XBRL Rendering Preview
Document and Entity Information
12 Months Ended
Dec. 31, 2016
USD ($)
shares
Document And Entity Information  
Entity Registrant Name ECO TEK 360 INC
Entity Central Index Key 0001338929
Document Type 10-K
Document Period End Date Dec. 31, 2016
Amendment Flag false
Current Fiscal Year End Date --12-31
Is Entity a Well-known Seasoned Issuer? No
Is Entity a Voluntary Filer? No
Is Entity's Reporting Status Current? Yes
Entity Filer Category Smaller Reporting Company
Entity Public Float $ 1,693,970
Entity Common Stock, Shares Outstanding | shares 19,481,661
Document Fiscal Period Focus FY
Document Fiscal Year Focus 2016
Consolidated Balance Sheets - USD ($)
Dec. 31, 2016
Dec. 31, 2015
Current assets:    
Cash $ 36,208 $ 32,989
Subscription receivable $ 10,000
Prepaid interest $ 21,622
Total current assets 57,830 $ 42,989
Property and equipment 1,873 2,252
Total assets 59,703 45,241
Current liabilities:    
Accounts payable 338,520 51,108
Accrued compensation 413,250 108,000
Secured note and accrued interest payable 122,333 $ 110,000
Unsecured notes and accrued interest payable 27,206
Convertible notes and accrued interest, 55,500 $ 52,312
Advances from related party 39,048 $ 115,633
Related party loans and accrued interest 289,741
Current liabilities from discontinued operations 84,281 $ 870,045
Total current liabilities 1,369,879 $ 1,307,098
Commitments and contingencies  
Stockholders' deficit    
Preferred stock $0.001 par value, 1,000,000 shares authorized, 200,000 shares issued and outstanding 200 $ 200
Common stock $0.001 par value, 400,000,000 shares authorized, 19,209,161 and 17,537,660 shares issued and outstanding, 871,166 and 1,377,667 issuable as of December 31, 2016 and 2015, respectively 20,080 18,915
Additional paid-in capital 28,410,437 $ 27,630,906
Stock subscription receivable (10,000)
Accumulated deficit (29,730,893) $ (28,911,878)
Total stockholders' deficit (1,310,176) (1,261,857)
Total liabilities and stockholders' deficit $ 59,703 $ 45,241
Consolidated Balance Sheets (Parenthetical) - $ / shares
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Statement of Financial Position [Abstract]      
Preferred Stock, par or stated value $ 0.001 $ 0.001  
Preferred Stock, shares authorized 1,000,000 1,000,000  
Preferred Stock, shares issued 200,000 200,000  
Preferred Stock, shares outstanding 200,000 200,000  
Common Stock, par or stated value $ 0.001 $ 0.001  
Common Stock, shares authorized 400,000,000 400,000,000  
Common Stock, shares issued 19,209,161 17,537,660  
Common Stock, shares outstanding 19,209,161 17,537,660  
Common Stock, shares issuable 871,166 1,377,667 87,655
Statements of Operations - USD ($)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Income Statement [Abstract]    
REVENUE $ 18,750 $ 3,500
OPERATING EXPENSES    
General and administrative $ 844,086 499,944
Participation share compensation - related party 1,514,060
Consulting fees share expense $ 380,696 89,283
Stock based compensation $ 50,000 1,609,375
Failed acquisition costs paid in stock 996,245
Failed acquisition costs paid in stock - related party 923,520
Employee stock settlement costs 200,000
Debt extinguishment income (573,787)
Debt extinguishment costs - related party 11,250,034
Total Operating Expenses $ 1,274,782 16,508,674
LOSS FROM OPERATIONS (1,256,032) (16,505,174)
OTHER EXPENSE    
Interest expense and financing costs 189,906 $ 42,016
Interest expense - related parties 8,841
Total other expense 198,747 $ 42,016
Loss from continuing operations before provision for income taxes $ (1,454,779) $ (16,547,190)
Provision for income taxes
LOSS FROM CONTINUING OPERATIONS $ (1,454,779) $ (16,547,190)
Income (Loss) from discontinued operations, net of tax 635,764 (2,585,535)
NET LOSS $ (819,015) $ (19,132,725)
Net loss per share from continuing operations $ (0.08) $ (1.23)
Net income (loss) per share from discontinued operations 0.03 (0.19)
Net income (loss) per share $ (0.04) $ (1.42)
Weighted average common shares outstanding 18,824,588 13,463,110
Statements of Cash Flows - USD ($)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES    
Net loss $ (819,015) $ (19,132,725)
Net Income (loss) from discontinued operations, net of taxes and minority interest 635,764 (2,585,535)
Loss from continuing operations $ (1,454,779) (16,547,190)
Adjustments to reconcile net income (loss) to net cash from operating activities:    
Debt extinguishment income (573,787)
Debt extinguishment cost - related party 11,250,034
Depreciation $ 379 398
Failed acquisition costs paid in stock 968,750
Failed acquisition costs paid in stock - related party 923,520
Stock based compensation expense $ 50,000 1,609,375
Stock issued for services $ 380,696 89,283
Employee stock settlement cost $ 200,000
Amortization of debt extension expense $ 178,378
Participation share compensation - related party $ 1,514,060
Changes in operating assets and liabilities:    
Accounts payable and accrued expenses $ 592,662 57,637
Accrued interest 20,368 42,016
Net cash used in operating activities $ (232,296) (465,904)
CASH FLOWS FROM INVESTING ACTIVITIES    
Additions to property and equipment (2,650)
Net cash used in investing activities (2,650)
CASH FLOWS FROM FINANCING ACTIVITIES    
Advances from related party $ 88,300 $ 41,155
Related party loans 284,900
Proceeds from unsecured notes 27,200 $ 50,000
Repayment of related party advance $ (164,885) (26,654)
Proceeds from the sale of common stock 458,000
Net cash provided by financing activities $ 235,515 522,501
DISCONTINUED ACTIVITIES:    
Net cash used in operating activities $ (21,713)
Net cash used in investing activities  
Net cash used in financing activities
Net cash flows used in discontinued activities $ (21,713)
Net increase in cash and cash equivalents $ 3,219 32,234
Cash and cash equivalents - beginning of period 32,989 755
Cash and cash equivalents - end of period $ 36,208 $ 32,989
Supplemental Cash Flow Disclosures    
Cash paid for interest
Cash paid for income taxes
Non-Cash Investing and Financing Activity:    
Common stock issued for reduction of debt, net $ 150,000 $ 931,306
Consolidated Statements of Stockholders Deficit - USD ($)
Class B Preferred Stock
Common Stock
Additional Paid-In Capital
Accumulated Deficit
Shareholder Receivable
Noncontrolling Interest
Stock Subscription Receivable
Total
Beginning Balance, Shares at Dec. 31, 2014 200,000 1,758,500            
Beginning Balance, Amount at Dec. 31, 2014 $ 200 $ 1,759 $ 6,438,915 $ (9,779,153) $ 791,319 $ (426,321)   $ (2,973,281)
Adjustments to correct shares issuable, shares   371,832            
Adjustments to correct shares issuable, amount   $ 372 (372)          
Common stock issued to convert notes payable, shares   6,062,154            
Common stock issued to convert notes payable, amount   $ 6,062 9,390,277         9,396,339
Common stock issued for participation expense - related party, shares   1,211,248            
Common stock issued for participation expense - related party, amount   $ 1,211 1,512,849         1,514,060
Common stock issued settlement of accrued compensation - related party, shares   2,500,000            
Common stock issued settlement of accrued compensation - related party, amount   $ 2,500 3,122,500         3,125,000
Common stock issued for sign-on bonus to two key employees, shares   1,000,000            
Common stock issued for sign-on bonus to two key employees, amount   $ 1,000 1,249,000         1,250,000
Common stock issued for services-BOD, shares   287,500            
Common stock issued for services-BOD, amount   $ 288 359,088         359,376
Common stock issued for services, shares   71,426            
Common stock issued for services, amount   $ 71 89,212         89,283
Common stock issued for cost of future private placement, shares   500,000            
Common stock issued for cost of future private placement, amount   $ 500 (500)          
Common stock issued related to failed acquisition, shares   755,000            
Common stock issued related to failed acquisition, amount   $ 775 967,975         968,750
Common stock issued related to failed acquisition-related party, shares   624,000            
Common stock issued related to failed acquisition-related party, amount   $ 624 922,896         923,520
Common stock issued related to discontinued operations, shares   1,710,000            
Common stock issued related to discontinued operations, amount   $ 1,710 2,135,790         2,137,500
Common stock issued for proceeds, shares   1,716,002            
Common stock issued for proceeds, amount   $ 1,715 442,285         444,000
Reclassfication of stock subscription received to issuable stock, shares   87,665            
Reclassfication of stock subscription received to issuable stock, amount   $ 88 791,231   $ (791,319)      
Common stock issued for subscription, shares   40,000            
Common stock issued for subscription, amount   $ 40 9,960         10,000
Stock issued for settlement cost with former CEO, shares   200,000            
Stock issued for settlement cost with former CEO, amount   $ 200 199,800         200,000
Minority interest reclassified to discontinued operations, amount           $ 426,321   426,321
Net Loss       (19,132,725)       (19,132,725)
Ending Balance, Shares at Dec. 31, 2015 200,000 18,915,327            
Ending Balance, Amount at Dec. 31, 2015 $ 200 $ 18,915 27,630,906 (28,911,878)   (1,261,857)
Adjustments to correct shares issuable, shares   10,000            
Adjustments to correct shares issuable, amount   $ 10 (10)          
Common stock issued for compensation, shares   50,000            
Common stock issued for compensation, amount   $ 50 49,950         50,000
Common stock issued for services, shares   305,000            
Common stock issued for services, amount   $ 305 302,445         302,750
Common stock issued for - loan extension, shares   200,000            
Common stock issued for - loan extension, amount   $ 200 199,800         200,000
Common stock issued for debt settlement, shares   600,000            
Common stock issued for debt settlement, amount   $ 600 149,400         150,000
Common stock issued for subscription, amount             $ (10,000) (10,000)
Options issued for consulting services     77,946         77,946
Net Loss       (819,015)     (819,015) (819,015)
Ending Balance, Shares at Dec. 31, 2016 200,000 20,080,327            
Ending Balance, Amount at Dec. 31, 2016 $ 200 $ 20,080 $ 28,410,437 $ (29,730,893) $ (10,000) $ (1,310,176)
Description of Business
12 Months Ended
Dec. 31, 2016
Description Of Business  
Description of Business

NOTE 1 – DESCRIPTION OF BUSINESS


Eco Tek 360, Inc. ("the Company") was incorporated in Nevada on March 25, 2005. As of December 31, 2016 and December 31, 2015, the Company had 400,000,000 shares of authorized common stock.

Eco Tek 360, Inc., during the fourth quarter, 2013, the Company changed its business plan to engage in future manufacturing and global distribution of ladies apparel. Trident Merchant Group, Inc. is a wholly owned subsidiary which provided "value added" strategic advisory services. Trident has since ceased operations in order to concentrate on the opportunities related to rejuvenating fibers and repurposing them into finished products.

During the second quarter, 2014 the Company formed Leading Edge Fashions, LLC of which it controls 51%. Effective December 31, 2014 the Company's Board of Directors determined it was in the best interest of the Company to discontinue the operations of Leading Edge Fashions, LLC.

The Company created a new limited liability company, Pure361, LLC ("Pure361") in May 2015 for the purpose of operating the portion of the Company's business that is involved with the collection, rejuvenation and manufacturing of garments and other accessories for the uniform marketplace that serves the hospitality, food service, medical, manufacturing, education, military, transportation and other commercial uniform industries. The Company owns 51% of Pure361. Pure361 entered into a license agreement with Pure System International Ltd. ("Pure"), the minority owner of Pure 361, related to potential future operations in which Pure361 was granted the exclusive license to use certain licensed intellectual property related to the manufacturing of uniforms from recyclable waste.

The Company created a new wholly owned subsidiary, Progressive Fashions Inc. ("PFI") in February 2016 for the purpose of designing, producing and marketing the EMME® Activewear Collection. The Company has had no operations to date and is in the process assessing when there may be a potential roll out of the EMME Activewear Collection.

 

Going Concern

The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles, which contemplates continuation of the Company as a going concern. The Company has an accumulated deficit of $29,730,893 and $28,911,878 as of December 31, 2016 and 2015, respectively, which include losses of $819,015 and $19,132,725 for the years ended December 31, 2016 and 2015, respectively.  Consequently, the aforementioned items raise substantial doubt about the Company's ability to continue as a going concern.

 

The Company's ability to continue as a going concern is dependent upon its ability to repay or settle its current indebtedness, acquire an operating business and raise capital through equity and debt financing or other means on desirable terms. If the Company is unable to obtain additional funds when they are required or if the funds cannot be obtained on favorable terms, management may be required to restructure the Company or cease operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Summary of Significant Accounting Policies
12 Months Ended
Dec. 31, 2016
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Principles of Consolidation

 

The accompanying consolidated financial statements include all of the accounts of the Company and its wholly owned subsidiary, Trident Merchant Group, Inc., Leading Edge Fashion, LLC which is 51% owned, and Pure361, LLC which is 51% owned.  All significant intercompany accounts and transactions have been eliminated. 

  

Reclassifications

 

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported consolidated net (loss).

 

Cash and Cash Equivalents

 

Cash and cash equivalents include cash on hand and investments in money market funds. The Company considers all highly-liquid instruments with an original maturity of 90 days or less at the time of purchase to be cash equivalents.

    

Equipment

 

Property and equipment are stated at cost. Costs of replacements and major improvements are capitalized, and maintenance and repairs are charged to operations as incurred. Depreciation expense is provided primarily by the straight-line method over the estimated useful lives of the assets which is seven years.

 

Revenue Recognition

 

Revenue for the women's fashion division will be recognized at the point-of-sale for retail store sales, net of estimated customer returns. Revenue is recognized at the completion of a job or service for the consulting division. Revenue is presented on a net basis and does not include any tax assessed by a governmental or municipal authority. Payment for merchandise at stores and through the Company's direct-to-consumer channel will be tendered by cash, check, credit card, debit card or gift card. Therefore, the Company's need to collect outstanding accounts receivable for its retail and direct-to-consumer channel is negligible and mainly results from returned checks or unauthorized credit card transactions. The Company maintains an allowance for doubtful accounts for its consulting service accounts receivable, which management reviews on a regular basis and believes is sufficient to cover potential credit losses and billing adjustments. Deposits for consulting services are recognized as a sale upon completion of service.

 

The Company accounts for a gift card transaction by recording a liability at the time the gift card is issued to the customer in exchange for consideration from the customer. A liability is established and remains on the Company's books until the card is redeemed by the customer, at which time the Company records the redemption of the card for merchandise as a sale or when it is determined the likelihood of redemption is remote, based on historical redemption patterns. Revenues attributable to gift card liabilities relieved after the likelihood of redemption becomes remote are included in sales and are not material.

 

Sales Return Reserve

 

The Company records a reserve for estimated product returns where the sale has occurred during the period reported, but the return is likely to occur subsequent to the period reported and may otherwise be considered in-transit. The reserve for estimated in-transit product returns is based on the Company's most recent historical return trends. If the actual return rate or experience is materially higher than the Company's estimate, additional sales returns would be recorded in the future.

 

Income Taxes

 

Income taxes are accounted for under the asset and liability method as stipulated by ASC 740 "Income Taxes." Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities or a change in tax rate is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced to estimated amounts to be realized by the use of a valuation allowance. A valuation allowance is applied when in management's view it is more likely than not that such deferred tax asset will be unable to be utilized. 

  

The Company adopted certain provisions under ASC Topic 740, which provide interpretative guidance for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Effective with the Company's adoption of these provisions, interest related to the unrecognized tax benefits is recognized in the financial statements as a component of income taxes.

 

In the unlikely event that an uncertain tax position exists in which the Company could incur income taxes, the Company would evaluate whether there is a probability that the uncertain tax position taken would be sustained upon examination by the taxing authorities. Reserves for uncertain tax positions would be recorded if the Company determined it is probable that a position would not be sustained upon examination or if payment would have to be made to a taxing authority and the amount is reasonably estimated. As of December 31, 2016 and 2015, the Company does not believe it has any uncertain tax positions that would result in the Company having a liability to the taxing authorities. The Company's tax returns are subject to examination by the federal and state tax authorities for the years ended 2005 through 2016.

 

Impairment or Disposal of Long-Lived Assets

 

ASC Topic 360 (formerly FASB issued Statement No. 144), "Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS 144"), clarifies the accounting for the impairment of long-lived assets and for long-lived assets to be disposed of, including the disposal of business segments and major lines of business.  Long-lived assets are reviewed when facts and circumstances indicate that the carrying value of the asset may not be recoverable.  When necessary, impaired assets are written down to their estimated fair value based on the best information available. No impairment was necessary as of December 31, 2016 and 2015.

 

Stock-based Compensation

 

We account for stock-based awards at fair value on the date of grant, and recognize compensation over the service-period that they are expected to vest. We estimate the fair value of stock options and stock purchase warrants using the Black-Scholes option pricing model. The estimated value of the portion of a stock-based award that is ultimately expected to vest, taking into consideration estimated forfeitures, is recognized as expense over the requisite service periods. The model includes subjective input assumptions that can materially affect the fair value estimates. The expected volatility is estimated based on the most recent historical period of time, of other comparative securities, equal to the weighted average life of the options. The estimate of stock awards that will ultimately vest requires judgment, and to the extent that actual forfeitures differ from estimated forfeitures, such differences are accounted for as a cumulative adjustment to compensation expenses and recorded in the period that estimates are revised.

 

Use of Accounting Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

 

Fair Value

 

FASB ASC 820, Fair Value Measurements and Disclosures ("ASC 820") establishes a framework for all fair value measurements and expands disclosures related to fair value measurement and developments. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

 

ASC 820 requires that assets and liabilities measured at fair value are classified and disclosed in one of the following three categories:

 

Level 1Quoted market prices for identical assets or liabilities in active markets or observable inputs; 

Level 2Significant other observable inputs that can be corroborated by observable market data; and

Level 3Significant unobservable inputs that cannot be corroborated by observable market data.

 

The carrying amounts of cash, accrued compensation, accounts payable and other liabilities, accrued interest payable, and short-term portion of notes payable approximate fair value because of the short-term nature of these items.

 

Concentration of Credit Risk

 

The carrying value of short-term financial instruments, including cash, restricted cash, trade accounts receivable, accounts payable, accrued expenses and short-term debt, approximates the fair value of these instruments. These financial instruments generally expose the Company to limited credit risk and have no stated maturities or have short-term maturities and carry interest rates that approximate market.  The Company maintains cash balances at financial institutions that are insured by the FDIC.  At December 31, 2016 or 2015 the Company had no amounts in excess of the FDIC limit.

  

Recently Issued Accounting Pronouncements

 

Changes to accounting principles generally accepted in the United States of America (U.S. GAAP) are established by the Financial Accounting Standards Board (FASB) in the form of accounting standards updates (ASU's) to the FASB's Accounting Standards Codification. The Company considers the applicability and impact of all new or revised ASU's.

 

In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, under which entities will no longer be able to recognize unrealized holding gains and losses on equity securities they classify as available-for-sale in other comprehensive income but instead recognize the change in fair value in net income. The standard is effective for interim and annual reporting periods beginning after December 15, 2017. We do not anticipate adoption to have a material impact to our consolidated results of operations, financial position or cash flows.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which replaces the existing guidance in Accounting Standard Codification 840, Leases. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018 and should be applied on a modified retrospective basis. ASU 2016-02 requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and corresponding lease liability. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset and for operating leases, the lessee would recognize straight-line total rent expense. We do not anticipate this change having any impact on our financial statements.

In March 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-09, Compensation - Stock Compensation. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. ASU 2016-09 requires entities to recognize the income tax effects of awards in the income statement when the awards vest or are settled. The standard also permits an employer to repurchase more of an employee's shares for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur. We do not anticipate a material impact to our consolidated results of operations based upon equity events.

There are no other new accounting pronouncements adopted or enacted during the year ended December 31, 2016 that had, or are expected to have, a material impact on our financial statements.

Capital Stock
12 Months Ended
Dec. 31, 2016
Equity [Abstract]  
Capital Stock

NOTE 3 – CAPITAL STOCK

 

Preferred Stock

  

The Company has designated a "Class B Convertible Preferred Stock" (the "Class B Preferred").  The number of authorized shares totals 1,000,000 and the par value is $.001 per share.  The Class B Preferred shareholders vote together with the common stock as a single class.  The holders of Class B Preferred are entitled to receive all notices relating to voting as are required to be given to the holders of the Common Stock.  The holders of shares of Class B Preferred shall be entitled to 10,000 votes per share.  The Class B Preferred Stock will have the rights to liquidation as all classes of the Common Stock of the Company.  The Class B Preferred stockholders are entitled to receive non-cumulative dividends at the rate of 8% per annum, and are accrued daily.  The Class B Preferred Stock shall be redeemed by the Corporation for 100% of the original purchase price plus the amount of cash dividends accrued on the earlier of 6 months from the date of issuance, or the date that the Corporation received its funding from any outside source in conjunction with a merger, reverse merger or any change of control.  In the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, the holders of the Class B Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any assets of the Corporation to the holders of the Common Stock, the amount of $.035 per share plus any and all accrued but unpaid dividends.

During the fourth quarter, 2011, 200,000 shares of the Series B Preferred Stock were issued to a related party for reimbursement of $7,500 of legal and accounting fees paid on behalf of the Company.

 

Common Stock

 

As of December 31, 2016 and December 31, 2015, the Company had 19,209,161 and 17,537,660 shares of its $0.001 par value common stock issued and outstanding, respectively.   In addition, as of December 31, 2016 and 2015, the Company had 871,666 and 1,377,667 shares of common stock issuable, respectively. The common stock subscriptions outstanding at December 31, 2014 of $791,319 relating to 87,655 issuable shares had been converted as of December 31, 2014.  This amount has been reclassified to additional paid-in-capital as of December 31, 2015.

 

The Company along with two of its former subsidiaries entered into a settlement agreement with R.R. Donnelly & Sons Company ("Donnelly") on June 6, 2007.  The settlement agreement provided for the Company to issue a Secured Promissory Note to Donnelly in the principal amount of $601,048, with an interest rate of 9% per annum and required monthly payments of $43,577.  The loan was secured by a first security lien in all of the Company's assets.  The Company subsequently defaulted on the note and Donnelly obtained judgment against the Company in the amount of $601,048.  The note along with the judgement, was subsequently sold to a Director of the Company.  On March 31, 2013 the Company's Board of Directors along with the director, issued a "Moratorium on Accrued Interest" agreeing that interest would cease at March 31, 2013 and that all past due accrued interest would be added to the principal portion of the note.  On March 1, 2015 the principal and accrued interest in the amount of $931,306 was converted into 6,062,154 shares of common stock which was valued at $9,396,338.  The Company recorded $8,465,034 of debt extinguishment cost. The outstanding balance of the note at December 31, 2016 and 2015 was $0 and $0, respectively.

 

In April 2015, the Company issued 1,211,248 shares of common stock to a director as a participation fee for past services.  The common stock was valued at $1.25 per share for a total value of $ 1,514,060.

 

In April 2015, the Company agreed to issue 2,500,000 shares of common stock valued at $1.25 per share, amounting to $3,125,000, to the president of the Company and to the principal financial officer and director of the Company in full settlement of $340,000 of accrued salaries.  The Company recorded an extinguishment of debt cost–related party for $2,785,000.  300,000 shares of the total remain to be issued as of December 31, 2016, and 2015.

 

In April 2015, the Company issued sign-on bonuses of 500,000 shares of common stock each to the chief operating officer of the Company and the chief technical officer of the Company.  The total value of the bonuses was $1,250,000 based on the trading price of the stock of, $1.25 per share, and is included in stock based compensation.

 

In April 2015, the Company issued 287,500 shares of its common stock to several board members in payment for their services.  The shares were valued at $359,375 based on the trading price of the shares, $1.25 per share, and were recorded as stock based compensation.

 

In April 2015, the Company issued 71,426 shares of its common stock at $1.25 per share amounting to $89,283 for payment of consulting services.

 

In April 2015, the Company issued 500,000 shares of common stock relating to a Placement Agreement for services for a future private placement.  The shares were recorded at a cost of capital by recording $500 of par value and a reduction of additional paid-in-capital of $500.

 

In April 2015, the Company issued 1,399,000 shares of common stock valued at $1.25 per share and amounting to $1,892,270 in full settlement of various claims related to the Company's failed acquisitions.

 

In April 2015, the Company issued 1,710,000 shares of common stock valued at $1.25 per share and amounting to $2,137,500 in full settlement of all claims related to the Company's discontinued operations of Leading Edge Fashions, LLC.

 

In January through June of 2015, 766,000 shares of common stock were issued for $169,000 in cash.  40,000 of these shares were issued for $0.25 per share with the Company having a remaining outstanding subscription receivable for $10,000 at December 31, 2016, and 2015.

 

The owner of the non-controlling interest of Leading Edge Fashions, LLC was unable to fund its share of the losses incurred in the fourth quarter of 2014. The minority interest of $426,322 at December 31, 2014 was therefore charged to discontinued operations in the year ended December 31, 2015.

 

On August 21, 2015, the Company entered into a separation agreement with a former executive of the Company, whereby the Company agreed to pay $37,500 cash and issued 200,000 shares of the Company's common stock valued at $1.00 per share and amounting to $200,000. The shares are subject to a lock-up/leak-out agreement.  The former employee is to receive one percent of any net profit of Pure 361 LLC (a limited liability company formed in the state of Delaware on May 18, 2015 in which the Company has a 51% ownership) for a period of five years beginning in the first profitable year.

 

In November and December 2015, the Company received $250,000 for the issuance of 990,002 shares of common stock.  The common stock was not issued, but was deemed issuable as of December 31, 2015.

 

In February 2016, the Company issued 50,000 shares of its common stock at a value of $1.00 per share for $50,000 to a board director for payment of services.

 

In March 2016, the Company issued 250,000 shares of its common stock at a value of $1.00 per share for $250,000 in payment for consulting services.  In addition, the Company granted a warrant to the consultant to purchase 250,000 shares of common stock at $0.50 per share for a period of two years.  The fair value of these warrants at the time they were granted was approximately $170,000 and was calculated using the Black-Scholes-Merton model.  The expense related to this stock option for the year ended December 31, 2016 was $77,946.

 

The following assumptions were used for the warrants granted in March 2016 are as follows:

 

    Year Ended December 31, 2016   
        
Expected term at issuance   2 years   
Expected average volatility   70.71% to 141.42%   
Expected dividend yield      
Risk-free interest rate   .70%– 1.64%   

 

 

The following table summarizes information relating to outstanding and exercisable stock warrants as of December 31, 2016:

 

Warrants Outstanding      Warrants Exercisable  
                           
Number of Shares      Weighted Average Remaining
Contractual life (in years)
     Weighted Average
Exercise Price
     Number of Shares      Weighted Average
Exercise Price
 
  275,000     1.053     $ 0.59       275,000     $ 0.59  
 

 

 

In March 2016, the Company issued 50,000 shares of its common stock at a value of $1.00 per share for $50,000 as payment for consulting services.

 

In the three month period ended March 31, 2016, the Company issued 200,000 shares of its common stock at a value of $1.00 per share, in conjunction with the extension of the maturity date of the $100,000 secured note.  $150,000 was amortized as of September 2016, and $50,000 is being amortized for the period ended August 31, 2017. The unamortized portion as of December 31, 2016 was $21,622.

 

In March 2016, the Company issued 884,001 shares of its common stock at approximately $0.25 per share amounting to $250,000 to two individuals for monies received in 2015 from subscription agreements that were entered into with the Company in 2015.  115,100 shares remain issuable related to these subscription agreements as of December 31, 2016.

 

In April 2016, the Company issued 5,000 shares of common stock valued at $0.55 per share for $2,750 of consulting services.

 

As of December 31, 2014, the Company owed $785,764 to trade creditors of Leading Edge Fashion LLC, a discontinued operation which was controlled by the Company.  The Company paid the outstanding obligations on July 1, 2016 by agreeing to issue as full consideration for the amount owed the trade creditors.  The 600,000 shares of common stock were issued, at a value of $0.25 per share for a total of $150,000 during the year ended December 31, 2016. The Company recorded a gain of $635,764 which is reflected in discontinued operations.

 

Stock Options

 

In April 2015, the Company and two members of executive management executed employment agreements which provided stock option awards for a minimum 250,000 shares of common stock each in conjunction with the schedule included with the employment agreement.  The stock option awards will be issued only when the Company reaches certain sales targets. All stock option awards earned by the executives shall have an exercise price equal to the fair market value of the common stock of GFTI at the close of market unless otherwise adjusted by the Board of Directors of GFTI at a later date.  The value of these options as of December 31, 2015 is $0 due to the extreme unlikelihood of the Company meeting its sales goals that trigger the issuances.

Notes Payable
12 Months Ended
Dec. 31, 2016
Notes Payable  
Notes Payable

NOTE 4 – NOTES PAYABLE

 

Secured Note Payable

 

The Company and its former consolidated subsidiaries entered into a settlement agreement with R.R. Donnelly & Sons Company ("Donnelly") on June 6, 2007.  As part of the settlement, the Company issued to Donnelly a Secured Promissory Note in the principal sum of $601,048, with an interest rate of 9% per annum and a requirement for monthly payments of $43,577, and granted Donnelly a first lien security interest in all of the Company's assets.  The Company was unable to meet the monthly payments and Donnelly obtained judgment in the amount of $601,048.  This note was subsequently sold to a Director of the Company.  On March 31, 2013, the Company's Board of Directors, along with the Director's consent, issued a "Moratorium on Accrued Interest" stating that the interest accrual on this note would cease indefinitely at March 31, 2013 and that all past due accrued interest would be added to the principal portion of the note.  On March 1, 2015, the principal and accrued interest in the amount of $931,306 was converted into 6,062,154 shares of common stock which was valued at $9,396,338.  The Company recorded $8,465,034 of debt extinguishment cost.

 

On November 25, 2014, the Company issued a secured promissory note to an individual in the amount of $100,000 at 10% interest and due on April 1, 2015. The note is secured by finished goods inventory consisting of active apparel, fabric inventory consisting of uncut fabrics intended for use in production of apparel, work in progress of apparel in various stages of completion, and office assets including all furniture, fixtures, and equipment.  On April 1, 2016 the Company entered into a forbearance agreement.  The Company was granted an extension of the note through September 30, 2016 in consideration of 150,000 shares of common stock valued at $150,000 with interest accruing after March 29, 2016 at 12%.  The lender was issued an additional 50,000 shares valued at $50,000 to extend the note to August 31, 2017.  The note and accrued interest was $122,333 and $110,000 as of December 31, 2016, and 2015.  The initial extension fee was amortized ratably over the extension period of 180 days. The subsequent extension fee is amortized over the period of the extension.

 

Unsecured Notes Payable

 

The Company had an unsecured note payable in the original principal amount of $67,057.  This note was issued to a vendor on August 23, 2007.  The note accrued interest at the rate of 10% per annum and required monthly payments of $4,500 with final payment due on July 15, 2008.  The Company made no payments under this note and the note had been in default.  The statute of limitations for the holders of this note to initiate litigation has expired, and therefore the note and the related accrued interest totaling $123,672 was written off and recorded as income from debt extinguishment.  The balance of this note plus accrued interest totals $0 at December 31, 2015 and 2016.

 

During the year ended December 31, 2016, the Company received two separate payments of $12,500, totaling $25,000, as secured notes. The notes are non-interest bearing, and have no terms of repayment.

 

On December 12, 2016, the Company issued an unsecured promissory note to an investor in the amount of $7,200. The note bears interest at 5% and matures on June 30, 2017. As of December 31, 2016, payments from the investor are $2,200. Subsequent to December 31, 2016, the investor paid the remaining $5,000 related to the promissory note. The balance of this note plus accrued interest totals $2,206 as of December 31, 2016.

 

Convertible Notes Payable

 

The Company issued an 8% unsecured convertible note payable in the amount of $250,000 in 2005.  The conversion feature had expired and the note was in default.  The statute of limitations for the holders of this note to initiate litigation expired, and therefore the note and its related accrued interest totaling $450,115 have been written off and recorded as income from debt extinguishment. The balance of the principal and interest is $0 as of December 31, 2015.

 

In August 2015, The Company issued an unsecured promissory note to an investor in the amount of $50,000, convertible to common stock at $1.00 per share.  The note bears an interest rate of 8% per annum and matured on August 8, 2016.  The note is currently unpaid and in default.  The note was also issued with a warrant for this investor to purchase 25,000 shares of common stock at $1.50 for a period of 2 years.  The fair value of these warrants was approximately $3,909 as of December 31, 2016 and was calculated using the Black-Scholes-Merton model. The note does not contain a beneficial conversion feature. The balance of this note plus accrued interest totals $55,500 and $52,312 at December 31, 2016 and December 31, 2015, respectively.

   

During the year ended December 31, 2012 the Company and certain holders agreed to convert the notes payable and related accrued interest totaling $791,319 into 89,000 shares of the Company's common stock.  The above balance was reflected as stock subscriptions received but not issued as of December 31, 2014 and reclassified to additional paid in capital as of December 31, 2015, and still remain issuable as of December 31, 2016.

 

During 2016, the Company received $50,000, $15,000, and $19,900 and issued a promissory note with a related party. Interest accrues at 5% per annum. Interest accrued on these amounts as of December 31, 2016, was $663. The note matures on June 30, 2017, or earlier in the event of default.

Income Taxes
12 Months Ended
Dec. 31, 2016
Income Tax Disclosure [Abstract]  
Income Taxes

NOTE 5 – INCOME TAXES

 

The Company uses the liability method, whereby deferred taxes and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes.  On December 31 2013 and 2012, the Company has no tax liability.  The net deferred tax asset generated by the loss carryforward has been fully reserved.  The cumulative net operating loss carry-forward is approximately $13,000,000 at December 31, 2016, and will expire in the years 2026 through 2036.

At December 31, 2016 and 2015, deferred tax assets consisted of the following:

  2016   2015  
             
Allowance for doubtful accounts   $     $  
Accrued expenses            
Current deferred tax asset            
                 
Intangible and fixed assets            
NOL carryforward     4,657,000       4,525,000  
Long-term deferred tax asset     4,657,000       4,525,000  
                 
Total deferred tax asset     4,657,000       4,525,000  
Less valuation allowance     (4,657,000 )     (4,525,000 )
                 
Net deferred tax asset   $     $  

 

The benefit for income taxes differed from the amount computed using the U.S. federal income tax rate of 34% for December 31, 2016 and 2015 as follows:   

      2016       2015  
Income tax benefit (federal and state)   $ (278,000)     $ (6,468,000)  
Non-deductible items     146,000       5,443,000  
State and other benefits included in valuation            
Change in valuation allowance     132,000        1,025,000   
Income tax benefit            

 

The utilization of the carryforwards is dependent upon the Company's ability to generate sufficient taxable income during the carryforward period. In addition, utilization of these carryforwards may be limited due to ownership changes as defined in the Internal Revenue Code.

Luminx Holdings, Inc.
12 Months Ended
Dec. 31, 2016
Notes to Financial Statements  
Luminx Holdings, Inc.

NOTE 6 – LUMINX HOLDINGS, INC.

During the year ended December 31, 2011, the Company acquired a 1.7% ownership of Direct LED, Inc. (formerly LuminX, Inc.) in exchange for consulting services.  The Company has not assigned a value to the investment at December 31, 2016 and 2015 due to the lack of marketability of the minority interest and the company is still in its start-up.  Direct LED, Inc. filed its S-1 Registration Statement with the Securities and Exchange Commission on July 18, 2012 which became effective on January 23, 2013.

Discontinued Operations
12 Months Ended
Dec. 31, 2016
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations

NOTE 7 – DISCONTINUED OPERATIONS

 

During 2014, the Company's Leading Edge Fashions, LLC retail businesses, of which it owned 51%, was classified as discontinued operations.  Based on the Company's strategy to allocate resources to its businesses relative to their growth potential and those with the greater right to win in the marketplace, the Company determined that this business did not align with the Company's long-term growth plans.

 

As of December 31, 2016 and December 31, 2015, $870,045 of current liabilities from discontinued operations includes $0 and $785,764 loan payable, respectively, and $84,281 accounts payable.  The loan payable was converted to common stock in July 2016, which resulted in a gain on the extinguishment of debt related to discontinued operations in the amount of $635,764.

 

Related Party Transactions
12 Months Ended
Dec. 31, 2016
Related Party Transactions [Abstract]  
Related Party Transactions

NOTE 8 – RELATED PARTY TRANSACTIONS

 

During 2016 the Company was advanced $88,300 from the president of the Company. The president was repaid $164,885. The president was owed $39,048 and $115,633 at December 31, 2016 and 2015, respectively. 

During 2016, the Company received loans from the CEO and a member of the board of directors totaling $284,900. The loans bear interest at 5% per annum and mature on June 30, 2017. The balance of these loans plus accrued interest was $289,741 and $0 at December 31, 2016 and 2015, respectively. 

Commitments and Contingencies
12 Months Ended
Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

NOTE 9 – COMMITMENTS AND CONTINGENCIES

 

On March 15, 2015 the Company entered into a trademark license agreement with True Beauty, LLC which controls the trademark EMME.  EMME is a market pioneer and trusted voice of the "Full-Figured" market. Under this licensing agreement the Company will design, produce and market the EMME® Activewear Collection.  On April 13, 2016, the agreement was amended regarding the term and minimum royalties.  The royalty expense was $100,000 and $50,000 for December 31, 2016, and 2015, respectively.

 

The additional minimum royalties are as follows:

 

Year      
2017     150,000  
2018     250,000  
2019     250,000  
Total   $ 650,000  

 

The license agreement is renewable for five consecutive one year terms commencing on January 1, 2020 if the Company reaches seventy percent of its projected sales by September 30 of the previous year.

 

As of January 18, 2016, the Company is a party to one pending litigation matter entitled Randazzo LLC v. Avani Holdings LLC & Global Fashion Technologies, Inc. This litigation was initiated by the plaintiff in order to evict Avani Holdings LLC from its rented premises in California and to recover unpaid rent. The Company does not operate out of those premises and has never signed any leases or other documents with the plaintiff. Consequently, management believes there to be no legitimate cause of action against the Company. However, the Company is attempting to resolve the matter due to the relatively small amount in controversy. The unpaid rent being sought by the plaintiff is $26,595.

 

As of January 18, 2016, the Company has been named as a defendant in the matter of Patrick Kalashyan v. Avani Holdings, LLC & Global Fashion Technologies, Inc.  This litigation was initiated by the plaintiff to recover monies owed on a September 23, 2011 settlement agreement signed between the Plaintiff and Avani Holdings, LLC.  The Company is not party to this agreement and never completed purchase of Avani Holdings, LLC.  Consequently, management believes there is no legitimate cause of action against the Company.  The amount being sought by the plaintiff is $150,000 plus interest. This case was subsequently dismissed by the plaintiff. 

 

The Company has been named as a defendant in the matter of Patricia Witthuhn v. Global Fashion Technologies, Inc. This litigation was initiated by the plaintiff in order to collect wages allegedly due pursuant to her employment with Avani Holdings LLC. The Company never hired Ms. Witthuhn and never acquired Avani Holdings, LLC. Consequently, there is no legitimate cause of action against the Company. However, due to cash flow constraints, the Company is unable to hire outside counsel for this litigation. The amount being sought by the plaintiff is approximately $15,000.

 

The Company has been named as a defendant in the matter of William Corso v. Global Fashion Technologies, Inc. This litigation was initiated by the plaintiff in order to collect wages allegedly due pursuant to his employment with Avani Holdings LLC. The Company never hired Mr. Corso and never acquired Avani Holdings, LLC. Consequently, there is no legitimate cause of action against the Company. However, due to cash flow constraints, the Company is unable to hire outside counsel for this litigation. The amount being sought by the plaintiff is approximately $40,000.

Net Loss Per Share
12 Months Ended
Dec. 31, 2016
Earnings Per Share [Abstract]  
Net Loss Per Share

NOTE 10 – NET LOSS PER SHARE

 

Potentially dilutive securities are excluded from the calculation of net loss per share when their effect would be anti-dilutive. For all periods presented in the consolidated financial statements, all potentially dilutive securities have been excluded from the diluted share calculations as they were anti-dilutive as a result of the net losses incurred for the respective periods. Accordingly, basic shares equal diluted shares for all periods presented.

 

Potentially dilutive securities were comprised of the following:  

    December 31,  
    2016     2015  
Warrants     275,000       25,000  
Options     -       -  
Convertible notes payable, including accrued interest     50,000       50,000  
Contingently issuable shares     -       -  
      275,000       25,000  

 

Subsequent Events
12 Months Ended
Dec. 31, 2016
Subsequent Events [Abstract]  
Subsequent Events

NOTE 11 – SUBSEQUENT EVENTS

 

On December 12, 2016, the Company issued an unsecured promissory note to an investor in the amount of $7,200. As of December 31, 2016, payments from the investor are $2,200. On January 11, 2017, the investor paid the remaining $5,000 related to the promissory note.

 

On January 27, February 14, and March 15, 2017 the Company received $20,000, $82,500, and $50,000 in relation to convertible promissory from a related party. Per the terms of the promissory note, the balance is convertible to common shares at $.375 per share.

 

On February 14, 2017, the Company received $8,150 in relation to a convertible promissory note with a related party. The loan bears interest at 5% per annum.

 

March 16, 2017, the Company received $5,000 in relation to a promissory note. The note bears interest at 6% and is convertible to common shares at $.50 per share.

 

On March 16, 2017, the Company loaned a related party $20,000. The loan bears interest at the rate of 5% per annum and has a term of six months.

 

The following options to purchase shares of the Company’s common stock were granted to certain members of the board of directors and its outside counsel in 2017:

1,500,000 options at the market close price on December 31, 2016 exercisable for a period of ten years.

100,000 options @ 0.0001 cents per share and 100,000 three-year common stock options exercisable at $1.50 per share. In addition, this individual will receive up to ten incentive stock option awards based on meeting certain future sales and income targets.

250,000 options @ 0.01 cents per share and 100,000 options exercisable at $0.50 per share for a period of two years.

250,000 options @ $0.50 per share for a period of five years. In addition, this individual will receive up to ten incentive stock option awards based on meeting certain future sales and income targets.

125,000 options @ $0.50 per share for a period of five years.

125,000 options @ $1.50 per share for a period of five years. 

Summary of Significant Accounting Policies (Policies)
12 Months Ended
Dec. 31, 2016
Accounting Policies [Abstract]  
Principles of Consolidation

Principles of Consolidation

 

The accompanying consolidated financial statements include all of the accounts of the Company and its wholly owned subsidiary, Trident Merchant Group, Inc., Leading Edge Fashion, LLC which is 51% owned, and Pure361, LLC which is 51% owned.  All significant intercompany accounts and transactions have been eliminated.

Reclassification

Reclassifications

 

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported consolidated net (loss).

Cash and Cash Equivalents

Cash and Cash Equivalents

 

Cash and cash equivalents include cash on hand and investments in money market funds. The Company considers all highly-liquid instruments with an original maturity of 90 days or less at the time of purchase to be cash equivalents.

Equipment

Equipment

 

Property and equipment are stated at cost. Costs of replacements and major improvements are capitalized, and maintenance and repairs are charged to operations as incurred. Depreciation expense is provided primarily by the straight-line method over the estimated useful lives of the assets which is seven years.

Revenue Recognition

Revenue Recognition

 

Revenue for the women's fashion division will be recognized at the point-of-sale for retail store sales, net of estimated customer returns. Revenue is recognized at the completion of a job or service for the consulting division. Revenue is presented on a net basis and does not include any tax assessed by a governmental or municipal authority. Payment for merchandise at stores and through the Company's direct-to-consumer channel will be tendered by cash, check, credit card, debit card or gift card. Therefore, the Company's need to collect outstanding accounts receivable for its retail and direct-to-consumer channel is negligible and mainly results from returned checks or unauthorized credit card transactions. The Company maintains an allowance for doubtful accounts for its consulting service accounts receivable, which management reviews on a regular basis and believes is sufficient to cover potential credit losses and billing adjustments. Deposits for consulting services are recognized as a sale upon completion of service.

 

The Company accounts for a gift card transaction by recording a liability at the time the gift card is issued to the customer in exchange for consideration from the customer. A liability is established and remains on the Company's books until the card is redeemed by the customer, at which time the Company records the redemption of the card for merchandise as a sale or when it is determined the likelihood of redemption is remote, based on historical redemption patterns. Revenues attributable to gift card liabilities relieved after the likelihood of redemption becomes remote are included in sales and are not material.

Sales Return Reserve

Sales Return Reserve

 

The Company records a reserve for estimated product returns where the sale has occurred during the period reported, but the return is likely to occur subsequent to the period reported and may otherwise be considered in-transit. The reserve for estimated in-transit product returns is based on the Company's most recent historical return trends. If the actual return rate or experience is materially higher than the Company's estimate, additional sales returns would be recorded in the future.

Income taxes

Income Taxes

 

Income taxes are accounted for under the asset and liability method as stipulated by ASC 740 "Income Taxes." Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities or a change in tax rate is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced to estimated amounts to be realized by the use of a valuation allowance. A valuation allowance is applied when in management's view it is more likely than not that such deferred tax asset will be unable to be utilized. 

  

The Company adopted certain provisions under ASC Topic 740, which provide interpretative guidance for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Effective with the Company's adoption of these provisions, interest related to the unrecognized tax benefits is recognized in the financial statements as a component of income taxes.

 

In the unlikely event that an uncertain tax position exists in which the Company could incur income taxes, the Company would evaluate whether there is a probability that the uncertain tax position taken would be sustained upon examination by the taxing authorities. Reserves for uncertain tax positions would be recorded if the Company determined it is probable that a position would not be sustained upon examination or if payment would have to be made to a taxing authority and the amount is reasonably estimated. As of December 31, 2016 and 2015, the Company does not believe it has any uncertain tax positions that would result in the Company having a liability to the taxing authorities. The Company's tax returns are subject to examination by the federal and state tax authorities for the years ended 2005 through 2016.

Impairment or Disposal of Long-Lived Assets

Impairment or Disposal of Long-Lived Assets

 

ASC Topic 360 (formerly FASB issued Statement No. 144), "Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS 144"), clarifies the accounting for the impairment of long-lived assets and for long-lived assets to be disposed of, including the disposal of business segments and major lines of business.  Long-lived assets are reviewed when facts and circumstances indicate that the carrying value of the asset may not be recoverable.  When necessary, impaired assets are written down to their estimated fair value based on the best information available. No impairment was necessary as of December 31, 2016 and 2015.

Stock Based Compensation

Stock-based Compensation

 

We account for stock-based awards at fair value on the date of grant, and recognize compensation over the service-period that they are expected to vest. We estimate the fair value of stock options and stock purchase warrants using the Black-Scholes option pricing model. The estimated value of the portion of a stock-based award that is ultimately expected to vest, taking into consideration estimated forfeitures, is recognized as expense over the requisite service periods. The model includes subjective input assumptions that can materially affect the fair value estimates. The expected volatility is estimated based on the most recent historical period of time, of other comparative securities, equal to the weighted average life of the options. The estimate of stock awards that will ultimately vest requires judgment, and to the extent that actual forfeitures differ from estimated forfeitures, such differences are accounted for as a cumulative adjustment to compensation expenses and recorded in the period that estimates are revised.

Use of Accounting Estimates

Use of Accounting Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Fair Value

Fair Value

 

FASB ASC 820, Fair Value Measurements and Disclosures ("ASC 820") establishes a framework for all fair value measurements and expands disclosures related to fair value measurement and developments. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

 

ASC 820 requires that assets and liabilities measured at fair value are classified and disclosed in one of the following three categories:

 

Level 1Quoted market prices for identical assets or liabilities in active markets or observable inputs; 

Level 2Significant other observable inputs that can be corroborated by observable market data; and

Level 3Significant unobservable inputs that cannot be corroborated by observable market data.

 

The carrying amounts of cash, accrued compensation, accounts payable and other liabilities, accrued interest payable, and short-term portion of notes payable approximate fair value because of the short-term nature of these items.

Concentration of credit risk

Concentration of Credit Risk

 

The carrying value of short-term financial instruments, including cash, restricted cash, trade accounts receivable, accounts payable, accrued expenses and short-term debt, approximates the fair value of these instruments. These financial instruments generally expose the Company to limited credit risk and have no stated maturities or have short-term maturities and carry interest rates that approximate market.  The Company maintains cash balances at financial institutions that are insured by the FDIC.  At December 31, 2016 or 2015 the Company had no amounts in excess of the FDIC limit.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

 

Changes to accounting principles generally accepted in the United States of America (U.S. GAAP) are established by the Financial Accounting Standards Board (FASB) in the form of accounting standards updates (ASU's) to the FASB's Accounting Standards Codification. The Company considers the applicability and impact of all new or revised ASU's.

 

In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, under which entities will no longer be able to recognize unrealized holding gains and losses on equity securities they classify as available-for-sale in other comprehensive income but instead recognize the change in fair value in net income. The standard is effective for interim and annual reporting periods beginning after December 15, 2017. We do not anticipate adoption to have a material impact to our consolidated results of operations, financial position or cash flows.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which replaces the existing guidance in Accounting Standard Codification 840, Leases. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018 and should be applied on a modified retrospective basis. ASU 2016-02 requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and corresponding lease liability. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset and for operating leases, the lessee would recognize straight-line total rent expense. We do not anticipate this change having any impact on our financial statements.

In March 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-09, Compensation - Stock Compensation. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. ASU 2016-09 requires entities to recognize the income tax effects of awards in the income statement when the awards vest or are settled. The standard also permits an employer to repurchase more of an employee's shares for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur. We do not anticipate a material impact to our consolidated results of operations based upon equity events.

There are no other new accounting pronouncements adopted or enacted during the year ended December 31, 2016 that had, or are expected to have, a material impact on our financial statements.

Capital Stock (Tables)
12 Months Ended
Dec. 31, 2016
Capital Stock Tables  
Assumptions for warrants
    Year Ended December 31, 2016   
        
Expected term at issuance   2 years   
Expected average volatility   70.71% to 141.42%   
Expected dividend yield      
Risk-free interest rate   .70%– 1.64%   
Stock Warrants
Warrants Outstanding      Warrants Exercisable  
                           
Number of Shares      Weighted Average Remaining
Contractual life (in years)
     Weighted Average
Exercise Price
     Number of Shares      Weighted Average
Exercise Price
 
  275,000     1.053     $ 0.59       275,000     $ 0.59  
 
Income Taxes (Tables)
12 Months Ended
Dec. 31, 2016
Income Taxes Tables  
Deferred Tax Asset
  2016   2015  
             
Allowance for doubtful accounts   $     $  
Accrued expenses            
Current deferred tax asset            
                 
Intangible and fixed assets            
NOL carryforward     4,657,000       4,525,000  
Long-term deferred tax asset     4,657,000       4,525,000  
                 
Total deferred tax asset     4,657,000       4,525,000  
Less valuation allowance     (4,657,000 )     (4,525,000 )
                 
Net deferred tax asset   $     $  
Benefit for income taxes
      2016       2015  
Income tax benefit (federal and state)   $ (278,000)     $ (6,468,000)  
Non-deductible items     146,000       5,443,000  
State and other benefits included in valuation            
Change in valuation allowance     132,000        1,025,000   
Income tax benefit            
Commitments and Contingencies (Tables)
12 Months Ended
Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract]  
Minimum Royalties

 

Year      
2017     150,000  
2018     250,000  
2019     250,000  
Total   $ 650,000  

Net Loss Per Share (Tables)
12 Months Ended
Dec. 31, 2016
Net Loss Per Share Tables  
Potentially dilutive securities
    December 31,  
    2016     2015  
Warrants     275,000       25,000  
Options     -       -  
Convertible notes payable, including accrued interest     50,000       50,000  
Contingently issuable shares     -       -  
      275,000       25,000  
Description of Business (Details Narrative) - shares
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2013
Description Of Business Details Narrative      
Common Stock, shares authorized 400,000,000 400,000,000  
Non-controlling interest     51.00%
Going Concern (Details Narrative) - USD ($)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Going Concern Details Narrative    
Accumulated deficit $ (29,730,893) $ (28,911,878)
Net loss $ (819,015) $ (19,132,725)
Capital Stock (Details Narrative 1) - USD ($)
1 Months Ended 2 Months Ended 6 Months Ended 12 Months Ended
Aug. 21, 2015
Apr. 30, 2016
Feb. 29, 2016
Dec. 31, 2015
Jun. 30, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Preferred Stock, par or stated value       $ 0.001   $ 0.001 $ 0.001  
Preferred Stock, shares authorized       1,000,000   1,000,000 1,000,000  
Preferred Stock, shares issued       200,000   200,000 200,000  
Preferred Stock, shares outstanding       200,000   200,000 200,000  
Class B Preferred Stock Voting Rights           10,000 votes per share 10,000 votes per share  
Class B Dividend Rate           8.00% 8.00%  
Common Stock, par value, incorrect value       $ 0.35     $ 0.35  
Common Stock, par or stated value       $ 0.001   $ 0.001 $ 0.001  
Common Stock, shares issued       17,537,660   19,209,161 17,537,660  
Common Stock, shares outstanding       17,537,660   19,209,161 17,537,660  
Common Stock, shares issuable       1,377,667   871,166 1,377,667 87,655
Stock subscriptions reclassified to equity       $ 87,655     $ 87,655  
Shares issued for Cash, amount             444,000  
Share issued for acquisition, amount             $ 968,750  
Share price       $ 1.25   $ .25 $ 1.25  
Common stock issued related to discontinued operations, amount             $ 2,137,500  
Debt extinguishment costs           11,250,034  
Minority interest reclassified to discontinued operations, amount             $ 426,321  
Directors Fee [Member]                
Shares issued for Services             1,211,248  
Shares issued for Services, amount             $ 1,514,060  
Share price       $ 1.25     $ 1.25  
Settlement Agreement [Member]                
Debt extinguishment costs             $ 8,465,034  
Note Payable Issued       $ 601,048     601,048  
Monthly Payment             $ 43,577  
Interest Rate       9.00%     9.00%  
Shares issued for debt             6,062,154  
Shares issued for debt, amount             $ 9,396,338  
Notes Payable       $ 0     $ 0 $ 931,306
Officers [Member]                
Common Stock, shares issuable       300,000     300,000  
Shares issued for Services             2,500,000  
Shares issued for Services, amount             $ 3,125,000  
Accrued salaries       $ 340,000     $ 340,000  
Share price       $ 1.25     $ 1.25  
Debt extinguishment costs             $ 2,785,000  
Bonuses [Member]                
Shares issued for Services             500,000  
Shares issued for Services, amount             $ 1,250,000  
Share price       1.25     $ 1.25  
Several Board Members [Member]                
Shares issued for Services     50,000       287,500  
Shares issued for Services, amount     $ 50,000       $ 359,375  
Share price     $ 1.00 $ 1.25     $ 1.25  
Common Stock [Member]                
Common Stock, shares issuable       900,002     900,002  
Stock subscriptions received         $ 10,000      
Termination agreement $ 37,500              
Shares issued for Services 200,000 5,000         71,426  
Shares issued for Services, amount $ 200,000 $ 2,750         $ 89,283  
Shares issued for cash         766,000      
Shares issued for Cash, amount       $ 250,000 $ 169,000      
Share issued for acquisition             1,399,000  
Share issued for acquisition, amount             $ 1,892,270  
Share price $ 1.00 $ 0.55     $ 0.25      
Common stock issued related to discontinued operations, shares             1,710,000  
Common stock issued related to discontinued operations, amount             $ 2,137,500  
Shares issued for debt           200,000    
Shares issued for debt, amount           $ 100,000    
Private Placement [Member]                
Additional paid-in-capital, reduction       $ (500)     $ (500)  
Par Value       $ 500     $ 500  
Shares issued for Services             500,000  
Capital Stock Additional (Details Narrative)
12 Months Ended
Dec. 31, 2016
$ / shares
shares
Annual Dividend Yield
Warrants Outstanding [Member]  
Number of shares, Otustanding and exercisable 275,000
Weighted Average Remaining contractual life 1 year 53 days
Weighted Average Exercise price | $ / shares $ 0.59
Warrants Exercisable [Member]  
Number of shares, Otustanding and exercisable 275,000
Weighted Average Exercise price | $ / shares $ 0.59
Minimum [Member]  
Exepected Life (years) 2 years
Expected volatility 70.71%
Risk-free Interest 0.70%
Maximum [Member]  
Expected volatility 141.42%
Risk-free Interest 1.64%
Capital Stock (Details Narrative 2) - USD ($)
1 Months Ended 2 Months Ended 6 Months Ended 12 Months Ended
Aug. 21, 2015
Apr. 30, 2016
Feb. 29, 2016
Dec. 31, 2015
Jun. 30, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Preferred Stock, par or stated value       $ 0.001   $ 0.001 $ 0.001  
Preferred Stock, shares authorized       1,000,000   1,000,000 1,000,000  
Preferred Stock, shares issued       200,000   200,000 200,000  
Preferred Stock, shares outstanding       200,000   200,000 200,000  
Class B Preferred Stock Voting Rights           10,000 votes per share 10,000 votes per share  
Class B Dividend Rate           8.00% 8.00%  
Common Stock, par value       $ 0.35     $ 0.35  
Common Stock, par or stated value       $ 0.001   $ 0.001 $ 0.001  
Common Stock, shares issued       17,537,660   19,209,161 17,537,660  
Common Stock, shares outstanding       17,537,660   19,209,161 17,537,660  
Common Stock, shares issuable       1,377,667   871,166 1,377,667 87,655
Shares issued for Cash, amount             $ 444,000  
Share price       $ 1.25   $ .25 $ 1.25  
Debt extinguishment costs           $ 11,250,034  
Stock and option expense for services           $ 380,696 89,283  
Shares of common stock issued in settlement of liabilities from discontinued operations, shares           600,000    
Shares of common stock issued in settlement of liabilities from discontinued operations, amount           $ 150,000    
Common stock issued for participation expense - related party, amount             $ 1,514,060  
Board of Director [Member]                
Shares issued for Services     50,000       287,500  
Shares issued for Services, amount     $ 50,000       $ 359,375  
Share price     $ 1.00 $ 1.25     $ 1.25  
Consulting Services [Member]                
Shares issued for Services           250,000    
Shares issued for Services, amount           $ 250,000    
Share price           $ 1.00    
Warrant for common shares           250,000    
Warrant, per share           $ 0.50    
Fair value of warrants           $ 170,000    
Stock and option expense for services           $ 77,946    
Consulting Services Additional [Member]                
Shares issued for Services           50,000    
Shares issued for Services, amount           $ 50,000    
Common Stock [Member]                
Common Stock, shares issuable       900,002     900,002  
Shares issued for Services 200,000 5,000         71,426  
Shares issued for Services, amount $ 200,000 $ 2,750         $ 89,283  
Shares issued for cash         766,000      
Shares issued for Cash, amount       $ 250,000 $ 169,000      
Share price $ 1.00 $ 0.55     $ 0.25      
Shares issued for debt           200,000    
Shares issued for debt, amount           $ 100,000    
Five Individuals Member]                
Common Stock, shares issuable           115,100    
Shares issued for cash           884,001    
Shares issued for Cash, amount           $ 250,000    
Share price           $ 0.25    
Notes Payable (Details) - USD ($)
9 Months Ended 12 Months Ended
Sep. 30, 2016
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2012
Common stock issued for - loan extension, amount   $ 200,000    
Proceeds from unsecured notes   $ 27,200 $ 50,000  
Secured Promissory Note        
Date Issued   Nov. 25, 2014    
Maturity Date   Apr. 01, 2015    
Terms   default    
Shares issued for debt 150,000      
Shares issued for debt, amount $ 150,000      
Interest rate after default   12.00%    
Common stock issued for - loan extension, shares   50,000    
Common stock issued for - loan extension, amount   $ 50,000    
Secured Promissory Note        
Note Payable Issued   $ 100,000    
Interest Rate   10.00%    
Notes Payable   $ 122,333 $ 110,000  
Accrued interest   $ 24,766    
Unsecured Notes Payable [Member]        
Date Issued   Aug. 23, 2007    
Maturity Date   Jul. 15, 2008    
Note Payable Issued   $ 67,057    
Interest Rate   10.00%    
Monthly Payment   $ 4,500    
Notes Payable   $ 0    
Terms   default    
Proceeds from unsecured notes   $ 12,500    
Debt extinguishment cost   $ 123,672    
Unsecured Notes Payable [Member] | Investor [Member]        
Date Issued   Dec. 12, 2016    
Note Payable Issued   $ 7,200    
Interest Rate   5.00%    
Monthly Payment   $ 2,200    
Notes Payable   2,206    
Debt Cost   $ 5,000    
Convertible notes payable[Member]        
Year Issued   2005    
Interest Rate   8.00%    
Notes Payable   $ 0    
Shares issued for debt       89,000
Shares issued for debt, amount       $ 791,319
Debt extinguishment cost   450,115    
Convertible notes payable[Member] | Investor [Member]        
Note Payable Issued   $ 50,000    
Interest Rate   8.00%    
Notes Payable   $ 55,500    
Convertible rate, per share   $ 1.00    
Warrant for common shares   25,000    
Warrant, per share   $ 1.50    
Fair value of warrants   $ 3,909    
Convertible notes payable[Membe