Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 13, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Helios & Matheson Analytics Inc. | |
Entity Central Index Key | 1,040,792 | |
Trading Symbol | HMNY | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 11,125,442 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 1,663,879 | $ 2,747,240 |
Accounts receivable - less allowance for doubtful accounts of $175,196 and $428,719 at September 30, 2017 and December 31, 2016, respectively | 254,930 | 410,106 |
Unbilled receivables | 48,595 | 45,207 |
Prepaid expenses and other current assets | 707,868 | 597,171 |
Convertible Promissory Note of MoviePass Inc. | 5,000,000 | |
Total current assets | 7,675,272 | 3,799,724 |
Property and equipment, net | 134,705 | 45,212 |
Intangible assets, net | 4,915,816 | 6,004,691 |
Goodwill | 4,599,969 | 4,599,969 |
Deposits and other assets | 139,012 | 59,189 |
Total assets | 17,464,774 | 14,508,785 |
Current liabilities: | ||
Accounts payable and accrued expenses | 2,539,018 | 1,331,118 |
Convertible notes payable, net of debt discount of $3,645,756 and $2,200,575, respectively | 381,244 | 31,425 |
Warrant liability | 24,119,148 | |
Derivative liability | 14,503,732 | 1,207,792 |
Total current liabilities | 41,543,142 | 2,570,335 |
Total liabilities | 41,543,142 | 2,570,335 |
Commitments and Contingencies | ||
Redeemable common stock, $.01 par value; 841,250 and 0 shares issued and outstanding that can be converted to Senior Secured Convertible Notes as of September 30, 2017 and December 31, 2016 respectively for a redemption amount of $2,523,700 | 2,097,867 | |
Shareholders' equity: | ||
Preferred stock, $.01 par value; 2,000,000 shares authorized; no shares issued and outstanding as of September 30, 2017 and December 31, 2016 | ||
Common stock, $.01 par value; 100,000,000 shares authorized; 8,544,554 and 4,874,839 issued and outstanding as of September 30, 2017 and December 31, 2016, respectively | 85,445 | 48,748 |
Paid-in capital | 72,445,147 | 55,258,111 |
Accumulated other comprehensive loss - foreign currency translation | (113,057) | (106,991) |
Accumulated deficit | (98,593,770) | (43,261,418) |
Total shareholders' (deficit) equity | (26,176,235) | 11,938,450 |
Total liabilities, redeemable common stock and shareholders' equity (deficit) | $ 17,464,774 | $ 14,508,785 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Short-term Debt [Line Items] | ||
Allowance for doubtful accounts | $ 175,196 | $ 428,719 |
Convertible notes payable, debt discount | $ 3,645,756 | $ 2,200,575 |
Redeemable common stock, shares authorized | 100,000,000 | 100,000,000 |
Redeemable common stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 8,544,554 | 4,874,839 |
Common stock, shares outstanding | 8,544,554 | 4,874,839 |
Senior Secured Convertible Notes | ||
Short-term Debt [Line Items] | ||
Redeemable common stock, shares issued | 841,250 | 0 |
Redeemable common stock, shares outstanding | 841,250 | 0 |
Redemption amount | $ 2,523,700 | $ 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues: | ||||
Revenue | $ 1,173,023 | $ 1,720,515 | $ 3,672,036 | $ 5,608,145 |
Cost of revenue | 946,308 | 1,130,091 | 2,969,357 | 3,922,469 |
Gross profit | 226,715 | 590,424 | 702,679 | 1,685,676 |
Operating expenses: | ||||
Selling, general & administrative | 2,243,440 | 741,530 | 8,023,886 | 2,073,888 |
Research and development | 621,754 | 1,555,095 | ||
Depreciation & amortization | 437,785 | 2,251 | 1,302,381 | 9,478 |
Total operating expenses | 3,302,979 | 743,781 | 10,881,362 | 2,083,366 |
Loss from operations | (3,076,264) | (153,357) | (10,178,683) | (397,690) |
Other income/(expense): | ||||
Change in fair market value - warrant liabilities | (17,038,711) | (17,038,711) | ||
Change in fair market value - derivative liabilities | (11,115,463) | 401,703 | (10,434,611) | 401,703 |
Loss on the extinguishment of the December Note | (683,885) | (683,885) | ||
Interest expense | (11,563,078) | (1,179,613) | (16,856,284) | (1,179,613) |
Interest income | 14,436 | 10,597 | 51,695 | 14,522 |
Total other expense | (40,386,701) | (767,313) | (44,961,796) | (763,388) |
Loss before income taxes | (43,462,965) | (920,670) | (55,140,479) | (1,161,078) |
(Benefit)/Provision for income taxes | (2,747) | 3,000 | 39,110 | 37,247 |
Net loss | (43,460,218) | (923,670) | (55,179,589) | (1,198,325) |
Other comprehensive income/(loss)-foreign currency adjustment | (7,355) | 35,686 | (6,066) | 16,146 |
Comprehensive loss | $ (43,467,573) | $ (887,984) | $ (55,185,655) | $ (1,182,179) |
Net loss per share | ||||
Basic and Diluted | $ (5.79) | $ (0.40) | $ (8.35) | $ (0.51) |
Weighted average shares | 7,500,558 | 2,309,175 | 6,607,149 | 2,349,657 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Shareholders' Equity (Deficit) (Unaudited) - 9 months ended Sep. 30, 2017 - USD ($) | Total | Mezzanine Equity | Preferred Stock | Additional Paid-In Capital | Common Stock | Accumulated other comprehensive income | Accumulated Deficit |
Balance at Dec. 31, 2016 | $ 11,938,450 | $ 55,258,111 | $ 48,748 | $ (106,991) | $ (43,261,418) | ||
Balance, shares at Dec. 31, 2016 | 4,874,839 | ||||||
Convertible common stock from converted February Note | 2,097,867 | 2,097,867 | |||||
Conversion of convertible notes and interest to shares of common stock | 10,297,935 | 10,267,722 | $ 30,214 | ||||
Conversion of convertible notes and interest to shares of common stock, shares | 3,862,632 | ||||||
Shares issued in exchange for services | 2,251,115 | 2,244,632 | $ 6,483 | ||||
Shares issued in exchange for services, shares | 648,333 | ||||||
Derivative liability which ceases to exist | 4,674,682 | 4,674,682 | |||||
Accretion of discount on redeemable common stock | (152,763) | (152,763) | |||||
Net loss | (55,179,589) | (55,179,589) | |||||
Foreign Exchange Translation | (6,066) | (6,066) | |||||
Balance at Sep. 30, 2017 | $ (26,176,235) | $ 2,097,867 | $ 72,445,147 | $ 85,445 | $ (113,057) | $ (98,593,770) | |
Balance, shares at Sep. 30, 2017 | 9,385,804 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (55,179,589) | $ (1,198,325) |
Adjustments to reconcile net loss to net cash provided by/(used in) operating activities: | ||
Depreciation and amortization | 1,302,381 | 9,478 |
Accretion of debt discount | 12,870,442 | 41,037 |
Change in fair market value - warrant liabilities | 17,038,711 | |
Change in fair market value - derivative liabilities | 10,434,611 | (401,703) |
Loss on Extinguishment of December Convertible Note | 683,885 | |
Provision for doubtful accounts | 8,005 | (13,627) |
Non-cash interest expense | 3,985,842 | 893,652 |
Shares issued in exchange for services | 2,251,115 | |
Change in operating assets and liabilities: | ||
Accounts receivable | 147,171 | 373,326 |
Unbilled receivables | (3,388) | 228,614 |
Prepaid expenses and other current assets | (110,697) | (90,255) |
Accounts payable and accrued expenses | (992,962) | 163,506 |
Deposits and other assets | (79,823) | 33,875 |
Net cash (used in)/provided by operating activities | (7,644,296) | 39,578 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Sale of property and equipment | 1,929 | 867 |
Loan to Zone | (750,000) | |
Purchases of equipment | (109,785) | |
Trendit Ltd patent acquisition | (195,143) | |
Prepaid acquisition cost to MoviePass | (5,000,000) | |
Net cash used in investing activities | (5,302,999) | (749,133) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from note payable | 11,950,000 | 1,000,000 |
Extinguishment of September Placement Note | (80,000) | |
Net cash provided by financing activities | 11,870,000 | 1,000,000 |
Net change in cash | (1,077,295) | 290,445 |
Effect of foreign currency exchange rate changes on cash and cash equivalents | (6,066) | 16,146 |
Cash, beginning of period | 2,747,240 | 898,477 |
Cash, end of period | 1,663,879 | 1,205,068 |
Supplemental disclosure of cash and non-cash transactions: | ||
Cash paid for income taxes | 5,975 | 4,379 |
Cash paid during the period for interest | 253,407 | |
Change in carrying value of convertible common stock equity | 152,763 | |
Conversion of convertible notes and interest to shares of common stock | 10,297,936 | |
Increase in debt for new original issue discount | 7,827,984 | 1,381,075 |
Derivative ceases to exist - reclassified to paid in capital | 4,674,682 | |
Embedded derivative - conversion feature and warrants | $ 1,893,651 |
General
General | 9 Months Ended |
Sep. 30, 2017 | |
General [Abstract] | |
General | 1. General The accompanying unaudited interim condensed consolidated financial statements (“interim statements”) of Helios and Matheson Analytics Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these interim statements have been included. The results reported in these interim statements are not necessarily indicative of the results that may be reported for the entire year. The consolidated balance sheet as of December 31, 2016 was derived from the audited consolidated financial statements as of and for the year ended December 31, 2016. These interim statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2016. |
Change in Controlled Company St
Change in Controlled Company Status | 9 Months Ended |
Sep. 30, 2017 | |
Change In Controlled Company Status [Abstract] | |
Change in Controlled Company Status | 2. Change in Controlled Company Status Prior to the merger between the Company’s wholly-owned subsidiary, Zone Acquisition, Inc. (“Zone Acquisition”), and Zone Technologies, Inc. (“Zone”), as described below, the Company was a controlled company as defined by Rule 5615(c)(1) of the NASDAQ Listing Rules because Helios and Matheson Information Technology Ltd., the former parent (referred to in this report as “HMIT”), was the beneficial owner of approximately 75% of the Company’s outstanding common stock. Upon consummation of the merger on November 9, 2016, the Company ceased to be a controlled company under NASDAQ Listing Rule 5615(c)(1). |
Merger with Zone Technologies,
Merger with Zone Technologies, Inc. | 9 Months Ended |
Sep. 30, 2017 | |
Merger With Zone Technologies [Abstract] | |
Merger with Zone Technologies, Inc. | 3. Merger with Zone Technologies, Inc. On November 9, 2016 (the “Closing Date”), the Company completed the merger contemplated by the Agreement and Plan of Merger, dated as of July 7, 2016, among the Company, Zone and Zone Acquisition, as amended by the Waiver and First Amendment to Agreement and Plan of Merger dated as of August 25, 2016 and the Acknowledgment of Satisfaction of Condition and Second Amendment to Agreement and Plan of Merger, dated as of September 21, 2016 (collectively, the “Merger Agreement”). On the Closing Date, the Company issued 1,740,000 shares of its common stock as merger consideration pursuant to the Merger Agreement, which represented an exchange ratio of 0.174 shares of the Company’s common stock for each share of Zone common stock outstanding, and Zone Acquisition, the wholly-owned subsidiary, was merged into Zone, with Zone surviving the merger as the Company’s wholly-owned subsidiary. Zone is the developer of the proprietary RedZone Map™, a GPS-driven, real-time crime and navigation map application whose goal is to enhance personal safety worldwide by providing users with real-time crime data and a platform for alerting other users to criminal and other safety related occurrences in a navigation map format. Zone’s mapping lets users be pro-active when traveling, allowing them to enter a number of different cautionary items such as traffic problems, police sightings, road hazards, accidents and road closures. It also allows users to report a crime and to video upload live incidents. Zone’s business model has four components. The first component is providing user access to public safety information. Zone’s goal is to enhance the personal safety of its users by providing crime data to anyone using a mobile or stationary mapping application for navigation. Zone also provides tools for examining such things as neighborhoods for possible relocation, schools to attend, travel planning and lodging selection. The second component, when implemented, will provide enterprise business solutions, such as choosing a route for trucking and delivery services based on crime mapping analytics. The third component, when implemented, will be geared towards providing law enforcement agencies with tools to better understand crime patterns and to engage with their jurisdictions more meaningfully. The fourth component, when implemented, will be to work with governmental agencies using advanced mapping and geo-fencing for counter-terrorism efforts. While RedZone Map is a fully functioning app available for free in the Apple App Store and the Google Play Store, the Company has not yet derived any advertising revenues from the app. The following tables summarize the fair values of the net assets/liabilities assumed and the allocation of the aggregate fair value of the purchase consideration, non–controlling interest and net liabilities to assumed identifiable and unidentifiable intangible assets: Purchase consideration: Common stock (1,740,000 shares at the transaction date fair value of $5.41 per share) $ 9,413,000 Liabilities assumed 1,574,512 Assets acquired (136,343 ) Aggregate fair value of enterprise 10,851,169 Purchase price allocation: Net liabilities assumed (1,488,476 ) Cash acquired 136,343 (1,352,133 ) Aggregate fair value of purchase consideration, non–controlling interest and net liabilities assumed allocated to intangible assets as follows: Technology 4,270,000 Broker Relationships 4,200 Trademarks 1,977,000 Goodwill 4,599,969 Total purchase price allocation $ 10,851,169 |
Securities Purchase Agreement
Securities Purchase Agreement | 9 Months Ended |
Sep. 30, 2017 | |
Securities Purchase Agreement | 13. Securities Purchase Agreement Senior Secured Convertible Notes and Warrants On September 7, 2016, the Company issued Senior Secured Convertible Notes (“September 2016 Notes”) in the aggregate principal amount of $4,301,075 for consideration consisting of (i) a cash payment by an institutional investor (the “Investor”) in the amount of $1,000,000 together with a secured promissory note payable by the Investor to the Company (the “Investor Note”) in the principal amount of $3,000,000 to finance a portion of the purchase price, fees and expenses for the direct or indirect acquisition of Zone. The September 2016 Notes had a maturity date of December 7, 2017. As of September 30, 2017, the Investor had made the following prepayments of the Investor Note: $1,000,000 on October 25, 2016; $1,100,000 on November 16, 2016; and $900,000 on December 2, 2016. As of January 23, 2017, the Investor had accepted a total of 887,707 shares of the Company’s common stock in full payment of the September 2016 Notes. On any principal balance owed by the Company to the Investor, a 6% interest obligation was due quarterly and calculated on a 360 day basis. For the three and nine months ended September 30, 2017, the Company had interest expense of $0 and $1,217 related to the September 2016 Notes as the final principal balance was converted in January of 2017. On December 2, 2016, the Company issued two Senior Secured Convertible Notes (the “December 2016 Notes”) to the Investor in the aggregate principal amount of $6,720,000 for consideration consisting of (i) a cash payment by the Investor in the amount of $1,100,000 and (ii) a secured promissory note payable by the Investor to the Company (the “December 2016 Investor Note”) in the principal amount of $4,900,000 to aid in the funding of Zone. prior to the entity’s ability to generate revenues. The December 2016 Notes have a maturity date of August 2, 2017 which was subsequently amended to October 8, 2017. At any time, the Investor may and, so long as certain equity conditions are met, the Company may require the Investor to convert the December 2016 Notes into shares of the Company’s common stock (a “Mandatory Conversion”). On September 19, 2017 (the “Exchange Date”) the Company and the Investor entered into an Amendment and Exchange Agreement pursuant to which the Company exercised its Mandatory Conversion right as to $890,000 of the December 2016 Notes in exchange for 445,367 shares of the Company’s common stock and the Investor prepaid $670,000 of the December 2016 Investor Note, which represented the entire unpaid principal amount of the December 2016 Investor Note. On the Exchange Date, the Company issued to the Investor a Senior Promissory Note in the principal amount of $697,000 (the “September 2017 Note”) in exchange for the remaining outstanding principal amount of the December 2016 Notes. The September 2017 Note may be converted into shares of the Company’s common stock at a price of $3.00 per share. As of September 30, 2017, the Investor had not converted any portion of the September 2017 Note into shares of the Company’s common stock. The September 2017 Note is non-interest bearing. Interest for the December 2016 Notes accrued at the rate of 6%, was due quarterly and was calculated on a 360-day basis. For the three and nine months ended September 30, 2017, the Company had $12,719 and $150,265, respectively, of interest expense pertaining to the unpaid principal amount of the December 2016 Notes. On February 8, 2017, the Company issued two Senior Secured Convertible Notes (the “February 2017 Notes”) to the Investor in the aggregate principal amount of $5,681,818 for consideration consisting of a secured promissory note payable by the Investor to the Company (the “February 2017 Investor Note”) in the principal amount of $5,000,000 to aid in the funding of Zone. prior to the entity’s ability to generate revenues. The February 2017 Notes have a maturity date of October 8, 2017. As of September 30, 2017, the Investor had made the following prepayments of the February 2017 Investor Note: $2,100,000 on August 15, 2017 and $2,900,000 on August 16, 2017. As of August 28, 2017, the Investor had accepted a total of 1,852,886 shares of the Company’s common stock in full payment of the February 2017 Notes. On any principal balance owed by the Company to the Investor, a 6% interest obligation was due quarterly and calculated on a 360 day basis. For the three and nine months ended September 30, 2017, the Company had interest expense of $42,750 and $173,963 related to the February 2017 Notes as the final principal balance was converted in August of 2017. In a letter agreement executed on August 27, 2017 (the “Letter Agreement”), in consideration for the prepayment in the amount of $2,500,000 of the February 2017 Investor Note, which the Investor subsequently made on August 28, 2017, the Investor and the Company agreed that the Investor would have the right, but not the obligation, until December 31, 2017, to effect an exchange (the “Share Exchange”) of 841,250 shares of the Company’s common stock for one or more senior secured convertible promissory notes in the form of the February Additional Note (the “New Note”), with the right to substitute the alternate conversion price of the New Note with the alternate conversion price of the Company’s Series B Senior Secured Convertible Note (the “Series B Note”) that was issued on August 16, 2017. Any New Note issued would be in the principal amount equal to the product of the prepayment amount ($2,500,000) multiplied by a fraction, the numerator of which is the number of the aggregate shares being tendered to the Company in the Share Exchange and the denominator of which is 841,250. The maturity date of any New Note will be 45 days following the issuance of the New Note, and the conversion price of the New Notes will be $4.50 or, at the election of the Investor, the Investor may convert at the Alternate Conversion Price. The Alternate Conversion Price is defined as either (A) the lower of (i) $4.50 and (ii) the greater of (I) $4.00 and (II) 85% of the quotient of (x) the sum of the volume weighted average price of the common stock for each of the 5 consecutive trading days ending on the trading day immediately preceding the delivery of the Conversion Notice, divided by (y) 5 or (B) that price which shall be the lowest of (i) $3.00 and (ii) the greater of (I) the Floor Price then in effect and (II) 85% of the quotient of (x) the sum of the volume weighted average price of the Company’s common stock for each of the 5 consecutive trading days ending and including the date of the alternate conversion, divided by (y) 5. The Floor Price is defined as $3.00 through October 4, 2017 and $0.50 following October 4, 2017. On August 16, 2017, the Company issued three Senior Secured Convertible Notes (the “August 2017 Notes”) in the aggregate principal amount of $10,300,000 and a 5-year warrant for the purchase of 1,892,972 shares of the Company’s common stock at an exercise price of $3.25 per share (the “Investor Warrant”) to the Investor for consideration consisting of a secured promissory note payable by the Investor to the Company (the “August 2017 Investor Note”) in the principal amount of $8,800,000 and $220,000 in cash to aid in the funding of the acquisition of the MoviePass Shares. The August 2017 Notes have a maturity date of April 16, 2018 and the Investor Warrant will expire on April 16, 2022. At any time the Investor may and, so long as certain equity conditions are met, the Company may require the Investor to, convert the August 2017 Notes into shares of the Company’s common stock (a “Mandatory Conversion”). At September 30, 2017, the contracted conversion prices for the August 2017 Notes, which include an Initial Series A Note, an Additional Series A Note and the Series B Note, were $4.00 for the Initial Series A Note and the Additional Series A Note and $3.00 for the Series B Note. In the event of a Mandatory Conversion, the conversion will be made at the Mandatory Conversion Price which is defined as that price which is the lower of (i) the applicable Conversion Price as in effect on the applicable Mandatory Conversion date, and (ii) 80% of the sum of (A) the volume weighted average price of the common stock for each of the 3 trading days with the lowest volume weighted average price during the 20-consecutive trading day period ending on and including the trading day immediately prior to the applicable Mandatory Conversion date divided by (B) 3. As of September 30, 2017, the Investor had paid $1,830,000 of the August 2017 Investor Note with the balance of the principal amount payable in full to the Company on April 16, 2018. As of September 30, 2017, the unpaid principal amount of the August 2017 Notes owed to the Investor was $6,970,000 which was offset by the same principal amount owed to the Company pursuant to the August 2017 Investor Note. As of September 30, 2017 the Investor had not converted any of the August 2017 Notes into shares of the Company’s common stock nor had the Investor Warrant been exercised. On any principal balance owed by the Company to the Investor, a 6% interest obligation is due quarterly and calculated on a 360-day basis. For the three and nine months ended September 30, 2017, the Company had $67,875 and $67,875, respectively, of interest expense pertaining to the unpaid principal amount of the August 2017 Notes. The Investor Warrant contains anti-dilution provisions. These anti-dilution provisions were triggered when the Company issued the September 2017 Note in the principal amount of $697,000 to the Investor. Because the September 2017 Note has a conversion price of $3.00 per share, which is lower than the Investor Warrant per share exercise price of $3.25, the number of shares of the Company’s common stock issuable to the Investor pursuant to the Investor Warrant was increased from 1,892,972 to 2,050,720 and the per share exercise price of the Investor Warrant was decreased from $3.25 to $3.00. The Placement Agent Notes and Warrants The Company entered into an agreement with a placement agent (the “Placement Agent”) for assistance with the placement of the September 2016 Notes. The Placement Agent accepted from the Company a Senior Secured Convertible Note (the “September Placement Note”) in the aggregate amount of $80,000 in partial payment of the Placement Agent’s fee. Unless earlier converted or redeemed, the September Placement Note matures 15 months from the date of issuance. The Placement Agent Note bears interest at a rate of 6% due quarterly and calculated on a 360-day basis. For the three and nine months ended September 30, 2017, the Company had interest expense pertaining to the September Placement Note in the amount of $0 and $1,200 respectively. The Placement Agent also received a 5-year warrant (the “Placement Agent Warrant”) for the purchase of the Company’s common stock as partial payment for the Placement Agent’s services. The Placement Agent Warrant is issued in tranches in conjunction with cash payments received by the Company on the corresponding Investor Note. During 2016, warrants were earned allowing for the purchase of 48,714 shares of the Company’s common stock at exercise prices ranging from $4.54 per share to $9.36 per share. As of September 30, 2017 the Placement Agent had not purchased any shares from the exercise of the Placement Agent Warrant. The Company entered into an agreement with the Placement Agent for assistance with the placement of the December Notes. The Placement Agent accepted from the Company a 5-year warrant (the “December Placement Agent Warrant”) as partial payment for the Placement Agent’s services. The December Placement Agent Warrant is issued in tranches in conjunction with cash payments received by the Company on the corresponding December 2016 Investor Note. As of December 31, 2016, the Placement Agent had the right to purchase, pursuant to the terms of the December Placement Agent Warrant, 22,000 shares of the Company’s common stock at an exercise price of $4.45 per share. Through the first nine months of 2017 the Company has received $4,900,000 of cash payments for the December Notes, resulting in the issuance of an additional 104,001 warrants at exercise prices of $3.00 per share, $3.47 per share, $4.00 per share and $6.13 per share. As of September 30, 2017 the Placement Agent had not purchased any shares from the exercise of the December Placement Agent Warrant. The Company entered into an agreement with the Placement Agent for assistance with the placement of the February 2017 Notes. The Placement Agent accepted from the Company a 5-year warrant (the “February Placement Agent Warrant”) as partial payment for the Placement Agent’s services. The February Placement Agent Warrant allows the purchase of up to 8% of the number of shares of the Company’s common stock into which the unrestricted principal of the February 2017 Notes may be converted. Through the first nine months of 2017 the Company received $5,000,000 of cash payments for the February 2017 Notes, resulting in the issuance of an additional 133,334 warrants at an exercise price of $3.00 per share. As of September 30, 2017 the Placement Agent had not purchased any shares from the exercise of the February Placement Agent Warrant. The Company entered into an agreement with the Placement Agent for assistance with the placement of the August 2017 Notes and Investor Warrant. The Placement Agent accepted from the Company a 5-year warrant (the “August Placement Agent Warrant”) as partial payment for the Placement Agent’s services. The August Placement Agent Warrant allows the purchase of up to 8% of the number of shares of the Company’s common stock into which the unrestricted principal of the Additional Series A Note and the Series B Note in the combined principal amount of $9,050,000 becomes convertible at an exercise price equal to the greater of the exercise price of the August 2017 Notes and the consolidated closing bid price of the Company’s common stock on the date that the Placement Agent becomes entitled to the warrant. During the period ended September 30, 2017, the Company received $2,050,000 of cash payments for the August 2017 Notes resulting in the issuance of 42,467 warrants at exercise prices of $3.00 and $6.13 per share. As of September 30, 2017 the Placement Agent had not purchased any shares from the exercise of the August Placement Agent Warrants. Note Activity: Senior Secured Convertible Notes consist of the following: September 30, December 31, September 2016 notes $ - $ 20,480 September Placement Agent Note - 902 December 2016 notes - 10,043 February 2017 notes - - August 2017 notes 335,215 - February 2017 notes 46,029 - Balance at period end $ 381,244 $ 31,425 Under ASC 210-20-45-1, management offset the Notes by the Investor Notes yet to be funded. The carrying value of the Senior Secured Convertible Notes is comprised of the following: September 30, December 31, September 2016 notes $ - $ 332,000 September Placement Agent Note - 80,000 December 2016 notes - 1,820,000 February 2017 notes - - August 2017 Notes 3,330,000 September 2017 Notes 697,000 Unamortized discounts (3,645,756 ) (2,200,575 ) Carrying value $ 381,244 $ 31,425 During the three and nine months ended September 30, 2017, the Investor converted a total of $6,066,818 and $12,723,818 in principal and $55,569 and $106,178 in interest into 2,185,663 and 3,862,623 shares of the Company’s common stock. On October 6, 2017 the Company received a prepayment of the August 2017 Investor Note in the amount of $6,970,000. |
MoviePass [Member] | |
Securities Purchase Agreement | 4. Securities Purchase Agreement On August 15, 2017 the Company and MoviePass Inc., a privately held Delaware corporation (“MoviePass”), entered into a securities purchase agreement (the “MoviePass SPA”), pursuant to which the Company agreed to purchase shares of common stock of MoviePass equal to fifty one percent of the then outstanding shares of MoviePass’ common stock (the “MoviePass Shares”) for an aggregate purchase price of up to $27,000,000 which is subject to the satisfaction or waiver of certain conditions set forth in the MoviePass SPA. MoviePass is a subscription-based service that allows moviegoers to see a number of movies in movie theaters for a monthly fee. At the closing of the MoviePass transaction, in exchange for the MoviePass Shares, the Company will issue to MoviePass (i) 3,333,334 unregistered shares of HMNY’s common stock for a total agreed upon value of approximately $10,000,000; and (ii) a promissory note in the principal amount of $10,000,000. Of the Company’s common shares being offered, 666,667 shares shall be subject to forfeiture by MoviePass if MoviePass fails to achieve either of the following two milestones within the specified time frame: (A) within one year after the closing, subscribers to MoviePass’ MoviePass product shall have exceeded on at least one day 100,000 subscribers, and (B) MoviePass’ common stock shall have been listed on The Nasdaq Stock Market (“Nasdaq”) or New York Stock Exchange by January 31, 2018. As of September 30, 2017, the MoviePass transaction had not been completed. On October 6, 2017, the Company and MoviePass amended the MoviePass SPA in connection with an additional loan made by the Company to MoviePass in the amount of $6,500,000. Of the loan amount, $1,500,000 will be allocated, upon the completion of the transaction, to the purchase of additional shares of MoviePass common stock, thereby increasing the purchase price from $27,000,000 to $28,500,000. On October 11, 2017, the Company and MoviePass entered into an investment option agreement (the “Option Agreement”), pursuant to which the Company was granted an option to purchase additional shares of MoviePass common stock in an amount up to $20 million based on a pre-money valuation of MoviePass of $210,000,000 (the “MoviePass Option”) amounting to an additional investment of up to 8.7% of the currently outstanding shares of MoviePass common stock (as defined in the MoviePass Option Agreement), giving effect to the closing of the transaction. The MoviePass Option may be exercised by the Company until 5:00 p.m. Eastern Time on the thirtieth day after the Company receives MoviePass’ audited financial statements for the years ended December 31, 2016 and 2015 and the reviewed unaudited interim financial statements for the periods ended September 30, 2017 and 2016. |
Licensing Agreement with is it
Licensing Agreement with is it You Ltd. | 9 Months Ended |
Sep. 30, 2017 | |
Licensing Agreement [Abstract] | |
Licensing Agreement with Is It You Ltd. | 5. Licensing Agreement with Is It You Ltd. On May 18, 2017, the Company entered into an Amended and Restated License Agreement (the “Agreement”) with Is It You Ltd., an Israeli company (“Licensor”), which is engaged in developing and marketing software that enables face recognition authentication and verification of users on mobile smartphones. Pursuant to the Agreement, the Company was granted a non-transferable, non-sublicensable, non-exclusive right and license (a) to integrate the licensed software with the Company’s RedZone Map family of products, applications, and services (the “RedZone Apps”) to create integrated service offerings that integrate and/or incorporate the licensed software with the RedZone Apps (the “Integrated Offerings”); (b) to commercialize, distribute, and sell the Integrated Offerings to customers worldwide; (c) to use the licensed software internally to create a non-commercial lab/testing environment; and (d) to use the licensed software to provide maintenance and support services to customers of the Integrated Offerings. In consideration of the license, the Company is required to pay the Licensor a one-time license fee of $80,000 for up to 1.6 million end-user licenses. In addition, in the event that the Company exceeds 1.6 million users of the Integrated Offerings, it will be required to pay the Licensor an additional one-time license fee of $20,000 for up to an aggregate of 20 million end-user licenses; in the event that the Company exceeds 20 million users of the Integrated Offerings, it will be required to pay the Licensor an additional one-time license fee of $1,000,000 for up to an aggregate of 100 million end-user licenses; and in the event the Company exceeds 100 million users of the Integrated Offerings, it will negotiate with the Licensor the additional compensation to be paid to the Licensor. Of the total $80,000 due in initial one-time license fees, $40,000 has been paid and was recorded to Research and Development Expense for the period ended September 30, 2017. Pursuant to the Agreement, the Licensor agreed to not license, sell or transfer the licensed software to any third party that wishes to integrate the licensed software with applications that compete with the Company’s Integrated Offerings relating to crime and terrorism mapping applications. The Agreement has an initial term of 5 years and shall be automatically renewed for additional one-year terms unless either party gives the other party 60 days advanced notice of termination prior to the expiration of the then-current term. Except for termination of the Agreement by the Licensor for breach by the Company, notwithstanding any termination or expiration of the Agreement, (i) the license shall remain in effect; and (ii) the Company shall have the right to order and the Licensor shall have the obligation to provide annual support services at the price set forth in the Agreement for up to 5 years from the effective date of termination. The Agreement may be terminated at any time by either party (i) if the other party materially breaches the Agreement and continues in such breach for 30 days after receiving notice from the non-breaching party; or (ii) for a period of 90 consecutive days, the other party is declared to be insolvent or is the subject of bankruptcy or liquidation proceedings, or has a receiver, judicial administrator or similar officer appointed over all or any material part of its assets, or any security holder or encumbrance lawfully takes possession of any property of or in possession of the other party, or if the other party ceases to carry on its business. |
Acquisition of Assets from Tren
Acquisition of Assets from Trendit Ltd. | 9 Months Ended |
Sep. 30, 2017 | |
Acquisition of Assets from Trendit Ltd. [Abstract] | |
Acquisition of Assets from Trendit Ltd. | 6. Acquisition of Assets from Trendit Ltd. On May 25, 2017, Zone completed the acquisition of all of the assets of Trendit Ltd. (“Trendit”), an Israel-based technology company, including certain patented technology, for cash compensation of $195,143. Zone plans to integrate the patented technology with the Redzone Map app, in order to enable the app to track and analyze real-time crowd behavior, migration and trends. The patented technology predicts population behavior, along with population size, origin and destination, with an accuracy rate of 85%-90%, and tracks demographic segmentation of a population using a population sample of 15%, together with anonymous cellular signals and demographic big data. The technology acquired collects data from regular cellphone activity, which it tracks and compares with extensive social/economic databases. Zone plans to use this patented, highly-sophisticated analytical technology to alert RedZone Map app users of potential threats to their personal safety and to inform law enforcement and government officials of the location and migration patterns of known criminal or terrorist individuals and groups. |
Going Concern Analysis
Going Concern Analysis | 9 Months Ended |
Sep. 30, 2017 | |
Going Concern Analysis [Abstract] | |
Going Concern Analysis | 7. Going Concern Analysis The Company is subject to a number of risks similar to those of other big data technology and technology consulting companies, including its dependence on key individuals, uncertainty of product development and generation of revenues, dependence on outside sources of capital, risks associated with research, development, testing, and successful protection of intellectual property, and the Company’s susceptibility to infringement on the proprietary rights of others. The attainment of profitable operations is dependent on future events, including obtaining adequate financing to fulfill the Company’s development activities and generating a level of revenues adequate to support the Company’s cost structure. The Company has experienced net losses and significant cash outflows from cash used in operating activities over the past years, and as of September 30, 2017, had an accumulated deficit of $98,593,770, a net loss for the three and nine months ended September 30, 2017 of $43,460,218 and $55,179,589, respectively, and net cash used in operating activities for the nine months ended September 30, 2017 of $7,644,296, and net cash provided by operating activities for the nine months ended September 30, 2016 of $39,578. The Company expects to continue to incur net losses and have significant cash outflows for at least the next twelve months. As of September 30, 2017, the Company had cash and a working capital deficit of $1,663,879 and $33,867,870 respectively, and during the nine months ended September 30, 2017, the Company used cash from operations of $7,644,296. Of the working capital deficit, $38,622,880 pertained to warrant and derivative liabilities classified on the balance sheet within short term liabilities. Management has evaluated the significance of the conditions described above in relation to the Company’s ability to meet its obligations and concluded that, without additional funding, the Company will not have sufficient funds to meet its obligations within one year from the date the condensed consolidated financial statements were issued. While management plans to raise additional capital from sources such as sales of its debt or equity securities or loans in order to meet operating cash requirements, there is no assurance that management’s plans will be successful. Having said this, the Company secured financing of $100,000,000 on November 7, 2017 which the Company can use for the MoviePass transaction and for general corporate purposes. The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of liabilities in the normal course of business. A successful transition to attaining profitable operations is dependent upon achieving a level of positive cash flows adequate to support the Company’s cost structure. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 8. Summary of Significant Accounting Policies Basis of Presentation The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Principles of Consolidation All intercompany transactions and balances have been eliminated. Goodwill Goodwill represents the excess of the purchase price over the fair value of the assets acquired and liabilities assumed. The Company is required to perform impairment reviews at each of its reporting units annually and more frequently in certain circumstances. The Company performs the annual assessment on December 31. In accordance with ASC 350–20 “ Goodwill There were no impairment charges recognized during the three and nine months ended September 30, 2017 and 2016. Revenue Recognition Consulting revenues are recognized as services are provided. The Company primarily provides consulting services under time and material contracts, whereby revenue is recognized as hours and costs are incurred. Clients for consulting revenues are billed on a weekly or monthly basis. Revenues from fixed fee contracts are recorded when work is performed on the basis of the proportionate performance method, which is based on costs incurred to date relative to total estimated costs. Any anticipated contract losses are estimated and accrued at the time they become known and estimable. Unbilled accounts receivables represent amounts recognized as revenue based on services performed in advance of customer billings. Revenue from sales of software licenses is recognized upon delivery of the software to a customer because future obligations associated with such revenue are insignificant. Research and Development Research and development costs are charged to operations when incurred and are included in operating expenses. Stock Based Compensation The Company uses the fair value method as specified by the FASB, whereby compensation cost is recognized over the remaining service period based on the grant-date fair value of those awards as calculated for pro forma disclosures as originally issued. Fair Value Measurements ASC Topic 820, Fair Value Measurement and Disclosures Level 1: Observable inputs such as quoted prices (unadjusted) in an active market for identical assets or liabilities. Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs that are supported by little or no market activity, therefore the inputs are developed by the Company using estimates and assumptions that the Company expects a market participant would use. The carrying value of the Company’s short-term investments, prepaid expenses and other current assets, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short-term maturity of these financial instruments. The derivative liability in connection with the conversion feature of the Company’s convertible debt and warrants is classified as a level 3 liability, and is the only financial liability measured at fair value on a recurring basis. Net Income/(Loss) Per Share Earnings per share (“EPS”) is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to Section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16, basic EPS is computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangements, stock options or warrants. The following table shows the outstanding dilutive common shares excluded from the diluted net loss per share calculation as they were anti-dilutive: September 30, December 31, Warrants 2,401,236 70,714 Conversion features on convertible notes 1,342,333 511,989 Total potentially dilutive shares 3,743,569 582,703 Recent Accounting Pronouncements In May 2014, the FASB issued a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The standard’s core principle (issued as Accounting Standards Update “ASU” 2014-09 by the FASB), is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The new guidance must be adopted using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. In August 2015, the FASB issued ASU No. 2015-14, which defers the effective date of ASU 2014-09 by one year, and would allow entities the option to early adopt the new revenue standard as of the original effective date. This ASU is effective for public reporting companies for interim and annual periods beginning after December 15, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is in the process of performing an initial review of custom contracts to determine the impact that ASU 2014-09 and its subsequent updates through December 31, 2017 will have on the Company’s consolidated financial statements or financial statement disclosures upon adoption. The Company is currently evaluating the overall impact that ASU 2014-09 will have on the Company’s consolidated financial statements, as well as the expected timing and method of adoption. The Company has established an implementation team, including external advisers, and has commenced the review of the Company’s revenue portfolio and related contracts. Discussions regarding changes to the Company’s current accounting policies and practices remain ongoing and preliminary conclusions are subject to change. Upon adoption, the Company will recognize revenue from contracts with customers as each performance obligation is satisfied, either at a point in time or over a period of time, based on when control transfers to customers. The Company plans to adopt the new revenue recognition standard under the modified retrospective transition method by recognizing the cumulative effect of applying the standard as an adjustment to the Company’s Balance Sheet. Until the Company completes testing of the new revenue recognition system, the Company does not anticipate being able to provide the impact of the new standard on the Balance Sheets or Statements of Operations however from the initial review and assessment of a sample of contracts with customers the Company does not anticipate the new accounting pronouncement to have a material impact on the Company’s financial statements. During January 2016, the FASB issued ASU No. 2016-01, Financial Instruments — Overall: Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, the FASB issued ASU 2016-02, Leases, Leases In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers : Narrow-Scope Improvements and Practical Expedients In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows : Classification of Certain Cash Receipts and Cash Payments, In October 2016, the FASB issued ASU 2016-16, Income Taxes : Intra-Entity Transfers of Assets Other than Inventory In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows In July 2017, the FASB issued ASU 2017-11, Earnings Per Share , Distinguishing Liabilities from Equity , and Derivatives and Hedging |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 9 Months Ended |
Sep. 30, 2017 | |
Prepaid Expenses and Other Current Assets [Abstract] | |
Prepaid Expenses and Other Current Assets | 9. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following at September 30, 2017 and December 31, 2016: September 30, December 31, Vendor Deposits $ 312,140 $ 300,199 Tax 95,875 187,776 Insurance 87,907 44,517 Professional fees and services 94,066 42,833 Rent 88,260 13,087 Other 29,620 8,759 Total prepaid expenses and other current assets $ 707,868 $ 597,171 |
Convertible Promissory Note of
Convertible Promissory Note of MoviePass | 9 Months Ended |
Sep. 30, 2017 | |
Convertible Promissory Note of Movie Pass [Abstract] | |
Convertible Promissory Note of MoviePass | 10. Convertible Promissory Note of MoviePass On August 15, 2017, in connection with the MoviePass SPA, the Company loaned MoviePass $4,950,000 in cash pursuant to a Second Amended and Restated Subordinated Convertible Note Purchase Agreement whereby, in exchange for such cash payment, the Company received a subordinated convertible promissory note of MoviePass in the principal amount of $5,000,000, which includes an additional $50,000 that was advanced by the Company to MoviePass prior to such date for legal and audit expenses (the “Original MoviePass Note”). The Original MoviePass Note accrues interest at a rate of 5% per annum and is due and payable two years from the date of issuance. The Original MoviePass Note provides that it will be cancelled automatically upon the closing of the MoviePass transaction described in Note 4. The Original MoviePass Note provides that if the MoviePass SPA is terminated by the Company or MoviePass due to a material breach of any representation, warranty or covenant of the Company or MoviePass, and such breach remains uncured, the outstanding principal amount and any accrued but unpaid interest under the Original MoviePass Note may, at the Company’s option, be converted, in whole or in part, into equity securities of MoviePass issued and sold at the initial closing of the next equity financing undertaken by MoviePass in a single transaction or a series of related transactions yielding gross proceeds to MoviePass of at least $1,000,000, at a 20% discount to the price of the securities sold in such next equity financing of MoviePass. As described in Note 4, on October 6, 2017, the MoviePass Note was amended and restated to increase the principal amount from $5,000,000 to $11,500,000. |
Property and Equipment, Net
Property and Equipment, Net | 9 Months Ended |
Sep. 30, 2017 | |
Property and Equipment, Net [Abstract] | |
Property and Equipment, net | 11. Property and Equipment, net Property and equipment, net on September 30, 2017 and December 31, 2016 are as follows: September 30, December 31, Equipment and leaseholds $ 98,587 $ 106,460 Furniture and fixtures 139,012 34,186 Software 177,225 167,337 Subtotal 414,824 307,983 Less: Accumulated depreciation 280,119 262,771 Total property and equipment, net $ 134,705 $ 45,212 The Company recorded depreciation expense of $6,054 and $9,478 for the three months ended September 30, 2017 and 2016, respectively, and $17,348 and $2,251 for the nine months ended September 30, 2017 and 2016, respectively. |
Intangible Assets, Net and Good
Intangible Assets, Net and Goodwill | 9 Months Ended |
Sep. 30, 2017 | |
Intangible Assets, Net and Goodwill [Abstract] | |
Intangible Assets, net and Goodwill | 12. Intangible Assets, net and Goodwill The Company’s intangible assets consisted of the following on September 30, 2017 and December 31, 2016: September 30, December 31, Estimated Useful Life Net Book Value Net Book Value Technology 3 $ 4,270,000 $ 4,270,000 Trademarks 7 1,977,000 1,977,000 Broker Relationships 1 4,200 4,200 Trendit Patents 1-11 195,143 - Subtotal $ 6,446,343 $ 6,251,200 Less: Accumulated amortization (1,530,527 ) (246,509 ) Total Intangible assets, net $ 4,915,816 $ 6,004,691 The Company recorded amortization expense of $430,716 and $0 for the three months ended September 30, 2017 and 2016, respectively, and $1,284,018 and $0 for the nine months ended September 30, 2017 and 2016, respectively. The following table outlines estimated future annual amortization expense for the next five years and thereafter: September 30, Remaining 2017 $ 430,716 2018 1,722,864 2019 1,517,271 2020 299,530 2021 299,409 Thereafter 646,026 Total $ 4,915,816 Goodwill represents the difference between purchase cost and the fair value of net assets acquired in business acquisitions. Goodwill and indefinite lived intangible assets are tested for impairment annually as of December 31 st Balance as of December 31, 2016 $ 4,599,969 Goodwill Impairment Charge - Balance as of September 30, 2017 $ 4,599,969 |
Fair Value of Financial Assets
Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis [Abstract] | |
Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis | 14. Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis Level 3 Financial Liabilities - Derivative conversion features and warrant liabilities. Financial liabilities measured at fair value on a recurring basis are summarized below and disclosed on the consolidated balance sheet as of September 30, 2017 and December 31, 2016: Fair Value Measurement Amount at Level 1 Level 2 Level 3 September 30, 2017 Liabilities Derivative liability - warrants $ 4,167,887 $ - $ - $ 4,167,887 Derivative liability – conversion feature 10,335,845 - - 10,335,845 Warrant liability 24,119,148 24,119,148 Total $ 38,622,880 $ - $ - $ 38,622,880 December 31, 2016 Liabilities Derivative liability - warrants $ 230,663 $ - $ - $ 230,663 Derivative liability – conversion feature 977,129 - - 977,129 Warrant liability - - - - Total $ 1,207,792 $ - $ - $ 1,207,792 The table below provides a summary of the changes in fair value, including net transfers in and/or out of all financial liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the nine months ended September 30, 2017: Amount Balance at December 31, 2016 $ 1,207,792 Purchases, issuances and settlements 14,626,338 Conversions to paid in capital (4,674,682 ) Extinguishment of December Convertible Note (9,890 ) Change in fair value of warrant liabilities 17,038,711 Change in fair value of derivative liabilities 10,434,611 Balance at September 30, 2017 $ 38,662,880 The fair value of the derivative conversion features and warrant liabilities as of September 30, 2017 and December 31, 2016 were calculated using a Monte-Carlo option model valued with the following weighted average assumptions: September 30, 2017 December 31, 2016 Amount Amount Dividend Yield 0% 0% Expected Volatility 50% - 270% 154% - 230% Risk free interest rate 0.96% - 1.92% 0.82% - 1.12% Contractual term (in years) 0.05 - 5.00 0.67 - 5.00 Exercise price $3.00 - 9.36 $4.00 - $9.36 Changes in the observable input values would likely cause material changes in the fair value of the Company’s Level 3 financial instruments. The significant unobservable input (probability of a down round event) used in the fair value measurement is the estimation of the likelihood of the occurrence of a change in the contractual terms of the financial instruments. A significant increase (decrease) in this likelihood or in the volatility assumptions would result in a higher (lower) fair value measurement. |
Stock Based Compensation
Stock Based Compensation | 9 Months Ended |
Sep. 30, 2017 | |
Stock Based Compensation [Abstract] | |
Stock Based Compensation | 15. Stock Based Compensation The Company has a stock based compensation plan, which is described as follows: On March 3, 2014, the Board of Directors terminated the Company’s 1997 Stock Option and Award Plan and approved and adopted the Helios and Matheson Analytics Inc. 2014 Equity Incentive Plan (the “2014 Plan”) which the Company’s stockholders approved at the annual stockholders meeting on May 5, 2014. The 2014 Plan originally set aside and reserved 400,000 shares of the Company’s common stock for grant and issuance in accordance with its terms and conditions. Persons eligible to receive awards from the 2014 Plan include employees (including officers and directors) of the Company and its affiliates, consultants who provide significant services to the Company or its affiliates, and directors who are not employees of the Company or its affiliates (the “Participants”). The 2014 Plan permits the Company to issue to Participants qualified and/or non-qualified options to purchase the Company’s common stock, restricted common stock, performance units, and performance shares. The 2014 Plan will terminate on March 3, 2024. The Company’s Board of Directors is responsible for administration of the 2014 Plan and has the sole discretion to determine which Participants will be granted awards and the terms and conditions of the awards granted. In conjunction with the merger with Zone, the Company’s Board of Directors agreed to approve and adopt an amendment to the 2014 Plan to increase the number of shares available for issuance pursuant to awards made from the 2014 Plan to no more than 15% of the Company’s common stock on a fully diluted basis immediately following the merger. The Board of Directors adopted the amendment on August 10, 2017 reserving a total of 1,125,000 shares of common stock for issuance from the 2014 Plan. Of that number, a total of 885,000 shares of common stock remain available for issuance. Through the date of filing this Form 10-Q, several awards have been granted outside of the 2014 Plan to third-party consultants in exchange for services rendered in the amount of $1,409,915, which is recorded as part of Selling, General and Administrative expenses on the Company’s Statements of Operations for the nine months ended September 30, 2017. |
Concentration of Credit Risk
Concentration of Credit Risk | 9 Months Ended |
Sep. 30, 2017 | |
Concentration of Credit Risk [Abstract] | |
Concentration of Credit Risk | 16. Concentration of Credit Risk As of September 30, 2017 and December 31, 2016, 6 customers accounted for 88% and 3 customers accounted for 61% of the Company’s total accounts receivable, respectively. During the nine months ended September 30, 2017 and 2016, 82%, and 83.0% of the Company’s revenues were earned from 3 customers and 3 customers, respectively. As of September 30, 2017 and December 31, 2016, 2 vendors accounted for 45% and 3 vendors accounted for 82% of the Company’s accounts payable, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 17. Commitments and Contingencies The Company’s commitments at September 30, 2017 are comprised of the following: Operating Lease Commitments (1) Payments due by period Less than 1 year $ 73,503 1 to 3 years 844,174 3 to 5 years 347,985 Thereafter - Total $ 1,265,662 (1) The Company’s executive office is located at the Empire State Building, 350 Fifth Avenue, Suite 7520, New York, New York 10118. The Company’s executive office is located in a leased facility with a term expiring on June 30, 2022. In addition, the Company’s Indian subsidiary had an office in Bangalore, India at a leased facility located at 3rd Floor, Beta Block, Number 7 Sigma Tech Park, Varthur Kodi, Bangalore 560066. This lease was amended on September 26, 2017 to extend the duration of the lease until September 30, 2019. The Company’s executive office lease is subject to escalations based on increases in real estate taxes and operating expenses, all of which are charged to rent expense. Rent expense was $81,051, and $50,264 for the three months ended September 30, 2017 and 2016, respectively, and $215,068 and $196,049 for the nine months ended September 30, 2017 and 2016, respectively. In April 2017, Zone signed a three-year lease agreement for office space in Miami. The lease term began in May 2017 and requires monthly rent payments of $5,026 for the first 12 months, $5,177 for the next 12 months, and $5,332 for the last 12 months of the lease. As of September 30, 2017, the Company does not have any “Off Balance Sheet Arrangements”. |
Transactions with Related Parti
Transactions with Related Parties | 9 Months Ended |
Sep. 30, 2017 | |
Transactions with Related Parties [Abstract] | |
Transactions with Related Parties | 18. Transactions with Related Parties Transactions with Helios and Matheson Information Technology Ltd. (“HMIT”) In September 2010, the Company entered into an amendment of a Memorandum of Understanding (the “MOU”) with its former parent, HMIT, which was subsequently amended on August 2013. Pursuant to the MOU, HMIT agreed to make available to the Company facilities of dedicated Off-shore Development Centers (“ODCs”) and also render services by way of support in technology, client engagement, and management and operation of the ODCs for the Company. The Company furnished HMIT with a security deposit of $2,000,000 to cover any expenses, claims or damages that HMIT may have incurred while discharging its obligations under the MOU and also to cover the Company’s payable to HMIT. As of December 31, 2015, the Company had a receivable from HMIT in the amount of $182,626 which represents amounts paid on behalf of HMIT, for which the Company fully reserved. In August 2014, the Company entered into a Professional Service Agreement with HMIT (the “PSA”), which documented ongoing services provided by HMIT from February 24, 2014. Pursuant to the PSA, HMIT hired employees in India and provided infrastructure services for those employees to facilitate the operations of those of the Company’s clients who needed offshore support for their businesses. For the services the Company paid the costs incurred by HMIT for the employees it hired to provide the services and a fixed fee for infrastructure support. Beginning October 2014, all employees were transferred to the payroll of the Company’s subsidiary, Helios and Matheson Global Services Pvt. Ltd., and HMIT was paid only for the infrastructure support it provided until August 2015. Beginning September 2015, Helios and Matheson Global Services Pvt. Ltd. leased an office and took over infrastructure support from HMIT. For the three and nine months ended September 30, 2017 and 2016 the Company did not have any revenue from services provided with offshore support of HMIT. HMIT ceased providing services under the MOU and PSA during the third quarter of 2015. The Company ensured continued uninterrupted services to its clients by taking on infrastructure costs relating to the lease and employees. The Company determined to provide for a reserve in its September 30, 2015 and December 31, 2015 financial statements in the amount of $2,300,000 (the “Reserve Amount”) due to an uncertainty relating to the ability of HMIT to (i) return the security deposit held by HMIT in connection with the MOU and (ii) pay approximately $344,000 in reimbursable expenses and advances pursuant to the PSA. On January 21, 2016, HMIT became subject to a liquidation order by an Indian court resulting from creditors’ claims against HMIT. On February 15, 2016, the High Court of Judicature at Madras (Civil Appellate Jurisdiction) issued an order of interim stay of the liquidation order. HMIT continues to await a decision from the High Court of Judicature relating to this matter. If HMIT becomes subject to liquidation, the Company would likely not be able to collect the full amount of $2,300,000 reserved in its September 30, 2016 and December 31, 2016 financial statements. Maruthi Consulting Inc. (Subsidiary of HMIT) The Company provided consulting services to Maruthi Consulting Inc., a subsidiary of HMIT. As of January 1, 2015, the Company had a receivable due from Maruthi in the amount of $75,338 and during 2015 the Company billed an additional $223,454 to Maruthi for services rendered. The Company provided no services to Maruthi during the year ended December 31, 2016. During 2015, the Company received $237,318 in payments from Maruthi. Therefore, the amounts receivable at September 30, 2017 and December 31, 2016 were approximately $61,474 and $61,474, respectively. |
Warrants
Warrants | 9 Months Ended |
Sep. 30, 2017 | |
Warrants [Abstract] | |
Warrants | 19. Warrants The following is a summary of the Company’s warrant activity during the nine months ending September 30, 2017: Warrant Shares Weighted Average Exercise Price Weighted Outstanding/exercisable – December 31, 2016 70,714 $ 6.26 4.87 Granted 2,172,774 3.31 4.85 Shares issued from anti-dilutive events 157,748 3.00 4.90 Exercised - - - Forfeited/cancelled - - - Outstanding/exercisable – September 30, 2017 2,401,236 $ 3.40 4.85 |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment Reporting | 20. Segment Reporting Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision–making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision–making group is composed of the Chief Executive Officer. The Company operates in two segments, Consulting and Technology. During the three and nine months ended September 30, 2016, the Company only operated in the consulting segment. The Company evaluates performance of its operating segments based on revenue and operating loss. The following table summarizes the Company’s segment information for the nine months ended September 30, 2017 and 2016 as well as for the balance sheet dates presented: For the Nine Months Ended September 30, 2017 2016 Consulting Revenue $ 3,672,036 $ 5,608,145 Cost of Revenue 2,969,357 3,922,469 Gross Margin 702,679 1,685,676 Total operating expenses 6,280,032 2,083,366 Loss from operations (5,577,353 ) (397,690 ) Total other expense (44,914,576 ) (763,388 ) Provision for income taxes 39,110 37,247 Total net loss $ (50,531,039 ) $ (1,198,325 ) Technology Revenue $ - $ - Cost of Revenue - - Gross Margin - - Total operating expenses 4,601,330 Loss from operations (4,601,330 ) - Total other expense (47,220 ) - Provision for income taxes - - Total net loss $ (4,648,550 ) $ - As of September 30, As of December 31, 2017 2016 Consulting Cash and cash equivalents $ 394,172 $ 1,095,732 Accounts receivable $ 254,930 $ 410,106 Unbilled receivables $ 48,595 $ 45,207 Prepaid expenses and other current assets $ 696,003 $ 554,338 Property and equipment $ 38,454 $ 34,368 Deposits and other assets $ 128,960 $ 59,189 Accounts payable and accrued expenses $ 1,606,733 $ 1,196,668 Technology Cash and cash equivalents $ 1,269,707 $ 1,651,508 Prepaid expenses and other current assets $ 11,865 $ 42,833 Property and equipment $ 96,251 $ 10,844 Intangible assets $ 4,915,816 $ 6,004,691 Goodwill $ 4,599,969 $ 4,599,969 Deposits and other assets $ 10,052 $ - Accounts payable and accrued expenses $ 932,285 $ 134,450 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | 21. Subsequent Events Transactions with MoviePass See Note 4 for a discussion relating to transactions with MoviePass that occurred after September 30, 2017. On each of November 2, 2017 and November 7, 2017, the Company exercised a portion of the MoviePass Option for an aggregate purchase price of $750,000 and $3,000,000, respectively. In connection with the option exercises, MoviePass issued to the Company subordinated convertible promissory notes in the principal amount of $750,000 and $3,000,000, respectively. Share Exchange Conversion and Amendment to the Agreement On October 13, 2017, pursuant to the Letter Agreement executed by the Company and the Investor on August 27, 2017, the Investor converted 100,000 shares of the Company’s common stock for a New Note (the “New February 2017 Exchange Note”) in the principal amount of $300,000. The New February 2017 Exchange Note had a maturity date of November 27, 2017. On October 23, 2017, the Company and the Investor entered into a Third Amendment and Exchange Agreement (the “Exchange Agreement”). Pursuant to the Exchange Agreement, the Investor exchanged the New February 2017 Exchange Note for 947,218 shares of the Company’s common stock and for rights to receive 552,782 additional shares of common stock (collectively, the “Exchange Securities”) subject to a beneficial ownership limitation of 9.9% and limitations under Nasdaq Listing Rule 5635(d). In exchange for the Exchange Securities, the Investor agreed to, among other things: (i) terminate the Investor’s right to receive any further New Notes, which would have had a principal amount up to $2.2 million and a $0.50 conversion price floor if issued; (ii) (A) release all security interests held by the Investor in the Company’s assets and those of the Company’s subsidiaries, including Zone and its proprietary RedZone Map™ product (“RedZone”) and the Company’s interest in MoviePass (collectively, the “Collateral”), (B) terminate each security agreement between the Company and the Investor, and (C) authorize the Company to file amendments to all UCC Financing Statements for the purpose of terminating the Investor’s security interests in the Collateral; (iii) permit the Company to obtain non-convertible senior secured debt financing from a qualified bank in an amount not less than $20 million and not more than $100 million while the Convertible Notes remain outstanding; (iv) defer the Company’s obligation to pay any interest under the August 2017 Notes until the earlier to occur of (x) each conversion of the August 2017 Notes, solely with respect to the portion of interest included in the applicable conversion amount, (y) each redemption of the August 2017 Notes, solely with respect to the portion of interest included in the applicable redemption amount, and (z) the maturity date of the August 2017 Notes; and (v) waive any and all Events of Default (as defined in the August 2017 Notes) prior to October 23, 2017. Consulting Agreement On October 5, 2017 the Company entered into a consulting agreement (the “Consulting Agreement”) with Mr. Muralikrishna Gadiyaram, a member of the Company’s Board of Directors. The Consulting Agreement formalizes the consulting arrangement between the Company and Mr. Gadiyaram, for which the Company has been accruing consulting fees since January 1, 2017. In exchange for his services, Mr. Gadiyaram will receive fees in the amount of $18,750 per month in cash and, upon execution of the Consulting Agreement, all accrued consulting fees payable to Mr. Gadiyaram became due. The Consulting Agreement has a term of two years but may be terminated by either party at any time by giving 30 days written notice to the other party. If the Company elects to terminate the Consulting Agreement without cause prior to the end of the term, Mr. Gadiyaram will be entitled to a termination fee equal to the lesser of (a) the consulting fee for the remainder of the term, or (b) the consulting fee for a period of 12 months following the delivery of written notice of termination. Issuance of Demand Note On November 2, 2017, the Company issued a demand promissory note in the principal amount of $750,000 (the “Demand Note”) to the Investor. The proceeds from the Demand Note were used to exercise a portion of the MoviePass Option. Issuance of New Series of Senior Convertible Notes On November 7, 2017 (the “Closing Date”), the Company completed an offering of a new series of senior convertible notes in the aggregate principal amount of $100,000,000 to certain institutional investors. A portion of the proceeds from this offering was used to pay the Demand Note and the remaining proceeds may be used by the Company in connection with exercising the Company’s rights pursuant to the MoviePass Option Agreement or any other transaction whereby the Company increases its ownership interests or other rights and interests in MoviePass. On the Closing Date, the Company received $5,000,000 in proceeds from the sale of the senior convertible notes. |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). |
Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions | Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. |
Principles of Consolidation | Principles of Consolidation All intercompany transactions and balances have been eliminated. |
Revenue Recognition | Revenue Recognition Consulting revenues are recognized as services are provided. The Company primarily provides consulting services under time and material contracts, whereby revenue is recognized as hours and costs are incurred. Clients for consulting revenues are billed on a weekly or monthly basis. Revenues from fixed fee contracts are recorded when work is performed on the basis of the proportionate performance method, which is based on costs incurred to date relative to total estimated costs. Any anticipated contract losses are estimated and accrued at the time they become known and estimable. Unbilled accounts receivables represent amounts recognized as revenue based on services performed in advance of customer billings. Revenue from sales of software licenses is recognized upon delivery of the software to a customer because future obligations associated with such revenue are insignificant. |
Research and Development | Research and Development Research and development costs are charged to operations when incurred and are included in operating expenses. |
Stock Based Compensation | Stock Based Compensation The Company uses the fair value method as specified by the FASB, whereby compensation cost is recognized over the remaining service period based on the grant-date fair value of those awards as calculated for pro forma disclosures as originally issued. |
Fair Value Measurements | Fair Value Measurements ASC Topic 820, Fair Value Measurement and Disclosures Level 1: Observable inputs such as quoted prices (unadjusted) in an active market for identical assets or liabilities. Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs that are supported by little or no market activity, therefore the inputs are developed by the Company using estimates and assumptions that the Company expects a market participant would use. The carrying value of the Company’s short-term investments, prepaid expenses and other current assets, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short-term maturity of these financial instruments. The derivative liability in connection with the conversion feature of the Company’s convertible debt and warrants is classified as a level 3 liability, and is the only financial liability measured at fair value on a recurring basis. |
Net Income/(Loss) Per Share | Net Income/(Loss) Per Share Earnings per share (“EPS”) is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to Section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16, basic EPS is computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangements, stock options or warrants. The following table shows the outstanding dilutive common shares excluded from the diluted net loss per share calculation as they were anti-dilutive: September 30, December 31, Warrants 2,401,236 70,714 Conversion features on convertible notes 1,342,333 511,989 Total potentially dilutive shares 3,743,569 582,703 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The standard’s core principle (issued as Accounting Standards Update “ASU” 2014-09 by the FASB), is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The new guidance must be adopted using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. In August 2015, the FASB issued ASU No. 2015-14, which defers the effective date of ASU 2014-09 by one year, and would allow entities the option to early adopt the new revenue standard as of the original effective date. This ASU is effective for public reporting companies for interim and annual periods beginning after December 15, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is in the process of performing an initial review of custom contracts to determine the impact that ASU 2014-09 and its subsequent updates through December 31, 2017 will have on the Company’s consolidated financial statements or financial statement disclosures upon adoption. The Company is currently evaluating the overall impact that ASU 2014-09 will have on the Company’s consolidated financial statements, as well as the expected timing and method of adoption. The Company has established an implementation team, including external advisers, and has commenced the review of the Company’s revenue portfolio and related contracts. Discussions regarding changes to the Company’s current accounting policies and practices remain ongoing and preliminary conclusions are subject to change. Upon adoption, the Company will recognize revenue from contracts with customers as each performance obligation is satisfied, either at a point in time or over a period of time, based on when control transfers to customers. The Company plans to adopt the new revenue recognition standard under the modified retrospective transition method by recognizing the cumulative effect of applying the standard as an adjustment to the Company’s Balance Sheet. Until the Company completes testing of the new revenue recognition system, the Company does not anticipate being able to provide the impact of the new standard on the Balance Sheets or Statements of Operations however from the initial review and assessment of a sample of contracts with customers the Company does not anticipate the new accounting pronouncement to have a material impact on the Company’s financial statements. During January 2016, the FASB issued ASU No. 2016-01, Financial Instruments — Overall: Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, the FASB issued ASU 2016-02, Leases, Leases In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers : Narrow-Scope Improvements and Practical Expedients In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows : Classification of Certain Cash Receipts and Cash Payments, In October 2016, the FASB issued ASU 2016-16, Income Taxes : Intra-Entity Transfers of Assets Other than Inventory In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows In July 2017, the FASB issued ASU 2017-11, Earnings Per Share , Distinguishing Liabilities from Equity , and Derivatives and Hedging |
Merger with Zone Technologies28
Merger with Zone Technologies, Inc. (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Merger With Zone Technologies [Abstract] | |
Schedule of fair values of net assets/liabilities assumed | Purchase consideration: Common stock (1,740,000 shares at the transaction date fair value of $5.41 per share) $ 9,413,000 Liabilities assumed 1,574,512 Assets acquired (136,343 ) Aggregate fair value of enterprise 10,851,169 Purchase price allocation: Net liabilities assumed (1,488,476 ) Cash acquired 136,343 (1,352,133 ) Aggregate fair value of purchase consideration, non–controlling interest and net liabilities assumed allocated to intangible assets as follows: Technology 4,270,000 Broker Relationships 4,200 Trademarks 1,977,000 Goodwill 4,599,969 Total purchase price allocation $ 10,851,169 |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of outstanding dilutive common shares excluded from the diluted net loss per share | September 30, December 31, Warrants 2,401,236 70,714 Conversion features on convertible notes 1,342,333 511,989 Total potentially dilutive shares 3,743,569 582,703 |
Prepaid Expenses and Other Cu30
Prepaid Expenses and Other Current Assets (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Prepaid Expenses and Other Current Assets [Abstract] | |
Schedule of prepaid expenses and other current assets | September 30, December 31, Vendor Deposits $ 312,140 $ 300,199 Tax 95,875 187,776 Insurance 87,907 44,517 Professional fees and services 94,066 42,833 Rent 88,260 13,087 Other 29,620 8,759 Total prepaid expenses and other current assets $ 707,868 $ 597,171 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Property and Equipment, Net [Abstract] | |
Schedule of property and equipment, net | September 30, December 31, Equipment and leaseholds $ 98,587 $ 106,460 Furniture and fixtures 139,012 34,186 Software 177,225 167,337 Subtotal 414,824 307,983 Less: Accumulated depreciation 280,119 262,771 Total property and equipment, net $ 134,705 $ 45,212 |
Intangible Assets, Net and Go32
Intangible Assets, Net and Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Intangible Assets, Net and Goodwill [Abstract] | |
Schedule of intangibles assets | September 30, December 31, Estimated Useful Life Net Book Value Net Book Value Technology 3 $ 4,270,000 $ 4,270,000 Trademarks 7 1,977,000 1,977,000 Broker Relationships 1 4,200 4,200 Trendit Patents 1-11 195,143 - Subtotal $ 6,446,343 $ 6,251,200 Less: Accumulated amortization (1,530,527 ) (246,509 ) Total Intangible assets, net $ 4,915,816 $ 6,004,691 |
Schedule of estimated future annual amortization expense | September 30, Remaining 2017 $ 430,716 2018 1,722,864 2019 1,517,271 2020 299,530 2021 299,409 Thereafter 646,026 Total $ 4,915,816 |
Schedule of goodwill and indefinite lived intangible assets | Balance as of December 31, 2016 $ 4,599,969 Goodwill Impairment Charge - Balance as of September 30, 2017 $ 4,599,969 |
Securities Purchase Agreement (
Securities Purchase Agreement (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of senior secured convertible notes | September 30, December 31, September 2016 notes $ - $ 20,480 September Placement Agent Note - 902 December 2016 notes - 10,043 February 2017 notes - - August 2017 notes 335,215 - February 2017 notes 46,029 - Balance at period end $ 381,244 $ 31,425 |
Schedule of carrying value of the senior secured convertible notes | September 30, December 31, September 2016 notes $ - $ 332,000 September Placement Agent Note - 80,000 December 2016 notes - 1,820,000 February 2017 notes - - August 2017 Notes 3,330,000 September 2017 Notes 697,000 Unamortized discounts (3,645,756 ) (2,200,575 ) Carrying value $ 381,244 $ 31,425 |
Fair Value of Financial Asset34
Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis [Abstract] | |
Summary of financial liabilities measured at fair value on recurring basis | Fair Value Measurement Amount at Level 1 Level 2 Level 3 September 30, 2017 Liabilities Derivative liability - warrants $ 4,167,887 $ - $ - $ 4,167,887 Derivative liability – conversion feature 10,335,845 - - 10,335,845 Warrant liability 24,119,148 24,119,148 Total $ 38,622,880 $ - $ - $ 38,622,880 December 31, 2016 Liabilities Derivative liability - warrants $ 230,663 $ - $ - $ 230,663 Derivative liability – conversion feature 977,129 - - 977,129 Warrant liability - - - - Total $ 1,207,792 $ - $ - $ 1,207,792 |
Summary of the changes in fair value | Amount Balance at December 31, 2016 $ 1,207,792 Purchases, issuances and settlements 14,626,338 Conversions to paid in capital (4,674,682 ) Extinguishment of December Convertible Note (9,890 ) Change in fair value of warrant liabilities 17,038,711 Change in fair value of derivative liabilities 10,434,611 Balance at September 30, 2017 $ 38,662,880 |
Schedule of fair value of the derivative conversion features and warrant liabilities | September 30, 2017 December 31, 2016 Amount Amount Dividend Yield 0% 0% Expected Volatility 50% - 270% 154% - 230% Risk free interest rate 0.96% - 1.92% 0.82% - 1.12% Contractual term (in years) 0.05 - 5.00 0.67 - 5.00 Exercise price $3.00 - 9.36 $4.00 - $9.36 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies [Abstract] | |
Schedule of commitments | Operating Lease Commitments (1) Payments due by period Less than 1 year $ 73,503 1 to 3 years 844,174 3 to 5 years 347,985 Thereafter - Total $ 1,265,662 |
Warrants (Tables)
Warrants (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Warrants [Abstract] | |
Summary of the Company's warrant activity | Warrant Shares Weighted Average Exercise Price Weighted Outstanding/exercisable – December 31, 2016 70,714 $ 6.26 4.87 Granted 2,172,774 3.31 4.85 Shares issued from anti-dilutive events 157,748 3.00 4.90 Exercised - - - Forfeited/cancelled - - - Outstanding/exercisable – September 30, 2017 2,401,236 $ 3.40 4.85 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting information | For the Nine Months Ended September 30, 2017 2016 Consulting Revenue $ 3,672,036 $ 5,608,145 Cost of Revenue 2,969,357 3,922,469 Gross Margin 702,679 1,685,676 Total operating expenses 6,280,032 2,083,366 Loss from operations (5,577,353 ) (397,690 ) Total other expense (44,914,576 ) (763,388 ) Provision for income taxes 39,110 37,247 Total net loss $ (50,531,039 ) $ (1,198,325 ) Technology Revenue $ - $ - Cost of Revenue - - Gross Margin - - Total operating expenses 4,601,330 Loss from operations (4,601,330 ) - Total other expense (47,220 ) - Provision for income taxes - - Total net loss $ (4,648,550 ) $ - As of September 30, As of December 31, 2017 2016 Consulting Cash and cash equivalents $ 394,172 $ 1,095,732 Accounts receivable $ 254,930 $ 410,106 Unbilled receivables $ 48,595 $ 45,207 Prepaid expenses and other current assets $ 696,003 $ 554,338 Property and equipment $ 38,454 $ 34,368 Deposits and other assets $ 128,960 $ 59,189 Accounts payable and accrued expenses $ 1,606,733 $ 1,196,668 Technology Cash and cash equivalents $ 1,269,707 $ 1,651,508 Prepaid expenses and other current assets $ 11,865 $ 42,833 Property and equipment $ 96,251 $ 10,844 Intangible assets $ 4,915,816 $ 6,004,691 Goodwill $ 4,599,969 $ 4,599,969 Deposits and other assets $ 10,052 $ - Accounts payable and accrued expenses $ 932,285 $ 134,450 |
Change in Controlled Company 38
Change in Controlled Company Status (Details) | Nov. 09, 2016 |
Change in Controlled Company Status (Textual) | |
Beneficial owner outstanding, percentage | 75.00% |
Merger with Zone Technologies39
Merger with Zone Technologies, Inc. (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Purchase consideration: | ||
Common stock (1,740,000 shares at the transaction date fair value of $5.41 per share) | $ 9,413,000 | |
Liabilities assumed | 1,574,512 | |
Assets acquired | (136,343) | |
Aggregate fair value of enterprise | 10,851,169 | |
Purchase price allocation: | ||
Net liabilities assumed | (1,488,476) | |
Cash acquired | 136,343 | |
Total | (1,352,133) | |
Aggregate fair value of purchase consideration, non-controlling interest and net liabilities assumed allocated to intangible assets as follows: | ||
Technology | 4,270,000 | |
Broker Relationships | 4,200 | |
Trademarks | 1,977,000 | |
Goodwill | 4,599,969 | $ 4,599,969 |
Total purchase price allocation | $ 10,851,169 |
Merger with Zone Technologies40
Merger with Zone Technologies, Inc. (Details Textual) | Nov. 09, 2016$ / sharesshares |
Merger with Zone Technologies, Inc. (Textual) | |
Shares issued of common stock as merger | shares | 1,740,000 |
Exchange ratio of merger | 0.174 |
Common stock transaction date at fair value per share | $ / shares | $ 5.41 |
Securities Purchase Agreement M
Securities Purchase Agreement MoviePass (Details) - USD ($) | Oct. 11, 2017 | Oct. 06, 2017 | Aug. 15, 2017 |
Subsequent Event [Member] | |||
Securities Purchase Agreement (Textual) | |||
Maximum aggregate purchase price | $ 28,500,000 | ||
MoviePass [Member] | |||
Securities Purchase Agreement (Textual) | |||
Aggregate purchase price | $ 27,000,000 | ||
Unregistered shares of common stock | 3,333,334 | ||
Total agreed upon value of common stock | $ 10,000,000 | ||
Promissory note in the principal amount | $ 10,000,000 | ||
Common shares being subject to forfeiture | 666,667 | ||
Conversion of stock, description | (A) within one year after the closing, subscribers to MoviePass’ MoviePass product shall have exceeded on at least one (1) day 100,000 subscribers, and (B) the Common Stock shall have been listed on The Nasdaq Stock Market (“Nasdaq”) or New York Stock Exchange by January 31, 2018. | ||
MoviePass [Member] | Subsequent Event [Member] | |||
Securities Purchase Agreement (Textual) | |||
Aggregate purchase price | 27,000,000 | ||
Maximum aggregate purchase price | 28,500,000 | ||
Additional loan amount | 6,500,000 | ||
Loan amount allocated to purchase of additional shares | $ 1,500,000 | ||
MoviePass [Member] | Subsequent Event [Member] | Option Agreement [Member] | |||
Securities Purchase Agreement (Textual) | |||
Investment option agreement, description | The Company and MoviePass entered into an investment option agreement (the "Option Agreement"), pursuant to which the Company was granted an option to purchase additional shares of MoviePass common stock in an amount up to $20 million based on a pre-money valuation of MoviePass of $210,000,000 (the "MoviePass Option") amounting to an additional investment of up to 8.7% of the currently outstanding shares of Common Stock (as defined in the MoviePass Option agreement) of MoviePass, giving effect to the closing of the transaction. |
Licensing Agreement with is i42
Licensing Agreement with is it You Ltd. (Details) - USD ($) | 1 Months Ended | 9 Months Ended |
May 18, 2017 | Sep. 30, 2017 | |
Licensing Agreement with Is It You Ltd. (Textual) | ||
One-time license fee | $ 80,000 | |
License agreement, description | In consideration of the license, the Company is required to pay the Licensor a one-time license fee of $80,000 for up to 1.6 million end-user licenses. In addition, in the event that the Company exceeds 1.6 million users of the Integrated Offerings, it will be required to pay the Licensor an additional one-time license fee of $20,000 for up to an aggregate of 20 million end-user licenses; in the event that the Company exceeds 20 million users of the Integrated Offerings, it will be required to pay the Licensor an additional one-time license fee of $1,000,000 for up to an aggregate of 100 million end-user licenses; and in the event the Company exceeds 100 million users of the Integrated Offerings, it will negotiate with the Licensor the additional compensation to be paid to the Licensor. | |
Agreement term, description | The Agreement has an initial term of 5 years and shall be automatically renewed for additional one-year terms unless either party gives the other party 60 days advanced notice of termination prior to the expiration of the then-current term. Except for termination of the Agreement by the Licensor for breach by the Company, notwithstanding any termination or expiration of the Agreement, (i) the license shall remain in effect; and (ii) the Company shall have the right to order and the Licensor shall have the obligation to provide annual support services at the price set forth in the Agreement for up to 5 years from the effective date of termination. The Agreement may be terminated at any time by either party (i) if the other party materially breaches the Agreement and continues in such breach for 30 days after receiving notice from the non-breaching party; or (ii) for a period of 90 consecutive days. | |
Initial one-time license fees paid | $ 40,000 |
Acquisition of Assets from Tr43
Acquisition of Assets from Trendit Ltd. (Details) | 1 Months Ended |
May 25, 2017USD ($) | |
Acquisition of Assets from Trendit Ltd. (Textual) | |
Cash compensation | $ 195,143 |
Acquisition of assets, description | The patented technology predicts population behavior, along with population size, origin and destination, with an accuracy rate of 85%-90%, and tracks demographic segmentation of a population using a population sample of 15%, together with anonymous cellular signals and demographic big data. |
Going Concern Analysis (Details
Going Concern Analysis (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Going Concern Analysis (Textual) | ||||||
Accumulated deficit | $ (98,593,770) | $ (98,593,770) | $ (43,261,418) | |||
Net loss | (43,460,218) | $ (923,670) | (55,179,589) | $ (1,198,325) | ||
Net cash used in operating activities | (7,644,296) | 39,578 | ||||
Cash and cash equivalents | 1,663,879 | $ 1,205,068 | 1,663,879 | $ 1,205,068 | 2,747,240 | $ 898,477 |
Working capital deficit | 33,867,870 | 33,867,870 | ||||
Secured financing | 100,000,000 | 100,000,000 | ||||
Warrant and derivative liabilities | $ 38,622,880 | $ 38,622,880 | $ 1,207,792 |
Summary of Significant Accoun45
Summary of Significant Accounting Policies (Details) - shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Total potentially dilutive shares | 3,743,569 | 582,703 |
Warrants [Member] | ||
Total potentially dilutive shares | 2,401,236 | 70,714 |
Conversion features on convertible notes [Member] | ||
Total potentially dilutive shares | 1,342,333 | 511,989 |
Prepaid Expenses and Other Cu46
Prepaid Expenses and Other Current Assets (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Prepaid Expenses and Other Current Assets [Abstract] | ||
Vendor Deposits | $ 312,140 | $ 300,199 |
Tax | 95,875 | 187,776 |
Insurance | 87,907 | 44,517 |
Professional fees and services | 94,066 | 42,833 |
Rent | 88,260 | 13,087 |
Other | 29,620 | 8,759 |
Total prepaid expenses and other current assets | $ 707,868 | $ 597,171 |
Convertible Promissory Note o47
Convertible Promissory Note of MoviePass (Details) - USD ($) | Aug. 15, 2017 | Oct. 06, 2017 | Sep. 30, 2017 | Feb. 08, 2017 | Dec. 02, 2016 | Nov. 09, 2016 |
Convertible Promissory Note of MoviePass (Textual) | ||||||
Principal amount | $ 5,000,000 | $ 5,000,000 | $ 4,900,000 | |||
Interest percentage | 75.00% | |||||
Subsequent Event [Member] | Maximum [Member] | ||||||
Convertible Promissory Note of MoviePass (Textual) | ||||||
Principal amount | $ 11,500,000 | |||||
Subsequent Event [Member] | Minimum [Member] | ||||||
Convertible Promissory Note of MoviePass (Textual) | ||||||
Principal amount | $ 5,000,000 | |||||
MoviePass [Member] | ||||||
Convertible Promissory Note of MoviePass (Textual) | ||||||
Principal amount | $ 10,000,000 | |||||
Legal and audit expenses | $ 50,000 | |||||
Interest percentage | 5.00% | |||||
Discount price percentage | 20.00% | |||||
Transactions yielding gross proceeds | $ 10,000,000 | |||||
MoviePass [Member] | Convertible promissory note [Member] | ||||||
Convertible Promissory Note of MoviePass (Textual) | ||||||
Cash amount | 4,950,000 | |||||
Principal amount | $ 5,000,000 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Property and Equipment, Net [Abstract] | ||
Equipment and leaseholds | $ 98,587 | $ 106,460 |
Furniture and fixtures | 139,012 | 34,186 |
Software | 177,225 | 167,337 |
Subtotal | 414,824 | 307,983 |
Less: Accumulated depreciation | (280,119) | (262,771) |
Total property and equipment, net | $ 134,705 | $ 45,212 |
Property and Equipment, Net (49
Property and Equipment, Net (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Property and Equipment, Net (Textual) | ||||
Depreciation expense | $ 6,054 | $ 9,478 | $ 17,348 | $ 2,251 |
Intangible Assets, Net and Go50
Intangible Assets, Net and Goodwill (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Finite-Lived Intangible Assets [Line Items] | ||
Subtotal | $ 6,446,343 | $ 6,251,200 |
Less: Accumulated amortization | (1,530,527) | (246,509) |
Total Intangible assets, net | 4,915,816 | 6,004,691 |
Technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Subtotal | $ 4,270,000 | 4,270,000 |
Estimated Useful Life | 3 years | |
Trademarks [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Subtotal | $ 1,977,000 | 1,977,000 |
Estimated Useful Life | 7 years | |
Broker Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Subtotal | $ 4,200 | 4,200 |
Estimated Useful Life | 1 year | |
Trendit Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Subtotal | $ 195,143 | |
Trendit Patents [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life | 1 year | |
Trendit Patents [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life | 11 years |
Intangible Assets, Net and Go51
Intangible Assets, Net and Goodwill (Details 1) | Sep. 30, 2017USD ($) |
Intangible Assets, Net and Goodwill [Abstract] | |
Remaining 2,017 | $ 430,716 |
2,018 | 1,722,864 |
2,019 | 1,517,271 |
2,020 | 299,530 |
2,021 | 299,409 |
Thereafter | 646,026 |
Total | $ 4,915,816 |
Intangible Assets, Net and Go52
Intangible Assets, Net and Goodwill (Details 2) | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Intangible Assets, Net and Goodwill [Abstract] | |
Balance as of December 31, 2016 | $ 4,599,969 |
Goodwill Impairment Charge | |
Balance as of September 30, 2017 | $ 4,599,969 |
Intangible Assets, Net and Go53
Intangible Assets, Net and Goodwill (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Intangible Assets, Net and Goodwill (Textual) | ||||
Amortization expense | $ 430,716 | $ 0 | $ 1,284,018 | $ 0 |
Securities Purchase Agreement54
Securities Purchase Agreement (Details) - USD ($) | Sep. 30, 2017 | Aug. 16, 2017 | Feb. 08, 2017 | Dec. 31, 2016 | Dec. 02, 2016 |
Short-term Debt [Line Items] | |||||
Senior secured convertible notes | $ 381,244 | $ 31,425 | |||
September 2016 notes [Member] | |||||
Short-term Debt [Line Items] | |||||
Senior secured convertible notes | 20,480 | ||||
September Placement Agent Note [Member] | |||||
Short-term Debt [Line Items] | |||||
Senior secured convertible notes | 902 | ||||
December 2016 notes [Member] | |||||
Short-term Debt [Line Items] | |||||
Senior secured convertible notes | 10,043 | $ 2 | |||
February 2017 notes [Member] | |||||
Short-term Debt [Line Items] | |||||
Senior secured convertible notes | $ 2 | ||||
August 2017 notes [Member] | |||||
Short-term Debt [Line Items] | |||||
Senior secured convertible notes | 335,215 | $ 3 | |||
February 2017 notes [Member] | |||||
Short-term Debt [Line Items] | |||||
Senior secured convertible notes | $ 46,029 |
Securities Purchase Agreement55
Securities Purchase Agreement (Details 1) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Short-term Debt [Line Items] | ||
Unamortized discounts | $ (3,645,756) | $ (2,200,575) |
Carrying value | 381,244 | 31,425 |
September 2016 notes [Member] | ||
Short-term Debt [Line Items] | ||
Carrying value | 332,000 | |
September Placement Agent Note [Member] | ||
Short-term Debt [Line Items] | ||
Carrying value | 80,000 | |
December 2016 notes [Member] | ||
Short-term Debt [Line Items] | ||
Carrying value | $ 1,820,000 | |
February 2017 notes [Member] | ||
Short-term Debt [Line Items] | ||
Carrying value | ||
August 2017 notes [Member] | ||
Short-term Debt [Line Items] | ||
Carrying value | 3,330,000 | |
September 2017 Notes [Member] | ||
Short-term Debt [Line Items] | ||
Carrying value | $ 697,000 |
Securities Purchase Agreement56
Securities Purchase Agreement (Details Textual) | Aug. 15, 2017USD ($) | Feb. 08, 2017USD ($)ConvertibleNotes | Dec. 02, 2016USD ($)ConvertibleNotes | Sep. 07, 2016USD ($)shares | Aug. 28, 2017shares | Aug. 16, 2017USD ($)ConvertibleNotes$ / sharesshares | Feb. 28, 2017USD ($) | Sep. 30, 2017USD ($)$ / sharesshares | Sep. 30, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | Nov. 07, 2017USD ($) | Nov. 02, 2017USD ($) | Oct. 06, 2017USD ($) | Nov. 16, 2016USD ($) | Nov. 09, 2016 | Oct. 25, 2016USD ($) |
Short-term Debt [Line Items] | ||||||||||||||||
Senior secured convertible notes | $ 381,244 | $ 381,244 | $ 31,425 | |||||||||||||
Principal amount | $ 5,000,000 | $ 4,900,000 | 5,000,000 | 5,000,000 | ||||||||||||
Interest percentage | 75.00% | |||||||||||||||
Convertible note payable | $ 6,970,000 | $ 6,970,000 | ||||||||||||||
Common stock at exercise prices | $ / shares | $ 3.40 | $ 3.40 | $ 6.26 | |||||||||||||
Investor converted total | $ 2,500,000 | |||||||||||||||
Subsequent Event [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Business acquisition related expenses | $ 28,500,000 | |||||||||||||||
Minimum [Member] | Subsequent Event [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Principal amount | 5,000,000 | |||||||||||||||
Maximum [Member] | Subsequent Event [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Principal amount | 11,500,000 | |||||||||||||||
September 2016 notes [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Senior secured convertible notes | $ 20,480 | |||||||||||||||
Consideration received in cash for convertible note | $ 1,000,000 | |||||||||||||||
Principal amount | 4,301,075 | |||||||||||||||
Interest expenses | 0 | $ 1,217 | ||||||||||||||
Business acquisition related expenses | $ 3,000,000 | |||||||||||||||
Notes, maturity date | Dec. 7, 2017 | |||||||||||||||
September 2016 notes [Member] | Placement Agent Notes and Warrants [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Principal amount | $ 80,000 | $ 80,000 | ||||||||||||||
Interest percentage | 6.00% | 6.00% | ||||||||||||||
Interest expenses | $ 1,200 | |||||||||||||||
Warrants issued to purchase common stock | shares | 48,714 | |||||||||||||||
Warrant term | 5 years | |||||||||||||||
September 2016 notes [Member] | Minimum [Member] | Placement Agent Notes and Warrants [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Common stock at exercise prices | $ / shares | $ 4.54 | |||||||||||||||
September 2016 notes [Member] | Maximum [Member] | Placement Agent Notes and Warrants [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Common stock at exercise prices | $ / shares | $ 9.36 | |||||||||||||||
December 2016 notes [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Senior secured convertible notes | 2 | $ 10,043 | ||||||||||||||
Consideration received in cash for convertible note | $ 1,100,000 | |||||||||||||||
Number of instruments issued | ConvertibleNotes | 2 | |||||||||||||||
Principal amount | $ 6,720,000 | |||||||||||||||
Interest percentage | 6.00% | |||||||||||||||
Interest expenses | 12,719 | $ 150,265 | ||||||||||||||
Maturity date, description | The December 2016 Notes have a maturity date of August 2, 2017 which was subsequently amended to October 8, 2017. | |||||||||||||||
Description of notes conversion agreement | At any time, the Investor may and, so long as certain equity conditions are met, the Company may require the Investor to convert the December 2016 Notes into shares of the Company's common stock (a "Mandatory Conversion"). On September 19, 2017 (the "Exchange Date") the Company and the Investor entered into an Amendment and Exchange Agreement pursuant to which the Company exercised its Mandatory Conversion right as to $890,000 of the December 2016 Notes in exchange for 445,367 shares of the Company's common stock and the Investor prepaid $670,000 of the December 2016 Investor Note, which represented the entire unpaid principal of the December 2016 Investor Note. On the Exchange Date, the Company issued to the Investor a Senior Promissory Note in the principal amount of $697,000 (the "September 2017 Note") in exchange for the remaining outstanding principal amount of the December 2016 Notes. The September 2017 Note may be converted into shares of the Company's common stock at a price of $3.00 per share. | |||||||||||||||
December 2016 notes [Member] | Placement Agent Notes and Warrants [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Warrants issued to purchase common stock | shares | 22,000 | |||||||||||||||
Warrants exercise price | $ / shares | $ 4.45 | |||||||||||||||
Warrant term | 5 years | |||||||||||||||
Placement agent notes and warrants, description | Through the first nine months of 2017 the Company has received $4,900,000 of cash payments for the December Notes, resulting in the issuance of an additional 104,001 warrants at exercise prices of $3.00 per share, $3.47 per share, $4.00 per share and $6.13 per share. | |||||||||||||||
February 2017 notes [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Senior secured convertible notes | $ 2 | |||||||||||||||
Number of instruments issued | ConvertibleNotes | 2 | |||||||||||||||
Principal amount | $ 5,681,818 | |||||||||||||||
Interest percentage | 6.00% | |||||||||||||||
Interest expenses | 42,750 | $ 173,963 | ||||||||||||||
Notes, maturity date | Oct. 8, 2017 | |||||||||||||||
Maturity date, description | The maturity date of any New Note will be 45 days following the issuance of the New Note, and the conversion price of the New Notes will be $4.50 or, at the election of the Investor, the Investor may convert at the Alternate Conversion Price. The Alternate Conversion Price is defined as either (A) the lower of (i) $4.50 and (ii) the greater of (I) $4.00 and (II) 85% of the quotient of (x) the sum of the volume weighted average price of the common stock for each of the 5 consecutive trading days ending on the trading day immediately preceding the delivery of the Conversion Notice, divided by (y) 5 or (B) that price which shall be the lowest of (i) $3.00 and (ii) the greater of (I) the Floor Price then in effect and (II) 85% of the quotient of (x) the sum of the volume weighted average price of the Company’s common stock for each of the 5 consecutive trading days ending and including the date of the alternate conversion, divided by (y) 5. | |||||||||||||||
Prepayments of the Investor Note | $ 2,900,000 | |||||||||||||||
Floor price variances | The Floor Price is defined as $3.00 through October 4, 2017 and $0.50 following October 4, 2017. | |||||||||||||||
February 2017 notes [Member] | Placement Agent Notes and Warrants [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Principal amount | $ 5,000,000 | $ 5,000,000 | ||||||||||||||
Interest percentage | 8.00% | 8.00% | ||||||||||||||
Warrants issued to purchase common stock | shares | 133,334 | 133,334 | ||||||||||||||
Warrants exercise price | $ / shares | $ 3 | |||||||||||||||
Warrant term | 5 years | |||||||||||||||
August 2017 notes [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Senior secured convertible notes | $ 3 | $ 335,215 | $ 335,215 | |||||||||||||
Consideration received in cash for convertible note | 1,830,000 | |||||||||||||||
Number of instruments issued | ConvertibleNotes | 3 | |||||||||||||||
Principal amount | $ 10,300,000 | |||||||||||||||
Interest percentage | 6.00% | |||||||||||||||
Interest expenses | 67,875 | 67,875 | ||||||||||||||
Notes, maturity date | Aug. 16, 2018 | |||||||||||||||
August 2017 notes [Member] | Subsequent Event [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Prepayments of the Investor Note | 6,970,000 | |||||||||||||||
August 2017 notes [Member] | Placement Agent Notes and Warrants [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Consideration received in cash for convertible note | 2,050,000 | |||||||||||||||
Principal amount | $ 9,050,000 | $ 9,050,000 | ||||||||||||||
Interest percentage | 8.00% | 8.00% | ||||||||||||||
Warrants issued to purchase common stock | shares | 42,467 | 42,467 | ||||||||||||||
August 2017 notes [Member] | Minimum [Member] | Placement Agent Notes and Warrants [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Common stock at exercise prices | $ / shares | $ 3 | $ 3 | ||||||||||||||
August 2017 notes [Member] | Maximum [Member] | Placement Agent Notes and Warrants [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Common stock at exercise prices | $ / shares | $ 6.13 | $ 6.13 | ||||||||||||||
Investor Note [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Interest percentage | 6.00% | |||||||||||||||
Prepayments of the Investor Note | $ 900,000 | $ 1,100,000 | $ 1,000,000 | |||||||||||||
Common stock issued upon convertible notes | shares | 887,707 | 1,852,886 | ||||||||||||||
February 2017 Investor Note [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Prepayments of the Investor Note | 2,100,000 | |||||||||||||||
Description of notes conversion agreement | To effect an exchange (the “Share Exchange”) of 841,250 shares of the Company’s common stock for one or more senior secured convertible promissory notes in the form of the February Additional Note (the “New Note”), with the right to substitute the alternate conversion price of the New Note with the alternate conversion price of the Company’s Series B Senior Secured Convertible Note (the “Series B Note”) that was issued on August 16, 2017. Any New Note issued would be in the principal amount equal to the product of the prepayment amount ($2,500,000) multiplied by a fraction, the numerator of which is the number of the aggregate shares being tendered to the Company in the Share Exchange and the denominator of which is 841,250. | |||||||||||||||
Investor Warrant [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Consideration received in cash for convertible note | $ 220,000 | |||||||||||||||
Principal amount | $ 8,800,000 | $ 697,000 | $ 697,000 | |||||||||||||
Warrants issued to purchase common stock | shares | 1,892,972 | |||||||||||||||
Warrants exercise price | $ / shares | $ 3.25 | $ 3.25 | ||||||||||||||
Warrant expiration date | Apr. 16, 2022 | |||||||||||||||
Warrant expiration term | 5 years | |||||||||||||||
Investor Warrant [Member] | Minimum [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Warrants issued to purchase common stock | shares | 1,892,972 | 1,892,972 | ||||||||||||||
Warrants exercise price | $ / shares | $ 3 | |||||||||||||||
Investor Warrant [Member] | Maximum [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Warrants issued to purchase common stock | shares | 2,050,720 | 2,050,720 | ||||||||||||||
Warrants exercise price | $ / shares | $ 3.25 | |||||||||||||||
MoviePass [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Principal amount | $ 10,000,000 | |||||||||||||||
Interest percentage | 5.00% | |||||||||||||||
Principal amount | $ 10,000,000 | |||||||||||||||
MoviePass [Member] | Subsequent Event [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Business acquisition related expenses | $ 28,500,000 | |||||||||||||||
Convertible note payable | $ 3,000,000 | $ 750,000 | ||||||||||||||
Zone Technologies [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Principal amount | $ 4,900,000 | |||||||||||||||
Business acquisition related expenses | $ 5,000,000 | |||||||||||||||
Investor [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Principal amount | $ 55,569 | $ 106,178 | ||||||||||||||
Interest amount of common stock | 2,185,663 | 3,862,623 | ||||||||||||||
Investor converted total | $ 6,066,818 | $ 12,723,818 |
Fair Value of Financial Asset57
Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Liabilities | ||
Derivative liability - warrants | $ 4,167,887 | $ 230,663 |
Derivative liability - conversion feature | 10,335,845 | 977,129 |
Warrant liability | 24,119,148 | |
Total | 38,622,880 | 1,207,792 |
Level 1 [Member] | ||
Liabilities | ||
Derivative liability - warrants | ||
Derivative liability - conversion feature | ||
Warrant liability | ||
Total | ||
Level 2 [Member] | ||
Liabilities | ||
Derivative liability - warrants | ||
Derivative liability - conversion feature | ||
Warrant liability | ||
Total | ||
Level 3 [Member] | ||
Liabilities | ||
Derivative liability - warrants | 4,167,887 | 230,663 |
Derivative liability - conversion feature | 10,335,845 | 977,129 |
Warrant liability | 24,119,148 | |
Total | $ 38,622,880 | $ 1,207,792 |
Fair Value of Financial Asset58
Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis (Details 1) - Level 3 [Member] | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Balance at December 31, 2016 | $ 1,207,792 |
Purchases, issuances and settlements | 14,626,338 |
Conversions to paid in capital | (4,674,682) |
Extinguishment of December Convertible Note | (9,890) |
Change in fair value of warrant liabilities | 17,038,711 |
Change in fair value of derivative liabilities | 10,434,611 |
Balance at September 30, 2017 | $ 38,662,880 |
Fair Value of Financial Asset59
Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis (Details 2) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Dividend Yield | 0.00% | 0.00% |
Maximum [Member] | ||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Expected Volatility | 270.00% | 230.00% |
Risk free interest rate | 1.92% | 1.12% |
Contractual term (in years) | 5 years | 5 years |
Exercise price | $ 9.36 | $ 9.36 |
Minimum [Member] | ||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Expected Volatility | 50.00% | 154.00% |
Risk free interest rate | 0.96% | 0.82% |
Contractual term (in years) | 18 days | 8 months 2 days |
Exercise price | $ 3 | $ 4 |
Stock Based Compensation (Detai
Stock Based Compensation (Details) - USD ($) | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Aug. 10, 2017 | Mar. 03, 2014 | |
Stock Based Compensation (Textual) | ||||
Shares issued in exchange for services | $ 2,251,115 | |||
Stock Issued During Period, Value, Issued for Services | 2,251,115 | |||
Common stock [Member] | ||||
Stock Based Compensation (Textual) | ||||
Stock Issued During Period, Value, Issued for Services | $ 6,483 | |||
2014 Equity Incentive Plan [Member] | ||||
Stock Based Compensation (Textual) | ||||
Share-based compensation, outstanding number | 885,000 | |||
Reserved shares of common stock | 1,125,000 | 400,000 | ||
2014 Equity Incentive Plan [Member] | Zone Technologies, Inc. [Member] | ||||
Stock Based Compensation (Textual) | ||||
Shares issued in exchange for services | $ 1,409,915 | |||
Stock based compensation plan, description | In conjunction with the merger with Zone, the Company's Board of Directors agreed to approve and adopt an amendment to the 2014 Plan to increase the number of shares available for issuance pursuant to awards made from the 2014 Plan to no more than 15% of the Company's common stock on a fully diluted basis immediately following the merger. |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2017VendorsCustomers | Sep. 30, 2016Customers | Dec. 31, 2016VendorsCustomers | |
Accounts Payable, Benchmark [Member] | |||
Concentration of Credit Risk (Textual) | |||
Number of major vendors | Vendors | 2 | 3 | |
Concentration risk, percentage | 45.00% | 82.00% | |
Revenues [Member] | |||
Concentration of Credit Risk (Textual) | |||
Concentration risk, percentage | 82.00% | 83.00% | |
Number of major customers | 3 | 3 | |
Accounts Receivable [Member] | |||
Concentration of Credit Risk (Textual) | |||
Concentration risk, percentage | 88.00% | 61.00% | |
Number of major customers | 6 | 3 |
Commitments and Contingencies62
Commitments and Contingencies (Details) | Sep. 30, 2017USD ($) | |
Operating Lease Commitments | ||
Less than 1 year | $ 73,503 | |
1 to 3 years | 844,174 | [1] |
3 to 5 years | 347,985 | [1] |
Thereafter | [1] | |
Total | $ 1,265,662 | [1] |
[1] | The Company's executive office is located at the Empire State Building, 350 Fifth Avenue, Suite 7520, New York, New York 10118. The Company's executive office is located in a leased facility with a term expiring on June 30, 2022. |
Commitments and Contingencies63
Commitments and Contingencies (Details Textual) - USD ($) | Apr. 01, 2017 | Aug. 24, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Apr. 30, 2017 |
Commitments and Contingencies (Textual) | |||||||
Rent expense | $ 81,051 | $ 50,264 | $ 215,068 | $ 196,049 | |||
Lease agreement, term | 3 years | ||||||
Monthly rent payments for the first 12 months | $ 5,026 | ||||||
Monthly rent payments for the next 12 months | 5,177 | ||||||
Monthly rent payments for the last 12 months | $ 5,332 | ||||||
Purchase interest in HHGI, percentage | 10.00% | ||||||
Compensation from the company for attorney's fees and costs and expenses | $ 3,000,000 | ||||||
Lease expiration, date | Sep. 30, 2019 |
Transactions with Related Par64
Transactions with Related Parties (Details) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Feb. 28, 2017 | Sep. 30, 2017 | Dec. 31, 2015 | Dec. 31, 2016 | Sep. 30, 2015 | Jan. 02, 2015 | Sep. 30, 2010 | |
Transactions with Related Parties (Textual) | |||||||
Payment received from maruthi | $ 2,500,000 | ||||||
HMIT [Member] | |||||||
Transactions with Related Parties (Textual) | |||||||
Security deposit | $ 2,000,000 | ||||||
Reserve amount | $ 2,300,000 | $ 2,300,000 | |||||
Payment of reimbursable expenses | $ 344,000 | ||||||
Accounts receivable, related parties | 182,626 | ||||||
Maruthi consulting inc., subsidiary [Member] | |||||||
Transactions with Related Parties (Textual) | |||||||
Receivable due from maruthi amount | $ 75,338 | ||||||
Accounts receivable, related parties | $ 61,474 | $ 61,474 | |||||
Payment received from maruthi | 237,318 | ||||||
Billed an additional for service amount | $ 223,454 |
Warrants (Details)
Warrants (Details) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Warrants [Abstract] | ||
Warrant Shares, Outstanding/exercisable, beginning | 70,714 | |
Warrant Shares, Granted | 2,172,774 | |
Warrant Shares, Shares issued from anti-dilutive events | 157,748 | |
Warrant Shares, Exercised | ||
Warrant Shares, Forfeited/cancelled | ||
Warrant Shares, Outstanding/exercisable, ending | 2,401,236 | 70,714 |
Weighted Average Exercise Price, Outstanding/exercisable, beginning | $ 6.26 | |
Weighted Average Exercise Price, Granted | 3.31 | |
Weighted Average Exercise Price, Shares issued from anti-dilutive events | 3 | |
Weighted Average Exercise Price, Exercised | ||
Weighted Average Exercise Price, Forfeited/cancelled | ||
Weighted Average Exercise Price, Outstanding/exercisable, ending | $ 3.40 | $ 6.26 |
Weighted Average Remaining Contractual Life Years, Granted | 4 years 10 months 6 days | |
Weighted Average Remaining Contractual Life Years, Shares issued from anti-dilutive events | 4 years 10 months 25 days | |
Weighted Average Remaining Contractual Life Years | 4 years 10 months 6 days | 4 years 10 months 14 days |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | ||||||
Revenue | $ 1,173,023 | $ 1,720,515 | $ 3,672,036 | $ 5,608,145 | ||
Cost of Revenue | 946,308 | 1,130,091 | 2,969,357 | 3,922,469 | ||
Gross Margin | 226,715 | 590,424 | 702,679 | 1,685,676 | ||
Total operating expenses | 3,302,979 | 743,781 | 10,881,362 | 2,083,366 | ||
Income/(loss) from operations | (3,076,264) | (153,357) | (10,178,683) | (397,690) | ||
Total other expense | (40,386,701) | (767,313) | (44,961,796) | (763,388) | ||
Provision for income taxes | (2,747) | 3,000 | 39,110 | 37,247 | ||
Total net loss | (43,460,218) | (923,670) | (55,179,589) | (1,198,325) | ||
Cash and cash equivalents | 1,663,879 | 1,205,068 | 1,663,879 | 1,205,068 | $ 2,747,240 | $ 898,477 |
Accounts receivable | 254,930 | 254,930 | 410,106 | |||
Unbilled receivables | 48,595 | 48,595 | 45,207 | |||
Prepaid expenses and other current assets | 707,868 | 707,868 | 597,171 | |||
Property and equipment | 134,705 | 134,705 | 45,212 | |||
Intangible assets | 4,915,816 | 4,915,816 | 6,004,691 | |||
Goodwill | 4,599,969 | 4,599,969 | 4,599,969 | |||
Deposits and other assets | 139,012 | 139,012 | 59,189 | |||
Accounts payable and accrued expenses | 2,539,018 | 2,539,018 | 1,331,118 | |||
Technology [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | ||||||
Cost of Revenue | ||||||
Gross Margin | ||||||
Total operating expenses | 4,601,330 | |||||
Income/(loss) from operations | (4,601,330) | |||||
Total other expense | (47,220) | |||||
Provision for income taxes | ||||||
Total net loss | (4,648,550) | |||||
Cash and cash equivalents | 1,269,707 | 1,269,707 | 1,651,508 | |||
Prepaid expenses and other current assets | 11,865 | 11,865 | 42,833 | |||
Property and equipment | 96,251 | 96,251 | 10,844 | |||
Intangible assets | 4,915,816 | 4,915,816 | 6,004,691 | |||
Goodwill | 4,599,969 | 4,599,969 | 4,599,969 | |||
Deposits and other assets | 10,052 | 10,052 | ||||
Accounts payable and accrued expenses | 932,285 | 932,285 | 134,450 | |||
Consulting [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 3,672,036 | 5,608,145 | ||||
Cost of Revenue | 2,969,357 | 3,922,469 | ||||
Gross Margin | 702,679 | 1,685,676 | ||||
Total operating expenses | 6,280,032 | 2,083,366 | ||||
Income/(loss) from operations | (5,577,353) | (397,690) | ||||
Total other expense | (44,914,576) | (763,388) | ||||
Provision for income taxes | 39,110 | 37,247 | ||||
Total net loss | (50,531,039) | (1,198,325) | ||||
Cash and cash equivalents | 394,172 | 394,172 | 1,095,732 | |||
Accounts receivable | 254,930 | 254,930 | 410,106 | |||
Unbilled receivables | 48,595 | 48,595 | 45,207 | |||
Prepaid expenses and other current assets | 696,003 | 696,003 | 554,338 | |||
Property and equipment | 38,454 | 38,454 | 34,368 | |||
Goodwill | ||||||
Deposits and other assets | 128,960 | 128,960 | 59,189 | |||
Accounts payable and accrued expenses | $ 1,606,733 | $ 1,606,733 | $ 1,196,668 |
Segment Reporting (Details Text
Segment Reporting (Details Textual) | 9 Months Ended |
Sep. 30, 2017segments | |
Segment Reporting (Textual) | |
Number of operating segments | 2 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Nov. 07, 2017 | Nov. 02, 2017 | Oct. 13, 2017 | Oct. 05, 2017 | Aug. 15, 2017 | Oct. 23, 2017 | Sep. 30, 2017 |
Subsequent Event [Line Items] | |||||||
Convertible promissory notes principal amount | $ 6,970,000 | ||||||
MoviePass [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Exchanged of common stock shares | 3,333,334 | ||||||
Subsequent Event [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Consulting agreement, description | The agreement has a term of two years but may be terminated by either party at any time by giving 30 days written notice to the other party. If the Company elects to terminate the Agreement without cause prior to the end of the term, Mr. Gadiyaram will be entitled to a termination fee equal to the lesser of (a) the consulting fee for the remainder of the term, or (b) the consulting fee for a period of 12 months following the delivery of written notice of termination. | ||||||
Consulting fees payable | $ 18,750 | ||||||
Subsequent Event [Member] | Investor [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Principal amount | $ 100,000,000 | $ 750,000 | |||||
Subsequent Event [Member] | MoviePass [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Aggregate purchase price | 3,000,000 | 750,000 | |||||
Convertible promissory notes principal amount | 3,000,000 | $ 750,000 | |||||
Proceeds from sale of senior convertible notes | $ 5,000,000 | ||||||
Subsequent Event [Member] | New February Exchange Note [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Principal amount | $ 300,000 | $ 2,200,000 | |||||
Maturity date | Nov. 27, 2017 | ||||||
Investor converted | 100,000 | ||||||
Consulting agreement, description | In exchange for the Exchange Securities, the Investor agreed to, among other things: (i) terminate the Investor's right to receive any further New Notes, which would have had a principal amount up to $2.2 million and a $0.50 conversion price floor if issued; (ii) (A) release all security interests held by the Investor in the Company's assets and those of the Company's subsidiaries, including Zone and its proprietary RedZone Map™ product ("RedZone") and the Company's interest in MoviePass, (B) terminate each security agreement between the Company and the Investor, and (C) authorize the Company to file amendments to all UCC Financing Statements for the purpose of terminating the Investor's security interests in the Company's assets and those of its subsidiaries, including RedZone and the Company's interest in MoviePass; (iii) permit the Company to obtain non-convertible senior secured debt financing from a qualified bank in an amount not less than $20 million and not more than $100 million while the Convertible Notes remain outstanding; (iv) defer the Company's obligation to pay any interest under the Convertible Notes until the earlier to occur of (x) each conversion of the Convertible Notes, solely with respect to the portion of interest included in the applicable conversion amount, (y) each redemption of the Convertible Notes, solely with respect to the portion of interest included in the applicable redemption amount, and (z) the maturity date of the Convertible Notes; and (v) waive any and all Events of Default (as defined in the Convertible Notes) prior to October 23, 2017. | ||||||
Exchanged of common stock shares | 947,218 | ||||||
Additional shares of common stock | 552,782 | ||||||
Beneficial ownership percentage | 9.90% |