Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 02, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Healthier Choices Management Corp. | |
Entity Central Index Key | 844,856 | |
Trading Symbol | HCMC | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 29,348,867,108 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 7,659,019 | $ 7,883,191 |
Due from merchant credit card processors, net of reserves | 12,795 | 28,410 |
Accounts receivable, net of allowance of $31,690 and $18,995, respectively | 46,509 | 75,568 |
Inventories | 985,511 | 861,650 |
Prepaid expenses and vendor deposits | 71,554 | 63,808 |
Other current assets | 38,750 | 41,183 |
TOTAL CURRENT ASSETS | 8,814,138 | 8,953,810 |
Property and equipment, net of accumulated depreciation of $440,976 and $393,771, respectively | 544,900 | 589,506 |
Intangible assets, net | 1,519,191 | 1,559,531 |
Goodwill | 481,314 | 481,314 |
Other assets | 116,914 | 117,244 |
TOTAL ASSETS | 11,476,457 | 11,701,405 |
CURRENT LIABILITIES | ||
Accounts payable | 462,333 | 512,395 |
Accrued expenses | 464,956 | 439,133 |
Contract liabilities | 58,866 | 61,312 |
Current portion of loan payable | 2,139 | 2,111 |
Derivative liabilities - warrants | 10,231,697 | 10,231,697 |
TOTAL CURRENT LIABILITIES | 11,219,991 | 11,246,648 |
Loan payable, net of current portion | 9,913 | 10,459 |
TOTAL LIABILITIES | 11,229,904 | 11,257,107 |
COMMITMENTS AND CONTINGENCIES (SEE NOTE 10) | ||
STOCKHOLDERS' EQUITY | ||
Common Stock, $.0001 par value per share, 750,000,000,000 shares authorized; 29,348,867,108 shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively | 2,934,887 | 2,934,887 |
Additional paid-in capital | 11,152,128 | 10,080,238 |
Accumulated deficit | (13,840,462) | (12,570,827) |
TOTAL STOCKHOLDERS' EQUITY | 246,553 | 444,298 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 11,476,457 | $ 11,701,405 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, net allowance | $ 31,690 | $ 18,995 |
Property and equipment, net of accumulated depreciation | $ 440,976 | $ 393,771 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 750,000,000,000 | 750,000,000,000 |
Common stock, shares issued | 29,348,867,108 | 29,348,867,108 |
Common stock, shares outstanding | 29,348,867,108 | 29,348,867,108 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
SALES | ||
Vapor sales, net | $ 1,308,895 | $ 1,479,631 |
Grocery sales, net | 2,298,511 | 2,091,053 |
TOTAL SALES, NET | 3,607,406 | 3,570,684 |
Cost of sales vapor | 576,661 | 543,491 |
Cost of sales grocery | 1,386,278 | 1,216,873 |
GROSS PROFIT | 1,644,467 | 1,810,320 |
OPERATING EXPENSES | ||
Advertising | 37,763 | 26,456 |
Selling, general and administrative | 3,097,728 | 3,539,764 |
Total operating expenses | 3,135,491 | 3,566,220 |
LOSS FROM OPERATIONS | (1,491,024) | (1,755,900) |
OTHER INCOME (EXPENSE) | ||
Loss on repurchase of Series A warrants | (74,795) | |
Other income | 210,000 | 40,461 |
Interest income | 11,388 | 16,544 |
Total other income (expense), net | 221,388 | (17,790) |
Net loss from continuing operations | (1,269,636) | (1,773,690) |
Net loss from discontinued operations | (7,482) | |
NET LOSS | $ (1,269,636) | $ (1,781,172) |
NET LOSS PER SHARE-BASIC AND DILUTED | ||
Continuing operations | $ 0 | $ 0 |
Discontinued operations | 0 | 0 |
NET LOSS PER SHARE -BASIC AND DILUTED | $ 0 | $ 0 |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-BASIC AND DILUTED | 29,348,867,108 | 17,765,032,561 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - 3 months ended Mar. 31, 2018 - USD ($) | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit |
Beginning balance at Dec. 31, 2017 | $ 444,298 | $ 2,934,887 | $ 10,080,238 | $ (12,570,827) |
Beginning balance, shares at Dec. 31, 2017 | 29,348,867,108 | |||
Stock-based compensation expenses | 1,071,890 | 1,071,890 | ||
Net loss | (1,269,636) | (1,269,636) | ||
Ending balance at Mar. 31, 2018 | $ 246,553 | $ 2,934,887 | $ 11,152,128 | $ (13,840,462) |
Ending balance, shares at Mar. 31, 2018 | 29,348,867,108 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
OPERATING ACTIVITIES | ||
Net loss | $ (1,269,636) | $ (1,781,172) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Loss from discontinued operations | 7,482 | |
Change in allowances for bad debt | 12,695 | (1,175) |
Depreciation and amortization | 87,546 | 83,543 |
Loss on repurchase of Series A warrants | 74,795 | |
Stock-based compensation expense | 1,071,890 | 1,197,194 |
Net cash used in discontinued operations | (52,531) | |
Changes in operating assets and liabilities: | ||
Due from merchant credit card processors | 15,615 | 1,862 |
Accounts receivable | 16,364 | (25,848) |
Inventories | (123,861) | (154,293) |
Prepaid expenses and vendor deposits | (7,746) | (52,764) |
Other assets | 2,763 | (9,810) |
Accounts payable | (50,062) | (70,125) |
Accrued expenses | 25,823 | (232,678) |
Contract liabilities | (2,446) | (154) |
NET CASH USED IN OPERATING ACTIVITIES | (221,055) | (1,015,674) |
INVESTING ACTIVITIES | ||
Purchases of patent | (25,000) | |
Purchases of property and equipment | (2,600) | |
NET CASH USED IN INVESTING ACTIVITIES | (2,600) | (25,000) |
FINANCING ACTIVITIES | ||
Principal payments on loan payable | (517) | |
Payments for repurchase of Series A warrants | (2,382,467) | |
Principal payments of capital lease obligations | (16,994) | |
Proceeds from exercise of stock options | 1,000 | |
NET CASH USED IN FINANCING ACTIVITIES | (517) | (2,398,461) |
DECREASE IN CASH | (224,172) | (3,439,135) |
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 7,883,191 | 13,366,272 |
CASH AND CASH EQUIVALENTS - END OF PERIOD | 7,659,019 | 9,927,137 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Cash paid for interest | 204 | 1,877 |
Issuance of common stock in connection with cashless exercise of Series A warrants | $ 250,308 |
Organization, Going Concern, an
Organization, Going Concern, and Basis of Presentation | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Going Concern, and Basis of Presentation [Abstract] | |
ORGANIZATION, GOING CONCERN, AND BASIS OF PRESENTATION | Note 1. ORGANIZATION, GOING CONCERN, AND BASIS OF PRESENTATION Organization Healthier Choices Management Corp. (the “Company”) is a holding company focused on providing consumers with healthier daily choices with respect to nutrition and other lifestyle alternatives. The Company currently operates thirteen retail vape stores in the Southeast region of the United States, through which it offers e-liquids, vaporizers and related products. The Company also operates Ada’s Natural Market, a natural and organic grocery store, through its wholly owned subsidiary Healthy Choice Markets, Inc. Ada’s Natural Market offers fresh produce, bulk foods, vitamins and supplements, packaged groceries, meat and seafood, deli, baked goods, dairy products, frozen foods, health & beauty products and natural household items. Going Concern and Liquidity The accompanying unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern and realization of assets and satisfaction of liabilities in the normal course of business and do not include any adjustments that might result from the outcome of any uncertainties related to our going concern assessment. The carrying amounts of assets and liabilities presented in the financial statements do not necessarily purport to represent realizable or settlement values. The Company incurred a loss from operations of approximately $1.5 million for the three months ended March 31, 2018. As of March 31, 2018, cash and cash equivalents totaled approximately $7.7 million . While we anticipate that our current cash, cash equivalents, and cash to be generated from operations will be sufficient to meet our projected operating plans for the foreseeable future through a year and a day from the issuance of these unaudited consolidated financial statements, should we require additional funds (either through equity or debt financings, collaborative agreements or from other sources) we have no commitments to obtain such additional financing, and we may not be able to obtain any such additional financing on terms favorable to us, or at all. If adequate financing is not available, the Company will further delay, postpone or terminate product and service expansion and curtail certain selling, general and administrative operations. The inability to raise additional financing may have a material adverse effect on the future performance of the Company. Sourcing and Vendors We source from multiple suppliers. These suppliers range from small independent businesses to multinational conglomerates. For the three months ended March 31, 2018, we purchased approximately 83% of the goods we sell from our top 20 suppliers and approximately 33% of our total purchases were from one vendor . Basis of Presentation and Principles of Consolidation The Company’s unaudited consolidated financial statements are prepared in accordance with GAAP. The unaudited consolidated financial statements include the accounts of all subsidiaries in which the Company holds a controlling financial interest as of the financial statement date. The unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The terms “we,” “us,” “our,” and the “Company” refer to Healthier Choices Management Corp. and its wholly-owned subsidiaries, Healthy Choice Markets, Inc., Vaporin, Inc., The Vape Store, Inc. (“Vape Store”), Smoke Anywhere U.S.A., Inc. (“Smoke”), Emagine the Vape Store, LLC (“Emagine”), IVGI Acquisition, Inc., Vapormax Franchising LLC., Vaporin LLC., and Vaporin Florida, Inc. All intercompany accounts and transactions have been eliminated in consolidation. Unaudited Interim Financial Information The unaudited consolidated financial statements have been prepared by the Company and reflect all normal, recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the interim financial information. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the year ending December 31, 2018. Certain information and footnotes normally included in financial statements prepared in accordance with GAAP have been omitted under the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (“SEC”). These unaudited consolidated financial statements and notes included herein should be read in conjunction with the audited consolidated financial statements and related notes thereto as of and for the year ended December 31, 2017 included in the Company’s Annual Report on Form 10-K for such year as filed with the SEC on March 15, 2018. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates in the Preparation of the Financial Statements The preparation of unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements, and the reported amounts of net revenue and expenses during the reporting periods. Actual results could differ from those estimates. These estimates and assumptions include allowances, reserves and write-downs of receivables and inventory, valuing equity securities and hybrid instruments, share-based payment arrangements, deferred taxes and related valuation allowances, and the valuation of assets and liabilities acquired in business combinations. Certain of management’s estimates could be affected by external conditions, including those unique to the Company’s industry, and general economic conditions. It is possible that these external factors could have an effect on the Company’s estimates that could cause actual results to differ from those estimates. The Company re-evaluates all accounting estimates at least quarterly based on these conditions and records adjustments when necessary. Shipping and Handling Shipping charges billed to customers are included in net sales and the related shipping and handling costs are included in cost of sales. For the three months ended March 31, 2018 and 2017 shipping and handling costs of approximately $12,000 and $32,000, respectively, were included in cost of sales. Concentration of Risk Our cash balances are kept liquid to support our growing acquisition and infrastructure needs for operational expansion. The majority of the Company’s cash and cash equivalents are concentrated in one large financial institution, which is in excess of Federal Deposit Insurance Corporation (FDIC) coverage. At March 31, 2018 and December 31, 2017, cash in excess of FDIC limits of $250,000 per financial institution were approximately $7.3 million and $7.1 million, respectively. The Company continually monitors its positions with, and the credit quality of, the financial institutions with which it invests, as deposits are held in excess of federally insured limits. The Company’s cash equivalents at March 31, 2018 and December 31, 2017 were money market accounts. The Company has not experienced any losses in such accounts. Concentration of accounts receivable consist of the following, all of which are greater than 10% of the total net accounts receivable balance: March 31, December 31, Customers balances in excess of 10% of total accounts receivable Customer A - 27 % Customer B 12 % 21 % Customer C - 19 % For the three months ended March 31, 2018 and 2017, the Company did not have any customers with sales in excess of 10% of total sales. Revenue Recognition Revenues from product sales and services rendered, net of promotional discounts, manufacturer coupons and rebates, return allowances, and sales and consumption taxes, are recorded when products are delivered, title passes to customers and collection is likely to occur. Title passes to customers at the point of sale for retail and at upon delivery of products for wholesale. Return allowances, which reduce revenue, are estimated using historical experience. The Company recognizes revenue in accordance with the following five step model: ● identify arrangements with customers; ● identify performance obligations; ● determine transaction price; ● allocate transaction price to the separate performance obligations in the arrangement, if more than one exists; ● recognize revenue as performance obligations are satisfied. Accounting Standards Update (“ASU”) No. 2014-9, Revenue from Contracts with Customers (“ASU 2014-9”), is a comprehensive revenue recognition standard that superseded nearly all existing revenue recognition guidance. The Company adopted the standard on January 1, 2018 using the retrospective transition method, which requires reporting entities to apply the standard as of the earliest period presented in their financial statements. The adoption of the new standard resulted in no impact to the consolidated statements of operations and an immaterial impact to the consolidated balance sheets for reclassifying $61,312 of contract liabilities from accrued expenses as of December 31, 2017. Contract liabilities consist of gift card and loyalty point program liabilities. See “Accounts Receivable, Contract Assets, and Deferred Revenue” significant accounting policy. Adoption of ASU 2014-09 impacted the previously reported results for the quarter ended March 31, 2017 as follows: As reported After adoption Quarter Ended ASU 2014-09 Quarter Ended 2017 Impact 2017 Vapor sales, net $ 1,481,364 (1,733 ) $ 1,479,631 Grocery sales, net $ 2,104,626 (13,573 ) $ 2,091,053 Gross profit $ 1,825,626 (15,306 ) $ 1,810,320 Net loss $ (1,765,866 ) (15,306 ) $ (1,781,172 ) Adoption of ASU 2014-09 impacted the previously reported balance sheet as of December 31, 2017 as follows: As reported ASU 2014-09 After adoption 31-Dec-17 Impact 31-Dec-17 Accrued Expenses $ 538,204 (99,071 ) $ 439,133 Contract liabilities $ - 61,312 $ 61,312 Total current liabilities $ 11,284,407 (37,759 ) $ 11,246,648 Accumulated deficit $ (12,608,586 ) 37,759 $ (12,570,827 ) Total stockholders’ equity $ 406,539 37,759 $ 444,298 Accounts Receivable, Contract Assets, and Contract Liabilities Accounts receivable are claims to consideration which are unconditional; meaning no performance obligations remain for the Company and only the passage of time is necessary before collection. Contract assets are distinguished from accounts receivable as performance obligations remain before claims to consideration become unconditional. By nature of the Company’s operations, contract assets are typically not recognized. Contract liabilities are recorded when customers transfer consideration in advance of delivery of products or services, which the Company records for gift cards and loyalty reward programs. When one party to an arrangement performs before the other(s), the Company records an accounts receivable, contract asset or contract liability . The majority of arrangements with customers contain one performance obligation; to provide a distinct set of products or services. Most performance obligations are satisfied simultaneously as the Company exchanges products or services for customer payment. Exceptions include gift cards and loyalty rewards, for which the Company has a performance obligation to deliver products or services at a future date. As gift cards are purchased and loyalty points earned, contract liability is recorded until the performance obligation is satisfied through delivery of products or services or breakage based on gift card and loyalty reward program term limits. The Company’s breakage policy is twenty-four months for gift cards, twelve months for Grocery loyalty rewards, and six months for Vapor loyalty rewards. Loyalty rewards are earned at five percent on qualifying purchases and the reward functions as an allocation of transaction price from the period earned by the customer to the period the performance obligation is satisfied by the Company. As such, all contract liabilities are expected to be recognized within a twenty-four month period. Adopted Accounting Pronouncements In August 2016, the FASB issued ASU 2016-15 (Topic 230), “Statement of Cash Flows Classification of Certain Cash Receipts and Cash Payments”. The new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2017. The adoption of ASU 2016-15 was done on a retrospective basis and it did not have a significant impact on the Company’s consolidated financial statements. Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, and annual and interim periods thereafter, with early adoption permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact that the adoption of this new standard will have on its consolidated financial statements. In July 2017, the FASB issued a two-part ASU No. 2017-11, I “Accounting for Certain Financial Instruments With Down Round Features” and II “Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests With a Scope Exception”. The ASU is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this new standard will have on its consolidated financial statements. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2018 | |
Segment Information [Abstract] | |
SEGMENT INFORMATION | Note 3. SEGMENT INFORMATION Management determines the reportable segments based on the internal reporting used by our Chief Operating Decision Makers to evaluate performance and to assess where to allocate resources. The Company evaluates segment performance based on the segment gross profit before corporate expenses. Summarized below are the total net sales and segment operating loss for each reporting segment: Three Months Ended Net Sales Segment Gross Profit March 31, March 31, March 31, March 31, Vapor sales, net $ 1,308,895 $ 1,479,631 $ 732,234 $ 936,140 Grocery sales, net 2,298,511 2,091,053 912,233 874,180 Total sales $ 3,607,406 $ 3,570,684 1,644,467 1,810,320 Operating expenses 3,135,491 3,566,220 Operating loss (1,491,024 ) (1,755,900 ) Other income (expense), net 221,388 (17,790 ) Net loss from continuing operations (1,269,636 ) (1,773,690 ) Net income (loss) from discontinued operations - (7,482 ) Net loss $ (1,269,636 ) $ (1,781,172 ) For the three months ended March 31, 2018, depreciation and amortization was $15,526 and $69,357 for Vapor and Grocery, respectively. For the three months ended March 31, 2017, depreciation and amortization was $16,732 and $63,182 for Vapor and Grocery, respectively. |
Notes Receivable from Related P
Notes Receivable from Related Party and Other Income | 3 Months Ended |
Mar. 31, 2018 | |
Notes Receivable from Related Party and Other Income [Abstract] | |
NOTES RECEIVABLE FROM RELATED PARTY AND OTHER INCOME | Note 4. NOTES RECEIVABLE FROM RELATED PARTY AND OTHER INCOME Management determined both notes receivable were uncollectable based on payment history and recorded a valuation allowance to fully reserve both notes receivable on December 31, 2016. A summary of the notes receivable is presented below: Description Due Date Interest Rate Remaining Allowance Acquisition Note In Default 4.5% $ 74,687 $ (74,687 ) Promissory Note In Default Prime rate plus 2.0% $ 178,851 $ (178,851 ) During the three months ended March 31, 2018 and 2017, the Company had notes receivables collections of $210,000 and 25,000 , respectively, these collections were recorded to other income. Management believes the valuation allowance is appropriate at March 31, 2018. |
Intangible Assets
Intangible Assets | 3 Months Ended |
Mar. 31, 2018 | |
Intangible Assets [Abstract] | |
INTANGIBLE ASSETS | Note 5. INTANGIBLE ASSETS Intangible assets, net are as follows: March 31, 2018 Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Favorable lease 15 years $ 890,000 $ (106,809 ) $ 783,191 Trade names 10 years 820,000 (190,000 ) 630,000 Customer relationships 5 years 60,000 (22,000 ) 38,000 Technology 10 years 75,000 (8,750 ) 66,250 Website 3 years 4,500 (2,750 ) 1,750 Intangible assets, net $ 1,849,500 $ (330,309 ) $ 1,519,191 December 31, 2017 Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Favorable lease 15 years $ 890,000 $ (92,219 ) $ 797,781 Trade names 10 years 820,000 (169,500 ) 650,500 Customer relationships 5 years 60,000 (19,000 ) 41,000 Technology 10 years 75,000 (6,875 ) 68,125 Website 3 years 4,500 (2,375 ) 2,125 Intangible assets, net $ 1,849,500 $ (289,969 ) $ 1,559,531 Intangible assets are amortized on a straight-line basis over their estimated useful lives. Amortization expense amounted to approximately $ 40,000 and $39,000 for the three months ended March 31, 2018 and 2017, respectively. Future annual estimated amortization expense is as follows: Years ending December 31, 2018 (remaining nine months) $ 121,020 2019 160,486 2020 159,861 2021 152,861 2022 147,861 Thereafter 777,102 Total $ 1,519,191 |
Contract Liabilities
Contract Liabilities | 3 Months Ended |
Mar. 31, 2018 | |
Contract Liabilities [Abstract] | |
CONTRACT LIABILITIES | Note 6. CONTRACT LIABILITIES The Company’s deferred revenue consists of gift cards and loyalty rewards, for which the Company has a performance obligation to deliver products when customers redeem balances or terms expire through breakage. Our breakage policy is twenty-four months for gift cards, twelve months for Grocery loyalty rewards, and six months for Vapor loyalty rewards. As such, all contract liabilities are expected to be recognized within a twenty-four month period. A summary of the contract liabilities activity for the three months ended March 31, 2017 and 2018 is presented below: March 31, 2018 March 31, 2017 Beginning balance as January 1, $ 61,312 $ 34,564 Issued 83,834 87,312 Redeemed (85,357 ) (91,837 ) Breakage recognized (923 ) 4,370 Ending balance as of March 31, $ 58,866 $ 34,409 |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2018 | |
Stockholders' Equity [Abstract] | |
STOCKHOLDERS' EQUITY | Note 7. STOCKHOLDERS’ EQUITY Series A Warrants Through March 31, 2018, there were no Series A Warrants exercised through the cashless exercise provision of such warrants. As a result, the Company’s common stock remained unchanged for the first quarter of 2018. Pursuant to the Series A Warrant agreement, the Black Scholes value is calculated by a third-party and utilized in calculating the warrant common stock equivalents at the point of cashless exercise. As such, the value is computed at the end of each reporting period to determine the amount of warrant common stock equivalents outstanding using the formula below: (Series A Warrants exercised * Black Scholes Value) / closing common stock bid price as of two trading days prior. A summary of the outstanding warrant common stock equivalents at January 1, 2018 and March 31, 2018 is presented below: March 31, January 1, Warrants outstanding 33 33 Black Scholes value 1,522,852 1,520,919 Closing bid stock price $ 0.0001 $ 0.0001 Warrant common stock equivalent 505,888,354,828 505,246,312,541 Stock Options During the three months ended March 31, 2018 and 2017, the Company recognized stock-based compensation of approximately $1.1 million and $1.2 million, respectively, in connection with the amortization of stock options, net of recovery of stock-based charges for forfeited unvested stock options. Stock-based compensation expense is included as part of selling, general and administrative expense in the accompanying consolidated statements of operations. At March 31, 2018, the amount of unamortized stock-based compensation expense associated with unvested stock options granted to employees, directors and consultants was approximately $0.3 million, which will be amortized over a weighted average period of 0.90 years. At December 31, 2017, the amount of unamortized stock-based compensation expense associated with unvested stock options granted to employees, directors and consultants was approximately $1.3 million, which will be amortized over a weighted average period of 0.43 years. Loss per Share Basic loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is computed using the weighted average number of shares of common stock outstanding and, if dilutive, potential shares of common stock outstanding during the period. Potential common shares consist of incremental shares of common stock issuable upon (a) the exercise of stock options (using the treasury stock method), and (b) the exercise of warrants (using the if-converted method). For the three months ended March 31, 2018 and 2017, diluted loss per share excludes the potential shares of common stock, as their effect is antidilutive. The following table summarizes the Company’s securities, in common share equivalents, that have been excluded from the calculation of dilutive loss per share as their effect would be anti-dilutive: March 31, March 31, Stock options 89,268,899,200 82,851,011,360 Warrants 505,888,354,828 508,574,762,763 Total 595,157,254,028 591,425,774,123 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Measurements [Abstract] | |
FAIR VALUE MEASUREMENTS | Note 8. FAIR VALUE MEASUREMENTS The fair value framework under FASB’s guidance requires the categorization of assets and liabilities into three levels based upon the assumptions used to measure the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3, if applicable, would generally require significant management judgment. The three levels for categorizing assets and liabilities under the fair value measurement requirements are as follows: ● Level 1: Fair value measurement of the asset or liability using observable inputs such as quoted prices in active markets for identical assets or liabilities; ● Level 2: Fair value measurement of the asset or liability using inputs other than quoted prices that are observable for the applicable asset or liability, either directly or indirectly, such as quoted prices for similar (as opposed to identical) assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and ● Level 3: Fair value measurement of the asset or liability using unobservable inputs that reflect the Company’s own assumptions regarding the applicable asset or liability. Nonfinancial assets such as goodwill, other intangible assets, and long-lived assets held and used are measured at fair value and tested for impairment annually, or when there is an indicator of impairment between annual tests. The following table summarizes the liabilities measured at fair value on a recurring basis as of March 31, 2018 and December 2017: Level 1 Level 2 Level 3 Total LIABILITIES Derivative liabilities - warrants $ - $ 10,231,697 $ - $ 10,231,697 Total derivative liabilities - warrants $ - $ 10,231,697 $ - $ 10,231,697 The Company determined that its offer to purchase its Series A Warrants for $0.22 per warrant was the best indicator of the fair value of the derivative liabilities - warrants as of March 31, 2018 and December 31, 2017. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Note 9. COMMITMENTS AND CONTINGENCIES Fontem License Agreement The Company has a non-exclusive license to certain products with Fontem Ventures B.V. “Fontem”. The Company will make quarterly license and royalty payments in perpetuity to Fontem based on the sale of qualifying products as defined in the license agreement at a royalty rate of 5.25% For the three months ended March 31, 2018 and 2017, the Company incurred royalty expenses of approximately $20,000 and $0, respectively. Legal Proceedings From time to time the Company may be involved in various claims and legal actions arising in the ordinary course of our business. With respect to legal costs, we record such costs as incurred. |
Disaggregation of Revenues
Disaggregation of Revenues | 3 Months Ended |
Mar. 31, 2018 | |
Disaggregation of Revenues [Abstract] | |
DISAGGREGATION OF REVENUES | Note 10. DISAGGREGATION OF REVENUES The Company reports the following segments in accordance with management guidance: Vapor and Grocery. When the Company prepares its internal management reporting to evaluate business performance, we disaggregate revenue into the following categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Three Months Ended March 31, March 31, Vapor $ 1,308,895 $ 1,479,631 Grocery 2,298,511 2,091,053 Total revenue $ 3,607,406 $ 3,507,684 Retail Vapor $ 1,302,855 $ 1,351,956 Retail Grocery 1,646,636 1,666,845 Food service/restaurant 397,564 423,505 Online/eCommerce 250,960 703 Wholesale Grocery 3,352 - Wholesale Vapor 6,040 127,675 Total revenue $ 3,607,406 $ 3,570,684 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Note 11. SUBSEQUENT EVENTS On April 13, 2018, the Company agreed to a new revolving credit line of $2 million and a money market account of $2 million (“blocked account”) with Professional Bank in Coral Gables, Florida. The agreement included a variable interest rate that it is based on a rate of 1% over what is earned on the collateral amount. The collateral amount established in the arrangement with the bank is $2 million. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Use of Estimates in the Preparation of the Financial Statements | Use of Estimates in the Preparation of the Financial Statements The preparation of unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements, and the reported amounts of net revenue and expenses during the reporting periods. Actual results could differ from those estimates. These estimates and assumptions include allowances, reserves and write-downs of receivables and inventory, valuing equity securities and hybrid instruments, share-based payment arrangements, deferred taxes and related valuation allowances, and the valuation of assets and liabilities acquired in business combinations. Certain of management’s estimates could be affected by external conditions, including those unique to the Company’s industry, and general economic conditions. It is possible that these external factors could have an effect on the Company’s estimates that could cause actual results to differ from those estimates. The Company re-evaluates all accounting estimates at least quarterly based on these conditions and records adjustments when necessary. |
Shipping and Handling | Shipping and Handling Shipping charges billed to customers are included in net sales and the related shipping and handling costs are included in cost of sales. For the three months ended March 31, 2018 and 2017 shipping and handling costs of approximately $12,000 and $32,000, respectively, were included in cost of sales. |
Concentration of Risk | Concentration of Risk Our cash balances are kept liquid to support our growing acquisition and infrastructure needs for operational expansion. The majority of the Company’s cash and cash equivalents are concentrated in one large financial institution, which is in excess of Federal Deposit Insurance Corporation (FDIC) coverage. At March 31, 2018 and December 31, 2017, cash in excess of FDIC limits of $250,000 per financial institution were approximately $7.3 million and $7.1 million, respectively. The Company continually monitors its positions with, and the credit quality of, the financial institutions with which it invests, as deposits are held in excess of federally insured limits. The Company’s cash equivalents at March 31, 2018 and December 31, 2017 were money market accounts. The Company has not experienced any losses in such accounts. Concentration of accounts receivable consist of the following, all of which are greater than 10% of the total net accounts receivable balance: March 31, December 31, Customers balances in excess of 10% of total accounts receivable Customer A - 27 % Customer B 12 % 21 % Customer C - 19 % For the three months ended March 31, 2018 and 2017, the Company did not have any customers with sales in excess of 10% of total sales. |
Revenue Recognition | Revenue Recognition Revenues from product sales and services rendered, net of promotional discounts, manufacturer coupons and rebates, return allowances, and sales and consumption taxes, are recorded when products are delivered, title passes to customers and collection is likely to occur. Title passes to customers at the point of sale for retail and at upon delivery of products for wholesale. Return allowances, which reduce revenue, are estimated using historical experience. The Company recognizes revenue in accordance with the following five step model: ● identify arrangements with customers; ● identify performance obligations; ● determine transaction price; ● allocate transaction price to the separate performance obligations in the arrangement, if more than one exists; ● recognize revenue as performance obligations are satisfied. Accounting Standards Update (“ASU”) No. 2014-9, Revenue from Contracts with Customers (“ASU 2014-9”), is a comprehensive revenue recognition standard that superseded nearly all existing revenue recognition guidance. The Company adopted the standard on January 1, 2018 using the retrospective transition method, which requires reporting entities to apply the standard as of the earliest period presented in their financial statements. The adoption of the new standard resulted in no impact to the consolidated statements of operations and an immaterial impact to the consolidated balance sheets for reclassifying $61,312 of contract liabilities from accrued expenses as of December 31, 2017. Contract liabilities consist of gift card and loyalty point program liabilities. See “Accounts Receivable, Contract Assets, and Deferred Revenue” significant accounting policy. Adoption of ASU 2014-09 impacted the previously reported results for the quarter ended March 31, 2017 as follows: As reported After adoption Quarter Ended ASU 2014-09 Quarter Ended 2017 Impact 2017 Vapor sales, net $ 1,481,364 (1,733 ) $ 1,479,631 Grocery sales, net $ 2,104,626 (13,573 ) $ 2,091,053 Gross profit $ 1,825,626 (15,306 ) $ 1,810,320 Net loss $ (1,765,866 ) (15,306 ) $ (1,781,172 ) Adoption of ASU 2014-09 impacted the previously reported balance sheet as of December 31, 2017 as follows: As reported ASU 2014-09 After adoption 31-Dec-17 Impact 31-Dec-17 Accrued Expenses $ 538,204 (99,071 ) $ 439,133 Contract liabilities $ - 61,312 $ 61,312 Total current liabilities $ 11,284,407 (37,759 ) $ 11,246,648 Accumulated deficit $ (12,608,586 ) 37,759 $ (12,570,827 ) Total stockholders’ equity $ 406,539 37,759 $ 444,298 |
Accounts Receivable, Contract Assets, and Contract Liabilities | Accounts Receivable, Contract Assets, and Contract Liabilities Accounts receivable are claims to consideration which are unconditional; meaning no performance obligations remain for the Company and only the passage of time is necessary before collection. Contract assets are distinguished from accounts receivable as performance obligations remain before claims to consideration become unconditional. By nature of the Company’s operations, contract assets are typically not recognized. Contract liabilities are recorded when customers transfer consideration in advance of delivery of products or services, which the Company records for gift cards and loyalty reward programs. When one party to an arrangement performs before the other(s), the Company records an accounts receivable, contract asset or contract liability . The majority of arrangements with customers contain one performance obligation; to provide a distinct set of products or services. Most performance obligations are satisfied simultaneously as the Company exchanges products or services for customer payment. Exceptions include gift cards and loyalty rewards, for which the Company has a performance obligation to deliver products or services at a future date. As gift cards are purchased and loyalty points earned, contract liability is recorded until the performance obligation is satisfied through delivery of products or services or breakage based on gift card and loyalty reward program term limits. The Company’s breakage policy is twenty-four months for gift cards, twelve months for Grocery loyalty rewards, and six months for Vapor loyalty rewards. Loyalty rewards are earned at five percent on qualifying purchases and the reward functions as an allocation of transaction price from the period earned by the customer to the period the performance obligation is satisfied by the Company. As such, all contract liabilities are expected to be recognized within a twenty-four month period. |
Adopted Accounting Pronouncements | Adopted Accounting Pronouncements In August 2016, the FASB issued ASU 2016-15 (Topic 230), “Statement of Cash Flows Classification of Certain Cash Receipts and Cash Payments”. The new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2017. The adoption of ASU 2016-15 was done on a retrospective basis and it did not have a significant impact on the Company’s consolidated financial statements. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, and annual and interim periods thereafter, with early adoption permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact that the adoption of this new standard will have on its consolidated financial statements. In July 2017, the FASB issued a two-part ASU No. 2017-11, I “Accounting for Certain Financial Instruments With Down Round Features” and II “Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests With a Scope Exception”. The ASU is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this new standard will have on its consolidated financial statements. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of concentration of accounts receivable | March 31, December 31, Customers balances in excess of 10% of total accounts receivable Customer A - 27 % Customer B 12 % 21 % Customer C - 19 % |
Schedule of previously reported results | As reported After adoption Quarter Ended ASU 2014-09 Quarter Ended 2017 Impact 2017 Vapor sales, net $ 1,481,364 (1,733 ) $ 1,479,631 Grocery sales, net $ 2,104,626 (13,573 ) $ 2,091,053 Gross profit $ 1,825,626 (15,306 ) $ 1,810,320 Net loss $ (1,765,866 ) (15,306 ) $ (1,781,172 ) As reported ASU 2014-09 After adoption 31-Dec-17 Impact 31-Dec-17 Accrued Expenses $ 538,204 (99,071 ) $ 439,133 Contract liabilities $ - 61,312 $ 61,312 Total current liabilities $ 11,284,407 (37,759 ) $ 11,246,648 Accumulated deficit $ (12,608,586 ) 37,759 $ (12,570,827 ) Total stockholders’ equity $ 406,539 37,759 $ 444,298 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment Information [Abstract] | |
Schedule of net sales and segment operating loss | Three Months Ended Net Sales Segment Gross Profit March 31, March 31, March 31, March 31, Vapor sales, net $ 1,308,895 $ 1,479,631 $ 732,234 $ 936,140 Grocery sales, net 2,298,511 2,091,053 912,233 874,180 Total sales $ 3,607,406 $ 3,570,684 1,644,467 1,810,320 Operating expenses 3,135,491 3,566,220 Operating loss (1,491,024 ) (1,755,900 ) Other income (expense), net 221,388 (17,790 ) Net loss from continuing operations (1,269,636 ) (1,773,690 ) Net income (loss) from discontinued operations - (7,482 ) Net loss $ (1,269,636 ) $ (1,781,172 ) |
Notes Receivable from Related21
Notes Receivable from Related Party and Other Income (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Notes Receivable from Related Party and Other Income [Abstract] | |
Summary of notes receivable | Description Due Date Interest Rate Remaining Allowance Acquisition Note In Default 4.5% $ 74,687 $ (74,687 ) Promissory Note In Default Prime rate plus 2.0% $ 178,851 $ (178,851 ) |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Intangible Assets [Abstract] | |
Schedule of intangible assets, net | March 31, 2018 Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Favorable lease 15 years $ 890,000 $ (106,809 ) $ 783,191 Trade names 10 years 820,000 (190,000 ) 630,000 Customer relationships 5 years 60,000 (22,000 ) 38,000 Technology 10 years 75,000 (8,750 ) 66,250 Website 3 years 4,500 (2,750 ) 1,750 Intangible assets, net $ 1,849,500 $ (330,309 ) $ 1,519,191 December 31, 2017 Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Favorable lease 15 years $ 890,000 $ (92,219 ) $ 797,781 Trade names 10 years 820,000 (169,500 ) 650,500 Customer relationships 5 years 60,000 (19,000 ) 41,000 Technology 10 years 75,000 (6,875 ) 68,125 Website 3 years 4,500 (2,375 ) 2,125 Intangible assets, net $ 1,849,500 $ (289,969 ) $ 1,559,531 |
Schedule of future annual estimated amortization expense | Years ending December 31, 2018 (remaining nine months) $ 121,020 2019 160,486 2020 159,861 2021 152,861 2022 147,861 Thereafter 777,102 Total $ 1,519,191 |
Contract Liabilities (Tables)
Contract Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Contract Liabilities [Abstract] | |
Schedule of contract liabilities | March 31, 2018 March 31, 2017 Beginning balance as January 1, $ 61,312 $ 34,564 Issued 83,834 87,312 Redeemed (85,357 ) (91,837 ) Breakage recognized (923 ) 4,370 Ending balance as of March 31, $ 58,866 $ 34,409 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Stockholders' Equity [Abstract] | |
Summary of the outstanding warrant common stock equivalents | March 31, January 1, Warrants outstanding 33 33 Black Scholes value 1,522,852 1,520,919 Closing bid stock price $ 0.0001 $ 0.0001 Warrant common stock equivalent 505,888,354,828 505,246,312,541 |
Summary of anti-dilutive activities excluded from basic and dilutive loss per share | March 31, March 31, Stock options 89,268,899,200 82,851,011,360 Warrants 505,888,354,828 508,574,762,763 Total 595,157,254,028 591,425,774,123 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Measurements [Abstract] | |
Schedule of liabilities measured at fair value on a recurring basis | Level 1 Level 2 Level 3 Total LIABILITIES Derivative liabilities - warrants $ - $ 10,231,697 $ - $ 10,231,697 Total derivative liabilities - warrants $ - $ 10,231,697 $ - $ 10,231,697 |
Disaggregation of Revenues (Tab
Disaggregation of Revenues (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Disaggregation of Revenues [Abstract] | |
Summary of disaggregate revenue | Three Months Ended March 31, March 31, Vapor $ 1,308,895 $ 1,479,631 Grocery 2,298,511 2,091,053 Total revenue $ 3,607,406 $ 3,507,684 Retail Vapor $ 1,302,855 $ 1,351,956 Retail Grocery 1,646,636 1,666,845 Food service/restaurant 397,564 423,505 Online/eCommerce 250,960 703 Wholesale Grocery 3,352 - Wholesale Vapor 6,040 127,675 Total revenue $ 3,607,406 $ 3,570,684 |
Organization, Going Concern, 27
Organization, Going Concern, and Basis of Presentation (Details) | 3 Months Ended | |||
Mar. 31, 2018USD ($)VendorSupplier | Dec. 31, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Organization, Going Concern, and Basis of Presentation (Textual) | ||||
Loss from operations | $ 1,500,000 | |||
Cash and cash equivalents | $ 7,659,019 | $ 7,883,191 | $ 9,927,137 | $ 13,366,272 |
Suppliers [Member] | ||||
Organization, Going Concern, and Basis of Presentation (Textual) | ||||
Concentration risk, percentage | 83.00% | |||
Number of suppliers | Supplier | 20 | |||
Vendor [Member] | ||||
Organization, Going Concern, and Basis of Presentation (Textual) | ||||
Concentration risk, percentage | 33.00% | |||
Number of vendor | Vendor | 1 |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Details) - Accounts Receivable [Member] | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Customer A [Member] | ||
Significant Accounting Policies [Line Items] | ||
Concentration of risk, percentage | 27.00% | |
Customer B [Member] | ||
Significant Accounting Policies [Line Items] | ||
Concentration of risk, percentage | 12.00% | 21.00% |
Customer C [Member] | ||
Significant Accounting Policies [Line Items] | ||
Concentration of risk, percentage | 19.00% |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Details 1) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Vapor sales, net | $ 1,308,895 | $ 1,479,631 |
Grocery sales, net | 2,298,511 | 2,091,053 |
Gross profit | 1,644,467 | 1,810,320 |
Net loss | $ (1,269,636) | (1,781,172) |
ASU 2014-09 Impact [Member] | ||
Vapor sales, net | (1,733) | |
Grocery sales, net | (13,573) | |
Gross profit | (15,306) | |
Net loss | (15,306) | |
As reported [Member] | ||
Vapor sales, net | 1,481,364 | |
Grocery sales, net | 2,104,626 | |
Gross profit | 1,825,626 | |
Net loss | $ (1,765,866) |
Summary of Significant Accoun30
Summary of Significant Accounting Policies (Details 2) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Accrued Expenses | $ 464,956 | $ 439,133 | ||
Contract liabilities | 58,866 | 61,312 | $ 34,409 | $ 34,564 |
Total current liabilities | 11,219,991 | 11,246,648 | ||
Accumulated deficit | (13,840,462) | (12,570,827) | ||
Total stockholders' equity | $ 246,553 | 444,298 | ||
ASU 2014-09 Impact [Member] | ||||
Accrued Expenses | (99,071) | |||
Contract liabilities | 61,312 | |||
Total current liabilities | (37,759) | |||
Accumulated deficit | 37,759 | |||
Total stockholders' equity | 37,759 | |||
As reported [Member] | ||||
Accrued Expenses | 538,204 | |||
Contract liabilities | ||||
Total current liabilities | 11,284,407 | |||
Accumulated deficit | (12,608,586) | |||
Total stockholders' equity | $ 406,539 |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Summary of Significant Accounting Policies (Textual) | |||
Shipping and handling costs | $ 12,000 | $ 32,000 | |
Cash in excess of FDIC limits | 250,000 | $ 250,000 | |
Cash in excess of financial institution | $ 7,300,000 | 7,100,000 | |
Contract liabilities from accrued expenses | $ 61,312 | ||
Sales [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentration risk, percentage | 10.00% | 10.00% |
Segment Information (Details)
Segment Information (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Segment Reporting Information [Line Items] | ||
Net Sales | $ 3,607,406 | $ 3,570,684 |
Segment Gross Profit | 1,644,467 | 1,810,320 |
Operating expenses | 3,135,491 | 3,566,220 |
Operating loss | (1,491,024) | (1,755,900) |
Other income (expense), net | 221,388 | (17,790) |
Net income (loss) from discontinued operations | (7,482) | |
Net loss | (1,269,636) | (1,781,172) |
Operating segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Operating expenses | 3,135,491 | 3,566,220 |
Operating loss | (1,491,024) | (1,755,900) |
Other income (expense), net | 221,388 | (17,790) |
Net loss from continuing operations | (1,269,636) | (1,773,690) |
Net income (loss) from discontinued operations | (7,482) | |
Net loss | (1,269,636) | (1,781,172) |
Vapor [Member] | Operating segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 1,308,895 | 1,479,631 |
Segment Gross Profit | 732,234 | 936,140 |
Grocery [Member] | Operating segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 2,298,511 | 2,091,053 |
Segment Gross Profit | $ 912,233 | $ 874,180 |
Segment Information (Details Te
Segment Information (Details Textual) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Vapor [Member] | ||
Segment Information (Textual) | ||
Depreciation and amortization | $ 15,526 | $ 16,732 |
Grocery [Member] | ||
Segment Information (Textual) | ||
Depreciation and amortization | $ 69,357 | $ 63,182 |
Notes Receivable from Related34
Notes Receivable from Related Party and Other Income (Details) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Acquisition Note [Member] | |
Short-term Debt [Line Items] | |
Due Date | In Default |
Interest Rate | 4.50% |
Remaining Principal | $ 74,687 |
Allowance | $ (74,687) |
Promissory Note [Member] | |
Short-term Debt [Line Items] | |
Due Date | In Default |
Interest Rate | 2.00% |
Remaining Principal | $ 178,851 |
Allowance | $ (178,851) |
Notes Receivable from Related35
Notes Receivable from Related Party and Other Income (Details Textual) - USD ($) | Mar. 31, 2018 | Mar. 31, 2017 |
Notes Receivable from Related Party and Other Income (Abstract) | ||
Other income | $ 210,000 | $ 25,000 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 1,849,500 | $ 1,849,500 |
Accumulated Amortization | (330,309) | (289,969) |
Net Carrying Amount | $ 1,519,191 | $ 1,559,531 |
Favorable lease [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Lives (Years) | 15 years | 15 years |
Gross Carrying Amount | $ 890,000 | $ 890,000 |
Accumulated Amortization | (106,809) | (92,219) |
Net Carrying Amount | $ 783,191 | $ 797,781 |
Trade names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Lives (Years) | 10 years | 10 years |
Gross Carrying Amount | $ 820,000 | $ 820,000 |
Accumulated Amortization | (190,000) | (169,500) |
Net Carrying Amount | $ 630,000 | $ 650,500 |
Website [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Lives (Years) | 3 years | 3 years |
Gross Carrying Amount | $ 4,500 | $ 4,500 |
Accumulated Amortization | (2,750) | (2,375) |
Net Carrying Amount | $ 1,750 | $ 2,125 |
Customer relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Lives (Years) | 5 years | 5 years |
Gross Carrying Amount | $ 60,000 | $ 60,000 |
Accumulated Amortization | (22,000) | (19,000) |
Net Carrying Amount | $ 38,000 | $ 41,000 |
Technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Lives (Years) | 10 years | 10 years |
Gross Carrying Amount | $ 75,000 | $ 75,000 |
Accumulated Amortization | (8,750) | (6,875) |
Net Carrying Amount | $ 66,250 | $ 68,125 |
Intangible Assets (Details 1)
Intangible Assets (Details 1) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Intangible Assets [Abstract] | ||
2018 (remaining nine months) | $ 121,020 | |
2,019 | 160,486 | |
2,020 | 159,861 | |
2,021 | 152,861 | |
2,022 | 147,861 | |
Thereafter | 777,102 | |
Total | $ 1,519,191 | $ 1,559,531 |
Intangible Assets (Details Text
Intangible Assets (Details Textual) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Intangible Assets (Textual) | ||
Amortization expense | $ 40,000 | $ 39,000 |
Contract Liabilities (Details)
Contract Liabilities (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Contract Liabilities [Abstract] | ||
Beginning balance as January 1, | $ 61,312 | $ 34,564 |
Issued | 83,834 | 87,312 |
Redeemed | (85,357) | (91,837) |
Breakage recognized | (923) | 4,370 |
Ending balance as of March 31, | $ 58,866 | $ 34,409 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Stockholders' Equity [Abstract] | ||
Warrants outstanding | 33 | 33 |
Black Scholes value | 1,522,852 | 1,520,919 |
Closing bid stock price | $ 0.0001 | $ 0.0001 |
Warrant common stock equivalent | 505,888,354,828 | 505,246,312,541 |
Stockholders' Equity (Details 1
Stockholders' Equity (Details 1) - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities excluded from calculation of dilutive loss per share | 595,157,254,028 | 591,425,774,123 |
Stock options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities excluded from calculation of dilutive loss per share | 89,268,899,200 | 82,851,011,360 |
Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities excluded from calculation of dilutive loss per share | 505,888,354,828 | 508,574,762,763 |
Stockholders' Equity (Details T
Stockholders' Equity (Details Textual) - Stock Options [Member] - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Stockholders' Equity (Textual) | |||
Stock-based compensation expense | $ 1.1 | $ 1.2 | |
Unamortized stock based compensation expense on unvested stock options | $ 0.3 | $ 1.3 | |
Amortized over a weighted average period | 10 months 25 days | 5 months 5 days |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
LIABILITIES | ||
Derivative liabilities - warrants | $ 10,231,697 | $ 10,231,697 |
Total derivative liabilities - warrants | 10,231,697 | |
Recurring basis [Member] | Level 1 [Member] | ||
LIABILITIES | ||
Derivative liabilities - warrants | ||
Total derivative liabilities - warrants | ||
Recurring basis [Member] | Level 2 [Member] | ||
LIABILITIES | ||
Derivative liabilities - warrants | 10,231,697 | |
Total derivative liabilities - warrants | 10,231,697 | |
Recurring basis [Member] | Level 3 [Member] | ||
LIABILITIES | ||
Derivative liabilities - warrants | ||
Total derivative liabilities - warrants |
Fair Value Measurements (Deta44
Fair Value Measurements (Details Textual) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Fair Value Measurements (Textual) | ||
Exercise price per Series A Warrants | $ 0.22 | $ 0.22 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - Fontem License Agreement [Member] - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Commitments and Contingencies (Textual) | ||
Royalty expenses | $ 20,000 | $ 0 |
Percentage of royalty rate | 5.25% |
Disaggregation of Revenues (Det
Disaggregation of Revenues (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 3,607,406 | $ 3,570,684 |
Vapor [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 1,308,895 | 1,479,631 |
Grocery [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 2,298,511 | 2,091,053 |
Retail Vapor [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 1,302,855 | 1,351,956 |
Retail Grocery [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 1,646,636 | 1,666,845 |
Food Service Restaurant [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 397,564 | 423,505 |
Online Ecommerce [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 250,960 | 703 |
Wholesale Grocery [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 3,352 | |
Wholesale Vapor [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 6,040 | $ 127,675 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent event [Member] $ in Millions | 1 Months Ended |
Apr. 13, 2018USD ($) | |
Subsequent Events (Textual) | |
Description of collateral interest rate | The agreement included a variable interest rate that it is based on a rate of 1% over what is earned on the collateral amount. |
Collateral arrangement amount | $ 2 |
Professional Bank Coral Gables, Florida [Member] | |
Subsequent Events (Textual) | |
Revolving credit line | 2 |
Money market amount | $ 2 |