Digerati (DTGI) 10-Q/A 13 Feb 19 2018 Q1 Quarterly report (amended) Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Oct. 31, 2017	Dec. 19, 2017
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, 2017
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2,018
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		9,458,556

Consolidated Balance Sheets (Un

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Oct. 31, 2017	Jul. 31, 2017
CURRENT ASSETS:
Cash and cash equivalents	$ 709	$ 673
Accounts receivable, net	9	15
Prepaid and other current assets	25	9
Total current assets	743	697
LONG-TERM ASSETS:
Intangible assets, net	10	14
Property and equipment, net	2	2
Total assets	755	713
CURRENT LIABILITIES:
Accounts payable	921	859
Accrued liabilities	379	365
Total current liabilities	1,300	1,224
LONG-TERM LIABILITIES:
Customer deposits	131	131
Total long-term liabilities	131	131
Total liabilities	1,431	1,355
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, 8,958,556 and 8,386,056 issued and outstanding, respectively	9	8
Additional paid in capital	77,321	76,986
Accumulated deficit	(78,007)	(77,637)
Other comprehensive income	1	1
Total stockholders' deficit	(676)	(642)
Total liabilities and stockholders' deficit	$ 755	$ 713

Consolidated Balance Sheets (_2

Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Oct. 31, 2017	Jul. 31, 2017
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	8,958,556	8,386,056
Common stock, shares outstanding	8,958,556	8,386,056
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, 2017	Oct. 31, 2016
OPERATING REVENUES:
Cloud-based hosted services	$ 55	$ 44
Total operating revenues	55	44
OPERATING EXPENSES:
Cost of services (exclusive of depreciation and amortization)	45	33
Selling, general and administrative expense	201	278
Stock compensation expense	56
Legal and professional fees	119	10
Depreciation and amortization expense	4	5
Total operating expenses	425	326
OPERATING LOSS	(370)	(282)
OTHER INCOME (EXPENSE):
Interest income (expense)
Total other income (expense)
NET LOSS	$ (370)	$ (282)
LOSS PER SHARE - BASIC AND DILUTED	$ (0.04)	$ (0.05)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED	8,798,089	5,234,165

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Oct. 31, 2017	Oct. 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (370)	$ (282)
Adjustments to reconcile net loss to cash used in by operating activities:
Depreciation and amortization	4	5
Stock compensation	56
Changes in operating assets and liabilities:
Accounts receivable	6	(10)
Notes receivable		(14)
Prepaid expenses and other current assets	(16)	(67)
Accounts payable	62	(8)
Accrued liabilities and customer deposits	14	10
Net cash used in operating activities	(244)	(366)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property & equipment		(1)
Net cash used in investing activities		(1)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock	280
Net cash provided by financing activities	280
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	36	(367)
CASH AND CASH EQUIVALENTS, beginning of period	673
CASH AND CASH EQUIVALENTS, end of period	709	802
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest

Basis of Presentation

Basis of Presentation	3 Months Ended
	Oct. 31, 2017
Accounting Policies [Abstract]
BASIS OF PRESENTATION	NOTE 1 – BASIS OF PRESENTATION The accompanying unaudited interim consolidated financial statements of Digerati Technologies, Inc. (“Digerati” 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, 2017 contained in the Company’s Form 10-K filed on December 14, 2017 have been omitted. Income Taxes The effective tax rate was 0% for the three months ended October 31, 2017 and 2016, respectively. The Company recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. The Company provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not. Since January 1, 2007, the Company accounts for uncertain tax positions in accordance with the authoritative guidance issued by the Financial Accounting Standards Board on income taxes which addresses how an entity should recognize, measure and present in the financial statements uncertain tax positions that have been taken or are expected to be taken in a tax return. Pursuant to this guidance, the Company recognizes a tax benefit only if it is “more likely than not” that a particular tax position will be sustained upon examination or audit. To the extent the “more likely than not” standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that is greater than 50% likely of being realized upon settlement. As of October 31, 2017 we have no liability for unrecognized tax benefits. Cash and cash equivalents The Company considers all bank deposits and highly liquid investments with original maturities of three months or less to be cash and cash equivalents. Reclassifications For comparability, certain prior period amounts have been reclassified, where applicable, to conform to the financial statement presentation used in fiscal 2018. The reclassifications have no impact on net loss.

Going Concern

Going Concern	3 Months Ended
	Oct. 31, 2017
Going Concern [Abstract]
GOING CONCERN	NOTE 2 – GOING CONCERN Financial Condition Digerati’s consolidated financial statements for the period ending October 31, 2017 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 $78,007,000 since 1993 and a working capital deficit of approximately $557,000 which raises substantial 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, issuing stock-based compensation to certain members of the executive management team in lieu of cash, 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 equity or debt financing, sales of assets, or collaborative arrangements. 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 curtail 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 best-efforts 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, 2017 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.

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Oct. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
STOCK-BASED COMPENSATION	NOTE 3 – 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, 2017, we did not issue any common stock to our employees. Digerati recognized approximately $56,000 and $0 in stock based compensation expense to employees during the three months ended October 31, 2017 and 2016, respectively. Unamortized compensation cost totaled $37,000 and $0 at October 31, 2017 and October 31, 2016, respectively.

Non-Standardized Profit Sharing

Non-Standardized Profit Sharing Plan	3 Months Ended
	Oct. 31, 2017
Non-Standardized Profit Sharing Plan [Abstract]
Non-Standardized Profit Sharing Plan	NOTE 4 – 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 period ended October 31, 2017 and October 31, 2016, the Company did not make any contributions under the plan.

Equity

Equity	3 Months Ended
	Oct. 31, 2017
Stockholders' Equity Note [Abstract]
EQUITY	NOTE 5 – EQUITY During the three months ended October 31, 2017, the Company issued the following shares of common stock: In August, 2017, the Company issued an aggregate of 480,000 shares of common stock for $240,000 and 3-year warrants to purchase 90,000 shares of common stock at an exercise price of $0.50 per share. In September, 2017, the Company issued an aggregate of 12,500 shares of common stock with a market value at time of issuance of $4,375. The shares were issued for consulting services. In October, 2017, the Company issued an aggregate of 80,000 shares of common stock for $40,000 and 3-year warrants to purchase 15,000 shares of common stock at an exercise price of $0.50 per share.

Significant Customers

Significant Customers	3 Months Ended
	Oct. 31, 2017
Significant Customers [Abstract]
Significant Customers	NOTE 6 – SIGNIFICANT CUSTOMERS During the three months ended October 31, 2017, the Company derived a significant amount of revenue from four customers, comprising 19%, 17%, 11% and 8% of the total revenue for the period, respectively, compared to four customers, comprising 34%, 24%, 16% and 5% of the total revenue for the three months ended October 31, 2016. During the three months ended October 31, 2017, the Company derived a significant amount of accounts receivable from three customers, comprising 56%, 18% and 11% of the total accounts receivable for the period, compared to three customers, comprising 50%, 37% and 6% of the total accounts receivable for the three months ended October 31, 2016.

Agreement and Plan of Merger

Agreement and Plan of Merger	3 Months Ended
	Oct. 31, 2017
Business Combinations [Abstract]
Agreement and Plan of Merger	NOTE 7 – AGREEMENT AND PLAN OF MERGER On May 8, 2017, Shift8 Technologies, In., a Nevada corporation ("Shift8 Tech"), a wholly owned subsidiary of Digerati Technologies, Inc., a Nevada corporation (the "Company"), and T3 Acquisition, Inc., a Florida corporation (Acquisition Sub"), and newly formed wholly-owned subsidiary of Shift8 Tech, entered into an Agreement and Plan Merger (the "Merger Agreement") with T3 Communications, a Florida corporation ("T3"). The Merger Agreement provides that, upon the terms and subject to the conditions thereof, the Acquisition Sub will be merged with and into T3, with T3 continuing as the surviving corporation and as a wholly-owned subsidiary of Shift8 Tech. The Company anticipates closing the transaction during second quarter of fiscal year 2018, the Merger has been approved by the Shareholders of T3 and is subject to certain customary closing conditions. In November 2017, under an Amendment to the Agreement and Plan of Merger, Shift8 funded to T3 a nonrefundable extension fee of $100,000 to extend the closing date until November 28, 2017. In December 2017, Shift8 funded to T3 a second nonrefundable extension fee payment of $100,000 to extend the closing date until December 22, 2017. Upon closing, the extension fee total of $200,000 will be credited towards the purchase price for the acquisition of T3.

Subsequent Events

Subsequent Events	3 Months Ended
	Oct. 31, 2017
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	NOTE 8 – SUBSEQUENT EVENTS Other Matters On December 1, 2017, Shift8 Technologies, In., a Nevada corporation ("Shift8"), a wholly owned subsidiary of Digerati Technologies, Inc., a Nevada corporation (the "Company"), and Synergy Telecom, Inc., a Texas corporation ("Synergy"), closed a transaction to acquire all the assets, assumed all customers, and critical vendor arrangements from Synergy. Shift8 paid $125,000 upon execution of the agreement, issued 500,000 shares of common stock with an agreed market value of $200,000, and entered into a promissory note for $125,000 with an effective annual interest rate of 6% with 5 quarterly payments and a maturity date of February 28, 2019.

Basis of Presentation (Details)

Basis of Presentation (Details)	Jan. 01, 2007	Oct. 31, 2017	Oct. 31, 2016
Basis of Presentation (Textual)
Effective tax rate, percentage		0.00%	0.00%
Settlement percentage	50.00%

Going Concern (Details)

Going Concern (Details) - USD ($) $ in Thousands	3 Months Ended
	Oct. 31, 2017	Jul. 31, 2017
Going Concern (Textual)
Accumulated deficit	$ (78,007)	$ (77,637)
Working capital deficit	$ 557,000

Stock-Based Compensation (Detai

Stock-Based Compensation (Details) - USD ($)	3 Months Ended
	Oct. 31, 2017	Oct. 31, 2016	Nov. 30, 2015
2015 Equity Compensation Plan [Member]
Stock-Based Compensation (Textual)
Shares of stock options			7,500,000
Employees [Member]
Stock-Based Compensation (Textual)
Stock-based compensation expense to employees	$ 56,000	$ 0
Unamortized compensation cost	$ 37,000	$ 0

Non-Standardized Profit Shari_2

Non-Standardized Profit Sharing Plan (Details)	3 Months Ended
	Oct. 31, 2017
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.

Equity (Details)

Equity (Details) - Common Stock [Member] - USD ($)	1 Months Ended
	Oct. 31, 2017	Sep. 30, 2017	Aug. 31, 2017
Equity (Textual)
Warrants to purchase of common stock	15,000		90,000
Exercise price, per share	$ 0.50		$ 0.50
Aggregate shares of common stock	80,000	12,500	480,000
Issuance of common stock, value	$ 40,000	$ 4,375	$ 240,000
Warrants term	3 years		3 years

Significant Customers (Details)

Significant Customers (Details)	3 Months Ended
	Oct. 31, 2017	Oct. 31, 2016
Concentration Risk [Line Items]
Number of customers	4	3
Customer One [Member]
Concentration Risk [Line Items]
Percentage of revenue from customers	19.00%	34.00%
Percentage of accounts receivable from customers	56.00%	50.00%
Customer Two [Member]
Concentration Risk [Line Items]
Percentage of revenue from customers	17.00%	24.00%
Percentage of accounts receivable from customers	18.00%	37.00%
Customer Three [Member]
Concentration Risk [Line Items]
Percentage of revenue from customers	11.00%	16.00%
Percentage of accounts receivable from customers	11.00%	6.00%
Customer Four [Member]
Concentration Risk [Line Items]
Percentage of revenue from customers	8.00%	5.00%

Agreement and Plan of Merger (D

Agreement and Plan of Merger (Details) - Subsequent Event [Member] - USD ($)	1 Months Ended
	Dec. 22, 2017	Nov. 28, 2017
Agreement and Plan of Merger (Textual)
Nonrefundable extension fee	$ 100,000	$ 100,000
Purchase price for the acquisition of T3	$ 200,000

Subsequent Events (Details)

Subsequent Events (Details)	Dec. 01, 2017
Subsequent Event [Member]
Subsequent Events (Textual)
Description on execution of the agreement	Shift8 paid $125,000 upon execution of the agreement, issued 500,000 shares of common stock with an agreed market value of $200,000, and entered into a promissory note for $125,000 with an effective annual interest rate of 6% with 5 quarterly payments and a maturity date of February 28, 2019.