Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | May 23, 2017 | Jun. 30, 2016 | |
Document And Entity Information | |||
Entity Registrant Name | Reign Sapphire Corp | ||
Entity Central Index Key | 1,642,159 | ||
Document Type | 10-K | ||
Trading Symbol | RSAP | ||
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 | $ 4,488,000 | ||
Entity Common Stock, Shares Outstanding | 43,809,554 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Successor [Member] | ||
Current assets: | ||
Cash | $ 149,607 | |
Accounts receivable | ||
Inventory | 723,602 | |
Prepaid expenses | 1,667 | |
Total current assets | 874,876 | |
Equipment, net | 38,050 | |
Intangible assets, net | 947,259 | |
Goodwill | 481,947 | |
Deposits | ||
Total assets | 2,342,132 | |
Current liabilities: | ||
Accounts payable | 31,940 | |
Due to related party | 440,747 | |
Accrued compensation - related party | 776,000 | |
Deferred revenue | 78,820 | |
Short term notes payable | ||
Short term notes payable - related party | ||
Current portion of convertible notes payable, less unamortized debt discount of $273,859 at December 31, 2016 | 588,641 | |
Derivative liabilities | 153,663 | |
Estimated fair value of contingent payments | 424,511 | |
Warrant liabilities | 473,296 | |
Other current liabilities | 35,571 | |
Total current liabilities | 3,003,189 | |
Long-term liabilities: | ||
Convertible notes, less unamortized debt discount of $256,722 at December 31, 2016 | 30,780 | |
Total long-term liabilities | 30,780 | |
Total liabilities | 3,033,969 | |
Commitments and contingencies | ||
Shareholders' deficit | ||
Preferred stock | ||
Common stock | 4,342 | |
Additional paid-in-capital | 5,433,552 | |
Accumulated deficit | (6,129,731) | |
Total shareholders' deficit | (691,837) | |
Total liabilities and shareholders' deficit | $ 2,342,132 | |
Predecessor [Member] | ||
Current assets: | ||
Cash | $ 42,332 | |
Accounts receivable | 25,901 | |
Inventory | 6,987 | |
Prepaid expenses | 16,202 | |
Total current assets | 91,422 | |
Equipment, net | 18,868 | |
Intangible assets, net | 126,252 | |
Goodwill | ||
Deposits | 8,701 | |
Total assets | 245,243 | |
Current liabilities: | ||
Accounts payable | 577,106 | |
Due to related party | ||
Accrued compensation - related party | ||
Deferred revenue | 261,662 | |
Short term notes payable | 40,895 | |
Short term notes payable - related party | 459,681 | |
Current portion of convertible notes payable, less unamortized debt discount of $273,859 at December 31, 2016 | ||
Derivative liabilities | ||
Estimated fair value of contingent payments | ||
Warrant liabilities | ||
Other current liabilities | 87,161 | |
Total current liabilities | 1,426,505 | |
Long-term liabilities: | ||
Convertible notes, less unamortized debt discount of $256,722 at December 31, 2016 | ||
Total long-term liabilities | ||
Total liabilities | 1,426,505 | |
Commitments and contingencies | ||
Shareholders' deficit | ||
Preferred stock | ||
Common stock | 100 | |
Additional paid-in-capital | 1,588,167 | |
Accumulated deficit | (2,769,529) | |
Total shareholders' deficit | (1,181,262) | |
Total liabilities and shareholders' deficit | $ 245,243 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Predecessor [Member] | ||
Preferred stock, issued | ||
Preferred stock, outstanding | ||
Common stock, par value (in dollars per share) | $ 0.0001 | |
Common stock, authorized | 150,000,000 | |
Successor [Member] | ||
Debt discount on convertible notes, current | $ 273,859 | |
Debt discount on convertible notes, non current | $ 256,722 | |
Preferred stock, par value (in dollars per share) | $ 0.0001 | |
Preferred stock, authorized | 10,000,000 | |
Preferred stock, issued | ||
Preferred stock, outstanding | ||
Common stock, par value (in dollars per share) | $ 0.0001 | |
Common stock, authorized | 150,000,000 | |
Common stock, issued | 43,414,687 | |
Common stock, outstanding | 43,414,687 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Nov. 30, 2016 | Dec. 31, 2015 | |
Successor [Member] | |||
Net revenues | $ 250,601 | ||
Cost of Sales | 229,878 | ||
Gross Profit | 20,723 | ||
Operating expenses: | |||
Advertising and marketing expenses | 98,079 | ||
Stock based compensation - related party | 24,302 | ||
General and administrative | 104,281 | ||
Total operating expenses | 226,662 | ||
Loss from operations | (205,939) | ||
Other (income) expense: | |||
Change in fair value of warrant liabilities | (3,612) | ||
Change in fair value of derivative liabilities | (68,331) | ||
Other (income) expense | |||
Interest expense | 65,146 | ||
Total other (income) expense | (6,797) | ||
Loss before income taxes | (199,142) | ||
Income taxes | |||
Net loss | $ (199,142) | ||
Net loss per share, basic and diluted (in dollars per share) | $ 0 | ||
Weighted average number of shares outstanding | |||
Basic and diluted (in shares) | 43,163,881 | ||
Predecessor [Member] | |||
Net revenues | $ 1,553,986 | $ 3,287,056 | |
Cost of Sales | 717,334 | 1,442,459 | |
Gross Profit | 836,652 | 1,844,597 | |
Operating expenses: | |||
Advertising and marketing expenses | 314,645 | 795,817 | |
Stock based compensation - related party | |||
General and administrative | 1,026,271 | 1,769,229 | |
Total operating expenses | 1,340,916 | 2,565,046 | |
Loss from operations | (504,264) | (720,449) | |
Other (income) expense: | |||
Change in fair value of warrant liabilities | |||
Change in fair value of derivative liabilities | |||
Other (income) expense | (2,375) | 27,361 | |
Interest expense | 130,499 | 52,772 | |
Total other (income) expense | 128,124 | 80,133 | |
Loss before income taxes | (632,388) | (800,582) | |
Income taxes | |||
Net loss | $ (632,388) | $ (800,582) | |
Net loss per share, basic and diluted (in dollars per share) | $ (0.06) | $ (0.08) | |
Weighted average number of shares outstanding | |||
Basic and diluted (in shares) | 10,032,000 | 9,806,356 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT - USD ($) | Preferred Shares [Member] | Common Stock [Member] | Additional Paid in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at beginning (Predecessor [Member]) at Dec. 31, 2014 | $ 98 | $ 1,388,169 | $ (1,968,947) | $ (580,680) | |
Balance at beginning (in shares) (Predecessor [Member]) at Dec. 31, 2014 | 9,800,000 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of preferred shares for cash - related party | Predecessor [Member] | $ 2 | 199,998 | 200,000 | ||
Issuance of preferred shares for cash - related party (in shares) | Predecessor [Member] | 200,000 | ||||
Exchange of preferred shares for common shares in restructuring - related party | Predecessor [Member] | $ (2) | $ 2 | |||
Exchange of preferred shares for common shares in restructuring - related party (in shares) | Predecessor [Member] | (200,000) | 232,000 | |||
Net loss | Predecessor [Member] | (800,582) | (800,582) | |||
Balance at end (Predecessor [Member]) at Dec. 31, 2015 | 100 | 1,588,167 | (2,769,529) | (1,181,262) | |
Balance at end at Dec. 31, 2015 | $ 100 | 1,588,167 | |||
Balance at end (in shares) (Predecessor [Member]) at Dec. 31, 2015 | 10,032,000 | ||||
Balance at end (in shares) at Dec. 31, 2015 | 10,032,000 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | Predecessor [Member] | (632,388) | (632,388) | |||
Balance at end (Predecessor [Member]) at Nov. 30, 2016 | $ 100 | 1,588,167 | (3,401,917) | (1,813,650) | |
Balance at end (Successor [Member]) at Nov. 30, 2016 | $ 3,641 | 4,637,867 | (5,930,589) | (1,289,081) | |
Balance at end (in shares) (Predecessor [Member]) at Nov. 30, 2016 | 10,032,000 | ||||
Balance at end (in shares) (Successor [Member]) at Nov. 30, 2016 | 36,406,354 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Shares issued in conjunction with CCI acquisition | Successor [Member] | $ 700 | 769,300 | 770,000 | ||
Shares issued in conjunction with CCI acquisition (in shares) | Successor [Member] | 7,000,000 | ||||
Shares issued to advisory board for services | Successor [Member] | $ 1 | 2,083 | 2,084 | ||
Shares issued to advisory board for services (in shares) | Successor [Member] | 8,333 | ||||
Stock based compensation - related party | Successor [Member] | 24,302 | 24,302 | |||
Net loss | Successor [Member] | (199,142) | (199,142) | |||
Balance at end (Successor [Member]) at Dec. 31, 2016 | $ 4,342 | $ 5,433,552 | $ (6,129,731) | $ (691,837) | |
Balance at end (in shares) (Successor [Member]) at Dec. 31, 2016 | 43,414,687 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Nov. 30, 2016 | Dec. 31, 2015 | |
Successor [Member] | |||
Cash flows from operating activities: | |||
Net loss | $ (199,142) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities | |||
Stock based compensation - related party | 24,302 | ||
Depreciation expense | 228 | ||
Amortization expense | 16,568 | ||
Accretion of debt discount | 64,869 | ||
Change in derivative liabilities | (68,331) | ||
Change in warrant liabilities | (3,612) | ||
Estimated fair market value of stock issued for services | 2,084 | ||
Disposal of fixed assets | |||
Changes in operating assets and liabilities: | |||
Accounts receivable | |||
Inventory | |||
Prepaid expenses | 733 | ||
Deposits | |||
Accounts payable | 31,940 | ||
Due to related party | 28,633 | ||
Accrued compensation - related party | 21,667 | ||
Deferred revenue | 78,820 | ||
Other current liabilities | 2,929 | ||
Net cash provided by (used in) operating activities | 1,688 | ||
Cash flows from investing activities: | |||
Acquisition of intangible assets | (27,136) | ||
Purchases of computer equipment | |||
Net cash used in investing activities | (27,136) | ||
Cash flows from financing activities: | |||
Proceeds from short-term notes, net of debt issuance costs | |||
Repayments of short term notes | |||
Repayments of short term notes - related party | |||
Proceeds from short-term notes - related party | |||
Issuance of preferred stock for cash | |||
Net cash provided by financing activities | |||
Net decrease in cash | (25,448) | ||
Cash at beginning of period | 175,055 | ||
Cash at end of period | 149,607 | $ 175,055 | |
Cash paid during the period for: | |||
Interest | |||
Income taxes | |||
Non-cash investing and financing activities: | |||
Intangibles acquired in conjunction with acquisition of CCI | 680,000 | ||
Goodwill acquired in conjunction with acquisition of CCI | 481,947 | ||
Equipment acquired in conjunction with acquisition of CCI | $ 32,564 | ||
Common stock issued in conjunction with acquisition of CCI | 770,000 | ||
Estimated fair value of contingent payments issued in conjunction with acquisition of CCI | $ 424,511 | ||
Total debt discount at origination | |||
Predecessor [Member] | |||
Cash flows from operating activities: | |||
Net loss | (632,388) | $ (800,582) | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities | |||
Stock based compensation - related party | |||
Depreciation expense | 7,080 | 16,639 | |
Amortization expense | 62,581 | 39,553 | |
Accretion of debt discount | 31,500 | 29,039 | |
Change in derivative liabilities | |||
Change in warrant liabilities | |||
Estimated fair market value of stock issued for services | |||
Disposal of fixed assets | 33,854 | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | 5,335 | 28,757 | |
Inventory | 1,173 | (6,987) | |
Prepaid expenses | 3,902 | 30,239 | |
Deposits | (4,351) | ||
Accounts payable | 302,263 | 24,507 | |
Due to related party | (26,072) | ||
Accrued compensation - related party | |||
Deferred revenue | 38,189 | (44,751) | |
Other current liabilities | 47,623 | 46,396 | |
Net cash provided by (used in) operating activities | (132,742) | (633,759) | |
Cash flows from investing activities: | |||
Acquisition of intangible assets | (90,855) | (93,133) | |
Purchases of computer equipment | (128) | (12,615) | |
Net cash used in investing activities | (90,983) | (105,748) | |
Cash flows from financing activities: | |||
Proceeds from short-term notes, net of debt issuance costs | 225,600 | 115,900 | |
Repayments of short term notes | (174,338) | (104,044) | |
Repayments of short term notes - related party | (50,000) | ||
Proceeds from short-term notes - related party | 157,442 | 278,273 | |
Issuance of preferred stock for cash | 200,000 | ||
Net cash provided by financing activities | 208,704 | 440,129 | |
Net decrease in cash | (15,021) | (299,378) | |
Cash at beginning of period | $ 27,311 | 42,332 | 341,710 |
Cash at end of period | 27,311 | 42,332 | |
Cash paid during the period for: | |||
Interest | 448 | 521 | |
Income taxes | |||
Non-cash investing and financing activities: | |||
Intangibles acquired in conjunction with acquisition of CCI | |||
Goodwill acquired in conjunction with acquisition of CCI | |||
Equipment acquired in conjunction with acquisition of CCI | |||
Common stock issued in conjunction with acquisition of CCI | |||
Estimated fair value of contingent payments issued in conjunction with acquisition of CCI | |||
Total debt discount at origination | $ 31,500 | $ 29,039 |
ORGANIZATION AND PRINCIPAL ACTI
ORGANIZATION AND PRINCIPAL ACTIVITIES | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES Corporate History and Background On December 1, 2016, substantially all of the operating assets of Coordinates Collection, Inc. (“CCI” or “Coordinates Collection“) was acquired by Reign ( RGNP , (see “ is a Beverly Hills-based, direct-to-consumer, branded and custom jewelry company. The accompanying consolidated financial statements have been presented on a comparative basis. For periods after the acquisition of the Coordinates Collection (since December 1, 2016), our financial results are referred to as "Successor" and its results of operations combines Reign Corporation operations and the Coordinates Collection operations. For periods prior to the acquisition of the Coordinates Collection brand, our financial results are referred to as "Predecessor" and its operations includes only the Coordinates Collection operations. Where tables are presented, a black line separates the Successor and Predecessor financial information to highlight the lack of comparability between the periods. Predecessor CCI, previously known as FD9 Group, Inc., markets and distributes classic custom jewelry through Le Bloc Coordinates Collection On December 21, 2015, the shareholders of CCI approved an Successor RGNP is a Beverly Hills-based, direct-to-consumer, branded and custom jewelry company with 3 niche brands: Reign Sapphire: ethically produced, direct mine-to-consumer sapphire jewelry targeting millennials, Coordinates Collection: custom jewelry, inscribed with location coordinates commemorating life's special moments, and Le Bloc: classic customized jewelry. Reign Corporation was established on December 15, 2014 in the State of Delaware as a vertically integrated “mines-gate to retail” model for sapphires – rough sapphires to finished jewelry; a color gemstone brand; and a jewelry brand featuring Australian sapphires. The Company acquired its Coordinates Collection and Le Bloc brands and the assets related to the production and sale of it on December 1, 2016 (See Note 4). The Company is focusing its marketing initiatives on: (1) Direct-to-Consumer (“D2C”) ecommerce marketing to attract customers to the reignsappires.com website, (2) Business-to-Business (“B2B”) marketing and sales efforts, to establish distribution partners such as high-end fashion retailers, and eventually (3) building a strong retail presence to market the products directly to consumers on a retail level. The Company is initially focusing its marketing efforts in the U.S. with online, wholesale, and retail sales, and then the Company intends to expand its marketing efforts internationally. The Company started as UWI Holdings Corporation (previously known as Australian Sapphire Corporation) (“UWI”) and was established on May 31, 2013 in the Province of New Brunswick, Canada. On December 31, 2014, UWI entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations with Reign Corporation, pursuant to which UWI transferred all of its net assets to Reign. The sole shareholder of UWI along with his spouse retained 100% ownership of Reign and were issued 27,845,000 of Reign common shares in exchange for the 16,000,250 outstanding shares of UWI. There was no significant tax consequence to this exchange. As a result, Reign is considered to be the continuation of the predecessor UWI. All historical financial information prior to the reorganization is that of UWI. Prior to the reorganization, the Company was authorized to issue 50,000,000 shares of common stock and 5,000,000 shares of preferred stock. On May 8, 2015, the Company’s Articles of incorporation were amended to increase the authorized common shares to 100,000,000 and preferred shares to 10,000,000. On December 22, 2015, the Company’s Articles of Incorporation were amended to increase the authorized number common shares to 150,000,000 with the authorized number of preferred shares remaining at 10,000,000. On March 17, 2017, the shareholders of the Company approved an amendment to the Company’s Certificate of Incorporation to designate 1 share of the Company’s authorized 10,000,000 shares of Preferred Stock as Series A Preferred Stock (“Series A Preferred Stock”), which shall vote with the Common Stock, and shall be entitled to fifty-one percent (51%) of the total votes of Common Stock on all such matters voted on. On March 17, 2017, the shareholders of the Company approved a corporate name change to Reign Corporation to better identify the business operations of , as due to the recent acquisition, no longer only sells sapphire jewelry. believes it will be better positioned in the future with a corporate name that does not identify with only one business line. The Company has begun its planned principal operations, and accordingly, the Company has prepared its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”). |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | NOTE 2 – BASIS OF PRESENTATION The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include all adjustments necessary for the fair presentation of the Company’s financial position for the periods presented. The Company currently operates in one business segment. The Company is not organized by market and is managed and operated as one business. A single management team reports to the chief operating decision maker, the Chief Executive Officer, who comprehensively manages the entire business. The Company does not currently operate any separate lines of businesses or separate business entities. Going Concern The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of approximately $6,130,000 and $2,770,000 at December 31, 2016 (Successor) and 2015 (Predecessor), respectively, had a working capital deficit of approximately $2,128,000 and $1,335,000 at December 31, 2016 (Successor) and 2015 (Predecessor), respectively had a net loss of approximately $199,000 for the one month ended December 31, 2016 (Successor), $632,000 for the eleven months ended November 30, 2016 (Predecessor) and $801,000 for the year ended December 31, 2015 (Predecessor), and net cash provided by operating activities of approximately $2,000 for the one month ended December 31, 2016 (Successor), net cash used in operating activities of approximately $133,000 for the eleven months ended November 30, 2016 (Predecessor) and $634,000 the year ended December 31, 2015 (Predecessor), with limited revenue earned since inception, and a lack of operational history. These matters raise substantial doubt about the Company’s ability to continue as a going concern. While the Company is attempting to expand operations and increase revenues, the Company’s cash position may not be significant enough to support the Company’s daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While management believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect or on terms acceptable to the Company. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate revenues. Our current burn rate to maintain the minimal level of operations for us to be in a position to execute our business plan upon funding is anticipated to be no greater than $25,000 per month in cash and Joseph Segelman, our President and CEO, has agreed to underwrite these costs until we are then able to begin execution of our business plan. In addition, until we begin execution of our business plan, we will continue to defer and accrue salaries and thus will not require cash to make payments under employment agreements. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s consolidated financial statements. The consolidated financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to GAAP and have been consistently applied in the preparation of the consolidated financial statements. Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Reign Brands, Inc. All significant intercompany accounts and transactions are eliminated in consolidation. Use of Estimates The preparation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America 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 dates of the consolidated financial statements and the reported amounts of net sales and expenses during the reported periods. Actual results may differ from those estimates and such differences may be material to the consolidated financial statements. The more significant estimates and assumptions by management include among others: inventory valuation, derivative liabilities, warrant liabilities, common stock and option valuation, valuation of acquired intangible assets. and the recoverability of intangibles. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions. Cash The Company’s cash is held in bank accounts in the United States and is insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. The Company has not experienced any cash losses. Income Taxes Income taxes are accounted for under an asset and liability approach. This process involves calculating the temporary and permanent differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The temporary differences result in deferred tax assets and liabilities, which would be recorded on the Balance Sheets in accordance with ASC 740, which established financial accounting and reporting standards for the effect of income taxes. The likelihood that its deferred tax assets will be recovered from future taxable income must be assessed and, to the extent that recovery is not likely, a valuation allowance is established. Changes in the valuation allowance in a period are recorded through the income tax provision in the consolidated Statements of Operations. ASC 740-10-30 was adopted from the date of its inception. ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized in an entity’s consolidated financial statements and prescribes a recognition threshold and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. Under ASC 740-10, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, ASC 740-10 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As a result of the implementation of ASC 740-10, the Company does not have a liability for unrecognized income tax benefits. Advertising and Marketing Costs Advertising and marketing costs are recorded as general and administrative expenses when they are incurred. Advertising and marketing expenses were recorded for the one month ended December 31, 2016 (Successor) of approximately $98,000, for the eleven months ended November 30, 2016 (Predecessor) of approximately $315,000, and year ended December 31, 2015 (Predecessor) of approximately $796,000. Comprehensive Income Comprehensive income is reported in accordance with FASB ASC Topic 220 “Comprehensive Income," which established standards for reporting and displaying comprehensive income and its components in a financial statement that is displayed with the same prominence as other financial statements. Total comprehensive income is defined as all changes in shareholders' equity during a period, other than those resulting from investments by and distributions to shareholders (i.e., issuance of equity securities and dividends). Generally, total comprehensive income (loss) equals net income (loss) plus or minus adjustments for currency translation. There are no items other than net loss affecting comprehensive loss for the one month ended December 31, 2016 (Successor), for the eleven months ended November 30, 2016 (Predecessor), and year ended December 31, 2015 (Predecessor), respectively. Foreign Currency - Functional and Presentation Currency The functional currency represents the currency of the primary economic environment in which the entity operates. Management has determined the functional currency of the Company to be the USD, as sales prices and major costs of operating expenses are primarily influenced by fluctuations in the USD, and with its Chief Executive Officer and director (“CEO”), and employees of the Company headquartered and operating in the United States. The results of transactions in foreign currency are remeasured into the functional currency at the average rate of exchange during the reporting period. The Company had no aggregate net foreign currency remeasurements included in general and administrative expenses in the accompanying consolidated statements of operations for the one month ended December 31, 2016 (Successor), for the eleven months ended November 30, 2016 (Predecessor), and year ended December 31, 2015 (Predecessor), respectively. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated into the Company’s reporting currency of USD at the exchange rates prevailing at the balance sheet date. All translation adjustments resulting from the translation of the consolidated financial statements into the reporting currency at USD are dealt with as a separate component within shareholders’ equity. There were no translation adjustments for the one month ended December 31, 2016 (Successor), for the eleven months ended November 30, 2016 (Predecessor), and year ended December 31, 2015 (Predecessor). Revenue Recognition Revenues are recognized in accordance with FASB ASC Topic 605, “Revenue Recognition”, and with the guidelines of the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104 “Revenue Recognition”. Under SAB 104, four conditions must be met before revenue can be recognized: (i) there is persuasive evidence that an arrangement exists, (ii) delivery has occurred or service has been rendered, (iii) the price is fixed or determinable, and (iv) collection is reasonably assured. Revenue is recognized from product sales when the product is shipped to the customer, provided that collection of the resulting receivable is reasonably assured. Credit is granted generally for terms of 7 to 90 days, based on credit evaluations. Discounts and refunds are recorded as a reduction of revenue. There is a no return policy. The return policy is currently being evaluated to be more in line with industry standards. Inventories Reign Sapphire Inventories are stated at the lower of cost or market on a lot basis each quarter. A lot is determined by the cut, clarity, size, and weight of the sapphires. Inventory consists of sapphire jewels that meet rigorous grading criteria and are of cuts and sizes most commonly used in the jewelry industry. As of December 31, 2016 (Successor), the Company carried primarily loose sapphire jewels and loose sapphire jewels held as samples. As of December 31, 2015 (Predecessor), there was minimal inventory. Samples are used to show potential customers what the jewelry would look like. Promotional items given to customers that are not expected to be returned will be removed from inventory and expensed. There have been no promotional items given to customers as of December 31, 2016. The Company performs its own in-house assessment based on gem guide and the current market price for metals to value its inventory on an annual basis or if circumstances dictate sooner to determine if the estimated fair value is greater or less than cost. In addition, the inventory is reviewed each quarter by the Company against industry prices from gem-guide and if there is a potential impairment, the Company would appraise the inventory. The estimated fair value is subject to significant change due to changes in popularity of cut, perceived grade of the clarity of the sapphires, the number, type and size of inclusions, the availability of other similar quality and size sapphires, and other factors. As a result, the internal assessed value of the sapphires could be significantly lower from the current estimated fair value. Loose sapphire jewels do not degrade in quality over time and are not subject to fashion trends. The estimated fair value per management’s internal assessment is greater than the cost, therefore, there is no indicator of impairment as of December 31, 2016 (Successor). CCI and Le Bloc CCI and Le Bloc products are outsourced to a third party for manufacture, made to order, and when completed are shipped to the customer. The inventory for CCI and Le Bloc are considered immaterial as of December 31, 2016 (Successor) and December 31, 2015 (Predecessor). Property and Equipment Property and equipment are carried at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets, generally five years. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. Fixed assets are examined for the possibility of decreases in value when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. Business Combinations Amounts paid for acquisitions are allocated to the assets acquired and liabilities assumed based on their estimated fair value at the date of acquisition. The fair value of identifiable intangible assets is based on detailed valuations that use information and assumptions provided by management, including expected future cash flows. We allocate any excess purchase price over the fair value of the net assets and liabilities acquired to goodwill. Identifiable intangible assets with finite lives are amortized over their useful lives. Acquisition-related costs, including advisory, legal, accounting, valuation and other costs, are expensed in the periods in which the costs are incurred. The results of operations of acquired businesses are included in the consolidated financial statements from the acquisition date. Intangible Assets and Goodwill Goodwill is the cost of an acquisition less the fair value of the net assets of the acquired business. Intangible assets consist primarily of tradenames, proprietary designs, developed technology – website, and developed technology – Ipad application. Our intangible assets are being amortized on a straight-line basis over a period of three to ten years. Impairment of Long-lived Assets and Goodwill We evaluate goodwill for impairment annually in the fourth quarter, and whenever events or changes in circumstances indicate it is more likely than not that the fair value of a reporting unit containing goodwill is less than its carrying amount. The goodwill impairment test consists of a two-step process, if necessary. The first step is to compare the fair value of a reporting unit to its carrying value, including goodwill. We typically use discounted cash flow models to determine the fair value of a reporting unit. The assumptions used in these models are consistent with those we believe hypothetical marketplace participants would use. If the fair value of the reporting unit is less than its carrying value, the second step of the impairment test must be performed in order to determine the amount of impairment loss, if any. The second step compares the implied fair value of the reporting unit's goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit's goodwill exceeds its implied fair value, an impairment charge is recognized in an amount equal to that excess. There are no impairments as of December 31, 2016 (Successor) or December 31, 2015 (Predecessor). We periodically evaluate whether the carrying value of property, equipment and intangible assets has been impaired when circumstances indicate the carrying value of those assets may not be recoverable. The carrying amount is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the carrying value is not recoverable, the impairment loss is measured as the excess of the asset’s carrying value over its fair value. There are no impairments as of December 31, 2016 (Successor) and 2015 (Predecessor). Our impairment analyses require management to apply judgment in estimating future cash flows as well as asset fair values, including forecasting useful lives of the assets, assessing the probability of different outcomes, and selecting the discount rate that reflects the risk inherent in future cash flows. If the carrying value is not recoverable, we assess the fair value of long-lived assets using commonly accepted techniques, and may use more than one method, including, but not limited to, recent third party comparable sales and discounted cash flow models. If actual results are not consistent with our assumptions and estimates, or our assumptions and estimates change due to new information, we may be exposed to an impairment charge in the future. Deferred revenue Deferred revenue consists of customer orders paid in advance of the delivery of the order. Deferred revenue is classified as short-term as the typical order ships within approximately three weeks of placing the order. Deferred revenue is recognized as revenue when the product is shipped to the customer and all other revenue recognition criteria have been met. Deferred Revenue(Predecessor) In March 2016, CCI entered into an agreement with Knight Capital LLC (“Knight”) whereby in exchange for $147,500, CCI agreed to sell Knight $199,125 of its future sales. CCI accounted for the sale of future receivables in accordance with ASC 470 (“Debt”) as deferred revenue on the date of the agreement. For the eleven months ended November 30, 2016 (Predecessor), CCI repaid approximately $102,000 to Knight. Fair Value of Financial Instruments The provisions of accounting guidance, FASB Topic ASC 825 requires all entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value, and defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. As of December 31, 2016 (Successor) and 2015 (Predecessor), the fair value of cash, accounts receivable, accounts payable, accrued expenses, notes payable, and convertible debt approximated carrying value due to the short maturity of the instruments, quoted market prices or interest rates which fluctuate with market rates. Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, as follows: · Level 1 – Quoted prices in active markets for identical assets or liabilities. · Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. · Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. There were no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. The warrant and the embedded derivative liabilities are recognized at fair value on a recurring basis at December 31, 2016 (Successor) and are Level 3 measurements (see Note 9). There have been no transfers between levels. Debt The Company issues debt that may have separate warrants, conversion features, or no equity-linked attributes. Debt with warrants Convertible debt – derivative treatment If the conversion feature within convertible debt meets the requirements to be treated as a derivative, we estimate the fair value of the convertible debt derivative using Monte Carlo Method upon the date of issuance. If the fair value of the convertible debt derivative is higher than the face value of the convertible debt, the excess is immediately recognized as interest expense. Otherwise, the fair value of the convertible debt derivative is recorded as a liability with an offsetting amount recorded as a debt discount, which offsets the carrying amount of the debt. The convertible debt derivative is revalued at the end of each reporting period and any change in fair value is recorded as a gain or loss in the statement of operations. The debt discount is amortized through interest expense over the life of the debt. Convertible debt – beneficial conversion feature If the conversion feature does not qualify for either the derivative treatment or as a BCF, the convertible debt is treated as traditional debt. Employee Stock Based Compensation Stock based compensation issued to employees and members of our board of directors is measured at the date of grant based on the estimated fair value of the award, net of estimated forfeitures. The grant date fair value of a stock based award is recognized as an expense over the requisite service period of the award on a straight-line basis. For purposes of determining the variables used in the calculation of stock based compensation issued to employees , Non-Employee Stock Based Compensation Issuances of the Company's common stock or warrants for acquiring goods or services are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date for the fair value of the equity instruments issued to consultants or vendors is determined at the earlier of (i) the date at which a commitment for performance to earn the equity instruments is reached (a "performance commitment" which would include a penalty considered to be of a magnitude that is a sufficiently large disincentive for nonperformance) or (ii) the date at which performance is complete. Although situations may arise in which counter performance may be required over a period of time, the equity award granted to the party performing the service is fully vested and non-forfeitable on the date of the agreement. As a result, in this situation in which vesting periods do not exist as the instruments fully vested on the date of agreement, the Company determines such date to be the measurement date and will record the estimated fair market value of the instruments granted as a prepaid expense and amortize such amount to general and administrative expense in the accompanying statement of operations over the contract period. When it is appropriate for the Company to recognize the cost of a transaction during financial reporting periods prior to the measurement date, for purposes of recognition of costs during those periods, the equity instrument is measured at the then-current fair values at each of those interim financial reporting dates. Non-Cash Equity Transactions Shares of equity instruments issued for non-cash consideration are recorded at the fair value of the consideration received based on the market value of services to be rendered, or at the value of the stock given, considered in reference to contemporaneous cash sale of stock. Earnings per Share Diluted earnings (loss) per share are computed on the basis of the weighted average number of common shares (including common stock subject to redemption) plus dilutive potential common shares outstanding for the reporting period. In periods where losses are reported, the weighted-average number of common stock outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive. The total number of potential additional dilutive securities outstanding for the one month ended December 31, 2016 (Successor), for the eleven months ended November 30, 2016 (Predecessor), and year ended December 31, 2015 (Predecessor), was none since the Company had net losses and any additional potential common shares would have an anti-dilutive effect. Related Parties Related parties are any entities or individuals that, through employment, ownership or other means, possess the ability to direct or cause the direction of the management and policies of the Company. Concentrations, Risks, and Uncertainties Business Risk Substantial business risks and uncertainties are inherent to an entity, including the potential risk of business failure. The Company is headquartered and operates in the United States. To date, the Company has generated limited revenues from operations. As the Company generates significant revenues from operations, business activities will also include Australia and Asia and geographic segment reporting will be provided. There can be no assurance that the Company will be able to successfully continue to produce its products and failure to do so would have a material adverse effect on the Company’s financial position, results of operations and cash flows. Also, the success of the Company’s operations is subject to numerous contingencies, some of which are beyond management’s control. These contingencies include general economic conditions, price of raw material, competition, governmental and political conditions, and changes in regulations. Because the Company is dependent on foreign trade in Australia and Asia, the Company is subject to various additional political, economic and other uncertainties. Among other risks, the Company’s operations will be subject to risk of restrictions on transfer of funds, domestic and international customs, changing taxation policies, foreign exchange restrictions, and political and governmental regulations. The Company has business activities in Australia and Asia, which may give rise to significant foreign currency risks from fluctuations and the degree of volatility of foreign exchange rates between USD and the Australian currency AUD. The results of operations denominated in foreign currency are translated at the average rate of exchange during the reporting period. The Company had no aggregate net foreign currency transactions included in the income statement for the one month ended December 31, 2016 (Successor), for the eleven months ended November 30, 2016 (Predecessor), and year ended December 31, 2015 (Predecessor), respectively. Interest rate risk Financial assets and liabilities do not have material interest rate risk. Credit risk The Company is exposed to credit risk from its cash in banks and accounts receivable. The credit risk on cash in banks is limited because the counterparties are recognized financial institutions. There were no customers that accounted for 10% or more of total revenue for the one month ended December 31, 2016 (Successor), for the eleven months ended November 30, 2016 (Predecessor), and for the year ended December 31, 2015 (Predecessor), respectively. There were no customers that comprised 10% or more of accounts receivable at December 31, 2016 (Successor), and one customer that accounted for 10%, comprising 28.5%, or more of accounts receivable at December 31, 2015 (Predecessor). Foreign currency risk The Company has transactions settled in AUD and British Pound. Thus, the Company has foreign currency risk exposure. Seasonality The business is subject to substantial seasonal fluctuations. Historically, a significant portion of net sales and net earnings have been realized during the period from October through December. Major Suppliers The Company does not manufacture its own products and currently depends primarily upon ASK Gold to manufacture its products. Pursuant to the acquisition of CCI (see Note 4), the company issued ASK Gold 1,000,000 shares of the 7,000,000 shares issued in connection to the transaction. In the event that the manufacturing provided by ASK Gold were discontinued, it is believed that alternate suppliers could be identified which would be able to provide it with sufficient levels of products at terms similar to those of ASK Gold. Recent Accounting Pronouncements Financial Accounting Standards Board, or FASB, Accounting Standards Update, or FASB ASU 2017-04 “Simplifying the Test for Goodwill Impairment (Topic 350)” FASB ASU 2017-01 “Clarifying the Definition of a Business (Topic 805)” FASB ASU 2016-15 “Statement of Cash Flows (Topic 230)” – FASB ASU 2016-12 “Revenue from Contracts with Customers (Topic 606)” FASB ASU 2016-11 “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815)” FASB ASU 2016-10 “Revenue from Contracts with Customers (Topic 606)” FASB ASU 2016-09 “Compensation – Stock Compensation (Topic 718)” FASB ASU 2016-02 “Leases (Topic 842)” – FASB ASU 2015-17 ”Income Taxes (Topic 740)” – FASB ASU 2015-16 “Business Combinations (Topic 805),” or ASU 2015-16 FASB ASU 2015-11 “Inventory (Topic 330): Simplifying the Measurement of Inventory,” or ASU 2015-11 |
ACQUISITION OF COORDINATES COLL
ACQUISITION OF COORDINATES COLLECTION | 12 Months Ended |
Dec. 31, 2016 | |
Business Combinations [Abstract] | |
ACQUISITION OF COORDINATES COLLECTION | NOTE 4 – ACQUISITION OF COORDINATES COLLECTION On December 1, 2016, the Company acquired substantially all of the operating assets of CCI (the "Acquisition"). CCI is engaged in the marketing and distribution of Coordinates Collection and Le Bloc customized jewelry. Upon the closing of the Acquisition, we received substantially all of the operating assets of CCI, consisting of fixed assets and intellectual property. As part of the Acquisition, the Company created a wholly owned subsidiary, Reign Brands, and shall act as the operating entity for the acquired CCI assets. With the acquisition of the Coordinates Collection and Le Bloc brands, the Company plans to leverage its custom jewelry expertise to expand distribution worldwide. The purchase price of the operating assets of CCI was the issuance 7,000,000 shares of common stock (of which 1,000,000 shares were issued to ASK Gold, a major supplier) (see Note 3) valued at $770,000 (based on our stock price on the date of issuance). In addition, there is a cash payment of $500,000 contingent upon a future offering and earn out payments for all sales of CCI and RGNP products sold via CCI sales channels for the 2017, 2018, 2019 and 2020 calendar years. The estimated fair value of the contingent payments totaled $424,511 and was recognized as a liability in the accompanying consolidated Balance sheet as of December 31, 2016 (Successor). The Company accounted for the Acquisition using the acquisition method of accounting. Total Purchase Consideration: Common stock issued $ 770,000 Estimated fair value of contingent payments 424,511 $ 1,194,511 The following table summarizes the estimated fair values of the tangible and intangible assets acquired as of the date of Acquisition: Net assets acquired: Equipment $ 32,564 Developed technology - website 117,500 Developed technology – Ipad application 117,500 Tradename 365,000 Proprietary design 80,000 Goodwill 481,947 $ 1,194,511 Goodwill is the excess of the purchase price over the fair value of the underlying net tangible and identifiable intangible assets. In accordance with applicable accounting standards, goodwill is not amortized but instead is tested for impairment at least annually or more frequently if certain indicators are present. |
INVENTORY
INVENTORY | 12 Months Ended |
Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |
INVENTORY | NOTE 5 – INVENTORY Inventories consisted of the following as of: December 31, December 31, Successor Predecessor Raw materials $ 478,096 $ 6,987 Work-in-process 111,361 - Samples 134,145 - $ 723,602 $ 6,987 |
EQUIPMENT
EQUIPMENT | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
EQUIPMENT | NOTE 6 – Equipment Equipment consisted of the following as of: December 31, December 31, Estimated Life Successor Predecessor Office equipment 5 years $ 2,451 $ 15,444 Computer equipment 3 years 39,311 47,163 Accumulated depreciation (3,712 ) (43,739 ) $ 38,050 $ 18,868 Depreciation expense was $228 for the one month ended December 31, 2016 (Successor), $7,080 for the eleven months ended November 30, 2016 (Predecessor) and $16,639 for the year ended December 31, 2015 (Predecessor), and is classified in general and administrative expenses in the consolidated Statements of Operations. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 7 – INTANGIBLE ASSETS Intangible assets consisted of the following as of: December 31, 2016 December 31, 2015 Estimated Life Successor Predecessor Trademarks 3.3 – 4.5 years $ 260,000 $ 88,700 Website 3 years 35,125 97,944 Acquired tradename 10 years 365,000 - Acquired proprietary design 5 years 80,000 - Acquired developed technology - website 3 years 117,500 - Acquired developed technology – Ipad application 3 years 117,500 - Goodwill indefinite 481,947 - Accumulated amortization (27,866 ) (60,392 ) $ 1,429,206 $ 126,252 Amortization expense was $16,568 for the one month ended December 31, 2016 (Successor), $62,581 for the eleven months ended November 30, 2016 (Predecessor) and $39,553 for the year ended December 31, 2015 (Predecessor), and is classified in general and administrative expenses in the accompanying consolidated Statements of Operations. |
DUE TO RELATED PARTY
DUE TO RELATED PARTY | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
DUE TO RELATED PARTY | NOTE 8 – DUE TO RELATED PARTY Successor During 2016, the Company received advances from its CEO/director totaling $256,606, incurred business expenses of $551,724 (comprised of operating expenses of $334,627, inventory purchases totaling $213,815, and purchased equipment of $3,282) and had repayments of $817,527. The Company has a balance owed to the related party of $440,747 at December 31, 2016 (Successor). During 2016, the Company incurred $180,000 of deferred compensation related to the CEO/director’s employment agreement and $80,000 of deferred compensation related to the Secretary’s employment agreement. As of December 31, 2016 (Successor), accrued compensation-related party was $776,000. Predecessor CCI had no employment agreement with its CEO and director but CCI still incurred compensation on behalf of the CEO and director. CCI incurred compensation expense of $79,288 and $72,000 in the eleven months ended November 30, 2016 (Predecessor) and the year ended December 31, 2015 (Predecessor), respectively, with no amounts due at November 30, 2016 (Predecessor) and December 31, 2015 (Predecessor), respectively. During the eleven months ended November 30, 2016 (Predecessor) and for the year ended December 31, 2015 (Predecessor), the CEO and director received employee benefits totaling $43,947 and $31,588, respectively. In addition, the CEO and director incurred business expenses and had repayments for business expenses of $13,130 and $360 for the eleven months ended November 30, 2016 (Predecessor) and for the year ended December 31, 2015 (Predecessor), respectively. |
CONVERTIBLE NOTE PAYABLE
CONVERTIBLE NOTE PAYABLE | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTE PAYABLE | NOTE 9 – CONVERTIBLE NOTE PAYABLE November 2016 (Successor) As of December 31, 2016, the Company previously entered into a Securities Purchase Agreement (the “November 2016 Purchase Agreement”) with respect to the sale and issuance to certain institutional investors Alpha Capital Anstalt and Brio Capital Master Fund Ltd. (collectively “November 2016 Purchasers”) of up to (i) 833,354 shares of the Company’s Common Stock (the “November 2016 Incentive Shares”); (ii) $287,502 aggregate principal amount of Secured Convertible Notes (the “November 2016 Notes”) and (iii) Common Stock Purchase Warrants to purchase up to an aggregate of 2,395,850 shares of the Company’s Common Stock (the “November 2016 Warrants”). The November 2016 Incentive Shares, November 2016 Notes and November 2016 Warrants were issued on November 10, 2016 (the “November 2016 Original Issue Date”). November 2016 Purchasers received (i) November 2016 Incentive Shares at the rate of 2.8986 November 2016 Incentive Shares for each $1.00 of November 2016 Note principal issued to such November 2016 Purchaser; (ii) a November 2016 Note with a principal amount of $1.00 for each $0.86956 for each $1.00 paid by each purchaser for such purchaser’s November 2016 Note; and (iii) November 2016 Warrants to purchase up to a number of shares of Common Stock equal to 100% of such purchaser’s November 2016 Note principal amount divided by $0.12 (“Purchaser Conversion Price”), the conversion price in effect on the Initial Closing Date, with a per share exercise price equal to $0.30, subject to adjustment. The aggregate cash subscription amount received by the Company from the purchasers for the issuance of the November 2016 Incentive Shares, November 2016 Notes and November 2016 Warrants was approximately $244,945 (the “Subscription Amount”) which was issued at a $42,557 original issue discount from the face value of the Note. The November 2016 Notes mature on May 10, 2018, eighteen (18) months after the November 2016 Original Issue Date, and provide for interest to accrue at an interest rate equal to the lesser of 15% per annum or the maximum rate permitted under applicable law after the occurrence of any event of default as provided in the November 2016 Notes. At any time after the November 2016 Original Issue Date, the holders, at their option, may convert the outstanding principal balance and accrued interest into shares of our Common Stock. The initial conversion price for the principal and interest in connection with voluntary conversions by a holder of a Note is $0.12 per share, subject to adjustment as provided therein. Each November 2016 Note, for example, is subject to adjustment upon certain events such as stock splits and has full ratchet anti-dilution protections for issuance of securities by us at a price that is lower than the conversion price. Each November 2016 Note also contains certain negative covenants, including prohibitions on incurrence of indebtedness, liens, charter amendments, dividends, redemption. None of the holders of the November 2016 Note have the right to convert any portion of their November 2016 Note if it (together with its affiliates) would beneficially own in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the exercise. The November 2016 Notes include customary events of default, including, among other things, payment defaults, covenant breaches, certain representations and warranties, certain events of bankruptcy, liquidation and suspension of the Company’s Common Stock from trading. If such an event of default occurs, the holders of the November 2016 Notes may be entitled to take various actions, which may include the acceleration of amounts due under the November 2016 Notes and accrual of interest as described above. The November 2016 Notes are collectively collateralized by substantially all of the Company’s assets and guarantees of payment of the November 2016 Notes have also been delivered by Joseph Segelman, the Chief Executive Officer and President of the Company, and Australian Sapphire Corporation (“ASC”), a stockholder of the Company which is wholly-owned by Joseph Segelman, guaranteed payment of all amounts owed under the November 2016 Notes, subject to the terms of such guaranty agreements. The November 2016 Purchase Agreement is being entered into in accordance with the halachically accepted exemptions on the paying of interest payments in business transactions known as “heter iska”. is still accounting for the interest in accordance with GAAP. As a result of the failure to timely file our 2016 Form 10-K for the year ended December 31, 2016 and our Form 10-Q for the three month period ended March 31, 2107, the November 2016 and December 2015 Notes were in default. On May 30, 2017, the Company entered into a Second Consent, Waiver and Modification Agreement (the “Agreement”) with certain purchasers of convertible promissory notes (the “Notes”) pursuant to securities purchase agreements dated December 23, 2015 and November 10, 2016, which were amended pursuant to a Consent, Waiver and Modification Agreement dated October 13, 2016. The waivers contained in the Agreement were related to a waiver of the right to participate in additional offerings by the Company, allowing shares of the Company’s common stock to be issued pursuant to a private offering at a price of not less than $0.08 per share as well as warrants exercisable for a period of five years at $0.30 per share, adjusting the conversion price of the Notes issued to the purchasers to $0.08 per share, extending the maturity date of the December 23, 2015 convertible promissory notes to December 31, 2017 and waiving default provisions listed in the Notes related to the Company’s failure to timely file its Form 10-K for the year ended December 31, 2016 and the Form 10-Q for the three month period ended March 31, 2017. Optional Redemption The November 2016 Notes provide that commencing six (6) months after the November 2016 Original Issue Date, the Company will have the option of prepaying the outstanding principal amount of the November 2016 Notes (an “November 2016 Optional Redemption”), in whole or in part, by paying to the holders a sum of money in cash equal to one hundred percent (100%) of the principal amount to be redeemed, together with accrued but unpaid interest thereon, if any, and any and all other sums due, accrued or payable to the holder arising under the November 2016 Note through the November 2016 Redemption Payment Date and 2.8986 shares of the Company’s Common Stock for each $1.00 of November 2016 Note principal amount being redeemed. A Notice of Redemption, if given, may be given on the first Trading Day following twenty (20) consecutive Trading Days during which all of the “Equity Conditions”, as defined, have been in effect. As of December 31, 2016, no derivative liability has been recorded for the November 2016 Optional Redemption, as redemption is contingent. Purchaser Conversion The November 2016 Purchaser has the right at any time after the November 2016 Original Issue Date until the outstanding balance of the Note has been paid in full, to convert all or any part of the outstanding balance into shares (“November 2016 Purchaser Conversion Shares”) of the Company’s common stock, of the portion of the outstanding balance being converted (the “November 2016 Conversion Amount”) divided by the November 2016 Purchaser Conversion Price of $0.12, subject to potential future adjustments described below. If the total outstanding balance of the November 2016 Note were convertible as of December 31, 2016, the November 2016 Note would have been convertible into 2,395,850 shares of our common stock. The Company evaluated the note under the requirements of ASC 480 “Distinguishing Liabilities From Equity” and concluded that the Note does not fall within the scope of ASC 480. The Company next evaluated the November 2016 Note under the requirements of ASC 815 “Derivatives and Hedging”. Due to the existence of the anti-dilution provision which reduces the November 2016 Purchaser Conversion Price in the event of subsequent dilutive issuances by the Company below the November 2016 Purchaser Conversion Price as described above, the November 2016 Purchaser Conversion feature does not meet the definition of “indexed to” our stock, and the scope exception to ASC 815’s derivative accounting provisions does not apply. The Company also evaluated the embedded derivative criteria in ASC 815, and concluded that the Purchaser Conversion feature meets all of the embedded derivative criteria in ASC 815, and therefore, the November 2016 Purchaser Conversion feature meets the definition of an embedded derivative that should be separated from the note and accounted for as a derivative liability. The embedded derivative was recorded as a derivative liability on the consolidated Balance Sheet at its fair value of $32,016 at the date of issuance. At each subsequent reporting date, the fair value of the embedded derivative liability will be remeasured and changes in the fair value will be recorded in the consolidated Statements of Operations. At December 31, 2016 (Successor), the embedded derivative was re-measured at fair value that was determined to be $23,995. During the one month ended December 31, 2016 (Successor), the Company recorded a gain on embedded derivative re-valuation of $8,021. The fair value of the embedded derivative liability is measured in accordance with ASC 820 “Fair Value Measurement”, using “Monte Carlo Method” modeling incorporating the following inputs: December 31, November 10, 2016 2016 Expected dividend yield 0.00 % 0.00 % Expected stock-price volatility 55.0 % 55.0 % Risk-free interest rate 1.47 % 1.17% - 1.56 % Expected term of options (years) 1.5 - 5 .5 - 1.5 Stock price $ 0.11 $ 0.12 Conversion price $ 0.12 $ 0.12 November 2016 Purchaser Warrants The November 2016 Purchaser Warrants allow the November 2016 Purchaser to purchase up to a number of shares of common stock equal to 100% of such purchaser’s Note principal amount divided by $0.12, the conversion price in effect on the November 2016 Initial Closing Date, with a per share exercise price equal to $0.30, subject to adjustment. The term of the Purchaser Warrants is at any time on or after the six (6) month anniversary of the November 2016 Original Issue Date and on or prior to the five (5) year anniversary of the November 2016 Initial Trading Date of our common stock on a Trading Market. The exercise price of the November 2016 Purchaser Warrants is $0.30 per share of our common stock, as may be adjusted from time to time pursuant to the antidilution provisions of the November 2016 Purchaser Warrants. The November 2016 Purchaser Warrants are exercisable by the November 2016 Purchaser in whole or in part, as either a cash exercise or as a “cashless” exercise. The Company evaluated the November 2016 Warrants under ASC 480 “Distinguishing Liabilities From Equity” and ASC 815 “Derivatives and Hedging”. Due to the existence of the antidilution provision, which reduces the November 2016 Exercise Price and November 2016 Conversion Price in the event of subsequent November 2016 Dilutive Issuances, the November 2016 Purchaser Warrants are not indexed to our common stock, and the Company has determined that the November 2016 Purchaser Warrants meet the definition of a derivative under ASC 815. Accordingly, the November 2016 Purchaser Warrants were recorded as derivative liabilities in the consolidated Balance Sheet at their fair value of $108,597 at the date of issuance. At each subsequent reporting date, the fair value of the Purchaser Warrants will be remeasured and changes in the fair value will be reported in the consolidated Statements of Operations. At December 31, 2016, the warrant liability was re-measured at fair value that was determined to be $105,338. During the one month ended December 31, 2016 (Successor), the Company recorded a gain on warrant re-valuation of $3,259. The fair value of the November 2016 Purchaser Warrants is measured in accordance with ASC 820 “Fair Value Measurement”, using “Monte Carlo simulation” modeling, incorporating the following inputs: December 31, November 10, 2016 2016 Expected dividend yield 0.00 % 0.00 % Expected stock-price volatility 55.0 % 55.0 % Risk-free interest rate 1.93 % 1.93 % Expected term of options (years) 1.5 - 5 .5 - 1.5 Stock price $ 0.11 $ 0.12 Exercise price $ 0.30 $ 0.30 November 2016 Purchaser Common Stock The November 2016 Purchasers were issued a total of 833,354 shares of the Company’s common stock, valued at $100,002 (based on the stock price on the date of issuance). As of December 31, 2016, the total proceeds of $244,945 previously received by the Company for the November 2016 Note, November 2016 Purchaser Common Stock, and November 2016 Purchaser Warrants, was allocated first to the November 2016 Purchaser Common Stock, November 2016 Purchaser Warrants, and embedded derivative liabilities at their initial fair values determined at the issuance date. Since the difference between the full fair value of November 2016 Purchaser Common Stock, November 2016 Purchaser Warrants, and embedded derivative liabilities of $240,615 was less than the proceeds of $244,945, no additional amounts were recorded. Debt Discount The Company issued the November 2016 Notes with warrants and conversion features that require liability treatment under ASC 815. As such, the proceeds of the notes were allocated, based on fair values, as follows: $100,002 to the common shares issued; $108,567 to the warrants granted; $42,557 to the original issue discount; and $32,016 to the embedded derivative, resulting in a debt discount to such notes of $283,172. The debt discount is accreted over the term of the convertible notes to interest expense in the accompanying consolidated Statements of Operations. The Company recorded debt discount accretion of $16,078 to interest expense in the consolidated Statements of Operations during the one month ended December 31, 2016 (Successor) and has an unamortized debt discount of $256,722 as of December 31, 2016 (Successor). December 2015 (Successor) As of December 31, 2016, the Company previously entered into a Securities Purchase Agreement (the “Purchase Agreement”) with respect to the sale and issuance to certain institutional investors Alpha Capital Anstalt and Brio Capital Master Fund Ltd. (collectively “Purchasers”) of up to (i) 2,500,000 shares of the Company’s Common Stock (the “December 2015 Incentive Shares”); (ii) $862,500 aggregate principal amount of Secured Convertible Notes (the “December 2015 Notes”) and (iii) December 2015 Common Stock Purchase Warrants to purchase up to an aggregate of 7,187,542 shares of the Company’s Common Stock (the “December 2015 Warrants”). The December 2015 Incentive Shares, December 2015 Notes and December 2015 Warrants were issued on December 23, 2015 (the “Original Issue Date”). December 2015 Purchasers received (i) December 2015 Incentive Shares at the rate of 2.8986 December 2015 Incentive Shares for each $1.00 of December 2015 Note principal issued to such December 2015 Purchaser; (ii) a December 2015 Note with a principal amount of $1.00 for each $0.86956 for each $1.00 paid by each purchaser for such purchaser’s December 2015 Note; and (iii) December 2015 Warrants to purchase up to a number of shares of Common Stock equal to 100% of such purchaser’s December 2015 Note principal amount divided by $0.12 (“December 2015 Purchaser Conversion Price”), the conversion price in effect on the Initial Closing Date, with a per share exercise price equal to $0.30, subject to adjustment. The aggregate cash subscription amount received by the Company from the purchasers for the issuance of the December 2015 Incentive Shares, December 2015 Notes and December 2015 Warrants was approximately $724,500 (the “December 2015 Subscription Amount”) which was issued at a $138,000 original issue discount from the face value of the December 2015 Note. The December 2015 Notes mature on June 23, 2017, eighteen (18) months after the December 2015 Original Issue Date, and provide for interest to accrue at an interest rate equal to the lesser of 15% per annum or the maximum rate permitted under applicable law after the occurrence of any event of default as provided in the December 2015 Notes. At any time after the December 2015 Original Issue Date, the holders, at their option, may convert the outstanding principal balance and accrued interest into shares of the Company’s Common Stock. The initial conversion price for the principal and interest in connection with voluntary conversions by a holder of a December 2015 Note is $0.12 per share, subject to adjustment as provided therein. Each December 2015 Note, for example, is subject to adjustment upon certain events such as stock splits and has full ratchet anti-dilution protections for issuance of securities by us at a price that is lower than the conversion price. Each December 2015 Note also contains certain negative covenants, including prohibitions on incurrence of indebtedness, liens, charter amendments, dividends, redemption. None of the holders of the December 2015 Note have the right to convert any portion of their December 2015 Note if it (together with its affiliates) would beneficially own in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the exercise. The December 2015 Notes include customary events of default, including, among other things, payment defaults, covenant breaches, certain representations and warranties, certain events of bankruptcy, liquidation and suspension of the Company’s Common Stock from trading. If such an event of default occurs, the holders of the December 2015 Notes may be entitled to take various actions, which may include the acceleration of amounts due under the December 2015 Notes and accrual of interest as described above. The December 2015 Notes are collectively collateralized by substantially all of our assets and guarantees of payment of the December 2015 Notes have also been delivered by Joseph Segelman, the Chief Executive Officer and President of the Company, and Australian Sapphire Corporation (“ASC”), a stockholder of the Company which is wholly-owned by Joseph Segelman, guaranteed payment of all amounts owed under the December 2015 Notes, subject to the terms of such guaranty agreements. In addition, until one year after the initial trading date of a Registration Statement which registers all then outstanding or issuable underlying shares, the December 2015 Purchasers shall have the right to participate in an amount of subsequent financing equal to 100% of the December 2015 Purchase Agreement. As of December 31, 2016, this requirement was waived pursuant to the terms of the Consent, Waiver and Modification Agreement with certain Purchasers of Purchase Agreement dated December 23, 2015. The Purchase Agreement is being entered into in accordance with the halachically accepted exemptions on the paying of interest payments in business transactions known as “heter iska”. is still accounting for the interest in accordance with GAAP. As a result of the failure to timely file our 2016 Form 10-K for the year ended December 31, 2016 and our Form 10-Q for the three month period ended March 31, 2107, the November 2016 and December 2015 Notes were in default. On May 30, 2017, the Company entered into a Second Consent, Waiver and Modification Agreement (the “Agreement”) with certain purchasers of convertible promissory notes (the “Notes”) pursuant to securities purchase agreements dated December 23, 2015 and November 10, 2016, which were amended pursuant to a Consent, Waiver and Modification Agreement dated October 13, 2016. The waivers contained in the Agreement were related to a waiver of the right to participate in additional offerings by the Company, allowing shares of the Company’s common stock to be issued pursuant to a private offering at a price of not less than $0.08 per share as well as warrants exercisable for a period of five years at $0.30 per share, adjusting the conversion price of the Notes issued to the purchasers to $0.08 per share, extending the maturity date of the December 23, 2015 convertible promissory notes to December 31, 2017 and waiving default provisions listed in the Notes related to the Company’s failure to timely file its Form 10-K for the year ended December 31, 2016 and the Form 10-Q for the three month period ended March 31, 2017. December 2015 Optional Redemption The December 2015 Notes provide that commencing six (6) months after the December 2015 Original Issue Date, the Company will have the option of prepaying the outstanding principal amount of the December 2015 Notes (an “December 2015 Optional Redemption”), in whole or in part, by paying to the holders a sum of money in cash equal to one hundred percent (100%) of the principal amount to be redeemed, together with accrued but unpaid interest thereon, if any, and any and all other sums due, accrued or payable to the holder arising under the December 2015 Note through the December 2015 Redemption Payment Date and 2.8986 shares of the Company’s Common Stock for each $1.00 of December 2015 Note principal amount being redeemed. A Notice of Redemption, if given, may be given on the first Trading Day following twenty (20) consecutive Trading Days during which all of the “Equity Conditions”, as defined, have been in effect. The Company evaluated the Optional Redemption in ASC 815, and concluded that the Optional Redemption meets the criteria in ASC 815, and therefore, is accounted for as a liability. As of December 31, 2016, the Optional Redemption was recorded as a derivative liability on the consolidated Balance Sheet using “Monte Carlo Method” modeling and at each subsequent reporting date, the fair value of the Optional Redemption liability will be re-measured and changes in the fair value will be recorded in the consolidated Statements of Operations. The Optional Redemption liability fair value was originally valued at $199,150 and was re-measured at fair value that was determined to be $130,448 at November 30, 2016 (Successor) and remeasured to be $97,348 at December 31, 2016 (Successor), respectively. During the one month ended December 31, 2016 (Successor), we recorded a gain on Optional Redemption valuation of $33,100 in the change in fair value of derivative liabilities in the accompanying consolidated Statements of Operations. December 31, 2016 June 30, 2016 Expected dividend yield 0.00 % 0.00 % Expected stock-price volatility 50.0 % 50.0% - 60.0 % Risk-free interest rate 0.62 % 0.36 % Expected term of options (years) 0.5 .5 - 1.0 Stock price $ 0.11 $ 0.25 Conversion price $ 0.12 $ 0.12 December 2015 Purchaser Conversion The December 2015 Purchaser has the right at any time after the December 2015 Original Issue Date until the outstanding balance of the December 2015 Note has been paid in full, to convert all or any part of the outstanding balance into shares (“December 2015 Purchaser Conversion Shares”) of the Company’s common stock, of the portion of the outstanding balance being converted (the “December 2015 Conversion Amount”) divided by the December 2015 Purchaser Conversion Price of $0.12, subject to potential future adjustments described below. If the total outstanding balance of the Note were convertible as of December 31, 2016, the December 2015 Note would have been convertible into 7,187,500 shares of our common stock. The Company evaluated the note under the requirements of ASC 480 “Distinguishing Liabilities From Equity” and concluded that the December 2015 Note does not fall within the scope of ASC 480. The Company next evaluated the December 2015 Note under the requirements of ASC 815 “Derivatives and Hedging”. Due to the existence of the anti-dilution provision which reduces the December 2015 Purchaser Conversion Price in the event of subsequent dilutive issuances by the Company below the December 2015 Purchaser Conversion Price as described above, the December 2015 Purchaser Conversion feature does not meet the definition of “indexed to” the Company’s stock, and the scope exception to ASC 815’s derivative accounting provisions does not apply. The Company also evaluated the embedded derivative criteria in ASC 815, and concluded that the December 2015 Purchaser Conversion feature meets all of the embedded derivative criteria in ASC 815, and therefore, the December 2015 Purchaser Conversion feature meets the definition of an embedded derivative that should be separated from the note and accounted for as a derivative liability. The embedded derivative was recorded as a derivative liability on the consolidated Balance Sheet using “Monte Carlo Method” modeling and at each subsequent reporting date, the fair value of the embedded derivative liability will be remeasured and changes in the fair value will be recorded in the consolidated Statements of Operations. The original fair value of the derivative was $88,983 and the fair value was remeasured at November 30, 2016 and was determined to be $59,530. At December 31, 2016 (Successor), the embedded derivative was re-measured at fair value that was determined to be $32,320. During the one month ended December 31, 2016 (Successor), the Company recorded a gain on embedded derivative re-valuation of $27,210. December 31, 2016 Year Ended Expected dividend yield 0.00 % 0.00 % Expected stock-price volatility 50.0 % 50.0 % Risk-free interest rate 0.62 % 0.47% - 0.86 % Expected term of options (years) 0.5 .5 - 1.5 Stock price $ 0.11 $ 0.25 Conversion price $ 0.12 $ 0.12 December 2015 Purchaser Warrants The December 2015 Purchaser Warrants allow the December 2015 Purchaser to purchase up to a number of shares of Common Stock equal to 100% of such purchaser’s Note principal amount divided by $0.12, the conversion price in effect on the December 2015 Initial Closing Date, with a per share exercise price equal to $0.30, subject to adjustment. The term of the December 2015 Purchaser Warrants is at any time on or after the six (6) month anniversary of the December 2015 Original Issue Date and on or prior to the five (5) year anniversary of the December 2015 Initial Trading Date of the Company’s common stock on a Trading Market. The exercise price of the December 2015 Purchaser Warrants is $0.30 per share of the Company’s common stock, as may be adjusted from time to time pursuant to the antidilution provisions of the December 2015 Purchaser Warrants. The December 2015 Purchaser Warrants are exercisable by the Purchaser in whole or in part, as either a cash exercise or as a “cashless” exercise. The Company evaluated the Warrants under ASC 480 “Distinguishing Liabilities From Equity” and ASC 815 “Derivatives and Hedging”. Due to the existence of the antidilution provision, which reduces the Exercise Price and Conversion Price in the event of subsequent Dilutive Issuances, the December 2015 Purchaser Warrants are not indexed to the Company’s common stock, and the Company determined that the December 2015 Purchaser Warrants meet the definition of a derivative under ASC 815. At each subsequent reporting date, the fair value of the Purchaser Warrants will be remeasured and changes in the fair value will be reported in the consolidated Statements of Operations. The original fair value of the warrants were $439,107 and the remeasured fair value at November 30, 2016 was $368,311. At December 31, 2016, the warrant liability was re-measured at fair value that was determined to be $367,958. During the one month ended December 31, 2016 (Successor), the Company recorded a gain on warrant re-valuation of $353. December 31, 2016 Year Ended Expected dividend yield 0.00 % 0.00 % Expected stock-price volatility 50.0 % 50.0 % Risk-free interest rate 1.70 % 1.74 % Expected term of options (years) 0.5 .5 - 1.5 Stock price $ 0.11 $ 0.25 Exercise price $ 0.30 $ 0.30 December 2015 Purchaser Common Stock The December 2015 Purchasers were issued a total of 2,500,000 shares of the Company’s common stock, valued at $625,000 (based on the estimated fair value of the stock on the date of grant). Debt Discount The Company issued the December 2015 Notes with warrants that require liability treatment under ASC 815. As such, the proceeds of the notes were allocated, based on fair values, as follows: original issue discount of $138,000, $625,000 to the common shares issued, $439,107 to the warrants granted, and $88,983 to the embedded derivative, resulting in a debt discount to such notes of $862,500 with the remaining amount of approximately $429,000 expensed at inception of the note. The debt discount is accreted to interest expense over the term of the note. The Company recorded debt discount accretion of $48,791 to interest expense in the consolidated Statements of Operations during the one month ended December 31, 2016 (Successor) and has an unamortized debt discount of $273,859 as of December 31, 2016 (Successor). |
NOTES PAYBALE
NOTES PAYBALE | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
NOTES PAYBALE | NOTE 10 – NOTES PAYBALE Predecessor CCI borrows funds from third parties from time to time for working capital purposes. For the year ended December 31, 2015 (Predecessor), CCI had borrowings of $144,939 (including $29,039 of debt discount), repayments of $104,044, and accretion of debt discount of $29,039 for a balance of $40,895 at December 31, 2015. For the eleven months ended November 30, 2016 (Predecessor), CCI had borrowings of $257,100 (including $31,500 of debt discount), repayments of $174,338, and accretion of debt discount of $31,500. CCI issued notes payable to Menno Holterman (“Holterman Notes”), a director of CCI. As of December 31, 2014, CCI had borrowed $181,408 bearing interest at 10% (“December 2014 Note”). During the year ended December 31, 2015, CCI borrowed an additional $278,273 bearing no interest and had no repayments for a balance of $459,681 at December 31, 2015. During the eleven months ended November 30, 2016, CCI borrowed an additional $157,442 bearing no interest and had no repayments. For the 2015 and 2016 Notes, we imputed interest on the principal amount of the borrowings at 10% per annum. The terms of the December 2014 note call for interest only payments payable for the first three months of the note and beginning April 2015, payment of principal amortized over the remaining term of the note plus interest. The note was due June 1, 2016. As CCI is in default, the Holterman Notes were reclassed to short term note payable – related party. CCI recognized interest expense of $46,144 and $24,963 under Other (income) expense in the accompanying Statements of Operations for the eleven months ended November 30, 2016 (Predecessor) and the year ended December 31, 2015 (Predecessor), respectively. On October 1, 2014, CCI, through Owen deVries, its CEO and director, borrowed $50,000 from a related party through common ownership for working capital purposes. The loan was due on January 1, 2015 and bearing no interest. CCI imputed interest on $50,000 principal amount of the borrowings at 10% per annum. The note was repaid on January 2, 2015. |
STOCK TRANSACTIONS
STOCK TRANSACTIONS | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
STOCK TRANSACTIONS | NOTE 11 – stock transactionS Predecessor On March 30, 2015, CCI issued 200,000 preferred shares for aggregate gross proceeds of $200,000. On December 21, 2015, the preferred shares were exchanged for 232,000 common shares in a restructuring. On December 21, 2015, CCI issued 8,800,000 common shares to the shareholders. This transaction was accounted for as a stock split. CCI has retroactively restated per share and the outstanding shares for weighted average shares used in the basic and diluted earnings per share calculations for all periods presented, as a result of the reorganization. Successor As of December 31, 2016, the Company previously issued common shares pursuant to the terms of the Consent, Waiver and Modification Agreement (the “Agreement”) with certain Purchasers of Purchase Agreement dated December 23, 2015. The waivers contained in the Agreement were related to an increase in the shares issuable under the Company’s 2015 Stock Option Plan, a waiver of the right to participate in additional offerings by the Company, and allowing up to 20,000,000 shares of the Company’s common stock to be issued pursuant to a private or public offering at a price of not less than $0.30 per share. As consideration for the terms contained in the Agreement, as well as for a fee of $0.0001 per share, the Company issued an aggregate of 1,000,000 shares to the Purchasers. The aggregate fair market value of these shares was approximately $200,000 as the fair market value of the stock was $0.20 per share. We used recent sales of stock to determine the fair market value of these transactions. |
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK BASED COMPENSATION | NOTE 12 – STOCK BASED COMPENSATION 2015 Equity Incentive Plan (Successor) As of December 31, 2016, the board of directors and shareholders of the Company previously authorized the adoption and implementation of the Company’s 2015 Equity Incentive Plan (the “2015 Plan”). The principal purpose of the 2015 Plan is to attract, retain and motivate employees, officers, directors, consultants, agents, advisors and independent contractors of the Company and its related companies by providing them the opportunity to acquire a proprietary interest in the Company and to link their interests and efforts to the long-term interests of the Company's shareholders. Under the 2015 Plan, an aggregate of 20,000,000 shares of the Company's common stock have initially been reserved for issuance pursuant to a variety of stock-based compensation awards, including stock options, stock appreciation rights, stock awards, restricted stock, restricted stock units and other stock and cash-based awards. The exercise price for each option may not be less than fair market value of the common stock on the date of grant, and shall vest as determined by the Company’s board of directors but shall not exceed a ten-year period. As of December 31, 2016, the Company issued a total of 400,000 restricted common shares to members of its advisory committee (“Advisors”), valued at $100,000 (based on the estimated fair value of the stock on the date of grant) for outside advisory and consulting services pursuant to the Company’s 2015 Equity Incentive Plan. One-twelfth (1/12) of the shares will be earned each month. The Company will revalue the shares at each vesting period and recognize expense for the portion of the shares earned. The Company recognized compensation expense of $2,084 under general and administrative expenses in the accompanying consolidated Statements of Operations for the one month ended December 31, 2016 (Predecessor) with $35,417 remaining to be amortized. As of December 31, 2016, the Advisors had vested in 258,333 shares with 141,667 shares to vest over the remaining vesting period. As of December 31, 2016, the Company previously granted to its CEO, options to purchase 10,000,000 shares of our common stock under the 2015 Plan, valued at $2,500,000 (based on the Black Scholes valuation model on the date of grant). The Black-Scholes option-pricing model used the following weighted average assumptions as of December 31, 2016: (i) no dividend yield for each year, (ii) volatility of 35.6 percent, (iii) risk-free interest rate of 1.87 percent, (iv) stock price of $0.25, (v) exercise price of $0.005, and (vi) expected life of 6.0 years. The options will vest 50% on the first anniversary of the grant date (“First Year Vest”) and the remaining 50% of the shares shall vest in twelve (12) equal installments on the first day of each calendar month following the first anniversary of the Grant Date beginning on June 1, 2016 and ending on June 1, 2017 (“Second Year Vest”), provided that CEO is continuously employed by the Company from the grant date through such applicable vesting date. Notwithstanding the foregoing, 100% of the shares of the Company’s common stock subject to the Option shall fully vest if the Company shall successfully sell all of the shares of its common stock included in the primary offering of such common stock by the Company pursuant to the registration statement on Form S-1 to be filed with the Securities and Exchange Commission within ninety (90) days of the Grant Date. The First Year Vest options will amortize to expense over a 12 month period beginning May 2015 through April 2016 and the Second Year Vest options will amortize to expense over a 24 month period beginning May 2015 through April 2017. The Company recognized expense of $24,302 for the one month ended December 31, 2016 (Successor) within stock based compensation – related party in the accompanying consolidated Statement of Operations with the remaining $45,391 to be recognized over the remaining vesting period of five months. The following represents a summary of the Options outstanding at December 31, 2016 Weighted Average Aggregate Options Exercise Price Intrinsic Value * Outstanding at December 1, 2016 10,000,000 $ 0.005 $ 1,100,000 Granted - - - Exercised - - - Expired/Forfeited - - - Outstanding at December 31, 2016 10,000,000 $ 0.005 $ 1,100,000 Exercisable at December 31, 2016 7,916,665 $ - $ - Expected to be vested 10,000,000 $ 0.005 $ - * Based on the Company’s stock price on December 1, 2016 (Successor) and December 31 2016 (Successor), respectively |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 13 – Related Party Transactions Other than as set forth below, and as disclosed in Notes 3, 8, 10, 11, 12, and 16, there have not been any transaction entered into or been a participant in which a related person had or will have a direct or indirect material interest. Sublease The Company’s customer service and distribution facility is subleased at $7,834 per month through CCI for a period of eighteen months. The sublease may be terminated by either party with ninety (90) days written notice. On March 1, 2017, the Company gave ninety day written notice to terminate the sublease with no costs to terminate the lease. Employment Agreements (Successor) The Company previously had a consulting agreement with its CEO under which he was compensated $120,000 per annum. Beginning June 20, 2013, this contract was to continue unless and until terminated at any time by either the Company or CEO giving two month notice in writing. Such consulting agreement was terminated by mutual agreement as of May 1, 2015 and superseded by the employment agreement effective May 1, 2015. The initial term of employment agreement expires on December 31, 2018, unless earlier terminated by either party. The agreement provides for automatic one-year renewals, unless either party gives notice of their intention not to extend at least 90 days prior to the expiration of any term. Under this employment agreement, the CEO receives a minimum annual base salary of $180,000, is eligible to receive an annual performance bonus each year, if performance goals established by the Company’s board of directors are met, and is entitled to participate in customary benefit plans. There have been no performance goals established. If the Company terminates the CEO’s employment without cause, he will be entitled to the following: (i) payment of (x) accrued compensation and unpaid base salary through the date of such termination, (y) any amounts previously deferred by CEO and (z) the payment or reimbursement for expenses incurred prior to the date of such termination; (ii) an amount equal to 200% of the base salary and (iii) continued participation, at the Company’s expense, in the Company’s health and welfare programs for a period of two years after the date of termination. The Company incurred compensation expense of $15,000 for the month ended December 31, 2016 (Successor). Deferred compensation totaling $529,000 as of December 31, 2016 (Successor), is included in Accrued Compensation in the accompanying consolidated Balance Sheet. Deferred compensation includes $315,000 related to the employment agreement and $214,000 related to the consulting agreement. In addition, we incurred employee benefits on behalf of the CEO totaling approximately $43,239. Employee benefits include health and dental coverage, use of a car, car insurance, and a gym membership. The Company previously had a consulting agreement with its secretary and director (“Secretary”) under which she was compensated $60,000 per annum. Beginning June 20, 2013, this contract was to continue unless and until terminated at any time by either the Company or Secretary giving two month notice in writing. Such consulting agreement was terminated by mutual agreement as of May 1, 2015 and superseded by the employment agreement effective May 1, 2015. The initial term of employment agreement expires on December 31, 2018, unless earlier terminated by either party. The agreement provides for automatic one-year renewals, unless either party gives notice of their intention not to extend at least 90 days prior to the expiration of any term. Under this employment agreement, the Secretary receives a minimum annual base salary of $80,000. If the Company terminates the Secretary’s employment without cause, she will be entitled to the following: (i) payment of (x) accrued compensation and unpaid base salary through the date of such termination, (y) any amounts previously deferred by Secretary and (z) the payment or reimbursement for expenses incurred prior to the date of such termination; (ii) an amount equal to 50% of the base salary and (iii) continued participation, at the Company’s expense, in the Company’s health and welfare programs for a period of two years after the date of termination. The Company incurred compensation expense of $6,667 for the month ended December 31, 2016 (Successor). Deferred compensation totaling $247,000 as of December 31, 2016 (Successor), is included in Accrued Compensation in the accompanying consolidated Balance Sheet. Deferred compensation includes $133,333 related to the employment agreement and $113,667 related to the consulting agreement. In addition, we incurred employee benefits on behalf of the Secretary totaling approximately $7,176. Employee benefits include use of a car and car insurance. Consulting Agreement On December 1, 2016, the Company entered into a consulting agreement with Owen deVries, CCI’s CEO and director. The agreement calls for Mr. deVries to develop strategic partnerships and international business on the Company’s behalf for initial monthly payments of $11,000. The agreement was amended in April 2017 to reduce the monthly payment to $4,000. The agreement may be terminated given 90 day written notice. Loan and Advances Successor During 2016, the Company received advances from its CEO/director totaling $256,606, incurred business expenses of $551,724 (comprised of operating expenses of $334,627, inventory purchases totaling $213,815, and purchased equipment of $3,282) and had repayments of $817,527. The Company has a balance owed to the related party of $440,747 at December 31, 2016 (Successor). During 2016, the Company incurred $180,000 of deferred compensation related to the CEO/director’s employment agreement and $80,000 of deferred compensation related to the Secretary’s employment agreement. As of December 31, 2016 (Successor), accrued compensation-related party was $776,000. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 14 – INCOME TAXES At December 31, 2016 (Successor), net operating loss carry forwards for Federal and state income tax purposes totaling approximately $2,914,000 available to reduce future income which, if not utilized, will begin to expire in the year 2032. There is no income tax affect due to the recognition of a full valuation allowance on the expected tax benefits of future loss carry forwards based on uncertainty surrounding realization of such assets. A reconciliation of the statutory income tax rates and the effective tax rate is as follows: For the One For the Eleven For the Year 2016 2016 2015 Successor Predecessor Predecessor Statutory U.S. federal rate 34.0 % 34.0 % 34.0 % State income tax, net of federal benefit 5.9 % 5.9 % 5.9 % Permanent differences (8.3 )% (2.8 )% (2.1 )% Valuation allowance (31.6 )% (37.1 )% (37.8 )% Provision for income taxes 0.0 % 0.0 % 0.0 % The tax effects of the temporary differences and carry forwards that give rise to deferred tax assets consist of the following: December 31, December 31, 2016 2015 Successor Predecessor Deferred tax assets: Net operating loss carry forwards $ 1,161,751 $ 1,071,043 Stock based compensation 1,043,626 - Valuation allowance (2,205,377 ) (1,071,043 ) $ - $ - Major tax jurisdictions are the United States and California. All of the tax years will remain open three and four years for examination by the Federal and state tax authorities, respectively, from the date of utilization of the net operating loss. There are no tax audits pending. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | NOTE 15 – EARNINGS PER SHARE FASB ASC Topic 260, Earnings Per Share Basic earnings (loss) per share are computed by dividing net earnings available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. In periods where losses are reported, the weighted-average number of common stock outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive. Basic and diluted earnings (loss) per share are the same since net losses for all periods presented and including the additional potential common shares would have an anti-dilutive effect. The following table sets forth the computation of basic and diluted net income per share: For the One For the Eleven Month Ended Months Ended For the Year Ended December 31, November 30, December 31, 2016 2016 2015 Successor Predecessor Predecessor Net loss attributable to the common stockholders $ (199,142 ) $ (632,388 ) $ (800,582 ) Basic weighted average outstanding shares of common stock 43,163,881 10,032,000 9,806,356 Dilutive effect of options and warrants - - - Diluted weighted average common stock and common stock equivalents 43,163,881 10,032,000 9,806,356 Loss per share: Basic and diluted $ (0.00 ) $ (0.06 ) $ (0.08 ) |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 16 – COMMITMENTS AND CONTINGENCIES Operating Leases The Company has month-to month leases for its headquarters and its sales and marketing office. The total rent is approximately $3,200 per month. The Company’s customer service and distribution facility is located at 1933 S. Broadway. Los Angeles, California. This facility is subleased at $7,834 per month through CCI for a period of eighteen months. The sublease may be terminated by either party with ninety (90) days written notice. On March 1, 2017, the Company gave ninety day written notice to terminate the sublease with no costs to terminate the lease. Rent expense was approximately $11,031 for the one month ended December 31, 2016 (Successor), $84,572 for the eleven months ended November 30, 2016 (Predecessor) and $63,908 for the year ended December 31, 2015 (Predecessor). Legal From time to time, various lawsuits and legal proceedings may arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any legal proceedings or claims that it believes will have a material adverse effect on its business, financial condition or operating results. |
SUBSEQUENT EVENTS (SUCCESSOR)
SUBSEQUENT EVENTS (SUCCESSOR) | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 17 – SUBSEQUENT EVENTS (SUCCESSOR) On March 17, 2017, the Company held an annual meeting of its shareholders. At the annual meeting, the majority shareholders of the Company approved an amendment to the articles of incorporation, authorizing one share of Series A Preferred stock, which would be issued to Joseph Segelman. The share of Series A Preferred stock shall vote together as a single class with the holders of the Company’s common stock, and the holders of any other class or series of shares entitled to vote with the common stock, with the holder of the Series A Preferred stock being entitled to fifty-one percent (51%) of the total votes on all such matters regardless of the actual number of shares of Series A Preferred stock then outstanding, and the holders of the common stock and any other shares entitled to vote shall be entitled to their proportional share of the remaining forty-nine percent (49%) of the total votes based on their respective voting power. The share of Series A Preferred stock shall not be entitled to receive any distributions in the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary. The share of Series A Preferred stock shall not be eligible to receive dividends. The class of Series A Preferred stock shall be automatically cancelled ten (10) years after the initial issue date of such Series A Preferred stock. On May 19, 2017, the Company received the file stamped certificate of amendment from the state of Delaware, which lists an effective date of March 20, 2017. On May 23, 2017, the Company issued the share of Series A Preferred stock to Joseph Segelman, which will allow Mr. Segelman to maintain fifty-one percent (51%) voting control of the Company regardless of how many shares of common stock are issued and outstanding. Therefore, the Company considers the Series A Preferred stock to be issued on May 23, 2017. On March 17, 2017, the shareholders of the Company approved a corporate name change to Reign Corporation to better identify the business operations of , as due to recent acquisitions, no longer only sells sapphire jewelry. believes it will be better positioned in the future with a corporate name that does not identify with only one business line. On January 2, 2017, the Company issued 150,000 restricted common shares, valued at $14,985 (based on our stock price on the date of grant) for outside consulting services. On January 22, 2017, the Company issued a total of 103,200 restricted common shares to our employees, valued at $5,160 (based on our stock price on the date of grant) as compensation pursuant to the Company’s 2015 Equity Incentive Plan. There were no other events subsequent to December 31, 2016, and up to the date of this filing that would require disclosure. |
SUMMARY OF SIGNIFICANT ACCOUN24
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Consolidation | Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Reign Brands, Inc. All significant intercompany accounts and transactions are eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America 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 dates of the consolidated financial statements and the reported amounts of net sales and expenses during the reported periods. Actual results may differ from those estimates and such differences may be material to the consolidated financial statements. The more significant estimates and assumptions by management include among others: inventory valuation, derivative liabilities, warrant liabilities, common stock and option valuation, valuation of acquired intangible assets. and the recoverability of intangibles. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions. |
Cash | Cash The Company’s cash is held in bank accounts in the United States and is insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. The Company has not experienced any cash losses. |
Income Taxes | Income Taxes Income taxes are accounted for under an asset and liability approach. This process involves calculating the temporary and permanent differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The temporary differences result in deferred tax assets and liabilities, which would be recorded on the Balance Sheets in accordance with ASC 740, which established financial accounting and reporting standards for the effect of income taxes. The likelihood that its deferred tax assets will be recovered from future taxable income must be assessed and, to the extent that recovery is not likely, a valuation allowance is established. Changes in the valuation allowance in a period are recorded through the income tax provision in the consolidated Statements of Operations. ASC 740-10-30 was adopted from the date of its inception. ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized in an entity’s consolidated financial statements and prescribes a recognition threshold and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. Under ASC 740-10, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, ASC 740-10 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As a result of the implementation of ASC 740-10, the Company does not have a liability for unrecognized income tax benefits. |
Advertising and Marketing Costs | Advertising and Marketing Costs Advertising and marketing costs are recorded as general and administrative expenses when they are incurred. Advertising and marketing expenses were recorded for the one month ended December 31, 2016 (Successor) of approximately $98,000, for the eleven months ended November 30, 2016 (Predecessor) of approximately $315,000, and year ended December 31, 2015 (Predecessor) of approximately $796,000. |
Comprehensive Income | Comprehensive Income Comprehensive income is reported in accordance with FASB ASC Topic 220 “Comprehensive Income," which established standards for reporting and displaying comprehensive income and its components in a financial statement that is displayed with the same prominence as other financial statements. Total comprehensive income is defined as all changes in shareholders' equity during a period, other than those resulting from investments by and distributions to shareholders (i.e., issuance of equity securities and dividends). Generally, total comprehensive income (loss) equals net income (loss) plus or minus adjustments for currency translation. There are no items other than net loss affecting comprehensive loss for the one month ended December 31, 2016 (Successor), for the eleven months ended November 30, 2016 (Predecessor), and year ended December 31, 2015 (Predecessor), respectively. |
Foreign Currency - Functional and Presentation Currency | Foreign Currency - Functional and Presentation Currency The functional currency represents the currency of the primary economic environment in which the entity operates. Management has determined the functional currency of the Company to be the USD, as sales prices and major costs of operating expenses are primarily influenced by fluctuations in the USD, and with its Chief Executive Officer and director (“CEO”), and employees of the Company headquartered and operating in the United States. The results of transactions in foreign currency are remeasured into the functional currency at the average rate of exchange during the reporting period. The Company had no aggregate net foreign currency remeasurements included in general and administrative expenses in the accompanying consolidated statements of operations for the one month ended December 31, 2016 (Successor), for the eleven months ended November 30, 2016 (Predecessor), and year ended December 31, 2015 (Predecessor), respectively. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated into the Company’s reporting currency of USD at the exchange rates prevailing at the balance sheet date. All translation adjustments resulting from the translation of the consolidated financial statements into the reporting currency at USD are dealt with as a separate component within shareholders’ equity. There were no translation adjustments for the one month ended December 31, 2016 (Successor), for the eleven months ended November 30, 2016 (Predecessor), and year ended December 31, 2015 (Predecessor). |
Revenue Recognition | Revenue Recognition Revenues are recognized in accordance with FASB ASC Topic 605, “Revenue Recognition”, and with the guidelines of the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104 “Revenue Recognition”. Under SAB 104, four conditions must be met before revenue can be recognized: (i) there is persuasive evidence that an arrangement exists, (ii) delivery has occurred or service has been rendered, (iii) the price is fixed or determinable, and (iv) collection is reasonably assured. Revenue is recognized from product sales when the product is shipped to the customer, provided that collection of the resulting receivable is reasonably assured. Credit is granted generally for terms of 7 to 90 days, based on credit evaluations. Discounts and refunds are recorded as a reduction of revenue. There is a no return policy. The return policy is currently being evaluated to be more in line with industry standards. |
Inventories | Inventories Reign Sapphire Inventories are stated at the lower of cost or market on a lot basis each quarter. A lot is determined by the cut, clarity, size, and weight of the sapphires. Inventory consists of sapphire jewels that meet rigorous grading criteria and are of cuts and sizes most commonly used in the jewelry industry. As of December 31, 2016 (Successor), the Company carried primarily loose sapphire jewels and loose sapphire jewels held as samples. As of December 31, 2015 (Predecessor), there was minimal inventory. Samples are used to show potential customers what the jewelry would look like. Promotional items given to customers that are not expected to be returned will be removed from inventory and expensed. There have been no promotional items given to customers as of December 31, 2016. The Company performs its own in-house assessment based on gem guide and the current market price for metals to value its inventory on an annual basis or if circumstances dictate sooner to determine if the estimated fair value is greater or less than cost. In addition, the inventory is reviewed each quarter by the Company against industry prices from gem-guide and if there is a potential impairment, the Company would appraise the inventory. The estimated fair value is subject to significant change due to changes in popularity of cut, perceived grade of the clarity of the sapphires, the number, type and size of inclusions, the availability of other similar quality and size sapphires, and other factors. As a result, the internal assessed value of the sapphires could be significantly lower from the current estimated fair value. Loose sapphire jewels do not degrade in quality over time and are not subject to fashion trends. The estimated fair value per management’s internal assessment is greater than the cost, therefore, there is no indicator of impairment as of December 31, 2016 (Successor). CCI and Le Bloc CCI and Le Bloc products are outsourced to a third party for manufacture, made to order, and when completed are shipped to the customer. The inventory for CCI and Le Bloc are considered immaterial as of December 31, 2016 (Successor) and December 31, 2015 (Predecessor). |
Property and Equipment | Property and Equipment Property and equipment are carried at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets, generally five years. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. Fixed assets are examined for the possibility of decreases in value when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. |
Business Combinations | Business Combinations Amounts paid for acquisitions are allocated to the assets acquired and liabilities assumed based on their estimated fair value at the date of acquisition. The fair value of identifiable intangible assets is based on detailed valuations that use information and assumptions provided by management, including expected future cash flows. We allocate any excess purchase price over the fair value of the net assets and liabilities acquired to goodwill. Identifiable intangible assets with finite lives are amortized over their useful lives. Acquisition-related costs, including advisory, legal, accounting, valuation and other costs, are expensed in the periods in which the costs are incurred. The results of operations of acquired businesses are included in the consolidated financial statements from the acquisition date. |
Intangible Assets and Goodwill | Intangible Assets and Goodwill Goodwill is the cost of an acquisition less the fair value of the net assets of the acquired business. Intangible assets consist primarily of tradenames, proprietary designs, developed technology – website, and developed technology – Ipad application. Our intangible assets are being amortized on a straight-line basis over a period of three to ten years. |
Impairment of Long-lived Assets and Goodwill | Impairment of Long-lived Assets and Goodwill We evaluate goodwill for impairment annually in the fourth quarter, and whenever events or changes in circumstances indicate it is more likely than not that the fair value of a reporting unit containing goodwill is less than its carrying amount. The goodwill impairment test consists of a two-step process, if necessary. The first step is to compare the fair value of a reporting unit to its carrying value, including goodwill. We typically use discounted cash flow models to determine the fair value of a reporting unit. The assumptions used in these models are consistent with those we believe hypothetical marketplace participants would use. If the fair value of the reporting unit is less than its carrying value, the second step of the impairment test must be performed in order to determine the amount of impairment loss, if any. The second step compares the implied fair value of the reporting unit's goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit's goodwill exceeds its implied fair value, an impairment charge is recognized in an amount equal to that excess. There are no impairments as of December 31, 2016 (Successor) or December 31, 2015 (Predecessor). We periodically evaluate whether the carrying value of property, equipment and intangible assets has been impaired when circumstances indicate the carrying value of those assets may not be recoverable. The carrying amount is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the carrying value is not recoverable, the impairment loss is measured as the excess of the asset’s carrying value over its fair value. There are no impairments as of December 31, 2016 (Successor) and 2015 (Predecessor). Our impairment analyses require management to apply judgment in estimating future cash flows as well as asset fair values, including forecasting useful lives of the assets, assessing the probability of different outcomes, and selecting the discount rate that reflects the risk inherent in future cash flows. If the carrying value is not recoverable, we assess the fair value of long-lived assets using commonly accepted techniques, and may use more than one method, including, but not limited to, recent third party comparable sales and discounted cash flow models. If actual results are not consistent with our assumptions and estimates, or our assumptions and estimates change due to new information, we may be exposed to an impairment charge in the future. |
Deferred revenue | Deferred revenue Deferred revenue consists of customer orders paid in advance of the delivery of the order. Deferred revenue is classified as short-term as the typical order ships within approximately three weeks of placing the order. Deferred revenue is recognized as revenue when the product is shipped to the customer and all other revenue recognition criteria have been met. Deferred Revenue (Predecessor) In March 2016, CCI entered into an agreement with Knight Capital LLC (“Knight”) whereby in exchange for $147,500, CCI agreed to sell Knight $199,125 of its future sales. CCI accounted for the sale of future receivables in accordance with ASC 470 (“Debt”) as deferred revenue on the date of the agreement. For the eleven months ended November 30, 2016 (Predecessor), CCI repaid approximately $102,000 to Knight. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The provisions of accounting guidance, FASB Topic ASC 825 requires all entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value, and defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. As of December 31, 2016 (Successor) and 2015 (Predecessor), the fair value of cash, accounts receivable, accounts payable, accrued expenses, notes payable, and convertible debt approximated carrying value due to the short maturity of the instruments, quoted market prices or interest rates which fluctuate with market rates. |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, as follows: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. There were no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. The warrant and the embedded derivative liabilities are recognized at fair value on a recurring basis at December 31, 2016 (Successor) and are Level 3 measurements (see Note 9). There have been no transfers between levels. |
Debt | Debt The Company issues debt that may have separate warrants, conversion features, or no equity-linked attributes. Debt with warrants Convertible debt – derivative treatment If the conversion feature within convertible debt meets the requirements to be treated as a derivative, we estimate the fair value of the convertible debt derivative using Monte Carlo Method upon the date of issuance. If the fair value of the convertible debt derivative is higher than the face value of the convertible debt, the excess is immediately recognized as interest expense. Otherwise, the fair value of the convertible debt derivative is recorded as a liability with an offsetting amount recorded as a debt discount, which offsets the carrying amount of the debt. The convertible debt derivative is revalued at the end of each reporting period and any change in fair value is recorded as a gain or loss in the statement of operations. The debt discount is amortized through interest expense over the life of the debt. Convertible debt – beneficial conversion feature If the conversion feature does not qualify for either the derivative treatment or as a BCF, the convertible debt is treated as traditional debt. |
Employee Stock Based Compensation | Employee Stock Based Compensation Stock based compensation issued to employees and members of our board of directors is measured at the date of grant based on the estimated fair value of the award, net of estimated forfeitures. The grant date fair value of a stock based award is recognized as an expense over the requisite service period of the award on a straight-line basis. For purposes of determining the variables used in the calculation of stock based compensation issued to employees , |
Non-Employee Stock Based Compensation | Non-Employee Stock Based Compensation Issuances of the Company's common stock or warrants for acquiring goods or services are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date for the fair value of the equity instruments issued to consultants or vendors is determined at the earlier of (i) the date at which a commitment for performance to earn the equity instruments is reached (a "performance commitment" which would include a penalty considered to be of a magnitude that is a sufficiently large disincentive for nonperformance) or (ii) the date at which performance is complete. Although situations may arise in which counter performance may be required over a period of time, the equity award granted to the party performing the service is fully vested and non-forfeitable on the date of the agreement. As a result, in this situation in which vesting periods do not exist as the instruments fully vested on the date of agreement, the Company determines such date to be the measurement date and will record the estimated fair market value of the instruments granted as a prepaid expense and amortize such amount to general and administrative expense in the accompanying statement of operations over the contract period. When it is appropriate for the Company to recognize the cost of a transaction during financial reporting periods prior to the measurement date, for purposes of recognition of costs during those periods, the equity instrument is measured at the then-current fair values at each of those interim financial reporting dates. |
Non-Cash Equity Transactions | Non-Cash Equity Transactions Shares of equity instruments issued for non-cash consideration are recorded at the fair value of the consideration received based on the market value of services to be rendered, or at the value of the stock given, considered in reference to contemporaneous cash sale of stock. |
Earnings per Share | Earnings per Share Diluted earnings (loss) per share are computed on the basis of the weighted average number of common shares (including common stock subject to redemption) plus dilutive potential common shares outstanding for the reporting period. In periods where losses are reported, the weighted-average number of common stock outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive. The total number of potential additional dilutive securities outstanding for the one month ended December 31, 2016 (Successor), for the eleven months ended November 30, 2016 (Predecessor), and year ended December 31, 2015 (Predecessor), was none since the Company had net losses and any additional potential common shares would have an anti-dilutive effect. |
Related Parties | Related Parties Related parties are any entities or individuals that, through employment, ownership or other means, possess the ability to direct or cause the direction of the management and policies of the Company. |
Concentrations, Risks, and Uncertainties | Concentrations, Risks, and Uncertainties Business Risk Substantial business risks and uncertainties are inherent to an entity, including the potential risk of business failure. The Company is headquartered and operates in the United States. To date, the Company has generated limited revenues from operations. As the Company generates significant revenues from operations, business activities will also include Australia and Asia and geographic segment reporting will be provided. There can be no assurance that the Company will be able to successfully continue to produce its products and failure to do so would have a material adverse effect on the Company’s financial position, results of operations and cash flows. Also, the success of the Company’s operations is subject to numerous contingencies, some of which are beyond management’s control. These contingencies include general economic conditions, price of raw material, competition, governmental and political conditions, and changes in regulations. Because the Company is dependent on foreign trade in Australia and Asia, the Company is subject to various additional political, economic and other uncertainties. Among other risks, the Company’s operations will be subject to risk of restrictions on transfer of funds, domestic and international customs, changing taxation policies, foreign exchange restrictions, and political and governmental regulations. The Company has business activities in Australia and Asia, which may give rise to significant foreign currency risks from fluctuations and the degree of volatility of foreign exchange rates between USD and the Australian currency AUD. The results of operations denominated in foreign currency are translated at the average rate of exchange during the reporting period. The Company had no aggregate net foreign currency transactions included in the income statement for the one month ended December 31, 2016 (Successor), for the eleven months ended November 30, 2016 (Predecessor), and year ended December 31, 2015 (Predecessor), respectively. Interest rate risk Financial assets and liabilities do not have material interest rate risk. Credit risk The Company is exposed to credit risk from its cash in banks and accounts receivable. The credit risk on cash in banks is limited because the counterparties are recognized financial institutions. There were no customers that accounted for 10% or more of total revenue for the one month ended December 31, 2016 (Successor), for the eleven months ended November 30, 2016 (Predecessor), and for the year ended December 31, 2015 (Predecessor), respectively. There were no customers that comprised 10% or more of accounts receivable at December 31, 2016 (Successor), and one customer that accounted for 10%, comprising 28.5%, or more of accounts receivable at December 31, 2015 (Predecessor). Foreign currency risk The Company has transactions settled in AUD and British Pound. Thus, the Company has foreign currency risk exposure. Seasonality The business is subject to substantial seasonal fluctuations. Historically, a significant portion of net sales and net earnings have been realized during the period from October through December. Major Suppliers The Company does not manufacture its own products and currently depends primarily upon ASK Gold to manufacture its products. Pursuant to the acquisition of CCI (see Note 4), the Company issued ASK Gold 1,000,000 shares of the 7,000,000 shares issued in connection to the transaction. In the event that the manufacturing provided by ASK Gold were discontinued, it is believed that alternate suppliers could be identified which would be able to provide it with sufficient levels of products at terms similar to those of ASK Gold. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Financial Accounting Standards Board, or FASB, Accounting Standards Update, or FASB ASU 2017-04 “Simplifying the Test for Goodwill Impairment (Topic 350)” FASB ASU 2017-01 “Clarifying the Definition of a Business (Topic 805)” FASB ASU 2016-15 “Statement of Cash Flows (Topic 230)” – FASB ASU 2016-12 “Revenue from Contracts with Customers (Topic 606)” FASB ASU 2016-11 “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815)” FASB ASU 2016-10 “Revenue from Contracts with Customers (Topic 606)” FASB ASU 2016-09 “Compensation – Stock Compensation (Topic 718)” FASB ASU 2016-02 “Leases (Topic 842)” – FASB ASU 2015-17 ”Income Taxes (Topic 740)” – FASB ASU 2015-16 “Business Combinations (Topic 805),” or ASU 2015-16 FASB ASU 2015-11 “Inventory (Topic 330): Simplifying the Measurement of Inventory,” or ASU 2015-11 |
ACQUISITION OF COORDINATES CO25
ACQUISITION OF COORDINATES COLLECTION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Business Combinations [Abstract] | |
Schedule of purchase price over the value of the net assets acquired | The excess of purchase price over the value of the net assets acquired was recorded as goodwill. Total Purchase Consideration: Common stock issued $ 770,000 Estimated fair value of contingent payments 424,511 $ 1,194,511 |
Schedule of estimated fair values of the tangible and intangible assets acquired | The following table summarizes the estimated fair values of the tangible and intangible assets acquired as of the date of Acquisition: Net assets acquired: Equipment $ 32,564 Developed technology - website 117,500 Developed technology – Ipad application 117,500 Tradename 365,000 Proprietary design 80,000 Goodwill 481,947 $ 1,194,511 |
INVENTORY (Tables)
INVENTORY (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consisted of the following as of: December 31, December 31, Successor Predecessor Raw materials $ 478,096 $ 6,987 Work-in-process 111,361 - Samples 134,145 - $ 723,602 $ 6,987 |
EQUIPMENT (Tables)
EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of equipment | Equipment consisted of the following as of: December 31, December 31, Estimated Life Successor Predecessor Office equipment 5 years $ 2,451 $ 15,444 Computer equipment 3 years 39,311 47,163 Accumulated depreciation (3,712 ) (43,739 ) $ 38,050 $ 18,868 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | Intangible assets consisted of the following as of: December 31, 2016 December 31, 2015 Estimated Life Successor Predecessor Trademarks 3.3 – 4.5 years $ 260,000 $ 88,700 Website 3 years 35,125 97,944 Acquired tradename 10 years 365,000 - Acquired proprietary design 5 years 80,000 - Acquired developed technology - website 3 years 117,500 - Acquired developed technology – Ipad application 3 years 117,500 - Goodwill indefinite 481,947 - Accumulated amortization (27,866 ) (60,392 ) $ 1,429,206 $ 126,252 |
CONVERTIBLE NOTE PAYABLE (Table
CONVERTIBLE NOTE PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of fair value assumptions using monte carlo simulation | The fair value of the embedded derivative liability is measured in accordance with ASC 820 “Fair Value Measurement”, using “Monte Carlo Method” modeling incorporating the following inputs: December 31, November 10, 2016 2016 Expected dividend yield 0.00 % 0.00 % Expected stock-price volatility 55.0 % 55.0 % Risk-free interest rate 1.47 % 1.17% - 1.56 % Expected term of options (years) 1.5 - 5 .5 - 1.5 Stock price $ 0.11 $ 0.12 Conversion price $ 0.12 $ 0.12 The fair value of the November 2016 Purchaser Warrants is measured in accordance with ASC 820 “Fair Value Measurement”, using “Monte Carlo simulation” modeling, incorporating the following inputs: December 31, November 10, 2016 2016 Expected dividend yield 0.00 % 0.00 % Expected stock-price volatility 55.0 % 55.0 % Risk-free interest rate 1.93 % 1.93 % Expected term of options (years) 1.5 - 5 .5 - 1.5 Stock price $ 0.11 $ 0.12 Exercise price $ 0.30 $ 0.30 |
Schedule of purchaser warrants fair value assumptions using monte carlo simulation | During the one month ended December 31, 2016 (Successor), we recorded a gain on Optional Redemption valuation of $33,100 in the change in fair value of derivative liabilities in the accompanying consolidated Statements of Operations. December 31, 2016 June 30, 2016 Expected dividend yield 0.00 % 0.00 % Expected stock-price volatility 50.0 % 50.0% - 60.0 % Risk-free interest rate 0.62 % 0.36 % Expected term of options (years) 0.5 .5 - 1.0 Stock price $ 0.11 $ 0.25 Conversion price $ 0.12 $ 0.12 During the one month ended December 31, 2016 (Successor), the Company recorded a gain on embedded derivative re-valuation of $27,208. December 31, 2016 Year Ended Expected dividend yield 0.00 % 0.00 % Expected stock-price volatility 50.0 % 50.0 % Risk-free interest rate 0.62 % 0.47% - 0.86 % Expected term of options (years) 0.5 .5 - 1.5 Stock price $ 0.11 $ 0.25 Conversion price $ 0.12 $ 0.12 During the one month ended December 31, 2016 (Successor), the Company recorded a gain on warrant re-valuation of $354. December 31, 2016 Year Ended Expected dividend yield 0.00 % 0.00 % Expected stock-price volatility 50.0 % 50.0 % Risk-free interest rate 1.70 % 1.74 % Expected term of options (years) 0.5 .5 - 1.5 Stock price $ 0.11 $ 0.25 Exercise price $ 0.30 $ 0.30 |
STOCK BASED COMPENSATION (Table
STOCK BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of options outstanding and changes during the period | The following represents a summary of the Options outstanding at December 31, 2016 Weighted Average Aggregate Options Exercise Price Intrinsic Value * Outstanding at December 1, 2016 10,000,000 $ 0.005 $ 1,100,000 Granted - - - Exercised - - - Expired/Forfeited - - - Outstanding at December 31, 2016 10,000,000 $ 0.005 $ 1,100,000 Exercisable at December 31, 2016 7,916,665 $ - $ - Expected to be vested 10,000,000 $ 0.005 $ - * Based on the Company’s stock price on December 1, 2016 (Successor) and December 31 2016 (Successor), respectively |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of reconciliation of the statutory income tax rates and effective tax rate | A reconciliation of the statutory income tax rates and the effective tax rate is as follows: For the One For the Eleven For the Year 2016 2016 2015 Successor Predecessor Predecessor Statutory U.S. federal rate 34.0 % 34.0 % 34.0 % State income tax, net of federal benefit 5.9 % 5.9 % 5.9 % Permanent differences (8.3 )% (2.8 )% (2.1 )% Valuation allowance (31.6 )% (37.1 )% (37.8 )% Provision for income taxes 0.0 % 0.0 % 0.0 % |
Schedule of deferred tax assets | The tax effects of the temporary differences and carry forwards that give rise to deferred tax assets consist of the following: December 31, December 31, 2016 2015 Successor Predecessor Deferred tax assets: Net operating loss carry forwards $ 1,161,751 $ 1,071,043 Stock based compensation 1,043,626 - Valuation allowance (2,205,377 ) (1,071,043 ) $ - $ - |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of computation of basic and diluted net income per share | The following table sets forth the computation of basic and diluted net income per share: For the One For the Eleven Month Ended Months Ended For the Year Ended December 31, November 30, December 31, 2016 2016 2015 Successor Predecessor Predecessor Net loss attributable to the common stockholders $ (199,142 ) $ (632,388 ) $ (800,582 ) Basic weighted average outstanding shares of common stock 43,163,881 10,032,000 9,806,356 Dilutive effect of options and warrants - - - Diluted weighted average common stock and common stock equivalents 43,163,881 10,032,000 9,806,356 Loss per share: Basic and diluted $ (0.00 ) $ (0.06 ) $ (0.08 ) |
ORGANIZATION AND PRINCIPAL AC33
ORGANIZATION AND PRINCIPAL ACTIVITIES (Details Narrative) - $ / shares | May 23, 2017 | Mar. 17, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 22, 2015 | Dec. 21, 2015 | May 08, 2015 | Dec. 31, 2014 |
Predecessor [Member] | ||||||||
Preferred stock, issued | ||||||||
Common stock, authorized | 150,000,000 | 15,000,000 | ||||||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | ||||||
Successor [Member] | ||||||||
Common stock, issued | 43,414,687 | 27,845,000 | ||||||
Common stock, outstanding | 43,414,687 | 16,000,250 | ||||||
Preferred stock, authorized | 10,000,000 | 150,000,000 | 10,000,000 | |||||
Preferred stock, issued | 5,000,000 | |||||||
Common stock, authorized | 150,000,000 | 10,000,000 | 100,000,000 | 50,000,000 | ||||
Common stock, par value (in dollars per share) | $ 0.0001 | |||||||
Successor [Member] | Subsequent Event [Member] | ||||||||
Description of shares amendment | On May 23, 2017, the Company issued the share of Series A Preferred stock to Joseph Segelman, which will allow Mr. Segelman to maintain fifty-one percent (51%) voting control of the Company regardless of how many shares of common stock are issued and outstanding. Therefore, the Company considers the Series A Preferred stock to be issued on May 23, 2017. | Successor's articles of incorporation, authorizing one share of Series A Preferred stock, which would be issued to Joseph Segelman. The share of Series A Preferred stock shall vote together as a single class with the holders of the Company’s common stock, and the holders of any other class or series of shares entitled to vote with the common stock, with the holder of the Series A Preferred stock being entitled to fifty-one percent (51%) of the total votes on all such matters regardless of the actual number of shares of Series A Preferred stock then outstanding, and the holders of the common stock and any other shares entitled to vote shall be entitled to their proportional share of the remaining forty-nine percent (49%) of the total votes based on their respective voting power. |
BASIS OF PRESENTATION (Details
BASIS OF PRESENTATION (Details Narrative) - USD ($) | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Nov. 30, 2016 | Dec. 31, 2015 | |
Maximum [Member] | |||
Restricted cash | $ 25,000 | ||
Successor [Member] | |||
Accumulated deficit | (6,129,731) | ||
Working capital deficit | 2,128,000 | ||
Net loss | (199,142) | ||
Net cash used in operating activities | $ 1,688 | ||
Predecessor [Member] | |||
Accumulated deficit | $ (2,769,529) | ||
Working capital deficit | 1,335,000 | ||
Net loss | $ (632,388) | (800,582) | |
Net cash used in operating activities | $ (132,742) | $ (633,759) |
SUMMARY OF SIGNIFICANT ACCOUN35
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 1 Months Ended | 11 Months Ended | 12 Months Ended | |
Dec. 31, 2016 | Nov. 30, 2016 | Dec. 31, 2015 | Mar. 31, 2016 | |
Predecessor [Member] | ||||
Advertising and marketing expenses | $ 314,645 | $ 795,817 | ||
Deferred revenue | $ 261,662 | |||
Predecessor [Member] | Sales Revenue, Net [Member] | ||||
Concentration risk (in percent) | 10.00% | 28.50% | ||
Predecessor [Member] | Knight Capital LLC [Member] | ||||
Exchange receivables | $ 147,500 | |||
Future receivables | $ 199,125 | |||
Repayment of future receivables | $ 102,000 | |||
Successor [Member] | ||||
Advertising and marketing expenses | $ 98,079 | |||
Estimated useful life | P5Y | |||
Deferred revenue | $ 78,820 | |||
Successor [Member] | Sales Revenue, Net [Member] | ||||
Concentration risk (in percent) | 10.00% | |||
Successor [Member] | Minimum [Member] | ||||
Estimated useful life of intangible assets | 3 years | |||
Successor [Member] | Maximum [Member] | ||||
Estimated useful life of intangible assets | 10 years | |||
Successor [Member] | Mr. Joseph Segelman [Member] | ||||
FDIC amount | $ 250,000 | |||
Successor [Member] | Coordinates Collection Inc [Member] | ||||
Share issued for acquisition (in shares) | 7,000,000 | |||
Successor [Member] | ASK Gold [Member] | ||||
Share issued for acquisition (in shares) | 1,000,000 |
ACQUISITION OF COORDINATES CO36
ACQUISITION OF COORDINATES COLLECTION (Details) - Successor [Member] | 1 Months Ended |
Dec. 31, 2016USD ($)shares | |
Total Purchase Consideration: | $ 1,194,511 |
Coordinates Collection Inc [Member] | |
Common stock issued | shares | 770,000 |
Estimated fair value of contingent payments | $ 424,511 |
Total Purchase Consideration: | $ 1,194,511 |
ASK Gold [Member] | |
Common stock issued | shares | 1,000,000 |
ACQUISITION OF COORDINATES CO37
ACQUISITION OF COORDINATES COLLECTION (Details 1) - Successor [Member] | Dec. 31, 2016USD ($) |
Total Purchase Consideration: | $ 1,194,511 |
Goodwill [Member] | |
Total Purchase Consideration: | 481,947 |
Developed Technology - Website [Member] | |
Total Purchase Consideration: | 117,500 |
Developed Technology - Ipad Application [Member] | |
Total Purchase Consideration: | 117,500 |
Tradename [Member] | |
Total Purchase Consideration: | 365,000 |
Proprietary Design [Member] | |
Total Purchase Consideration: | 80,000 |
Equipment [Member] | |
Total Purchase Consideration: | $ 32,564 |
ACQUISITION OF COORDINATES CO38
ACQUISITION OF COORDINATES COLLECTION (Details Narrative) - Successor [Member] | 1 Months Ended |
Dec. 31, 2016USD ($)shares | |
Share issued for acquisition | $ 770,000 |
Coordinates Collection Inc [Member] | |
Share issued for acquisition | $ 770,000 |
Share issued for acquisition (in shares) | shares | 7,000,000 |
Cash paid for acquisition | $ 500,000 |
Estimated fair value of contingent payments | $ 424,511 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Predecessor [Member] | ||
Raw materials | $ 6,987 | |
Work-in-process | ||
Samples | ||
Inventory, net | $ 6,987 | |
Successor [Member] | ||
Raw materials | $ 478,096 | |
Work-in-process | 111,361 | |
Samples | 134,145 | |
Inventory, net | $ 723,602 |
EQUIPMENT (Details)
EQUIPMENT (Details) - USD ($) | 1 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Successor [Member] | ||
Accumulated depreciation | $ (3,712) | |
Total | $ 38,050 | |
Estimated useful life | P5Y | |
Successor [Member] | Office Equipment [Member] | ||
Total | $ 2,451 | |
Estimated useful life | P5Y | |
Successor [Member] | Computer Equipment [Member] | ||
Total | $ 39,311 | |
Estimated useful life | P3Y | |
Predecessor [Member] | ||
Accumulated depreciation | $ (43,739) | |
Total | 18,868 | |
Predecessor [Member] | Office Equipment [Member] | ||
Total | 15,444 | |
Predecessor [Member] | Computer Equipment [Member] | ||
Total | $ 47,163 |
EQUIPMENT (Details Narrative)
EQUIPMENT (Details Narrative) - USD ($) | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Nov. 30, 2016 | Dec. 31, 2015 | |
Successor [Member] | |||
Depreciation expense | $ 228 | ||
Predecessor [Member] | |||
Depreciation expense | $ 7,080 | $ 16,639 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | 1 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Successor [Member] | ||
Accumulated amortization | $ (27,866) | |
Intangible assets net | 947,259 | |
Successor [Member] | Goodwill [Member] | ||
Intangible assets gross | $ 481,947 | |
Successor [Member] | Maximum [Member] | ||
Estimated life | 10 years | |
Successor [Member] | Minimum [Member] | ||
Estimated life | 3 years | |
Successor [Member] | Trademarks [Member] | ||
Intangible assets gross | $ 260,000 | |
Successor [Member] | Trademarks [Member] | Maximum [Member] | ||
Estimated life | 4 years 6 months | |
Successor [Member] | Trademarks [Member] | Minimum [Member] | ||
Estimated life | 3 years 3 months 18 days | |
Successor [Member] | Website [Member] | ||
Estimated life | 3 years | |
Intangible assets gross | $ 35,125 | |
Successor [Member] | Tradename [Member] | ||
Estimated life | 10 years | |
Intangible assets gross | $ 365,000 | |
Successor [Member] | Proprietary Design [Member] | ||
Estimated life | 5 years | |
Intangible assets gross | $ 80,000 | |
Successor [Member] | Developed Technology - Website [Member] | ||
Estimated life | 3 years | |
Intangible assets gross | $ 117,500 | |
Successor [Member] | Developed Technology - Ipad Application [Member] | ||
Estimated life | 3 years | |
Intangible assets gross | $ 117,500 | |
Predecessor [Member] | ||
Accumulated amortization | $ (60,392) | |
Intangible assets net | 126,252 | |
Predecessor [Member] | Goodwill [Member] | ||
Intangible assets gross | ||
Predecessor [Member] | Trademarks [Member] | ||
Intangible assets gross | 88,700 | |
Predecessor [Member] | Website [Member] | ||
Intangible assets gross | 97,944 | |
Predecessor [Member] | Tradename [Member] | ||
Intangible assets gross | ||
Predecessor [Member] | Proprietary Design [Member] | ||
Intangible assets gross | ||
Predecessor [Member] | Developed Technology - Website [Member] | ||
Intangible assets gross | ||
Predecessor [Member] | Developed Technology - Ipad Application [Member] | ||
Intangible assets gross |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - General and Administrative Expense [Member] - USD ($) | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Nov. 30, 2016 | Dec. 31, 2015 | |
Successor [Member] | |||
Amortization expense | $ 16,568 | ||
Predecessor [Member] | |||
Amortization expense | $ 62,581 | $ 39,553 |
DUE TO RELATED PARTY (Details N
DUE TO RELATED PARTY (Details Narrative) - USD ($) | 1 Months Ended | 11 Months Ended | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2016 | Nov. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Successor [Member] | |||||
Unpaid business expenses | $ 440,747 | $ 440,747 | $ 440,747 | ||
Operating expenses | 226,662 | ||||
Accrued compensation - related party | 776,000 | 776,000 | 776,000 | ||
Successor [Member] | Mr. Joseph Segelman [Member] | |||||
Advances received | 56,649 | 256,606 | |||
Unpaid business expenses | 551,724 | 551,724 | 551,724 | ||
Inventory purchases | 213,815 | 213,815 | 213,815 | ||
Operating expenses | 334,627 | ||||
Equipment purchases | 3,282 | 3,282 | 3,282 | ||
Repayments of related party | 817,527 | ||||
Deferred compensation | 180,000 | 180,000 | 180,000 | ||
Successor [Member] | Mr. Joseph Segelman [Member] | Consulting Agreement [Member] | |||||
Deferred compensation | 214,000 | 214,000 | 214,000 | ||
Successor [Member] | Mr. Chaya Segelman [Member] | |||||
Deferred compensation | $ 80,000 | $ 80,000 | $ 80,000 | ||
Predecessor [Member] | |||||
Unpaid business expenses | |||||
Operating expenses | $ 1,340,916 | 2,565,046 | |||
Accrued compensation - related party | |||||
Predecessor [Member] | Mr. Owen deVries [Member] | Consulting Agreement [Member] | |||||
Advances received | 13,130 | 360 | |||
Minimum annual base salary and compensation | 79,288 | 72,000 | |||
Unsubstantiated business expenses | $ 43,947 | $ 31,588 |
CONVERTIBLE NOTE PAYABLE (Detai
CONVERTIBLE NOTE PAYABLE (Details) - Successor [Member] - Embedded Derivative Liability [Member] - $ / shares | Nov. 10, 2016 | Dec. 31, 2016 | Dec. 31, 2015 |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Expected stock-price volatility | 55.00% | 55.00% | 50.00% |
Risk-free interest rate | 1.47% | ||
Expected term of options (years) | 6 months | ||
Stock price | $ 0.12 | $ 0.11 | $ 0.25 |
Conversion price | $ 0.12 | $ 0.12 | $ 0.12 |
Minimum [Member] | |||
Risk-free interest rate | 1.17% | 0.47% | |
Expected term of options (years) | 6 months | 1 year 6 months | 6 months |
Maximum [Member] | |||
Risk-free interest rate | 1.56% | 0.86% | |
Expected term of options (years) | 1 year 6 months | 5 years | 1 year 6 months |
CONVERTIBLE NOTE PAYABLE (Det46
CONVERTIBLE NOTE PAYABLE (Details 1) - Warrant [Member] - Successor [Member] - $ / shares | Nov. 10, 2016 | Dec. 31, 2016 | Dec. 31, 2015 |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Expected stock-price volatility | 55.00% | 55.00% | 50.00% |
Risk-free interest rate | 1.93% | 1.93% | 1.74% |
Expected term of options (years) | 6 months | ||
Stock price | $ 0.12 | $ 0.11 | $ 0.25 |
Exercise price | $ 0.30 | $ 0.30 | $ 0.30 |
Maximum [Member] | |||
Expected term of options (years) | 6 months | 1 year 6 months | 1 year 6 months |
Minimum [Member] | |||
Expected term of options (years) | 1 year 6 months | 5 years | 6 months |
CONVERTIBLE NOTE PAYABLE (Det47
CONVERTIBLE NOTE PAYABLE (Details 2) - Successor [Member] - Securities Purchase Agreement [Member] - $ / shares | 1 Months Ended | |
Dec. 31, 2016 | Jun. 30, 2016 | |
Expected dividend yield | 0.00% | 0.00% |
Expected stock-price volatility | 55.00% | |
Risk-free interest rate | 0.62% | 0.36% |
Expected term of options (years) | 6 months | |
Stock price | $ 0.11 | $ 0.25 |
Conversion price | $ 0.12 | $ 0.12 |
Minimum [Member] | ||
Expected stock-price volatility | 50.00% | |
Expected term of options (years) | 6 months | |
Maximum [Member] | ||
Expected stock-price volatility | 60.00% | |
Expected term of options (years) | 1 year |
CONVERTIBLE NOTE PAYABLE (Det48
CONVERTIBLE NOTE PAYABLE (Details 3) - Successor [Member] - Embedded Derivative Liability [Member] - $ / shares | Nov. 10, 2016 | Dec. 31, 2016 | Dec. 31, 2015 |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Expected stock-price volatility | 55.00% | 55.00% | 50.00% |
Risk-free interest rate | 1.47% | ||
Expected term of options (years) | 6 months | ||
Stock price | $ 0.12 | $ 0.11 | $ 0.25 |
Conversion price | $ 0.12 | $ 0.12 | $ 0.12 |
Minimum [Member] | |||
Risk-free interest rate | 1.17% | 0.47% | |
Expected term of options (years) | 6 months | 1 year 6 months | 6 months |
Maximum [Member] | |||
Risk-free interest rate | 1.56% | 0.86% | |
Expected term of options (years) | 1 year 6 months | 5 years | 1 year 6 months |
CONVERTIBLE NOTE PAYABLE (Det49
CONVERTIBLE NOTE PAYABLE (Details 4) - Warrant [Member] - Successor [Member] - $ / shares | Nov. 10, 2016 | Dec. 31, 2016 | Dec. 31, 2015 |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Expected stock-price volatility | 55.00% | 55.00% | 50.00% |
Risk-free interest rate | 1.93% | 1.93% | 1.74% |
Expected term of options (years) | 6 months | ||
Stock price | $ 0.12 | $ 0.11 | $ 0.25 |
Conversion price | $ 0.30 | $ 0.30 | $ 0.30 |
Minimum [Member] | |||
Expected term of options (years) | 1 year 6 months | 5 years | 6 months |
Maximum [Member] | |||
Expected term of options (years) | 6 months | 1 year 6 months | 1 year 6 months |
CONVERTIBLE NOTE PAYABLE (Det50
CONVERTIBLE NOTE PAYABLE (Details Narrative) - USD ($) | May 30, 2017 | Dec. 21, 2015 | Dec. 31, 2016 | Nov. 30, 2016 | Nov. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Nov. 10, 2016 | Jun. 30, 2016 | Nov. 30, 2015 |
Successor [Member] | ||||||||||
Interest expense | $ 65,146 | |||||||||
Derivative liabilities | $ 153,663 | $ 153,663 | ||||||||
Successor [Member] | December 2015 Purchaser Conversion [Member] | ||||||||||
Description of terms of conversion feature | December 2015 Purchaser Conversion Price of $0.12, subject to potential future adjustments described below. If the total outstanding balance of the Note were convertible as of December 31, 2016, the December 2015 Note would have been convertible into 7,187,500 shares of our common stock. | |||||||||
Successor [Member] | November 2016 Notes [Member] | ||||||||||
Unamortized debt discount | $ 256,722 | 256,722 | ||||||||
Interest expense | 16,078 | |||||||||
Successor [Member] | November 2015 Notes [Member] | ||||||||||
Unamortized debt discount | 273,859 | 273,859 | ||||||||
Interest expense | 48,791 | |||||||||
Successor [Member] | December 2015 Optional Redemption [Member] | ||||||||||
Derivative liabilities | 97,348 | $ 130,448 | $ 130,448 | 97,348 | ||||||
Re-measurement of derivative liability | 36,247 | |||||||||
Contingent fair value | $ 199,150 | $ 199,150 | ||||||||
Successor [Member] | Warrant [Member] | ||||||||||
Share price (in dollars per share) | $ 0.11 | $ 0.11 | $ 0.25 | $ 0.12 | ||||||
Successor [Member] | Warrant [Member] | November 2016 Notes [Member] | ||||||||||
Unamortized debt discount | $ 283,172 | $ 283,172 | ||||||||
Number of common shares issued | 100,002 | |||||||||
Warrants granted | $ 108,567 | |||||||||
Successor [Member] | Warrant [Member] | November 2015 Notes [Member] | ||||||||||
Unamortized debt discount | $ 862,500 | |||||||||
Number of common shares issued | 625,000 | |||||||||
Warrants granted | $ 439,107 | |||||||||
Debt origination expenses | $ 429,000 | |||||||||
Successor [Member] | November 2016 Purchaser Conversion Shares [Member] | ||||||||||
Conversion rate | $ 0.12 | $ 0.12 | ||||||||
Embedded derivative liability | $ 32,016 | $ 32,016 | ||||||||
Accretion of debt discount | 2,395,850 | |||||||||
Derivative liabilities | 23,995 | $ 23,995 | ||||||||
Re-measurement of derivative liability | $ 8,021 | |||||||||
Successor [Member] | November 2016 Purchaser Warrants [Member] | ||||||||||
Conversion rate | $ 0.12 | $ 0.12 | ||||||||
Embedded derivative liability | $ 108,597 | $ 108,597 | ||||||||
Trading days | 5 years | |||||||||
Issuance date | 6 months | |||||||||
Share price (in dollars per share) | $ 0.30 | $ 0.30 | ||||||||
Derivative liabilities | $ 105,338 | $ 105,338 | ||||||||
Re-measurement of derivative liability | 3,259 | |||||||||
Successor [Member] | November 2016 Purchaser Common Stock [Member] | ||||||||||
Embedded derivative liability | $ 240,615 | $ 240,615 | ||||||||
Value of shares issued | $ 833,354 | |||||||||
Number of shares issued | 244,945 | 100,002 | ||||||||
Successor [Member] | November 2015 Purchaser Conversion Shares [Member] | ||||||||||
Conversion rate | $ 0.12 | |||||||||
Accretion of debt discount | $ 7,187,500 | |||||||||
Derivative liabilities | 32,320 | |||||||||
Re-measurement of derivative liability | $ 27,210 | |||||||||
Derivative fair value | $ 88,983 | $ 59,530 | ||||||||
Successor [Member] | November 2015 Purchaser Warrants [Member] | ||||||||||
Conversion rate | $ 0.12 | $ 0.12 | ||||||||
Trading days | 5 years | |||||||||
Issuance date | 6 months | |||||||||
Derivative liabilities | $ 353 | |||||||||
Share price (in dollars per share) | $ 0.30 | $ 0.30 | ||||||||
Derivative liabilities | $ 367,958 | $ 367,958 | ||||||||
Re-measurement of derivative liability | 4,840 | |||||||||
Derivative fair value | $ 439,107 | $ 368,311 | 368,311 | 439,107 | ||||||
Successor [Member] | Securities Purchase Agreement [Member] | ||||||||||
Issuance date | Nov. 10, 2016 | Dec. 23, 2015 | ||||||||
Description of terms of conversion feature | (ii) a November 2016 Note with a principal amount of $1.00 for each $0.86956 for each $1.00 paid by each purchaser for such purchaser’s November 2016 Note; and (iii) November 2016 Warrants to purchase up to a number of shares of Common Stock equal to 100% of such purchaser’s November 2016 Note principal amount divided by $0.12 (“Purchaser Conversion Price”), the conversion price in effect on the Initial Closing Date, with a per share exercise price equal to $0.30, subject to adjustment. | (ii) a Note with a principal amount of $1.00 for each $0.86956 for each $1.00 paid by each purchaser for such purchasers Note; and (iii) Warrants to purchase up to a number of shares of Common Stock equal to 100% of such purchasers Note principal amount divided by $0.12 (Purchaser Conversion Price), the conversion price in effect on the Initial Closing Date, with a per share exercise price equal to $0.30, subject to adjustment. | ||||||||
Issuance of convertible debt | $ 244,945 | $ 724,500 | ||||||||
Unamortized debt discount | $ 42,557 | $ 42,557 | $ 138,000 | |||||||
Maturity date | May 10, 2018 | Jun. 23, 2017 | ||||||||
Interest rate | 15.00% | 15.00% | 15.00% | |||||||
Conversion rate | $ 0.12 | $ 0.12 | $ 0.12 | |||||||
Percentage of beneficially own in excess of common shares outstanding | 9.99% | 9.99% | 9.99% | |||||||
Percentage of right to participate subsequent financing | 100.00% | 100.00% | 100.00% | |||||||
Description of redemption of debt intrument | The Notes provide that commencing six (6) months after the Original Issue Date, we will have the option of prepaying the outstanding principal amount of the Notes (an Optional Redemption), in whole or in part, by paying to the holders a sum of money in cash equal to one hundred percent (100%) of the principal amount to be redeemed, together with accrued but unpaid interest thereon, if any, and any and all other sums due, accrued or payable to the holder arising under the Note through the Redemption Payment Date and 2.8986 shares of our Common Stock for each $1.00 of Note principal amount being redeemed. A Notice of Redemption, if given, may be given on the first Trading Day following twenty (20) consecutive Trading Days during which all of the Equity Conditions, as defined, have been in effect. | |||||||||
Embedded derivative liability | $ 88,983 | |||||||||
Share price (in dollars per share) | $ 0.11 | $ 0.11 | $ 0.25 | |||||||
Successor [Member] | Securities Purchase Agreement [Member] | Common Stock [Member] | ||||||||||
Common stock convertible shares | 2,500,000 | |||||||||
Unamortized debt discount | $ 273,859 | $ 273,859 | ||||||||
Common stock convertible amount | 625,000 | |||||||||
Accretion of debt discount | $ 48,791 | |||||||||
Successor [Member] | Securities Purchase Agreement [Member] | Alpha Capital Anstalt and Brio Capital Master Fund Ltd. [Member] | ||||||||||
Conversion rate | $ 0.3 | $ 0.3 | ||||||||
Percentage of right to participate subsequent financing | 100.00% | 100.00% | ||||||||
Trading days | 5 years | |||||||||
Issuance date | 6 months | |||||||||
Successor [Member] | Securities Purchase Agreement [Member] | Alpha Capital Anstalt and Brio Capital Master Fund Ltd. [Member] | Secured Convertible Notes [Member] | ||||||||||
Principle amount | $ 287,502 | $ 287,502 | $ 862,500 | |||||||
Successor [Member] | Securities Purchase Agreement [Member] | Alpha Capital Anstalt and Brio Capital Master Fund Ltd. [Member] | Common Stock [Member] | ||||||||||
Common stock convertible shares | 833,354 | 2,500,000 | ||||||||
Successor [Member] | Securities Purchase Agreement [Member] | Alpha Capital Anstalt and Brio Capital Master Fund Ltd. [Member] | Warrant [Member] | ||||||||||
Common stock convertible shares | 2,395,850 | 7,187,542 | ||||||||
Description of terms of conversion feature | ii) a December 2015 Note with a principal amount of $1.00 for each $0.86956 for each $1.00 paid by each purchaser for such purchaser’s December 2015 Note; and (iii) December 2015 Warrants to purchase up to a number of shares of Common Stock equal to 100% of such purchaser’s December 2015 Note principal amount divided by $0.12 (“December 2015 Purchaser Conversion Price”), the conversion price in effect on the Initial Closing Date, with a per share exercise price equal to $0.30, subject to adjustment. | |||||||||
Successor [Member] | Second Consent Waiver and Modification Agreement [Member] | Convertible Promissory Note [Member] | Subsequent Event [Member] | ||||||||||
Conversion rate | $ 0.08 | |||||||||
Successor [Member] | Second Consent Waiver and Modification Agreement [Member] | Common Stock [Member] | Convertible Promissory Note [Member] | Subsequent Event [Member] | ||||||||||
Share price (in dollars per share) | 0.08 | |||||||||
Successor [Member] | Second Consent Waiver and Modification Agreement [Member] | Warrant [Member] | Convertible Promissory Note [Member] | Subsequent Event [Member] | ||||||||||
Share price (in dollars per share) | $ 0.30 | |||||||||
Warrant exercisable term | 5 years | |||||||||
Predecessor [Member] | ||||||||||
Unamortized debt discount | $ 31,500 | 31,500 | $ 29,039 | |||||||
Interest expense | $ 130,499 | 52,772 | ||||||||
Accretion of debt discount | 29,039 | |||||||||
Value of shares issued | 200,000 | |||||||||
Number of shares issued | 8,800,000 | |||||||||
Derivative liabilities | ||||||||||
Predecessor [Member] | Common Stock [Member] | ||||||||||
Value of shares issued | ||||||||||
Predecessor [Member] | Second Consent Waiver and Modification Agreement [Member] | Convertible Promissory Note [Member] | Subsequent Event [Member] | ||||||||||
Conversion rate | $ 0.08 | |||||||||
Predecessor [Member] | Second Consent Waiver and Modification Agreement [Member] | Common Stock [Member] | Convertible Promissory Note [Member] | Subsequent Event [Member] | ||||||||||
Share price (in dollars per share) | 0.08 | |||||||||
Predecessor [Member] | Second Consent Waiver and Modification Agreement [Member] | Warrant [Member] | Convertible Promissory Note [Member] | Subsequent Event [Member] | ||||||||||
Share price (in dollars per share) | $ 0.30 | |||||||||
Warrant exercisable term | 5 years |
NOTES PAYBALE (Details Narrativ
NOTES PAYBALE (Details Narrative) - Predecessor [Member] - USD ($) | Oct. 01, 2014 | Nov. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Advance | $ 257,100 | $ 144,939 | ||
Repayment of notes | 174,338 | 104,044 | ||
Accretion of debt discount | 29,039 | |||
Debt discount | 31,500 | 29,039 | ||
Total balance due | 40,895 | |||
Interest expense | 130,499 | 52,772 | ||
10% Note Payable due June 1, 2016 [Member] | Menno Holterman [Member] | ||||
Total balance due | 459,681 | $ 181,408 | ||
Additional borrowings | 157,442 | 278,273 | ||
10% Note Payable due June 1, 2016 [Member] | Menno Holterman [Member] | Other (income) expense [Member] | ||||
Interest expense | $ 46,144 | $ 24,963 | ||
10% Note Payable due June 1, 2016 [Member] | Mr. Joseph Segelman [Member] | ||||
Principle amount | $ 50,000 | |||
Imputed interest | $ 50,000 |
STOCK TRANSACTIONS (Details Nar
STOCK TRANSACTIONS (Details Narrative) - USD ($) | Dec. 21, 2015 | Mar. 30, 2015 | Dec. 31, 2016 | Dec. 31, 2015 |
Predecessor [Member] | ||||
Value of shares issued | $ 200,000 | |||
Number of shares issued | 8,800,000 | |||
Predecessor [Member] | Preferred Shares [Member] | ||||
Value of shares issued | $ 200,000 | $ 2 | ||
Number of shares issued | 200,000 | |||
Conversion of shares | (200,000) | |||
Successor [Member] | Consent Waiver and Modification Agreement [Member] | ||||
Value of shares issued | $ 200,000 | |||
Number of shares issued | 1,000,000 | |||
Description of agreement | The waivers contained in the Agreement were related to an increase in the shares issuable under Successor’s 2015 Stock Option Plan, a waiver of the right to participate in additional offerings by Successor, and allowing up to 20,000,000 shares of Successor’s common stock to be issued pursuant to a private or public offering at a price of not less than $0.30 per share. As consideration for the terms contained in the Agreement, as well as for a fee of $0.0001 per share. | |||
Share price (in dollars per share) | $ 0.20 |
STOCK BASED COMPENSATION (Detai
STOCK BASED COMPENSATION (Details) - Successor [Member] | 1 Months Ended | |
Dec. 31, 2016USD ($)$ / sharesshares | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Outstanding - beginning of year | shares | 10,000,000 | |
Granted | shares | ||
Exercised | shares | ||
Expired/Forfeited | shares | ||
Outstanding - ending of period | shares | 10,000,000 | |
Exercisable - ending of period | shares | 7,916,665 | |
Expected to be vested | shares | 10,000,000 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | ||
Outstanding - beginning of year | $ / shares | $ 0.005 | |
Granted | $ / shares | ||
Exercised | $ / shares | ||
Expired/Forfeited | $ / shares | ||
Outstanding - ending of period | $ / shares | 0.005 | |
Exercisable - ending of period | $ / shares | ||
Expected to be vested | $ / shares | $ 0.005 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Aggregate Intrinsic Value [Roll Forward] | ||
Outstanding - beginning of year | $ | $ 1,100,000 | [1] |
Outstanding - ending of period | $ | $ 1,100,000 | [1] |
[1] | Based on the Company's stock price on December 1, 2016 (Successor) and December 31 2016 (Successor), respectively. |
STOCK BASED COMPENSATION (Det54
STOCK BASED COMPENSATION (Details Narrative) - Successor [Member] - USD ($) | 1 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2014 | |
Common stock, issued (in shares) | 43,414,687 | 27,845,000 |
Stock based compensation - related party | $ 24,302 | |
2015 Equity Incentive Plan [Member] | ||
Common stock, issued (in shares) | 20,000,000 | |
Stock based compensation | $ 45,391 | |
Stock based compensation - related party | 24,302 | |
2015 Equity Incentive Plan [Member] | Outside Consultant [Member] | ||
Stock based compensation | $ 35,417 | |
Volatility rate | 35.60% | |
Risk-free interest rate | 1.87% | |
Stock price | $ 0.25 | |
Exercise price | $ 0.005 | |
Number of shares vested | 258,333 | |
Number of remaining shares vested | 141,667 | |
2015 Equity Incentive Plan [Member] | Outside Consultant [Member] | Minimum [Member] | ||
Expected life | 6 years | |
2015 Equity Incentive Plan [Member] | Outside Consultant [Member] | General and Administrative Expense [Member] | ||
Stock based compensation | $ 2,084 | |
2015 Equity Incentive Plan [Member] | Outside Consultant [Member] | Restricted Stock [Member] | ||
Number of shares issued | 400,000 | |
Value of common stock | $ 100,000 | |
2015 Equity Incentive Plan [Member] | Mr. Joseph Segelman [Member] | ||
Number of shares issued | 10,000,000 | |
Value of common stock | $ 2,500,000 | |
2015 Equity Incentive Plan [Member] | Mr. Joseph Segelman [Member] | First Year Vest [Member] | ||
Award vesting rights percentage | 50.00% | |
Vesting period | 12 months | |
2015 Equity Incentive Plan [Member] | Mr. Joseph Segelman [Member] | Second Year Vest [Member] | ||
Award vesting rights percentage | 50.00% | |
Vesting period | 24 months |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | Dec. 02, 2016 | Dec. 21, 2015 | Dec. 31, 2016 | Dec. 31, 2016 | Nov. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 |
Predecessor [Member] | |||||||
Unpaid business expenses | |||||||
Proceeds from preferred stock issuance | 200,000 | ||||||
Number of shares issued | 8,800,000 | ||||||
Operating expenses | 1,340,916 | 2,565,046 | |||||
Accrued compensation - related party | |||||||
Predecessor [Member] | Consulting Agreement [Member] | Mr. Owen deVries [Member] | |||||||
Minimum annual base salary and compensation | 79,288 | 72,000 | |||||
Reimbursable business expenses | $ 13,130 | $ 360 | |||||
Initial monthly payments | $ 11,000 | ||||||
Revised initial monthly payment | $ 4,000 | ||||||
Agreement expiration term | 90 days | ||||||
Successor [Member] | |||||||
Unpaid business expenses | $ 440,747 | $ 440,747 | $ 440,747 | ||||
Monthly sub leased | 7,834 | ||||||
Proceeds from preferred stock issuance | |||||||
Operating expenses | 226,662 | ||||||
Accrued compensation - related party | 776,000 | 776,000 | 776,000 | ||||
Successor [Member] | Mr. Joseph Segelman [Member] | |||||||
Unpaid business expenses | 551,724 | 551,724 | 551,724 | ||||
Deferred compensation | 180,000 | 180,000 | 180,000 | ||||
Reimbursable business expenses | 56,649 | 256,606 | |||||
Employee benefits | 43,239 | ||||||
Inventory purchases | 213,815 | 213,815 | 213,815 | ||||
Operating expenses | 334,627 | ||||||
Repayments of related party | 817,527 | ||||||
Equipment purchases | 3,282 | 3,282 | 3,282 | ||||
Successor [Member] | Mr. Chaya Segelman [Member] | |||||||
Deferred compensation | 80,000 | 80,000 | 80,000 | ||||
Employee benefits | $ 7,176 | ||||||
Successor [Member] | Consulting Agreement [Member] | Mr. Joseph Segelman [Member] | |||||||
Description of consulting agreement | The Company previously had a consulting agreement with its CEO under which he was compensated $120,000 per annum. Beginning June 20, 2013, this contract was to continue unless and until terminated at any time by either the Company or CEO giving two month notice in writing. Such consulting agreement was terminated by mutual agreement as of May 1, 2015 and superseded by the employment agreement effective May 1, 2015. | ||||||
Consulting fees | $ 120,000 | ||||||
Deferred compensation | 214,000 | 214,000 | 214,000 | ||||
Successor [Member] | Consulting Agreement [Member] | Secretary [Member] | |||||||
Consulting fees | 60,000 | ||||||
Deferred compensation | 113,667 | 113,667 | 113,667 | ||||
Successor [Member] | Employment Agreements [Member] | Mr. Joseph Segelman [Member] | |||||||
Minimum annual base salary and compensation | $ 180,000 | ||||||
Description of amount equal to base salary | An amount equal to 200% of the base salary. | ||||||
Agreement expiration date | Dec. 31, 2018 | ||||||
Compensation expense | $ 15,000 | ||||||
Deferred compensation | 529,000 | 529,000 | 529,000 | ||||
Deferred compensation | 315,000 | 315,000 | 315,000 | ||||
Successor [Member] | Employment Agreements [Member] | Secretary [Member] | |||||||
Minimum annual base salary and compensation | $ 80,000 | ||||||
Description of amount equal to base salary | An amount equal to 50% of the base salary | ||||||
Agreement expiration date | Dec. 31, 2018 | ||||||
Compensation expense | $ 6,667 | ||||||
Deferred compensation | 247,000 | 247,000 | 247,000 | ||||
Deferred compensation | $ 133,333 | $ 133,333 | $ 133,333 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Nov. 30, 2016 | Dec. 31, 2015 | |
Successor [Member] | |||
Statutory U.S. federal rate | 34.00% | 34.00% | |
State income tax, net of federal benefit | 5.90% | 5.90% | |
Permanent differences | (8.30%) | (2.80%) | |
Valuation allowance | (31.60%) | (37.10%) | |
Provision for income taxes | 0.00% | 0.00% | |
Predecessor [Member] | |||
Statutory U.S. federal rate | 34.00% | ||
State income tax, net of federal benefit | 5.90% | ||
Permanent differences | (2.10%) | ||
Valuation allowance | (37.80%) | ||
Provision for income taxes | 0.00% |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Successor [Member] | ||
Deferred tax assets: | ||
Net operating loss carry forwards | $ 1,161,751 | |
Stock based compensation | 1,043,626 | |
Bad debt | ||
Valuation allowance | (2,205,377) | |
Total | ||
Predecessor [Member] | ||
Deferred tax assets: | ||
Net operating loss carry forwards | $ 1,071,043 | |
Stock based compensation | ||
Valuation allowance | (1,071,043) | |
Total |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - Successor [Member] | 1 Months Ended |
Dec. 31, 2016USD ($) | |
Net operating loss carry forwards for Federal and state | $ 2,914,000 |
Expire date | 2,032 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Nov. 30, 2016 | Dec. 31, 2015 | |
Successor [Member] | |||
Net loss attributable to the common stockholders | $ (199,142) | ||
Basic weighted average outstanding shares of common stock | 43,163,881 | ||
Dilutive effect of options and warrants | |||
Diluted weighted average common stock and common stock equivalents | 43,163,881 | ||
Loss per share: | |||
Basic and diluted (in dollars per share) | $ 0 | ||
Predecessor [Member] | |||
Net loss attributable to the common stockholders | $ (632,388) | $ (800,582) | |
Basic weighted average outstanding shares of common stock | 10,032,000 | 9,806,356 | |
Dilutive effect of options and warrants | |||
Diluted weighted average common stock and common stock equivalents | 10,032,000 | 9,806,356 | |
Loss per share: | |||
Basic and diluted (in dollars per share) | $ (0.06) | $ (0.08) |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 1 Months Ended | 11 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Nov. 30, 2016 | Dec. 31, 2015 | |
Successor [Member] | |||
Total rent | $ 3,200 | ||
Rent expense | 11,031 | ||
Monthly sub leased | $ 7,834 | ||
Predecessor [Member] | |||
Rent expense | $ 84,572 | $ 63,908 |
SUBSEQUENT EVENTS (SUCCESSOR) (
SUBSEQUENT EVENTS (SUCCESSOR) (Details Narrative) - Successor [Member] - USD ($) | May 23, 2017 | Mar. 17, 2017 | Jan. 22, 2017 | Jan. 02, 2017 | Dec. 31, 2016 |
Value of shares issued for services | $ 2,084 | ||||
Subsequent Event [Member] | |||||
Description of shares amendment | On May 23, 2017, the Company issued the share of Series A Preferred stock to Joseph Segelman, which will allow Mr. Segelman to maintain fifty-one percent (51%) voting control of the Company regardless of how many shares of common stock are issued and outstanding. Therefore, the Company considers the Series A Preferred stock to be issued on May 23, 2017. | Successor's articles of incorporation, authorizing one share of Series A Preferred stock, which would be issued to Joseph Segelman. The share of Series A Preferred stock shall vote together as a single class with the holders of the Company’s common stock, and the holders of any other class or series of shares entitled to vote with the common stock, with the holder of the Series A Preferred stock being entitled to fifty-one percent (51%) of the total votes on all such matters regardless of the actual number of shares of Series A Preferred stock then outstanding, and the holders of the common stock and any other shares entitled to vote shall be entitled to their proportional share of the remaining forty-nine percent (49%) of the total votes based on their respective voting power. | |||
Subsequent Event [Member] | Restricted Stock [Member] | |||||
Number of shares issued for services | 150,000 | ||||
Value of shares issued for services | $ 14,985 | ||||
Subsequent Event [Member] | Restricted Stock [Member] | 2015 Equity Incentive Plan [Member] | |||||
Number of shares issued | 103,200 | ||||
Value of shares issued | $ 5,160 |