Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Apr. 21, 2016 | Jun. 30, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | U-Vend, Inc. | ||
Entity Central Index Key | 1,487,718 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
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 | $ 2,637,999 | ||
Entity Common Stock, Shares Outstanding | 18,198,816 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash | $ 139,677 | $ 73,396 |
Accounts Receivable | 3,807 | |
Inventory (net) | 46,979 | $ 28,732 |
Prepaid expenses and other assets | 79,548 | 130,081 |
Total current assets | 270,011 | 232,209 |
Noncurrent assets: | ||
Property and equipment (net) | 747,298 | 675,772 |
Security deposits | 16,018 | 7,171 |
Deferred financing costs (net) | 70,010 | 73,139 |
Intangible asset (net) | 260,401 | 347,201 |
Goodwill | 642,340 | 642,340 |
Total noncurrent assets | 1,736,067 | 1,745,623 |
Total assets | 2,006,078 | 1,977,832 |
Current liabilities: | ||
Accounts payable | 254,946 | 187,460 |
Accrued expenses | 156,484 | 124,676 |
Accrued interest | 121,080 | $ 90,797 |
NHL sponsorship liability | $ 316,997 | |
Contingent consideration | $ 226,866 | |
Registration rights liability | $ 22,156 | 22,156 |
Amounts due to officers | 624,307 | 380,442 |
Senior convertible notes, net of discount | 372,498 | 319,014 |
Promissory notes payable | 479,576 | 304,277 |
Convertible notes payable, net of discount | 744,807 | 303,074 |
Current capital lease obligation | 90,783 | 116,000 |
Total current liabilities | $ 3,183,634 | 2,074,762 |
Noncurrent liabilities: | ||
Contingent consideration | 246,423 | |
Capital lease obligation, net of discount | $ 207,703 | 280,959 |
Warrant liabilities | 310,960 | 309,993 |
Total noncurrent liabilities | 518,663 | 837,375 |
Total liabilities | $ 3,702,297 | $ 2,912,137 |
Commitments and contingencies (Note 12) | ||
Stockholders' deficiency | ||
Common stock, $.001 par value, 600,000,000 shares authorized, 18,148,816 shares issued and outstanding (10,151,390 - 2014) | $ 18,148 | $ 10,151 |
Additional paid-in capital | 4,113,055 | 2,832,392 |
Accumulated deficit | (5,827,422) | (3,776,848) |
Total stockholders' deficiency | (1,696,219) | (934,305) |
Total liabilities and stockholders' deficiency | $ 2,006,078 | $ 1,977,832 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 600,000,000 | 600,000,000 |
Common stock, shares issued | 18,148,816 | 10,151,390 |
Common stock, shares outstanding | 18,148,816 | 10,151,390 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | ||
Revenue | $ 891,227 | $ 268,804 |
Cost of revenue | 539,999 | 177,839 |
Gross profit | 351,228 | 90,965 |
Operating expenses: | ||
Selling | 876,415 | 414,148 |
General and administrative | 1,399,552 | $ 1,271,840 |
Accretion and reversal of earn-out liability | (201,013) | |
[OperatingExpenses] | 2,074,954 | $ 1,685,988 |
Operating loss | (1,723,726) | (1,595,023) |
Other (income) expense: | ||
Gain on the change in fair value of debt and warrant liabilities | (89,281) | (101,028) |
Amortization of debt discount and deferred financing costs | 202,247 | 535,328 |
Interest expense | $ 239,570 | 156,740 |
Gain on extinguishment of debt | (114,266) | |
Registration rights penalty | 22,156 | |
Unrealized gain on foreign currency | $ (29,158) | (18,461) |
[Other Expenses] | 323,378 | 480,469 |
Loss before income taxes | (2,047,104) | (2,075,492) |
Income tax (benefit) | 3,470 | (72,906) |
Net loss | $ (2,050,574) | $ (2,002,586) |
Net loss per share - basic and diluted (in dollars per share) | $ (.15) | $ (0.23) |
Weighted average common shares outstanding - basic and diluted (in shares) | 14,099,052 | 8,571,934 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - USD ($) | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Beginning balance at Dec. 31, 2013 | $ 2,446 | $ 1,442,729 | $ (1,774,262) | $ (329,087) |
Beginning balance, shares at Dec. 31, 2013 | 2,446,276 | |||
Stock-based compensation | $ 389 | 144,224 | 144,613 | |
Stock-based compensation, shares | 389,520 | |||
Shares issued for advisor fees | $ 1,354 | 188,221 | 189,575 | |
Shares issued for advisor fees, shares | 1,354,111 | |||
Shares issued in satisfaction of interest expense | $ 9 | 491 | 500 | |
Shares issued in satisfaction of interest expense, shares | 8,621 | |||
Shares issued for conversion and settlement of debt with director | $ 625 | 149,437 | 150,062 | |
Shares issued for conversion and settlement of debt with director, shares | 625,006 | |||
Shares issued for services | $ 232 | 56,118 | 56,350 | |
Shares issued for services, shares | 231,667 | |||
Common shares issued for lease obligation | $ 347 | 66,898 | 67,245 | |
Common shares issued for lease obligation, shares | 346,961 | |||
Shares issued on debt conversion | $ 450 | 22,050 | 22,500 | |
Shares issued on debt conversion, shares | 450,000 | |||
Shares issued on warrants exercised | $ 797 | 70,863 | 71,660 | |
Shares issued on warrants exercised, shares | 797,000 | |||
Debt discount related to beneficial conversion | 106,842 | 106,842 | ||
Warrant liability reclasses to equity upon reverse stock split-adequate authorized shares available | 52,833 | 52,833 | ||
Debt discount related to warrants granted with capital lease obligation | 21,947 | 21,947 | ||
Warrants granted for services | 181,841 | 181,841 | ||
Elimination of beneficial conversion feature with debt extinguishment | (90,000) | (90,000) | ||
Shares issued in acquisition | $ 3,500 | 417,900 | 421,400 | |
Shares issued in acquisition, shares | 3,500,000 | |||
Fractional shares issued in reverse stock split | $ 2 | (2) | ||
Fractional shares issued in reverse stock split, shares | 2,228 | |||
Net loss | (2,002,586) | (2,002,586) | ||
Ending balance at Dec. 31, 2014 | $ 10,151 | 2,832,392 | (3,776,848) | $ (934,305) |
Ending balance, shares at Dec. 31, 2014 | 10,151,390 | 10,151,390 | ||
Stock-based compensation | $ 500 | 257,404 | $ 257,904 | |
Stock-based compensation, shares | 500,000 | |||
Shares issued for services | $ 1,305 | 95,668 | 96,973 | |
Shares issued for services, shares | 1,305,000 | |||
Common shares issued for lease obligation | $ 1,247 | 245,532 | 246,779 | |
Common shares issued for lease obligation, shares | 1,247,177 | |||
Shares issued on debt conversion | $ 100 | 4,900 | 5,000 | |
Shares issued on debt conversion, shares | 100,000 | |||
Shares issued on warrants exercised | $ 925 | 57,609 | 58,534 | |
Shares issued on warrants exercised, shares | 925,000 | |||
Warrants granted for services | 69,695 | 69,695 | ||
Shares issued on earn out of contingent consideration | $ 2,261 | 270,014 | 272,275 | |
Shares issued on earn out of contingent consideration, shares | 2,261,425 | |||
Shares issued as fees for debt extension | $ 100 | 16,400 | 16,500 | |
Shares issued as fees for debt extension, shares | 100,000 | |||
Private sale of common shares with warrants | $ 1,559 | 263,441 | 265,000 | |
Private sale of common shares with warrants, shares | 1,558,824 | |||
Net loss | (2,050,574) | (2,050,574) | ||
Ending balance at Dec. 31, 2015 | $ 18,148 | $ 4,113,055 | $ (5,827,422) | $ (1,696,219) |
Ending balance, shares at Dec. 31, 2015 | 18,148,816 | 18,148,816 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | ||
Net loss | $ (2,050,574) | $ (2,002,586) |
Adjustments to reconcile net loss to net cash used by operating activities: | ||
Stock based compensation | 257,904 | 144,613 |
(Gain) loss on fair value of warrant liabilities | (83,881) | (99,190) |
Common shares issued for lease obligation | 42,269 | 17,658 |
Common shares and warrants issued for services | 156,973 | 290,832 |
Depreciation | 123,439 | 67,703 |
Amortization of intangible assets | 86,800 | 86,799 |
Amortization of debt discount and deferred financing costs | 202,247 | 535,328 |
Accretion and fair value adjustment of liability for contingent consideration | (201,013) | 261,241 |
Unrealized gain on foreign currency | $ (29,158) | (18,461) |
Benefit recognized on deferred taxes | (75,000) | |
Convertible notes payable fair value adjustment | $ (5,400) | (1,838) |
Conversion of accrued interest to common stock | 500 | |
Gain on extinguishment of debt | (114,266) | |
Increase in reserve for inventory | $ 7,500 | |
(Increase) decrease in assets: | ||
Accounts Receivable | $ (3,807) | |
Inventory | (18,247) | $ (5,599) |
Prepaid expenses and other assets | 45,760 | 4,779 |
Increase in liabilities: | ||
Accounts payable and accrued expenses | 475,244 | 109,927 |
Accrued interest | 125,186 | 87,363 |
Amounts due to officers | $ 243,865 | 178,176 |
Registration rights liability | 22,156 | |
Net cash used by operating activities | $ (632,393) | (502,365) |
Cash flows from investing activities: | ||
Purchase of property and equipment | $ (7,115) | (7,550) |
Acquisition of business | 11,132 | |
Net cash (used) provided by investing activities | $ (7,115) | 3,582 |
Cash flows from financing activities: | ||
Proceeds from common stock warrant exercises | $ 55,000 | 71,660 |
Proceeds from senior convertible notes, net of financing costs | 198,500 | |
Proceeds from convertible notes, net of financing costs | $ 469,900 | 191,687 |
Proceeds from promissory notes | 48,839 | $ 50,000 |
Pricnipal repayments of promissory notes | $ (12,750) | |
Proceeds from notes payable - director | $ 50,000 | |
Repayment of convertible note | $ (70,200) | |
Deferred financing costs paid | $ (50,000) | |
Net (repayments) from related party | $ (4,288) | |
Proceeds from private sale of common shares with warrants | $ 265,000 | |
Net cash provided by financing activities | 705,789 | $ 557,559 |
Net increase in cash | 66,281 | 58,776 |
Cash - beginning of period | 73,396 | 14,620 |
Cash - end of period | 139,677 | 73,396 |
Cash paid for: | ||
Income taxes | 3,700 | 2,100 |
Interest | $ 55,000 | 23,200 |
Non-cash investing and financing activities: | ||
Property and equipment financed with capital lease | $ 271,572 | |
Equipment acquired in exchange of warrant liability | $ 50,100 | |
Debt discount related to warrant liability and beneficial conversion feature | 10,792 | $ 399,062 |
Issuance of warrants offsetting accrued expenses | 60,000 | 57,807 |
Issuance of common stock to satisfy capital lease obligation | 204,533 | $ 49,586 |
Issuance of common shares to satisfy contingent consideration obligation | $ 272,275 | |
Acquisition of U-Vend Canada, Inc. for issuance of shares and effective settlement of inter-company | $ 808,349 | |
Settlement of notes payable director in common shares and warrants | $ 150,062 | |
Issuance of common stocks and warrants as debt financing cost | $ 44,972 | |
Reclassification of warrant liability to paid in capital - adequate authorized shares available | $ 52,833 | |
Conversion of senior convertible notes into common stock | $ 5,000 | 22,500 |
Financing cost in accrued expenses and additional paid-in capital | 111,495 | |
Issuance of common stock and warrants for services | 126,596 | |
Warrants issued for equipment leasing and debt with lessor | 21,947 | |
Equipment, inventory and coin financed with debt | $ 137,750 | $ 250,000 |
NATURE OF BUSINESS AND SUMMARY
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES U-Vend, Inc., 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 its 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. The Company’s 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. The Company’s approach to the market can include the addition of a digital LCD monitor to most makes and models in a kiosk program. This would allow the Company 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. The Company incurred a loss of $2,050,574 during the year ended December 31, 2015, has incurred accumulated losses totaling $5,827,422, and has a working capital deficit of $2,913,623 at December 31, 2015. These factors, among others, indicate that there is substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. To fund the Company’s operations for the next 12 months, to allow the Company to continue the development of its business plans and satisfy its obligations on a timely basis the Company needs to raise additional financing. 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 that the Company will be able to successfully restructure its debt obligations in the event it fails to obtain additional financing. On January 7, 2014, U-Vend, Inc. (formerly Internet Media Services, Inc. (“IMS”)) entered into an Exchange of Securities Agreement with U-Vend Canada, Inc., and the shareholders of U-Vend Canada, Inc. (“U-Vend Canada”) The Company believes the merger with U-Vend Canada will provide it with business operations and also working capital. The Company is in discussion to raise 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 of U-Vend, Inc. 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 Use of Estimates Inventory - Property and Equipment Long lived assets, Identifiable Intangible Assets and Goodwill 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 its evaluation of goodwill for impairment, if the Company concludes 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 the Company is unable to reach this conclusion, then the Company 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; the Company is required to perform a second step, as this is an indication that the reporting unit goodwill may be impaired. In this step, the Company compares 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 the Company’s 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 the Company’s planning assumptions are modified resulting in impairment to the Company’s assets, the associated expense would be included in the consolidated statements of operations, which could materially impact the Company’s 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 projected growth as well as current operations. If the Company’s business plans result in significant delays in implementation and sales of the Company’s products are not in alignment with its projections, a future impairment charge could result for a portion or all of the goodwill noted previously. Common Shares Issued and Earnings Per Share As of December 31, 2015, there were approximately 46 million (43 million at December 31, 2014) shares potentially issuable under convertible debt agreements, options, and warrants 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. 1 for 200 stock split and change in trading symbol effective May 16, 2014 - Preferred Stock Authorized - Fair Value of Financial Instruments - Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 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. Derivative Financial Instruments Share-Based Compensation Expense – Revenue Recognition Income Taxes 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, 2015 or 2014. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in tax expense. During the years ended December 31, 2015 and 2014, the Company recognized no interest and penalties. Reclassifications Accounting Pronouncements In May 2014, the FASB issued new accounting guidance on revenue from contracts with customers. The new guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods and services to customers. The updated guidance will replace most existing revenue recognition guidance in GAAP when it becomes effective. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The Company is currently evaluating the effect the updated standard will have on its consolidated financial statements and related disclosures. In April 2015, the FASB issued new accounting guidance on the presentation of debt issuance costs. The new guidance requires that debt issuance costs related to a note be presented as a direct deduction from that note. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. The Company is currently evaluating the effect the updated standard will have on its consolidated financial statements and related disclosures. In February 2016, the FASB issued an accounting standard update ASU 2016-02, “Leases”, which requires that lease arrangements longer than 12 months result in an entity recognizing an asset and liability. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. The Company has not yet evaluated nor has it determined the effect of the standard on its ongoing financial reporting. In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” The guidance requires an entity to evaluate whether there are conditions or events, in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued and to provide related footnote disclosures in certain circumstances. The guidance is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early application is permitted. The Company does not believe the adoption of this ASU will have a significant impact on its consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes”, which simplifies the presentation of deferred income taxes by requiring deferred tax assets and liabilities be classified as noncurrent on the balance sheet. The guidance becomes effective for annual reporting periods beginning after December 15, 2016, with early adoption permitted. The Company applied this guidance to its current fiscal years ending December 31, 2015 and 2014. The adoption of this guidance had no material impact on the results of operations or financial position. Certain prior year deferred tax assets or liabilities have been reclassified to conform with the current year presentation. |
MERGER WITH U-VEND CANADA, INC.
MERGER WITH U-VEND CANADA, INC. | 12 Months Ended |
Dec. 31, 2015 | |
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 were granted the right 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 connection with this agreement, 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 of the aforementioned 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 has been 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 were recorded at their estimated fair value on the date of the acquisition. The excess of the purchase price over the estimated fair values was recorded as goodwill. Purchase Price - Contingent Consideration - 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. During the first quarter of 2015, 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. During the second quarter of 2015, the Company issued the 2,261,425 shares to Paul Neelin and Diane Hope. At December 31, 2015 the consolidated balance sheet reflects no liability for contingent consideration as the Company believes the level of financing has been achieved and the revenue targets have not been achieved. As a result, during the year ended December 31, 2015, the Company reversed the remaining liability for contingent consideration in the amount of $201,013, resulting in non-cash operating income reflected in accompanying consolidated Statement of Operations. At December 31, 2014, the consolidated balance sheet reflects a total contingent consideration liability of $473,289. Allocation of Purchase Price - 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 at the date of the acquisition is presented in the table below. This allocation is based upon valuations using management’s estimates and assumptions. 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 amounted to $86,800 in 2014 and 2015 and is estimated to be $86,800 in 2016 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 Unaudited Pro Forma Results For the year ended December 31, 2014 Revenues $ 268,804 Gross profit $ 90,965 Net loss $ (2,002,586 ) Basic and fully diluted loss per share $ (0.23 ) |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 3. PROPERTY AND EQUIPMENT Property and equipment consist of the following as of December 31: Estimated useful 2015 2014 Electronic kiosks and vending machines 5 to 7 years $ 937,389 $ 742,425 Less: accumulated depreciation 190,091 66,653 $ 747,298 $ 675,772 Depreciation expense amounted to $123,439 and $67,703, respectively for the years ended December 31, 2015 and 2014. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 4. INTANGIBLE ASSETS Intangible assets arose from merger with U-Vend Canada, Inc. (See Note 2) and consist of the following as of December 31: Estimated useful 2015 2014 Operating agreement 5 years $ 434,000 $ 434,000 Less: accumulated amortization 173,599 86,799 $ 260,401 $ 347,201 Amortization expense related to these intangible assets amounted to $86,800 and $86,799 for the years ended December 31, 2015 and 2014, respectively. |
SENIOR CONVERTIBLE NOTES
SENIOR CONVERTIBLE NOTES | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
SENIOR CONVERTIBLE NOTES | NOTE 5. SENIOR CONVERTIBLE NOTES The Company entered into a Securities Purchase Agreement (“2013 SPA”) dated June 18, 2013 with Cobrador Multi-Strategy Partners, LP (“Investor” or “Cobrador”) pursuant to Cobrador provided an aggregate of $400,000 financing through senior convertible notes and warrants. The senior convertible notes are unsecured, have a 7.0% annual interest rate, and due at Cobrador’s option in cash or common shares at a conversion rate of $0.05 per common share. 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). As of December 31, 2015, total outstanding Senior Convertible Notes had a face value and carrying value of $372,498 as the debt discounts are completely amortized. As of December 31, 2014, total outstanding Senior Convertible Notes had a face value of $377,500 and are presented net of unamortized debt discounts of $58,486, resulting in a carrying value of $319,014. During the year ended December 31, 2015, Cobrador converted $5,000 of outstanding principal at $0.05 per share into 100,000 common shares. During the years ended December 31, 2015 and 2014, approximately $58,000 and $385,000, respectively, was amortized and recorded as amortization of debt discount. The Company received extensions until December 31, 2015 from Cobrador on the due dates for principal and interest payments on outstanding senior convertible notes. In the first quarter of 2016, the Company received an extension from Cobrador on the due dates of the principal and interest payments on the outstanding notes until December 31, 2017 and granted a one-year extension on the expiration date of the Series A warrants. 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. When the notes were issued, Cobrador agreed to restrict its ability to convert the Senior Convertible Notes 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. On May 5, 2015, the Company and Cobrador agreed to amend the convertible notes, including the notes issued in connection with 2014 and 2015 SPA (See Note 6), to allow the Cobrador to hold in excess of 4.99% with 61 days written notice of such intent to the Company. Pursuant to the 2013 SPA and related amendments, the Company issued Series A and Series B Warrants to Cobrador. The Series A and Series B warrants are exercisable to shares of the Company shares of common shares at an exercise price of $0.05 and $0.06, respectively and expire at various dates through December 2019. As of December 31, 2015, 11,200,000 of Series A and 12,000,000 of Series B warrants are outstanding. 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 the outstanding warrants issued in connection with this 2013 SPA aggregate $220,829 and $303,648 as of December 31, 2015 and 2014, respectively. 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. 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 which is reflected as a liability at December 31, 2015. The Investor has extended the due day for this payment until December 31, 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. 2014 Gain on extinguishment of debt During the second quarter of 2014, the Company and Cobrador entered into an agreement to extend the maturity of certain of the notes issued as part of the 2013 SPA. Accordingly, Cobrador consented to the extension of the maturity dates of the notes dated June 18, 2013 and August 21, 2013 to December 26, 2014. 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 Company recognized a gain of approximately $122,000 on extinguishment of debt in the year ended December 31, 2014, resulting from changes to the terms of the Cobrador notes, as described above which is reflected in gain on extinguishment of debt in the consolidated statements of operations. Also, during the second quarter of 2014, the Company issued three senior convertible notes, in addition to the reissued notes described above, to the Investor in the aggregate principal amount of $70,000 along with Series A and Series B warrants (“Warrants”) to the Investor to acquire shares of common stock in the Company. The SPA, Senior Convertible Notes, Warrants and other ancillary agreements with the Investor are referred to as the “Financing Agreement.” Each Senior Convertible Note under the Financing Agreement was for a term of one year and bears interest at 7% payable in cash or shares of the Company’s common stock, and provides for an increase in the rate of interest if there is a default as defined in the Financing Agreement. The debt issued during the second quarter of 2014 can be converted into 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 notes issued in the second quarter of 2014, the Company issued the Investor 2.1 million Series A warrants with an exercise price of $0.05 per share and 2.1 million Series B warrants with an exercise price of $0.06 per share in connection with this debt under previously described terms. In the first quarter of 2016, the term of the convertible notes were extended until December 31, 2017. |
CONVERTIBLE NOTES PAYABLE AND P
CONVERTIBLE NOTES PAYABLE AND PROMISSORY NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES PAYABLE AND PROMISSORY NOTES PAYABLE | NOTE 6. CONVERTIBLE NOTES PAYABLE AND PROMISSORY NOTES PAYABLE 2015 Stock Purchase Agreement (2015 SPA) with 9.5% Convertible Notes and Warrants On May 11, 2015, the Company entered into a non-binding term sheet with Cobrador Multi-Strategy Partners, LP for up to $1 million in senior secured convertible notes with a twelve month term and 9.5% annual interest rate payable quarterly in cash or at 15% if paid in restricted stock. The agreement allows for a debt conversion price of $0.30 per common share and the issuance of warrants equal to 50% of the convertible shares in the underlying notes. The warrants have an exercise price of $0.40 per share and a five year term from the date of grant. The Company and Cobrador finalized the Securities Purchase Agreement, the Notes and Warrant Agreements on August 17, 2015. During the year ended December 31, 2015, the Company issued eleven 9.5% subordinated convertible notes aggregating $441,000 in connection with this agreement with maturity dates ranging from April 2016 through November 2016 with a lien on all assets. The principal on these notes is due at Cobrador’s option in cash or common shares at a conversion rate of $0.30 per share. In connection with these borrowings, the Company granted a total of 735,002 warrants with an exercise price of $0.40 per share and 5 year terms. The Company allocated the $8,113 of proceeds received to debt discount based on the computed fair value of the convertible notes and warrants issued. During the year ended December 31, 2015 the Company recorded $5,804 as amortization of debt discount on the 2015 SPA subordinated convertible notes. As of December 31, 2015, outstanding 2015 SPA notes had a face value of $441,000 and are presented net of debt discount of $2,309 resulting in a carrying value of $438,691. Following, in the first quarter of 2016, the Company received an extension from Cobrador on the due dates of the principal and interest payments on the outstanding notes until December 31, 2017. 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 the outstanding warrants issued in connection with this 2015 SPA aggregate $6,919 as of December 31, 2015. 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. The debt conversion price on the 2015 SPA 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 lenders and its affiliates in the aggregate after such conversion exceeds 9.99% 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. 2014 Stock Purchase Agreement (2014 SPA) with 10% Convertible Notes and Warrants During the year ended December 31, 2015, the Company issued four 10% subordinated convertible notes in the aggregate face amount of $70,000 due at various dates between January and March, 2016 with a lien on all assets. Principal on these notes is due at Cobrador’s option in cash or common shares at a conversion rate of $0.30 per share. In connection with these borrowings, the Company granted a total of 116,668 warrants with an exercise price of $0.35 per share and 5 year terms. The Company allocated the $1,441 of proceeds received to debt discount based on the computed fair value of the convertible notes and warrants issued. The warrants issued in connection with these notes have a “down round provision” and as a result, are classified as derivative liabilities for accounting purposes. During 2014, the Company issued four 10% subordinated convertible notes in the aggregate face amount of $146,000 due at various dates between August and December 2015 with a lien on all assets. The principal on these notes is due at the holder’s option in cash or common shares at a conversion 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 five year terms. The warrants issued have a “down round provision” and as a result are classified as derivative liabilities for accounting purposes. The fair value of the outstanding warrants issued in connection with this 2014 SPA aggregate $3,389 and $3,874 as of December 31, 2015 and 2014, respectively. The Company and the note holders of two of the 10% subordinated convertible notes in the aggregate face amount of $125,000 extended the maturity of the notes to December 2015. The Company issued the note holders an aggregate of 100,000 shares of common stock as consideration for the extension. The fair value of the common shares issued was recorded as deferred financing costs amounting to $16,500, which was charged to operations as amortization of deferred financing costs during the year ended December 31, 2015. As of December 31, 2015, two of the aforementioned notes in the aggregate amount of $85,000 are due for repayment. The terms of the notes, amongst other things, provide for payment of additional interest if repayments are not made on due dates. The Company is in discussion with the noteholders for an extension of the repayment date, however, as of April 27, 2016 no agreement has been concluded. Additional interest payable, if any, on the notes as of December 31, 2016 was immaterial. As of December 31, 2015 and 2014, outstanding subordinated convertible notes had a face value of $216,000 and $146,000 and are presented net of unamortized debt discounts of $196 and $27,277 resulting in a carrying amount of $215,804 and $118,723, respectively. During the years ended December 31, 2015 and 2014, the Company recorded $27,081 and $17,315, respectively, as amortization of debt discount on the 2014 SPA subordinated convertible notes. The debt conversion price on the 2014 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 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 KBM SPA”), bears interest at the rate of 8% per annum. In connection with the KBM 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 KBM SPA and underlying Note was 2,500,000 shares. The Company incurred approximately $4,000 financing costs in connection with the note issuance that are fully expensed as of December 31, 2015. On April 17, 2015, the Company prepaid and retired the KBM note in the amount of $70,200. The Note, as described above, included a prepayment option which resulted the Company incurring a 30% prepayment premium of the principal amount ($16,200). In addition, the Company paid $1,278 in accrued interest. No amounts remain outstanding and payable to the holder of the Note subsequent to this payment. No shares of the Company stock were issued to the Note holder. During the year ended December 31, 2015, the Company recorded a $5,400 gain on fair value of debt based upon the repayment date to a total fair value of $70,200. The fair value included in convertible notes payable on the consolidated balance sheets was $75,600 at December 31, 2014. Under FASB ASC 480 “Distinguishing Liabilities from Equity,” the Company determined the Notes were 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 were subsequently measured at fair value at each reporting period, with changes in fair value being recognized in earnings. The fair value of the Notes was 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 fair value measurement is classified as a Level 3 in the valuation hierarchy. U-Vend Canada Convertible Notes The Company has two convertible 18% notes, payable in Canadian dollars that were acquired in connection with the U-Vend Canada merger on January 7, 2014. As of December 31, 2015 and 2014, these convertible notes have a carrying value of $90,313 and $108,750, respectively. These convertible promissory notes reached maturity on July 26, 2014 and September 14, 2014 and are currently due. The Company is in discussion with the noteholders for an extension of the repayment date, however, as of April 27, 2016 no agreement has been concluded. 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 continue to evaluate 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. During the year ended December 31, 2015, the Company recorded an unrealized gain on foreign currency related to these notes and the related accrued interest of $29,158. During the year ended December 31, 2014, the Company recorded $18,461 unrealized gain on foreign currency related to these notes. Deferred Financing Costs Financing costs associated with the Senior Secured Convertible Notes (See Note 5) and certain of the Subordinated Convertible Notes payable are included in deferred financing costs on the consolidated balance sheets at December 31, 2015 and 2014. These costs are amortized over the term of the respective notes. The Company incurred approximately $135,000 of financing costs during the year ended December 31, 2015, including $16,500 related to maturity extensions of two convertible notes. Amortization of financing costs for the years ended December 31, 2015 and 2014 was $83,843 and $61,813, respectively. |
PROMISSORY NOTES PAYABLE
PROMISSORY NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
PROMISSORY NOTES PAYABLE | NOTE 7. PROMISSORY NOTES PAYABLE Promissory Notes Payable During the year ended December 31, 2015, the Company borrowed an aggregate of $23,833 pursuant to two promissory notes. The notes bear interest at 19% and the borrowings are payable together with interest over a period of six months from the date of borrowing. The balance outstanding on these notes at December 31, 2015 was $11,083. During the first quarter of 2015, the Company issued an unsecured promissory note in the amount of $25,000 with an interest rate of 10% due and payable on with an original maturity date of June 30, 2015. The lender agreed to extend the maturity of his note until the Company obtains additional financing as defined in the extension agreement.. Effective July 1, 2015 with this maturity extension, the interest rate was increased to 12%. During 2014, the Company issued an unsecured promissory note to a 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 principal outstanding on this promissory note at December 31, 2015 and 2014 was $6,235. During 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 reflecting a debt discount on the promissory note. The carrying value of this note at December 31, 2015 and was $10,000. The Company and the lender agreed to a revised maturity date on this promissory note and has extended the maturity to December 31, 2015. The Company is in discussion with the note holder for an extension of the repayment date, however, as of April 27, 2016 no agreement has been concluded. In connection with this new repayment date, the interest rate on the promissory note were modified to 9.5%. During 2014, the Company issued a $40,000 unsecured promissory note with a 10% interest rate and a maturity of December 19, 2015. The Company and the note holder extended the maturity date of the note to May 31, 2016. 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 carrying value on this financing is $250,000 at December 31, 2015 and $248,044, net of $1,956 in debt discount at December 31, 2014. 2015 Perkin Industries, LLC Equipment Financing In January and October 2015, the Company entered into two separate 24 month equipment financing agreements with Perkin Industries, LLC (“the Lender”) for equipment in the aggregate amount of $137,750 with an annual interest rate of 15%. The assets financed consisted of self-service electronic kiosks 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 $68,875. 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 $68,875. 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 $137,750. The Lender received an aggregate of 110,200 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 $1,237. The carrying value of this financing is $137,254, net of $496 debt discount at December 31, 2015. The fair value of the warrant liability related to 2014 and 2015 Perkin equipment financing obligations was $2,920 as of December 31, 2015. Total amortization of debt discount related to 2014 and 2015 Perkin equipment financing during the years ended December 31, 2015 and 2014 was $2,697 and $515, respectively. |
CAPITAL LEASE OBLIGATIONS
CAPITAL LEASE OBLIGATIONS | 12 Months Ended |
Dec. 31, 2015 | |
Leases [Abstract] | |
CAPITAL LEASE OBLIGATIONS | NOTE 8. 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 2017. Accordingly, the lease has been treated as a capital lease. The following schedule provides minimum future rental payments required as of December 31, 2015, under capital leases which have a remaining non-cancelable lease term in excess of one year: 2016 126,822 2017 25,831 Total minimum lease payments 152,653 Guaranteed residual value 206,833 359,486 Less: Amount represented interest (40,168 ) Present value of minimum lease payments and guaranteed residual value 319,318 Less: Current portion of capital lease obligations (90,783 ) Long term capital lease obligations and guaranteed residual value 228,535 Less: Unamortized debt discount on capital leases (20,832 ) Long term capital lease obligations and guaranteed residual value, net $ 207,703 Equipment held under capital leases at December 31, 2015 had a cost of $465,500 and accumulated depreciation of $132,896. Equipment held under capital leases at December 31, 2014 had a cost of $465,500 and accumulated depreciation of $55,406. 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 which is reflected in the consolidated balance sheets at December 31, 2015 and 2014. The Lessor has extended the due day for this payment until December 31, 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. |
STOCKHOLDERS' DEFICIENCY
STOCKHOLDERS' DEFICIENCY | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
STOCKHOLDERS' DEFICIENCY | NOTE 9. STOCKHOLDERSÂ’ DEFICIENCY The Company has authorized shares of common stock of 600,000,000 shares. During the year ended December 31, 2015, the Company issued 925,000 shares of common stock upon exercise of warrants resulting in cash proceeds of $55,000 to the Company and $3,534 of warrant liability was reclassified as additional paid in capital. In addition, the Company issued 100,000 shares of its common stock upon conversion of a senior convertible note in the face amount of $5,000. During the year ended December 31, 2015, the Company issued 1,247,177 shares of common stock with a fair value of $246,779 to pay capital leases obligations, interest and penalties related to the capital leases. During the year ended December 31, 2015, the Company issued 1,305,000 shares of common stock with a fair value of $96,973 and warrants with a fair value of $69,695 to consultants for services rendered. During the year ended December 31, 2015, the Company sold in private sale 1,558,824 shares of common stock for an aggregate consideration of $265,000 and issued an aggregate of 779,413 warrants to acquire shares of common stock at $0.30. The warrants have a term of two years. In addition, during the year ended December 31, 2015, the Company issued 2,261,425 shares of common stock as earn out consideration (See Note 2) and 100,000 shares of common stock as consideration for debt maturity extension (See Note 6). At December 31, 2015 the Company had the following warrant securities outstanding: Warrants Exercise Price Expiration 2011 Private placement warrants 12,500 $ 60.00 March 2018 2013 Series A warrants Senior convertible notes 5,200,000 $ 0.05 June 2017-December 2017 2013 Series B warrants Senior convertible notes 6,000,000 $ 0.06 June 2018-December 2018 2013 Issued with lease obligation 861,250 $ 0.12 October 2016 2014 Acquired in U-Vend Canada merger 517,335 $ 0.24 October 2015-January 2016 2014 Series A warrants Senior convertible notes 6,000,000 $ 0.05 January 2017-December 2018 2014 Series B warrants Senior convertible notes 6,000,000 $ 0.06 January 2019-November 2019 2014 Warrants for services 18,480 $ 0.01 January 2016 2014 Warrants for services 420,000 $ 0.35 August 2019-December 2019 2014 Warrants for services 35,000 $ 0.24 January 2016 2014 Warrants for services 770,000 $ 0.05 October 2015-December 2016 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 2014 SPA convertible debt 243,334 $ 0.35 August 2019-December 2019 2014 Issued with equipment financing obligation 200,000 $ 0.35 October 2017 2014 issued with lease obligation 246,563 $ 0.20 March 2017 2014 issued with lease obligation 483,889 $ 0.18 May 2017 2014 Issued with promissory note 41,667 $ 0.18 May 2017 2015 Issued with 2014 SPA convertible debt 116,668 $ 0.35 January 2020-March 2020 2015 Issued with convertible financing obligation 110,200 $ 0.35 January-October 2018 2015 Issued for services 407,067 $ 0.40 February 2020-November 2020 2015 Issued with 2015 SPA convertible debt 735,002 $ 0.40 April 2020-November 2020 2015 Warrants issued for equipment 200,000 $ 0.35 January 2020 2015 Warrants issued with sale of common shares 779,413 $ 0.30 December 2017 31,311,534 During the year ended December 31, 2015, there were 849,751 warrants that expired unexercised, 925,000 warrants exercised and 2,348,350 warrants issued. Warrants Outstanding warrant securities consist of the following at December 31, 2014: Warrants Exercise Price Expiration 2011 Private placement warrants 12,500 $ 60.00 March 2018 2012 Private placement warrants 750 $ 30.00 April 2015 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 October 2016 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-December 2018 2014 Series B warrants Senior convertible notes 6,000,000 $ 0.06 January 2019-November 2019 2014 warrants for services 18,480 $ 0.01 January 2016 2014 warrants for services 420,000 $ 0.35 August 2019-December 2019 2014 warrants for services 35,000 $ 0.24 January 2016 2014 warrants for services 994,000 $ 0.05 June 2015-December 2016 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 October 2017 2014 issued with lease obligation 246,563 $ 0.20 March 2017 2014 issued with lease obligation 483,889 $ 0.24 May 2017 2014 Issued with promissory note 41,667 $ 0.18 May 2017 30,737,935 |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | NOTE 10. 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 years ended December 31, 2015 and 2014. December 31, 2015 December 31, 2014 Balance at beginning of period $ 309,993 $ 214,609 Allocation of proceeds related to convertible and promissory notes to derivative liabilities due to “down round” provision 38,282 285,269 Reclassification of warrant liability as additional paid in capital upon exercise of warrants (3,534 ) — Equipment purchased with warrants classified as derivative liabilities due to “down round” provision 50,100 — 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 derivatives to additional-paid-in capital as a result of adequate authorized due to reverse stock split on May 16, 2014 — (52,833 ) Unrealized gain on fair value adjustment (83,881 ) (99,190 ) $ 310,960 $ 309,993 The fair value of warrants outstanding at December 31, 2015 and 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. |
EQUITY INCENTIVE PLAN
EQUITY INCENTIVE PLAN | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
EQUITY INCENTIVE PLAN | NOTE 11. 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 share 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 granted during the years ended December 31, 2015 and 2014: Volatility 65% Expected term 2 - 5 Risk-free interest rate 1.62% - 1.790 Expected dividend yield 0% A summary of all stock option activity for the years ended December 31, 2015 and 2014 is as follows: Options Weighted Average Exercise Price Weighted Average Contractual Life Aggregate Intrinsic Value Outstanding at December 31, 2013 13,300 $ 58.00 Issued in 2014 350,000 $ 0.30 Cancelled in 2014 (2,650 ) $ 60.00 Outstanding at December 31, 2014 360,650 $ 1.99 Issued in 2015 4,280,000 $ 0.20 Outstanding at December 31, 2015 4,640,650 $ 0.34 4.4 years $ — Exercisable at December 31, 2015 1,776,068 $ 0.48 4.4 years $ — The Company granted 4,280,000 options during the year ended December 31, 2015 and 350,000 options in the year ended December 31, 2014. No options were exercised during the years ended December 31, 2015 or 2014. The weighted average grant date fair value of options granted during the year ended December 31, 2015 and 2014 were $0.09 and $0.32, respectively. The fair value of options that vested during the year ended December 31, 2015 and 2014 amounted to approximately $ 221,207 and $89,200, respectively. The Company recorded stock compensation expense for options vesting during the years ended December 31, 2015 and 2014 of $221,237 and $89,207, respectively. At December 31, 2015, there was approximately $208,831 of unrecognized compensation cost related to non-vested options. This cost is expected to be recognized over a weighted average period of approximately 1.5 years. The Company granted 500,000 restricted shares to an officer with a three year vesting. During the year ended December 31, 2015, $36,667 was charged to operations as stock based compensation costs for the restricted shares granted. At December 31, 2015, there was approximately $73,333 of unrecognized compensation cost related to non-vested stock grants that is expected to be recognized over a period of approximately 2.75 years. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 12. COMMITMENTS AND CONTINGENCIES 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 Frozen Pond 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 Cyber Enterprises, 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. The following schedule provides minimum future payments for each of the periods ending June 30, 2016 through 2020 as defined in the NHL license and sponsorship agreements as of December 31, 2015 remeasured from Canadian dollars to U. S. dollars at the spot rate on December 31, 2015: For the period June 30, 2016 June 30, 2017 June 30, 2018 June 30, 2019 June 30, 2020 Total Sponsorship fee 361,250 505,750 614,125 614,125 614,125 2,709,375 Minimum royalty 216,750 361,250 433,500 505,750 650,250 2,167,500 Media commitment 144,500 144,500 144,500 144,500 144,500 722,500 Product in kind 1,445 1,445 1,445 1,445 1,445 7,225 Total Commitment 723,945 1,012,945 1,193,570 1,265,820 1,410,320 5,606,600 No payments were made to the NHL under this agreement as of December 31, 2015. The Sponsorship and Minimum royalty payments due to the NHL (in Canadian dollars) are as follows in the initial period: $200,000 on November 15, 2015, $200,000 on January 15, 2016 and $400,000 on April 15, 2016. The company has accrued $316,997 of this total commitment as of December 31, 2015. As part of the agreement, the NHL has commitments to the Company including a retail royalty fund which partially reduces the total commitment above. Operating Lease Obligations As of December 31, 2015, the Company has two operating lease agreements 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 lease for California warehouse was extended for an additional term of one year until January 2017 with a base rent of $2,550. In addition, the Company leased a warehouse space in Las Vegas, Nevada. The lease for the warehouse in Las Vegas is for a term of 25 months commencing in February 2016 and provides for a base rent of $1,068 with scheduled increases. 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. Rent expense amounted to $65,141 and $33,724 during the years ended December 31, 2015 and 2014, respectively. The aggregate rental commitments for the real estate leases at December 31, 2015 is: 2016 $ 61,297 2017 37,637 2018 23,460 2019 6,210 Total $ 128,604 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 13. INCOME TAXES Loss from continuing operations before provision (benefit) for income taxes is summarized in the following table. 2015 2014 Domestic $ (1,873,516 ) $ (1,234,293 ) Foreign (173,588 ) (841,199 ) $ (2,047,104 ) $ (2,075,492 ) The income tax provision (benefit) is summarized in the following table. 2015 2014 Current: Federal $ — $ — State 3,470 2,094 Foreign — — Total current 3,470 2,094 Deferred: Federal (694,357 ) (390,726 ) State (94,514 ) (1,777 ) Foreign (42,055 ) (134,000 ) Total deferred (830,926 ) (526,503 ) Less increase in allowance 830,926 451,503 Net deferred — (75,000 ) Total income tax provision (benefit) $ 3,470 $ (72,906 ) The significant components of the deferred tax assets and liabilities are summarized below. 2015 2014 Deferred tax assets (liabilities): Net operating loss carryforwards $ 1,669,671 $ 1,055,408 Depreciable and amortizable assets (48,106 ) (8,252 ) Prepaid expense (253 ) (253 ) Intangible asset (130,503 ) (174,003 ) Stock based compensation 162,396 38,617 Beneficial conversion feature — (13,309 ) Loss reserve 3,239 3,239 Accrued compensation 157,443 86,194 Other 116 (4,564 ) Total 1,814,003 983,077 Less valuation allowance (1,814,003 ) (983,077 ) Net deferred assets (liabilities) $ — $ — The Company has approximately $4,128,000, and $967,000 in federal U.S. and Canadian net operating loss carryforwards (“NOLs”), respectively, as well as $2,813,000 in U.S. state and $967,000 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, 2015 and 2014 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 2012-2015 generally remain open to examination by the U.S. federal and state taxing authorities. In addition, the 2011 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. 2015 2014 Statutory United States federal rate 34.00 % 34.00 % United States federal tax on foreign branch operations 4.99 7.54 State income tax, net of federal benefit 4.25 3.95 Other foreign income tax, net of federal benefit .82 3.99 Change in valuation reserves (40.59 ) (21.75 ) Permanent differences (.44 ) (4.80 ) Tax rate differential between jurisdictions (2.54 ) (16.76 ) State income tax law changes — (2.66 ) Other (1.54 ) Effective tax rate benefit (provision) (.17 ))% 3.51 % |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 14. SUBSEQUENT EVENTS In January 2016, the Company issued 50,000 shares of common stock to a note holder to extend the maturity date of the note. In March 2016, the Company issued three promissory notes and borrowed an aggregate amount of $155,000. The promissory notes bear interest at 10% per annum and are due at various due dates in May 2016. |
NATURE OF BUSINESS AND SUMMAR21
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation |
Use of Estimates | Use of Estimates |
Inventory | Inventory - |
Property and Equipment | Property and Equipment |
Long lived assets, Identifiable Intangible Assets and Goodwill | Long lived assets, Identifiable Intangible Assets and Goodwill Assessment for possible impairment is based on the CompanyÂ’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 assetsÂ’ carrying value, an impairment charge is recognized for the difference between estimated fair value and carrying value. When performing its evaluation of goodwill for impairment, if the Company concludes 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 the Company is unable to reach this conclusion, then the Company 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; the Company is required to perform a second step, as this is an indication that the reporting unit goodwill may be impaired. In this step, the Company compares 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 the CompanyÂ’s 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 the CompanyÂ’s planning assumptions are modified resulting in impairment to the CompanyÂ’s assets, the associated expense would be included in the consolidated statements of operations, which could materially impact the CompanyÂ’s business, financial condition and results of operations. ManagementÂ’s forecasts of future earnings are largely dependent on future cash infusion or incremental borrowing to fund projected growth as well as current operations. If the CompanyÂ’s business plans result in significant delays in implementation and sales of the CompanyÂ’s products are not in alignment with its projections, a future impairment charge could result for a portion or all of the goodwill noted previously. |
Common Shares Issued and Earnings Per Common Share | Common Shares Issued and Earnings Per Share As of December 31, 2015, there were approximately 46 million (43 million at December 31, 2014) shares potentially issuable under convertible debt agreements, options, and warrants 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 CompanyÂ’s losses during the periods presented. |
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 - |
Preferred Stock Authorized | Preferred Stock Authorized - |
Fair Value of Financial Instruments | Fair Value of Financial Instruments - Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 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. |
Derivative Financial Instruments | Derivative Financial Instruments |
Share-Based Compensation Expense | Share-Based Compensation Expense – |
Revenue Recognition | Revenue Recognition |
Income Taxes | Income Taxes 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, 2015 or 2014. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in tax expense. During the years ended December 31, 2015 and 2014, the Company recognized no interest and penalties. |
Reclassifications | Reclassifications |
Accounting Pronouncements | Accounting Pronouncements In May 2014, the FASB issued new accounting guidance on revenue from contracts with customers. The new guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods and services to customers. The updated guidance will replace most existing revenue recognition guidance in GAAP when it becomes effective. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The Company is currently evaluating the effect the updated standard will have on its consolidated financial statements and related disclosures. In April 2015, the FASB issued new accounting guidance on the presentation of debt issuance costs. The new guidance requires that debt issuance costs related to a note be presented as a direct deduction from that note. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. The Company is currently evaluating the effect the updated standard will have on its consolidated financial statements and related disclosures. In February 2016, the FASB issued an accounting standard update ASU 2016-02, “Leases”, which requires that lease arrangements longer than 12 months result in an entity recognizing an asset and liability. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. The Company has not yet evaluated nor has it determined the effect of the standard on its ongoing financial reporting. In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” The guidance requires an entity to evaluate whether there are conditions or events, in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued and to provide related footnote disclosures in certain circumstances. The guidance is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early application is permitted. The Company does not believe the adoption of this ASU will have a significant impact on its consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes”, which simplifies the presentation of deferred income taxes by requiring deferred tax assets and liabilities be classified as noncurrent on the balance sheet. The guidance becomes effective for annual reporting periods beginning after December 15, 2016, with early adoption permitted. The Company applied this guidance to its current fiscal years ending December 31, 2015 and 2014. The adoption of this guidance had no material impact on the results of operations or financial position. Certain prior year deferred tax assets or liabilities have been reclassified to conform with the current year presentation. |
MERGER WITH U-VEND CANADA, IN22
MERGER WITH U-VEND CANADA, INC. (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
Schedule of purchase price consideration | 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 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, 2014. 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. Unaudited Pro Forma Results For the year ended December 31, 2014 Revenues $ 268,804 Gross profit $ 90,965 Net loss $ (2,002,586 ) Basic and fully diluted loss per share $ (0.23 ) |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consist of the following as of December 31: Estimated useful 2015 2014 Electronic kiosks and vending machines 5 to 7 years $ 937,389 $ 742,425 Less: accumulated depreciation 190,091 66,653 $ 747,298 $ 675,772 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | Intangible assets arose from merger with U-Vend Canada, Inc. (See Note 2) and consist of the following as of December 31: Estimated useful 2015 2014 Operating agreement 5 years $ 434,000 $ 434,000 Less: accumulated amortization 173,599 86,799 $ 260,401 $ 347,201 |
CAPITAL LEASE OBLIGATIONS (Tabl
CAPITAL LEASE OBLIGATIONS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Leases [Abstract] | |
Schedule of minimum future rental payments under capital lease obligations | The following schedule provides minimum future rental payments required as of December 31, 2015, under capital leases which have a remaining non-cancelable lease term in excess of one year: 2016 126,822 2017 25,831 Total minimum lease payments 152,653 Guaranteed residual value 206,833 359,486 Less: Amount represented interest (40,168 ) Present value of minimum lease payments and guaranteed residual value 319,318 Less: Current portion of capital lease obligations (90,783 ) Long term capital lease obligations and guaranteed residual value 228,535 Less: Unamortized debt discount on capital leases (20,832 ) Long term capital lease obligations and guaranteed residual value, net $ 207,703 |
STOCKHOLDERS' DEFICIENCY (Table
STOCKHOLDERS' DEFICIENCY (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Stockholders' Equity Note [Abstract] | |
Schedule of outstanding warrant securities | At December 31, 2015 the Company had the following warrant securities outstanding: Warrants Exercise Price Expiration 2011 Private placement warrants 12,500 $ 60.00 March 2018 2013 Series A warrants Senior convertible notes 5,200,000 $ 0.05 June 2017-December 2017 2013 Series B warrants Senior convertible notes 6,000,000 $ 0.06 June 2018-December 2018 2013 Issued with lease obligation 861,250 $ 0.12 October 2016 2014 Acquired in U-Vend Canada merger 517,335 $ 0.24 October 2015-January 2016 2014 Series A warrants Senior convertible notes 6,000,000 $ 0.05 January 2017-December 2018 2014 Series B warrants Senior convertible notes 6,000,000 $ 0.06 January 2019-November 2019 2014 Warrants for services 18,480 $ 0.01 January 2016 2014 Warrants for services 420,000 $ 0.35 August 2019-December 2019 2014 Warrants for services 35,000 $ 0.24 January 2016 2014 Warrants for services 770,000 $ 0.05 October 2015-December 2016 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 2014 SPA convertible debt 243,334 $ 0.35 August 2019-December 2019 2014 Issued with equipment financing obligation 200,000 $ 0.35 October 2017 2014 issued with lease obligation 246,563 $ 0.20 March 2017 2014 issued with lease obligation 483,889 $ 0.18 May 2017 2014 Issued with promissory note 41,667 $ 0.18 May 2017 2015 Issued with 2014 SPA convertible debt 116,668 $ 0.35 January 2020-March 2020 2015 Issued with convertible financing obligation 110,200 $ 0.35 January-October 2018 2015 Issued for services 407,067 $ 0.40 February 2020-November 2020 2015 Issued with 2015 SPA convertible debt 735,002 $ 0.40 April 2020-November 2020 2015 Warrants issued for equipment 200,000 $ 0.35 January 2020 2015 Warrants issued with sale of common shares 779,413 $ 0.30 December 2017 31,311,534 Warrants Outstanding warrant securities consist of the following at December 31, 2014: Warrants Exercise Price Expiration 2011 Private placement warrants 12,500 $ 60.00 March 2018 2012 Private placement warrants 750 $ 30.00 April 2015 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 October 2016 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-December 2018 2014 Series B warrants Senior convertible notes 6,000,000 $ 0.06 January 2019-November 2019 2014 warrants for services 18,480 $ 0.01 January 2016 2014 warrants for services 420,000 $ 0.35 August 2019-December 2019 2014 warrants for services 35,000 $ 0.24 January 2016 2014 warrants for services 994,000 $ 0.05 June 2015-December 2016 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 October 2017 2014 issued with lease obligation 246,563 $ 0.20 March 2017 2014 issued with lease obligation 483,889 $ 0.24 May 2017 2014 Issued with promissory note 41,667 $ 0.18 May 2017 30,737,935 |
FAIR VALUE OF FINANCIAL INSTR27
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of derivative warrant liabilities | 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 years ended December 31, 2015 and 2014. December 31, 2015 December 31, 2014 Balance at beginning of period $ 309,993 $ 214,609 Allocation of proceeds related to convertible and promissory notes to derivative liabilities due to “down round” provision 38,282 285,269 Reclassification of warrant liability as additional paid in capital upon exercise of warrants (3,534 ) — Equipment purchased with warrants classified as derivative liabilities due to “down round” provision 50,100 — 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 derivatives to additional-paid-in capital as a result of adequate authorized due to reverse stock split on May 16, 2014 — (52,833 ) Unrealized gain on fair value adjustment (83,881 ) (99,190 ) $ 310,960 $ 309,993 |
EQUITY INCENTIVE PLAN (Tables)
EQUITY INCENTIVE PLAN (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Equity Incentive Plan Tables | |
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 granted during the years ended December 31, 2015 and 2014: Volatility 65% Expected term 2 - 5 Risk-free interest rate 1.62% - 1.790 Expected dividend yield 0% |
Schedule of stock option activity | A summary of all stock option activity for the years ended December 31, 2015 and 2014 is as follows: Options Weighted Average Exercise Price Weighted Average Contractual Life Aggregate Intrinsic Value Outstanding at December 31, 2013 13,300 $ 58.00 Issued in 2014 350,000 $ 0.30 Cancelled in 2014 (2,650 ) $ 60.00 Outstanding at December 31, 2014 360,650 $ 1.99 Issued in 2015 4,280,000 $ 0.20 Outstanding at December 31, 2015 4,640,650 $ 0.34 4.4 years $ — Exercisable at December 31, 2015 1,776,068 $ 0.48 4.4 years $ — |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of minimum future payments | The following schedule provides minimum future payments for each of the periods ending June 30, 2016 through 2020 as defined in the NHL license and sponsorship agreements as of December 31, 2015 remeasured from Canadian dollars to U. S. dollars at the spot rate on December 31, 2015: For the period June 30, 2016 June 30, 2017 June 30, 2018 June 30, 2019 June 30, 2020 Total Sponsorship fee 361,250 505,750 614,125 614,125 614,125 2,709,375 Minimum royalty 216,750 361,250 433,500 505,750 650,250 2,167,500 Media commitment 144,500 144,500 144,500 144,500 144,500 722,500 Product in kind 1,445 1,445 1,445 1,445 1,445 7,225 Total Commitment 723,945 1,012,945 1,193,570 1,265,820 1,410,320 5,606,600 The aggregate rental commitments for the real estate leases at December 31, 2015 is: 2016 $ 61,297 2017 37,637 2018 23,460 2019 6,210 Total $ 128,604 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Summary of loss from continuing operations before income taxes | Loss from continuing operations before provision (benefit) for income taxes is summarized in the following table. 2015 2014 Domestic $ (1,873,516 ) $ (1,234,293 ) Foreign (173,588 ) (841,199 ) $ (2,047,104 ) $ (2,075,492 ) |
Summary of the income tax provision (benefit) | The income tax provision (benefit) is summarized in the following table. 2015 2014 Current: Federal $ — $ — State 3,470 2,094 Foreign — — Total current 3,470 2,094 Deferred: Federal (694,357 ) (390,726 ) State (94,514 ) (1,777 ) Foreign (42,055 ) (134,000 ) Total deferred (830,926 ) (526,503 ) Less increase in allowance 830,926 451,503 Net deferred — (75,000 ) Total income tax provision (benefit) $ 3,470 $ (72,906 ) |
Summary of the components of the deferred tax assets and liabilities | The significant components of the deferred tax assets and liabilities are summarized below. 2015 2014 Deferred tax assets (liabilities): Net operating loss carryforwards $ 1,669,671 $ 1,055,408 Depreciable and amortizable assets (48,106 ) (8,252 ) Prepaid expense (253 ) (253 ) Intangible asset (130,503 ) (174,003 ) Stock based compensation 162,396 38,617 Beneficial conversion feature — (13,309 ) Loss reserve 3,239 3,239 Accrued compensation 157,443 86,194 Other 116 (4,564 ) Total 1,814,003 983,077 Less valuation allowance (1,814,003 ) (983,077 ) Net deferred assets (liabilities) $ — $ — |
Schedule of reconciliation of the income tax provision using the statutory U.S. income tax rate compared with the actual income tax provision | 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. 2015 2014 Statutory United States federal rate 34.00 % 34.00 % United States federal tax on foreign branch operations 4.99 7.54 State income tax, net of federal benefit 4.25 3.95 Other foreign income tax, net of federal benefit .82 3.99 Change in valuation reserves (40.59 ) (21.75 ) Permanent differences (.44 ) (4.80 ) Tax rate differential between jurisdictions (2.54 ) (16.76 ) State income tax law changes — (2.66 ) Other (1.54 ) Effective tax rate benefit (provision) (.17 ))% 3.51 % |
NATURE OF BUSINESS AND SUMMAR31
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 12 Months Ended | |
Dec. 31, 2015USD ($)Nshares | Dec. 31, 2014USD ($)shares | |
Net loss | $ | $ (2,050,574) | $ (2,002,586) |
Accumulated deficit | $ | (5,827,422) | (3,776,848) |
Working capital deficit | $ | 2,913,623 | |
Reserve for spoilage and product losses | $ | $ 7,500 | $ 7,500 |
Anti-dilutive shares excluded from calculation of diluted earnings per share | shares | 46,000,000 | 43,000,000 |
Reverse stock split date | Effective May 16, 2014 | |
Reverse stock split conversion ratio | 0.005 | |
Preferred stock, shares authorized | shares | 10,000,000 | 10,000,000 |
Number of electronic kiosks installed | N | 127 | |
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 | N | 23 | |
California [Member] | ||
Number of electronic kiosks installed | N | 82 | |
Nevada [Member] | ||
Number of electronic kiosks installed | N | 22 |
MERGER WITH U-VEND CANADA, IN32
MERGER WITH U-VEND CANADA, INC. (Details Narrative) - USD ($) | Jan. 07, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Common stock par value (in dollars per share) | $ 0.001 | $ 0.001 | ||
Liability for contingent consideration | $ 246,423 | |||
Accretion and reversal of earn-out liability | $ 201,013 | |||
Contingent consideration | $ 226,866 | |||
Intangible asset (net) | $ 260,401 | 347,201 | ||
Estimated life of operating agreement (intangible asset) | 5 years | |||
Amortization expense | $ 86,800 | $ 86,799 | ||
Contingent Consideration - Earn-out Provision [Member] | ||||
Number of additional common shares issuable after earn-out provisions based on targeted revenue | 2,261,425 | 2,261,425 | ||
U-Vend Canada, Inc [Member] | ||||
Number of shares issued for acquisition | 3,500,000 | |||
Common stock par value (in dollars per share) | $ 0.001 | |||
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 | |||
Value of shares issued for acquisition | 490,000 | |||
Liability for contingent consideration | $ 246,568 | |||
Share price of shares issued for acquisition (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. | |||
Consolidated gross revenue target | $ 2,000,000 | $ 1,000,000 | ||
Minimum percentage of targeted revenue for percentage share distribution | 80.00% | |||
Shares issued on earn out of contingent consideration, shares | 2,261,425 | |||
Intangible asset (net) | $ 434,000 | |||
Estimated life of operating agreement (intangible asset) | 5 years | |||
Amortization expense | $ 86,800 | $ 86,800 | $ 86,800 | |
Deferred tax liability on acquisition (initial recognition) | $ 164,920 | |||
Deferred tax liability on acquisition | 75,000 | |||
Adjustment to deferred tax liability on acquisition (during measurement period) | $ 89,920 | |||
U-Vend Canada, Inc [Member] | Mr. Raymond Meyers [Member] | ||||
Number of shares issued to advisers in connection with acquisition | 389,520 |
MERGER WITH U-VEND CANADA, IN33
MERGER WITH U-VEND CANADA, INC. (Details) - U-Vend Canada, Inc [Member] | Jan. 07, 2014USD ($) |
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 U-VEND CANADA, IN34
MERGER WITH U-VEND CANADA, INC. (Details 1) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 | Jan. 07, 2014 |
Allocation of Purchase Price | |||
Goodwill | $ 642,340 | $ 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 U-VEND CANADA, IN35
MERGER WITH U-VEND CANADA, INC. (Details 2) - U-Vend Canada, Inc [Member] | 12 Months Ended |
Dec. 31, 2014USD ($)$ / shares | |
Unaudited Pro Forma Results | |
Revenue | $ 268,804 |
Gross profit | 90,965 |
Net loss | $ (2,002,586) |
Fully diluted loss per share (in dollars per share) | $ / shares | $ (0.23) |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 123,439 | $ 67,703 |
PROPERTY AND EQUIPMENT (Detai37
PROPERTY AND EQUIPMENT (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Electronic kiosks and vending machines | $ 937,389 | $ 742,425 |
Less: accumulated depreciation | 190,091 | 66,653 |
Property and equipment (net) | $ 747,298 | $ 675,772 |
Electronic kiosks and related equipment [Member] | Minimum [Member] | ||
Estimated useful life | 5 years | |
Electronic kiosks and related equipment [Member] | Maximum [Member] | ||
Estimated useful life | 7 years |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of intangible assets | $ 86,800 | $ 86,799 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Estimated useful life of acquired intangible assets | 5 years | |
Operating agreement | $ 434,000 | $ 434,000 |
Less: accumulated amortization | 173,599 | 86,799 |
Intangible asset (net) | $ 260,401 | $ 347,201 |
SENIOR CONVERTIBLE NOTES (Detai
SENIOR CONVERTIBLE NOTES (Details Narrative) | Oct. 17, 2013N$ / sharesshares | Aug. 21, 2013N$ / sharesshares | Jun. 18, 2013USD ($)N$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($)N$ / sharesshares |
Senior convertible notes, net of discount | $ 372,498 | $ 319,014 | |||
Debt converted into common stock | 5,000 | 22,500 | |||
Debt discount amortized in the period | $ 2,697 | $ 515 | |||
Exercise price of warrants | $ / shares | $ .30 | ||||
Warrants outstanding | shares | 31,311,534 | 30,737,935 | |||
Gain on extinguishment of debt | $ 114,266 | ||||
Senior Convertible Note Payable [Member] | |||||
Total debt financing available | $ 400,000 | ||||
Debt interest rate (in percent) | 7.00% | ||||
Debt conversion price per share | $ / shares | $ 0.20 | $ 0.20 | $ 0.20 | $ 0.05 | |
Face amount of debt | 377,500 | ||||
Unamortized debt discount | 58,486 | ||||
Debt converted into common stock | $ 5,000 | ||||
Shares of common stock issued on conversion of debt | shares | 100,000 | ||||
Debt discount amortized in the period | $ 58,000 | 385,000 | |||
Maximum number of common shares percentage | 4.99% | ||||
Warrants granted fair value | $ 220,829 | 303,648 | |||
Registration right agreement, monthly penalty | 1.00% | ||||
Registration right agreement, penalty amount | $ 14,234 | ||||
Number of shares convertible into | N | 750,000 | 750,000 | 750,000 | 3,000,000 | |
Minimum adjusted conversion price | $ / shares | $ 0.03 | ||||
Gain on extinguishment of debt | $ 122,000 | ||||
2014 Senior Convertible Note Payable [Member] | |||||
Face amount of debt | $ 70,000 | ||||
Class A Warrants [Member] | Senior Convertible Note Payable [Member] | |||||
Exercise price of warrants | $ / shares | $ 0.20 | $ 0.20 | $ 0.20 | $ 0.05 | |
Warrants outstanding | shares | 11,200,000 | ||||
Number of common stock warrants issued | shares | 1,125,000 | 1,125,000 | 1,125,000 | 4,500,000 | |
Warrant expiration period | 15 months | 15 months | 15 months | 24 months | |
Class B Warrants [Member] | Senior Convertible Note Payable [Member] | |||||
Exercise price of warrants | $ / shares | $ 0.24 | $ 0.24 | $ 0.24 | $ 0.06 | |
Warrants outstanding | shares | 12,000,000 | ||||
Number of common stock warrants issued | shares | 1,125,000 | 1,125,000 | 1,125,000 | 4,500,000 | |
Warrant expiration period | 5 years | 5 years | 5 years | 5 years | |
2014 Series A Warrants Senior Convertible Notes [Member] | |||||
Exercise price of warrants | $ / shares | $ 0.05 | ||||
Warrants outstanding | shares | 6,000,000 | ||||
2014 Series A Warrants Senior Convertible Notes [Member] | 2014 Senior Convertible Note Payable [Member] | |||||
Exercise price of warrants | $ / shares | $ 0.05 | ||||
Number of common stock warrants issued | shares | 2,100,000 | ||||
2014 Series B Warrants Senior Convertible Notes [Member] | |||||
Exercise price of warrants | $ / shares | $ 0.06 | ||||
Warrants outstanding | shares | 6,000,000 | ||||
2014 Series B Warrants Senior Convertible Notes [Member] | 2014 Senior Convertible Note Payable [Member] | |||||
Exercise price of warrants | $ / shares | $ 0.06 | ||||
Number of common stock warrants issued | shares | 2,100,000 |
CONVERTIBLE NOTES PAYABLE AND41
CONVERTIBLE NOTES PAYABLE AND PROMISSORY NOTES PAYABLE (Details Narrative) | May. 11, 2015USD ($)$ / shares | Apr. 17, 2015USD ($) | Dec. 30, 2014USD ($)shares | Jan. 07, 2014N$ / shares | Dec. 31, 2015USD ($)N$ / sharesshares | Dec. 31, 2014USD ($)N$ / sharesshares |
Debt Instrument [Line Items] | ||||||
Warrant exercise price | $ / shares | $ .30 | |||||
Debt discount amortized in the period | $ 2,697 | $ 515 | ||||
Convertible notes payable, net of discount | 744,807 | $ 303,074 | ||||
Financing costs | 135,000 | |||||
Repayment of convertible note | 70,200 | |||||
Accrued interest paid | $ 475,244 | $ 109,927 | ||||
Gain on extinguishment of debt | 114,266 | |||||
Unrealized gain on foreign currency | $ 29,158 | 18,461 | ||||
Amortization of financing costs | 83,843 | 61,813 | ||||
15% 2015 SPA Convertible Notes and Warrants [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument face amount | $ 1,000,000 | $ 441,000 | ||||
Debt term | 12 months | |||||
Debt interest rate | 9.50% | 9.50% | ||||
Interest rate, if paid in restricted stock | 15.00% | |||||
Debt conversion price per share | $ / shares | $ 0.30 | $ 0.30 | ||||
Warrant exercise price | $ / shares | $ 0.40 | |||||
Warrant expiration period | 5 years | |||||
Number of notes issued | N | 11 | |||||
Warrant granted | shares | 735,002 | |||||
Debt instrument discount | $ 8,113 | |||||
Debt discount amortized in the period | 5,804 | |||||
Unamortized debt discount | 2,309 | |||||
Convertible notes payable, net of discount | 438,691 | |||||
Warrant fair value | 6,919 | |||||
15% 2015 SPA Convertible Notes and Warrants [Member] | 2015 SPA Warrants [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Warrant exercise price | $ / shares | $ 0.40 | |||||
Warrant expiration period | 5 years | |||||
10% 2014 SPA Convertible Notes and Warrants issued in 2015 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument face amount | $ 70,000 | |||||
Debt interest rate | 10.00% | |||||
Debt conversion price per share | $ / shares | $ 0.30 | |||||
Warrant exercise price | $ / shares | $ 0.35 | |||||
Warrant expiration period | 5 years | |||||
Number of notes issued | N | 4 | |||||
Warrant granted | shares | 116,668 | |||||
Debt instrument discount | $ 1,441 | |||||
10% 2014 SPA Convertible Notes and Warrants [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument face amount | 216,000 | $ 146,000 | ||||
Debt interest rate | 10.00% | |||||
Debt conversion price per share | $ / shares | $ 0.30 | |||||
Warrant exercise price | $ / shares | $ 0.35 | |||||
Number of notes issued | N | 4 | |||||
Warrant granted | shares | 243,334 | |||||
Debt discount amortized in the period | 27,081 | $ 17,315 | ||||
Unamortized debt discount | 196 | 27,277 | ||||
Convertible notes payable, net of discount | 215,804 | 118,703 | ||||
Warrant fair value | 3,389 | $ 3,874 | ||||
Number of notes extended | N | 2 | |||||
Amount of notes extended | $ 125,000 | |||||
Shares issued for notes extension | shares | 100,000 | |||||
Deferred financing costs | $ 16,500 | |||||
KBM SPA 8% Convertible Note [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument face amount | $ 54,000 | |||||
Proceeds from issuance of debt | 50,000 | |||||
Debt instrument, fee amount | $ 4,000 | |||||
Common stock reserved for future issuance | shares | 2,500,000 | |||||
Financing costs | $ 4,000 | |||||
Repayment of convertible note | $ 70,200 | |||||
Debt prepayment penalty | 16,200 | |||||
Accrued interest paid | 1,278 | |||||
Gain on extinguishment of debt | $ 5,400 | |||||
U-Vend Canada Convertible Notes [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 18.00% | |||||
Debt conversion price per share | $ / shares | $ 1 | |||||
Number of notes issued | N | 2 | |||||
Convertible notes payable, net of discount | 90,313 | 108,750 | ||||
Unrealized gain on foreign currency | $ 29,158 | $ 18,461 |
PROMISSORY NOTES PAYABLE (Detai
PROMISSORY NOTES PAYABLE (Details Narrative) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2015USD ($)N$ / sharesshares | Dec. 31, 2014USD ($) | |
Debt Instrument [Line Items] | |||
Promissory notes payable | $ 479,576 | $ 304,277 | |
Warrant exercise price | $ / shares | $ .30 | ||
U-Vend Canada Former Employee [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument amount | $ 10,512 | ||
Debt interest rate | 17.00% | ||
Promissory notes payable | 6,235 | $ 6,235 | |
Debt term | 3 years | ||
2015 Promissory Notes [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument amount | $ 23,833 | ||
Number of notes issued | N | 2 | ||
Debt interest rate | 19.00% | ||
Promissory notes payable | $ 11,083 | ||
Unsecured Promissory Notes [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument amount | $ 25,000 | ||
Debt interest rate | 10.00% | ||
Debt maturity date | Jun. 30, 2015 | ||
Debt interest rate after maturity extension | 12.00% | ||
9.5% Unsecured Promissory Note [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument amount | $ 10,000 | ||
Debt interest rate | 9.50% | ||
Debt term | 2 years | ||
Warrant exercise price | $ / shares | $ .24 | ||
Long term debt | $ 10,000 | ||
Debt instrument discount | $ 1,970 | ||
Warrants granted with debt | shares | 41,667 | ||
10% Promissory Note [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument amount | $ 40,000 | ||
Debt interest rate | 10.00% | ||
Debt maturity date | May 31, 2016 |
PROMISSORY NOTES PAYABLE (Det43
PROMISSORY NOTES PAYABLE (Details Narrative 1) | Oct. 23, 2014USD ($)shares | Dec. 31, 2015USD ($)N$ / sharesshares | Dec. 31, 2014USD ($)$ / shares |
Debt Instrument [Line Items] | |||
Warrant exercise price | $ / shares | $ .30 | ||
Amortization of debt discount | $ 2,697 | $ 515 | |
Fair value of warrant liability | 2,920 | ||
15% 24 Month Equipment Financing 2014 Agreement (Perkin Industries, LLC) [Member] | |||
Debt Instrument [Line Items] | |||
Debt term | 24 months | ||
Debt instrument face amount | $ 250,000 | ||
Warrant exercise price | $ / shares | $ 0.35 | ||
Debt instrument discount | $ 1,956 | ||
Warrant liablilty | 2,471 | ||
Long term debt | $ 250,000 | 248,044 | |
Interest rate on debt | 15.00% | ||
Put/call option on equipment | $ 125,000 | ||
Put/call option on equipment (percent) | 50.00% | ||
Warrants granted with debt | shares | 200,000 | ||
15% 24 Month Equipment Financing 2015 Agreement (Perkin Industries, LLC) [Member] | |||
Debt Instrument [Line Items] | |||
Number of notes issued | N | 2 | ||
Debt term | 24 months | ||
Debt instrument face amount | $ 137,750 | ||
Warrant exercise price | $ / shares | $ .35 | ||
Debt instrument discount | $ 496 | ||
Warrant liablilty | 1,237 | ||
Long term debt | $ 137,254 | ||
Interest rate on debt | 15.00% | ||
Put/call option on equipment | $ 68,875 | ||
Put/call option on equipment (percent) | 50.00% | ||
Warrants granted with debt | shares | 110,200 |
CAPITAL LEASE OBLIGATIONS (Deta
CAPITAL LEASE OBLIGATIONS (Details Narrative) - USD ($) | 36 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Oct. 15, 2013 | |
Registration right agreement, percentage of common stock underlying the warrants | 110.00% | ||
Registration right agreement, penalty amount | $ 7,922 | $ 7,922 | |
9.5% Subordinated Convertible Promissory Notes [Member] | |||
Registration right agreement, percentage of common stock underlying the warrants | 110.00% | ||
U-Vend Canada, Inc [Member] | Equipment lease financing [Member] | |||
Equipment lease financing, borrowing capacity | $ 1,000,000 | ||
Equipment acquired under equipment lease | $ 465,500 | ||
Equipment held under capital lease | 465,500 | 465,500 | |
Accumulated depreciation | $ 132,896 | $ 55,406 |
CAPITAL LEASE OBLIGATIONS (De45
CAPITAL LEASE OBLIGATIONS (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Minimum future rental payments due in the year: | ||
Less: Current portion of capital lease obligations | $ (90,783) | $ (116,000) |
Long term capital lease obligations and guaranteed residual value, net | 207,703 | $ 280,959 |
U-Vend Canada, Inc [Member] | ||
Minimum future rental payments due in the year: | ||
2,016 | 126,822 | |
2,017 | 25,831 | |
Total minimum lease payments | 152,653 | |
Guaranteed residual value | 206,833 | |
Net minimum lease payments | 359,486 | |
Less: Amount represented interest | (40,168) | |
Present value of minimum lease payments and guaranteed residual value | 319,318 | |
Less: Current portion of capital lease obligations | (90,783) | |
Long term capital lease obligations and guaranteed residual value | 228,535 | |
Less: Unamortized debt discount on capital leases | (20,832) | |
Long term capital lease obligations and guaranteed residual value, net | $ 207,703 |
STOCKHOLDERS' DEFICIENCY (Detai
STOCKHOLDERS' DEFICIENCY (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Warrant liability reclassified to APIC | $ 3,534 | |
Common stock granted under stock option plan | 4,280,000 | 350,000 |
Recognized compensation period | 1 year 6 months | |
Fair value of warrantss issued to consultant for services | $ 195,473 | |
Face amount of debt converted | $ 5,000 | |
Warrants issued | 779,413 | |
Warrant exercise price | $ .30 | |
Warrant [Member] | ||
Fair value of warrantss issued to consultant for services | $ 69,695 | |
Warrants expired unexercised | 849,751 | |
Warrants exercised | 925,000 | |
Warrants issued | 2,348,350 | |
Restricted Stock [Member] | ||
Common stock granted under stock option plan | 500,000 | |
Vesting period under stock option plan | 3 years | |
Recognized compensation period | 2 years 9 months |
STOCKHOLDERS' DEFICIENCY (Det47
STOCKHOLDERS' DEFICIENCY (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Warrants | 31,311,534 | 30,737,935 |
Exercise Price | $ .30 | |
2011 Private Placement Warrants [Member] | ||
Warrants | 12,500 | 12,500 |
Exercise Price | $ 60 | $ 60 |
Expiration | March 2,018 | March 2,018 |
2013 Series A Warrants Senior Convertible Notes [Member] | ||
Warrants | 5,200,000 | 6,000,000 |
Exercise Price | $ 0.05 | $ 0.05 |
Expiration | June 2016-December 2016 | June 2016-December 2016 |
2013 Series B Warrants Senior Convertible Notes [Member] | ||
Warrants | 6,000,000 | 6,000,000 |
Exercise Price | $ 0.06 | $ 0.06 |
Expiration | June 2018-December 2018 | June 2018-December 2018 |
2013 Issued With Lease Obligation [Member] | ||
Warrants | 861,250 | 986,250 |
Exercise Price | $ 0.12 | $ 0.12 |
Expiration | October- 2016 | October- 2016 |
2014 Acquired In U-Vend Canada Merger [Member] | ||
Warrants | 517,335 | 1,142,336 |
Exercise Price | $ 0.24 | $ 0.24 |
Expiration | October 2015-January 2016 | September 2015-January 2016 |
Series A Warrants [Member] | ||
Warrants | 6,000,000 | |
Exercise Price | $ 0.05 | |
Expiration | January 2017-November 2017 | January 2017-November 2017 |
Series B Warrants [Member] | ||
Warrants | 6,000,000 | |
Exercise Price | $ 0.06 | |
Expiration | January 2019-November 2019 | January 2019-November 2019 |
2014 Warrants For Services [Member] | ||
Warrants | 18,480 | 18,480 |
Exercise Price | $ 0.01 | $ 0.01 |
Expiration | January- 2016 | January- 2016 |
Warrants For Services # 2 [Member] | ||
Warrants | 420,000 | 420,000 |
Exercise Price | $ 0.35 | $ 0.35 |
Expiration | August 2019-December 2019 | August 2019-December 2019 |
Warrants For Services #3 [Member] | ||
Warrants | 35,000 | 35,000 |
Exercise Price | $ 0.24 | $ 0.24 |
Expiration | January- 2016 | January- 2016 |
Warrants For Services #4 [Member] | ||
Warrants | 770,000 | 994,000 |
Exercise Price | $ 0.05 | $ 0.05 |
Expiration | October 2015-December 2015 | June 2015-December 2016 |
Warrants For Services #5 [Member] | ||
Warrants | 1,184,000 | 1,184,000 |
Exercise Price | $ 0.06 | $ 0.06 |
Expiration | June 2018-December 2018 | June 2018-December 2018 |
2014 Issued To Director For Debt [Member] | ||
Warrants | 729,166 | 729,166 |
Exercise Price | $ 0.24 | $ 0.24 |
Expiration | November 2016-July 2017 | November 2016-July 2017 |
2014 Issued With SPA Convertible Debt [Member] | ||
Warrants | 243,334 | 243,334 |
Exercise Price | $ 0.35 | $ 0.35 |
Expiration | August 2019-December 2019 | August 2019-December 2019 |
2014 Issued With Equipment Financing Obligation [Member] | ||
Warrants | 200,000 | 200,000 |
Exercise Price | $ 0.35 | $ 0.35 |
Expiration | October2017 | October2017 |
2014 Issued With Lease Obligation [Member] | ||
Warrants | 246,563 | 246,563 |
Exercise Price | $ 0.20 | $ 0.20 |
Expiration | March2017 | March2017 |
IssuedWithLeaseObligation12014Member | ||
Warrants | 483,889 | 483,889 |
Exercise Price | $ 0.24 | $ 0.24 |
Expiration | May2016 | May2017 |
2014 Issued With Promissory Note [Member] | ||
Warrants | 41,667 | 41,667 |
Exercise Price | $ 0.18 | $ 0.18 |
Expiration | May2017 | May2017 |
2015 Issued with convertible debt [Member] | ||
Warrants | 116,668 | |
Exercise Price | $ 0.35 | |
Expiration | January 2020-March 2020 | |
2015 Issued with convertible financing obligation [Member] | ||
Warrants | 110,200 | |
Exercise Price | $ 0.35 | |
Expiration | January2018 | |
2015 Issued for Services [Member] | ||
Warrants | 407,067 | |
Exercise Price | $ .40 | |
Expiration | February 2020-September 2020 | |
2015 Issued for SPA Convertible Debt [Member] | ||
Warrants | 735,002 | |
Exercise Price | $ 0.40 | |
Expiration | April 2020- September 2020 | |
Issued for Equipment [Member] | ||
Warrants | 200,000 | |
Exercise Price | $ 0.35 | |
Expiration | January 2,020 | |
Issued for with sale of Common Stock [Member] | ||
Warrants | 779,413 | |
Exercise Price | $ .30 | |
Expiration | December 31, 2014 | |
2014 Series A Warrants Senior Convertible Notes [Member] [Member] | ||
Warrants | 6,000,000 | |
Exercise Price | $ 0.05 | |
2014 Series B Warrants Senior Convertible Notes [Member] [Member] | ||
Warrants | 6,000,000 | |
Exercise Price | $ 0.06 | |
2012 Private Placement Warrants [Member] | ||
Warrants | 750 | |
Exercise Price | $ 30 | |
Expiration | April 2,015 |
FAIR VALUE OF FINANCIAL INSTR48
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Changes in derivative warrant liabilities | ||
Balance, beginning | $ 309,993 | |
Balance, ending | 310,960 | $ 309,993 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Changes in derivative warrant liabilities | ||
Balance, beginning | 309,993 | 214,609 |
Allocation of proceeds related to convertible and promissory notes to derivative liabilities due to "down round" provision | 38,282 | 285,269 |
Reclassification of warrant liability as additional paid in capital upon exercise of warrants | (3,534) | |
Equipment purchased with warrants classified as derivative liabilities due to "down round" provision | 50,100 | |
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 derivatives to additional-paid-in capital as a result of adequate authorized due to reverse stock split on May 16, 2014 | (52,833) | |
Unrealized gain on fair value adjustment | (83,881) | (99,190) |
Balance, ending | $ 310,960 | $ 309,993 |
EQUITY INCENTIVE PLAN (Details
EQUITY INCENTIVE PLAN (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Shares available under stock option plan | 5,000,000 | |
Expiration period of stock options | 3 years | |
Weighted average grant date fair value of options | $ .09 | $ .32 |
Fair value of vested options | $ 89,200 | $ 221,207 |
Unrecognized compensation cost - stock options | 208,831 | |
Unrecognized compensation cost - stock grants | $ 73,333 | |
Period of recognition | 1 year 6 months | |
Stock compensation expense - stock options | $ 221,237 | $ 89,207 |
Expected dividend yield | 0.00% | 0.00% |
Restricted Stock [Member] | ||
Vesting period of award | 3 years | |
Period of recognition | 2 years 9 months | |
Stock compensation expense - restricted stock | $ 36,667 | |
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) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Volatility | 65.00% | 65.00% |
Risk-free interest rate - min | 1.62% | 1.62% |
Risk-free interest rate - max | 1.79% | 1.79% |
Expected dividend yield | 0.00% | 0.00% |
Minimum [Member] | ||
Expected term | 2 years | |
Maximum [Member] | ||
Expected term | 5 years |
EQUITY INCENTIVE PLAN (Detail51
EQUITY INCENTIVE PLAN (Details 1) - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Stock Option Activity | ||
Outstanding, beginning - Options | 360,150 | 13,300 |
Options granted - Options | 4,280,000 | 350,000 |
Options cancelled - Options | (2,650) | |
Outstanding, ending - Options | 4,640,650 | 360,150 |
Exercisable, ending - Options | 1,776,068 | 260,150 |
Weighted Average Exercise Price | ||
Outstanding, beginning | $ 1.99 | $ 58 |
Options granted | .20 | 0.30 |
Options cancelled | 60 | |
Outstanding, ending | .34 | 1.99 |
Exercisable, ending | $ .48 | $ 1.99 |
Outstanding, ending - Weighted Average Contractual life | 4 years 4 months 24 days | |
Exercisable, ending -Weighted Average Contractual life | 4 years 4 months 24 days |
COMMITMENTS AND CONTINGENCIES52
COMMITMENTS AND CONTINGENCIES (Details Narrative) | 12 Months Ended | ||
Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2015CADN | |
Number of operating lease | N | 2 | ||
Rent expense | $ 65,141 | $ 33,724 | |
Warehouse Lease - Chicago IL [Member] | |||
Number of operating lease | N | 1 | ||
Term of operating lease | 65 months | ||
Monthly rent expense | $ 1,875 | ||
Warehouse Lease - California [Member] | |||
Number of operating lease | N | 1 | ||
Term of operating lease | 12 months | ||
Monthly rent expense | $ 2,464 | ||
Percentage of common area operating charges | 27.00% | ||
Warehouse Lease Extension - California [Member] | |||
Term of operating lease | 12 months | ||
Monthly rent expense | $ 2,550 | ||
Vehicle lease [Member] | |||
Term of operating lease | 48 months | ||
Monthly rent expense | $ 670 | ||
Warehouse Lease - Las Vegas, NV [Member] | |||
Term of operating lease | 25 months | ||
Monthly rent expense | $ 1,068 | ||
NHL Retail License and Sponsorship Agreement [Member] | |||
Percentage of sales - royalty payment | 5.00% | ||
Payment 11/15/15 [Member] | |||
Sponsorship and minimum royalty payments | CAD | CAD 200,000 | ||
Payment 01/15/16 [Member] | |||
Sponsorship and minimum royalty payments | CAD | 200,000 | ||
Payment 04/15/16 [Member] | |||
Sponsorship and minimum royalty payments | CAD | CAD 400,000 |
COMMITMENTS AND CONTINGENCIES53
COMMITMENTS AND CONTINGENCIES (Details) | Dec. 31, 2015USD ($) |
June 30, 2016 | $ 723,945 |
June 30, 2017 | 1,012,945 |
June 30, 2018 | 1,193,570 |
June 30, 2019 | 1,265,820 |
June 30, 2020 | 1,410,320 |
Total | 5,606,600 |
Sponsorship Fee [Member] | |
June 30, 2016 | 361,250 |
June 30, 2017 | 505,750 |
June 30, 2018 | 614,125 |
June 30, 2019 | 614,125 |
June 30, 2020 | 614,125 |
Total | 2,709,375 |
Minimum Royalty [Member] | |
June 30, 2016 | 216,750 |
June 30, 2017 | 361,250 |
June 30, 2018 | 433,500 |
June 30, 2019 | 505,750 |
June 30, 2020 | 650,250 |
Total | 2,167,500 |
Media Commitment [Member] | |
June 30, 2016 | 144,500 |
June 30, 2017 | 144,500 |
June 30, 2018 | 144,500 |
June 30, 2019 | 144,500 |
June 30, 2020 | 144,500 |
Total | 722,500 |
Product in Kind [Member] | |
June 30, 2016 | 1,445 |
June 30, 2017 | 1,445 |
June 30, 2018 | 1,445 |
June 30, 2019 | 1,445 |
June 30, 2020 | 1,445 |
Total | $ 7,225 |
COMMITMENTS AND CONTINGENCIES54
COMMITMENTS AND CONTINGENCIES (Details 1) | Dec. 31, 2014USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,016 | $ 61,297 |
2,017 | 37,637 |
2,018 | 23,460 |
2,019 | 6,210 |
Total | $ 128,604 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Operating loss carryforwards expiry year | 2,030 |
US state [Member] | |
NOL available for future taxable income | $ 2,813,000 |
Candian provincial [Member] | |
NOL available for future taxable income | 967,000 |
Federal US [Member] | |
NOL available for future taxable income | 4,128,000 |
Canada Revenue Agency [Member] | |
NOL available for future taxable income | $ 967,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
Domestic | $ (1,873,516) | $ (1,234,293) |
Foreign | (173,588) | (841,199) |
Loss before income taxes | $ (2,047,104) | $ (2,075,492) |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Current: | ||
State | $ 3,470 | $ 2,094 |
Total current | 3,470 | 2,094 |
Deferred | ||
Federal | (694,357) | (390,726) |
State | (94,514) | (1,777) |
Foreign | (42,055) | (134,000) |
Total deferred | (830,926) | (526,503) |
Less increase in allowance | $ 830,926 | 451,503 |
Net deferred | (75,000) | |
Total income tax provision (benefit) | $ 3,470 | $ (72,906) |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred tax assets (liabilities): | ||
Net operating loss carryforwards | $ 1,669,671 | $ 1,055,408 |
Depreciable and amortizable assets | (48,106) | (8,252) |
Prepaid expense | (253) | (253) |
Intangible assets | (130,503) | (174,003) |
Stock based compensation | 162,396 | 38,617 |
Beneficial conversion feature | (13,309) | |
Loss reserve | 3,239 | 3,239 |
Accrued compensation | 157,443 | 86,194 |
Other | 116 | (4,564) |
Total | 1,814,003 | 983,077 |
Less valuation allowance | $ (1,814,003) | $ (983,077) |
INCOME TAXES (Details 3)
INCOME TAXES (Details 3) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
Statutory United States Federal rate | 34.00% | 34.00% |
United States federal tax on foreidn branch operations | 4.99% | 7.54% |
State income taxes net of federal benefit | 4.25% | 3.95% |
Other foreign income tax, net of federal benefit | 0.82% | 3.99% |
Change in valuation reserves | (40.59%) | (21.75%) |
Permanent differences | (0.44%) | (4.80%) |
Tax rate differential between juristictions | (2.54%) | (16.76%) |
State income tax law changes | (2.66%) | |
Other | (1.54%) | |
Effective tax rate (provision) | (0.17%) | 3.51% |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2016USD ($)N | Jan. 31, 2016shares | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Subsequent Event [Line Items] | ||||
Proceeds from promissory notes | $ 48,839 | $ 50,000 | ||
Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Shares issued as fees for debt extension, shares | shares | 50,000 | |||
Number of promissory notes issued during period | N | 3 | |||
Proceeds from promissory notes | $ 155,000 | |||
Interest rate | 10.00% |