notes the Series A warrants were amended to increase the term from 15 months to 24 months. The Series B term remained at 5 years. | ||||||||||
Outstanding warrant securities consist of the following at December 31, 2013: | ||||||||||
Warrants | Exercise Price | Expiration | ||||||||
2011 Issued with Convertible Notes | 83 | $ | 60 | Jun-14 | ||||||
2011 Common share private placement warrants | 12,500 | $ | 60 | Mar-18 | ||||||
2012 Private placement warrants | 750 | $ | 30 | March-April 2015 | ||||||
2013 Issued with lease obligation | 986,250 | $ | 0.12 | Nov-16 | ||||||
2013 Series A Senior Convertible Notes | 1,125,000 | $ | 0.05 | October-November 2014 | ||||||
2013 Series A Senior Convertible Notes | 1,500,000 | $ | 0.24 | January 2014-March 2015 | ||||||
2013 Series B Senior Convertible Notes | 1,125,000 | $ | 0.06 | June-August 2018 | ||||||
2013 Series B Senior Convertible Notes | 1,500,000 | $ | 1.2 | October- December 2018 | ||||||
6,249,583 |
EQUITY_INCENTIVE_PLAN_Tables
EQUITY INCENTIVE PLAN (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Equity Incentive Plan Tables | ||||||||||||||
Schedule of stock option activity | A summary of all stock option activity for the years ended December 31, 2014 and 2013 is as follows: | |||||||||||||
Options | Weighted | Weighted | Aggregate | |||||||||||
Average | Average | Intrinsic | ||||||||||||
Exercise | Remaining | Value | ||||||||||||
Price | Life | |||||||||||||
Outstanding at December 31, 2013 | 13,300 | $ | 58 | 5.7 years | - | |||||||||
Issued in 2014 | 350,000 | $ | 0.3 | - | ||||||||||
Cancelled in 2014 | (3,150 | ) | $ | 60 | - | |||||||||
Outstanding at December 31, 2014 | 360,150 | $ | 1.99 | 4.3 years | - | |||||||||
Exercisable at December 31, 2014 | 260,150 | $ | 1.99 | 4.4 years | - | |||||||||
Schedule of significant assumptions used to compute the share-based compensation expense for stock options | The following shows the significant assumptions used to compute the share-based compensation expense for stock options and non-derivative warrants (see Note 6) granted during the year ended December 31, 2014: | |||||||||||||
Volatility | 65% | |||||||||||||
Expected term | 2-5 years | |||||||||||||
Risk-free interest rate | 1.53% | |||||||||||||
Expected dividend yield | 0% |
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Income Tax Disclosure [Abstract] | |||||||||
Schedule of components of income tax expense | Loss from continuing operations before provision (benefit) for income taxes is summarized in the following table. | ||||||||
2014 | 2013 | ||||||||
Domestic | $ | (1,234,293 | ) | $ | (408,094 | ) | |||
Foreign | (841,199 | ) | - | ||||||
$ | (2,075,492 | ) | $ | (408,094 | ) | ||||
The income tax provision (benefit) is summarized in the following table. | |||||||||
2014 | 2013 | ||||||||
Current: | |||||||||
Federal | $ | - | $ | - | |||||
State | 2,094 | 2,200 | |||||||
Foreign | - | - | |||||||
Total current | 2,094 | 2,200 | |||||||
Deferred: | |||||||||
Federal | (390,726 | ) | (128,472 | ) | |||||
State | (1,777 | ) | (15,983 | ) | |||||
Foreign | (134,000 | ) | - | ||||||
Total deferred | (526,503 | ) | (144,455 | ) | |||||
Less increase in allowance | 451,503 | 144,455 | |||||||
Net deferred | (75,000 | ) | - | ||||||
Total income tax provision (benefit) | $ | (72,906 | ) | $ | 2,200 | ||||
Schedule of deferred tax assets | The significant components of the deferred tax assets and liabilities are summarized below. | ||||||||
2014 | 2013 | ||||||||
Deferred tax assets (liabilities): | |||||||||
Net operating loss carryforwards | $ | 1,055,408 | $ | 499,696 | |||||
Depreciable and amortizable assets | (8,252 | ) | - | ||||||
Prepaid expense | (253 | ) | (888 | ) | |||||
Intangible asset | (174,003 | ) | - | ||||||
Stock based compensation | 38,617 | 15,769 | |||||||
Beneficial conversion feature | (13,309 | ) | (8,623 | ) | |||||
Loss reserve | 3,239 | - | |||||||
Accrued compensation | 86,194 | 54,519 | |||||||
Other | (4,564 | ) | - | ||||||
Total | 983,077 | 560,473 | |||||||
Less valuation allowance | (983,077 | ) | (560,473 | ) | |||||
Net deferred assets (liabilities) | $ | - | $ | - | |||||
Schedule of income tax rate reconciliation | A reconciliation of the income tax provision using the statutory U.S. income tax rate compared with the actual income tax provision reported on the consolidated statements of operations is summarized in the following table. | ||||||||
2014 | 2013 | ||||||||
Statutory United States federal rate | 34 | % | 34 | % | |||||
United States federal tax on foreign branch operations | 7.54 | - | |||||||
State income tax, net of federal benefit | 3.95 | 2.2 | |||||||
Other foreign income tax, net of federal benefit | 3.99 | - | |||||||
Change in valuation reserves | (21.75 | ) | (36.20 | ) | |||||
Permanent differences | (4.80 | ) | (0.600 | ) | |||||
Tax rate differential between jurisdictions | (16.76 | ) | - | ||||||
State income tax law changes | (2.66 | ) | - | ||||||
Effective tax rate benefit (provision) | 3.51 | % | (0.60 | ) % |
DISCONTINUED_OPERATIONS_Tables
DISCONTINUED OPERATIONS (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Discontinued Operations and Disposal Groups [Abstract] | |||||
Schedule of gain from the sale of discontinued operation | The following table presents information regarding calculation of gain from the sale of LegalStore.com: | ||||
Net cash proceeds after brokerage fee of $21,000 | $ | 74,000 | |||
LegalStore.com liabilities assumed | 136,241 | ||||
Total purchase price | 210,241 | ||||
LegalStore.com assets | 206,402 | ||||
Gain on sale | $ | 3,839 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and Contingencies Disclosure [Abstract] | |||||
Schedule of minimum future rental payments | The following schedule provides minimum future rental payments required as of December 31, 2014, under capital leases which have a remaining non-cancelable lease term in excess of one year: | ||||
2015 | $ | 204,533 | |||
2016 | 126,822 | ||||
2017 | 25,831 | ||||
Total minimum lease payments | 357,186 | ||||
Guaranteed residual value | 206,833 | ||||
564,019 | |||||
Less: amount represented by interest | (123,322 | ) | |||
Present value of minimum lease payments and guaranteed residual value | 440,687 | ||||
Less: current portion of capital lease obligations | (116,000 | ) | |||
Long term capital lease obligations and guaranteed residual value | 324,687 | ||||
Less: unamortized debt discount on capital leases | (43,728 | ) | |||
Long term capital lease obligation and guaranteed residual value, net | $ | 280,959 |
NATURE_OF_BUSINESS_AND_SUMMARY2
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
N | |||
Net loss | ($2,002,586) | ($387,281) | |
Accumulated deficit | -3,776,848 | -1,774,262 | |
Total stockholders' deficiency | -934,305 | -329,087 | -591,557 |
Working capital deficit | 1,843,000 | ||
Reserve for spoilage and product losses | 7,500 | ||
Anti-dilutive shares excluded from calculation | 43,000,000 | 8,000,000 | |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | |
Number of electronic kiosks installed | 104 | ||
Reverse stock split date | Effective May 16, 2014 | ||
Reverse stock split conversion ratio | 0.005 | ||
Depreciation Expense | $68,000 | ||
Electronic kiosks and related equipment [Member] | Minimum [Member] | |||
Estimated useful lives | 5 years | ||
Electronic kiosks and related equipment [Member] | Maximum [Member] | |||
Estimated useful lives | 7 years | ||
ILLINOIS [Member] | |||
Number of electronic kiosks installed | 76 | ||
CALIFORNIA [Member] | |||
Number of electronic kiosks installed | 28 |
MERGER_WITH_UVEND_CANADA_INC_D
MERGER WITH U-VEND CANADA, INC. (Details Narrative) (USD $) | 12 Months Ended | 3 Months Ended | 0 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2015 | Jan. 07, 2014 | Apr. 07, 2015 | |
Common stock par value (in dollars per share) | $0.00 | $0.00 | |||
Number of shares issued to advisers in connection with acquisition | |||||
Liability for contingent consideration | $246,423 | ||||
Amortization expense | 86,799 | ||||
Effective income tax rate | 34.00% | 34.00% | |||
Subsequent Event [Member] | |||||
Number of shares issued to advisers in connection with acquisition | 70,000 | ||||
Contingent Consideration - Paul Neelin [Member] | |||||
Consolidated gross revenue target | 1,000,000 | ||||
Contingent Consideration - Paul Neelin [Member] | Subsequent Event [Member] | |||||
Number of additional common shares issuable after earn-out provisions based on targeted revenue | 2,261,425 | 1,130,712 | |||
Contingent Consideration - Diane Hope [Member] | |||||
Consolidated gross revenue target | 2,000,000 | ||||
Contingent Consideration - Diane Hope [Member] | Subsequent Event [Member] | |||||
Number of additional common shares issuable after earn-out provisions based on targeted revenue | 2,261,425 | 1,130,712 | |||
U-Vend Canada, Inc [Member] | |||||
Number of shares issued for acquisition | 3,500,000 | ||||
Common stock par value (in dollars per share) | $0.00 | ||||
Number of additional common shares issuable after earn-out provisions based on targeted revenue | 4,522,850 | ||||
Number of shares issued to advisers in connection with acquisition | 1,354,111 | ||||
Broker, advisory and professional fees | 264,000 | ||||
Description of acquired entity | U-Vend Canada is in the business of developing, marketing and distributing self-serve electronic kiosks throughout North America. U-Vend Canada has several market concentrations; Retail, Service and Mall/Airport Islands with a primary focus on Retail. U-Vend Canada seeks to place its kiosks in high-traffic host locations such as big box stores, restaurants, malls, airports, casinos, universities, and colleges. | ||||
Value of shares issued for acquisition | 490,000 | ||||
Liability for contingent consideration | 246,568 | ||||
Share price (in dollars per share) | $0.14 | ||||
Description of contingent consideration | The Agreement allows for an earn-out based on 2014 and 2015 gross revenue targets. In the event that consolidated gross revenue during the calendar year 2014 exceeds $1,000,000 then the Company shall issue to Paul Neelin and Diane Hope, allocated to them on an equal basis and no other U-Vend Canada shareholders, an additional 2,261,425 shares of common stock. In addition, in the event that consolidated gross revenue exceeds $2,000,000 during the calendar year 2015, the Company shall issue to Paul Neelin and Diane Hope, allocated to them on an equal basis and no other U-Vend Canada shareholders, an additional 2,261,425 shares of common stock. These conditional shares are issued solely to Paul Neelin and Diane Hope in order to restore their ownership of the total shares issued for consideration to their approximate pre-merger ownership in U-Vend Canada. In the event that consolidated gross revenue equals not less than 80% nor more than 99% of the $1,000,000 and $2,000,000 gross amounts described above, then the Company shall issue to Paul Neelin and Diane Hope and no other U-Vend Canada shareholders, allocated to them on an equal basis, additional shares of common stock computed by determining the percentage of gross revenue achieved relative to the target revenues described above. Any shortfall or overage of shares measured in 2014 can be combined to the actual revenue earned in 2015 to earn the maximum shares in the earn-out provision. The issuance of the earn-out shares is conditional on U-Vend, Inc. providing access to a minimum level of financing needed to achieve the earn-out gross revenues. In the event that the gross revenue targets are not obtained and the minimum level of financing was not provided during the respective period, then at the end of each period Paul Neelin and Diane Hope shall receive the additional shares described above. | ||||
Amortization expense | $86,800 | ||||
U-Vend Canada, Inc [Member] | Mr. Raymond Meyers [Member] | |||||
Number of shares issued to advisers in connection with acquisition | 389,520 |
MERGER_WITH_UVEND_CANADA_INC_D1
MERGER WITH U-VEND CANADA, INC. (Details) (U-Vend Canada, Inc [Member], USD $) | 0 Months Ended |
Jan. 07, 2014 | |
U-Vend Canada, Inc [Member] | |
Consideration: | |
Fair value of 3,500,000 shares of IMS common stock issued at $0.14 on January 7, 2014 | $490,000 |
Fair value of 4,522,850 shares of IMS common stock measured at $0.14, discounted for the probability of achievement | 246,568 |
Gross total estimated purchase price | 736,568 |
Discount for restrictions | -103,118 |
Effective settlement of intercompany payable due to U-Vend, Inc. | 174,899 |
Total estimated purchase price | $808,349 |
MERGER_WITH_UVEND_CANADA_INC_D2
MERGER WITH U-VEND CANADA, INC. (Details 1) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Jan. 07, 2014 |
Allocation of Purchase Price | |||
Goodwill | $642,340 | ||
U-Vend Canada, Inc [Member] | |||
Allocation of Purchase Price | |||
Cash | 11,132 | ||
Inventory | 15,253 | ||
Prepaid expense | 350 | ||
Property and equipment | 232,835 | ||
Security deposits | 6,631 | ||
Intangible assets- Operating Agreement | 434,000 | ||
Goodwill | 642,340 | ||
Accounts payable and accrued expenses | -135,634 | ||
Notes payable | -170,517 | ||
Capital lease obligations | -153,041 | ||
Deferred tax liability | -75,000 | ||
Total purchase price | $808,349 |
MERGER_WITH_UVEND_CANADA_INC_D3
MERGER WITH U-VEND CANADA, INC. (Details 2) (U-Vend Canada, Inc [Member], USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
U-Vend Canada, Inc [Member] | ||
Unaudited Pro Forma Results | ||
Revenue | $268,804 | $14,300 |
Gross profit | 90,965 | 2,600 |
Net loss | ($2,002,586) | ($563,100) |
Fully diluted loss per share (in dollars per share) | ($0.23) | ($0.07) |
SENIOR_CONVERTIBLE_NOTES_Detai
SENIOR CONVERTIBLE NOTES (Details Narrative) (USD $) | 0 Months Ended | 12 Months Ended | |||
Oct. 17, 2013 | Aug. 21, 2013 | Jun. 18, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
N | N | N | N | ||
Unamortized debt discount | $17,315 | ||||
Carrying value of Senior Notes | 319,014 | 56,249 | |||
Amortization of financing costs | 61,369 | 7,167 | |||
Senior Convertible Note Payable [Member] | |||||
Total debt financing available | 400,000 | ||||
Debt price - Conversion option | $0.20 | $0.20 | $0.20 | $0.05 | |
Number of shares convertible into | 750,000 | 750,000 | 750,000 | 3,000,000 | |
Minimum adjusted conversion price | $0.03 | ||||
Number of common stock warrants issued | 18,750,000 | 5,250,000 | |||
Face amount of debt | 377,500 | ||||
Unamortized debt discount | 58,486 | ||||
Carrying value of Senior Notes | 319,014 | 56,249 | |||
Debt discount amortized in the period | 385,000 | 56,000 | |||
Two Senior Convertible Note Payable [Member] | |||||
Face amount of debt | 30,000 | ||||
Registration right agreement, monthly penalty | 1.00% | ||||
Registration right agreement, penalty amount | 14,234 | ||||
Maximum number of common shares percentage | 4.99% | ||||
Warrants granted fair value | 303,648 | ||||
Class A Warrants [Member] | Senior Convertible Note Payable [Member] | |||||
Number of common stock warrants issued | 1,125,000 | 1,125,000 | 1,125,000 | 4,500,000 | |
Exercise price of warrants | $0.20 | $0.20 | $0.20 | $0.05 | |
Warrant expiration period | 15 months | 15 months | 15 months | 24 months | |
Debt interest rate (in percent) | 7.00% | ||||
Face amount of debt | 400,000 | ||||
Maturity date of debt | 2-Dec-17 | ||||
Class B Warrants [Member] | Senior Convertible Note Payable [Member] | |||||
Number of common stock warrants issued | 1,125,000 | 1,125,000 | 1,125,000 | 4,500,000 | |
Exercise price of warrants | $0.24 | $0.24 | $0.24 | $0.06 | |
Warrant expiration period | 5 years | 5 years | 5 years | 5 years | |
Subordinated Convertible Debt [Member] | |||||
Deferred financing costs | $50,000 |
CONVERTIBLE_NOTES_PAYABLE_AND_1
CONVERTIBLE NOTES PAYABLE AND PROMISSORY NOTES PAYABLE (Details Narrative) (USD $) | 12 Months Ended | 0 Months Ended | 3 Months Ended | ||||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 30, 2014 | Dec. 19, 2014 | Jan. 07, 2014 | Mar. 31, 2014 | Dec. 31, 2014 | Sep. 30, 2014 | Oct. 23, 2014 | |
N | N | ||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument discount | $17,315 | 17,315 | |||||||
Debt instrument beneficial conversion | 399,062 | 200,000 | |||||||
Unrealized gain on foreign currency | 18,461 | ||||||||
10% Subordinated Convertible Promissory Notes [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Number of notes issued | 4 | ||||||||
Debt instrument conversion common stock per share | $0.30 | 0.3 | |||||||
Debt instrument discount | 22,277 | 22,277 | |||||||
Proceeds from issuance of debt | 46,592 | ||||||||
Debt instrument beneficial conversion | 42,111 | ||||||||
Long term debt | 118,723 | 118,723 | |||||||
Long term debt fair value | 3,874 | 3,874 | |||||||
Description of conversion feature | The lenders agreed to restrict their ability to convert the subordinated convertible note and receive shares of the Company if the number of shares of common stock beneficially held by the lenders and its affiliates in the aggregate after such conversion exceeds 4.99% of the then outstanding shares of common stock. However, this limitation does not preclude the lenders from converting notes payable into common stock after selling shares owned into the market. The Company has provided for piggy-back registration rights on any registration statement covering 110% of the maximum number of shares underlying these notes and warrants. The subordinated convertible promissory notes are secured by substantially all assets of the Company with the exception of lease equipment obligations. | ||||||||
10% Subordinated Convertible Promissory Notes [Member] | Warrant [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Warrant granted | 243,334 | 243,334 | |||||||
Warrant exercise price | $0.35 | 0.35 | |||||||
Warrant expiration period | 5 years | ||||||||
Warrant liablilty | 4,481 | 4,481 | |||||||
10% First Subordinated Convertible Promissory Notes [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument face amount | 75,000 | 75,000 | |||||||
Maturity date | 25-Aug-15 | ||||||||
10% Second Subordinated Convertible Promissory Notes [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument face amount | 50,000 | 50,000 | |||||||
Maturity date | 13-Aug-15 | ||||||||
10% Third Subordinated Convertible Promissory Notes [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument face amount | 10,000 | 10,000 | |||||||
Maturity date | 30-Oct-15 | ||||||||
10% Fourth Subordinated Convertible Promissory Notes [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument face amount | 11,000 | 11,000 | |||||||
Maturity date | 12-Dec-15 | ||||||||
8% Convertible Note (Securities Purchase Agreement with KBM Worldwide Inc) [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument face amount | 54,000 | ||||||||
Maturity date | 23-Sep-15 | ||||||||
Proceeds from issuance of debt | 50,000 | ||||||||
Description of conversion feature | KBM has the right to convert the principal amount of $54,000 after 180 days following the date of the Note and ending on the complete satisfaction by payment or conversion.B B The conversion price for the Note shall be determined based on 58% of the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period ending one trading day prior to the date of conversion.B B KBM agreed to restrict its ability to convert the Note and receive shares of the Company if the number of shares of common stock beneficially held by KBM and its affiliates in the aggregate after such conversion exceeds 4.99% of the then outstanding shares of common stock. In the Event of Default the Note is immediately due and payable.B B The minimum amount due under the default conditions is 150% times the principal and unpaid interest at the date of default.B B The Note contains default events which, if triggered and not timely cured (if curable), will result in a default interest rate of 22% per annum.B B KBM may request the payment in shares. | ||||||||
Debt instrument, fee amount | 4,000 | ||||||||
Common stock reserved for future issuance | 2,500,000 | ||||||||
Description of restrictive covenants | Penalty prepayments ranging from 15 - 40% of the principal amount if the Note is repaid from 30 to 180 days following the issuance date of the Note. | ||||||||
Increase decrease fair value loss | 22,600 | ||||||||
Total fair value | 75,600 | ||||||||
U-Vend Canada Convertible Notes [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Number of notes issued | 2 | ||||||||
Debt instrument conversion common stock per share | $1 | 1 | |||||||
Long term debt | 108,750 | 108,750 | |||||||
Long term debt fair value | 148,438 | ||||||||
Description of conversion feature | The note holders have the option of debt conversion at the lesser of 80% of the market price of the CompanyBs common stock on the date of maturity. | ||||||||
Description of maturity date | Maturity on July 26, 2014 and September 14, 2014. | ||||||||
Gain on sale of debt investments | 23,438 | ||||||||
Unrealized gain on foreign currency | 18,461 | ||||||||
17% unsecured promissory note (former employee of U-Vend Canada) [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument face amount | 10,512 | ||||||||
Long term debt | 6,232 | 6,232 | |||||||
Maturity period | 3 years | ||||||||
10% promissory note [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Maturity period | 12 months | ||||||||
15% 24 Month Equipment Financing Agreement (Perkin Industries, LLC) [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument face amount | 250,000 | ||||||||
Debt instrument discount | 2,471 | 2,471 | |||||||
Payment terms | The agreement includes a put/call option that allows the Lender to put 50% of the equipment back or the Company to call for $125,000 at the end of year one. If the year one put and/or call is exercised, the monthly interest-only payment under the agreement is reduced by 50%. At the end of year two, the Lender shall have the option to put the remaining 50% of the equipment back to the Company or the Company to call for $125,000. If the year one put /or call is not exercised by either party, the Lender shall be permitted to put 100% of the equipment back to the Company for $250,000. | ||||||||
15% 24 Month Equipment Financing Agreement (Perkin Industries, LLC) [Member] | Warrant [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Warrant granted | 200,000 | 200,000 | |||||||
Warrant exercise price | $0.35 | 0.35 | |||||||
Warrant expiration period | 3 years | ||||||||
Promissory and Convertible Notes Payable - Director [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Number of notes issued | 2 | ||||||||
Debt instrument face amount | 100,000 | ||||||||
Debt instrument discount | 7,632 | 7,632 | |||||||
Debt instrument beneficial conversion | 50,000 | ||||||||
Number of shares issued upon conversion | 208,340 | 416,666 | |||||||
Accrued interest | $8,965 | 8,965 | |||||||
Promissory and Convertible Notes Payable - Director [Member] | Warrant [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Number of shares issued upon conversion | 312,500 |
REVOLVING_NOTE_FROM_RELATED_PA1
REVOLVING NOTE FROM RELATED PARTY (Details (Narrative) (USD $) | 12 Months Ended | 0 Months Ended | ||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 30, 2013 | Dec. 16, 2013 | Sep. 17, 2013 | Aug. 29, 2014 | |
Interest expense | $156,740 | $35,882 | ||||
Common shares converted, value | 595,150 | |||||
Accrued salary - officer | 380,442 | |||||
Chief Operating Officer [Member] | ||||||
Outstanding amount of promissory note | 45,257 | |||||
Promissory note expiration term | 4 years | |||||
Promissory note interest rate | 20.00% | |||||
Mr. Raymond Meyers [Member] | ||||||
Revolving credit agreement, maximum borrowing | 282,000 | |||||
Interest rate variable basis | one year LIBOR | |||||
Interest rate, variable rate basis spread | 6.00% | |||||
Effective interest rate | 6.60% | |||||
Credit agreement expiration | 30-Jun-14 | |||||
Repayment of line of credit | 86,591 | |||||
Common shares converted, value | $145,980 | $80,746 | $86,591 | |||
Number of common shares converted | 1,402,375 | 181,303 | ||||
Director [Member] | ||||||
Promissory note interest rate | 16.00% |
STOCKHOLDERS_DEFICIENCY_Detail
STOCKHOLDERS' DEFICIENCY (Details Narrative) (USD $) | 12 Months Ended | 0 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Oct. 17, 2013 | Aug. 21, 2013 | Jun. 18, 2013 | |
Senior Convertible Note Payable [Member] | |||||
Number of common stock warrants issued | 18,750,000 | 5,250,000 | |||
Senior Convertible Note Payable [Member] | Class A Warrants [Member] | |||||
Number of common stock warrants issued | 4,500,000 | 1,125,000 | 1,125,000 | 1,125,000 | |
Exercise price of warrants | 0.05 | $0.20 | $0.20 | $0.20 | |
Warrant expiration period | 24 months | 15 months | 15 months | 15 months | |
Senior Convertible Note Payable [Member] | Class B Warrants [Member] | |||||
Number of common stock warrants issued | 4,500,000 | 1,125,000 | 1,125,000 | 1,125,000 | |
Exercise price of warrants | 0.06 | $0.24 | $0.24 | $0.24 | |
Warrant expiration period | 5 years | 5 years | 5 years | 5 years | |
Equipment lease financing [Member] | |||||
Number of common stock warrants issued | 730,452 | 986,250 |
STOCKHOLDERS_DEFICIENCY_Detail1
STOCKHOLDERS' DEFICIENCY (Details) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Stockholders Deficiency Details | |
Fair value, Beginning | $214,609 |
Allocation of proceeds related to senior convertible notes as derivative liabilities due to "down round" provision | 285,269 |
Allocation of proceeds related to subordinated convertible notes and equipment financing obligation as derivative liabilities due to "down round" provision | 6,951 |
Extinguishment of June 18, 2013, August 21, 2013 and October 17, 2013 senior convertible notes | -87,921 |
Warrants classified as derivative liabilities due to inadequate shares authorized to accommodate the exercise of all outstanding equity instruments | 43,108 |
Adjustment of warrants classified as derivative liabilities to additional paid-in capital as a result adequate shares authorized due to reverse stock split on May 16, 2014 | -52,833 |
Unrealized gain on fair market value adjustment | -99,190 |
Fair value, End | $309,993 |
STOCKHOLDERS_DEFICIENCY_Detail2
STOCKHOLDERS' DEFICIENCY (Details 1) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Warrants | 30,737,935 | 6,249,583 |
2011 Private Placement Warrants [Member] | ||
Warrants | 12,500 | |
Exercise Price | $60 | |
Expiration | 18-Mar | |
2012 Private Placement Warrants [Member] | ||
Warrants | 750 | 750 |
Exercise Price | $30 | $30 |
Expiration | 15-Apr | March-April 2015 |
2013 Series A Warrants Senior Convertible Notes [Member] | ||
Warrants | 6,000,000 | |
Exercise Price | $0.05 | |
Expiration | June 2016-December 2016 | |
2013 Series B Warrants Senior Convertible Notes [Member] | ||
Warrants | 6,000,000 | |
Exercise Price | $0.06 | |
Expiration | June 2018-December 2018 | |
2013 Issued With Lease Obligation [Member] | ||
Warrants | 986,250 | 986,250 |
Exercise Price | $0.12 | $0.12 |
Expiration | 16-Oct | 16-Nov |
2014 Acquired In U-Vend Canada Merger [Member] | ||
Warrants | 1,142,336 | |
Exercise Price | $0.24 | |
Expiration | September 2015-January 2016 | |
2014 Series A Warrants Senior Convertible Notes [Member] | ||
Warrants | 6,000,000 | |
Exercise Price | $0.05 | |
Expiration | January 2017-November 2017 | |
2014 Series B Warrants Senior Convertible Notes [Member] | ||
Warrants | 6,000,000 | |
Exercise Price | $0.06 | |
Expiration | January 2019-November 2019 | |
2014 Warrants For Services [Member] | ||
Warrants | 18,480 | |
Exercise Price | $0.01 | |
Expiration | 16-Jan | |
2014 Warrants For Services [Member] | ||
Warrants | 420,000 | |
Exercise Price | $0.35 | |
Expiration | August 2019-December 2019 | |
2014 Warrants For Services [Member] | ||
Warrants | 35,000 | |
Exercise Price | $0.24 | |
Expiration | 16-Jan | |
2014 Warrants For Services [Member] | ||
Warrants | 994,000 | |
Exercise Price | $0.05 | |
Expiration | June 2015-December 2015 | |
2014 Warrants For Services [Member] | ||
Warrants | 1,184,000 | |
Exercise Price | $0.06 | |
Expiration | June 2018-December 2018 | |
2014 Issued To Director For Debt [Member] | ||
Warrants | 729,166 | |
Exercise Price | $0.24 | |
Expiration | November 2016-July 2017 | |
2014 Issued With Convertible Debt [Member] | ||
Warrants | 243,334 | |
Exercise Price | $0.35 | |
Expiration | August 2019-December 2019 | |
2014 Issued With Equipment Financing Obligation [Member] | ||
Warrants | 200,000 | |
Exercise Price | $0.35 | |
Expiration | 17-Oct | |
2014 Issued With Lease Obligation [Member] | ||
Warrants | 246,563 | |
Exercise Price | $0.20 | |
Expiration | 17-Mar | |
2014 Issued With Lease Obligation [Member] | ||
Warrants | 483,889 | |
Exercise Price | $0.24 | |
Expiration | 16-May | |
2014 Issued With Promissory Note [Member] | ||
Warrants | 41,667 | |
Exercise Price | $0.18 | |
Expiration | 17-May | |
2011 Issued With Convertible Notes [Member] | ||
Warrants | 83 | |
Exercise Price | $60 | |
Expiration | 14-Jun | |
2011 Common Share Private Placement Warrants [Member] | ||
Warrants | 12,500 | |
Exercise Price | $60 | |
Expiration | 18-Mar | |
2013 Series A Senior Convertible Notes [Member] | ||
Warrants | 1,125,000 | |
Exercise Price | $0.05 | |
Expiration | October-November 2014 | |
2013 Series A Senior Convertible Notes [Member] | ||
Warrants | 1,500,000 | |
Exercise Price | $0.24 | |
Expiration | January 2014-March 2015 | |
2013 Series B Senior Convertible Notes [Member] | ||
Warrants | 1,125,000 | |
Exercise Price | $0.06 | |
Expiration | June-August 2018 | |
2013 Series B Senior Convertible Notes [Member] | ||
Warrants | 1,500,000 | |
Exercise Price | $1.20 | |
Expiration | October- November 2018 |
EQUITY_INCENTIVE_PLAN_Details_
EQUITY INCENTIVE PLAN (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Shares available under stock option plan | 5,000,000 | |
Vesting period under stock option plan | 3 years | |
Method used | Black-Scholes option-pricing model | |
Total fair value of options | $89,200 | $23,400 |
Unrecognized compensation cost | $32,000 | |
Weighted average period for non-vested options | 4 years 8 months 12 days | |
Stock compensation expense | $144,613 | $23,496 |
Minimum [Member] | ||
Expiration period of stock options | 5 years | |
Maximum [Member] | ||
Expiration period of stock options | 10 years |
EQUITY_INCENTIVE_PLAN_Details
EQUITY INCENTIVE PLAN (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Equity Incentive Plan Details | ||
Outstanding, beginning - Options | 13,300 | |
Options granted - Options | 350,000 | |
Options cancelled - Options | -3,150 | |
Outstanding, ending - Options | 360,150 | 13,300 |
Exercisable, ending - Options | 260,150 | |
Outstanding, beginning - Weighted Average Exercise Price | $58 | $0.29 |
Options granted - Weighted Average Exercise Price | $0.30 | |
Options cancelled - Weighted Average Exercise Price | $60 | |
Outstanding, ending - Weighted Average Exercise Price | $1.99 | $58 |
Exercisable, ending - Weighted Average Exercise Price | $1.99 | |
Outstanding, ending - Weighted Average Contractual life | 4 years 5 months 12 days | 5 years 8 months 12 days |
Exercisable, ending -Weighted Average Contractual life | 4 years 4 months 12 days | |
Outstanding, ending - Aggregate Intrinsic Value | ||
Exercisable, ending - Aggregate Intrinsic Value |
INCOME_TAXES_Details_Narrative
INCOME TAXES (Details Narrative) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Income Taxes Details Narrative | |
NOL available for future taxable income | $1,308,000 |
Operating loss carryforwards expiry year | 2030 |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Current: | ||
Federal | ||
State | 2,094 | 2,200 |
Total current | 2,094 | 2,200 |
Deferred | ||
Federal | -390,726 | -128,472 |
State | -1,777 | -15,983 |
Foreign | -134,000 | |
Total deferred | -526,503 | -144,455 |
Less increase in allowance | 451,503 | 144,455 |
Net deferred | -75,000 | |
Total income tax provision | $72,906 | ($2,200) |
INCOME_TAXES_Details_1
INCOME TAXES (Details 1) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Deferred tax assets (liabilities): | ||
Net operating loss carryforwards | $499,696 | |
Depreciable and amortizable assets | ||
Prepaid expense | -888 | |
Fair market value adjustments | ||
Stock based compensation | 15,769 | |
Beneficial conversion feature | -8,623 | |
Accrued salary | 54,519 | |
Total | 560,473 | |
Less valuation allowance | -560,473 | |
Net deferred tax (liabilities) |
INCOME_TAXES_Details_2
INCOME TAXES (Details 2) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Taxes Details 2 | ||
Statutory United States Federal rate | 34.00% | 34.00% |
State income taxes net of federal benefit | 3.95% | 2.20% |
Other foreign income tax, net of federal benefit | 3.99% | |
Change in valuation reserves | -21.75% | -36.20% |
Permanent differences | 4.80% | -0.60% |
Tax rate differential between juristictions | -16.76% | |
State income tax law changes | -2.66% | |
Effective tax rate (provision) | 3.51% | -60.00% |
DISCONTINUED_OPERATIONS_Detail
DISCONTINUED OPERATIONS (Details Narrative) (LegalStore.com [Member], USD $) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | |
LegalStore.com [Member] | |||
Gross proceeds from discontinued operations | $95,000 | ||
Impairment charge on discontinued operations | 35,000 | ||
Brokerage fee | $21,000 |
DISCONTINUED_OPERATIONS_Detail1
DISCONTINUED OPERATIONS (Details) (LegalStore.com [Member], USD $) | 9 Months Ended |
Sep. 30, 2013 | |
LegalStore.com [Member] | |
Calculation of gain from sale of LegalStore.com: | |
Net cash proceeds after brokerage fee | $74,000 |
LegalStore.com liabilities assumed | 136,241 |
Total purchase price | 210,241 |
LegalStore.com assets | 206,402 |
Gain on sale | $3,839 |
COMMITMENTS_AND_CONTINGENCIES_1
COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $) | 0 Months Ended | 12 Months Ended | ||||
Jan. 07, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Oct. 31, 2014 | Mar. 31, 2014 | 31-May-14 | |
Capital lease | $280,959 | |||||
Unamortized debt discount | 17,315 | |||||
U-Vend Canada, Inc [Member] | Equipment Held Under Capital Leases [Member] | ||||||
Capital lease | 1,000,000 | |||||
Acquired leased equipment capital lease | 465,500 | |||||
Capital lease gross | 465,500 | |||||
Accumulated depreciation | 55,406 | |||||
Depreciation expenses | 67,703 | |||||
U-Vend Canada, Inc [Member] | Equipment Held Under Capital Leases [Member] | First Common Stock Warrants [Member] | ||||||
Warrant granted | 986,250 | |||||
Warrant exercise price | $0.12 | |||||
U-Vend Canada, Inc [Member] | Equipment Held Under Capital Leases [Member] | Second Common Stock Warrants [Member] | ||||||
Warrant granted | 246,563 | |||||
Warrant exercise price | $0.20 | |||||
U-Vend Canada, Inc [Member] | Equipment Held Under Capital Leases [Member] | Third Common Stock Warrants [Member] | ||||||
Warrant granted | 483,889 | |||||
Warrant exercise price | $0.24 | |||||
U-Vend Canada, Inc [Member] | Equipment Held Under Capital Leases [Member] | Common Stock Warrants [Member] | ||||||
Warrant expiration period | 3 years | |||||
Unamortized debt discount | 68,190 | |||||
Description of conversion feature | Covering the registration of 110% of common stock underlying the Warrants. The Company was required to file a registration statement within 45 days after completion of the acquisition of U-Vend Canada and meet an effectiveness deadline of 90 days after the closing date of the acquisition, 120 days if the Securities and Exchange Commission provides comment. The Company met the filing and effectiveness criteria, as extended by the Lessor on April 2014, on November 21, 2014 which resulted in a penalty of $7,922 recorded by the Company at December 31, 2014. | |||||
Warehouse lease [Member] | ILLINOIS [Member] | ||||||
Number of operating lease acquired | 2 | |||||
Lease term | 65 months | |||||
Monthly lease rent | 1,875 | |||||
Warehouse lease [Member] | CALIFORNIA [Member] | ||||||
Number of operating lease acquired | 1 | |||||
Lease term | 12 months | |||||
Monthly lease rent | 2,464 | |||||
Percentage of common area operating charges | 27.00% | |||||
Vehicle lease [Member] | ILLINOIS [Member] | ||||||
Number of operating lease acquired | 1 | |||||
Lease term | 48 months | |||||
Monthly lease rent | $670 |
COMMITMENTS_AND_CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Commitments And Contingencies Details | ||
2015 | $204,533 | |
2016 | 126,822 | |
2017 | 25,831 | |
Total minimum lease payments | 357,186 | |
Guaranteed residual value | 206,833 | |
Net minimum lease payments | 564,019 | |
Less: amount represented by interest | -123,332 | |
Present value of minimum lease payments and guaranteed residual value | 440,687 | |
Less: current portion of capital lease obligations | -116,000 | |
Long term capital lease obligations and guaranteed residual value | 324,687 | |
Less: unamortized debt discount on capital leases | -43,728 | |
Long term capital lease obligation and guaranteed residual value, net | $280,959 |
SUBSEQUENT_EVENTS_Details_Narr
SUBSEQUENT EVENTS (Details Narrative) (USD $) | 12 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | |||||||||
Dec. 31, 2014 | Dec. 31, 2013 | Oct. 17, 2013 | Aug. 21, 2013 | Jun. 18, 2013 | Mar. 31, 2015 | Jan. 28, 2015 | Feb. 28, 2015 | Mar. 23, 2015 | Feb. 03, 2015 | Mar. 06, 2015 | Oct. 23, 2014 | Apr. 07, 2015 | |
N | N | N | N | N | N | N | |||||||
Subsequent Event [Line Items] | |||||||||||||
Number of shares issued for services | |||||||||||||
Debt instrument beneficial conversion | $399,062 | $200,000 | |||||||||||
15% 24 Month Equipment Financing Agreement (Perkin Industries, LLC) [Member] | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Debt instrument face amount | 250,000 | ||||||||||||
Payment terms | The agreement includes a put/call option that allows the Lender to put 50% of the equipment back or the Company to call for $125,000 at the end of year one. If the year one put and/or call is exercised, the monthly interest-only payment under the agreement is reduced by 50%. At the end of year two, the Lender shall have the option to put the remaining 50% of the equipment back to the Company or the Company to call for $125,000. If the year one put /or call is not exercised by either party, the Lender shall be permitted to put 100% of the equipment back to the Company for $250,000. | ||||||||||||
15% 24 Month Equipment Financing Agreement (Perkin Industries, LLC) [Member] | Warrant [Member] | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Warrant granted | 200,000 | ||||||||||||
Warrant exercise price | $0.35 | ||||||||||||
Warrant expiration period | 3 years | ||||||||||||
Senior Convertible Note Payable [Member] | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Debt instrument face amount | 377,500 | ||||||||||||
Debt instrument conversion common stock per share | $0.05 | $0.20 | $0.20 | $0.20 | |||||||||
Number of shares issued upon conversion | 3,000,000 | 750,000 | 750,000 | 750,000 | |||||||||
Subsequent Event [Member] | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Number of shares issued for services | 70,000 | ||||||||||||
Subsequent Event [Member] | Contingent Consideration - Paul Neelin [Member] | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Number of additional common shares issuable after earn-out provisions based on targeted revenue | 2,261,425 | 1,130,712 | |||||||||||
Subsequent Event [Member] | Contingent Consideration - Diane Hope [Member] | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Number of additional common shares issuable after earn-out provisions based on targeted revenue | 2,261,425 | 1,130,712 | |||||||||||
Subsequent Event [Member] | Minimum [Member] | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Share price | 0.16 | ||||||||||||
Subsequent Event [Member] | Maximum [Member] | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Share price | 0.18 | ||||||||||||
Subsequent Event [Member] | 10% subordinated convertible promissory notes [Member] | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Number of notes issued | 2 | ||||||||||||
Debt instrument face amount | 70,000 | ||||||||||||
Description of maturity date | first quarter of 2016 | ||||||||||||
Debt instrument conversion common stock per share | $0.30 | ||||||||||||
Subsequent Event [Member] | 10% subordinated convertible promissory notes [Member] | Warrant [Member] | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Warrant granted | 116,667 | ||||||||||||
Warrant exercise price | $0.35 | ||||||||||||
Warrant expiration period | 5 years | ||||||||||||
Description of conversion feature | The debt conversion price on the subordinated convertible notes are subject to certain anti-dilution protection; for example, if the Company issues shares for a consideration less than the applicable conversion price, the conversion price is reduced to such amount. The lenders agreed to restrict their ability to convert the subordinated convertible note and receive shares of the Company if the number of shares of common stock beneficially held by the lender and its affiliates in the aggregate after such conversion exceeds 4.99% of the then outstanding shares of common stock. However, this limitation does not preclude the lender from converting notes payable into common stock after selling shares owned into the market. The Company has provided for piggy-back registration rights on any registration statement covering 110% of the maximum number of shares underlying these notes and warrants. | ||||||||||||
Subsequent Event [Member] | 15% 24 Month Equipment Financing Agreement (Perkin Industries, LLC) [Member] | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Debt instrument face amount | 65,750 | ||||||||||||
Payment terms | The agreement includes a put/call option that allows the Lender at the end of year one to put 50% of the equipment back to the Company or the Company to call for $32,875. If the year one put and/or call is exercised, the monthly interest-only payment under the agreement is reduced by 50%.B B At the end of year two, the Lender shall have the option to put the remaining 50% of the equipment back to the Company or the Company to put for $32,875. If the year one put /or call is not exercised by either party, the Lender shall be permitted to put 100% of the equipment back to the Company for $65,750.B B | ||||||||||||
Subsequent Event [Member] | 15% 24 Month Equipment Financing Agreement (Perkin Industries, LLC) [Member] | Warrant [Member] | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Warrant granted | 52,600 | ||||||||||||
Warrant exercise price | $0.35 | ||||||||||||
Warrant expiration period | 3 years | ||||||||||||
Subsequent Event [Member] | 10% promissory note [Member] | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Debt instrument face amount | 25,000 | ||||||||||||
Maturity date | 30-Jun-15 | ||||||||||||
Subsequent Event [Member] | Senior Convertible Note Payable [Member] | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Debt instrument conversion common stock per share | $0.05 | ||||||||||||
Debt instrument beneficial conversion | 5,000 | ||||||||||||
Number of shares issued upon conversion | 100,000 | ||||||||||||
Subsequent Event [Member] | Senior Convertible Note Payable [Member] | Series A Warrant [Member] | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Debt instrument conversion common stock per share | $0.05 | $0.05 | |||||||||||
Debt instrument beneficial conversion | 17,500 | 7,500 | |||||||||||
Number of shares issued upon conversion | 350,000 | 150,000 | |||||||||||
Subsequent Event [Member] | Automated Retail Leasing Partners [Member] | Warrant [Member] | |||||||||||||
Subsequent Event [Line Items] | |||||||||||||
Debt instrument conversion common stock per share | $0.12 | ||||||||||||
Debt instrument beneficial conversion | $15,000 | ||||||||||||
Number of shares issued upon conversion | 125,000 |