Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Apr. 07, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | American Cannabis Company, Inc. | |
Entity Central Index Key | 945,617 | |
Document Type | 10-K | |
Document Period End Date | Dec. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Public Float | $ 22,792,655 | |
Entity Common Stock, Shares Outstanding | 51,187,210 | |
Document Fiscal Period Focus | FY | |
Document Fiscal Year Focus | 2,016 |
Balance Sheets
Balance Sheets - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 751,038 | $ 555,780 |
Accounts receivable, net | 164,451 | 48,285 |
Deposits | 9,345 | |
Inventory | 42,500 | 67,435 |
Prepaid expenses and other current assets | 9,825 | 32,117 |
Total current assets | 967,814 | 712,962 |
Property and equipment, net | 11,639 | 13,448 |
Other Assets | 4,500 | 4,500 |
TOTAL ASSETS | 983,953 | 730,910 |
Current liabilities | ||
Accounts payable | 55,782 | 218,334 |
Accounts payable, related party | 14,325 | |
Advances from clients | 222,188 | 220,966 |
Convertible note, net of discount of $0 and $35,235 | 60,252 | |
Accrued and other current liabilities | 36,724 | 93,468 |
Total current liabilities | 329,019 | 593,020 |
Stockholders equity | ||
Preferred stock, $0.01 par value; 5,000,000 shares authorized; 0 shares issued and outstanding at December 31, 2016 and 2015, respectively | ||
Common stock, $0.00001 par value; 100,000,000 shares authorized; 49,847,593 and 44,808,731 shares issued and outstanding at December 31, 2016 and 2015, respectively | 498 | 448 |
Additional paid-in capital | 5,389,384 | 4,268,708 |
Accumulated deficit | (4,734,948) | (4,131,266) |
Total Shareholder's equity | 654,934 | 137,890 |
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY | $ 983,953 | $ 730,910 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Allowance for Accoounts Receivable | $ 0 | $ 35,235 |
Preferred stock Par Value | $ 0.01 | $ 0.01 |
Preferred Stock Shares Authorized | 5,000,000 | 5,000,000 |
Preferred Stock Shares Issued | 0 | 0 |
Preferred Stock Shares Outstanding | $ 0 | $ 0 |
Common stock Par Value | $ 0.00001 | $ 0.00001 |
Common Stock Shares Authorized | 100,000,000 | 100,000,000 |
Common Stock Shares Issued | 49,847,593 | 44,808,731 |
Common Stock Shares Outstanding | 49,847,593 | 44,808,731 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues | ||
Consulting services | $ 943,563 | $ 693,225 |
Products and equipment | 613,535 | 2,081,448 |
Product and equipment, related party | 3,768 | 25,214 |
Total revenues | 1,560,866 | 2,799,887 |
Costs of revenues | ||
Cost of consulting services | 145,849 | 182,161 |
Cost of products and equipment | 545,732 | 1,817,952 |
Total cost of revenues | 691,581 | 2,000,113 |
Gross profit | 869,285 | 799,774 |
Operating expenses | ||
General and administrative | 1,273,749 | 687,082 |
Investor Relations | 37,919 | 307,069 |
Selling and marketing | 88,047 | 307,474 |
Research and development | 2,553 | 51,115 |
Total Operating expenses | 1,402,268 | 1,352,740 |
Income (Loss) from Operations | (532,983) | (552,966) |
Other Income (expense) | ||
Gain (loss) on debt extinguishment | (7,640) | 72,771 |
Interest (expense) | (87,314) | (35,458) |
Change in Derivative Liability | 14,449 | |
Other Income | 9,806 | |
Total Other Income (expense) | (70,699) | 37,313 |
Net Income (Loss) before taxes | (603,682) | (515,653) |
Income Tax expense (benefit) | ||
NET INCOME (LOSS) | $ (603,682) | $ (515,653) |
Basic and diluted net loss per common share | $ (0.01) | $ (0.01) |
Basic and diluted weighted average common shares outstanding | 46,389,474 | 44,637,046 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
CASH FLOW FROM OPERATING ACTIVITIES: | ||
Net loss | $ (603,682) | $ (515,653) |
Adjustments to reconcile net income (loss) to net cash (used in) operating activities: | ||
Bad debt expenses | 118,641 | 30,753 |
Depreciation | 5,173 | 3,575 |
Amortization of discount on convertible notes payable | 41,578 | 35,701 |
Interest Converted to Common Stock | 12,000 | |
Change in Value of Derivative Liability | (14,449) | |
Stock-based compensation to employees | 16,240 | 124,099 |
Stock-based compensation to service providers | 13,968 | 195,087 |
Loss (gain) on debt extinguishment | 7,640 | (72,771) |
Changes in operating assets and liabilities | ||
Accounts receivable | (234,807) | (21,396) |
Deposits | 9,345 | 168,096 |
Inventory | 24,935 | (22,829) |
Prepaid expenses and other current assets | 22,292 | (19,792) |
Advances from clients | 1,222 | 47,438 |
Accrued and other current liabilities | (56,744) | 40,720 |
Accounts payable | (162,556) | 156,196 |
Accounts payable, Related Party | 14,325 | |
Net Cash provided by (used in) Operating Activities | (784,879) | 149,223 |
CASH FLOW FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (3,360) | (8,656) |
Net cash provided by (Used in) Investing Activities | (3,360) | (8,656) |
CASH FLOW FROM FINANCING ACTIVITIES | ||
Proceeds from convertible notes | 305,250 | |
Principal payments of convertible debt | (180,000) | |
Proceeds from issuance of common shares | 858,247 | 250,000 |
Net cash Provided by Financing Activities | 983,497 | 250,000 |
NET INCREASE IN CASH | 195,258 | 390,567 |
CASH AT BEGINNING OF PERIOD | 555,780 | 165,213 |
CASH AT END OF YEAR | 751,038 | 555,780 |
Supplemental disclosure of non-cash transactions | ||
Convertible notes payable assumed from Brazil Interactive Media, Inc., net of accumulated discount amortization | 220,271 | |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for interest | 33,840 | |
Cash paid during the period for income taxes, net |
Shareholders Equity
Shareholders Equity - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance, Shares at Dec. 31, 2014 | 44,518,750 | |||
Beginning Balance, Value at Dec. 31, 2014 | $ 446 | $ 3,699,526 | $ (3,619,613) | $ 84,359 |
Common shares issued for services, Shares | 250,000 | |||
Common shares issued for services, Value | $ 2 | 195,085 | 195,087 | |
Shares issued for cash, Amount | 250,000 | 250,000 | ||
Stock based compensation granted to employees, Shares | 164,981 | |||
Stock based compensation granted to employees, Amount | $ 2 | 124,097 | 124,099 | |
Recension and cancellation of common shares, Shares | (125,000) | |||
Recension and cancellation of common shares, Amount | $ (2) | (2) | ||
Net income (loss) | (515,653) | |||
Ending Balance, Shares at Dec. 31, 2015 | 44,808,731 | |||
Ending Balance, Value at Dec. 31, 2015 | $ 448 | 4,268,708 | (4,131,266) | 137,890 |
Common shares issued for services, Shares | 195,260 | |||
Common shares issued for services, Value | $ 2 | 13,966 | 13,968 | |
Shares issued for cash, Shares | 2,370,039 | |||
Shares issued for cash, Amount | $ 23 | 858,224 | 858,247 | |
Stock based compensation granted to employees, Shares | 152,500 | |||
Stock based compensation granted to employees, Amount | $ 2 | 16,238 | 16,240 | |
Conversion of convertible notes payable to common shares, Shares | 2,321,063 | |||
Conversion of convertible notes payable to common shares, Value | $ 23 | 232,248 | 232,271 | |
Net income (loss) | (603,682) | (603,682) | ||
Ending Balance, Shares at Dec. 31, 2016 | 49,847,593 | |||
Ending Balance, Value at Dec. 31, 2016 | $ 498 | $ 5,389,384 | $ (4,734,948) | $ 654,934 |
1. Description of the Business
1. Description of the Business | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
1. Description of the Business | Note 1. Description of the Business American Cannabis Company, Inc. and its subsidiary Company, Hollister & Blacksmith, Inc., doing business as American Cannabis Consulting (“American Cannabis Consulting”), (collectively “the “Company”) are based in Denver, Colorado and operate a fully-integrated business model that features end-to-end solutions for businesses operating in the regulated cannabis industry in states and countries where cannabis is regulated and/or has been de-criminalized for medical use and/or legalized for recreational use. We provide advisory and consulting services specific to this industry, design industry-specific products and facilities, and sell both exclusive and non-exclusive customer products commonly used in the industry. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
2. Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The Company has elected a fiscal year ending on December 31. Use of Estimates in Financial Reporting The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the periods presented. Actual results could differ from these estimates. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the financial statements in the period they are deemed to be necessary. Significant estimates made in the accompanying financial statements include but are not limited to following: those related to revenue recognition, allowance for doubtful accounts and unbilled services, lives and recoverability of equipment and other long-lived assets, contingencies and litigation. The Company is subject to uncertainties, such as the impact of future events, economic, environmental and political factors, and changes in the business climate; therefore, actual results may differ from those estimates. When no estimate in a given range is deemed to be better than any other when estimating contingent liabilities, the low end of the range is accrued. Accordingly, the accounting estimates used in the preparation of the Company's financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the Company's operating environment changes. Changes in estimates are made when circumstances warrant. Such changes and refinements in estimation methodologies are reflected in reported results of operations; if material, the effects of changes in estimates are disclosed in the notes to the financial statements. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents are held in operating accounts at a major financial institution. Cash balances may exceed federally insured limits. Management believes the financial risk associated with these balances is minimal and has not experienced any losses to date. As of December 31, 2016, and 2015, the Company had cash balances in excess of FDIC insured limits of $453,691 and $130,667, respectively. Inventory Inventory is comprised of products and equipment owned by the Company to be sold to end-customers. Inventory is valued at cost, using the first-in first-out and specific identification methods, unless and until the market value for the inventory is lower than cost, in which case an allowance is established to reduce the valuation to market value. As of December 31, 2016, market values of all of the Company’s inventory were greater than cost, and accordingly, no such valuation allowances was recognized. Deposits Deposits is comprised of advance payments made to third parties, primarily for inventory for which the Company has not yet taken title. When the Company takes title to inventory for which deposits are made, the related amount is classified as inventory, then recognized as a cost of revenues upon sale (see “Costs of Revenues” below). Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets is primarily comprised of advance payments made to third parties for independent contractors’ services or other general expenses. Prepaid services and general expenses are amortized over the applicable periods which approximate the life of the contract or service period. Accounts Receivable Accounts receivable are recorded at the net value of face amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and, based on a method of specific identification of any accounts receivable for which it deems the net realizable value to be less than the gross amount of accounts receivable recorded, establishes an allowance for doubtful accounts for those balances. In determining its need for an allowance for doubtful accounts, the Company considers historical experience, analysis of past due amounts, client creditworthiness and any other relevant available information. However, the Company’s actual experience may vary from its estimates. If the financial condition of its clients were to deteriorate, resulting in their inability or unwillingness to pay the Company’s fees, it may need to record additional allowances or write-offs in future periods. This risk is mitigated to the extent that the Company receives retainers from its clients prior to performing significant services. The allowance for doubtful accounts, if any, is recorded as a reduction in revenue to the extent the provision relates to fee adjustments and other discretionary pricing adjustments. To the extent the provision relates to a client's inability to make required payments on accounts receivables, the provision is recorded in operating expenses. As of December 31, 2016, and December 31, 2015 our allowance for doubtful accounts was $31,421 and $8,419, respectively. For December 31, 2016 and December 31, 2015, we recorded bad debt expense of $118,641 and $30,753, respectively, which is reflected as a component of general and administrative expenses on the consolidated statement of operations. Significant Customers For the year ended December 31, 2016 and December 31, 2015, in the aggregate, three customers, respectively, accounted for 46% and 74% of the Company’s total revenues for each respective period. On a geographical basis, for the year ended December 31, 2016, approximately 92% and 5% of our total revenues were generated from the United States and Canada, respectively, and for the year ended December 31, 2015, approximately 91% and 9% of our total revenues were generated from the United States and Canada. Property and Equipment, net Property and Equipment is stated at net book value, cost less depreciation. Maintenance and repairs are expensed as incurred. Depreciation of owned equipment is provided using the straight-line method over the estimated useful lives of the assets, ranging from two to seven years. Depreciation of capitalized construction in progress costs, a component of property and equipment, net, begins once the underlying asset is placed into service. Property and equipment is reviewed for impairment as discussed below under “Accounting for the Impairment of Long-Lived Assets.” The Company had not capitalized any interest as of December 31, 2016 and 2015. Accounting for the Impairment of Long-Lived Assets The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Upon such an occurrence, recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to forecasted undiscounted net cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. For long-lived assets held for sale, assets are written down to fair value, less cost to sell. Fair value is determined based on discounted cash flows, appraised values or management's estimates, depending upon the nature of the assets. The Company did not record any impairment charges related to long-lived assets during the years ended December 31, 2016 and 2015. Beneficial Conversion Feature If the conversion features of conventional convertible debt provide for a rate of conversion that is below market value at issuance, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ACF”) Topic 470-20 Debt with Conversion and Other Options Embedded Conversion Features The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial conversion features. Derivative Financial Instruments Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments. Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model. Revenue Recognition Revenue is recognized in accordance with FASB ASC Topic 605, Revenue Recognition The Company primarily generates revenues from professional services consulting agreements. These arrangements are generally entered into on a time basis, for a fixed-fee or on a contingent fee basis. Generally, a prepayment or retainer is required prior to performing services. Revenues from time-based engagements are recognized as the hours are incurred by the Company. Revenues from fixed-fee engagements are recognized under the completed or proportional performance methods. Management reviews arrangement to determine whether or not the fixed-fee is for a final deliverable or act which is significant to the arrangement as a whole. If it is, revenue is recognized under the completed performance method, in which revenue is recognized once the final act or deliverable is performed or delivered. Revenue recognized under the proportional performance method is recognized as services are performed. Under this method, the Company estimates the amount of completed work in comparison to the total services to be provided under the arrangement or deliverable in order to determine the amount of revenue to be recognized. Revenue recognition is affected by a number of factors that change the estimated amount of work required to complete the deliverable, such as changes in scope, timing, awaiting notification of license award from local government, and the level of client involvement. Losses, if any, on fixed-fee engagements are recognized in the period in which the loss first becomes probable and reasonably estimable. During the year ended December 31, 2016 and December 31, 2015, no such losses have occurred. The Company believes if an engagement terminates prior to completion it can recover the costs incurred related to the services provided. The Company occasionally enters into arrangements for which revenues are contingent upon achieving a pre-determined deliverable or future outcome. Any contingent revenue for these arrangements is not recognized until the contingency is resolved and collectability is reasonably assured. The Company’s arrangements with clients may include terms to deliver multiple services or deliverables. These contracts specifically identify the services to be provided with the corresponding deliverable. The value for each deliverable is determined based on the prices charged when each element is sold separately or by other vendor-specific objective evidence (“VSOE”), or estimates of stand-alone selling prices. Revenues are recognized in accordance with the Company’s accounting policies for the elements as described above. The elements qualify for separation when the deliverables have value on a stand-alone basis and the value of the separate elements can be established by VSOE or an estimated selling price. While assigning values and identifying separate elements requires judgment, selling prices of the separate elements are generally readily identifiable as the Company also sells those elements individually outside of a multiple services engagement. Contracts with multiple elements typically incorporate a fixed-fee or hourly pricing structure. Arrangements are typically terminable by either party upon sufficient notice and do not include provisions for refunds relating to services provided. Differences between the timing of billings and the recognition of revenue are recognized as either unbilled revenue (a component of accounts receivable) or deferred revenue on the consolidated balance sheet. Revenues recognized for services performed but not yet billed to clients are recorded as unbilled revenue. Reimbursable expenses, including those relating to travel, other out-of-pocket expenses and any third-party costs, are included as a component of revenues. Typically, an equivalent amount of reimbursable expenses are included in total direct client service costs. Reimbursable expenses related to time and materials and fixed-fee engagements are recognized as revenue in the period in which the expense is incurred and collectability is reasonably assured. Taxes collected from customers and remitted to governmental authorities are presented in the statement of operations on a net basis. Revenue from product and equipment sales, including delivery fees, is recognized when an order has been obtained, the price is fixed and determinable, the product is shipped, title has transferred and collectability is reasonably assured. Generally, our suppliers’ drop-ship orders to our clients with origin terms. For any shipments with destination terms, the Company defers revenue until delivery to the customer. During the year ended December 31, 2016 and December 31, 2015, sales returns were not significant and as such, no sales return allowance had been recorded as of December 31, 2016 nor at December 31, 2015. During the year ended December 31, 2016, the Company generated revenue from the sale of products to an entity controlled by a shareholder (Director). Costs of Revenues The Company’s policy is to recognize costs of revenue in the same manner in conjunction with revenue recognition. Cost of revenue includes the costs directly attributable to revenue recognition and includes compensation and fees for services, travel and other expenses for services and costs of products and equipment. Selling, general and administrative expenses are charged to expense as incurred. Advertising and Promotion Costs Advertising and promotion costs are included as a component of selling and marketing expense and are expensed as incurred. During the year ended December 31, 2016 and 2015, these costs were $88,047 and $79,989, respectively. Shipping and Handling Costs For product and equipment sales, shipping and handling costs are included as a component of cost of revenues. Stock-Based Compensation Restricted shares are awarded to employees and entitle the grantee to receive shares of common stock at the end of the established vesting period. The fair value of the grant is based on the stock price on the date of grant. We recognize related compensation costs on a straight-line basis over the requisite vesting period of the award, which to date has been one year from the grant date. During the years ended December 31, 2016 and 2015, stock-based compensation expense for restricted shares for Company employees and service providers was $30,208 and $319,187, respectively. Compensation expense for warrants and options is based on the fair value of the instruments on the grant date, which is determined using the Black-Scholes valuation model, and are expensed over the expected term of the awards. During the year ended December 31, 2016 and 2015, compensation expense for warrants and options was $0, respectively. Income Taxes We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns in accordance with applicable accounting guidance for accounting for income taxes, using currently enacted tax rates in effect for the year in which the differences are expected to reverse. We record a valuation allowance when necessary to reduce deferred tax assets to the amount expected to be realized. For the years ended December 31, 2016 and 2015, we recorded a valuation allowance against our deferred tax asset that reduced our income tax benefit for the period to zero. As of December 31, 2016, and, we had no liabilities related to federal or state income taxes and the carrying value of our deferred tax asset was zero. Net Income (Loss) Per Common Share The Company reports net income (loss) per common share in accordance with FASB ASC 260, “Earnings per Share”. This statement requires dual presentation of basic and diluted earnings with a reconciliation of the numerator and denominator of the earnings per share computations. Basic net income (loss) per share is computed by dividing net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period and excludes the effects of any potentially dilutive securities. Diluted net income (loss) per share gives effect to any dilutive potential common stock outstanding during the period. The computation does not assume conversion, exercise or contingent exercise of securities since that would have an anti-dilutive effect on earnings. Related Party Transactions The Company follows FASB ASC subtopic 850-10, Related Party Disclosures Material related party transactions are required to be disclosed in the consolidated financial statements, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which statements of operation are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which statements of operations are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. During the year ended December 31, 2016, the Company generated revenue from the sale of products to an entity controlled by a shareholder (Director). See Note 10. Related Party Transactions for associated disclosures. Reclassifications Certain balance sheet reclassifications have been made to prior period balances to reflect the current period’s presentation format; such reclassifications had no impact on the Company’s consolidated statements of operations or consolidated statements of cash flows and had no material impact on the Company’s consolidated balance sheets. Recent Accounting Pronouncements In August 2014, the FASB issued ASU 2014-15 “Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). By incorporating and expanding upon certain principles that are currently in U.S. auditing standards, ASU 2014-15 requires management to assess whether there is substantial doubt about the entity’s ability to continue as a going concern. Specifically, ASU 2014-15 (1) provides a definition of the term substantial doubt, (2) requires an evaluation every reporting period including interim periods, (3) provides principles for considering the mitigating effect of management’s plans, (4) requires certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) requires an express statement and other disclosures when substantial doubt is not alleviated, and (6) requires an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company has not elected to early adopt the provisions of ASU 2014-15, and accordingly, the requirements of ASU 2014-15 will apply beginning with the year ended December 31, 2017. The Company is currently evaluating the effects, if any, that the application of ASU 2014-15 will have on disclosures associated with its consolidated financial statements. In May 2014, the FASB issued ASU 2014-9 “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-9”), which provides a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. This guidance is effective for annual reporting and interim periods beginning after December 15, 2016 and allows for either full retrospective or modified retrospective application, with early adoption not permitted. Accordingly, the standard becomes effective for the Company on January 1, 2017. The Company is currently evaluating the adoption method it will apply and the impact that this guidance will have on its consolidated financial statements and related disclosures. In February 2016, the FASB issued its new lease accounting guidance in Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). Under the new guidance, the following will be required to be recognized for all leases (with the exception of short-term leases) as of the commencement date: • A lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and • A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. • Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. • The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing. Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (i.e., January 1, 2019, for a calendar year entity). The Company is currently evaluating the effects, if any, that the application of ASU 2016-02 will have on disclosures associated with its consolidated financial statements. In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation —Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments are intended to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. For public companies, the amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For private companies, the amendments are effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for any organization in any interim or annual period. The Company is currently evaluating the effects, if any, that the application of ASU 2016-09 will have on disclosures associated with its consolidated financial statements. In April 2016, the FASB issued Accounting Standards Update No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments clarify the following two aspects of Topic 606: (a) identifying performance obligations; and (b) the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606. The Company is currently evaluating the effects, if any, that the application of ASU 2016-10 will have on disclosures associated with its consolidated financial statements. In January 2017, FASB issued Accounting Standards Update (ASU) No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, clarifying the definition of a business. The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business. For public companies, the amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The Company is currently evaluating the effects, if any, that the application of ASU 2017-01 will have on disclosures associated with its consolidated financial statements. |
3. Accounts Receivable, net
3. Accounts Receivable, net | 12 Months Ended |
Dec. 31, 2016 | |
Receivables [Abstract] | |
3. Accounts Receivable, net | Note 3. Accounts Receivable, net Accounts receivable, net, was comprised of the following: December 31, 2016 December 31, 2015 Gross accounts receivable $ 195,872 $ 56,704 Less: allowance for doubtful accounts (31,421 ) (8,419 ) Accounts receivable, net $ 164,451 $ 48,285 For the years ended December 31, 2016 and December 31, 2015, the Company had bad debt expense of $118,641 and $30,753, respectively. |
4. Inventory
4. Inventory | 12 Months Ended |
Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |
4. Inventory | Note 4 Inventory Inventory as of December 31, 2016 and 2015 consisted of the following: December 31, 2016 December 31, 2015 Raw materials $ 16,614 $ — Demo — 57,170 Finished goods 25,886 10,265 Total $ 42,500 $ 67,435 |
5. Property and Equipment, net
5. Property and Equipment, net | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
5. Property and Equipment, net | Note 5. Property and Equipment, net Property and equipment, net, was comprised of the following: December 31, 2016 December 31, 2015 Office equipment $ 7,472 $ 7,472 Furniture and fixtures 8,777 8,777 Machinery and equipment 4,938 2,336 Property and equipment, gross 21,187 18,585 Less: accumulated depreciation (10,148 ) (5,137 ) Property and equipment, net $ 11,639 $ 13,448 For the year ended December 31, 2016 and December 31, 2015, the Company recorded depreciation expense of $5,173 and $3,575, respectively. |
6. Convertible Notes Payable
6. Convertible Notes Payable | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
6. Convertible Notes Payable | Note 6. Convertible Notes Payable The Company had convertible debentures which were originally issued on April 24, 2014, maturing on April 24, 2016, paid zero interest, and were convertible until maturity at the holders’ discretion into shares of the Company’s common stock at $0.08 per share. On April 11, 2016, the maturity date on this note was renegotiated to April 24th, 2018. On April 12, 2016, the Company received notice of a partial conversion of the outstanding balance due in the amount of $58,000 that was converted into 725,000 shares of common stock at a price of $0.08 per share. On May 6, 2016, the Company received notice for the conversion of the remaining balance of the note in the amount of $13,500 that was converted into 168,750 shares of common stock at a price of $0.08 per share. The unamortized debt discount was applied to additional paid in capital. On June 23, 2016, the Company entered into two convertible promissory notes: one for $50,000 and one for $330,000. As of the date of this filing, the Company received $330,000 in principal less origination discounts of $24,750. The maturity date for each note was February 14, 2017. Each note paid 8% fixed guaranteed interest and was convertible at the holder’s discretion into shares of the Company’s common stock at a conversion formula based on the closing bid price of our common stock used to determine the conversion price per share. The conversion formula created an embedded conversion feature. The Company valued this conversion feature on the first $150,000 advance and guaranteed interest at origination at $90,222 using the Black Scholes valuation model with the following assumptions: dividend yield of zero, 236 day term to maturity, risk free interest rate of 0.474% and annualized volatility of 125%. The value of the conversion feature was assigned to the derivative liability and created a conversion debt discount to be amortized over the life of the convertible debt. On August 4, 2016, the notes were amended and restated to change the conversion formula used to determine the conversion price per share to a fixed price of $0.1135 per share, and to delete a provision that provided for repayment of the notes through a separate investment agreement providing for the Company to sell its registered shares to an investor. Based on the August 4, 2016 amendment to the convertible feature of the note payable, The Company revalued the conversion feature on the first $150,000 advance as of the date of the amendment at $75,773 which yielded a change in derivative liabilities of $14,449. The Company utilized the Black Scholes valuation model with the following assumptions: dividend yield of zero, 194-day term to maturity, risk free interest rate of 0.409% and annualized volatility of 109%. The resulting change in the value of the conversion feature exceeded 10% of the debt’s carrying value, and we recognized a loss on extinguishment of debt of $7,639. On December 5, 2016, the Company received notice for the conversion of the first $150,000 advance and related guaranteed interest of $12,000. The Company issued 1,427,313 shares of common stock in accordance with the amended conversion formula and price On December 28, 2016, the Company remaining outstanding convertible debt balance of $180,000 and related guaranteed interest of $14,400 along with prepayment penalty interest of $19,440. |
7. Accrued and Other Current Li
7. Accrued and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
7. Accrued and Other Current Liabilities | Note 7. Accrued and Other Current Liabilities Accrued and other current liabilities consisted of the following: December 31, 2016 December 31, 2015 Accrued legal fees $ 8,835 $ — Accrued payroll liabilities 12,903 18,185 Accrual for inventory products sold and shipped (in transit) — 64,050 Other 14,986 11,233 Accrued and other current liabilities $ 36,724 $ 93,468 |
8. Related Party Transactions
8. Related Party Transactions | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
8. Related Party Transactions | Note 8. Related Party Transactions For the year ended December 31, 2016, the Company generated $3,768 in revenue from the sale of SoHum Soil to Dixie Brands, an entity controlled by Vincent Keber, III, a Director. During the year ended December 31, 2015, the Company incurred $38,360 of expense payable to New Era CPAs, an accounting firm in which Antonio Migliarese, the Company’s former Chief Financial Officer, was a partner. During the year ended December 31, 2015 the Company sold $25,214 of equipment and supplies to an entity controlled by Vincent Keber, III, a Director of the Company. As of December 31, 2015, the Company was owed $17,512 from this entity. During the year ended December 31, 2016, the Company incurred $40,922 of expenses to JDE Development LLC, an accounting firm in which, the Company’s form Chief Financial Officer, is a partner. During the year ended December 31, 2016, the Company incurred $34,250 of expenses to Prince & Tuohey CPA, LTD, an accounting firm in which, the Company’s Chief Financial Officer, is a partner. As of December 31, 2016, the Company had $14,325 due to this related party. |
9. Commitments and Contingencie
9. Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
9. Commitments and Contingencies | Note 9. Commitments and Contingencies Under the terms of our agreement with the manufacturer of our exit packing product, the Satchel TM Under the terms of the Company’s various consulting agreements with clients, the Company is obligated to perform certain future services. On January 20, 2016, we were named as a defendant in a civil suit entitled: Anthony Baroud vs. Hollister & Blacksmith, Inc., dba American Cannabis Company filed in the Circuit Court of Cook County, Illinois. The lawsuit sought damages of $100,000 related to a terminated employment contract. The Company filed a motion to dismiss the case based upon the employment contract, which required mandatory contractual arbitration of disputes. On May 18, 2016, the Circuit Court of Cook County, Illinois granted the Company’s motion and the case was dismissed. On November 1, 2016, the Company received notice of a demand for arbitration filed with the American Arbitration Association by Mr. Baroud on October 27, 2016. The Company filed an answer denying liability and a cross compliant for damages against Mr. Baroud. The case is in litigation and an arbitration hearing is set for September 11-12, 2017. Based upon available information at this very early stage of litigation, management believes the likelihood of material loss resulting from this action to be remote. On July 28, 2015, the Company entered into a 5-year lease for 6,500 square feet of office space to house its corporate offices. Under the terms of the lease, payments are $4,500 per month for the first 36 months of the lease, and escalate thereafter. Rent expense was $54,084 and $53,800 for the years ended December 31, 2016 and 2015, respectively. The following table summarizes the Company’s future lease obligations: Year Amount 2017 $ 54,000 2018 54,000 2019 56,320 2020 33,610 Total $ 143,930 |
10. Stock-based Compensation
10. Stock-based Compensation | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
10. Stock-based Compensation | Note 10. Stock-based Compensation During the year ended December 31, 2016 and December 31, 2015, stock-based compensation expense for restricted shares to Company employees and service providers was $30,208 and $319,187, which was the result of the following activity: Restricted Shares From time to time, the Company grants certain employees restricted shares of its common stock to provide further compensation in-lieu of wages and to align the employee’s interests with the interests of its stockholders. Because vesting is based on continued employment, these equity-based incentives are also intended to attract, retain and motivate personnel upon whose judgment, initiative and effort the Company’s success is largely dependent. There were 220,100 shares granted as of December 31, 2016. The fair value of restricted stock units is determined based on the quoted closing price of the Company’s common stock on the date of grant. The following table summarizes the Company’s restricted share award activity during the years ended December 31, 2016 and 2015: Restricted Shares Common Stock Weighted Average Grant Date Fair Value Outstanding unvested at December 31, 2014 150,000 $ 0.94 Granted 164,981 0.21 Vested restricted shares (100,000 ) 0.94 Forfeited (50,000 ) 0.94 Outstanding unvested at December 31, 2015 164,981 0.21 Granted 267,172 0.11 Vested restricted shares (323,553 ) 0.15 Forfeited — — Outstanding unvested at December 31, 2016 — $ — During the year ended December 31, 2016, the Company granted 158,572 restricted shares to Company employees and service providers and recognized $30,208 in associated stock-based compensation expense. During the year ended December 31, 2015, the Company granted 164,981 restricted shares and recognized $319,187 in associated employee stock based compensation expense. Warrants In connection with his appointment to the Company’s board of directors, the Company granted its independent board member, Vincent “Tripp” Keber, warrants to purchase up to two hundred and fifty thousand (250,000) shares of common stock at an exercise price of sixty-three cents ($0.63) per share, exercisable within five (5) years of the date of issuance on November 19, 2014. Additionally, Mr. Keber shall be eligible to receive options for 400,000 shares of common stock under the Company’s incentive plan, as and when duly approved by the Board of Directors. The Company used the Black-Scholes valuation model to determine the fair value of warrants as of the grant date. Assumptions used in this calculation for the warrant award to purchase 250,000 shares of common stock include expected volatility of 160.7%, based on an average of historical data of the Company’s stock price and the stock prices of three comparable companies that are also included in the marijuana index, a risk-free rate of 1.62%, based on U.S. Treasury yields as published by the Federal Reserve, a dividend yield of 0.0%, as the Company has not historically paid dividends nor does it have any plans to do so in the foreseeable future, and an expected term of five years. The grant date fair value of the warrants, as calculated based on these assumptions, was $0.59 per share. During 2016 the Company had no warrant activity. During 2016 and 2015, the Company had the following warrant activity: Weighted Average Common Stock Warrants Grant Date Fair Value Outstanding at December 31, 2014 250,000 $ 0.59 Granted — — Exercised — — Expired or forfeited — — Outstanding at December 31, 2015 250,000 $ 0.59 Granted — — Exercised — — Expired or forfeited — — Outstanding at December 31, 2016 250,000 $ 0.59 Vested at December 31, 2016 250,000 $ 0.59 As of December 31, 2016, the price per share exceeded the exercise price per share of our common shares, resulting in an aggregate intrinsic value of $40,000 of the outstanding warrants. |
11. Income Taxes
11. Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
11. Income Taxes | Note 11. Income Taxes As part of the Reverse Merger on September 29, 2014, the Company’s corporate status changed from an S-Corporation, which it had been since inception, to a C-Corporation. As provided in Section 1361 of the Internal Revenue Code, for income tax purposes, S-Corporations are not subject to corporate income taxes; instead, the owners are taxed on their proportionate share of the S-Corporation’s taxable income. Accordingly, the Company’s accumulated net losses prior to September 29, 2014 were not subject to income tax. The following table displays a reconciliation from the U.S. statutory rate to the effective tax rate and the provision for (benefit from) income taxes for the years ended December 31, 2016 and 2015, respectively: December 31, 2016 December 31, 2015 Tax benefit at the US statutory rate of 34% $ 205,253 $ 175,322 State income tax benefit 27,951 23,875 Non-deductible expenses including non-deductible pre-merger losses — (773 ) Change in valuation allowance (233,204 ) (198,424 ) Total income tax benefit $ — $ — Deferred tax assets (liabilities) consisted of the following: December 31, 2016 December 31, 2015 Net operating loss carryforwards $ 441,067 $ 212,106 Beneficial conversion feature accumulated amortization 13,791 13,791 Allowance for Doubtful Accounts 13,727 — Valuation allowance (468,585 ) (235,381 ) Total deferred tax assets $ — $ — Due to cumulative net losses since the change in our corporate status to a C-Corporation, the Company determined that it is not more likely than not that its deferred tax asset would be realizable. Accordingly, the Company recorded a valuation allowance for the full amount of its deferred tax asset, resulting in a zero carrying value of the Company’s deferred tax asset and no benefit from or provision for income taxes for the year ended December 31, 2016 and 2015. Federal and state operating loss carry forwards of $1,141,773 and $549,070 as of December 31, 2016 and 2015, respectively, begin expiring on 2034. The years 2010 to 2015 remain subject to examination by the Company’s major tax jurisdictions. Utilization of the net operating loss carry forwards and credits may be subject to a substantial annual limitation due to ownership change limitations provided by Section 382 of the Internal Revenue Code of 1986, as amended, and similar state provisions. |
12. Stockholders Equity
12. Stockholders Equity | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
12. Stockholders Equity | Note 12. Stockholders’ Equity Preferred Stock The American Cannabis Company, Inc. is authorized to issue 5,000,000 shares of preferred stock at $0.01 par value. No shares of preferred stock were issued and outstanding during the year ended December 31, 2016 and 2015. Common Stock The American Cannabis Company, Inc. is authorized to issue 100,000,000 shares of common stock at $0.0001 par value. As of December 31, 2016, and 2015, the Company had 49,847,593 and 44,808,731 shares issued and outstanding, respectively. In connection with the September 29, 2014 Reverse Merger, American Cannabis Consulting was deemed to have been the accounting acquirer in accordance with U.S. GAAP. Consequently, the Company’s consolidated financial statements reflect the results of American Cannabis Consulting since Inception (March 5, 2013) and of American Cannabis Company, Inc. (formerly BIMI) from September 29, 2014 to December 31, 2014. As a reverse triangular merger, the Reverse Merger resulted in a recapitalization of American Cannabis Company, Inc. (formerly BIMI). This recapitalization included retrospective restatement of all stock issuances by American Cannabis Consulting from Inception (March 5, 2013), whereby the issued and outstanding shares of American Cannabis Consulting common stock were retrospectively restated for a 1:3,171.0628 forward share split to recognize the exchange ratio associated with the Reverse Merger, and for the change in the par value of shares issued in connection with the Reverse Merger. On the date of the Reverse Merger, an additional 8,714,372 shares were issued, and accordingly, $87 of common stock was recorded (8,714,372 shares issued multiplied by the $0.00001 par value) and additional paid-in capital of $5,258 was recorded, reflecting the net assets assumed from Brazil Interactive Media, Inc. in connection with the Reverse Merger. As a result of the transactions described above, as of December 31, 2014, the balances of common stock and additional paid-in capital were $446 and $3,699,526, respectively. During the year ended December 31, 2015, the Company rescinded and canceled 250,000 shares of restricted common stock. The Company issued 250,000 shares of restricted common stock to various vendors for $195,087 during the year ended December 31, 2015. The Company issued 164,981 shares of restricted common stock valued at $124,099 to various employees for services during the year ended December 31, 2015. The Company received $250,000 from an investor for the purchase of 833,333 shares of unrestricted common stock during the year ended December 31, 2015. These shares were issued to the investor during year ended December 31, 2016. The Company issued 195,260 shares of restricted common stock to various vendors for $13,968 during the year ended December 31, 2016. The Company issued 152,500 shares of restricted common stock valued at $16,240 to various employees for services during the year ended December 31, 2016. As discussed in Note 7, the company issued 2,321,063 shares of restricted common stock to convert outstanding convertible debt during the year ended December 31, 2016. Pursuant to the amended and restated Investment Agreement, the Company sold 1,536,706 registered common shares to Tangiers for $858,247 net of applicable financing costs in three separate transactions: On December 6, 2016, the Company sold 284,933 shares to Tangiers in exchange for $ $159,688; and on December 14, 2016, the Company sold 628,536 shares to Tangiers in exchange for $ $370,082; and, on December 27, 2016, the Company sold 623,237 shares to Tangiers in exchange for $370,701. |
13. Subsequent Events
13. Subsequent Events | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
13. Subsequent Events | Note 13. Subsequent Events Effective January 1, 2017, Mr. Corey Hollister resigned as our Principal Executive Officer. Effective January 1, 2017, Mr. Terry Buffalo was appointed as our Principal Executive Officer. On January 4, 2017, the Company issued a total of 430,227 shares of restricted common stock to 9 employees and consultants pursuant to consulting contracts and the Company’s 2015 Employee Incentive Plan. On January 10, 2017, the Company sold, pursuant to the amended and restated Investment Agreement, 588,841 shares of registered common stock to Tangiers in exchange for $414,544. On February 22, 2017, the Company sold, pursuant to the amended and restated Investment Agreement, the Company sold 320,549 registered common shares to Tangiers in exchange for $250,000. |
2. Summary of Significant Acc20
2. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Accounting | Basis of Accounting The financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The Company has elected a fiscal year ending on December 31. |
Use of Estimates in Financial Reporting | Use of Estimates in Financial Reporting The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the periods presented. Actual results could differ from these estimates. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the financial statements in the period they are deemed to be necessary. Significant estimates made in the accompanying financial statements include but are not limited to following: those related to revenue recognition, allowance for doubtful accounts and unbilled services, lives and recoverability of equipment and other long-lived assets, contingencies and litigation. The Company is subject to uncertainties, such as the impact of future events, economic, environmental and political factors, and changes in the business climate; therefore, actual results may differ from those estimates. When no estimate in a given range is deemed to be better than any other when estimating contingent liabilities, the low end of the range is accrued. Accordingly, the accounting estimates used in the preparation of the Company's financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the Company's operating environment changes. Changes in estimates are made when circumstances warrant. Such changes and refinements in estimation methodologies are reflected in reported results of operations; if material, the effects of changes in estimates are disclosed in the notes to the financial statements. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents are held in operating accounts at a major financial institution. Cash balances may exceed federally insured limits. Management believes the financial risk associated with these balances is minimal and has not experienced any losses to date. As of December 31, 2016, and 2015, the Company had cash balances in excess of FDIC insured limits of $453,691 and $130,667, respectively. |
Inventory | Inventory Inventory is comprised of products and equipment owned by the Company to be sold to end-customers. Inventory is valued at cost, using the first-in first-out and specific identification methods, unless and until the market value for the inventory is lower than cost, in which case an allowance is established to reduce the valuation to market value. As of December 31, 2016, market values of all of the Company’s inventory were greater than cost, and accordingly, no such valuation allowances was recognized. |
Deposits | Deposits Deposits is comprised of advance payments made to third parties, primarily for inventory for which the Company has not yet taken title. When the Company takes title to inventory for which deposits are made, the related amount is classified as inventory, then recognized as a cost of revenues upon sale (see “Costs of Revenues” below). |
Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets is primarily comprised of advance payments made to third parties for independent contractors’ services or other general expenses. Prepaid services and general expenses are amortized over the applicable periods which approximate the life of the contract or service period. |
Accounts Receivable | Accounts Receivable Accounts receivable are recorded at the net value of face amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and, based on a method of specific identification of any accounts receivable for which it deems the net realizable value to be less than the gross amount of accounts receivable recorded, establishes an allowance for doubtful accounts for those balances. In determining its need for an allowance for doubtful accounts, the Company considers historical experience, analysis of past due amounts, client creditworthiness and any other relevant available information. However, the Company’s actual experience may vary from its estimates. If the financial condition of its clients were to deteriorate, resulting in their inability or unwillingness to pay the Company’s fees, it may need to record additional allowances or write-offs in future periods. This risk is mitigated to the extent that the Company receives retainers from its clients prior to performing significant services. The allowance for doubtful accounts, if any, is recorded as a reduction in revenue to the extent the provision relates to fee adjustments and other discretionary pricing adjustments. To the extent the provision relates to a client's inability to make required payments on accounts receivables, the provision is recorded in operating expenses. As of December 31, 2016, and December 31, 2015 our allowance for doubtful accounts was $31,421 and $8,419, respectively. For December 31, 2016 and December 31, 2015, we recorded bad debt expense of $118,641 and $30,753, respectively, which is reflected as a component of general and administrative expenses on the consolidated statement of operations. |
Significant Clients and Customers | Significant Customers For the year ended December 31, 2016 and December 31, 2015, in the aggregate, three customers, respectively, accounted for 46% and 74% of the Company’s total revenues for each respective period. On a geographical basis, for the year ended December 31, 2016, approximately 92% and 5% of our total revenues were generated from the United States and Canada, respectively, and for the year ended December 31, 2015, approximately 91% and 9% of our total revenues were generated from the United States and Canada. |
Property and Equipment, net | Property and Equipment, net Property and Equipment is stated at net book value, cost less depreciation. Maintenance and repairs are expensed as incurred. Depreciation of owned equipment is provided using the straight-line method over the estimated useful lives of the assets, ranging from two to seven years. Depreciation of capitalized construction in progress costs, a component of property and equipment, net, begins once the underlying asset is placed into service. Property and equipment is reviewed for impairment as discussed below under “Accounting for the Impairment of Long-Lived Assets.” The Company had not capitalized any interest as of December 31, 2016 and 2015. |
Accounting for the Impairment of Long-Lived Assets | Accounting for the Impairment of Long-Lived Assets The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Upon such an occurrence, recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to forecasted undiscounted net cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. For long-lived assets held for sale, assets are written down to fair value, less cost to sell. Fair value is determined based on discounted cash flows, appraised values or management's estimates, depending upon the nature of the assets. The Company did not record any impairment charges related to long-lived assets during the years ended December 31, 2016 and 2015. |
Beneficial Conversion Feature | Beneficial Conversion Feature If the conversion features of conventional convertible debt provide for a rate of conversion that is below market value at issuance, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ACF”) Topic 470-20 Debt with Conversion and Other Options |
Embedded Conversion Features | Embedded Conversion Features The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial conversion features. |
Derivative Financial Instruments | Derivative Financial Instruments Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments. Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model. |
Revenue Recognition | Revenue Recognition Revenue is recognized in accordance with FASB ASC Topic 605, Revenue Recognition The Company primarily generates revenues from professional services consulting agreements. These arrangements are generally entered into on a time basis, for a fixed-fee or on a contingent fee basis. Generally, a prepayment or retainer is required prior to performing services. Revenues from time-based engagements are recognized as the hours are incurred by the Company. Revenues from fixed-fee engagements are recognized under the completed or proportional performance methods. Management reviews arrangement to determine whether or not the fixed-fee is for a final deliverable or act which is significant to the arrangement as a whole. If it is, revenue is recognized under the completed performance method, in which revenue is recognized once the final act or deliverable is performed or delivered. Revenue recognized under the proportional performance method is recognized as services are performed. Under this method, the Company estimates the amount of completed work in comparison to the total services to be provided under the arrangement or deliverable in order to determine the amount of revenue to be recognized. Revenue recognition is affected by a number of factors that change the estimated amount of work required to complete the deliverable, such as changes in scope, timing, awaiting notification of license award from local government, and the level of client involvement. Losses, if any, on fixed-fee engagements are recognized in the period in which the loss first becomes probable and reasonably estimable. During the year ended December 31, 2016 and December 31, 2015, no such losses have occurred. The Company believes if an engagement terminates prior to completion it can recover the costs incurred related to the services provided. The Company occasionally enters into arrangements for which revenues are contingent upon achieving a pre-determined deliverable or future outcome. Any contingent revenue for these arrangements is not recognized until the contingency is resolved and collectability is reasonably assured. The Company’s arrangements with clients may include terms to deliver multiple services or deliverables. These contracts specifically identify the services to be provided with the corresponding deliverable. The value for each deliverable is determined based on the prices charged when each element is sold separately or by other vendor-specific objective evidence (“VSOE”), or estimates of stand-alone selling prices. Revenues are recognized in accordance with the Company’s accounting policies for the elements as described above. The elements qualify for separation when the deliverables have value on a stand-alone basis and the value of the separate elements can be established by VSOE or an estimated selling price. While assigning values and identifying separate elements requires judgment, selling prices of the separate elements are generally readily identifiable as the Company also sells those elements individually outside of a multiple services engagement. Contracts with multiple elements typically incorporate a fixed-fee or hourly pricing structure. Arrangements are typically terminable by either party upon sufficient notice and do not include provisions for refunds relating to services provided. Differences between the timing of billings and the recognition of revenue are recognized as either unbilled revenue (a component of accounts receivable) or deferred revenue on the consolidated balance sheet. Revenues recognized for services performed but not yet billed to clients are recorded as unbilled revenue. Reimbursable expenses, including those relating to travel, other out-of-pocket expenses and any third-party costs, are included as a component of revenues. Typically, an equivalent amount of reimbursable expenses are included in total direct client service costs. Reimbursable expenses related to time and materials and fixed-fee engagements are recognized as revenue in the period in which the expense is incurred and collectability is reasonably assured. Taxes collected from customers and remitted to governmental authorities are presented in the statement of operations on a net basis. Revenue from product and equipment sales, including delivery fees, is recognized when an order has been obtained, the price is fixed and determinable, the product is shipped, title has transferred and collectability is reasonably assured. Generally, our suppliers’ drop-ship orders to our clients with origin terms. For any shipments with destination terms, the Company defers revenue until delivery to the customer. During the year ended December 31, 2016 and December 31, 2015, sales returns were not significant and as such, no sales return allowance had been recorded as of December 31, 2016 nor at December 31, 2015. During the year ended December 31, 2016, the Company generated revenue from the sale of products to an entity controlled by a shareholder (Director). |
Costs of Revenues | Costs of Revenues The Company’s policy is to recognize costs of revenue in the same manner in conjunction with revenue recognition. Cost of revenue includes the costs directly attributable to revenue recognition and includes compensation and fees for services, travel and other expenses for services and costs of products and equipment. Selling, general and administrative expenses are charged to expense as incurred. |
Advertising and Promotion Costs | Advertising and Promotion Costs Advertising and promotion costs are included as a component of selling and marketing expense and are expensed as incurred. During the year ended December 31, 2016 and 2015, these costs were $88,047 and $79,989, respectively. |
Shipping and Handling Costs | Shipping and Handling Costs For product and equipment sales, shipping and handling costs are included as a component of cost of revenues. |
Stock-Based Compensation | Stock-Based Compensation Restricted shares are awarded to employees and entitle the grantee to receive shares of common stock at the end of the established vesting period. The fair value of the grant is based on the stock price on the date of grant. We recognize related compensation costs on a straight-line basis over the requisite vesting period of the award, which to date has been one year from the grant date. During the years ended December 31, 2016 and 2015, stock-based compensation expense for restricted shares for Company employees and service providers was $30,208 and $319,187, respectively. Compensation expense for warrants and options is based on the fair value of the instruments on the grant date, which is determined using the Black-Scholes valuation model, and are expensed over the expected term of the awards. During the year ended December 31, 2016 and 2015, compensation expense for warrants and options was $0, respectively. |
Income Taxes | Income Taxes We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns in accordance with applicable accounting guidance for accounting for income taxes, using currently enacted tax rates in effect for the year in which the differences are expected to reverse. We record a valuation allowance when necessary to reduce deferred tax assets to the amount expected to be realized. For the years ended December 31, 2016 and 2015, we recorded a valuation allowance against our deferred tax asset that reduced our income tax benefit for the period to zero. As of December 31, 2016, and, we had no liabilities related to federal or state income taxes and the carrying value of our deferred tax asset was zero. |
Net Income (Loss) Per Common Share | Net Income (Loss) Per Common Share The Company reports net income (loss) per common share in accordance with FASB ASC 260, “Earnings per Share”. This statement requires dual presentation of basic and diluted earnings with a reconciliation of the numerator and denominator of the earnings per share computations. Basic net income (loss) per share is computed by dividing net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period and excludes the effects of any potentially dilutive securities. Diluted net income (loss) per share gives effect to any dilutive potential common stock outstanding during the period. The computation does not assume conversion, exercise or contingent exercise of securities since that would have an anti-dilutive effect on earnings. |
Related Party Transactions | Related Party Transactions The Company follows FASB ASC subtopic 850-10, Related Party Disclosures Material related party transactions are required to be disclosed in the consolidated financial statements, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which statements of operation are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which statements of operations are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. During the year ended December 31, 2016, the Company generated revenue from the sale of products to an entity controlled by a shareholder (Director). See Note 10. Related Party Transactions for associated disclosures. |
Reclassifications | Reclassifications Certain balance sheet reclassifications have been made to prior period balances to reflect the current period’s presentation format; such reclassifications had no impact on the Company’s consolidated statements of operations or consolidated statements of cash flows and had no material impact on the Company’s consolidated balance sheets. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2014, the FASB issued ASU 2014-15 “Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). By incorporating and expanding upon certain principles that are currently in U.S. auditing standards, ASU 2014-15 requires management to assess whether there is substantial doubt about the entity’s ability to continue as a going concern. Specifically, ASU 2014-15 (1) provides a definition of the term substantial doubt, (2) requires an evaluation every reporting period including interim periods, (3) provides principles for considering the mitigating effect of management’s plans, (4) requires certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) requires an express statement and other disclosures when substantial doubt is not alleviated, and (6) requires an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company has not elected to early adopt the provisions of ASU 2014-15, and accordingly, the requirements of ASU 2014-15 will apply beginning with the year ended December 31, 2017. The Company is currently evaluating the effects, if any, that the application of ASU 2014-15 will have on disclosures associated with its consolidated financial statements. In May 2014, the FASB issued ASU 2014-9 “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-9”), which provides a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. This guidance is effective for annual reporting and interim periods beginning after December 15, 2016 and allows for either full retrospective or modified retrospective application, with early adoption not permitted. Accordingly, the standard becomes effective for the Company on January 1, 2017. The Company is currently evaluating the adoption method it will apply and the impact that this guidance will have on its consolidated financial statements and related disclosures. In February 2016, the FASB issued its new lease accounting guidance in Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). Under the new guidance, the following will be required to be recognized for all leases (with the exception of short-term leases) as of the commencement date: • A lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and • A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. • Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. • The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing. Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (i.e., January 1, 2019, for a calendar year entity). The Company is currently evaluating the effects, if any, that the application of ASU 2016-02 will have on disclosures associated with its consolidated financial statements. In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation —Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments are intended to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. For public companies, the amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For private companies, the amendments are effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for any organization in any interim or annual period. The Company is currently evaluating the effects, if any, that the application of ASU 2016-09 will have on disclosures associated with its consolidated financial statements. In April 2016, the FASB issued Accounting Standards Update No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments clarify the following two aspects of Topic 606: (a) identifying performance obligations; and (b) the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606. The Company is currently evaluating the effects, if any, that the application of ASU 2016-10 will have on disclosures associated with its consolidated financial statements. In January 2017, FASB issued Accounting Standards Update (ASU) No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, clarifying the definition of a business. The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business. For public companies, the amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The Company is currently evaluating the effects, if any, that the application of ASU 2017-01 will have on disclosures associated with its consolidated financial statements. |
3. Accounts Receivable, net (Ta
3. Accounts Receivable, net (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Receivables [Abstract] | |
Accounts Receivable | December 31, 2016 December 31, 2015 Gross accounts receivable $ 195,872 $ 56,704 Less: allowance for doubtful accounts (31,421 ) (8,419 ) Accounts receivable, net $ 164,451 $ 48,285 |
4. Inventory (Tables)
4. Inventory (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Inventory Tables | |
Inventory | December 31, 2016 December 31, 2015 Raw materials $ 16,614 $ — Demo — 57,170 Finished goods 25,886 10,265 Total $ 42,500 $ 67,435 |
6. Property and Equipment, net
6. Property and Equipment, net (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | December 31, 2016 December 31, 2015 Office equipment $ 7,472 $ 7,472 Furniture and fixtures 8,777 8,777 Machinery and equipment 4,938 2,336 Property and equipment, gross 21,187 18,585 Less: accumulated depreciation (10,148 ) (5,137 ) Property and equipment, net $ 11,639 $ 13,448 |
7. Accrued and Other Current 24
7. Accrued and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
Accrued and Other Current Liabilities | December 31, 2016 December 31, 2015 Accrued legal fees $ 8,835 $ — Accrued payroll liabilities 12,903 18,185 Accrual for inventory products sold and shipped (in transit) — 64,050 Other 14,986 11,233 Accrued and other current liabilities $ 36,724 $ 93,468 |
9. Commitments and Contingenc25
9. Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments And Contingencies Tables | |
Commitments and Contingencies | Year Amount 2017 $ 54,000 2018 54,000 2019 56,320 2020 33,610 Total $ 143,930 |
10. Stock-based Compensation (T
10. Stock-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Restricted Share Award Activity | Restricted Shares Common Stock Weighted Average Grant Date Fair Value Outstanding unvested at December 31, 2014 150,000 $ 0.94 Granted 164,981 0.21 Vested restricted shares (100,000 ) 0.94 Forfeited (50,000 ) 0.94 Outstanding unvested at December 31, 2015 164,981 0.21 Granted 267,172 0.11 Vested restricted shares (323,553 ) 0.15 Forfeited — — Outstanding unvested at December 31, 2016 — $ — |
Warrant Award Activity | Restricted Shares Common Stock Weighted Average Grant Date Fair Value Outstanding unvested at December 31, 2014 150,000 $ 0.94 Granted 164,981 0.21 Vested restricted shares (100,000 ) 0.94 Forfeited (50,000 ) 0.94 Outstanding unvested at December 31, 2015 164,981 0.21 Granted 267,172 0.11 Vested restricted shares (323,553 ) 0.15 Forfeited — — Outstanding unvested at December 31, 2016 — $ — |
11. Income Taxes (Tables)
11. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | December 31, 2016 December 31, 2015 Tax benefit at the US statutory rate of 34% $ 205,253 $ 175,322 State income tax benefit 27,951 23,875 Non-deductible expenses including non-deductible pre-merger losses — (773 ) Change in valuation allowance (233,204 ) (198,424 ) Total income tax benefit $ — $ — |
Deferred tax assets | December 31, 2016 December 31, 2015 Net operating loss carryforwards $ 441,067 $ 212,106 Beneficial conversion feature accumulated amortization 13,791 13,791 Allowance for Doubtful Accounts 13,727 — Valuation allowance (468,585 ) (235,381 ) Total deferred tax assets $ — $ — |
3. Accounts Receivable, net - A
3. Accounts Receivable, net - Accounts Receivable (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Receivables [Abstract] | ||
Gross accounts receivable | $ 195,872 | $ 56,704 |
Less: allowance for doubtful accounts | (31,421) | (8,419) |
Accounts receivable, net | $ 164,451 | $ 48,285 |
3. Accounts Receivable, net (De
3. Accounts Receivable, net (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Receivables [Abstract] | ||
Bad Debt Expense | $ 118,641 | $ 30,753 |
4. Inventory (Details)
4. Inventory (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 16,614 | |
Demo | 57,170 | |
Finished Goods | 25,886 | 10,265 |
Total | $ 42,500 | $ 67,435 |
5. Property and Equipment, net
5. Property and Equipment, net - Property and Equipment, Net (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Property and equipment, gross | $ 21,187 | $ 18,585 |
Less: accumulated depreciation | (10,148) | (5,137) |
Property and equipment, net | 11,639 | 13,448 |
Office Equipment | ||
Property and equipment, gross | 7,472 | 7,472 |
Furniture and Fixtures | ||
Property and equipment, gross | 8,777 | 8,777 |
Machinery and Equipment | ||
Property and equipment, gross | $ 4,938 | $ 2,336 |
5. Property and Equipment, ne32
5. Property and Equipment, net (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation Expense | $ 5,173 | $ 3,575 |
7. Accrued and Other Current 33
7. Accrued and Other Current Liabilities - Accrued and Other Current Liabilities (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Payables and Accruals [Abstract] | ||
Accrued legal fees | $ 8,835 | |
Accrued payroll liabilities | 12,903 | 18,185 |
Accrual for inventory products sold and shipped (in transit) | 64,050 | |
Other | 14,986 | 11,233 |
Accrued and other current liabilities | $ 36,724 | $ 93,468 |
9. Commitments and Contingenc34
9. Commitments and Contingencies (Details) | Dec. 31, 2016USD ($) |
Commitments And Contingencies Details | |
2,017 | $ 54,000 |
2,018 | 54,000 |
2,019 | 56,320 |
2,020 | 33,610 |
Total | $ 143,930 |
9. Commitments and Contingenc35
9. Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Commitments And Contingencies Details Narrative | ||
Rent Expense | $ 54,084 | $ 53,800 |
10. Stock-based Compensation -
10. Stock-based Compensation - Restricted Share Award Activity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Equity [Abstract] | ||
Outstanding Shares, Beginning | 164,981 | 150,000 |
Outstanding Weighted Average Grant Date Fair Value, Beginning | $ 0.94 | $ 0.94 |
Granted Shares | 267,172 | 164,981 |
Granted, Weighted Average Grant Date Fair Value | $ 0.11 | $ 0.21 |
Vested restricted shares, shares | (323,553) | (100,000) |
Vested restricted shares, Weighted Average Grant Date Fair Value | $ 0.15 | $ 0.94 |
Forfeited, Shares | (50,000) | |
Forfeited, Weighted Average Grant Date Fair Value | $ 0.94 | |
Outstanding Shares, End | 164,981 | |
Outstanding Weighted Average Grant Date Fair Value, End | $ 0.94 |
10. Stock-based Compensation 37
10. Stock-based Compensation - Warrant Award Activity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Equity [Abstract] | ||
Warrants Outstanding, Shares, Beginning | 250,000 | 250,000 |
Warrants Outstanding, Fair Value, Beginning | $ 0.59 | $ 0.59 |
Warrants Outstanding, Shares, Ending | 250,000 | 250,000 |
Warrants Outstanding, Fair Value, Ending | $ 0.59 | $ 0.59 |
Vested, Shares | 250,000 | 250,000 |
Vested, Fair value | $ 0.59 | $ 0.59 |
11. Income Taxes - Income Taxes
11. Income Taxes - Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Tax benefit at the US statutory rate | $ 205,253 | $ 175,322 |
State income tax benefit | 27,951 | 23,875 |
Non-deductible expenses including non-deductible pre-merger losses | (773) | |
Change in valuation allowance | (233,204) | (198,424) |
Total income tax benefit | $ 0 | $ 0 |
11. Income Taxes - Deferred Tax
11. Income Taxes - Deferred Tax Assets (liabilities) (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Income Taxes - Deferred Tax Assets Liabilities Details | ||
Net operating loss carryforwards | $ 441,067 | $ 212,106 |
Beneficial conversion feature accumulated amortization | 13,791 | 13,791 |
Allowance for Doubtful Accounts | 13,727 | |
Valuation allowance | (468,585) | (235,381) |
Total deferred tax assets | $ 0 | $ 0 |
11. Income Taxes (Details Narra
11. Income Taxes (Details Narrative) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Income Tax Disclosure [Abstract] | ||
Net Operating Loss Carryforwards | $ 1,141,773 | $ 549,070 |