Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | May. 20, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Vape Holdings, Inc. | |
Entity Central Index Key | 1,455,819 | |
Amendment Flag | true | |
Amendment Description | This Amendment No. 1 to Form 10-K (“Amendment”) amends the Annual Report on Form 10-K for the fiscal year ended September 30, 2015 (the “2015 Form 10-K”) originally filed on January 13, 2016 (the “Original Filing”) by Vape Holdings, Inc. (“Vape,” the “Company,” “we,” or “us”). We are filing this Amendment to correctly account for the following non-cash transactions: In August 2015 the Company entered into convertible notes without conversion floors resulting in an unlimited potential of shares to be issued. The notes were not convertible until six months from the issuance date, and accordingly, we adjusted the consolidated financial statements to defer recognition of the embedded conversion feature until the instruments are convertible. On August 13, 2015 and August 26, 2015, the fixed conversion floors of the Redwood and Typenex notes, respectively, were removed creating a potentially unlimited number of shares to be issued on the date of the amendment. Accordingly, we amended this Form 10-K/A to account for the embedded conversion features as derivative financial instruments at fair value. This increased the loss on debt extinguishments and interest expense previously recorded, as well as the derivative liabilities at fair value. Except as described above, no other changes have been made to the Original Filing. The Original Filing continues to speak as of the date of the Original Filing, and we have not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of the Original Filing. | |
Current Fiscal Year End Date | --09-30 | |
Document Type | 10-K | |
Document Period End Date | Sep. 30, 2015 | |
Document Fiscal Period Focus | FY | |
Document Fiscal Year Focus | 2,015 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Public Float | $ 1,467,493 | |
Entity Common Stock, Shares Outstanding | 366,873,168 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Current assets: | ||
Cash | $ 273,904 | $ 48,370 |
Accounts receivable | 72,401 | 16,771 |
Inventory | 194,937 | 227,530 |
Prepaid inventory | 64,079 | 246,491 |
Other current assets | 40,679 | $ 44,100 |
Deferred financing costs | 107,908 | |
Total current assets | 753,908 | $ 583,262 |
Fixed assets, net of accumulated depreciation | 118,327 | 106,377 |
Trademarks | $ 123,150 | 119,575 |
Pending patents | $ 14,890 | |
Deferred financing costs, long-term | $ 12,067 | |
TOTAL ASSETS | 1,007,452 | $ 824,104 |
Current liabilities: | ||
Accounts payable | 115,938 | 216,388 |
Accrued expenses | 207,609 | $ 169,513 |
Customer deposits | 1,275 | |
Convertible notes payable, net of unamortized discount of $153,096 and $32,333, respectively | $ 522,396 | $ 187,667 |
Related party convertible notes payable, net of unamortized discount of $4,168 at September 30, 2014 | $ 45,832 | |
Derivative liabilities | $ 1,672,726 | |
Warrant liability | 31,401 | |
Total current liabilities | 2,551,345 | $ 619,400 |
Long -term liabilities: | ||
Convertible notes payable, long-term, net of unamortized discount of $665,607 and $19,800, respectively | $ 300,156 | 178,200 |
Related party convertible notes payable, long-term, net of unamortized discount of $125,480 at September 30, 2014 | 199,115 | |
Related party notes payable, long-term | $ 265,000 | $ 341,290 |
Other liabilities, long-term | $ 12,235 | |
Warrant liability | $ 2,464,232 | |
Total liabilities | $ 3,128,736 | $ 3,802,237 |
Commitments and contingencies | ||
Stockholders' deficit: | ||
Preferred stock, $0.00001 par value - 100,000,000 authorized; 500,000 outstanding at September 30, 2015 and September 30, 2014 | ||
Common stock, $0.00001 par value - authorized 1,000,000,000 shares; 19,896,521 issued at September 30, 2015, 19,205,896 outstanding at September 30, 2015, and 10,032,436 issued and outstanding at September 30, 2014 | $ 192 | $ 100 |
Additional paid-in capital | 26,412,800 | $ 22,402,662 |
Treasury stock, 690,625 shares at September 30, 2015 | (367,531) | |
Accumulated deficit | (28,166,745) | $ (25,380,895) |
Total stockholders' deficit | (2,121,284) | (2,978,133) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ 1,007,452 | $ 824,104 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Balance Sheets [Abstract] | ||
Unamortized discount convertible notes payable, current | $ 153,096 | $ 32,333 |
Unamortized discount related party convertible notes payable, current | 4,168 | |
Unamortized discount convertible notes payable, non current | $ 665,607 | 19,800 |
Unamortized discount related party convertible notes payable, non current | $ 125,480 | |
Preferred stock, par value | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares outstanding | 500,000 | 500,000 |
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 19,896,521 | 10,032,436 |
Common stock, shares outstanding | 19,205,896 | 10,032,436 |
Treasury stock, shares | 690,625 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | ||
Income Statement [Abstract] | |||
Revenue | $ 1,277,657 | $ 841,724 | |
Cost of revenue [A] | [1] | 1,013,641 | 458,387 |
Gross profit | 264,016 | 383,337 | |
Operating expenses: | |||
Sales and marketing [B] | [2] | 715,292 | 219,891 |
Research and development | 212,424 | 45,757 | |
General and administrative [C] | [3] | 2,126,538 | 1,315,710 |
Total operating expenses | 30,542,543 | 1,581,358 | |
Operating loss | (2,790,238) | (1,198,021) | |
Other income (expense): | |||
Interest expense | (1,745,408) | (241,065) | |
Interest expense - related party | (148,562) | (219,714) | |
Change in derivative liabilities | 2,315,916 | $ (23,404,058) | |
Gain on settlement | 625,461 | ||
Loss on debt extinguishments, net | (971,560) | ||
Other | (69,250) | ||
Total other income (expense), net | 6,597 | $ (23,864,837) | |
Loss before provision for income taxes | (2,783,641) | (25,062,858) | |
Provision for income taxes | 2,209 | 800 | |
Net loss | $ (2,785,850) | $ (25,063,658) | |
Net loss available to common shareholders: | |||
Loss per common share - basic | $ (0.24) | $ (3.20) | |
Loss per common share - diluted | $ (0.24) | $ (3.20) | |
Weighted average shares - basic | 11,563,247 | 7,822,212 | |
Weighted average shares - diluted | 11,563,247 | 7,822,212 | |
[1] | Stock-based compensation was $50,558 and $0 for the years ended September 30, 2015 and 2014, respectively. | ||
[2] | Stock-based compensation was $156,086 and $0 for the years ended September 30, 2015 and 2014, respectively. | ||
[3] | Stock-based compensation was $799,699 and $450,501 for the years ended September 30, 2015 and 2014, respectively. |
Consolidated Statements of Ope5
Consolidated Statements of Operations (Parenthetical) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Stock-based compensation | $ 969,577 | $ 450,501 |
Cost of Revenue | ||
Stock-based compensation | 50,558 | 0 |
Sales and Marketing | ||
Stock-based compensation | 156,086 | 0 |
General and Administrative | ||
Stock-based compensation | $ 799,699 | $ 450,501 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficit - USD ($) | Total | Series A Preferred stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Treasury Stock |
Balance at Sep. 30, 2013 | $ (317,191) | $ 46 | $ (317,237) | |||
Balance, Shares at Sep. 30, 2013 | 4,684,537 | |||||
Shares retained by PeopleString shareholders upon merger | 16 | $ 16 | ||||
Shares retained by PeopleString shareholders upon merger, Shares | 1,565,463 | |||||
Conversion of related party notes payables and accrued interest | 341,545 | $ 7 | $ 341,538 | |||
Conversion of related party notes payables and accrued interest, Shares | 571,630 | |||||
Conversion of notes payable and accrued interest | 55,586 | 55,586 | ||||
Conversion of notes payable and accrued interest, Shares | 28,836 | |||||
Fair value of officer services | 15,000 | 15,000 | ||||
Common stock issued for services | 133,200 | 133,200 | ||||
Common stock issued for services, Shares | 50,000 | |||||
Discount on convertible note payable at 10% | 4,424 | 4,424 | ||||
Discount on convertible notes payable at 8% | 158,402 | 158,402 | ||||
Discount on convertible note payable at 6% | 108,000 | 108,000 | ||||
Discount on related party convertible note payable at 8% | 193,217 | 193,217 | ||||
Discount on related party convertible note payable at 6% | 3,000 | 3,000 | ||||
Common stock issued in connection with warrant settlement | 98,822 | 98,822 | ||||
Common stock issued in connection with warrant settlement, Shares | 3,542 | |||||
Cashless exercise of warrants | 20,841,003 | $ 31 | 20,840,972 | |||
Cashless exercise of warrants, Shares | 3,128,428 | |||||
Stock-based compensation - employee options | 326,812 | 326,812 | ||||
Stock-based compensation - non-employee options | $ 123,689 | $ 123,689 | ||||
Issuance of preferred stock for HIVE asset acquisition | ||||||
Issuance of preferred stock for HIVE asset acquisition, shares | 500,000 | |||||
Net income | $ (25,063,658) | $ (25,063,658) | ||||
Balance at Sep. 30, 2014 | (2,978,133) | $ 100 | $ 22,402,662 | $ (25,380,895) | ||
Balance, Shares at Sep. 30, 2014 | 500,000 | 10,032,436 | ||||
Conversion of related party notes payables and accrued interest | 341,747 | $ 6 | 341,741 | |||
Conversion of related party notes payables and accrued interest, Shares | 625,478 | |||||
Conversion of notes payable and accrued interest | 1,168,279 | $ 80 | 1,168,199 | |||
Conversion of notes payable and accrued interest, Shares | 8,230,155 | |||||
Conversion of unpaid wages | 96,487 | $ 2 | 96,485 | |||
Conversion of unpaid wages, Shares | 158,175 | |||||
Common stock issued for services | 36,769 | $ 1 | 36,768 | |||
Common stock issued for services, Shares | 60,277 | |||||
Common stock issued for bonuses | 288,202 | $ 6 | 288,196 | |||
Common stock issued for bonuses, Shares | 440,000 | |||||
Stock issued for settlement of accounts payable | 100,000 | $ 1 | 99,999 | |||
Stock issued for settlement of accounts payable, Shares | 100,000 | |||||
Discount on convertible note payable at 10% | 252,079 | 252,079 | ||||
Discount on related party convertible note payable at 10% | 525,000 | 525,000 | ||||
Discount on related party convertible note payable at 6% | 5,410 | 5,410 | ||||
Extinguishment of related party accrued interest | 1,625 | 1,625 | ||||
Modification of convertible notes payable | 444,008 | 444,008 | ||||
Stock-based compensation - employee options | 606,362 | 606,362 | ||||
Stock-based compensation - non-employee options | 75,012 | 75,012 | ||||
Issuance of common stock for BetterChem Acquisition | 67,500 | $ 3 | 67,497 | |||
Issuance of common stock for BetterChem Acquisition,Shares | 250,000 | |||||
Unwinding of BetterChem Acquisition | 1,750 | $ (3) | 1,753 | |||
Unwinding of BetterChem Acquisition, Shares | (250,000) | |||||
Surrender of common stock | (367,531) | $ (4) | $ 4 | $ (367,531) | ||
Surrender of common stock, Shares | (440,625) | |||||
Net income | (2,785,850) | $ (2,785,850) | ||||
Balance at Sep. 30, 2015 | $ (2,121,284) | $ 192 | $ 26,412,800 | $ (28,166,745) | $ (367,531) | |
Balance, Shares at Sep. 30, 2015 | 500,000 | 19,205,896 |
Consolidated Statements of Sto7
Consolidated Statements of Stockholders' Deficit (Parenthetical) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Statement of Stockholders' Equity [Abstract] | ||
Discount on convertible note payable percentage | 10.00% | 10.00% |
Discount on convertible note payable percentage one | 8.00% | |
Discount on convertible note payable percentage two | 6.00% | |
Discount on related party convertible note payable | 10.00% | 8.00% |
Discount on related arty convertible note payable one | 6.00% | 6.00% |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows from operating activities: | ||
Net loss | $ (2,785,850) | $ (25,063,658) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 71,305 | 16,178 |
Accretion of debt discounts and deferred financing costs | 1,735,119 | 366,431 |
Fair value in excess of stock issued for conversion of notes payable and accrued interest | 28,393 | 1,323 |
Fair value in excess of stock issued for conversion of related party notes payable and accrued interest | 9,630 | 44,239 |
Gain on change in derivative liabilities | (2,315,916) | $ 23,404,058 |
Gain on settlement | (625,461) | |
Loss on debt extinguishments, net | $ 971,560 | |
Fair value of officer services | $ 15,000 | |
Common stock issued for services | $ 36,769 | 133,200 |
Stock-based compensation | 969,577 | 450,501 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (55,630) | (16,771) |
Inventory | 215,005 | (474,021) |
Other assets | 18,311 | (2,433) |
Accounts payable | 194,549 | 156,042 |
Accrued expenses | 111,694 | (10,092) |
Net cash used in operating activities | (1,420,945) | (980,003) |
Cash flows from investing activities: | ||
Capital expenditures | (83,255) | (122,555) |
Purchase of trademarks | (3,575) | $ (134,465) |
Net proceeds from settlement | 62,930 | |
Other | 69,250 | |
Net cash provided by (used in) investing activities | 45,350 | $ (257,020) |
Cash flows from financing activities: | ||
Net proceeds from issuance of convertible note payable | $ 1,763,957 | 438,000 |
Net proceeds from issuances of related party convertible notes payable | 505,535 | |
Net proceeds from issuances of related party notes payable | $ 341,290 | |
Repayments on convertible notes payable | $ (40,000) | |
Repayments on related party convertible notes payable | (50,000) | |
Repayments on related party notes payable | (72,828) | |
Net cash provided by financing activities | 1,601,129 | $ 1,284,825 |
Net change in cash | 225,534 | 47,802 |
Cash, beginning of period | 48,370 | 568 |
Cash, end of period | 273,904 | $ 48,370 |
Supplemental disclosures of cash flow information Cash paid during the period for: | ||
Interest | 18,788 | |
Taxes | 2,209 | |
Non-cash investing and financing activities: | ||
Conversion of notes payable and accrued interest | 1,168,279 | $ 55,586 |
Conversion of related party notes payable and accrued interest | $ 341,747 | 341,545 |
Issuance of convertible note payable for services | 41,667 | |
Issuance of convertible note payable for former officer services | 50,000 | |
Issuance of common stock in connection with warrant settlement | $ 98,822 | |
Beneficial conversion feature recorded with convertible notes payable | $ 252,079 | |
Beneficial conversion feature recorded with related party convertible note payable | 530,410 | |
Other | $ 67,500 |
Description of Business, Recent
Description of Business, Recent Acquisitions and Summary of Significant Accounting Policies | 12 Months Ended |
Sep. 30, 2015 | |
Description of Business, Recent Acquisitions and Summary of Significant Accounting Policies [Abstract] | |
DESCRIPTION OF BUSINESS, RECENT ACQUISITIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1. DESCRIPTION OF BUSINESS, RECENT ACQUISITIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BUSINESS Vape Holdings, Inc. (“VAPE,” the “Company,” “we,” “us,” “our,” “our company”) is a holding company with its primary focus in the manufacturing and distribution of healthy and sustainable vaporization products. The Company designs, markets and distributes ceramic vaporization products under a unique brand. The Company has introduced a nonporous, non-corrosive, chemically inert medical-grade ceramic vaporization element as a healthy, sustainable alternative to traditional titanium and quartz vaporization materials, as well as lower-grade ceramic found in traditional electronic cigarettes and vaporizers. This material can be used for a wide range of applications, including stand-alone vaporization products and "E-cigs." Electronic cigarettes come in a variety of designs ranging from those that look vastly like traditional cigarettes, to larger vaporizer units which are capable of vaporizing liquid with varying viscosity. The process of vaporization is believed to eliminate the smoke, tar, ash, and other byproducts of traditional smoking by utilizing lower temperatures in a controlled electronic environment. HIVE CERAMICS HIVE Ceramics (“HIVE”) is the premier brand under the VAPE umbrella. HIVE manufactures and distributes a proprietarily blended ceramic vaporization element for torched, electronic and portable vaporizers with countless design and product crossover capabilities in existing and emerging markets. HIVE is dedicated to bringing the healthiest and cleanest vaporization experience possible to the market. The HIVE product line currently consists of over 15 distinct ceramic elements, including the 2 piece domeless, domeless direct inject, and HIVE’s signature domeless elements covering 10mm, 14mm and 18mm applications as well as regular elements, the HIVE Flower Cup, the HIVE Carb Cap, HIVE Stinger Dabber, the 14mm HIVE x Quave - Club Banger, and the HIVE x D-Nail 16mm and 20mm attachments. The Company has recently launched ‘HIVE Glass.’ HIVE Glass is VAPE’s newest line of products under the HIVE brand name. The HIVE GLASS line is precision made using state of the art manufacturing processes and techniques, and exclusively uses German Schott glass caliber and fittings through all production phases. The aim with HIVE Glass is to create an affordable, high quality glass product that is both aesthetically pleasing and a highly functional vaporization product. VAPE’s existing customer base and distribution network will be the catalyst for expansion of this new HIVE product line. Under HIVE Glass, the Company also buys and sells high-end collector pieces. Subsequent to year end, the Company curtailed the product line in order to focus on HIVE Ceramics. VAPE has also recently launched ‘HIVE Supply.’ HIVE Supply is a packaging and sourcing division of VAPE designed to serve as a competitively priced, comprehensive “one-stop shop” for all medical and recreational marijuana packaging needs. As with all of VAPE’s products, HIVE Supply will operate in full compliance with all federal laws and the laws of each individual state in which it does business. HIVE Supply will focus on providing much-needed support to cannabis businesses in regards to sourcing consumer products, brand management and marketing services. HIVE Supply is currently operated out of three (3) locations: HIVE Supply in Southern California, HIVE Supply Washington in Spokane and HIVE Supply Oregon in Portland. Under HIVE Supply, the Company also buys and sells high-end manufacturing machines. Subsequent to year end, the Company curtailed the product line in order to focus on HIVE Ceramics. In connection with its launch of HIVE Supply and HIVE Glass, the Company opened ‘THE HIVE’ retail store and gallery in Los Angeles, an end-user experience to showcase the complete line of HIVE Ceramics and HIVE Glass products, while introducing HIVE Supply and all the new products being tested and developed through each vertical. Subsequent to year end, the Company curtailed its retail store in order to reduce overhead costs and focus on HIVE Ceramics. The Company intends to rely on a combination of trademark, copyright, trade secret and patent laws in the United States as well as confidentiality procedures and contractual provisions to protect future proprietary technology and its brands, as they are developed. The Company has created or acquired and continues in the process of creating and/or acquiring proprietary vaporizers and e-cigarettes, and various trademarks, patents and copyrights for brands which are developed or in development. The Company is actively engaged in improving and expanding lines of branded products through business alliances and acquisitions, as well as developing its branded retail business expansion. VAPE and its business units are organized and directed to operate strictly in accordance with all applicable state and federal laws. REVIVAL PRODUCTS On December 28, 2015, the Company created a new wholly-owned subsidiary, Revival Products, LLC (“Revival”), which is in the business of portable vaporization devices. Revival will disposable cartridge complement HIVE Ceramic’s product lines utilizing its sales and distribution channels and via its own designated e-commerce site at www.revivalvapes.com. BETTERCHEM On July 1, 2015, the Company entered into a Share Exchange Agreement with BetterChem Consulting, Inc. (“BetterChem”), a Pennsylvania corporation, and its sole shareholder and the Company’s current Chief Science Officer Dr. Mark Scialdone (“Dr. Scialdone”), whereby the Company acquired a controlling 80% interest in BetterChem from Dr. Scialdone in exchange for up to 400,000 shares of the Company’s restricted common stock. In consideration for the issuance of the shares to Dr. Scialdone, the Company acquired 80 shares of the common stock of BetterChem which represents 80% of the issued and outstanding shares of BetterChem. Dr. Scialdone retained a 20% interest in BetterChem. The Share Exchange Agreement transaction closed concurrently with its execution on July 1, 2015 and was approved by Unanimous Written Consent of the Board of Directors (the “Board”) of the Company on the same date. At closing, the Company issued 250,000 shares of its common stock valued at $67,500 to BetterChem. The Company acquired an 80% controlling interest of the business in order to expand its science consulting segment and research and development. BetterChem had no assets and liabilities upon closing. An additional up to 150,000 shares of common stock to be issued to Dr. Scialdone will be subject to the following terms: 1. Due to the uncertain nature of the valuation of BetterChem, a privately held consulting business, the parties have agreed that Dr. Scialdone shall have a nonassignable contingent contractual right to receive additional shares contingent on the future gross revenues of BetterChem as follows: a. On the one year anniversary of the closing, Dr. Scialdone shall be entitled to an additional 75,000 shares if BetterChem has generated at least $100,000 in gross revenues beginning on the date of closing and up to the one year anniversary of the closing. The additional stock issuance will be calculated on a pro rata basis (i.e. If BetterChem only generates $50,000 in gross revenues in the first year then Dr. Scialdone will be entitled to only 37,500 shares). b. On the two year anniversary of the closing, Dr. Scialdone shall be entitled to an additional 75,000 shares if BetterChem has generated at least $100,000 in gross revenues beginning on the one year anniversary of the closing up to the two year anniversary of the closing. The additional stock issuance will be calculated on a pro rata basis (i.e. If BetterChem only generates $50,000 in gross revenues in the second year then Dr. Scialdone will be entitled to only 37,500 shares). 2. In the event of a change in control of BetterChem or a sale of all or substantially all of the assets of BetterChem during the two year period, the additional 150,000 shares shall automatically vest and be payable in full to Dr. Scialdone and any salary compensation due Dr. Scialdone under the 2 year term of his employment agreement with the Company dated May 1, 2015, or extensions of that Employment Agreement which the parties may thereafter execute, shall be accelerated and shall be due and payable in full within 30 days of the event of change in control of BetterChem. In connection with the Share Exchange Agreement, on July 1, 2015, Dr. Scialdone and the Company entered into an Intellectual Property Rights Transfer Agreement (the “I.P. Agreement”) whereby Dr. Scialdone agreed to transfer and assign to Company the entire right, title and interest in and to any and all intellectual property in which Dr. Scialdone has a right to convey an interest, including intellectual property conceived, developed, reduced to practice, assigned or acquired by Dr. Scialdone prior to the date of the I.P. Agreement as well as intellectual property held, conceived, developed, reduced to practice, assigned or acquired by BetterChem. There were no assets or liabilities assumed by the Company. On January 12, 2016, the Company unwound the transaction and curtailed the subsidiary’s operations in order to reduce overhead costs and focus on HIVE Ceramics and reflected such as of September 30, 2015 in the consolidated financial statements. During the year ended September 30, 2015, the 250,000 shares issued to BetterChem valued at $67,500 was recorded as an impairment of acquisition on the statement of operations as a result of the settlement to receive the shares back as part of the unwind. Also, the fair value of 250,000 shares as of the unwind date of January 12, 2016 of $1,750 was recorded as an impairment of acquisition during the year ended September 30, 2015. VAPE is organized and directed to operate strictly in accordance with all applicable state and federal laws. Subsequent to year end, the Company abandoned such plans in order to reduce overhead costs and focus on HIVE Ceramics. Subsequent to the Company’s fiscal year ended September 30, 2015, the Company began taking steps to curtail its Offset, HIVE Glass and HIVE Supply business lines to focus more on consumer vaporization products including the launch of “Revival” discussed above. The Company also curtailed its ‘THE HIVE’ retail store in order to reduce overhead costs and focus on HIVE Ceramics. Moreover, the Company curtailed its exploration into providing real estate, management and consulting solutions to the legal cannabis industry in states where such cannabis cultivation and extraction is legal. The Company was never able to execute on any of these plans and ultimately determined that the Company’s capital reserves for such projects as well as the risks inherent in each project due to the current regulatory environment surrounding the cannabis industry made this line of business too difficult to pursue. BASIS OF PRESENTATION The accompanying unaudited interim consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the SEC. Certain information and disclosures normally included in the annual financial statements prepared in accordance with the accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these consolidated financial statements have been included. Such adjustments consist of normal recurring adjustments. The current results are not an indication of the full year. CONSOLIDATION The consolidated financial statements include the assets, liabilities, and operating results of the Company and its wholly-owned subsidiaries, HIVE Ceramics, Offset, and Nouveau after elimination of all material inter-company accounts and transactions. No segment information is presented as the assets, liabilities, and results of HIVE represent over 90% of the Company’s operations. USE OF ESTIMATES The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates and assumptions include losses for warrant contingencies and the valuation of conversion features in notes. FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability. There are three levels of inputs that may be used to measure fair value: Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 - Include other inputs that are directly or indirectly observable in the marketplace. Level 3 - Unobservable inputs which are supported by little or no market activity. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Derivative instruments include the convertible notes payable derivative liability and warrant liability (Level 2). Derivative instruments are valued using standard calculations/models that are primarily based on observable inputs, including volatilities and interest rates. Therefore, derivative instruments are included in Level 2. Fair-value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September 30, 2015 and 2014. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaid expenses, accounts payable, accrued liabilities, and notes payable. Fair values for these items were assumed to approximate carrying values because of their short-term nature or they are payable on demand. The following table presents the Company’s fair value hierarchy for assets measured at fair value on a recurring basis at September 30, 2015: Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 273,904 $ - $ - $ 273,904 Total assets measured at fair value $ 273,904 $ - $ - $ 273,904 Liabilities Derivative instruments $ - $ 1,704,127 $ - $ 1,704,127 Total liabilities measured at fair value $ - $ 1,704,127 $ - $ 1,704,127 The following table presents the Company’s fair value hierarchy for assets and liabilities measured at fair value on a recurring basis at September 30, 2014: Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 48,370 $ - $ - $ 48,370 Total assets measured at fair value $ 48,370 $ - $ - $ 48,370 Liabilities Derivative instruments $ - $ 2,464,232 $ - $ 2,464,232 Total liabilities measured at fair value $ - $ 2,464,232 $ - $ 2,464,232 CONCENTRATION Credit Risk At times, the Company maintains cash balances at a financial institution in excess of the FDIC insurance limit. In addition, at we extend credit to customers in the normal course of business, after we evaluate the credit worthiness. The Company does not expect to take any unnecessary credit risks causing significant write-offs of potentially uncollectible accounts. Customers One (1) customer accounted for 37% of our accounts receivable as of September 30, 2015. The loss of this customer would have a significant impact on the Company’s financial results. Suppliers One (1) supplier accounted for 54% of our purchases during the year ended September 30, 2015. We purchased $60,000 in high-end glass from Kyle Tracey for HIVE Glass, which accounted for 10% of purchases during the year ended September 30, 2015. The loss of these suppliers would have a significant impact on the Company’s financial results. REVENUE RECOGNITION The Company recognizes revenues from product sales when (a) persuasive evidence that an agreement exists; (b) the products have been delivered; (c) the prices are fixed and determinable and not subject to refund or adjustment; and (d) collection of the amounts due is reasonably assured. Revenue is recorded when sales orders are shipped. INVENTORY Inventory is valued at the lower of cost or market, as determined primarily by the average cost inventory method, and are stated using the first-in, first-out (FIFO) method. Management will record a provision for loss for obsolete or slow moving inventory to reduce carrying amounts to net realizable value. We purchase product sourced from China which we are required to pay 50% upon placing the order. Amounts paid for products, which have not been received, are recorded as prepaid inventory. There are no amounts paid which are in dispute or considered impaired. FIXED ASSETS Fixed assets are recorded at cost and depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The estimated life of tooling related to our ceramic products is three (3) years. The estimated life of our leasehold improvements is the lesser of the term of the related lease and useful life. IMPAIRMENT OF LONG-LIVED AND PURCHASED INTANGIBLE ASSETS The Company has adopted Accounting Standards Codification (“ASC”) 350 “Intangibles - Goodwill and Other.” The Statement requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undercounted cash flows. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC 350 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less costs to sell. Long-lived assets, such as fixed assets and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the asset is measured by comparison of its carrying amount to undiscounted future net cash flows the asset is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds its fair market value. Estimates of expected future cash flows represent management's best estimate based on currently available information and reasonable and supportable assumptions. Any impairment recognized is permanent and may not be restored. During the year ended September 30, 2015 and 2014, the Company recorded $22,133 and $0 of impairment of its pending patents as its expected cash flows did not exceed its carrying amounts and none towards its trademarks as its expected future cash flows are in excess of their carrying amounts. RESEARCH AND DEVELOPMENT Research and development costs are expensed as incurred. The costs of materials and equipment that will be acquired or constructed for research and development activities, and that have alternative future uses, both in research and development, marketing or sales, will be classified as fixed assets and depreciated over their estimated useful lives. To date, research and development costs include the research and development expenses related to prototypes of the Company’s products. During the year ended September 30, 2015 and 2014, research and development costs were $212,424 and $45,757, respectively. CONVERTIBLE DEBT Convertible debt is accounted for under the guidelines established by ASC 470-20 “Debt with Conversion and Other Options.” ASC 470-20 governs the calculation of an embedded beneficial conversion, which is treated as an additional discount to the instruments where derivative accounting (explained below) does not apply. The amount of the value of warrants and beneficial conversion feature may reduce the carrying value of the instrument to zero, but no further. Many of the conversion features embedded in the Company's notes are variable and are adjusted based on a discount to market prices which could cause an unlimited number of common stock to be issued. In these cases, we record the embedded conversion feature as a derivate instrument, at fair value. The embedded conversion features are recorded as discounts when the notes become convertible. The excess of fair value of the embedded conversion feature over the carrying value of the debt is recorded as an immediate charge to operations. Each reporting period, the Company will compute the estimated fair value of derivatives and record changes to operations. The discounts relating to the initial recording of the derivatives or beneficial conversion features are accreted over the term of the debt using the effective interest method. The Company has lost the ability to increase the share reserves due to the significantly increased outstanding held by convertible noteholders and a shareholder vote is required to increase the authorized amount of shares the Company may issue. Further, the combination of limited capital and depleted share reserves have severely damaged the Company’s ability to find continued finance, properly run the Company, and proceed with business to include any mergers or acquisitions or any transactions that would require available stock. DERIVATIVE FINANCIAL INSTRUMENTS Derivative financial instruments, as defined in ASC 815, “Accounting for Derivative Financial Instruments and Hedging Activities”, consist of financial instruments or other contracts that contain a notional amount and one or more underlying (e.g. interest rate, security price or other variable), require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing or embedded in other financial instruments. Further, derivative financial instruments are initially, and subsequently, measured at fair value and recorded as liabilities or, in rare instances, assets. The Company does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company has issued financial instruments including senior convertible notes payable and freestanding stock purchase warrants with features that are either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host contracts, or (iii) may be net-cash settled by the counterparty. As required by ASC 815, in certain instances, these instruments are required to be carried as derivative liabilities, at fair value, in our consolidated financial statements. The Company estimates the fair values of derivative financial instruments using various techniques (and combinations thereof) that are considered to be consistent with objectively measuring fair values. In selecting the appropriate technique, consideration is given to, among other factors, the nature of the instrument, the market risks that it embodies and the expected means of settlement. For less complex derivative instruments, such as free-standing warrants, the Company generally uses the Black-Scholes option valuation technique because it embodies all of the requisite assumptions (including trading volatility, estimated terms 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 are highly volatile and sensitive to changes in the trading market price of our common stock, which has a high-historical volatility. Since derivative financial instruments are initially and subsequently carried at fair values, the Company's operating results will reflect the volatility in these estimate and assumption changes. EARNINGS PER COMMON SHARE Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per common share is computed by dividing net income available to common shareholders by the combination of dilutive common share equivalents, comprised of shares issuable under the Company’s share-based compensation plans and the weighted-average number of common shares outstanding during the reporting period. Dilutive common share equivalents include the dilutive effect of in-the-money share equivalents, which are calculated, based on the average share price for each period using the treasury stock method. Under the treasury stock method, the exercise price of an award, if any, the amount of compensation cost, if any, for future service that the Company has not yet recognized, and the estimated tax benefits that would be recorded in paid-in capital, if any, when an award is settled are assumed to be used to repurchase shares in the current period. The following is a summary of outstanding securities that would have been included in the calculation of diluted shares outstanding since the exercise prices did not exceed the average market value of the Company’s common stock if the Company generated net income for the year ended September 30, 2015 and 2014: For the Year Ended For the Year Ended September 30, September 30, 2015 2014 Series A Preferred stock 500,000 500,000 Common stock options - 303,889 Common stock warrants 1,184,727 1,184,727 Convertible notes 79,699,946 843,213 81,384,673 2,831,829 The Company would have excluded 125,000 options from the computation for the year ended September 30, 2014 as their exercise prices were in excess of the average closing market price of the Company’s common stock, causing their effects to be anti-dilutive using the treasury stock method. STOCK-BASED COMPENSATION ASC 718, “Share-Based Payment” requires that compensation cost related to share-based payment transactions be recognized in the consolidated financial statements. Share-based payment transactions within the scope of ASC 718 include stock options, restricted stock plans, performance-based awards, stock appreciation rights, and employee share purchase plans. The Company adopted ASC 718, which requires disclosure of the fair value and other characteristics of stock options and more prominent disclosure about the effects of an entity’s accounting policy decisions with respect to stock-based compensation on reported net loss. The Company has reflected the expense of such stock based compensation based on the fair value at the grant date for awards consistent with the provisions of ASC 718. In connection with the adoption of ASC 718, the fair value of our share-based compensation has been determined utilizing the Black-Scholes pricing model. The fair value of the options granted is amortized as compensation expense on a straight line basis over the requisite service period of the award, which is generally the vesting period. The fair value calculations involve significant judgments, assumptions, estimates and complexities that impact the amount of compensation expense to be recorded in current and future periods. Upon option exercise, the Company issues new shares of stock. The following weighted average variables were used in the Black Scholes model for all option issuances valued during the year ended September 30, 2015 and 2014: Year Ended September 30, Stock Price at Dividend Exercise Risk Free Volatility Average 2015 $ 0.73 -% $ 0.73 2.2 % 380 % 10.0 2014 $ 1.66 -% $ 1.66 2.5 % 401 % 10.0 The Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of Emerging Issues Task Force (“EITF”) 96-18, “Accounting for Equity Instruments That are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services”, codified into ASC 505-50. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement. RECENT ACCOUNTING PRONOUNCEMENTS In May 2014, the FASB issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers”, which supersedes most of the current revenue recognition requirements. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for these goods or services. New disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers are also required. This guidance is effective for the Company in the first quarter of fiscal year 2018 and early application is not permitted. Entities must adopt the new guidance using one of two retrospective application methods. The Company is currently evaluating the standard but does not expect it to have a material impact on our financial position, results of operations or cash flows. In August 2014, the FASB issued ASU 2014-15, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued.2 An entity must provide certain disclosures if “conditions or events raise substantial doubt about the entity’s ability to continue as a going concern.” The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Financial Accounting Standards Board issues Accounting Standard Updates (“ASUs”) to amend the authoritative literature in Accounting Standards Codification (“ASC”). There have been a number of ASUs to date that amend the original text of ASC. The Company believes those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company. RISKS AND UNCERTAINTIES Although forward-looking statements in this Quarterly Report reflect our good faith judgment, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include without limitation those discussed under the heading “Risk Factors” be |
Going Concern
Going Concern | 12 Months Ended |
Sep. 30, 2015 | |
Going Concern [Abstract] | |
GOING CONCERN | NOTE 2. GOING CONCERN VAPE’s consolidated financial statements reflect a net loss of $2,785,850 during the year ended September 30, 2015. As of September 30, 2015, we had cash of $273,904 and working capital deficit of $1,797,437. VAPE has suffered an accumulated deficit of $28,166,745 and subsequent to the Company’s fiscal year ended September 30, 2015, the Company began taking steps to curtail its Offset, HIVE Glass and HIVE Supply business lines to focus more on consumer vaporization products including the launch of “Revival” discussed above. The Company also curtailed its ‘THE HIVE’ retail store in order to reduce overhead costs and focus on HIVE Ceramics. Moreover, the Company curtailed its exploration into providing real estate, management and consulting solutions to the legal cannabis industry in states where such cannabis cultivation and extraction is legal. The Company was never able to execute on any of these plans and ultimately determined that the Company’s capital reserves for such projects as well as the risks inherent in each project due to the current regulatory environment surrounding the cannabis industry made this line of business too difficult to pursue. All of which have resulted in losses and opportunity costs. In addition, the ongoing need to obtain financing to fund operations also raise substantial doubt about the ability of Vape to continue as a going concern. Management expects to obtain funding for the new operations for the foreseeable future; however, there are no assurances that the Company will obtain such funding. VAPE’s financial statements do not include any adjustments to reflect the possible effects on recoverability and classification of assets or the amounts and classification of liabilities that may result from the inability to continue as a going concern. See Note 11 for subsequent events regarding financing activities. |
Fixed Assets
Fixed Assets | 12 Months Ended |
Sep. 30, 2015 | |
Fixed Assets [Abstract] | |
FIXED ASSETS | NOTE 3. FIXED ASSETS The following is a summary of fixed assets as of September 30, 2015 and 2014: September 30, September 30, Molds and Tooling $ 176,015 $ 122,555 Leasehold improvements 29,795 - Accumulated depreciation (87,483 ) (16,178 ) $ 118,327 $ 106,377 |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Sep. 30, 2015 | |
Accrued Expenses [Abstract] | |
ACCRUED EXPENSES | NOTE 4. ACCRUED EXPENSES The following is a summary of accrued expenses as of September 30, 2015 and 2014: September 30, September 30, Accrued interest $ 46,337 $ 16,300 Accrued interest - related party 24,538 18,325 Accrued wages and taxes 112,322 108,374 Other 24,412 26,514 $ 207,609 $ 169,513 As of September 30, 2015 and 2014, the Company recorded accrued wages and taxes for Kyle Tracey of $55,000 and $59,273, Joe Andreae of $14,667 and $0, Allan Viernes of $1,833 and $0, and Benjamin Beaulieu of $1,833 and $0, respectively. |
Third Party Debt
Third Party Debt | 12 Months Ended |
Sep. 30, 2015 | |
Third Party Debt [Abstract] | |
THIRD PARTY DEBT | NOTE 5. THIRD PARTY DEBT CONVERTIBLE NOTES PAYABLE Beginning on February 11, 2014, the Company issued 6% Convertible Notes (the “6% Notes”) pursuant to subscription agreements to ten (10) accredited investors (the “Holders”) with the aggregate principal amount of $230,000. The 6% Notes are not secured by any collateral or any assets pledged to the Holders. The maturity dates are from February 28, 2015 to March 31, 2015, and the annual rate of interest is six percent (6%). Subject to certain limitations, the Holders can, at their sole discretion, convert the outstanding and unpaid principal and interest of their notes into fully paid and nonassessable shares of the Company’s common stock. The conversion price of these 6% Notes is the average of the fifteen (15) lowest daily VWAP’s occurring during the twenty (20) consecutive trading days immediately preceding the date each Holder elects convert all of their 6% Note minus a discount of 40%. In no event will the conversion price be less than $1.00 per share or greater than $3.00 per share. The Company had a preexisting relationship with each of the Holders, and no general solicitation or advertising was used in connection with the issuance of the 6% Notes. We recorded a discount totaling $92,000 related to the beneficial conversion feature embedded in the notes upon issuance and amortized $32,333 and $57,667 of the discount to interest expense during the year ended September 30, 2015 and 2014, respectively. On March 12, 2015, the Company offered to pay accrued interest and modify the terms of the six (6) Holders’ outstanding 6% Notes, decreasing the conversion floor from $1.00 to $0.50 in order to encourage the noteholders to convert their promissory notes. The Company recorded a loss on debt extinguishment of $23,443 as a result of the fair value in excess of the modified conversion floor. In March 2015, the Company paid all accrued interest on the 6% notes of $17,200. Five (5) of the six (6) holders converted in full a total of $80,000 of 6% Notes into 160,000 shares of common stock. The remaining note holder partially converted $20,000 of 6% Notes into 40,000 of common shares and extended the terms on the remaining $30,000 for six (6) months. As of September 30, 2015, there is $1,010 in accrued interest expense related to the one (1) remaining note and the Company recorded $1,010 in interest expense related to the 6% note during the year ended September 30, 2015. On December 14, 2015, the note holder converted $30,000 in principal and $1,351 of accrued interest into 13,063,013 shares of common stock. As a result of the subsequent conversion the principal balance and accrued interest as of September 30, 2015 were classified as long-term. Securities Purchase Agreement On December 3, 2014, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with an accredited investor (the “Investor”) pursuant to which the Company agreed to sell, and the Investor agreed to purchase, an unsecured convertible promissory note (the “Note”) in the principal amount of $560,000 less an original issue discount (“OID”) of $50,000 and transaction expenses of $10,000 for a total purchase price of $500,000. The Company also paid a finder’s fee in the amount of $25,000 in connection with this transaction, which was recorded as a discount to the note as it was paid from the proceeds. The closing under the Securities Purchase Agreement occurred on December 3, 2014. The Company received $475,000 net proceeds after transactions costs. We amortized $27,778 of the discount to interest expense during the year ended September 30, 2015. In addition, the Company recorded $45,940 in deferred financing costs and amortized $25,522 to interest expense during the year ended September 30, 2015. As of September 30, 2015, the Company had unamortized costs of $20,418 in current deferred financing costs. The deferred financing costs are amortized through the maturity date. The Note bears interest at the rate of 10% per annum and is convertible into common stock of the Company at a conversion price per share of 70% of the average of the three (3) lowest Closing Sale Prices in the ten (10) Trading Days immediately preceding the applicable Conversion (subject to adjustment in the event of stock splits, stock dividends, and similar transactions, and in the event of subsequent sales of common stock at a lower purchase price (subject to certain exceptions))(the “Conversion Price”). In no event will the Conversion Price be less than $0.50 per share. Repayment of principal on the Note, together with accrued interest thereon, is due in twelve monthly installments, commencing six months from issuance. The Company may make such payments in cash (in which event the Company will pay a 25% premium) or, subject to certain conditions, in shares of common stock valued at the lower of the Conversion Price or 70% of the average of the three (3) lowest Closing Sale Prices in the ten (10) Trading Days immediately preceding the applicable payment date (the “Amortization Conversion Rate”). The Maturity Date of the Note is seventeen months from the date of issuance. We recorded a discount totaling $168,000 related to the beneficial conversion feature embedded in the note upon issuance. We amortized $84,000 of the discount to interest expense during the year ended September 30, 2015. On August 26, 2015, the Company and Investor entered into an Amendment whereby the conversion rate of the note was amended to 55% of the lowest price of the prior fifteen (15) trading days and conversion floor removed which amendment was triggered by the dilutive issuances of the August 2015 convertible note financing thereby entitling Investor to the lowest conversion rate granted during the year ended September 30, 2015 per the terms of the Securities Purchase Agreement. As a result, we expensed the unamortized discount of $84,000 to loss on debt extinguishment. On August 26, 2015, the carrying value on the note was $332,666, net of unamortized discounts of $109,000. The Company recorded the note as a derivative liability at fair value of $830,921, a derivative discount of $332,666, and the excess in fair value of $498,254 to loss on debt extinguishment. The total loss on debt extinguishment on this note was $582,254. During the year ended September 30, 2015, the Company amortized $54,984 of the derivative discount to interest expense, recorded a gain on the change in fair value of the derivative liability of $63,699, and allocated the fair value of $123,310 of the conversions below as a reduction in the derivative liability. As of September 30, 2015, the derivative liability was $643,912. On December 10, 2015, the Company and the Investor entered into a forbearance agreement regarding the Investor’s convertible note and added $105,000 to the principal. See Note 11 to the consolidated financial statements. Between June 2015 and September 2015, the Company issued the following conversions for payment towards Investor: Conversion Date Principal Accrued Total Conversion Common June 4, 2015 $ 46,667 $ 28,871 $ 75,538 $ 0.342 220,949 July 3, 2015 46,667 4,295 50,962 $ 0.194 263,141 August 11, 2015 25,000 - 25,000 $ 0.138 181,818 September 3, 2015 25,000 - 25,000 $ 0.056 445,196 September 23, 2015 25,000 - 25,000 $ 0.041 606,061 September 29, 2015 23,000 - 23,000 $ 0.015 1,548,822 $ 191,334 $ 33,166 $ 224,500 3,265,987 Subsequent to year end, the Investor also enacted the following conversions: Conversion Date Principal Accrued Total Conversion Common October 8, 2015 $ 21,000 $ - $ 21,000 $ 0.012 1,818,182 October 16, 2015 18,900 - 18,900 $ 0.012 1,636,364 October 22, 2015 25,800 - 25,800 $ 0.011 2,333,786 October 29, 2015 22,460 - 22,460 $ 0.011 2,031,660 November 11, 2015 33,500 - 33,500 $ 0.007 4,649,549 November 18, 2015 24,000 - 24,000 $ 0.006 4,195,804 November 30, 2015 30,000 - 30,000 $ 0.005 5,741,627 December 11, 2015 22,000 - 22,000 $ 0.002 9,090,909 December 28, 2015 22,500 - 22,500 $ 0.002 9,297,521 January 7, 2016 20,000 - 20,000 $ 0.002 10,101,010 $ 240,160 $ - $ 240,160 50,896,412 As a result, as of September 30, 2015, $23,969 and $44,794, net of total unamortized discounts of $104,538 and $195,366 are classified as current and long-term on the accompanying consolidated balance sheet. As of September 30, 2015, there is $9,945 in accrued interest expense related to this note and the Company recorded $43,111 in interest expense related to this note during the year ended September 30, 2015. $2M Securities Purchase Agreement On February 10, 2015, the Company entered into a securities purchase agreement (the “February 2015 Securities Purchase Agreement”) with an accredited investor pursuant to which the Company agreed to sell, and the investor agreed to purchase, an unsecured convertible promissory note (the “$2M Note”) in the principal amount of $2,000,000 less an OID of $182,000 and transaction expenses of $10,000 for a total purchase price of $1,808,000. The closing under the February 2015 Securities Purchase Agreement occurred on February 10, 2015. The $2M Note bears interest at the rate of 10% per annum and is immediately convertible into common stock of the Company at a conversion price per share of 70% of the lowest daily VWAP in the ten (10) Trading Days immediately preceding the applicable Conversion (subject to adjustment in the event of stock splits, stock dividends, and similar transactions, and in the event of subsequent sales of common stock at a lower purchase price (subject to certain exceptions))(the “Conversion Price”). In no event will the Conversion Price be less than $0.50 per share. Repayment of principal on the $2M Note, together with accrued interest thereon, is due in twelve bi-monthly installments, commencing approximately six months from issuance. The Company may make such payments in cash (in which event the Company will pay a 25% premium) or, subject to certain conditions, in shares of common stock valued at the lower of the Conversion Price or 70% of the lowest daily VWAP in the ten (10) Trading Days immediately preceding the applicable payment date (the “Amortization Conversion Rate”). The Maturity Date of the $2M Note is twelve months from the date of issuance. During the year ended September 30, 2015, the Company received $800,000 toward the $2M Note with an original issue discount of $148,600 and transaction costs for net proceeds of $651,395, respectively. We amortized $46,087 of the discount to interest expense during the year ended September 30, 2015. In addition, we recorded a discount totaling $108,641 related to the beneficial conversion feature embedded in the note upon issuance. During the year ended September 30, 2015, we amortized $54,456 of the discount to interest expense. On August 13, 2015, the Company entered into an Amendment, Waiver and Modification Agreement (the “Amendment”) to its $2M Securities Purchase Agreement and related Transaction Documents with Redwood Management, LLC including any designees and or assignees thereto. Under the terms of the Amendment, the parties agreed to reduce the $2,000,000 outstanding balance of the $2M Note to $800,000 to reflect the total amount funded under the note, to terminate the offsetting investor note securing the additional unfunded balance and to waive any past claims of default or offsetting interest on the $2M Note or investor note. In addition, the conversion rate of the note was amended to 55% of the lowest price of the prior fifteen (15) trading days and conversion floor removed which amendment was triggered by the dilutive issuances of the August 2015 convertible note financing thereby entitling Investor to the lowest conversion rate granted during the year ended September 30, 2015 per the terms of the $2M Securities Purchase Agreement. As a result, we expensed the unamortized discount of $40,000 to loss on debt extinguishment. On August 13, 2015, the carrying value on the note was $655,816, net of unamortized discounts of $94,184. The Company recorded the note as a derivative liability at fair value of $970,956, a derivative discount of $655,816, and the excess in fair value of $315,140 to loss on debt extinguishment. The total loss on debt extinguishment on this note was $369,324. During the year ended September 30, 2015, the Company amortized $183,189 of the derivative discount to interest expense, recorded a loss on the change in fair value of the derivative liability of $288,763, and allocated the fair value of $230,905 of the conversions below as a reduction in the derivative liability. As of September 30, 2015, the derivative liability was $1,028,814. The following is summary of conversions by the $2M Note holder during the year ended September 30, 2015: Conversion Date Principal Converted Accrued Total Converted Conversion Rate Common Shares Issued August 13, 2015 $ 50,000 - $ 50,000 $ 0.127 393,701 August 26, 2015 25,000 - 25,000 $ 0.056 446,428 September 8, 2015 25,000 - 25,000 $ 0.056 446,428 September 14, 2015 25,000 $ - 25,000 $ 0.053 469,925 September 16, 2015 10,000 - 10,000 $ 0.053 188,679 September 17, 2015 25,000 - 25,000 $ 0.053 469,925 September 22, 2015 10,000 - 10,000 $ 0.043 232,558 September 24, 2015 10,000 - 10,000 $ 0.026 390,625 September 25, 2015 10,000 - 10,000 $ 0.019 518,135 September 29, 2015 13,410 - 13,410 $ 0.015 900,000 $ 203,410 $ - $ 203,410 4,456,404 Subsequent to year end, the $2M Note holder also enacted the following conversions: Conversion Date Principal Converted Accrued Interest Converted Total Converted Conversion Rate Common Shares Issued October 1, 2015 $ 10,000 $ - $ 10,000 $ 0.0148 675,676 October 5, 2015 10,000 - 10,000 $ 0.0148 675,676 October 6, 2015 13,262 - 13,262 $ 0.0138 961,000 October 7, 2015 10,000 - 10,000 $ 0.0115 865,801 October 9, 2015 11,728 - 11,728 $ 0.0116 1,011,000 October 9, 2015 10,000 - 10,000 $ 0.0115 865,801 October 12, 2015 14,680 - 14,680 $ 0.0115 1,271,000 October 13, 2015 11,601 - 11,601 $ 0.0116 1,000,052 October 15, 2015 14,680 - 14,680 $ 0.0115 1,271,000 October 19, 2015 17,400 - 17,400 $ 0.0116 1,500,000 October 19, 2015 15,000 - 15,000 $ 0.0116 1,298,701 October 20, 2015 16,650 - 16,650 $ 0.0111 1,500,000 October 21, 2015 17,500 - 17,500 $ 0.0115 1,515,152 October 23, 2015 20,000 - 20,000 $ 0.0115 1,731,602 October 26, 2015 24,420 - 24,420 $ 0.0111 2,200,000 October 29, 2015 26,640 - 26,640 $ 0.0111 2,400,000 November 2, 2015 29,970 - 29,970 $ 0.0111 2,700,000 November 2, 2015 20,000 - 20,000 $ 0.0111 1,809,136 November 5, 2015 32,190 - 32,190 $ 0.0111 2,900,000 November 10, 2015 28,800 - 28,800 $ 0.0096 3,000,000 November 12, 2015 23,930 - 23,930 $ 0.0072 3,323,611 November 17, 2015 16,500 - 16,500 $ 0.0060 2,727,273 November 19, 2015 1,640 11,225 12,865 $ 0.0056 2,316,013 November 23, 2015 23,111 - 23,111 $ 0.0056 4,127,000 November 27, 2015 24,750 - 24,750 $ 0.0055 4,500,000 December 2, 2015 18,450 - 18,450 $ 0.0041 4,500,000 December 8, 2015 18,000 - 18,000 $ 0.0036 5,000,000 December 11, 2015 13,368 - 13,368 $ 0.0024 5,570,000 December 16, 2015 14,181 - 14,181 $ 0.0024 5,860,000 December 22, 2015 15,488 - 15,488 $ 0.0024 6,400,000 December 29, 2015 17,666 17,666 $ 0.0024 7,300,000 $ 541,604 $ 11,225 $ 552,830 82,775,494 As a result, as of September 30, 2015, $10,427 and $82,822, net of total unamortized discounts of $44,558 and $458,782 are classified as current and long-term on the accompanying consolidated balance sheet. As of September 30, 2015, there is $26,861 and $11,225 in current and long-term accrued interest expense related to this note, respectively, and the Company recorded $38,086 in interest expense related to this note during the year ended September 30, 2015. Convertible Note Financing On August 5, 2015, the Company entered into a series of convertible note financings with several accredited investors totaling an aggregate of $541,000 in aggregate proceeds raised less certain fees and costs as set forth in the financing documents known as the “August 2015 Notes”. The financing was disclosed on the Company’s Current Report on Form 8-K filed on August 11, 2015 and is incorporated herein by reference. The Company recorded an original issue discount of $12,500 along with these notes and amortized $1,042 of the discount to interest expense during the year ended September 30, 2015. As of September 30, 2015, there is $8,388 of accrued interest related to these notes and the Company recorded $8,388 in interest expense related to the notes during the year ended September 30, 2015. The Company will record an embedded beneficial conversion feature at estimated fair value as a derivative liability at fair value in six months when the notes become convertible. On August 12, 2015, the Company entered into an additional convertible note financing transaction with an accredited investor in the principal amount of $105,000 less fees and costs. The closing under the financing occurred concurrently with the execution of the financing documents on August 12, 2015. The convertible note bears interest at the rate of 8% per annum and is convertible into common stock of the Company at any time after 180 days from issuance of the note at a conversion price per share equal to 58% of the average of the lowest trading price of the common stock in the thirteen (13) trading days immediately preceding the applicable conversion date. The Company has the option to prepay the convertible note in the first 180 days from closing subject to a prepayment penalty of 150% of principal plus interest. The maturity date of the convertible note is June 12, 2016 subject to the noteholder’s right to extend maturity an additional nine (9) month period. The Company recorded an original issue discount of $5,000 along with these notes and amortized $1,000 of the discount to interest expense during the year ended September 30, 2015. The Company will record an embedded beneficial conversion feature at estimated fair value as a derivative liability at fair value in six months when the notes become convertible. The discount will be amortized over the remaining term of the note. As of September 30, 2015, there is $1,143 of accrued interest and related interest expense on the notes during the year ended September 30, 2015. The foregoing descriptions of the August 12, 2015 note financing and related documentation do not purport to be complete and are qualified in their entirety by reference to the full text of the documents, which are filed as exhibits to this Quarterly Report on Form 10-K and are incorporated herein by reference. As of September 30, 2015, future minimum principal payments for the years ending September 30, 2016 and 2017 are $1,487,256 and $154,000, respectively. As of September 30, 2015, expected amortization of debt discounts for the years ending September 30, 2016 and 2017 are $179,528 and $695,963, respectively. As of September 30, 2015, expected amortization of deferred financing costs for the years ending September 30, 2016 and 2017 are $107,909 and $12,067, respectively. The Company has the ability to increase the authorized common stock of the Company in the event that the convertible notes require more shares than available. |
Related Party Debt
Related Party Debt | 12 Months Ended |
Sep. 30, 2015 | |
Related Party Debt [Abstract] | |
RELATED PARTY DEBT | NOTE 6. RELATED PARTY DEBT RELATED PARTY NOTES PAYABLE, LONG-TERM The Company had outstanding accounts payable balance to a related party (shareholder of the Company) in the amount of $15,000 as of September 30, 2013. This payable was converted into a note payable on December 7, 2013. The note payable bears interest of 6% per annum with a maturity date of December 1, 2016. As of September 30, 2015, there is $1,645 in accrued interest expense related to this note and the Company recorded $913 in interest expense related to this note during the year ended September 30, 2015. On December 7, 2013, the Company issued a note payable to a shareholder of the Company in the amount of $23,462 for monies previously borrowed from shareholder. The note is unsecured and bears interest of 6% per annum and matures on December 1, 2016. On January 22, 2015, the Company settled and paid the note and accrued interest of $1,504 for $20,000 and recorded a gain on extinguishment of the note of $3,462. On February 28, 2014, the Company issued a note payable to HIVE (the “HIVE Note”) for the principal amount of $250,000 in connection with the Hive asset acquisition. Per the terms of the HIVE Note, the maturity date is February 27, 2016 and the annual rate of interest is six percent (6%). No prepayment penalty exists. The HIVE Note is unsecured. As of September 30, 2015, there is $22,893 in accrued interest expense related to this note and the Company recorded $15,208 in interest expense related to this note during the year ended September 30, 2015, respectively. On December 10, 2015, the HIVE Note was converted into a Series B Convertible Preferred Note payable and the maturity date was extended to December 10, 2016. See Note 11 to the consolidated financial statements. On May 12, 2014, the Company issued a note payable to its President, Joseph Andreae in the amount of $40,000 for monies previously borrowed during the three and six months ended March 31, 2014 (the “Andreae Note”). The note was unsecured and bears interest of 6% per annum and matures on May 1, 2016. On December 4, 2014, the Company repaid the principal balance of $40,000 and accrued interest of $1,348 in full satisfaction on the Andreae Note. On August 11, 2014, the Company issued a 6% note payable to its President, Joseph Andreae, for monies borrowed from Mr. Andreae to cover outstanding accounts payable in the amount of $12,828 (the “Andreae Note II”). Per the terms of the Andreae Note, the original principal balance was $12,828, and was not secured by any collateral or any assets pledged to the holder. The maturity date is November 30, 2014, and the annual rate of interest is six percent (6%). The monies were funded during the three and nine months ended June 30, 2014. On December 4, 2014, the Company repaid principal balance of $12,828 and accrued interest of $240 in full satisfaction of the Andreae Note II. RELATED PARTY CONVERTIBLE NOTES PAYABLE On February 18, 2014, the Company issued 8% Convertible Notes to two third parties to cover outstanding accounts payable in the amount of $20,000. Per the terms of the notes, the aggregate principal balance is $20,000, and was not secured by any collateral or any assets pledged to the holders. The maturity date is February 18, 2016, and the annual rate of interest is eight percent (8%). Subject to certain limitations, the holders can, at their sole discretion, convert the outstanding and unpaid principal and interest into fully paid and nonassessable shares of the Company’s common stock. The conversion price for the notes was the lowest market closing price per share within the previous twenty (20) market days of the date of conversion minus a discount of forty percent (40%). We recorded a discount totaling $8,000 related to the beneficial conversion feature embedded in the notes upon issuance. We amortized $1,000 and $1,667 of the discount to interest expense during the three and nine months ended June 30, 2014, respectively. On October 28, 2014, the Company received a Notice of Conversion on two (2) 8% Convertible Notes issued to third parties on February 18, 2014 to cover expenses of the Company. The noteholders converted aggregate principal of $20,000 and aggregate outstanding accrued and unpaid interest of $1,100 into an aggregate of 42,370 shares of restricted common stock of the Company at a per share conversion price of $0.498 in accordance with the terms of their convertible notes payable. The conversion of these notes was in full satisfaction of the notes payable. The shares of common stock under the conversion were issued by the Company on November 7, 2014. Upon conversion, we expensed the unamortized discount of $5,333 to interest expense. On February 18, 2014, the Company issued an 8% Convertible Note to Kyle Tracey for monies borrowed from Mr. Tracey to cover outstanding accounts payable in the amount of $10,612 (the “Tracey Note”). Per the terms of the Tracey Note, the original principal balance is $10,612, and was not secured by any collateral or any assets pledged to the holder. The maturity date was February 18, 2016, and the annual rate of interest is eight percent (8%). Subject to certain limitations, the holder can, at its sole discretion, convert the outstanding and unpaid principal and interest into fully paid and nonassessable shares of the Company’s common stock. The conversion price for the Tracey Note was the lowest market closing price per share within the previous twenty (20) market days of the date of conversion minus a discount of forty percent (40%). We recorded a discount totaling $4,245 related to the beneficial conversion feature embedded in the notes upon issuance. We amortized $1,415 of the discount to interest expense during the year ended September 30, 2014. On October 28, 2014, the Company received a Notice of Conversion the Tracey Note. Mr. Tracey converted principal of $10,612 and outstanding accrued and unpaid interest of $584 into 22,481 shares of restricted common stock of the Company at a per share conversion price of $0.498 in accordance with the terms of the convertible note payable. The conversion of the Tracey Note was in full satisfaction of the note payable. The shares of common stock under the conversion were issued by the Company on November 7, 2014. Upon conversion, we expensed the unamortized discount of $2,830 to interest expense. On March 17, 2014, the Company issued an 8% Convertible Note to Jerome Kaiser, former CEO, CFO and Director of the Company for services rendered to the Company in the amount of $50,000 (the “Kaiser Note”) which was charged to expense during the three months March 31, 2014. Per the terms of the Kaiser Note, the principal balance is $50,000, and is not secured by any collateral or any assets pledged to the holders. The maturity date is March 17, 2015, and the annual rate of interest is eight percent (8%). Subject to certain limitations, the holder can, at his sole discretion, convert the outstanding and unpaid principal and interest into fully paid and nonassessable shares of the Company’s common stock. The conversion price for the Kaiser Note is the market closing price of the market day immediately preceding the date of conversion minus twenty percent (20%). We recorded a discount totaling $10,000 related to the beneficial conversion feature embedded in the notes upon issuance. We amortized $4,167 of the discount to interest expense during the year ended September 30, 2015. In March 2015, the Company paid the outstanding principal and accrued interest in satisfaction on the note of $50,000 and $4,000, respectively. On May 12, 2014, in connection with the 6% Notes, the Company issued a note for $40,000 to Kyle Tracey, which was recorded as a related party convertible note payable. We recorded a discount totaling $16,000 related to the beneficial conversion feature embedded in the 6% note to Mr. Tracey upon issuance. We amortized $6,667 of the discount to interest expense during the year ended September 30, 2014. On October 28, 2014, the Company received a Notice of Conversion on the 6% Convertible Note issued on May 13, 2014 to Mr. Tracey (the “Tracey PPM Note”) as part of a private placement transaction in exchange for capital of $40,000. Mr. Tracey converted principal of $40,000 and outstanding accrued and unpaid interest of $1,098 into 41,098 shares of restricted common stock of the Company at a per share conversion price of $1.00 in accordance with the terms of the convertible note. The conversion of the Tracey PPM Note was in full satisfaction of the note. The shares of common stock under the conversion were issued by the Company on November 7, 2014. Upon conversion, we expensed the unamortized discount of $13,333 to interest expense. On May 12, 2014, the Company issued an 8% Convertible Note to Kyle Tracey for monies borrowed from Mr. Tracey to cover outstanding accounts payable in the amount of $11,042 (the “Tracey Note II”). Per the terms of the Tracey Note II, the original principal balance is $11,042, and was not secured by any collateral or any assets pledged to the holder. The maturity date was May 12, 2016, and the annual rate of interest is eight percent (8%). Subject to certain limitations, the holder can, at its sole discretion, convert the outstanding and unpaid principal and interest into fully paid and nonassessable shares of the Company’s common stock. The conversion price for the Tracey Note II was the lowest market closing price per share within the previous twenty (20) market days of the date of conversion minus a discount of forty percent (40%). We recorded a discount totaling $4,417 related to the beneficial conversion feature embedded in the notes upon issuance. We amortized $920 of the discount to interest expense during the year ended September 30, 2014. On October 28, 2014, the Company received a Notice of Conversion on the Tracey Note II. Tracey converted principal of $11,042 and outstanding accrued and unpaid interest of $407 into 22,989 shares of restricted common stock of the Company at a per share conversion price of $0.498 in accordance with the terms of the convertible note payable. The conver s On May 12, 2014, the Company issued an 8% Convertible Note to its Director of Business Development, Michael Cook, for monies borrowed from Mr. Cook to cover outstanding accounts payable in the amount of $11,825 (the “Cook Note”). Per the terms of the Cook Note, the original principal balance was $11,825, and was not secured by any collateral or any assets pledged to the holder. The maturity date is May 12, 2016, and the annual rate of interest is eight percent (8%). Subject to certain limitations, the holder can, at its sole discretion, convert the outstanding and unpaid principal and interest into fully paid and nonassessable shares of the Company’s common stock. The conversion price for the Cook Note was the lowest market closing price per share within the previous twenty (20) market days of the date of conversion minus a discount of forty percent (40%). We recorded a discount totaling $4,730 related to the beneficial conversion feature embedded in the notes upon issuance. We amortized $985 of the discount to interest expense during the year ended September 30, 2014. On October 28, 2014, the Company received a Notice of Conversion on the “Cook Note. Mr. Cook converted principal of $11,825 and outstanding accrued and unpaid interest of $435 into 24,619 shares of restricted common stock of the Company at a per share conversion price of $0.498 in accordance with the terms of the convertible note payable. The conversion of the Cook Note was in full satisfaction of the note payable. The shares of common stock under the conversion were issued by the Company on November 7, 2014. Upon conversion, we expensed the unamortized discount of $3,745 to interest expense. On August 11, 2014, the Company issued a second 8% Convertible Note to Mr. Cook for monies borrowed from Mr. Cook to cover outstanding accounts payable in the amount of $15,115 (the “Cook Note II”). Per the terms of the Cook Note II, the original principal balance was $15,115, and is was secured by any collateral or any assets pledged to the holder. The maturity date is August 11 2016, and the annual rate of interest is eight percent (8%). Subject to certain limitations, the holder can, at its sole discretion, convert the outstanding and unpaid principal and interest into fully paid and nonassessable shares of the Company’s common stock. The conversion price for the Cook Note II was the lowest market closing price per share within the previous twenty (20) market days of the date of conversion minus a discount of forty percent (40%). We recorded a discount totaling $6,046 related to the beneficial conversion feature embedded in the notes upon issuance. On October 28, 2014, the Company received a Notice of Conversion on the Cook Note II. Mr. Cook converted principal of $15,115 and outstanding accrued and unpaid interest of $255 into 30,864 shares of restricted common stock of the Company at a per share conversion price of $0.498 in accordance with the terms of the convertible note payable. The conversion of the Cook Note II was in full satisfaction of the note payable. The shares of common stock under the conversion were issued by the Company on November 7, 2014. Upon conversion, we expensed the unamortized discount of $5,542 to interest expense. On August 11, 2014, the Company issued an 8% Convertible Note to Mr. Tracey for monies borrowed from Mr. Tracey to cover outstanding accounts payable in the amount of $216,001 (the “Tracey Note III”). Per the terms of the Tracey Note III, the original principal balance was $216,001, and is not secured by any collateral or any assets pledged to the holder. The maturity date was August 11, 2016, and the annual rate of interest is eight percent (8%). Subject to certain limitations, the holder can, at its sole discretion, convert the outstanding and unpaid principal and interest into fully paid and nonassessable shares of the Company’s common stock. The conversion price for the Tracey Note III was the lowest market closing price per share within the previous twenty (20) market days of the date of conversion minus a discount of forty percent (40%). We recorded a discount totaling $86,401 related to the beneficial conversion feature embedded in the notes upon issuance. On October 28, 2014, the Company received a Notice of Conversion on the Tracey Note III. Mr. Tracey converted principal of $216,001 and outstanding accrued and unpaid interest of $3,645 into 441,057 shares of restricted common stock of the Company at a per share conversion price of $0.498 in accordance with the terms of the convertible note payable. The shares of common stock under the conversion were issued by the Company on November 7, 2014. Upon conversion, we expensed the unamortized discount of $79,200 to interest expense. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 7. COMMITMENTS AND CONTINGENCIES Office Lease As of September 30, 2015, the Company leases a 5,000 square foot office in Chatsworth, California for $4,947 per month which expires in November 2015. Warrant Liability The Company recorded the estimated settlement liability as of March 31, 2014 for the Warrant Shares issued and the Warrants that remain outstanding and unexercised that would be entitled to the same settlement based on the number of shares expected to be issued and the market price of the Company’s common stock on the dates of the actual settlements from $4.72 per share to $7.25 per share, and market price of the first settlement of $7.25 for the unsettled claims. We believe the issuance of convertible notes in the three months ended March 31, 2014 triggered the full ratchet anti-dilution adjustment; before the provision was triggered, the fair value of the warrant liability was not significant as the exercise was so far out of the money. As a result of the above settlements with warrant holders, the Company recorded a loss on settlement of warrants of $29,528,844 during the six months ended March 31, 2014 and a long-term warrant liability of $29,430,022 as of March 31, 2014 based on 4,407,200 shares of common stock under the settlement at the Company’s closing stock prices discussed above. As of September 30, 2015, the estimated settlement liability is $31,401 based on the fair market value of 1,184,727 remaining warrants and using the Black-Scholes model and therefore the Company recorded a gain on the change in warrant liability of $2,432,832 during the year ended September 30, 2015. Settlement of Company Legal Claims On December 15, 2014, the Company recorded a gain on settlement of $257,930 for a confidential settlement by and between the Company and certain shareholders and related parties as settlement for certain potential legal claims held by the Company. As a result of the settlement, the Company received net proceeds of $62,930 and vendor credits of $200,000 during the year ended September 30, 2015. A total of $325,000 in vendor credits has been received in connection with the settlement and no further credits will be given. In January 2015, the Company received 440,625 shares from the settlement that was assigned to officers of the Company. The officers decided it was in the best interest of the Company to return these shares to the Company to be used for future strategic issuances. Accordingly, the 440,625 shares valued at $367,531 were recorded as treasury stock as of September 30, 2015, and the Company recorded a gain on settlement of $625,461 during the year ended September 30, 2015. Chief Science Officer On May 1, 2015, the Company appointed Dr. Mark A. Scialdone to the newly-created executive officer position of Chief Science Officer. Dr. Scialdone’s Executive Employment Agreement was for a period of two (2) years. Dr. Scialdone shall receive an annual salary of $102,000, he shall be eligible for any benefits made generally available by the Company, he shall be eligible to receive any bonuses made generally available by the Company, and he shall be reimbursed for any reasonable expenses incurred while performing his duties as the Company’s Chief Science Officer. Additionally, Dr. Scialdone is entitled to receive severance equal to six (6) months base salary if terminated without cause by the Company. The Chief Science Officer was also receive bonus compensation associated with revenue generated from consulting services revenues generated over the term of this Agreement such bonus compensation to be calculated in accordance with the schedule below. On January 12, 2016, the Company unwound the transaction and curtailed the subsidiary’s operations in order to reduce overhead costs and focus on HIVE Ceramics and reflected such as of September 30, 2015 in the consolidated financial statements. As of September 30, 2015, the 250,000 shares issued to BetterChem were recorded as treasury stock valued at $67,500 as a result of the settlement to receive the shares back as part of the unwind. Officer & Director Appointments and Related Matters Pursuant to Board consent on May 11, 2015, the Company made several changes to its management structure. The Company confirmed the appointment of Dr. Mark Scialdone to the newly-created officer position of Chief Science Officer which was announced by Current Report on Form 8-K dated May 5, 2015 which is incorporated by reference herein. See above in this section for more information about Dr. Scialdone. |
Income Taxes
Income Taxes | 12 Months Ended |
Sep. 30, 2015 | |
Income Taxes [Abstract] | |
INCOME TAXES | NOTE 8. INCOME TAXES The following table presents the current and deferred income tax provision for federal and state income taxes for the year ended September 30, 2015 and 2014: 2015 2014 Current tax provision (benefit): Federal $ - $ - State 2,209 800 Total 2,209 800 Deferred tax provision (benefit) Federal (418,000 ) (262,000 ) State - - Valuation allowance 418,000 262,000 Total - - Total provision (benefit) for income taxes $ 2,209 $ 800 Reconciliations of the U.S. federal statutory rate to the actual tax rate for the year ended September 30, 2015 and 2014: 2015 2014 US federal statutory income tax rate (34.0 %) (34.0 %) State tax – (6.0 %) (6.0 %) (40.0 %) (40.0 %) Permanent differences: - % 38.7 % Stock-based compensation 2.8 % 0.2 % Changes in warrant liability - % 1.0 % Increase in valuation allowance 37.2 % 0.1 % Effective tax rate - % - % The Company incurred certain non-cash transactions which are not includable or deductible for income tax reporting purposes, such the change in fair value of warrant liability, certain stock-based compensation and accretion of debt discounts. The components of the Company’s deferred tax assets and (liabilities) for federal and state income taxes as of September 30, 2015 and 2014: As of September, 2015 2014 Current deferred tax assets (liabilities): Accrued expenses and other $ - $ - Total current deferred tax assets - - Non-current deferred tax assets and liabilities: Property, plant and equipment 29,000 29,000 Net operating losses 680,000 262,000 Total non-current deferred tax assets 709,000 291,000 Valuation allowance (709,000 ) (291,000 ) Total non-current deferred tax assets - - Net deferred tax assets $ - $ - During the year ended September 30, 2015 and 2014 the valuation allowance increased by $418,000 and $233,000, respectively. At September 30, 2015, the Company had approximately $680,000 of federal and state gross net operating losses allocated to continuing operations available. The net operating loss carry forwards, if not utilized, will begin to expire in 2033 for federal purposes and 2031 for state purposes. Based on the available objective evidence, including the Company’s limited operating history and current liabilities in excess of assets, management believes it is more likely than not that some of the net deferred tax assets, specifically certain net operating losses, at September 30, 2014 will not be fully realizable. In addition, subsequent to year end significant shares were issued to shareholders in connection with the conversion of notes payable and a subscription for the purchase of common stock. In connection, with these issuances the Company determined that the historical NOLs have probably been impaired due to IRS Section 382 limitations. Due to the uncertainty surrounding realization of the remaining deferred tax assets, specifically the NOLs, the Company has provided a valuation allowance of $709,000 and $291,000 against its net deferred tax assets at September 30, 2015 and 2014, respectively. We will continue to monitor the recoverability of our net deferred tax assets. As of September 30, 2015 and 2014, the Company has a State tax liability of $0 and $0, respectively. As of September 30, 2015 and 2014, the Company recorded no estimated taxes payable for Federal and State. The Company has filed all United States Federal and State tax returns. The Company has identified the United States Federal tax returns as its “major” tax jurisdiction. The United States Federal return years 2014 through 2015 are still subject to tax examination by the United States Internal Revenue Service; however, we do not currently have any ongoing tax examinations. The Company is subject to examination by the California Franchise Tax Board for the year ended 2014 through 2015 and currently does not have any ongoing tax examinations. |
Stockholders' Deficit
Stockholders' Deficit | 12 Months Ended |
Sep. 30, 2015 | |
Stockholders' Deficit [Abstract] | |
STOCKHOLDERS' DEFICIT | NOTE 9. STOCKHOLDERS’ DEFICIT COMMON STOCK On November 27, 2013, the Board and shareholders approved an increase in the authorized number of shares of common and preferred stock which may be issued by the Company to 1,000,000,000 shares and 100,000,000 shares, respectively. On December 3, 2013, the certificate of amendment was filed with the Secretary of State of Delaware to reflect the increase in authorized. PREFERRED STOCK On April 1, 2014, the Board formally approved the filing of a Preferred Stock Designation in connection with the commitment of 500,000 Series A Shares to HIVE on March 27, 2014 pursuant to its authority to issue blank check preferred stock as provided in the Company’s Certificate of Incorporation. Per the Certificate of Designation (the “Designation”), there are 100,000,000 shares of preferred stock authorized by the Company’s Certificate of Incorporation. The Company is authorized to issue 500,000 shares of Series A Shares pursuant to the Designation. As provided in the Designation (and as set forth in the HIVE Asset Purchase Agreement), Series A Shares are entitled to vote at a 15-1 ratio to Common Stock. Each share of preferred stock shall initially be convertible into one share of common stock (500,000 shares of common stock in the aggregate). On the two year anniversary of the transaction of HIVE, the preferred stock conversion ratio shall be adjusted as follows: a one-time pro rata adjustment of up to ten-for-one (10-1) based upon the Company generating aggregate gross revenues over the two years of at least $8,000,000 (e.g. If the Company generates only $4,000,000 in aggregate gross revenues over the two year period then the convertible ratio will adjust to 5-1). In no event will the issuance convert into more than 5,000,000 shares of common stock of the Company. On June 19, 2014, the Company formally issued the 500,000 Series A Shares to HIVE. The value ascribed to the Series A Shares was based on the historical costs of the assets acquired on March 27, 2014 from HIVE since the transfer of assets was made among entities under common control. COMMON STOCK ISSUED FOR BONUSES On October 20, 2014, the Company’s Board of Directors issued bonus stock grants of 30,000 shares of restricted common stock each to Kyle Tracey, Joseph Andreae, and Benjamin Beaulieu. These issuances were based on the fair market value on the date of issuance immediately vested and resulted in $24,900, $24,900, and $24,900 being charged to and general and administrative expense during the year ended September 30, 2015. On March 12, 2015, the Company’s Board of Directors issued bonus stock grants of 30,000 shares of restricted common stock each to Kyle Tracey, Joseph Andreae, and Allan Viernes. In addition, a total of 60,000 shares were granted to three (3) employees. These issuances were based on the fair market value on the date of issuance immediately vested and resulted in $9,150, $9,150, and $195,200 being charged to cost of revenue, sales and marketing, and general and administrative expense during the year ended September 30, 2015. COMMON STOCK ISSUED FOR SERVICES On March 12, 2015, the Company’s Board of Directors issued a bonus stock grant of 60,277 shares of restricted common stock to an outside sales consultant for services performed. This issuance based on the fair market value on the date of issuance immediately vested resulting in $36,769 being charged to sales and marketing expense during the year ended September 30, 2015. COMMON STOCK ISSUED FOR ACCRUED WAGES On March 12, 2015, Kyle Tracey converted $59,718 of accrued wages into 97,898 shares of immediately vested restricted common stock based on the fair market value on the date of issuance. On March 12, 2015, Michael Cook converted $36,769 of accrued wages into 60,277 shares of immediately vested restricted common stock based on the fair market value on the date of issuance. COMMON STOCK ISSUED AS DIRECTOR COMPENSATION On March 12, 2015, the Company’s Board of Directors issued 100,000 shares of restricted common stock each were granted to Kyle Tracey and Joseph Andreae for serving on the Board of Directors. COMMON STOCK ISSUED FOR ACCOUNTS PAYABLE On June 1, 2015, the Board issued 100,000 shares of restricted common stock at $1.00 per share for payment of accrued legal services. This $100,000 issuance was based on the fair market value of $50,000 and additional consideration of $50,000 given on the date of issuance. COMMON STOCK ISSUED FOR ACQUISITION OF BETTERCHEM See Note 1 for common stock issued for the acquisition of BetterChem. WARRANTS The table below summarizes the Company’s warrant activity during the year ended September 30, 2015: Shares Weighted Average Weighted Average Remaining Contractual Term Aggregate Intrinsic Warrants outstanding at September 30, 2014 1,184,726 $ 0.114 1.6 $ 7,217,234 Warrants issued - - Warrants exercised - - Cancelled/forfeited/expired - - Warrants outstanding at September 30, 2015 1,184,726 $ 0.021 0.6 $ 694,008 As a result of the anti-dilution provision of the warrants, the exercise price as of September 30, 2015 was reduced to $0.021 per share using the following weighted average variables in the Black Scholes model during the year ended September 30, 2015: Year Ended September 30, Stock Price at Dividend Exercise Risk Free Volatility Average 2015 $ 0.04 - % $ 0.023 0.08 % 351 % 0.7 The Company’s warrants above are accounted for as derivative liabilities in the accompanying consolidated balance sheets. OPTIONS On June 27, 2014, the Company authorized the “2014 Incentive and Nonstatutory Stock Option Plan” (the “Plan”) whereby a maximum of 2,000,000 shares of the Company’s common stock could be granted in the form of incentive and nonstatutory stock options. If any shares of common stock subject to an award under the Plan are forfeited, expire, are settled for cash or are tendered by the participant or withheld by us to satisfy any tax withholding obligation, then, in each case, the shares subject to the award may be used again for awards under the Plan to the extent of the forfeiture, expiration, cash settlement or withholding. The stock option awards issuable under the Plan can be made up of any combination of incentive and nonstatutory stock options. The stock options will be granted at fair market value on the date of grant and will vest as directed by the Board. Incentive stock options are available to employees only whereas nonstatutory stock options are available to independent contractors and consultants of the Company. On June 27, 2014, concurrent with the formal adoption of the Plan, the Company’s Board granted a total of 1,000,000 stock options to certain employees, consultants and/or independent contractors of the Company (the “Option Grant”). The Option Grant includes options to purchase 520,000 shares granted to employees, consultants and/or independent contractors of the Company that are not executive officers. In addition, the Board determined that executive officer Michael Cook, Director of Business Development, should receive options to purchase 100,000 shares and that Kyle Tracey, Chief Executive Officer and Chairman, and Joseph Andreae, President and member of the Board, should receive options to purchase 190,000 shares each. The options were granted at the market price of the Company’s common stock at close of business ($1.66 per share) on June 27, 2014, pursuant to the Company’s standard form stock option agreements under the Plan. The options vest 25% at grant and 25% each subsequent six (6) months from the date of grant. The aggregate value of the 1,000,000 options on the grant date was $1,660,000 and the amount expensed upon the grant date was $415,000 as result of 250,000 options immediately vested. On September 30, 2014 an additional $22,312 was expensed due to the revaluing 212,500 non-employee options. The description of the incentive and nonstatutory stock options herein is qualified in its entirety by reference to the full text of the Form of Incentive Stock Option Agreement and Nonstatutory Stock Option Agreement, which are attached as Exhibits 10.2 and 10.3, respectively, to the Current Report on Form 8-K filed with the SEC on July 3, 2014. Additional Option Grants Under 2014 Stock Option Plan On October 20, 2014, the Board granted a total of 20,000 stock options to certain employees and canceled 20,000 options previously allocated (but not issued) to employees. The options were granted at the market price of the Company’s common stock at close of business ($0.83 per share). The options vest 25% at grant and 25% each subsequent six (6) months from the date of grant. The aggregate value of the 20,000 options on the grant date was $16,600 and the amount expensed upon the grant date was $4,150 as result of 5,000 options immediately vested. On December 22, 2014, the Company’s Board granted a total of 775,000 stock options to certain employees. The option grant includes options to purchase 225,000 shares granted to employees that are not executive officers. In addition, the Board determined that executive officer Michael Cook, Director of Business Development, should receive options to purchase 25,000 shares and that Kyle Tracey, Chief Executive Officer and Chairman, and Joseph Andreae, President and member of the Board, and Allan Viernes, Chief Financial Officer should receive options to purchase 175,000 shares each. The options were granted at the market price of the Company’s common stock at close of business ($0.70 per share). The options vest 25% at grant and 25% each subsequent six (6) months from the date of grant. The aggregate value of the 775,000 options on the grant date was $542,500 and the amount expensed upon the grant date was $135,625 as result of 193,750 options immediately vested. Consulting Agreements On October 20, 2014, the Company entered into consulting agreements with two consultants to provide business development and acquisition services to the Company. The consultants were each issued 100,000 options to purchase common stock of the Company by the Board as consideration for consulting services. The options were granted at the market price of the Company’s common stock at close of business ($0.83 per share). The options vest 25% at grant and 25% each subsequent six (6) months from the date of grant. The aggregate value of the 200,000 options on the grant date was $166,000 and the amount expensed upon the grant date was $41,500 as result of 50,000 options immediately vested. On December 31, 2014 an additional $3,000 was expensed due to the revaluing the 200,000 non-employee options. Cancellation of Option Plans Collectively, officers, employees, and consultants of the Company decided to surrender and cancel all options outstanding. Option activity during the year ended September 30, 2015, was as follows: Shares Weighted Weighted Aggregate Options outstanding at September 30, 2014 1,150,000 $ 2.92 8.7 $ 4,648,294 Options granted 995,000 $ 0.73 10.0 Options exercised - $ - - Options cancelled/forfeited/expired (2,145,000 ) $ 1.91 9.0 Options outstanding at September 30, 2015 - $ - - $ - Options exercisable at September 30, 2015 - $ - - $ - The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the aggregate difference between the closing stock prices of VAPE’s common stock at the specified dates and the exercise prices for in-the-money options) that would have been received by the option holders if all in-the-money options had been exercised on the specified dates. The fair value of each option award is estimated on the date of grant using the Black-Scholes valuation model, consistent with the provisions of ASC 718. Because option-pricing models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. VAPE has limited relevant historical information to support the expected exercise behavior because no exercises have taken place. During the year ended September 30, 2015 and 2014, $1,006,343 and $681,375 were recorded as stock-based compensation related to options, respectively. As of September 30, 2015, there is no future stock compensation expense related to options. |
Intellectual Property
Intellectual Property | 12 Months Ended |
Sep. 30, 2015 | |
Intellectual Property [Abstract] | |
INTELLECTUAL PROPERTY | NOTE 10. INTELLECTUAL PROPERTY The Company plans to rely on a combination of trademark, copyright, trade secret and patent laws in the United States as well as confidentiality procedures and contractual provisions to protect future proprietary technology and its brands, as they are developed. The Company has begun to execute on this plan with the acquisition of the patent pending HIVE Ceramic vaporization product and the HIVE trademark as well as several pending trademark applications. The Company intends to continue to create or acquire proprietary vaporizers and e-cigarettes, and various trademarks, patents and/or copyrights for brands which are developed. TRADEMARKS On March 27, 2014, the Company and Stone Arch Studio, LLC entered into a Trademark Assignment Agreement whereby the Company acquired all right, title, priority and interest to the HIVE trademark U.S. Registration No. 44513069 as registered with the U.S. Patent and Trade Office (“USPTO”). This acquisition further protects the Company’s HIVE Ceramics brand vaporization line. As of September 30, 2015, the Company has capitalized $123,150 in costs paid related to the trademarks. PATENTS On March 27, 2014, the Company formally closed its acquisition of the patent pending HIVE Ceramics vaporization technology. The Company has already begun exploiting this technology and intends to prosecute the patent application to completion. As of September 30, 2015, the Company has capitalized had no costs of patents capitalized and recorded impairment to pending patents of $22,133 based on its expected cash flow not exceeding its carrying amount. The Company also has been in discussions to acquire additional patented technology from third parties to further grow and develop its branded product lines in the vaporization market. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Sep. 30, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 11. SUBSEQUENT EVENTS Common Stock Issued for Accrued Wages On October 22, 2015, the Company’s Board of Directors issued 2,083,333 shares of restricted common stock each to Kyle Tracey at $0.024 per share for payment of $50,000 in accrued wages. On October 22, 2015, the Company’s Board of Directors issued 555,555 shares of restricted common stock each to Kyle Tracey at $0.024 per share for payment of $13,333 in accrued wages. On October 22, 2015, the Company’s Board of Directors issued 1,250,000 shares of restricted common stock each to Michael Cook at $0.024 per share for payment of $3,000 in accrued wages. Common Stock Issued for Bonuses On October 22, 2015, the Company’s Board of Directors issued bonus stock grants of 600,000 shares of restricted common stock each to Allan Viernes and Benjamin Beaulieu at $0.024 per share. In addition, the Company issued 300,000 shares of restricted common stock to employees at $0.024 per share. These issuances were based on the fair market value on the date of issuance immediately vested and resulted in $36,000 being charged to general and administrative expense during the three months ended December 31, 2015. On October 22, 2015, the Company’s Board of Directors issued bonus stock grants of 1,250,000 shares of restricted common stock an outside sales consultant at $0.024 per share. The issuance was based on the fair market value on the date of issuance immediately vested and resulted in $30,000 being charged to sales and marketing expense during the three months ended December 31, 2015. Common Stock Surrenders On October 22, 2015, the Kyle Tracey and Joe Andreae each surrendered 130,000 shares of restricted common stock, with 60,000 shares valued at $49,800 and 200,000 shares valued at $122,000. As result, 260,000 shares of common stock were recorded as treasury stock valued at $171,800. In addition, on October 22, 2015, an employee also surrendered 30,000 shares valued at $9,150 which was recorded as treasury stock. On December 21, 2015, the Allan Viernes and Benjamin Beaulieu each surrendered 30,000 shares of restricted common stock valued at $36,600. As result, 60,000 shares of common stock were recorded as treasury stock valued at $36,600. Appointment of Justin Braune as Chief Executive Officer On December 10, 2015, the Board appointed Justin Braune to serve as the Company’s Chief Executive Officer and as a director, effective immediately. Prior to joining the Company, Mr. Braune, 33, served as the chief operating officer of Voodoo Science, LLC and Vapor Wild from 2014 to 2015. From 2013 to 2014, Mr. Braune served as the Chief of Operations for Veracity Security, a technology company located in San Diego. From 2013-2014 Mr. Braune was the Director of Sales at Lear Capital. Since 2010 he owned and operated Braune Enterprises a real estate and investment brokerage firm. Mr. Braune graduated from the United States Naval Academy with a B.S. degree in electrical engineering in and was commissioned as an officer in the U.S. Navy. After earning his master’s degree in nuclear engineering, Mr. Braune operated the nuclear reactors onboard the USS RONALD REAGAN aircraft carrier. He served in the U.S. Navy until 2009 and subsequently earned his MBA at the University of Southern California, Marshall School of Business. Our Board believes that Mr. Braune’s extensive relationships and experience in the industry of vaporization products and e-cigarettes will bring added value to the Company’s management team. In connection with his appointment as Chief Executive Officer and a member of our Board, Mr. Braune entered into an employment agreement dated as of December 10, 2015 (the “Employment Agreement”) with the Company pursuant to which he will receive an annual salary of $150,000, subject to adjustment, and bi-monthly sales-based compensation of $1.00 USD per unit of wholesale sales of Mr. Braune’s new vaporizer pen product line and $3.00 USD per unit on retail sales. The sales-based compensation and salary is payable in cash or stock as further described in the Employment Agreement. In addition, the Company will issue to Mr. Braune 20,000,000 shares of the Company’s common stock, to be held in escrow and released by the Company to Mr. Braune in accordance with the following vesting schedule: (i) 5,000,000 shares shall vest on June 10, 2015, (ii) 5,000,000 shares shall vest on December 10, 2016, (iii) 5,000,000 shares shall vest on June 10, 2016, and (iv) 5,000,000 shares shall vest on December 10, 2016. Mr. Braune also is eligible to participate in any stock option plan maintained by the Company and available to other employees and standard benefit programs for similarly situated employees. The Employment Agreement continues until terminated by either party upon 30 days’ prior written notice. Resignations of Kyle Tracey and Joe Andreae; Appointment of Benjamin Beaulieu as Chairman On December 10, 2015, the Board accepted the resignation of Kyle Tracey as Chief Executive Officer, Chairman of the Board and all other officer positions held by him with the Company. Mr. Tracey will remain in a consultant role with the Company focusing on sales and business development of HIVE Ceramics for a period of two (2) years. Mr. Tracey also retains a large block of voting control of the Company due to the above issuance of the Series B Notes issued to HIVE Ceramics, LLC an entity he co-owns. The Board also accepted the resignation of Joe Andreae as President and a director as of December 10, 2015. The President seat will remain vacant until a qualified candidate is located. Benjamin Beaulieu was elevated from his position as a member of the Board to Chairman of the Board on December 10, 2015 to replace Mr. Tracey. Mr. Beaulieu also currently serves as the Company’s COO and will remain in that role. Series B Preferred Stock Convertible Notes On December 10, 2015, the Company entered into two Secured Series B Preferred Stock Convertible Notes (the “Series B Notes”) for an aggregate principal of $300,000 including 1) $50,000 from Hive Ceramics, LLC in new capital to the Company and 2) an amended and restated note for Hive Ceramics LLC in the amount of $250,000 for capital previously contributed which is soon to be due and payable. The Series B Notes accrue interest at eight percent (8%) per annum, mature one (1) year from issuance and are secured by all of the assets and property of the Company. Upon the election of the noteholder, the Series B Notes are convertible into newly created Series B Preferred Stock on a one-for-one (1:1) basis into shares of common stock of the Company at a fixed price per share of $0.01. Concurrently, the Company filed a Certificate of Designation with the Delaware Secretary of State on the Series B Preferred Stock which provides, in pertinent part, for the following rights and privileges: Authorized Amount of Series B Preferred Stock Voting Rights Rank pari passu The Board of Directors authorized the designation of the Series B Preferred Stock pursuant to the authority of the Certificate of Incorporation, which confers said authority on the Board, and the issuance of the Series B Notes pursuant to a unanimous written consent of the Board dated December 10, 2015. Equity Investment by the Investor On December 10, 2015, the Investor purchased $90,000 in common stock at a purchase price equal to 90% of the average of the closing prices of the common stock for the three (3) trading days immediately preceding the date that is 6 months from the date of the agreement. Forbearance Agreement On December 10, 2015, the Company and the Investor entered into a forbearance agreement regarding the Investor’s convertible note. The Investor alleged certain breaches by the Company of its obligations under the note. The Company denied any breaches or defaults occurred under the note. However, in an effort to avoid protracted litigation about the dispute, the parties agreed to enter into the forbearance agreement which provided that the outstanding balance of the note increased by $105,000 as provided for in the original note. Additional Funding Under August 2015 Note On December 15, 2015 , an accredited investor provided the Company with $50,000 in additional proceeds under the same terms of their original convertible note. Third Party Debt Conversions See Note 5 for subsequent conversions related to third party debt. Unwinding of BetterChem Acquisition See Note 1 for the unwinding of BetterChem. |
Description of Business, Rece20
Description of Business, Recent Acquisitions and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Sep. 30, 2015 | |
Description of Business, Recent Acquisitions and Summary of Significant Accounting Policies [Abstract] | |
BUSINESS | BUSINESS Vape Holdings, Inc. (“VAPE,” the “Company,” “we,” “us,” “our,” “our company”) is a holding company with its primary focus in the manufacturing and distribution of healthy and sustainable vaporization products. The Company designs, markets and distributes ceramic vaporization products under a unique brand. The Company has introduced a nonporous, non-corrosive, chemically inert medical-grade ceramic vaporization element as a healthy, sustainable alternative to traditional titanium and quartz vaporization materials, as well as lower-grade ceramic found in traditional electronic cigarettes and vaporizers. This material can be used for a wide range of applications, including stand-alone vaporization products and "E-cigs." Electronic cigarettes come in a variety of designs ranging from those that look vastly like traditional cigarettes, to larger vaporizer units which are capable of vaporizing liquid with varying viscosity. The process of vaporization is believed to eliminate the smoke, tar, ash, and other byproducts of traditional smoking by utilizing lower temperatures in a controlled electronic environment. HIVE CERAMICS HIVE Ceramics (“HIVE”) is the premier brand under the VAPE umbrella. HIVE manufactures and distributes a proprietarily blended ceramic vaporization element for torched, electronic and portable vaporizers with countless design and product crossover capabilities in existing and emerging markets. HIVE is dedicated to bringing the healthiest and cleanest vaporization experience possible to the market. The HIVE product line currently consists of over 15 distinct ceramic elements, including the 2 piece domeless, domeless direct inject, and HIVE’s signature domeless elements covering 10mm, 14mm and 18mm applications as well as regular elements, the HIVE Flower Cup, the HIVE Carb Cap, HIVE Stinger Dabber, the 14mm HIVE x Quave - Club Banger, and the HIVE x D-Nail 16mm and 20mm attachments. The Company has recently launched ‘HIVE Glass.’ HIVE Glass is VAPE’s newest line of products under the HIVE brand name. The HIVE GLASS line is precision made using state of the art manufacturing processes and techniques, and exclusively uses German Schott glass caliber and fittings through all production phases. The aim with HIVE Glass is to create an affordable, high quality glass product that is both aesthetically pleasing and a highly functional vaporization product. VAPE’s existing customer base and distribution network will be the catalyst for expansion of this new HIVE product line. Under HIVE Glass, the Company also buys and sells high-end collector pieces. Subsequent to year end, the Company curtailed the product line in order to focus on HIVE Ceramics. VAPE has also recently launched ‘HIVE Supply.’ HIVE Supply is a packaging and sourcing division of VAPE designed to serve as a competitively priced, comprehensive “one-stop shop” for all medical and recreational marijuana packaging needs. As with all of VAPE’s products, HIVE Supply will operate in full compliance with all federal laws and the laws of each individual state in which it does business. HIVE Supply will focus on providing much-needed support to cannabis businesses in regards to sourcing consumer products, brand management and marketing services. HIVE Supply is currently operated out of three (3) locations: HIVE Supply in Southern California, HIVE Supply Washington in Spokane and HIVE Supply Oregon in Portland. Under HIVE Supply, the Company also buys and sells high-end manufacturing machines. Subsequent to year end, the Company curtailed the product line in order to focus on HIVE Ceramics. In connection with its launch of HIVE Supply and HIVE Glass, the Company opened ‘THE HIVE’ retail store and gallery in Los Angeles, an end-user experience to showcase the complete line of HIVE Ceramics and HIVE Glass products, while introducing HIVE Supply and all the new products being tested and developed through each vertical. Subsequent to year end, the Company curtailed its retail store in order to reduce overhead costs and focus on HIVE Ceramics. The Company intends to rely on a combination of trademark, copyright, trade secret and patent laws in the United States as well as confidentiality procedures and contractual provisions to protect future proprietary technology and its brands, as they are developed. The Company has created or acquired and continues in the process of creating and/or acquiring proprietary vaporizers and e-cigarettes, and various trademarks, patents and copyrights for brands which are developed or in development. The Company is actively engaged in improving and expanding lines of branded products through business alliances and acquisitions, as well as developing its branded retail business expansion. VAPE and its business units are organized and directed to operate strictly in accordance with all applicable state and federal laws. REVIVAL PRODUCTS On December 28, 2015, the Company created a new wholly-owned subsidiary, Revival Products, LLC (“Revival”), which is in the business of portable vaporization devices. Revival will disposable cartridge complement HIVE Ceramic’s product lines utilizing its sales and distribution channels and via its own designated e-commerce site at www.revivalvapes.com. BETTERCHEM On July 1, 2015, the Company entered into a Share Exchange Agreement with BetterChem Consulting, Inc. (“BetterChem”), a Pennsylvania corporation, and its sole shareholder and the Company’s current Chief Science Officer Dr. Mark Scialdone (“Dr. Scialdone”), whereby the Company acquired a controlling 80% interest in BetterChem from Dr. Scialdone in exchange for up to 400,000 shares of the Company’s restricted common stock. In consideration for the issuance of the shares to Dr. Scialdone, the Company acquired 80 shares of the common stock of BetterChem which represents 80% of the issued and outstanding shares of BetterChem. Dr. Scialdone retained a 20% interest in BetterChem. The Share Exchange Agreement transaction closed concurrently with its execution on July 1, 2015 and was approved by Unanimous Written Consent of the Board of Directors (the “Board”) of the Company on the same date. At closing, the Company issued 250,000 shares of its common stock valued at $67,500 to BetterChem. The Company acquired an 80% controlling interest of the business in order to expand its science consulting segment and research and development. BetterChem had no assets and liabilities upon closing. An additional up to 150,000 shares of common stock to be issued to Dr. Scialdone will be subject to the following terms: 1. Due to the uncertain nature of the valuation of BetterChem, a privately held consulting business, the parties have agreed that Dr. Scialdone shall have a nonassignable contingent contractual right to receive additional shares contingent on the future gross revenues of BetterChem as follows: a. On the one year anniversary of the closing, Dr. Scialdone shall be entitled to an additional 75,000 shares if BetterChem has generated at least $100,000 in gross revenues beginning on the date of closing and up to the one year anniversary of the closing. The additional stock issuance will be calculated on a pro rata basis (i.e. If BetterChem only generates $50,000 in gross revenues in the first year then Dr. Scialdone will be entitled to only 37,500 shares). b. On the two year anniversary of the closing, Dr. Scialdone shall be entitled to an additional 75,000 shares if BetterChem has generated at least $100,000 in gross revenues beginning on the one year anniversary of the closing up to the two year anniversary of the closing. The additional stock issuance will be calculated on a pro rata basis (i.e. If BetterChem only generates $50,000 in gross revenues in the second year then Dr. Scialdone will be entitled to only 37,500 shares). 2. In the event of a change in control of BetterChem or a sale of all or substantially all of the assets of BetterChem during the two year period, the additional 150,000 shares shall automatically vest and be payable in full to Dr. Scialdone and any salary compensation due Dr. Scialdone under the 2 year term of his employment agreement with the Company dated May 1, 2015, or extensions of that Employment Agreement which the parties may thereafter execute, shall be accelerated and shall be due and payable in full within 30 days of the event of change in control of BetterChem. In connection with the Share Exchange Agreement, on July 1, 2015, Dr. Scialdone and the Company entered into an Intellectual Property Rights Transfer Agreement (the “I.P. Agreement”) whereby Dr. Scialdone agreed to transfer and assign to Company the entire right, title and interest in and to any and all intellectual property in which Dr. Scialdone has a right to convey an interest, including intellectual property conceived, developed, reduced to practice, assigned or acquired by Dr. Scialdone prior to the date of the I.P. Agreement as well as intellectual property held, conceived, developed, reduced to practice, assigned or acquired by BetterChem. There were no assets or liabilities assumed by the Company. On January 12, 2016, the Company unwound the transaction and curtailed the subsidiary’s operations in order to reduce overhead costs and focus on HIVE Ceramics and reflected such as of September 30, 2015 in the consolidated financial statements. During the year ended September 30, 2015, the 250,000 shares issued to BetterChem valued at $67,500 was recorded as an impairment of acquisition on the statement of operations as a result of the settlement to receive the shares back as part of the unwind. Also, the fair value of 250,000 shares as of the unwind date of January 12, 2016 of $1,750 was recorded as an impairment of acquisition during the year ended September 30, 2015. VAPE is organized and directed to operate strictly in accordance with all applicable state and federal laws. Subsequent to year end, the Company abandoned such plans in order to reduce overhead costs and focus on HIVE Ceramics. Subsequent to the Company’s fiscal year ended September 30, 2015, the Company began taking steps to curtail its Offset, HIVE Glass and HIVE Supply business lines to focus more on consumer vaporization products including the launch of “Revival” discussed above. The Company also curtailed its ‘THE HIVE’ retail store in order to reduce overhead costs and focus on HIVE Ceramics. Moreover, the Company curtailed its exploration into providing real estate, management and consulting solutions to the legal cannabis industry in states where such cannabis cultivation and extraction is legal. The Company was never able to execute on any of these plans and ultimately determined that the Company’s capital reserves for such projects as well as the risks inherent in each project due to the current regulatory environment surrounding the cannabis industry made this line of business too difficult to pursue. |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The accompanying unaudited interim consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the SEC. Certain information and disclosures normally included in the annual financial statements prepared in accordance with the accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these consolidated financial statements have been included. Such adjustments consist of normal recurring adjustments. The current results are not an indication of the full year. |
CONSOLIDATION | CONSOLIDATION The consolidated financial statements include the assets, liabilities, and operating results of the Company and its wholly-owned subsidiaries, HIVE Ceramics, Offset, and Nouveau after elimination of all material inter-company accounts and transactions. No segment information is presented as the assets, liabilities, and results of HIVE represent over 90% of the Company’s operations. |
USE OF ESTIMATES | USE OF ESTIMATES The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates and assumptions include losses for warrant contingencies and the valuation of conversion features in notes. |
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability. There are three levels of inputs that may be used to measure fair value: Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 - Include other inputs that are directly or indirectly observable in the marketplace. Level 3 - Unobservable inputs which are supported by little or no market activity. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Derivative instruments include the convertible notes payable derivative liability and warrant liability (Level 2). Derivative instruments are valued using standard calculations/models that are primarily based on observable inputs, including volatilities and interest rates. Therefore, derivative instruments are included in Level 2. Fair-value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September 30, 2015 and 2014. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaid expenses, accounts payable, accrued liabilities, and notes payable. Fair values for these items were assumed to approximate carrying values because of their short-term nature or they are payable on demand. The following table presents the Company’s fair value hierarchy for assets measured at fair value on a recurring basis at September 30, 2015: Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 273,904 $ - $ - $ 273,904 Total assets measured at fair value $ 273,904 $ - $ - $ 273,904 Liabilities Derivative instruments $ - $ 1,704,127 $ - $ 1,704,127 Total liabilities measured at fair value $ - $ 1,704,127 $ - $ 1,704,127 The following table presents the Company’s fair value hierarchy for assets and liabilities measured at fair value on a recurring basis at September 30, 2014: Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 48,370 $ - $ - $ 48,370 Total assets measured at fair value $ 48,370 $ - $ - $ 48,370 Liabilities Derivative instruments $ - $ 2,464,232 $ - $ 2,464,232 Total liabilities measured at fair value $ - $ 2,464,232 $ - $ 2,464,232 |
CONCENTRATION | CONCENTRATION Credit Risk At times, the Company maintains cash balances at a financial institution in excess of the FDIC insurance limit. In addition, at we extend credit to customers in the normal course of business, after we evaluate the credit worthiness. The Company does not expect to take any unnecessary credit risks causing significant write-offs of potentially uncollectible accounts. Customers One (1) customer accounted for 37% of our accounts receivable as of September 30, 2015. The loss of this customer would have a significant impact on the Company’s financial results. Suppliers One (1) supplier accounted for 54% of our purchases during the year ended September 30, 2015. We purchased $60,000 in high-end glass from Kyle Tracey for HIVE Glass, which accounted for 10% of purchases during the year ended September 30, 2015. The loss of these suppliers would have a significant impact on the Company’s financial results. |
REVENUE RECOGNITION | REVENUE RECOGNITION The Company recognizes revenues from product sales when (a) persuasive evidence that an agreement exists; (b) the products have been delivered; (c) the prices are fixed and determinable and not subject to refund or adjustment; and (d) collection of the amounts due is reasonably assured. Revenue is recorded when sales orders are shipped. |
INVENTORY | INVENTORY Inventory is valued at the lower of cost or market, as determined primarily by the average cost inventory method, and are stated using the first-in, first-out (FIFO) method. Management will record a provision for loss for obsolete or slow moving inventory to reduce carrying amounts to net realizable value. We purchase product sourced from China which we are required to pay 50% upon placing the order. Amounts paid for products, which have not been received, are recorded as prepaid inventory. There are no amounts paid which are in dispute or considered impaired. |
FIXED ASSETS | FIXED ASSETS Fixed assets are recorded at cost and depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The estimated life of tooling related to our ceramic products is three (3) years. The estimated life of our leasehold improvements is the lesser of the term of the related lease and useful life. |
IMPAIRMENT OF LONG-LIVED AND PURCHASED INTANGIBLE ASSETS | IMPAIRMENT OF LONG-LIVED AND PURCHASED INTANGIBLE ASSETS The Company has adopted Accounting Standards Codification (“ASC”) 350 “Intangibles - Goodwill and Other.” The Statement requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undercounted cash flows. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC 350 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less costs to sell. Long-lived assets, such as fixed assets and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the asset is measured by comparison of its carrying amount to undiscounted future net cash flows the asset is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds its fair market value. Estimates of expected future cash flows represent management's best estimate based on currently available information and reasonable and supportable assumptions. Any impairment recognized is permanent and may not be restored. During the year ended September 30, 2015 and 2014, the Company recorded $22,133 and $0 of impairment of its pending patents as its expected cash flows did not exceed its carrying amounts and none towards its trademarks as its expected future cash flows are in excess of their carrying amounts. |
RESEARCH AND DEVELOPMENT | RESEARCH AND DEVELOPMENT Research and development costs are expensed as incurred. The costs of materials and equipment that will be acquired or constructed for research and development activities, and that have alternative future uses, both in research and development, marketing or sales, will be classified as fixed assets and depreciated over their estimated useful lives. To date, research and development costs include the research and development expenses related to prototypes of the Company’s products. During the year ended September 30, 2015 and 2014, research and development costs were $212,424 and $45,757, respectively. |
CONVERTIBLE DEBT | CONVERTIBLE DEBT Convertible debt is accounted for under the guidelines established by ASC 470-20 “Debt with Conversion and Other Options.” ASC 470-20 governs the calculation of an embedded beneficial conversion, which is treated as an additional discount to the instruments where derivative accounting (explained below) does not apply. The amount of the value of warrants and beneficial conversion feature may reduce the carrying value of the instrument to zero, but no further. Many of the conversion features embedded in the Company's notes are variable and are adjusted based on a discount to market prices which could cause an unlimited number of common stock to be issued. In these cases, we record the embedded conversion feature as a derivate instrument, at fair value. The embedded conversion features are recorded as discounts when the notes become convertible. The excess of fair value of the embedded conversion feature over the carrying value of the debt is recorded as an immediate charge to operations. Each reporting period, the Company will compute the estimated fair value of derivatives and record changes to operations. The discounts relating to the initial recording of the derivatives or beneficial conversion features are accreted over the term of the debt using the effective interest method. The Company has lost the ability to increase the share reserves due to the significantly increased outstanding held by convertible noteholders and a shareholder vote is required to increase the authorized amount of shares the Company may issue. Further, the combination of limited capital and depleted share reserves have severely damaged the Company’s ability to find continued finance, properly run the Company, and proceed with business to include any mergers or acquisitions or any transactions that would require available stock. |
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS Derivative financial instruments, as defined in ASC 815, “Accounting for Derivative Financial Instruments and Hedging Activities”, consist of financial instruments or other contracts that contain a notional amount and one or more underlying (e.g. interest rate, security price or other variable), require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing or embedded in other financial instruments. Further, derivative financial instruments are initially, and subsequently, measured at fair value and recorded as liabilities or, in rare instances, assets. The Company does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company has issued financial instruments including senior convertible notes payable and freestanding stock purchase warrants with features that are either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host contracts, or (iii) may be net-cash settled by the counterparty. As required by ASC 815, in certain instances, these instruments are required to be carried as derivative liabilities, at fair value, in our consolidated financial statements. The Company estimates the fair values of derivative financial instruments using various techniques (and combinations thereof) that are considered to be consistent with objectively measuring fair values. In selecting the appropriate technique, consideration is given to, among other factors, the nature of the instrument, the market risks that it embodies and the expected means of settlement. For less complex derivative instruments, such as free-standing warrants, the Company generally uses the Black-Scholes option valuation technique because it embodies all of the requisite assumptions (including trading volatility, estimated terms 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 are highly volatile and sensitive to changes in the trading market price of our common stock, which has a high-historical volatility. Since derivative financial instruments are initially and subsequently carried at fair values, the Company's operating results will reflect the volatility in these estimate and assumption changes. |
EARNINGS PER COMMON SHARE | EARNINGS PER COMMON SHARE Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per common share is computed by dividing net income available to common shareholders by the combination of dilutive common share equivalents, comprised of shares issuable under the Company’s share-based compensation plans and the weighted-average number of common shares outstanding during the reporting period. Dilutive common share equivalents include the dilutive effect of in-the-money share equivalents, which are calculated, based on the average share price for each period using the treasury stock method. Under the treasury stock method, the exercise price of an award, if any, the amount of compensation cost, if any, for future service that the Company has not yet recognized, and the estimated tax benefits that would be recorded in paid-in capital, if any, when an award is settled are assumed to be used to repurchase shares in the current period. The following is a summary of outstanding securities that would have been included in the calculation of diluted shares outstanding since the exercise prices did not exceed the average market value of the Company’s common stock if the Company generated net income for the year ended September 30, 2015 and 2014: For the Year Ended For the Year Ended September 30, September 30, 2015 2014 Series A Preferred stock 500,000 500,000 Common stock options - 303,889 Common stock warrants 1,184,727 1,184,727 Convertible notes 79,699,946 843,213 81,384,673 2,831,829 The Company would have excluded 125,000 options from the computation for the year ended September 30, 2014 as their exercise prices were in excess of the average closing market price of the Company’s common stock, causing their effects to be anti-dilutive using the treasury stock method. |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION ASC 718, “Share-Based Payment” requires that compensation cost related to share-based payment transactions be recognized in the consolidated financial statements. Share-based payment transactions within the scope of ASC 718 include stock options, restricted stock plans, performance-based awards, stock appreciation rights, and employee share purchase plans. The Company adopted ASC 718, which requires disclosure of the fair value and other characteristics of stock options and more prominent disclosure about the effects of an entity’s accounting policy decisions with respect to stock-based compensation on reported net loss. The Company has reflected the expense of such stock based compensation based on the fair value at the grant date for awards consistent with the provisions of ASC 718. In connection with the adoption of ASC 718, the fair value of our share-based compensation has been determined utilizing the Black-Scholes pricing model. The fair value of the options granted is amortized as compensation expense on a straight line basis over the requisite service period of the award, which is generally the vesting period. The fair value calculations involve significant judgments, assumptions, estimates and complexities that impact the amount of compensation expense to be recorded in current and future periods. Upon option exercise, the Company issues new shares of stock. The following weighted average variables were used in the Black Scholes model for all option issuances valued during the year ended September 30, 2015 and 2014: Year Ended September 30, Stock Price at Dividend Exercise Risk Free Volatility Average 2015 $ 0.73 -% $ 0.73 2.2 % 380 % 10.0 2014 $ 1.66 -% $ 1.66 2.5 % 401 % 10.0 The Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of Emerging Issues Task Force (“EITF”) 96-18, “Accounting for Equity Instruments That are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services”, codified into ASC 505-50. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement. |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS In May 2014, the FASB issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers”, which supersedes most of the current revenue recognition requirements. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for these goods or services. New disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers are also required. This guidance is effective for the Company in the first quarter of fiscal year 2018 and early application is not permitted. Entities must adopt the new guidance using one of two retrospective application methods. The Company is currently evaluating the standard but does not expect it to have a material impact on our financial position, results of operations or cash flows. In August 2014, the FASB issued ASU 2014-15, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued.2 An entity must provide certain disclosures if “conditions or events raise substantial doubt about the entity’s ability to continue as a going concern.” The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Financial Accounting Standards Board issues Accounting Standard Updates (“ASUs”) to amend the authoritative literature in Accounting Standards Codification (“ASC”). There have been a number of ASUs to date that amend the original text of ASC. The Company believes those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company. |
RISKS AND UNCERTAINTIES | RISKS AND UNCERTAINTIES Although forward-looking statements in this Quarterly Report reflect our good faith judgment, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include without limitation those discussed under the heading “Risk Factors” below, as well as those discussed elsewhere in this Quarterly Report. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report. We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Quarterly Report. Readers are urged to carefully review and consider the various disclosures made in this Quarterly Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects. |
AMENDMENT | AMENDMENT We have amended this Form 10-K/A to correctly account for the following non-cash transactions: In August 2015 the Company entered into convertible notes without conversion floors resulting in an unlimited potential of shares to be issued. The notes are not convertible until six months from the issuance date, and accordingly, we adjusted the consolidated financial statements to defer recognition of the embedded conversion feature until the instruments are convertible. On August 13, 2015 and August 26, 2015, the convertible notes due to Redwood and Typenex, respectively, were amended which removed the fixed conversion floors per common share creating a potentially unlimited number of shares to be issued on the date of the amendment. Accordingly, we amended this Form 10-K/A to account for the embedded conversion features as derivative financial instruments at fair value. This increased the loss on debt extinguishments and interest expense previously recorded, as well as the derivative liabilities at fair value. The following was the effect on the previously reported consolidated financial statements. As Previously Reported As Restated September 30, 2015 Change September 30, 2015 LIABILITIES AND STOCKHOLDERS' DEFICIT Total current liabilities $ 631,801 $ 1,919,544 $ 2,551,345 Total liabilities $ 1,392,465 $ 1,736,271 $ 3,128,736 Total stockholders' deficit $ (385,013 ) $ (1,736,271 ) $ (2,121,284 ) TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 1,007,452 $ - $ 1,007,452 Interest expense $ (788,038 ) $ (957,370 ) $ (1,745,408 ) Change in derivative liabilities $ 2,439,207 $ (123,291 ) $ 2,315,916 Loss on debt extinguishment, net $ (564,712 ) $ (406,848 ) $ (971,560 ) Other $ - $ (69,250 ) $ (69,250 ) Net loss $ (1,230,147 ) $ (1,555,703 ) $ (2,785,850 ) Net loss available to common shareholders: Loss per common share - basic $ (0.11 ) $ (0.24 ) Loss per common share - diluted $ (0.11 ) $ (0.24 ) |
Description of Business, Rece21
Description of Business, Recent Acquisitions and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Description of Business, Recent Acquisitions and Summary of Significant Accounting Policies [Abstract] | |
Schedule of assets and liabilities measured at fair value on a recurring basis | The following table presents the Company’s fair value hierarchy for assets measured at fair value on a recurring basis at September 30, 2015: Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 273,904 $ - $ - $ 273,904 Total assets measured at fair value $ 273,904 $ - $ - $ 273,904 Liabilities Derivative instruments $ - $ 1,704,127 $ - $ 1,704,127 Total liabilities measured at fair value $ - $ 1,704,127 $ - $ 1,704,127 The following table presents the Company’s fair value hierarchy for assets and liabilities measured at fair value on a recurring basis at September 30, 2014: Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 48,370 $ - $ - $ 48,370 Total assets measured at fair value $ 48,370 $ - $ - $ 48,370 Liabilities Derivative instruments $ - $ 2,464,232 $ - $ 2,464,232 Total liabilities measured at fair value $ - $ 2,464,232 $ - $ 2,464,232 |
Schedule of securities to be included in diluted share calculation | For the Year Ended For the Year Ended September 30, September 30, 2015 2014 Series A Preferred stock 500,000 500,000 Common stock options - 303,889 Common stock warrants 1,184,727 1,184,727 Convertible notes 79,699,946 843,213 81,384,673 2,831,829 |
Summary of weighted average variables used in the Black Scholes model | Year Ended September 30, Stock Price at Dividend Exercise Risk Free Volatility Average 2015 $ 0.73 -% $ 0.73 2.2 % 380 % 10.0 2014 $ 1.66 -% $ 1.66 2.5 % 401 % 10.0 |
Summary of previously reported consolidated financial statements | As Previously Reported As Restated September 30, 2015 Change September 30, 2015 LIABILITIES AND STOCKHOLDERS' DEFICIT Total current liabilities $ 631,801 $ 1,919,544 $ 2,551,345 Total liabilities $ 1,392,465 $ 1,736,271 $ 3,128,736 Total stockholders' deficit $ (385,013 ) $ (1,736,271 ) $ (2,121,284 ) TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 1,007,452 $ - $ 1,007,452 Interest expense $ (788,038 ) $ (957,370 ) $ (1,745,408 ) Change in derivative liabilities $ 2,439,207 $ (123,291 ) $ 2,315,916 Loss on debt extinguishment, net $ (564,712 ) $ (406,848 ) $ (971,560 ) Other $ - $ (69,250 ) $ (69,250 ) Net loss $ (1,230,147 ) $ (1,555,703 ) $ (2,785,850 ) Net loss available to common shareholders: Loss per common share - basic $ (0.11 ) $ (0.24 ) Loss per common share - diluted $ (0.11 ) $ (0.24 ) |
Fixed Assets (Tables)
Fixed Assets (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Fixed Assets [Abstract] | |
Summary of fixed assets | September 30, September 30, Molds and Tooling $ 176,015 $ 122,555 Leasehold improvements 29,795 - Accumulated depreciation (87,483 ) (16,178 ) $ 118,327 $ 106,377 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Accrued Expenses [Abstract] | |
Summary of accrued expenses | September 30, September 30, Accrued interest $ 46,337 $ 16,300 Accrued interest - related party 24,538 18,325 Accrued wages and taxes 112,322 108,374 Other 24,412 26,514 $ 207,609 $ 169,513 |
Third Party Debt (Tables)
Third Party Debt (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Securities Purchase Agreement [Member] | |
Debt Instrument [Line Items] | |
Shedule of conversions for payments | Between June 2015 and September 2015, the Company issued the following conversions for payment towards Investor: Conversion Date Principal Accrued Total Conversion Common June 4, 2015 $ 46,667 $ 28,871 $ 75,538 $ 0.342 220,949 July 3, 2015 46,667 4,295 50,962 $ 0.194 263,141 August 11, 2015 25,000 - 25,000 $ 0.138 181,818 September 3, 2015 25,000 - 25,000 $ 0.056 445,196 September 23, 2015 25,000 - 25,000 $ 0.041 606,061 September 29, 2015 23,000 - 23,000 $ 0.015 1,548,822 $ 191,334 $ 33,166 $ 224,500 3,265,987 Subsequent to year end, the Investor also enacted the following conversions: Conversion Date Principal Accrued Total Conversion Common October 8, 2015 $ 21,000 $ - $ 21,000 $ 0.012 1,818,182 October 16, 2015 18,900 - 18,900 $ 0.012 1,636,364 October 22, 2015 25,800 - 25,800 $ 0.011 2,333,786 October 29, 2015 22,460 - 22,460 $ 0.011 2,031,660 November 11, 2015 33,500 - 33,500 $ 0.007 4,649,549 November 18, 2015 24,000 - 24,000 $ 0.006 4,195,804 November 30, 2015 30,000 - 30,000 $ 0.005 5,741,627 December 11, 2015 22,000 - 22,000 $ 0.002 9,090,909 December 28, 2015 22,500 - 22,500 $ 0.002 9,297,521 January 7, 2016 20,000 - 20,000 $ 0.002 10,101,010 $ 240,160 $ - $ 240,160 50,896,412 |
$2M Securities Purchase Agreement [Member] | |
Debt Instrument [Line Items] | |
Shedule of conversions for payments | Conversion Date Principal Converted Accrued Total Converted Conversion Rate Common Shares Issued August 13, 2015 $ 50,000 - $ 50,000 $ 0.127 393,701 August 26, 2015 25,000 - 25,000 $ 0.056 446,428 September 8, 2015 25,000 - 25,000 $ 0.056 446,428 September 14, 2015 25,000 $ - 25,000 $ 0.053 469,925 September 16, 2015 10,000 - 10,000 $ 0.053 188,679 September 17, 2015 25,000 - 25,000 $ 0.053 469,925 September 22, 2015 10,000 - 10,000 $ 0.043 232,558 September 24, 2015 10,000 - 10,000 $ 0.026 390,625 September 25, 2015 10,000 - 10,000 $ 0.019 518,135 September 29, 2015 13,410 - 13,410 $ 0.015 900,000 $ 203,410 $ - $ 203,410 4,456,404 Subsequent to year end, the $2M Note holder also enacted the following conversions: Conversion Date Principal Converted Accrued Interest Converted Total Converted Conversion Rate Common Shares Issued October 1, 2015 $ 10,000 $ - $ 10,000 $ 0.0148 675,676 October 5, 2015 10,000 - 10,000 $ 0.0148 675,676 October 6, 2015 13,262 - 13,262 $ 0.0138 961,000 October 7, 2015 10,000 - 10,000 $ 0.0115 865,801 October 9, 2015 11,728 - 11,728 $ 0.0116 1,011,000 October 9, 2015 10,000 - 10,000 $ 0.0115 865,801 October 12, 2015 14,680 - 14,680 $ 0.0115 1,271,000 October 13, 2015 11,601 - 11,601 $ 0.0116 1,000,052 October 15, 2015 14,680 - 14,680 $ 0.0115 1,271,000 October 19, 2015 17,400 - 17,400 $ 0.0116 1,500,000 October 19, 2015 15,000 - 15,000 $ 0.0116 1,298,701 October 20, 2015 16,650 - 16,650 $ 0.0111 1,500,000 October 21, 2015 17,500 - 17,500 $ 0.0115 1,515,152 October 23, 2015 20,000 - 20,000 $ 0.0115 1,731,602 October 26, 2015 24,420 - 24,420 $ 0.0111 2,200,000 October 29, 2015 26,640 - 26,640 $ 0.0111 2,400,000 November 2, 2015 29,970 - 29,970 $ 0.0111 2,700,000 November 2, 2015 20,000 - 20,000 $ 0.0111 1,809,136 November 5, 2015 32,190 - 32,190 $ 0.0111 2,900,000 November 10, 2015 28,800 - 28,800 $ 0.0096 3,000,000 November 12, 2015 23,930 - 23,930 $ 0.0072 3,323,611 November 17, 2015 16,500 - 16,500 $ 0.0060 2,727,273 November 19, 2015 1,640 11,225 12,865 $ 0.0056 2,316,013 November 23, 2015 23,111 - 23,111 $ 0.0056 4,127,000 November 27, 2015 24,750 - 24,750 $ 0.0055 4,500,000 December 2, 2015 18,450 - 18,450 $ 0.0041 4,500,000 December 8, 2015 18,000 - 18,000 $ 0.0036 5,000,000 December 11, 2015 13,368 - 13,368 $ 0.0024 5,570,000 December 16, 2015 14,181 - 14,181 $ 0.0024 5,860,000 December 22, 2015 15,488 - 15,488 $ 0.0024 6,400,000 December 29, 2015 17,666 17,666 $ 0.0024 7,300,000 $ 541,604 $ 11,225 $ 552,830 82,775,494 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Income Taxes [Abstract] | |
Schedule of current and deferred income tax provision for federal and state income taxes | 2015 2014 Current tax provision (benefit): Federal $ - $ - State 2,209 800 Total 2,209 800 Deferred tax provision (benefit) Federal (418,000 ) (262,000 ) State - - Valuation allowance 418,000 262,000 Total - - Total provision (benefit) for income taxes $ 2,209 $ 800 |
Schedule of reconciliations of the U.S. federal statutory rate to the actual tax rate | 2015 2014 US federal statutory income tax rate (34.0 %) (34.0 %) State tax – (6.0 %) (6.0 %) (40.0 %) (40.0 %) Permanent differences: - % 38.7 % Stock-based compensation 2.8 % 0.2 % Changes in warrant liability - % 1.0 % Increase in valuation allowance 37.2 % 0.1 % Effective tax rate - % - % |
Schedule of deferred tax assets and liabilities | As of September, 2015 2014 Current deferred tax assets (liabilities): Accrued expenses and other $ - $ - Total current deferred tax assets - - Non-current deferred tax assets and liabilities: Property, plant and equipment 29,000 29,000 Net operating losses 680,000 262,000 Total non-current deferred tax assets 709,000 291,000 Valuation allowance (709,000 ) (291,000 ) Total non-current deferred tax assets - - Net deferred tax assets $ - $ - |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of weighted average variables in the Black Scholes model | Year Ended September 30, Stock Price at Dividend Exercise Risk Free Volatility Average 2015 $ 0.04 - % $ 0.023 0.08 % 351 % 0.7 |
Employee Stock Option [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of option activity | Shares Weighted Weighted Aggregate Options outstanding at September 30, 2014 1,150,000 $ 2.92 8.7 $ 4,648,294 Options granted 995,000 $ 0.73 10.0 Options exercised - $ - - Options cancelled/forfeited/expired (2,145,000 ) $ 1.91 9.0 Options outstanding at September 30, 2015 - $ - - $ - Options exercisable at September 30, 2015 - $ - - $ - |
Warrant [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of option activity | Shares Weighted Average Weighted Average Remaining Contractual Term Aggregate Intrinsic Warrants outstanding at September 30, 2014 1,184,726 $ 0.114 1.6 $ 7,217,234 Warrants issued - - Warrants exercised - - Cancelled/forfeited/expired - - Warrants outstanding at September 30, 2015 1,184,726 $ 0.021 0.6 $ 694,008 |
Description of Business, Rece27
Description of Business, Recent Acquisitions and Summary of Significant Accounting Policies (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Assets | ||
Cash and cash equivalents | $ 273,904 | $ 48,370 |
Total assets measured at fair value | 273,904 | 48,370 |
Liabilities | ||
Derivative instruments | 1,704,127 | 2,464,232 |
Total liabilities measured at fair value | 1,704,127 | 2,464,232 |
Level 1 [Member] | ||
Assets | ||
Cash and cash equivalents | 273,904 | 48,370 |
Total assets measured at fair value | $ 273,904 | $ 48,370 |
Liabilities | ||
Derivative instruments | ||
Total liabilities measured at fair value | ||
Level 2 [Member] | ||
Assets | ||
Cash and cash equivalents | ||
Total assets measured at fair value | ||
Liabilities | ||
Derivative instruments | $ 1,704,127 | $ 2,464,232 |
Total liabilities measured at fair value | $ 1,704,127 | $ 2,464,232 |
Level 3 [Member] | ||
Assets | ||
Cash and cash equivalents | ||
Total assets measured at fair value | ||
Liabilities | ||
Derivative instruments | ||
Total liabilities measured at fair value |
Description of Business, Rece28
Description of Business, Recent Acquisitions and Summary of Significant Accounting Policies (Details 1) - shares | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Diluted shares outstanding | 81,384,673 | 2,831,829 |
Series A Preferred stock [Member] | ||
Diluted shares outstanding | 500,000 | 500,000 |
Common stock options [Member] | ||
Diluted shares outstanding | 303,889 | |
Common stock warrants [Member] | ||
Diluted shares outstanding | 1,184,727 | 1,184,727 |
Convertible notes [Member] | ||
Diluted shares outstanding | 79,699,946 | 843,213 |
Description of Business, Rece29
Description of Business, Recent Acquisitions and Summary of Significant Accounting Policies (Details 2) - $ / shares | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Weighted average variables used in the Black Scholes model | ||
Stock Price at Grant Date | $ 0.73 | $ 1.66 |
Dividend Yield | ||
Exercise Price | $ 0.73 | $ 1.66 |
Risk Free Interest Rate | 2.20% | 2.50% |
Volatility | 380.00% | 401.00% |
Average Life | 10 years | 10 years |
Description of Business, Rece30
Description of Business, Recent Acquisitions and Summary of Significant Accounting Policies (Details 3) - USD ($) | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
LIABILITIES AND STOCKHOLDERS' DEFICIT | |||
Total current liabilities | $ 2,551,345 | $ 619,400 | |
Total liabilities | 3,128,736 | 3,802,237 | |
Total stockholders' deficit | (2,121,284) | (2,978,133) | $ (317,191) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | 1,007,452 | 824,104 | |
Interest expense | (1,745,408) | (241,065) | |
Change in derivative liabilities | 2,315,916 | $ (23,404,058) | |
Loss on debt extinguishments, net | 971,560 | ||
Other | (69,250) | ||
Net loss | $ (2,785,850) | $ (25,063,658) | |
Net loss available to common shareholders: | |||
Loss per common share - basic | $ (0.24) | $ (3.20) | |
Loss per common share - diluted | $ (0.24) | $ (3.20) | |
As Previously Reported [Member] | |||
LIABILITIES AND STOCKHOLDERS' DEFICIT | |||
Total current liabilities | $ 631,801 | ||
Total liabilities | 1,392,465 | ||
Total stockholders' deficit | (385,013) | ||
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | 1,007,452 | ||
Interest expense | (788,038) | ||
Change in derivative liabilities | 2,439,207 | ||
Loss on debt extinguishments, net | $ (564,712) | ||
Other | |||
Net loss | $ (1,230,147) | ||
Net loss available to common shareholders: | |||
Loss per common share - basic | $ (0.11) | ||
Loss per common share - diluted | $ (0.11) | ||
Adjustment [Member] | |||
LIABILITIES AND STOCKHOLDERS' DEFICIT | |||
Total current liabilities | $ 1,919,544 | ||
Total liabilities | 1,736,271 | ||
Total stockholders' deficit | $ (1,736,271) | ||
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | |||
Interest expense | $ (957,370) | ||
Change in derivative liabilities | (123,291) | ||
Loss on debt extinguishments, net | (406,848) | ||
Other | (69,250) | ||
Net loss | $ (1,555,703) |
Description of Business, Rece31
Description of Business, Recent Acquisitions and Summary of Significant Accounting Policies (Details Textual) | Mar. 12, 2015shares | Jul. 31, 2015USD ($)shares | Sep. 30, 2015USD ($)customerssuppliershares | Sep. 30, 2014USD ($)shares |
Description of Business and Summary of Significant Accounting Policies (Textual) | ||||
Estimated useful lives | 3 years | |||
Impairment charges | $ | $ 22,133 | $ 0 | ||
Research and development expense | $ | $ 212,424 | $ 45,757 | ||
Number of options excluded from the compution of diluted shares outstanding | 125,000 | |||
Customer [Member] | ||||
Description of Business and Summary of Significant Accounting Policies (Textual) | ||||
Number of customers | customers | 1 | |||
Credit risk rate | 37.00% | |||
Suppliers [Member] | ||||
Description of Business and Summary of Significant Accounting Policies (Textual) | ||||
Number of suppliers | supplier | 1 | |||
Credit risk rate | 54.00% | |||
Dr. Mark Scialdone [Member] | ||||
Description of Business and Summary of Significant Accounting Policies (Textual) | ||||
Common stock shares issued | 150,000 | |||
Kyle Tracey [Member] | ||||
Description of Business and Summary of Significant Accounting Policies (Textual) | ||||
Restricted common stock issued | 97,898 | |||
Credit risk rate | 10.00% | |||
Purchases of HIVE Glass | $ | $ 60,000 | |||
BetterChem Consulting, Inc. [Member] | ||||
Description of Business and Summary of Significant Accounting Policies (Textual) | ||||
Acquired controlling interest percentage | 80.00% | |||
Description of acquired entity | In consideration for the issuance of the shares to Dr. Scialdone, the Company acquired 80 shares of the common stock of BetterChem which represents 80% of the issued and outstanding shares of BetterChem. Dr. Scialdone retained a 20% interest in BetterChem. | |||
Common stock shares issued | 250,000 | 250,000 | ||
Common stock value | $ | $ 67,500 | $ 1,750 | ||
Description of share exchange agreement | In the event of a change in control of BetterChem or a sale of all or substantially all of the assets of BetterChem during the two year period, the additional 150,000 shares shall automatically vest and be payable in full to Dr. Scialdone and any salary compensation due Dr. Scialdone under the 2 year term of his employment agreement with the Company dated May 1, 2015, or extensions of that Employment Agreement which the parties may thereafter execute, shall be accelerated and shall be due and payable in full within 30 days of the event of change in control of BetterChem. | |||
Interest rate | 80.00% | |||
Treasury stock, Share | 250,000 | |||
Treasury stock | $ | $ 67,500 | |||
BetterChem Consulting, Inc. [Member] | One Year Anniversary [Member] | ||||
Description of Business and Summary of Significant Accounting Policies (Textual) | ||||
Description of share exchange agreement | On the one year anniversary of the closing, Dr. Scialdone shall be entitled to an additional 75,000 shares if BetterChem has generated at least $100,000 in gross revenues beginning on the date of closing and up to the one year anniversary of the closing. The additional stock issuance will be calculated on a pro rata basis (i.e. If BetterChem only generates $50,000 in gross revenues in the first year then Dr. Scialdone will be entitled to only 37,500 shares). | |||
BetterChem Consulting, Inc. [Member] | Two Year Anniversary [Member] | ||||
Description of Business and Summary of Significant Accounting Policies (Textual) | ||||
Description of share exchange agreement | On the two year anniversary of the closing, Dr. Scialdone shall be entitled to an additional 75,000 shares if BetterChem has generated at least $100,000 in gross revenues beginning on the one year anniversary of the closing up to the two year anniversary of the closing. The additional stock issuance will be calculated on a pro rata basis (i.e. If BetterChem only generates $50,000 in gross revenues in the second year then Dr. Scialdone will be entitled to only 37,500 shares). | |||
BetterChem Consulting, Inc. [Member] | Dr. Mark Scialdone [Member] | ||||
Description of Business and Summary of Significant Accounting Policies (Textual) | ||||
Acquired controlling interest percentage | 80.00% | |||
Restricted common stock issued | 400,000 |
Going Concern (Details)
Going Concern (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Going Concern (Textual) | |||
Net loss | $ (2,785,850) | $ (25,063,658) | |
Cash | 273,904 | 48,370 | $ 568 |
Working capital deficit | 1,797,437 | ||
Accumulated deficit | $ (28,166,745) | $ (25,380,895) |
Fixed Assets (Details)
Fixed Assets (Details) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Fixed Assets [Abstract] | ||
Molds and Tooling | $ 176,015 | $ 122,555 |
Leasehold improvements | 29,795 | |
Accumulated depreciation | (87,483) | $ (16,178) |
Fixed assets, net | $ 118,327 | $ 106,377 |
Fixed Assets (Details Textual)
Fixed Assets (Details Textual) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Fixed Assets [Abstract] | ||
Depreciation | $ 71,305 | $ 16,178 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Summary of Accrued Expenses: | ||
Accrued interest | $ 46,337 | $ 16,300 |
Accrued interest - related party | 24,538 | 18,325 |
Accrued wages and taxes | 112,322 | 108,374 |
Other | 24,412 | 26,514 |
Accrued expenses | $ 207,609 | $ 169,513 |
Accrued Expenses (Details Textu
Accrued Expenses (Details Textual) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Related Party Transaction [Line Items] | ||
Accrued wages and taxes | $ 112,322 | $ 108,374 |
Kyle Tracey [Member] | ||
Related Party Transaction [Line Items] | ||
Accrued wages and taxes | 55,000 | 59,273 |
Joseph Andreae [Member] | ||
Related Party Transaction [Line Items] | ||
Accrued wages and taxes | 14,667 | 0 |
Allan Viernes [Member] | ||
Related Party Transaction [Line Items] | ||
Accrued wages and taxes | 1,833 | 0 |
Benjamin Beaulieu [Member] | ||
Related Party Transaction [Line Items] | ||
Accrued wages and taxes | $ 1,833 | $ 0 |
Third Party Debt (Details)
Third Party Debt (Details) - Securities Purchase Agreement [Member] | 12 Months Ended |
Sep. 30, 2015USD ($)$ / sharesshares | |
Debt Instrument [Line Items] | |
Principal Converted | $ 191,334 |
Accrued Interest Converted | 33,166 |
Total Converted | $ 224,500 |
Common Shares Issued | shares | 3,265,987 |
Subsequent Period Conversion [Member] | |
Debt Instrument [Line Items] | |
Principal Converted | $ 240,160 |
Accrued Interest Converted | |
Total Converted | $ 240,160 |
Common Shares Issued | shares | 50,896,412 |
June 4, 2015 | |
Debt Instrument [Line Items] | |
Principal Converted | $ 46,667 |
Accrued Interest Converted | 28,871 |
Total Converted | $ 75,538 |
Conversion Rate | $ / shares | $ 0.342 |
Common Shares Issued | shares | 220,949 |
July 3, 2015 | |
Debt Instrument [Line Items] | |
Principal Converted | $ 46,667 |
Accrued Interest Converted | 4,295 |
Total Converted | $ 50,962 |
Conversion Rate | $ / shares | $ 0.194 |
Common Shares Issued | shares | 263,141 |
August 11, 2015 | |
Debt Instrument [Line Items] | |
Principal Converted | $ 25,000 |
Accrued Interest Converted | |
Total Converted | $ 25,000 |
Conversion Rate | $ / shares | $ 0.138 |
Common Shares Issued | shares | 181,818 |
September 3, 2015 | |
Debt Instrument [Line Items] | |
Principal Converted | $ 25,000 |
Accrued Interest Converted | |
Total Converted | $ 25,000 |
Conversion Rate | $ / shares | $ 0.056 |
Common Shares Issued | shares | 445,196 |
September 23, 2015 | |
Debt Instrument [Line Items] | |
Principal Converted | $ 25,000 |
Accrued Interest Converted | |
Total Converted | $ 25,000 |
Conversion Rate | $ / shares | $ 0.041 |
Common Shares Issued | shares | 606,061 |
September 29, 2015 | |
Debt Instrument [Line Items] | |
Principal Converted | $ 23,000 |
Accrued Interest Converted | |
Total Converted | $ 23,000 |
Conversion Rate | $ / shares | $ 0.015 |
Common Shares Issued | shares | 1,548,822 |
October 8, 2015 | Subsequent Period Conversion [Member] | |
Debt Instrument [Line Items] | |
Principal Converted | $ 21,000 |
Accrued Interest Converted | |
Total Converted | $ 21,000 |
Conversion Rate | $ / shares | $ 0.012 |
Common Shares Issued | shares | 1,818,182 |
October 16, 2015 | Subsequent Period Conversion [Member] | |
Debt Instrument [Line Items] | |
Principal Converted | $ 18,900 |
Accrued Interest Converted | |
Total Converted | $ 18,900 |
Conversion Rate | $ / shares | $ 0.012 |
Common Shares Issued | shares | 1,636,364 |
October 22, 2015 | Subsequent Period Conversion [Member] | |
Debt Instrument [Line Items] | |
Principal Converted | $ 25,800 |
Accrued Interest Converted | |
Total Converted | $ 25,800 |
Conversion Rate | $ / shares | $ 0.011 |
Common Shares Issued | shares | 2,333,786 |
October 29, 2015 | Subsequent Period Conversion [Member] | |
Debt Instrument [Line Items] | |
Principal Converted | $ 22,460 |
Accrued Interest Converted | |
Total Converted | $ 22,460 |
Conversion Rate | $ / shares | $ 0.011 |
Common Shares Issued | shares | 2,031,660 |
November 11, 2015 | Subsequent Period Conversion [Member] | |
Debt Instrument [Line Items] | |
Principal Converted | $ 33,500 |
Accrued Interest Converted | |
Total Converted | $ 33,500 |
Conversion Rate | $ / shares | $ 0.007 |
Common Shares Issued | shares | 4,649,549 |
November 18, 2015 | Subsequent Period Conversion [Member] | |
Debt Instrument [Line Items] | |
Principal Converted | $ 24,000 |
Accrued Interest Converted | |
Total Converted | $ 24,000 |
Conversion Rate | $ / shares | $ 0.006 |
Common Shares Issued | shares | 4,195,804 |
November 30, 2015 | Subsequent Period Conversion [Member] | |
Debt Instrument [Line Items] | |
Principal Converted | $ 30,000 |
Accrued Interest Converted | |
Total Converted | $ 30,000 |
Conversion Rate | $ / shares | $ 0.005 |
Common Shares Issued | shares | 5,741,627 |
December 11, 2015 | Subsequent Period Conversion [Member] | |
Debt Instrument [Line Items] | |
Principal Converted | $ 22,000 |
Accrued Interest Converted | |
Total Converted | $ 22,000 |
Conversion Rate | $ / shares | $ 0.002 |
Common Shares Issued | shares | 9,090,909 |
December 28, 2015 | Subsequent Period Conversion [Member] | |
Debt Instrument [Line Items] | |
Principal Converted | $ 22,500 |
Accrued Interest Converted | |
Total Converted | $ 22,500 |
Conversion Rate | $ / shares | $ 0.002 |
Common Shares Issued | shares | 9,297,521 |
January 7, 2016 | Subsequent Period Conversion [Member] | |
Debt Instrument [Line Items] | |
Principal Converted | $ 20,000 |
Accrued Interest Converted | |
Total Converted | $ 20,000 |
Conversion Rate | $ / shares | $ 0.002 |
Common Shares Issued | shares | 10,101,010 |
Third Party Debt (Details 1)
Third Party Debt (Details 1) - $2M Securities Purchase Agreement [Member] - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Aug. 13, 2015 | |
Debt Instrument [Line Items] | ||
Principal Converted | $ 203,410 | $ 2,000,000 |
Accrued Interest Converted | ||
Total Converted | $ 203,410 | |
Common Shares Issued | 4,456,404 | |
Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 541,604 | |
Accrued Interest Converted | 11,225 | |
Total Converted | $ 552,830 | |
Common Shares Issued | 82,775,494 | |
August 13, 2015 | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 50,000 | |
Accrued Interest Converted | ||
Total Converted | $ 50,000 | |
Conversion Rate | $ 0.127 | |
Common Shares Issued | 393,701 | |
August 26, 2015 | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 25,000 | |
Accrued Interest Converted | ||
Total Converted | $ 25,000 | |
Conversion Rate | $ 0.056 | |
Common Shares Issued | 446,428 | |
September 8, 2015 | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 25,000 | |
Accrued Interest Converted | ||
Total Converted | $ 25,000 | |
Conversion Rate | $ 0.056 | |
Common Shares Issued | 446,428 | |
September 14, 2015 | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 25,000 | |
Accrued Interest Converted | ||
Total Converted | $ 25,000 | |
Conversion Rate | $ 0.053 | |
Common Shares Issued | 469,925 | |
September 16, 2015 | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 10,000 | |
Accrued Interest Converted | ||
Total Converted | $ 10,000 | |
Conversion Rate | $ 0.053 | |
Common Shares Issued | 188,679 | |
September 17, 2015 | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 25,000 | |
Accrued Interest Converted | ||
Total Converted | $ 25,000 | |
Conversion Rate | $ 0.053 | |
Common Shares Issued | 469,925 | |
September 22, 2015 | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 10,000 | |
Accrued Interest Converted | ||
Total Converted | $ 10,000 | |
Conversion Rate | $ 0.043 | |
Common Shares Issued | 232,558 | |
September 24, 2015 | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 10,000 | |
Accrued Interest Converted | ||
Total Converted | $ 10,000 | |
Conversion Rate | $ 0.026 | |
Common Shares Issued | 390,625 | |
September 25, 2015 | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 10,000 | |
Accrued Interest Converted | ||
Total Converted | $ 10,000 | |
Conversion Rate | $ 0.019 | |
Common Shares Issued | 518,135 | |
September 29, 2015 | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 13,410 | |
Accrued Interest Converted | ||
Total Converted | $ 13,410 | |
Conversion Rate | $ 0.015 | |
Common Shares Issued | 900,000 | |
October 1, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 10,000 | |
Accrued Interest Converted | ||
Total Converted | $ 10,000 | |
Conversion Rate | $ 0.0148 | |
Common Shares Issued | 675,676 | |
October 5, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 10,000 | |
Accrued Interest Converted | ||
Total Converted | $ 10,000 | |
Conversion Rate | $ 0.0148 | |
Common Shares Issued | 675,676 | |
October 6, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 13,262 | |
Accrued Interest Converted | ||
Total Converted | $ 13,262 | |
Conversion Rate | $ 0.0138 | |
Common Shares Issued | 961,000 | |
October 7, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 10,000 | |
Accrued Interest Converted | ||
Total Converted | $ 10,000 | |
Conversion Rate | $ 0.0115 | |
Common Shares Issued | 865,801 | |
October 9, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 11,728 | |
Accrued Interest Converted | ||
Total Converted | $ 11,728 | |
Conversion Rate | $ 0.0116 | |
Common Shares Issued | 1,011,000 | |
October 9, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 10,000 | |
Accrued Interest Converted | ||
Total Converted | $ 10,000 | |
Conversion Rate | $ 0.0115 | |
Common Shares Issued | 865,801 | |
October 12, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 14,680 | |
Accrued Interest Converted | ||
Total Converted | $ 14,680 | |
Conversion Rate | $ 0.0115 | |
Common Shares Issued | 1,271,000 | |
October 13, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 11,601 | |
Accrued Interest Converted | ||
Total Converted | $ 11,601 | |
Conversion Rate | $ 0.0116 | |
Common Shares Issued | 1,000,052 | |
October 15, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 14,680 | |
Accrued Interest Converted | ||
Total Converted | $ 14,680 | |
Conversion Rate | $ 0.0115 | |
Common Shares Issued | 1,271,000 | |
October 19, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 17,400 | |
Accrued Interest Converted | ||
Total Converted | $ 17,400 | |
Conversion Rate | $ 0.0116 | |
Common Shares Issued | 1,500,000 | |
October 19, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 15,000 | |
Accrued Interest Converted | ||
Total Converted | $ 15,000 | |
Conversion Rate | $ 0.0116 | |
Common Shares Issued | 1,298,701 | |
October 20, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 16,650 | |
Accrued Interest Converted | ||
Total Converted | $ 16,650 | |
Conversion Rate | $ 0.0111 | |
Common Shares Issued | 1,500,000 | |
October 21, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 17,500 | |
Accrued Interest Converted | ||
Total Converted | $ 17,500 | |
Conversion Rate | $ 0.0115 | |
Common Shares Issued | 1,515,152 | |
October 23, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 20,000 | |
Accrued Interest Converted | ||
Total Converted | $ 20,000 | |
Conversion Rate | $ 0.0115 | |
Common Shares Issued | 1,731,602 | |
October 26, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 24,420 | |
Accrued Interest Converted | ||
Total Converted | $ 24,420 | |
Conversion Rate | $ 0.0111 | |
Common Shares Issued | 2,200,000 | |
October 29, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 26,640 | |
Accrued Interest Converted | ||
Total Converted | $ 26,640 | |
Conversion Rate | $ 0.0111 | |
Common Shares Issued | 2,400,000 | |
November 2, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 29,970 | |
Accrued Interest Converted | ||
Total Converted | $ 29,970 | |
Conversion Rate | $ 0.0111 | |
Common Shares Issued | 2,700,000 | |
November 2, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 20,000 | |
Accrued Interest Converted | ||
Total Converted | $ 20,000 | |
Conversion Rate | $ 0.0111 | |
Common Shares Issued | 1,809,136 | |
November 5, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 32,190 | |
Accrued Interest Converted | ||
Total Converted | $ 32,190 | |
Conversion Rate | $ 0.0111 | |
Common Shares Issued | 2,900,000 | |
November 10, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 28,800 | |
Accrued Interest Converted | ||
Total Converted | $ 28,800 | |
Conversion Rate | $ 0.0096 | |
Common Shares Issued | 3,000,000 | |
November 12, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 23,930 | |
Accrued Interest Converted | ||
Total Converted | $ 23,930 | |
Conversion Rate | $ 0.0072 | |
Common Shares Issued | 3,323,611 | |
November 17, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 16,500 | |
Accrued Interest Converted | ||
Total Converted | $ 16,500 | |
Conversion Rate | $ 0.0060 | |
Common Shares Issued | 2,727,273 | |
November 19, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 1,640 | |
Accrued Interest Converted | 11,225 | |
Total Converted | $ 12,865 | |
Conversion Rate | $ 0.0056 | |
Common Shares Issued | 2,316,013 | |
November 23, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 23,111 | |
Accrued Interest Converted | ||
Total Converted | $ 23,111 | |
Conversion Rate | $ 0.0056 | |
Common Shares Issued | 4,127,000 | |
November 27, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 24,750 | |
Accrued Interest Converted | ||
Total Converted | $ 24,750 | |
Conversion Rate | $ 0.0055 | |
Common Shares Issued | 4,500,000 | |
December 2, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 18,450 | |
Accrued Interest Converted | ||
Total Converted | $ 18,450 | |
Conversion Rate | $ 0.0041 | |
Common Shares Issued | 4,500,000 | |
December 8, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 18,000 | |
Accrued Interest Converted | ||
Total Converted | $ 18,000 | |
Conversion Rate | $ 0.0036 | |
Common Shares Issued | 5,000,000 | |
December 11, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 13,368 | |
Accrued Interest Converted | ||
Total Converted | $ 13,368 | |
Conversion Rate | $ 0.0024 | |
Common Shares Issued | 5,570,000 | |
December 16, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 14,181 | |
Accrued Interest Converted | ||
Total Converted | $ 14,181 | |
Conversion Rate | $ 0.0024 | |
Common Shares Issued | 5,860,000 | |
December 22, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 15,488 | |
Accrued Interest Converted | ||
Total Converted | $ 15,488 | |
Conversion Rate | $ 0.0024 | |
Common Shares Issued | 6,400,000 | |
December 29, 2015 | Subsequent Period Conversion [Member] | ||
Debt Instrument [Line Items] | ||
Principal Converted | $ 17,666 | |
Accrued Interest Converted | ||
Total Converted | $ 17,666 | |
Conversion Rate | $ 0.0024 | |
Common Shares Issued | 7,300,000 |
Third Party Debt (Details Textu
Third Party Debt (Details Textual) | Dec. 14, 2015USD ($)shares | Dec. 10, 2015USD ($) | Aug. 26, 2015USD ($) | Aug. 13, 2015USD ($) | Aug. 12, 2015USD ($)$ / shares | Aug. 05, 2015USD ($) | Mar. 12, 2015USD ($)$ / sharesshares | Feb. 10, 2015USD ($)$ / shares | Dec. 02, 2014USD ($) | Feb. 11, 2014USD ($)investors$ / shares | Feb. 18, 2014USD ($)$ / sharesshares | Jun. 30, 2014USD ($) | Jun. 30, 2014USD ($) | Sep. 30, 2015USD ($)shares | Sep. 30, 2014USD ($) | Dec. 03, 2014USD ($)$ / shares |
Third Party Debt (Textual) | ||||||||||||||||
Amortized discount to interest expense | $ 1,000 | |||||||||||||||
Original issue discount | 400,000 | |||||||||||||||
Accrued interest | 1,143 | |||||||||||||||
Interest expense | 1,745,408 | $ 241,065 | ||||||||||||||
Deferred financing costs | 107,908 | |||||||||||||||
Deferred financing costs, long-term | 12,067 | |||||||||||||||
Original issue discount of note | $ 5,000 | |||||||||||||||
Net proceeds | $ 341,290 | |||||||||||||||
Amortization of interest expense | $ 54,456 | |||||||||||||||
Convertible notes payable, current | 522,396 | 187,667 | ||||||||||||||
Convertible notes payable, long-term | 300,156 | 178,200 | ||||||||||||||
Unamortized discount convertible notes payable, current | 153,096 | 32,333 | ||||||||||||||
Unamortized discount convertible notes payable, non current | 665,607 | 19,800 | ||||||||||||||
Total unamortized discounts | 44,558 | |||||||||||||||
Loss on debt extinguishment | $ 582,254 | $ 369,324 | 625,461 | |||||||||||||
Fair value of derivative liability | 643,912 | |||||||||||||||
Subsequent Event [Member] | ||||||||||||||||
Third Party Debt (Textual) | ||||||||||||||||
Convertible note principal amount | $ 105,000 | |||||||||||||||
September 30, 2016 [Member] | ||||||||||||||||
Third Party Debt (Textual) | ||||||||||||||||
Amortized discount to interest expense | 179,528 | |||||||||||||||
Amortization of interest expense | 107,909 | |||||||||||||||
Minimum principal payments | 1,487,256 | |||||||||||||||
September 30, 2017 [Member] | ||||||||||||||||
Third Party Debt (Textual) | ||||||||||||||||
Amortized discount to interest expense | 695,963 | |||||||||||||||
Amortization of interest expense | 12,067 | |||||||||||||||
Minimum principal payments | 154,000 | |||||||||||||||
Securities Purchase Agreement [Member] | ||||||||||||||||
Third Party Debt (Textual) | ||||||||||||||||
Principal amount | 191,334 | |||||||||||||||
Amortized discount to interest expense | 27,778 | |||||||||||||||
Deferred financing costs | 45,940 | |||||||||||||||
Amortization of interest expense | 25,522 | |||||||||||||||
Converted amount | $ 224,500 | |||||||||||||||
Converted shares | shares | 3,265,987 | |||||||||||||||
Securities Purchase Agreement [Member] | Investor [Member] | ||||||||||||||||
Third Party Debt (Textual) | ||||||||||||||||
Principal amount | $ 500,000 | |||||||||||||||
Original issue discount | 50,000 | |||||||||||||||
Transaction expenses | $ 10,000 | |||||||||||||||
Finder's fee | 25,000 | |||||||||||||||
Net proceeds | 475,000 | |||||||||||||||
Unsecured convertible promissory note principal amount | $ 560,000 | |||||||||||||||
$2M Securities Purchase Agreement [Member] | ||||||||||||||||
Third Party Debt (Textual) | ||||||||||||||||
Principal amount | 2,000,000 | $ 203,410 | ||||||||||||||
Interest rate | 10.00% | |||||||||||||||
Conversion price | $ / shares | $ 0.50 | |||||||||||||||
Discount related to beneficial conversion feature | 108,641 | |||||||||||||||
Original issue discount | $ 182,000 | |||||||||||||||
Convertible notes payable | 1,808,000 | |||||||||||||||
Accrued and unpaid interest | 11,225 | |||||||||||||||
Accrued interest | 26,861 | |||||||||||||||
Interest expense | 38,086 | |||||||||||||||
Transaction expenses | $ 10,000 | 148,600 | ||||||||||||||
Value of note issued | 655,816 | 800,000 | ||||||||||||||
Original issue discount of note | 148,600 | |||||||||||||||
Net proceeds | 651,395 | |||||||||||||||
Amortization of interest expense | 46,087 | |||||||||||||||
Unamortized discount convertible notes payable, current | 10,427 | |||||||||||||||
Unamortized discount convertible notes payable, non current | 82,822 | |||||||||||||||
Total unamortized discounts | 94,184 | 108,641 | ||||||||||||||
Unamortized long term discounts | 458,782 | |||||||||||||||
Percentage of premium amount | 25.00% | |||||||||||||||
Percentage of conversion price | 70.00% | |||||||||||||||
Converted amount | $ 203,410 | |||||||||||||||
Converted shares | shares | 4,456,404 | |||||||||||||||
Unsecured convertible promissory note principal amount | $ 2,000,000 | |||||||||||||||
Loss on debt extinguishment | 315,140 | |||||||||||||||
Fair value of derivative liability | 970,956 | |||||||||||||||
Derivative discount | 655,816 | |||||||||||||||
$2M Securities Purchase Agreement [Member] | September 30, 2015 [Member] | ||||||||||||||||
Third Party Debt (Textual) | ||||||||||||||||
Amortization of interest expense | $ 183,189 | |||||||||||||||
Fair value of loss on debt | 288,763 | |||||||||||||||
Converted amount | 230,905 | |||||||||||||||
Fair value of derivative liability | 1,028,814 | |||||||||||||||
Minimum [Member] | $2M Securities Purchase Agreement [Member] | ||||||||||||||||
Third Party Debt (Textual) | ||||||||||||||||
Principal amount | 800,000 | $ 800,000 | ||||||||||||||
Maximum [Member] | $2M Securities Purchase Agreement [Member] | ||||||||||||||||
Third Party Debt (Textual) | ||||||||||||||||
Principal amount | $ 2,000,000 | |||||||||||||||
6% Convertible Notes [Member] | ||||||||||||||||
Third Party Debt (Textual) | ||||||||||||||||
Principal amount | $ 230,000 | |||||||||||||||
Interest rate | 6.00% | 6.00% | ||||||||||||||
Amortized discount to interest expense | $ 32,333 | $ 57,667 | ||||||||||||||
Discount related to beneficial conversion feature | $ 92,000 | |||||||||||||||
Convertible notes payable | $ 17,200 | |||||||||||||||
Number of accredited investors | investors | 10 | |||||||||||||||
Conversion description | The conversion price of these 6% Notes is the average of the fifteen (15) lowest daily VWAP's occurring during the twenty (20) consecutive trading days immediately preceding the date each Holder elects convert all of their 6% Note minus a discount of 40%. | |||||||||||||||
Accrued interest | 1,010 | |||||||||||||||
Interest expense | 1,010 | |||||||||||||||
Percentage of note outstanding | 6.00% | |||||||||||||||
Fair value of loss on debt | $ 23,443 | |||||||||||||||
Converted amount | $ 80,000 | |||||||||||||||
Converted shares | shares | 160,000 | |||||||||||||||
Converted shares outstanding | $ 30,000 | |||||||||||||||
Proceeds from initial investor | 800,000 | |||||||||||||||
6% Convertible Notes [Member] | Subsequent Event [Member] | ||||||||||||||||
Third Party Debt (Textual) | ||||||||||||||||
Accrued interest | $ 1,351 | |||||||||||||||
Shares of common stock | shares | 13,063,013 | |||||||||||||||
Converted amount | $ 30,000 | |||||||||||||||
6% Convertible Notes [Member] | Securities Purchase Agreement [Member] | ||||||||||||||||
Third Party Debt (Textual) | ||||||||||||||||
Deferred financing costs | 20,418 | |||||||||||||||
6% Convertible Notes [Member] | Minimum [Member] | ||||||||||||||||
Third Party Debt (Textual) | ||||||||||||||||
Maturity date | Feb. 28, 2015 | |||||||||||||||
Conversion price | $ / shares | $ 0.50 | $ 1 | ||||||||||||||
6% Convertible Notes [Member] | Maximum [Member] | ||||||||||||||||
Third Party Debt (Textual) | ||||||||||||||||
Maturity date | Mar. 31, 2015 | |||||||||||||||
Conversion price | $ / shares | $ 1 | $ 3 | ||||||||||||||
10% Convertible Notes [Member] | Securities Purchase Agreement [Member] | ||||||||||||||||
Third Party Debt (Textual) | ||||||||||||||||
Interest rate | 10.00% | |||||||||||||||
Conversion price | $ / shares | $ 0.50 | |||||||||||||||
Discount related to beneficial conversion feature | $ 168,000 | |||||||||||||||
Conversion description | The Note bears interest at the rate of 10% per annum and is convertible into common stock of the Company at a conversion price per share of 70% of the average of the three (3) lowest Closing Sale Prices in the ten (10) Trading Days immediately preceding the applicable Conversion (subject to adjustment in the event of stock splits, stock dividends, and similar transactions, and in the event of subsequent sales of common stock at a lower purchase price (subject to certain exceptions))(the "Conversion Price"). In no event will the Conversion Price be less than $0.50 per share. | |||||||||||||||
Repayment of debt description | Repayment of principal on the Note, together with accrued interest thereon, is due in twelve monthly installments, commencing six months from issuance. The Company may make such payments in cash (in which event the Company will pay a 25% premium) or, subject to certain conditions, in shares of common stock valued at the lower of the Conversion Price or 70% of the average of the three (3) lowest Closing Sale Prices in the ten (10) Trading Days immediately preceding the applicable payment date. | |||||||||||||||
Value of note issued | 332,666 | |||||||||||||||
Total unamortized discounts | 109,000 | |||||||||||||||
Converted amount | 123,310 | |||||||||||||||
Loss on debt extinguishment | 498,254 | 84,000 | ||||||||||||||
Fair value of derivative liability | 830,921 | 63,699 | ||||||||||||||
Derivative discount | $ 332,666 | 54,984 | ||||||||||||||
8% Convertible Note [Member] | ||||||||||||||||
Third Party Debt (Textual) | ||||||||||||||||
Principal amount | $ 20,000 | |||||||||||||||
Maturity date | Feb. 18, 2016 | |||||||||||||||
Interest rate | 8.00% | |||||||||||||||
Conversion price | $ / shares | $ 0.498 | |||||||||||||||
Amortized discount to interest expense | $ 1,000 | $ 1,667 | ||||||||||||||
Discount related to beneficial conversion feature | $ 8,000 | |||||||||||||||
Original issue discount | 5,333 | |||||||||||||||
Accrued and unpaid interest | $ 1,100 | |||||||||||||||
Conversion description | The conversion price for the notes was the lowest market closing price per share within the previous twenty (20) market days of the date of conversion minus a discount of forty percent (40%). | |||||||||||||||
Converted shares | shares | 42,370 | |||||||||||||||
Convertible Note [Member] | ||||||||||||||||
Third Party Debt (Textual) | ||||||||||||||||
Accrued interest | 9,945 | |||||||||||||||
Interest expense | 43,111 | |||||||||||||||
Convertible notes payable, current | 23,969 | |||||||||||||||
Convertible notes payable, long-term | 44,794 | |||||||||||||||
Unamortized discount convertible notes payable, current | 104,538 | |||||||||||||||
Unamortized discount convertible notes payable, non current | 195,366 | |||||||||||||||
Convertible Note Financing [Member] | ||||||||||||||||
Third Party Debt (Textual) | ||||||||||||||||
Principal amount | $ 105,000 | |||||||||||||||
Interest rate | 8.00% | |||||||||||||||
Conversion price | $ / shares | $ 58 | |||||||||||||||
Original issue discount | 12,500 | |||||||||||||||
Accrued interest | 8,388 | |||||||||||||||
Interest expense | 8,388 | |||||||||||||||
Original issue discount of note | $ 1,042 | |||||||||||||||
Percentage of conversion price | 150.00% | |||||||||||||||
Certain fees | $ 541,000 |
Related Party Debt (Details)
Related Party Debt (Details) - USD ($) | Aug. 26, 2015 | Aug. 13, 2015 | Jan. 22, 2015 | Dec. 04, 2014 | Oct. 28, 2014 | Aug. 11, 2014 | May. 12, 2014 | Mar. 17, 2014 | Feb. 28, 2014 | Dec. 07, 2013 | Feb. 18, 2014 | Jun. 30, 2014 | Mar. 31, 2015 | Jun. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2013 |
Related Party Debt (Textual) | ||||||||||||||||||
Unamortized discount convertible notes payable, non current | $ 665,607 | $ 19,800 | ||||||||||||||||
Notes payable, related parties | 265,000 | 341,290 | ||||||||||||||||
Accrued interest | 46,337 | 16,300 | ||||||||||||||||
Interest Expense | 1,745,408 | 241,065 | ||||||||||||||||
Unamortized discount | 400,000 | |||||||||||||||||
Amortized discount to interest expense | 1,000 | |||||||||||||||||
Gain on extinguishment of debt | $ 582,254 | $ 369,324 | 625,461 | |||||||||||||||
Hive Asset Acquisition [Member] | ||||||||||||||||||
Related Party Debt (Textual) | ||||||||||||||||||
Interest rate | 6.00% | |||||||||||||||||
Accrued interest | 22,893 | |||||||||||||||||
Maturity date | Feb. 27, 2016 | |||||||||||||||||
Interest expense related to notes payable | 15,208 | |||||||||||||||||
Principal amount | $ 250,000 | |||||||||||||||||
8% Convertible Note [Member] | ||||||||||||||||||
Related Party Debt (Textual) | ||||||||||||||||||
Interest rate | 8.00% | |||||||||||||||||
Accounts payable, related parties | $ 20,000 | |||||||||||||||||
Maturity date | Feb. 18, 2016 | |||||||||||||||||
Principal amount | $ 20,000 | |||||||||||||||||
Conversion price | $ 0.498 | |||||||||||||||||
Unamortized discount | $ 5,333 | |||||||||||||||||
Common stock issued on conversion | 42,370 | |||||||||||||||||
Discount related to beneficial conversion feature | $ 8,000 | |||||||||||||||||
Amortized discount to interest expense | $ 1,000 | $ 1,667 | ||||||||||||||||
Conversion description | The conversion price for the notes was the lowest market closing price per share within the previous twenty (20) market days of the date of conversion minus a discount of forty percent (40%). | |||||||||||||||||
Accrued and unpaid interest | $ 1,100 | |||||||||||||||||
Related Party [Member] | ||||||||||||||||||
Related Party Debt (Textual) | ||||||||||||||||||
Accounts payable, related parties | $ 40,000 | |||||||||||||||||
Maturity date | May 1, 2016 | |||||||||||||||||
Joseph Andreae [Member] | ||||||||||||||||||
Related Party Debt (Textual) | ||||||||||||||||||
Accounts payable outstanding | $ 12,828 | |||||||||||||||||
Interest rate | 6.00% | 6.00% | ||||||||||||||||
Notes payable, related parties | $ 12,828 | $ 40,000 | ||||||||||||||||
Accrued interest | $ 1,348 | |||||||||||||||||
Maturity date | Nov. 30, 2014 | May 1, 2016 | ||||||||||||||||
Repayament of principal balance | 40,000 | |||||||||||||||||
Joseph Andreae [Member] | Andreae Note II [Member] | ||||||||||||||||||
Related Party Debt (Textual) | ||||||||||||||||||
Accrued interest | 240 | |||||||||||||||||
Repayament of principal balance | $ 12,828 | |||||||||||||||||
Jerome Kaiser [Member] | 8% Convertible Note [Member] | ||||||||||||||||||
Related Party Debt (Textual) | ||||||||||||||||||
Interest rate | 8.00% | |||||||||||||||||
Accrued interest | $ 4,000 | |||||||||||||||||
Maturity date | Mar. 17, 2015 | |||||||||||||||||
Future principal payments of related party notes payable | $ 50,000 | |||||||||||||||||
Notes payable | $ 50,000 | |||||||||||||||||
Principal amount | 50,000 | |||||||||||||||||
Discount related to beneficial conversion feature | $ 10,000 | |||||||||||||||||
Amortized discount to interest expense | $ 4,167 | |||||||||||||||||
Conversion description | The conversion price for the Kaiser Note is the market closing price of the market day immediately preceding the date of conversion minus twenty percent (20%). | |||||||||||||||||
Kyle [Member] | 6% Note [Member] | ||||||||||||||||||
Related Party Debt (Textual) | ||||||||||||||||||
Interest rate | 6.00% | |||||||||||||||||
Notes payable, related parties | $ 40,000 | $ 40,000 | ||||||||||||||||
Interest expense related to notes payable | $ 1,098 | |||||||||||||||||
Conversion price | $ 1 | |||||||||||||||||
Unamortized discount | 13,333 | |||||||||||||||||
Common stock issued on conversion | 41,098 | |||||||||||||||||
Discount related to beneficial conversion feature | $ 16,000 | |||||||||||||||||
Amortized discount to interest expense | 6,667 | |||||||||||||||||
Kyle Tracey [Member] | 8% Convertible Note [Member] | ||||||||||||||||||
Related Party Debt (Textual) | ||||||||||||||||||
Interest rate | 8.00% | |||||||||||||||||
Accounts payable, related parties | $ 10,612 | |||||||||||||||||
Maturity date | Feb. 18, 2016 | |||||||||||||||||
Interest expense related to notes payable | $ 584 | |||||||||||||||||
Principal amount | $ 10,612 | |||||||||||||||||
Conversion price | $ 0.498 | |||||||||||||||||
Unamortized discount | 2,830 | |||||||||||||||||
Common stock issued on conversion | 22,481 | |||||||||||||||||
Discount related to beneficial conversion feature | $ 4,245 | |||||||||||||||||
Amortized discount to interest expense | 1,415 | |||||||||||||||||
Conversion description | The conversion price for the Tracey Note was the lowest market closing price per share within the previous twenty (20) market days of the date of conversion minus a discount of forty percent (40%). | |||||||||||||||||
Kyle Tracey Two [Member] | 8% Convertible Note [Member] | ||||||||||||||||||
Related Party Debt (Textual) | ||||||||||||||||||
Interest rate | 8.00% | |||||||||||||||||
Accounts payable, related parties | $ 11,042 | |||||||||||||||||
Maturity date | May 12, 2016 | |||||||||||||||||
Interest expense related to notes payable | $ 407 | |||||||||||||||||
Principal amount | $ 11,042 | |||||||||||||||||
Conversion price | $ 0.498 | |||||||||||||||||
Unamortized discount | 3,497 | |||||||||||||||||
Common stock issued on conversion | 22,989 | |||||||||||||||||
Discount related to beneficial conversion feature | $ 4,417 | |||||||||||||||||
Amortized discount to interest expense | 920 | |||||||||||||||||
Conversion description | The conversion price for the Tracey Note II was the lowest market closing price per share within the previous twenty (20) market days of the date of conversion minus a discount of forty percent (40%). | |||||||||||||||||
Michael Cook [Member] | 8% Convertible Note [Member] | ||||||||||||||||||
Related Party Debt (Textual) | ||||||||||||||||||
Interest rate | 8.00% | |||||||||||||||||
Accounts payable, related parties | $ 11,825 | |||||||||||||||||
Maturity date | May 12, 2016 | |||||||||||||||||
Interest expense related to notes payable | $ 435 | |||||||||||||||||
Principal amount | $ 11,825 | |||||||||||||||||
Conversion price | $ 0.498 | |||||||||||||||||
Unamortized discount | 3,745 | |||||||||||||||||
Common stock issued on conversion | 24,619 | |||||||||||||||||
Discount related to beneficial conversion feature | $ 4,730 | |||||||||||||||||
Amortized discount to interest expense | $ 985 | |||||||||||||||||
Conversion description | The conversion price for the Cook Note was the lowest market closing price per share within the previous twenty (20) market days of the date of conversion minus a discount of forty percent (40%). | |||||||||||||||||
Mr. Cook [Member] | 8% Convertible Note [Member] | ||||||||||||||||||
Related Party Debt (Textual) | ||||||||||||||||||
Interest rate | 8.00% | |||||||||||||||||
Accounts payable, related parties | $ 15,115 | |||||||||||||||||
Maturity date | Aug. 11, 2016 | |||||||||||||||||
Interest expense related to notes payable | $ 255 | |||||||||||||||||
Principal amount | $ 15,115 | $ 15,115 | ||||||||||||||||
Conversion price | $ 0.498 | |||||||||||||||||
Unamortized discount | 5,542 | |||||||||||||||||
Common stock issued on conversion | 30,864 | |||||||||||||||||
Discount related to beneficial conversion feature | $ 6,046 | |||||||||||||||||
Conversion description | The conversion price for the Cook Note II was the lowest market closing price per share within the previous twenty (20) market days of the date of conversion minus a discount of forty percent (40%). | |||||||||||||||||
Mr. Tracey [Member] | 8% Convertible Note [Member] | ||||||||||||||||||
Related Party Debt (Textual) | ||||||||||||||||||
Interest rate | 8.00% | |||||||||||||||||
Accounts payable, related parties | $ 216,001 | |||||||||||||||||
Maturity date | Aug. 11, 2016 | |||||||||||||||||
Interest expense related to notes payable | $ 3,645 | |||||||||||||||||
Principal amount | $ 216,001 | $ 216,001 | ||||||||||||||||
Conversion price | $ 0.498 | |||||||||||||||||
Unamortized discount | 79,200 | |||||||||||||||||
Common stock issued on conversion | 441,057 | |||||||||||||||||
Discount related to beneficial conversion feature | $ 86,401 | |||||||||||||||||
Conversion description | The conversion price for the Tracey Note III was the lowest market closing price per share within the previous twenty (20) market days of the date of conversion minus a discount of forty percent (40%). | |||||||||||||||||
Shareholder [Member] | ||||||||||||||||||
Related Party Debt (Textual) | ||||||||||||||||||
Interest rate | 6.00% | |||||||||||||||||
Notes payable, related parties | $ 23,462 | |||||||||||||||||
Accounts payable, related parties | $ 15,000 | |||||||||||||||||
Accrued interest | $ 1,504 | 1,645 | ||||||||||||||||
Maturity date | Dec. 1, 2016 | |||||||||||||||||
Interest expense related to notes payable | $ 913 | |||||||||||||||||
Notes payable | 20,000 | |||||||||||||||||
Gain on extinguishment of debt | $ 3,462 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | May. 01, 2015USD ($) | Dec. 15, 2014USD ($) | Jan. 31, 2015shares | Mar. 31, 2014USD ($)$ / sharesshares | Sep. 30, 2015USD ($)ft²shares | Sep. 30, 2014USD ($) | Dec. 21, 2015USD ($)shares | Oct. 22, 2015USD ($)$ / sharesshares |
Other Commitments [Line Items] | ||||||||
Company leases for office | ft² | 5,000 | |||||||
Leases rent expense | $ 4,947 | |||||||
Lease expiration date | Nov. 30, 2015 | |||||||
Warrant liability | $ 2,464,232 | |||||||
Net proceeds from settlement | $ 62,930 | |||||||
Vendor credits on settlement | 200,000 | |||||||
Total vendor credits on settlement | 325,000 | |||||||
Treasury stock value | $ 367,531 | |||||||
Treasury stock, shares | shares | 690,625 | |||||||
Gain on settlement | $ 625,461 | |||||||
Gain on change in warrant liability | 2,432,832 | |||||||
Subsequent Event [Member] | ||||||||
Other Commitments [Line Items] | ||||||||
Shares issued, price per share | $ / shares | $ 0.024 | |||||||
Treasury stock value | $ 36,600 | $ 171,800 | ||||||
Treasury stock, shares | shares | 60,000 | 260,000 | ||||||
Chief Science Officer [Member] | ||||||||
Other Commitments [Line Items] | ||||||||
Term of executive employment agreement | 2 years | |||||||
Annual salary | $ 102,000 | |||||||
Bonus compensation description | Additionally, Dr. Scialdone is entitled to receive severance equal to six (6) months base salary if terminated without cause by the Company. | |||||||
Betterchem [Member] | ||||||||
Other Commitments [Line Items] | ||||||||
Treasury stock value | $ 67,500 | |||||||
Treasury stock, shares | shares | 250,000 | |||||||
Shareholders and Related Parties [Member] | ||||||||
Other Commitments [Line Items] | ||||||||
Gain on settlement | $ 257,930 | |||||||
Officer [Member] | ||||||||
Other Commitments [Line Items] | ||||||||
Shares assigned to officers | shares | 440,625 | |||||||
Treasury stock value | $ 367,531 | |||||||
Treasury stock, shares | shares | 440,625 | |||||||
Warrant [Member] | ||||||||
Other Commitments [Line Items] | ||||||||
Shares issued, price per share | $ / shares | $ 7.25 | |||||||
Loss on settlement of warrants | $ 29,528,844 | |||||||
Long term warrant liability | $ 29,430,022 | |||||||
Closing stock shares | shares | 4,407,200 | |||||||
Fair value of warrant liability | $ 1,184,727 | |||||||
Warrant liability | $ 31,401 | |||||||
Warrant [Member] | Minimum [Member] | ||||||||
Other Commitments [Line Items] | ||||||||
Shares issued, price per share | $ / shares | $ 4.72 | |||||||
Warrant [Member] | Maximum [Member] | ||||||||
Other Commitments [Line Items] | ||||||||
Shares issued, price per share | $ / shares | $ 7.25 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Current tax provision (benefit): | ||
Federal | ||
State | $ 2,209 | $ 800 |
Total | 2,209 | 800 |
Deferred tax provision (benefit) | ||
Federal | $ (418,000) | $ (262,000) |
State | ||
Valuation allowance | $ 418,000 | $ 262,000 |
Total | ||
Total provision (benefit) for income taxes | $ 2,209 | $ 800 |
Income Taxes (Details 1)
Income Taxes (Details 1) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Reconciliations of the U.S. federal statutory rate to the actual tax rate | ||
US federal statutory income tax rate | (34.00%) | (34.00%) |
State tax - net of benefit | (6.00%) | (6.00%) |
Effective income tax rate reconciliation total | (40.00%) | (40.00%) |
Permanent differences: | 38.70% | |
Stock-based compensation | 2.80% | 0.20% |
Changes in warrant liability | 1.00% | |
Increase in valuation allowance | 37.20% | 0.10% |
Effective tax rate |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Current deferred tax assets (liabilities): | ||
Accrued expenses and other | ||
Total current deferred tax assets | ||
Non-current deferred tax assets and liabilities: | ||
Property, plant and equipment | $ 29,000 | $ 29,000 |
Net operating losses | 680,000 | 262,000 |
Total non-current deferred tax assets | 709,000 | 291,000 |
Valuation allowance | $ (709,000) | $ (291,000) |
Total non-current deferred tax assets | ||
Net deferred tax assets |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Income Taxes (Textual) | ||
Valuation allowance, Deferred tax assets | $ 418,000 | $ 233,000 |
Net operating losses | $ 680,000 | |
Operating loss carryforward expiration date | The net operating loss carry forwards, if not utilized, will begin to expire in 2033 for federal purposes and 2031 for state purposes. | |
State tax liability | ||
Valuation allowance | $ 709,000 | $ 291,000 |
Stockholders' Deficit (Details)
Stockholders' Deficit (Details) | 12 Months Ended |
Sep. 30, 2015USD ($)$ / sharesshares | |
Warrant [Member] | |
STOCK OPTIONS/WARRANTS: | |
Options/ Warrants outstanding, Shares, Beginning balance | shares | 1,184,726 |
Options/ Warrants issued/granted | shares | |
Option/ Warrants exercised | shares | |
Option/ Warrants Cancelled/forfeited/expired | shares | |
Options/ Warrants Outstanding, Shares, Ending Balance | shares | 1,184,726 |
Option/ Warrents Weighted Average Exercise Price, Beginning balance | $ / shares | $ 0.114 |
Option/ Warrents issued/granted, Weighted Average Exercise Price | $ / shares | |
Option/ Warrents exercised, Weighted Average Exercise Price | $ / shares | |
Option/ Warrents Cancelled/forfeited/expired, Weighted Average Exercise Price | $ / shares | |
Option/ Warrents Weighted Average Exercise Price, Ending Balance | $ / shares | $ 0.021 |
Options/ Warrants outstanding, Weighted Average Remaining Contractual Term, Beginning | 1 year 7 months 6 days |
Options/ Warrants outstanding, Weighted Average Remaining Contractual Term, Ending | 7 months 6 days |
Option/ Warrents Outstanding, Aggregate Intrinsic Value, Beginning balance | $ | $ 7,217,234 |
Option/ Warrents Outstanding, Aggregate Intrinsic value, Balance | $ | $ 694,008 |
Stock Options [Member] | |
STOCK OPTIONS/WARRANTS: | |
Options/ Warrants outstanding, Shares, Beginning balance | shares | 1,150,000 |
Options/ Warrants issued/granted | shares | 995,000 |
Option/ Warrants exercised | shares | |
Option/ Warrants Cancelled/forfeited/expired | shares | (2,145,000) |
Options/ Warrants Outstanding, Shares, Ending Balance | shares | |
Options/ Warrants exercisable, Shares | shares | |
Option/ Warrents Weighted Average Exercise Price, Beginning balance | $ / shares | $ 2.92 |
Option/ Warrents issued/granted, Weighted Average Exercise Price | $ / shares | $ 0.73 |
Option/ Warrents exercised, Weighted Average Exercise Price | $ / shares | |
Option/ Warrents Cancelled/forfeited/expired, Weighted Average Exercise Price | $ / shares | $ 1.91 |
Option/ Warrents Weighted Average Exercise Price, Ending Balance | $ / shares | |
Options/ Warrants exercisable, Weighted Average Exercise Price | $ / shares | |
Options/ Warrants outstanding, Weighted Average Remaining Contractual Term, Beginning | 8 years 8 months 12 days |
Options/ Warrants granted, Weighted Average Remaining Contractual Term | 10 years |
Options/ Warrants outstanding, Weighted Average Remaining Contractual Term, Ending | 9 years |
Option/ Warrents Outstanding, Aggregate Intrinsic Value, Beginning balance | $ | $ 4,648,294 |
Option/ Warrents Outstanding, Aggregate Intrinsic value, Balance | $ | |
Options/ Warrants exercisable, Aggregate Intrinsic value | $ |
Stockholders' Deficit (Details
Stockholders' Deficit (Details 1) | 12 Months Ended |
Sep. 30, 2015$ / shares | |
Stockholders' Deficit [Abstract] | |
Stock Price at Grant Date | $ 0.04 |
Dividend Yield | |
Exercise Price | $ 0.023 |
Risk Free Interest Rate | 0.08% |
Volatility | 351.00% |
Average Life | 8 months 12 days |
Stockholders' Deficit (Detail48
Stockholders' Deficit (Details Textual) | Jun. 01, 2015USD ($)$ / sharesshares | Mar. 12, 2015USD ($)Employeeshares | Oct. 20, 2014USD ($)consultant$ / sharesshares | Dec. 31, 2014USD ($)shares | Dec. 22, 2014USD ($)$ / sharesshares | Jun. 27, 2014USD ($)$ / sharesshares | Jun. 19, 2014shares | Apr. 30, 2014shares | Sep. 30, 2015USD ($)$ / sharesshares | Sep. 30, 2014USD ($)shares | Nov. 27, 2013shares |
Stockholders' Deficit (Textual) | |||||||||||
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 | ||||||||
Preferred stock, shares authorized | 100,000,000 | 100,000,000 | 100,000,000 | ||||||||
Common stock issued for services | $ | $ 36,769 | $ 133,200 | |||||||||
Conversion of unpaid wages | $ | $ 96,487 | ||||||||||
Number of employee | Employee | 3 | ||||||||||
Issuance of fair market value | $ | 341,290 | ||||||||||
Exercise price of warrant | $ / shares | $ 0.021 | ||||||||||
Cost of Revenue [Member] | |||||||||||
Stockholders' Deficit (Textual) | |||||||||||
Fair value of the stock vested issuance | $ | $ 24,900 | ||||||||||
Sales and Marketing Expense [Member] | |||||||||||
Stockholders' Deficit (Textual) | |||||||||||
Fair value of the stock vested issuance | $ | 24,900 | ||||||||||
General and Administrative Expense [Member] | |||||||||||
Stockholders' Deficit (Textual) | |||||||||||
Fair value of the stock vested issuance | $ | $ 24,900 | ||||||||||
2014 Incentive and Nonstatutory Stock Option Plan [Member] | |||||||||||
Stockholders' Deficit (Textual) | |||||||||||
Maximum number of shares could be granted under the plan | 2,000,000 | ||||||||||
Under 2014 Stock Option Plan [Member] | |||||||||||
Stockholders' Deficit (Textual) | |||||||||||
Vesting rights, Description | The options vest 25% at grant and 25% each subsequent six (6) months from the date of grant. | The options vest 25% at grant and 25% each subsequent six (6) months from the date of grant. | |||||||||
Options/ Warrants issued/granted | 20,000 | 775,000 | |||||||||
Stock option cancelled | 20,000 | ||||||||||
Option/ Warrents Granted, Weighted Average Exercise Price | $ / shares | $ 0.83 | $ 0.70 | |||||||||
Stock option granted value | $ | $ 16,600 | $ 542,500 | |||||||||
Share-based compensation expense | $ | $ 4,150 | $ 135,625 | |||||||||
Number of options vested | 5,000 | 193,750 | |||||||||
Stock Options [Member] | |||||||||||
Stockholders' Deficit (Textual) | |||||||||||
Options/ Warrants issued/granted | 995,000 | ||||||||||
Stock option cancelled | 2,145,000 | ||||||||||
Option/ Warrents Granted, Weighted Average Exercise Price | $ / shares | $ 0.73 | ||||||||||
Share-based compensation expense | $ | $ 1,006,343 | $ 681,375 | |||||||||
Consulting Agreements [Member] | |||||||||||
Stockholders' Deficit (Textual) | |||||||||||
Vesting rights, Description | The options vest 25% at grant and 25% each subsequent six (6) months from the date of grant. | ||||||||||
Options/ Warrants issued/granted | 200,000 | ||||||||||
Option/ Warrents Granted, Weighted Average Exercise Price | $ / shares | $ 0.83 | ||||||||||
Stock option granted value | $ | $ 166,000 | ||||||||||
Options to purchase shares | 100,000 | ||||||||||
Share-based compensation expense | $ | $ 41,500 | ||||||||||
Additional expenses | $ | $ 3,000 | ||||||||||
Non employee options | 200,000 | ||||||||||
Number of options vested | 50,000 | ||||||||||
Number of consultant | consultant | 2 | ||||||||||
Series A Preferred stock | |||||||||||
Stockholders' Deficit (Textual) | |||||||||||
Shares issued during period | 500,000 | ||||||||||
Preferred stock, shares authorized | 500,000 | ||||||||||
Common stock issued for services, Shares | |||||||||||
Common stock issued for services | $ | |||||||||||
Common stock issued for bonuses, Shares | |||||||||||
Common Stock [Member] | |||||||||||
Stockholders' Deficit (Textual) | |||||||||||
Common stock issued for services, Shares | 60,277 | 50,000 | |||||||||
Common stock issued for services | $ | $ 1 | ||||||||||
Conversion of unpaid wages, Shares | 158,175 | ||||||||||
Conversion of unpaid wages | $ | $ 2 | ||||||||||
Common stock issued for bonuses, Shares | 440,000 | ||||||||||
Preferred Stock [Member] | |||||||||||
Stockholders' Deficit (Textual) | |||||||||||
Shares issued during period | 500,000 | ||||||||||
Preferred stock, shares authorized | 100,000,000 | ||||||||||
Description of asset purchase agreement | Series A Shares are entitled to vote at a 15-1 ratio to Common Stock. | ||||||||||
Convertible price, description | A one-time pro rata adjustment of up to ten-for-one (10-1) based upon the Company generating aggregate gross revenues over the two years of at least $8,000,000 (e.g. If the Company generates only $4,000,000 in aggregate gross revenues over the two year period then the convertible ratio will adjust to 5-1). In no event will the issuance convert into more than 5,000,000 shares of common stock of the Company. | ||||||||||
Common Stock Issued For Bonuses [Member] | Cost of Revenue [Member] | |||||||||||
Stockholders' Deficit (Textual) | |||||||||||
Fair value of the stock vested issuance | $ | $ 9,150 | ||||||||||
Common Stock Issued For Bonuses [Member] | Sales and Marketing Expense [Member] | |||||||||||
Stockholders' Deficit (Textual) | |||||||||||
Fair value of the stock vested issuance | $ | 9,150 | ||||||||||
Common Stock Issued For Bonuses [Member] | General and Administrative Expense [Member] | |||||||||||
Stockholders' Deficit (Textual) | |||||||||||
Fair value of the stock vested issuance | $ | 195,200 | ||||||||||
Common Stock Issued For Services [Member] | |||||||||||
Stockholders' Deficit (Textual) | |||||||||||
Common stock issued for bonuses, Shares | 60,277 | ||||||||||
Common Stock Issued For Services [Member] | Sales and Marketing Expense [Member] | |||||||||||
Stockholders' Deficit (Textual) | |||||||||||
Fair value of the stock vested issuance | $ | $ 36,769 | ||||||||||
Kyle Tracey [Member] | |||||||||||
Stockholders' Deficit (Textual) | |||||||||||
Options/ Warrants issued/granted | 60,000 | ||||||||||
Options to purchase shares | 175,000 | 100,000 | |||||||||
Conversion of unpaid wages | $ | $ 59,718 | ||||||||||
Common stock issued for bonuses, Shares | 30,000 | 30,000 | |||||||||
Restricted common stock issued | 97,898 | ||||||||||
Kyle Tracey [Member] | Common Stock Issued As Director Compensation [Member] | |||||||||||
Stockholders' Deficit (Textual) | |||||||||||
Restricted common stock issued | 100,000 | ||||||||||
Employee's, Consultants, Officers and Independent Contractors [Member] | |||||||||||
Stockholders' Deficit (Textual) | |||||||||||
Vesting rights, Description | The options vest 25% at grant and 25% each subsequent six (6) months from the date of grant. | ||||||||||
Options/ Warrants issued/granted | 1,000,000 | ||||||||||
Option/ Warrents Granted, Weighted Average Exercise Price | $ / shares | $ 1.66 | ||||||||||
Stock option granted value | $ | $ 1,000,000 | ||||||||||
Options to purchase shares | 520,000 | ||||||||||
Share-based compensation expense | $ | $ 1,660,000 | ||||||||||
Compensation cost upon grant date | $ | $ 415,000 | ||||||||||
Additional expenses | $ | $ 22,312 | ||||||||||
Non employee options | 212,500 | ||||||||||
Number of options vested | 250,000 | ||||||||||
Joseph Andreae [Member] | |||||||||||
Stockholders' Deficit (Textual) | |||||||||||
Options/ Warrants issued/granted | 60,000 | ||||||||||
Options to purchase shares | 175,000 | 190,000 | |||||||||
Common stock issued for bonuses, Shares | 30,000 | 30,000 | |||||||||
Joseph Andreae [Member] | Common Stock Issued As Director Compensation [Member] | |||||||||||
Stockholders' Deficit (Textual) | |||||||||||
Restricted common stock issued | 100,000 | ||||||||||
Allan Viernes [Member] | |||||||||||
Stockholders' Deficit (Textual) | |||||||||||
Options to purchase shares | 175,000 | ||||||||||
Michael Cook [Member] | |||||||||||
Stockholders' Deficit (Textual) | |||||||||||
Options to purchase shares | 25,000 | ||||||||||
Conversion of unpaid wages | $ | $ 36,769 | ||||||||||
Restricted common stock issued | 60,277 | ||||||||||
Board of Directors [Member] | |||||||||||
Stockholders' Deficit (Textual) | |||||||||||
Restricted common stock issued | 100,000 | ||||||||||
Shares issued, price per share | $ / shares | $ 1 | ||||||||||
Issuance of common stock | $ | $ 100,000 | ||||||||||
Issuance of fair market value | $ | 50,000 | ||||||||||
Additional consideration amount | $ | $ 50,000 | ||||||||||
Employees [Member] | Under 2014 Stock Option Plan [Member] | |||||||||||
Stockholders' Deficit (Textual) | |||||||||||
Options/ Warrants issued/granted | 775,000 | ||||||||||
Options to purchase shares | 225,000 | ||||||||||
Benjamin Beaulieu [Member] | |||||||||||
Stockholders' Deficit (Textual) | |||||||||||
Options/ Warrants issued/granted | 60,000 | ||||||||||
Common stock issued for bonuses, Shares | 30,000 | 30,000 |
Intellectual Property (Details)
Intellectual Property (Details) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Intellectual Property (Textual) | ||
Trademarks | $ 123,150 | $ 119,575 |
Pending patents | $ 14,890 | |
Patents [Member] | ||
Intellectual Property (Textual) | ||
Pending patents | $ 22,133 | |
Trademarks [Member] | ||
Intellectual Property (Textual) | ||
Trademarks | $ 123,150 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Dec. 10, 2016 | Jun. 10, 2016 | Dec. 15, 2015 | Dec. 10, 2015 | Jun. 10, 2015 | Jun. 01, 2015 | Dec. 31, 2015 | Dec. 21, 2015 | Oct. 22, 2015 | Dec. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Nov. 27, 2013 |
Subsequent Event (Textual) | |||||||||||||
Preferred stock, shares authorized | 100,000,000 | 100,000,000 | 100,000,000 | ||||||||||
Proceeds from original convertible note | $ 1,763,957 | $ 438,000 | |||||||||||
Conversion of unpaid wages | 96,487 | ||||||||||||
Treasury stock value | $ 367,531 | ||||||||||||
Treasury stock, shares | 690,625 | ||||||||||||
General and Administrative Expense [Member] | |||||||||||||
Subsequent Event (Textual) | |||||||||||||
Fair value of the stock vested issuance | $ 24,900 | ||||||||||||
Justin Braune [Member] | |||||||||||||
Subsequent Event (Textual) | |||||||||||||
Common stock shares vested | 5,000,000 | ||||||||||||
Board of Directors [Member] | |||||||||||||
Subsequent Event (Textual) | |||||||||||||
Shares issued, price per share | $ 1 | ||||||||||||
Restricted common stock issued | 100,000 | ||||||||||||
Subsequent Event [Member] | |||||||||||||
Subsequent Event (Textual) | |||||||||||||
Original debt outstanding increased | $ 105,000 | ||||||||||||
Shares issued, price per share | $ 0.024 | ||||||||||||
Additional shares of restricted common stock, Granted | 300,000 | ||||||||||||
Sales and marketing expense | $ 30,000 | ||||||||||||
Shares surrendered | 30,000 | ||||||||||||
Common stock value | $ 9,150 | ||||||||||||
Treasury stock value | $ 36,600 | $ 171,800 | |||||||||||
Treasury stock, shares | 60,000 | 260,000 | |||||||||||
Subsequent Event [Member] | General and Administrative Expense [Member] | |||||||||||||
Subsequent Event (Textual) | |||||||||||||
Fair value of the stock vested issuance | $ 36,000 | ||||||||||||
Subsequent Event [Member] | Series B Preferred Stock [Member] | |||||||||||||
Subsequent Event (Textual) | |||||||||||||
Convertible note interest rate | 8.00% | ||||||||||||
Term of convertible note | 1 year | ||||||||||||
Common stock conversion basis | Series B Preferred Stock on a one-for-one (1:1) basis into shares of common stock | ||||||||||||
Common stock fixed price per share | $ 0.01 | ||||||||||||
Preferred stock, shares authorized | 30,000,000 | ||||||||||||
Voting rights, description | Each share of Series B shall be entitled to five (5) votes for every one (1) vote entitled to each share of Common Stock. | ||||||||||||
Aggregate principal amount | $ 300,000 | ||||||||||||
Equity investment by the investor, description | 1) $50,000 from Hive Ceramics, LLC in new capital to the Company and 2) an amended and restated note for Hive Ceramics LLC in the amount of $250,000 for capital previously contributed which is soon to be due and payable. | ||||||||||||
Subsequent Event [Member] | Kyle Tracey [Member] | |||||||||||||
Subsequent Event (Textual) | |||||||||||||
Shares surrendered | 130,000 | ||||||||||||
Common stock value | $ 49,800 | ||||||||||||
Shares of common stock | 60,000 | ||||||||||||
Subsequent Event [Member] | Allan Viernes [Member] | |||||||||||||
Subsequent Event (Textual) | |||||||||||||
Shares surrendered | 30,000 | ||||||||||||
Common stock value | $ 36,600 | ||||||||||||
Subsequent Event [Member] | Benjamin Beaulieu [Member] | |||||||||||||
Subsequent Event (Textual) | |||||||||||||
Shares surrendered | 30,000 | ||||||||||||
Common stock value | $ 36,600 | ||||||||||||
Subsequent Event [Member] | Joe Andreae [Member] | |||||||||||||
Subsequent Event (Textual) | |||||||||||||
Shares surrendered | 130,000 | ||||||||||||
Common stock value | $ 122,000 | ||||||||||||
Shares of common stock | 200,000 | ||||||||||||
Subsequent Event [Member] | Justin Braune [Member] | |||||||||||||
Subsequent Event (Textual) | |||||||||||||
Annual salary | $ 150,000 | ||||||||||||
Sales based compensation, description | Bi-monthly sales-based compensation of $1.00 USD per unit of wholesale sales of Mr. Braune’s new vaporizer pen product line and $3.00 USD per unit on retail sales. | ||||||||||||
Common stock issued as compensation | 20,000,000 | ||||||||||||
Common stock shares vested | 5,000,000 | 5,000,000 | |||||||||||
Description of employment agreement | The Employment Agreement continues until terminated by either party upon 30 days' prior written notice. | ||||||||||||
Subsequent Event [Member] | Investor [Member] | |||||||||||||
Subsequent Event (Textual) | |||||||||||||
Equity investment by the investor | $ 90,000 | ||||||||||||
Equity investment by the investor, description | Common stock at a purchase price equal to 90% of the average of the closing prices of the common stock for the three (3) trading days immediately preceding the date that is 6 months from the date of the agreement. | ||||||||||||
Subsequent Event [Member] | Board of Directors [Member] | Kyle Tracey [Member] | |||||||||||||
Subsequent Event (Textual) | |||||||||||||
Conversion of unpaid wages, Shares | 2,083,333 | ||||||||||||
Conversion of unpaid wages | $ 50,000 | ||||||||||||
Shares issued, price per share | $ 0.024 | ||||||||||||
Subsequent Event [Member] | Board of Directors [Member] | Kyle Tracey Two [Member] | |||||||||||||
Subsequent Event (Textual) | |||||||||||||
Conversion of unpaid wages, Shares | 555,555 | ||||||||||||
Conversion of unpaid wages | $ 13,333 | ||||||||||||
Shares issued, price per share | $ 0.024 | ||||||||||||
Subsequent Event [Member] | Board of Directors [Member] | Michael Cook [Member] | |||||||||||||
Subsequent Event (Textual) | |||||||||||||
Conversion of unpaid wages, Shares | 1,250,000 | ||||||||||||
Conversion of unpaid wages | $ 3,000 | ||||||||||||
Shares issued, price per share | $ 0.024 | ||||||||||||
Subsequent Event [Member] | Board of Directors [Member] | Allan Viernes [Member] | |||||||||||||
Subsequent Event (Textual) | |||||||||||||
Shares issued, price per share | $ 0.024 | ||||||||||||
Common stock issued for bonuses, Shares | 600,000 | ||||||||||||
Subsequent Event [Member] | Board of Directors [Member] | Consultant [Member] | |||||||||||||
Subsequent Event (Textual) | |||||||||||||
Shares issued, price per share | $ 0.024 | ||||||||||||
Common stock issued for bonuses, Shares | 1,250,000 | ||||||||||||
Subsequent Event [Member] | Board of Directors [Member] | Benjamin Beaulieu [Member] | |||||||||||||
Subsequent Event (Textual) | |||||||||||||
Shares issued, price per share | $ 0.024 | ||||||||||||
Common stock issued for bonuses, Shares | 600,000 | ||||||||||||
Subsequent Event [Member] | Accredited Investor [Member] | |||||||||||||
Subsequent Event (Textual) | |||||||||||||
Proceeds from original convertible note | $ 50,000 |