Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 12, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | VAPOR CORP. | |
Entity Central Index Key | 844,856 | |
Trading Symbol | vpcod | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 4,999,106,905 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 22,592,099 | $ 27,214,991 |
Due from merchant credit card processor, net of reserves of $2,355 and $2,355 for chargebacks, respectively | 102,053 | 92,552 |
Accounts receivable, net allowance of $ 85,643 and $76,694, respectively | 300,345 | 290,096 |
Inventories | 1,473,975 | 1,529,806 |
Prepaid expenses and vendor deposits | 295,167 | 438,925 |
TOTAL CURRENT ASSETS | 24,763,639 | 29,566,370 |
Property and equipment, net of accumulated depreciation of $257,243 and $211,824 respectively | 371,350 | 410,277 |
Intangible assets, net of accumulated amortization of $151,328 and $12,500, respectively | 903,672 | 929,000 |
Goodwill | 3,177,017 | 3,177,017 |
Other assets | 151,417 | 165,198 |
TOTAL ASSETS | 29,367,095 | 34,247,862 |
CURRENT LIABILITIES: | ||
Accounts payable | 487,672 | 1,581,347 |
Accrued expenses | 1,585,989 | 3,946,111 |
Current portion of capital lease | 63,312 | 60,871 |
Customer deposits | 29,025 | 95,588 |
Derivative liabilities | 53,616,983 | 41,089,580 |
TOTAL CURRENT LIABILITIES | 55,782,981 | 46,773,497 |
Capital lease, net of current portion | 41,799 | 58,572 |
TOTAL LIABILITIES | $ 55,824,780 | $ 46,832,069 |
COMMITMENTS AND CONTINGENCIES (SEE NOTE 8) | ||
STOCKHOLDERS' DEFICIT | ||
Series A convertible preferred stock, $.001 par value, 1,000,000 shares authorized and designated, 838 and 13,434 shares issued and outstanding, respectively, no liquidation value | $ 1 | $ 13 |
Common stock, $.0001 par value, 5,000,000,000 shares authorized, 45,146,438 and 147,943 shares issued and outstanding, respectively (See Note 6) | 4,515 | 15 |
Additional paid-in capital | 3,155,849 | 846,915 |
Accumulated deficit | (29,618,050) | (13,431,150) |
TOTAL STOCKHOLDERS' DEFICIT | (26,457,685) | (12,584,207) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ 29,367,095 | $ 34,247,862 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Credit card processor for chargebacks valuation reserves | $ 2,355 | $ 2,355 |
Accounts receivable, allowance for doubtful accounts | 85,643 | 76,694 |
Property and equipment, accumulated depreciation | 257,243 | 211,824 |
Intangible assets, accumulated amortization | $ 151,328 | $ 12,500 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 838 | 13,434 |
Preferred stock, shares outstanding | 838 | 13,434 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 5,000,000,000 | 5,000,000,000 |
Common stock, shares issued | 45,146,438 | 147,943 |
Common stock, shares outstanding | 45,146,438 | 147,943 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
SALES, NET: | ||
Wholesale and online sales, net | $ 1,889,777 | $ 927,269 |
Retail sales, net | 1,846,451 | 541,352 |
Total Sales, net | 3,736,228 | 1,468,621 |
Cost of sales wholesale and online | 1,494,207 | 1,491,761 |
Cost of sales retail | 755,755 | 159,349 |
GROSS PROFIT (LOSS) | 1,486,266 | (182,489) |
OPERATING EXPENSES: | ||
Advertising | 49,732 | 105,177 |
Selling, general and administrative | 2,845,896 | 3,243,189 |
Total operating expenses | 2,895,628 | 3,348,366 |
Operating loss | (1,409,362) | (3,530,855) |
OTHER INCOME (EXPENSES): | ||
Amortization of debt discounts | (317,702) | |
Amortization of deferred financing costs | (34,917) | |
Non-cash change in fair value of derivative liabilities | (14,782,039) | 250,826 |
Interest income | 9,040 | 1,316 |
Interest expense | (4,539) | (21,073) |
Interest expense-related party | (40,000) | |
Total other expense | (14,777,538) | (161,550) |
NET LOSS | $ (16,186,900) | $ (3,692,405) |
LOSS PER SHARE - BASIC AND DILUTED | $ (1.80) | $ (57.50) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED | 8,993,213 | 64,212 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (UNAUDITED) - 3 months ended Mar. 31, 2016 - USD ($) | Series A Convertible Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2015 | $ 13 | $ 15 | $ 846,915 | $ (13,431,150) | $ (12,584,207) |
Balance, (in shares) at Dec. 31, 2015 | 13,434 | 147,943 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock in connection with cashless exercise of Series A warrants | $ 4,449 | 2,250,187 | 2,254,636 | ||
Issuance of common stock in connection with cashless exercise of Series A warrants (in shares) | 44,485,874 | ||||
Issuance of common stock in connection with conversion of Series A convertible preferred stock | $ (12) | $ 51 | (39) | ||
Issuance of common stock in connection with conversion of Series A convertible preferred stock (in shares) | (12,596) | 512,100 | |||
Stock-based compensation expense | 58,786 | $ 58,786 | |||
Issuance of common stock in connection with delivery of restricted stock units | |||||
Issuance of common stock in connection with delivery of restricted stock units (in shares) | 521 | ||||
Net loss | $ (16,186,900) | $ (16,186,900) | |||
Balance at Mar. 31, 2016 | $ 1 | $ 4,515 | $ 3,155,849 | $ (29,618,050) | $ (26,457,685) |
Balance, (in shares) at Mar. 31, 2016 | 838 | 45,146,438 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
OPERATING ACTIVITIES: | ||
Net loss | $ (16,186,900) | $ (3,692,405) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Change in allowances for bad debt | 8,948 | |
Depreciation and amortization | 70,746 | 85,013 |
Loss on disposal of assets | 289,638 | |
Amortization of debt discounts | 317,702 | |
Amortization of deferred financing cost | 34,917 | |
Write-down of obsolete and slow moving inventory | 55,548 | 70,657 |
Stock-based compensation expense | 58,786 | 364,576 |
Non-cash change in fair value of derivative liabilities | 14,782,039 | (250,826) |
Changes in operating assets and liabilities: | ||
Due from merchant credit card processors | (9,501) | (35,083) |
Accounts receivable | (140,145) | 117,115 |
Inventories | 283 | 423,635 |
Prepaid expenses and vendor deposits | 143,759 | 164,917 |
Other assets | 13,780 | (771) |
Accounts payable | (1,093,674) | (140,092) |
Accrued expenses | (2,242,266) | 191,384 |
Customer deposits | (63,471) | (89,882) |
NET CASH USED IN OPERATING ACTIVITIES | (4,602,068) | (2,149,505) |
INVESTING ACTIVITIES: | ||
Cash received in connection with Merger | 136,468 | |
Collection of loan receivable | 467,095 | |
Purchases of property and equipment | (6,491) | (67,492) |
NET CASH USED IN (PROVIDED BY) INVESTING ACTIVITIES: | (6,491) | 536,071 |
FINANCING ACTIVITIES: | ||
Proceeds from private placement of common stock and warrants, net of offering costs | 2,941,960 | |
Principal payments on term loan payable | (226,273) | |
Principal payments of capital lease obligations | (14,333) | (12,248) |
Proceeds from loan payable from Vaporin, Inc. | 350,000 | |
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | (14,333) | 3,053,439 |
(DECREASE) INCREASE IN CASH | (4,622,892) | 1,440,005 |
CASH - BEGINNING OF YEAR | 27,214,991 | 471,194 |
CASH - END OF YEAR | 22,592,099 | 1,911,199 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid for interest | 4,539 | 30,351 |
Cash paid for income taxes | 2,791 | |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Cashless exercise of common stock purchase warrants | $ 4,449 | 143 |
Recognition of debt discount in connection with convertible note issuance | 1,250,000 | |
Purchase of equipment through capital lease obligation | $ 179,359 | |
Contribution of note and interest payable to Vaporin to capital in connection with the Merger | ||
Issuance of common stock in connection with Preferred Stock Conversion | $ 51 | |
Reclassification of conversion option from liability to equity | ||
Purchase Price Allocation in connection with the Merger: | ||
Cash | $ 136,468 | |
Accounts receivable | 81,256 | |
Merchant credit card processor receivable | 201,141 | |
Prepaid expense and other current assets | 28,021 | |
Inventory | 981,558 | |
Property and equipment | 206,668 | |
Accounts payable and accrued expenses | (779,782) | |
Derivative liabilities | (49,638) | |
Notes payable, net of debt discount of $54,623 | (512,377) | |
Notes payable - related party | (1,000,000) | |
Net liabilities assumed | (706,685) | |
Consideration: | ||
Value of common stock issued | 17,028,399 | |
Excess of liabilities over assets assumed | 706,685 | |
Total consideration | 17,735,084 | |
Amount allocated to goodwill | (15,654,484) | |
Amount allocated to identifiable intangible assets | $ (2,080,600) | |
Remaining unallocated consideration | ||
Purchase Price Allocation in connection with the aggregate retail store acquisitions: | ||
Amount allocated to goodwill | $ 1,977,533 | |
Amount allocated to other assets | 17,736 | |
Amount allocated to Inventory | 263,810 | |
Purchase price | 2,259,079 | |
Hold back obligation | (860,000) | |
Cash used in retail store acquisitions | $ 1,399,079 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Statement of Cash Flows [Abstract] | ||
Notes payable, debt discounts | $ 54,623 |
ORGANIZATION, GOING CONCERN, AN
ORGANIZATION, GOING CONCERN, AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION, GOING CONCERN, BASIS OF PRESENTATION, AND RECENT DEVELOPMENTS | Note 1. ORGANIZATION, GOING CONCERN, AND BASIS OF PRESENTATION Organization Vapor Corp. (the “Company” or “Vapor”) is a distributor and retailer of vaporizers, e-liquids and electronic cigarettes. The Company United States of America. Vaporin™, Vapor offers e-liquids, vaporizers, e-cigarettes and related products through our vape stores, online, retail channels through our direct sales force, and through third party wholesalers, retailers and value-added resellers. Retailers of our products include small-box discount retailers, gas stations, drug stores, convenience stores, and tobacco shops throughout the United States. Going Concern and Liquidity The accompanying 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 unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. In July 2015, the Company closed a registered public offering of 3,761,657 Units (the “Units”). Each Unit consisted of 0.1429 shares of Series A Convertible Preferred Stock (the “Series A Preferred Stock”) and 0.2857 Series A Warrants (the “Series A Warrants”). The Units separated into the Series A Preferred Stock and Series A Warrants as of January 25, 2016. See Note 6- Stockholders’ Equity – Series A Unit Public Offering. Holders of Series A Warrants may exercise such warrants by paying the exercise price in cash or, in lieu of payment of the exercise price in cash by electing to receive a cash payment from us (subject to certain conditions not being met by the Company) equal to the Black Scholes Value (as defined in the Series A Warrant) of the number of shares of the Company’s common stock (the “Common Stock”) the holder elects to exercise, which we refer to as the Black Scholes Payment; provided, that we have discretion as to whether to deliver the Black Scholes Payment or, subject to meeting certain conditions, to deliver shares of Common Stock. The number of shares of Common Stock that the Company is obligated to issue in connection with the exercise of the Series A Warrants is based on the closing price of the Common Stock two trading days prior to the date of exercise. On May 4, 2016, the Company determined that it had insufficient shares of Common Stock authorized to allow for the exercise of the Series A Warrants or stock options, or allow the conversion of the Series A Preferred Stock. Accordingly, the Company currently is not permitted to elect to issue Common Stock in lieu of cash payments to satisfy its obligations pursuant to a cashless exercise of the Series A Warrants. On March 21, 2016, the Company’s stockholders approved a reverse stock split of the Common Stock at a ratio between 1-for-10,000 and 1-for-20,000, such ratio to be determined by the Company’s Board of Directors (the “Board”). The Company is seeking the necessary approval from the Financial Industry Regulatory Authority (“FINRA”) to implement the reverse stock split. In the event that FINRA approves the reverse stock split and the split is effected, the Company would have sufficient authorized shares of Common Stock to meet its obligations pursuant to its outstanding Series A Warrants, Series A Preferred Stock and stock options. The Company reported a net loss of approximately $16.2 million for the three months ended March 31, 2016. The Company also had negative working capital of approximately $31 million and a stockholders’ deficit of approximately $26.5 million as of March 31, 2016. The Company expects to continue incurring operating losses for the foreseeable future and may need to satisfy all exercises of Series A Warrants on a cashless basis. Accordingly, the material uncertainty related to the exercise of Series A Warrants and the sufficiency of cash reserves to satisfy obligations related to such exercises raises substantial doubt about the Company’s ability to continue as a going concern. Basis of Presentation and Principles of Consolidation The Company’s unaudited condensed consolidated financial statements are prepared in accordance with GAAP. The unaudited condensed 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 condensed consolidated financial statements include the accounts of Vapor and its wholly-owned subsidiaries, Vaporin, Inc. (“Vaporin”), 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. On February 1, 2016, the Company filed an amendment to its Certificate of Incorporation to increase its authorized Common Stock to 5,000,000,000, and change the par value to $0.0001. On March 4, 2016, the Company filed an amendment to its Certificate of Incorporation to effectuate a one-for-seventy reverse stock split to its Common Stock. All warrant, convertible preferred stock, option, Common Stock shares and per share information included in these unaudited condensed consolidated financial statements gives retroactive effect to the aforementioned reverse split of the Company’s Common Stock. See Note 6- Stockholders’ Equity for additional details regarding the Company’s authorized capital. Unaudited Interim Financial Information The unaudited condensed 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, 2016. Certain information and footnotes normally included in financial statements prepared in accordance with GAAP have been condensed or omitted under the rules and regulations of the Securities and Exchange Commission (“SEC”). These unaudited condensed consolidated financial statements for the three months ended March 31, 2016 and 2015 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, 2015 included in the Company’s Annual Report on Form 10-K for such year as filed with the SEC on April 8, 2016. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reclassifications Certain prior period amounts in the unaudited condensed consolidated financial statements have been reclassified to conform to the current period’s presentation. No changes to the Company’s net loss were made as a result of such reclassifications. Use of Estimates in the Preparation of the Financial Statements The preparation of unaudited condensed 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 condensed 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, and deferred taxes and related valuation allowances. Certain of our estimates could be affected by external conditions, including those unique to our industry, and general economic conditions. It is possible that these external factors could have an effect on our estimates that could cause actual results to differ from our estimates. The Company re-evaluates all of its accounting estimates at least quarterly based on these conditions and records adjustments when necessary. Revenue Recognition The Company recognizes revenue from product sales or services rendered when the following four revenue recognition criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the selling price is fixed or determinable, and collectability is reasonably assured. Product sales revenues, net of promotional discounts, rebates, and return allowances, are recorded when the products are shipped, title passes to customers and collection is reasonably assured. Retail sales revenues are recorded at the point of sale when both title and risk of loss is transferred to the customer. Return allowances, which reduce product revenue, are estimated using historical experience. Revenue from product sales and services rendered is recorded net of sales and consumption taxes. The Company periodically provides incentive offers to its customers to encourage purchases. Such offers include discounts and rebates. Discounts offered to wholesale and distributor customers are reflected as a reduction to the sales price. Rebate offers, when accepted by customers, are generally calculated as a percentage of the product sold by the customer and are recorded as a reduction in net sales. Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. In connection with this review, the Company also reevaluates the depreciable lives for these assets. The Company assesses recoverability by determining whether the net book value of the related asset will be recovered through the projected undiscounted future cash flows of the asset. If the Company determines that the carrying value of the asset may not be recoverable, it measures any impairment based on the projected future discounted cash flows as compared to the asset’s carrying value. Fair Value Measurements The Company applies the provisions of ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”). The Company’s short term financial instruments include cash, due from merchant credit card processors, accounts receivable, accounts payable and accrued expenses, each of which approximate their fair values based upon their short term nature. The Company’s other financial instruments include notes payable obligations and derivative liabilities. The carrying value of these instruments approximates fair value, as they bear terms and conditions comparable to market value, for obligations with similar terms and maturities. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 – quoted prices in active markets for identical assets or liabilities; Level 2 – quoted prices for similar assets and liabilities in active market or inputs that are observable; and Level 3 – inputs that are unobservable. Stock-Based Compensation The Company accounts for stock-based compensation for employees and directors under ASC Topic No. 718, “Compensation-Stock Compensation” (“ASC 718”). These standards define a fair value based method of accounting for stock-based compensation. In accordance with ASC 718, the cost of stock-based compensation is measured at the grant date based on the value of the award and is recognized over the vesting period. The value of the stock-based award is determined using an appropriate valuation model, whereby compensation cost is the fair value of the award as determined by the valuation model at the grant date. The resulting amount is charged to expenses on the straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period. The Company considers many factors when estimating expected forfeitures, including types of awards, employee class, and historical experience. Stock-based compensation for non-employees is measured at the grant date, is re-measured at subsequent vesting dates and reporting dates, and is amortized over the service period. Derivative Instruments The Company accounts for free-standing derivative instruments and hybrid instruments that contain embedded derivative features in accordance with ASC Topic No. 815, “Derivative Instruments and Hedging Activities” (“ASC 815”), as well as related interpretations of this topic. In accordance with this topic, derivative instruments and hybrid instruments are recognized as either assets or liabilities on the balance sheet and are measured at fair values with gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. The Company determines the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, giving consideration to all of the rights and obligations of each instrument. The Company estimates fair values of derivative instruments and hybrid instruments using various techniques (and combinations thereof) that are considered to be consistent with the objective of measuring fair values. In selecting the appropriate technique, the Company considers, among other factors, the nature of the instrument, the market risks that it embodies and the expected means of settlement. For complex instruments, the Company utilizes custom Monte Carlo simulation models. For less complex instruments, such as free-standing warrants, the Company generally uses the Binomial Lattice model, adjusted for the effect of dilution, because it embodies all of the requisite assumptions (including trading volatility, estimated terms, dilution and risk free rates) necessary to fair value these instruments. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques (such as the Binomial Lattice model or the Black-Scholes-Merton valuation model) are highly volatile and sensitive to changes in the trading market price of the Common Stock. Since derivative financial instruments are initially and subsequently carried at fair values, the Company’s net income (loss) going forward will reflect the volatility in these estimates and assumption changes. Under ASC 815, increases in the trading price of the Common Stock and increases in fair value during a given financial quarter result in the application of non-cash derivative losses. Conversely, decreases in the trading price of the Common Stock and decreases in trading fair value during a given financial quarter result in the application of non-cash derivative gains. Sequencing Policy Under ASC 815-40-35, the Company has adopted a sequencing policy whereby, in the event that reclassification of contracts from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company's inability to demonstrate it has sufficient authorized shares, shares will be allocated on the basis of the earliest issuance date of potentially dilutive instruments, with the earliest grants receiving the first allocation of shares. Preferred Stock The Company applies the accounting standards for distinguishing liabilities from equity when determining the classification and measurement of its preferred stock. Shares that are subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. The Company classifies conditionally redeemable preferred shares, which include preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control, as temporary equity. At all other times, preferred shares are classified as stockholders' equity. Recently Issued Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, “Compensation – Stock Compensation (Topic 718)” (“ASU 2016-09”). ASU 2016-09 requires an entity to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company is currently evaluating ASU 2016-09 and its impact on its consolidated financial statements or disclosures. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU The new standard 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 March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). This ASU amends the principal versus agent guidance in ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which was issued in May 2014 (“ASU 2014-09”). Further, in April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. This ASU also amends ASU 2014-09 and is related to the identification of performance obligations and accounting for licenses. The effective date and transition requirements for both of these amendments to ASU 2014-09 are the same as those of ASU 2014-09, which was deferred for one year by ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. That is, the guidance under these standards is to be applied using a full retrospective method or a modified retrospective method, as outlined in the guidance, and is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted only for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. The Company is currently evaluating the provisions of each of these standards and assessing their impact on the Company’s condensed consolidated financial statements and disclosures. |
MERGER WITH VAPORIN, INC.
MERGER WITH VAPORIN, INC. | 3 Months Ended |
Mar. 31, 2016 | |
Business Combinations [Abstract] | |
MERGER WITH VAPORIN, INC. | Note 3. MERGER WITH VAPORIN, INC. On December 17, 2014, the Company entered into an Agreement and Plan of Merger with Vaporin (the “Merger”) pursuant to which Vaporin was to merge with and into the Company with the Company being the surviving and controlling entity (as a result of the stockholders of the Company maintaining more than 50% ownership in the Company’s outstanding shares of Common Stock and the Vapor directors comprising the majority of the board at the date of the Merger). The Merger closed on March 4, 2015 and was accounted for as a business combination. The following presents the unaudited pro-forma combined results of operations of the Company with Vaporin as if the Merger occurred on January 1, 2014. For the Three Months Ended March 31, 2015 Wholesale and online revenues $ 1,318,291 Retail revenues $ 1,266,593 Net loss $ (5,378,927 ) Net loss per share $ (60.22 ) Weighted average number of shares outstanding 89,315 The unaudited pro-forma results of operations are presented for information purposes only. The unaudited pro-forma results of operations are not intended to present actual results that would have been attained had the acquisition been completed as of January 1, 2014 or to project potential operating results as of any future date or for any future periods. |
RETAIL STORES AND KIOSKS
RETAIL STORES AND KIOSKS | 3 Months Ended |
Mar. 31, 2016 | |
Retail Stores And Kiosks | |
RETAIL STORES AND KIOSKS | Note 4. RETAIL STORES AND KIOSKS Retail Stores During 2015, the Company acquired the assets and business operations of established retail stores. The purchase prices were generally allocated to inventory, leasehold improvements, fixtures, security deposits, intangible assets, and goodwill. No liabilities are assumed from the seller and the Company has no obligation to retain existing employees. The Company holds back a portion of the seller’s purchase price for three to six months during the operational transition period (the “hold back period”). If the stores’ gross minimum revenues during the hold back period do not reach an amount agreed upon by the Company and the seller at closing, then the hold back amount due to the seller is reduced in the final settlement. The hold back amount due to sellers of $860,000 was recorded in accrued liabilities at December 31, 2015 as the achievement of the minimum revenue milestones are considered probable. The hold back liability is considered contingent consideration recorded at fair value at each respective acquisition date and is re-measured each reporting period. During the three months ended March 31, 2016, the Company made $185,000 of aggregate holdback payments. Subsequent to March 31, 2016, the Company made $35,000 of aggregate holdback payments. The accounting and reporting of the acquired retail store operations were fully integrated into the Company at dates of the individual acquisitions and it is impracticable to separate. Unaudited pro-forma combined results of operations of the Company are not presented, as it is unfeasible to obtain complete, reliable and financial information prepared in accordance with GAAP. The prior owners of the retail store businesses were individuals without reporting requirements and, accordingly, the financial data available is incomplete, inconsistent, and the presentation would not add value to the Company’s pro-forma financial disclosure. During the fourth quarter of 2015, the Company ceased its plans to increase the number of retail stores due to adverse industry trends and increasing federal and state regulations. After evaluating retail store operations, management decided to close one of its Atlanta area retail stores on February 15, 2016. In connection with the retail store closing, for the three months ended March 31, 2016, the Company incurred approximately $7,800 of exit costs for settlement of non-cancellable lease obligations. The exit costs are included in selling, general and administrative expenses. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 3 Months Ended |
Mar. 31, 2016 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES | Note 5. ACCRUED EXPENSES Accrued expenses are comprised of the following: March 31, 2016 December 31, 2015 Commissions payable $ 44,505 $ 196,096 Retirement plan contributions 77,861 77,861 Accrued severance - 51,145 Accrued customer returns 302,415 435,832 Accrued payroll 47,375 46,325 Accrued settlements and royalty fees 200,683 1,900,000 Accrued legal and professional fees 91,075 191,643 Accrued retail store hold back payments from acquisitions 675,000 860,000 Other accrued liabilities 147,075 187,209 Total $ 1,585,989 $ 3,946,111 See Note 4 - Retail Stores and Kiosks for more information related to accrued retail store hold back payments from acquisitions. See Note 8 – Commitments and Contingencies – Legal Proceedings for additional information related for the accrual of legal settlement and royalty fees. |
STOCKHOLDERS' DEFICIT
STOCKHOLDERS' DEFICIT | 3 Months Ended |
Mar. 31, 2016 | |
Equity Abstract | |
STOCKHOLDERS' DEFICIT | Note 6. STOCKHOLDERS’ DEFICIT Reverse Splits On July 7, 2015, the Company filed an amendment to its Certificate of Incorporation to effectuate a one-for-five reverse stock split to its Common Stock. On February 1, 2016, the Company’s stockholders approved an amendment to the Company’s Amended and Restated Certificate of Incorporation to (i) effect a reverse stock split of the Common Stock at a ratio between 1-for-10 and 1-for-70, such ratio to be determined by the Board, (ii) reduce the par value of the Common Stock from $0.001 to $0.0001 and (iii) increase the number of authorized shares of the Common Stock from 500,000,000 shares to 5,000,000,000 shares. Each share entitles the holder to one vote. On March 8, 2016, the Board effected a reverse stock split of the Common Stock at a ratio of 1-for-70. On March 21, 2016, the Company’s stockholders approved an amendment to the Company’s Amended and Restated Certificate of Incorporation to effect a reverse stock split of the Common Stock at a ratio between 1-for-10,000 and 1-for-20,000, such ratio to be determined by the Company’s Board. The Board approved the reverse split on February 2, 2016 with ratio to be determined by the Company’s management. The Company is seeking to effect a 1-for-20,000 reverse split and the action is pending approval by Financial Industry Regulatory Authority (“FINRA”). Series A Preferred Stock Conversions On January 25, 2016, each Unit sold pursuant to the Company’s July 2015 registered offering automatically separated into shares of Series A Preferred Stock and Series A Warrants. From January 25, 2016 through March 31, 2016, 12,596 shares of Series A Preferred Stock have been converted and the Company issued 512,100 shares of Common Stock to settle these conversions. Compensatory Common Stock Summary During the three months ended March 31, 2016 and 2015, the Company recognized stock-based compensation expense related to compensatory Common Stock in the amount of $52,000 and $322,067, respectively, which is included as part of selling, general and administrative expense in the accompanying consolidated statements of operations. As of March 31, 2016, there was no unamortized expense remaining related to stock awards because the remaining non-vested shares vested on April 1, 2016. A summary of compensatory Common Stock activity for the three months ended March 31, 2016 is presented below: Weighted Average Issuance Date Total Number of Fair Value Issuance Date Shares Per Share Fair Value Non-vested, January 1, 2016 357 $ 364.00 $ 130,000 Granted - - - Vested (213 ) 364.00 (78,000 ) Forfeited - - Non-vested, March 31, 2016 144 $ 364.00 $ 52,000 Warrants During the three months ended March 31, 2016, 41,548 Series A Warrants were exercised through the cashless exercise provision in the Series A Warrant resulting in the issuance of 44.5 million shares of Common Stock. A summary of warrant activity for the three months ended March 31, 2016 is presented below: Number of Weighted Weighted Aggregate Outstanding at January 1, 2016 1,096,299 $ 88.20 Warrants granted - - Warrants exercised (41,548 ) 86.80 Impact of reverse split rounding 37 - Warrants forfeited or expired - - Outstanding at March 31, 2016 1,054,788 $ 87.94 4.5 $ - Exercisable at March 31, 2016 1,054,788 $ 87.94 4.5 $ - The following table presents additional information related to warrants as of March 31, 2016: Warrants Outstanding Warrants Exercisable Weighted Weighted Weighted Range of Average Outstanding Average Remaining Exercisable Exercise Exercise Number of Exercise Life Number of Price Price Warrants Price In Years Warrants $77.00 - $149.99 $ 86.61 1,054,111 $ 86.61 4.5 1,054,111 $150.00 - $699.99 205.83 205 205.83 2.7 205 $700.00 - $1799.99 761.88 187 761.88 3.6 187 $1800.00 - $4,633.68 4,495.43 285 4,495.43 1.6 285 1,054,788 4.5 1,054,788 Stock-Based Compensation Stock Options During the three months ended March 31, 2016 and 2015, the Company recognized stock-based compensation expense of $58,786 and $364,576, respectively, in connection with the amortization of stock option expense. Stock-based compensation expense is included as part of selling, general and administrative expense in the accompanying consolidated statements of operations. At March 31, 2016, the amount of unamortized stock-based compensation expense associated with unvested stock options granted to employees, directors and consultants was $28,000 which will be amortized over 1.2 years. Loss per Share Basic loss per share is computed by dividing the net loss available to common stockholders 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 the incremental shares of Common Stock issuable upon (a) the exercise of stock options (using the treasury stock method); (b) the vesting of restricted stock units; (c) the conversion of Series A Preferred Stock; (d) the exercise of warrants (using the if-converted method), and (e) convertible notes payable. For the three months ended March 31, 2016 and 2015, diluted loss per share excludes the potential shares of Common Stock, as their effect is antidilutive. The following table summarizes the Company’s securities that have been excluded from the calculation of basic and dilutive loss per share as their effect would be anti-dilutive: March 31, 2016 March 31, 2015 Restricted stock units 144 - Stock options 558 3,495 Series A Preferred Stock 33,480 - Senior convertible notes payable - 5,125 Warrants 1,054,788 12,029 Total 1,088,970 20,649 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | Note 7. 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. The following table summarizes the liabilities measured at fair value on a recurring basis as of March 31, 2016: Level 1 Level 2 Level 3 Total LIABILITIES: Warrant liabilities $ - $ - $ 53,616,983 $ 53,616,983 Total derivative liabilities $ - $ - $ 53,616,983 $ 53,616,983 The following table summarizes the liabilities measured at fair value on a recurring basis as of December 31, 2015: Level 1 Level 2 Level 3 Total LIABILITIES: Warrant liabilities $ - $ - $ 41,089,580 $ 41,089,580 Total derivative liabilities $ - $ - $ 41,089,580 $ 41,089,580 Level 3 Valuation Techniques Level 3 financial liabilities consist of the derivative liabilities for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation and the use of at least one significant unobservable input. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. The Company deems financial instruments to be derivative instruments if they (a) do not have fixed settlement provisions; or (b) have potential cash settlement provisions which are not within the Company’s control. The Common Stock purchase warrants (a) issued by the Company in connection with the Merger; (b) issued in connection with the 2015 private placement of Common Stock and warrants; (c) granted in connection with certain 2015 waivers agreements; and (d) issued in connection with the July 2015 underwritten offering; have all been deemed to be derivative liabilities. In accordance with FASB ASC Topic No. 815-40, “Derivatives and Hedging - Contracts in an Entity’s Own Stock” (“ASC 815”), the embedded conversion options and the warrants were accounted for as derivative liabilities at the date of issuance and adjusted to fair value through earnings at each reporting date. In accordance with ASC 815, the Company has bifurcated the conversion feature of the convertible Debentures and warrant derivative instruments and recorded derivative liabilities on their issuance date. The Company used a Monte Carlo model and a Binomial Lattice model to value the derivative liabilities. These derivative liabilities are then revalued on each reporting date. The Company’s derivative liabilities are carried at fair value and were classified as Level 3 in the fair value hierarchy due to the use of unobservable inputs, including the likelihood transactions limiting warrant holder payments, and factors limiting the exercise of warrants. During the three months ended March 31, 2016, Series A warrants to purchase an aggregate of 41,548 shares of Common Stock which had been accounted for as a derivative liability were exercised. These warrants had an aggregate exercise date value of $2,254,636. During the three months ended March 31, 2016, certain holders of Series A Warrants executed Standstill Agreements, which were subsequently amended and restated whereby the holders agreed not to exercise Series A Warrants for a specified period of time and under certain circumstances. See Note 9 – Subsequent Events. The following tables summarizes the values of certain assumptions used by the Company’s custom models to estimate the fair value of the warrant liabilities during the three months ended March 31: March 31, 2016 March 31, 2015 Stock price $ .0001- 0.5400 $ 385.00 Strike price $ 77.00 - 86.80 $ 448.00 Remaining term (years) 3.92- 4.33 5.00 Volatility 126 % -177 % 115 % Risk-free rate 1.20% -1.50 % 1.61 % Dividend yield 0.0 % 0.0 % The following table sets forth a summary of the changes in the fair value of our Level 3 financial liabilities that are measured at fair value on a recurring basis: For the Three Months For the Three Months Ended Balance at January 1, $ 41,089,580 $ - Private placement warrants - 2,544,277 Exercise of Series A warrant liabilities (2,254,636 ) - Change in fair value of derivative liabilities 14,782,039 (250,826 ) Ending balance $ 53,616,983 $ 2,293,451 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Note 8. COMMITMENTS AND CONTINGENCIES Employment and Consulting and Other Related Party Agreements On April 8, 2016, Gregory Brauser informed the Board of his decision to resign from the Board and as President of the Company. Mr. Brauser’s resignation was not due to any disagreement with the Company on any matters relating to the Company’s operations, policies or practices. Through GAB Management Group, Inc., Mr. Brauser will serve as a consultant to the Company pursuant to an Executive Services Consulting Agreement dated as of April 11, 2016 (the “Consulting Agreement”), the term of which is two years. Under the Consulting Agreement, GAB Management Group, Inc., will receive the following benefits in connection with consulting services that its principal, Mr. Brauser, will provide to the Company beginning on April 11, 2016: (1) an engagement fee of $50,000 payable at the time the Consulting Agreement is executed, and (2) thereafter monthly installments of $10,000 for 24 months. Subsequent to March 31, 2016, the Company paid $60,000 pursuant to the Consulting Agreement. On August 13, 2015, the Company entered into consulting agreements with each of GRQ Consultants, Inc. and Grander Holdings, Inc. Pursuant to its consulting agreement, GRQ Consultants, Inc. was to primarily focus on investor relations and presenting the Company and its business plans, strategy and personnel to the financial community. Pursuant to its consulting agreement, Grander Holdings, Inc. was to primarily assist the Company in further developing and executing its acquisitions strategy, focusing on the Company’s “The Vape Store” properties. Mr. Michael Brauser, who is the father of Gregory Brauser, is the Chief Executive Officer of Grander Holdings, Inc. Pursuant to the foregoing agreements, each consultant received an initial fee of $50,000, payable upon execution, and would receive $20,000 monthly throughout the 12-month term of each agreement if such consulting services continued. The Company made payments of $40,000 each to Grander Holdings, Inc. and GRQ Consultants, Inc. during the three months ended March 31, 2016. The consulting agreements with Grander Holdings, Inc. and GRQ Consultants were terminated amicably effective February 29, 2016, with no requirement for additional payments. During 2015, the Company purchased, at rates comparable to market rates, e-liquids sold in its retail stores and wholesale operations, respectively from Liquid Science, Inc., a company in which Jeffrey Holman (the Company’s Chief Executive Officer), Gregory Brauser (the Company’s former President) and Michael Brauser each have a 15% beneficial ownership interest. During the three months ended March 31 2016, the Company made approximately 44% of its purchases of e-liquid from Liquid Science for its wholesale and online operations, which purchases equaled $264,401 in the aggregate. The Company did not make any purchases from Liquid Science during the three months ended March 31, 2015. Jeffrey Holman sold his ownership interest in Liquid Science, Inc. in April 2016. 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. Fontem Matters Effective December 16, 2015, the Company entered into a confidential Settlement Agreement and a non-exclusive royalty-bearing confidential Global License Agreement (“License Agreement”) with Fontem Ventures B.V. (“Fontem”) resulting in the dismissal of all of the aforementioned patent infringement cases by Fontem against the Company. The estimated settlement fee of approximately $1.7 million was included in selling, general and administrative expenses and in accrued expense at December 31, 2015. On January 15, 2016, the Company made a payment of $1.7 million under the terms of the Settlement and License Agreements. In connection with the License Agreement, Fontem granted the Company a non-exclusive license to certain of its products. As consideration, the Company will make quarterly license and royalty payments to Fontem based on the sale of qualifying products as defined in the License Agreement. The term of the License Agreement will continue until all of the patents on the products subject to the agreement are no longer enforceable. California Center for Environment Health Matters On June 22, 2015, the Center for Environment Health, as plaintiff, filed suit against a number of defendants including Vapor Corp., its wholly-owned subsidiary, the Vape Store, Inc., Vaporin and another wholly-owned subsidiary, Vaporin Florida, Inc. The lawsuit was filed in the Superior Court of the State of California, County of Alameda. The suit seeks relief under California Proposition 65 which makes it unlawful for businesses to knowingly and intentionally expose individuals in California to chemicals known to cause birth defects or other harm without providing clear and reasonable warnings. All of the defendants are alleged to have sold products containing significant quantities of nicotine without warnings in violation of Proposition 65. The plaintiff is seeking a civil penalty against these defendants in the amount of $2,500 per day for each violation of Proposition 65, together with attorneys’ fees and costs. On April 6, 2016, the Company and the plaintiff entered into a settlement agreement, which required the Company to (1) make a payment of $45,000 and (2) comply with enhanced product labeling requirements within a set implementation period as defined in the consent judgment. The settlement cost was included in selling, general and administrative expenses and accrued expenses at March 31, 2016. The settlement payment was made on May 2, 2016. Other Matters On March 2, 2016, Hudson Bay Master Fund Ltd., filed a complaint against the Company in the Supreme Court of the State of New York, County of New York, captioned Hudson Bay Master Fund Ltd. versus Vapor Corp., Index No. 651094/2016. The Complaint alleges that the Company failed to timely effect exercises of its Series A Warrants delivered by the plaintiff and seeks damages of $339,810. On May 10, 2016, solely to avoid the costs, risks and uncertainties inherent in litigation, the Company entered into a settlement agreement with respect to all claims included in the Complaint (the “Settlement”). The Settlement provides, among other things, that the parties would enter into and file a stipulation of discontinuance that provides for the dismissal of the Complaint (the “Stipulation”). Once the court enters the Stipulation, the Complaint will be dismissed with prejudice. The final terms of the Settlement will not have a material adverse effect on the Company’s financial position or results of operations. Future events or circumstances, currently unknown to management, will determine whether the resolution of pending or threatened litigation or claims will ultimately have a material effect on the Company’s condensed consolidated financial position, liquidity or results of operations in any future reporting periods. Purchase Commitments At March 31, 2016 and December 31, 2015, the Company had vendor deposits of $154,075 and $310,936, respectively, and vendor deposits are included as a component of prepaid expenses and vendor deposits on the consolidated balance sheets included herewith. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 9. SUBSEQUENT EVENTS The Company evaluates events that have occurred after the balance sheet date but before the condensed consolidated financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the accompanying unaudited condensed consolidated financial statements other than those set forth below. On May 2, 2016, the OTC Markets notified the Company that, based upon its non-compliance with the minimum $0.01 bid price requirement for the prior 30 consecutive business days, the Company – in accordance with the OTC Markets Listing Rules – is provided a grace period, through October 29, 2016, to regain compliance with the minimum bid price requirement. On May 4, 2016, the Company determined that it had insufficient shares of Common Stock authorized to allow for the exercise of Series A Warrants or stock options, or allow the conversion of the Series A Preferred Stock. The Company is seeking the necessary approval from FINRA to implement a reverse stock split that was previously approved by the Company’s stockholders. In the event that FINRA approves the reverse stock split and the split is effected, the Company would have sufficient authorized shares of Common Stock to meet its obligations pursuant to its outstanding warrants, Series A Preferred Stock and stock options. From April 1, 2016 through May 10, 2016, 15,994 Series A Warrants were exercised through the cashless exercise provision in the Series A Warrant resulting in the issuance of approximately 4,953,943,720 shares of the Common Stock. As of May 12, 2016, there were 4,999,106,905 shares of the Common Stock issued and outstanding. On May 4, 2016, the Company determined it had insufficient shares of Common Stock available for future issuances. The Company currently is not permitted to elect to issue Common Stock in lieu of cash payments to satisfy its obligations pursuant to a cashless exercise of the Series A Warrants. If all of the outstanding Series A Warrants were fully exercised as of May 12, 2016, the amounts payable to the holders of the Series A Warrants on a cashless basis would be approximately $77.1 million, using a Black Scholes Value of $75.80 per Series A Warrant. On May 3, 2016, the Company entered into Third Amended and Restated Standstill Agreements with holders of over 85% of the outstanding Series A Warrants, pursuant to which, among other things, the holders agreed not to exercise their Series A Warrants pursuant to the "cashless exercise" provisions of the Series A Warrants prior to the earlier of (1) June 2, 2016, or (2) the date the Company completes its previously approved reverse stock split. |
SUMMARY OF SIGNIFICANT ACCOUN17
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Reclassifications | Reclassifications Certain prior period amounts in the unaudited condensed consolidated financial statements have been reclassified to conform to the current period’s presentation. No changes to the Company’s net loss were made as a result of such reclassifications. |
Use of Estimates in the Preparation of the Financial Statements | Use of Estimates in the Preparation of the Financial Statements The preparation of unaudited condensed 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 condensed 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, and deferred taxes and related valuation allowances. Certain of our estimates could be affected by external conditions, including those unique to our industry, and general economic conditions. It is possible that these external factors could have an effect on our estimates that could cause actual results to differ from our estimates. The Company re-evaluates all of its accounting estimates at least quarterly based on these conditions and records adjustments when necessary. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue from product sales or services rendered when the following four revenue recognition criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the selling price is fixed or determinable, and collectability is reasonably assured. Product sales revenues, net of promotional discounts, rebates, and return allowances, are recorded when the products are shipped, title passes to customers and collection is reasonably assured. Retail sales revenues are recorded at the point of sale when both title and risk of loss is transferred to the customer. Return allowances, which reduce product revenue, are estimated using historical experience. Revenue from product sales and services rendered is recorded net of sales and consumption taxes. The Company periodically provides incentive offers to its customers to encourage purchases. Such offers include discounts and rebates. Discounts offered to wholesale and distributor customers are reflected as a reduction to the sales price. Rebate offers, when accepted by customers, are generally calculated as a percentage of the product sold by the customer and are recorded as a reduction in net sales. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. In connection with this review, the Company also reevaluates the depreciable lives for these assets. The Company assesses recoverability by determining whether the net book value of the related asset will be recovered through the projected undiscounted future cash flows of the asset. If the Company determines that the carrying value of the asset may not be recoverable, it measures any impairment based on the projected future discounted cash flows as compared to the asset’s carrying value. |
Fair Value Measurements | Fair Value Measurements The Company applies the provisions of ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”). The Company’s short term financial instruments include cash, due from merchant credit card processors, accounts receivable, accounts payable and accrued expenses, each of which approximate their fair values based upon their short term nature. The Company’s other financial instruments include notes payable obligations and derivative liabilities. The carrying value of these instruments approximates fair value, as they bear terms and conditions comparable to market value, for obligations with similar terms and maturities. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 – quoted prices in active markets for identical assets or liabilities; Level 2 – quoted prices for similar assets and liabilities in active market or inputs that are observable; and Level 3 – inputs that are unobservable. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation for employees and directors under ASC Topic No. 718, “Compensation-Stock Compensation” (“ASC 718”). These standards define a fair value based method of accounting for stock-based compensation. In accordance with ASC 718, the cost of stock-based compensation is measured at the grant date based on the value of the award and is recognized over the vesting period. The value of the stock-based award is determined using an appropriate valuation model, whereby compensation cost is the fair value of the award as determined by the valuation model at the grant date. The resulting amount is charged to expenses on the straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period. The Company considers many factors when estimating expected forfeitures, including types of awards, employee class, and historical experience. Stock-based compensation for non-employees is measured at the grant date, is re-measured at subsequent vesting dates and reporting dates, and is amortized over the service period. |
Derivative Instruments | Derivative Instruments The Company accounts for free-standing derivative instruments and hybrid instruments that contain embedded derivative features in accordance with ASC Topic No. 815, “Derivative Instruments and Hedging Activities” (“ASC 815”), as well as related interpretations of this topic. In accordance with this topic, derivative instruments and hybrid instruments are recognized as either assets or liabilities on the balance sheet and are measured at fair values with gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. The Company determines the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, giving consideration to all of the rights and obligations of each instrument. The Company estimates fair values of derivative instruments and hybrid instruments using various techniques (and combinations thereof) that are considered to be consistent with the objective of measuring fair values. In selecting the appropriate technique, the Company considers, among other factors, the nature of the instrument, the market risks that it embodies and the expected means of settlement. For complex instruments, the Company utilizes custom Monte Carlo simulation models. For less complex instruments, such as free-standing warrants, the Company generally uses the Binomial Lattice model, adjusted for the effect of dilution, because it embodies all of the requisite assumptions (including trading volatility, estimated terms, dilution and risk free rates) necessary to fair value these instruments. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques (such as the Binomial Lattice model or the Black-Scholes-Merton valuation model) are highly volatile and sensitive to changes in the trading market price of the Common Stock. Since derivative financial instruments are initially and subsequently carried at fair values, the Company’s net income (loss) going forward will reflect the volatility in these estimates and assumption changes. Under ASC 815, increases in the trading price of the Common Stock and increases in fair value during a given financial quarter result in the application of non-cash derivative losses. Conversely, decreases in the trading price of the Common Stock and decreases in trading fair value during a given financial quarter result in the application of non-cash derivative gains. |
Sequencing Policy | Sequencing Policy Under ASC 815-40-35, the Company has adopted a sequencing policy whereby, in the event that reclassification of contracts from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company's inability to demonstrate it has sufficient authorized shares, shares will be allocated on the basis of the earliest issuance date of potentially dilutive instruments, with the earliest grants receiving the first allocation of shares. |
Preferred Stock | Preferred Stock The Company applies the accounting standards for distinguishing liabilities from equity when determining the classification and measurement of its preferred stock. Shares that are subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. The Company classifies conditionally redeemable preferred shares, which include preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control, as temporary equity. At all other times, preferred shares are classified as stockholders' equity. |
Recent Accounting Pronouncements | Recently Issued Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, “Compensation – Stock Compensation (Topic 718)” (“ASU 2016-09”). ASU 2016-09 requires an entity to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company is currently evaluating ASU 2016-09 and its impact on its consolidated financial statements or disclosures. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU The new standard 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 March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). This ASU amends the principal versus agent guidance in ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which was issued in May 2014 (“ASU 2014-09”). Further, in April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. This ASU also amends ASU 2014-09 and is related to the identification of performance obligations and accounting for licenses. The effective date and transition requirements for both of these amendments to ASU 2014-09 are the same as those of ASU 2014-09, which was deferred for one year by ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. That is, the guidance under these standards is to be applied using a full retrospective method or a modified retrospective method, as outlined in the guidance, and is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted only for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. The Company is currently evaluating the provisions of each of these standards and assessing their impact on the Company’s condensed consolidated financial statements and disclosures. |
MERGER WITH VAPORIN, INC. (Tabl
MERGER WITH VAPORIN, INC. (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Business Combinations [Abstract] | |
Schedule of Pro Forma Consolidated Results of Operations | For the Three Months Ended March 31, 2015 Wholesale and online revenues $ 1,318,291 Retail revenues $ 1,266,593 Net loss $ (5,378,927 ) Net loss per share $ (60.22 ) Weighted average number of shares outstanding 89,315 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | March 31, 2016 December 31, 2015 Commissions payable $ 44,505 $ 196,096 Retirement plan contributions 77,861 77,861 Accrued severance - 51,145 Accrued customer returns 302,415 435,832 Accrued payroll 47,375 46,325 Accrued settlements and royalty fees 200,683 1,900,000 Accrued legal and professional fees 91,075 191,643 Accrued retail store hold back payments from acquisitions 675,000 860,000 Other accrued liabilities 147,075 187,209 Total $ 1,585,989 $ 3,946,111 |
STOCKHOLDERS' DEFICIT (Tables)
STOCKHOLDERS' DEFICIT (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Equity Abstract | |
Schedule of compensatory common stock activity | Weighted Average Issuance Date Total Number of Fair Value Issuance Date Shares Per Share Fair Value Non-vested, January 1, 2016 357 $ 364.00 $ 130,000 Granted - - - Vested (213 ) 364.00 (78,000 ) Forfeited - - Non-vested, March 31, 2016 144 $ 364.00 $ 52,000 |
Summary of Warrant Activity | Number of Weighted Weighted Aggregate Outstanding at January 1, 2016 1,096,299 $ 88.20 Warrants granted - - Warrants exercised (41,548 ) 86.80 Impact of reverse split rounding 37 - Warrants forfeited or expired - - Outstanding at March 31, 2016 1,054,788 $ 87.94 4.5 $ - Exercisable at March 31, 2016 1,054,788 $ 87.94 4.5 $ - |
Schedule of additional information related to warrants | Warrants Outstanding Warrants Exercisable Weighted Weighted Weighted Range of Average Outstanding Average Remaining Exercisable Exercise Exercise Number of Exercise Life Number of Price Price Warrants Price In Years Warrants $77.00 - $149.99 $ 86.61 1,054,111 $ 86.61 4.5 1,054,111 $150.00 - $699.99 205.83 205 205.83 2.7 205 $700.00 - $1799.99 761.88 187 761.88 3.6 187 $1800.00 - $4,633.68 4,495.43 285 4,495.43 1.6 285 1,054,788 4.5 1,054,788 |
Schedule of anti-dilutive activities excluded from basic and dilutive loss per share | March 31, 2016 March 31, 2015 Restricted stock units 144 - Stock options 558 3,495 Series A Preferred Stock 33,480 - Senior convertible notes payable - 5,125 Warrants 1,054,788 12,029 Total 1,088,970 20,649 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of assets and liabilities measured fair value on recurring basis | The following table summarizes the liabilities measured at fair value on a recurring basis as of March 31, 2016: Level 1 Level 2 Level 3 Total LIABILITIES: Warrant liabilities $ - $ - $ 53,616,983 $ 53,616,983 Total derivative liabilities $ - $ - $ 53,616,983 $ 53,616,983 The following table summarizes the liabilities measured at fair value on a recurring basis as of December 31, 2015: Level 1 Level 2 Level 3 Total LIABILITIES: Warrant liabilities $ - $ - $ 41,089,580 $ 41,089,580 Total derivative liabilities $ - $ - $ 41,089,580 $ 41,089,580 |
Schedule of fair value of assumption of warrant liabilities | March 31, 2016 March 31, 2015 Stock price $ .0001- 0.5400 $ 385.00 Strike price $ 77.00 - 86.80 $ 448.00 Remaining term (years) 3.92- 4.33 5.00 Volatility 126 % -177 % 115 % Risk-free rate 1.20% -1.50 % 1.61 % Dividend yield 0.0 % 0.0 % |
Schedule of changes the fair value of level 3 financial liabilities measured fair value on recurring basis | For the Three Months For the Three Months Ended Balance at January 1, $ 41,089,580 $ - Private placement warrants - 2,544,277 Exercise of Series A warrant liabilities (2,254,636 ) - Change in fair value of derivative liabilities 14,782,039 (250,826 ) Ending balance $ 53,616,983 $ 2,293,451 |
ORGANIZATION, GOING CONCERN, BA
ORGANIZATION, GOING CONCERN, BASIS OF PRESENTATION, AND RECENT DEVELOPMENTS (Detail Textuals) - USD ($) | Mar. 08, 2016 | Mar. 04, 2016 | Jul. 07, 2015 | Mar. 21, 2016 | Jul. 31, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | Feb. 01, 2016 | May. 12, 2016 | Jan. 31, 2016 | Dec. 31, 2015 |
Organization, Going Concern, Basis Of Presentation [Line Items] | |||||||||||
Number of shares issued in public offering | 3,761,657 | ||||||||||
Reverse stock split ratio | 1-for-70 | one-for-seventy | one-for-five | 1-for-10,000 and 1-for-20,000 | 1-for-10 and 1-for-70 | ||||||
Working capital | $ 31,000,000 | ||||||||||
Net income | (16,186,900) | $ (3,692,405) | |||||||||
Stockholders' deficit | $ (26,457,685) | $ (12,584,207) | |||||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.001 | $ 0.0001 | |||||||
Common stock, shares authorized | 5,000,000,000 | 5,000,000,000 | 500,000,000 | 5,000,000,000 | |||||||
Series A Preferred Stock | |||||||||||
Organization, Going Concern, Basis Of Presentation [Line Items] | |||||||||||
Number of shares issued in public offering | 0.1429 | ||||||||||
Series A Warrants | |||||||||||
Organization, Going Concern, Basis Of Presentation [Line Items] | |||||||||||
Number of shares issued in public offering | 0.2857 | ||||||||||
Series A Warrants | Subsequent Event | |||||||||||
Organization, Going Concern, Basis Of Presentation [Line Items] | |||||||||||
Amount of Series A Warrants exercised on a cashless basis | $ 77,100,000 | ||||||||||
Exercise price per Series A Warrant (in dollars per share) | $ 75.80 |
MERGER WITH VAPORIN, INC. - Sch
MERGER WITH VAPORIN, INC. - Schedule of Pro Forma Consolidated Results of Operations (Details) | 3 Months Ended |
Mar. 31, 2015USD ($)$ / sharesshares | |
Net loss | $ (5,378,927) |
Net loss per share | $ / shares | $ (60.22) |
Weighted average number of shares outstanding | shares | 89,315 |
Wholesale and online revenues | |
Revenues | $ 1,318,291 |
Retail revenues | |
Revenues | $ 1,266,593 |
MERGER WITH VAPORIN, INC. (Deta
MERGER WITH VAPORIN, INC. (Detail Textuals) | Dec. 17, 2014 |
Vaporin | |
Business Acquisition [Line Items] | |
Ownership percentage | 50.00% |
RETAIL STORES AND KIOSKS (Detai
RETAIL STORES AND KIOSKS (Detail Textuals) - USD ($) | 1 Months Ended | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | |
Retail Stores And Kiosks | |||
Hold back amount due to sellers | $ 675,000 | $ 675,000 | $ 860,000 |
Aggregate holdback payments | $ 35,000 | 185,000 | |
Exit costs for non-cancellable leases and license obligation | $ 7,800 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Payables and Accruals [Abstract] | ||
Commissions payable | $ 44,505 | $ 196,096 |
Retirement plan contributions | 77,861 | 77,861 |
Accrued severance | 51,145 | |
Accrued customer returns | 302,415 | 435,832 |
Accrued payroll | 47,375 | 46,325 |
Accrued settlements and royalty fees | 200,683 | 1,900,000 |
Accrued legal and professional fees | 91,075 | 191,643 |
Accrued retail store hold back payments from acquisitions | 675,000 | 860,000 |
Other accrued liabilities | 147,075 | 187,209 |
Total | $ 1,585,989 | $ 3,946,111 |
STOCKHOLDERS' DEFICIT - Summary
STOCKHOLDERS' DEFICIT - Summary of compensatory common stock activity (Details) - Common Stock | 3 Months Ended |
Mar. 31, 2016USD ($)$ / sharesshares | |
Number of Shares | |
Non-vested, January 1, 2016 | shares | 357 |
Granted | shares | |
Vested | shares | (213) |
Forfeited | shares | |
Non-vested, March 31, 2016 | shares | 144 |
Weighted Average Issuance Date Fair Value Per Share | |
Non-vested, January 1, 2016 | $ / shares | $ 364 |
Granted | $ / shares | |
Vested | $ / shares | $ 364 |
Forfeited | $ / shares | |
Non-vested, March 31, 2016 | $ / shares | $ 364 |
Total Issuance Date Fair Value | |
Non-vested, January 1, 2016 | $ | $ 130,000 |
Granted | $ | |
Vested | $ | $ (78,000) |
Forfeited | $ | |
Non-vested, March 31, 2016 | $ | $ 52,000 |
STOCKHOLDERS' DEFICIT - Summa28
STOCKHOLDERS' DEFICIT - Summary of Warrant Activity (Details) - Warrants | 3 Months Ended |
Mar. 31, 2016USD ($)$ / sharesshares | |
Number of Warrants | |
Outstanding at January 1, 2016 | shares | 1,096,299 |
Warrants granted | shares | |
Warrants exercised | shares | (41,548) |
Impact of reverse split rounding | shares | 37 |
Warrants forfeited or expired | shares | |
Outstanding at March 31, 2016 | shares | 1,054,788 |
Exercisable at March 31, 2016 | shares | 1,054,788 |
Weighted Average Exercise Price | |
Outstanding at January 1, 2016 | $ / shares | $ 88.20 |
Warrants granted | $ / shares | |
Warrants exercised | $ / shares | $ 86.80 |
Impact of reverse split rounding | $ / shares | |
Warrants forfeited or expired | $ / shares | |
Outstanding at March 31, 2016 | $ / shares | $ 87.94 |
Exercisable at March 31, 2016 | $ / shares | $ 87.94 |
Outstanding at March 31, 2016, Weighted Average Remaining Term (Yrs.) | 4 years 6 months |
Exercisable at March 31, 2016, Weighted Average Remaining Term (Yrs.) | 4 years 6 months |
Aggregate Intrinsic Value, Outstanding at March 31, 2016 | $ | |
Aggregate Intrinsic Value, Exercisable at March 31, 2016 | $ |
STOCKHOLDERS' DEFICIT - Additio
STOCKHOLDERS' DEFICIT - Additional information related to warrants (Details) | 3 Months Ended |
Mar. 31, 2016$ / sharesshares | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Warrants Outstanding, Outstanding Number of Warrants | shares | 1,054,788 |
Warrants Exercisable, Weighted Average Remaining Life In Years | 4 years 6 months |
Warrants Exercisable, Exercisable Number of Warrants | shares | 1,054,788 |
$77.00 - $149.99 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of Exercise Price, lower | $ 77 |
Range of Exercise Price, Upper | 149.99 |
Warrants Outstanding, Weighted Average Exercise Price | $ 86.61 |
Warrants Outstanding, Outstanding Number of Warrants | shares | 1,054,111 |
Warrants Exercisable, Weighted Average Exercise Price | $ 86.61 |
Warrants Exercisable, Weighted Average Remaining Life In Years | 4 years 6 months |
Warrants Exercisable, Exercisable Number of Warrants | shares | 1,054,111 |
$150.00 - $699.99 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of Exercise Price, lower | $ 150 |
Range of Exercise Price, Upper | 699.99 |
Warrants Outstanding, Weighted Average Exercise Price | $ 205.83 |
Warrants Outstanding, Outstanding Number of Warrants | shares | 205 |
Warrants Exercisable, Weighted Average Exercise Price | $ 205.83 |
Warrants Exercisable, Weighted Average Remaining Life In Years | 2 years 8 months 12 days |
Warrants Exercisable, Exercisable Number of Warrants | shares | 205 |
$700.00 - $1799.99 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of Exercise Price, lower | $ 700 |
Range of Exercise Price, Upper | 1,799.99 |
Warrants Outstanding, Weighted Average Exercise Price | $ 761.88 |
Warrants Outstanding, Outstanding Number of Warrants | shares | 187 |
Warrants Exercisable, Weighted Average Exercise Price | $ 761.88 |
Warrants Exercisable, Weighted Average Remaining Life In Years | 3 years 7 months 6 days |
Warrants Exercisable, Exercisable Number of Warrants | shares | 187 |
$1800.00 - $4,633.68 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of Exercise Price, lower | $ 1,800 |
Range of Exercise Price, Upper | 4,633.68 |
Warrants Outstanding, Weighted Average Exercise Price | $ 4,495.43 |
Warrants Outstanding, Outstanding Number of Warrants | shares | 285 |
Warrants Exercisable, Weighted Average Exercise Price | $ 4,495.43 |
Warrants Exercisable, Weighted Average Remaining Life In Years | 1 year 7 months 6 days |
Warrants Exercisable, Exercisable Number of Warrants | shares | 285 |
STOCKHOLDERS' DEFICIT - Securit
STOCKHOLDERS' DEFICIT - Securities excluded from calculation of basic and dilutive loss per share (Details) - shares | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities excluded from calculation of basic and dilutive loss per share | 1,088,970 | 20,649 |
Restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities excluded from calculation of basic and dilutive loss per share | 144 | |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities excluded from calculation of basic and dilutive loss per share | 558 | 3,495 |
Series A Preferred Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities excluded from calculation of basic and dilutive loss per share | 33,480 | |
Senior convertible notes payable | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities excluded from calculation of basic and dilutive loss per share | 5,125 | |
Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities excluded from calculation of basic and dilutive loss per share | 1,054,788 |
STOCKHOLDERS' DEFICIT (Detail T
STOCKHOLDERS' DEFICIT (Detail Textuals) - USD ($) | Mar. 08, 2016 | Mar. 04, 2016 | Jul. 07, 2015 | Mar. 21, 2016 | Mar. 31, 2016 | Mar. 31, 2015 | Feb. 01, 2016 | Jan. 31, 2016 | Dec. 31, 2015 |
Stockholders' Deficit [Line Items] | |||||||||
Reverse stock split ratio | 1-for-70 | one-for-seventy | one-for-five | 1-for-10,000 and 1-for-20,000 | 1-for-10 and 1-for-70 | ||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.001 | $ 0.0001 | |||||
Common stock, shares authorized | 5,000,000,000 | 5,000,000,000 | 500,000,000 | 5,000,000,000 | |||||
Common Stock, Voting Rights | one vote | ||||||||
Stock-based compensation expense | $ 52,000 | $ 322,067 | |||||||
Stock Options | |||||||||
Stockholders' Deficit [Line Items] | |||||||||
Stock-based compensation expense | 58,786 | $ 364,576 | |||||||
Unamortized stock based compensation expense on unvested stock options | $ 28,000 | ||||||||
Amortization period of unamortized stock based compensation expense on unvested stock options | 1 year 2 months 12 days | ||||||||
Series A Preferred Stock | |||||||||
Stockholders' Deficit [Line Items] | |||||||||
Number of shares issued on conversion | 12,596 | ||||||||
Issuance of common stock in connection with conversion of Series A convertible preferred stock (in shares) | 512,100 | ||||||||
Series A Warrants | |||||||||
Stockholders' Deficit [Line Items] | |||||||||
Number of warrants exercised | 41,548 | ||||||||
Number of common stock issued upon exercise of warrants | 44,500,000 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
LIABILITIES: | ||
Total derivative liabilities | $ 53,616,983 | $ 41,089,580 |
Fair value on recurring basis | ||
LIABILITIES: | ||
Warrant liabilities | 53,616,983 | 41,089,580 |
Total derivative liabilities | $ 53,616,983 | $ 41,089,580 |
Fair value on recurring basis | Level 1 | ||
LIABILITIES: | ||
Warrant liabilities | ||
Total derivative liabilities | ||
Fair value on recurring basis | Level 2 | ||
LIABILITIES: | ||
Warrant liabilities | ||
Total derivative liabilities | ||
Fair value on recurring basis | Level 3 | ||
LIABILITIES: | ||
Warrant liabilities | $ 53,616,983 | $ 41,089,580 |
Total derivative liabilities | $ 53,616,983 | $ 41,089,580 |
FAIR VALUE MEASUREMENTS (Deta33
FAIR VALUE MEASUREMENTS (Details 1) - $ / shares | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Stock price | $ 385 | |
Strike price | $ 448 | |
Remaining term (years) | 5 years | |
Volatility | 115.00% | |
Risk-free rate | 1.61% | |
Dividend yield | 0.00% | 0.00% |
Warrants | Minimum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Stock price | $ 0.0001 | |
Strike price | $ 77 | |
Remaining term (years) | 3 years 11 months 1 day | |
Volatility | 126.00% | |
Risk-free rate | 1.20% | |
Warrants | Maximum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Stock price | $ 0.5400 | |
Strike price | $ 86.80 | |
Remaining term (years) | 4 years 3 months 29 days | |
Volatility | 177.00% | |
Risk-free rate | 1.50% |
FAIR VALUE MEASUREMENTS (Deta34
FAIR VALUE MEASUREMENTS (Details 2) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at January 1, | $ 41,089,580 | |
Private placement warrants | $ 2,544,277 | |
Exercise of Series A warrant liabilities | (2,254,636) | |
Change in fair value of derivative liabilities | 14,782,039 | (250,826) |
Ending balance | $ 53,616,983 | $ 2,293,451 |
FAIR VALUE MEASUREMENTS (Deta35
FAIR VALUE MEASUREMENTS (Detail Textuals) | 3 Months Ended |
Mar. 31, 2016USD ($)shares | |
Fair Value Disclosures [Abstract] | |
Number of shares called by warrants | shares | 41,548 |
Aggregate exercise date value of warrants | $ | $ 2,254,636 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Detail Textuals) - USD ($) | Apr. 08, 2016 | Apr. 06, 2016 | Mar. 02, 2016 | Aug. 13, 2015 | Jun. 22, 2015 | Mar. 31, 2016 | Dec. 31, 2015 | Dec. 16, 2015 |
Commitments And Contingencies [Line Items] | ||||||||
Civil penalty against defendants | $ 2,500 | |||||||
Vendor deposits | $ 154,075 | $ 310,936 | ||||||
Pending Litigation | Hudson Bay Master Fund Ltd Versus Vapor Corp Case | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Seeking monetary damages | $ 339,810 | |||||||
Subsequent Event | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Payment for settlement agreement | $ 45,000 | |||||||
Liquid Science Inc | Wholesale | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Purchases in percentage | 44.00% | |||||||
Purchases | $ 264,401 | |||||||
Liquid Science Inc | Gregory Brauser | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Ownership percentage | 15.00% | |||||||
Liquid Science Inc | Mr. Michael Brauser | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Ownership percentage | 15.00% | |||||||
Liquid Science Inc | Jeffrey Holman | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Ownership percentage | 15.00% | |||||||
Consulting Agreement | Gregory Brauser | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Fees paid | 60,000 | |||||||
Consulting Agreement | Gregory Brauser | Subsequent Event | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Term of consulting agreement | 2 years | |||||||
Engagement fee payable | $ 50,000 | |||||||
Monthly engagement fee | $ 10,000 | |||||||
Period of monthly installments | 24 months | |||||||
Consulting Agreement | Grander Holdings Inc | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Fees paid | 40,000 | |||||||
Initial fee | $ 50,000 | |||||||
Additional consultancy fees | 20,000 | |||||||
Consulting Agreement | GRQ Consultants Inc | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Fees paid | $ 40,000 | |||||||
Initial fee | 50,000 | |||||||
Additional consultancy fees | $ 20,000 | |||||||
Settlement and License Agreements | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Estimated settlement fee | $ 1,700,000 |
SUBSEQUENT EVENTS (Detail Textu
SUBSEQUENT EVENTS (Detail Textuals) - USD ($) | May. 02, 2016 | May. 10, 2016 | Mar. 31, 2016 | May. 12, 2016 | Dec. 31, 2015 |
Number of common stock issued | 45,146,438 | 147,943 | |||
Number of common stock outstanding | 45,146,438 | 147,943 | |||
Series A Warrants | |||||
Number of Warrants exercised | 41,548 | ||||
Number of common stock issued upon exercise of warrants | 44,500,000 | ||||
Subsequent Event | |||||
Minimum bid price requirement for non compliance | $ 0.01 | ||||
Number of common stock issued | 4,999,106,905 | ||||
Number of common stock outstanding | 4,999,106,905 | ||||
Subsequent Event | Series A Warrants | |||||
Number of Warrants exercised | 15,994 | ||||
Number of common stock issued upon exercise of warrants | 4,953,943,720 | ||||
Amount of Series A Warrants exercised on a cashless basis | $ 77,100,000 | ||||
Exercise price per Series A Warrant (in dollars per share) | $ 75.80 |