Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 07, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Arista Financial Corp. | |
Entity Central Index Key | 1,498,122 | |
Trading Symbol | ARST | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,018 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 3,148,333 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS: | ||
Cash | $ 10,402 | $ 728 |
Financing leases receivable, net | 28,663 | 33,125 |
Due from lease service provider | 6,850 | 6,755 |
Accrued interest receivable | 1,026 | 1,026 |
Prepaid expenses | 68,745 | 780 |
Subscription receivable | 50,000 | |
Equipment held for sale | 15,000 | 15,000 |
Total Current Assets | 130,686 | 107,414 |
LONG-TERM ASSETS: | ||
Financing leases receivable, net | 11,787 | 19,760 |
Total Long-term Assets | 11,787 | 19,760 |
Total Assets | 142,473 | 127,174 |
CURRENT LIABILITIES: | ||
Notes payable - related parties, net | 43,311 | 35,284 |
Note payable - net | 42,282 | 34,109 |
Accounts payable | 133,474 | 81,266 |
Line of credit - related party | 35,000 | |
Accrued interest payable | 13,874 | 11,102 |
Accrued interest payable - related parties | 2,492 | 186 |
Due to related party | 15,000 | |
Accrued expenses | 82,209 | 43,542 |
Total Current Liabilities | 352,642 | 220,489 |
LONG-TERM LIABILITIES: | ||
Convertible notes payable, net | 318,012 | 306,516 |
Total Long-term Liabilities | 318,012 | 306,516 |
Total Liabilities | 670,654 | 527,005 |
Commitments and Contingencies (See Note 8) | ||
STOCKHOLDERS' DEFICIT: | ||
Preferred stock, $.0001 par value, 5,000,000 shares authorized; No shares issued and outstanding at March 31, 2018 and December 31, 2017 | ||
Common stock: $.0001 par value, 100,000,000 shares authorized; 3,148,333 and 3,088,333 shares issued and outstanding at March 31, 2018 and December 31, 2017 | 315 | 309 |
Additional paid-in capital | 637,751 | 534,353 |
Accumulated deficit | (1,166,247) | (934,493) |
Total Stockholders' Deficit | (528,181) | (399,831) |
Total Liabilities and Stockholders' Deficit | $ 142,473 | $ 127,174 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 3,148,333 | 3,088,333 |
Common stock, shares outstanding | 3,148,333 | 3,088,333 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
REVENUES: | ||
Interest on lease financings | $ 3,673 | $ 10,302 |
Other fee income | ||
Total revenues | 3,673 | 10,302 |
OPERATING EXPENSES: | ||
Compensation and benefits | 100,622 | 28,901 |
Professional fees | 86,880 | 1,425 |
Provision for lease losses | (4,176) | |
General and administrative expenses | 10,963 | 4,889 |
Total operating expenses | 194,289 | 35,215 |
LOSS FROM OPERATIONS | (190,616) | (24,913) |
OTHER EXPENSES: | ||
Interest expense | 31,503 | 23,845 |
Interest expense - related parties | 9,635 | 929 |
Total other expenses | 41,138 | 24,774 |
LOSS BEFORE INCOME TAXES | (231,754) | (49,687) |
PROVISION FOR INCOME TAXES | ||
NET LOSS | $ (231,754) | $ (49,687) |
NET LOSS PER COMMON SHARE: | ||
Basic and Diluted | $ (0.07) | $ (0.02) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||
Basic and Diluted | 3,108,333 | 2,084,000 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (231,754) | $ (49,687) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation expense | 50 | |
Stock-based compensation | 40,154 | |
Amortization of debt discount to interest expense | 27,696 | 13,431 |
Bad debt recovery | (4,176) | |
Change in operating assets and liabilities: | ||
Financing leases receivable | 16,611 | 13,761 |
Due from lease service provider | (95) | |
Accrued interest receivable | 186 | |
Prepaid expenses | (4,715) | 128 |
Accounts payable | 52,208 | (3,000) |
Accrued interest payable | 2,772 | 1,764 |
Accrued interest payable - related parties | 2,306 | (756) |
Accrued expenses | 38,667 | (9,256) |
NET CASH USED IN OPERATING ACTIVITIES | (60,326) | (33,379) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Proceeds from sale of equipment held for sale | 2,700 | |
NET CASH PROVIDED BY INVESTING ACTIVITIES | 2,700 | |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from line of credit - related party | 20,000 | |
Proceeds from note payable subscription receivable | 50,000 | |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 70,000 | |
NET INCREASE (DECREASE) IN CASH | 9,674 | (30,679) |
CASH, beginning of period | 728 | 91,687 |
CASH, end of period | 10,402 | 61,008 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Interest paid | 8,364 | 10,335 |
Income taxes paid | ||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Issuance of common stock for services | 69,000 | |
Reclassification of due to related party to line of credit - related party | $ 15,000 |
Organization and Nature of Oper
Organization and Nature of Operations | 3 Months Ended |
Mar. 31, 2018 | |
Organization and Nature of Operations [Abstract] | |
ORGANIZATION AND NATURE OF OPERATIONS | NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS Organization Arista Financial Corp. (the “Company”) was incorporated in Nevada on December 15, 2009. Effective February 21, 2012, the Company filed with the State of Nevada a Certificate of Amendment to the Articles of Incorporation changing the Company’s name from Hunt for Travel, Inc. to Praco Corporation (“Praco”) and on January 2, 2018, the Company changed its name to Arista Financial Corp. On April 19, 2017, the Company entered into the Share Exchange Agreement with Arista Capital Ltd. (“Arista Capital”) and the Arista Capital Shareholders (the “Share Exchange Agreement”) pursuant to which the Company agreed, subject to the terms and conditions in the Share Exchange Agreement, to exchange newly issued shares of the Company for shares of Arista Capital held by the Arista Capital Shareholders, with Arista Capital becoming a wholly-owned subsidiary of the Company (the “Transaction”). The closing of the Transaction (the “Closing”) was to take place sixty days after the execution of this Agreement. On July 18, 2017, the parties entered into the First Addendum to the Share Exchange Agreement, pursuant to which the closing date for the Transaction was scheduled for September 15, 2017. In connection with this First Addendum, Arista Capital paid the Company a $15,000 non-refundable deposit, and had the right to extend the closing date in intervals of thirty days upon payment of an additional non-refundable deposit of $10,000 for each requested extension interval. In November 2017, Arista Capital paid the Company an additional $10,000 non-refundable deposit. The Closing occurred on December 14, 2017. At Closing, Arista Capital paid the Company $72,500 which was used to pay all remaining outstanding liabilities of Praco. Prior to Closing, the Company restructured its equity ownership via a reverse stock split at a ratio of 13.2 to 1 which reduced the number of shares of common stock outstanding to 522,558 shares followed by the issuance of an additional 95,109 shares to certain Praco Shareholders so that there were 617,667 shares outstanding immediately prior to the Closing. On the date of the Exchange Agreement, the fair value of the 617,667 shares retained by Praco shareholders was approximately $401,000, or $0.65 per common share, based on the quoted closing price of the Company common shares. Therefore, the Praco shareholders received aggregate consideration for the acquisition of $498,500. At Closing, the Company exchanged two shares of its common stock for each outstanding share of Arista common stock. This resulted in the issuance at Closing of an additional 2,470,666 shares of common stock which consisted of 2,084,000 common shares issued to Arista Shareholders and 386,666 common shares issued to certain Arista Capital noteholders upon the conversion of convertible notes payable. Accordingly, Arista Capital Shareholders owned in the aggregate approximately 80% of the outstanding common stock of the Company, with the Praco Shareholders owning the remaining approximately 20% of the Company and Arista Capital became a wholly-owned subsidiary of the Company. At the time of the closing, under the Exchange Agreement, the Company, then known as Praco Corporation, was not engaged in any business activity and was considered a shell. Also, at Closing, the Praco Shareholders were issued warrants for 283,749 common shares on a pro-rata basis exercisable at $2.00 per share and subject to the same terms and conditions as the warrants currently held by the Arista warrant holders except without a cashless exercise option. On the date of the Exchange Agreement, the Company calculated the fair value of the 283,749 warrants using the Black-Sholes option pricing method. The fair value of the warrants was approximately $108,000. In addition, immediately following the Closing, the Company exchanged each outstanding Arista warrant for new warrants issued by the Company entitling the holder to purchase an equal number of shares of the Company’s common stock as the number of Arista shares they were entitled to purchase upon exercise, subject to the same terms and conditions as the Arista Capital warrants except without a cashless exercise option. Also, at Closing, the Company exchanged each outstanding Arista Capital convertible note into a convertible note issued by the Company convertible into an equal amount of shares of the Company’s common stock as the number of Arista Capital shares into which such notes were convertible, subject to the same terms and conditions as the convertible notes currently held by Arista Capital convertible noteholders. As a result of such exchange offers, at Closing, the Company issued warrants to purchase 935,000 shares of Common Stock and convertible notes convertible into 199,999 shares of Common Stock. As of December 31, 2017, the Company has recapitalized the Company to give effect to the Share Exchange Agreement discussed above. Under generally accepted accounting principles, the acquisition by the Company of Arista Capital is considered to be capital transactions in substance, rather than a business combination. That is, the acquisition is equivalent, to the acquisition by Arista Capital of the Company, then known as Praco Corporation, with the issuance of stock by Arista Capital for the net assets of the Company. This transaction is reflected as a recapitalization, and is accounted for as a change in capital structure. Accordingly, the accounting for the acquisition is identical to that resulting from a reverse acquisition. Under reverse takeover accounting, the comparative historical financial statements of the Company, as the legal acquirer, are those of the accounting acquirer, Arista Capital. Accordingly, the Company’s financial statements prior to the closing of the reverse acquisition, reflect only the business of Arista Capital. The accompanying consolidated financial statements reflect the recapitalization of the stockholders’ deficit as if the transactions occurred as of the beginning of the first period presented. Thus, the 2,000,000 shares of common stock issued to the former Arista Capital stockholders are deemed to be outstanding from December 31, 2015. Arista Capital was formed on June 10, 2014 as a Nevada corporation. The Company is a finance company that provides financing to other very small finance companies that do not have significant access to the capital markets. Typically, the Company does this by acquiring lease portfolios from such lenders at a purchase price that yields the Company an annual return and these lenders continue to service the portfolios purchased by the Company. The Company is currently focused on leases for trucks and construction equipment. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. GAAP pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial information. Accordingly they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying condensed consolidated financial statements include all adjustments, which consist of normal recurring adjustments and transactions or events discretely impacting the interim periods, considered necessary by management to fairly state our results of operations, financial position and cash flows. The operating results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2017 Form 10-K. Use of estimates The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates for the three months ended March 31, 2018 and 2017 include estimates of allowances for uncollectible finance leases receivable, the useful life of property and equipment, estimates of current and deferred income taxes and deferred tax valuation allowances, the fair value of equipment held for sale, and the fair value of non-cash equity transactions. Going concern These condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in our accompanying condensed consolidated financial statements, for the three months ended March 31, 2018, the Company had a net loss of $231,754 and used cash in operating activities of $60,326, respectively. Additionally, the Company had an accumulated deficit of $1,166,247 and had a stockholders’ deficit of $528,181 at March 31, 2018, respectively, and had minimal revenues for the three months ended March 31, 2018. Management believes that these matters raise substantial doubt about the Company’s ability to continue as a going concern for twelve months from the issuance date of this report. Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. Management believes that its capital resources are not currently adequate to continue operating and maintaining its business strategy for a period of twelve months from the issuance date of this report. Although the Company has historically raised capital from the issuance of promissory notes, there is no assurance that it will be able to continue to do so. Management believes that’s its ability to attract debt and equity financing in the capital markets will be greatly enhanced by becoming a public reporting company. If the Company is unable to raise additional capital or secure additional lending in the near future, management expects that the Company will need to curtail or cease operations. These consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Fair value of financial instruments and fair value measurements The Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard Board’s (the “FASB”) accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company did not identify any assets or liabilities that are required to be presented on the balance sheet at fair value in accordance with Accounting Standards Codification (“ASC”) Topic 820. The carrying amounts reported in the consolidated balance sheets for cash, financing lease receivables, due from lease service provider, accrued interest receivables, prepaid expenses, notes payable, accounts payable, accrued expenses, accrued interest payable and amounts due to related party approximate their fair market value based on the short-term maturity of these instruments. The Company does not account for any instruments at fair value using level 3 valuation. ASC 825-10 “ Financial Instruments , Credit risk and concentrations The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. At March 31, 2018 and December 31, 2017, cash in bank did not exceed federally insured limits. The Company has not experienced any losses in such accounts through March 31, 2018. Financing leases receivable represent amounts due from lessees in various industries, related to equipment on direct financing leases. Currently, the Company relies on one source to acquire financing leases and to service such leases. The Company believes that other lenders are available to acquire lease portfolios if the Company cannot acquire additional financing lease receivable portfolios from its single source. Additionally, as of March 31, 2018, the Company’s portfolio of financing leases consists of five leases. A default on or loss of any of these leases would have a material adverse effect on the Company’s results of operations and financial condition. Cash and cash equivalent For purposes of the statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents. At March 31, 2018 and December 31, 2017, the Company did not have any cash equivalents. Financing leases receivable Financing leases receivable are recorded at the aggregate future minimum lease payments, estimated unguaranteed residual value of the leased equipment less unearned income. Residual values, which are reviewed periodically, represent the estimated amount the Company expects to receive at lease termination from the disposition of the leased equipment. Actual residual values realized could differ from these estimates. The unearned income is recognized in revenues in the statements of operations over the lease term, in a manner that produces a constant rate of return on the lease. Financing leases receivable due after twelve months from the balance sheet date are reflected as a long-term asset. Financing leases receivables are periodically evaluated based on individual credit worthiness of customers. Based on this evaluation, the Company records allowance for estimated losses on these receivables. Property and equipment Property are stated at cost and are depreciated using the straight-line method over their estimated useful lives, which range from three to five years. Leasehold improvements are depreciated over the shorter of the useful life or lease term including scheduled renewal terms. Maintenance and repairs are charged to expense as incurred. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company examines the possibility of decreases in the value of these assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. Impairment of long-lived assets In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. Revenue recognition Income from direct financing lease transactions is reported using the financing method of accounting, in which the Company’s investment in the leased property is reported as a receivable from the lessee to be recovered through future rentals. The interest income portion of each rental payment is calculated so as to generate a constant rate of return on the net receivable outstanding. Allowances for losses on direct financing leases are typically established based on historical charge-off and collection experience and the collectability of specifically identified lessees and billed and unbilled receivables. Direct financing leases are charged off to the allowance as they are deemed uncollectible. Direct financing leases are generally placed in a nonaccrual status (i.e., no revenue is recognized) and deemed impaired when payments are more than 90 days past due. Additionally, management periodically reviews the creditworthiness of all direct finance lessees with payments outstanding less than 90 days. Based upon management’s judgment, the related direct financing leases may be placed on nonaccrual status. Leases placed on nonaccrual status are only returned to an accrual status when the account has been brought current and management believes recovery of the remaining unpaid lease payments is probable. Until such time, all payments received are applied only against outstanding principal balances. Income taxes The Company accounts for income tax using the liability method prescribed by ASC 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date. The Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes Stock-based compensation Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC 505-50 – “Equity-Based Payments to Non-Employees” Basic and diluted loss per share Pursuant to ASC 260-10-45, basic loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the periods presented. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Potentially dilutive common shares consist of common stock issuable for stock warrants (using the treasury stock method) and common shares issuable upon the conversion of convertible notes payable (using the as-if converted method). These common stock equivalents may be dilutive in the future. All potentially dilutive common shares were excluded from the computation of diluted shares outstanding as they would have an anti-dilutive impact on the Company’s net losses and consisted of the following: March 31, March 31, Stock warrants 1,268,749 635,000 Stock options 300,000 - Convertible debt 200,000 326,665 Related parties Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. Recent accounting pronouncements Management does not believe that any recently issued, but not yet effective accounting pronouncements will have a material effect on the accompanying condensed consolidated financial statements. |
Financing Leases Receivable
Financing Leases Receivable | 3 Months Ended |
Mar. 31, 2018 | |
Financing Leases Receivable [Abstract] | |
FINANCING LEASES RECEIVABLE | NOTE 3 – FINANCING LEASES RECEIVABLE In December 2017, the Company repossessed one truck from one lessee that defaulted on their lease in 2017. At March 31, 2018 and December 31, 2017, the truck held for sale has an estimated residual value of $15,000 and $15,000, respectively. The Seller is responsible for administrating the leases, collecting all payments, and distributing funds to the Company. On a monthly basis, the Company shall pay the seller an administrative fee equal to 2% of the scheduled payment amount of each lease, 50% of all penalties or late fee charges collected, and 50% of all default interest collected. The seller shall remit the remaining amount received from the lessees to the Company. The finance leases require 36 monthly/weekly or bi-weekly payments through February 2020. Each lease is secured by ownership of the related transportation equipment. As of March 31, 2018 and December 31, 2017, financing leases receivable consists of leases for transportation equipment. At March 31, 2018 and December 31, 2017, financing leases receivable consisted of the following: March 31, December 31, Total minimum financing leases receivable $ 69,085 $ 89,370 Unearned income (7,406 ) (11,080 ) Total financing leases receivable 61,679 78,290 Less: allowance for uncollectible financing leases receivable (21,229 ) (25,405 ) Financing leases receivable, net 40,450 52,885 Less: current portion of financing leases receivable, net (28,663 ) (33,125 ) Financing leases receivable, net – long-term $ 11,787 $ 19,760 For the three months ended March 31, 2018 and 2017, activities in the Company’s allowance for uncollectible financing leases receivable were are follows: For the Three Months 2018 2017 Allowance for uncollectible financing leases receivable at beginning of period $ 25,405 $ 79,000 Provisions for credit losses - - Bad debt recovery (4,176 ) Allowance for uncollectible financing leases receivable at end of period $ 21,229 $ 79,000 At March 31, 2018, the aggregate amounts of future minimum gross lease payments receivable are as follows: Amount 2018 $ 55,660 2019 13,425 Future minimum gross financing leases receivable $ 69,085 |
Convertible Debt
Convertible Debt | 3 Months Ended |
Mar. 31, 2018 | |
Convertible Debt/Note Payable [Abstract] | |
CONVERTIBLE DEBT | NOTE 4 – CONVERTIBLE DEBT During the year ended December 31, 2016, the Company issued 10% convertible promissory notes (the “2016 10% Convertible Notes”) to seven third party individuals in the aggregate amount of $400,000. The unpaid principal and interest is payable three years from the date of the respective 2016 10% Convertible Note through December 2019. The Company may prepay any amount outstanding under the 2016 10% Convertible Note by making a payment to note holder of an amount in cash equal to the principal amount multiplied by a prepayment penalty percentage of 5.0%. The Noteholders are entitled, at their option, at any time after the issuance of the 2016 10% Convertible Notes, to convert all or any lesser portion of the outstanding principal amount and accrued but unpaid interest into the Company’s common stock at a conversion price of $1.50 per share. The noteholders have the option to extend the due date of the notes for three additional one-year periods. In connection with the 2016 10% Convertible Notes, the Company issued to noteholders five-year warrants to acquire up to 575,000 shares of common stock at $2.00 per share. On December 14, 2017, in connection with the Share Exchange Agreement, the Company issued 266,666 shares to certain noteholders upon conversion of principal amount of $200,000. During the period from July 1, 2017 to September 30, 2017, the Company issued 12% convertible promissory notes to three individuals in the aggregate amount of $200,000. The unpaid principal and interest is payable three years from the date of the respective 12% Convertible Note through August 1, 2020. The Company may prepay any amount outstanding under the 12% Convertible Note by making a payment to note holder of an amount in cash equal to the principal amount multiplied by a prepayment penalty percentage of 5.0%. The Noteholders are entitled, at their option, at any time after the issuance of the 12% Convertible Notes, to convert all or any lesser portion of the outstanding principal amount and accrued but unpaid interest into the Company’s common stock at a conversion price of $3.00 per share. In connection with the 12% Convertible Notes, the Company issued to noteholders five-year warrants to acquire up to 300,000 shares of common stock at $4.00 per share. These Convertible Notes contain certain adjustment provisions that apply in connection with any stock split, stock dividend, stock combination, recapitalization or similar transactions. The Warrants are exercisable for shares of the Company’s common stock upon the payment in cash of the exercise price. The exercise price of the Warrants is subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the Company’s common stock. The Company evaluated whether or not the convertible notes and warrants above contained embedded conversion options, which meet the definition of a derivatives under ASC Topic 815. The Company concluded that since the above convertible notes had a fixed conversion price, the convertible notes were not derivative instruments. The convertible notes were analyzed to determine if the convertible notes have an embedded beneficial conversion feature (BCF). Based on this analysis, the Company concluded that the effective conversion price was greater than the fair value of the Company’s common stock on the note dates and therefore no BCF was recorded. For the three months ended March 31, 2018 and 2017, amortization of debt discount related to these convertible notes amounted to $11,496 and $13,242, respectively, which has been included in interest expense on the accompanying condensed consolidated statements of operations. As of March 31, 2018 and December 31, 2017, accrued interest payable amounted to $13,874 and $11,102, respectively. The weighted average interest rate for the three months ended March 31, 2018 and 2017 was approximately 11.0% and 10.0%, respectively. At March 31, 2018 and December 31, 2017, the convertible debt consisted of the following: March 31, December 31, Principal amount $ 400,000 $ 400,000 Less: unamortized debt discount (81,988 ) (93,484 ) Convertible note payable, net – long-term $ 318,012 $ 306,517 At March 31, 2018, debt maturities are $200,000 in 2019 and $200,000 in 2020 . |
Note Payable
Note Payable | 3 Months Ended |
Mar. 31, 2018 | |
Convertible Debt/Note Payable [Abstract] | |
NOTE PAYABLE | NOTE 5 – NOTE PAYABLE On December 31, 2017, the Company issued an 8% promissory notes to a third party in the amount of $50,000. In connection with this promissory note, at December 31, 2017, the Company recorded a subscription receivable of $50,000. The funds were received in January 2018. The unpaid principal and interest is payable on June 8, 2018. In connection with this 8% note, on December 31, 2017, the Company issued to this noteholder five-year warrants to acquire up to 25,000 shares of common stock at $0.01 per share. The warrants are exercisable for shares of the Company’s common stock upon the payment in cash of the exercise price. The exercise price of the Warrants is subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the Company’s common stock. As discussed above, in connection with this note payable, the Company granted a warrant to acquire an aggregate of 25,000 shares of common stock to noteholder. In December 2017, on the issuance date of the warrant, the fair value of the warrants of $16,345 was recorded as a debt discount and an increase to paid-in capital, respectively. At March 31, 2018 and December 31, 2017, note payable consisted of the following: March 31, December 31, Principal amount $ 50,000 $ 50,000 Less: unamortized debt discount (7,718 ) (15,891 ) Notes payable, net $ 42,282 $ 34,109 For the three months ended March 31, 2018 and 2017, amortization of debt discount related to this note amounted to $8,173 and $0, respectively, which has been included in interest expense on the accompanying condensed consolidated statements of operations. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 6 – RELATED PARTY TRANSACTIONS Notes payable – related parties In December 2017, the Company issued 8% promissory notes to certain officers and directors of the Company in the aggregate amount of $50,000. The unpaid principal and interest is payable on June 8, 2018. In connection with these 8% notes, in December 2017, the Company issued to these related party noteholders five-year warrants to acquire up to 25,000 shares of common stock at $0.01 per share These warrants are exercisable for shares of the Company’s common stock upon the payment in cash of the exercise price and they are also exercisable on a cashless basis. The exercise price of the Warrants is subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the Company’s common stock. As discussed above, in connection with the notes payable, the Company granted warrants to acquire an aggregate of 25,000 shares of common stock to note holders. In December 2017, on the issuance date of the respective warrants, the fair value of the warrants of $16,053 was recorded as a debt discount and an increase to paid-in capital, respectively. At March 31, 2018 and December 31, 2017, notes payable – related parties consisted of the following: March 31, December 31, Principal amount $ 50,000 $ 50,000 Less: unamortized debt discount (6,689 ) (14,716 ) Notes payable – related parties, net $ 43,311 $ 35,284 In connection with related party convertible note and notes payable, the weighted average interest rate for the three months ended March 31, 2018 and the year ended December 31, 2017 was approximately 8.0% and 9.9%, respectively. For the three months ended March 31, 2018 and 2017, amortization of debt discount related to these related party convertible notes and notes payable amounted to $8,027 and $189, respectively, which has been included in interest expense – related parties on the accompanying condensed consolidated statements of operations. As of March 31, 2018 and December 31, 2017, accrued interest payable - related parties amounted to $2,492 and $186, respectively. For the three months ended March 31, 2018 and 2017, interest expense - related parties amounted to $9,635 and $929, respectively. Due to related party In December 2017, a director of the Company advanced $15,000 to the Company for working capital purposes. The advance in non-interest bearing and is payable on demand, On January 1, 2018, the advance was converted into a line of credit promissory note. Line of credit – related party On January 1, 2018, the Company entered into a line of credit promissory note with a company owned by a director of the Company in the principal amount of $50,000 or such lesser amount as may be borrowed by the Company. This line of credit promissory note shall bear interest at the rate of 12% per annum and such interest shall be paid each month. The entire outstanding principal amount of this Note shall be due and payable on December 31, 2018. On the Maturity Date, if this Note has not been paid in full, it shall bear interest from inception at the rate of 18% per annum until paid in full. On January 1, 2018, the Company reclassified $15,000 of advances received by this related party entity into this promissory note. Additionally, during the three months ended March 31, 2018, the Company borrowed an additional $20,000 pursuant to the line of credit agreement. At March 31, 2018, amounts due under the line of credit amounted to $35,000. Office rent - related party During 2016 and through June 2017, the Company continued to rent its office space from a Director of the Company on a month-to-month basis for $500 per month. In July 2017, the Company continues to rent its office space this Director on a month-to-month basis for $750 per month. For the three months ended March 31, 2018 and 2017, rent expense – related party amounted to $2,250 and $1,500, respectively, and is included in general and administrative expenses on the accompanying condensed consolidated statements of operations. |
Stockholders' Deficit
Stockholders' Deficit | 3 Months Ended |
Mar. 31, 2018 | |
Stockholders' Deficit [Abstract] | |
STOCKHOLDERS' DEFICIT | NOTE 7 – STOCKHOLDERS’ DEFICIT Preferred Stock The Company has 5,000,000 shares of preferred stock authorized. Preferred stock may be issued in one or more series. The Company’s board of directors is authorized to issue the shares of preferred stock in such series and to fix from time to time before issuance thereof the number of shares to be included in any such series and the designation, powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations or restrictions thereof, of such series. Common stock issued for services On March 1, 2018 and effective on March 15. 2018, the Company entered into a six-month consulting agreement for business development services. In connection with the consulting agreement, the Company issued 60,000 shares of its common stock. The shares were valued at their fair value of $69,000 or $1.15 per common share which was the fair value on the date of grant based on the closing quoted share price on the date of grant. In connection with these shares, the Company recorded stock-based consulting fees of $5,750 and prepaid expenses of $63,250 which will be amortized over the remaining agreement term. Stock options Effective January 1, 2018, in connection with an employment agreement (see Note 8), the Company granted to its CEO options to purchase 300,000 shares of the Company’s common stock at an exercise price of $1.00 per share. The grant date of the options was January 1, 2018 and the options expire on January 1, 2023. The options vest as to (i) 100,000 of such shares on January 1, 2019, and (ii) as to 100,000 of such shares on January 1, 2020 and 100,000 of such shares on January 1, 2021. The fair value of this option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: dividend yield of 0%; expected volatility of 100%; risk-free interest rate of 2.20%; and, an estimated holding period of 5 years. In connection with these options, the Company valued these options at a fair value of $225,193 and will record stock-based compensation expense over the vesting period. For the three months ended March 31, 2018 and 2017, the Company recorded stock-based compensation expense of $34,404 and $0, respectively. At March 31, 2018, there were 300,000 options outstanding and no options vested and exercisable. As of March 31, 2018, there was $190,789 of unvested stock-based compensation expense to be recognized through September 2018. The aggregate intrinsic value at March 31, 2018 was approximately $0 and was calculated based on the difference between the quoted share price on March 31, 2018 and the exercise price of the underlying options. Stock option activities for the three months ended March 31, 2018 is summarized as follows: Number of Weighted Weighted Average Aggregate Balance Outstanding December 31, 2017 - - Granted 300,000 1.00 Balance Outstanding March 31, 2018 300,000 $ 1.00 4.76 $ - Exercisable, March 31, 2018 - $ - - $ - Warrants Warrant activities for the three months ended March 31, 2018 is summarized as follows: Number of Weighted Weighted Average Aggregate Balance Outstanding December 31, 2017 1,268,749 2.39 Granted - - Balance Outstanding March 31, 2018 1,268,749 $ 2.39 4.91 $ - Exercisable, March 31, 2018 1,268,749 $ 2.39 4.91 $ - |
Commitments and Contincengies
Commitments and Contincengies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contincengies [Abstract] | |
COMMITMENTS AND CONTINCENGIES | NOTE 8 – COMMITMENTS AND CONTINCENGIES Employment agreement On December 14, 2017 and effective on January 1, 2018 (the “Effective Date”), the Company entered into a new employment agreement with its CEO. For all services rendered by CEO pursuant to this Agreement, during the term of this Agreement the Company shall pay the CEO a salary at the following annual rates based upon the financial statements of the Company: (i) Upon the Effective Date, the CEO’s base compensation shall be at the annual rate of $150,000; (ii) Thereafter; upon the first $500,000 of gross proceeds in a financing raised by the Company during the term of the Agreement the CEO’s base salary compensation shall be raised to $200,000; (iii) Thereafter; upon the next $500,000 of gross proceeds in financings raised by the Company during the term of the Agreement the CEO’s base salary compensation shall be raised to $250,000; (iv) Thereafter; for each additional $1,000,000 of gross proceeds in financings raised by the Company during the term of the Agreement the CEO’s base salary compensation shall be increased by $12,000. The CEO’s base salary shall be increased on each January 1st during the term of this Agreement by not less than five percent (5%) of the then annual compensation amount. The Company will provide the CEO with an allowance equal to $2,000 per month for health insurance with such allowance increased on each anniversary date of this Agreement at the same rate as the CEO’s base compensation in addition to any amounts provided to employees generally. The CEO will earn an annual bonus as follows: nine percent (9%) of the Company’s annual EBITDA (Earnings before interest expense, taxes, depreciation, and amortization and all other non-cash charges) up to the first $5,000,000 of EBITDA, then 5% on amounts thereafter, based on the audited consolidated results of the Company. This bonus shall be payable in cash within thirty days after the audit has been completed. In addition, the CEO was entitled to a transaction bonus in the amount of $20,000 payable in cash at the closing of the Share Exchange in addition to any amounts outstanding to him from Arista at that time. In addition, effective January 1, 2018, the CEO was granted options to purchase 300,000 shares of the Corporation’s common stock at an exercise price of $1.00 per share which shall vest annually on a pro rata basis over the 3 year period commencing January 1, 2019. Unless earlier terminated in accordance with the terms hereof, the term of the Agreement shall be for the period commencing as of the Effective Date and ending December 31, 2022; provided, however, that on each anniversary date of the Agreement, this Agreement shall automatically be extended for successive one-year periods unless the Company or the CEO shall have given the other written notice of its or his intention to terminate this Agreement at least six months prior to the anniversary date in any such year. In the event of termination of employment by the Company pursuant to the Agreement, without cause, the Company shall continue for a period equal to the greater of (A) the balance of the term of the Agreement, or (B) two (2) years, the following: (i) the CEO’s base salary at its then annual rate, and (ii) provide to the Executive the benefits. In the event of termination of the CEO’s employment by the Company in the first year of the Agreement for any reason whatsoever excluding a termination with cause, the Company shall pay as severance to CEO, no later than thirty days following the date of termination, the greater of (i) 300% of the maximum allowable bonus payable to the Executive pursuant to Section 4(b); or (ii) the sum of $300,000. Future minimum commitment payments under an employment agreement at March 31, 2018 are as follows: Years ending December 31, Amount 2018 (remainder of year) $ 157,500 2019 220,500 2020 231,525 2021 243,101 2022 255,256 Total minimum commitment employment agreement payments $ 1,107,882 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 9 - SUBSEQUENT EVENTS On March 1, 2018, the Company entered into a one year consulting agreement with a third party entity for business development services. In connection with this consulting agreement, the Company paid the consultant $5,000. In May 2018, the Company issued an 8% promissory note to an individual in the amount of $50,000. The unpaid principal and interest is payable in November 2018. In connection with these 8% notes, in May 2018, the Company issued to this individual noteholder five-year warrants to acquire up to 25,000 shares of common stock at $0.01 per share. The warrants are exercisable for shares of the Company’s common stock upon the payment in cash of the exercise price and they are also exercisable on a cashless basis. The exercise price of the Warrants is subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the Company’s common stock. |
Summary of Significant Accoun15
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. GAAP pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial information. Accordingly they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying condensed consolidated financial statements include all adjustments, which consist of normal recurring adjustments and transactions or events discretely impacting the interim periods, considered necessary by management to fairly state our results of operations, financial position and cash flows. The operating results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2017 Form 10-K. |
Use of estimates | Use of estimates The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates for the three months ended March 31, 2018 and 2017 include estimates of allowances for uncollectible finance leases receivable, the useful life of property and equipment, estimates of current and deferred income taxes and deferred tax valuation allowances, the fair value of equipment held for sale, and the fair value of non-cash equity transactions. |
Going concern | Going concern These condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in our accompanying condensed consolidated financial statements, for the three months ended March 31, 2018, the Company had a net loss of $231,754 and used cash in operating activities of $60,326, respectively. Additionally, the Company had an accumulated deficit of $1,166,247 and had a stockholders’ deficit of $528,181 at March 31, 2018, respectively, and had minimal revenues for the three months ended March 31, 2018. Management believes that these matters raise substantial doubt about the Company’s ability to continue as a going concern for twelve months from the issuance date of this report. Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. Management believes that its capital resources are not currently adequate to continue operating and maintaining its business strategy for a period of twelve months from the issuance date of this report. Although the Company has historically raised capital from the issuance of promissory notes, there is no assurance that it will be able to continue to do so. Management believes that’s its ability to attract debt and equity financing in the capital markets will be greatly enhanced by becoming a public reporting company. If the Company is unable to raise additional capital or secure additional lending in the near future, management expects that the Company will need to curtail or cease operations. These consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
Fair value of financial instruments and fair value measurements | Fair value of financial instruments and fair value measurements The Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard Board’s (the “FASB”) accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company did not identify any assets or liabilities that are required to be presented on the balance sheet at fair value in accordance with Accounting Standards Codification (“ASC”) Topic 820. The carrying amounts reported in the consolidated balance sheets for cash, financing lease receivables, due from lease service provider, accrued interest receivables, prepaid expenses, notes payable, accounts payable, accrued expenses, accrued interest payable and amounts due to related party approximate their fair market value based on the short-term maturity of these instruments. The Company does not account for any instruments at fair value using level 3 valuation. ASC 825-10 “ Financial Instruments , |
Credit risk and concentrations | Credit risk and concentrations The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. At March 31, 2018 and December 31, 2017, cash in bank did not exceed federally insured limits. The Company has not experienced any losses in such accounts through March 31, 2018. Financing leases receivable represent amounts due from lessees in various industries, related to equipment on direct financing leases. Currently, the Company relies on one source to acquire financing leases and to service such leases. The Company believes that other lenders are available to acquire lease portfolios if the Company cannot acquire additional financing lease receivable portfolios from its single source. Additionally, as of March 31, 2018, the Company’s portfolio of financing leases consists of five leases. A default on or loss of any of these leases would have a material adverse effect on the Company’s results of operations and financial condition. |
Cash and Cash Equivalents | Cash and cash equivalent For purposes of the statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents. At March 31, 2018 and December 31, 2017, the Company did not have any cash equivalents. |
Financing leases receivable | Financing leases receivable Financing leases receivable are recorded at the aggregate future minimum lease payments, estimated unguaranteed residual value of the leased equipment less unearned income. Residual values, which are reviewed periodically, represent the estimated amount the Company expects to receive at lease termination from the disposition of the leased equipment. Actual residual values realized could differ from these estimates. The unearned income is recognized in revenues in the statements of operations over the lease term, in a manner that produces a constant rate of return on the lease. Financing leases receivable due after twelve months from the balance sheet date are reflected as a long-term asset. Financing leases receivables are periodically evaluated based on individual credit worthiness of customers. Based on this evaluation, the Company records allowance for estimated losses on these receivables. |
Property and equipment | Property and equipment Property are stated at cost and are depreciated using the straight-line method over their estimated useful lives, which range from three to five years. Leasehold improvements are depreciated over the shorter of the useful life or lease term including scheduled renewal terms. Maintenance and repairs are charged to expense as incurred. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company examines the possibility of decreases in the value of these assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. |
Impairment of long-lived assets | Impairment of long-lived assets In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. |
Revenue recognition | Revenue recognition Income from direct financing lease transactions is reported using the financing method of accounting, in which the Company’s investment in the leased property is reported as a receivable from the lessee to be recovered through future rentals. The interest income portion of each rental payment is calculated so as to generate a constant rate of return on the net receivable outstanding. Allowances for losses on direct financing leases are typically established based on historical charge-off and collection experience and the collectability of specifically identified lessees and billed and unbilled receivables. Direct financing leases are charged off to the allowance as they are deemed uncollectible. Direct financing leases are generally placed in a nonaccrual status (i.e., no revenue is recognized) and deemed impaired when payments are more than 90 days past due. Additionally, management periodically reviews the creditworthiness of all direct finance lessees with payments outstanding less than 90 days. Based upon management’s judgment, the related direct financing leases may be placed on nonaccrual status. Leases placed on nonaccrual status are only returned to an accrual status when the account has been brought current and management believes recovery of the remaining unpaid lease payments is probable. Until such time, all payments received are applied only against outstanding principal balances. |
Income taxes | Income taxes The Company accounts for income tax using the liability method prescribed by ASC 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date. The Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes |
Stock-based compensation | Stock-based compensation Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC 505-50 – “Equity-Based Payments to Non-Employees” |
Basic and diluted loss per share | Basic and diluted loss per share Pursuant to ASC 260-10-45, basic loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the periods presented. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Potentially dilutive common shares consist of common stock issuable for stock warrants (using the treasury stock method) and common shares issuable upon the conversion of convertible notes payable (using the as-if converted method). These common stock equivalents may be dilutive in the future. All potentially dilutive common shares were excluded from the computation of diluted shares outstanding as they would have an anti-dilutive impact on the Company’s net losses and consisted of the following: March 31, March 31, Stock warrants 1,268,749 635,000 Stock options 300,000 - Convertible debt 200,000 326,665 |
Related parties | Related parties Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. |
Recent accounting pronouncements | Recent accounting pronouncements Management does not believe that any recently issued, but not yet effective accounting pronouncements will have a material effect on the accompanying condensed consolidated financial statements. |
Summary of Significant Accoun16
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of anti-dilutive impact on net losses | March 31, March 31, Stock warrants 1,268,749 635,000 Stock options 300,000 - Convertible debt 200,000 326,665 |
Financing Leases Receivable (Ta
Financing Leases Receivable (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Financing Leases Receivable [Abstract] | |
Summary of financing leases receivable | March 31, December 31, Total minimum financing leases receivable $ 69,085 $ 89,370 Unearned income (7,406 ) (11,080 ) Total financing leases receivable 61,679 78,290 Less: allowance for uncollectible financing leases receivable (21,229 ) (25,405 ) Financing leases receivable, net 40,450 52,885 Less: current portion of financing leases receivable, net (28,663 ) (33,125 ) Financing leases receivable, net – long-term $ 11,787 $ 19,760 |
Summary of uncollectible financing leases receivable | For the Three Months 2018 2017 Allowance for uncollectible financing leases receivable at beginning of period $ 25,405 $ 79,000 Provisions for credit losses - - Bad debt recovery (4,176 ) Allowance for uncollectible financing leases receivable at end of period $ 21,229 $ 79,000 |
Summary of future minimum gross lease payments receivable | Amount 2018 $ 55,660 2019 13,425 Future minimum gross financing leases receivable $ 69,085 |
Convertible Debt (Tables)
Convertible Debt (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Convertible Debt/Note Payable [Abstract] | |
Schedule of convertible debt | March 31, December 31, Principal amount $ 400,000 $ 400,000 Less: unamortized debt discount (81,988 ) (93,484 ) Convertible note payable, net – long-term $ 318,012 $ 306,517 |
Note Payable (Tables)
Note Payable (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Convertible Debt/Note Payable [Abstract] | |
Schedule of note payable | March 31, December 31, Principal amount $ 50,000 $ 50,000 Less: unamortized debt discount (7,718 ) (15,891 ) Notes payable, net $ 42,282 $ 34,109 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
Schedule of notes payable - related parties | March 31, December 31, Principal amount $ 50,000 $ 50,000 Less: unamortized debt discount (6,689 ) (14,716 ) Notes payable – related parties, net $ 43,311 $ 35,284 |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Stockholders' Deficit [Abstract] | |
Schedule of stock option activities | Number of Weighted Weighted Average Aggregate Balance Outstanding December 31, 2017 - - Granted 300,000 1.00 Balance Outstanding March 31, 2018 300,000 $ 1.00 4.76 $ - Exercisable, March 31, 2018 - $ - - $ - |
Schedule of warrant activities | Number of Weighted Weighted Average Aggregate Balance Outstanding December 31, 2017 1,268,749 2.39 Granted - - Balance Outstanding March 31, 2018 1,268,749 $ 2.39 4.91 $ - Exercisable, March 31, 2018 1,268,749 $ 2.39 4.91 $ - |
Commitments and Contincengies (
Commitments and Contincengies (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contincengies [Abstract] | |
Schedule of future minimum commitment payments under an employment agreement | Years ending December 31, Amount 2018 (remainder of year) $ 157,500 2019 220,500 2020 231,525 2021 243,101 2022 255,256 Total minimum commitment employment agreement payments $ 1,107,882 |
Organization and Nature of Op23
Organization and Nature of Operations (Details) - USD ($) | Dec. 14, 2017 | Nov. 30, 2017 | Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2015 |
Organization and Nature of Operations (Textual) | |||||
Non-refundable deposit | $ 15,000 | ||||
Additional non-refundable deposit | $ 10,000 | $ 10,000 | |||
Remaining outstanding liabilities Paid | $ 72,500 | ||||
Reverse stock split, description | The Company restructured its equity ownership via a reverse stock split at a ratio of 13.2 to 1 which reduced the number of shares of common stock outstanding to 522,558 shares followed by the issuance of an additional 95,109 shares to certain Praco Shareholders so that there were 617,667 shares outstanding immediately prior to the Closing | ||||
Common stock, per share | $ 0.0001 | $ 0.0001 | |||
Common stock, shares outstanding | 3,148,333 | 3,088,333 | |||
Common stock, shares issued | 3,148,333 | 3,088,333 | |||
Common stock, value issued | $ 315 | $ 309 | |||
Praco Shareholders [Member] | |||||
Organization and Nature of Operations (Textual) | |||||
Common stock, per share | $ 0.65 | ||||
Common stock, shares outstanding | 617,667 | ||||
Common stock, shares issued | 617,667 | ||||
Issuance of additional shares | 95,109 | ||||
Common stock, value issued | $ 401,000 | ||||
Fair value of shares | 283,749 | ||||
Acquisitions of stocks | $ 498,500 | ||||
Ownership percentage | 20.00% | ||||
Pro Rate Basis Exercisable | $ 2 | ||||
Praco Shareholders [Member] | Warrants [Member] | |||||
Organization and Nature of Operations (Textual) | |||||
Common stock, shares issued | 283,749 | ||||
Fair value of shares | 108,000 | ||||
Praco Shareholders [Member] | Common Stock [Member] | |||||
Organization and Nature of Operations (Textual) | |||||
Convertible into shares of common stock | 199,999 | ||||
Fair value of shares | 935,000 | ||||
Arista Shareholders [Member] | |||||
Organization and Nature of Operations (Textual) | |||||
Common stock, shares outstanding | 2,000,000 | ||||
Common stock, shares issued | 386,666 | ||||
Issuance of additional shares | 2,470,666 | ||||
Ownership percentage | 80.00% |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Details) - USD ($) | Mar. 31, 2018 | Mar. 31, 2017 |
Summary of Significant Accounting Policies [Abstract] | ||
Stock warrants | $ 1,268,749 | $ 635,000 |
Stock options | 300,000 | |
Convertible debt | $ 200,000 | $ 326,665 |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Summary of Significant Accounting Policies (Textual) | |||
Net loss | $ (231,754) | $ (49,687) | |
Cash used in operations activities | (60,326) | $ (33,379) | |
Accumulated deficit | (1,166,247) | $ (934,493) | |
Stockholders' deficit | $ (528,181) | $ (399,831) |
Financing Leases Receivable (De
Financing Leases Receivable (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Financing Leases Receivable [Abstract] | ||
Total minimum financing leases receivable | $ 69,085 | $ 89,370 |
Unearned income | (7,406) | (11,080) |
Total financing leases receivable | 61,679 | 78,290 |
Less: allowance for uncollectible financing leases receivable | (21,229) | (25,405) |
Financing leases receivable, net | 40,450 | 52,885 |
Less: current portion of financing leases receivable, net | (28,663) | (33,125) |
Financing leases receivable, net - long-term | $ 11,787 | $ 19,760 |
Financing Leases Receivable (27
Financing Leases Receivable (Details 1) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Financing Leases Receivable [Abstract] | ||
Allowance for uncollectible financing leases receivable at beginning of period | $ 25,405 | $ 79,000 |
Provisions for credit losses | ||
Bad debt recovery | (4,176) | |
Allowance for uncollectible financing leases receivable at end of period | $ 21,229 | $ 79,000 |
Financing Leases Receivable (28
Financing Leases Receivable (Details 2) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Financing Leases Receivable [Abstract] | ||
2,018 | $ 55,660 | |
2,019 | 13,425 | |
Future minimum gross financing leases receivable | $ 69,085 | $ 89,370 |
Financing Leases Receivable (29
Financing Leases Receivable (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Mar. 31, 2018 | |
Financing Leases Receivable (Textual) | ||
Financing lease transaction, description | The Company shall pay the seller an administrative fee equal to 2% of the scheduled payment amount of each lease, 50% of all penalties or late fee charges collected, and 50% of all default interest collected. The seller shall remit the remaining amount received from the lessees to the Company. The finance leases require 36 monthly/weekly or bi-weekly payments through February 2020. | |
Truck held for sale [Member] | ||
Financing Leases Receivable (Textual) | ||
Estimated residual value | $ 15,000 | $ 15,000 |
Convertible Debt (Details)
Convertible Debt (Details) - Convertible Debt [Member] - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Extinguishment of Debt [Line Items] | ||
Principal amount | $ 400,000 | $ 400,000 |
Less: unamortized debt discount | (81,988) | (93,484) |
Convertible note payable, net - long-term | $ 318,012 | $ 306,517 |
Convertible Debt (Details Textu
Convertible Debt (Details Textual) | Dec. 14, 2017USD ($)shares | Mar. 31, 2018USD ($)$ / shares | Sep. 30, 2017USD ($)Number$ / sharesshares | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($)Number$ / sharesshares | Dec. 31, 2017USD ($) |
Convertible Debt (Textual) | ||||||
Shares issued per share | $ / shares | $ 1.15 | |||||
Amortization of Debt Discount (Premium) | $ 27,696 | $ 13,431 | ||||
10% convertible promissory notes one [Member] | ||||||
Convertible Debt (Textual) | ||||||
Convertible debt conversion, percentage | 10.00% | |||||
Number of individuals | Number | 7 | |||||
Aggregate amount | $ 400,000 | |||||
Convertible debt, description | The unpaid principal and interest is payable three years from the date of the respective 2016 10% Convertible Note through December 2019. | |||||
Interest rate | 10.00% | |||||
Common stock conversion price, per share | $ / shares | $ 1.50 | |||||
Number of shares issued to noteholders | shares | 575,000 | |||||
Warrants expiration, term | 5 years | |||||
Shares issued per share | $ / shares | $ 2 | |||||
Convertible debt prepayment penalty, percentage | 5.00% | |||||
Convertible debt due, description | The noteholders have the option to extend the due date of the notes for three additional one-year periods. | |||||
12% convertible promissory notes [Member] | ||||||
Convertible Debt (Textual) | ||||||
Convertible debt conversion, percentage | 12.00% | |||||
Number of individuals | Number | 3 | |||||
Aggregate amount | $ 200,000 | |||||
Convertible debt, description | The unpaid principal and interest is payable three years from the date of the respective 12% Convertible Note through August 1, 2020. | |||||
Interest rate | 12.00% | |||||
Common stock conversion price, per share | $ / shares | $ 3 | |||||
Number of shares issued to noteholders | shares | 300,000 | |||||
Warrants expiration, term | 5 years | |||||
Shares issued per share | $ / shares | $ 4 | |||||
Convertible debt prepayment penalty, percentage | 5.00% | |||||
Convertible Debt [Member] | ||||||
Convertible Debt (Textual) | ||||||
Amortization of Debt Discount (Premium) | 11,496 | $ 13,242 | ||||
Interest payable | $ 13,874 | $ 11,102 | ||||
Weighted average interest rate | 11.00% | 10.00% | ||||
Debt maturities in 2019 | $ 200,000 | |||||
Debt maturities in 2020 | $ 200,000 | |||||
Share Exchange Agreement [Member] | 10% convertible promissory notes one [Member] | ||||||
Convertible Debt (Textual) | ||||||
Number of shares issued upon conversion | shares | 266,666 | |||||
Number of value issued upon conversion | $ 200,000 |
Note Payable (Details)
Note Payable (Details) - Note Payable [Member] - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Short-term Debt [Line Items] | ||
Principal amount | $ 50,000 | $ 50,000 |
Less: unamortized debt discount | (7,718) | (15,891) |
Notes payable, net | $ 42,282 | $ 34,109 |
Note Payable (Details Textual)
Note Payable (Details Textual) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Note Payable (Textual) | |||
Common stock, per share | $ 0.0001 | $ 0.0001 | |
Amortization of Debt Discount (Premium) | $ 27,696 | $ 13,431 | |
Note Payable [Member] | |||
Note Payable (Textual) | |||
Note payable | 42,282 | $ 34,109 | |
Subscription receivable | $ 50,000 | ||
Promissory notes interest rate | 8.00% | ||
Warrants to acquire common shares | 25,000 | ||
Common stock, per share | $ 0.01 | ||
Fair values of the warrants | $ 16,345 | ||
Aggregate granted warrants | 25,000 | ||
Amortization of Debt Discount (Premium) | 8,173 | $ 0 | |
Principal amount | $ 50,000 | $ 50,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Related Party Transaction [Line Items] | ||
Notes payable - related parties, net | $ 43,311 | $ 35,284 |
Notes payable - related parties [Member] | ||
Related Party Transaction [Line Items] | ||
Principal amount | 50,000 | 50,000 |
Less: unamortized debt discount | (6,689) | (14,716) |
Notes payable - related parties, net | $ 43,311 | $ 35,284 |
Related Party Transactions (D35
Related Party Transactions (Details Textual) - USD ($) | Jan. 01, 2018 | Dec. 14, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 |
Related Party Transactions (Textual) | |||||
Amortization of debt discount (related party convertible notes and notes payable) | $ 27,696 | $ 13,431 | |||
Interest expense - related parties | $ 9,635 | 929 | |||
Office rent - related party, description | During 2016 and through June 2017, the Company continued to rent its office space from a Director of the Company on a month-to-month basis for $500 per month. In July 2017, the Company continues to rent its office space this Director on a month-to-month basis for $750 per month. | ||||
Rent expense - related party | $ 2,250 | 1,500 | |||
Proceeds from line of credit - related party | 20,000 | ||||
Line of credit - related party | 35,000 | ||||
Reclassification of due to related party to line of credit - related party | 15,000 | ||||
Working capital advanced | 15,000 | ||||
Line of Credit [Member] | |||||
Related Party Transactions (Textual) | |||||
Interest, percentage | 18.00% | ||||
Principal amount | $ 50,000 | ||||
Promissory notes, percentage | 12.00% | ||||
Reclassification of due to related party to line of credit - related party | $ 15,000 | ||||
Director [Member] | Due to related party [Member] | |||||
Related Party Transactions (Textual) | |||||
Working capital | 15,000 | ||||
Notes payable - related parties [Member] | |||||
Related Party Transactions (Textual) | |||||
Principal amount | $ 50,000 | $ 50,000 | |||
Weighted average interest rate | 8.00% | 9.90% | |||
Amortization of debt discount (related party convertible notes and notes payable) | $ 8,027 | 189 | |||
Accrued interest payable - related parties | 2,492 | $ 186 | |||
Interest expense - related parties | $ 9,635 | $ 929 | |||
Notes payable - related parties [Member] | Warrants [Member] | |||||
Related Party Transactions (Textual) | |||||
Aggregate of warrants | 25,000 | ||||
Fair values of the warrants | $ 16,053 | ||||
Notes payable - related parties [Member] | Officers and directors [Member] | |||||
Related Party Transactions (Textual) | |||||
Convertible promissory notes, percentage | 8.00% | ||||
Principal amount | $ 50,000 | ||||
Conversion shares | 25,000 | ||||
Warrants to acquire common shares | 5 years | ||||
Acquire common shares, per share | $ 0.01 | ||||
Promissory notes, percentage | 8.00% | ||||
Convertible notes payable - related parties [Member] | |||||
Related Party Transactions (Textual) | |||||
Convertible promissory notes | |||||
Principal amount | |||||
Conversion shares | 60,000 |
Stockholders' Deficit (Details)
Stockholders' Deficit (Details) - Stock options [Member] | 3 Months Ended |
Mar. 31, 2018USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Balance Outstanding, Number of Options/Warrants | |
Granted , Number of Options | 300,000 |
Balance Outstanding, Number of Options/Warrants | 300,000 |
Exercisable, Number of Options | |
Balance Outstanding, Weighted Average Exercise Price | $ / shares | |
Granted , Weighted Average Exercise Price | $ / shares | 1 |
Balance Outstanding, Weighted Average Exercise Price | $ / shares | $ 1 |
Balance Outstanding, Weighted Average Remaining Contractual Term (Years) | 4 years 9 months 3 days |
Exercisable, Weighted Average Remaining Contractual Term (Years) | 0 years |
Balance Outstanding, Aggregate Intrinsic Value | $ | |
Exercisable, Aggregate Intrinsic Value | $ |
Stockholders' Deficit (Details
Stockholders' Deficit (Details 1) - Warrant [Member] | 3 Months Ended |
Mar. 31, 2018USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Balance Outstanding, Number of Options/Warrants | shares | 1,268,749 |
Granted , Number of Warrants | shares | |
Balance Outstanding, Number of Options/Warrants | shares | 1,268,749 |
Exercisable, Number of Warrants | shares | 1,268,749 |
Balance Outstanding, Weighted Average Exercise Price | $ / shares | $ 2.39 |
Granted , Weighted Average Exercise Price | $ / shares | |
Balance Outstanding, Weighted Average Exercise Price | $ / shares | 2.39 |
Exercisable, Weighted Average Exercise Price | $ / shares | $ 2.39 |
Balance Outstanding, Weighted Average Remaining Contractual Term (Years) | 4 years 10 months 28 days |
Exercisable, Weighted Average Remaining Contractual Term (Years) | 4 years 10 months 28 days |
Balance Outstanding, Aggregate Intrinsic Value | $ | |
Exercisable, Aggregate Intrinsic Value | $ |
Stockholders' Deficit (Detail38
Stockholders' Deficit (Details Textual) - USD ($) | Mar. 01, 2018 | Jan. 01, 2018 | Mar. 31, 2018 | Mar. 31, 2017 | Jan. 03, 2018 | Dec. 31, 2017 |
Stockholders' Deficit (Textual) | ||||||
Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 | ||||
Number of common stock issued for services, value | $ 69,000 | |||||
Shares issued per share | $ 1.15 | |||||
Stock-based compensation expense | $ 34,404 | $ 0 | ||||
Consultant Fee | 5,750 | |||||
Prepaid expenses | 63,250 | |||||
Stock-based compensation expense over the vesting period | $ 190,789 | |||||
Stock options [Member] | ||||||
Stockholders' Deficit (Textual) | ||||||
Number of options outstanding | 300,000 | |||||
Aggregate intrinsic value | ||||||
Chief Executive Officer [Member] | ||||||
Stockholders' Deficit (Textual) | ||||||
Options to purchase shares of common stock | 300,000 | |||||
Exercisable price per share | $ 1 | |||||
Employment agreement, description | (i) 100,000 of such shares on January 1, 2019, and (ii) as to 100,000 of such shares on January 1, 2020 and 100,000 of such shares on January 1, 2021. | |||||
Dividend yield | 0.00% | |||||
Expected volatility rate | 100.00% | |||||
Risk free interest rate | 2.20% | |||||
Estimated holding period | 5 years | |||||
Stock-based compensation expense over the vesting period | $ 225,193 | |||||
Common Stock [Member] | ||||||
Stockholders' Deficit (Textual) | ||||||
Number of common stock issued for services | 60,000 |
Commitments and Contincengies39
Commitments and Contincengies (Details) | Mar. 31, 2018USD ($) |
Commitments and Contincengies [Abstract] | |
2018 (remainder of year) | $ 157,500 |
2,019 | 220,500 |
2,020 | 231,525 |
2,021 | 243,101 |
2,022 | 255,256 |
Total minimum commitment employment agreement payments | $ 1,107,882 |
Commitments and Contincengies40
Commitments and Contincengies (Details Textual) - CEO [Member] - USD ($) | Jan. 01, 2018 | Dec. 14, 2017 | Dec. 31, 2017 |
Commitments and Contincengies (Textual) | |||
Other commitments, description | The CEO will earn an annual bonus as follows: nine percent (9%) of the Company’s annual EBITDA (Earnings before interest expense, taxes, depreciation, and amortization and all other non-cash charges) up to the first $5,000,000 of EBITDA, then 5% on amounts thereafter, based on the audited consolidated results of the Company. | ||
Employment agreement, description | (i) 100,000 of such shares on January 1, 2019, and (ii) as to 100,000 of such shares on January 1, 2020 and 100,000 of such shares on January 1, 2021. | ||
Vesting over period | 3 years | ||
Options granted to CEO | 300,000,000,000,000,000 | ||
Options to purchase shares of common stock | 300,000 | ||
Exercisable price per share | $ 1 | ||
Amount of bonus transaction | $ 20,000 | ||
Bonus payable agreement, description | The Company shall pay as severance to CEO, no later than thirty days following the date of termination, the greater of (i) 300% of the maximum allowable bonus payable to the Executive pursuant to Section 4(b); or (ii) the sum of $300,000. | ||
Health insurance | $ 2,000 | ||
Employment Agreement [Member] | |||
Commitments and Contincengies (Textual) | |||
Agreement of annual salary, description | (i) Upon the Effective Date, the CEO’s base compensation shall be at the annual rate of $150,000; (ii) Thereafter; upon the first $500,000 of gross proceeds in a financing raised by the Company during the term of the Agreement the CEO’s base salary compensation shall be raised to $200,000; (iii) Thereafter; upon the next $500,000 of gross proceeds in financings raised by the Company during the term of the Agreement the CEO’s base salary compensation shall be raised to $250,000; (iv) Thereafter; for each additional $1,000,000 of gross proceeds in financings raised by the Company during the term of the Agreement the CEO’s base salary compensation shall be increased by $12,000. |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Jan. 01, 2018 | May 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Subsequent Events (Textual) | ||||
Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | ||
Paid to consultant | $ 5,750 | |||
One year consulting agreement [Member] | ||||
Subsequent Events (Textual) | ||||
Paid to consultant | $ 5,000 | |||
Subsequent Event [Member] | ||||
Subsequent Events (Textual) | ||||
Subscription receivable | $ 50,000 | |||
Promissory notes interest rate | 8.00% | |||
Aggregate granted warrants | 25,000 | |||
Common Stock, Par or Stated Value Per Share | $ 0.01 |