Document and Entity Information
Document and Entity Information | 3 Months Ended |
Mar. 31, 2017 | |
Document And Entity Information | |
Entity Registrant Name | Eastside Distilling, Inc. |
Entity Central Index Key | 1,534,708 |
Document Type | S-1/A |
Document Period End Date | Mar. 31, 2017 |
Amendment Flag | true |
Amendment Description | AMENDMENT NO. 5 |
Entity Filer Category | Smaller Reporting Company |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | |||
Cash | $ 883,715 | $ 1,088,066 | $ 141,317 |
Trade receivables | 360,126 | 344,955 | 142,206 |
Inventories | 995,733 | 780,037 | 683,824 |
Prepaid expenses and current assets | 146,802 | 187,714 | 163,506 |
Total current assets | 2,386,376 | 2,400,772 | 1,130,853 |
Property and equipment, net | 128,560 | 99,216 | 112,005 |
Intangible assets, net | 373,502 | ||
Deposits | 59,400 | 48,000 | 49,000 |
Total Assets | 2,947,838 | 2,547,988 | 1,291,858 |
Current liabilities: | |||
Accounts payable | 476,175 | 457,034 | 1,300,532 |
Accrued liabilities | 208,418 | 523,702 | 563,814 |
Deferred revenue | 1,458 | 2,126 | 727 |
Current portion of notes payable | 4,537 | 4,098 | |
Related party note payable | 12,500 | ||
Convertible notes payable - net of debt discount | 455,958 | ||
Total current liabilities | 686,051 | 987,399 | 2,337,629 |
Notes payable - less current portion and debt discount | 365,160 | 427,756 | 17,842 |
Total liabilities | 1,051,211 | 1,415,155 | 2,355,471 |
Commitments and contingencies (Note 9) | |||
Stockholders’ (deficit) equity: | |||
Series A convertible preferred stock, $0.0001 par value; 3,000 shares authorized; 50, 300 and 0 shares issued and outstanding at March 31, 2017, December 31, 2016 and 2015, respectively (liquidation value of $125,000 and $750,000 at December 31, 2016 and March 31, 2017) | 49,426 | 245,838 | |
Common stock, $0.0001 par value; 15,000,000 shares authorized; 3,003,451, 2,542,504 and 769,917 shares issued and outstanding at March 31, 2017, December 31, 2016 and 2015, respectively | 300 | 254 | 77 |
Additional paid-in capital | 15,566,800 | 13,699,785 | 6,498,061 |
Accumulated deficit | (13,719,899) | (12,813,044) | (7,561,751) |
Total stockholders’ equity (deficit) | 1,896,627 | 1,132,833 | (1,063,613) |
Total Liabilities and Stockholders’ Equity (Deficit) | $ 2,947,838 | $ 2,547,988 | $ 1,291,858 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | |||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 3,000 | 3,000 | 3,000 |
Preferred stock, shares issued | 50 | 300 | 0 |
Preferred stock, shares outstanding | 50 | 300 | 0 |
Preferred stock, liquidation value | $ 125,000 | $ 750,000 | |
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 15,000,000 | 15,000,000 | 15,000,000 |
Common stock, shares issued | 3,003,451 | 2,542,504 | 769,917 |
Common stock, shares outstanding | 3,003,451 | 2,542,504 | 769,917 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Statement [Abstract] | ||||
Sales | $ 829,669 | $ 621,882 | $ 3,042,527 | $ 2,326,664 |
Less excise taxes, customer programs and incentives | 217,188 | 167,120 | 934,221 | 624,046 |
Net sales | 612,481 | 454,762 | 2,108,306 | 1,702,618 |
Cost of sales | 322,913 | 256,169 | 1,280,344 | 870,390 |
Gross profit | 289,568 | 198,593 | 827,962 | 832,228 |
Operating expenses: | ||||
Advertising, promotional and selling expenses | 386,132 | 156,203 | 1,244,152 | 923,310 |
General and administrative expenses | 726,396 | 886,011 | 3,881,771 | 3,450,436 |
Loss on disposal of property and equipment | 35,534 | |||
Total operating expenses | 1,148,062 | 1,042,214 | ||
Loss from operations | (858,494) | (843,621) | (4,297,961) | (3,541,518) |
Other income (expense), net | ||||
Interest expense | (47,809) | (171,054) | (862,468) | (112,458) |
Gain on spin-off of subsidiary | 52,890 | |||
Other income (expense) | 4,485 | (4) | (39,190) | 20 |
Total other expense, net | (43,324) | (171,058) | (901,658) | (59,548) |
Loss before income taxes | (901,818) | (1,014,679) | (5,199,619) | (3,601,066) |
Provision for income taxes | ||||
Net loss | (901,818) | (1,014,679) | (5,199,619) | (3,601,066) |
Dividends on convertible preferred stock | (5,037) | (51,674) | ||
Net loss attributable to common shareholders | $ (906,855) | $ (1,014,679) | $ (5,251,293) | $ (3,601,066) |
Basic and diluted net loss per common share | $ (0.35) | $ (1.34) | $ (4.21) | $ (4.72) |
Basic and diluted weighted average common shares outstanding | 2,614,324 | 758,542 | 1,247,281 | 762,506 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholder's (Deficit) Equity - USD ($) | Convertible Series A Preferred Stock [Member] | Common Stock [Member] | Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2014 | $ 76 | $ 5,542,717 | $ (3,960,685) | $ 1,582,108 | |
Balance, shares at Dec. 31, 2014 | 758,542 | ||||
Issuance of common stock in exchange for services, net of issuance costs | $ 1 | 671,974 | 671,975 | ||
Issuance of common stock in exchange for services, net of issuance costs, shares | 9,264 | ||||
Stock-based compensation | 140,370 | 140,370 | |||
Shares issued for payoff of trade debt, net | $ 1 | 142,999 | 143,000 | ||
Shares issued for payoff of trade debt, net, shares | 2,111 | ||||
Net loss | (3,601,066) | (3,601,066) | |||
Balance at Dec. 31, 2015 | $ 77 | 6,498,061 | (7,561,751) | (1,063,613) | |
Balance, shares at Dec. 31, 2015 | 769,917 | ||||
Stock-based compensation | $ 2 | 374,685 | 374,687 | ||
Stock-based compensation, shares | 21,167 | ||||
Issuance of common stock, net of issuance cost of $23,762, with detachable warrants | $ 93 | 3,016,145 | 3,016,238 | ||
Issuance of common stock, net of issuance cost of $23,762, with detachable warrants, shares | 933,334 | ||||
Issuance of common stock from warrant exercise for cash | $ 19 | 734,197 | 734,216 | ||
Issuance of common stock from warrant exercise for cash, shares | 188,261 | ||||
Issuance of common stock for services rendered | $ 4 | 284,274 | 284,278 | ||
Issuance of common stock for services rendered, shares | 38,395 | ||||
Issuance of Series A convertible Preferred stock, net of issuance cost of $69,528, with detachable warrants | $ 972 | 145,637 | 902,472 | ||
Issuance of Series A convertible Preferred stock, net of issuance cost of $69,528, with detachable warrants, shares | 756,835 | ||||
Issuance of common stock for note payable | $ 41 | 1,348,961 | 1,349,002 | ||
Issuance of common stock for note payable, shares | 410,137 | ||||
Issuance of detachable warrants on notes payable | 506,622 | 506,622 | |||
Cumulative dividend on Series A preferred | 51,674 | (51,674) | |||
Issuance of common stock for Series A preferred dividend | $ (17,759) | $ 1 | 17,759 | ||
Issuance of common stock for Series A preferred dividend, shares | 4,268 | ||||
Common shares issued for preferred conversion | $ (544,912) | $ 18 | 544,894 | ||
Common shares issued for preferred conversion, shares | (672) | 177,000 | |||
Beneficial conversion feature of convertible debt | $ 228,550 | $ 228,550 | |||
Adjustment of shares for reverse stock-split | 26 | ||||
Net loss | $ (5,199,619) | $ (5,199,619) | |||
Balance at Dec. 31, 2016 | $ 300 | $ 254 | 13,699,785 | (12,813,044) | 1,132,833 |
Balance, shares at Dec. 31, 2016 | 245,838 | 2,542,504 | |||
Issuance of common stock in exchange for services, net of issuance costs | $ 2 | 83,798 | 83,800 | ||
Issuance of common stock in exchange for services, net of issuance costs, shares | 19,796 | ||||
Issuance of common stock, net of issuance cost of $23,762, with detachable warrants | $ 2 | 58,498 | $ 58,500 | ||
Issuance of common stock, net of issuance cost of $23,762, with detachable warrants, shares | 15,000 | 192,308 | |||
Common shares issued for preferred conversion | $ (250) | $ 8 | 201,441 | ||
Common shares issued for preferred conversion, shares | (201,449) | 83,334 | |||
Net loss | (901,818) | (901,818) | |||
Balance at Mar. 31, 2017 | $ 49,426 | $ 300 | $ 15,566,800 | $ (13,719,899) | $ 1,896,627 |
Balance, shares at Mar. 31, 2017 | 50 | 3,003,451 |
Consolidated Statements of Sto6
Consolidated Statements of Stockholder's (Deficit) Equity (Parenthetical) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Statement of Stockholders' Equity [Abstract] | ||
Common stock, issuance costs | $ 6,033 | $ 23,762 |
Series A convertible preferred stock, issuance costs | $ 69,528 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash Flows From Operating Activities: | ||||
Net loss | $ (901,818) | $ (1,014,679) | $ (5,199,619) | $ (3,601,066) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Depreciation and amortization | 9,006 | 5,574 | 21,991 | 19,277 |
Loss on disposal of property and equipment | 35,534 | |||
Amortization of debt issuance costs | 37,009 | 11,167 | 116,750 | 16,750 |
Amortization of beneficial conversion feature | 148,077 | 228,550 | ||
Issuance of common stock in exchange for services | 86,317 | 89,100 | 265,065 | 671,920 |
Issuance of common stock for payoff of trade debt | 19,212 | 142,987 | ||
Stock-based compensation | 158,658 | 105,839 | 374,687 | 140,370 |
Cumulative dividend on preferred stock | 39,200 | |||
Gain on spin-off of subsidiary | (52,890) | |||
Changes in operating assets and liabilities: | ||||
Trade receivables | (15,171) | (40,974) | (202,749) | (4,265) |
Inventories | (112,208) | 61,356 | (96,213) | (306,804) |
Prepaid expenses and other assets | 29,512 | 64,751 | (23,208) | 155,391 |
Accounts payable | 13,961 | (7,808) | (843,498) | 1,133,166 |
Accrued liabilities | (466,335) | 304,739 | 343,762 | 502,074 |
Deferred revenue | (668) | 1,381 | 1,399 | (4,688) |
Net cash used in operating activities | (1,126,203) | (271,477) | (4,954,671) | (1,187,778) |
Cash Flows From Investing Activities: | ||||
Cash acquired in acquisition | 7,062 | |||
Purchases of property and equipment | (39,631) | (6,954) | (9,202) | (50,076) |
Net cash used in investing activities | (32,569) | (6,954) | (9,202) | (50,076) |
Cash Flows From Financing Activities: | ||||
Preferred stock deposit | 151,200 | |||
Stock issuance cost related to acquisition | (5,580) | |||
Payments of principal on notes payable | (1,716) | (1,286) | ||
Proceeds from preferred stock, net of issuance costs of $69,528, with detachable warrants | 429,572 | |||
Proceeds from common stock, with detachable warrants - related party | 565,000 | |||
Proceeds from common stock, net of issuance costs of $6,033 and $23,762 with detachable warrants at March 31, 2017 and December 31, 2016. | 802,467 | 2,451,238 | ||
Payments on convertible notes payable | (141,904) | (4,892) | ||
Proceeds from notes payable with warrants issued - related party | 295,000 | |||
Proceeds from notes payable with warrants issued | 1,405,000 | |||
Proceeds from convertible notes payable, net of issuance costs | 185,000 | 289,273 | ||
Proceeds from (repayment of) related party note payable | (12,500) | 12,500 | ||
Proceeds from warrant exercise - related party | 50,000 | |||
Proceeds from warrant exercise | 159,250 | 684,216 | ||
Net cash provided by financing activities | 954,421 | 149,914 | 5,910,622 | 296,881 |
Net (decrease) increase in cash | (204,351) | (128,517) | 946,749 | (940,973) |
Cash - beginning of period | 1,088,066 | 141,317 | 141,317 | 1,082,290 |
Cash - end of period | 883,715 | 12,800 | 1,088,066 | 141,317 |
Supplemental Disclosure of Cash Flow Information: | ||||
Cash paid during the period for interest | 10,800 | 1,380 | 91,237 | 4,593 |
Income taxes | ||||
Supplemental Disclosure of Non-Cash Financing Activity: | ||||
Issuance of common stock for the acquisition of MotherLode Craft Distillery, LLC | 377,000 | |||
Common stock issued in exchange of notes payable | $ 87,500 | 196,330 | ||
Stock issued for payment of trade debt | 19,212 | |||
Series A preferred issued in exchange for compensation - related party | 423,000 | |||
Series A preferred issued in exchange of debt | 50,000 | |||
Common stock issued in exchange for dividend | 17,759 | |||
Stock-based compensation recorded as prepaid expenses and other long-term assets | 65,625 | |||
Conversion of accounts payable to common stock | 142,987 | |||
Exchange of warrant exercise used to repay notes payable - related party | 169,999 | |||
Exchange of warrant exercise used to repay notes payable | $ 401,148 |
Consolidated Statements of Cas8
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Statement of Cash Flows [Abstract] | ||
Preferred stock, net of issuance costs | $ 69,528 | |
Common stock, net of issuance costs | $ 6,033 | $ 23,762 |
Description of Business
Description of Business | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | ||
Description of Business | 1. Description of Business We are a Portland, Oregon-based producer and marketer of craft spirits, founded in 2008. Our products span several alcoholic beverage categories, including bourbon, American whiskey, vodka and rum. Unlike many, if not most distillers, we operate several retail tasting rooms in Oregon to market our brands directly to consumers. Our growth strategy is to build on our local base in the Pacific Northwest and expand selectively to other markets by using major spirits distributors, such as Southern Glazer Wines and Spirits, or regional distributors that focus on craft brands. As a small company in the large, international spirits marketplace filled with massive conglomerates, we are innovative in exploiting new trends with our products, for example our Coffee Rum with cold brew coffee and low sugar and our gluten free potato vodka. In December of 2016 we retained Sandstrom Partners (an internationally known spirit branding firm that branded St Germain and Bulleit Bourbon), to guide our marketing strategy and branding. They subsequently became an investor in our Company. We seek to be both a leader in creating spirits that offer better value than comparable spirits, for example our value priced Burnside Bourbon and Portland Potato Vodka, and an innovator in creating imaginative spirits that offer a unique taste experience, for example our cold-brewed coffee rum, Oregon oak aged whiskeys, Marionberry Whiskey and Peppermint Bark holiday liqueur. On May 1, 2017, we acquired Big Bottom Distillery (“BBD”) for its excellent, award winning range of super premium gins and whiskeys, including Navy Proof Gin, Oregon Gin, Delta Rye and initial production of American Single Malt whiskey. BBD’s super premium spirits will expand our tasting room offerings and give us a presence at the “high end” of the market. In addition, through MotherLode Craft Distillery (“MotherLode”), our wholly-owned subsidiary acquired on March 8, 2017, we also provide contract bottling and packaging services for existing and would be spirits producers, some of whom contract with us to blend or distill spirits. As a publicly-traded craft spirit producers, we have access to the public capital markets to support our long-term growth initiatives, including strategic acquisitions. We currently sell our products in 22 states (Oregon, California, Washington, Florida, Nevada, Texas, Virginia, Indiana, Illinois, New York, New Jersey, Massachusetts, Connecticut, Minnesota, Georgia, Pennsylvania, Rhode Island, New Hampshire, Maine, Idaho, Vermont and Maryland) as well as Canada and China. The Company also generates revenue from tastings, tasting room tours, private parties, and merchandise sales from its facilities in Oregon. The Company is subject to the Oregon Liquor Control Commission (OLCC) and the Alcohol and Tobacco Tax and Trade Bureau (TTB). | 1. Description of Business We are a Portland, Oregon-based producer and marketer of craft spirits, founded in 2008. Our products span several alcoholic beverage categories, including bourbon, American whiskey, vodka and rum. As a small business in the large, international spirits marketplace dominated by massive conglomerates, we rely heavily on our creativity. Our mission is to be an innovator in creating spirits that offer better value than comparable spirits, for example our Burnside Bourbon and Portland Potato Vodka, and in creating imaginative spirits that offer an unusual taste experience, for example our cold-brewed coffee rum, Oregon oak aged whiskeys, Marionberry Whiskey and Peppermint Bark holiday liquor. Our strategy is to expand from our local base in the Pacific Northwest by using major spirits distributors, such as Southern Glazer Wines and Spirits, to address the demand for premium and high-end craft spirits. In late 2016, to aid us in this strategy, we retained Sandstrom Partners, a Portland-based firm specializing in spirits branding, and tasked them with reviewing our current product portfolio, as well as our new ideas, and advising us on marketing, creation of brand awareness and product positioning, locally and nationally. We also intend to capitalize on our uniqueness as a publicly-traded craft spirit producer, with access to the public markets, to support our growth, including by making strategic acquisitions. We currently sell our products in 22 states (Oregon, California, Washington, Florida, Nevada, Texas, Virginia, Indiana, Illinois, New York, New Jersey, Massachusetts, Connecticut, Minnesota, Georgia, Pennsylvania, Rhode Island, New Hampshire, Maine, Idaho, Vermont and Maryland) as well as Ontario, Canada. The Company also generates revenue from tastings, tasting room tours, private parties, and merchandise sales from its facilities in Oregon. The Company is subject to the Oregon Liquor Control Commission (OLCC) and the Alcohol and Tobacco Tax and Trade Bureau (TTB). On October 31, 2014, Eurocan Holdings Ltd. (Eurocan) consummated the acquisition (the Acquisition) of Eastside Distilling, LLC (the LLC) pursuant to an Agreement and Plan of Merger (the Agreement) by and among Eurocan, the LLC, and Eastside Distilling, Inc., Eurocan’s wholly-owned subsidiary. Pursuant to the Agreement, the LLC merged with and into Eastside Distilling, Inc. The merger consideration for the Acquisition consisted of 533,334 shares of Eurocan’s common stock. In addition, certain of Eurocan’s stockholders cancelled an aggregate of 415,167 shares of Eurocan’s common stock held by them. As a result, on October 31, 2014, Eurocan had 666,667 shares of common stock issued and outstanding, of which 533,334 shares were held by the former members of the LLC. Consequently, for accounting purposes, the transaction was accounted for as a reverse acquisition, with the LLC as the acquirer of Eurocan. These consolidated financial statements are presented as a continuation of the operations of the LLC with one adjustment to retroactively adjust the legal common stock of Eastside Distilling, Inc. to reflect the legal capital of Eurocan prior to the Acquisition. Subsequent to the Acquisition, Eastside Distilling, Inc. merged with and into Eurocan, and Eurocan’s name was officially changed to Eastside Distilling, Inc. (Eastside). Prior to the Acquisition, Michael Williams Web Design, Inc. (MWWD) was a wholly-owned subsidiary of Eurocan and constituted the majority of Eurocan’s operations. Pursuant to the Agreement and subsequent activity, MWWD became a wholly-owned subsidiary of Eastside on October 31, 2014. MWWD’s operations were not significant. Eastside and MWWD are collectively referred to herein as “the Company”. On February 3, 2015, the Company entered into a Separation and Share Transfer Agreement (Share Transfer) with MWWD under which substantially all assets and liabilities of MWWD were transferred to Michael Williams in consideration of MWWD’s and Mr. Williams’ full release of all claims and liabilities related to MWWD and the MWWD business. Following the Share Transfer, MWWD ceased to be a subsidiary. As a result of the Share Transfer, the Company recorded a gain of $52,890, which is included in other income (expense) in the accompanying consolidated statement of operations for the year ended December 31, 2015. This gain is primarily the result of the transfer of net liabilities to Michael Williams. The results for the year ended December 31, 2015 referred to in these consolidated financial statements include both the results of Eastside and MWWD (through February 3, 2015). |
Liquidity
Liquidity | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Liquidity | 2. Liquidity Historically, the Company has funded its cash and liquidity needs through convertible notes, extended credit terms, and equity raisings. The Company has incurred a net loss of approximately $901,818 and has an accumulated deficit of $13,719,889 for the three months ended March 31, 2017. The Company has been dependent on raising capital from debt and equity financings to meet its needs for cash flow used in operating activities. For the three months ended March 31, 2017, the Company raised $954,421 in cash flow from financing activities to meet cash flow used in operating activities. At March 31, 2017, the Company has $883,715 of cash on hand with a positive working capital of $1,700,325. The Company’s ability to meet its ongoing operating cash needs is dependent on generating positive operating cash flow, primarily through increased sales, improved profit growth and controlling expenses. Management has taken actions to improve profitability, by reducing headcount, rent, professional fees and increasing sales. In addition, through May 12, 2017, the Company has raised an additional $833,815 in cash through equity and debt offerings (see Note 14, Subsequent Events). Also in May 2017, the Company acquired a small distillery business (stock purchase transaction) that is expected to improve operating results (see Note 14, Subsequent Events). Management believes that cash on hand and the most recent equity raise and acquisition will be sufficient to meet their operating activities to meet their near-term cash needs over the next twelve months. | 2. Liquidity Historically, the Company has funded its cash and liquidity needs through convertible notes, extended credit terms, and equity raisings. For the years ended December 31, 2016 and 2015, the Company incurred a net loss of approximately $5.3 and $3.6 million in 2016 and 2015, respectively, and has an accumulated deficit of approximately $12.8 million as of December 31, 2016. The Company has been dependent on raising capital from debt and equity financings to meet its needs for cash flow used in operating activities. For the year ended December 31, 2016, the Company raised approximately $5.9 million in cash flow from financing activities to meet cash flow used in operating activities. At December 31, 2016, the Company has approximately $1.1 million of cash on hand with a positive working capital of $1.4 million. The Company’s ability to meet its ongoing operating cash needs is dependent on generating positive operating cash flow, primarily through increased sales, improved profit growth and controlling expenses. Management has taken actions to improve profitability, reduce headcount, reduce rent, reduce professional fees and increase sales. In addition, through March 31, 2017, the Company has raised an additional $967,750 in cash through equity offerings (see Note 14, Subsequent Events). Also in March 2017, the Company acquired a small distillery bottling and production support business (stock purchase transaction) that is expected to improve operating results (see Note 14, Subsequent Events). Management believes that cash on hand and the most recent equity raise and acquisition will be sufficient to meet their operating activities to meet their near-term cash needs over the next twelve months. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | ||
Summary of Significant Accounting Policies | 3. Summary of Significant Accounting Policies Basis of Presentation and Consolidation The accompanying condensed consolidated financial statements for Eastside Distilling, Inc. and Subsidiary were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and with instructions for Form 10-Q and, therefore, do not include all disclosures necessary for a complete presentation of financial condition, results of operations, and cash flows in conformity with GAAP. However, all adjustments which are, in the opinion of management, necessary for a fair presentation of the interim condensed consolidated financial statements have been included. All such adjustments are of a normal recurring nature. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The unaudited condensed consolidated results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 31, 2017. The condensed consolidated financial statements include the accounts of Eastside Distilling, Inc.’s wholly-owned subsidiary, MotherLode (beginning as of March 8, 2017). All intercompany balances and transactions have been eliminated in consolidation. Segment Reporting The Company determined its operating segment on the same basis that it uses to evaluate its performance internally. The Company has one business activity, producing, marketing and distributing hand-crafted spirits, and operates as one segment. The Company’s chief operating decision makers, its chief executive officer and chief financial officer, review the Company’s operating results on an aggregate basis for purposes of allocating resources and evaluating financial performance. Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition Net revenue includes product sales, less excise taxes and customer programs and incentives. The Company records revenue when all four of the following criteria are met: (i) there is persuasive evidence that an arrangement exists; (ii) delivery of the products and/or services has occurred; (iii) the selling price is fixed or determinable; and (iv) collectability is reasonably assured. The Company recognizes sales when merchandise is shipped from a warehouse directly to wholesale customers (except in the case of a consignment sale). For consignment sales, which include sales to the Oregon Liquor Control Commission (OLCC), the Company recognizes sales upon the consignee’s shipment to the customer. Postage and handling charges billed to customers are also recognized as sales upon shipment of the related merchandise. Shipping terms are generally FOB shipping point, and title passes to the customer at the time and place of shipment or purchase by customers at a retail location. For consignment sales, title passes to the consignee concurrent with the consignee’s shipment to the customer. The customer has no cancellation privileges after shipment or upon purchase at retail locations, other than customary rights of return. The Company excludes sales tax collected and remitted to various states from sales and cost of sales. Sales from items sold through the Company’s retail location are recognized at the time of sale. Revenue received from online merchants who sell discounted gift certificates for the Company’s merchandise and tastings is deferred until the customer has redeemed the discounted gift certificate or the gift certificate has expired, whichever occurs earlier. Customer Programs and Incentives Customer programs and incentives, which include customer promotional discount programs, customer incentives and other payments, are a common practice in the alcohol beverage industry. The Company makes these payments to customers and incurs these costs to promote sales of products and to maintain competitive pricing. Amounts paid in connection with customer programs and incentives are recorded as reductions to net sales or as advertising, promotional and selling expenses in accordance with ASC Topic 605-50, Revenue Recognition - Customer Payments and Incentives, based on the nature of the expenditure. Amounts paid to customers totaled $40,772 and $8,712 for the three months ended March 31, 2017 and 2016, respectively. Advertising, Promotional and Selling Expenses The following expenses are included in advertising, promotions and selling expenses in the accompanying consolidated statements of operations: media advertising costs, special event costs, tasting room costs, sales and marketing expenses, salary and benefit expenses, travel and entertainment expenses for the sales, brand and sales support workforce and promotional activity expenses. Cost of Sales Cost of sales consists of the costs of ingredients utilized in the production of spirits, manufacturing labor and overhead, warehousing rent, packaging, and in-bound freight charges. Ingredients account for the largest portion of the cost of sales, followed by packaging and production costs. Shipping and Fulfillment Costs Freight costs incurred related to shipment of merchandise from the Company’s distribution facilities to customers are recorded in cost of sales. Cash and Cash Equivalents Cash equivalents are considered to be highly liquid investments with maturities of three months or less at the time of the purchase. The Company had no cash equivalents at March 31, 2017 and December 31, 2016. Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of trade receivables. At March 31, 2017 and December 31, 2016, three customers represented 79% and 91% of trade receivables, respectively. Sales to three customers accounted for approximately 57% of consolidated net sales for the three months ended March 31, 2017. Sales to one customer, the OLCC, accounted for approximately 32% of net sales for the three months ended March 31, 2016. Fair Value Measurements GAAP defines fair value, establishes a framework for measuring fair value, and requires certain disclosures about fair value measurements. GAAP permits an entity to choose to measure many financial instruments and certain other items at fair value and contains financial statement presentation and disclosure requirements for assets and liabilities for which the fair value option is elected. At March 31, 2017 and December 31, 2016, management has not elected to report any of the Company’s assets or liabilities at fair value under the “fair value option” provided by GAAP. The hierarchy of fair value valuation techniques under GAAP provides for three levels: Level 1 provides the most reliable measure of fair value, whereas Level 3, if applicable, generally would require significant management judgment. The three levels for categorizing assets and liabilities under GAAP’s fair value measurement requirements are as follows: Level 1: Fair value of the asset or liability is determined using unadjusted quoted prices in active markets for identical assets or liabilities. Level 2: Fair value of the asset or liability is determined using inputs other than quoted prices that are observable for the applicable asset or liability, either directly or indirectly, such as quoted prices for similar (as opposed to identical) assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Fair value of the asset or liability is determined using unobservable inputs that are significant to the fair value measurement and reflect management’s own assumptions regarding the applicable asset or liability. None of the Company’s assets or liabilities were measured at fair value at March 31, 2017 and December 31, 2016. However, GAAP requires the disclosure of fair value information about financial instruments that are not measured at fair value. Financial instruments consist principally of trade receivables, accounts payable, accrued liabilities, note payable, and convertible note payable. The estimated fair value of trade receivables, accounts payable, and accrued liabilities approximates their carrying value due to the short period of time to their maturities. At March 31, 2017 and December 31, 2016, the Company’s note payable and convertible notes payable are at fixed rates and their carrying value approximates fair value. Items Measured at Fair Value on a Nonrecurring Basis Certain assets and liabilities acquired in a business acquisition are valued at fair value at the date of acquisition. Inventories Inventories primarily consist of bulk and bottled liquor and merchandise and are stated at the lower of cost or market. Cost is determined using an average costing methodology, which approximates cost under the first-in, first-out (FIFO) method. A portion of inventory is held by certain independent distributors on consignment until it is sold to a third party. The Company regularly monitors inventory quantities on hand and records write-downs for excess and obsolete inventories based primarily on the Company’s estimated forecast of product demand and production requirements. Such write-downs establish a new cost basis of accounting for the related inventory. The Company has recorded no write-downs of inventory for the three months ended March 31, 2017 and 2016. Property and Equipment Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, ranging from three to seven years. Amortization of leasehold improvements is computed using the straight-line method over the life of the lease or the useful lives of the assets, whichever is shorter. The cost and related accumulated depreciation and amortization of property and equipment sold or otherwise disposed of are removed from the accounts and any gain or loss is reported as current period income or expense. The costs of repairs and maintenance are expensed as incurred. Long-lived Assets The Company accounts for long-lived assets, including property and equipment, at amortized cost. Management reviews long-lived assets for probable impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. If there is an indication of impairment, management would prepare an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these estimated cash flows were less than the carrying amount of the asset, an impairment loss would be recognized to write down the asset to its estimated fair value. Income Taxes The provision for income taxes is based on income and expenses as reported for financial statement purposes using the “asset and liability method” for accounting for deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. At March 31, 2017 and December 31, 2016, the Company established valuation allowances against its net deferred tax assets. Income tax positions that meet the “more-likely-than-not” recognition threshold are measured at the largest amount of income tax benefit that is more than 50 percent likely to be realized upon settlement with the applicable taxing authority. The portion of the benefits associated with income tax positions taken that exceeds the amount measured as described above would be reflected as a liability for unrecognized income tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized income tax benefits would be classified as additional income taxes in the accompanying condensed consolidated statements of operations. There were no unrecognized income tax benefits, nor any interest and penalties associated with unrecognized income tax benefits, accrued or expensed at and for the three months ended March 31, 2017 and 2016. The Company files federal income tax returns in the U.S. and various state income tax returns. The Company is no longer subject to examinations by the related tax authorities for the Company’s U.S. federal and state income tax returns for years prior to 2011. Advertising Advertising costs are expensed as incurred. Advertising expense was $386,132 and $156,203 for the three months ended March 31, 2017 and 2016, respectively. Comprehensive Income The Company does not have any reconciling other comprehensive income items for the three months ended March 31, 2017 and 2016. Excise Taxes The Company is responsible for compliance with the TTB regulations, which includes making timely and accurate excise tax payments. The Company is subject to periodic compliance audits by the TTB. Individual states also impose excise taxes on alcohol beverages in varying amounts. The Company calculates its excise tax expense based upon units produced and on its understanding of the applicable excise tax laws. Excise taxes totaled $176,416 and $158,408 for the three months ended March 31, 2017 and 2016, respectively. Stock-Based Compensation The Company recognizes as compensation expense all stock-based awards issued to employees. The compensation cost is measured based on the grant-date fair value of the related stock-based awards and is recognized over the service period of stock-based awards, which is generally the same as the vesting period. The fair value of stock options is determined using the Black-Scholes valuation model, which estimates the fair value of each award on the date of grant based on a variety of assumptions including expected stock price volatility, expected terms of the awards, risk-free interest rate, and dividend rates, if applicable. Stock-based awards issued to nonemployees are recorded at fair value on the measurement date and are subject to periodic market adjustments at the end of each reporting period and as the underlying stock-based awards vest. Stock-based compensation was $158,658 and $105,839 for the three months ended March 31, 2017 and 2016, respectively. Accounts Receivable Factoring Program We use an accounts receivable factoring program with certain customer accounts. Under this program, we have the option to sell those customer receivables in advance of payment for 75% of the amount due. When the customer remits payment, we then receive the remaining 25%. We are charged interest on the advanced 75% payment at a rate of 1.5% per month. Under the terms of the agreement with the factoring provider, any factored invoices have recourse should the customer fail to pay the invoice. Thus, we record factored amounts as a liability until the customer remits payment and we receive the remaining 25% of the non-factored amount. We did not factor any invoices during the three months ended March 31, 2017. At March 31, 2017, we had factored invoices outstanding of $59,547, and we incurred fees associated with the factoring program of $2,582 during the three months ended March 31, 2017. During the three months ended March 31, 2016, we factored invoices totaling $117,933 and received total proceeds of $88,450. At March 31, 2016, we had factored invoices outstanding of $79,120, and we incurred fees associated with the factoring program of $4,269 during the three months ended March 31, 2016. Recent Accounting Pronouncements In March 2016, the Financial Accounting Standard Boards (the “FASB”) issued Accounting Standard Update (“ASU”) No. 2016-09, Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ● A lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and ● A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing. Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (i.e., January 1, 2019, for a calendar year entity). Early application is permitted for all public business entities upon issuance. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. We are currently evaluating the impact ASU 2016-02 will have on the Company’s condensed consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330), Simplifying the Measurement of Inventory In April 2015, the FASB issued ASU 2015-03, simplifying the presentation of debt issuance costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 is effective for annual and interim periods beginning after December 15, 2015 and early application is permitted. We have early adopted as of December 31, 2015. Reclassifications Certain prior period amounts have been reclassified to conform to the March 31, 2017 presentation with no changes to net loss or total stockholders’ equity previously reported. | 3. Summary of Significant Accounting Policies Basis of Presentation and Consolidation The accompanying consolidated financial statements for Eastside Distilling, Inc. were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The consolidated financial statements include the accounts of Eastside Distilling, Inc. and its wholly-owned subsidiary MWWD (through February 3, 2015). All intercompany balances and transactions have been eliminated in consolidation. Segment Reporting The Company determined its operating segment on the same basis that it uses to evaluate its performance internally. The Company has one business activity, marketing and distributing hand-crafted spirits, and operates as one segment. The Company’s chief operating decision makers, its chief executive officer and chief financial officer, review the Company’s operating results on an aggregate basis for purposes of allocating resources and evaluating financial performance. Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition Net revenue includes product sales, less excise taxes and customer programs and incentives. The Company records revenue when all four of the following criteria are met: (i) there is persuasive evidence that an arrangement exists; (ii) delivery of the products and/or services has occurred; (iii) the selling price is fixed or determinable; and (iv) collectability is reasonably assured. The Company recognizes sales when merchandise is shipped from a warehouse directly to wholesale customers (except in the case of a consignment sale). For consignment sales, which include sales to the Oregon Liquor Control Commission (OLCC), the Company recognizes sales upon the consignee’s shipment to the customer. Postage and handling charges billed to customers are also recognized as sales upon shipment of the related merchandise. Shipping terms are generally FOB shipping point, and title passes to the customer at the time and place of shipment or purchase by customers at a retail location. For consignment sales, title passes to the consignee concurrent with the consignee’s shipment to the customer. The customer has no cancellation privileges after shipment or upon purchase at retail locations, other than customary rights of return. The Company excludes sales tax collected and remitted to various states from sales and cost of sales. Sales from items sold through the Company’s retail location are recognized at the time of sale. Revenue received from online merchants who sell discounted gift certificates for the Company’s merchandise and tastings is deferred until the customer has redeemed the discounted gift certificate or the gift certificate has expired, whichever occurs earlier. Customer Programs and Incentives Customer programs and incentives, which include customer promotional discount programs, customer incentives and other payments, are a common practice in the alcohol beverage industry. The Company makes these payments to customers and incurs these costs to promote sales of products and to maintain competitive pricing. Amounts paid in connection with customer programs and incentives are recorded as reductions to net revenue or as advertising, promotional and selling expenses in accordance with ASC Topic 605-50, Revenue Recognition - Customer Payments and Incentives, based on the nature of the expenditure. Amounts paid to customers totaled $136,786 and $3,184 in years 2016 and 2015, respectively. Advertising, Promotional and Selling Expenses The following expenses are included in advertising, promotions and selling expenses in the accompanying consolidated statements of operations: media advertising costs, special event costs, tasting room costs, sales and marketing expenses, salary and benefit expenses, travel and entertainment expenses for the sales, brand and sales support workforce and promotional activity expenses. Cost of Sales Cost of sales consists of the costs of ingredients utilized in the production of spirits, manufacturing labor and overhead, warehousing rent, packaging, and in-bound freight charges. Ingredients account for the largest portion of the cost of sales, followed by packaging and production costs. Shipping and Fulfillment Costs Freight costs incurred related to shipment of merchandise from the Company’s distribution facilities to customers are recorded in cost of sales. Cash and Cash Equivalents Cash equivalents are considered to be highly liquid investments with maturities of three months or less at the time of the purchase. The Company had no cash equivalents at December 31, 2016 and 2015. Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of trade receivables. At December 31, 2016, three distributors represented 91% of trade receivables. At December 31, 2015, one distributor, the Oregon Liquor Control Commission (OLCC), represented 67% of trade receivables. Sales to two distributors accounted for approximately 46% of consolidated net sales for the year ended December 31, 2016. Sales to one distributor, the OLCC, accounted for approximately 40% of consolidated net sales for the year ended December 31, 2015. Fair Value Measurements GAAP defines fair value, establishes a framework for measuring fair value, and requires certain disclosures about fair value measurements. GAAP permits an entity to choose to measure many financial instruments and certain other items at fair value and contains financial statement presentation and disclosure requirements for assets and liabilities for which the fair value option is elected. At December 31, 2016 and December 31, 2015, management has not elected to report any of the Company’s assets or liabilities at fair value under the “fair value option” provided by GAAP. The hierarchy of fair value valuation techniques under GAAP provides for three levels: Level 1 provides the most reliable measure of fair value, whereas Level 3, if applicable, generally would require significant management judgment. The three levels for categorizing assets and liabilities under GAAP’s fair value measurement requirements are as follows: Level 1: Fair value of the asset or liability is determined using unadjusted quoted prices in active markets for identical assets or liabilities. Level 2: Fair value of the asset or liability is determined using inputs other than quoted prices that are observable for the applicable asset or liability, either directly or indirectly, such as quoted prices for similar (as opposed to identical) assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Fair value of the asset or liability is determined using unobservable inputs that are significant to the fair value measurement and reflect management’s own assumptions regarding the applicable asset or liability. None of the Company’s assets or liabilities were measured at fair value at December 31, 2016 and 2015. However, GAAP requires the disclosure of fair value information about financial instruments that are not measured at fair value. Financial instruments consist principally of trade receivables, accounts payable, accrued liabilities, note payable, and convertible note payable. The estimated fair value of trade receivables, accounts payable, and accrued liabilities approximates their carrying value due to the short period of time to their maturities. At December 31, 2016 and 2015, the Company’s note payable and convertible notes payable are at fixed rates and their carrying value approximates fair value. Inventories Inventories primarily consist of bulk and bottled liquor and merchandise and are stated at the lower of cost or market. Cost is determined using an average costing methodology, which approximates cost under the first-in, first-out (FIFO) method. A portion of inventory is held by certain independent distributors on consignment until it is sold to a third party. The Company regularly monitors inventory quantities on hand and records write-downs for excess and obsolete inventories based primarily on the Company’s estimated forecast of product demand and production requirements. Such write-downs establish a new cost basis of accounting for the related inventory. The Company has recorded no write-downs of inventory for the years ended December 31, 2016 and 2015. Property and Equipment Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, ranging from three to seven years. Amortization of leasehold improvements is computed using the straight-line method over the life of the lease or the useful lives of the assets, whichever is shorter. The cost and related accumulated depreciation and amortization of property and equipment sold or otherwise disposed of are removed from the accounts and any gain or loss is reported as current period income or expense. The costs of repairs and maintenance are expensed as incurred. Long-lived Assets The Company accounts for long-lived assets, including property and equipment, at amortized cost. Management reviews long-lived assets for probable impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. If there is an indication of impairment, management would prepare an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these estimated cash flows were less than the carrying amount of the asset, an impairment loss would be recognized to write down the asset to its estimated fair value. Income Taxes The provision for income taxes is based on income and expenses as reported for financial statement purposes using the “asset and liability method” for accounting for deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. At December 31, 2016 and 2015, the Company established valuation allowances against its net deferred tax assets. Income tax positions that meet the “more-likely-than-not” recognition threshold are measured at the largest amount of income tax benefit that is more than 50 percent likely to be realized upon settlement with the applicable taxing authority. The portion of the benefits associated with income tax positions taken that exceeds the amount measured as described above would be reflected as a liability for unrecognized income tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized income tax benefits would be classified as additional income taxes in the accompanying consolidated statements of operations. There were no unrecognized income tax benefits, nor any interest and penalties associated with unrecognized income tax benefits, accrued or expensed at and for the years ended December 31, 2016 and 2015. The Company files federal income tax returns in the U.S. and various state income tax returns. The Company is no longer subject to examinations by the related tax authorities for the Company’s U.S. federal and state income tax returns for years prior to 2011. Advertising Advertising costs are expensed as incurred. Advertising expense was approximately $297,000 and $389,000 for the years ended December 31, 2016 and 2015, respectively. Comprehensive Income The Company does not have any reconciling other comprehensive income (expense) items for the years ended December 31, 2016 and 2015. Excise Taxes The Company is responsible for compliance with the TTB regulations, which includes making timely and accurate excise tax payments. The Company is subject to periodic compliance audits by the TTB. Individual states also impose excise taxes on alcohol beverages in varying amounts. The Company calculates its excise tax expense based upon units produced and on its understanding of the applicable excise tax laws. Excise taxes totaled $797,435 and $620,862 in years 2016 and 2015, respectively. Stock-Based Compensation The Company recognizes as compensation expense all stock-based awards issued to employees. The compensation cost is measured based on the grant-date fair value of the related stock-based awards and is recognized over the service period of stock-based awards, which is generally the same as the vesting period. The fair value of stock options is determined using the Black-Scholes valuation model, which estimates the fair value of each award on the date of grant based on a variety of assumptions including expected stock price volatility, expected terms of the awards, risk-free interest rate, and dividend rates, if applicable. Stock-based awards issued to nonemployees are recorded at fair value on the measurement date and are subject to periodic market adjustments as the underlying stock-based awards vest. Stock-based compensation was $374,687 and $140,370 in fiscal years 2016 and 2015, respectively. Accounts Receivable Factoring Program We use an accounts receivable factoring program with certain customer accounts. Under this program, we have the option to sell those customer receivables in advance of payment for 75% of the amount due. When the customer remits payment, we then receive the remaining 25%. We are charged interest on the advanced 75% payment at a rate of 1.5% per month. Under the terms of the agreement with the factoring provider, any factored invoices have recourse should the customer fail to pay the invoice. Thus, we record factored amounts as a liability until the customer remits payment and we receive the remaining 25% of the non-factored amount. During the year ended December 31, 2016, we factored invoices totaling $542,083 and received total proceeds of $406,562. At December 31, 2016, we had factored invoices outstanding of $171,150, and we incurred fees associated with the factoring program of $48,601 during 2016. Comparatively, during the year ended December 31, 2015, we factored invoices totaling $99,258 and received total proceeds of $74,444. At December 31, 2015, we had $17,601 in factored invoices outstanding, and we incurred fees associated with the factoring program of $5,867 during 2015. Recent Accounting Pronouncements In March 2016, the Financial Accounting Standard Boards (the “FASB”) issued Accounting Standard Update (“ASU”) No. 2016-09, Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). - A lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and - A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing. Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (i.e., January 1, 2019, for a calendar year entity). Early application is permitted for all public business entities upon issuance. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. We are currently evaluating the impact ASU 2016-02 will have on the Company’s condensed consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330), Simplifying the Measurement of Inventory In April 2015, the FASB issued ASU 2015-03, simplifying the presentation of debt issuance costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 is effective for annual and interim periods beginning after December 15, 2015 and early application is permitted. We have early adopted as of December 31, 2015. Reclassifications Certain prior period amounts have been reclassified to conform to the December 31, 2016 presentation with no changes to net loss or total stockholders’ equity (deficit) previously reported. |
Business Acquisition
Business Acquisition | 3 Months Ended |
Mar. 31, 2017 | |
Business Combinations [Abstract] | |
Business Acquisition | 4. Business Acquisition For the three months ended March 31, 2017, the Company completed the following acquisition. MotherLode LLC On March 8, 2017, the Company completed the acquisition of MotherLode LLC (“MotherLode”), a small Portland, Oregon based provider of bottling services and production support to craft distilleries. The Company’s consolidated financial statements for the three months ended March 31, 2017 include MotherLode’s results of operations from the Acquisition date of March 8, 2017 through March 31, 2017. The Company’s consolidated financial statements reflect the final purchase accounting adjustments in accordance with ASC 805 “Business Combinations”, whereby the purchase price was allocated to the assets acquired and liabilities assumed based upon their estimated fair values on the Acquisition date. The Company had approximately $375,000 in revenues (unaudited) in 2016. The following allocation of the purchase price is as follows: Consideration given: 86,667 shares of common stock valued at $4.35 per share $ 377,000 Assets and liabilities acquired: Cash 7,062 Inventory 103,488 Property and equipment 46,250 Intangible assets - customer list 376,431 Accounts payable (5,180 ) Customer deposits (151,051 ) $ 377,000 Intangible assets are recorded at estimated fair value, as determined by management based on available information. The fair values assigned to identifiable intangible assets were determined through the use of the income approach, specifically the relief from royalty and the multi-period excess earning methods. The major assumptions used in arriving at the estimated identifiable intangible asset values included management’s estimates of future cash flows, discounted at an appropriate rate of return which are based on the weighted average cost of capital for both the Company and other market participants, projected customer attrition rates, as well as applicable royalty rates for comparable assets. The useful lives for intangible assets were determined based upon the remaining useful economic lives of the tangible assets that are expected to contribute directly or indirectly to future cash flows. The customer relationships estimated useful life is seven years. |
Inventories
Inventories | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | ||
Inventories | 5. Inventories Inventories consist of the following at March 31, 2017 and December 31, 2016: 2017 2016 Raw materials $ 533,814 $ 439,739 Finished goods 461,919 340,298 Total inventories $ 995,733 $ 780,037 | 4. Inventories Inventories consist of the following at December 31: 2016 2015 Raw materials $ 439,739 $ 415,953 Finished goods 340,298 248,713 Other - 19,158 Total inventories $ 780,037 $ 683,824 |
Property and Equipment
Property and Equipment | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | ||
Property and Equipment | 6. Property and Equipment Property and equipment consists of the following at March 31, 2017 and December 31, 2016: 2017 2016 Furniture and fixtures $ 147,721 $ 70,140 Leasehold improvements 14,907 8,607 Vehicles 12,000 38,831 Construction In-Progress - 34,603 Total cost 174,928 152,181 Less accumulated depreciation (46,068 ) (52,965 ) Property and equipment - net $ 128,560 $ 99,216 Depreciation expense totaled $6,077 and $5,574 for the three months ended March 31, 2017 and 2016, respectively. | 5. Property and Equipment Property and equipment consists of the following at December 31: 2016 2015 Furniture and fixtures $ 70,140 $ 64,288 Leasehold improvements 8,607 8,607 Vehicles 38,831 38,831 Construction In Progress 34,603 31,253 Total cost 152,181 142,979 Less accumulated depreciation and amortization (52,965 ) (30,974 ) Total property and equipment, net $ 99,216 $ 112,005 Depreciation and amortization expense totaled $21,991 and $19,277 for the years ended December 31, 2016 and 2015, respectively. |
Intangible Assets
Intangible Assets | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | 7. Intangible Assets There were no intangible assets at December 31, 2016. At March 31, 2017, intangible assets consist of the following: 2017 Permits and licenses $ 25,000 Customer lists 351,431 Total intangible asset 376,431 Less accumulated amortization (2,929 ) Intangible assets - net $ 373,502 Amortization expense totaled $2,929 and nil for the three months ended March 31, 2017 and 2016, respectively. |
Notes Payable
Notes Payable | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Debt Disclosure [Abstract] | ||
Notes Payable | 8. Notes Payable Notes payable consists of the following at March 31, 2017 and December 31, 2016: 2017 2016 Notes payable bearing interest at 7.99%. The note is payable in monthly principal plus interest payments of $472 through December, 2020. The note is secured by a vehicle. $ - $ 16,642 Notes payable bearing interest at 8%. The notes have a 2-year maturity and are due at various dates between September 19, 2018 – October 19, 2018, and pay interest only on a monthly basis 460,000 547,500 Total note payable 460,000 564,142 Less current portion - (4,537 ) Less debt discount for detachable warrant (94,840 ) (131,849 ) Long-term portion of note payable $ 365,160 $ 427,756 Maturities on notes payable as of March 31, 2017, are as follows: Year ending December 31: 2017 $ - 2018 460,000 Thereafter - $ 460,000 | 6. Notes Payable Notes payable consists of the following at December 31: 2016 2015 Notes payable bearing interest at 7.99%. The note is payable in monthly principal plus interest payments of $472 through December, 2020. The note is secured by a vehicle. $ 16,642 $ 21,940 Notes payable bearing interest at 8%. The notes have a 2-year maturity and are due at various dates between September 19, 2018 – October 19, 2018, and pay interest only on a monthly basis 547,500 Total note payable 564,142 21,940 Less current portion (4,537 ) (4,098 ) Less debt discount for detachable warrant (131,849 ) Total notes payable, less current portion and debt discount $ 427,756 $ 17,842 Maturities on notes payable as of December 31, 2016, are as follows: Year ending December 31: 2017 $ 4,537 2018 554,915 2019 4,690 Thereafter - $ 564,142 |
Convertible Notes Payable
Convertible Notes Payable | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Convertible Notes Payable | 7. Convertible Notes Payable There were no convertible notes payable outstanding at December 31, 2016. At December 31, 2015, convertible notes payable consisted of three separate notes: December 31, 2015 Convertible note bearing interest at 5% per annum in the principal amount of $150,000. The original maturity date of June 13, 2015 was extended to April 1, 2016 during the period ended December 31, 2015 and was further extended to July 1, 2016. The note was convertible into shares of the Company’s common stock at a fixed conversion price of $8.00 per share. On July 1, 2016, the Company paid the outstanding amount under this Note, including interest in full. $ 150,000 Secured Convertible promissory note, bearing interest at 14% per annum in the principal amount of $275,000 (the “Note”), payable in six installments (“Amortization Payments”) as set forth in an Amortization Schedule beginning the 30 th 272,708 Convertible note bearing interest at 0% per annum. The note was converted into Company’s preferred equity financing on April 4, 2016. 50,000 Total convertible notes payable 472,708 Less discount on convertible debt 16,750 Total convertible notes payable – net of debt discount $ 455,958 (1) On April 14, 2016, this note (the “Initial Note”) was transferred to MR Group I, LLC (“Investor”). In addition, on April 14, 2016, the Company issued and sold to Investor a convertible promissory note dated April 18, 2016, bearing interest at 14% per annum in the principal amount of $300,000 (the “Additional Note”, together with the Initial Note, the “Notes”). The Additional Note had a maturity date of January 18, 2017 and an original issue discount of $100,000. On May 13, 2016, the Company entered into Exchange Agreement (the “Exchange Agreement”) with the Investor pursuant to which the Company (i) issued Investor a 14% secured convertible promissory note dated May 13, 2016 in the aggregate principal amount of $219,200 with an August 31, 2016 maturity date (the “Note”) in exchange for a previously issued 14% secured convertible promissory note dated September 10, 2015 in the original principal amount of $275,000 (with current outstanding principal and interest of $197,208 and $21,992, respectively) with a May 10, 2016 maturity date held by Investor and (ii) issued Investor a 14% secured convertible promissory note dated May 13, 2016 in the aggregate principal amount of $302,647 with an April 30, 2017 maturity date (the “Second Note”, together with the Note, the “Exchange Notes”) in exchange for a previously issued 14% secured convertible promissory note dated April 18, 2016 in the original principal amount of $300,000 (with current outstanding principal and interest of $300,000 and $2,647, respectively) with a May 10, 2016 maturity date held by Investor. During the June period, $196,330 of the note was converted into common shares. On June 6, 2016, the Company paid the remaining outstanding amount under this Note ($100,000) in full, and on June 28, 2016, the Company paid the outstanding amount under the Second Note ($306,378) in full. Amortization of the debt discount and beneficial conversion feature of the convertible notes totaled $359,688 for the fiscal year ended December 31, 2016. Amortization of the debt discount was $16,750 for the year ended December 31, 2015 and was recorded as other expense in the consolidated statement of operations. |
Income Taxes
Income Taxes | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Income Taxes | 9. Income Taxes The provision for income taxes results in effective tax rates which are different than the federal income tax statutory rate. The nature of the differences for the three months ended March 31, 2017 and 2016 were as follows: 2017 2016 Expected federal income tax benefit $ (286,381 ) $ (344,991 ) State income taxes after credits (59,520 ) (66,969 ) Change in valuation allowance 345,901 411,960 Total provision for income taxes $ - $ - The components of the net deferred tax assets and liabilities at March 31, 2017 and December 31, 2016 consisted of the following: 2017 2016 Deferred tax assets: Net operating loss carryforwards $ 3,843,052 $ 3,557,909 Stock-based compensation 277,596 213,181 Total deferred tax assets 4,120,648 3,771,090 Deferred tax liabilities: Depreciation and amortization (74,473 ) (70,816 ) Total deferred tax liabilities (74,473 ) (70,816 ) Valuation allowance (4,046,175 ) (3,700,274 ) Net deferred tax assets $ - $ - At March 31, 2017, the Company has a cumulative net operating loss carryforward (NOL) of approximately $3.8 million, to offset against future income for federal and state tax purposes. These federal and state NOLs can be carried forward for 20 and 15 years, respectively. The federal NOLs begin to expire in 2034, and the state NOLs begin to expire in 2029. The utilization of the net operating loss carryforwards may be subject to substantial annual limitation due to ownership change provisions of the Internal Revenue code of 1986 and similar state provisions. In general, if the Company experiences a greater than 50 percentage aggregate change in ownership of certain significant stockholders over a three-year period (a “Section 382 ownership change”), utilization of its pre-change NOL carryforwards are subject to an annual limitation under Section 382 of the Internal Revenue Code (and similar state laws). The annual limitation generally is determined by multiplying the value of the Company’s stock at the time of such ownership change (subject to certain adjustments) by the applicable long-term tax-exempt rate. Such limitations may result in expiration of a portion of the NOL carryforwards before utilization and may be substantial. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon generation of future taxable income during the periods in which those temporary differences become deductible. Due to the uncertainty of the realizability of the deferred tax assets, management has determined a full valuation allowance is appropriate. | 8. Income Taxes The provision for income taxes results in effective tax rates which are different than the federal income tax statutory rate. The nature of the differences for the year ended December 31 were as follows: 2016 2015 Expected federal income tax benefit $ (1,774,361 ) $ (1,200,378 ) State income taxes after credits (344,435 ) (233,015 ) Change in valuation allowance 2,118,795 1,442,900 Other - (9,507 ) Total provision for income taxes $ - $ - The components of the net deferred tax assets and liabilities at December 31 consisted of the following: 2016 2015 Deferred tax assets: Net operating loss carryforwards $ 3,557,909 1,582,317 Stock-based compensation 213,181 61,050 Total deferred tax assets 3,771,090 1,643,367 Deferred tax liabilities: Depreciation and amortization (70,816 ) (61,888 ) Total deferred tax liabilities (70,816 ) (61,888 ) Valuation allowance (3,700,274 ) (1,581,479 ) Net deferred tax assets $ - - At December 31, 2016, the Company has a cumulative net operating loss carryforward (NOL) of approximately $3.6 million, to offset against future income for federal and state tax purposes. These federal and state NOLs can be carried forward for 20 and 15 years, respectively. The federal NOLs begin to expire in 2034, and the state NOLs begin to expire in 2029. The utilization of the net operating loss carryforwards may be subject to substantial annual limitation due to ownership change provisions of the Internal Revenue code of 1986 and similar state provisions. In general, if the Company experiences a greater than 50 percentage aggregate change in ownership of certain significant stockholders over a three-year period (a “Section 382 ownership change”), utilization of its pre-change NOL carryforwards are subject to an annual limitation under Section 382 of the Internal Revenue Code (and similar state laws). The annual limitation generally is determined by multiplying the value of the Company’s stock at the time of such ownership change (subject to certain adjustments) by the applicable long-term tax-exempt rate. Such limitations may result in expiration of a portion of the NOL carryforwards before utilization and may be substantial. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon generation of future taxable income during the periods in which those temporary differences become deductible. Due to the uncertainty of the realizability of the deferred tax assets, management has determined a full valuation allowance is appropriate. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Commitments and Contingencies | 10. Commitments and Contingencies Operating Leases The Company leases its warehouse, kiosks, and tasting room space under operating lease agreements, which expire through December 2018. Monthly lease payments range from $1,802 to $21,000 over the terms of the leases. For operating leases which contain fixed escalations in rental payments, the Company records the total rent expense on a straight-line basis over the lease term. The difference between the expense computed on a straight-line basis and actual payments for rent represents deferred rent which is included within accrued liabilities on the accompanying consolidated balance sheets. Retail spaces under lease are subject to monthly percentage rent adjustments when gross sales exceed certain minimums. At March 31, 2017, future minimum lease payments required under the operating leases are approximately as follows: 2017 $ 213,000 2018 90,000 2019 2,000 Thereafter - Total $ 305,000 Total rent expense was approximately $19,000 and $74,000 for the three months ended March 31, 2017 and 2016, respectively. On February 7, 2017, we entered into a Lease Termination Agreement with PJM BLDG. II LLC (the “Termination Agreement”), the landlord of our former headquarters and production facilities located at 1805 SE Martin Luther King Jr. Blvd., Portland, Oregon. The Termination Agreement provides that the original lease agreement dated July 17, 2014 (the “Lease”) will terminate on June 30, 2017 rather than October 30, 2020. Legal Matters We are not currently subject to any material legal proceedings, however we could be subject to legal proceedings and claims from time to time in the ordinary course of our business. Regardless of the outcome, litigation can, among other things, be time consuming and expensive to resolve, and divert management resources. | 9. Commitments and Contingencies Operating Leases The Company leases its warehouse, kiosks, and tasting room space under operating lease agreements which expire through October 2020. Monthly lease payments range from $1,300 to $24,000 over the terms of the leases. For operating leases which contain fixed escalations in rental payments, the Company records the total rent expense on a straight-line basis over the lease term. The difference between the expense computed on a straight-line basis and actual payments for rent represents deferred rent which is included within accrued liabilities on the accompanying consolidated balance sheets. Retail spaces under lease are subject to monthly percentage rent adjustments when gross sales exceed certain minimums. At December 31, 2016, future minimum lease payments required under the operating leases are approximately as follows: For year ending December 31st: 2017 $ 297,000 2018 272,000 2019 278,000 2020 240,000 Total $ 1,087,000 Total rent expense was approximately $416,000 and $384,000 for the years ended December 31, 2016 and 2015, respectively. Legal Matters We are not currently subject to any material legal proceedings, however we could be subject to legal proceedings and claims from time to time in the ordinary course of our business. Regardless of the outcome, litigation can, among other things, be time consuming and expensive to resolve, and divert management resources. |
Net Loss per Common Share
Net Loss per Common Share | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Earnings Per Share [Abstract] | ||
Net Loss per Common Share | 11. Net Loss per Common Share Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period, without considering any dilutive items. Diluted net loss per common share is computed by dividing net loss by the sum of the weighted average number of common shares outstanding and the potential number of any dilutive common shares outstanding during the period. Potentially dilutive securities consist of the incremental common stock issuable upon exercise of stock options and convertible notes. Potentially dilutive securities are excluded from the computation if their effective is anti-dilutive. There were no dilutive common shares at March 31, 2017 and 2016. The numerators and denominators used in computing basic and diluted net loss per common share in 2017 and 2016 are as follows: March 31, 2017 2016 Net loss attributable to common stockholders (numerator) $ (906,855 ) $ (1,014,679 ) Weighted average shares (denominator) 2,614,324 758,542 Basic and diluted net loss per common share $ (0.35 ) $ (1.34 ) | 10. Net Loss per Common Share Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period, without considering any dilutive items. Diluted net loss per common share is computed by dividing net loss by the sum of the weighted average number of common shares outstanding and the potential number of any dilutive common shares outstanding during the period. Potentially dilutive securities consist of the incremental common stock issuable upon exercise of stock options and convertible notes. Potentially dilutive securities are excluded from the computation if their effective is anti-dilutive. There were no dilutive common shares at December 31, 2016 and 2015. The numerators and denominators used in computing basic and diluted net loss per common share in 2016 and 2015 are as follows: December 31, 2016 2015 Net loss available to common stockholders (numerator) $ (5,251,293 ) $ (3,601,066 ) Weighted average shares (denominator) 1,247,281 762,506 Basic and diluted net loss per common share $ (4.21 ) $ (4.72 ) |
Issuance of Common Stock, Warra
Issuance of Common Stock, Warrants and Convertible Preferred Stock | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Issuance of Common Stock, Warrants and Convertible Preferred Stock | 11. Issuance of Common Stock, Warrants and Convertible Preferred Stock Reverse Stock Splits All shares related and per share information in these financial statements has been adjusted to give effect to the 1-for-20 reverse stock split of the Company’s common stock effected on October 18, 2016 and the 1-for-3 reverse stock split of the Company’s common stock effected on June 15, 2017. Issuance of Common Stock In the year ended December 31, 2016, the Company issued 21,167 shares of common stock to employees for stock-based compensation of $153,996. Additionally, the Company had $220,691 of stock-based compensation expense related to stock options granted to employees and vested during the year ended December 31, 2016. In the year ended December 31, 2016, the Company issued 38,395 shares of common stock to eight third-party consultants in exchange for services rendered and trade debt totaling $284,277. In December, 2016, the Company issued 266,667 shares of its common stock for $1,040,000, including 266,667 warrants for common stock. In December, 2016, the Company issued 188,261 shares of its common stock for warrant exercises totaling $734,216. In December 2016, the Company issued 295,513 shares of its common stock upon conversion of 8% convertible promissory notes with an aggregate principal amount converted of $1,152,499. In December 2016, the Company issued 177,000 shares of its common stock upon conversion of 672 shares of preferred stock. In July 2016, the Company issued 4,268 shares of its common stock in consideration of $17,759 in accrued and unpaid dividends due at June 30, 2016 for its outstanding Series A Preferred. From June 4, 2016 to June 22, 2016, the Company issued 666,667 shares of its common stock for $2,000,000, including 666,667 warrants for common stock, net of issuance costs of $23,762. From April 20, 2016 to June 3, 2016, the Company issued 114,625 shares of its common stock upon conversion of a 14% convertible promissory note. The aggregate principal amount of this note that was converted was $196,503. In December 2015, the Company entered into management consulting agreements under which it agreed to issue 834 shares of common stock to third-party consultants in exchange for services rendered of $10,500. These shares were issued effective February 18, 2016. In November 2015, the Company entered into management consulting agreements under which it agreed to issue 1,500 shares of common stock to third-party consultants in exchange for services rendered of $17,100. These shares were issued in February 2016. In October 2015, the Company entered into a consulting agreement under which it agreed to issue 1,667 shares of common stock to a consultant for services of $45,000. These shares have not been issued. In August 2015, the Company issued 750 shares of common stock to employees valued at $42,750. In August 2015, the Company issued 2,250 shares of common stock to two third-party consultants in exchange for services rendered of $128,250. In July 2015, the Company issued 3,750 shares of common stock to two third-party consultants in exchange for services rendered of $479,250. In April 2015, the Company issued 625 shares of common stock to a third-party consultant in exchange for services rendered of $65,625. All shares were fully vested upon issuance. Issuance of Convertible Preferred Stock The Company has authorized the issuance of 3,000 shares of Series A convertible preferred stock as of December 31, 2016. From April 4, 2016 to June 17, 2016, the Company sold 972 shares of its series A convertible preferred stock (“Series A Preferred”) for an aggregate purchase price of $972,000, of which (i) 499 Units were purchased for $499,000 in cash (ii) 423 Units were purchased by certain of our officers in consideration of $423,000 accrued and unpaid salary and (iii) 50 Units were purchased in consideration of cancellation of $50,000 of outstanding indebtedness net of issuance costs of $69,528. Each share of Series A Convertible Preferred has a stated value of $1,000, which is convertible into shares of the Company’s common stock (the “Common Stock”) at a fixed conversion price equal to $4.50 per share. The Series A Convertible Preferred accrue dividends at a rate of 8% per annum, cumulative. Dividends are payable quarterly in arrears at the Company’s option either in cash or “in kind” in shares of Common Stock; provided, however that dividends may only be paid in cash following the fiscal year in which the Company has net income (as shown in its audited financial statements contained in its Annual Report on Form 10-K for such year) of at least $500,000, to the extent permitted under applicable law out of funds legally available therefore. For ‘in-kind” dividends, holders will receive that number of shares of Common Stock equal to (i) the amount of the dividend payment due such stockholder divided by (ii) 90% of the average of the per share market values during the twenty (20) trading days immediately preceding a dividend date. In the event of any voluntary or involuntary liquidation, dissolution or winding up, or sale of the Company, each holder of Series A Preferred shall be entitled to receive its pro rata portion of an aggregate payment equal to: (i) $1,000 multiplied by (ii) the total number of shares of Series A Preferred Stock issued under the Series A Certificate of Designation multiplied by (iii) 2.5. For all matters submitted to a vote of the Company’s stockholders, the holders of the Series A Preferred as a class shall have an aggregate number of votes equal to the product of (x) the number of shares of Common Stock (rounded to the nearest whole number) into which the total shares of Series A Preferred Stock issued under the Series A Certificate of Designation on such date of determination are convertible multiplied by (y) 2.5 (the “Total Series A Votes”), with each holder of Series A Preferred entitled to vote its pro rata portion of the Total Series A Votes. Holders of Common Stock do not have cumulative voting rights. In addition, the holders of Series A Preferred shall vote separately a class to change any of the rights, preferences and privileges of the Series A Preferred. The following table provides various information about the Series A convertible preferred stock. Shares Number of shares Shares Issued and Net Conversion of common stock Liquidation Liquidation Authorized Outstanding Proceeds Price/Share Equivalents Preference Value/Share Series A convertible preferred stock 3,000 50 $ 38,932 $ 4.50 11,112 $ 125,000 $ 2,500 Beneficial conversion feature The Company evaluated the convertible note and determined that a portion of the note should be allocated to additional paid-in capital as a beneficial conversion feature, since the conversion price on the note as of March 10, 2016 was set at a discount to the fair market value of the underlying stock. As a result, a discount of $228,550 was attributed to the beneficial conversion feature of the note, which amount was then amortized fully during the year ended December 31, 2016. Warrants During the year ended December 31, 2016, the Company issued detachable warrants in connection to common stock, Series A preferred stock, and convertible notes payable to purchase 1,435,639 shares of common stock. The Company has determined the warrants are classified as equity on the consolidated balance sheet as of December 31, 2016. The estimated fair value of the warrants after relative fair value allocation at issuance was $2,010,502, based on the Black-Scholes option-pricing model using the weighted-average assumptions below: Volatility 75 % Risk-free interest rate 1.03 % Expected term (in years) 3.0 Expected dividend yield - Fair value of common stock $ 5.04 A summary of activity in warrants is as follows: Warrants Weighted Average Remaining Life Weighted Average Exercise Price Aggregate Intrinsic Value Outstanding at December 31, 2015 — — $ — $ — Granted 1,435,639 $ 6.18 $ - Exercised (483,773 ) 3.90 Forfeited and cancelled (105,101 ) 6.00 - Outstanding at December 31, 2016 846,765 2.77 years $ 6.48 $ - |
Stockholder's Deficit
Stockholder's Deficit | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
Stockholder's Deficit | 12. Stockholder’s Deficit Convertible Series A Total Preferred Stock Common Stock Paid-in Accumulated Stockholders' Shares Amount Shares Amount Capital Deficit Deficit Balance, Dec 31, 2016 300 $ 245,838 2,542,504 $254 13,699,785 $ (12,813,044 ) $ 1,132,833 Issuance of common stock - - 15,000 2 58,498 58,500 Issuance of common stock, net of issuance costs of $6,033, with detachable warrants - - 192,308 19 743,948 743,967 Issuance of common stock from warrant exercise for cash - - 40,834 4 159,246 159,250 Issuance of common stock for services by third parties - - 19,796 2 83,798 83,800 Issuance of common stock for services by employees - - 575 - 2,517 2,517 Stock-based compensation - - - - 158,658 158,658 Issuance of common stock for acquisition of MotherLode, net of issuance costs of $5,580 - - 86,667 9 371,411 371,420 Shares Issued for payoff of long-term notes - - 22,436 2 87,498 87,500 Cumulative dividend on Series A preferred - 5,037 (5,037 ) - Common shares issued for preferred conversion (250 ) (201,449 ) 83,334 8 201,441 - Net loss - - - - - (901,818 ) (901,818 ) Balance, Mar 31, 2017 50 $ 49,426 3,003,451 $ 300 $15,566,800 $ (13,719,899 ) $ 1,896,627 Reverse Stock Splits All shares related and per share information in these financial statements has been adjusted to give effect to the 1-for-20 reverse stock split of the Company’s common stock effected on October 18, 2016 and the 1-for-3 reverse stock split of the Company’s common stock effected on June 15, 2017. Issuance of Common Stock From January 4, 2017 to January 22, 2017, we sold 15,000 shares of common stock to accredited investors at a price of $3.90 per share for aggregate cash proceeds of $58,500. On March 31, 2017, the Company issued 192,308 shares of its common stock for $750,000 including 192,308 warrants for common stock. This represented an initial closing of the Company’s private offering as filed in the Form 8-K on March 27, 2017. From January 15, 2017 through February 16, 2017, the Company received warrant exercises and subscription documents totaling $159,250 for 40,834 shares issued. In March 2017, the Company issued 19,795 shares of common stock to four third-party consultants in exchange for services rendered. In March 2017, the Company issued 575 shares of common stock to employees for stock-based compensation of $2,517. On March 8, 2017, the Company completed the acquisition of MotherLode LLC (“MotherLode”), a Portland, Oregon based provider of bottling services and production support to craft distilleries. We issued 86,667 shares of common stock to the owners of MotherLode as consideration for the acquisition. Based on the closing share price of our common stock of $4.35 on March 8, 2017, the value of the transaction was $377,000. In March 2017, the Company issued 22,436 shares of its common stock upon conversion of 8% convertible promissory notes with an aggregate principal amount converted of $87,500. In March 2017, the Company issued 83,334 shares of its common stock upon conversion of 250 shares of preferred stock. All shares were fully vested upon issuance. Issuance of Convertible Preferred Stock From April 4, 2016 to June 17, 2016, the Company sold 972 shares of its series A convertible preferred stock (“Series A Preferred”) for an aggregate purchase price of $972,000, of which (i) 499 Units were purchased for $499,000 in cash (ii) 423 Units were purchased by certain of our officers in consideration of $423,000 accrued and unpaid salary and (iii) 50 Units were purchased in consideration of cancellation of $50,000 of outstanding indebtedness net of issuance costs of $35,920. Each share of Series A Convertible Preferred has a stated value of $1,000, which is convertible into shares of the Company’s common stock (the “Common Stock”) at a fixed conversion price equal to $4.50 per share. The Series A Convertible Preferred accrue dividends at a rate of 8% per annum, cumulative. Dividends are payable quarterly in arrears at the Company’s option either in cash or “in kind” in shares of Common Stock; provided, however that dividends may only be paid in cash following the fiscal year in which the Company has net income (as shown in its audited financial statements contained in its Annual Report on Form 10-K for such year) of at least $500,000, to the extent permitted under applicable law out of funds legally available therefore. For ‘in-kind” dividends, holders will receive that number of shares of Common Stock equal to (i) the amount of the dividend payment due such stockholder divided by (ii) 90% of the average of the per share market values during the twenty (20) trading days immediately preceding a dividend date. In the event of any voluntary or involuntary liquidation, dissolution or winding up, or sale of the Company, each holder of Series A Preferred shall be entitled to receive its pro rata portion of an aggregate payment equal to: (i) $1,000 multiplied by (ii) the total number of shares of Series A Preferred Stock issued under the Series A Certificate of Designation multiplied by (iii) 2.5. For all matters submitted to a vote of the Company’s stockholders, the holders of the Series A Preferred as a class shall have an aggregate number of votes equal to the product of (x) the number of shares of Common Stock (rounded to the nearest whole number) into which the total shares of Series A Preferred Stock issued under the Series A Certificate of Designation on such date of determination are convertible multiplied by (y) 2.5 (the “Total Series A Votes”), with each holder of Series A Preferred entitled to vote its pro rata portion of the Total Series A Votes. Holders of Common Stock do not have cumulative voting rights. In addition, the holders of Series A Preferred shall vote separately a class to change any of the rights, preferences and privileges of the Series A Preferred. Number of shares Shares Shares Issued and Net Conversion of common stock Liquidation Liquidation Authorized Outstanding Proceeds Price/Share Equivalents Preference Value/Share Series A 3,000 50 $ 49,426 $ 4.50 11,111 $ 125,000 $ 2,500 Stock-Based Compensation On September 8, 2016, the Company adopted the 2016 Equity Incentive Plan (the 2016 Plan). The total number of shares available for the grant of either stock options or compensation stock under the 2016 Plan is 166,667 shares, subject to adjustment. On January 1, 2017, the number of shares available for grant under the 2016 Plan reset to 289,709 shares, equal to 8% of the number of outstanding shares of the Company’s capital stock, calculated on an as-converted basis, on December 31 of the preceding calendar year. In May 2017 the Board of Directors approved an amendment to the 2016 Plan to increase the number of shares of common stock reserved thereunder to a new total of 389,709 shares, contingent upon stockholder adoption and approval of this amendment at the next annual meeting of stockholders. The exercise price per share of each stock option shall not be less than 100 percent of the fair market value of the Company’s common stock on the date of grant. At March 31, 2017, there were 254,167 options and 22,847 RSU’s issued under the Plan, with vesting schedules varying between immediate and five (5) years from the grant date. On January 29, 2015, the Company adopted the 2015 Stock Incentive Plan (the 2015 Plan). The total number of shares available for the grant of either stock options or compensation stock under the 2015 Plan is 50,000 shares, subject to adjustment. The exercise price per share of each stock option shall not be less than 20 percent of the fair market value of the Company’s common stock on the date of grant. At March 31, 2017, there were 14,584 options issued under the Plan outstanding, which options vest at the rate of at least 25 percent in the first year, starting 6-months after the grant date, and 75% in year two. The Company also issues, from time to time, options which are not registered under a formal option plan. At March 31, 2017, there were 16,667 options outstanding that were not issued under the Plan. A summary of all stock option activity at and for the three months ended March 31, 2017 is presented below: # of Options Weighted- Average Exercise Price Outstanding at December 31, 2016 173,750 $ 9.24 Options granted 111,667 (1) 4.71 Options exercised - - Options canceled - - Outstanding at March 31, 2017 285,417 $ 7.47 Exercisable at March 31, 2017 86,285 $ 11.79 (1) options granted under 2016 Stock Incentive Plan; The aggregate intrinsic value of options outstanding at March 31, 2017 was $0. At March 31, 2017, there were 199,132 unvested options with an aggregate grant date fair value of $612,752. The unvested options will vest in accordance with the vesting schedule in each respective option agreement, which varies between immediate and five (5) years from the grant date. The aggregate intrinsic value of unvested options at March 31, 2017 was $0. During the three months ended March 31, 2017, 37,961 options became vested. The Company uses the Black-Scholes valuation model to measure the grant-date fair value of stock options. The grant-date fair value of stock options issued to employees is recognized on a straight-line basis over the requisite service period. Stock-based awards issued to nonemployees are recorded at fair value on the measurement date and are subject to periodic market adjustments as the underlying stock-based awards vest. To determine the fair value of stock options using the Black-Scholes valuation model, the calculation takes into consideration the effect of the following: ● Exercise price of the option ● Fair value of the Company’s common stock on the date of grant ● Expected term of the option ● Expected volatility over the expected term of the option ● Risk-free interest rate for the expected term of the option The calculation includes several assumptions that require management’s judgment. The expected term of the options is calculated using the simplified method described in GAAP. The simplified method defines the expected term as the average of the contractual term and the vesting period. Estimated volatility is derived from volatility calculated using historical closing prices of common shares of similar entities whose share prices are publicly available for the expected term of the options. The risk-free interest rate is based on the U.S. Treasury constant maturities in effect at the time of grant for the expected term of the options. The following weighted-average assumptions were used in the Black-Scholes valuation model for options granted during the three months ended March 31, 2017: Risk-free interest rate 1.60 % Expected term (in years) 7.25 Dividend yield - Expected volatility 75 % The weighted-average grant-date fair value per share of stock options granted during the three months ended March 31, 2017 was $3.33. The aggregate grant date fair value of the 111,667 options granted during the three months ended March 31, 2017 was $371,865. For the three months ended March 31, 2017 and 2016, total stock option expense related to stock options was $158,658 and $51,569 respectively. At March 31, 2017, the total compensation cost related to stock options not yet recognized is approximately $666,286, which is expected to be recognized over a weighted-average period of approximately 3.41 years. Warrants During the three months ended March 31, 2017, the Company issued 192,308 detachable warrants in connection with the purchase of 192,308 shares of common stock. The Company has determined the warrants are classified as equity on the condensed consolidated balance sheet as of March 31, 2017. The estimated fair value of the warrants at issuance was $301,731, based on the Black-Scholes option-pricing model using the weighted-average assumptions below: Volatility 75 % Risk-free interest rate 1.50 % Expected term (in years) 3.0 Expected dividend yield - Fair value of common stock $ 4.38 A total of 40,834 warrants were exercised during the three months ended March 31, 2017 for cash proceeds of $159,250. A summary of activity in warrants is as follows: Warrants Weighted Average Remaining Life Weighted Average Exercise Price Aggregate Intrinsic Value Outstanding at December 31, 2016 846,765 2.77 years $ 6.48 $ — Three months ended March 31, 2017: Granted 192,308 3.00 years $ 7.50 $ 0 Exercised (40,834 ) 2.00 years $ 3.90 Forfeited and cancelled - - - - Outstanding at March 31, 2017 998,239 2.61 years $ 6.75 $ 0 |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | 12. Stock-Based Compensation On September 8, 2016, the Company adopted the 2016 Equity Incentive Plan (the 2016 Plan). The total number of shares available for the grant of either stock options or compensation stock under the Plan is 166,667 shares, subject to adjustment. The exercise price per share of each stock option shall not be less than 100 percent of the fair market value of the Company’s common stock on the date of grant. At December 31, 2016, there were 142,500 options and 17,817 RSU’s issued under the Plan outstanding, with vesting schedules varying between immediate and three (3) years from the grant date. On January 29, 2015, the Company adopted the 2015 Stock Incentive Plan (the 2015 Plan). The total number of shares available for the grant of either stock options or compensation stock under the 2015 Plan is 50,000 shares, subject to adjustment. The exercise price per share of each stock option shall not be less than 20 percent of the fair market value of the Company’s common stock on the date of grant. At December 31, 2016, there were 4,802 options issued under the Plan outstanding, which options vest at the rate of at least 25 percent in the first year, starting 6-months after the grant date, and 75% in year two. The Company also issues, from time to time, options which are not registered under a formal option plan. At December 31, 2016, there were 16,667 options outstanding that were not issued under the Plan. A summary of all stock option activity at and for the years ended December 31, 2016 and 2015 is presented below: # of Options Weighted- Average Exercise Price Outstanding at December 31, 2014 16,667 (1) $ 24.00 Options granted 27,500 (2) 69.60 Options exercised - - Options canceled (7,500 )(2) 120.00 Outstanding at December 31, 2015 36,667 $ 38.40 Options granted 142,500 (3) 5.49 Options exercised - - Options canceled (5,417 )(3) 108.69 Outstanding at December 31, 2016 173,750 $ 9.24 Exercisable at December 31, 2016 48,325 $ 14.31 (1) Non-Plan options. (2) 27,500 options granted under 2015 Stock Incentive Plan; 7,500 non-plan options, which were subsequently canceled under an agreement with the holder. (3) 142,500 options granted under 2016 Equity Incentive Plan; 5,417 options were canceled under the 2015 Stock Incentive Plan. The aggregate intrinsic value of options outstanding at December 31, 2016 was $60,900. At December 31, 2016, there were 125,426 unvested options with an aggregate grant date fair value of $489,230. The unvested options will vest in accordance with the vesting schedule in each respective option agreement, which is generally over a period of 6 to 36 months. The aggregate intrinsic value of unvested options at December 31, 2016 was $60,900. During the year ended December 31, 2016, 34,523 options vested. The Company uses the Black-Scholes valuation model to measure the grant-date fair value of stock options. The grant-date fair value of stock options issued to employees is recognized on a straight-line basis over the requisite service period. Stock-based awards issued to nonemployees are recorded at fair value on the measurement date and are subject to periodic market adjustments as the underlying stock-based awards vest. To determine the fair value of stock options using the Black-Scholes valuation model, the calculation takes into consideration the effect of the following: ● Exercise price of the option ● Fair value of the Company’s common stock on the date of grant ● Expected term of the option ● Expected volatility over the expected term of the option ● Risk-free interest rate for the expected term of the option The calculation includes several assumptions that require management’s judgment. The expected term of the options is calculated using the simplified method described in GAAP. The simplified method defines the expected term as the average of the contractual term and the vesting period. Estimated volatility is derived from volatility calculated using historical closing prices of common shares of similar entities whose share prices are publicly available for the expected term of the options. The risk-free interest rate is based on the U.S. Treasury constant maturities in effect at the time of grant for the expected term of the options. The following weighted-average assumptions were used in the Black-Scholes valuation model for options granted during the year ended December 31, 2016: Risk-free interest rate 1.17 % Expected term (in years) 3.38 Dividend yield - Expected volatility 75 % The weighted-average grant-date fair value per share of stock options granted during the year ended December 31, 2016 was $2.91. The aggregate grant date fair value of the 142,500 options granted during the year ended December 31, 2016 was $414,383. For the twelve months ended December 31, 2016, total stock option expense related to stock options was $220,691. At December 31, 2016, the total compensation cost related to stock options not yet recognized is approximately $234,391, which is expected to be recognized over a weighted-average period of approximately 2.08 years. |
Related Party Transactions
Related Party Transactions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Related Party Transactions [Abstract] | ||
Related Party Transactions | 13. Related Party Transactions There were no related party transactions during the three months ended March 31, 2017. During the three months ended March 31, 2016, the Company’s chief executive officer paid expenses on behalf of the Company on his personal credit card. These related party advances do not bear interest and are payable on demand. At March 31, 2016, the balance due to the chief executive officer was approximately $95,000, and is included in accounts payable on the accompanying condensed consolidated balance sheets. | 13. Related Party Transactions During the years ended December 31, 2016 and 2015, the Company’s chief executive officer paid expenses on behalf of the Company on his personal credit card. These related party advances do not bear interest and are payable on demand. At December 31, 2016 and 2015, the balance due to the chief executive officer was approximately $0 and $27,075, respectively, and is included in accounts payable on the accompanying consolidated balance sheets. The Company also has a note payable due its chief executive officer in the amount of $12,500 at December 31, 2015, that was repaid during fiscal year 2016. On April 4, 2016, the following officers purchased an aggregate of 423 Units, with each Unit consisting of 1 share of our Series A Preferred and a 3-year warrant to purchase 223 shares of the Company’s common stock at an exercise price of $6.00 per share: (i) the Company’s president and chief executive officer, purchased 185 Units in consideration of $185,000 in accrued and unpaid salary; (ii) the Company’s chief financial officer purchased 97 Units in consideration of $97,000 in accrued and unpaid salary; (iii) the Company’s chief marketing officer and secretary purchased 58 Units in consideration of $58,000 in accrued and unpaid salary and (iv) the Company’s chief branding officer and wife of the Company’s chief executive officer purchased 83 Units in consideration of $83,000 in accrued and unpaid salary. On November 4, 2016, the Company entered into separate agreements with Steven Earles, Steven Shum, Carrie Earles and Martin Kunkel pursuant to which each of such individuals agreed to convert an aggregate of 423 shares of Series A Convertible Preferred Stock at the Conversion Price into an aggregate of 94,000 shares of Common Stock. Between June 2016 and December 2016, pursuant to subscription agreements, the following securities were purchased by Mr. Wickersham, our Chairman and Chief Executive Officer, or by entities he controls or with whom he has a material relationship: ● Mr. Wickersham, in his capacity as trustee of The Grover T. Wickersham Employees’ Profit Sharing Plan (“PSP”), purchased in a private placement an aggregate of 83,334 units, each unit consisting of one share of common stock and one common stock purchase warrant (collectively with the Common Stock, the “Common Stock Units”) at a purchase price of $3.00 per Common Stock Unit, for a total purchase price of $250,000. The exercise price of the warrants was temporarily reduced to $3.90 in December 2016, at which time 43,590 warrants were exercised. ● Mr. Wickersham directly purchased in a private placement an aggregate of 33,334 Common Stock Units at a purchase price of $3.00 per Common Stock Unit for a total purchase price of $100,000. In December 2016, Mr. Wickersham transferred and/or voluntarily cancelled 11,218 of his warrants. ● Mr. Wickersham, in his capacity as trustee of an education trust established for the benefit of an unrelated minor (“Education Trust”) purchased in a private placement 16,667 Common Stock Units at a purchase price of $3.00 per Unit, for a total purchase price of $50,000. The exercise price of the warrants was temporarily reduced to $3.90 in December 2016, at which time 8,334 of the warrants were exercised. ● Mr. Wickersham, in his capacity as trustee of the Lindsay Anne Wickersham 1999 Irrevocable Trust (the “Irrevocable Trust”) purchased in a private placement 66,667 Common Stock Units at a purchase price of $3.00 per Common Stock Unit, for a total purchase price of $200,000. ● In June 2016, the PSP purchased from us a promissory note bearing interest at the rate of 8% per annum (a “Promissory Note”) for aggregate consideration of $50,000, along with a warrant to acquire 8,334 shares of common stock at a price of $6.00 per share. In July 2016, the PSP purchased an additional Promissory Note for aggregate consideration of $120,000, along with a warrant to acquire 20,000 shares of common stock at an exercise price of $6.00 per share. ● In June 2016, the Grover T. and Jill Z. Wickersham 2000 Charitable Remainder Trust (the “CRUT”) purchased a Promissory Note for aggregate consideration of $50,000, along with a warrant to acquire 8,334 shares of common stock at an exercise price of $6.00 per share. In November 2016, the CRUT purchased an additional Promissory Note for aggregate consideration of $75,000, along with a warrant to acquire 12,500 shares of common stock at an exercise price of $6.00 per share. The exercise price of the warrants was temporarily reduced to $3.90 in December 2016, at which time the warrants were exercised. In June 2016, pursuant to a Subscription Agreement, Michael M. Fleming, one of our directors, purchased in a private placement an aggregate of 8,334 Units at a purchase price of $3.00 per Unit, each Unit consisting of one share of Common Stock and a warrant to purchase one share of Common Stock at an exercise price of $6.00 per share, for a total purchase price of $25,000. On September 19, 2016, an entity for which Lawrence Hirson, a former director, serves as manager purchased $150,000 of promissory notes and received 3-year warrants to purchase 25,000 shares of our common stock at an exercise price of $6.00 per share. |
Subsequent Events
Subsequent Events | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Subsequent Events [Abstract] | ||
Subsequent Events | 14. Subsequent Events On May 12, 2017, the Company filed a revised S-1 registration statement for the proposed sale common stock of up to $6.9 million. On May 1, 2017, the Company announced the acquisition of a majority stake in Big Bottom Distilling, LLC (“BBD”), a Hillsboro, Oregon-based distiller of award winning and super premium gins, whiskeys, brandies, rum, and vodka. The transaction is structured as an exchange of 28,096 Eastside shares for 90% of the BBD LLC units, and will maintain the independence of BBD as a separate entity underneath the operational umbrella of Eastside Distilling. BBD and Eastside will benefit from brand synergies because of the limited overlap with Eastside products. Eastside will devote sales, marketing, financial capital and production resources to expanding BBDs business, which in 2016 had total revenues of approximately $201,000. On April 24, 2017, the Company issued 16,667 shares of its common stock upon conversion of 50 shares of preferred stock. As of April 24, 2017, the Company has zero shares of preferred stock outstanding. On April 21, 2017, the Company completed a $500,000 convertible note purchase agreement with an accredited investor. The note has a maturity date of April 3, 2020, and bears interest at the rate of five percent (5%) per annum. The note has an automatic conversion feature upon the closing (or first in a series of closings) of the next equity financing in which the Company sells shares of its equity securities for an aggregate consideration of at least $4,000,000 at a purchase price of at least $7.50. The outstanding principal and unpaid accrued interest on the Note shall be automatically converted into equity securities at a price equal to 80% of the price paid per share by the investors in the next equity financing or $6.00, whichever is lower, provided, however, that in no event shall the conversion price be less than $6.00. The note has a voluntary conversion feature where the investor may convert, in whole or in part, at any time at the conversion rate of $6.00. On April 5, 2017, the board approved an incentive option grant to Mr. Grover Wickersham totaling 33,334 shares with an exercise price of $4.80. In addition, the board approved a restricted stock unit grant of 33,334 shares of common stock that vested on April 5, 2017. 10,217 shares were not issued in order to satisfy Mr. Wickersham’s personal tax withholding responsibility. On April 3, 2017, the Company issued 8,334 shares of common stock to a third-party consultant in exchange for services rendered. From April 3, 2017 to May 4, 2017, the Company issued 85,594 shares of its common stock for $333,815 in cash, including warrants to purchase 256,781 shares of common stock. On April 2, 2017 and April 18, 2017, the independent directors, Messrs. Trent Davis and Michael Fleming, respectively, each exercised 4,630 stock options to purchase common stock at $5.40 per share. | 14. Subsequent Events From January 15, 2017 through February 16, 2017, the Company received additional warrant exercises and subscription documents totaling $217,750 for 55,834 shares issued. On January 19, 2017, Eastside Distilling, Inc. (the “Company”) received a written letter of resignation from Steven Earles stating that he has resigned, effective immediately, from his position as President and a director of the Company. Mr. Earles did not sit on any committees of the Board of Directors. His resignation from all positions with the Company was not because of any disagreements with the Company on matters relating to its operations, policies and practices. In connection with his resignation, Mr. Earles has agreed to continue working with the Company in a consultant capacity for the foreseeable future. The vacancy on the Company’s Board of Directors resulting from Mr. Earles’ resignation will remain vacant until such time as a new director is identified and appointed. Similarly, the Company has not yet appointed a new President. Grover T. Wickersham continues to serve as the Company’s Chief Executive Officer and Chairman of the Board and, until such time as a new President is appointed, he will assume the functions of that office. On February 1, 2017, the Company filed an S-1 registration statement for the proposed sale common stock of up to $6.9 million. On February 7, 2017 we entered into a Lease Termination Agreement with PJM BLDG. II LLC (the “Termination Agreement”), the landlord of our former headquarters and production facilities located at 1805 SE Martin Luther King Jr. Blvd., Portland, Oregon. The Termination Agreement provides that the original lease agreement dated July 17, 2014 (the “Lease”) will terminate on June 30, 2017 rather than October 30, 2020. On February 17, 2017, the Company entered into a Commercial Sublease Agreement (the “Sublease”) dated February 1, 2017 with MotherLode, LLC, an Oregon limited liability company (“MotherLode”). Under the Sublease, the Company has agreed to sublease from MotherLode a total of 5,000 square feet of MotherLode’s facility located at 2150 SE Hanna Harvester Drive, Milwaukie, OR 97222 (the “Premises”) for $5,000 per month from February 1, 2017 through December 31, 2018. Under the Sublease, the Company is permitted to use the subleased Premises for its distillery operations, including, without limitation, blending, bottling and warehousing. The sublease facilities will be used as the new production facilities upon completion of the tenant improvements. Under the terms of the Sublease, the parties will enter into an addendum to the Sublease within 120 days of the effective date of the Sublease that will describe the tenant improvements to be constructed, any construction requirements and MotherLode’s approval of such tenant improvements. In the event the parties are unable to agree on tenant improvement issues within the stated period, the Company may terminate the Sublease. On March 8, 2017, the Company completed the acquisition of MotherLode LLC (“MotherLode”), a Portland, Oregon based provider of bottling services and production support to craft distilleries. Since its founding in 2014 by Allen Barteld, the mission of MotherLode has been to enable craft distillers to increase their production and extend their product lines, reducing cost and increasing efficiency, thereby freeing them to focus on their craft. The typical MotherLode customer is a distillery of small batch, hand-crafted spirits, or a premium craft spirit sold as a private label. We plan to relocate much of our own operations to MotherLode’s facility and jointly expand both companies manufacturing resources. Plans are in place for a pneumatic bottling line, allowing for a five times increase in bottling rate, and large volume spirit handling capability. The Company believes the MotherLode operations will be immediately accretive to earnings. In addition to bottling services for distillers and other producers of spirits, MotherLode bottles “private label” craft spirits for customers who have on-premise or off-premise licenses including retail and liquor stores, bars, restaurants, events, and businesses who want to take advantage of the benefits that come from having their brand clearly printed on a label. MotherLode’s premium craft spirits can also be private labeled for corporate gifts, wedding, birthdays and other personal events. We believe that MotherLode can help with new product development and the implementation of Eastside’s spirits branding initiatives in concert with our Portland-based spirits branding firm, Sandstrom Partners. We issued 86,667 shares of common stock to the owners of MotherLode as consideration for the acquisition. Based on the closing share price of our common stock of $4.35 on March 8, 2017, the value of the transaction was $377,000 which is approximately equal to the revenues of MotherLode in 2016. Additionally, Eastside entered into a three-year employment agreement with Allen Barteld and issued standard employee stock options, with vesting over five years. The terms of the acquisition and Mr. Barteld’s employment are more fully set forth in the Form 8-K filed on March 14, 2017. On March 31, 2017, the Company issued 192,307 shares of its common stock for $750,000, including 192,307 warrants for common stock. This represented an initial closing of the Company’s private offering as filed in the Form 8-K on March 27, 2017. |
Selected Quarterly Consolidated
Selected Quarterly Consolidated Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Selected Quarterly Consolidated Financial Data (Unaudited) | 15. Selected Quarterly Consolidated Financial Data (unaudited) The following table sets for the selected unaudited condensed consolidated statements of operations data for each of the four quarters of the years ended December 31, 2016 and 2015. The unaudited quarterly information has been prepared on the same basis as the annual information presented elsewhere herein and, in the Company’s opinion, includes all adjustments (consisting only of normal recurring entries) necessary for a fair statement of the information for the quarters presented. The operating results for any quarter are not necessarily indicative of results for any future period and should be read in conjunction with the audited consolidated financial statements of the Company’s and the notes thereto included elsewhere herein. Three Months Ended March 31, June 30, September 30, December 31, 2016 2016 2016 2016 Net sales $ 463,474 $ 504,311 $ 607,847 $ 532,674 Gross profit 207,305 236,095 236,993 147,569 Net loss (1,014,679 ) (1,309,500 ) (1,456,049 ) (1,419,391 ) Net loss available per common share, basic and diluted (1.34 ) (1.38 ) (0.92 ) (0.57 ) Three Months Ended March 31, June 30, September 30, December 31, 2015 2015 2015 2015 Net sales $ 325,070 $ 304,414 $ 352,081 $ 721,053 Gross profit 107,208 146,763 184,557 393,700 Net loss (831,018 ) (688,060 ) (1,412,612 ) (669,376 ) Net loss available per common sharebasic and diluted (1.10 ) (0.91 ) (1.85 ) (0.87 ) |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Policies) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | ||
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation The accompanying condensed consolidated financial statements for Eastside Distilling, Inc. and Subsidiary were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and with instructions for Form 10-Q and, therefore, do not include all disclosures necessary for a complete presentation of financial condition, results of operations, and cash flows in conformity with GAAP. However, all adjustments which are, in the opinion of management, necessary for a fair presentation of the interim condensed consolidated financial statements have been included. All such adjustments are of a normal recurring nature. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The unaudited condensed consolidated results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 31, 2017. The condensed consolidated financial statements include the accounts of Eastside Distilling, Inc.’s wholly-owned subsidiary, MotherLode (beginning as of March 8, 2017). All intercompany balances and transactions have been eliminated in consolidation. | Basis of Presentation and Consolidation The accompanying consolidated financial statements for Eastside Distilling, Inc. were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The consolidated financial statements include the accounts of Eastside Distilling, Inc. and its wholly-owned subsidiary MWWD (through February 3, 2015). All intercompany balances and transactions have been eliminated in consolidation. |
Segment Reporting | Segment Reporting The Company determined its operating segment on the same basis that it uses to evaluate its performance internally. The Company has one business activity, producing, marketing and distributing hand-crafted spirits, and operates as one segment. The Company’s chief operating decision makers, its chief executive officer and chief financial officer, review the Company’s operating results on an aggregate basis for purposes of allocating resources and evaluating financial performance. | Segment Reporting The Company determined its operating segment on the same basis that it uses to evaluate its performance internally. The Company has one business activity, marketing and distributing hand-crafted spirits, and operates as one segment. The Company’s chief operating decision makers, its chief executive officer and chief financial officer, review the Company’s operating results on an aggregate basis for purposes of allocating resources and evaluating financial performance. |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Revenue Recognition | Revenue Recognition Net revenue includes product sales, less excise taxes and customer programs and incentives. The Company records revenue when all four of the following criteria are met: (i) there is persuasive evidence that an arrangement exists; (ii) delivery of the products and/or services has occurred; (iii) the selling price is fixed or determinable; and (iv) collectability is reasonably assured. The Company recognizes sales when merchandise is shipped from a warehouse directly to wholesale customers (except in the case of a consignment sale). For consignment sales, which include sales to the Oregon Liquor Control Commission (OLCC), the Company recognizes sales upon the consignee’s shipment to the customer. Postage and handling charges billed to customers are also recognized as sales upon shipment of the related merchandise. Shipping terms are generally FOB shipping point, and title passes to the customer at the time and place of shipment or purchase by customers at a retail location. For consignment sales, title passes to the consignee concurrent with the consignee’s shipment to the customer. The customer has no cancellation privileges after shipment or upon purchase at retail locations, other than customary rights of return. The Company excludes sales tax collected and remitted to various states from sales and cost of sales. Sales from items sold through the Company’s retail location are recognized at the time of sale. Revenue received from online merchants who sell discounted gift certificates for the Company’s merchandise and tastings is deferred until the customer has redeemed the discounted gift certificate or the gift certificate has expired, whichever occurs earlier. | Revenue Recognition Net revenue includes product sales, less excise taxes and customer programs and incentives. The Company records revenue when all four of the following criteria are met: (i) there is persuasive evidence that an arrangement exists; (ii) delivery of the products and/or services has occurred; (iii) the selling price is fixed or determinable; and (iv) collectability is reasonably assured. The Company recognizes sales when merchandise is shipped from a warehouse directly to wholesale customers (except in the case of a consignment sale). For consignment sales, which include sales to the Oregon Liquor Control Commission (OLCC), the Company recognizes sales upon the consignee’s shipment to the customer. Postage and handling charges billed to customers are also recognized as sales upon shipment of the related merchandise. Shipping terms are generally FOB shipping point, and title passes to the customer at the time and place of shipment or purchase by customers at a retail location. For consignment sales, title passes to the consignee concurrent with the consignee’s shipment to the customer. The customer has no cancellation privileges after shipment or upon purchase at retail locations, other than customary rights of return. The Company excludes sales tax collected and remitted to various states from sales and cost of sales. Sales from items sold through the Company’s retail location are recognized at the time of sale. Revenue received from online merchants who sell discounted gift certificates for the Company’s merchandise and tastings is deferred until the customer has redeemed the discounted gift certificate or the gift certificate has expired, whichever occurs earlier. |
Customer Programs and Incentives | Customer Programs and Incentives Customer programs and incentives, which include customer promotional discount programs, customer incentives and other payments, are a common practice in the alcohol beverage industry. The Company makes these payments to customers and incurs these costs to promote sales of products and to maintain competitive pricing. Amounts paid in connection with customer programs and incentives are recorded as reductions to net sales or as advertising, promotional and selling expenses in accordance with ASC Topic 605-50, Revenue Recognition - Customer Payments and Incentives, based on the nature of the expenditure. Amounts paid to customers totaled $40,772 and $8,712 for the three months ended March 31, 2017 and 2016, respectively. | Customer Programs and Incentives Customer programs and incentives, which include customer promotional discount programs, customer incentives and other payments, are a common practice in the alcohol beverage industry. The Company makes these payments to customers and incurs these costs to promote sales of products and to maintain competitive pricing. Amounts paid in connection with customer programs and incentives are recorded as reductions to net revenue or as advertising, promotional and selling expenses in accordance with ASC Topic 605-50, Revenue Recognition - Customer Payments and Incentives, based on the nature of the expenditure. Amounts paid to customers totaled $136,786 and $3,184 in years 2016 and 2015, respectively. |
Advertising, Promotional and Selling Expenses | Advertising, Promotional and Selling Expenses The following expenses are included in advertising, promotions and selling expenses in the accompanying consolidated statements of operations: media advertising costs, special event costs, tasting room costs, sales and marketing expenses, salary and benefit expenses, travel and entertainment expenses for the sales, brand and sales support workforce and promotional activity expenses. | Advertising, Promotional and Selling Expenses The following expenses are included in advertising, promotions and selling expenses in the accompanying consolidated statements of operations: media advertising costs, special event costs, tasting room costs, sales and marketing expenses, salary and benefit expenses, travel and entertainment expenses for the sales, brand and sales support workforce and promotional activity expenses. |
Cost of Sales | Cost of Sales Cost of sales consists of the costs of ingredients utilized in the production of spirits, manufacturing labor and overhead, warehousing rent, packaging, and in-bound freight charges. Ingredients account for the largest portion of the cost of sales, followed by packaging and production costs. | Cost of Sales Cost of sales consists of the costs of ingredients utilized in the production of spirits, manufacturing labor and overhead, warehousing rent, packaging, and in-bound freight charges. Ingredients account for the largest portion of the cost of sales, followed by packaging and production costs. |
Shipping and Fulfillment Costs | Shipping and Fulfillment Costs Freight costs incurred related to shipment of merchandise from the Company’s distribution facilities to customers are recorded in cost of sales. | Shipping and Fulfillment Costs Freight costs incurred related to shipment of merchandise from the Company’s distribution facilities to customers are recorded in cost of sales. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash equivalents are considered to be highly liquid investments with maturities of three months or less at the time of the purchase. The Company had no cash equivalents at March 31, 2017 and December 31, 2016. | Cash and Cash Equivalents Cash equivalents are considered to be highly liquid investments with maturities of three months or less at the time of the purchase. The Company had no cash equivalents at December 31, 2016 and 2015. |
Concentrations | Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of trade receivables. At March 31, 2017 and December 31, 2016, three customers represented 79% and 91% of trade receivables, respectively. Sales to three customers accounted for approximately 57% of consolidated net sales for the three months ended March 31, 2017. Sales to one customer, the OLCC, accounted for approximately 32% of net sales for the three months ended March 31, 2016. | Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of trade receivables. At December 31, 2016, three distributors represented 91% of trade receivables. At December 31, 2015, one distributor, the Oregon Liquor Control Commission (OLCC), represented 67% of trade receivables. Sales to two distributors accounted for approximately 46% of consolidated net sales for the year ended December 31, 2016. Sales to one distributor, the OLCC, accounted for approximately 40% of consolidated net sales for the year ended December 31, 2015. |
Fair Value Measurements | Fair Value Measurements GAAP defines fair value, establishes a framework for measuring fair value, and requires certain disclosures about fair value measurements. GAAP permits an entity to choose to measure many financial instruments and certain other items at fair value and contains financial statement presentation and disclosure requirements for assets and liabilities for which the fair value option is elected. At March 31, 2017 and December 31, 2016, management has not elected to report any of the Company’s assets or liabilities at fair value under the “fair value option” provided by GAAP. The hierarchy of fair value valuation techniques under GAAP provides for three levels: Level 1 provides the most reliable measure of fair value, whereas Level 3, if applicable, generally would require significant management judgment. The three levels for categorizing assets and liabilities under GAAP’s fair value measurement requirements are as follows: Level 1: Fair value of the asset or liability is determined using unadjusted quoted prices in active markets for identical assets or liabilities. Level 2: Fair value of the asset or liability is determined using inputs other than quoted prices that are observable for the applicable asset or liability, either directly or indirectly, such as quoted prices for similar (as opposed to identical) assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Fair value of the asset or liability is determined using unobservable inputs that are significant to the fair value measurement and reflect management’s own assumptions regarding the applicable asset or liability. None of the Company’s assets or liabilities were measured at fair value at March 31, 2017 and December 31, 2016. However, GAAP requires the disclosure of fair value information about financial instruments that are not measured at fair value. Financial instruments consist principally of trade receivables, accounts payable, accrued liabilities, note payable, and convertible note payable. The estimated fair value of trade receivables, accounts payable, and accrued liabilities approximates their carrying value due to the short period of time to their maturities. At March 31, 2017 and December 31, 2016, the Company’s note payable and convertible notes payable are at fixed rates and their carrying value approximates fair value. Items Measured at Fair Value on a Nonrecurring Basis Certain assets and liabilities acquired in a business acquisition are valued at fair value at the date of acquisition. | Fair Value Measurements GAAP defines fair value, establishes a framework for measuring fair value, and requires certain disclosures about fair value measurements. GAAP permits an entity to choose to measure many financial instruments and certain other items at fair value and contains financial statement presentation and disclosure requirements for assets and liabilities for which the fair value option is elected. At December 31, 2016 and December 31, 2015, management has not elected to report any of the Company’s assets or liabilities at fair value under the “fair value option” provided by GAAP. The hierarchy of fair value valuation techniques under GAAP provides for three levels: Level 1 provides the most reliable measure of fair value, whereas Level 3, if applicable, generally would require significant management judgment. The three levels for categorizing assets and liabilities under GAAP’s fair value measurement requirements are as follows: Level 1: Fair value of the asset or liability is determined using unadjusted quoted prices in active markets for identical assets or liabilities. Level 2: Fair value of the asset or liability is determined using inputs other than quoted prices that are observable for the applicable asset or liability, either directly or indirectly, such as quoted prices for similar (as opposed to identical) assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Fair value of the asset or liability is determined using unobservable inputs that are significant to the fair value measurement and reflect management’s own assumptions regarding the applicable asset or liability. None of the Company’s assets or liabilities were measured at fair value at December 31, 2016 and 2015. However, GAAP requires the disclosure of fair value information about financial instruments that are not measured at fair value. Financial instruments consist principally of trade receivables, accounts payable, accrued liabilities, note payable, and convertible note payable. The estimated fair value of trade receivables, accounts payable, and accrued liabilities approximates their carrying value due to the short period of time to their maturities. At December 31, 2016 and 2015, the Company’s note payable and convertible notes payable are at fixed rates and their carrying value approximates fair value. |
Inventories | Inventories Inventories primarily consist of bulk and bottled liquor and merchandise and are stated at the lower of cost or market. Cost is determined using an average costing methodology, which approximates cost under the first-in, first-out (FIFO) method. A portion of inventory is held by certain independent distributors on consignment until it is sold to a third party. The Company regularly monitors inventory quantities on hand and records write-downs for excess and obsolete inventories based primarily on the Company’s estimated forecast of product demand and production requirements. Such write-downs establish a new cost basis of accounting for the related inventory. The Company has recorded no write-downs of inventory for the three months ended March 31, 2017 and 2016. | Inventories Inventories primarily consist of bulk and bottled liquor and merchandise and are stated at the lower of cost or market. Cost is determined using an average costing methodology, which approximates cost under the first-in, first-out (FIFO) method. A portion of inventory is held by certain independent distributors on consignment until it is sold to a third party. The Company regularly monitors inventory quantities on hand and records write-downs for excess and obsolete inventories based primarily on the Company’s estimated forecast of product demand and production requirements. Such write-downs establish a new cost basis of accounting for the related inventory. The Company has recorded no write-downs of inventory for the years ended December 31, 2016 and 2015. |
Property and Equipment | Property and Equipment Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, ranging from three to seven years. Amortization of leasehold improvements is computed using the straight-line method over the life of the lease or the useful lives of the assets, whichever is shorter. The cost and related accumulated depreciation and amortization of property and equipment sold or otherwise disposed of are removed from the accounts and any gain or loss is reported as current period income or expense. The costs of repairs and maintenance are expensed as incurred. | Property and Equipment Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, ranging from three to seven years. Amortization of leasehold improvements is computed using the straight-line method over the life of the lease or the useful lives of the assets, whichever is shorter. The cost and related accumulated depreciation and amortization of property and equipment sold or otherwise disposed of are removed from the accounts and any gain or loss is reported as current period income or expense. The costs of repairs and maintenance are expensed as incurred. |
Long-lived Assets | Long-lived Assets The Company accounts for long-lived assets, including property and equipment, at amortized cost. Management reviews long-lived assets for probable impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. If there is an indication of impairment, management would prepare an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these estimated cash flows were less than the carrying amount of the asset, an impairment loss would be recognized to write down the asset to its estimated fair value. | Long-lived Assets The Company accounts for long-lived assets, including property and equipment, at amortized cost. Management reviews long-lived assets for probable impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. If there is an indication of impairment, management would prepare an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these estimated cash flows were less than the carrying amount of the asset, an impairment loss would be recognized to write down the asset to its estimated fair value. |
Income Taxes | Income Taxes The provision for income taxes is based on income and expenses as reported for financial statement purposes using the “asset and liability method” for accounting for deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. At March 31, 2017 and December 31, 2016, the Company established valuation allowances against its net deferred tax assets. Income tax positions that meet the “more-likely-than-not” recognition threshold are measured at the largest amount of income tax benefit that is more than 50 percent likely to be realized upon settlement with the applicable taxing authority. The portion of the benefits associated with income tax positions taken that exceeds the amount measured as described above would be reflected as a liability for unrecognized income tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized income tax benefits would be classified as additional income taxes in the accompanying condensed consolidated statements of operations. There were no unrecognized income tax benefits, nor any interest and penalties associated with unrecognized income tax benefits, accrued or expensed at and for the three months ended March 31, 2017 and 2016. The Company files federal income tax returns in the U.S. and various state income tax returns. The Company is no longer subject to examinations by the related tax authorities for the Company’s U.S. federal and state income tax returns for years prior to 2011. | Income Taxes The provision for income taxes is based on income and expenses as reported for financial statement purposes using the “asset and liability method” for accounting for deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. At December 31, 2016 and 2015, the Company established valuation allowances against its net deferred tax assets. Income tax positions that meet the “more-likely-than-not” recognition threshold are measured at the largest amount of income tax benefit that is more than 50 percent likely to be realized upon settlement with the applicable taxing authority. The portion of the benefits associated with income tax positions taken that exceeds the amount measured as described above would be reflected as a liability for unrecognized income tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized income tax benefits would be classified as additional income taxes in the accompanying consolidated statements of operations. There were no unrecognized income tax benefits, nor any interest and penalties associated with unrecognized income tax benefits, accrued or expensed at and for the years ended December 31, 2016 and 2015. The Company files federal income tax returns in the U.S. and various state income tax returns. The Company is no longer subject to examinations by the related tax authorities for the Company’s U.S. federal and state income tax returns for years prior to 2011. |
Advertising | Advertising Advertising costs are expensed as incurred. Advertising expense was $386,132 and $156,203 for the three months ended March 31, 2017 and 2016, respectively. | Advertising Advertising costs are expensed as incurred. Advertising expense was approximately $297,000 and $389,000 for the years ended December 31, 2016 and 2015, respectively. |
Comprehensive Income | Comprehensive Income The Company does not have any reconciling other comprehensive income items for the three months ended March 31, 2017 and 2016. | Comprehensive Income The Company does not have any reconciling other comprehensive income (expense) items for the years ended December 31, 2016 and 2015. |
Excise Taxes | Excise Taxes The Company is responsible for compliance with the TTB regulations, which includes making timely and accurate excise tax payments. The Company is subject to periodic compliance audits by the TTB. Individual states also impose excise taxes on alcohol beverages in varying amounts. The Company calculates its excise tax expense based upon units produced and on its understanding of the applicable excise tax laws. Excise taxes totaled $176,416 and $158,408 for the three months ended March 31, 2017 and 2016, respectively. | Excise Taxes The Company is responsible for compliance with the TTB regulations, which includes making timely and accurate excise tax payments. The Company is subject to periodic compliance audits by the TTB. Individual states also impose excise taxes on alcohol beverages in varying amounts. The Company calculates its excise tax expense based upon units produced and on its understanding of the applicable excise tax laws. Excise taxes totaled $797,435 and $620,862 in years 2016 and 2015, respectively. |
Stock-Based Compensation | Stock-Based Compensation The Company recognizes as compensation expense all stock-based awards issued to employees. The compensation cost is measured based on the grant-date fair value of the related stock-based awards and is recognized over the service period of stock-based awards, which is generally the same as the vesting period. The fair value of stock options is determined using the Black-Scholes valuation model, which estimates the fair value of each award on the date of grant based on a variety of assumptions including expected stock price volatility, expected terms of the awards, risk-free interest rate, and dividend rates, if applicable. Stock-based awards issued to nonemployees are recorded at fair value on the measurement date and are subject to periodic market adjustments at the end of each reporting period and as the underlying stock-based awards vest. Stock-based compensation was $158,658 and $105,839 for the three months ended March 31, 2017 and 2016, respectively. | Stock-Based Compensation The Company recognizes as compensation expense all stock-based awards issued to employees. The compensation cost is measured based on the grant-date fair value of the related stock-based awards and is recognized over the service period of stock-based awards, which is generally the same as the vesting period. The fair value of stock options is determined using the Black-Scholes valuation model, which estimates the fair value of each award on the date of grant based on a variety of assumptions including expected stock price volatility, expected terms of the awards, risk-free interest rate, and dividend rates, if applicable. Stock-based awards issued to nonemployees are recorded at fair value on the measurement date and are subject to periodic market adjustments as the underlying stock-based awards vest. Stock-based compensation was $374,687 and $140,370 in fiscal years 2016 and 2015, respectively. |
Accounts Receivable Factoring Program | Accounts Receivable Factoring Program We use an accounts receivable factoring program with certain customer accounts. Under this program, we have the option to sell those customer receivables in advance of payment for 75% of the amount due. When the customer remits payment, we then receive the remaining 25%. We are charged interest on the advanced 75% payment at a rate of 1.5% per month. Under the terms of the agreement with the factoring provider, any factored invoices have recourse should the customer fail to pay the invoice. Thus, we record factored amounts as a liability until the customer remits payment and we receive the remaining 25% of the non-factored amount. We did not factor any invoices during the three months ended March 31, 2017. At March 31, 2017, we had factored invoices outstanding of $59,547, and we incurred fees associated with the factoring program of $2,582 during the three months ended March 31, 2017. During the three months ended March 31, 2016, we factored invoices totaling $117,933 and received total proceeds of $88,450. At March 31, 2016, we had factored invoices outstanding of $79,120, and we incurred fees associated with the factoring program of $4,269 during the three months ended March 31, 2016. | Accounts Receivable Factoring Program We use an accounts receivable factoring program with certain customer accounts. Under this program, we have the option to sell those customer receivables in advance of payment for 75% of the amount due. When the customer remits payment, we then receive the remaining 25%. We are charged interest on the advanced 75% payment at a rate of 1.5% per month. Under the terms of the agreement with the factoring provider, any factored invoices have recourse should the customer fail to pay the invoice. Thus, we record factored amounts as a liability until the customer remits payment and we receive the remaining 25% of the non-factored amount. During the year ended December 31, 2016, we factored invoices totaling $542,083 and received total proceeds of $406,562. At December 31, 2016, we had factored invoices outstanding of $171,150, and we incurred fees associated with the factoring program of $48,601 during 2016. Comparatively, during the year ended December 31, 2015, we factored invoices totaling $99,258 and received total proceeds of $74,444. At December 31, 2015, we had $17,601 in factored invoices outstanding, and we incurred fees associated with the factoring program of $5,867 during 2015. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2016, the Financial Accounting Standard Boards (the “FASB”) issued Accounting Standard Update (“ASU”) No. 2016-09, Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ● A lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and ● A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing. Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (i.e., January 1, 2019, for a calendar year entity). Early application is permitted for all public business entities upon issuance. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. We are currently evaluating the impact ASU 2016-02 will have on the Company’s condensed consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330), Simplifying the Measurement of Inventory In April 2015, the FASB issued ASU 2015-03, simplifying the presentation of debt issuance costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 is effective for annual and interim periods beginning after December 15, 2015 and early application is permitted. We have early adopted as of December 31, 2015. | Recent Accounting Pronouncements In March 2016, the Financial Accounting Standard Boards (the “FASB”) issued Accounting Standard Update (“ASU”) No. 2016-09, Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). - A lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and - A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing. Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (i.e., January 1, 2019, for a calendar year entity). Early application is permitted for all public business entities upon issuance. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. We are currently evaluating the impact ASU 2016-02 will have on the Company’s condensed consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330), Simplifying the Measurement of Inventory In April 2015, the FASB issued ASU 2015-03, simplifying the presentation of debt issuance costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 is effective for annual and interim periods beginning after December 15, 2015 and early application is permitted. We have early adopted as of December 31, 2015. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the March 31, 2017 presentation with no changes to net loss or total stockholders’ equity previously reported. | Reclassifications Certain prior period amounts have been reclassified to conform to the December 31, 2016 presentation with no changes to net loss or total stockholders’ equity (deficit) previously reported. |
Business Acquisition (Tables)
Business Acquisition (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisition Assets and Libilities | The following allocation of the purchase price is as follows: Consideration given: 86,667 shares of common stock valued at $4.35 per share $ 377,000 Assets and liabilities acquired: Cash 7,062 Inventory 103,488 Property and equipment 46,250 Intangible assets - customer list 376,431 Accounts payable (5,180 ) Customer deposits (151,051 ) $ 377,000 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | ||
Schedule of Inventories | Inventories consist of the following at March 31, 2017 and December 31, 2016: 2017 2016 Raw materials $ 533,814 $ 439,739 Finished goods 461,919 340,298 Total inventories $ 995,733 $ 780,037 | Inventories consist of the following at December 31: 2016 2015 Raw materials $ 439,739 $ 415,953 Finished goods 340,298 248,713 Other - 19,158 Total inventories $ 780,037 $ 683,824 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | ||
Schedule of Property and Equipment Net | Property and equipment consists of the following at March 31, 2017 and December 31, 2016: 2017 2016 Furniture and fixtures $ 147,721 $ 70,140 Leasehold improvements 14,907 8,607 Vehicles 12,000 38,831 Construction In-Progress - 34,603 Total cost 174,928 152,181 Less accumulated depreciation (46,068 ) (52,965 ) Property and equipment - net $ 128,560 $ 99,216 | Property and equipment consists of the following at December 31: 2016 2015 Furniture and fixtures $ 70,140 $ 64,288 Leasehold improvements 8,607 8,607 Vehicles 38,831 38,831 Construction In Progress 34,603 31,253 Total cost 152,181 142,979 Less accumulated depreciation and amortization (52,965 ) (30,974 ) Total property and equipment, net $ 99,216 $ 112,005 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | There were no intangible assets at December 31, 2016. At March 31, 2017, intangible assets consist of the following: 2017 Permits and licenses $ 25,000 Customer lists 351,431 Total intangible asset 376,431 Less accumulated amortization (2,929 ) Intangible assets - net $ 373,502 |
Notes Payable (Tables)
Notes Payable (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Debt Disclosure [Abstract] | ||
Schedule of Notes Payable | Notes payable consists of the following at March 31, 2017 and December 31, 2016: 2017 2016 Notes payable bearing interest at 7.99%. The note is payable in monthly principal plus interest payments of $472 through December, 2020. The note is secured by a vehicle. $ - $ 16,642 Notes payable bearing interest at 8%. The notes have a 2-year maturity and are due at various dates between September 19, 2018 – October 19, 2018, and pay interest only on a monthly basis 460,000 547,500 Total note payable 460,000 564,142 Less current portion - (4,537 ) Less debt discount for detachable warrant (94,840 ) (131,849 ) Long-term portion of note payable $ 365,160 $ 427,756 | Notes payable consists of the following at December 31: 2016 2015 Notes payable bearing interest at 7.99%. The note is payable in monthly principal plus interest payments of $472 through December, 2020. The note is secured by a vehicle. $ 16,642 $ 21,940 Notes payable bearing interest at 8%. The notes have a 2-year maturity and are due at various dates between September 19, 2018 – October 19, 2018, and pay interest only on a monthly basis 547,500 Total note payable 564,142 21,940 Less current portion (4,537 ) (4,098 ) Less debt discount for detachable warrant (131,849 ) Total notes payable, less current portion and debt discount $ 427,756 $ 17,842 |
Schedule of Maturities on Notes Payable | Maturities on notes payable as of March 31, 2017, are as follows: Year ending December 31: 2017 $ - 2018 460,000 Thereafter - $ 460,000 | Maturities on notes payable as of December 31, 2016, are as follows: Year ending December 31: 2017 $ 4,537 2018 554,915 2019 4,690 Thereafter - $ 564,142 |
Convertible Notes Payable (Tabl
Convertible Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Convertible Notes Payable | There were no convertible notes payable outstanding at December 31, 2016. At December 31, 2015, convertible notes payable consisted of three separate notes: December 31, 2015 Convertible note bearing interest at 5% per annum in the principal amount of $150,000. The original maturity date of June 13, 2015 was extended to April 1, 2016 during the period ended December 31, 2015 and was further extended to July 1, 2016. The note was convertible into shares of the Company’s common stock at a fixed conversion price of $8.00 per share. On July 1, 2016, the Company paid the outstanding amount under this Note, including interest in full. $ 150,000 Secured Convertible promissory note, bearing interest at 14% per annum in the principal amount of $275,000 (the “Note”), payable in six installments (“Amortization Payments”) as set forth in an Amortization Schedule beginning the 30 th 272,708 Convertible note bearing interest at 0% per annum. The note was converted into Company’s preferred equity financing on April 4, 2016. 50,000 Total convertible notes payable 472,708 Less discount on convertible debt 16,750 Total convertible notes payable – net of debt discount $ 455,958 (1) On April 14, 2016, this note (the “Initial Note”) was transferred to MR Group I, LLC (“Investor”). In addition, on April 14, 2016, the Company issued and sold to Investor a convertible promissory note dated April 18, 2016, bearing interest at 14% per annum in the principal amount of $300,000 (the “Additional Note”, together with the Initial Note, the “Notes”). The Additional Note had a maturity date of January 18, 2017 and an original issue discount of $100,000. On May 13, 2016, the Company entered into Exchange Agreement (the “Exchange Agreement”) with the Investor pursuant to which the Company (i) issued Investor a 14% secured convertible promissory note dated May 13, 2016 in the aggregate principal amount of $219,200 with an August 31, 2016 maturity date (the “Note”) in exchange for a previously issued 14% secured convertible promissory note dated September 10, 2015 in the original principal amount of $275,000 (with current outstanding principal and interest of $197,208 and $21,992, respectively) with a May 10, 2016 maturity date held by Investor and (ii) issued Investor a 14% secured convertible promissory note dated May 13, 2016 in the aggregate principal amount of $302,647 with an April 30, 2017 maturity date (the “Second Note”, together with the Note, the “Exchange Notes”) in exchange for a previously issued 14% secured convertible promissory note dated April 18, 2016 in the original principal amount of $300,000 (with current outstanding principal and interest of $300,000 and $2,647, respectively) with a May 10, 2016 maturity date held by Investor. During the June period, $196,330 of the note was converted into common shares. On June 6, 2016, the Company paid the remaining outstanding amount under this Note ($100,000) in full, and on June 28, 2016, the Company paid the outstanding amount under the Second Note ($306,378) in full. |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Schedule of Effective Tax Rates Reconciliation | The nature of the differences for the three months ended March 31, 2017 and 2016 were as follows: 2017 2016 Expected federal income tax benefit $ (286,381 ) $ (344,991 ) State income taxes after credits (59,520 ) (66,969 ) Change in valuation allowance 345,901 411,960 Total provision for income taxes $ - $ - | The nature of the differences for the year ended December 31 were as follows: 2016 2015 Expected federal income tax benefit $ (1,774,361 ) $ (1,200,378 ) State income taxes after credits (344,435 ) (233,015 ) Change in valuation allowance 2,118,795 1,442,900 Other - (9,507 ) Total provision for income taxes $ - $ - |
Schedule of Deferred Tax Assets and Liabilities | The components of the net deferred tax assets and liabilities at March 31, 2017 and December 31, 2016 consisted of the following: 2017 2016 Deferred tax assets: Net operating loss carryforwards $ 3,843,052 $ 3,557,909 Stock-based compensation 277,596 213,181 Total deferred tax assets 4,120,648 3,771,090 Deferred tax liabilities: Depreciation and amortization (74,473 ) (70,816 ) Total deferred tax liabilities (74,473 ) (70,816 ) Valuation allowance (4,046,175 ) (3,700,274 ) Net deferred tax assets $ - $ - | The components of the net deferred tax assets and liabilities at December 31 consisted of the following: 2016 2015 Deferred tax assets: Net operating loss carryforwards $ 3,557,909 1,582,317 Stock-based compensation 213,181 61,050 Total deferred tax assets 3,771,090 1,643,367 Deferred tax liabilities: Depreciation and amortization (70,816 ) (61,888 ) Total deferred tax liabilities (70,816 ) (61,888 ) Valuation allowance (3,700,274 ) (1,581,479 ) Net deferred tax assets $ - - |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Schedule of Future Minimum Lease Payments Under Operating leases | At March 31, 2017, future minimum lease payments required under the operating leases are approximately as follows: 2017 $ 213,000 2018 90,000 2019 2,000 Thereafter - Total $ 305,000 | At December 31, 2016, future minimum lease payments required under the operating leases are approximately as follows: For year ending December 31st: 2017 $ 297,000 2018 272,000 2019 278,000 2020 240,000 Total $ 1,087,000 |
Net Loss per Common Share (Tabl
Net Loss per Common Share (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Earnings Per Share [Abstract] | ||
Schedule of Basic and Diluted Net Loss Per Common Share | The numerators and denominators used in computing basic and diluted net loss per common share in 2017 and 2016 are as follows: March 31, 2017 2016 Net loss attributable to common stockholders (numerator) $ (906,855 ) $ (1,014,679 ) Weighted average shares (denominator) 2,614,324 758,542 Basic and diluted net loss per common share $ (0.35 ) $ (1.34 ) | The numerators and denominators used in computing basic and diluted net loss per common share in 2016 and 2015 are as follows: December 31, 2016 2015 Net loss available to common stockholders (numerator) $ (5,251,293 ) $ (3,601,066 ) Weighted average shares (denominator) 1,247,281 762,506 Basic and diluted net loss per common share $ (4.21 ) $ (4.72 ) |
Issuance of Common Stock, War37
Issuance of Common Stock, Warrants and Convertible Preferred Stock (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Schedule of Issuance of Convertible Preferred Stock | Number of shares Shares Shares Issued and Net Conversion of common stock Liquidation Liquidation Authorized Outstanding Proceeds Price/Share Equivalents Preference Value/Share Series A 3,000 50 $ 49,426 $ 4.50 11,111 $ 125,000 $ 2,500 | The following table provides various information about the Series A convertible preferred stock. Shares Number of shares Shares Issued and Net Conversion of common stock Liquidation Liquidation Authorized Outstanding Proceeds Price/Share Equivalents Preference Value/Share Series A convertible preferred stock 3,000 50 $ 38,932 $ 4.50 11,112 $ 125,000 $ 2,500 |
Schedule of Weighted-average Assumptions Used in Black-Scholes Valuation Method | The following weighted-average assumptions were used in the Black-Scholes valuation model for options granted during the three months ended March 31, 2017: Risk-free interest rate 1.60 % Expected term (in years) 7.25 Dividend yield - Expected volatility 75 % | |
Warrant [Member] | ||
Schedule of Weighted-average Assumptions Used in Black-Scholes Valuation Method | Black-Scholes option-pricing model using the weighted-average assumptions below: Volatility 75 % Risk-free interest rate 1.50 % Expected term (in years) 3.0 Expected dividend yield - Fair value of common stock $ 4.38 | Volatility 75 % Risk-free interest rate 1.03 % Expected term (in years) 3.0 Expected dividend yield - Fair value of common stock $ 5.04 |
Summary of Warrant Activity | A summary of activity in warrants is as follows: Warrants Weighted Average Remaining Life Weighted Average Exercise Price Aggregate Intrinsic Value Outstanding at December 31, 2016 846,765 2.77 years $ 6.48 $ — Three months ended March 31, 2017: Granted 192,308 3.00 years $ 7.50 $ 0 Exercised (40,834 ) 2.00 years $ 3.90 Forfeited and cancelled - - - - Outstanding at March 31, 2017 998,239 2.61 years $ 6.75 $ 0 | A summary of activity in warrants is as follows: Warrants Weighted Average Remaining Life Weighted Average Exercise Price Aggregate Intrinsic Value Outstanding at December 31, 2015 — — $ — $ — Granted 1,435,639 $ 6.18 $ - Exercised (483,773 ) 3.90 Forfeited and cancelled (105,101 ) 6.00 - Outstanding at December 31, 2016 846,765 2.77 years $ 6.48 $ - |
Stockholder's Deficit (Tables)
Stockholder's Deficit (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Schedule of Balance of Stockholder's Equity | Convertible Series A Total Preferred Stock Common Stock Paid-in Accumulated Stockholders' Shares Amount Shares Amount Capital Deficit Deficit Balance, Dec 31, 2016 300 $ 245,838 2,542,504 $254 13,699,785 $ (12,813,044 ) $ 1,132,833 Issuance of common stock - - 15,000 2 58,498 58,500 Issuance of common stock, net of issuance costs of $6,033, with detachable warrants - - 192,308 19 743,948 743,967 Issuance of common stock from warrant exercise for cash - - 40,834 4 159,246 159,250 Issuance of common stock for services by third parties - - 19,796 2 83,798 83,800 Issuance of common stock for services by employees - - 575 - 2,517 2,517 Stock-based compensation - - - - 158,658 158,658 Issuance of common stock for acquisition of MotherLode, net of issuance costs of $5,580 - - 86,667 9 371,411 371,420 Shares Issued for payoff of long-term notes - - 22,436 2 87,498 87,500 Cumulative dividend on Series A preferred - 5,037 (5,037 ) - Common shares issued for preferred conversion (250 ) (201,449 ) 83,334 8 201,441 - Net loss - - - - - (901,818 ) (901,818 ) Balance, Mar 31, 2017 50 $ 49,426 3,003,451 $ 300 $15,566,800 $ (13,719,899 ) $ 1,896,627 | |
Schedule of Issuance of Convertible Preferred Stock | Number of shares Shares Shares Issued and Net Conversion of common stock Liquidation Liquidation Authorized Outstanding Proceeds Price/Share Equivalents Preference Value/Share Series A 3,000 50 $ 49,426 $ 4.50 11,111 $ 125,000 $ 2,500 | The following table provides various information about the Series A convertible preferred stock. Shares Number of shares Shares Issued and Net Conversion of common stock Liquidation Liquidation Authorized Outstanding Proceeds Price/Share Equivalents Preference Value/Share Series A convertible preferred stock 3,000 50 $ 38,932 $ 4.50 11,112 $ 125,000 $ 2,500 |
Summary of Stock Option Activity | A summary of all stock option activity at and for the three months ended March 31, 2017 is presented below: # of Options Weighted- Average Exercise Price Outstanding at December 31, 2016 173,750 $ 9.24 Options granted 111,667 (1) 4.71 Options exercised - - Options canceled - - Outstanding at March 31, 2017 285,417 $ 7.47 Exercisable at March 31, 2017 86,285 $ 11.79 (1) options granted under 2016 Stock Incentive Plan; | A summary of all stock option activity at and for the years ended December 31, 2016 and 2015 is presented below: # of Options Weighted- Average Exercise Price Outstanding at December 31, 2014 16,667 (1) $ 24.00 Options granted 27,500 (2) 69.60 Options exercised - - Options canceled (7,500 )(2) 120.00 Outstanding at December 31, 2015 36,667 $ 38.40 Options granted 142,500 (3) 5.49 Options exercised - - Options canceled (5,417 )(3) 108.69 Outstanding at December 31, 2016 173,750 $ 9.24 Exercisable at December 31, 2016 48,325 $ 14.31 (1) Non-Plan options. (2) 27,500 options granted under 2015 Stock Incentive Plan; 7,500 non-plan options, which were subsequently canceled under an agreement with the holder. (3) 142,500 options granted under 2016 Equity Incentive Plan; 5,417 options were canceled under the 2015 Stock Incentive Plan. |
Schedule of Weighted-average Assumptions Used in Black-Scholes Valuation Method | The following weighted-average assumptions were used in the Black-Scholes valuation model for options granted during the three months ended March 31, 2017: Risk-free interest rate 1.60 % Expected term (in years) 7.25 Dividend yield - Expected volatility 75 % | |
Warrant [Member] | ||
Schedule of Weighted-average Assumptions Used in Black-Scholes Valuation Method | Black-Scholes option-pricing model using the weighted-average assumptions below: Volatility 75 % Risk-free interest rate 1.50 % Expected term (in years) 3.0 Expected dividend yield - Fair value of common stock $ 4.38 | Volatility 75 % Risk-free interest rate 1.03 % Expected term (in years) 3.0 Expected dividend yield - Fair value of common stock $ 5.04 |
Summary of Warrant Activity | A summary of activity in warrants is as follows: Warrants Weighted Average Remaining Life Weighted Average Exercise Price Aggregate Intrinsic Value Outstanding at December 31, 2016 846,765 2.77 years $ 6.48 $ — Three months ended March 31, 2017: Granted 192,308 3.00 years $ 7.50 $ 0 Exercised (40,834 ) 2.00 years $ 3.90 Forfeited and cancelled - - - - Outstanding at March 31, 2017 998,239 2.61 years $ 6.75 $ 0 | A summary of activity in warrants is as follows: Warrants Weighted Average Remaining Life Weighted Average Exercise Price Aggregate Intrinsic Value Outstanding at December 31, 2015 — — $ — $ — Granted 1,435,639 $ 6.18 $ - Exercised (483,773 ) 3.90 Forfeited and cancelled (105,101 ) 6.00 - Outstanding at December 31, 2016 846,765 2.77 years $ 6.48 $ - |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Schedule of Stock Option Activity | A summary of all stock option activity at and for the three months ended March 31, 2017 is presented below: # of Options Weighted- Average Exercise Price Outstanding at December 31, 2016 173,750 $ 9.24 Options granted 111,667 (1) 4.71 Options exercised - - Options canceled - - Outstanding at March 31, 2017 285,417 $ 7.47 Exercisable at March 31, 2017 86,285 $ 11.79 (1) options granted under 2016 Stock Incentive Plan; | A summary of all stock option activity at and for the years ended December 31, 2016 and 2015 is presented below: # of Options Weighted- Average Exercise Price Outstanding at December 31, 2014 16,667 (1) $ 24.00 Options granted 27,500 (2) 69.60 Options exercised - - Options canceled (7,500 )(2) 120.00 Outstanding at December 31, 2015 36,667 $ 38.40 Options granted 142,500 (3) 5.49 Options exercised - - Options canceled (5,417 )(3) 108.69 Outstanding at December 31, 2016 173,750 $ 9.24 Exercisable at December 31, 2016 48,325 $ 14.31 (1) Non-Plan options. (2) 27,500 options granted under 2015 Stock Incentive Plan; 7,500 non-plan options, which were subsequently canceled under an agreement with the holder. (3) 142,500 options granted under 2016 Equity Incentive Plan; 5,417 options were canceled under the 2015 Stock Incentive Plan. |
Schedule of Weighted-Average Assumptions Used in the Black-scholes Valuation Model Options | The following weighted-average assumptions were used in the Black-Scholes valuation model for options granted during the year ended December 31, 2016: Risk-free interest rate 1.17 % Expected term (in years) 3.38 Dividend yield - Expected volatility 75 % |
Selected Quarterly Consolidat40
Selected Quarterly Consolidated Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Condensed Consolidated Statements of Operations Data | Three Months Ended March 31, June 30, September 30, December 31, 2016 2016 2016 2016 Net sales $ 463,474 $ 504,311 $ 607,847 $ 532,674 Gross profit 207,305 236,095 236,993 147,569 Net loss (1,014,679 ) (1,309,500 ) (1,456,049 ) (1,419,391 ) Net loss available per common share, basic and diluted (1.34 ) (1.38 ) (0.92 ) (0.57 ) Three Months Ended March 31, June 30, September 30, December 31, 2015 2015 2015 2015 Net sales $ 325,070 $ 304,414 $ 352,081 $ 721,053 Gross profit 107,208 146,763 184,557 393,700 Net loss (831,018 ) (688,060 ) (1,412,612 ) (669,376 ) Net loss available per common sharebasic and diluted (1.10 ) (0.91 ) (1.85 ) (0.87 ) |
Description of Business and Liq
Description of Business and Liquidity (Details Narrative) (10K) | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Accounting Policies [Abstract] | |
Description of acquired entity | The merger consideration for the Acquisition consisted of 533,334 shares of Eurocans common stock. In addition, certain of Eurocans stockholders cancelled an aggregate of 415,167 shares of Eurocans common stock held by them. As a result, on October 31, 2014, Eurocan had 666,667 shares of common stock issued and outstanding, of which 533,334 shares were held by the former members of the LLC. |
Other income included in other income (expense) | $ 52,890 |
Liquidity (Details Narrative)
Liquidity (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||||||
Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||
Net loss | $ 901,818 | $ 1,419,391 | $ 1,456,049 | $ 1,309,500 | $ 1,014,679 | $ 669,376 | $ 1,412,612 | $ 688,060 | $ 831,018 | $ 5,199,619 | $ 3,601,066 | |
Accumulated deficit | 13,719,899 | 12,813,044 | 7,561,751 | 12,813,044 | 7,561,751 | |||||||
Net cash provided by financing activities | 954,421 | 149,914 | 5,910,622 | 296,881 | ||||||||
Cash on hand | 883,715 | $ 1,088,066 | $ 12,800 | $ 141,317 | 1,088,066 | $ 141,317 | $ 1,082,290 | |||||
Working capital | 1,700,325 | $ 1,400,000 | ||||||||||
Equity and debt offerings | $ 833,815 |
Liquidity (Details Narrative) (
Liquidity (Details Narrative) (10K) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||
Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Net loss | $ (901,818) | $ (1,419,391) | $ (1,456,049) | $ (1,309,500) | $ (1,014,679) | $ (669,376) | $ (1,412,612) | $ (688,060) | $ (831,018) | $ (5,199,619) | $ (3,601,066) |
Accumulated deficit | (13,719,899) | (12,813,044) | $ (7,561,751) | (12,813,044) | (7,561,751) | ||||||
Net cash provided by financing activities | 954,421 | $ 149,914 | 5,910,622 | $ 296,881 | |||||||
Cash on hand | 1,100,000 | 1,100,000 | |||||||||
Working capital | $ 1,700,325 | 1,400,000 | |||||||||
March 31, 2017 [Member] | |||||||||||
Cash on hand | $ 967,750 | $ 967,750 |
Summary of Significant Accoun44
Summary of Significant Accounting Policies (Details Narrative) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2017USD ($)Number | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($)Number | Dec. 31, 2015USD ($) | |
Number of operating segments | Number | 1 | 1 | ||
Customer programs and incentives paid | $ 40,772 | $ 8,712 | $ 136,786 | $ 3,184 |
Cash equivalents | ||||
Unrecognized income tax benefit, interest and penalties | ||||
Advertising expense | 386,132 | 156,203 | 297,000 | 389,000 |
Excise taxes | 176,416 | 158,408 | ||
Stock-based compensation | $ 158,658 | 105,839 | 374,687 | 140,370 |
Percentage of factored and non-factored amount description | Under this program, we have the option to sell those customer receivables in advance of payment for 75% of the amount due. When the customer remits payment, we then receive the remaining 25%. We are charged interest on the advanced 75% payment at a rate of 1.5% per month. Under the terms of the agreement with the factoring provider, any factored invoices have recourse should the customer fail to pay the invoice. Thus, we record factored amounts as a liability until the customer remits payment and we receive the remaining 25% of the non-factored amount. | |||
Accounts receivable factored invoices | $ 59,547 | 79,120 | 171,150 | 17,601 |
Accounts receivable factored program | $ 2,582 | 4,269 | 48,601 | 5,867 |
Amount of factored invoice | 117,933 | 542,083 | 99,258 | |
Proceeds from accounts receivable invoice | $ 88,450 | $ 406,562 | $ 74,444 | |
Minimum [Member] | ||||
Property and equipment estimated useful lives | 3 years | |||
Maximum [Member] | ||||
Property and equipment estimated useful lives | 7 years | |||
Trade Receivables [Member] | Three Customers [Member] | ||||
Concentration of crdit risk percentage | 79.00% | 91.00% | ||
Sales Revenue, Net [Member] | Three Customers [Member] | ||||
Concentration of crdit risk percentage | 57.00% | |||
Sales Revenue, Net [Member] | One Customers [Member] | ||||
Concentration of crdit risk percentage | 32.00% |
Summary of Significant Accoun45
Summary of Significant Accounting Policies (Details Narrative) (10K) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2017USD ($)Number | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($)Number | Dec. 31, 2015USD ($)Number | |
Number of operating segment | Number | 1 | 1 | ||
Customer programs and incentives paid | $ 40,772 | $ 8,712 | $ 136,786 | $ 3,184 |
Advertising expense | 386,132 | 156,203 | 297,000 | 389,000 |
Excise taxes | 217,188 | 167,120 | 934,221 | 624,046 |
Stock based compensation expense | 158,658 | 105,839 | 374,687 | 140,370 |
Amount of factored invoice | 117,933 | 542,083 | 99,258 | |
Proceeds from accounts receivable invoice | 88,450 | 406,562 | 74,444 | |
Accounts receivable factored invoices | 59,547 | 79,120 | $ 171,150 | 17,601 |
Accounts receivable factoring program description | We use an accounts receivable factoring program with certain customer accounts. Under this program, we have the option to sell those customer receivables in advance of payment for 75% of the amount due. When the customer remits payment, we then receive the remaining 25%. We are charged interest on the advanced 75% payment at a rate of 1.5% per month. | |||
Accounts receivable factoring program | $ 2,582 | $ 4,269 | $ 48,601 | $ 5,867 |
Minimum [Member] | ||||
Useful life | 3 years | |||
Maximum [Member] | ||||
Useful life | 7 years | |||
Property And Equipment [Member] | Minimum [Member] | ||||
Useful life | 3 years | |||
Property And Equipment [Member] | Maximum [Member] | ||||
Useful life | 7 years | |||
Accounts Receivable [Member] | ||||
Number of distributors | Number | 3 | 1 | ||
Accounts Receivable [Member] | Distributor One [Member] | ||||
Percentage concentration risk | 91.00% | |||
Accounts Receivable [Member] | Distributor Two [Member] | ||||
Percentage concentration risk | 91.00% | |||
Accounts Receivable [Member] | Distributor Three [Member] | ||||
Percentage concentration risk | 91.00% | |||
Sales Revenue [Member] | Two Distributors [Member] | ||||
Number of distributors | Number | 2 | |||
Percentage concentration risk | 46.00% | |||
Oregon Liquor Control Commission [Member] | Accounts Receivable [Member] | Distributor One [Member] | ||||
Percentage concentration risk | 67.00% | |||
Oregon Liquor Control Commission [Member] | Sales Revenue [Member] | Distributor One [Member] | ||||
Number of distributors | Number | 1 | |||
Percentage concentration risk | 40.00% |
Business Acquisition (Details N
Business Acquisition (Details Narrative) | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Business Combinations [Abstract] | |
Business acquisition revenue | $ 375,000 |
Business Acquisition - Schedule
Business Acquisition - Schedule of Business Acquisition Assets and Libilities (Details) | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Business Combinations [Abstract] | |
Consideration given: 86,667 shares of common stock valued at $4.35 per share | $ 377,000 |
Cash | 7,062 |
Inventory | 103,488 |
Property and equipment | 46,250 |
Intangible assets - customer list | 376,431 |
Accounts payable | (5,180) |
Customer deposits | (151,051) |
Total assets and liabilities assumed | $ 377,000 |
Business Acquisition - Schedu48
Business Acquisition - Schedule of Business Acquisition Assets and Libilities (Details) (Parenthetical) | 3 Months Ended |
Mar. 31, 2017$ / sharesshares | |
Business consideration shares of common stock | 260,000 |
Common stock valued per share | $ / shares | $ 4.35 |
Common Stock [Member] | |
Business consideration shares of common stock | 86,667 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | |||
Raw materials | $ 533,814 | $ 439,739 | $ 415,953 |
Finished goods | 461,919 | 340,298 | 248,713 |
Other | 19,158 | ||
Total inventories | $ 995,733 | $ 780,037 | $ 683,824 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 6,077 | $ 5,574 | ||
Depreciation and amortization expense | $ 9,006 | $ 5,574 | $ 21,991 | $ 19,277 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment Net (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Total cost | $ 174,928 | $ 152,181 | $ 142,979 |
Less accumulated depreciation | (46,068) | (52,965) | (30,974) |
Total property and equipment, net | 128,560 | 99,216 | 112,005 |
Furniture and Fixtures [Member] | |||
Total cost | 147,721 | 70,140 | 64,288 |
Leasehold Improvements [Member] | |||
Total cost | 14,907 | 8,607 | 8,607 |
Vehicles [Member] | |||
Total cost | 12,000 | 38,831 | 38,831 |
Construction In-Progress [Member] | |||
Total cost | $ 34,603 | $ 31,253 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of intangible assets | $ (2,929) |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Total intangible assets | $ 376,431 | ||
Less accumulated amortization | (2,929) | ||
Intangible assets - net | 373,502 | ||
Permits and Licenses [Member] | |||
Total intangible assets | 25,000 | ||
Customer Lists [Member] | |||
Total intangible assets | $ 351,431 |
Notes Payable - Schedule of Not
Notes Payable - Schedule of Notes Payable (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Total note payable | $ 460,000 | $ 564,142 | $ 21,940 |
Less current portion | (4,537) | (4,098) | |
Less debt discount for detachable warrant | (94,840) | (131,849) | |
Long-term portion of notes payable | 365,160 | 427,756 | 17,842 |
Notes Payable [Member] | |||
Total note payable | 16,642 | 21,940 | |
Notes Payable 1 [Member] | |||
Total note payable | $ 460,000 | $ 547,500 |
Notes Payable - Schedule of N55
Notes Payable - Schedule of Notes Payable (Details) (Parenthetical) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Notes Payable [Member] | |||
Debt instrument interest rate | 7.99% | 7.99% | 7.99% |
Debt instrument principal and interest | $ 472 | $ 472 | $ 472 |
Notes Payable 1 [Member] | |||
Debt instrument interest rate | 8.00% | 8.00% | 8.00% |
Debt instrument maturity date description | The notes have a 2-year maturity and are due at various dates between September 19, 2018 October 19, 2018, and pay interest only on a monthly basis | The notes have a 2-year maturity and are due at various dates between September 19, 2018 October 19, 2018, and pay interest only on a monthly basis | The notes have a 2-year maturity and are due at various dates between September 19, 2018 October 19, 2018, and pay interest only on a monthly basis |
Notes Payable - Schedule of Mat
Notes Payable - Schedule of Maturities on Notes Payable (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||
2,017 | $ 4,537 | |
2,018 | 460,000 | 554,915 |
2,019 | 4,690 | |
Thereafter | ||
Total | $ 460,000 | $ 564,142 |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details Narrative) (10K) - USD ($) | Jun. 28, 2016 | Jun. 06, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2017 | Apr. 14, 2016 |
Short-term Debt [Line Items] | ||||||
Original debt issue discount | $ (131,849) | $ (94,840) | ||||
MR Group I, LLC [Member] | 14% Secured Convertible Promissory Note [Member] | Exchange Agreement [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Repayments of debt | $ 306,378 | $ 100,000 | ||||
Conversion value of notes | $ 196,330 | |||||
14% Additional Secured Convertible Promissory Note Due January 18, 2017 [Member] | MR Group I, LLC [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Principal amount | $ 300,000 | |||||
Interest payable | 2,647 | |||||
Original debt issue discount | $ 300,000 | |||||
14% Additional Secured Convertible Promissory Note Due January 18, 2017 [Member] | MR Group I, LLC [Member] | Exchange Agreement [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Principal amount | 300,000 | |||||
Interest payable | 2,647 | |||||
Original debt issue discount | 100,000 | |||||
14% Additional Secured Convertible Promissory Note Due January 18, 2017 [Member] | MR Group I, LLC [Member] | 14% Secured Convertible Promissory Note Due April 30, 2017 [Member] | Exchange Agreement [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Principal amount | 302,647 | |||||
14% Secured Convertible Promissory Note (Initial Note) [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Principal amount | 275,000 | 275,000 | ||||
Amortization of the debt discount | 359,688 | $ 16,750 | ||||
14% Secured Convertible Promissory Note (Initial Note) [Member] | MR Group I, LLC [Member] | Exchange Agreement [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Principal amount | 197,208 | |||||
Interest payable | 21,992 | |||||
14% Secured Convertible Promissory Note (Initial Note) [Member] | MR Group I, LLC [Member] | 14% Secured Convertible Promissory Note Due August 31, 2016 [Member] | Exchange Agreement [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Principal amount | $ 219,200 |
Convertible Notes Payable - Sch
Convertible Notes Payable - Schedule of Convertible Notes Payable (Details) (10K) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Short-term Debt [Line Items] | ||||
Less: discount on convertible debt | $ (94,840) | $ (131,849) | ||
Total convertible notes payable - net of debt discount | 455,958 | |||
5% Convertible Note Due July 1, 2016 [Member] | ||||
Short-term Debt [Line Items] | ||||
Total convertible notes payable | 150,000 | |||
14% Secured Convertible Promissory Note (Initial Note) [Member] | ||||
Short-term Debt [Line Items] | ||||
Total convertible notes payable | [1] | 272,708 | ||
0% Convertible Interest Bearing Note [Member] | ||||
Short-term Debt [Line Items] | ||||
Total convertible notes payable | 50,000 | |||
Convertible Note Payable [Member] | ||||
Short-term Debt [Line Items] | ||||
Total convertible notes payable | 472,708 | |||
Less: discount on convertible debt | 16,750 | |||
Total convertible notes payable - net of debt discount | $ 455,958 | |||
[1] | On April 14, 2016, this note (the "Initial Note") was transferred to MR Group I, LLC ("Investor"). In addition, on April 14, 2016, the Company issued and sold to Investor a convertible promissory note dated April 18, 2016, bearing interest at 14% per annum in the principal amount of $300,000 (the "Additional Note", together with the Initial Note, the "Notes"). The Additional Note had a maturity date of January 18, 2017 and an original issue discount of $100,000. On May 13, 2016, the Company entered into Exchange Agreement (the "Exchange Agreement") with the Investor pursuant to which the Company (i) issued Investor a 14% secured convertible promissory note dated May 13, 2016 in the aggregate principal amount of $219,200 with an August 31, 2016 maturity date (the "Note") in exchange for a previously issued 14% secured convertible promissory note dated September 10, 2015 in the original principal amount of $275,000 (with current outstanding principal and interest of $197,208 and $21,992, respectively) with a May 10, 2016 maturity date held by Investor and (ii) issued Investor a 14% secured convertible promissory note dated May 13, 2016 in the aggregate principal amount of $302,647 with an April 30, 2017 maturity date (the "Second Note", together with the Note, the "Exchange Notes") in exchange for a previously issued 14% secured convertible promissory note dated April 18, 2016 in the original principal amount of $300,000 (with current outstanding principal and interest of $300,000 and $2,647, respectively) with a May 10, 2016 maturity date held by Investor. During the June period, $196,330 of the note was converted into common shares. On June 6, 2016, the Company paid the remaining outstanding amount under this Note ($100,000) in full, and on June 28, 2016, the Company paid the outstanding amount under the Second Note ($306,378) in full. |
Convertible Notes Payable - S59
Convertible Notes Payable - Schedule of Convertible Notes Payable (Details) (10K) (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2016 | |
Convertible Note Payable [Member] | ||
Debt interest rate | 5.00% | |
Principal amount | $ 150,000 | |
Conversion price | $ 8 | |
14% Secured Convertible Promissory Note (Initial Note) [Member] | ||
Debt interest rate | 14.00% | |
Principal amount | $ 275,000 | $ 275,000 |
Description of conversion price terms | The Note is convertible at a price per share equal to the lesser of (i) the Fixed Conversion Price (currently $3.00) or (ii) 65% of the lowest trading price of the Companys common stock during the 5 trading days prior to conversion. |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Net operating loss carryforward | $ 3,800,000 | $ 3,600,000 |
Federal [Member] | ||
Net operating loss carrayforward year | 20 years | 20 years |
Net operating loss expiration year | 2,034 | 2,034 |
State [Member] | ||
Net operating loss carrayforward year | 15 years | 15 years |
Net operating loss expiration year | 2,029 | 2,029 |
Income Taxes (Details Narrati61
Income Taxes (Details Narrative) (10K) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Tax Credit Carryforward [Line Items] | ||
Net operating loss carryforward | $ 3,800,000 | $ 3,600,000 |
Federal [Member] | ||
Tax Credit Carryforward [Line Items] | ||
Net operating loss carrayforward year | 20 years | 20 years |
Net operating loss expiration year | 2,034 | 2,034 |
State [Member] | ||
Tax Credit Carryforward [Line Items] | ||
Net operating loss carrayforward year | 15 years | 15 years |
Net operating loss expiration year | 2,029 | 2,029 |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Tax Rates Reconciliation (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||||
Expected federal income tax benefit | $ (286,381) | $ (344,991) | $ (1,774,361) | $ (1,200,378) |
State income taxes after credits | (59,520) | (66,969) | (344,435) | (233,015) |
Change in valuation allowance | 345,901 | 411,960 | 2,118,795 | 1,442,900 |
Other | (9,507) | |||
Total provision for income taxes |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Income Tax Disclosure [Abstract] | |||
Net operating loss carryforwards | $ 3,843,052 | $ 3,557,909 | $ 1,582,317 |
Stock-based compensation | 277,596 | 213,181 | 61,050 |
Total deferred tax assets | 4,120,648 | 3,771,090 | 1,643,367 |
Depreciation and amortization | (74,473) | (70,816) | (61,888) |
Total deferred tax liabilities | (74,473) | (70,816) | (61,888) |
Valuation allowance | (4,046,175) | (3,700,274) | (1,581,479) |
Net deferred tax assets |
Commitments and Contingencies64
Commitments and Contingencies (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operation lease expiration | expire through December 2018. | |||
Rent expense | $ 19,000 | $ 74,000 | $ 416,000 | $ 384,000 |
Operating lease agreements expiration | The Termination Agreement provides that the original lease agreement dated July 17, 2014 (the Lease) will terminate on June 30, 2017 rather than October 30, 2020. | operating lease agreements which expire through October 2020. | ||
Minimum [Member] | ||||
Monthly lease payments | $ 1,802 | $ 1,300 | ||
Maximum [Member] | ||||
Monthly lease payments | $ 21,000 | $ 24,000 |
Commitments and Contingencies65
Commitments and Contingencies (Details Narrative) (10K) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating lease agreements expiration | The Termination Agreement provides that the original lease agreement dated July 17, 2014 (the Lease) will terminate on June 30, 2017 rather than October 30, 2020. | operating lease agreements which expire through October 2020. | ||
Rent expense | $ 19,000 | $ 74,000 | $ 416,000 | $ 384,000 |
Minimum [Member] | ||||
Monthly lease payments | 1,802 | 1,300 | ||
Maximum [Member] | ||||
Monthly lease payments | $ 21,000 | $ 24,000 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Future Minimum Lease Payments Under Operating leases (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Commitments and Contingencies Disclosure [Abstract] | ||
2,017 | $ 213,000 | $ 297,000 |
2,018 | 90,000 | 272,000 |
2,019 | 2,000 | 278,000 |
2,020 | 240,000 | |
Thereafter | ||
Total | $ 305,000 | $ 1,087,000 |
Net Loss per Common Share - Sch
Net Loss per Common Share - Schedule of Basic and Diluted Net Loss Per Common Share (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Earnings Per Share [Abstract] | ||||
Net loss available to common shareholders (numerator) | $ (906,855) | $ (1,014,679) | $ (5,251,293) | $ (3,601,066) |
Weighted average shares (denominator) | 2,614,324 | 758,542 | 1,247,281 | 762,506 |
Basic and diluted net loss per common share | $ (0.35) | $ (1.34) | $ (4.21) | $ (4.72) |
Issuance of Common Stock, War68
Issuance of Common Stock, Warrants and Convertible Preferred Stock (Details Narrative) (10K) - USD ($) | Mar. 31, 2017 | Oct. 18, 2016 | Oct. 18, 2016 | Apr. 04, 2016 | Mar. 31, 2017 | Aug. 31, 2016 | Jul. 31, 2016 | Jun. 22, 2016 | Jun. 03, 2016 | Nov. 30, 2015 | Oct. 31, 2015 | Aug. 31, 2015 | Jul. 31, 2015 | Apr. 30, 2015 | Jun. 17, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 |
Reverse stock split | 1-for-20 reverse stock split of the Companys common stock effected on October 18, 2016 and the 1-for-3 reverse stock split of the Companys common stock effected on June 15, 2017. | 1-for-20 reverse stock split of the Companys common stock effected on October 18, 2016 and the 1-for-3 reverse stock split of the Companys common stock effected on June 15, 2017. | |||||||||||||||||
Value of shares issued to employees | $ 374,687 | $ 140,370 | |||||||||||||||||
Stock based compensation expense | $ 158,658 | $ 105,839 | 374,687 | 140,370 | |||||||||||||||
Number of units issued for service value | $ 83,800 | $ 671,975 | |||||||||||||||||
Number of shares issued | 192,308 | 666,667 | 192,308 | ||||||||||||||||
Number of shares issued, value | $ 2,000,000 | $ 58,500 | $ 3,016,238 | ||||||||||||||||
Number of common stock exercises shares | 192,308 | 192,308 | 192,308 | ||||||||||||||||
Debt issuance cost | $ 23,762 | ||||||||||||||||||
Preferred stock, authorized | 3,000 | 3,000 | 3,000 | 3,000 | 3,000 | ||||||||||||||
Number of units issued for cancellation outstanding indebtedness | 50 | ||||||||||||||||||
Number of units issued for cancellation outstanding indebtedness, value | $ 50,000 | ||||||||||||||||||
Outstanding indebtedness net of issuance costs | $ 460,000 | $ 460,000 | $ 460,000 | $ 564,142 | |||||||||||||||
Beneficial conversation feature | $ 228,550 | ||||||||||||||||||
Series A Convertible Preferred Stock [Member] | |||||||||||||||||||
Conversion of stock | 11,112 | ||||||||||||||||||
Preferred stock, authorized | 3,000 | ||||||||||||||||||
Preferred stock fixed conversion price | $ 4.50 | ||||||||||||||||||
Preferred stock dividend rate, percentage | 8.00% | ||||||||||||||||||
8% Convertible Promissory Notes [Member] | |||||||||||||||||||
Conversion of stock issued | 295,513 | ||||||||||||||||||
Conversion of stock amount issued | $ 1,152,499 | ||||||||||||||||||
Common Stock to Employees [Member] | |||||||||||||||||||
Number of shares issued | 266,667 | ||||||||||||||||||
Number of shares issued, value | $ 1,040,000 | ||||||||||||||||||
Warrant [Member] | |||||||||||||||||||
Number of shares issued | 666,667 | 266,667 | |||||||||||||||||
Number of common stock exercises shares | 122,500 | 122,500 | 122,500 | 188,261 | |||||||||||||||
Number of common stock exercises shares, value | $ 734,216 | ||||||||||||||||||
Conversion of stock amount issued | 1,435,639 | ||||||||||||||||||
Fair value of warrants | $ 2,010,502 | ||||||||||||||||||
Preferred Stock [Member] | |||||||||||||||||||
Conversion of stock issued | 672 | ||||||||||||||||||
Conversion of stock | 177,000 | ||||||||||||||||||
Series A Convertible Preferred Stock [Member] | |||||||||||||||||||
Number of shares issued | 1 | ||||||||||||||||||
Number of shares issued upon accrued and unpaid dividends | 4,268 | ||||||||||||||||||
Number of shares issued upon accrued and unpaid dividends, value | $ 17,759 | ||||||||||||||||||
Number of units issued | 972 | ||||||||||||||||||
Number of units issued, value | $ 972,000 | ||||||||||||||||||
Outstanding indebtedness net of issuance costs | $ 69,528 | ||||||||||||||||||
Preferred stock stated value | $ 1,000 | ||||||||||||||||||
Preferred stock fixed conversion price | $ 4.50 | ||||||||||||||||||
Description of participation rights | Dividends are payable quarterly in arrears at the Companys option either in cash or in kind in shares of Common Stock; provided, however that dividends may only be paid in cash following the fiscal year in which the Company has net income (as shown in its audited financial statements contained in its Annual Report on Form 10-K for such year) of at least $500,000, to the extent permitted under applicable law out of funds legally available therefore. For in-kind dividends, holders will receive that number of shares of Common Stock equal to (i) the amount of the dividend payment due such stockholder divided by (ii) 90% of the average of the per share market values during the twenty (20) trading days immediately preceding a dividend date. | ||||||||||||||||||
Description of liquidation rights | In the event of any voluntary or involuntary liquidation, dissolution or winding up, or sale of the Company, each holder of Series A Preferred shall be entitled to receive its pro rata portion of an aggregate payment equal to: (i) $1,000 multiplied by (ii) the total number of shares of Series A Preferred Stock issued under the Series A Certificate of Designation multiplied by (iii) 2.5. | ||||||||||||||||||
Series A Convertible Preferred Stock [Member] | Cash Purchase [Member] | |||||||||||||||||||
Number of units issued | 499 | ||||||||||||||||||
Number of units issued, value | $ 499,000 | ||||||||||||||||||
Eight Third-Party Consultants [Member] | |||||||||||||||||||
Number of common stock shares issued for service rendered | 38,395 | ||||||||||||||||||
Number of units issued for service value | $ 284,277 | ||||||||||||||||||
Third-Party Consultants [Member] | Management Consulting Agreements [Member] | |||||||||||||||||||
Number of common stock shares issued for service rendered | 1,500 | 834 | |||||||||||||||||
Number of units issued for service value | $ 17,100 | $ 10,500 | |||||||||||||||||
Consultant [Member] | Management Consulting Agreements [Member] | |||||||||||||||||||
Number of common stock shares issued for service rendered | 1,667 | ||||||||||||||||||
Number of units issued for service value | $ 45,000 | ||||||||||||||||||
Two Third-Party Consultants [Member] | |||||||||||||||||||
Number of common stock shares issued for service rendered | 2,250 | 3,750 | 625 | ||||||||||||||||
Number of units issued for service value | $ 128,250 | $ 479,250 | $ 65,625 | ||||||||||||||||
Employees [Member] | |||||||||||||||||||
Number of shares issued to employees | 575 | 750 | 21,167 | ||||||||||||||||
Value of shares issued to employees | $ 2,517 | $ 42,750 | $ 153,996 | ||||||||||||||||
Stock based compensation expense | $ 220,691 | ||||||||||||||||||
MR Group I, LLC [Member] | 14% Secured Convertible Promissory Note [Member] | Exchange Agreement [Member] | |||||||||||||||||||
Debt conversion amount | $ 196,503 | ||||||||||||||||||
Number of shares issued upon debt conversion | 114,625 | ||||||||||||||||||
Officers [Member] | |||||||||||||||||||
Number of units issued for services | 423 | 423 | |||||||||||||||||
Number of units issued for services, value | $ 423,000 |
Issuance of Common Stock, War69
Issuance of Common Stock, Warrants and Convertible Preferred Stock - Schedule of Issuance of Convertible Preferred Stock (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 31, 2017 | Dec. 31, 2015 | |
Shares Authorized | 3,000 | 3,000 | 3,000 |
Liquidation Preference | $ 750,000 | $ 125,000 | |
Series A Convertible Preferred Stock [Member] | |||
Shares Authorized | 3,000 | ||
Shares Issued and Outstanding | 50 | ||
Net Proceeds | $ 38,932 | ||
Conversion Price/Share | $ 4.50 | ||
Number of shares of common stock Equivalents | 11,112 | ||
Liquidation Preference | $ 125,000 | ||
Liquidation Value/Share | $ 2,500 |
Issuance of Common Stock, War70
Issuance of Common Stock, Warrants and Convertible Preferred Stock - Schedule of Weighted-average Assumptions Used in Black-Scholes Valuation Method (Details) - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Volatility | 75.00% | 75.00% |
Risk-free interest rate | 1.60% | 1.17% |
Expected term (in years) | 7 years 2 months 30 days | 3 years 4 months 17 days |
Expected dividend yield | 0.00% | 0.00% |
Warrant [Member] | ||
Volatility | 75.00% | 75.00% |
Risk-free interest rate | 1.50% | 1.03% |
Expected term (in years) | 3 years | 3 years |
Expected dividend yield | 0.00% | 0.00% |
Fair value of common stock | $ 4.38 | $ 5.04 |
Issuance of Common Stock, War71
Issuance of Common Stock, Warrants and Convertible Preferred Stock - Summary of Warrant Activity (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Warrants Outstanding, Beginning Balance | 846,765 | |
Warrants Outstanding, Granted | 192,308 | |
Warrants Outstanding, Exercised | (40,834) | |
Warrants Outstanding, Forfeited and Cancelled | ||
Warrants Outstanding, Ending Balance | 998,239 | 846,765 |
Warrants Outstanding Weighted Average Exercise Price, Beginning Balance | $ 6.48 | |
Warrants Outstanding Weighted Average Exercise Price, Granted | 7.50 | |
Warrants Outstanding Weighted Average Exercise Price, Exercised | 3.90 | |
Warrants Outstanding Weighted Average Exercise Price, Forfeited and Cancelled | 0 | |
Warrants Outstanding Weighted Average Exercise Price, Ending Balance | $ 6.75 | $ 6.48 |
Warrants Outstanding Aggregate Intrinsic Value, Beginning Balance | ||
Warrants Outstanding Aggregate Intrinsic Value, Ending Balance | $ 0 | |
Warrant [Member] | ||
Warrants Outstanding, Beginning Balance | 846,765 | |
Warrants Outstanding, Granted | 1,435,639 | |
Warrants Outstanding, Exercised | (483,773) | |
Warrants Outstanding, Forfeited and Cancelled | (105,101) | |
Warrants Outstanding, Ending Balance | 846,765 | |
Warrants Outstanding Weighted Average Remaining Life, Beginning Balance | 2 years 9 months 7 days | |
Warrants Outstanding Weighted Average Exercise Price, Beginning Balance | $ 6.48 | |
Warrants Outstanding Weighted Average Exercise Price, Granted | 6.18 | |
Warrants Outstanding Weighted Average Exercise Price, Exercised | 3.90 | |
Warrants Outstanding Weighted Average Exercise Price, Forfeited and Cancelled | 6 | |
Warrants Outstanding Weighted Average Exercise Price, Ending Balance | $ 6.48 | |
Warrants Outstanding Aggregate Intrinsic Value, Beginning Balance | ||
Warrants Outstanding Aggregate Intrinsic Value, Ending Balance |
Stockholder's Deficit (Details
Stockholder's Deficit (Details Narrative) - USD ($) | Mar. 31, 2017 | Mar. 08, 2017 | Jan. 02, 2017 | Oct. 18, 2016 | Oct. 18, 2016 | Jan. 29, 2015 | Mar. 31, 2017 | Jan. 22, 2017 | Aug. 31, 2016 | Jun. 22, 2016 | Mar. 31, 2017 | Jul. 17, 2016 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Sep. 08, 2016 | |
Reverse stock split | 1-for-20 reverse stock split of the Companys common stock effected on October 18, 2016 and the 1-for-3 reverse stock split of the Companys common stock effected on June 15, 2017. | 1-for-20 reverse stock split of the Companys common stock effected on October 18, 2016 and the 1-for-3 reverse stock split of the Companys common stock effected on June 15, 2017. | |||||||||||||||
Number of common stock shares sold | 40,834 | ||||||||||||||||
Proceeds from issuance of common stock | $ 750,000 | $ 802,467 | $ 2,451,238 | ||||||||||||||
Issuance of common stock, shares | 192,308 | 666,667 | 192,308 | ||||||||||||||
Issuance of common stock | $ 2,000,000 | $ 58,500 | 3,016,238 | ||||||||||||||
Number of warrant shares of common stock | 192,308 | 192,308 | 192,308 | ||||||||||||||
Proceeds from issuance of warrant exercises | $ 159,250 | 684,216 | |||||||||||||||
Value of shares issued to employees | $ 374,687 | 140,370 | |||||||||||||||
Number of units issued for service value | $ 83,800 | 671,975 | |||||||||||||||
Number of options granted | 111,667 | [1] | 142,500 | ||||||||||||||
Vesting period of option | 5 years | ||||||||||||||||
Aggregate intrinsic value of options outstanding | $ 0 | $ 0 | $ 0 | $ 60,900 | |||||||||||||
Number of unvested options | 199,132 | 199,132 | 199,132 | 125,426 | |||||||||||||
Aggregate grant date fair value unvested options | $ 612,752 | $ 691,042 | $ 489,230 | ||||||||||||||
Aggregate intrinsic value of unvested options | 0 | $ 0 | $ 0 | $ 60,900 | |||||||||||||
Number of vested options | 37,961 | 34,523 | |||||||||||||||
Weighted-average grant-date fair value of stock options granted | $ 3.33 | $ 2.91 | |||||||||||||||
Stock-based compensation | $ 158,658 | 105,839 | $ 374,687 | $ 140,370 | |||||||||||||
Fair value of stock option granted | 371,865 | ||||||||||||||||
Stock option plan expenses | 158,658 | $ 51,569 | |||||||||||||||
Compensation cost related to stock options not yet recognized | $ 666,286 | $ 666,286 | $ 666,286 | $ 234,391 | |||||||||||||
Period of compensation cost related to stock options not yet recognized | 3 years 4 months 28 days | 2 years 29 days | |||||||||||||||
Fair value of warrants | $ 301,731 | ||||||||||||||||
2016 Equity Incentive Plan [Member] | |||||||||||||||||
Number of shares available for grant | 289,709 | 166,667 | |||||||||||||||
Outstanding capital stock shares percentage | 8.00% | ||||||||||||||||
Number of options granted | 254,167 | ||||||||||||||||
Number of RSU's issued | 22,847 | ||||||||||||||||
Vesting period of option | 5 years | ||||||||||||||||
2016 Equity Incentive Plan [Member] | May 11, 2017 [Member] | |||||||||||||||||
Number of common stock shares reserved for future issuance | 389,709 | 389,709 | 389,709 | ||||||||||||||
Stock option exercise price percentage description | The exercise price per share of each stock option shall not be less than 100 percent of the fair market value of the Companys common stock on the date of grant. | ||||||||||||||||
2015 Equity Incentive Plan [Member] | |||||||||||||||||
Number of shares available for grant | 50,000 | ||||||||||||||||
Stock option exercise price percentage description | The exercise price per share of each stock option shall not be less than 20 percent of the fair market value of the Companys common stock on the date of grant. | ||||||||||||||||
Number of options issued | 14,584 | ||||||||||||||||
Description of vesting percentage | vest at the rate of at least 25 percent in the first year, starting 6-months after the grant date, and 75% in year two. | ||||||||||||||||
Non Plan Options [Member] | |||||||||||||||||
Number of options granted | 7,500 | ||||||||||||||||
Number of unregistered option outstanding | 16,667 | 16,667 | 16,667 | ||||||||||||||
Officer [Member] | |||||||||||||||||
Number of common stock shares issued for service rendered | 423 | ||||||||||||||||
Number of units issued for service value | $ 423,000 | ||||||||||||||||
Series A Convertible Preferred Stock [Member] | |||||||||||||||||
Issuance of common stock, shares | 972 | ||||||||||||||||
Issuance of common stock | $ 972,000 | ||||||||||||||||
Number of units issued for cancellation outstanding indebtness | 50 | ||||||||||||||||
Number of units issued for cancellation outstanding indebtness, value | $ 50,000 | ||||||||||||||||
Outstanding indebtness net of issuance costs | 69,528 | ||||||||||||||||
Preferred stock stated value | $ 1,000 | ||||||||||||||||
Fixed conversion price per share | $ 4.50 | ||||||||||||||||
Preferred stock accrued dividend rate | 8.00% | ||||||||||||||||
Description of parcipation rights | Dividends are payable quarterly in arrears at the Companys option either in cash or in kind in shares of Common Stock; provided, however that dividends may only be paid in cash following the fiscal year in which the Company has net income (as shown in its audited financial statements contained in its Annual Report on Form 10-K for such year) of at least $500,000, to the extent permitted under applicable law out of funds legally available therefore. For in-kind dividends, holders will receive that number of shares of Common Stock equal to (i) the amount of the dividend payment due such stockholder divided by (ii) 90% of the average of the per share market values during the twenty (20) trading days immediately preceding a dividend date. | ||||||||||||||||
Description of liquidation rights | In the event of any voluntary or involuntary liquidation, dissolution or winding up, or sale of the Company, each holder of Series A Preferred shall be entitled to receive its pro rata portion of an aggregate payment equal to: (i) $1,000 multiplied by (ii) the total number of shares of Series A Preferred Stock issued under the Series A Certificate of Designation multiplied by (iii) 2.5. | ||||||||||||||||
Series A Convertible Preferred Stock [Member] | Cash Purchase [Member] | |||||||||||||||||
Issuance of common stock, shares | 499 | ||||||||||||||||
Issuance of common stock | $ 499,000 | ||||||||||||||||
Warrant [Member] | |||||||||||||||||
Issuance of common stock, shares | 666,667 | 266,667 | |||||||||||||||
Number of warrant shares of common stock | 122,500 | 122,500 | 122,500 | 188,261 | |||||||||||||
Proceeds from issuance of warrant exercises | $ 159,250 | ||||||||||||||||
Conversion Shares [Member] | |||||||||||||||||
Number of shares issued upon conversion | 83,334 | ||||||||||||||||
Number of preferred stock shares issued upon conversion | 250 | 250 | 250 | ||||||||||||||
8% Convertible Promissory Notes [Member] | |||||||||||||||||
Number of shares issued upon conversion | 22,436 | ||||||||||||||||
Debt conversion on converted amount | $ 87,500 | ||||||||||||||||
Percentage of convertible promissory notes | 8.00% | 8.00% | 8.00% | ||||||||||||||
MotherLode Distillery, LLC [Member] | |||||||||||||||||
Issuance of common stock, shares | 86,667 | ||||||||||||||||
Issuance of common stock | $ 377,000 | ||||||||||||||||
Common stock closing share price per share | $ 4.35 | ||||||||||||||||
Accredited Investors [Member] | |||||||||||||||||
Number of common stock shares sold | 15,000 | ||||||||||||||||
Sale of stock price per share | $ 3.90 | ||||||||||||||||
Proceeds from issuance of common stock | $ 58,500 | ||||||||||||||||
Four Third-party Consultants [Member ] | |||||||||||||||||
Number of common stock shares issued for service rendered | 19,795 | ||||||||||||||||
Employees [Member] | |||||||||||||||||
Number of shares issued employees | 575 | 750 | 21,167 | ||||||||||||||
Value of shares issued to employees | $ 2,517 | $ 42,750 | $ 153,996 | ||||||||||||||
Stock-based compensation | $ 220,691 | ||||||||||||||||
[1] | Options granted under 2016 Stock Incentive Plan |
Stockholder's Deficit - Schedul
Stockholder's Deficit - Schedule of Balance of Stockholder's Equity (Details) - USD ($) | Mar. 31, 2017 | Jun. 22, 2016 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 |
Balance | $ 1,132,833 | $ (1,063,613) | $ 1,582,108 | $ (1,063,613) | $ 1,582,108 | ||||||||
Issuance of common stock | $ 2,000,000 | $ 58,500 | 3,016,238 | ||||||||||
Issuance of common stock, shares | 192,308 | 666,667 | 192,308 | ||||||||||
Issuance of common stock, net of issuance costs of $6,033, with detachable warrants | $ 743,967 | ||||||||||||
Issuance of common stock from warrant exercise for cash | 159,250 | ||||||||||||
Issuance of common stock for services by third parties | 83,800 | 671,975 | |||||||||||
Issuance of common stock for services by employees | 2,517 | ||||||||||||
Stock-based compensation | 158,658 | ||||||||||||
Issuance of common stock for acquisition of MotherLode, net of issuance costs of $5,580 | $ 371,420 | ||||||||||||
Issuance of common stock for acquisition of MotherLode, net of issuance costs of $5,580, shares | 260,000 | ||||||||||||
Shares Issued for payoff of long-term notes | $ 87,500 | ||||||||||||
Cumulative dividend on Series A preferred | |||||||||||||
Common shares issued for preferred conversion | |||||||||||||
Net loss | (901,818) | $ (1,419,391) | $ (1,456,049) | $ (1,309,500) | (1,014,679) | $ (669,376) | $ (1,412,612) | $ (688,060) | (831,018) | (5,199,619) | (3,601,066) | ||
Balance | $ 1,896,627 | 1,896,627 | 1,132,833 | (1,063,613) | 1,132,833 | (1,063,613) | |||||||
Convertible Series A Preferred Stock [Member] | |||||||||||||
Balance | $ 300 | ||||||||||||
Balance, shares | 245,838 | ||||||||||||
Issuance of common stock | |||||||||||||
Issuance of common stock, shares | |||||||||||||
Issuance of common stock, net of issuance costs of $6,033, with detachable warrants | |||||||||||||
Issuance of common stock, net of issuance costs of $6,033, with detachable warrants, shares | |||||||||||||
Issuance of common stock from warrant exercise for cash | |||||||||||||
Issuance of common stock from warrant exercise for cash, shares | |||||||||||||
Issuance of common stock for services by third parties | |||||||||||||
Issuance of common stock for services by third parties, shares | |||||||||||||
Issuance of common stock for services by employees | |||||||||||||
Issuance of common stock for services by employees, shares | |||||||||||||
Stock-based compensation | |||||||||||||
Issuance of common stock for acquisition of MotherLode, net of issuance costs of $5,580 | |||||||||||||
Issuance of common stock for acquisition of MotherLode, net of issuance costs of $5,580, shares | |||||||||||||
Shares Issued for payoff of long-term notes | |||||||||||||
Shares Issued for payoff of long-term notes, shares | |||||||||||||
Cumulative dividend on Series A preferred | $ 5,037 | ||||||||||||
Common shares issued for preferred conversion | $ (250) | $ (544,912) | |||||||||||
Common shares issued for preferred conversion, shares | (201,449) | (672) | |||||||||||
Net loss | |||||||||||||
Balance | $ 49,426 | $ 49,426 | $ 300 | $ 300 | |||||||||
Balance, shares | 50 | 50 | 245,838 | 245,838 | |||||||||
Common Stock [Member] | |||||||||||||
Balance | $ 254 | $ 77 | $ 76 | $ 77 | $ 76 | ||||||||
Balance, shares | 2,542,504 | 769,917 | 758,542 | 769,917 | 758,542 | ||||||||
Issuance of common stock | $ 2 | $ 93 | |||||||||||
Issuance of common stock, shares | 15,000 | 933,334 | |||||||||||
Issuance of common stock, net of issuance costs of $6,033, with detachable warrants | $ 19 | ||||||||||||
Issuance of common stock, net of issuance costs of $6,033, with detachable warrants, shares | 192,308 | ||||||||||||
Issuance of common stock from warrant exercise for cash | $ 4 | ||||||||||||
Issuance of common stock from warrant exercise for cash, shares | 40,834 | ||||||||||||
Issuance of common stock for services by third parties | $ 2 | $ 1 | |||||||||||
Issuance of common stock for services by third parties, shares | 19,796 | 9,264 | |||||||||||
Issuance of common stock for services by employees | |||||||||||||
Issuance of common stock for services by employees, shares | 575 | ||||||||||||
Stock-based compensation | |||||||||||||
Issuance of common stock for acquisition of MotherLode, net of issuance costs of $5,580 | $ 9 | ||||||||||||
Issuance of common stock for acquisition of MotherLode, net of issuance costs of $5,580, shares | 86,667 | ||||||||||||
Shares Issued for payoff of long-term notes | $ 2 | ||||||||||||
Shares Issued for payoff of long-term notes, shares | 22,436 | ||||||||||||
Cumulative dividend on Series A preferred | |||||||||||||
Common shares issued for preferred conversion | $ 8 | $ 18 | |||||||||||
Common shares issued for preferred conversion, shares | 83,334 | 177,000 | |||||||||||
Net loss | |||||||||||||
Balance | $ 300 | $ 300 | $ 254 | $ 77 | $ 254 | $ 77 | |||||||
Balance, shares | 3,003,451 | 3,003,451 | 2,542,504 | 769,917 | 2,542,504 | 769,917 | |||||||
Paid-in Capital [Member] | |||||||||||||
Balance | $ 13,699,785 | $ 6,498,061 | $ 5,542,717 | $ 6,498,061 | $ 5,542,717 | ||||||||
Issuance of common stock | 58,498 | 3,016,145 | |||||||||||
Issuance of common stock, net of issuance costs of $6,033, with detachable warrants | 743,948 | ||||||||||||
Issuance of common stock from warrant exercise for cash | 159,246 | ||||||||||||
Issuance of common stock for services by third parties | 83,798 | 671,974 | |||||||||||
Issuance of common stock for services by employees | 2,517 | ||||||||||||
Stock-based compensation | 158,658 | ||||||||||||
Issuance of common stock for acquisition of MotherLode, net of issuance costs of $5,580 | 371,411 | ||||||||||||
Shares Issued for payoff of long-term notes | 87,498 | ||||||||||||
Cumulative dividend on Series A preferred | |||||||||||||
Common shares issued for preferred conversion | 201,441 | 544,894 | |||||||||||
Net loss | |||||||||||||
Balance | $ 15,566,800 | 15,566,800 | $ 13,699,785 | $ 6,498,061 | 13,699,785 | 6,498,061 | |||||||
Accumulated Deficit [Member] | |||||||||||||
Balance | (12,813,044) | $ (7,561,751) | $ (3,960,685) | (7,561,751) | (3,960,685) | ||||||||
Issuance of common stock | |||||||||||||
Issuance of common stock, net of issuance costs of $6,033, with detachable warrants | |||||||||||||
Issuance of common stock from warrant exercise for cash | |||||||||||||
Issuance of common stock for services by third parties | |||||||||||||
Issuance of common stock for services by employees | |||||||||||||
Stock-based compensation | |||||||||||||
Issuance of common stock for acquisition of MotherLode, net of issuance costs of $5,580 | |||||||||||||
Shares Issued for payoff of long-term notes | |||||||||||||
Cumulative dividend on Series A preferred | (5,037) | ||||||||||||
Common shares issued for preferred conversion | |||||||||||||
Net loss | (901,818) | (5,199,619) | (3,601,066) | ||||||||||
Balance | $ (13,719,899) | $ (13,719,899) | $ (12,813,044) | $ (7,561,751) | $ (12,813,044) | $ (7,561,751) |
Stockholder's Deficit - Sched74
Stockholder's Deficit - Schedule of Balance of Stockholder's Equity (Details) (Parenthetical) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Equity [Abstract] | ||
Common stock, net of issuance costs | $ 6,033 | $ 23,762 |
Issuance of common stock for acquisition costs | $ 5,580 |
Stockholder's Deficit - Sched75
Stockholder's Deficit - Schedule of Issuance of Convertible Preferred Stock (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Shares Authorized | 3,000 | 3,000 | 3,000 |
Liquidation Preference | $ 125,000 | $ 750,000 | |
Series A [Member] | |||
Shares Authorized | 3,000 | ||
Shares Issued and Outstanding | 50 | ||
Net Proceeds | $ 49,426 | ||
Conversion Price/Share | $ 4.50 | ||
Number of shares of common stock Equivalents | 11,111 | ||
Liquidation Preference | $ 125,000 | ||
Liquidation Value/Share | $ 2,500 |
Stockholder's Deficit - Summary
Stockholder's Deficit - Summary of Stock Option Activity (Details) - $ / shares | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | ||
Equity [Abstract] | |||
Number of Options Outstanding, Beginning Balance | 173,750 | ||
Number of Options Outstanding, Granted | 111,667 | [1] | 142,500 |
Number of Options Outstanding, Exercised | |||
Number of Options Outstanding, Canceled | 5,417 | ||
Number of Options Outstanding, Ending Balance | 285,417 | 173,750 | |
Number of Options Exercisable, Ending Balance | 86,285 | ||
Weighted- Average Exercise Price Options Outstanding, Beginning Balance | $ 9.24 | ||
Weighted- Average Exercise Price Options Outstanding, Granted | 4.71 | ||
Weighted- Average Exercise Price Options Outstanding, Exercised | |||
Weighted- Average Exercise Price Options Outstanding, Canceled | |||
Weighted- Average Exercise Price Options Outstanding, Ending Balance | 7.47 | $ 9.24 | |
Weighted- Average Exercise Price Options Exercisable, Ending Balance | $ 11.79 | ||
[1] | Options granted under 2016 Stock Incentive Plan |
Stockholder's Deficit - Sched77
Stockholder's Deficit - Schedule of Weighted-average Assumptions Used in Black-Scholes Valuation Method (Details) - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Risk-free interest rate | 1.60% | 1.17% |
Expected term (in years) | 7 years 2 months 30 days | 3 years 4 months 17 days |
Expected dividend yield | 0.00% | 0.00% |
Expected volatility | 75.00% | 75.00% |
Warrant [Member] | ||
Risk-free interest rate | 1.50% | 1.03% |
Expected term (in years) | 3 years | 3 years |
Expected dividend yield | 0.00% | 0.00% |
Expected volatility | 75.00% | 75.00% |
Fair value of common stock | $ 4.38 | $ 5.04 |
Stockholder's Deficit - Summa78
Stockholder's Deficit - Summary of Warrant Activity (Details) | 3 Months Ended |
Mar. 31, 2017USD ($)$ / sharesshares | |
Equity [Abstract] | |
Warrants Outstanding, Beginning Balance | shares | 846,765 |
Warrants Outstanding, Granted | shares | 192,308 |
Warrants Outstanding, Exercised | shares | (40,834) |
Warrants Outstanding, Forfeited and Cancelled | shares | |
Warrants Outstanding, Ending Balance | shares | 998,239 |
Warrants Outstanding Weighted Average Exercise Price, Beginning Balance | $ 6.48 |
Warrants Outstanding Weighted Average Exercise Price, Granted | 7.50 |
Warrants Outstanding Weighted Average Exercise Price, Exercised | 3.90 |
Warrants Outstanding Weighted Average Exercise Price, Forfeited and Cancelled | 0 |
Warrants Outstanding Weighted Average Exercise Price, Ending Balance | $ 6.75 |
Warrants Outstanding Aggregate Intrinsic Value, Beginning Balance | $ | |
Warrants Outstanding Aggregate Intrinsic Value, Granted | $ 0 |
Warrants Outstanding Aggregate Intrinsic Value, Ending Balance | $ | $ 0 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Narrative) (10K) - USD ($) | Mar. 31, 2017 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Sep. 08, 2016 | Jan. 29, 2015 | |
Number of options granted | 111,667 | [1] | 142,500 | |||||
Stock options issued plan outstanding | 27,500 | |||||||
Vesting period of option | 5 years | |||||||
Number of options outstanding | 285,417 | 285,417 | 173,750 | |||||
Number of common stock purchase under plan | 16,667 | |||||||
Number of options canceled | 5,417 | |||||||
Aggregate intrinsic value of options outstanding | $ 0 | $ 0 | $ 60,900 | |||||
Number of unvested options | 199,132 | 199,132 | 125,426 | |||||
Aggregate grant date fair value unvested options | $ 612,752 | $ 691,042 | $ 489,230 | |||||
Aggregate intrinsic value of unvested options | 0 | $ 0 | $ 60,900 | |||||
Number of vested options | 37,961 | 34,523 | ||||||
Weighted-average grant-date fair value of stock options granted | $ 3.33 | $ 2.91 | ||||||
Aggregate grant date fair value of options granted | $ 414,383 | |||||||
Stock-based compensation expense | $ 158,658 | $ 105,839 | 374,687 | $ 140,370 | ||||
Compensation cost related to stock options not yet recognized | $ 666,286 | $ 666,286 | $ 234,391 | |||||
Period of compensation cost related to stock options not yet recognized | 3 years 4 months 28 days | 2 years 29 days | ||||||
Employees [Member] | ||||||||
Stock-based compensation expense | $ 220,691 | |||||||
2016 Stock Incentive Plan [Member] | ||||||||
Number of shares available for grant | 166,667 | |||||||
Description of exercise price | The exercise price per share of each stock option shall not be less than 100 percent of the fair market value of the Companys common stock on the date of grant. | |||||||
Number of options granted | 142,500 | |||||||
Vesting period of option | 3 years | |||||||
2015 Stock Incentive Plan [Member] | ||||||||
Number of shares available for grant | 50,000 | |||||||
Number of options granted | 4,802 | |||||||
Vesting rights | options vest at the rate of at least 25 percent in the first year, starting 6-months after the grant date, and 75% in year two. | |||||||
Number of options outstanding | 16,667 | |||||||
Non Plan Options [Member] | ||||||||
Number of options granted | 7,500 | |||||||
Non Plan Options [Member] | Minimum [Member] | ||||||||
Vesting period of option | 6 months | |||||||
Non Plan Options [Member] | Maximum [Member] | ||||||||
Vesting period of option | 36 months | |||||||
Restricted Stock Units [Member] | 2016 Stock Incentive Plan [Member] | ||||||||
Number of options granted | 17,817 | |||||||
[1] | Options granted under 2016 Stock Incentive Plan |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Stock Option Activity (Details) - $ / shares | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||||
Number of Options Outstanding, Beginning Balance | 173,750 | |||||
Number of Options Outstanding, Granted | 111,667 | [1] | 142,500 | |||
Number of Options Outstanding, Exercised | ||||||
Number of Options Outstanding, Canceled | (5,417) | |||||
Number of Options Outstanding, Ending Balance | 285,417 | 173,750 | ||||
Number of Options Exercisable, Ending Balance | 86,285 | |||||
Weighted- Average Exercise Price Options Outstanding, Beginning Balance | $ 9.24 | |||||
Weighted- Average Exercise Price Options Outstanding, Granted | 4.71 | |||||
Weighted- Average Exercise Price Options Outstanding, Exercised | ||||||
Weighted- Average Exercise Price Options Outstanding, Ending Balance | 7.47 | $ 9.24 | ||||
Weighted- Average Exercise Price Options Exercisable, Ending Balance | $ 11.79 | |||||
Stock Option [Member] | ||||||
Number of Options Outstanding, Beginning Balance | 173,750 | 36,667 | 16,667 | [2] | ||
Number of Options Outstanding, Granted | 142,500 | [3] | 27,500 | [4] | ||
Number of Options Outstanding, Exercised | ||||||
Number of Options Outstanding, Canceled | (5,417) | [3] | (7,500) | [4] | ||
Number of Options Outstanding, Ending Balance | 173,750 | 36,667 | ||||
Number of Options Exercisable, Ending Balance | 48,325 | |||||
Weighted- Average Exercise Price Options Outstanding, Beginning Balance | $ 9.24 | $ 38.40 | $ 24 | |||
Weighted- Average Exercise Price Options Outstanding, Granted | 5.49 | 69.60 | ||||
Weighted- Average Exercise Price Options Outstanding, Exercised | ||||||
Weighted- Average Exercise Price Options Outstanding, Canceled | 108.69 | 120 | ||||
Weighted- Average Exercise Price Options Outstanding, Ending Balance | 9.24 | $ 38.40 | ||||
Weighted- Average Exercise Price Options Exercisable, Ending Balance | $ 14.31 | |||||
[1] | Options granted under 2016 Stock Incentive Plan | |||||
[2] | Non-Plan options. | |||||
[3] | 142,500 options granted under 2016 Equity Incentive Plan; 5,417 options were canceled under the 2015 Stock Incentive Plan. | |||||
[4] | 27,500 options granted under 2015 Stock Incentive Plan; 7,500 non-plan options, which were subsequently canceled under an agreement with the holder. |
Stock-Based Compensation - Sc81
Stock-Based Compensation - Schedule of Weighted-Average Assumptions Used in the Black-scholes Valuation Model Options (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation [Abstract] | ||
Risk-free interest rate | 1.60% | 1.17% |
Expected term (in years) | 7 years 2 months 30 days | 3 years 4 months 17 days |
Dividend yield | 0.00% | 0.00% |
Expected volatility | 75.00% | 75.00% |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | Dec. 31, 2015 |
Accounts payable | $ 476,175 | $ 457,034 | $ 1,300,532 | |
Chief Executive Officer [Member] | ||||
Accounts payable | $ 95,000 |
Related Party Transactions (D83
Related Party Transactions (Details Narrative) (10K) - USD ($) | Mar. 31, 2017 | Nov. 04, 2016 | Sep. 19, 2016 | Apr. 04, 2016 | Dec. 31, 2016 | Jun. 30, 2016 | Jun. 22, 2016 | Jun. 17, 2016 | Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2016 | Nov. 30, 2016 | Dec. 31, 2015 |
Related party note payable | $ 12,500 | ||||||||||||
Description of number of shares consisted in each unit | Each Units consisting of 1 share of our Series A Preferred and a 3-year warrant to purchase 223 shares of the Company?s common stock at an exercise price of $2.00 per share. | ||||||||||||
Number of shares issued | 192,308 | 666,667 | 192,308 | ||||||||||
Number of units purchased | 40,834 | ||||||||||||
Series A Convertible Preferred Stock [Member] | |||||||||||||
Number of shares issued | 1 | ||||||||||||
Aggregate conversion shares | 423 | ||||||||||||
Warrant [Member] | |||||||||||||
Number of shares issued | 666,667 | 266,667 | |||||||||||
Number of warrants purchased | 223 | ||||||||||||
Warrant term | 3 years | ||||||||||||
Warrant exercise price (in dollars per share) | $ 6 | ||||||||||||
Common Stock [Member] | |||||||||||||
Aggregate conversion shares | 94,000 | ||||||||||||
Common Stock [Member] | |||||||||||||
Number of shares issued | 15,000 | 933,334 | |||||||||||
Aggregate conversion shares | 83,334 | 177,000 | |||||||||||
Mr. Steven Earles [Member] | |||||||||||||
Amount due to related party | 0 | 0 | $ 0 | $ 27,075 | |||||||||
Related party note payable | $ 12,500 | $ 12,500 | $ 12,500 | ||||||||||
Number of units issued for services | 185 | ||||||||||||
Value of units issued for services | $ 185,000 | ||||||||||||
Officers [Member] | |||||||||||||
Number of units issued for services | 423 | 423 | |||||||||||
Mr. Steve Shum [Member] | |||||||||||||
Number of units issued for services | 97 | ||||||||||||
Value of units issued for services | $ 97,000 | ||||||||||||
Mr. Martin Kunkel [Member] | |||||||||||||
Number of units issued for services | 58 | ||||||||||||
Value of units issued for services | $ 58,000 | ||||||||||||
Carris Earles & Wife of the Company's Chief Executive Officer [Member] | |||||||||||||
Number of units issued for services | 83 | ||||||||||||
Value of units issued for services | $ 83,000 | ||||||||||||
Grover T. Wickersham [Member] | Profit Sharing Plan [Member] | 8% Promissory Note [Member] | |||||||||||||
Principal amount | $ 120,000 | ||||||||||||
Grover T. Wickersham [Member] | Profit Sharing Plan [Member] | Jill Z. Wickersham 2000 Charitable Remainder Trust [Member] | 8% Promissory Note [Member] | |||||||||||||
Principal amount | $ 75,000 | ||||||||||||
Grover T. Wickersham [Member] | Subscription Agreements [Member] | Profit Sharing Plan [Member] | Private Placement [Member] | |||||||||||||
Description of number of shares consisted in each unit | Each unit consisting of one share of common stock and one common stock purchase warrant. | ||||||||||||
Number of units purchased | 83,334 | ||||||||||||
Total purchase price | $ 25,000 | ||||||||||||
Grover T. Wickersham [Member] | Warrant [Member] | Profit Sharing Plan [Member] | 8% Promissory Note [Member] | |||||||||||||
Number of warrants purchased | 8,334 | ||||||||||||
Warrant exercise price (in dollars per share) | $ 6 | ||||||||||||
Debt interest rate | 8.00% | ||||||||||||
Grover T. Wickersham [Member] | Warrant [Member] | Profit Sharing Plan [Member] | 8% Promissory Note [Member] | Warrant One [Member] | |||||||||||||
Number of warrants purchased | 20,000 | ||||||||||||
Warrant exercise price (in dollars per share) | $ 6 | ||||||||||||
Grover T. Wickersham [Member] | Warrant [Member] | Profit Sharing Plan [Member] | Jill Z. Wickersham 2000 Charitable Remainder Trust [Member] | 8% Promissory Note [Member] | |||||||||||||
Number of warrants purchased | 8,334 | 12,500 | |||||||||||
Warrant exercise price (in dollars per share) | $ 3.90 | $ 6 | $ 3.90 | $ 3.90 | $ 6 | ||||||||
Grover T. Wickersham [Member] | Warrant [Member] | Subscription Agreements [Member] | Private Placement [Member] | |||||||||||||
Number of warrants cancelled | 11,218 | ||||||||||||
Grover T. Wickersham [Member] | Warrant [Member] | Subscription Agreements [Member] | Private Placement [Member] | Education Trust [Member] | |||||||||||||
Warrant exercise price (in dollars per share) | $ 3.90 | 3.90 | 3.90 | ||||||||||
Number of warrants cancelled | 8,334 | ||||||||||||
Grover T. Wickersham [Member] | Warrant [Member] | Subscription Agreements [Member] | Profit Sharing Plan [Member] | Private Placement [Member] | |||||||||||||
Warrant exercise price (in dollars per share) | $ 3.90 | $ 3.90 | 3.90 | ||||||||||
Number of warrants exercised | 43,590 | ||||||||||||
Grover T. Wickersham [Member] | Common Stock [Member] | Subscription Agreements [Member] | Private Placement [Member] | |||||||||||||
Number of units purchased | 33,334 | ||||||||||||
Total purchase price | $ 100,000 | ||||||||||||
Grover T. Wickersham [Member] | Common Stock [Member] | Subscription Agreements [Member] | Private Placement [Member] | Education Trust [Member] | |||||||||||||
Number of units purchased | 16,667 | ||||||||||||
Purchase price (in dollars per share) | $ 3 | $ 3 | 3 | ||||||||||
Total purchase price | $ 50,000 | ||||||||||||
Grover T. Wickersham [Member] | Common Stock [Member] | Subscription Agreements [Member] | Private Placement [Member] | Lindsay Anne Wickersham 1999 Irrevocable Trust [Member] | |||||||||||||
Number of units purchased | 66,667 | ||||||||||||
Purchase price (in dollars per share) | $ 3 | $ 3 | $ 3 | ||||||||||
Total purchase price | $ 200,000 | ||||||||||||
Mr. Michael M. Fleming [Member] | Subscription Agreements [Member] | Private Placement [Member] | |||||||||||||
Description of number of shares consisted in each unit | One share of Common Stock and a Warrant to purchase one share of Common Stock at an exercise price of $6.00 per share | ||||||||||||
Number of units purchased | 8,334 | ||||||||||||
Purchase price (in dollars per share) | $ 3 | ||||||||||||
Total purchase price | $ 25,000 | ||||||||||||
Mr. Michael M. Fleming [Member] | Warrant [Member] | Subscription Agreements [Member] | Private Placement [Member] | |||||||||||||
Warrant exercise price (in dollars per share) | $ 6 | ||||||||||||
Mr. Lawrence Hirson [Member] | Promissory Note [Member] | |||||||||||||
Principal amount | $ 150,000 | ||||||||||||
Mr. Lawrence Hirson [Member] | Warrant [Member] | Promissory Note [Member] | |||||||||||||
Number of warrants purchased | 25,000 | ||||||||||||
Warrant exercise price (in dollars per share) | $ 6 | ||||||||||||
Warrant Term | 3 years |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | May 12, 2017 | May 02, 2017 | Apr. 21, 2017 | Apr. 18, 2017 | Apr. 05, 2017 | Apr. 03, 2017 | Apr. 02, 2017 | Mar. 31, 2017 | Mar. 31, 2017 | Feb. 01, 2017 | May 04, 2017 | Feb. 16, 2017 | Jun. 22, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Apr. 24, 2017 | |
Sale of transaction is structured as an exchange, shares | 40,834 | ||||||||||||||||||
Revenues | $ 612,481 | $ 454,762 | $ 2,108,306 | $ 1,702,618 | |||||||||||||||
Preferred stock, shares outstanding | 50 | 50 | 50 | 300 | 0 | ||||||||||||||
Number of equity securities for an aggregate consideration | $ 377,000 | ||||||||||||||||||
Number of incentive option grant, shares | 111,667 | [1] | 142,500 | ||||||||||||||||
Issuance of common stock, shares | 192,308 | 666,667 | 192,308 | ||||||||||||||||
Issuance of common stock | $ 2,000,000 | $ 58,500 | $ 3,016,238 | ||||||||||||||||
Number of stock option exercised, shares | |||||||||||||||||||
Warrant [Member] | |||||||||||||||||||
Issuance of common stock, shares | 666,667 | 266,667 | |||||||||||||||||
Subsequent Event [Member] | |||||||||||||||||||
Sale of commomn stock | $ 6,900,000 | ||||||||||||||||||
Number of common stock, shares issued upon conversion | 16,667 | ||||||||||||||||||
Number of preferred stock, shares issued upon conversion | 50 | ||||||||||||||||||
Preferred stock, shares outstanding | 0 | ||||||||||||||||||
Issuance of common stock for services by third parties, shares | 8,334 | ||||||||||||||||||
Issuance of common stock, shares | 192,307 | 85,594 | |||||||||||||||||
Issuance of common stock | $ 750,000 | $ 333,815 | |||||||||||||||||
Subsequent Event [Member] | Warrant [Member] | |||||||||||||||||||
Issuance of common stock, shares | 192,307 | 256,781 | 55,834 | ||||||||||||||||
Issuance of common stock | $ 217,750 | ||||||||||||||||||
Subsequent Event [Member] | Grover Wickersham [Member] | |||||||||||||||||||
Number of incentive option grant, shares | 33,334 | ||||||||||||||||||
Option to grant exercise price, per share | $ 4.80 | ||||||||||||||||||
Number of common stock vested, shares | 30,650 | ||||||||||||||||||
Issuance of common stock for services by third parties, shares | 10,217 | ||||||||||||||||||
Subsequent Event [Member] | Grover Wickersham [Member] | Restricted Stock [Member] | |||||||||||||||||||
Number of common stock vested, shares | 33,334 | ||||||||||||||||||
Subsequent Event [Member] | Trent Davis [Member] | Directors [Member] | |||||||||||||||||||
Number of stock option exercised, shares | 4,630 | ||||||||||||||||||
Number of options to purchase shares of common stock price, per share | $ 5.40 | ||||||||||||||||||
Subsequent Event [Member] | Michael Fleming [Member] | Directors [Member] | |||||||||||||||||||
Number of stock option exercised, shares | 4,630 | ||||||||||||||||||
Number of options to purchase shares of common stock price, per share | $ 5.40 | ||||||||||||||||||
Subsequent Event [Member] | Convertible Note Purchase Agreement [Member] | |||||||||||||||||||
Convertible note with an accredited investor amount | $ 500,000 | ||||||||||||||||||
Convertible debt maturity date | Apr. 3, 2020 | ||||||||||||||||||
Convertible debt interest rate | 5.00% | ||||||||||||||||||
Number of equity securities for an aggregate consideration | $ 4,000,000 | ||||||||||||||||||
Business acquisitions purchase price, description | The note has an automatic conversion feature upon the closing (or first in a series of closings) of the next equity financing in which the Company sells shares of its equity securities for an aggregate consideration of at least $4,000,000 at a purchase price of at least $7.50. | ||||||||||||||||||
Debt conversion, converted instrument, price | 80.00% | ||||||||||||||||||
Debt conversion price per share | $ 6 | ||||||||||||||||||
Subsequent Event [Member] | Convertible Note Purchase Agreement [Member] | Investor [Member] | |||||||||||||||||||
Debt conversion price per share | 6 | ||||||||||||||||||
Subsequent Event [Member] | Big Bottom Distilling, LLC [Member] | |||||||||||||||||||
Sale of transaction is structured as an exchange, shares | 28,096 | ||||||||||||||||||
Sale of transaction is structured as an exchange, percent | 90.00% | ||||||||||||||||||
Revenues | $ 201,000 | ||||||||||||||||||
Subsequent Event [Member] | Maximum [Member] | |||||||||||||||||||
Sale of commomn stock | $ 6,900,000 | ||||||||||||||||||
Subsequent Event [Member] | Minimum [Member] | Convertible Note Purchase Agreement [Member] | |||||||||||||||||||
Debt conversion price per share | $ 2 | ||||||||||||||||||
[1] | Options granted under 2016 Stock Incentive Plan |
Subsequent Events (Details Na85
Subsequent Events (Details Narrative) (10K) | Mar. 31, 2017shares | Mar. 31, 2017USD ($)shares | Mar. 08, 2017USD ($)$ / sharesshares | Feb. 01, 2017USD ($) | May 04, 2017USD ($)shares | Feb. 17, 2017USD ($)a | Feb. 16, 2017USD ($)shares | Jun. 22, 2016USD ($)shares | Mar. 31, 2017USD ($)shares | Dec. 31, 2016USD ($)shares |
Issuance of common stock, shares | shares | 192,308 | 666,667 | 192,308 | |||||||
Issuance of common stock | $ 2,000,000 | $ 58,500 | $ 3,016,238 | |||||||
Common stock shares issued as consideration for acquisition | shares | 260,000 | |||||||||
Common stock value issued as consideration for acquisition | $ 371,420 | |||||||||
Vesting period | 5 years | |||||||||
Subsequent Event [Member] | ||||||||||
Issuance of common stock, shares | shares | 192,307 | 85,594 | ||||||||
Issuance of common stock | $ 750,000 | $ 333,815 | ||||||||
Sale of stock | $ 6,900,000 | |||||||||
Subsequent Event [Member] | Commercial Sublease Agreement [Member] | ||||||||||
Area of land | a | 5,000 | |||||||||
Sublease amount per month | $ 5,000 | |||||||||
Warrant [Member] | ||||||||||
Issuance of common stock, shares | shares | 666,667 | 266,667 | ||||||||
Warrant [Member] | Subsequent Event [Member] | ||||||||||
Issuance of common stock, shares | shares | 192,307 | 256,781 | 55,834 | |||||||
Issuance of common stock | $ 217,750 | |||||||||
MotherLode Craft Distillery [Member] | Subsequent Event [Member] | ||||||||||
Common stock shares issued as consideration for acquisition | shares | 86,667 | |||||||||
Common stock value issued as consideration for acquisition | $ 377,000 | |||||||||
Closing share price of common stock | $ / shares | $ 4.35 | |||||||||
Vesting period | 5 years |
Selected Quarterly Consolidat86
Selected Quarterly Consolidated Financial Data (Unaudited) - Schedule of Condensed Consolidated Statements of Operations Data (Details) (10K) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||
Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Net sales | $ 829,669 | $ 532,674 | $ 607,847 | $ 504,311 | $ 621,882 | $ 721,053 | $ 352,081 | $ 304,414 | $ 325,070 | $ 3,042,527 | $ 2,326,664 |
Gross profit | 289,568 | 147,569 | 236,993 | 236,095 | 198,593 | 393,700 | 184,557 | 146,763 | 107,208 | 827,962 | 832,228 |
Net loss | $ (901,818) | $ (1,419,391) | $ (1,456,049) | $ (1,309,500) | $ (1,014,679) | $ (669,376) | $ (1,412,612) | $ (688,060) | $ (831,018) | $ (5,199,619) | $ (3,601,066) |
Net loss available per common share, basic and diluted | $ (0.57) | $ (0.92) | $ (1.38) | $ (1.34) | $ (0.87) | $ (1.85) | $ (0.91) | $ (1.10) |