Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Apr. 14, 2017 | Jun. 30, 2016 | |
Document And Entity Information | |||
Entity Registrant Name | Cabinet Grow, Inc. | ||
Entity Central Index Key | 1,610,462 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 84,664 | ||
Entity Common Stock, Shares Outstanding | 1,190,060 | ||
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 and cash equivalents | $ 1,582 | |
Prepaid assets and other | 4,000 | |
Assets of discontinued operations | 44,915 | |
Total current assets | 5,583 | 44,915 |
Land and property, furniture and fixtures and equipment, net of accumulated depreciation of $5,407 (2016) and $4,373 (2015) | 181,649 | 182,683 |
Total assets | 187,232 | 227,598 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 144,425 | 131,547 |
Accounts payable and accrued expenses, stockholders | 20,960 | 25,475 |
Note payable, related party | 180,000 | 180,000 |
Convertible notes payable, related party, net of discount of $531,187 (2015) | 1,229,360 | 774,820 |
Derivative liability | 1,225,803 | 1,648,255 |
Liabilities of discontinued operations | 117,352 | 166,260 |
Total current liabilities | 2,917,900 | 2,926,357 |
Total liabilities | 2,917,900 | 2,926,357 |
Stockholders' Deficit: | ||
Common stock, $0.001 par value; 300,000,000 shares authorized; 1,200,043 (2016) and 148,221 (2015) shares issued and outstanding | 1,200 | 148 |
Preferred stock, $0.001 par value; 10,000,000 shares authorized; Series A preferred stock, $0.001 par value; 100 shares issued and authorized | ||
Additional paid-in capital | 5,141,459 | 2,486,880 |
Accumulated deficit | (7,873,328) | (5,185,787) |
Total stockholders' deficit | (2,730,669) | (2,698,759) |
Total liabilities and stockholders' deficit | $ 187,232 | $ 227,598 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Accumulated depreciation of property, furniture and fixtures and equipment | $ (5,407) | $ (4,373) |
Discount on convertible notes payable, related party | $ 531,187 | |
Common Stock, par value | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 300,000,000 | 300,000,000 |
Common Stock, shares issued | 1,200,043 | 148,221 |
Common Stock, shares outstanding | 1,200,043 | 148,221 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Series A Preferred Stock | ||
Preferred stock, par value | $ 0.001 | |
Preferred stock, shares authorized | 100 | |
Preferred stock, shares issued | 100 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Statement [Abstract] | ||
Revenues, related party | $ 12,000 | |
Operating Expenses: | ||
Professional fees | 82,153 | 416,785 |
General and administrative | 18,418 | 82,175 |
Depreciation and amortization | 1,034 | |
Gain on debt payments | (59,646) | |
Total operating expenses | 41,959 | 498,960 |
Loss from operations | (29,959) | (498,960) |
Other income (expenses): | ||
Derivative liability | (918,956) | (648,540) |
Interest expense | (1,706,607) | (1,125,521) |
Total other expense, net | (2,625,563) | (1,774,062) |
Net loss from continuing operations | (2,655,521) | (2,273,021) |
Discontinued operations: | ||
Loss from discontinued operations, net of income taxes | (32,020) | (1,195,262) |
Net loss | $ (2,687,541) | $ (3,468,283) |
Basic and diluted loss per share Continuing operations | $ (4.42) | $ (16.13) |
Basic and diluted loss per share Discontinued operations | (.05) | (8.48) |
Basic and diluted loss per share | $ (4.47) | $ (24.61) |
Weighted average number of common shares outstanding Basic and diluted | 600,630 | 140,928 |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT - USD ($) | Common Stock | Common stock to be issued | Preferred stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, shares at Dec. 31, 2014 | 132,400 | 1,409 | 100 | |||
Beginning balance, amount at Dec. 31, 2014 | $ 132 | $ 1 | $ 865,209 | $ (1,717,505) | $ (852,163) | |
Sale of common stock, shares | 2,008 | |||||
Sale of common stock, amount | $ 2 | 200,798 | 200,800 | |||
Common stock issued for settlement of convertible note and accrued interest, shares | 5,644 | (1,409) | ||||
Common stock issued for settlement of convertible note and accrued interest, amount | $ 6 | $ (1) | 471,506 | 471,511 | ||
Beneficial conversion feature on convertible debt | 163,000 | 163,000 | ||||
Common stock issued for services, shares | 2,620 | |||||
Common stock issued for services, amount | $ 3 | 231,472 | 231,475 | |||
Common stock issued as part of employee wages, shares | 255 | |||||
Common stock issued as part of employee wages, amount | 25,500 | 25,500 | ||||
Common stock granted to employees, shares | 5,294 | |||||
Common stock granted to employees, amount | $ 5 | 529,395 | 529,400 | |||
Net loss | (3,468,283) | (3,468,283) | ||||
Ending balance, shares at Dec. 31, 2015 | 148,221 | 100 | ||||
Ending balance, amount at Dec. 31, 2015 | $ 148 | 2,486,880 | (5,185,787) | (2,698,759) | ||
Sale of common stock, amount | ||||||
Common stock issued for settlement of convertible note and accrued interest, shares | 1,051,779 | |||||
Common stock issued for settlement of convertible note and accrued interest, amount | $ 1,052 | 2,654,579 | 2,655,632 | |||
Rounding up of shares from reverse split, shares | 43 | |||||
Rounding up of shares from reverse split, amount | ||||||
Net loss | (2,687,541) | (2,687,541) | ||||
Ending balance, shares at Dec. 31, 2016 | 1,200,000 | 100 | ||||
Ending balance, amount at Dec. 31, 2016 | $ 1,200 | $ 5,141,459 | $ (7,873,328) | $ (2,730,669) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (2,687,541) | $ (3,468,283) |
Net loss from discontinued operation | 32,020 | 1,195,262 |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Gain on convertible debt reduction | (43,462) | |
Depreciation | 1,034 | |
Amortization of discounts on convertible notes | 987,245 | 463,637 |
Change in fair value of derivative liabilities | 918,956 | (60,603) |
Initial derivative liability on convertible notes | 509,969 | 2,021,387 |
Amortization of deferred financing fees | 3,288 | 2,002 |
Change in operating assets and liabilities: | ||
Increase in prepaid assets and other | 4,000 | |
Increase in accounts payable and accrued expenses | 529,867 | |
Increase in accounts payable and accrued expenses, stockholder | (4,515) | |
Net cash provided by operating activities - continuing operations | 250,859 | 153,401 |
Net cash used in operating activities - discontinued operations | (212,527) | (763,990) |
Net cash provided by (used in) operating activities | 38,332 | (610,589) |
Cash flows from investing activities: | ||
Net cash used in investing activities - discontinued operations | (4,023) | |
Net cash used in investing activities | (4,023) | |
Cash flows from financing activities: | ||
Proceeds from issuance of convertible debt from related party | 233,000 | |
Proceeds from issuance of convertible debt | 130,750 | |
Amount from advances and credit card charges from stockholder | 6,314 | |
Proceeds from sale of common stock | 200,800 | |
Net cash provided by financing activities - continuing operations | 570,864 | |
Net cash used in financing activities - discontinued operations | (36,750) | (17,724) |
Net cash provided by (used in) financing activities | (36,750) | 553,140 |
Net decrease in cash and cash equivalents | 1,582 | (61,472) |
Cash and cash equivalents, beginning | 61,472 | |
Cash and cash equivalents, ending | 1,582 | |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 13,189 | 3,071 |
Cash paid for income taxes | ||
Schedule of non-cash financing activities | ||
Original issue discount on convertible promissory notes | 18,676 | 42,050 |
Accounts payable paid directly by a related party lender | 186,758 | |
Debt discount for derivatives | 452,865 | |
Reclassification of derivative liability for note and interest converted | $ 1,735,324 |
ORGANIZATION
ORGANIZATION | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | NOTE 1 - ORGANIZATION BUSINESS Cabinet Grow, Inc. (the Company or CG-NV) began operations in California in 2008, doing business as Universal Hydro (Hydro). Prior to April 2014, the Company was a sole proprietorship owned by its former chief operating officer and stockholder. On April 28, 2014, the Company registered with the Secretary of State of California as Cabinet Grow, Inc. (CG-CA), and all of the business, assets and liabilities of Hydro were assigned to CG-CA. On May 14, 2014, the Company filed Articles of Incorporation with the Nevada Secretary of State. On May 15, 2014, CG-CA merged with CG-NV, with CG-NV being the surviving entity. All references herein to CG or the Company refer to CG-NV, CG-CA and Hydro. On November 24, 2015, the Company announced as a result of a working capital deficiency the Company has significantly reduced its cabinet making operations, including the layoff of all non-executive employees and has stopped taking new orders from customers. On December 31, 2015, the Company agreed to purchase a 100% membership interest (the Membership Interest Quasar Seller Purchase Purchase Agreement The Company paid for the Purchase by delivering to Seller at the closing a Secured Promissory Note (the Note Pledge Agreement Trust Deed Purchase Documents Also on December 31, 2015, the Company entered into a one year lease agreement with a related party tenant for the Quasar Property. Pursuant to the agreement, the tenant will pay $1,000 per month and the tenant is responsible for all operating costs of the Quasar Property including real estate taxes. In conjunction with the Purchase, other than the sale of 3 cabinets in January 2016, the Company ceased its prior business as a manufacturer and distributor of cabinet-based horticultural systems (presented as discontinued operations for the three and six months ended June 30, 2016 and 2015) and began operations in the land leasing business. On March 18, 2016, the Board of Directors (the Board) of the Company, acting pursuant to a Majority Consent of Stockholders, approved an amendment to the Articles of Incorporation (the Amended and Restated Articles) to among other matters, clarify that of the 310,000,000 shares of authorized capital stock of the Company, 300,000,000 shares are designated as common stock and 10,000,000 shares are designated as preferred stock, and to clarify that of the 10,000,000 shares of preferred stock, 100 have been designated as Class A Preferred Stock. Additionally, the Board has the authority to create and designate the rights and preferences of, additional series of preferred stock, without further stockholder approval. The Board also approved a resolution giving the Board the authority to effect between a 1:10 and a 1:250 consolidation of the outstanding common stock at any time before December 31, 2016, and to leave the authorized shares of common stock unchanged at 300,000,000. On May 2, 2016, the Company filed the Amended and Restated Articles with the Nevada Secretary of State. On December 30, 2016, the Board authorized a consolidation, whereby every 250 shares of the Companys common stock would be consolidated into 1 share. The consolidation became effective on March 9, 2017. All share amounts for all periods presented have been retroactively adjusted to reflect the Forward Split. On April 29, 2016, CVP and Tonaquint sold and transferred all of their ownership and rights under the CVP SPA and Note and the Tonaquint SPA and related Purchase documents to The Dove Foundation (Dove). On May 17, 2016, the Company received notification that Dove has waived the 9.99% ownership limitation contained in the CVP Note, thereby creating a potential change in control of the Company. On July 27, 2016, the Company received a Notice of Breach of Secured Convertible Promissory Note from Dove regarding the December 2015 and January 2016 installment payments. Pursuant to the terms and conditions of the default, the lender elected to multiply the outstanding balance by 125%, or $270,056 for the December default (included in the December 31, 2015, balances) and $344,654 for the January default. The Lender also increased the interest rate to 22% per annum pursuant to the default. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying financial statements are prepared in accordance with Generally Accepted Accounting Principles in the United States of America. EMERGING GROWTH COMPANY We qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (the JOBS Act). Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the Securities Act), for complying with new or revised accounting standards. As an emerging growth company, we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. USE OF ESTIMATES The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimates. DISCONTINUED OPERATIONS On December 31, 2015, the Companys Board of Directors approved the purchase of certain real property as described in Note 1. As a result of the purchase, the Companys prior business operations have been (re)classified as discontinued operations on a retrospective basis for all periods presented herein. CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with an original term of three months or less to be cash equivalents. ACCOUNTS RECEIVABLE Substantially all individuals pay in advance of their product being shipped. During the year ended December 31, 2015, the Company occasionally shipped product with payment terms of 30 to 60 days to retailers. For these shipments, the Company records accounts receivable from amounts due from its customers upon the shipment of products. The allowance for losses is established through a provision for losses charged to expenses. Receivables are charged against the allowance for losses when management believes collectability is unlikely. The allowance (if any) is an amount that management believes will be adequate to absorb estimated losses on existing receivables, based on evaluation of the collectability of the accounts and prior loss experience. For the years ended December 31, 2016 and 2015, managements evaluation did not require any allowance for uncollectible receivables. INVENTORY Inventory is valued at the lower of cost or market value. Cost is determined using the first in first out (FIFO) method. Provision for potentially obsolete or slow moving inventory is made based on management analysis or inventory levels and future sales forecasts. Based on managements analysis as of December 31, 2015, the Company recorded a write down of inventory of $31,598. LAND, PROPERTY AND EQUIPMENT Property and equipment are stated at cost, and depreciation is provided by use of straight-line methods over the estimated useful lives of the assets. The estimated useful lives of property and equipment are as follows: Manufacturing equipment 10 years Office equipment and furniture 7 years Computer hardware and software 3 years The Company's property and equipment consisted of the following at December 31, 2016 and 2015: 2016 2015 Furniture and Equipment $ 3,318 $ 3,318 Manufacturing equipment 826 826 Software 2,912 2,912 Land 180,000 180,000 Accumulated depreciation (5,407 ) (4,373 ) Balance $ 181,649 $ 182,683 Depreciation expense for the year ended December 31, 2016, was $1,034 and was $28,958 (included in loss of discontinued operations) for the year ended December 31, 2015. REVENUE RECOGNITION The Company recognizes revenue in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 605, Revenue Recognition. ASC 605 requires that the following four basic criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery of products and services has occurred, (3) the fee is fixed or determinable and (4) collectability is reasonably assured. The Company recognizes revenue from leased property during the month the tenant is responsible for payment. Revenues from the sale of cabinets are included in net loss from discontinued operations for all periods presented herein. FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value measurements are determined under a three-level hierarchy for fair value measurements that prioritizes the inputs to valuation techniques used to measure fair value, distinguishing between market participant assumptions developed based on market data obtained from sources independent of the reporting entity (observable inputs) and the reporting entitys own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). Fair value is the price that would be received to sell an asset or would be paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date. In determining fair value, the Company primarily uses prices and other relevant information generated by market transactions involving identical or comparable assets (market approach). The Company also considers the impact of a significant decrease in volume and level of activity for an asset or liability when compared with normal activity to identify transactions that are not orderly. The highest priority is given to unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Financial instruments are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The three hierarchy levels are defined as follows: Level 1 Quoted prices in active markets that is unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly; Level 3 Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Credit risk adjustments are applied to reflect the Companys own credit risk when valuing all liabilities measured at fair value. The methodology is consistent with that applied in developing counterparty credit risk adjustments, but incorporates the Companys own credit risk as observed in the credit default swap market. The Company's financial instruments consist primarily of cash, accounts receivable, accounts payable and accrued expenses, note payable and convertible debt. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments. The Companys derivative liability (conversion option and warrant derivative) is valued using the level 3 inputs. The estimated fair value is not necessarily indicative of the amounts the Company would realize in a current market exchange or from future earnings or cash flows. The following table represents the Companys financial instruments that are measured at fair value on a recurring basis as of December 31, 2016 and December 31, 2015 for each fair value hierarchy level: December 31, 2016 Derivative Total Level I $ $ Level II $ $ Level III $ 1,225,083 $ 1,225,083 December 31, 2015 Level I $ $ Level II $ $ Level III $ 1,648,255 $ 1,648,255 INCOME TAXES Prior to May 2014, the Company was organized as a sole proprietorship and was not subject to income taxes. Rather, the Companys sole stockholder was subject to income taxes on the Companys taxable activity. In May 2014, the Company became subject to income taxes and will be subject to Federal and State income taxes as a corporation. The Company accounts for income taxes in accordance with ASC 740-10, Income Taxes. Deferred tax assets and liabilities are recognized to reflect the estimated future tax effects, calculated at the tax rate expected to be in effect at the time of realization. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment. ASC 740-10 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. Interest and penalties are classified as a component of interest and other expenses. To date, the Company has not been assessed, nor paid, any interest or penalties. Uncertain tax positions are measured and recorded by establishing a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold at the effective date may be recognized or continue to be recognized. EARNINGS (LOSS) PER SHARE The Company reports earnings (loss) per share in accordance with ASC 260, "Earnings per Share." Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. For the periods ending ended December 31, 2016 and 2015, 445,603 and 1,049,418 shares of common stock, respectively, underlying convertible debt and warrants have been excluded from the computation diluted earnings per share because they are antidilutive. RECENT ACCOUNTING PRONOUNCEMENTS Recent accounting pronouncements issued by the FASB and the SEC did not have, or are not believed by management to have, a material impact on the Company's present or future consolidated financial statements. |
CONVERTIBLE NOTES PAYABLE
CONVERTIBLE NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES PAYABLE | NOTE 3 CONVERTIBLE NOTES PAYABLE THE DOVE FOUNDATION, RELATED PARTY On June 3, 2014, the Board authorized the Company to enter into a Securities Purchase Agreement (SPA) with Chicago Venture Partners, L.P. (CVP). Pursuant to the SPA, the Company agreed to issue to CVP a Secured Convertible Promissory Note in the principal amount of $1,657,500 (the Note). On April 29, 2016, CVP and Tonaquint sold and transferred all of their ownership and rights under the CVP SPA and Note and the Tonaquint SPA and related Purchase documents to The Dove Foundation (Dove). On June 6, 2014, the Company executed the SPA with CVP, for the sale of the Company Note in the principal amount of up to $1,657,500 (which included CVPs legal expenses in the amount of $7,500 and a $150,000 OID) for $1,500,000, consisting of $500,000 paid in cash on June 11, 2014 (the Closing Date), two $250,000 secured promissory notes and two $250,000 promissory notes (the Investor Notes), aggregating $1,000,000, bearing interest at the rate of 10% per annum. The Investor Notes are due 30 months from the Closing Date and may be prepaid, without penalty. A summary of the convertible note payable balance as of December 31, 2016 and 2015, is as follows: 2016 2015 Beginning balance $ 1,306,007 $ 733,500 Convertible notes-newly issued 205,434 463,450 Debt default penalty 344,654 270,057 Payments of convertible notes (36,750 ) Conversions of convertible notes (589,985 ) (161,000 ) Unamortized discount (531,187 ) Total $ 1,229,360 $ 774,820 The newly issued funded amounts for the year ended December 31, 2016, were made directly to various vendors from CVP and includes $18,676 of OID. The Company has also not recorded the remaining balance of the Investor Notes issued by CVP to the Company. As security for the Note, the Companys CEO and former COO each pledged to CVP their 50 shares of Class A Preferred Stock (see Note 8). On August 5, 2016, Dove acquired all of the Class A Preferred Stock. Pursuant to the terms of the Note, the Company was required to deliver the Installment Amount (as defined in the Note) on or before each Installment Date (as defined in the Note) until the Note was repaid. The Company failed to deliver the Installment Amount in June 2015, July 2015 and August 2015 (each, a Breach and collectively, the Breaches). Each such Breach would constitute a separate event of default pursuant to the terms of the Note if so declared by the Lender. On September 10, 2015, the Company entered into a forbearance and standstill agreement (the Forbearance and Standstill Agreement) with CVP and Matt Lee and Sam May, pursuant to which CVP agreed to refrain and forbear temporarily from exercising and enforcing remedies under the Note. On May 17, 2016, the Company received notification that Dove has waived the 9.99% ownership limitation contained in the CVP Note, thereby creating a potential change in control of the Company. On July 27, 2016, the Company received a Notice of Breach of Secured Convertible Promissory Note from Dove regarding the December 2015 and January 2016 installment payments. Pursuant to the terms and conditions of the default, the lender elected to multiply the outstanding balance by 125%, or $270,056 for the December default (included in the December 31, 2015, balances) and $344,654 for the January default. The Lender also increased the interest rate to 22% per annum pursuant to the default. Also on July 27, 2016, Dove sent the Company a conversion notice to issue 1,051,778 shares of common stock in exchange for the cancellation of $920,306 of interest and principal due. Immediately after the conversion Dove owned approximately 87.6% of the common stock of the Company. The Note may be converted at the option of the holder, on the date that is six months from the Trading Date (defined in the Purchase Agreement as the date on which the Common Stock is first trading on an Eligible Market, but in any event the Company shall cause its Common Stock to be trading on an Eligible Market within nine months of the Closing Date of June 11, 2014) or at any time thereafter at a conversion price of $0.1976. The conversion price is equal to $6,500,000 divided by 33,000,000 (the amount of fully diluted shares of Common Stock of the Company on the date the Company filed its Registration Statement). In the event the Company elects to prepay all or any portion of the Company Note, the Company is required to pay to CVP an amount in cash equal to 125% multiplied by the sum of all principal, interest and any other amounts owing. On July 16, 2015, CVP converted $50,000 of accrued and unpaid interest under the Company Note into 1,015 shares of common stock. Initially, the Company determined that the conversion feature of the convertible note did not meet the criteria of an embedded derivative and therefore the conversion feature was not bi-furcated and accounted for as a derivative because the Company was a private company, there was no quoted price and no active market for the Companys common stock. Since the convertible note included an embedded conversion feature that did not qualify to be bi-furcated as a derivative, management evaluated this feature to determine whether it meets the definition of a beneficial conversion feature (BCF) within the scope of ASC 470-20, Debt with Conversion and Other Options, and determined that a BCF existed. During the year ended December 31, 2015, and prior to the Company becoming a public company, the Company received $163,000 in new funding and recorded a BCF expense in the amount of $163,000. The Company began trading as a public Company on July 13, 2015, and on that date the Company determined that the conversion feature of the Note represented an embedded derivative since the Note is convertible into a variable number of shares upon conversion. Accordingly, on July 13, 2015, the Note was not considered to be conventional debt under ASC 815 and the embedded conversion feature was bifurcated from the debt host and accounted for as a derivative liability. Accordingly, the fair value of the derivative instruments for the fundings of the Note that occurred prior to July 13, 2015, were recorded as a liability on July 13, 2015, on the consolidated balance sheet with the corresponding amount recorded as a discount to the Note. Such discount is being amortized from the date of issuance to the maturity date of the Note. The change in the fair value of the liability for derivative contracts are recorded in other income or expenses in the consolidated statements of operations at the end of each quarter, with the offset to the derivative liability on the balance sheet. WARRANT The Company also issued a five year warrant to CVP to purchase the number of shares equal to $420,000 divided by 70% of the average of the three lowest closing bid prices in the 20 trading days immediately after becoming public (the Market Price). Since the Company was not public and could not determine the Market Price, based on the current discounted cash flow valuation, the Company initially estimated that CVP can purchase 24,000 shares of common stock, with an exercise price of $50 per share. As of December 31, 2016 and 2015, based on the Market Price, the Company estimated the number of shares that CVP can purchase to be 6,545. Accounting Standard Codification ASC 815 Derivatives and Hedging The warrants were valued using the Black-Scholes option pricing model. In order to calculate the fair value of the warrants, certain assumptions were made regarding components of the model, including the closing price of the underlying common stock, risk-free interest rate, volatility, expected dividend yield, and expected life. Changes to the assumptions could cause significant adjustments to valuation. Since the Company was not public, an estimated a volatility factor utilizing an average of comparable published volatilities of peer companies was utilized. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of the grant for treasury securities of similar maturity. The warrants associated with the Note were initially valued and recorded a derivative liability of $577,100 using the Black-Scholes valuation methodology and the Company also recorded an initial derivative liability expense of $77,100 and a discount to the Note of $500,000. On December 31, 2016, the Company revalued the warrant at $12,435 using the Black- Scholes option pricing model and recorded a credit to derivative liability expense for the year ended December 31, 2016, and decreased the derivative liability by $1,356 on the balance sheet as of December 31, 2016. |
NOTE DISCOUNTS AND DERIVATIVE L
NOTE DISCOUNTS AND DERIVATIVE LIABLITIES | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
NOTE DISCOUNTS AND DERIVATIVE LIABLITIES | NOTE 4 NOTE DISCOUNTS AND DERIVATIVE LIABLITIES A summary of the note discount balances as of December 31, 2016 and 2015, is as follows: 2016 2015 Beginning balance $ 531,187 $ 376,022 Initial note discounts 456,058 896,145 Amortization (987,245 ) (579,980 ) Reduction for conversions (161,000 ) Total $ $ 531,187 The change in the fair value of the liability for derivative contracts are recorded in other income or expenses in the consolidated statements of operations at the end of each quarter, with the offset to the derivative liability on the balance sheet. A summary of the derivative liability balance as of December 31, 2016 and 2015, is as follows: 2016 2015 Beginning balance $ 1,648,255 $ 581,373 Initial derivative liability 509,969 2,021,387 Fair value change 846,370 (694,265 ) Reduction for debt payments/conversions (1,778,791 ) (206,240 ) Total $ 1,225,803 $ 1,648,255 The fair value on the commitment dates for the Note fundings from January 1, 2016 through December 31, 2016, and the re-measurement date for the Companys derivative liabilities were based upon the following management assumptions: Commitment Date Re-Measurement Date Expected dividends -0- -0- Expected volatility 92%-215% 196 % Expected term .12-.84 years .12 years Risk free interest .19%-.58% .51 % Since the Company did not have a sufficient trading history, an estimated a volatility factor utilizing an average of comparable published volatilities of peer companies was utilized. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 5 RELATED PARTY TRANSACTIONS For the years ended December 31, 2016 and 2015, the Company paid its officers and former officers the following amounts: 2016 2015 Chief Executive Officer (CEO) $ $ 59,576 Chief Operating Officer (COO) 51,234 Chief Financial Officer (CFO) 55,650 Total $ $ 166,460 As of December 31, 2016 the Company owed $14,424, $22,766 and $16,350 to the CEO, former COO and former CFO, respectively, for accrued and unpaid fees. Of this amount, $37,190 is included in liabilities of discontinued operations and $16,350 is included in accounts payable and accrued liabilities, stockholders, on the December 31, 2016, balance sheet. Currently, Mr. May is the sole officer. NOTE PAYABLE, STOCKHOLDER The Companys former COO loaned the Company various amounts for Company expenses. The Company recorded interest expense of $984 and $948 for the years ended December 31, 2016 and 2015, respectively. As of December 31, 2016 and 2015, the former COO was owed accrued interest of $4,610 NOTE PAYABLE, RELATED PARTY On December 31, 2015, the Company agreed to purchase a 100% membership interest (the Membership Interest Quasar Seller Purchase Purchase Agreement The Company paid for the Purchase by delivering to Seller at the closing a Secured Promissory Note (the Note Pledge Agreement Trust Deed Purchase Documents Also on December 31, 2015, Quasar entered into a one year lease of the property to Miller Fabrication, LLC (Miller). Miller is controlled by the same individual as Tonaquint and CVP, and therefore is a related party to the Company. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 6 COMMITMENTS AND CONTINGENCIES LEASE AGREEMENTS Effective August 1, 2014, the Company moved into a 4,427 square foot facility under a new lease agreement, in an industrial complex in Irvine California. The Company entered into a 26 month lease, pursuant to which, there is no base rent for the first two months, beginning October 1, 2014, the monthly lease is $4,870 plus CAM charges of $354 and rent increases to $5,091 on October 1, 2015 for the final twelve months. The Company was straight lining the 24 months costs over the 26 month term of the lease through December 31, 2015, and in January 2016, the Company realized as an expense the remainder of the lease and recorded a liability. Effective February 19, 2016, the Company entered into a sublease with an unaffiliated third party, whereby, pursuant to the sublease CVP was to receive $5,500 per month through September 30, 2016 from the sub-tenant. For the year ended December 31, 2016, the Company received $36,750 under the terms of the sublease. The Company reduced the CVP convertible note for the proceeds and reduced rent expense. Net rent expense was $36,034 and $39,637 for years ended December 31, 2016 and 2015, respectively, and is included in loss from discontinued operations. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 7 STOCKHOLDERS EQUITY COMMON STOCK On March 18, 2016, the Board of Directors of the Company, acting pursuant to a Majority Consent of Stockholders, approved an amendment to the Articles of Incorporation (the Amended and Restated Articles) to among other matters, clarify that of the 310,000,000 shares of authorized capital stock of the Company, 300,000,000 shares are designated as common stock and 10,000,000 shares are designated as preferred stock, and to clarify that of the 10,000,000 shares of preferred stock, 100 have been designated as Class A Preferred Stock. Additionally, the Board has the authority to create and designate the rights and preferences of, additional series of preferred stock, without further stockholder approval. On May 2, 2016, the Company filed the Amended and Restated Articles with the Nevada Secretary of State. The Board also approved a resolution giving the Board the authority to effect between a 1:10 and a 1:250 consolidation of the outstanding common stock at any time before December 31, 2016, and to leave the authorized shares of common stock unchanged at 300,000,000. On December 30, 2016, the Board authorized a consolidation, whereby every 250 shares of the Companys common stock would be consolidated into 1 share. The consolidation become effective on March 9, 2017. On July 27, 2016, the Company issued 1,051,778 shares of common stock in exchange for the cancellation of $920,306 of interest and principal due on a convertible note. CLASS A PREFERRED STOCK On June 3, 2014, the Companys Board of Directors adopted and approved the Class A Preferred Stock Certificate of Designation, establishing the terms, conditions and relative rights of the Class A Preferred Stock, including that the holders of the Class A Preferred Stock (the Class A Holders) shall have limited voting rights and powers compared to the voting rights and powers of holders of Common Stock and other series of Preferred Stock. The Class A Holders shall be entitled to notice of any shareholders meeting in accordance with the Bylaws of the Corporation, and shall be entitled to vote, but only with respect to the following matters (collectively, the Class A Voting Matters): (i) the appointment and/or removal of any member of the Companys board of directors, (ii) any matter related to or transaction (or series of transactions) pursuant to which the Company would sell or license all or substantially all of its assets or the stockholders of the Company would sell all or substantially all of their shares of the Companys stock or where the Company would merge with or into any other entity, (iii) causing the Company to register its Common Stock for trading pursuant to the Securities Exchange Act of 1934, as amended, including by filing a Registration Statement on Form S-1 with the Securities Exchange Commission and filing and obtaining FINRA approval of a Form 15c2-11, and (iv) with respect to any matter involving a transaction whereby the Company will become part of or merge into an existing public company. For so WARRANTS In June 2014, the Company issued a five year warrant to CVP to purchase the number of shares equal to $420,000 divided by 70% of the average of the three lowest closing bid prices in the 20 trading days immediately after becoming public (the Market Price). Since the Company was not public and could not determine the Market Price, based on the current discounted cash flow valuation, the Company initially estimated that CVP can purchase 24,000 shares of common stock, with an exercise price of $0.20 per share. As of December 31, 2016 and 2015, based on the Market Price, the Company estimated the number of shares that CVP can purchase to be 6,545. |
GOING CONCERN
GOING CONCERN | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GOING CONCERN | NOTE 9 GOING CONCERN The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As of December 31, 2016 and 2015, the Company had an accumulated deficit of $7,873,328 and $5,185,787 and as of December 31, 2016, a working capital deficit of $2,912,317. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Managements Plans As a result of a working capital deficiency the Company ceased its prior business as a manufacturer and distributor of cabinet-based horticultural systems operations. On December 31, 2015, the Company agreed to purchase a 100% membership interest (the Membership Interest Quasar Seller The Company now operates in the land leasing business. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 10 SUBSEQUENT EVENTS On March 9, 2017, the share consolidation, whereby every 250 shares of the Companys common stock has been consolidated into 1 share became effective upon approval from the required regulatory authorities (see Note 1). In accordance with ASC 855-10, the Company has analyzed its operations subsequent to December 31, 2016 to the date these financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these financial statements other than the events described above. |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 12 Months Ended |
Dec. 31, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUED OPERATIONS | NOTE 8 DISCONTINUED OPERATIONS In December 2015, the Companys board of directors approved the purchase of certain real property and completed the purchase on December 31, 2015. In January 2016, the Company ceased its prior business activity of marketing, manufacturing and selling horticulture cabinets. ASC 205-20 Discontinued Operations establishes that the disposal or abandonment of a component of an entity or a group of components of an entity should be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entitys operations and financial results. As a result, the Companys results of operations have been reclassified as discontinued operations on a retrospective basis for all periods presented. Accordingly, the assets and liabilities of this component are separately reported as assets and liabilities of discontinued operations as of December 31, 2016 and 2015. The results of operations of this component, for all periods, are separately reported as discontinued operations. A reconciliation of the major classes of line items constituting the loss from discontinued operations, net of income taxes as is presented in the Consolidated Statements of Operations for the years ended December 31, 2016, and 2015 are summarized below: Years ended December 31, 2016 2015 Sales $ 7,350 $ 702,602 Cost of goods sold 515,461 Gross margin 7,350 187,141 Operating expenses: Salaries and management fees 592,588 Depreciation and amortization 28,958 Selling, advertising and marketing 279,700 Rent 36,034 39,637 General and administrative 7,417 143,344 Professional fees 290,773 Other (4,081 ) 7,403 Total operating expenses 39,370 1,382,403 Loss from discontinued operations net of income taxes $ (32,020 ) $ (1,195,262 ) The following table presents the reconciliation of carrying amounts of major classes of assets and liabilities of the Company classified as discontinued operations in the consolidated balance sheets at December 31, 2016 and 2015: 2016 2015 Carrying amounts of major classes of assets included as part of discontinued operations Current assets: Cash and cash equivalents $ $ 2,587 Accounts receivable, net 1,500 Prepaid expenses and other current assets 41,128 Total current assets included in the assets of discontinued operations $ 44,915 Carrying amounts of major classes of liabilities included as part of discontinued operations Current liabilities: Accounts payable and accrued expenses $ 67,680 $ 103,088 Accounts payable and accrued expenses, stockholders 37,190 48,190 Customer deposits 2,500 Note payable, stockholder 12,482 12,482 Total current liabilities included in the liabilities of discontinued operations $ 117,352 $ 166,260 |
SUMMARY OF SIGNIFICANT ACCOUN17
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The accompanying financial statements are prepared in accordance with Generally Accepted Accounting Principles in the United States of America. |
EMERGING GROWTH COMPANY | EMERGING GROWTH COMPANY We qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (the JOBS Act). Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the Securities Act), for complying with new or revised accounting standards. As an emerging growth company, we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. |
USE OF ESTIMATES | USE OF ESTIMATES The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimates. |
DISCONTINUED OPERATIONS | DISCONTINUED OPERATIONS On December 31, 2015, the Companys Board of Directors approved the purchase of certain real property as described in Note 1. As a result of the purchase, the Companys prior business operations have been (re)classified as discontinued operations on a retrospective basis for all periods presented herein. |
CASH AND CASH EQUIVALENTS | CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with an original term of three months or less to be cash equivalents. |
ACCOUNTS RECEIVABLE | ACCOUNTS RECEIVABLE Substantially all individuals pay in advance of their product being shipped. During the year ended December 31, 2015, the Company occasionally shipped product with payment terms of 30 to 60 days to retailers. For these shipments, the Company records accounts receivable from amounts due from its customers upon the shipment of products. The allowance for losses is established through a provision for losses charged to expenses. Receivables are charged against the allowance for losses when management believes collectability is unlikely. The allowance (if any) is an amount that management believes will be adequate to absorb estimated losses on existing receivables, based on evaluation of the collectability of the accounts and prior loss experience. For the years ended December 31, 2016 and 2015, managements evaluation did not require any allowance for uncollectible receivables. |
INVENTORY | INVENTORY Inventory is valued at the lower of cost or market value. Cost is determined using the first in first out (FIFO) method. Provision for potentially obsolete or slow moving inventory is made based on management analysis or inventory levels and future sales forecasts. Based on managements analysis as of December 31, 2015, the Company recorded a write down of inventory of $31,598. |
LAND, PROPERTY AND EQUIPMENT | LAND, PROPERTY AND EQUIPMENT Property and equipment are stated at cost, and depreciation is provided by use of straight-line methods over the estimated useful lives of the assets. The estimated useful lives of property and equipment are as follows: Manufacturing equipment 10 years Office equipment and furniture 7 years Computer hardware and software 3 years The Company's property and equipment consisted of the following at December 31, 2016 and 2015: 2016 2015 Furniture and Equipment $ 3,318 $ 3,318 Manufacturing equipment 826 826 Software 2,912 2,912 Land 180,000 180,000 Accumulated depreciation (5,407 ) (4,373 ) Balance $ 181,649 $ 182,683 Depreciation expense for the year ended December 31, 2016, was $1,034 and was $28,958 (included in loss of discontinued operations) for the year ended December 31, 2015. |
REVENUE RECOGNITION | REVENUE RECOGNITION The Company recognizes revenue in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 605, Revenue Recognition. ASC 605 requires that the following four basic criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery of products and services has occurred, (3) the fee is fixed or determinable and (4) collectability is reasonably assured. The Company recognizes revenue from leased property during the month the tenant is responsible for payment. Revenues from the sale of cabinets are included in net loss from discontinued operations for all periods presented herein. |
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value measurements are determined under a three-level hierarchy for fair value measurements that prioritizes the inputs to valuation techniques used to measure fair value, distinguishing between market participant assumptions developed based on market data obtained from sources independent of the reporting entity (observable inputs) and the reporting entitys own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). Fair value is the price that would be received to sell an asset or would be paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date. In determining fair value, the Company primarily uses prices and other relevant information generated by market transactions involving identical or comparable assets (market approach). The Company also considers the impact of a significant decrease in volume and level of activity for an asset or liability when compared with normal activity to identify transactions that are not orderly. The highest priority is given to unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Financial instruments are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The three hierarchy levels are defined as follows: Level 1 Quoted prices in active markets that is unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly; Level 3 Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Credit risk adjustments are applied to reflect the Companys own credit risk when valuing all liabilities measured at fair value. The methodology is consistent with that applied in developing counterparty credit risk adjustments, but incorporates the Companys own credit risk as observed in the credit default swap market. The Company's financial instruments consist primarily of cash, accounts receivable, accounts payable and accrued expenses, note payable and convertible debt. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments. The Companys derivative liability (conversion option and warrant derivative) is valued using the level 3 inputs. The estimated fair value is not necessarily indicative of the amounts the Company would realize in a current market exchange or from future earnings or cash flows. The following table represents the Companys financial instruments that are measured at fair value on a recurring basis as of December 31, 2016 and December 31, 2015 for each fair value hierarchy level: December 31, 2016 Derivative Total Level I $ $ Level II $ $ Level III $ 1,225,083 $ 1,225,083 December 31, 2015 Level I $ $ Level II $ $ Level III $ 1,648,255 $ 1,648,255 |
INCOME TAXES | INCOME TAXES Prior to May 2014, the Company was organized as a sole proprietorship and was not subject to income taxes. Rather, the Companys sole stockholder was subject to income taxes on the Companys taxable activity. In May 2014, the Company became subject to income taxes and will be subject to Federal and State income taxes as a corporation. The Company accounts for income taxes in accordance with ASC 740-10, Income Taxes. Deferred tax assets and liabilities are recognized to reflect the estimated future tax effects, calculated at the tax rate expected to be in effect at the time of realization. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment. ASC 740-10 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. Interest and penalties are classified as a component of interest and other expenses. To date, the Company has not been assessed, nor paid, any interest or penalties. Uncertain tax positions are measured and recorded by establishing a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold at the effective date may be recognized or continue to be recognized. |
EARNINGS (LOSS) PER SHARE | EARNINGS (LOSS) PER SHARE The Company reports earnings (loss) per share in accordance with ASC 260, "Earnings per Share." Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. For the periods ending ended December 31, 2016 and 2015, 445,603 and 1,049,418 shares of common stock, respectively, underlying convertible debt and warrants have been excluded from the computation diluted earnings per share because they are antidilutive. |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS Recent accounting pronouncements issued by the FASB and the SEC did not have, or are not believed by management to have, a material impact on the Company's present or future consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Property and equipment and leasehold improvements | 2016 2015 Furniture and Equipment $ 3,318 $ 3,318 Manufacturing equipment 826 826 Software 2,912 2,912 Land 180,000 180,000 Accumulated depreciation (5,407 ) (4,373 ) Balance $ 181,649 $ 182,683 |
Financial instruments measured at fair value on a recurring basis | December 31, 2016 Derivative Total Level I $ $ Level II $ $ Level III $ 1,225,083 $ 1,225,083 December 31, 2015 Level I $ $ Level II $ $ Level III $ 1,648,255 $ 1,648,255 |
CONVERTIBLE NOTES PAYABLE (Tabl
CONVERTIBLE NOTES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Convertible Notes Payable Tables | |
Summary of convertible notes payable balance | 2016 2015 Beginning balance $ 1,306,007 $ 733,500 Convertible notes-newly issued 205,434 463,450 Debt default penalty 344,654 270,057 Payments of convertible notes (36,750 ) Conversions of convertible notes (589,985 ) (161,000 ) Unamortized discount (531,187 ) Total $ 1,229,360 $ 774,820 |
NOTE DISCOUNTS AND DERIVATIVE20
NOTE DISCOUNTS AND DERIVATIVE LIABLITIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
Summary of note discount balances | 2016 2015 Beginning balance $ 531,187 $ 376,022 Initial note discounts 456,058 896,145 Amortization (987,245 ) (579,980 ) Reduction for conversions (161,000 ) Total $ $ 531,187 |
Summary of derivative liability balance | 2016 2015 Beginning balance $ 1,648,255 $ 581,373 Initial derivative liability 509,969 2,021,387 Fair value change 846,370 (694,265 ) Reduction for debt payments/conversions (1,778,791 ) (206,240 ) Total $ 1,225,803 $ 1,648,255 |
Assumptions used in measurement derivative liabilities | Commitment Date Re-Measurement Date Expected dividends -0- -0- Expected volatility 92%-215% 196 % Expected term .12-.84 years .12 years Risk free interest .19%-.58% .51 % |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions Tables | |
Officers' compensation | 2016 2015 Chief Executive Officer (CEO) $ $ 59,576 Chief Operating Officer (COO) 51,234 Chief Financial Officer (CFO) 55,650 Total $ $ 166,460 |
DISCONTINUED OPERATIONS (Tables
DISCONTINUED OPERATIONS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Reconciliation of major classes of line items constituting loss from discontinued operations, net of income taxes | Years ended December 31, 2016 2015 Sales $ 7,350 $ 702,602 Cost of goods sold 515,461 Gross margin 7,350 187,141 Operating expenses: Salaries and management fees 592,588 Depreciation and amortization 28,958 Selling, advertising and marketing 279,700 Rent 36,034 39,637 General and administrative 7,417 143,344 Professional fees 290,773 Other (4,081 ) 7,403 Total operating expenses 39,370 1,382,403 Loss from discontinued operations net of income taxes $ (32,020 ) $ (1,195,262 ) |
Reconciliation of carrying amounts of major classes of assets and liabilities classified as discontinued operations | 2016 2015 Carrying amounts of major classes of assets included as part of discontinued operations Current assets: Cash and cash equivalents $ $ 2,587 Accounts receivable, net 1,500 Prepaid expenses and other current assets 41,128 Total current assets included in the assets of discontinued operations $ 44,915 Carrying amounts of major classes of liabilities included as part of discontinued operations Current liabilities: Accounts payable and accrued expenses $ 67,680 $ 103,088 Accounts payable and accrued expenses, stockholders 37,190 48,190 Customer deposits 2,500 Note payable, stockholder 12,482 12,482 Total current liabilities included in the liabilities of discontinued operations $ 117,352 $ 166,260 |
ORGANIZATION (Details Narrative
ORGANIZATION (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Jul. 27, 2017 | Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Membership interest agreed to be purchased in Quasar, LLC | 100.00% | ||
Purchase price of membership interest acquisition | $ 180,000 | ||
Consolidation of outstanding common stock | 1:250 | ||
December 2015 installment payment owed on Dove Secured Convertible Promissory Note, modified amount after default | $ 270,056 | ||
January 2016 installment payment owed on Dove Secured Convertible Promissory Note, modified amount after default | $ 344,654 |
SUMMARY OF SIGNIFICANT ACCOUN24
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and equipment (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Summary Of Significant Accounting Policies - Property And Equipment Details | ||
Furniture and Equipment | $ 3,318 | $ 3,318 |
Manufacturing equipment | 826 | 826 |
Software | 2,912 | 2,912 |
Land | 180,000 | 180,000 |
Accumulated depreciation | (5,407) | (4,373) |
Balance | $ 181,649 | $ 182,683 |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Financial instruments measured at fair value on a recurring basis (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Level 1 | ||
Derivative liability | ||
Total | ||
Level 2 | ||
Derivative liability | ||
Total | ||
Level 3 | ||
Derivative liability | 1,225,083 | 1,648,255 |
Total | $ 1,225,083 | $ 1,648,255 |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Write down of remaining inventory | $ 31,598 | |
Depreciation expense | $ 1,034 | $ 28,958 |
Antidilutive securities, underlying convertible debt and warrants excluded from computation of diluted earnings per share | 445,603 | 1,049,418 |
Manufacturing equipment | ||
Useful life of property and equipment | 10 years | |
Office equipment and furniture | ||
Useful life of property and equipment | 7 years | |
Computer hardware and software | ||
Useful life of property and equipment | 3 years |
CONVERTIBLE NOTES PAYABLE - Sum
CONVERTIBLE NOTES PAYABLE - Summary of convertible notes payable balance (Details) - Convertible note payable balance - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Beginning balance | $ 1,306,007 | $ 733,500 |
Convertible notes - newly issued | 205,434 | 463,450 |
Debt default penalty | 344,654 | 270,057 |
Payment of convertible notes | (36,750) | |
Conversion of convertible notes | (589,985) | (161,000) |
Unamortized discount | (531,187) | |
Total | $ 1,229,360 | $ 774,820 |
CONVERTIBLE NOTES PAYABLE - Dov
CONVERTIBLE NOTES PAYABLE - Dove Foundation, Related Party and Warrant (Details Narrative) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2016 | Dec. 31, 2015 | Jul. 27, 2016 | Jun. 11, 2014 | Jun. 06, 2014 | |
Investor Notes | |||||
New funding received | $ 163,000 | ||||
Beneficial conversion feature expense recorded | (163,000) | ||||
CVP Convertible Note | |||||
Investor Notes | |||||
Company Note principal amount | $ 1,657,500 | ||||
Legal expenses included in principal amount of Company Note | 7,500 | ||||
Original issue discount of Company Note | 150,000 | ||||
Sale price of Company Note | $ 1,500,000 | ||||
Cash paid for note on Closing Date | $ 500,000 | ||||
Aggregate value of two secured promissory notes and two promissory notes issued in sale of Company Note, $250,000 each | $ 1,000,000 | ||||
Interest rate of Company Note | 10.00% | ||||
Outstanding balance increased amount after December default | $ 270,056 | ||||
Outstanding balance increased amount after January default | $ 344,654 | ||||
Increased interest rate per annum pursuant to default | 22.00% | ||||
Cancellation of interest and principal due, shares issued in exchange | 1,051,778 | ||||
Cancellation of interest and principal due, amount | $ (920,306) | ||||
Cancellation of interest and principal due, Company common stock percentage owned by holder of note | 87.60% | ||||
CVP Convertible Note - Conversion Details | |||||
Investor Notes | |||||
OID included in newly issued funded amounts of notes | $ 18,676 | ||||
Conversion price of Company Note | $ 0.1976 | ||||
Conversion of accrued and unpaid interest by CVP, shares | 1,015 | ||||
Conversion of accrued and unpaid interest by CVP, amount | $ 50,000 | ||||
Warrants issued to CVP | |||||
Warrant | |||||
Warrant issued to CVP, number of shares purchaseable value | $ 420,000 | ||||
Warrant issued to CVP, estimated number of shares purchaseable | 24,000 | ||||
Warrant issued to CVP, current estimated number of shares purchaseable | 6,545 | 6,545 | |||
Warrant issued to CVP, exercise price | $ 50 | $ 50 | |||
Initial derivative liability of warrants | $ 577,100 | ||||
Initial derivative liability expense of warrants | 77,100 | ||||
Discount to the Note for warrants | $ 500,000 | ||||
Revaluation of warrant | $ 12,435 | ||||
Decrease in derivative liability | $ (1,356) |
NOTE DISCOUNTS AND DERIVATIVE29
NOTE DISCOUNTS AND DERIVATIVE LIABLITIES - Summary of note discount balances (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Note Discounts And Derivative Liablities - Summary Of Note Discount Balances Details | ||
Beginning Balance | $ 531,187 | $ 376,022 |
Initial note discounts | 456,058 | 896,145 |
Amortization | (987,245) | (579,980) |
Reduction for conversions | (161,000) | |
Ending Balance | $ 531,187 |
NOTE DISCOUNTS AND DERIVATIVE30
NOTE DISCOUNTS AND DERIVATIVE LIABLITIES - Summary of derivative liability balance (Details) - Derivative liability balance - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Beginning Balance | $ 1,648,255 | $ 581,373 |
Initial Derivative Liability | 509,969 | 2,021,387 |
Fair Value Change | 846,370 | (694,265) |
Reduction for debt payments/conversions | (1,778,791) | (206,240) |
Ending Balance | $ 1,225,803 | $ 1,648,255 |
NOTE DISCOUNTS AND DERIVATIVE31
NOTE DISCOUNTS AND DERIVATIVE LIABLITIES - Assumptions used in measurement derivative liabilities (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Commitment Date | |
Expected dividends | |
Expected volatility, minimum | 92.00% |
Expected volatility, maximum | 215.00% |
Expected term, minimum | 1 month 13 days |
Expected term, maximum | 10 months 2 days |
Risk free interest, minimum | 0.19% |
Risk free interest, maximum | 0.58% |
Re-Measurement Date | |
Expected dividends | |
Expected volatility | 196.00% |
Expected term, maximum | 1 month 13 days |
Risk free interest | 0.51% |
RELATED PARTY TRANSACTIONS - Of
RELATED PARTY TRANSACTIONS - Officers' compensation (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Chief Executive Officer ("CEO") | ||
Officers' compensation | $ 59,576 | |
Chief Operating Officer ("COO") | ||
Officers' compensation | 51,234 | |
Chief Financial Officer ("CFO") | ||
Officers' compensation | 55,650 | |
Total | ||
Officers' compensation | $ 166,460 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Amounts owed to officers included in liabilities of discontinued operations | $ 37,190 | |
Amounts owed to officers included in accounts payable and accrued liabilities, stockholders | 16,350 | |
Interest expense for note payable, stockholder | 984 | $ 948 |
Accrued interest owed to COO, included in accounts payable and accrued liabilities, stockholders | 4,610 | 3,625 |
Loan balance of note payable, stockholder included in liabilities of discontinued operations | 12,482 | $ 12,482 |
Membership interest agreed to be purchased in Quasar, LLC | 100.00% | |
Purchase price of membership interest acquisition | $ 180,000 | |
Chief Executive Officer ("CEO") | ||
Amounts owed to officers for accrued and unpaid fees | 14,424 | |
Former COO | ||
Amounts owed to officers for accrued and unpaid fees | 22,766 | |
Former CFO | ||
Amounts owed to officers for accrued and unpaid fees | $ 16,350 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 10 Months Ended | 12 Months Ended | 17 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2016 | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | ||||||
Office space lease term length | 26 months | |||||
Monthly rent | $ 5,091 | $ 4,870 | ||||
CAM charges | $ 354 | |||||
Net rent expense included in loss from discontinued operations | $ 36,034 | $ 39,637 | ||||
Sublease with unaffiliated third party, amounts received per month | $ 5,500 | |||||
Sublease with unaffiliated third party, amounts received | $ 36,750 |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2016 | Aug. 05, 2016 | Jul. 27, 2016 | Dec. 31, 2015 | Jun. 03, 2014 | |
COMMON STOCK | |||||
Consolidation of outstanding common stock | 1:250 | ||||
Cancellation of interest and principal due, shares issued in exchange | 1,051,778 | ||||
Cancellation of interest and principal due, amount | $ (920,306) | ||||
CLASS A PREFERRED STOCK | |||||
Value of Class A Preferred Stock | $ 428,000 | ||||
Preferred stock shares purchased by Dove in private transactions | 100 | ||||
Chief Executive Officer ("CEO") | |||||
CLASS A PREFERRED STOCK | |||||
Class A Preferred Stock issued to officers | 50 | ||||
Chief Operating Officer ("COO") | |||||
CLASS A PREFERRED STOCK | |||||
Class A Preferred Stock issued to officers | 50 | ||||
Warrants issued to CVP | |||||
WARRANTS | |||||
Warrant issued to CVP, number of shares purchaseable value | $ 420,000 | ||||
Warrant issued to CVP, initial estimated number of shares purchaseable | 24,000 | ||||
Warrant issued to CVP, current estimated number of shares purchaseable | 6,545 | 6,545 | |||
Warrant issued to CVP, exercise price | $ 0.20 | $ 0.20 |
DISCONTINUED OPERATIONS - Recon
DISCONTINUED OPERATIONS - Reconciliation of major classes of line items constituting loss from discontinued operations, net of income taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | ||
Sales | $ 7,350 | $ 702,602 |
Cost of goods sold | 515,461 | |
Gross margin | 7,350 | 187,141 |
Operating expenses: | ||
Salaries and management fees | 592,588 | |
Depreciation and amortization | 28,958 | |
Selling, advertising and marketing | 279,700 | |
Rent | 36,034 | 39,637 |
General and administrative | 7,417 | 143,344 |
Professional fees | 290,773 | |
Other | (4,081) | 7,403 |
Total operating expenses | 39,370 | 1,382,403 |
Loss from discontinued operations, net of income taxes | $ (32,020) | $ (1,195,262) |
DISCONTINUED OPERATIONS - Rec37
DISCONTINUED OPERATIONS - Reconciliation of carrying amounts of major classes of assets and liabilities classified as discontinued operations (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 2,587 | |
Accounts receivable, net | 1,500 | |
Prepaid expenses and other current assets | 41,128 | |
Total current assets included in the assets of discontinued operations | 44,915 | |
Current liabilities: | ||
Accounts payable and accrued expenses | 67,680 | 103,088 |
Accounts payable and accrued expenses, stockholders | 37,190 | 48,190 |
Customer deposits | 2,500 | |
Note payable, stockholder | 12,482 | 12,482 |
Total current liabilities included in the liabilities of discontinued operations | $ 117,352 | $ 166,260 |
GOING CONCERN (Details Narrativ
GOING CONCERN (Details Narrative) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accumulated deficit | $ (7,873,328) | $ (5,185,787) |
Working capital deficit | $ (2,912,317) | |
Membership interest agreed to be purchased in Quasar, LLC | 100.00% | |
Purchase price of membership interest acquisition | $ 180,000 |