Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 31, 2017 | Jun. 30, 2016 | |
Document And Entity Information | |||
Entity Registrant Name | Eastside Distilling, Inc. | ||
Entity Central Index Key | 1,534,708 | ||
Document Type | 10-K | ||
Trading Symbol | ESDI | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 6,559,868 | ||
Entity Common Stock, Shares Outstanding | 8,925,935 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash | $ 1,088,066 | $ 141,317 |
Trade receivables | 344,955 | 142,206 |
Inventories | 780,037 | 683,824 |
Prepaid expenses and current assets | 187,714 | 163,506 |
Total current assets | 2,400,772 | 1,130,853 |
Property and equipment, net | 99,216 | 112,005 |
Deposits | 48,000 | 49,000 |
Total Assets | 2,547,988 | 1,291,858 |
Current liabilities: | ||
Accounts payable | 457,034 | 1,300,532 |
Accrued liabilities | 523,702 | 563,814 |
Deferred revenue | 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 | 987,399 | 2,337,629 |
Notes payable - less current portion and debt discount | 427,756 | 17,842 |
Total liabilities | 1,415,155 | 2,355,471 |
Commitments and contingencies (Note 9) | ||
Stockholders' equity (deficit): | ||
Common stock, $0.0001 par value; 45,000,000 shares authorized; 7,627,512 and 2,309,750 shares issued and outstanding at December 31, 2016 and 2015, respectively | 764 | 231 |
Additional paid-in capital | 13,699,275 | 6,497,907 |
Accumulated deficit | (12,813,044) | (7,561,751) |
Total stockholders' equity (deficit) | 1,132,833 | (1,063,613) |
Total Liabilities and Stockholders' Equity (Deficit) | 2,547,988 | 1,291,858 |
8% Series A Convertible Preferred Stock [Member] | ||
Stockholders' equity (deficit): | ||
Series A convertible preferred stock, $0.0001 par value; 3,000 shares authorized; 300 and 0 shares issued and outstanding at December 31, 2016 and 2015, respectively (liquidation value of $750,000 at December 31, 2016) | 245,838 | |
Total stockholders' equity (deficit) | $ 245,838 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 45,000,000 | 45,000,000 |
Common stock, issued | 7,627,512 | 2,309,750 |
Common stock, outstanding | 7,627,512 | 2,309,750 |
8% Series A Convertible Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, authorized | 3,000 | 3,000 |
Preferred stock, issued | 300 | 0 |
Preferred stock, outstanding | 300 | 0 |
Preferred stock, liquidation | $ 125,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Statement [Abstract] | ||
Sales | $ 3,042,527 | $ 2,326,664 |
Less excise taxes, customer programs and incentives | 934,221 | 624,046 |
Net sales | 2,108,306 | 1,702,618 |
Cost of sales | 1,280,344 | 870,390 |
Gross profit | 827,962 | 832,228 |
Operating expenses: | ||
Advertising, promotional and selling expenses | 1,244,152 | 923,310 |
General and administrative expenses | 3,881,771 | 3,450,436 |
Loss from operations | (4,297,961) | (3,541,518) |
Other income (expense), net | ||
Interest expense | (862,468) | (112,458) |
Gain on spin-off of subsidiary | 52,890 | |
Other income (expense) | (39,190) | 20 |
Total other expense, net | (901,658) | (59,548) |
Loss before income taxes | (5,199,619) | (3,601,066) |
Provision for income taxes | ||
Net loss | (5,199,619) | (3,601,066) |
Dividends on convertible preferred stock | (51,674) | |
Net loss available to common shareholders | $ (5,251,293) | $ (3,601,066) |
Basic and diluted net loss per common share (in dollars per share) | $ (1.40) | $ (1.57) |
Basic and diluted weighted average common shares outstanding (in shares) | 3,741,842 | 2,287,518 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholder's (Deficit) Equity - USD ($) | 8% Series A Convertible Preferred Stock [Member] | Common Stock [Member] | Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at beginning at Dec. 31, 2014 | $ 227 | $ 5,542,566 | $ (3,960,685) | $ 1,582,108 | |
Balance at beginning (in shares) at Dec. 31, 2014 | 2,275,625 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock in exchange for services, net of issuance costs | $ 3 | 671,972 | 671,975 | ||
Issuance of common stock in exchange for services, net of issuance costs (in shares) | 27,792 | ||||
Shares issued for payoff of trade debt, net | $ 1 | 142,999 | 143,000 | ||
Shares issued for payoff of trade debt, net (in shares) | 6,333 | ||||
Stock-based compensation | 140,370 | 140,370 | |||
Net loss | (3,601,066) | (3,601,066) | |||
Balance at end at Dec. 31, 2015 | $ 231 | 6,497,907 | (7,561,751) | (1,063,613) | |
Balance at end (in shares) at Dec. 31, 2015 | 2,309,750 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock, net of issuance cost of $23,762, with detachable warrants | $ 280 | 3,015,958 | 3,016,238 | ||
Issuance of common stock, net of issuance cost of $23,762, with detachable warrants (in shares) | 2,800,000 | ||||
Issuance of common stock from warrant exercise for cash | $ 57 | 734,159 | 734,216 | ||
Issuance of common stock from warrant exercise for cash (in shares) | 564,781 | ||||
Issuance of common stock for services rendered | $ 12 | 284,266 | 284,278 | ||
Issuance of common stock for services rendered (in shares) | 115,184 | ||||
Issuance of Series A convertible Preferred stock, net of issuance cost of $69,528, with detachable warrants | $ 756,835 | 145,637 | 902,472 | ||
Issuance of Series A convertible Preferred stock, net of issuance cost of $69,528, with detachable warrants (in shares) | 972 | ||||
Stock-based compensation | $ 6 | 374,681 | 374,687 | ||
Stock-based compensation (in shares) | 63,499 | ||||
Issuance of common stock for note payable | $ 123 | 1,348,879 | 1,349,002 | ||
Issuance of common stock for note payable (in shares) | 1,230,411 | ||||
Issuance of detachable warrants on notes payable | 506,622 | 506,622 | |||
Cummulative dividend on Series A preferred | $ 51,674 | (51,674) | |||
Issuance of common stock for Series A preferred dividend | (17,759) | $ 1 | 17,758 | ||
Issuance of common stock for Series A preferred dividend (in shares) | 12,802 | ||||
Common shares issued for preferred conversion | $ (544,912) | $ 53 | 544,859 | ||
Common shares issued for preferred conversion (in shares) | (672) | 531,000 | |||
Beneficial conversion feature of convertible debt | 228,550 | $ 228,550 | |||
Adjustment of shares for reverse stock-split | $ 1 | $ (1) | |||
Adjustment of shares for reverse stock-split (in shares) | 85 | ||||
Net loss | $ (5,199,619) | $ (5,199,619) | |||
Balance at end at Dec. 31, 2016 | $ 245,838 | $ 764 | $ 13,699,275 | $ (12,813,044) | $ 1,132,833 |
Balance at end (in shares) at Dec. 31, 2016 | 300 | 7,627,512 |
Consolidated Statements of Sto6
Consolidated Statements of Stockholder's (Deficit) Equity (Parenthetical) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2016 | |
Statement of Stockholders' Equity [Abstract] | ||
Preferred stock, issuance costs | $ 0 | $ 69,528 |
Common stock, issuance costs | $ 0 | $ 23,762 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Cash Flows From Operating Activities | ||
Net loss | $ (5,199,619) | $ (3,601,066) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 21,991 | 19,277 |
Amortization of debt issuance costs | 116,750 | 16,750 |
Amortization of beneficial conversion feature | 228,550 | |
Issuance of common stock in exchange for services | 265,065 | 671,920 |
Issuance of common stock for payoff of trade debt | 19,212 | 142,987 |
Stock-based compensation | 374,687 | 140,370 |
Cummulative dividend on preferred stock | 39,200 | |
Gain on spin-off of subsidiary | (52,890) | |
Changes in operating assets and liabilities: | ||
Trade receivables | (202,749) | (4,265) |
Inventories | (96,213) | (306,804) |
Prepaid expenses, current assets and deposits | (23,208) | 155,391 |
Accounts payable | (843,498) | 1,133,166 |
Accrued liabilities | 343,762 | 502,074 |
Deferred revenue | 1,399 | (4,688) |
Net cash used in operating activities | (4,954,671) | (1,187,778) |
Cash Flows From Investing Activities | ||
Purchases of property and equipment | (9,202) | (50,076) |
Net cash used in investing activities | (9,202) | (50,076) |
Cash Flows From Financing Activities | ||
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 $23,762, with detachable warrants | 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 | 684,216 | |
Net cash provided by financing activities | 5,910,622 | 296,881 |
Net increase (decrease) in cash | 946,749 | (940,973) |
Cash - beginning of year | 141,317 | 1,082,290 |
Cash - end of year | 1,088,066 | 141,317 |
Supplemental Disclosure of Cash Flow Information | ||
Cash paid during the period for interest | 91,237 | 4,593 |
Cash paid during the period for income taxes | ||
Supplemental Disclosure of Non-Cash Financing Activity | ||
Stock issued for payment of trade debt | 19,212 | |
Series A preferred issued in exchange of compensation - related party | 423,000 | |
Series A preferred issued in exchange of debt | 50,000 | |
Common stock issued in exchange of notes payable | 196,330 | |
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 |
Condensed Consolidated Stateme8
Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2016 | |
Statement of Cash Flows [Abstract] | ||
Preferred stock, issuance costs | $ 0 | $ 69,528 |
Common stock, issuance costs | $ 0 | $ 23,762 |
Description of Business and Liq
Description of Business and Liquidity | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Liquidity | 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 32,000,000 shares of Eurocan's common stock. In addition, certain of Eurocan's stockholders cancelled an aggregate of 24,910,000 shares of Eurocan's common stock held by them. As a result, on October 31, 2014, Eurocan had 40,000,000 shares of common stock issued and outstanding, of which 32,000,000 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 | 12 Months Ended |
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. 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 their 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 | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 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. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | 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 | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 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. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2016 | |
Notes Payable [Abstract] | |
Notes Payable | 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 notes 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 Note 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, 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 | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 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 begins to expire in 2034, and the state NOLs begins 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 | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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 | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
Net Loss per Common Share | 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 shareholders (numerator) $ (5,251,293 ) $ (3,601,066 ) Weighted average shares (denominator) 3,741,842 2,287,518 Basic and diluted net loss per common share $ (1.40 ) $ (1.57 ) |
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 Split All shares related and per share information in these financial statements has been adjusted to give effect to the 20-for-1 reverse stock split of the Company’s common stock effected on October 18, 2016. Issuance of Common Stock In the year ended December 31, 2016, the Company issued 63,499 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 115,184 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 800,000 shares of its common stock for $1,040,000, including 800,000 warrants for common stock. In December, 2016, the Company issued 564,781 shares of its common stock for warrant exercises totaling $734,216. In December 2016, the Company issued 886,538 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 531,000 shares of its common stock upon conversion of 672 shares of preferred stock. In July 2016, the Company issued 12,802 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 2,000,000 shares of its common stock for $2,000,000, including 2,000,000 warrants for common stock, net of issuance costs of $23,762. From April 20, 2016 to June 3, 2016, the Company issued 343,873 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 2,500 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 4,500 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 5,000 shares of common stock to a consultant for services of $45,000. These shares have not been issued. In August 2015, the Company issued 2,250 shares of common stock to employees valued at $42,750. In August 2015, the Company issued 6,750 shares of common stock to two third-party consultants in exchange for services rendered of $128,250. In July 2015, the Company issued 11,250 shares of common stock to two third-party consultants in exchange for services rendered of $479,250. In April 2015, the Company issued 1,875 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 100,000,000 shares available for issuance with 3,000 shares of Series A authorized 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 $1.50 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. Shares Number of shares of common Shares Issued and Net Conversion stock Liquidation Liquidation Authorized Outstanding Proceeds Price/Share Equivalents Preference Value/Share Series A 3,000 50 $ 38,932 $ 1.50 33,333 $ 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 4,306,915 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 $ 1.68 A summary of activity in warrants is as follows: Warrants Weighted Weighted Aggregate Outstanding at December 31, 2015 — — $ — $ — Granted 4,306,915 $ 2.06 $ - Exercised (1,451,319 ) 1.30 Forfeited and cancelled (315,301 ) 2.00 - Outstanding at December 31, 2016 2,540,295 2.77 years $ 2.16 $ - |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2016 | |
Share-based Compensation [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 500,000 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 427,500 options and 53,449 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 150,000 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 43,750 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 50,000 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 50,000 (1) $ 8.00 Options granted 82,500 (2) 23.20 Options exercised - - Options canceled (22,500 )(2) 40.00 Outstanding at December 31, 2015 110,000 $ 12.80 Options granted 427,500 (3) 1.83 Options exercised - - Options canceled (16,250 )(3) 36.23 Outstanding at December 31, 2016 521,250 $ 3.08 Exercisable at December 31, 2016 144,973 $ 4.77 (1) Non-Plan options. (2) 82,500 options granted under 2015 Stock Incentive Plan; 22,500 non-plan options, which were subsequently canceled under an agreement with the holder. (3) 427,500 options granted under 2016 Equity Incentive Plan; 16,250 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 376,277 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, 103,567 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 $0.97. The aggregate grant date fair value of the 427,500 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 | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 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 667 shares of the Company’s common stock at an exercise price of $2.00 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 282,000 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 250,000 units, each unit consisting of one share of common stock and one common stock purchase warrant (the “Warrants, and collectively with the Common Stock, the “Common Stock Units”) at a purchase price of $1.00 per Common Stock Unit, for a total purchase price of $250,000. The exercise price of the warrants was temporarily reduced to $1.30 in December 2016, at which time 130,769 warrants were exercised. · Mr. Wickersham directly purchased in a private placement an aggregate of 100,000 Common Stock Units at a purchase price of $1.00 per Common Stock Unit for a total purchase price of $100,000. In December 2016, Mr. Wickersham transferred and/or voluntarily cancelled 33,653 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 50,000 Common Stock Units at a purchase price of $1.00 per Unit, for a total purchase price of $50,000. The exercise price of the warrants was temporarily reduced to $1.30 in December 2016, at which time 25,000 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 200,000 Common Stock Units at a purchase price of $1.00 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 25,000 shares of common stock at a price of $2.00 per share. In July 2016, the PSP purchased an additional Promissory Note for aggregate consideration of $120,000, along with a warrant to acquire 60,000 shares of common stock at an exercise price of $2.00 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 25,000 shares of common stock at an exercise price of $2.00 per share. In November 2016, the CRUT purchased an additional Promissory Note for aggregate consideration of $75,000, along with a warrant to acquire 37,500 shares of common stock at an exercise price of $2.00 per share. The exercise price of the warrants was temporarily reduced to $1.30 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 25,000 Units at a purchase price of $1.00 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 $2.00 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 75,000 shares of our common stock at an exercise price of $2.00 per share. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | 14. Subsequent Events From January 15, 2017 through February 16, 2017, the Company received additional warrant exercises and subscription documents totaling $217,750 for 167,500 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 current 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 Craft Distillery (“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, Sandstorm Partners. We issued 260,000 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 $1.45 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 576,923 shares of its common stock for $750,000, including 576,923 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 tables 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 (0.44 ) (0.46 ) (0.31 ) (0.20 ) 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 share basic and diluted (0.37 ) (0.30 ) (0.62 ) (0.28 ) |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation and 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, 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. |
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. |
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 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. |
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. |
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. |
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 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 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 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 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. |
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. |
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 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 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 (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 $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 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. 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. |
Reclassifications | 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. |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of 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 (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment net | 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 |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Notes Payable [Abstract] | |
Schedule of 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 notes 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 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, 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) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of effective tax rates reconciliation | 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 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) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of operating leases | 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) | 12 Months Ended |
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 2016 and 2015 are as follows: December 31, 2016 2015 Net loss available to common shareholders (numerator) $ (5,251,293 ) $ (3,601,066 ) Weighted average shares (denominator) 3,741,842 2,287,518 Basic and diluted net loss per common share $ (1.40 ) $ (1.57 ) |
Issuance of Common Stock, War32
Issuance of Common Stock, Warrants and Convertible Preferred Stock (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Schedule of balance of stockholder's equity | Shares Number of shares of common Shares Issued and Net Conversion stock Liquidation Liquidation Authorized Outstanding Proceeds Price/Share Equivalents Preference Value/Share Series A 3,000 50 $ 38,932 $ 1.50 33,333 $ 125,000 $ 2,500 |
Schedule of warrants Black-Scholes option-pricing model assumption | 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 $ 1.68 |
Schedule of warrants activity | A summary of activity in warrants is as follows: Warrants Weighted Weighted Aggregate Outstanding at December 31, 2015 — — $ — $ — Granted 4,306,915 $ 2.06 $ - Exercised (1,451,319 ) 1.30 Forfeited and cancelled (315,301 ) 2.00 - Outstanding at December 31, 2016 2,540,295 2.77 years $ 2.16 $ - |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Share-based Compensation [Abstract] | |
Schedule of summary of all stock option activity | 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 50,000 (1) $ 8.00 Options granted 82,500 (2) 23.20 Options exercised - - Options canceled (22,500 )(2) 40.00 Outstanding at December 31, 2015 110,000 $ 12.80 Options granted 427,500 (3) 1.83 Options exercised - - Options canceled (16,250 )(3) 36.23 Outstanding at December 31, 2016 521,250 $ 3.08 Exercisable at December 31, 2016 144,973 $ 4.77 (1) Non-Plan options. (2) 60,000 options granted under 2015 Stock Incentive Plan; 22,500 non-plan options, which were subsequently canceled under an agreement with the holder. (3) 427,500 options granted under 2016 Equity Incentive Plan; 16,250 options were canceled under the 2015 Stock Incentive Plan |
Schedule of weighted-average assumptions were used in the Black-Scholes valuation model for 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 Consolidat34
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 | The following tables 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 ) (1,436,449 ) (1,438,991 ) Net loss available per common share basic and diluted (0.44 ) (0.46 ) (0.31 ) (0.19 ) 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 share basic and diluted (0.37 ) (0.30 ) (0.62 ) (0.28 ) |
Description of Business and L35
Description of Business and Liquidity (Details Narrative) | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Accounting Policies [Abstract] | |
Description of acquired entity | The merger consideration for the Acquisition consisted of 32,000,000 shares of Eurocan's common stock. In addition, certain of Eurocan's stockholders cancelled an aggregate of 24,910,000 shares of Eurocan's common stock held by them. As a result, on October 31, 2014, Eurocan had 40,000,000 shares of common stock issued and outstanding, of which 32,000,000 shares were held by the former members of the LLC. |
Other income | $ 52,890 |
Liquidity (Details Narrative)
Liquidity (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||||||
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 | Mar. 31, 2017 | Dec. 31, 2014 | |
Net loss | $ (1,438,991) | $ (1,436,449) | $ (1,309,500) | $ (1,014,679) | $ (669,376) | $ (1,412,612) | $ (688,060) | $ (831,018) | $ (5,199,619) | $ (3,601,066) | ||
Accumulated deficit | (12,813,044) | (7,561,751) | (12,813,044) | (7,561,751) | ||||||||
Net cash provided by financing activities | 5,910,622 | 296,881 | ||||||||||
Cash on hand | $ 1,088,066 | $ 141,317 | $ 1,088,066 | 141,317 | $ 1,082,290 | |||||||
Working capital | $ 1,400,000 | |||||||||||
Subsequent Event [Member] | ||||||||||||
Cash on hand | $ 967,750 |
Summary of Significant Accoun37
Summary of Significant Accounting Policies (Details Narrative) | 12 Months Ended | |
Dec. 31, 2016USD ($)Number | Dec. 31, 2015USD ($)Number | |
Number of operating segment | Number | 1 | |
Customer programs and incentives paid | $ 136,786 | $ 3,184 |
Advertising expense | 297,000 | 389,000 |
Interest expense | 862,468 | 112,458 |
Excise taxes | 934,221 | 624,046 |
Stock based compensation expense | 374,687 | 140,370 |
Amount of factored invoice | 542,083 | 99,258 |
Proceeds from accounts receivable invoice | 406,562 | 74,444 |
Accounts receivable factored invoices | 184,875 | 17,601 |
Accounts receivable factored program | $ 48,601 | $ 5,867 |
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 One [Member] | Oregon Liquor Control Commission [Member] | ||
Percentage concentration risk | 67.00% | |
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] | Distributor One [Member] | Oregon Liquor Control Commission [Member] | ||
Number of distributors | Number | 1 | |
Percentage concentration risk | 40.00% | |
Sales Revenue [Member] | Two Distributors [Member] | ||
Number of distributors | Number | 2 | |
Percentage concentration risk | 46.00% |
Inventories (Details)
Inventories (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 439,739 | $ 415,953 |
Finished goods | 340,298 | 248,713 |
Other | 19,158 | |
Total inventories | $ 780,037 | $ 683,824 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Line Items] | ||
Total cost | $ 152,181 | $ 142,979 |
Less accumulated depreciation and amortization | (52,965) | (30,974) |
Total property and equipment, net | 99,216 | 112,005 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 70,140 | 64,288 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 8,607 | 8,607 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 38,831 | 38,831 |
Construction In Progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | $ 34,603 | $ 31,253 |
Property and Equipment (Detai40
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization expense | $ 21,991 | $ 19,277 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Total notes 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 |
7.99% Notes Payable Due On December, 2020 [Member] | ||
Total notes payable | 16,642 | $ 21,940 |
Principal plus interest payments | $ 472 | |
Frequency of payment | Monthly | |
8% Notes Payable Due On June 30, 2018 [Member] | ||
Total notes payable | $ 547,500 | |
Frequency of payment | Monthly |
Notes Payable (Details 1)
Notes Payable (Details 1) | Dec. 31, 2016USD ($) |
Long-term Debt, Rolling Maturity [Abstract] | |
2,017 | $ 4,537 |
2,018 | 554,915 |
2,019 | 4,690 |
Thereafter | |
Total | $ 564,142 |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 | |
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 | ||
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 | ||
[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 ($306,378) in full. |
Convertible Notes Payable (De44
Convertible Notes Payable (Details Narrative) - USD ($) | Jun. 28, 2016 | Jun. 06, 2016 | Jun. 22, 2016 | Jun. 03, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | May 13, 2016 | Apr. 14, 2016 |
Short-term Debt [Line Items] | ||||||||
Original debt issue discount | $ 16,750 | |||||||
Debt conversion amount | $ 23,762 | $ 196,330 | ||||||
MR Group I, LLC [Member] | Exchange Agreement [Member] | 14% Secured Convertible Promissory Note [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Debt conversion amount | $ 196,503 | |||||||
Repayments of debt | $ 306,378 | $ 100,000 | ||||||
5% Convertible Note Due July 1, 2016 [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Conversion price (in dollars per share) | $ 8 | |||||||
14% Secured Convertible Promissory Note (Initial Note) [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Principal amount | $ 275,000 | |||||||
Description of repayment terms | Payable in six installments (Amortization Payments) as set forth in an Amortization Schedule beginning the 30th day after issuance and each 30-days thereafter. | |||||||
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 Company’s common stock during the 5 trading days prior to conversion. | |||||||
Description of collateral | Secured by all of the Companys assets pursuant to the terms and conditions of an Amended and Restated Pledge and Security Agreement. | |||||||
Amortization of the debt discount | $ 359,688 | $ 16,750 | ||||||
14% Secured Convertible Promissory Note (Initial Note) [Member] | MR Group I, LLC [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Principal amount | $ 275,000 | |||||||
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 | $ 275,000 | ||||||
Interest payable | 21,992 | |||||||
14% Secured Convertible Promissory Note (Initial Note) [Member] | MR Group I, LLC [Member] | Exchange Agreement [Member] | 14% Secured Convertible Promissory Note Due August 31, 2016 [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Principal amount | $ 219,200 | |||||||
0% Convertible Interest Bearing Note [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Description of conversion price terms | The note was converted into Company's preferred equity financing on April 4, 2016. | |||||||
14% Additional Secured Convertible Promissory Note Due January 18, 2018 [Member] | MR Group I, LLC [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Principal amount | 300,000 | |||||||
Original debt issue discount | $ 100,000 | |||||||
14% Additional Secured Convertible Promissory Note Due January 18, 2018 [Member] | MR Group I, LLC [Member] | Exchange Agreement [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Principal amount | $ 300,000 | |||||||
Interest payable | 2,647 | |||||||
14% Additional Secured Convertible Promissory Note Due January 18, 2018 [Member] | MR Group I, LLC [Member] | Exchange Agreement [Member] | 14% Secured Convertible Promissory Note Due April 30, 2017 [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Principal amount | $ 302,647 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Expected federal income tax benefit | $ (1,774,361) | $ (1,200,378) |
Expected State income tax benefits | (344,435) | (233,015) |
Change in valuation allowance | 2,118,795 | 1,442,900 |
Other | (9,507) | |
Total provision for income taxes |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | Dec. 31, 2016 | Dec. 31, 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 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Tax Credit Carryforward [Line Items] | |
Net operating loss carryforward | $ 3,600,000 |
Federal [Member] | |
Tax Credit Carryforward [Line Items] | |
Net operating loss carrayforward year | 20 years |
Net operating loss expiration year | 2,034 |
State [Member] | |
Tax Credit Carryforward [Line Items] | |
Net operating loss carrayforward year | 15 years |
Net operating loss expiration year | 2,029 |
Commitments and Contingencies48
Commitments and Contingencies (Details) | Dec. 31, 2016USD ($) |
For year ending December 31st:: | |
2,017 | $ 297,000 |
2,018 | 272,000 |
2,019 | 278,000 |
2,020 | 240,000 |
Total | $ 1,087,000 |
Commitments and Contingencies49
Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Rent expense | $ 416,000 | $ 384,000 |
Operating lease agreements expiration | October 2,020 | |
Minimum [Member] | ||
Monthly lease payments | $ 1,300 | |
Maximum [Member] | ||
Monthly lease payments | $ 24,000 |
Net Loss per Common Share (Deta
Net Loss per Common Share (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Earnings Per Share [Abstract] | ||
Net loss available to common shareholders (numerator) | $ (5,251,293) | $ (3,601,066) |
Weighted average shares (denominator) | 3,741,842 | 2,287,518 |
Basic and diluted net loss per common share (in dollars per share) | $ (1.40) | $ (1.57) |
Issuance of Common Stock, War51
Issuance of Common Stock, Warrants and Convertible Preferred Stock (Details) - 8% Series A Convertible Preferred Stock [Member] - USD ($) | 2 Months Ended | 12 Months Ended | |
Jun. 17, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Shares Authorized | 3,000 | 3,000 | |
Shares Issued and Outstanding | 50 | ||
Net Proceeds | $ 38,932 | ||
Conversion Price/Share | $ 1.50 | $ 1.50 | |
Number of shares of common stock Equivalents | 33,333 | ||
Liquidation Preference | $ 125,000 | ||
Liquidation Value/Share | $ 2,500 |
Issuance of Common Stock, War52
Issuance of Common Stock, Warrants and Convertible Preferred Stock (Details 1) | 12 Months Ended |
Dec. 31, 2016$ / shares | |
Volatility | 75.00% |
Risk-free interest rate | 1.17% |
Expected term | 3 years 4 months 17 days |
Expected dividend yield | |
Warrant [Member] | |
Volatility | 75.00% |
Risk-free interest rate | 1.03% |
Expected term | 3 years |
Expected dividend yield | |
Fair value of common stock | $ 1.68 |
Issuance of Common Stock, War53
Issuance of Common Stock, Warrants and Convertible Preferred Stock (Details 2) - Warrant [Member] | 12 Months Ended |
Dec. 31, 2016USD ($)$ / sharesshares | |
Class Of Warrant Or Right Outstanding [Roll Forward] | |
Outstanding at beginning | shares | |
Granted | shares | 4,306,915 |
Exercised | shares | (1,451,319) |
Forfeited and cancelled | shares | (315,301) |
Outstanding at ending | shares | 2,540,295 |
Forfeited and cancelled | |
Outstanding at ending | 2 years 8 months 26 days |
Class Of Warrant Or Right Exercise Price Of Warrants Or Rights [Roll Forward] | |
Outstanding at beginning | $ / shares | |
Granted | $ / shares | 2 |
Exercised | $ / shares | 1.30 |
Forfeited and cancelled | $ / shares | 2 |
Outstanding at ending | $ / shares | $ 2.16 |
Class Of Warrant Or Right Aggregate Intrinsic Value [Roll Forward] | |
Outstanding at beginning | $ | |
Granted | $ | |
Outstanding at ending | $ |
Issuance of Common Stock, War54
Issuance of Common Stock, Warrants and Convertible Preferred Stock (Details Narrative) - USD ($) | Jul. 07, 2016 | Apr. 04, 2016 | Aug. 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 | Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 |
Value of issuance of common stock for services rendered | $ 284,278 | |||||||||||||
Value of shares issued to employees | 374,687 | $ 140,370 | ||||||||||||
Stock based compensation expense | 374,687 | 140,370 | ||||||||||||
Debt conversion amount | $ 23,762 | $ 196,330 | ||||||||||||
Number of shares issued | 2,000,000 | 800,000 | ||||||||||||
Number of shares issued, value | $ 2,000,000 | $ 1,040,000 | ||||||||||||
Number of shares issued upon accrued and unpaid dividends, value | 0 | |||||||||||||
Number of units issued for cash | 499 | |||||||||||||
Number of units issued for cash, value | $ 499,000 | |||||||||||||
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 | 564,142 | |||||||||||||
Beneficial conversation feature | $ 228,550 | $ 228,550 | ||||||||||||
Number of units issued for services, value | $ 671,975 | |||||||||||||
8% Series A Convertible Preferred Stock [Member] | ||||||||||||||
Conversion of stock issued | 886,538 | |||||||||||||
Conversion of stock amount issued | $ 1,152,499 | |||||||||||||
Warrant [Member] | ||||||||||||||
Conversion of stock amount issued | $ 4,306,915 | |||||||||||||
Number of shares issued | 800,000 | |||||||||||||
Fair value of warrants | $ 2,010,502 | |||||||||||||
Preferred Stock [Member] | ||||||||||||||
Conversion of stock | 531,000 | |||||||||||||
Conversion of stock issued | 672 | |||||||||||||
8% Series A Convertible Preferred Stock [Member] | ||||||||||||||
Preferred stock, authorized | 3,000 | 3,000 | ||||||||||||
Preferred stock, authorized | 100,000,000 | |||||||||||||
Conversion of stock | 33,333 | |||||||||||||
Number of shares issued | 1 | |||||||||||||
Number of shares issued upon accrued and unpaid dividends | 12,802 | |||||||||||||
Number of shares issued upon accrued and unpaid dividends, value | $ 17,759 | |||||||||||||
Outstanding indebtedness net of issuance costs | $ 69,528 | |||||||||||||
Preferred stock stated value (in dollars per share) | $ 1,000 | |||||||||||||
Preferred stock fixed conversion price (in dollars per share) | $ 1.50 | $ 1.50 | ||||||||||||
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 therefor. 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. | |||||||||||||
Number of units issued | 972 | |||||||||||||
Number of units issued, value | $ 972,000 | |||||||||||||
Employees [Member] | ||||||||||||||
Number of shares issued to employees | 2,250 | 63,499 | ||||||||||||
Value of shares issued to employees | $ 42,750 | $ 153,996 | ||||||||||||
Stock based compensation expense | $ 220,691 | |||||||||||||
MR Group I, LLC [Member] | Exchange Agreement [Member] | 14% Secured Convertible Promissory Note [Member] | ||||||||||||||
Debt conversion amount | $ 196,503 | |||||||||||||
Number of shares issued upon debt conversion | 343,873 | |||||||||||||
Officers [Member] | ||||||||||||||
Number of units issued for services | 423 | 423 | ||||||||||||
Number of units issued for services, value | $ 423,000 | |||||||||||||
Two Third-Party Consultants [Member] | ||||||||||||||
Number of shares issued for services | 6,750 | 11,250 | 1,875 | |||||||||||
Value of issuance of common stock for services rendered | $ 128,250 | $ 479,250 | $ 65,625 | |||||||||||
Consultant [Member] | Management Consulting Agreements [Member] | ||||||||||||||
Number of shares issued for services | 5,000 | |||||||||||||
Value of issuance of common stock for services rendered | $ 45,000 | |||||||||||||
Third-Party Consultants [Member] | Management Consulting Agreements [Member] | ||||||||||||||
Number of shares issued for services | 4,500 | 2,500 | ||||||||||||
Value of issuance of common stock for services rendered | $ 17,100 | $ 10,500 | ||||||||||||
Eight Third-Party Consultants [Member] | ||||||||||||||
Number of shares issued for services | 115,184 | |||||||||||||
Value of issuance of common stock for services rendered | $ 284,277 | |||||||||||||
Six Third-Party Consultant [Member] | ||||||||||||||
Number of shares issued for services | 81,434 | |||||||||||||
Value of issuance of common stock for services rendered | $ 218,970 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - $ / shares | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||||
Outstanding at beginning | 110,000 | 50,000 | [1] | |
Options granted | 427,500 | [2] | 82,500 | [3] |
Options exercised | ||||
Options canceled | (16,250) | [2] | (22,500) | [3] |
Outstanding at ending | 521,250 | 110,000 | ||
Exercisable at ending | 144,973 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||||
Outstanding at beginning | $ 12.80 | $ 8 | ||
Options granted | 1.83 | 23.20 | ||
Options exercised | ||||
Options canceled | 36.23 | 40 | ||
Outstanding at ending | 3.08 | $ 12.80 | ||
Exercisable at ending | $ 4.77 | |||
[1] | Non-Plan options. | |||
[2] | 427,500 options granted under 2016 Equity Incentive Plan; 16,250 options were canceled under the 2015 Stock Incentive Plan. | |||
[3] | 60,000 options granted under 2015 Stock Incentive Plan; 22,500 non-plan options, which were subsequently canceled under an agreement with the holder. |
Stock-Based Compensation (Det56
Stock-Based Compensation (Details 1) | 12 Months Ended |
Dec. 31, 2016 | |
Share-based Compensation [Abstract] | |
Risk-free interest rate | 1.17% |
Expected term (in years) | 3 years 4 months 17 days |
Dividend yield | |
Expected volatility | 75.00% |
Stock-Based Compensation (Det57
Stock-Based Compensation (Details Narrative) - USD ($) | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | |||
Weighted-average grant-date fair value of stock options granted | $ 0.97 | |||
Stock-based compensation expense | $ 374,687 | $ 140,370 | ||
Compensation cost related to stock options not yet recognized | $ 234,391 | |||
Period of compensation cost related to stock options not yet recognized | 2 years 28 days | |||
Number of common stock purchase under plan | 50,000 | |||
Description of exercise price | 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. | |||
Aggregate intrinsic value of options outstanding | $ 60,900 | |||
Number of unvested options | 376,277 | |||
Number of vested options | 52,083 | |||
Aggregate grant date fair value unvested options | $ 489,230 | |||
Aggregate intrinsic value of unvested options | 60,900 | |||
Aggregate grant date fair value of options granted | $ 414,383 | |||
Vesting period of option | 5 years | |||
Number of options granted | 427,500 | [1] | 82,500 | [2] |
Stock options issued plan outstanding | 82,500 | |||
Number of options canceled | 16,250 | [1] | 22,500 | [2] |
Employees [Member] | ||||
Stock-based compensation expense | $ 220,691 | |||
2016 Stock Incentive Plan [Member] | ||||
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 Company's common stock on the date of grant. | |||
Number of shares available for grant | 500,000 | |||
Vesting period of option | 3 years | |||
Number of options granted | 427,500 | |||
2016 Stock Incentive Plan [Member] | Restricted Stock Units [Member] | ||||
Number of options granted | 53,449 | |||
2015 Stock Incentive Plan [Member] | ||||
Vesting rights | At December 31, 2016, there were 43,750 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. | |||
Number of shares available for grant | 150,000 | |||
Number of options granted | 43,750 | |||
Non Plan Options [Member] | ||||
Number of options granted | 22,500 | |||
Non Plan Options [Member] | Maximum [Member] | ||||
Vesting period of option | 36 months | |||
Non Plan Options [Member] | Minimum [Member] | ||||
Vesting period of option | 6 months | |||
[1] | 427,500 options granted under 2016 Equity Incentive Plan; 16,250 options were canceled under the 2015 Stock Incentive Plan. | |||
[2] | 60,000 options granted under 2015 Stock Incentive Plan; 22,500 non-plan options, which were subsequently canceled under an agreement with the holder. |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | Nov. 04, 2016 | Sep. 19, 2016 | Apr. 04, 2016 | Dec. 31, 2016 | Jun. 30, 2016 | Jun. 22, 2016 | Jun. 17, 2016 | Dec. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Nov. 30, 2016 | Jul. 31, 2016 |
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 667 shares of the Company’s common stock at an exercise price of $2.00 per share. | |||||||||||
Number of shares issued | 2,000,000 | 800,000 | ||||||||||
8% Series A Convertible Preferred Stock [Member] | ||||||||||||
Number of shares issued | 1 | |||||||||||
Aggregate conversion shares | 423 | (672) | ||||||||||
Warrant [Member] | ||||||||||||
Number of shares issued | 800,000 | |||||||||||
Number of warrants purchased | 667 | |||||||||||
Warrant term | 3 years | |||||||||||
Warrant exercise price (in dollars per share) | $ 2 | $ 2.16 | $ 2.16 | $ 2.16 | ||||||||
Common Stock [Member] | ||||||||||||
Number of units issued for services | 27,792 | |||||||||||
Aggregate conversion shares | 282,000 | 531,000 | ||||||||||
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 | $ 50,000 | $ 120,000 | ||||||||||
Grover T. Wickersham [Member] | Profit Sharing Plan [Member] | Jill Z. Wickersham 2000 Charitable Remainder Trust [Member] | 8% Promissory Note [Member] | ||||||||||||
Principal amount | $ 50,000 | $ 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 | 250,000 | |||||||||||
Purchase price (in dollars per share) | $ 1 | $ 1 | $ 1 | |||||||||
Total purchase price | $ 25,000 | |||||||||||
Grover T. Wickersham [Member] | Warrant [Member] | Profit Sharing Plan [Member] | 8% Promissory Note [Member] | ||||||||||||
Number of warrants purchased | 25,000 | 60,000 | ||||||||||
Warrant exercise price (in dollars per share) | $ 2 | $ 2 | ||||||||||
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 | 25,000 | 37,500 | ||||||||||
Warrant exercise price (in dollars per share) | $ 1.30 | $ 2 | $ 1.30 | 1.30 | $ 2 | |||||||
Grover T. Wickersham [Member] | Warrant [Member] | Subscription Agreements [Member] | Private Placement [Member] | ||||||||||||
Number of warrants cancelled | 33,653 | |||||||||||
Grover T. Wickersham [Member] | Warrant [Member] | Subscription Agreements [Member] | Private Placement [Member] | Education Trust [Member] | ||||||||||||
Warrant exercise price (in dollars per share) | $ 1.30 | 1.30 | 1.30 | |||||||||
Number of warrants cancelled | 25,000 | |||||||||||
Grover T. Wickersham [Member] | Warrant [Member] | Subscription Agreements [Member] | Profit Sharing Plan [Member] | Private Placement [Member] | ||||||||||||
Warrant exercise price (in dollars per share) | $ 1.30 | $ 1.30 | 1.30 | |||||||||
Number of warrants exercised | 130,769 | |||||||||||
Grover T. Wickersham [Member] | Common Stock [Member] | Subscription Agreements [Member] | Private Placement [Member] | ||||||||||||
Number of units purchased | 100,000 | |||||||||||
Purchase price (in dollars per share) | $ 1 | $ 1 | 1 | |||||||||
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 | 50,000 | |||||||||||
Purchase price (in dollars per share) | 1 | $ 1 | 1 | |||||||||
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 | 200,000 | |||||||||||
Purchase price (in dollars per share) | $ 1 | $ 1 | $ 1 | |||||||||
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 $2.00 per share | |||||||||||
Number of units purchased | 25,000 | |||||||||||
Purchase price (in dollars per share) | $ 1 | |||||||||||
Mr. Michael M. Fleming [Member] | Warrant [Member] | Subscription Agreements [Member] | Private Placement [Member] | ||||||||||||
Warrant exercise price (in dollars per share) | $ 2 | |||||||||||
Mr. Lawrence Hirson [Member] | 8% Promissory Note [Member] | ||||||||||||
Principal amount | $ 150,000 | |||||||||||
Mr. Lawrence Hirson [Member] | Warrant [Member] | 8% Promissory Note [Member] | ||||||||||||
Number of warrants purchased | 75,000 | |||||||||||
Warrant exercise price (in dollars per share) | $ 2 | |||||||||||
Warrant Term | 3 years |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | Mar. 31, 2017USD ($)shares | Mar. 08, 2017USD ($)$ / sharesshares | Feb. 01, 2017USD ($) | Feb. 17, 2017USD ($)ft² | Feb. 16, 2017USD ($)shares | Jun. 22, 2016USD ($)shares | Dec. 31, 2016USD ($)$ / sharesshares |
Number of shares issued | shares | 2,000,000 | 800,000 | |||||
Number of shares issued, value | $ 2,000,000 | $ 1,040,000 | |||||
Vesting period | 5 years | ||||||
Warrant [Member] | |||||||
Number of shares issued | shares | 800,000 | ||||||
Closing share price of common stock | $ / shares | $ 1.68 | ||||||
Subsequent Event [Member] | |||||||
Sale of stock | $ 6,900,000 | ||||||
Number of shares issued | shares | 576,923 | ||||||
Number of shares issued, value | $ 750,000 | ||||||
Subsequent Event [Member] | MotherLode Craft Distillery [Member] | |||||||
Common stock shares issued as consideration for acquisition | shares | 260,000 | ||||||
Closing share price of common stock | $ / shares | $ 1.45 | ||||||
Common stock value issued as consideration for acquisition | $ 377,000 | ||||||
Vesting period | 5 years | ||||||
Subsequent Event [Member] | Commercial Sublease Agreement [Member] | |||||||
Area of land | ft² | 5,000 | ||||||
Sublease amount per month | $ 5,000 | ||||||
Subsequent Event [Member] | Warrant [Member] | |||||||
Number of shares issued | shares | 576,923 | 167,500 | |||||
Number of shares issued, value | $ 217,750 |
Selected Quarterly Consolidat60
Selected Quarterly Consolidated Financial Data (unaudited) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||||
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 | $ 532,674 | $ 607,847 | $ 504,311 | $ 463,474 | $ 721,053 | $ 352,081 | $ 304,414 | $ 325,070 | $ 2,108,306 | $ 1,702,618 |
Gross profit | 147,569 | 236,993 | 236,095 | 207,305 | 393,700 | 184,557 | 146,763 | 107,208 | 827,962 | 832,228 |
Net loss | $ (1,438,991) | $ (1,436,449) | $ (1,309,500) | $ (1,014,679) | $ (669,376) | $ (1,412,612) | $ (688,060) | $ (831,018) | $ (5,199,619) | $ (3,601,066) |
Basic and diluted net loss per common share (in dollars per share) | $ (0.19) | $ (0.31) | $ (0.46) | $ (0.44) | $ (0.28) | $ (0.62) | $ (0.30) | $ (0.37) | $ (1.40) | $ (1.57) |