Digerati (DTGI) 10-Q 14 Dec 18 2019 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Oct. 31, 2018	Dec. 14, 2018
Document and Entity Information [Abstract]
Entity Registrant Name	Digerati Technologies, Inc.
Entity Central Index Key	1,014,052
Trading Symbol	DTGI
Amendment Flag	false
Current Fiscal Year End Date	--07-31
Document Type	10-Q
Document Period End Date	Oct. 31, 2018
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2,019
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Ex Transition Period	false
Entity Common Stock, Shares Outstanding		13,628,296

Consolidated Balance Sheets (Un

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Oct. 31, 2018	Jul. 31, 2018
CURRENT ASSETS:
Cash and cash equivalents	$ 591	$ 388
Accounts receivable, net	193	229
Prepaid and other current assets	82	124
Total current assets	866	741
LONG-TERM ASSETS:
Intangible assets, net	2,951	3,046
Property and equipment, net	653	713
Other assets	59	59
Total assets	4,529	4,559
CURRENT LIABILITIES:
Accounts payable	1,194	1,177
Accrued liabilities	1,047	893
Current portion of capital lease obligations	31	30
Convertible note payable, current, net $116 and $187, respectively	656	585
Note payable, current, related party	129	126
Note payable, current, net $31 and $0, respectively	785	725
Convertible note payable, current, net $182 and $273, respectively	124	33
Deferred income	390	262
Derivative liability	772	632
Total current liabilities	5,128	4,463
LONG-TERM LIABILITIES:
Convertible debenture, net $213 and $273, respectively	47	27
Notes payable, related party, net $34 and $38, respectively	476	505
Note payable	500	500
Obligations under capital leases	56	64
Total long-term liabilities	1,079	1,096
Total liabilities	6,207	5,559
Commitments and contingencies
STOCKHOLDERS' DEFICIT:
Preferred stock, $0.001, 50,000,000 shares authorized, none issued and outstanding
Common stock, $0.001, 150,000,000 shares authorized, 13,116,815 and 12,775,143 issued and outstanding, respectively	13	13
Additional paid in capital	80,256	79,993
Accumulated deficit	(81,714)	(80,800)
Other comprehensive income	1	1
Total Digerati's stockholders' deficit	(1,444)	(793)
Noncontrolling interest	(234)	(207)
Total stockholders' deficit	(1,678)	(1,000)
Total liabilities and stockholders' deficit	$ 4,529	$ 4,559

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($) $ in Thousands	Oct. 31, 2018	Jul. 31, 2018
Statement of Financial Position [Abstract]
Convertible note payable, current, net	$ 116	$ 187
Note payable, current, net	31	0
Convertible note payable, current, net one	182	273
Convertible debenture, net	213	273
Notes payable, related party, net	$ 34	$ 38
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	13,116,815	13,116,815
Common stock, shares outstanding	12,775,143	12,775,143
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	50,000,000	50,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding

Consolidated Statements of Oper

Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Oct. 31, 2018	Oct. 31, 2017
OPERATING REVENUES:
Cloud-based hosted services	$ 1,522	$ 55
Total operating revenues	1,522	55
OPERATING EXPENSES:
Cost of services (exclusive of depreciation and amortization)	757	45
Selling, general and administrative expense	743	201
Stock compensation & warrant expense	144	56
Legal and professional fees	124	119
Bad debt	(3)
Depreciation and amortization expense	170	4
Total operating expenses	1,935	425
OPERATING LOSS	(413)	(370)
OTHER INCOME (EXPENSE):
Loss on derivative instruments	(139)
Income tax	(13)
Interest income (expense)	(376)
Total other income (expense)	(528)
NET LOSS INCLUDING NONCONTROLLING INTEREST	(941)	(370)
Less: Net loss attributable to the noncontrolling interest	27
NET LOSS ATTRIBUTABLE TO DIGERATI'S SHAREHOLDERS	$ (914)	$ (370)
INCOME (LOSS) PER SHARE - BASIC	$ (0.07)	$ (0.04)
INCOME (LOSS) PER SHARE - DILUTED	$ (0.07)	$ (0.04)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC	12,905,639	8,798,089
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED	12,905,639	8,798,089

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Oct. 31, 2018	Oct. 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (941)	$ (370)
Adjustments to reconcile net loss to cash used in by operating activities:
Depreciation and amortization	170	4
Stock compensation & warrant expense	144	56
Bad debt recovery	(3)
Amortization of debt discount	259
Loss (Gain) on derivative liabilities	139
Changes in operating assets and liabilities:
Accounts receivable	39	6
Prepaid expenses and other current assets	42	(16)
Accounts payable	26	62
Accrued expenses	153	14
Deferred income	128
Net cash provided (used in) operating activities	156	(244)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid in acquisition of equipment	(15)
Net cash used in investing activities	(15)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of stock	40	280
Borrowings from 3rd party promissory notes, net	100
Principal payments on related party notes, net	(31)
Principal payments on convertible notes, net	(40)
Principal payment on financing leases	(7)
Net cash provided by financing activities	62	280
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	203	36
CASH AND CASH EQUIVALENTS, beginning of period	388	673
CASH AND CASH EQUIVALENTS, end of period	591	709
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	89
Income tax paid
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Debt discount from warrants issued with debt	38
Debt discount from common stock issued with debt	36
Common Stock issued to settle AP	$ 5

Basis of Presentation

Basis of Presentation	3 Months Ended
	Oct. 31, 2018
Basis of Presentation [Abstract]
BASIS OF PRESENTATION	NOTE 1 – BASIS OF PRESENTATION The accompanying unaudited interim consolidated financial statements of Digerati Technologies, Inc. ("we;" "us," "our," or the "Company") have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the United States Securities and Exchange Commission. In the opinion of management, these interim financial statements contain all adjustments, consisting of normal recurring adjustments necessary for a fair presentation of financial position and the results of operations for the interim periods presented. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements, which would substantially duplicate the disclosure contained in the audited consolidated financial statements for the year ended July 31, 2018 contained in the Company’s Form 10-K filed on November 16, 2018 have been omitted. Revenue Recognition On August 1, 2018, we adopted Topic 606 using the modified retrospective method applied to those contracts which were not completed as of August 1, 2018. Results for reporting periods beginning after August 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 605. There was no impact to the opening balance of accumulated deficit or revenues for the quarter ended October 31, 2018 as a result of applying Topic 606. The Company recognizes cloud-based hosted services revenue, mainly from subscription services to its cloud-based hosted IP/PBX services, SIP trunking, call center applications, interactive voice response auto attendant, voice and web conferencing, call recording, simultaneous calling, voicemail to email conversion, integrated mobility applications that are device and location agnostic, and multiple customized IP/PBX features in a hosted or cloud environment. Other services include enterprise-class data and connectivity solutions through multiple broadband technologies including cloud WAN or SD-WAN (Software-defined Wide Area Network), fiber, and Ethernet over copper. We also offer remote network monitoring, data backup and disaster recovery. The Company applies a five-step approach in determining the amount and timing of revenue to be recognized: (1) identifying the contract with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations in the contract and (5) recognizing revenue when the performance obligation is satisfied. Substantially all of the Company’s revenue is recognized at the time control of the products transfers to the customer. Service Revenue Service revenue from subscriptions to the Company's cloud-based technology platform is recognized over time on a ratable basis over the contractual subscription term beginning on the date that the platform is made available to the customer. Payments received in advance of subscription services being rendered are recorded as a deferred revenue. Usage fees, either bundled or not bundled, are recognized when the Company has a right to invoice. Professional services for configuration, system integration, optimization, customer training and/or education are primarily billed on a fixed-fee basis and are performed by the Company directly or, alternatively, customers may also choose to perform these services themselves or engage their own third-party service providers. Professional services revenue is recognized over time, generally as customer services are activated. Product Revenue The Company recognizes product revenue for telephony equipment at a point in time, when transfer of control has occurred, which is generally upon delivery. Sales returns are recorded as a reduction to revenue estimated based on historical experience. Disaggregation of Revenue Summary of disaggregated revenue is as follows (in thousands): For the three months ended October 31, 2018 2017 Service revenue $ 1,474 $ 55 Product revenue 48 - Total revenue $ 1,522 $ 55 Contract Assets Contract assets are recorded for those parts of the contract consideration not yet invoiced but for which the performance obligations are completed. The revenue is recognized when the customer receives services or equipment for a reduced consideration at the onset of an arrangement, for example when the initial month's services or equipment are discounted. Contract assets are included in prepaid and other current assets in the consolidated balance sheets, depending on if their reduction is recognized during the succeeding 12-month period or beyond. Contract assets as of October 31, 2018 and July 31, 2018, were $19,405 and $12,155, respectively. Deferred Income Deferred income represent billings or payments received in advance of revenue recognition and is recognized upon transfer of control. Balances consist primarily of annual plan subscription services, for services not yet provided as of the balance sheet date. Deferred revenues that will be recognized during the succeeding 12-month period are recorded as current deferred revenues in the consolidated balance sheets, with the remainder recorded as other noncurrent liabilities in the consolidated balance sheets. Deferred income as of October 31, 2018 and July 31, 2018, were $390,000 and $262,000, respectively. Costs to Obtain a Customer Contract Sales commissions are paid upon collections of related revenue and are expensed during the same period. Sales commissions for the three months ended October 31, 2018. and year ended October 31, 2017, were $10,620 and $4,000, respectively.

Going Concern

Going Concern	3 Months Ended
	Oct. 31, 2018
Going Concern [Abstract]
GOING CONCERN	NOTE 2 – GOING CONCERN Financial Condition Digerati’s consolidated financial statements for the three months ending October 31, 2018 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. Digerati has incurred net losses and accumulated a deficit of approximately $81,714,000 and a working capital deficit of approximately $4,262,000 which raises doubt about Digerati’s ability to continue as a going concern. Management Plans to Continue as a Going Concern Management believes that current available resources will not be sufficient to fund the Company’s operations over the next 12 months. The Company’s ability to continue to meet its obligations and to achieve its business objectives is dependent upon, among other things, raising additional capital or generating sufficient revenue in excess of costs. At such time as the Company requires additional funding, the Company will seek to secure such additional funding from various possible sources, including the public equity market, private financings, sales of assets, collaborative arrangements and debt. If the Company raises additional capital through the issuance of equity securities or securities convertible into equity, stockholders will experience dilution, and such securities may have rights, preferences or privileges senior to those of the holders of common stock or convertible senior notes. If the Company raises additional funds by issuing debt, the Company may be subject to limitations on its operations, through debt covenants or other restrictions. If the Company obtains additional funds through arrangements with collaborators or strategic partners, the Company may be required to relinquish its rights to certain technologies. There can be no assurance that the Company will be able to raise additional funds or raise them on acceptable terms. If the Company is unable to obtain financing on acceptable terms, it may be unable to execute its business plan, the Company could be required to delay or reduce the scope of its operations, and the Company may not be able to pay off its obligations, if and when they come due. The Company will continue to work with various funding sources to secure additional debt and equity financings. However, Digerati cannot offer any assurance that it will be successful in executing the aforementioned plans to continue as a going concern. Digerati’s consolidated financial statements as of October 31, 2018 do not include any adjustments that might result from the inability to implement or execute Digerati’s plans to improve our ability to continue as a going concern.

Intangible Assets

Intangible Assets	3 Months Ended
	Oct. 31, 2018
Intangible Assets [Abstract]
INTANGIBLE ASSETS	NOTE 3 – INTANGIBLE ASSETS Below are summarized changes in intangible assets at October 31, 2018 and July 31, 2018: Gross Carrying Accumulated Net Carrying October 31, 2018 Value Amortization Amount NetSapeins - license, 10 years $ 150,000 $ (150,000 ) $ - Customer relationships, 5 years 40,000 (6,666 ) 33,334 Customer relationships, 7 years 1,480,000 (117,510 ) 1,362,490 Marketing & Non-compete, 5 years 800,000 (80,000 ) 720,000 Total Define-lived Assets 2,470,000 (354,176 ) 2,115,824 Goodwill, Indefinite 834,828 - 834,828 Balance, October 31, 2018 $ 3,304,828 $ (354,176 ) $ 2,950,652 Gross Carrying Accumulated Net Carrying July 31, 2018 Value Amortization Amount NetSapeins - license, 10 years $ 150,000 $ (150,000 ) $ - Customer relationships, 5 years 40,000 (4,667 ) 35,333 Customer relationships, 7 years 1,480,000 (64,652 ) 1,415,348 Marketing & Non-compete, 5 years 800,000 (40,000 ) 760,000 Total Define-lived Assets 2,470,000 (259,319 ) 2,210,681 Goodwill, Indefinite 834,828 - 834,828 Balance, July 31, 2018 $ 3,304,828 $ (259,319 ) $ 3,045,509 Total amortization expense for the periods ended October 31, 2018 and 2017 was approximately $94,857 and $3,750, respectively. Additional details on intangible assets are disclosed in the Company’s Form 10-K filed on November 16, 2018.

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Oct. 31, 2018
Stock-Based Compensation [Abstract]
STOCK-BASED COMPENSATION	NOTE 4 – STOCK-BASED COMPENSATION In November 2015, Digerati adopted the Digerati Technologies, Inc. 2015 Equity Compensation Plan (the “Plan”). The Plan authorizes the grant of up to 7.5 million stock options, restricted common shares, non-restricted common shares and other awards to employees, directors, and certain other persons. The Plan is intended to permit Digerati to retain and attract qualified individuals who will contribute to the overall success of Digerati. Digerati’s Board of Directors determines the terms of any grants under the Plan. Exercise prices of all stock options and other awards vary based on the market price of the shares of common stock as of the date of grant. The stock options, restricted common stock, non-restricted common stock and other awards vest based on the terms of the individual grant. During the three months ended October 31, 2018, we did not issue any stock to employees. During the three months ended October 31, 2018 we issued the following to settle accounts payables: ● In September 2018, the Company issued an aggregate of 21,672 shares of common stock with a market value at time of issuance of $5,794. The shares were issued to settle accounts payables of $5,287 to a professional, the Company recognized a loss of $507 upon issuance of the shares. This loss is immaterial, thus presented in stock-based compensation expense on the statement of cash flows. Digerati recognized approximately $95,000 and $51,000 in stock-based compensation expense to employees during the three months ended October 31, 2018 and 2017, respectively. Unamortized compensation cost totaled $294,000 and $34,000 at October 31, 2018 and October 31, 2017, respectively. A summary of the stock options as of October 31, 2018 and July 31, 2018 and the changes during the three months ended October 31, 2018 and July 31,2018: Weighted-average Weighted-average remaining contractual Options exercise price (years) Outstanding at July 31, 2018 3,415,000 $ 0.33 4.58 Granted - - - Exercised - - - Forfeited and cancelled - - - Outstanding at October 31, 2018 3,415,000 $ 0.33 3.97 Exercisable at October 31, 2018 2,448,701 $ 0.30 3.97 The aggregate intrinsic value (the difference between the Company’s closing stock price on the last trading day of the three months and the exercise price, multiplied by the number of in-the-money options) of the 3,415,000 and 3,415,000 stock options outstanding at October 31, 2018 and July 31, 2018 was $34,500 and $706,372, respectively. The aggregate intrinsic value of 2,448,701 and 2,006,111 stock options exercisable at October 31, 2018 and July 31, 2018 was $34,500 and $587,389, respectively.

Non-Standardized Profit-Sharing

Non-Standardized Profit-Sharing Plan	3 Months Ended
	Oct. 31, 2018
Non-Standardized Profit-Sharing Plan [Abstract]
NON-STANDARDIZED PROFIT-SHARING PLAN	NOTE 5 – NON-STANDARDIZED PROFIT-SHARING PLAN We currently provide a Non-Standardized Profit-Sharing Plan ("Plan"), adopted September 15, 2006. Under the plan our employees qualify to participate in the plan after one year of employment. Contributions under the plan are based on 25% of the annual base salary of each eligible employee up to $54,000 per year. Contributions under the plan are fully vested upon funding. During the three months ended October 31, 2018 and October 31, 2017, the Company did not make any contributions under the plan.

Warrants

Warrants	3 Months Ended
	Oct. 31, 2018
Warrants [Abstract]
WARRANTS	NOTE 6 – WARRANTS During the three months ended October 31, 2018, the Company issued the following warrants: The Company secured $40,000 from an accredited investor under a private placement and issued 80,000 shares of its common stock at a price of $0.50 per share and warrants to purchase an additional 15,000 shares of its common stock at an exercise price of $0.50 per share. We determined that the warrants issued in connection with the private placement were equity instruments and did not represent derivative instruments. The Company adopted a sequencing policy, and determined that the warrants with fixed exercise price were excluded from derivative consideration. In October 2018, Digerati issued 200,000 warrants under an extension of payments to an existing promissory note, with a current principal balance of $75,000, the warrants vested at time of issuance. The warrants have a term of 3 years, with an exercise price of $0.10. Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was approximately $38,000 and was recognized as a discount on the promissory note, the company will amortize the fair market value as interest expense over 3 months. The Company adopted a sequencing policy, and determined that the warrants with fixed exercise price were excluded from derivative consideration. The fair market value of all warrants issued was determined using the Black-Scholes option pricing model which used the following assumptions: Expected dividend yield 0.00% Expected stock price volatility 153.99% - 237.00% Risk-free interest rate 2.05% -2.93% Expected term 3.0 - 5.0 years A summary of the warrants as of October 31, 2018 and July 31, 2018 and the changes during the three months ended October 31, 2018 and July 31, 2018 are presented below: Weighted-average Weighted-average remaining contractual Warrants exercise price (years) Outstanding at July 31, 2017 510,000 $ 0.29 2.87 Granted 2,010,000 $ 0.26 3.34 Exercised (150,000 ) $ 0.10 3.00 Forfeited and cancelled - - - Outstanding at July 31, 2018 2,370,000 $ 0.28 2.90 Granted 215,000 $ 0.13 3.00 Exercised - - - Forfeited and cancelled (240,000 ) $ 0.15 3.43 Outstanding at October 31, 2018 2,345,000 $ 0.34 2.60 Exercisable at October 31, 2018 2,045,000 $ 0.24 2.48 The aggregate intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money warrants) of the 2,345,000 and 2,370,000 warrants outstanding at October 31, 2018 and July 31, 2018 was $205,000 and $607,557, respectively. During the three months ended October 31, 2018, we cancelled 240,000 warrants with an exercise price of $0.15. Additionally, the Company issued 240,000 common shares to replace these warrants, in conjunction with two promissory notes with a principal balance of $50,000, in addition at the time of issuance we recognized a discount of $36,000. The aggregate intrinsic value of 2,045,000 and 2,070,000 warrants exercisable at October 31, 2018 and July 31, 2018 was $205,000 and $597,927, respectively. In December 2017, Digerati issued 100,000 warrants to a consultant for services, the warrants vested at time of issuance. The warrants have a term of 5 years, with an exercise price of $0.50. Under a Black-Scholes valuation the fair market value of the warrants at time of issuance was approximately $49,000, the company will amortize the fair market value as warrant expense over 12 months. Additionally, Digerati committed to issue 100,000 warrants if the Company’s stock price traded at $0.75 per share for 10 consecutive days, to issue 100,000 warrants if the Company’s stock price traded at $1.00 per share for 10 consecutive days, and to issue 100,000 warrants if the Company’s stock price traded at $1.25 per share for 10 consecutive days. Under a Black-Scholes valuation the fair market value of the warrants at time of issuance was approximately $143,000, the company will amortize the fair market value as warrant expense over 12 months. During the three months ended October 31, 2018 and 2017, the Company amortized $48,000 and $0, respectively in warrant expense related to these warrants. Unamortized warrant expense totaled $16,000 and $0, respectively as of October 31, 2018 and October 31, 2017.

Equity

Equity	3 Months Ended
	Oct. 31, 2018
Equity [Abstract]
EQUITY	NOTE 7 – EQUITY During the three months ended October 31, 2018, the Company issued the following shares of common stock: On August 1, 2018, the Company secured $40,000 from an accredited investor under a private placement and issued 80,000 shares of its common stock at a price of $0.50 per share and warrants to purchase an additional 15,000 shares of its common stock at an exercise price of $0.50 per share. We determined that the warrants issued in connection with the private placement were equity instruments and did not represent derivative instruments. The Company adopted a sequencing policy, and determined that the warrants with fixed exercise price were excluded from derivative consideration. On September 28, 2018, the Company issued an aggregate of 21,672 shares of common stock with a market value at time of issuance of $5,794. The shares were issued to settle accounts payables of $5,287 to a professional, the Company recognized a loss of $507 upon issuance of the shares. This loss is immaterial, thus presented in stock-based compensation expense on the statement of cash flows. On October 12, 2018, the Company issued a promissory note for $25,000, bearing interest at a rate of 8% per annum, with maturity date of November 12, 2018. In conjunction with the Note, the Company issued 140,000 common shares, the shares vested at time of issuance, these shares replace previously issued warrants with an exercise price of $0.15, therefore the exercise price of $21,000 was recognized as a discount on the promissory note. The company will amortize the fair market value as interest expense over the term of the note. On October 18, 2018, the Company issued a promissory note for $25,000, bearing interest at a rate of 8% per annum, with maturity date of November 18, 2018. In conjunction with the Note, the Company issued 100,000 common shares, the shares vested at time of issuance, these shares replace previously issued warrants with an exercise price of $0.15, therefore the exercise price of $15,000 was recognized as a discount on the promissory note. The company will amortize the fair market value as interest expense over the term of the note.

Debt

Debt	3 Months Ended
	Oct. 31, 2018
Debt [Abstract]
DEBT	NOTE 8 - DEBT Non-convertible - debt On October 12, 2018, the Company issued a promissory note for $25,000, bearing interest at a rate of 8% per annum, with maturity date of November 12, 2018. In conjunction with the promissory note, the Company issued 140,000 common shares, the shares vested at time of issuance, these shares replace previously issued warrants with an exercise price of $0.15, therefore the exercise price of $21,000 was recognized as a discount on the promissory note. The Company will amortize the fair market value as interest expense over the term of the note. During the three months ended October 31, 2018, the Company amortized $14,334 of the debt discount as interest expense related to the note. The total principal outstanding and unamortized discount as of October 31, 2018 were $25,000 and $6,666, respectively. On October 18, 2018, the Company issued a promissory note for $25,000, bearing interest at a rate of 8% per annum, with maturity date of November 18, 2018. In conjunction with the promissory note, the Company issued 100,000 common shares, the shares vested at time of issuance, these shares replace previously issued warrants with an exercise price of $0.15, therefore the exercise price of $15,000 was recognized as a discount on the promissory note. During the three months ended October 31, 2018, the Company amortized $12,500 of the debt discount as interest expense related to the note. The total principal outstanding and unamortized discount as of October 31, 2018 were $25,000 and $2,500, respectively. On October 22, 2018, the Company issued a promissory note for $50,000, bearing interest at a rate of 8% per annum, with maturity date of December 31, 2018. The promissory note is secured by a Pledge and Escrow Agreement, whereby the Company agreed to pledge rights to a collateral due under certain Agreement. As of October 31, 2018, the outstanding principal balance was $50,000. Notes payable, related party On April 30, 2018, Shift8 Technologies, Inc. ("Shift8") entered into a convertible promissory note for $525,000 with an effective annual interest rate of 8% and a maturity date of April 30, 2020. With a principal payment of $100,000 due on June 1, 2018 and a principal payment of $280,823 due on April 30, 2020. Payment are based on a 60-month repayment schedule. At any time while this Note is outstanding, but only upon: (i) the occurrence of an Event of Default under the Note or the Pledge and Escrow Agreement; or (ii) mutual agreement between the Borrower and the Holder, the Holder may convert all or any portion of the outstanding principal, accrued and unpaid interest, Premium, if applicable, and any other sums due and payable hereunder (such total amount, the “Conversion Amount”) into shares of Common Stock (the “Conversion Shares”) at a price equal to: (i) the Conversion Amount (the numerator); divided by On May 1, 2018, Shift8 entered into a promissory note for $275,000 with an effective annual interest rate of 0% with an interest and principal payment of $6,000 per month and shall continue perpetuity until the entire principal amount is paid in full. The promissory note is guaranteed to the lender by 15% of the stock owned by Shift8 in T3, the secured interest will continue until the principal balance is paid in full. In conjunction with the promissory note, the Company issued 3-year warrants to purchase 100,000 shares of common stock at an exercise price of $0.50 per share. Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was approximately $27,000 and was recognized as a discount on the promissory note, the company amortized $2,000 as interest expense during the three months ended October 31, 2018. During the three months ended October 31, 2018, the Company paid $13,000 of the principal balance. The total principal outstanding and unamortized discount as of October 31, 2018 were $250,000 and $22,000, respectively. The note holder also serves as Board Member of T3 Communications, Inc., one of our operating subsidiaries. Convertible debt non-derivative In March 2018, the Company entered into two (2) Promissory Notes (the "Notes") for $250,000 each, bearing interest at a rate of 12% per annum. The Notes have a maturity date of September 15, 2018, provided, however, the Company shall have the right to request that the maturity date to be extended by one (1) additional period of ninety (90) days, until December 14, 2018. The Notes are payable every month, commencing April 15, 2018, in monthly payments of interest only and a single payment of the principal amount outstanding plus accrued interes t on September 15, 2018. T " Variable Conversion Price Shares " Fixed Conversion Price On June 19, 2018, the Company entered into various Promissory Notes (the "Notes") for $272,000, bearing interest at a rate of 10% per annum, with maturity date of April 10, 2019. In conjunction with the Notes, the Company issued 255,000 warrants under the promissory notes, the warrants vested at time of issuance. The warrants have a term of 3 years, with an exercise price of $0.10. Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was approximately $119,000 and was recognized as a discount on the promissory notes. The company amortized $33,892 as interest expense during the three months ended October 31, 2018. The total principal outstanding and unamortized discount as of October 31, 2018 were $272,000 and $75,000, respectively. Convertible debt - derivative During the three months ended October 31, 2018, the Company redeemed $40,000 of the principal outstanding under the convertible debenture, dated January 12, 2018 with Peak One Opportunity Fund, L. P., at a redemption price of $56,000. The Company recognized the deference between the redemption price and principal balance paid as interest expense of $16,000 during the three months ended October 31, 2018. In addition, during the three months ended October 31, 2018, the Company amortized $44,000 of the debt discount as interest expense related to the convertible debenture. The total principal outstanding and unamortized discount as of October 31, 2018 were $40,000 and $35,863, respectively During the three months ended October 31, 2018, the Company amortized $16,066 of the debt discount as interest expense related to the convertible debenture, dated July 31, 2018 with Peak One Opportunity Fund L.P. The total principal outstanding and unamortized discount as of October 31, 2018 were $220,000 and $176,732, respectively. During the three months ended October 31, 2018, the Company amortized $90,834 of the debt discount as interest expense related to the convertible note, dated May 30, 2018 with Firstfire Global Opportunities Fund, LLC. The total principal outstanding and unamortized discount as of October 31, 2018 were $305,556 and $181,666, respectively. Fair Value of Financial Instruments. Level 1 Level 2 Level 3 For certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, the carrying amounts approximate fair value due to the short maturity of these instruments. The carrying value of our long-term debt approximates its fair value based on the quoted market prices for the same or similar issues or the current rates offered to us for debt of the same remaining maturities. Our derivative liabilities as of October 31, 2018 and July 31, 2018 were $771,524 and $632,268, respectively. The fair market value of all derivatives during the three months ended October 31, 2018 was determined using the Black-Scholes option pricing model which used the following assumptions: Expected dividend yield 0.00% Expected stock price volatility 165.84% - 179.03% Risk-free interest rate 2.21% -2.93% Expected term 0.58 - 2.75 years Level 3 inputs. The following table provides a summary of the changes in fair value of the derivative financial instruments measured at fair value on a recurring basis using significant unobservable inputs: Balance at July 31, 2018 $ 632,268 Derivative loss 139,256 Balance at October 31, 2018 $ 771,524

Subsequent Events

Subsequent Events	3 Months Ended
	Oct. 31, 2018
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	9 – SUBSEQUENT EVENTS On November 14, 2018, the Company received $75,000 for the issuance of 258,621 shares of Common Stock. At the time of issuance the shares of Common Stock were priced at $0.29. On November 21, 2018, the Company entered into an Amendment to the Convertible Promissory Note dated May 30, 2018 with FirstFire Global Opportunity Fund, LLC. ("FirstFire"). Under the Amendment FirstFire agreed to extend the "conversion period" from 180 days after the issuance date to 210 days after the issuance date. No other changes were made to the Convertible Promissory Note. In conjunction with the Amendment, the Company issued 85,000 shares of Common Stock at price per share of $0.28. On November 26, 2018, Peak One Opportunity Fund, L. P., converted $20,000 of the principal outstanding under the convertible debenture dated January 12, 2018. At the time of conversion, the Company issued 139,860 shares of Common Stock at a price per share of $0.14. On December 7, 2018, the Company secured a promissory note for $28,000, bearing interest at a rate of 0% per annum, with maturity date of January 22, 2019. In conjunction with the note, the Company issued 28,000 shares of Common Stock, the shares vested at time of issuance. The relative fair market value of the shares of Common Stock at time of issuance was approximately $5,000 and was recognized as a discount on the promissory note, the company will amortize the fair market value as interest expense over the term of the note.

Basis of Presentation (Tables)

Basis of Presentation (Tables)	3 Months Ended
	Oct. 31, 2018
Basis of Presentation [Abstract]
Summary of disaggregated revenue	For the three months ended October 31, 2018 2017 Service revenue $ 1,474 $ 55 Product revenue 48 - Total revenue $ 1,522 $ 55

Intangible Assets (Tables)

Intangible Assets (Tables)	3 Months Ended
	Oct. 31, 2018
Intangible Assets [Abstract]
Summarized changes in intangible assets	Gross Carrying Accumulated Net Carrying October 31, 2018 Value Amortization Amount NetSapeins - license, 10 years $ 150,000 $ (150,000 ) $ - Customer relationships, 5 years 40,000 (6,666 ) 33,334 Customer relationships, 7 years 1,480,000 (117,510 ) 1,362,490 Marketing & Non-compete, 5 years 800,000 (80,000 ) 720,000 Total Define-lived Assets 2,470,000 (354,176 ) 2,115,824 Goodwill, Indefinite 834,828 - 834,828 Balance, October 31, 2018 $ 3,304,828 $ (354,176 ) $ 2,950,652 Gross Carrying Accumulated Net Carrying July 31, 2018 Value Amortization Amount NetSapeins - license, 10 years $ 150,000 $ (150,000 ) $ - Customer relationships, 5 years 40,000 (4,667 ) 35,333 Customer relationships, 7 years 1,480,000 (64,652 ) 1,415,348 Marketing & Non-compete, 5 years 800,000 (40,000 ) 760,000 Total Define-lived Assets 2,470,000 (259,319 ) 2,210,681 Goodwill, Indefinite 834,828 - 834,828 Balance, July 31, 2018 $ 3,304,828 $ (259,319 ) $ 3,045,509

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	3 Months Ended
	Oct. 31, 2018
Stock-Based Compensation [Abstract]
Schedule of stock options	Weighted-average Weighted-average remaining contractual Options exercise price (years) Outstanding at July 31, 2018 3,415,000 $ 0.33 4.58 Granted - - - Exercised - - - Forfeited and cancelled - - - Outstanding at October 31, 2018 3,415,000 $ 0.33 3.97 Exercisable at October 31, 2018 2,448,701 $ 0.30 3.97

Warrants (Tables)

Warrants (Tables)	3 Months Ended
	Oct. 31, 2018
Warrants [Abstract]
Schedule of fair market value of all warrants issued determined using the Black-Scholes option pricing model	Expected dividend yield 0.00% Expected stock price volatility 153.99% - 237.00% Risk-free interest rate 2.05% -2.93% Expected term 3.0 - 5.0 years
Schedule of warrants	Weighted-average Weighted-average remaining contractual Warrants exercise price (years) Outstanding at July 31, 2017 510,000 $ 0.29 2.87 Granted 2,010,000 $ 0.26 3.34 Exercised (150,000 ) $ 0.10 3.00 Forfeited and cancelled - - - Outstanding at July 31, 2018 2,370,000 $ 0.28 2.90 Granted 215,000 $ 0.13 3.00 Exercised - - - Forfeited and cancelled (240,000 ) $ 0.15 3.43 Outstanding at October 31, 2018 2,345,000 $ 0.34 2.60 Exercisable at October 31, 2018 2,045,000 $ 0.24 2.48

Debt (Tables)

Debt (Tables)	3 Months Ended
	Oct. 31, 2018
Debt [Abstract]
Schedule of fair market value of all derivatives determined using the Black-Scholes option pricing model	Expected dividend yield 0.00% Expected stock price volatility 165.84% - 179.03% Risk-free interest rate 2.21% -2.93% Expected term 0.58 - 2.75 years
Schedule of changes in fair value of derivative financial instruments	Balance at July 31, 2018 $ 632,268 Derivative loss 139,256 Balance at October 31, 2018 $ 771,524

Basis of Presentation (Details)

Basis of Presentation (Details) - USD ($) $ in Thousands	3 Months Ended
	Oct. 31, 2018	Oct. 31, 2017
Basis of Presentation [Abstract]
Service revenue	$ 1,474	$ 55
Product revenue	48
Total revenue	$ 1,522	$ 55

Basis of Presentation (Details

Basis of Presentation (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Oct. 31, 2018	Oct. 31, 2017	Jul. 31, 2018
Basis of Presentation (Textual)
Contract assets	$ 12,155		$ 19,405
Deferred income	262		$ 390
Sales commissions	$ 4,000	$ 10,620

Going Concern (Details)

Going Concern (Details) - USD ($) $ in Thousands	3 Months Ended
	Oct. 31, 2018	Jul. 31, 2018
Going Concern (Textual)
Accumulated deficit	$ (81,714)	$ (80,800)
Working capital deficit	$ 4,262,000

Intangible Assets (Details)

Intangible Assets (Details) - USD ($)	Oct. 31, 2018	Jul. 31, 2018
Indefinite-lived Intangible Assets [Line Items]
Total Define-lived Assets, Gross Carrying Value	$ 2,470,000	$ 2,470,000
Total Define-lived Assets, Accumulated Amortization	(354,176)	(259,319)
Total Define-lived Assets, Net Carrying Amount	2,115,824	2,210,681
Goodwill, Indefinite, Gross Carrying Value	834,828	834,828
Goodwill, Indefinite, Accumulated Amortization
Goodwill, Indefinite, Net Carrying Amount	834,828	834,828
Balance, Gross Carrying Value	3,304,828	3,304,828
Balance, Accumulated Amortization	(354,176)	(259,319)
Balance, Net Carrying Amount	2,950,652	3,045,509
NetSapeins - license, 10 years [Member]
Indefinite-lived Intangible Assets [Line Items]
Total Define-lived Assets, Gross Carrying Value	150,000	150,000
Total Define-lived Assets, Accumulated Amortization	(150,000)	(150,000)
Total Define-lived Assets, Net Carrying Amount
Customer relationships, 5 years [Member]
Indefinite-lived Intangible Assets [Line Items]
Total Define-lived Assets, Gross Carrying Value	40,000	40,000
Total Define-lived Assets, Accumulated Amortization	(6,666)	(4,667)
Total Define-lived Assets, Net Carrying Amount	33,334	35,333
Customer relationships, 7 years [Member]
Indefinite-lived Intangible Assets [Line Items]
Total Define-lived Assets, Gross Carrying Value	1,480,000	1,480,000
Total Define-lived Assets, Accumulated Amortization	(117,510)	(64,652)
Total Define-lived Assets, Net Carrying Amount	1,362,490	1,415,348
Marketing & Non-compete, 5 years [Member]
Indefinite-lived Intangible Assets [Line Items]
Total Define-lived Assets, Gross Carrying Value	800,000	800,000
Total Define-lived Assets, Accumulated Amortization	(80,000)	(40,000)
Total Define-lived Assets, Net Carrying Amount	$ 720,000	$ 760,000

Intangible Assets (Details Text

Intangible Assets (Details Textual) - USD ($)	3 Months Ended
	Oct. 31, 2018	Oct. 31, 2017
Intangible Assets (Textual)
Total amortization expense	$ 94,857	$ 3,750

Stock-Based Compensation (Detai

Stock-Based Compensation (Details) - Stock options [Member] - $ / shares	3 Months Ended	12 Months Ended
	Oct. 31, 2018	Jul. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Options/Warrants, Outstanding at July 31, 2018	3,415,000
Options/Warrants, Granted
Options/Warrants, Exercised
Options, Forfeited and cancelled
Options/Warrants, Outstanding at October 31, 2018	3,415,000
Options/Warrants, Exercisable at October 31, 2018	2,448,701
Options/Warrants, Weighted-average exercise price, Outstanding at July 31, 2018	$ 0.33
Options/Warrants, Weighted-average exercise price, Granted
Options/Warrants, Weighted-average exercise price, Exercised
Options/Warrants, Weighted-average exercise price, Forfeited and cancelled
Options/Warrants, Weighted-average exercise price, Outstanding at October 31, 2018	0.33
Options/Warrants, Weighted-average exercise price, Exercisable at October 31, 2018	$ 0.30
Options/Warrants, Weighted-average remaining contractual term (years), Outstanding	3 years 11 months 19 days	4 years 6 months 29 days
Options/Warrants, Weighted-average remaining contractual term (years), Exercisable at October 31, 2018	3 years 11 months 19 days

Stock-Based Compensation (Det_2

Stock-Based Compensation (Details Textual) - USD ($)	1 Months Ended	3 Months Ended		12 Months Ended
	Sep. 30, 2018	Oct. 31, 2018	Oct. 31, 2017	Jul. 31, 2018	Nov. 30, 2015
Stock options [Member]
Stock-Based Compensation (Textual)
Aggregate intrinsic outstanding, shares		3,415,000		3,415,000
Aggregate intrinsic outstanding, value		$ 34,500		$ 706,372
Aggregate intrinsic exercisable, shares		2,448,701		2,006,111
Aggregate intrinsic exercisable, value		$ 34,500		$ 587,389
Employees [Member]
Stock-Based Compensation (Textual)
Unamortized compensation cost		294,000	$ 34,000
Stock-based compensation expense		$ 95,000	$ 51,000
Settle accounts payables [Member]
Stock-Based Compensation (Textual)
Common stock, shares issued	21,672
Common shares issued, value	$ 5,794
Settle of accounts payables to professional	5,287
Loss upon issuance of shares	$ 507
2015 Equity Compensation Plan [Member]
Stock-Based Compensation (Textual)
Shares of stock options					7,500,000

Non-Standardized Profit-Shari_2

Non-Standardized Profit-Sharing Plan (Details)	3 Months Ended
	Oct. 31, 2018
Non-Standardized Profit-Sharing Plan (Textual)
Non-standardized profit-sharing plan, description	Under the plan our employees qualify to participate in the plan after one year of employment. Contributions under the plan are based on 25% of the annual base salary of each eligible employee up to $54,000 per year. Contributions under the plan are fully vested upon funding.

Warrants (Details)

Warrants (Details) - Warrants [Member]	3 Months Ended
	Oct. 31, 2018
Class of Warrant or Right [Line Items]
Expected dividend yield	0.00%
Maximum [Member]
Class of Warrant or Right [Line Items]
Expected stock price volatility	237.00%
Risk-free interest rate	2.93%
Expected term	5 years
Minimum [Member]
Class of Warrant or Right [Line Items]
Expected stock price volatility	153.99%
Risk-free interest rate	2.05%
Expected term	3 years

Warrants (Details 1)

Warrants (Details 1) - Warrant [Member] - $ / shares	3 Months Ended	12 Months Ended
	Oct. 31, 2018	Jul. 31, 2018
Class of Warrant or Right [Line Items]
Options/Warrants, Outstanding at July 31, 2018	2,370,000	510,000
Options/Warrants, Granted	215,000	2,010,000
Options/Warrants, Exercised		(150,000)
Warrants, Forfeited and cancelled	(240,000)
Options/Warrants, Outstanding at October 31, 2018	2,345,000	2,370,000
Options/Warrants, Exercisable at October 31, 2018	2,045,000
Options/Warrants, Weighted-average exercise price, Outstanding at July 31, 2018	$ 0.28	$ 0.29
Options/Warrants, Weighted-average exercise price, Granted	0.13	0.26
Options/Warrants, Weighted-average exercise price, Exercised		0.10
Options/Warrants, Weighted-average exercise price, Forfeited and cancelled	0.15
Options/Warrants, Weighted-average exercise price, Outstanding at October 31, 2018	0.34	$ 0.28
Options/Warrants, Weighted-average exercise price, Exercisable at October 31, 2018	$ 0.24
Options/Warrants, Weighted-average remaining contractual term (years), Outstanding		2 years 10 months 14 days
Options/Warrants, Weighted-average remaining contractual term (years), Exercisable at October 31, 2018	2 years 5 months 23 days	2 years 10 months 25 days
Options/Warrants, Granted, Weighted-average remaining contractual term (years)	3 years	3 years 4 months 2 days
Options/Warrants, Forfeited and cancelled, Weighted-average remaining contractual term (years)	3 years 5 months 5 days	3 years
Options/Warrants, Weighted-average remaining contractual term (years), Outstanding, Ending	2 years 7 months 6 days	2 years 10 months 25 days

Warrants (Details Textual)

Warrants (Details Textual) - USD ($)	Aug. 01, 2018	Dec. 31, 2017	Oct. 31, 2018	Oct. 31, 2017	Jul. 31, 2018	Mar. 31, 2018
Warrants (Textual)
Warrants, outstanding and exercisable			2,345,000	2,370,000
Warrants, description		Digerati issued 100,000 warrants to a consultant for services, the warrants vested at time of issuance. The warrants have a term of 5 years, with an exercise price of $0.50. Under a Black-Scholes valuation the fair market value of the warrants at time of issuance was approximately $49,000, the company will amortize the fair market value as warrant expense over 12 months. Additionally, Digerati committed to issue 100,000 warrants if the Company's stock price traded at $0.75 per share for 10 consecutive days, to issue 100,000 warrants if the Company's stock price traded at $1.00 per share for 10 consecutive days, and to issue 100,000 warrants if the Company's stock price traded at $1.25 per share for 10 consecutive days. Under a Black-Scholes valuation the fair market value of the warrants at time of issuance was approximately $143,000, the company will amortize the fair market value as warrant expense over 12 months.	Digerati issued 200,000 warrants under an extension of payments to an existing promissory note, with a current principal balance of $75,000, the warrants vested at time of issuance. The warrants have a term of 3 years, with an exercise price of $0.10. Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance was approximately $38,000 and was recognized as a discount on the promissory note, the company will amortize the fair market value as interest expense over 3 months.
Warrants, outstanding			$ 205,000		$ 597,927
Warrants, cancelled			240,000
Warrant expense			$ 48,000	$ 0
Unamortized warrant expense			$ 16,000	$ 0
Exercise price of warrants			$ 0.15
Warrant [Member]
Warrants (Textual)
Warrants, outstanding and exercisable			2,045,000	2,070,000
Warrants, description			The Company issued 240,000 common shares to replace these warrants, in conjunction with two promissory notes with a principal balance of $50,000, in addition at the time of issuance we recognized a discount of $36,000.
Warrants, outstanding			$ 205,000		$ 607,557
Promissory Notes Two [Member]
Warrants (Textual)
Warrants, outstanding and exercisable						300,000
Private placement [Member] | Accredited investors [Member]
Warrants (Textual)
Secured amount			$ 40,000
Common stock, shares issued			80,000
Common stock price per share			$ 0.50
Warrants to purchase of common stock	15,000		15,000
Exercise price of warrants			$ 0.50

Equity (Details)

Equity (Details) - USD ($)	Oct. 12, 2018	Sep. 28, 2018	Aug. 01, 2018	Oct. 18, 2018	Oct. 31, 2018	May 01, 2018
Equity (Textual)
Exercise price, per share						$ 0.50
Promissory note [Member]
Equity (Textual)
Promissory note	$ 25,000			$ 25,000
Interest rate	8.00%			8.00%
Maturity date	Nov. 12, 2018			Nov. 18, 2018
Promissory note, description	In conjunction with the Note, the Company issued 140,000 common shares, the shares vested at time of issuance, these shares replace previously issued warrants with an exercise price of $0.15, therefore the exercise price of $21,000 was recognized as a discount on the promissory note.			In conjunction with the Note, the Company issued 100,000 common shares, the shares vested at time of issuance, these shares replace previously issued warrants with an exercise price of $0.15, therefore the exercise price of $15,000 was recognized as a discount on the promissory note.
Common stock [Member]
Equity (Textual)
Aggregate shares of common stock		21,672
Issuance of common stock, value		$ 5,794
Settle of accounts payables to professional		5,287
Loss upon issuance of shares		$ 507
Private placement [Member] | Accredited investors [Member]
Equity (Textual)
Secured amount			$ 40,000
Common stock, shares issued			80,000
Common stock price, per share			$ 0.50
Warrants to purchase of common stock			15,000		15,000
Exercise price, per share			$ 0.50

Debt (Details)

Debt (Details) - Black-Scholes Valuation [Member]	3 Months Ended
	Oct. 31, 2018
Debt Instrument [Line Items]
Expected dividend yield	0.00%
Minimum [Member]
Debt Instrument [Line Items]
Expected stock price volatility	165.84%
Risk-free interest rate	2.21%
Expected term	6 months 29 days
Maximum [Member]
Debt Instrument [Line Items]
Expected stock price volatility	179.03%
Risk-free interest rate	2.93%
Expected term	2 years 9 months

Debt (Details 1)

Debt (Details 1)	3 Months Ended
	Oct. 31, 2018USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Balance at October 31, 2018	$ 771,524
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Balance at July 31, 2018	632,268
Derivative loss	139,256
Balance at October 31, 2018	$ 771,524

Debt (Details Textual)

Debt (Details Textual) - USD ($)

Dec. 07, 2018

Nov. 21, 2018

Oct. 12, 2018

Jun. 19, 2018

Mar. 15, 2018

Nov. 26, 2018

Oct. 22, 2018

Oct. 18, 2018

May 01, 2018

Apr. 30, 2018

Mar. 31, 2018

Oct. 31, 2018

Oct. 31, 2017

Jul. 31, 2018

Debt (Textual)

Interest rate

12.00%

Warrants to purchase of common stock

2,345,000

2,370,000

Exercise price

$ 0.50

Discount on promissory note

$ 259,000

Derivative liability

771,524

$ 632,268

Amortization

94,857

$ 3,750

Subsequent Event [Member]

Debt (Textual)

Debt maturity date

Jan. 22, 2019

Principal outstanding

$ 28,000

Promissory note, the company issued shares

85,000

139,860

Peak One Opportunity Fund, L. P [Member] | January 12, 2018 [Member]

Debt (Textual)

Debt discount as interest expense

44,000

Principal outstanding

40,000

Unamortized discount

35,863

Principal balance

16,000

Redemption price

56,000

Peak One Opportunity Fund, L. P [Member] | July 31, 2018 [Member]

Debt (Textual)

Debt discount as interest expense

16,066

Principal outstanding

220,000

Unamortized discount

176,732

Firstfire Global Opportunities Fund, LLC [Member] | May 30, 2018 [Member]

Debt (Textual)

Debt discount as interest expense

90,834

Principal outstanding

305,556

Unamortized discount

181,666

Shift8 Networks, Inc [Member]

Debt (Textual)

Promissory note

$ 275,000

$ 525,000

Interest rate

0.00%

8.00%

Debt maturity date

Apr. 30, 2020

Warrants to purchase of common stock

100,000

Exercise price

$ 0.50

Discount on promissory note

27,000

Principal outstanding

388,000

Unamortized discount

12,000

Warrants terms

3 years

Debt instrument, description of variable rate basis

The promissory note is guaranteed to the lender by 15% of the stock owned by Shift8 in T3, the secured interest will continue until the principal balance is paid in full.

Description of conversion price

With a principal payment of $100,000 due on June 1, 2018 and a principal payment of $280,823 due on April 30, 2020. Payment are based on a 60-month repayment schedule. At any time while this Note is outstanding, but only upon: (i) the occurrence of an Event of Default under the Note or the Pledge and Escrow Agreement; or (ii) mutual agreement between the Borrower and the Holder, the Holder may convert all or any portion of the outstanding principal, accrued and unpaid interest, Premium, if applicable, and any other sums due and payable hereunder (such total amount, the "Conversion Amount") into shares of Common Stock (the "Conversion Shares") at a price equal to: (i) the Conversion Amount (the numerator); divided by (ii) a conversion price of $1.50 per share of Common Stock, which price shall be indicated in the conversion notice (in the form attached hereto as Exhibit "B", the "Conversion Notice") (the denominator) (the "Conversion Price"). The Holder shall submit a Conversion Notice indicating the Conversion Amount, the number of Conversion Shares issuable upon such conversion, and where the Conversion Shares should be delivered. The promissory note is secured by a Pledge and Escrow Agreement, whereby Shift8 agreed to pledge 51% of the securities owned in T3 until the principal payment is paid in full. In conjunction with the promissory note, the Company issued 3-year warrants to purchase 75,000 shares of common stock at an exercise price of $0.50 per share.

Amortization

2,000

Principal balance

18,000

Interest and principal payment

$ 6,000

Promissory note [Member]

Debt (Textual)

Promissory note

$ 25,000

Interest rate

8.00%

Debt maturity date

Nov. 12, 2018

Exercise price

$ 0.15

Discount on promissory note

$ 21,000

Debt discount as interest expense

14,334

Principal outstanding

25,000

Unamortized discount

6,666

Promissory note, the company issued shares

140,000

Promissory note one [Member]

Debt (Textual)

Promissory note

$ 25,000

Interest rate

8.00%

Debt maturity date

Nov. 18, 2018

Exercise price

$ 0.15

Discount on promissory note

$ 15,000

Debt discount as interest expense

12,500

Principal outstanding

25,000

Unamortized discount

2,500

Promissory note, the company issued shares

100,000

Promissory note three [Member]

Debt (Textual)

Promissory note

$ 50,000

Interest rate

8.00%

Debt maturity date

Dec. 31, 2018

Principal outstanding

50,000

Black-Scholes Valuation [Member]

Debt (Textual)

Discount on promissory note

19,000

Debt discount as interest expense

1,688

Principal outstanding

250,000

Unamortized discount

22,000

Company paid principal balance

13,000

Two Promissory Notes [Member]

Debt (Textual)

Promissory note

$ 250,000

Interest rate

12.00%

Debt maturity date

Sep. 15, 2018

Warrants to purchase of common stock

300,000

Exercise price

$ 0.10

Principal outstanding

500,000

Unamortized discount

41,000

Warrants terms

3 years

Description of debt maturity date

The Company shall have the right to request that the maturity date to be extended by one (1) additional period of ninety (90) days, until December 14, 2018.

Description of conversion price

The Company entered into a Note Conversion Agreement (the "Agreement") with the Note holders, whereby, the holders may elect to convert up to 50% of the principal amount outstanding on the Notes into Common Stock of Digerati at any time after 90 days of funding the Notes. The Conversion Price shall be the greater of: (i) the Variable Conversion Price (as defined herein) or (ii) the Fixed Conversion Price (as defined herein). The "Variable Conversion Price" shall be equal to the average closing price for Digerati's Common Stock (the "Shares") for the ten (10) Trading Day period immediately preceding the Conversion Date. "Trading Day" shall mean any day on which the Common Stock is tradable for any period on the OTCQB, or on the principal securities exchange or other securities market on which the Common Stock is then being traded. The "Fixed Conversion Price" shall mean $0.50.

Fair value of warrants

127,000

Amortization

43,457

Promissory Notes Four [Member]

Debt (Textual)

Promissory note

$ 272,000

Interest rate

10.00%

Debt maturity date

Apr. 10, 2019

Warrants to purchase of common stock

255,000

Exercise price

$ 0.10

Principal outstanding

272,000

Unamortized discount

75,000

Warrants terms

3 years

Fair value of warrants

$ 119,000

Amortization

$ 33,892

Subsequent Events (Details)

Subsequent Events (Details) - Subsequent Events [Member] - USD ($)	Dec. 07, 2018	Nov. 21, 2018	Nov. 14, 2018	Nov. 26, 2018
Subsequent Events (Textual)
Issuance of common stock, value			$ 75,000
Aggregate shares of common stock			258,621
Common stock price per share			$ 0.29
Conversion period, description		Under the Amendment FirstFire agreed to extend the "conversion period" from 180 days after the issuance date to 210 days after the issuance date.
Common stock issued on conversion, shares		85,000		139,860
Conversion price per share		$ 0.28		$ 0.14
Principal outstanding amount				$ 20,000
Convertible debenture date		May 30, 2018		Jan. 12, 2018
Promissory note	$ 28,000
Interest rate	0.00%
Maturity date	Jan. 22, 2019
Promissory note, description	In conjunction with the note, the Company issued 28,000 shares of Common Stock, the shares vested at time of issuance. The relative fair market value of the shares of Common Stock at time of issuance was approximately $5,000 and was recognized as a discount on the promissory note, the company will amortize the fair market value as interest expense over the term of the note.