Property and Equipment, Net

12 Months Ended

Dec. 31, 2016

Property and Equipment, Net [Abstract]

NOTE 5 – PROPERTY AND EQUIPMENT, NET

At December 31, 2016 and 2015 property and equipment, net consists of the following:

	2016			2015
Leasehold improvements	$	-		$	3,449
Production equipment under capital lease		514,707			514,707
		514,707			518,156
Accumulated depreciation		(147,842	)		(46,923	)
Property and equipment, net	$	366,865		$	471,233

Depreciation expense was $100,920 and $180,567 for the years ended December 31, 2016 and 2015, respectively.

On July 17, 2015, the Company entered into an equipment purchase agreement (the “Purchase Agreement”) with Fordham Capital Partners, LLC (“Fordham”) pursuant to which the Company sold all of its right, title and interest in production equipment utilized by the Company to Fordham for a purchase price of $500,000. From the proceeds of the sale, the company repaid outstanding borrowings of $200,000 due to Fordham Capital under a previous equipment note plus accrued interest of $3,112, 2014 franchise taxes of $96,542 and a security deposit of $15,800 related to the equipment lease. The Company recognized a loss on the sale of 574,331.Concurrently with entering into the Purchase Agreement, on July 17, 2015, the Company entered into an equipment lease agreement (the “Equipment Lease Agreement”) with Fordham pursuant to which the Company leased the production equipment from Fordham on terms that included the following: a lease term of 24 months, monthly lease payments by the Company of $15,800 and the option (at the election of the Company) to purchase the equipment on or after July 8, 2016 on the following terms: (i) if the purchase date is between 12- 18 months $425,000; (ii) if the purchase date is between 19- 23 months: $360,000; and (iii) if the purchase date is during the 24th month (but no later than July 8, 2017): $325,000. The Equipment Lease Agreement includes customary events of default, including non- payment by the Company of the monthly lease payments and the payment of penalties upon such late payments. The Company received cash proceeds of $172,911 from the Purchase Agreement after paying off the obligations described above. These proceeds were used for general corporate purposes.

On February 1, 2017, the Company exercised its option under the Equipment Lease Agreement that it had entered into with Fordham on July 17, 2015 and paid Fordham $360,000 plus additional expenses for purchase of the Equipment that was subject to the Equipment Lease Agreement. In connection with the payment, the Equipment Lease Agreement was terminated, which was a lease for 24 months with monthly lease payments of $15,800.