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Subsequent Events
12 Months Ended
Dec. 31, 2017
Subsequent Events [Abstract]  
Subsequent Events

NOTE 14 – SUBSEQUENT EVENTS

 

Employment Agreement

 

Effective February 20, 2018, the Company appointed Shamyl Malik as Chief Executive Officer of the Company. Mr. Malik will remain a member of the Board of Directors. The Company and Mr. Malik entered into a one-year employment agreement, pursuant to which Mr. Malik will receive a base annual salary of $250,000, and for the first six months of his employment, his salary will be paid in shares of common stock of the Company. For the remaining six months, Mr. Malik’s salary will be payable in cash, shares of common stock or a combination thereof, at the sole option of Mr. Malik. Additionally, if Mr. Malik is still employed by the Company on January 1, 2019, he will be entitled to a guaranteed bonus of $250,000, half of which will be payable in shares of common stock and half in cash, or in any combination thereof approved by Mr. Malik.

 

Termination of Employment Agreement with Executive

 

On February 20, 2018, Phillip Thomas terminated his employment agreement with the Company for “good reason” due to a substantial and material adverse change in Mr. Thomas’ title, duties and responsibilities, and resigned as a director of the Company. According to Mr. Thomas’ employment agreement, he is entitled to be paid nine months of his base salary, all valid expense reimbursements and all accrued but unused vacation pay. Further, stock options granted to Mr. Thomas became fully vested and may be exercised up to one year from the termination date.

 

Issuance of Stock Options

 

On February 19, 2018, the Company’s board of directors approved the issuance of stock options to various employees to purchase 22,500 shares of the Company’s common stock. The options expire five years from the date of grant, have an exercise price of $3.23 per share, and vest one-third on date of grant and one-third in each of February 2019 and February 2020. These options have a grant date fair value of $51,156.

 

Issuance of Common Stock

 

On March 9, 2018, the Company issued 87,546 shares of common stock to members of the advisory board and board of directors of the Company.

 

On March 9, 2018, the Company issued 56,158 shares of common stock to employees and consultants of the Company.
 

Hashcove Merger

 

On March 15, 2018, the Company entered into a sale and purchase agreement (the “Hashcove Agreement”), as amended, on March 16, 2018, with the shareholders (collectively, the “Shareholders”) of Hashcove Limited (“Hashcove”).

 

Hashcove is an early stage UK-based technology company focused on developing and deploying globally scalable distributed ledger technology solutions. Among its planned product offerings, Hashcove is developing tokenized platforms, crypto-exchanges and wallets, smart contracts for initial coin offerings (“ICO”), know-your-customer (“KYC”) and financial clearing technology on blockchain, and other related blockchain applications. Upon closing, which the Company expects will occur by the third quarter of 2018, Hashcove will become a wholly-owned subsidiary of the Company.

 

Pursuant to the Hashcove Agreement, the Company is purchasing (the “Hashcove Purchase”) the entire issued share capital of Hashcove from the Hashcove Shareholders. In exchange, the Company will issue 531,250 shares of common stock of the Company to the Hashcove Shareholders. Additionally, the Shareholders may earn up to an aggregate of 1,533,750 of additional shares of common stock of the Company (the ” Contingent Shares “) upon the achievement of the following milestones: (a) if (i) the Company’s net revenue (as defined in the Agreement) equals or exceeds $10,000,000 during any 12-calendar month period beginning six months after the closing (as defined below) and ending no later than 36 months after the closing; (ii) Hashcove’s net revenue equals or exceeds $5,000,000 during any 12-calendar month period beginning six months after the closing and ending no later than 36 months after the closing; or (iii) the closing sale price of the Company’s common stock equals or exceeds $8.00 for a minimum of 30 consecutive trading days during the 36 months following the closing, the Shareholders shall receive an aggregate of an additional 1,135,312 shares of common stock of the Company; and (b) if Hashcove completes the crypto exchange, ICO smart contract solution, “clearing on blockchain” and “KYC on blockchain” products in accordance with the Agreement during the 24 months following the closing, the Shareholders shall receive an aggregate of an additional 398,438 shares of common stock of the Company. The Contingent Shares will be placed in escrow at the Closing and will be released to the Shareholders upon achievement of the applicable milestones.

 

Upon the Closing, Kunal Nandwani, Hashcove’s Chief Executive Officer, will become an executive officer and director of the Company.

 

The Shareholders have agreed to certain restrictions on transfer of the shares they receive under the Agreement.

 

The Company has also agreed to file, as promptly as practicable in its reasonable discretion following the closing, a registration statement with the SEC registering the resale of the shares of common stock of the Company to be issued to the Shareholders pursuant to the Agreement and agreed to seek to have such registration statement declared effective by the SEC as promptly as practicable thereafter.

 

Stater Blockchain

 

On March 19, 2018, the Company entered into a contribution and exchange agreement (the “Stater Agreement”), with Stater Blockchain Limited (“SBL”), and simultaneously closed the transactions contemplated thereby.

 

SBL is a New Zealand-based technology company focused on developing and deploying globally scalable blockchain technology solutions in the financial markets. SBL is developing multiple blockchain and digital currency technology solutions, such as its “Smart Settlements” and “Smart KYC” platforms, for the global financial markets where significant disintermediation opportunities exist. SBL owns Stater Global Markets, a United Kingdom-based Financial Conduct Authority regulated prime-of-prime brokerage, which facilitates market access across multiple instruments including foreign exchange, exchange traded futures and contracts for difference.

 

Pursuant to the Stater Agreement, SBL issued to the Company 99 ordinary voting shares in SBL (“SBL Shares”) which, immediately following completion of the transaction contemplated by the Stater Agreement, constituted 9.9% of the total SBL Shares then issued and outstanding, in exchange for 1,135,435 shares of common stock of the Company, which constituted 9.9% of the total LBC Shares then issued and outstanding (the “Exchange”).

 

Upon closing, Shamyl Malik, the Company’s Chief Executive Officer, was appointed as a director of SBL and Ramy Soliman, SBL’s Chief Executive Officer, was appointed as a director of the Company.

 

Upon closing, the Company, SBL and the majority shareholder of SBL entered into a shareholders’ agreement (the “Stater Shareholders’ Agreement”), governing the management and ownership of SBL. The Stater Shareholders’ Agreement includes the Company’s right to appoint one director of SBL, so long as the Company holds at least 9.9% of the SBL Shares then on issue, certain restrictions on transfer and preemptive rights with respect to the issuance of new securities of SBL.

 

Upon closing, the Company, SBL and Long Island Iced Tea Corp. (” SpinCo “) entered into a voting agreement (the “Voting Agreement”), pursuant to which SBL agreed, if necessary, to vote its LBC Shares (i) in favor of the Company’s distributing the shares of common stock of SpinCo held by it (the “SpinCo Shares “) to the Company’s stockholders by way of a dividend (the “Spinoff”), and/or (ii) if requested by the Company against any agreement which would prevent the Spinoff. Additionally, until the earlier of (i) one year from the consummation of the Spinoff or (ii) the date on which SpinCo Shares become listed on a national securities exchange, in the event any vote of SpinCo’s stockholders is necessary to effectuate any corporate action, SBL agreed to vote the SpinCo Shares it directly or indirectly receives upon consummation of the Spinoff (i) in favor of any corporate action recommended by the then existing board of directors of SpinCo and/or (ii) against any action or agreement which would impede, interfere with or prevent any SpinCo Action from being consummated. Pursuant to the Voting Agreement, SBL also agreed to appoint the Company or SpinCo as the Stockholder’s proxy to vote SBL’s LBC Shares or SpinCo Shares, as applicable, if so requested by the Company. The voting requirements set forth in the Voting Agreement shall expire if the Spinoff is not consummated by November 13, 2018 or if prior to such date, the Company’s board of directors unanimously decides not to proceed with the Spinout.

 

Agreement with CASHe

 

On March 22, 2018, the Company entered into and closed on a contribution and exchange agreement (the “CASHe Agreement”), with TSLC PTE Ltd. (“TSLC”).

 

TSLC is the parent company of CASHe, a leading provider of digital money and short-term financial products to young millennials across India. TSLC also owns all of the intellectual property developed by CASHe and has the worldwide rights outside of India to the application of its intellectual property for its lending and money transfer platform.

 

CASHe provides short-term financial products using technology combined with analytics and proprietary algorithms to map young professionals across the country based on their mobile, digital footprint and their social behaviour patterns to rate their credit worthiness. CASHe has also implemented distributed ledger enabled digital tokens using smart contracts on its lending platform. The distributed ledger technology allows the platform to record transactions in a secure and transparent manner by creating an audit trail. Further, a smart contract-based distributed ledger records all lending transactions in an open and transparent manner.

 

Pursuant to the CASHe Agreement, TSLC issued the Company 1,145,960 shares of its voting capital stock (the “TSLC Capital Stock”), equal to 7.00% of the TSLC Capital Stock on a fully diluted basis, in exchange for (i) 1,949,736 shares of the Company’s common stock, equal to 17.00% of the Company’s total common stock issued and outstanding as of the date of the CASHe Agreement, and (ii) the right to receive, if a Material Adverse Effect (as defined in the CASHe Agreement) occurs with respect to the Company within ninety (90) days of the date of the CASHe Agreement, an additional 332,602 shares of the company’s common stock, equal to 2.90% of the Company’s total issued and outstanding common stock as of the date of the CASHe Agreement. As of April 12, 2018, the Company was delisted from NASDAQ, which triggered the Material Adverse Effect under the CASHe Agreement, and therefore the Company owes to TSLC an additional 332,602 shares of the Company’s common stock.

 

Pursuant to the CASHe Agreement, one person from TSLC will be appointed to the Company’s board of directors. As of the date that these financial statements were issued, no TSLC representative has been appointed to the Company’s board of directors.

 

Pursuant to the CASHe Agreement, TSLC agreed to vote its Company common stock received pursuant to the CASHe Agreement (i) in favor of the Company’s previously announced Spinoff of our beverage business, and/or (ii) if requested by us against any agreement which would prevent the Spinoff. Additionally, until the earlier of (i) one year from the consummation of the Spinoff or (ii) the date on which the shares of the spun off business (the “SpinCo Shares”) become listed on a national securities exchange, in the event any vote of the stockholders of the spun off business is necessary to effectuate any corporate action, TSLC agreed to vote the SpinCo Shares it directly or indirectly receives upon consummation of the Spinoff (i) in favor of any corporate action recommended by the then existing board of directors of the spun off business (each a “SpinCo Action”) and/or (ii) against any action or agreement which would impede, interfere with or prevent any SpinCo Action from being consummated.

 

Pursuant to the CASHe Agreement, TSLC granted the Company the rights to develop the business of CASHe in the Latin American market, subject to the parties entering into a mutually acceptable license agreement having terms customary for such agreements, including, without limitation, those relating to payment of license fees and royalties by us to TSLC (which terms have not yet been negotiated).

 

The Company agreed (a) to use our reasonable best efforts to file a registration statement to register the resale of the Company common stock issued pursuant to the CASHe Agreement as soon as practicable and have such registration statement declared effective as soon as possible thereafter and, (b) file any necessary notices with the OTC Markets, relating to the Company’s common stock as soon as reasonably possible to allow shares issued pursuant to the CASHe Agreement to be traded on the OTC.

 

Advances from Related Parties

 

As of April 12, 2018, the Company is indebted to Mr. Thomas, the Company’s former CEO and a shareholder of the Company, in the amount of $220,000.

 

As of April 12, 2018, the Company is indebted to Mr. Eric Watson, a shareholder of the Company, in the amount of $57,000.