Here are a few reasons why the upload functionality may not be working:
1. The uploads folder hasn’t writing permissions enabled
You have to make sure that the WordPress’ wp-content/uploads folder and all its subfolders have writing permissions enabled. To check the permissions currently assigned you would need to access the WordPress files uploaded to your server. A common method to do this is by using an FTP client such as FileZilla. Once you login to the server, you have to navigate to the wp-content/uploads folder and check the permissions assigned to it (with FileZilla: right click » File Permissions). Permissions settings set to 755 should be working fine.
2. The theme is not installed correctly
This problem generally happens when you install the theme via the WordPress uploader and you upload the whole zip file you have downloaded directly from ThemeForest, but not the theme zip only. It can also happen when you upload the theme via FTP and located the theme’s files within more than one folder apart of the wp-content/themes WordPress folder. For more information about installing the theme correctly, you can refer to the Installing a Pexeto Theme article.