Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Jun. 30, 2017 | Aug. 10, 2017 | |
Document Information [Line Items] | ||
Entity Registrant Name | Drone USA Inc. | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 1,704,795 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | DRUS | |
Entity Common Stock, Shares Outstanding | 42,694,692 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2017 | Sep. 30, 2016 |
Current Assets | ||
Cash | $ 134,526 | $ 631,020 |
Accounts receivable | 1,032,767 | 865,775 |
Inventory | 508,552 | 1,391,439 |
Prepaid expenses and other current assets | 42,953 | 92,047 |
Assets, Current | 1,718,798 | 2,980,281 |
Other Assets | ||
Goodwill | 2,410,335 | 2,410,335 |
Tradename | 760,000 | 760,000 |
Customer list, net | 846,530 | 1,045,278 |
Other Assets | 4,016,865 | 4,215,613 |
Total Assets | 5,735,663 | 7,195,894 |
Current Liabilities | ||
Accounts payable | 2,827,870 | 2,363,162 |
Accrued expenses | 863,640 | 239,271 |
Income tax payable | 100 | 50 |
Earnout payable | 64,500 | 64,500 |
Customers deposits | 0 | 78,841 |
Convertible note payable - related party | 122,000 | 0 |
Loan Payable - insurance financing | 5,882 | 0 |
Note payable - net of discounts and premium | 3,595,162 | 1,062,661 |
Note payable - related party seller | 900,000 | 900,000 |
Convertible line of credit - related party affiliate | 688,444 | 692,126 |
Line of credit - bank | 48,600 | 49,583 |
Settlement payable - vendor | 0 | 75,382 |
Contingent liability - advisory fees | 850,000 | 850,000 |
Accrued liability - advisory fees | 1,200,000 | 0 |
Deferred rent | 0 | 16,667 |
Liabilities, Current | 11,166,198 | 6,392,243 |
Other Liabilities | ||
Note payable - net of unamortized financing costs | 0 | 1,361,624 |
Convertible note payable - related party | 0 | 117,000 |
Earnout payable, net of current portion | 64,500 | 64,500 |
Other Liabilities | 64,500 | 1,543,124 |
Total Liabilities | 11,230,698 | 7,935,367 |
Commitments and Contingencies (Note 10) | ||
Stockholders' Deficit | ||
Preferred Stock Value | 0 | 0 |
Common stock - $0.0001 par value, 200,000,000 shares authorized, 42,694,692 and 41,719,492 shares issued and outstanding at June 30, 2017 and September 30, 2016, respectively | 4,270 | 4,172 |
Additional paid-in capital | 7,084,260 | 5,285,847 |
Accumulated deficit | (12,583,565) | (6,029,492) |
Total Stockholders' Deficit | (5,495,035) | (739,473) |
Total Liabilities and Stockholders' Deficit | 5,735,663 | 7,195,894 |
Series A Preferred Stock [Member] | ||
Stockholders' Deficit | ||
Preferred Stock Value | 0 | 0 |
Total Stockholders' Deficit | $ 0 | $ 0 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2017 | Sep. 30, 2016 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 200,000,000 | 200,000,000 |
Common Stock, Shares, Issued | 42,694,692 | 41,719,492 |
Common Stock, Shares, Outstanding | 42,694,692 | 41,719,492 |
Series A Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0 | $ 0 |
Preferred Stock, Shares Authorized | 250 | 250 |
Preferred Stock, Shares Issued | 250 | 250 |
Preferred Stock, Shares Outstanding | 250 | 250 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Revenues | $ 5,705,047 | $ 0 | $ 18,309,774 | $ 0 |
Cost of Goods Sold | 5,559,664 | 0 | 17,261,326 | 0 |
Gross Profit | 145,383 | 0 | 1,048,448 | 0 |
Selling, General, and Administrative Expenses | 1,581,784 | 216,847 | 5,595,992 | 669,201 |
Amortization | 66,249 | 0 | 198,748 | 0 |
Total Operating Expenses | 1,648,033 | 216,847 | 5,794,740 | 669,201 |
Loss Before Other Expense | (1,502,650) | (216,847) | (4,746,292) | (669,201) |
Other Expense | ||||
Interest and financing costs | 430,962 | 6,581 | 1,807,731 | 12,988 |
Net Loss before Provision for Income Tax | (1,933,612) | (223,428) | (6,554,023) | (682,189) |
Provision for Income Tax | 0 | 0 | 50 | 0 |
Net Loss | $ (1,933,612) | $ (223,428) | $ (6,554,073) | $ (682,189) |
Basic and Diluted Loss Per Share | $ (0.05) | $ (0.01) | $ (0.15) | $ (0.02) |
Weighted Average Number of Common Shares Outstanding - basic and diluted | 42,694,692 | 40,841,517 | 42,429,216 | 39,760,251 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Deficit - 9 months ended Jun. 30, 2017 - USD ($) | Total | Series A Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] |
Balance at Sep. 30, 2016 | $ (739,473) | $ 0 | $ 4,172 | $ 5,285,847 | $ (6,029,492) |
Balance (in shares) at Sep. 30, 2016 | 250 | 41,719,492 | |||
Share-based compensation | 1,573,628 | $ 0 | $ 0 | 1,573,628 | 0 |
Share-based compensation (in shares) | 0 | 0 | |||
Shares issued for settlement payable conversion | 75,382 | $ 0 | $ 46 | 75,336 | 0 |
Shares issued for settlement payable conversion (in shares) | 0 | 460,200 | |||
Shares issued for services | 149,501 | $ 0 | $ 52 | 149,449 | 0 |
Shares issued for services (in shares) | 0 | 515,000 | |||
Net loss | (6,554,073) | $ 0 | $ 0 | 0 | (6,554,073) |
Balance at Jun. 30, 2017 | $ (5,495,035) | $ 0 | $ 4,270 | $ 7,084,260 | $ (12,583,565) |
Balance (in shares) at Jun. 30, 2017 | 250 | 42,694,692 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash Flows from Operating Activities | ||
Net loss | $ (6,554,073) | $ (682,189) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Intangibles amortization | 198,748 | 0 |
Amortization of debt discounts | 553,230 | 0 |
Premium on convertible note | 617,647 | |
Share-based compensation expense | 1,723,129 | 0 |
Deferred rent | (16,667) | 7,500 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (166,992) | 0 |
Inventory | 882,887 | 0 |
Prepaid expenses and other current assets | 49,094 | (10,000) |
Accounts payable and accrued expenses | 2,289,077 | 79,235 |
Income tax payble | 50 | 0 |
Custmers deposits | (78,841) | 0 |
Cash Used in Operating Activities | (502,711) | (605,454) |
Cash Flows from Financing Activities | ||
Repayment of line of credit | (983) | 0 |
Insurance financing proceeds, net of repayments | 5,882 | |
Proceeds from (repayment of) lines of credit - related parties | (3,682) | 594,999 |
Proceeds from loan payable - related party | 5,000 | 12,000 |
Cash Provided by Financing Activities | 6,217 | 606,999 |
Net (Decrease) Increase in Cash | (496,494) | 1,545 |
Cash - beginning | 631,020 | 0 |
Cash - end | 134,526 | 1,545 |
Supplemental Disclosures of Cash Flow Information | ||
Interest | 474,514 | 586 |
Noncash financing and investing activities: Issuance of common stock to satisfy settlement payable | 48,998 | 0 |
Reclassification of debt premium upon conversion | $ 26,384 | $ 0 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Accounting [Text Block] | 1 - Basis of Presentation The accompanying consolidated financial statements of Drone USA, Inc. (“Drone”) and its wholly owned subsidiaries, Drone USA, LLC and HowCo Distributing Co. (“HowCo”) (collectively, the “Company,”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly certain information and footnote disclosures normally included in financial statements in accordance with GAAP have been omitted. In the opinion of management, all adjustments considered necessary for a fair presentation of financial condition, results of operations and cash flows for the periods presented have been included. All such adjustments are of a normal recurring nature. The results of any interim period are not necessarily indicative of results for any other interim period or the full fiscal year. Management believes that the disclosures included in the accompanying consolidated interim financial statements and footnotes are adequate to make the information not misleading, but should be read in conjunction with the consolidated financial statements and notes thereto for the years ended September 30, 2016 and 2015 included in the Company’s Form 10. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GOING CONCERN | 9 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | 2 - Summary of Significant Accounting Policies and Going Concern a. For the nine months ended June 30, 2017, the Company has incurred net losses of approximately $ 6,554,000 503,000 9,447,400 5,495,035 12,583,565 b. c. d. e. f. 50,851,200 33,025,000 500,000 500,000 883,232 3,633,000 3,613,168 18,250,000 850,000 3,324,432 g. In May 2014, the FASB issued a new accounting standard that attempts to establish a uniform basis for recording revenue to virtually all industries financial statements, under U.S. GAAP as amended in March 2016 and April 2016. The revenue standard’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. In order to accomplish this objective, companies must evaluate the following five basic steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. There are three basic transition methods that are available - full retrospective, retrospective with certain practical expedients, and a cumulative effect approach. Under the third alternative, an entity would apply the new revenue standard only to contracts that are incomplete under legacy U.S. guidance at the date of initial application and recognize the cumulative effect of the new standard as an adjustment to the opening balance of retained earnings. Prior years would not be restated and additional disclosures would be required to enable users of the financial statements to understand the impact of adopting the new standard in the current year compared to prior years that are presented under legacy U.S. guidance. For public business entities, this standard is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is prohibited. The Company is currently evaluating the impact of this new accounting standard on its consolidated financial position and results of operations. In February 2016, the FASB issued a new accounting standard on leases. The new standard, among other changes, will require lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases. The lease liability will be measured at the present value of the lease payments over the lease term. The right-of-use asset will be measured at the lease liability amount, adjusted for lease prepayments, lease incentives received and the lessee’s initial direct costs (e.g. commissions). The new standard is effective for annual reporting periods beginning after December 15, 2018, including interim reporting periods within those annual reporting periods. The adoption will require a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest period presented. The Company is currently evaluating the impact of this new accounting standard on its consolidated financial position and results of operations. The Company does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements |
INVENTORY
INVENTORY | 9 Months Ended |
Jun. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory Disclosure [Text Block] | 3 - Inventory At June 30, 2017, inventory consists of finished goods and was valued at $ 508,552 |
CONVERTIBLE NOTES PAYABLE
CONVERTIBLE NOTES PAYABLE | 9 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt Disclosure [Text Block] | 4 - Convertible Notes Payable The Company has an $ 840,000 interest at an annual rate of 7% with an original maturity date of June 11, 2017 that was extended to December 11, 2017 688,444 64,264 December 11, 2017 The Company has a convertible note payable (“Note 2”) with the Company’s CEO. Note 2 bears interest at an annual rate of 7% with a maturity date of December 31, 2017 122,000 8,525 Effective September 13, 2016, the Company entered into a senior secured credit facility note (the “Agreement”) with an investment fund to provide capital for the acquisition of HowCo. The Company can borrow up to $ 6,500,000 3,500,000 18 52,500 298,341 March 13, 2017 March 13, 2018 25 850,000 7,000,000 539,204 850,000 850,000 850,000 3,500,000 113,167 617,647 25 52,500 72,917 On March 28, 2017, the Company entered into an agreement with the above senior secured credit facility lender to receive a range of advisory services for a total of $ 1,200,000 1,200,000 selling, general, and administrative expenses June 30, September 30, Principal $ 3,500,000 $ 3,500,000 Premium 617,647 - Discount (522,485) (1,075,715) 3,595,162 2,424,285 Non-current - 1,361,624 Current $ 3,595,162 $ 1,062,661 |
DEFINED CONTRIBUTION PLAN
DEFINED CONTRIBUTION PLAN | 9 Months Ended |
Jun. 30, 2017 | |
Defined Contribution Plan [Abstract] | |
Defined Contribution Plan [Text Block] | 5 - Defined contribution Plan In August 2016, Drone established a qualified 401(k) plan with a discretionary employer matching provision. All employees who are at least twenty-one years of age and no minimum service requirement are eligible to participate in the plan. The plan allows participants to defer up to 90 9,230 The Company’s subsidiary, HowCo, is the sponsor of a qualified 401(k) plan with a safe harbor provision. All employees are eligible to enter the plan within one year of the commencement of employment. Employer contributions charged to expense for the nine months ended June 30, 2017 was $ 25,621 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | Related Party Transactions On October 1, 2016, the Company entered into employment agreements with two of its officers. The employment agreement with the company's President and CEO provides for annual base compensation of $ 370,000 2,500,000 250,000 1,500,000 The Company utilizes the office space and equipment of its management at no cost. See note 4 for related party note and convertible notes. |
COMMON STOCK
COMMON STOCK | 9 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Stockholders' Equity Note Disclosure [Text Block] | 7 - Common Stock As of June 30, 2017, the Company is authorized to issue 200,000,000 0.0001 42,694,692 In October 2016, the Company issued 115,000 57,500 In October through November 2016, the Company issued 460,200 48,998 26,384 In February 2017, the Company issued 400,000 92,000 |
PREFERRED STOCK
PREFERRED STOCK | 9 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Preferred Stock [Text Block] | 8 - Preferred Stock As of June 30, 2017, the Company has designated 250 0.0001 250 As of June 30, 2017, the Company is authorized to issue 5,000,000 shares of $.0001 par value preferred stock, with designations, voting, and other rights and preferences to be determined by the Board of Directors of which 4,999,750 remain available for designation and issuance. |
SHARE BASED PAYMENTS
SHARE BASED PAYMENTS | 9 Months Ended |
Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | 9 - Share Based Payments The Company established its 2016 Stock Incentive Plan (the “Plan”) that permits the granting of incentive stock options and other common stock awards. The maximum number of shares available under the Plan is 100,000,000 The Company recorded approximately $ 679,000 1,573,000 2,924,445 As of June 30, 2017, 33,025,000 of the 50,851,200 outstanding stock options were exercisable. For the nine months ended June 30, 2017, the Company granted options to purchase 14,566,200 10,485,000 0.20 0.24 5 2,014,000 2,015,000 1.46 0 1.75 5 5.75 6.5 117 Effective February 17, 2017, the Company entered into an agreement with a company to receive consulting services, for a period of six months from the effective date. In connection with the agreement, the Company agreed to issue 400,000 200 10,000 0.23 92,000 6 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | 10 - Commitments and Contingencies Legal Matters In connection with the merger with Texas Wyoming Drilling, Inc., a vendor has a claim for unpaid bills of approximately $ 75,000 During the quarter ended June 30, 2017, the Company received verbal and written demands for non-payment of five months of rent for its New York location and five months of rent for its California location, non-payment of a past due credit card balance and non-payment of past due amounts for services by several consultants and service providers. Subsequent to June 30, 2017, a lawsuit was filed in the Supreme Court of the State of New York for an alleged breach of a Service Agreement for approximately $116,000 in connection with the lease the Company entered into for its former office space in New York. The Company has filed a lawsuit against the former Chief Strategy Officer and member of the Board, who was terminated for cause on July 7, 2017, for breach of contract, breach of the covenant of good faith and fair dealing, and violation of the California Business & Professions Code. The former Chief Strategy Officer and member of the Board subsequently filed a counterclaim against the Company. Consulting Services On January 7, 2017, the Company entered into an agreement with a company to receive advisory services for a fee of $ 22,500 On February 13, 2017, the Company entered into an agreement with a company to receive due diligence services for an initial term of 180 days from February 17, 2017. Total fees for these services are $ 50,000 15,000 35,000 In May 2017, the Company entered into a three month consulting arrangement with an advisor to the Company for a fee of $ 2,500 In June 2017, the Company entered into an agreement with an investment bank to provide placement agent services on an exclusive basis as it relates to a private placement (“the placement”). The agreement calls for the investment bank to receive 9 2.5 The warrants shall entitle the investment bank to purchase securities of the Company at a purchase price equal to 110% of the implied price per share of the placement or 100% of the public market closing price of the Company’s common stock on the date of the placement, whichever is lower. In June 2017, the Company signed a term sheet for proposed unsecured convertible note financing of up to $ 150,000 8 8 200 Lease Obligations The Company entered into an agreement with a manufacturer in Pismo Beach, California. The agreement provides for certain services to be provided by the manufacturer as needed by the Company. The agreement has an initial term of three years with one year renewals. In connection with this agreement, the Company has agreed to sublease space based in San Luis Obispo, California from the manufacturer for the purposes of the development and manufacturing of unmanned aerial vehicles. The lease provides for base monthly rent of approximately $ 15,000 16,500 February 1, 2017 January 31, 2019 24 In May 2016, the Company entered into a lease agreement for office space in New York, New York. The lease provided for monthly base rent of approximately $ 5,000 a rent-free period from May 1, 2016 through July 31, 2016. May 1, 2016 April 30, 2017 10,000 additional space with rent-free periods through November 1, 2016. July 1, 2016 September 1, 2016 2,500 3,500 6,000 In May 2017, the Company extended HowCo’s office lease through May 30, 2020 4,860 |
CONCENTRATIONS
CONCENTRATIONS | 9 Months Ended |
Jun. 30, 2017 | |
Risks and Uncertainties [Abstract] | |
Concentration Risk Disclosure [Text Block] | 11 - Concentrations Economic Concentrations With respect to customer concentration, three customers accounted for approximately 66 12 12 With respect to accounts receivable concentration, three customers accounted for approximately 57 15 11 With respect to supplier concentration, two suppliers accounted for approximately 47 13 With respect to accounts payable concentration, two suppliers accounted for approximately 45 15 With respect to foreign sales, it totaled approximately $ 153,000 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | Subsequent Events On July 7, 2017, an employee and also a member of the Board was terminated for cause by the Company. Management does not believe the terminated employee is entitled to additional compensation pursuant to the employment agreement as a result of termination for cause. Upon termination of this employee, management decided it would not utilize the leased facility in California and therefore made a decision to abandon the lease which it never took occupancy of. (see Note 10 - Legal Matters and Lease Obligations) On July 10, 2017, the CFO of the Company and also a member of the Board resigned. Pursuant to an employment agreement, this employee is not eligible for the additional one-time severance payment of $ 1,500,000 Subsequent to June 30, 2017, a lawsuit was filed in the Supreme Court of the State of New York for an alleged breach of a Service Agreement for approximately $ 116,000 |
SUMMARY OF SIGNIFICANT ACCOUN19
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GOING CONCERN (Policies) | 9 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Going Concern Policy [Policy Text Block] | a. For the nine months ended June 30, 2017, the Company has incurred net losses of approximately $ 6,554,000 503,000 9,447,400 5,495,035 12,583,565 |
Use of Estimates, Policy [Policy Text Block] | b. |
Consolidation, Policy [Policy Text Block] | c. |
Inventory, Policy [Policy Text Block] | d. |
Revenue Recognition, Policy [Policy Text Block] | e. |
Earnings Per Share, Policy [Policy Text Block] | f. 50,851,200 33,025,000 500,000 500,000 883,232 3,633,000 3,613,168 18,250,000 850,000 3,324,432 |
New Accounting Pronouncements, Policy [Policy Text Block] | g. In May 2014, the FASB issued a new accounting standard that attempts to establish a uniform basis for recording revenue to virtually all industries financial statements, under U.S. GAAP as amended in March 2016 and April 2016. The revenue standard’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. In order to accomplish this objective, companies must evaluate the following five basic steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. There are three basic transition methods that are available - full retrospective, retrospective with certain practical expedients, and a cumulative effect approach. Under the third alternative, an entity would apply the new revenue standard only to contracts that are incomplete under legacy U.S. guidance at the date of initial application and recognize the cumulative effect of the new standard as an adjustment to the opening balance of retained earnings. Prior years would not be restated and additional disclosures would be required to enable users of the financial statements to understand the impact of adopting the new standard in the current year compared to prior years that are presented under legacy U.S. guidance. For public business entities, this standard is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is prohibited. The Company is currently evaluating the impact of this new accounting standard on its consolidated financial position and results of operations. In February 2016, the FASB issued a new accounting standard on leases. The new standard, among other changes, will require lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases. The lease liability will be measured at the present value of the lease payments over the lease term. The right-of-use asset will be measured at the lease liability amount, adjusted for lease prepayments, lease incentives received and the lessee’s initial direct costs (e.g. commissions). The new standard is effective for annual reporting periods beginning after December 15, 2018, including interim reporting periods within those annual reporting periods. The adoption will require a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest period presented. The Company is currently evaluating the impact of this new accounting standard on its consolidated financial position and results of operations. The Company does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements |
CONVERTIBLE NOTES PAYABLE (Tabl
CONVERTIBLE NOTES PAYABLE (Tables) | 9 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Debt [Table Text Block] | The senior secured credit facility note balance was as follows for June 30, 2017 and September 30, 2016: June 30, September 30, Principal $ 3,500,000 $ 3,500,000 Premium 617,647 - Discount (522,485) (1,075,715) 3,595,162 2,424,285 Non-current - 1,361,624 Current $ 3,595,162 $ 1,062,661 |
SUMMARY OF SIGNIFICANT ACCOUN21
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GOING CONCERN (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Sep. 30, 2016 | |
Summary Of Significant Accounting Policies And Going Concern Line Item [Line Items] | ||||||
Working Capital | $ 9,447,400 | $ 9,447,400 | ||||
Net Income (Loss) Attributable to Parent | (1,933,612) | $ (223,428) | (6,554,073) | $ (682,189) | ||
Net Cash Provided by (Used in) Operating Activities, Continuing Operations | (502,711) | $ (605,454) | ||||
Stockholders' Equity Attributable to Parent | (5,495,035) | (5,495,035) | $ (739,473) | |||
Retained Earnings (Accumulated Deficit) | $ (12,583,565) | $ (12,583,565) | (6,029,492) | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 50,851,200 | 50,851,200 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | 33,025,000 | 33,025,000 | ||||
Class of Warrant or Right, Outstanding | 500,000 | 500,000 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 500,000 | |||||
Debt Instrument, Periodic Payment, Interest | $ 52,500 | |||||
Business Combination, Contingent Consideration, Liability | $ 850,000 | $ 850,000 | 850,000 | |||
Common Stock [Member] | ||||||
Summary Of Significant Accounting Policies And Going Concern Line Item [Line Items] | ||||||
Net Income (Loss) Attributable to Parent | 0 | |||||
Stockholders' Equity Attributable to Parent | 4,270 | 4,270 | $ 4,172 | |||
Convertible Debt [Member] | ||||||
Summary Of Significant Accounting Policies And Going Concern Line Item [Line Items] | ||||||
Debt Instrument, Periodic Payment, Interest | $ 883,232 | |||||
Convertible Debt [Member] | Common Stock [Member] | ||||||
Summary Of Significant Accounting Policies And Going Concern Line Item [Line Items] | ||||||
Debt Conversion, Converted Instrument, Shares Issued | 3,633,000 | |||||
Convertible Notes Payable [Member] | ||||||
Summary Of Significant Accounting Policies And Going Concern Line Item [Line Items] | ||||||
Debt Instrument, Periodic Payment, Interest | $ 3,613,168 | |||||
Business Combination, Contingent Consideration, Liability | $ 850,000 | $ 850,000 | ||||
Convertible Notes Payable [Member] | Common Stock [Member] | ||||||
Summary Of Significant Accounting Policies And Going Concern Line Item [Line Items] | ||||||
Debt Conversion, Converted Instrument, Shares Issued | 18,250,000 | |||||
Conversion of Stock, Shares Issued | 3,324,432 |
INVENTORY (Details Textual)
INVENTORY (Details Textual) - USD ($) | Jun. 30, 2017 | Sep. 30, 2016 |
Inventory [Line Items] | ||
Inventory, Net | $ 508,552 | $ 1,391,439 |
CONVERTIBLE NOTES PAYABLE (Deta
CONVERTIBLE NOTES PAYABLE (Details) - USD ($) | Jun. 30, 2017 | Sep. 30, 2016 |
Principal | $ 3,500,000 | $ 3,500,000 |
Premium | 617,647 | 0 |
Discount | (522,485) | (1,075,715) |
Convertible Notes Payable | 3,595,162 | 2,424,285 |
Non-current | 0 | 1,361,624 |
Current | $ 3,595,162 | $ 1,062,661 |
CONVERTIBLE NOTES PAYABLE (De24
CONVERTIBLE NOTES PAYABLE (Details Textual) - USD ($) | Jun. 09, 2017 | Mar. 13, 2017 | Sep. 13, 2016 | Mar. 31, 2017 | Jun. 30, 2017 | Mar. 28, 2017 | Sep. 30, 2016 |
Convertible Debt | $ 150,000 | ||||||
Common Stock, Capital Shares Reserved for Future Issuance | 7,000,000 | ||||||
Proceeds From Sale Of Common Stock | 850,000 | ||||||
Business Combination, Contingent Consideration, Liability | 850,000 | $ 850,000 | |||||
Debt Instrument Embedded Conversion Amount | $ 617,647 | ||||||
Debt Instrument, Interest Rate, Increase (Decrease) | 25.00% | ||||||
Debt Instrument, Periodic Payment, Interest | $ 52,500 | ||||||
Debt Instrument, Periodic Payment | $ 72,917 | ||||||
Accrued Liabilities, Current | 863,640 | $ 1,200,000 | $ 239,271 | ||||
Selling, General and Administrative Expenses [Member] | |||||||
Advisory Fee Earned | $ 1,200,000 | ||||||
Common Stock [Member] | |||||||
Stock Issued During Period, Shares, Other | 539,204 | ||||||
Senior Secured Credit Facility [Member] | |||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 6,500,000 | ||||||
Line of Credit Facility, Remaining Borrowing Capacity | $ 3,500,000 | ||||||
Line of Credit Facility, Interest Rate During Period | 18.00% | ||||||
Line of Credit Facility, Initiation Date | Mar. 13, 2017 | ||||||
Line of Credit Facility, Expiration Date | Mar. 13, 2018 | ||||||
Line of Credit Facility, Interest Rate at Period End | 25.00% | ||||||
Additional Advisory Fees Payable | $ 850,000 | ||||||
Line of Credit Facility, Periodic Payment | $ 52,500 | ||||||
Conversion of Stock, Amount Converted | $ 3,500,000 | ||||||
Conversion Of Accrued Interest Amount Converted | $ 113,167 | ||||||
Conversion of Stock, Description | conversion rate of 85% of the lowest of the daily volume weighted average price of the Company’s common stock during the 5 business days immediately prior to the conversion date. | ||||||
Line of Credit Facility, Periodic Payment, Interest | $ 298,341 | ||||||
Convertible Notes Payable [Member] | |||||||
Convertible Debt | $ 840,000 | ||||||
Business Combination, Contingent Consideration, Liability | 850,000 | ||||||
Debt Instrument, Periodic Payment, Interest | $ 3,613,168 | ||||||
Convertible Notes Payable One [Member] | |||||||
Debt Instrument, Description | interest at an annual rate of 7% with an original maturity date of June 11, 2017 that was extended to December 11, 2017 | ||||||
Debt Instrument, Face Amount | $ 688,444 | ||||||
Debt Instrument, Increase, Accrued Interest | $ 64,264 | ||||||
Debt Instrument, Maturity Date | Dec. 11, 2017 | ||||||
Convertible Notes Payable Two [Member] | |||||||
Debt Instrument, Description | interest at an annual rate of 7% with a maturity date of December 31, 2017 | ||||||
Debt Instrument, Face Amount | $ 122,000 | ||||||
Debt Instrument, Increase, Accrued Interest | $ 8,525 |
DEFINED CONTRIBUTION PLAN (Deta
DEFINED CONTRIBUTION PLAN (Details Textual) - USD ($) | 1 Months Ended | 9 Months Ended |
Aug. 31, 2016 | Jun. 30, 2017 | |
Defined Contribution Plan Disclosure [Line Items] | ||
Defined Contribution Plan, Maximum Annual Contributions Per Employee, Percent | 90.00% | |
Defined Contribution Plan, Employer Discretionary Contribution Amount | $ 9,230 | |
Defined Contribution Plan, Maximum Annual Contributions Per Employee, Amount | $ 25,621 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Textual) | 9 Months Ended |
Jun. 30, 2017USD ($) | |
President [Member] | |
Related Party Transaction [Line Items] | |
Employee Benefits and Share-based Compensation | $ 370,000 |
Severance Costs | 2,500,000 |
Chief Executive Officer [Member] | |
Related Party Transaction [Line Items] | |
Employee Benefits and Share-based Compensation | 250,000 |
Severance Costs | $ 1,500,000 |
COMMON STOCK (Details Textual)
COMMON STOCK (Details Textual) - USD ($) | 1 Months Ended | 2 Months Ended | 9 Months Ended | |||
Feb. 28, 2017 | Oct. 31, 2016 | Nov. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Sep. 30, 2016 | |
Class of Stock [Line Items] | ||||||
Common Stock, Shares Authorized | 200,000,000 | 200,000,000 | ||||
Issuance of common stock to satisfy settlement payable | $ 48,998 | $ 48,998 | $ 0 | |||
Reclassification Of Debt Premium Upon Conversion | $ 26,384 | $ 26,384 | $ 0 | |||
Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | ||||
Common Stock, Shares, Issued | 42,694,692 | 41,719,492 | ||||
Stock Issued During Period, Value, New Issues | $ 75,382 | |||||
Common Stock, Shares, Outstanding | 42,694,692 | 41,719,492 | ||||
Common Stock [Member] | ||||||
Class of Stock [Line Items] | ||||||
Stock Issued During Period, Shares, New Issues | 460,200 | |||||
Stock Issued During Period, Value, New Issues | $ 46 | |||||
Acquisition Related Services [Member] | ||||||
Class of Stock [Line Items] | ||||||
Stock Issued During Period, Shares, New Issues | 115,000 | |||||
Stock Issued During Period, Value, New Issues | $ 57,500 | |||||
Consulting Services [Member] | ||||||
Class of Stock [Line Items] | ||||||
Stock Issued During Period, Shares, New Issues | 400,000 | |||||
Stock Issued During Period, Value, New Issues | $ 92,000 |
PREFERRED STOCK (Details Textua
PREFERRED STOCK (Details Textual) - USD ($) | 9 Months Ended | |
Jun. 30, 2017 | Sep. 30, 2016 | |
Class of Stock [Line Items] | ||
Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 |
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Preferred Stock, Capital Shares Reserved for Future Issuance | 4,999,750 | |
Series A Preferred Stock [Member] | ||
Class of Stock [Line Items] | ||
Preferred Stock, Shares Authorized | 250 | 250 |
Preferred Stock, Par or Stated Value Per Share | $ 0 | $ 0 |
Stock Issued | $ 250 | |
Preferred Stock, Voting Rights | These preferred shares have voting rights per share equal to the total number of issued and outstanding shares of common stock divided by 0.99. |
SHARE BASED PAYMENTS (Details T
SHARE BASED PAYMENTS (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |
Feb. 17, 2017 | Jun. 30, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | |
Share-based Compensation | $ 1,723,129 | $ 0 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 50,851,200 | 50,851,200 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | 33,025,000 | 33,025,000 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Vested, Shares Issued in Period | 400,000 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Vested, Payment | $ 200 | |||
Consulting Fees Per Month | $ 10,000 | |||
Share Price | $ 0.23 | |||
Equity Method Investment, Quoted Market Value | $ 92,000 | |||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 6 months | |||
Employee Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 10,485,000 | 10,485,000 | ||
Share-based Compensation | $ 679,000 | $ 1,573,000 | ||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options | 2,924,445 | $ 2,924,445 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 14,566,200 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 5 years | |||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 1.46% | |||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% | |||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 117.00% | |||
Employee Stock Option [Member] | Maximum [Member] | ||||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 0.24 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 6 years 6 months | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | 2,015,000 | $ 2,015,000 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 5 years | |||
Employee Stock Option [Member] | Minimum [Member] | ||||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 0.20 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 5 years 9 months | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | $ 2,014,000 | $ 2,014,000 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 1 year 9 months | |||
Two Thousand Sixteen Stock Incentive Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 100,000,000 | 100,000,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Textual) - USD ($) | 1 Months Ended | 9 Months Ended | |||||||
Jul. 31, 2017 | May 31, 2017 | Feb. 28, 2017 | May 31, 2016 | Jun. 30, 2017 | May 10, 2017 | Feb. 13, 2017 | Jan. 07, 2017 | Sep. 30, 2016 | |
Loss Contingency, Damages Sought, Value | $ 75,000 | ||||||||
Other Liabilities | $ 64,500 | $ 1,543,124 | |||||||
Business Development Services Fee Per Month | $ 2,500 | ||||||||
Percentage Of Gross Proceeds of Placement ,Payable | 9.00% | ||||||||
Percentage Of Warrant To Be Issued | 2.50% | ||||||||
Warrant Purchase Price ,Description | The warrants shall entitle the investment bank to purchase securities of the Company at a purchase price equal to 110% of the implied price per share of the placement or 100% of the public market closing price of the Companys common stock on the date of the placement, whichever is lower. | ||||||||
Convertible Debt | $ 150,000 | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 8.00% | ||||||||
Shares Issuable Conversion Of Warrant, Percentage | 200.00% | ||||||||
Class Of Warrant Or Right ,Term | 5 years | ||||||||
Lease Expiration Date | Apr. 30, 2017 | Jan. 31, 2019 | |||||||
Lease Security Deposit , Current | $ 6,000 | ||||||||
Lessee, Operating Lease, Term of Contract | 3 years | ||||||||
Lessee, Operating Lease, Renewal Term | 1 year | ||||||||
Lease Arrangement Start Date | Feb. 1, 2017 | ||||||||
Leasing Arrangements Operating Lease Extended Lease term | 24 months | ||||||||
Interest Rate ,Original Issue Discount | 8.00% | ||||||||
Subsequent Event [Member] | |||||||||
Operating Lease, Payments | $ 116,000 | ||||||||
Lease Arrangement One [Member] | |||||||||
Lease Arrangement Start Date | May 1, 2016 | ||||||||
Operating Leases, Rent Expense | $ 5,000 | ||||||||
Rent Free Period Term | a rent-free period from May 1, 2016 through July 31, 2016. | ||||||||
Lease Arrangement One [Member] | Prepaid Expenses and Other Current Assets [Member] | |||||||||
Deposits | $ 10,000 | ||||||||
Lease Arrangement Two [Member] | |||||||||
Lease Expiration Date | Sep. 1, 2016 | ||||||||
Lease Arrangement Start Date | Jul. 1, 2016 | ||||||||
Rent Free Period Term | additional space with rent-free periods through November 1, 2016. | ||||||||
Lease Arrangement Two [Member] | Lease One [Member] | |||||||||
Lessee, Operating Lease, Term of Contract | 1 year | ||||||||
Operating Leases, Rent Expense | $ 2,500 | ||||||||
Lease Arrangement Two [Member] | Lease Two [Member] | |||||||||
Lessee, Operating Lease, Term of Contract | 1 year | ||||||||
Operating Leases, Rent Expense | $ 3,500 | ||||||||
HowCo Office Lease [Member] | |||||||||
Lease Expiration Date | May 30, 2020 | ||||||||
Operating Leases, Rent Expense | $ 4,860 | ||||||||
Maximum [Member] | |||||||||
Contractual Obligation | $ 16,500 | ||||||||
Minimum [Member] | |||||||||
Contractual Obligation | $ 15,000 | ||||||||
Advisory Services [Member] | |||||||||
Other Commitment | $ 22,500 | ||||||||
Due Diligence Services [Member] | |||||||||
Other Commitment | $ 35,000 | $ 15,000 | |||||||
Other Liabilities | $ 50,000 |
CONCENTRATIONS (Details Textual
CONCENTRATIONS (Details Textual) | 9 Months Ended |
Jun. 30, 2017USD ($) | |
Concentrations Of Foreign Sales | $ 153,000 |
Accounts Payable [Member] | Supplier One [Member] | |
Concentration Risk, Percentage | 45.00% |
Accounts Payable [Member] | Supplier Two [Member] | |
Concentration Risk, Percentage | 15.00% |
Supplier Concentration Risk [Member] | Supplier One [Member] | |
Concentration Risk, Percentage | 47.00% |
Supplier Concentration Risk [Member] | Supplier Two [Member] | |
Concentration Risk, Percentage | 13.00% |
Sales Revenue, Net [Member] | Customer One [Member] | |
Concentration Risk, Percentage | 66.00% |
Sales Revenue, Net [Member] | Customer Two [Member] | |
Concentration Risk, Percentage | 12.00% |
Sales Revenue, Net [Member] | Customer Three [Member] | |
Concentration Risk, Percentage | 12.00% |
Accounts Receivable [Member] | Customer One [Member] | |
Concentration Risk, Percentage | 57.00% |
Accounts Receivable [Member] | Customer Two [Member] | |
Concentration Risk, Percentage | 15.00% |
Accounts Receivable [Member] | Customer Three [Member] | |
Concentration Risk, Percentage | 11.00% |
SUBSEQUENT EVENTS (Details Text
SUBSEQUENT EVENTS (Details Textual) - Subsequent Event [Member] - USD ($) | 1 Months Ended | |
Jul. 31, 2017 | Jul. 10, 2017 | |
Operating Lease, Payments | $ 116,000 | |
Chief Financial Officer [Member] | ||
Severance Costs | $ 1,500,000 |