Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Apr. 11, 2018 | Jun. 30, 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-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 8,627,586 | ||
Entity Common Stock, Shares Outstanding | 52,996,631 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 24,949,393 | $ 2,747,240 |
Accounts receivable - less allowance for doubtful accounts of $72,335 and $428,719 at December 31, 2017 and December 31, 2016, respectively | 27,470,219 | 410,106 |
Unbilled receivables | 45,207 | |
Prepaid expenses and other current assets | 3,557,811 | 597,171 |
Total current assets | 55,977,423 | 3,799,724 |
Property and equipment, net | 234,035 | 45,212 |
Intangible assets, net | 28,536,782 | 6,004,691 |
Goodwill | 79,137,177 | 4,599,969 |
Deposits and other assets | 147,171 | 59,189 |
Total assets | 164,032,588 | 14,508,785 |
Current liabilities: | ||
Accounts payable and accrued expenses | 13,144,003 | 1,331,118 |
Deferred revenue | 54,425,630 | |
Liabilities to be settled in stock | 21,320,705 | |
Convertible notes payable, net of debt discount of $2,444,368 and $2,200,575, respectively | 2,061,072 | 31,425 |
Warrant liability | 67,288,800 | 230,663 |
Derivative liability | 4,834,462 | 977,129 |
Total current liabilities | 163,074,672 | 2,570,335 |
Convertible notes payable, net of current portion and debt discount of $1,392,514 and $0, respectively | 1,550,555 | |
Total liabilities | 164,625,227 | 2,570,335 |
Commitments and contingencies | ||
Stockholders' (deficit) equity: | ||
Preferred stock, $0.01 par value; 2,000,000 shares authorized; no shares issued and outstanding as of December 31, 2017 and December 31, 2016 | ||
Common stock, $0.01 par value; 100,000,000 shares authorized; 23,981,253 issued and outstanding as of December 31, 2017; 4,874,839 issued and outstanding as of December 31, 2016 | 239,813 | 48,748 |
Additional paid-in capital | 150,356,757 | 55,258,111 |
Accumulated other comprehensive loss - foreign currency translation | (103,980) | (106,991) |
Accumulated deficit | (189,495,185) | (43,261,418) |
Total Helios stockholders' (deficit) equity | (39,002,595) | 11,938,450 |
Non-controlling interest | 38,409,956 | |
Total stockholders' (deficit) equity | (592,639) | 11,938,450 |
Total liabilities and stockholders' equity | $ 164,032,588 | $ 14,508,785 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 72,335 | $ 428,719 |
Convertible notes payable, debt discount - current | 2,444,368 | 2,200,575 |
Convertible notes payable, debt discount - long term | $ 1,392,514 | $ 0 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 23,981,253 | 4,874,839 |
Common stock, shares outstanding | 23,981,253 | 4,874,839 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues: | ||
Consulting | $ 4,512,300 | $ 6,759,700 |
Subscription | 5,929,267 | |
Total revenues | 10,441,567 | 6,759,700 |
Cost of revenue | 20,538,709 | 4,860,927 |
Gross (loss)/profit | (10,097,142) | 1,898,773 |
Operating expenses: | ||
Selling, general & administrative | 35,698,134 | 3,602,267 |
Research and development | 2,012,548 | 133,462 |
Loss on impairment of Zone goodwill and intangible assets | 6,256,983 | |
Depreciation & amortization | 1,951,977 | 259,379 |
Total operating expenses | 45,919,642 | 3,995,108 |
Loss from operations | (56,016,784) | (2,096,335) |
Other income/(expense): | ||
Change in fair market value - derivative liabilities | 28,303,612 | (192,339) |
Change in fair market value - warrant liabilities | (20,409,937) | 85,090 |
Loss on extinguishment of debt | (4,346,885) | |
Interest expense | (98,478,473) | (5,210,413) |
Interest income | 177,157 | 18,261 |
Total other expense | (94,754,526) | (5,299,401) |
Loss before income taxes | (150,771,310) | (7,395,736) |
Income tax (expense)/benefit | (53,532) | 14,665 |
Net loss | (150,824,842) | (7,381,071) |
Net loss attributable to the non-controlling interest | 4,850,308 | |
Net loss attributable to Helios and Matheson Analytics Inc | (145,974,534) | (7,381,071) |
Other comprehensive income - foreign currency adjustment | 3,011 | 13,721 |
Comprehensive loss | $ (145,971,523) | $ (7,367,350) |
Net loss per share attributable to common stockholders | ||
Basic and Diluted | $ (17.46) | $ (2.74) |
Weighted average shares | 8,361,094 | 2,691,448 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Deficit) - USD ($) | Total | Common Stock | Additional Paid-In Capital | Accumulated other comprehensive loss | Accumulated Deficit | Noncontrolling Interest |
Beginning balance at Dec. 31, 2015 | $ 1,877,985 | $ 23,304 | $ 37,855,740 | $ (120,712) | $ (35,880,347) | |
Beginning balance, shares at Dec. 31, 2015 | 2,330,438 | |||||
Common shares issued in merger with Zone Technologies, Inc. | 9,413,000 | $ 17,400 | 9,395,600 | |||
Common shares issued in merger with Zone Technologies, Inc., shares | 1,740,000 | |||||
Conversion of convertible notes and interest to shares of common stock | 4,015,358 | $ 8,044 | 4,007,314 | |||
Conversion of convertible notes and interest to shares of common stock, shares | 804,401 | |||||
Reclassification of derivative liability to equity - derivative ceases to exist | 3,999,457 | 3,999,457 | ||||
Net loss | (7,381,071) | (7,381,071) | ||||
Foreign exchange translation | 13,721 | 13,721 | ||||
Ending balance at Dec. 31, 2016 | 11,938,450 | $ 48,748 | 55,258,111 | (106,991) | (43,261,418) | |
Ending balance, shares at Dec. 31, 2016 | 4,874,839 | |||||
Exercise of warrants to shares of common stock | 977,142 | $ 16,677 | 960,465 | |||
Exercise of warrants to shares of common stock, shares | 1,667,704 | |||||
Investor waiver agreement | 3,663,000 | $ 820 | 3,662,180 | |||
Investor waiver agreement, shares | 82,012 | |||||
Shares issued for financing fees | 19,950,000 | $ 14,000 | 19,936,000 | |||
Shares issued for financing fees, shares | 1,400,000 | |||||
Reclassification of shares from mezzanine to equity | 2,216,795 | $ 8,413 | 2,208,382 | |||
Reclassification of shares from mezzanine to equity, shares | 841,250 | |||||
Conversion of convertible notes and interest to shares of common stock | 16,837,895 | $ 47,364 | 16,790,531 | |||
Conversion of convertible notes and interest to shares of common stock, shares | 4,736,355 | |||||
Share based compensation | 5,510,800 | $ 11,483 | 5,499,317 | |||
Share based compensation, shares | 1,148,333 | |||||
Derivative liability which ceases to exist | 14,009,686 | 14,009,686 | ||||
Warrant liability which ceases to exist | 26,709,270 | 26,709,270 | ||||
Accretion of discount on redeemable common stock | (259,233) | (259,233) | ||||
Equity raise, net of transaction fees | 55,333,523 | $ 92,308 | 55,241,215 | |||
Equity raise, net of transaction fees, shares | 9,230,760 | |||||
Reclassification of Series A warrants to derivative liability | (49,918,400) | (49,918,400) | ||||
Acquisition of noncontrolling interest in connection with the MoviePass Acquisition | 43,260,264 | 43,260,264 | ||||
Net loss | (150,824,842) | (145,974,534) | (4,850,308) | |||
Foreign exchange translation | 3,011 | 3,011 | ||||
Ending balance at Dec. 31, 2017 | $ (592,639) | $ 239,813 | $ 150,356,757 | $ (103,980) | $ (189,495,185) | $ 38,409,956 |
Ending balance, shares at Dec. 31, 2017 | 23,981,253 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (150,824,842) | $ (7,381,071) |
Adjustments to reconcile net loss to net cash provided by/(used in) operating activities: | ||
Depreciation and amortization | 1,951,977 | 259,379 |
Accretion of debt discount | 56,444,825 | 4,000,500 |
Change in fair market value - warrant liabilities | 20,409,937 | |
Change in fair market value - derivative liabilities | (28,303,612) | 107,249 |
Loss on extinguishment of debt | 4,346,885 | |
Provision for doubtful accounts | 72,336 | 386,516 |
Non-cash interest expense | 37,136,900 | |
Shares issued in exchange for services | 23,946,227 | |
Loss on impairment of goodwill and intangibles | 6,256,983 | |
Change in operating assets and liabilities: | ||
Accounts receivable | (17,463,058) | 589,533 |
Unbilled receivables | 45,207 | 250,266 |
Prepaid expenses and other current assets | 116,818 | (379,581) |
Accounts payable and accrued expenses | 1,138,970 | (1,112) |
Deferred revenue | 17,425,739 | |
Deposits and other assets | (79,982) | 34,008 |
Net cash used in operating activities | (27,378,690) | (2,134,313) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Sale of property and equipment | 1,928 | 867 |
Pre acquisition loan to Zone Technologies, Inc. | (1,291,208) | |
Purchases of equipment | (186,162) | (11,064) |
Patent acquisition | (196,353) | |
Payments for acquisition of businesses net of cash acquired | (25,192,246) | 170,760 |
Net cash used in investing activities | (25,572,833) | (1,130,645) |
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES: | ||
Proceeds from notes payable | 40,320,000 | 5,100,000 |
Proceeds from public offering, net | 55,333,523 | |
Note repayments | (21,480,000) | |
Exercise of warrants | 977,142 | |
Net cash provided by financing activities | 75,150,665 | 5,100,000 |
Net change in cash | 22,199,142 | 1,835,042 |
Effect of foreign currency exchange rate changes on cash and cash equivalents | 3,011 | 13,721 |
Cash, beginning of period | 2,747,240 | 898,477 |
Cash, end of period | 24,949,393 | 2,747,240 |
Non-cash investing and financing activities | ||
Cash paid for income taxes | 37,931 | 4,379 |
Cash paid during the period for interest | 4,849,587 | |
Change in carrying value of convertible common stock equity | 259,233 | |
Conversion of convertible notes and interest to shares of common stock | (16,837,895) | 4,015,358 |
Debt discount on convertible notes | 11,101,075 | |
Increase in debt for new original issue discount | 51,067,455 | |
Derivative ceases to exist - reclassified to paid in capital | 14,009,686 | 3,999,457 |
Embedded derivative - conversion feature and warrants | $ 6,391,364 |
General
General | 12 Months Ended |
Dec. 31, 2017 | |
General [Abstract] | |
General | 1. General The Company's common stock is listed on The NASDAQ Capital Market (“NASDAQ”) under the symbol “HMNY”. Our website address is www.hmny.com. Information on our website is not a part of this report. |
Change in Controlled Company St
Change in Controlled Company Status | 12 Months Ended |
Dec. 31, 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). |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2017 | |
Acquisitions/Acquisition of Assets from Trendit Ltd. [Abstract] | |
Acquisitions | 3. Acquisitions Acquisition of Controlling Interest in MoviePass On December 11, 2017, the Company completed its acquisition of a majority interest in MoviePass Inc., a Delaware corporation (“MoviePass”) (such acquisition, the “MoviePass Transaction”), pursuant to the previously announced Securities Purchase Agreement, dated as of August 15, 2017, between the Company and MoviePass (as amended, the “MoviePass SPA”), and the Investment Option Agreement, dated October 11, 2017, between the Company and MoviePass (the “MoviePass Option Agreement”). The Company acquired its 62.41% stake in MoviePass as it aligns with its strategy to enter and grow in the theatrical ticketing subscription business. At the closing of the MoviePass Transaction (the “Closing”), MoviePass issued to the Company shares of its common stock representing 51.71% of its outstanding common stock in exchange for the following consideration: (1) a subordinated convertible promissory note in the principal amount of $12,000,000 (the “Helios Convertible Note”), which is convertible into shares of HMNY’s common stock, as further described below; (2) a $5,000,000 promissory note issued to MoviePass (the “Helios Note”); and (3) the exchange of a convertible promissory note issued by MoviePass to HMNY in an aggregate principal amount of $11,500,000 (plus accrued interest thereon). In addition, pursuant to the terms of the Note Purchase Agreement, dated as of December 11, 2017 (the “Kelly Note Purchase Agreement”), among the Company, MoviePass and Christopher Kelly, a director, stockholder and noteholder of MoviePass (“Kelly”), the Company agreed to purchase from Kelly, within two business days after the Closing, MoviePass convertible promissory notes in an aggregate principal amount of $1,000,000 (the “Kelly Notes”) for $1,000,000 in cash, which was converted into shares of MoviePass’ common stock amounting to an additional 2% of the outstanding shares of MoviePass common stock on a post-transaction basis pursuant to a Note Conversion Agreement entered into between the Company and MoviePass (the “Kelly Note Conversion Agreement”). Pursuant to the MoviePass Option Agreement, upon the Closing, the outstanding convertible promissory notes issued by MoviePass to the Company (each a “MoviePass Option Note”) in an aggregate principal amount of $12,150,000 as of the Closing date, as well as additional payments to MoviePass in the amount of $7,850,000, were cancelled in exchange for additional shares of MoviePass’ common stock representing an additional 8.7% of the outstanding shares of MoviePass. Upon completion of the above issuances, the Company owned 62.41% of MoviePass’ issued and outstanding common stock. Amendment No. 2 to the MoviePass SPA and Other Ancillary Agreements Immediately prior to the completion of the MoviePass Transaction, the Company and MoviePass entered into a second amendment to the MoviePass SPA (“Amendment No. 2”), pursuant to which, in lieu of issuing 4,000,001 unregistered shares of the Company’s common stock to MoviePass at the Closing (the “Helios Shares”), the Company agreed to issue the Helios Convertible Note to MoviePass, which will convert automatically upon the Company’s receipt of approval of its stockholders relating to the issuance of the Helios Shares as required by and in accordance with Nasdaq Listing Rule 5635 (the “Stockholder Approval”) into 4,000,001 unregistered shares of the Company’s common stock (the “Conversion Shares”). If MoviePass fails to list its common stock on The NASDAQ Stock Market or the New York Stock Exchange by March 31, 2018, 666,667 of the Conversion Shares will be subject to forfeiture by MoviePass, in the Company’s sole discretion. As of the date of the report, the Company has not made a decision with respect to the disposition of the shares. The Company has valued the Helios Convertible Note as of the acquisition date including the valuation of the shares subject to forfeiture as noted above, at the fair value on the acquisition date based on a Monte Carlo simulation. The shares subject to forfeiture are contingent consideration and have been valued as a separate component of the Helios Convertible Note. As of the acquisition date the Helios Convertible Note was valued at $29,000,000 and the portion of the Conversion Shares subject to the forfeiture provision were valued at $5,152,446. All of the purchase consideration with the exception of the $1,000,000 paid for the Kelly Notes, was retained by MoviePass. Accordingly, the value of the Helios Convertible Note, the Helios Note and the value associated with the Conversion Shares subject to forfeiture are eliminated in consolidation for financial reporting purposes. Goodwill recognized as part of the MoviePass acquisition is not expected to be tax deductible. Transaction related costs associated with the MoviePass acquisition amounted to $691,500 which is included in selling, general and administrative expenses. The Company has determined preliminary fair values of the assets acquired and liabilities assumed in the MoviePass acquisition. These values are subject to change as we perform additional reviews of our assumptions utilized. The Company has made a provisional allocation of the purchase price of the MoviePass Transaction to the assets acquired and the liabilities assumed as of the purchase date. The following table summarizes the provisional purchase price allocations relating to the MoviePass Transaction. Purchase consideration: MoviePass Cash $ 32,671,792 Notes payable (includes Helios Convertible Note) 39,152,446 Fair value of consideration transferred $ 71,824,238 Recognized amounts of identifiable assets and liabilities acquired: Cash acquired $ 1,106,171 Accounts receivable 9,669,390 Notes receivable 39,152,446 Investment option payment receivable 7,850,000 Prepaid expenses and other current assets 192,180 Property and equipment 39,320 Other assets 8,000 Identifiable intangible assets: Tradenames and trademarks 19,550,000 Technology 3,800,000 Customer relationships 2,560,000 Liabilities assumed (9,261,785 ) Deferred revenue (38,718,397 ) Non -controlling interest (43,260,264 ) Goodwill 79,137,177 Total purchase price allocation $ 71,824,238 The Company has not completed the valuation studies necessary to finalize the acquisition fair values of the assets acquired and liabilities assumed and related allocation of purchase price for MoviePass. Accordingly, the type and value of the intangible assets and deferred revenue amounts set forth above are preliminary. Once the valuation process is finalized for MoviePass, there could be changes to the reported values of the assets acquired and liabilities assumed, including goodwill, intangible assets and deferred revenue and those changes could differ materially from what is presented above. The Company determined the provisional fair value of the acquired intangible assets through a combination of the market approach and the income approach. The significant assumptions used in certain valuations associated with the MoviePass transaction include discount rates ranging from 10.0% to 51.0%. In determining the value of tradenames and trademarks the Company observed royalty rates ranging from 0.0% to 100.0%, and utilized a 1.0% rate for MoviePass’s aggregated tradenames and trademarks. Additionally, the Company observed royalty rates related to MoviePass’s technology assets acquired ranging from 0.0% to 50.0%, and used a 1.0% royalty rate in determining the fair value of the acquired technology. In accordance with EITF guidance, the fair value of an acquired liability related to deferred revenue would include the direct and incremental cost of fulfilling the obligation plus a normal profit margin. The Company utilized historical operating results in estimating the direct and incremental costs of fulfilling the acquired deferred revenue obligations. The Company recorded an amount of $43,260,264 representing the non-controlling interest of MoviePass. The non-controlling interest in MoviePass was determined based on the fair value of MoviePass less the amounts paid by the Company for its 62.41% controlling interest. The estimated useful lives of acquired intangible assets are 7 years for tradenames and trademarks, 7 years for customer relationships, and 3 years for technology. Acquired deferred revenue is estimated to be realized based on the length of the subscription, over 12 months from the acquisition date. 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. The following table summarizes the final purchase price allocations relating to the Zone merger. Purchase consideration: Zone Technologies, Inc. Common stock (1,740,000 shares at the transaction date fair value of $5.41 per share) 9,413,000 Fair value of consideration transferred $ 9,413,000 Recognized amounts of identifiable assets and liabilities acquired: Cash acquired $ 136,343 Identifiable intangible assets: Tradenames and trademarks 1,977,000 Technology 4,270,000 Broker relationships 4,200 Liabilities assumed (1,574,512 ) Goodwill 4,599,969 Total purchase price allocation $ 9,413,000 Supplemental pro forma information The unaudited pro forma information is presented for illustrative purposes only and is not necessarily indicative of the results of operations for future periods or the results of operations that actually would have been realized had these businesses been a single company during the periods presented or the results that a combined company will experience after the acquisition. The unaudited pro forma information does not give effect to the potential impact of current financial conditions, anticipated synergies, operating efficiencies or cost savings that may or may not be associated with the transactions. The following unaudited consolidated pro forma financial information assumes the Company’s acquisition of MoviePass had occurred on January 1, 2016 and the Zone Technologies, Inc. acquisition as of January 1, 2016. 2017 2016 Revenues $ 24,996,070 $ 15,472,410 Net loss $ (200,153,526 ) $ (15,558,382 ) Net loss attributable to common stockholders $ (195,308,218 ) $ (15,558,382 ) Net loss per share attributable to common stockholders $ (23.36 ) $ (5.78 ) The unaudited consolidated pro forma financial information has been adjusted to give effect to the pro forma events that are (1) directly attributable to the acquisitions (2) factually supportable, and (3) expected to have a continuing impact. |
Acquisition of Assets from Tren
Acquisition of Assets from Trendit Ltd. | 12 Months Ended |
Dec. 31, 2017 | |
Acquisitions/Acquisition of Assets from Trendit Ltd. [Abstract] | |
Acquisition of Assets from Trendit Ltd. | 4. 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. |
Licensing Agreement with Is It
Licensing Agreement with Is It You Ltd. | 12 Months Ended |
Dec. 31, 2017 | |
Licensing Agreement with Is It You Ltd. [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, the license agreement provides for increases in the annual fee. To date, the number of end-user licenses has not exceeded 1.6 million. 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 December 31, 2017. |
Going Concern Analysis
Going Concern Analysis | 12 Months Ended |
Dec. 31, 2017 | |
Going Concern Analysis [Abstract] | |
Going Concern Analysis | 6. Going Concern Analysis During the second quarter of 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern The Company is subject to a number of risks similar to those of other big data technology, technology consulting companies and subscription based businesses, 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, the Company’s ability to maintain and grow its subscriber base 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 growth and operating 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. As of and for the year ended December 31, 2017, the Company had an accumulated deficit of $189,495,185 a net loss of $150,824,842, and net cash used in operating activities of $27,286,382. As of and for the year ended December 31, 2016, the Company had an accumulated deficit of $43,261,418, a net loss of $7,381,071, and net cash used in operating activities of $2,134,313. The Company expects to continue to incur net losses and have significant cash outflows for at least the next twelve months. As of December 31, 2017, the Company had cash and a working capital deficit of $24,949,393 and $107,097,249, respectively. Of the working capital deficit, $72,123,262 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 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. The Company secured financing of $60,000,000 on January 11, 2018 which the Company has used (i) to increase the Company’s ownership interests or other rights and interests in MoviePass; (ii) to satisfy certain indebtedness; and (iii) for general corporate purposes and transaction expenses. The Company may also use the proceeds to make other acquisitions. In January 2018 the Company filed a shelf registration statement on form S-3 that was declared effective by the Securities and Exchange Commission on February 9, 2018, and that allows the Company to offer and sell up to $400,000,000 of securities. Using the shelf registration statement, the Company completed an underwritten public offering of common stock and warrants for gross proceeds of approximately $105 million on February 13, 2018. Provided that the Company continues to comply with the requirements of form S-3, the Company may, in the future, complete additional offerings thereunder. The total cash received from the public offering was $99 million. Considering the above, there is substantial doubt about the Company’s ability to continue as a going concern through April 16, 2019 without raising additional funding. The accompanying 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 | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 7. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation 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”). The consolidated financial statements include all accounts of the Company and its majority owned and controlled subsidiaries. The Company consolidates entities in which it owns more than 50% of the voting common stock and controls operations. All intercompany transactions and balances among consolidated subsidiaries have been eliminated. The Company consolidated the operations of MoviePass as of December 11, 2017 and Zone as of November 9, 2016. 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. Significant estimates made by management include, but are not limited to, allowance for doubtful accounts, purchase accounting allocations, recoverability and useful lives of property, plant and equipment, identifiable intangibles and goodwill, warrant liability, derivative liabilities, the valuation allowance of deferred taxes, contingencies and equity compensation. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with a maturity of three months or less at the date of acquisition to be cash equivalents. The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are stated at amounts due from clients, net of an allowance for doubtful accounts. The Company monitors its accounts receivable balances on a monthly basis to ensure that they are collectible. On a quarterly basis, the Company uses its historical experience to estimate its accounts receivable reserve. The Company’s allowance for doubtful accounts is an estimate based on specifically identified accounts as well as general reserves. The Company evaluates specific accounts where it has information that the client may have an inability to meet its financial obligations. In these cases, management uses its judgment, based on the best available facts and circumstances, and records a specific reserve for that client against amounts due to reduce the receivable to the amount that is expected to be collected. These specific reserves are reevaluated and adjusted as additional information is received that impacts the amount reserved. The Company also establishes a general reserve for all clients based on a range of percentages applied to aging categories. These percentages are based on historical collection and write-off experience. If circumstances change, the Company’s estimate of the recoverability of amounts due the Company could be reduced or increased by a material amount. Such a change in estimated recoverability would be accounted for in the period in which the facts that give rise to the change become known. Carrying Value, Recoverability and Impairment of Long-Lived Assets The Company has adopted Section 360-10-35 of the FASB Accounting Standards Codification for its long-lived assets. Pursuant to Paragraph 360-10-35-17 of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), an impairment loss shall be recognized only if the carrying amount of a long-lived asset (asset group) is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset (asset group) is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset (asset group). That assessment shall be based on the carrying amount of the asset (asset group) at the date it is tested for recoverability. An impairment loss shall be measured as the amount by which the carrying amount of a long-lived asset (asset group) exceeds its fair value. Pursuant to ASC Paragraph 360-10-35-20, if an impairment loss is recognized, the adjusted carrying amount of a long-lived asset shall be its new cost basis. For a depreciable long-lived asset, the new cost basis shall be depreciated (amortized) over the remaining useful life of that asset. Restoration of a previously recognized impairment loss is prohibited. Property and Equipment Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method (after taking into account their respective estimated residual values) over the estimated useful lives of the respective assets which range from three to ten years or the lease term, if shorter, for leasehold improvements. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of operations. Goodwill The Company reviews goodwill for impairment during the fourth quarter of each year, and also upon the occurrence of a triggering event. The Company performs reviews of each of its operating divisions and variable interest entities (collectively, “reporting units”) that have goodwill balances. Generally, fair value is determined using a multiple of earnings, or discounted projected future cash flows, and is compared to the carrying value of a reporting unit for purposes of identifying potential impairment. Project future cash flows are based on management’s knowledge of the current operating environment and expectations for the future. Goodwill impairment is recognized for any excess of the carrying value of the reporting unit’s goodwill over the fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The identification of relevant events and circumstances and how these may impact a reporting unit’s fair value or carrying amount involve significant judgments by management. These judgments include the consideration of the general economic outlook, industry and market considerations, cost factors, overall financial performance, events which are specific to the Company, and trends in the market price of our common stock. Each factor is assessed to determine whether it impacts the impairment test as well as the magnitude of any such impact. While RedZone Map is a fully functioning app available for free in the Apple App Store and the Google Play Store, the Company did not derive any advertising or other revenues from the app during the year ended December 31, 2017. Further, the Company was not able to secure contracts with customers during the year ended December 31, 2017. As such the Company determined that an assessment of Zone’s goodwill should be performed. The analysis of the fair value involved using the discounted cash flow method. Based on the analysis, the Company concluded that its carrying value exceeded its fair value. As a result, the Company recorded $4,599,969 of goodwill impairment during the year ended December 31, 2017. Intangible Assets, net Intangible assets consist of customer relationships, technology, trademarks, broker relationships and patents. Applicable long-lived assets are amortized or depreciated over the shorter of their estimated useful lives, the estimated period that the assets will generate revenue, or the statutory or contractual term in the case of patents. Estimates of useful lives and periods of expected revenue generation are reviewed periodically for appropriateness and are based upon management’s judgment. Intangible assets are amortized on the straight-line method over their useful lives ranging from 3 to 12 years. The Company recorded amortization expense of $1,917,247 and $246,509 during the year ended December 31, 2017 and 2016, respectively. The Company monitors the carrying value of long-lived assets for potential impairment each quarter based on whether certain triggering events have occurred. These events include current period losses or a projection of continuing losses or a significant decrease in the market value of an asset. When a triggering event occurs, an impairment calculation is performed, comparing projected undiscounted future cash flows, utilizing current cash flow information and expected growth rates, to the respective carrying value. If the Company identifies impairment for long-lived assets to be held and used, the Company compares the assets’ current carrying value to the assets’ fair value. Fair value is based on current market values or discounted future cash flows. The Company records impairment when the carrying value exceeds fair market value. With respect to owned property and equipment held for disposal, the value of the property and equipment is adjusted to reflect recoverable values based on previous efforts to dispose of similar assets and current economic conditions. Impairment is recognized for the excess of the carrying value over the estimated fair market value, reduced by estimated direct costs of disposal. The Company recorded impairment charges of $1,657,014 and $0, in regard to definite-lived intangible assets for the years ended December 31, 2017 and 2016, respectively. Debt Discount and Debt Issuance Costs Debt discounts and debt issuance costs incurred in connection with the issuance of debt are capitalized and amortized to interest expense based on the related debt agreements using the effective-interest method. Derivative Instruments The Company evaluates its convertible notes and warrants to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with Paragraph 815-10-05-4 of the FASB ASC and Paragraph 815-40-25 of the Codification. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statements of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities are classified in the balance sheet as current or non-current to correspond with its host instrument. The Company marks to market the fair value of the remaining embedded derivative warrants at each balance sheet date and records the change in the fair value of the remaining embedded derivative warrants as other income or expense in the statements of operations. The Company utilizes the Monte Carlo Method that values the liability of the debt conversion feature derivative financial instruments and derivative warrants based on a probability of a down round event. The reason the Company selected the lattice binomial model is that in many cases there may be multiple embedded features or the features of the bifurcated derivatives may be so complex that a Black-Scholes valuation does not consider all of the terms of the instrument. Therefore, the fair value may not be appropriately captured by simple models. Warrant Liability The Company evaluates its warrants to determine if those contracts qualify as liabilities in accordance with ASC 480-10. The result of this accounting treatment is that the fair value of the warrant liability is marked-to-market each balance sheet date and recorded as a liability, with the change in fair value recorded in the statements of operations as other income or expense. Upon conversion or exercise of a warrant liability, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. For warrants with a fixed conversion price and a fixed number of shares, the Company utilizes a Black Scholes model for valuation. For warrants with variability in the number of shares or conversion price (such as a down round feature), the Company utilizes the Monte Carlo Method to value the warrant liability. The reason the Company selected the lattice binomial model is that in many cases there may be multiple embedded features or the features may be so complex that a Black-Scholes valuation does not consider all of the terms of the instrument. Therefore, the fair value may not be appropriately captured by simple models. 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. As of December 31, 2017, the Company owns a majority interest in MoviePass, a movie-theater subscription service which provides subscribers access to one movie per day at participating theatres, subject to availability, at a fixed monthly or annual fee. We recognize revenue when four basic criteria are met: (1) persuasive evidence exists of an arrangement with the customer reflecting the terms and conditions under which the services will be provided; (2) the services have been provided; (3) the fee is fixed or determinable; and (4) collection is reasonably assured. We consider an activated subscription agreement to be persuasive evidence of an arrangement. Subscription revenue is generated primarily through the sale of monthly or annual paid subscriptions to the MoviePass service. Subscription revenue is recognized evenly over the subscription periods as services are provided. Subscription fees are predominantly paid by charges to customer credit cards or collected from third party partners. We record cash received in advance of revenue recognition as deferred revenue. Research and Development Research and development costs are charged to operations when incurred and are included in operating expenses. Stock Based Compensation The Company follows the fair value recognition provisions in ASC 718, Stock Compensation Advertising The Company expenses advertising costs when incurred and included in selling, general and administrative expenses and amounted to $134,734 and $0 for the years ended December 31, 2017 and December 31, 2016, respectively. Comprehensive Loss Comprehensive loss consists of two components, net loss and other comprehensive loss. Other comprehensive loss refers to revenue, expenses, gains and losses that are recorded as an element of stockholder’s equity but are excluded from net loss. The Company’s other comprehensive loss is comprised of foreign currency translation adjustments. Foreign Currency Translation Assets, liabilities, revenue and expenses denominated in non-U.S. currencies are translated at the rate of exchange prevailing on the date of the consolidated balance sheet. Gains (losses) on translation of the consolidated financial statements are from the Company’s subsidiary where the functional currency is not the U.S. dollar. Translation gains (losses) are reflected as a component of accumulated other comprehensive income (loss). Gains (losses) on foreign currency transactions are included in the consolidated statements of operations. Income Taxes Income taxes are provided in accordance with ASC No. 740, Accounting for Income Taxes Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company is no longer subject to tax examinations by tax authorities for years prior to 2013. The Company had income tax provision of $53,532 and a tax benefit of $14,665 for the year ended December 31, 2017 and 2016, respectively. Tax for the year ended December 31, 2017 was comprised of minimum state taxes and a provision reconciliation of an over estimate of the tax accrual for the Company’s Indian subsidiary’s audit. On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act ("Tax Act"), which made significant changes to the U.S. federal income tax law. The Tax Act will affect 2018 and forward, including but not limited to a reduction in the federal corporate rate from 35.0% to 21.0%, elimination of the corporate alternative minimum tax, a new limitation on the deductibility of certain executive compensation, limitations on net operating losses generated after December 31, 2017 and various other items. We do not expect these changes to have a material impact on our financial statements due to the accumulated net operating losses in the U.S. The Tax Act provides for a one-time “deemed repatriation” of accumulated unrepatriated foreign earnings determined as of November 2, 2017, or December 31, 2017, whichever is greater. We do not expect to be subject to this provision due to availability of federal net operating losses to offset any repatriation tax. in our foreign earnings for tax purposes. The Tax Act also created a new requirement that certain income earned by controlled foreign corporations must be included currently in the gross income of the U.S. shareholder under the Global Intangible Low-Taxed (GILTI) provision. We do not expect that any future foreign earnings will be subject to GILTI due to our federal net operating losses. Earnings 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 ASC. 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 attributable to common stockholder’s calculation as they were anti-dilutive: December 31, December 31, Warrants 9,631,588 70,714 Conversion features on convertible notes 1,370,396 511,989 Total potentially dilutive shares 11,001,984 582,703 Reclassification Certain prior period amounts have been reclassified to conform to current period presentation. Business Combinations The Company accounts for business combinations under the acquisition method of accounting. Identifiable assets acquired, liabilities assumed and non-controlling interest in the acquiree are recognized and measured as of the acquisition date at fair value. Additionally, contingent consideration is recorded at fair value on the acquisition date and classified as either liability or equity. Goodwill is recognized to the extent by which the aggregate of the acquisition date fair value of the consideration transferred and any non-controlling interests in the acquiree exceeds the recognized basis of the identifiable assets acquired net of assumed liabilities. Determining the fair value of assets acquired liabilities assumed and non-controlling interests requires management’s judgement and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates and asset lives among other items. Acquisition related costs, including advisory, legal, accounting valuation and other costs are expensed in the periods in which the costs are incurred. The results of operations of acquired businesses are included in the consolidated financial statements form the date of acquisition. 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 and the Conversion Shares subject to forfeiture are classified as level 3 liabilities, and are measured at fair value on a recurring basis. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers” ASU No. 2014-09 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual reporting periods. The Company developed an implementation plan to adopt this new guidance, which included an assessment of the impact of the new guidance on our financial position and results of operations. The Company has substantially completed its assessment and has determined that this standard will have no impact on its financial position or results of operations, except enhanced disclosure regarding revenue recognition, including disclosures of revenue streams, performance obligations, variable consideration and the related judgments and estimates necessary to apply the new standard. On January 1, 2018, the Company adopted the new accounting standard ASC 606, Revenue from Contracts with Customers 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 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 January 2017, the FASB issued ASU No 2017-04 Intangibles-Goodwill and Other Simplifying the Accounting for Goodwill Impairment 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 | 12 Months Ended |
Dec. 31, 2017 | |
Prepaid Expenses and Other Current Assets [Abstract] | |
Prepaid Expenses and Other Current Assets | 8. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following: December 31, 2017 December 31, 2016 Vendor deposits $ 147,533 $ 300,199 Tax 108,433 187,776 Deposits 230,711 - Insurance 86,181 44,517 Professional fees and services 2,918,611 42,833 Rent 52,650 13,087 Other 13,692 8,759 Total prepaid expenses and other current assets $ 3,557,811 $ 597,171 |
Convertible Promissory Note of
Convertible Promissory Note of MoviePass | 12 Months Ended |
Dec. 31, 2017 | |
Convertible Promissory Note of Moviepass [Abstract] | |
Convertible Promissory Note of MoviePass | 9. 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 the MoviePass Note in the principal amount of $5,000,000, which included an additional $50,000 that was advanced by the Company to MoviePass for legal and audit expenses prior to such date. On October 6, 2017, the MoviePass Note was amended and restated to increase the principal amount from $5,000,000 to $11,500,000. As described in Note 3, the MoviePass Note was exchanged pursuant to the close of the MoviePass Transaction. |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2017 | |
Property and Equipment, Net [Abstract] | |
Property and Equipment, net | 10. Property and Equipment, net Property and equipment, net on December 31, 2017 and December 31, 2016 are as follows: December 31, 2017 December 31, 2016 Equipment and leaseholds $ 130,956 $ 106,460 Furniture and fixtures 163,721 34,186 Software 213,945 167,337 Subtotal 508,622 307,983 Less: Accumulated depreciation (274,587 ) (262,771 ) Total $ 234,035 $ 45,212 The Company recorded depreciation expense of $34,730 and $12,870 for the year ended December 31, 2017 and 2016, respectively. |
Intangible Assets, Net and Good
Intangible Assets, Net and Goodwill | 12 Months Ended |
Dec. 31, 2017 | |
Intangible Assets, Net and Goodwill [Abstract] | |
Intangible Assets, net and Goodwill | 11. Intangible Assets, net and Goodwill The Company’s intangible assets consisted of the following on December 31, 2017 and December 31, 2016: December 31, December 31, Estimated Useful Life Net Book Value Net Book Value Customer relationships 7 $ 2,560,000 $ - Technology 3 8,070,000 4,270,000 Tradenames and trademarks 7 19,550,000 1,977,000 Broker relationships 5 - 4,200 Patents 12 196,353 - Subtotal 30,376,353 6,251,200 Less: Accumulated amortization (1,839,571 ) (246,509 ) Total $ 28,536,782 $ 6,004,691 The Company recorded amortization expense of $1,917,247 and $246,509 for the years ended December 31, 2017 and 2016, respectively. The following table outlines estimated future annual amortization expense for the next five years and thereafter: December 31, 2018 $ 5,026,976 2019 4,821,384 2020 3,532,137 2021 2,336,976 2022 2,336,976 Thereafter 10,482,333 $ 28,536,782 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 There were impairment charges recognized during the years ended December 31, 2017 and 2016 of $4,599,969 and $0, respectively, that related to goodwill associated with the acquisition of Zone. In addition, in 2017 the Company recognized impairment charges of $1,657,014 related to the net book value of trademarks and broker relationships associated with the Zone acquisition. The following table summarizes our goodwill balances at December 31, 2017 as well as changes to goodwill during 2017: Balance as of December 31, 2016 $ 4,599,969 Goodwill acquired – MoviePass acquisition 79,137,177 Goodwill impairment charge – Zone Technologies, Inc. (4,599,969 ) Balance as of December 31, 2017 $ 79,137,177 |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 12 Months Ended |
Dec. 31, 2017 | |
Accounts Payable and Accrued Expenses [Abstract] | |
Accounts Payable and Accrued Expenses | 12. Accounts Payable and Accrued Expenses As of December 31, 2017 and December 31, 2016, accounts payable and accrued expenses consisted of the following: December 31, December 31, Accounts payable $ 5,087,060 $ 517,973 Accrued ticket expense 4,743,582 - Accrued professional fees 597,187 509,433 Accrued credit card fees 782,670 - Accrued payroll expense 312,149 187,835 Accrued other expense 852,841 115,877 Accrued interest 768,515 - Total $ 13,144,003 $ 1,331,118 |
Securities Purchase Agreement
Securities Purchase Agreement | 12 Months Ended |
Dec. 31, 2017 | |
Securities Purchase Agreement [Abstract] | |
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 acquisition of Zone. The September 2016 Notes had a maturity date of December 7, 2017. As of December 31, 2017, the Investor had fully prepaid the Investor Note and subsequently converted the amount due under the September 2016 Notes into 83,306 shares during the year ended December 31, 2017 and 804,401 shares during the year ended December 31, 2016 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 twelve months ended December 31, 2017, the Company had interest expense of $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 unpaid principal amount of the secured promissory note is offset by the same principal amount owed to the Company pursuant to the December 2016 Investor Note. As cash payments are applied to the December 2016 Investor Note, a derivative liability is recognized and placement agent warrants are issued. At the time of issuance, a note in the amount of $720,000 was issued as an original issue discount in conjunction the December 2016 Notes. This note, and both the derivative liability and the warrants are accounted for as debt discount to the December 2016 Notes and accreted into interest expense over the life of the note using the effective interest method. The December 2016 Notes had a maturity date of August 2, 2017 which was subsequently amended to October 8, 2017. On September 19, 2017 (the “Exchange Date”) $5,820,000 of the principle balance of this noted had already been converted to shares of the Company’s common stock when the Company and the Investor entered into an Amendment and Exchange Agreement. Pursuant to this agreement, the Company exercised a mandatory conversion of $890,000 of the remaining $900,000 in principal of the December 2016 Notes in exchange for 445,367 shares of the Company’s common stock and an Investor prepayment of $670,000 of the December 2016 Investor Note. The principal balance converted contained an original issuance discount related to placement agent warrants issued in conjunction with the financing and a derivative liability associated with the embedded conversion feature. Upon exercise of the mandatory conversion, the outstanding balance of the original issuance discount was derecognized through interest expense. On the Exchange Date the Company issued to the Investor a Senior Convertible Note in the principal amount of $697,000 (the “Exchange Note”) in exchange for the remaining $10,000 outstanding principal amount of the December 2016 Notes. With the issuance of the Exchange Note, the resulting cash flows of the remaining December 2016 Notes were considered to be significantly modified within the context of ASC 470 and a loss on extinguishment was recognized in the amount of $683,885. The Exchange Note was a non-interest-bearing note and was convertible into shares of the Company’s common stock at a price of $3.00 per share. As of December 31, 2017, the Investor had fully converted the Exchange Note for 232,334 shares of the Company’s common stock. 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 twelve months ended December 31, 2017, the Company had $150,265 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 which offsets the February 2017 notes of the same amount. The issuance of this note is meant to aid in the funding of Zone prior to the entity’s ability to generate revenues. Upon issuance, the initial note with a principal balance of $681,818 was accounted for as an original issuance discount and accreted into interest expense over the life of the note. As cash payments are applied to the February 2017 Investor Note, a derivative liability is recognized and placement agent warrants are issued. Both the derivative liability and the warrants are accounted for as debt discount to the February 2017 Notes and accreted into interest expense over the life of the note using the effective interest method. The February 2017 Notes had a maturity date of October 8, 2017. As of December 31, 2017, the Investor had fully prepaid the February 2017 Investor Note and had subsequently converted the principal amount due under the February 2017 Notes and approximately $49,000 of interest into 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 year ended December 31, 2017, the Company had interest expense of $173,963 related to the February 2017 Notes as the final principal balance was converted in August 2017. In a letter agreement executed on August 27, 2017, in consideration for the prepayment in the amount of $2,500,000, on 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 (the “Exchange Shares”) 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 was 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 was 45 days following the issuance of the New Note, and the conversion price of the New Notes was $4.50, or, at the election of the Investor, the Investor could convert at the Alternate Conversion Price. The Alternate Conversion Price was 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 was defined as $3.00 through October 4, 2017 and $0.50 following October 4, 2017. On October 23, 2017, the Company and the Investor entered into a Third Amendment and Exchange Agreement (the “Third Exchange Agreement”) for the purpose of exchanging the New Note for 947,218 shares of common stock (the “New Exchange Shares”) and rights (the “Rights”) to receive 552,782 additional shares of common stock. As partial consideration for the New Exchange Shares and the Rights, the Investor agreed, among other things, to terminate the Investor’s right to exchange the remaining Exchange Shares for New Notes. The termination of these rights is accounted for as financing fees associated with the February 2017 Notes and valued at $19,950,000 based on the trading price of the Company’s stock on the date of the Third Amendment and Exchange Agreement. 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 which offsets the August 2017 Notes of the same amount. The issuance of these notes is meant to aid in the funding of the acquisition of the MoviePass Shares (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. The $220,000 secured promissory note payable by the Investor is issued in exchange for a $250,000 Senior Secured Convertible Note, therefore a discount of $30,000 is recognized upon issuance and accreted into interest expense over the life of the note using the effective interest method. Upon issuance, the Investor Warrants were recorded at fair value and accounted for as an original issuance discount to the August 2017 Notes. The excess in value of the Investor Warrants over the August 2017 Notes upon issuance was recorded as interest expense, while the capitalized balance was accreted into interest expense over the life of the August 2017 Notes. At December 31, 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. As of December 31, 2017, the Investor had fully prepaid the August 2017 Investor Note and subsequently converted $5,794,560 in principal amount, plus accrued interest, of the August 2017 Notes into 1,482,639 shares of the Company’s common stock. As of December 31, 2017, the unpaid principal amount of the August 2017 Notes owed to the Investor was $4,505,440. 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 year ended December 31, 2017, the Company had $115,096 of interest expense pertaining to the unpaid principal amount of the August 2017 Notes with $68,572 accrued as of year end. The Investor Warrant included anti-dilution provisions. The anti-dilution provisions were triggered when the Company issued the Exchange Note in the principal amount of $697,000 to the Investor. Because the Exchange Note had a conversion price of $3.00 per share, which was 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. As of December 31, 2017, the Investor had elected to, in a cashless transaction, exercise the Investor Warrant to purchase 1,715,006 shares of common stock and also paid the Company $977,142 to exercise the Investor Warrant for an additional 325,714 shares of common stock. On November 21, 2017 in conjunction with the Fourth Amendment and Exchange Agreement, the remaining 10,000 shares of common stock subject to the Investor Warrant were exchanged for a new warrant (the “Exchange Warrant”). The Exchange Warrant is in substantially the form of the August Warrant, except that: ● The Exchange Warrant has an exercise price of $14.31 ● The expiration date of the Exchange Warrant is November 21, 2022. ● The Exchange Warrant may not be exercised for the purchase of shares of common stock unless the stockholders of the Company approve the issuance in compliance with the rules and regulations of the Nasdaq Capital Market (the “Stockholder Approval”). ● The Exchange Warrant is subject to redemption, refund or alternate cashless exercise after the August Note is no longer outstanding (or on or after February 16, 2018 if the Company fails to remain current in its filings or an event of default under the August 2017 Notes occurs) (the “Adjustment Time”). With the issuance of the Exchange Warrant, the resulting cash flows of the remaining Investor Warrant were considered to be significantly modified within the context of ASC 470. Accordingly, the incremental change in fair value between the Investor Warrant and the Exchange Warrant is calculated as $12,878,864 and recorded as interest expense. On November 7, 2017, the Company issued two Senior Secured Convertible Notes (the “November 2017 Notes”) in the aggregate principal amount of $100,000,000 (collectively, the “November 2017 Notes”) to institutional investors (the “Investors”). The November Notes consist of a Senior Secured Convertible Note in the amount of $5,000,000 (the “November Initial Note”) and a Senior Secured Convertible Note in the amount of $95,000,000 (the “November Additional Note”) in exchange for an upfront cash payment of $5,000,000 and a senior secured promissory note of $95,000,000 (the “November 2017 Investor Note”) to aid in the funding of the acquisition of the MoviePass Shares. As of December 31, 2017, the investors prepaid $15,650,000 of the November 2017 Investor Note with the remaining principal being subject to master netting agreements between the Company and the Investors. In conjunction with the prepayment, the Company was also obligated to pay the Investor interest which would have accrued with respect to the outstanding balance for the period from the redemption through the maturity date (the “Make-Whole Interest”). The Company elected to defer payment of the Make-Whole Interest by capitalizing the full balance under the same terms as the original November 2017 Notes. As of December 31, 2017 the outstanding balance owed on the Make-Whole Interest was $2,943,069. The November 2017 Notes have a maturity date of November 7, 2019. As of December 31, 2017, the contracted conversion prices for the November 2017 Notes, which include both the November Initial Note and November Additional Note, were $12.06. As of December 31, 2017, the Investors had converted $0 of the November 2017 Notes into shares of the Company’s common stock. On any unfunded principal balance of the November 2017 Investor Notes the Company owed to the Investors a 5.25% interest obligation which is due quarterly and calculated on a 360-day basis. For the funded portion of the November 2017 Notes the Company has a 10% interest obligation. For the year ended December 31, 2017, the Company had $4,714,723 of interest expense pertaining to the November 2017 Notes and $633,873 accrued at yearend. 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 twelve months ended December 31, 2017, the Company had interest expense pertaining to the September Placement Note in the amount of $1,200. 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, Placement Agent 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. On October 2, 2017 the Placement Agent elected to exercise the Placement Agent Warrant in full in the form of a cashless exercise, calculated based on the September 29, 2017 VWAP. On October 5, 2017, 22,578 shares were issued. 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 $4.54 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 December Placement Agent Warrants at exercise prices of $3.00 per share, $3.47 per share, $4.00 per share and $6.13 per share. On October 6, 2017 the Placement Agent elected to exercise the Placement Agent Warrant in full in the form of a cashless exercise, calculated based on the September 29, 2017 VWAP. On October 6, 2017, 84,735 shares were issued. 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 February Placement Agent Warrants for the purchase of 133,334 shares of common stock at an exercise price of $3.00 per share. As of December 31, 2017 the Placement Agent has not elected to exercise the 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 December 31, 2017, the Company received $8,800,000 of cash payments in conjunction with the August 2017 Notes and issued 176,000 of August Placement Agent Warrants for the purchase of shares of common stock at exercise prices of $3.00 and $14.27 per share. As of December 31, 2017, the Placement Agent has not elected to exercise any shares of the August Placement Agent Warrants. The Company entered into an agreement with the Placement Agent for assistance with the placement of the November 2017 Notes. The Placement Agent accepted from the Company a 5-year warrant (the “November Placement Agent Warrant”) as partial payment for the Placement Agent’s services. The November 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 November Series A Note and the November Series B Note in the combined principal amount of $100,000,000 becomes convertible at an exercise price equal to the greater of the exercise price of the November 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 November Placement Agent Warrant. During the period ended December 31, 2017, the Company received $11,400,000 of cash payments for the November 2017 Notes resulting in the issuance of 75,618 warrants at exercise prices of $12.06 per share. As of December 31, 2017, the Placement Agent had not purchased any shares from the exercise of the November Placement Agent Warrants. Note Activity: Senior Secured Convertible Notes consist of the following: December 31, 2017 December 31, 2016 September Notes $ - $ 20,480 September Placement Note - 902 December Notes - 10,043 February 2017 Notes - - August 2017 Notes 2,061,072 - September 2017 Exchange Note - - November 2017 Notes 1,550,555 - $ 3,611,627 $ 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: December 31, 2017 December 31, 2016 September 2016 Notes $ - $ 332,000 September Placement Agent Note - 80,000 December 2016 Notes - 1,820,000 February 2017 Notes - - August 2017 Notes 4,505,440 - September 2017 Exchange Note - - November 2017 Notes 2,943,069 - Unamortized discounts (3,836,882 ) (2,200,575 ) $ 3,611,627 $ 31,425 During the year ended December 31, 2017, the Investor converted a total of $19,215,378 in principal and $154,577 in interest into 5,577,605 shares of the Company’s common stock. |
Fair Value of Financial Assets
Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis | 12 Months Ended |
Dec. 31, 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 Financial liabilities measured at fair value on a recurring basis are summarized below and disclosed on the consolidated balance sheet as of December 31, 2017 and December 31, 2016: Fair Value Measurement Amount at Fair Value Level 1 Level 2 Level 3 December 31, 2017 Liabilities Derivative liability – warrants $ 67,288,800 $ - $ - $ 67,288,800 Derivative liability – conversion feature 4,834,462 - - 4,834,462 Total $ 72,123,262 $ - $ - $ 72,123,262 December 31, 2016 Liabilities Derivative liability – warrants $ 230,663 $ - $ - $ 230,663 Derivative liability – conversion feature 997,129 - - 997,129 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 year ended December 31, 2017: Amount Balance at December 31, 2016 $ 1,207,792 Purchases, issuances and settlements 119,670,364 Conversions to paid in capital (14,009,654 ) Warrant exercises (26,851,565 ) Change in fair value of warrant liabilities 20,409,937 Change in fair value of derivative liabilities (28,303,612 ) Balance at December 31, 2017 $ 72,123,262 The fair value of the derivative conversion features and warrant liabilities as of December 31, 2017 and December 31, 2016 were calculated using a Monte-Carlo option model valued with the following weighted average assumptions: December 31, 2017 December 31, 2016 Amount Amount Dividend yield 0% 0% Expected volatility 45 % - 270 % 154 % - 230 % Risk free interest rate 1.06 % - 2.20 % 0.82 % - 1.12 % Contractual term (in years) 0.19 - 5.00 0.67 - 5.00 Exercise price $ 0.001 - $ 14.310 $ 4.000 - $ 9.360 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 | 12 Months Ended |
Dec. 31, 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 remained available for issuance on December 31, 2017. As of December 31, 2017 there have not been any stock option grants made pursuant to the 2014 Plan. During 2017 the Company issued 240,000 shares of common stock pursuant to the 2014 Plan to a consultant for the Company and recognized $841,200 in related stock compensation expense. Such amount is included in selling, general and administrative expenses. From time to time the Board of Directors has also authorized the issuance of shares of common stock outside of the 2014 Plan to consultants and employees for services rendered. During 2017 the Company awarded 908,333 shares to consultants who provided services to the Company. In connection with such awards the Company recorded stock compensation expense of $1,553,722 which is included in selling, general and administrative expenses. Unamortized stock compensation costs related to these awards of $2,885,278 will be recognized over the anticipated service period in 2018. During 2017, the Board authorized awards for an aggregate 2,242,167 shares of common stock to employees and consultants for services provided during 2017 which shares had not been issued as of December 31, 2017. Accordingly, the Company has recorded expense of $21,320,705 with respect to such awards which is included in selling, general and administrative expenses and also recorded a liability on the balance sheet related to these costs which will be settled in shares. The shares issued both pursuant to the 2014 Plan and outside the 2014 Plan have generally been fully vested and contain provisions with respect to salability pursuant to lock up agreements ranging from 18 to 24 months from the award date. The Company recognizes stock compensation expense generally upon the grant date and over the period of vesting or period that services will be provided. Compensation associated with shares issued or to be issued to consultants and other non-employees is recognized over the expected service period beginning on the measurement date which is generally the time the Company and the service provider enter into a commitment whereby the Company aggress to grant shares in exchange for the services to be provided. MoviePass, Inc. MoviePass maintained the 2011 Equity Incentive Plan (the “2011 Plan”) during 2017. The 2011 Plan provides for the grant of up to 46,200,097 shares of common stock for issuance as non-statutory or incentive stock options, stock appreciation rights, restricted stock and restricted stock units to the employees, officers, directors, or consultants of MoviePass. The 2011 Plan is administered by the Board of Directors of MoviePass, who select the individuals to whom options will be granted, determines the number of options to be granted, and the term and exercise price if each option. Stock options granted pursuant to the terms of the 2011 Plan generally cannot be granted with an exercise price of less than 100% of the fair market value on the date of grant. The term of the options granted under the 2011 Plan cannot be greater than 10 years. Options vest at varying rates generally over three to five years along with performance based options. For the period December 11, 2017 (the MoviePass acquisition date) through December 31, 2017, there was no option activity relating to the 2011 Plan. The following table reflects the outstanding options of the 2011 Plan as of December 31, 2017: Weighted Average Options for Common Shares Exercise Price Remaining Contractual Term Aggregate Intrinsic Value Outstanding as of December 31, 2016 17,553,242 $ 0.04 9.62 $ - Granted 2017 12,477,623 0.26 Exercised 2017 (193,583 ) 0.06 Forfeited, cancelled, expired (1,440,854 ) 0.04 Outstanding as of December 31, 2017 28,396,428 $ 0.14 9.13 $ 8,313,684 The Company recognized stock compensation expense of $204,685 for the period December 11, 2017 (the acquisition date of MoviePass) to December 31, 2017. This amount is included in selling, general, and administrative expenses in the consolidated statement of operations. No options were granted during the period from December 11, 2017 (the acquisition date of MoviePass, Inc.) to December 31, 2017. The following table summarizes additional information regarding the outstanding and exercisable options granted pursuant to the MoviePass 2011 Plan. Vested Options outstanding All Options Outstanding Exercise Price Number of Options Weighted Average Remaining Term Aggregate Intrinsic Value Number of Options Weighted Average Remaining Term Aggregate Intrinsic Value $ 0.240 241,818 5.44 $ 45,945 241,818 5.44 $ 45,945 $ 0.040 10,278,210 8.81 4,008,502 16,308,570 8.81 6,360,342 $ 0.430 - - - 6,430,182 9.93 - $ 0.048 70,481 5.08 26,924 370,198 4.47 141,416 $ 0.080 2,447,725 9.62 856,704 5,045,660 9.62 1,765,981 Total 13,038,234 $ 4,938,075 28,396,428 $ 8,313,684 |
Concentration of Credit Risk
Concentration of Credit Risk | 12 Months Ended |
Dec. 31, 2017 | |
Concentration of Credit Risk [Abstract] | |
Concentration of Credit Risk | 16. Concentration of Credit Risk Consulting As of December 31, 2017 and December 31, 2016, respectively, 4 customers accounted for 90.1% and 4 customers accounted for 91.3% of consulting revenues. As of December 31, 2017 and December 31, 2016, respectively, 4 customers accounted for 62.6% and 3 customers accounted for 62.2% of consulting accounts receivables. As of December 31, 2017 and December 31, 2016, respectively, 3 vendors accounted for 82.7% and 1 vendor accounted for 88.7% of consulting accounts payables. Technology As of December 31, 2017 and December 31, 2016, respectively, 3 vendors accounted for 60.8% and 4 vendors accounted for 90.8% of technology accounts payables. Subscription As of December 31, 2017 and December 31, 2016, respectively, 2 customers accounted for 100.0% for subscription accounts receivables. As of December 31, 2017 and December 31, 2016, respectively, 1 vendor accounted for 41.0% and 4 vendors accounted for 63.6% of subscription accounts payables. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 17. Commitments and Contingencies The Company’s operating lease commitments at December 31, 2017 are comprised of the following: 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 In addition, the Company’s Indian subsidiary has 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. The lease agreement expires in June 2022. Rent expense was $298,758, and $261,016 for the years ended December 31, 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 expires in April 2020 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 December 31, 2017, the Company does not have any “Off Balance Sheet Arrangements”. Legal Proceeding: On August 24, 2016, 3839 Holdings LLC (“3839 Holdings”) filed a summons and complaint in the Supreme Court of the State of New York, New York County, against Theodore Farnsworth (“Mr. Farnsworth”), Highland Holdings Group, Inc. (“HHGI”) and Zone Technologies, Inc., collectively referred to as the “Zone Defendants”. The claims arise out of 3839 Holdings’ purchase of a 10% interest in HHGI and an unsuccessful real estate investment. The Complaint asserted claims for: (i) breach of contract, breach of the implied covenant of good faith and fair dealing and breach of fiduciary duty against Mr. Farnsworth and HHGI; (ii) unjust enrichment against Mr. Farnsworth and Zone; (iii) fraudulent conveyance against all of the Zone Defendants; and (iv) alter ego liability against Mr. Farnsworth for HHGI’s obligations. The suit also sought, as part of any final relief it may obtain after trial, an injunction against the merger between Zone and the Company, along with an award of attorneys’ fees. On or about December 7, 2016, 3839 Holdings amended the complaint to add the Company as a defendant, alleging claims against the Company for unjust enrichment, fraudulent conveyance, aiding and abetting a fraudulent conveyance, tortious interference with contract, permanent injunction and attorneys’ fees and cost. 3839 Holdings sought compensation from the Company and the Zone Defendants in an amount of no less than $3,000,000 plus prejudgment interest, attorney’s fees and costs and expenses. 3839 Holdings is also sought an injunction to prevent the Company and the Zone Defendants from transferring or disposing of assets. On November 24, 2017, the Supreme Court of the State of New York granted the motion to dismiss filed by Zone and the Company, and all claims asserted by 3839 Holdings against Zone and the Company have been dismissed, however, 3839 Holdings is appealing the dismissal. |
Transactions with Related Parti
Transactions with Related Parties | 12 Months Ended |
Dec. 31, 2017 | |
Transactions with Related Parties [Abstract] | |
Transactions with Related Parties | 18. Transactions with Related Parties Gadiyaram Consulting Agreement On October 5, 2017, the Company entered into a consulting agreement (the “Consulting Agreement”) with Mr. Muralikrishna Gadiyaram (the “Consultant”), a director of Helios for a period of two years from the agreement date (the “Consulting Term”). The Consulting Agreement formalized the arrangement of the consulting services without compensation since the acquisition of Zone. Such fees have been accrued and paid by the Company since January 1, 2017. Mr. Gadiyaram will continue to provide guidance to the Company and Zone relating to the further development of the respective businesses and technologies. In addition to the aforementioned service, if requested by the Company, Mr. Gadiyaram will provide guidance with respect to the development of any businesses or technologies that the Company or Zone may acquire during the Consulting Term, including, but not limited to, MoviePass. Pursuant to the Consulting Agreement, the Consultant will receive fees in the amount of $18,750 per month in cash. Following the execution of the Consulting Agreement, the Company paid the consultant the accrued consulting fees for the period January1, 2017 through November 30, 2017. The amount payable to Mr. Gadiyaram as of December 31, 2017 was approximately $18,750. 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 in 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 year ended December 31, 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. |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2017 | |
Warrants [Abstract] | |
Warrants | 19. Warrants The following is a summary of the Company’s warrant activity during the year ended December 31, 2017: Warrant Shares Weighted Average Exercise Price Weighted Outstanding/exercisable – December 31, 2016 70,714 $ 6.26 4.87 Granted 12,755,539 6.47 4.90 Exercised (3,194,665 ) 4.33 4.71 Total 9,631,588 $ 6.04 4.86 |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 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 three segments, Consulting, Technology, and Subscription. During the year ended December 31, 2016, the Company operated two segments. 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 following balance sheet dates presented, and for the year ended December 31, 2017 and 2016, (Subscription segment information from the date of acquisition through December 31, 2017): For the Year Ended December 31, 2017 2016 Consulting Revenue $ 4,512,300 $ 6,759,700 Cost of revenue 3,678,294 4,860,927 Gross profit 834,006 1,898,773 Total operating expenses 28,364,072 3,437,283 Loss from operations (27,530,066 ) (1,538,510 ) Total other expense (94,686,108 ) (5,299,401 ) Provision for income taxes (49,932 ) 14,665 Total net loss $ (122,266,106 ) $ (6,823,246 ) Technology Revenue $ - $ - Cost of revenue - - Gross profit - - Total operating expenses 15,587,592 557,825 Loss from operations (15,587,592 ) (557,825 ) Total other expense (67,958 ) - Provision for income taxes - - Total net loss $ (15,655,550 ) $ (557,825 ) Subscription Revenue $ 5,929,267 $ - Cost of revenue 16,860,415 - Gross loss (10,931,148 ) - Total operating expenses 1,967,978 - Loss from operations (12,899,126 ) - Total other expense (460 ) - Provision for income taxes (3,600 ) - Total net loss $ (12,903,186 ) $ - As of December 31, As of December 31, 2017 2016 Consulting Cash and cash equivalents $ 569,886 $ 1,095,732 Accounts receivable $ 332,753 $ 410,106 Unbilled receivables $ - $ 45,207 Prepaid expenses and other current assets $ 3,382,127 $ 554,338 Property and equipment $ 96,464 $ 34,368 Intangible assets, net $ - $ - Deposits and other assets $ 129,119 $ 59,189 Accounts payable and accrued expenses $ 2,088,867 $ 1,196,668 Liabilities to be settled in stock $ 20,875,045 $ - Convertible notes payable $ 3,611,627 $ 31,425 Warrant liability $ 67,288,800 $ 230,663 Derivative liability $ 4,834,462 $ 977,129 Deferred revenue $ - $ - Technology Cash and cash equivalents $ 21,933,765 $ 1,651,508 Prepaid expenses and other current assets $ 21,666 $ 42,833 Property and equipment $ 95,301 $ 10,844 Intangible assets, net $ 2,829,295 $ 6,004,691 Goodwill $ - $ 4,599,969 Deposits and other assets $ 10,052 $ - Accounts payable and accrued expenses $ 607,622 $ 134,450 Liabilities to be settled in stock $ 445,660 $ - Subscription Cash and cash equivalents $ 2,445,742 $ - Accounts receivable $ 27,137,466 $ - Prepaid expenses and other current assets $ 154,018 $ - Property and equipment $ 42,270 $ - Intangible assets, net $ 25,707,487 $ - Goodwill $ 79,137,177 $ - Deposits and other assets $ 8,000 $ - Accounts payable and accrued expenses $ 10,447,514 $ - Deferred revenue $ 54,425,630 $ - |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes [Abstract] | |
Income Taxes | 21. Income Taxes The Company accounts for income taxes using the liability method. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and (liabilities) consist of the following: December 31, 2017 December 31, 2016 Licensing revenues $ 4,144,000 $ (7,000 ) Accounts receivable reserve 1,000 194,000 Depreciation and amortization (7,212,000 ) 353,000 Investments - 928,000 Other 132,000 1,141,000 Tax credits 120,000 - Net operating losses 46,126,000 9,427,000 Subtotal 43,311,000 12,036,000 Valuation allowance (43,311,000 ) (12,036,000 ) Total $ - $ - Internal Revenue Code Section 382 places a limitation on the utilization of federal net operating loss and other credit carry-forwards when an ownership change, as defined by the tax law, occurs. Generally, this occurs when a greater than 50 percentage point change in ownership occurs. On September 5, 2016, HMIT acquired a greater than 50 percent ownership of the Company. Additionally, on December 11, 2017 the Company completed its acquisition of a majority interest in MoviePass, a Delaware corporation with approximately $73 million in federal and state net operating losses. Accordingly, the actual utilization of the net operating loss carry-forwards for tax purposes are limited annually under Code Section 382 to a percentage of the fair market value of both the Company and MoviePass as of the date of both ownership changes. At December 31, 2016, the Company has total federal net operating loss carry-forwards of approximately $168 million, approximately $83 million attributed to the Company, and approximately $90 million attributed to MoviePass, which will begin to expire in 2020. The full utilization of the deferred tax assets in the future is dependent upon the Company's ability to generate taxable income; accordingly, a valuation allowance has been established against the Company's net deferred tax assets. During the years ended December 31, 2017 and 2016, the valuation allowance increased by approximately $31,275,000 and $4,514,000, respectively. December 31, December 31, Current Federal $ - $ - State and local 14,000 12,000 Foreign 39,532 (26,665 ) Total current $ 53,532 $ (14,665 ) Deferred: Federal $ - $ - State and local - - Foreign - - Total deferred - - Total $ - $ - December 31, December 31, Federal statutory rate 34.0 % 34.0 % State and local taxes net of federal tax benefit -0.1 % -0.1 % Non-deductible expenses -16.8 % 18.9 % Foreign tax expense 0.1 % -0.7 % Non-deductible expenses -19.2 % 18.9 % Change in valuation allowance 1.9 % -51.9 % Total -0.1 % 19.1 % On December 22, 2017, the United States enacted the Tax Act, which made significant changes to the U.S. federal income tax law. Set forth below is a discussion of certain provisions of the Tax Act and our preliminary assessment of the effect of such provisions on the Company's results of operations, cash flows and consolidated financial statements. The Tax Act will affect 2018 and forward, including but not limited to a reduction in the federal corporate rate from 35.0% to 21.0%, elimination of the corporate alternative minimum tax, a new limitation on the deductibility of certain executive compensation, limitations on net operating losses generated after December 31, 2017 and various other items. We do not expect these changes to have a material impact on our financial statements due to the accumulated net operating losses in the U.S. The Tax Act provides for a one-time “deemed repatriation” of accumulated unrepatriated foreign earnings determined as of November 2, 2017, or December 31, 2017, whichever is greater. We do not expect to be subject to this provision due to availability of federal net operating losses to offset any repatriation tax. in our foreign earnings for tax purposes. The Tax Act also created a new requirement that certain income earned by controlled foreign corporations must be included currently in the gross income of the U.S. shareholder under the Global Intangible Low-Taxed (GILTI) provision. We do not expect that any future foreign earnings will be subject to GILTI due to our federal net operating losses. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which addresses how a company recognizes provisional amounts when a company does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the effect of the changes in the Act. SAB 118 provides for a measurement period that should not extend beyond one year from the Act enactment date for companies to complete the accounting under Accounting Standards Codification Topic 740, Income Taxes (“ASC 740”). In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate to be included in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provision of the tax laws that were in effect immediately before the enactment of the Act. Based on our initial analysis of the Tax Act, the Company has made reasonable estimates of its 2017 impact. As a result of the federal corporate tax rate reduction from 35% to 21%, we re-measured certain deferred tax assets and liabilities, which resulted in a reduction in our DTA of approximately $20.5 million, that was offset by a decrease in our valuation allowance. As guidance and technical corrections, if any, are provided in the upcoming quarters, the Company will adjust its provisional estimates as required. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | 22. Subsequent Events Senior Convertible Bridge Note Financing On January 23, 2018 (the “Subscription Date”), pursuant to a securities purchase agreement entered into by the Company and an institutional investor (the “Buyer”), the Company sold and issued senior convertible notes in the aggregate principal amount of $60,000,000 (each, a “Note” and collectively, the “Notes”), consisting of (i) a Series A-1 Senior Bridge Subordinated Convertible Note in the aggregate principal amount of $25,000,000 (the “Series A-1 Note”) and (ii) a Series B-1 Senior Secured Bridge Convertible Note in the aggregate principal amount of $35,000,000 (the “Series B-1 Note”) for consideration consisting of (i) a cash payment in the aggregate amount of $25,000,000 (the “Cash Amount”), and (ii) a secured promissory note payable by the Buyer to the Company (the “Investor Note”) in the aggregate principal amount of $35,000,000 (the “Financing”). The date on which the Notes were issued is referred to as the “Closing Date.” Unless earlier converted or redeemed, the Notes will mature on the second anniversary of the Closing Date. The Company is required to redeem the Notes (i) at the option of the Buyer from and after June 7, 2018; (ii) at the option of the Buyer if the Company completes a subsequent public or private offering of debt or equity securities, including equity-linked securities (subject to certain excluded issuances); (iii) upon the occurrence of an Event of Default, including a Bankruptcy Event of Default (each, as defined in the Notes); or (iv) in the event of a Change of Control (as defined in the Notes). With the exception of a redemption required by an Event of Default, which may be paid with cash or shares of the Company’s common stock at the election of the Buyer, the Company will be required to redeem the Notes with cash. The Notes and the shares of common stock into which the Notes may be converted (collectively, the “Conversion Shares”) are sometimes referred to in this report as the “Securities.” All amounts outstanding under the Notes will be secured by the Investor Note and all proceeds therefrom. The Notes will not be secured by, and the Investors will not have a lien on, any assets of the Company other than the Investor Note. MoviePass Inc. has guaranteed the obligations arising under the Notes in accordance with the terms of a Guaranty (the “MoviePass Guaranty”). In accordance with terms of the SPA, the Company is obligated to convene a special meeting of its stockholders on or prior to June 1, 2018, for the purpose of approving the issuance of all Securities that may be issued in connection with the Financing. Series A-1 Note The aggregate principal amount of the Series A-1 Note is $25,000,000 which will bear interest at a rate of 10% per annum. Series B-1 Note Upon issuance, the Series B-1 Note initially consisted entirely of “Restricted Principal” which is defined as that portion of the principal amount of a Series B-1 Note that equals the outstanding principal amount of a corresponding Investor Note. The principal amount of the Investor Note is subject to reduction through prepayments by the applicable Buyer of the Investor Note given by the Buyer to the Company or, upon maturity or redemption of the Series B-1 Note, by netting the amount owed by the Buyer under such Investor Note against a corresponding amount of principal to be canceled under the Buyer’s Series B-1 Note. Each prepayment under the Investor Note will convert a corresponding amount of Restricted Principal under the Series B-1 Note into “Unrestricted Principal” that may be converted into common stock. The Series B-1 Note bears interest at a rate of (i) 5.25% per annum with respect to any Restricted Principal, and (ii) 10% per annum with respect to any Unrestricted Principal Payment of Interest Interest on the Notes is capitalized on each quarterly interest payment date starting April 1, 2018 by adding the interest to the then outstanding principal amount of the Notes. Interest may also be paid by inclusion in the Outstanding Amount, which is defined in the Notes as the principal amount to be converted or redeemed, accrued and unpaid interest with respect to such principal amount, accrued and unpaid late charges, if any, and the “Make-Whole Amount.” The “Make-Whole Amount” is defined as the amount of any interest that, but for a conversion or redemption, would have accrued with respect to the Outstanding Amount of principal being redeemed or converted under the Series A-1 Note and Unrestricted Principal under the Series B-1 Note, for the period from the applicable date of conversion or redemption date through the maturity date of the Notes. No Make-Whole Amount will be payable under the Series B-1 Note with respect to any portion of Restricted Principal after the cancellation of such Restricted Principal pursuant to netting under the Series B-1 Note, the Investor Note or the Master Netting Agreement (as defined below), as applicable. In the event of an event of default interest under the Notes may be increased to 15% during the first 30 days following the occurrence and continuance of an event of default and to 18% thereafter (the “Default Rate”). Conversion of the Notes The Buyer may elect, at any time after the Company obtains approval by its stockholders of the issuance of the Company’s securities pursuant to the November Notes (as defined below), to convert the Notes into shares of the Company’s common stock at the Conversion Price, subject to certain beneficial ownership limitations described below. The “Conversion Price” is $11.44 per share (subject to anti-dilution adjustment as described in the Notes). Redemption of the Notes Provided there has been no Equity Conditions Failure (as defined in the Notes) and, as to the Series A-1 Note, no senior secured convertible notes issued by the Company on August 16, 2017 (the “August Notes”) or senior convertible bridge notes issued by the Company on November 7, 2017 (the “November Notes”) remain outstanding, and as to the Series B-1 Note, no August Notes, November Notes, Series A-1 Note or Series B-1 Note with any Unrestricted Principal remain outstanding, the Company will have the right to redeem all, but not less than all, of the Outstanding Amount remaining unpaid under the Notes. The portion of the Notes subject to redemption can be redeemed by the Company in cash at a price equal to 115% of the amount being redeemed. Under the Series B-1 Note, the Company may reduce, on a dollar for dollar basis, the Restricted Principal by the surrender for cancellation of such portion of the corresponding Investor Note equal to the amount of Restricted Principal included in the redemption. The Buyer has the right to require the Company to redeem the Notes (i) at the option of the Buyer from and after June 7, 2018; (ii) if the Company completes a Subsequent Placement, as defined in the SPA; (iii) upon the occurrence of an Event of Default, including a Bankruptcy Event of Default (as defined in the Notes); or (iv) in the event of a Change of Control. With the exception of a redemption required by an Event of Default, which may be paid with cash or shares of the Company’s common stock at the election of the Buyer, the Company will be required to redeem the Notes with cash. Note Purchase Agreement The Investor Note was issued as payment in full for the Series B-1 Note pursuant to the terms and conditions of a note purchase agreement entered into by the Company and the Buyer (collectively, the “Note Purchase Agreement”). Investor Note The Investor Note will be payable in full on the forty-second anniversary of the Closing Date, although the Buyer may prepay the Investor Note in whole or in part, without premium or penalty, at any time. The Investor Note accrues interest at an annual rate of 0.61%. The Buyer’s obligation to pay the Company the principal amount of the Investor Note is secured with cash, cash equivalents, any Group of Ten (“G10”) currency and any notes or other securities issued by any G10 country having a value equal to the principal amount of the Investor Note. The Investor Note is also subject to mandatory prepayment, in whole or in part, at any time (i) if the Company receives a conversion notice from the Buyer in which all or any part of the principal of the Series B-1 Note to be converted includes any Restricted Principal and (ii) the Buyer receives a confirmation from the Company’s transfer agent that it has been irrevocably instructed by the Company to deliver to the Buyer the shares of the Company’s common stock to be issued pursuant to the conversion notice. February Public Offering On February 13, 2018, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Canaccord Genuity Inc., on behalf of itself and as representative of the underwriters named therein (the “Underwriters”), pursuant to which the Company agreed to issue and sell to the Underwriters in a best-efforts underwritten public offering (the “Offering”) of up to approximately $105 million in gross proceeds of securities of the Company including (A) 7,425,000 Series A-1 units (the “Series A-1 Units”), with each Series A-1 Unit consisting of (i) one share (the “Shares”) of the Company’s common stock, par value $0.01 per share (the “Common Stock”), and (ii) one Series A-1 warrant to purchase one share of Common Stock (the “Series A-1 Warrants”); and for those purchasers whose purchase of Series A-1 Units would result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 9.99% of the Company’s outstanding Common Stock following the consummation of the Offering, (B) 11,675,000 Series B-1 units (the “Series B-1 Units”, and together with the “Series A-1 Units”, the “Units”), consisting of (i) one pre-funded Series B-1 warrant to purchase one share of Common Stock (the “Series B-1 Warrants”, and together with the Series A-1 Warrants, the “Warrants”) and (ii) one Series A-1 Warrant. The Units were sold at a price to the public equal to $5.50 per Unit. Each Warrant is exercisable at any time on or after the issuance date until the five-year anniversary of the issuance date. Each Series A-1 Warrant is exercisable at a price of $6.50 per share of Common Stock. Each Series B-1 Warrant has an aggregate exercise price of $5.50 per share of Common Stock, all of which will be pre-funded except for a nominal exercise price of $0.001 per share of Common Stock. The Warrants will not be listed on The NASDAQ Capital Market or any other securities exchange. As of the date of this report, all Series B-1 Warrants have been exercised. The Company received approximately $96,817,200 in net proceeds from the sale of the Units, after deducting underwriting discounts and commissions equal to $5,882,800 and estimated offering expenses of approximately $450,000, not taking into account any exercise of the Warrants. New Subscription Agreement with MoviePass December 19, 2017 through February 20, 2018, Helios provided cash advances to MoviePass to support MoviePass’ working capital and operational requirements, as well as to support the expansion of MoviePass’ business plans and objectives. The total amount advanced by Helios to MoviePass during this period totaled $55,525,000 (the “Advance”). On March 8, 2018, the Company entered into a Subscription Agreement with MoviePass (the “March 2018 Agreement”), pursuant to which, in lieu of MoviePass repaying the Advance, MoviePass agreed to sell to the Company, and the Company agreed to accept, an amount of MoviePass Common Stock equal to 18.79% of the total then outstanding MoviePass Common Stock (excluding shares underlying MoviePass options and warrants) (the “March 2018 MoviePass Purchased Shares”), based on a pre-money valuation of MoviePass of $240,000,000 as of December 31, 2017. Pursuant to the March 2018 Agreement, MoviePass also agreed to issue to Helios, in addition to the March 2018 MoviePass Purchased Shares, without payment of additional consideration by Helios, for purposes of providing Helios with anti-dilution protection with respect to Helios’ prior equity investments in MoviePass, an amount of shares of MoviePass Common Stock that caused Helios’ total ownership of the outstanding shares of MoviePass Common Stock (excluding shares underlying MoviePass options and warrants), together with the March 2018 MoviePass Purchased Shares, to equal 81.2% as of March 8, 2018. In addition, from March 1, 2018 through April 12, 2018, the Company advanced a total of $35,000,000 to MoviePass (the “Second Advance”). On April 16, 2018, the Company entered into an additional Subscription Agreement with MoviePass (the “April 2018 Agreement”), pursuant to which, in lieu of repayment of the Second Advance, MoviePass agreed to sell to the Company an amount of MoviePass Common Stock equal to 10.6% of the total then outstanding MoviePass Common Stock (excluding shares underlying MoviePass options and warrants) (the “April 2018 MoviePass Purchased Shares”), based on a pre-money valuation of MoviePass of $295,000,000 as of March 31, 2018. Pursuant to the April 2018 Agreement, MoviePass also agreed to issue to the Company, in addition to the April 2018 MoviePass Purchased Shares, without payment of additional consideration by the Company, for purposes of anti-dilution, an amount of shares of MoviePass Common Stock that caused the Company’s total ownership of the outstanding shares of MoviePass Common Stock (excluding shares underlying MoviePass options and warrants), together with the April 2018 MoviePass Purchased Shares, to equal 91.8% as of March 8, 2018. Moviefone Acquisition Asset Purchase Agreement On April 4, 2018, the Company entered into an Asset Purchase Agreement (the “Moviefone Purchase Agreement”) with Oath Inc. (formerly, AOL Inc.), a Delaware corporation and subsidiary of Verizon Communications (“Oath”), pursuant to which the Company completed the acquisition from Oath of certain products, rights, technology, contracts, equipment, data and other assets related to the “Moviefone” brand (the “Moviefone Assets”). The purchase price for the transaction consisted of the following: (a) $1.0 million in cash, (b) the issuance of 2,550,154 shares of the Company’s common stock (the “Closing Shares”), and (c) the issuance of warrants (the “Closing Warrants”) to purchase 2,550,154 shares of the Company’s common stock at an exercise price of $5.50 per share (the “Moviefone Warrant Shares,” and together with the Closing Warrants and the Closing Shares, the “Closing Securities”). In addition, pursuant to the Moviefone Purchase Agreement, the Company assumed certain specified liabilities related to the Moviefone Assets. The Moviefone Purchase Agreement contains customary representations, warranties, covenants, and indemnification provisions. In connection with the Moviefone Purchase Agreement, the Company and Oath also entered into a Lock-up Agreement, Registration Rights Agreement, Transition Services Agreement (the “Services Agreement”), Advertising Representative Agreement (the “Representative Agreement”), and other ancillary agreements. Articles of Incorporation On February 5, 2018, the Company’s stockholders approved an amendment to the Company’s Certificate of Incorporation to increase the number of authorized shares of common stock from 100,000,000 to 500,000,000 shares (the “Charter Amendment”). Following stockholder approval of the Charter Amendment, a Certificate of Amendment to the Company’s Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on February 8, 2018, at which time the Charter Amendment became effective. Lock-Up Agreement On March 14, 2018, Helios and Matheson Analytics Inc. entered into a letter agreement (the “Lock-Up Agreement”) with Theodore Farnsworth, its Chief Executive Officer and Chairman of the Board of Directors, pursuant to which Mr. Farnsworth agreed that he would not sell or transfer any shares of the Company’s common stock (the “Common Stock”) held by him for a period of 24 months from the date of the Lock-Up Agreement, subject to certain permitted transfers as gifts, by will or intestate succession or to a family trust, provided that any such transfer is not a disposition for value and the transferee agrees to be bound by the Lock-Up Agreement. Mr. Farnsworth entered into the Lock-Up Agreement upon receipt from the Company of the Bonus (as defined below in Item 5.02 of this Current Report). The above discussion does not purport to be a complete description of the Lock-Up Agreement and is qualified in its entirety by reference to the full text of the Lock-Up Agreement, which is attached as Exhibit 10.1 to this Current Report and incorporated herein by reference. Employment Agreement with Stuart Benson On January 18, 2018, the Company entered into an employment agreement (the “Agreement”) with Stuart Benson, its Chief Financial Officer. The term of the Agreement will expire on December 31, 2020 and, following the expiration of the initial term, will be automatically renewed for additional consecutive terms of one year, unless either the Company or Mr. Benson objects to the renewal at least ninety days prior to the commencement of the renewal term. The contract is subject to termination provisions, please refer to the respective 8-K for more details. Compensation Base Salary. Annual Bonus. Grant of Common Stock. Increase of 2014 Equity Incentive Plan On February 5, 2018 at a Special Meeting of the Stockholders, the Company approved an amendment to the Company’s 2014 Equity Incentive Plan (the “2014 Plan”) to (i) increase the aggregate number of shares of common stock authorized for issuance thereunder by 1,875,000 to an aggregate of 3,000,000 shares and (ii) account for an annual automatic increase in the number of shares of common stock authorized for issuance thereunder by the lesser of (A) 3,000,000 shares of the Company’s common stock or the equivalent of such number of shares after the administrator of the 2014 Plan, in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction; (B) a number of shares of common stock equal to 5% of the Company’s common stock outstanding on January 2nd of each year; and (C) an amount determined by the Company’s Board of Directors (Proposal 1). MoviePass Ventures In April 2018, MoviePass Ventures entered into an Acquisition Co-Financing and Distribution Agreement with Orchard Enterprises NY, Inc. for the purpose of co-funding the acquisition, advertising and promotion of MoviePass Ventures’ first film, titled “American Animals”, which premiered at the 2018 Sundance Film Festival. |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation 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”). The consolidated financial statements include all accounts of the Company and its majority owned and controlled subsidiaries. The Company consolidates entities in which it owns more than 50% of the voting common stock and controls operations. All intercompany transactions and balances among consolidated subsidiaries have been eliminated. The Company consolidated the operations of MoviePass as of December 11, 2017 and Zone as of November 9, 2016. |
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. Significant estimates made by management include, but are not limited to, allowance for doubtful accounts, purchase accounting allocations, recoverability and useful lives of property, plant and equipment, identifiable intangibles and goodwill, warrant liability, derivative liabilities, the valuation allowance of deferred taxes, contingencies and equity compensation. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with a maturity of three months or less at the date of acquisition to be cash equivalents. The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are stated at amounts due from clients, net of an allowance for doubtful accounts. The Company monitors its accounts receivable balances on a monthly basis to ensure that they are collectible. On a quarterly basis, the Company uses its historical experience to estimate its accounts receivable reserve. The Company’s allowance for doubtful accounts is an estimate based on specifically identified accounts as well as general reserves. The Company evaluates specific accounts where it has information that the client may have an inability to meet its financial obligations. In these cases, management uses its judgment, based on the best available facts and circumstances, and records a specific reserve for that client against amounts due to reduce the receivable to the amount that is expected to be collected. These specific reserves are reevaluated and adjusted as additional information is received that impacts the amount reserved. The Company also establishes a general reserve for all clients based on a range of percentages applied to aging categories. These percentages are based on historical collection and write-off experience. If circumstances change, the Company’s estimate of the recoverability of amounts due the Company could be reduced or increased by a material amount. Such a change in estimated recoverability would be accounted for in the period in which the facts that give rise to the change become known. |
Carrying Value, Recoverability and Impairment of Long-Lived Assets | Carrying Value, Recoverability and Impairment of Long-Lived Assets The Company has adopted Section 360-10-35 of the FASB Accounting Standards Codification for its long-lived assets. Pursuant to Paragraph 360-10-35-17 of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), an impairment loss shall be recognized only if the carrying amount of a long-lived asset (asset group) is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset (asset group) is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset (asset group). That assessment shall be based on the carrying amount of the asset (asset group) at the date it is tested for recoverability. An impairment loss shall be measured as the amount by which the carrying amount of a long-lived asset (asset group) exceeds its fair value. Pursuant to ASC Paragraph 360-10-35-20, if an impairment loss is recognized, the adjusted carrying amount of a long-lived asset shall be its new cost basis. For a depreciable long-lived asset, the new cost basis shall be depreciated (amortized) over the remaining useful life of that asset. Restoration of a previously recognized impairment loss is prohibited. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method (after taking into account their respective estimated residual values) over the estimated useful lives of the respective assets which range from three to ten years or the lease term, if shorter, for leasehold improvements. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of operations. |
Goodwill | Goodwill The Company reviews goodwill for impairment during the fourth quarter of each year, and also upon the occurrence of a triggering event. The Company performs reviews of each of its operating divisions and variable interest entities (collectively, “reporting units”) that have goodwill balances. Generally, fair value is determined using a multiple of earnings, or discounted projected future cash flows, and is compared to the carrying value of a reporting unit for purposes of identifying potential impairment. Project future cash flows are based on management’s knowledge of the current operating environment and expectations for the future. Goodwill impairment is recognized for any excess of the carrying value of the reporting unit’s goodwill over the fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The identification of relevant events and circumstances and how these may impact a reporting unit’s fair value or carrying amount involve significant judgments by management. These judgments include the consideration of the general economic outlook, industry and market considerations, cost factors, overall financial performance, events which are specific to the Company, and trends in the market price of our common stock. Each factor is assessed to determine whether it impacts the impairment test as well as the magnitude of any such impact. While RedZone Map is a fully functioning app available for free in the Apple App Store and the Google Play Store, the Company did not derive any advertising or other revenues from the app during the year ended December 31, 2017. Further, the Company was not able to secure contracts with customers during the year ended December 31, 2017. As such the Company determined that an assessment of Zone’s goodwill should be performed. The analysis of the fair value involved using the discounted cash flow method. Based on the analysis, the Company concluded that its carrying value exceeded its fair value. As a result, the Company recorded $4,599,969 of goodwill impairment during the year ended December 31, 2017. |
Intangible Assets, net | Intangible Assets, net Intangible assets consist of customer relationships, technology, trademarks, broker relationships and patents. Applicable long-lived assets are amortized or depreciated over the shorter of their estimated useful lives, the estimated period that the assets will generate revenue, or the statutory or contractual term in the case of patents. Estimates of useful lives and periods of expected revenue generation are reviewed periodically for appropriateness and are based upon management’s judgment. Intangible assets are amortized on the straight-line method over their useful lives ranging from 3 to 12 years. The Company recorded amortization expense of $1,917,247 and $246,509 during the year ended December 31, 2017 and 2016, respectively. The Company monitors the carrying value of long-lived assets for potential impairment each quarter based on whether certain triggering events have occurred. These events include current period losses or a projection of continuing losses or a significant decrease in the market value of an asset. When a triggering event occurs, an impairment calculation is performed, comparing projected undiscounted future cash flows, utilizing current cash flow information and expected growth rates, to the respective carrying value. If the Company identifies impairment for long-lived assets to be held and used, the Company compares the assets’ current carrying value to the assets’ fair value. Fair value is based on current market values or discounted future cash flows. The Company records impairment when the carrying value exceeds fair market value. With respect to owned property and equipment held for disposal, the value of the property and equipment is adjusted to reflect recoverable values based on previous efforts to dispose of similar assets and current economic conditions. Impairment is recognized for the excess of the carrying value over the estimated fair market value, reduced by estimated direct costs of disposal. The Company recorded impairment charges of $1,657,014 and $0, in regard to definite-lived intangible assets for the years ended December 31, 2017 and 2016, respectively. |
Debt Discount and Debt Issuance Costs | Debt Discount and Debt Issuance Costs Debt discounts and debt issuance costs incurred in connection with the issuance of debt are capitalized and amortized to interest expense based on the related debt agreements using the effective-interest method. |
Derivative Instruments | Derivative Instruments The Company evaluates its convertible notes and warrants to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with Paragraph 815-10-05-4 of the FASB ASC and Paragraph 815-40-25 of the Codification. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statements of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities are classified in the balance sheet as current or non-current to correspond with its host instrument. The Company marks to market the fair value of the remaining embedded derivative warrants at each balance sheet date and records the change in the fair value of the remaining embedded derivative warrants as other income or expense in the statements of operations. The Company utilizes the Monte Carlo Method that values the liability of the debt conversion feature derivative financial instruments and derivative warrants based on a probability of a down round event. The reason the Company selected the lattice binomial model is that in many cases there may be multiple embedded features or the features of the bifurcated derivatives may be so complex that a Black-Scholes valuation does not consider all of the terms of the instrument. Therefore, the fair value may not be appropriately captured by simple models. |
Warrant Liability | Warrant Liability The Company evaluates its warrants to determine if those contracts qualify as liabilities in accordance with ASC 480-10. The result of this accounting treatment is that the fair value of the warrant liability is marked-to-market each balance sheet date and recorded as a liability, with the change in fair value recorded in the statements of operations as other income or expense. Upon conversion or exercise of a warrant liability, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. For warrants with a fixed conversion price and a fixed number of shares, the Company utilizes a Black Scholes model for valuation. For warrants with variability in the number of shares or conversion price (such as a down round feature), the Company utilizes the Monte Carlo Method to value the warrant liability. The reason the Company selected the lattice binomial model is that in many cases there may be multiple embedded features or the features may be so complex that a Black-Scholes valuation does not consider all of the terms of the instrument. Therefore, the fair value may not be appropriately captured by simple models. |
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. As of December 31, 2017, the Company owns a majority interest in MoviePass, a movie-theater subscription service which provides subscribers access to one movie per day at participating theatres, subject to availability, at a fixed monthly or annual fee. We recognize revenue when four basic criteria are met: (1) persuasive evidence exists of an arrangement with the customer reflecting the terms and conditions under which the services will be provided; (2) the services have been provided; (3) the fee is fixed or determinable; and (4) collection is reasonably assured. We consider an activated subscription agreement to be persuasive evidence of an arrangement. Subscription revenue is generated primarily through the sale of monthly or annual paid subscriptions to the MoviePass service. Subscription revenue is recognized evenly over the subscription periods as services are provided. Subscription fees are predominantly paid by charges to customer credit cards or collected from third party partners. We record cash received in advance of revenue recognition as deferred revenue. |
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 follows the fair value recognition provisions in ASC 718, Stock Compensation |
Advertising | Advertising The Company expenses advertising costs when incurred and included in selling, general and administrative expenses and amounted to $134,734 and $0 for the years ended December 31, 2017 and December 31, 2016, respectively. |
Comprehensive Loss | Comprehensive Loss Comprehensive loss consists of two components, net loss and other comprehensive loss. Other comprehensive loss refers to revenue, expenses, gains and losses that are recorded as an element of stockholder’s equity but are excluded from net loss. The Company’s other comprehensive loss is comprised of foreign currency translation adjustments. |
Foreign Currency Translation | Foreign Currency Translation Assets, liabilities, revenue and expenses denominated in non-U.S. currencies are translated at the rate of exchange prevailing on the date of the consolidated balance sheet. Gains (losses) on translation of the consolidated financial statements are from the Company’s subsidiary where the functional currency is not the U.S. dollar. Translation gains (losses) are reflected as a component of accumulated other comprehensive income (loss). Gains (losses) on foreign currency transactions are included in the consolidated statements of operations. |
Income Taxes | Income Taxes Income taxes are provided in accordance with ASC No. 740, Accounting for Income Taxes Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company is no longer subject to tax examinations by tax authorities for years prior to 2013. The Company had income tax provision of $53,532 and a tax benefit of $14,665 for the year ended December 31, 2017 and 2016, respectively. Tax for the year ended December 31, 2017 was comprised of minimum state taxes and a provision reconciliation of an over estimate of the tax accrual for the Company’s Indian subsidiary’s audit. On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act ("Tax Act"), which made significant changes to the U.S. federal income tax law. The Tax Act will affect 2018 and forward, including but not limited to a reduction in the federal corporate rate from 35.0% to 21.0%, elimination of the corporate alternative minimum tax, a new limitation on the deductibility of certain executive compensation, limitations on net operating losses generated after December 31, 2017 and various other items. We do not expect these changes to have a material impact on our financial statements due to the accumulated net operating losses in the U.S. The Tax Act provides for a one-time “deemed repatriation” of accumulated unrepatriated foreign earnings determined as of November 2, 2017, or December 31, 2017, whichever is greater. We do not expect to be subject to this provision due to availability of federal net operating losses to offset any repatriation tax. in our foreign earnings for tax purposes. The Tax Act also created a new requirement that certain income earned by controlled foreign corporations must be included currently in the gross income of the U.S. shareholder under the Global Intangible Low-Taxed (GILTI) provision. We do not expect that any future foreign earnings will be subject to GILTI due to our federal net operating losses. |
Earnings Per Share | Earnings 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 ASC. 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 attributable to common stockholder’s calculation as they were anti-dilutive: December 31, December 31, Warrants 9,631,588 70,714 Conversion features on convertible notes 1,370,396 511,989 Total potentially dilutive shares 11,001,984 582,703 |
Reclassification | Reclassification Certain prior period amounts have been reclassified to conform to current period presentation. |
Business Combinations | Business Combinations The Company accounts for business combinations under the acquisition method of accounting. Identifiable assets acquired, liabilities assumed and non-controlling interest in the acquiree are recognized and measured as of the acquisition date at fair value. Additionally, contingent consideration is recorded at fair value on the acquisition date and classified as either liability or equity. Goodwill is recognized to the extent by which the aggregate of the acquisition date fair value of the consideration transferred and any non-controlling interests in the acquiree exceeds the recognized basis of the identifiable assets acquired net of assumed liabilities. Determining the fair value of assets acquired liabilities assumed and non-controlling interests requires management’s judgement and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates and asset lives among other items. Acquisition related costs, including advisory, legal, accounting valuation and other costs are expensed in the periods in which the costs are incurred. The results of operations of acquired businesses are included in the consolidated financial statements form the date of acquisition. |
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 and the Conversion Shares subject to forfeiture are classified as level 3 liabilities, and are measured at fair value on a recurring basis. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers” ASU No. 2014-09 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual reporting periods. The Company developed an implementation plan to adopt this new guidance, which included an assessment of the impact of the new guidance on our financial position and results of operations. The Company has substantially completed its assessment and has determined that this standard will have no impact on its financial position or results of operations, except enhanced disclosure regarding revenue recognition, including disclosures of revenue streams, performance obligations, variable consideration and the related judgments and estimates necessary to apply the new standard. On January 1, 2018, the Company adopted the new accounting standard ASC 606, Revenue from Contracts with Customers 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 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 January 2017, the FASB issued ASU No 2017-04 Intangibles-Goodwill and Other Simplifying the Accounting for Goodwill Impairment In July 2017, the FASB issued ASU 2017-11, Earnings Per Share , Distinguishing Liabilities from Equity , and Derivatives and Hedging |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Business Acquisition [Line Items] | |
Schedule of pro forma financial information | 2017 2016 Revenues $ 24,996,070 $ 15,472,410 Net loss $ (200,153,526 ) $ (15,558,382 ) Net loss attributable to common stockholders $ (195,308,218 ) $ (15,558,382 ) Net loss per share attributable to common stockholders $ (23.36 ) $ (5.78 ) |
MoviePass [Member] | |
Business Acquisition [Line Items] | |
Schedule of fair values of net assets/liabilities assumed | Purchase consideration: MoviePass Cash $ 32,671,792 Notes payable (includes Helios Convertible Note) 39,152,446 Fair value of consideration transferred $ 71,824,238 Recognized amounts of identifiable assets and liabilities acquired: Cash acquired $ 1,106,171 Accounts receivable 9,669,390 Notes receivable 39,152,446 Investment option payment receivable 7,850,000 Prepaid expenses and other current assets 192,180 Property and equipment 39,320 Other assets 8,000 Identifiable intangible assets: Tradenames and trademarks 19,550,000 Technology 3,800,000 Customer relationships 2,560,000 Liabilities assumed (9,261,785 ) Deferred revenue (38,718,397 ) Non -controlling interest (43,260,264 ) Goodwill 79,137,177 Total purchase price allocation $ 71,824,238 |
Zone Technologies, Inc. [Member] | |
Business Acquisition [Line Items] | |
Schedule of fair values of net assets/liabilities assumed | Purchase consideration: Zone Technologies, Inc. Common stock (1,740,000 shares at the transaction date fair value of $5.41 per share) 9,413,000 Fair value of consideration transferred $ 9,413,000 Recognized amounts of identifiable assets and liabilities acquired: Cash acquired $ 136,343 Identifiable intangible assets: Tradenames and Trademarks 1,977,000 Technology 4,270,000 Broker relationships 4,200 Liabilities assumed (1,574,512 ) Goodwill 4,599,969 Total purchase price allocation $ 9,413,000 |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of outstanding dilutive common shares excluded from the diluted net loss per share | December 31, December 31, Warrants 9,631,588 70,714 Conversion features on convertible notes 1,370,396 511,989 Total potentially dilutive shares 11,001,984 582,703 |
Prepaid Expenses and Other Cu32
Prepaid Expenses and Other Current Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Prepaid Expenses and Other Current Assets [Abstract] | |
Schedule of prepaid expenses and other current assets | December 31, 2017 December 31, 2016 Vendor deposits $ 147,533 $ 300,199 Tax 108,433 187,776 Deposits 230,711 - Insurance 86,181 44,517 Professional fees and services 2,918,611 42,833 Rent 52,650 13,087 Other 13,692 8,759 Total prepaid expenses and other current assets $ 3,557,811 $ 597,171 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property and Equipment, Net [Abstract] | |
Schedule of property and equipment, net | December 31, 2017 December 31, 2016 Equipment and leaseholds $ 130,956 $ 106,460 Furniture and fixtures 163,721 34,186 Software 213,945 167,337 Subtotal 508,622 307,983 Less: Accumulated depreciation (274,587 ) (262,771 ) Total $ 234,035 $ 45,212 |
Intangible Assets, Net and Go34
Intangible Assets, Net and Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Intangible Assets, Net and Goodwill [Abstract] | |
Schedule of intangibles assets | December 31, December 31, Estimated Useful Life Net Book Value Net Book Value Customer relationships 7 $ 2,560,000 $ - Technology 3 8,070,000 4,270,000 Tradenames and trademarks 7 19,550,000 1,977,000 Broker relationships 5 - 4,200 Patents 12 196,353 - Subtotal 30,376,353 6,251,200 Less: Accumulated amortization (1,839,571 ) (246,509 ) Total $ 28,536,782 $ 6,004,691 |
Schedule of estimated future annual amortization expense | December 31, 2018 $ 5,026,976 2019 4,821,384 2020 3,532,137 2021 2,336,976 2022 2,336,976 Thereafter 10,482,333 $ 28,536,782 |
Schedule of changes to goodwill | Balance as of December 31, 2016 $ 4,599,969 Goodwill acquired – MoviePass acquisition 79,137,177 Goodwill impairment charge – Zone Technologies, Inc. (4,599,969 ) Balance as of December 31, 2017 $ 79,137,177 |
Accounts Payable and Accrued 35
Accounts Payable and Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounts Payable and Accrued Expenses [Abstract] | |
Schedule of accounts payable and accrued expenses | December 31, December 31, Accounts payable $ 5,087,060 $ 517,973 Accrued ticket expense 4,743,582 - Accrued professional fees 597,187 509,433 Accrued credit card fees 782,670 - Accrued payroll expense 312,149 187,835 Accrued other expense 852,841 115,877 Accrued interest 768,515 - Total $ 13,144,003 $ 1,331,118 |
Securities Purchase Agreement (
Securities Purchase Agreement (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Securities Purchase Agreement [Abstract] | |
Schedule of senior secured convertible notes | December 31, 2017 December 31, 2016 September Notes $ - $ 20,480 September Placement Note - 902 December Notes - 10,043 February 2017 Notes - - August 2017 Notes 2,061,072 - September 2017 Exchange Note - - November 2017 Notes 1,550,555 - $ 3,611,627 $ 31,425 |
Schedule of carrying value of the senior secured convertible notes | December 31, 2017 December 31, 2016 September 2016 Notes $ - $ 332,000 September Placement Agent Note - 80,000 December 2016 Notes - 1,820,000 February 2017 Notes - - August 2017 Notes 4,505,440 - September 2017 Exchange Note - - November 2017 Notes 2,943,069 - Unamortized discounts (3,836,882 ) (2,200,575 ) $ 3,611,627 $ 31,425 |
Fair Value of Financial Asset37
Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis (Tables) | 12 Months Ended |
Dec. 31, 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 Fair Value Level 1 Level 2 Level 3 December 31, 2017 Liabilities Derivative liability – warrants $ 67,288,800 $ - $ - $ 67,288,800 Derivative liability – conversion feature 4,834,462 - - 4,834,462 Total $ 72,123,262 $ - $ - $ 72,123,262 December 31, 2016 Liabilities Derivative liability – warrants $ 230,663 $ - $ - $ 230,663 Derivative liability – conversion feature 997,129 - - 997,129 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 119,670,364 Conversions to paid in capital (14,009,654 ) Warrant exercises (26,851,565 ) Change in fair value of warrant liabilities 20,409,937 Change in fair value of derivative liabilities (28,303,612 ) Balance at December 31, 2017 $ 72,123,262 |
Schedule of fair value of the derivative conversion features and warrant liabilities | December 31, 2017 December 31, 2016 Amount Amount Dividend yield 0% 0% Expected volatility 45 % - 270 % 154 % - 230 % Risk free interest rate 1.06 % - 2.20 % 0.82 % - 1.12 % Contractual term (in years) 0.19 - 5.00 0.67 - 5.00 Exercise price $ 0.001 - $ 14.310 $ 4.000 - $ 9.360 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Stock Based Compensation [Abstract] | |
Schedule of outstanding options | Weighted Average Options for Common Shares Exercise Price Remaining Contractual Term Aggregate Intrinsic Value Outstanding as of December 31, 2016 17,553,242 $ 0.04 9.62 $ - Granted 2017 12,477,623 0.26 Exercised 2017 (193,583 ) 0.06 Forfeited, cancelled, expired (1,440,854 ) 0.04 Outstanding as of December 31, 2017 28,396,428 $ 0.14 9.13 $ 8,313,684 |
Schedule of outstanding and exercisable options under the 2011 Plan for MoviePass, Inc. | Vested Options outstanding All Options Outstanding Exercise Price Number of Options Weighted Average Remaining Term Aggregate Intrinsic Value Number of Options Weighted Average Remaining Term Aggregate Intrinsic Value $ 0.240 241,818 5.44 $ 45,945 241,818 5.44 $ 45,945 $ 0.040 10,278,210 8.81 4,008,502 16,308,570 8.81 6,360,342 $ 0.430 - - - 6,430,182 9.93 - $ 0.048 70,481 5.08 26,924 370,198 4.47 141,416 $ 0.080 2,447,725 9.62 856,704 5,045,660 9.62 1,765,981 Total 13,038,234 $ 4,938,075 28,396,428 $ 8,313,684 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies [Abstract] | |
Schedule of commitments | 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) | 12 Months Ended |
Dec. 31, 2017 | |
Warrants [Abstract] | |
Schedule of warrant activity | Warrant Shares Weighted Average Exercise Price Weighted Outstanding/exercisable – December 31, 2016 70,714 $ 6.26 4.87 Granted 12,755,539 6.47 4.90 Exercised (3,194,665 ) 4.33 4.71 Total 9,631,588 $ 6.04 4.86 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting information | For the Year Ended December 31, 2017 2016 Consulting Revenue $ 4,512,300 $ 6,759,700 Cost of revenue 3,678,294 4,860,927 Gross profit 834,006 1,898,773 Total operating expenses 28,364,072 3,437,283 Loss from operations (27,530,066 ) (1,538,510 ) Total other expense (94,686,108 ) (5,299,401 ) Provision for income taxes (49,932 ) 14,665 Total net loss $ (122,266,106 ) $ (6,823,246 ) Technology Revenue $ - $ - Cost of revenue - - Gross profit - - Total operating expenses 15,587,592 557,825 Loss from operations (15,587,592 ) (557,825 ) Total other expense (67,958 ) - Provision for income taxes - - Total net loss $ (15,655,550 ) $ (557,825 ) Subscription Revenue $ 5,929,267 $ - Cost of revenue 16,860,415 - Gross loss (10,931,148 ) - Total operating expenses 1,967,978 - Loss from operations (12,899,126 ) - Total other expense (460 ) - Provision for income taxes (3,600 ) - Total net loss $ (12,903,186 ) $ - As of December 31, As of December 31, 2017 2016 Consulting Cash and cash equivalents $ 569,886 $ 1,095,732 Accounts receivable $ 332,753 $ 410,106 Unbilled receivables $ - $ 45,207 Prepaid expenses and other current assets $ 3,382,127 $ 554,338 Property and equipment $ 96,464 $ 34,368 Intangible assets, net $ - $ - Deposits and other assets $ 129,119 $ 59,189 Accounts payable and accrued expenses $ 2,088,867 $ 1,196,668 Liabilities to be settled in stock $ 20,875,045 $ - Convertible notes payable $ 3,611,627 $ 31,425 Warrant liability $ 67,288,800 $ 230,663 Derivative liability $ 4,834,462 $ 977,129 Deferred revenue $ - $ - Technology Cash and cash equivalents $ 21,933,765 $ 1,651,508 Prepaid expenses and other current assets $ 21,666 $ 42,833 Property and equipment $ 95,301 $ 10,844 Intangible assets, net $ 2,829,295 $ 6,004,691 Goodwill $ - $ 4,599,969 Deposits and other assets $ 10,052 $ - Accounts payable and accrued expenses $ 607,622 $ 134,450 Liabilities to be settled in stock $ 445,660 $ - Subscription Cash and cash equivalents $ 2,445,742 $ - Accounts receivable $ 27,137,466 $ - Prepaid expenses and other current assets $ 154,018 $ - Property and equipment $ 42,270 $ - Intangible assets, net $ 25,707,487 $ - Goodwill $ 79,137,177 $ - Deposits and other assets $ 8,000 $ - Accounts payable and accrued expenses $ 10,447,514 $ - Deferred revenue $ 54,425,630 $ - |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes [Abstract] | |
Schedule of deferred tax assets and (liabilities) | December 31, 2017 December 31, 2016 Licensing revenues $ 4,144,000 $ (7,000 ) Accounts receivable reserve 1,000 194,000 Depreciation and amortization (7,212,000 ) 353,000 Investments - 928,000 Other 132,000 1,141,000 Tax credits 120,000 - Net operating losses 46,126,000 9,427,000 Subtotal 43,311,000 12,036,000 Valuation allowance (43,311,000 ) (12,036,000 ) Total $ - $ - |
Schedule of income tax benefit | December 31, December 31, Current Federal $ - $ - State and local 14,000 12,000 Foreign 39,532 (26,665 ) Total current $ 53,532 $ (14,665 ) Deferred: Federal $ - $ - State and local - - Foreign - - Total deferred - - Total $ - $ - |
Schedule of income tax reconciliaion | December 31, December 31, Federal statutory rate 34.0 % 34.0 % State and local taxes net of federal tax benefit -0.1 % -0.1 % Non-deductible expenses -16.8 % 18.9 % Foreign tax expense 0.1 % -0.7 % Non-deductible expenses -19.2 % 18.9 % Change in valuation allowance 1.9 % -51.9 % Total -0.1 % 19.1 % |
Change in Controlled Company 43
Change in Controlled Company Status (Details) | Nov. 09, 2016 |
Zone Technologies [Member] | |
Change in Controlled Company Status (Textual) | |
Beneficial owner outstanding, percentage | 75.00% |
Acquisitions (Details)
Acquisitions (Details) - MoviePass [Member] | Dec. 31, 2017USD ($) |
Purchase consideration: | |
Cash | $ 32,671,792 |
Notes payable (includes Helios Convertible Note) | 39,152,446 |
Fair value of consideration transferred | 71,824,238 |
Recognized amounts of identifiable assets and liabilities acquired: | |
Cash acquired | 1,106,171 |
Accounts receivable | 9,669,390 |
Notes receivable | 39,152,446 |
Investment option payment receivable | 7,850,000 |
Prepaid expenses and other current assets | 192,180 |
Property and equipment | 39,320 |
Other assets | 8,000 |
Identifiable intangible assets: | |
Tradenames and trademarks | 19,550,000 |
Technology | 3,800,000 |
Customer relationships | 2,560,000 |
Liabilities assumed | (9,261,785) |
Deferred revenue | (38,718,397) |
Non -controlling interest | (43,260,264) |
Goodwill | 79,137,177 |
Total purchase price allocation | $ 71,824,238 |
Acquisitions (Details 1)
Acquisitions (Details 1) - Zone Technologies, Inc. [Member] | Dec. 31, 2017USD ($) |
Purchase consideration: | |
Common stock (1,740,000 shares at the transaction date fair value of $5.41 per share) | $ 9,413,000 |
Fair value of consideration transferred | 9,413,000 |
Recognized amounts of identifiable assets and liabilities acquired: | |
Cash acquired | 136,343 |
Identifiable intangible assets: | |
Tradenames and trademarks | 1,977,000 |
Technology | 4,270,000 |
Broker relationships | 4,200 |
Liabilities assumed | (1,574,512) |
Goodwill | 4,599,969 |
Total purchase price allocation | $ 9,413,000 |
Acquisitions (Details 2)
Acquisitions (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Acquisitions/Acquisition of Assets from Trendit Ltd. [Abstract] | ||
Revenues | $ 24,996,070 | $ 15,472,410 |
Net loss | (200,153,526) | (15,558,382) |
Net loss attributable to common stockholders | $ (195,308,218) | $ 15,558,382 |
Net loss per share attributable to common stockholders | $ (23.36) | $ (5.78) |
Acquisitions (Details Textual)
Acquisitions (Details Textual) | Dec. 11, 2017USD ($)shares | Nov. 09, 2016$ / sharesshares | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Acquisitions (Textual) | ||||
Exchange ratio of merger | 0.174 | |||
Common stock transaction date at fair value per share | $ / shares | $ 5.41 | |||
Acquisition of common stock shares issued | shares | 1,740,000 | |||
Percentage of shares outstanding | 51.71% | |||
Debt conversion, description | (1) a subordinated convertible promissory note in the principal amount of $12,000,000 (the “Helios Convertible Note”), which is convertible into shares of HMNY’s common stock, as further described below; (2) a $5,000,000 promissory note issued to MoviePass (the “Helios Note”); and (3) theexchangeof a convertible promissory note issued by MoviePass to HMNY in an aggregate principal amount of $11,500,000 (plus accrued interest thereon). | |||
Percentage of additional shares outstanding | 62.41% | |||
Repayments of convertible debt | $ 666,667 | $ (977,142) | ||
Unregistered common stock shares | shares | 4,000,001 | |||
Non-controlling interest | $ 43,260,264 | |||
Acquisition of controlling interest stake in MoviePass, percentage | 62.41% | |||
Capital raised has been charged to additional paid in capital | $ (49,918,400) | |||
Tradenames and trademarks [Member] | ||||
Acquisitions (Textual) | ||||
Estimated useful life | 7 years | |||
Customer relationships [Member] | ||||
Acquisitions (Textual) | ||||
Estimated useful life | 7 years | |||
Technology [Member] | ||||
Acquisitions (Textual) | ||||
Estimated useful life | 3 years | |||
Kelly Note Purchase Agreement [Member] | ||||
Acquisitions (Textual) | ||||
Principal amount | $ 1,000,000 | |||
Percentage of additional shares outstanding | 2.00% | |||
Moviepass Option Note [Member] | ||||
Acquisitions (Textual) | ||||
Principal amount | $ 12,150,000 | |||
Additional payment amount value | $ 7,850,000 | |||
Percentage of additional shares outstanding | 8.70% | 62.41% | ||
Controlling interest percentage | 62.41% | |||
Helios Convertible Note [Member] | ||||
Acquisitions (Textual) | ||||
Additional payment amount value | $ 29,000,000 | |||
Forfeiture provision value | 5,152,446 | |||
Consideration paid | $ 1,000,000 | |||
Royalty rate description | The significant assumptions used in certain valuations associated with the MoviePass transaction include discount rates ranging from 10.0% to 51.0%. In determining the value of tradenames and trademarks the Company observed royalty rates ranging from 0.0% to 100.0%, and utilized a 1.0% rate for MoviePass's aggregated tradenames and trademarks. Additionally, the Company observed royalty rates related to MoviePass's technology assets acquired ranging from 0.0% to 50.0%, and used a 1.0% royalty rate in determining the fair value of the acquired technology. | |||
Movie Pass Acquisition [Member] | ||||
Acquisitions (Textual) | ||||
Transaction related costs amount | $ 691,500 |
Acquisition of Assets from Tr48
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. |
Licensing Agreement with Is I49
Licensing Agreement with Is It You Ltd. (Details) - USD ($) | 1 Months Ended | 12 Months Ended |
May 18, 2017 | Dec. 31, 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, the license agreement provides for increases in the annual fee. To date, the number of end-user licenses has not exceeded 1.6 million. | |
License paid amount | $ 80,000 | |
Initial one-time license fees paid | $ 40,000 |
Going Concern Analysis (Details
Going Concern Analysis (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Going Concern Analysis (Textual) | |||
Accumulated deficit | $ (189,495,185) | $ (43,261,418) | |
Net loss | (150,824,842) | (7,381,071) | |
Net cash used in operating activities | (27,378,690) | (2,134,313) | |
Cash and cash equivalents | 24,949,393 | 2,747,240 | $ 898,477 |
Working capital deficit | 107,097,249 | ||
Warrant and derivative liabilities | 72,123,262 | $ 1,207,792 | |
Secured financing | $ 60,000,000 | ||
Ownership interests, description | (i) to increase the Company's ownership interests or other rights and interests in MoviePass; (ii) to satisfy certain indebtedness; and (iii) for general corporate purposes and transaction expenses. The Company may also use the proceeds to make other acquisitions. In January 2018 the Company filed a shelf registration statement on form S-3 that was declared effective by the Securities and Exchange Commission on February 9, 2018, and that allows the Company to offer and sell up to $400,000,000 of securities. Using the shelf registration statement, the Company completed an underwritten public offering of common stock and warrants for gross proceeds of approximately $105 million on February 13, 2018. | ||
Total cash received from the public offering | $ 99,000,000 |
Summary of Significant Accoun51
Summary of Significant Accounting Policies (Details) - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive shares | 11,001,984 | 582,703 |
Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive shares | 9,631,588 | 70,714 |
Conversion features on convertible notes [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive shares | 1,370,396 | 511,989 |
Summary of Significant Accoun52
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Summary of Significant Accounting Policies (Textual) | ||
Goodwill impairment | $ 4,599,969 | |
Amortization expense | 1,917,247 | $ 246,509 |
Impairment charges, definite-lived intangible | 1,657,014 | 0 |
Expenses advertising costs | 134,734 | 0 |
Income tax provision and tax benefit | $ 53,532 | $ (14,665) |
Federal corporate rate | 34.00% | 34.00% |
Minimum [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Federal corporate rate | 21.00% | |
Maximum [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Federal corporate rate | 35.00% |
Prepaid Expenses and Other Cu53
Prepaid Expenses and Other Current Assets (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Prepaid Expenses and Other Current Assets [Abstract] | ||
Vendor Deposits | $ 147,533 | $ 300,199 |
Tax | 108,433 | 187,776 |
Deposits | 230,711 | |
Insurance | 86,181 | 44,517 |
Professional fees and services | 2,918,611 | 42,833 |
Rent | 52,650 | 13,087 |
Other | 13,692 | 8,759 |
Total prepaid expenses and other current assets | $ 3,557,811 | $ 597,171 |
Convertible Promissory Note o54
Convertible Promissory Note of MoviePass (Details) - MoviePass [Member] - Convertible promissory note [Member] - USD ($) | Aug. 15, 2017 | Oct. 06, 2017 |
Convertible Promissory Note of MoviePass (Textual) | ||
Cash amount | $ 4,950,000 | |
Principal amount | 5,000,000 | |
Legal and audit expenses | $ 50,000 | |
Maximum [Member] | ||
Convertible Promissory Note of MoviePass (Textual) | ||
Principal amount | $ 11,500,000 | |
Minimum [Member] | ||
Convertible Promissory Note of MoviePass (Textual) | ||
Principal amount | $ 5,000,000 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Property and Equipment, Net [Abstract] | ||
Equipment and leaseholds | $ 130,956 | $ 106,460 |
Furniture and fixtures | 163,721 | 34,186 |
Software | 213,945 | 167,337 |
Subtotal | 508,622 | 307,983 |
Less: Accumulated depreciation | (274,587) | (262,771) |
Total | $ 234,035 | $ 45,212 |
Property and Equipment, Net (56
Property and Equipment, Net (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property and Equipment, Net (Textual) | ||
Depreciation expense | $ 34,730 | $ 12,870 |
Intangible Assets, Net and Go57
Intangible Assets, Net and Goodwill (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Finite-Lived Intangible Assets [Line Items] | ||
Subtotal | $ 30,376,353 | $ 6,251,200 |
Less: Accumulated amortization | (1,839,571) | (246,509) |
Total | 28,536,782 | 6,004,691 |
Customer relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Subtotal | $ 2,560,000 | |
Estimated useful life | 7 years | |
Technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Subtotal | $ 8,070,000 | 4,270,000 |
Estimated useful life | 3 years | |
Tradenames and trademarks [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Subtotal | $ 19,550,000 | 1,977,000 |
Estimated useful life | 7 years | |
Broker relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Subtotal | 4,200 | |
Estimated useful life | 5 years | |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Subtotal | $ 196,353 | |
Estimated useful life | 12 years |
Intangible Assets, Net and Go58
Intangible Assets, Net and Goodwill (Details 1) | Dec. 31, 2017USD ($) |
Intangible Assets, Net and Goodwill [Abstract] | |
2,018 | $ 5,026,976 |
2,019 | 4,821,384 |
2,020 | 3,532,137 |
2,021 | 2,336,976 |
2,022 | 2,336,976 |
Thereafter | 10,482,333 |
Total | $ 28,536,782 |
Intangible Assets, Net and Go59
Intangible Assets, Net and Goodwill (Details 2) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Intangible Assets, Net and Goodwill [Abstract] | |
Balance as of December 31, 2016 | $ 4,599,969 |
Goodwill acquired - MoviePass acquisition | 79,137,177 |
Goodwill impairment charge - Zone Technologies, Inc. | (4,599,969) |
Balance as of December 31, 2017 | $ 79,137,177 |
Intangible Assets, Net and Go60
Intangible Assets, Net and Goodwill (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Intangible Assets, Net and Goodwill (Textual) | ||
Amortization expense | $ 1,917,247 | $ 246,509 |
Impairment charges | (4,599,969) | |
Recognized impairment charges of related to the net book value of trademarks and broker relationships | $ 1,657,014 |
Accounts Payable and Accrued 61
Accounts Payable and Accrued Expenses (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Accounts Payable and Accrued Expenses [Abstract] | ||
Accounts payable | $ 5,087,060 | $ 517,973 |
Accrued ticket expense | 4,743,582 | |
Accrued professional fees | 597,187 | 509,433 |
Accrued credit card fees | 782,670 | |
Accrued payroll expense | 312,149 | 187,835 |
Accrued other expense | 852,841 | 115,877 |
Accrued interest | 768,515 | |
Total | $ 13,144,003 | $ 1,331,118 |
Securities Purchase Agreement62
Securities Purchase Agreement (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Short-term Debt [Line Items] | ||
Senior secured convertible notes | $ 3,611,627 | $ 31,425 |
September Notes [Member] | ||
Short-term Debt [Line Items] | ||
Senior secured convertible notes | 20,480 | |
September Placement Note [Member] | ||
Short-term Debt [Line Items] | ||
Senior secured convertible notes | 902 | |
December Notes [Member] | ||
Short-term Debt [Line Items] | ||
Senior secured convertible notes | 10,043 | |
February 2017 Notes [Member] | ||
Short-term Debt [Line Items] | ||
Senior secured convertible notes | ||
August 2017 Notes [Member] | ||
Short-term Debt [Line Items] | ||
Senior secured convertible notes | 2,061,072 | |
September 2017 Exchange Note [Member] | ||
Short-term Debt [Line Items] | ||
Senior secured convertible notes | ||
November 2017 Notes [Member] | ||
Short-term Debt [Line Items] | ||
Senior secured convertible notes | $ 1,550,555 |
Securities Purchase Agreement63
Securities Purchase Agreement (Details 1) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Short-term Debt [Line Items] | ||
Unamortized discounts | $ (3,836,882) | $ (2,200,575) |
Carrying value of senior secured convertible notes | 3,611,627 | 31,425 |
September 2016 Notes [Member] | ||
Short-term Debt [Line Items] | ||
Carrying value of senior secured convertible notes | 332,000 | |
September Placement Agent Note [Member] | ||
Short-term Debt [Line Items] | ||
Carrying value of senior secured convertible notes | 80,000 | |
December 2016 Notes [Member] | ||
Short-term Debt [Line Items] | ||
Carrying value of senior secured convertible notes | 1,820,000 | |
February 2017 Notes [Member] | ||
Short-term Debt [Line Items] | ||
Carrying value of senior secured convertible notes | ||
August 2017 Notes [Member] | ||
Short-term Debt [Line Items] | ||
Carrying value of senior secured convertible notes | 4,505,440 | |
September 2017 Exchange Note [Member] | ||
Short-term Debt [Line Items] | ||
Carrying value of senior secured convertible notes | ||
November 2017 Notes [Member] | ||
Short-term Debt [Line Items] | ||
Carrying value of senior secured convertible notes | $ 2,943,069 |
Securities Purchase Agreement64
Securities Purchase Agreement (Details Textual) | Dec. 02, 2017 | Nov. 07, 2017 | Oct. 23, 2017USD ($)shares | Feb. 08, 2017USD ($)ConvertibleNotesshares | Dec. 02, 2016USD ($)ConvertibleNotesshares | Sep. 07, 2016USD ($) | Nov. 21, 2017$ / sharesshares | Aug. 16, 2017USD ($)ConvertibleNotes$ / sharesshares | Feb. 28, 2017USD ($) | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | Oct. 06, 2017shares | Oct. 05, 2017shares |
Securities Purchase Agreement (Textual) | |||||||||||||
Balance at period end | $ 3,611,627 | $ 31,425 | |||||||||||
Convertible note payable | $ 6,970,000 | ||||||||||||
Common stock at exercise prices | $ / shares | $ 3.40 | $ 6.26 | |||||||||||
Investor converted total | $ 2,500,000 | ||||||||||||
New note shares of common stock | shares | 552,782 | ||||||||||||
Extinguishment of debt | $ (80,000) | ||||||||||||
September Notes [Member] | |||||||||||||
Securities Purchase Agreement (Textual) | |||||||||||||
Balance at period end | $ 20,480 | ||||||||||||
Consideration received in cash for convertible note | $ 1,000,000 | ||||||||||||
Principal amount | 4,301,075 | ||||||||||||
Interest expenses | $ 1,217 | ||||||||||||
Business acquisition related expenses | $ 3,000,000 | ||||||||||||
Notes, maturity date | Dec. 7, 2017 | ||||||||||||
September Notes [Member] | Placement Agent Notes and Warrants [Member] | |||||||||||||
Securities Purchase Agreement (Textual) | |||||||||||||
Principal amount | $ 80,000 | ||||||||||||
Interest percentage | 6.00% | ||||||||||||
Warrants issued to purchase common stock | shares | 48,714 | 22,578 | |||||||||||
Interest expenses | $ 1,200 | ||||||||||||
Warrant term | 5 years | ||||||||||||
Description of convertible debt | Through the first nine months of 2017 the Company received $5,000,000 of cash payments for the February 2017 Notes, | ||||||||||||
September Notes [Member] | Minimum [Member] | Placement Agent Notes and Warrants [Member] | |||||||||||||
Securities Purchase Agreement (Textual) | |||||||||||||
Common stock at exercise prices | $ / shares | $ 4.54 | ||||||||||||
September Notes [Member] | Maximum [Member] | Placement Agent Notes and Warrants [Member] | |||||||||||||
Securities Purchase Agreement (Textual) | |||||||||||||
Common stock at exercise prices | $ / shares | $ 9.36 | ||||||||||||
December Notes [Member] | |||||||||||||
Securities Purchase Agreement (Textual) | |||||||||||||
Balance at period end | $ 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% | ||||||||||||
Warrants issued to purchase common stock | shares | 720,000 | ||||||||||||
Interest expenses | $ 150,265 | ||||||||||||
Maturity date, description | The December 2016 Notes had a maturity date of August 2, 2017 which was subsequently amended to October 8, 2017. | ||||||||||||
Common stock issued upon convertible notes | shares | 232,334 | ||||||||||||
Description of notes conversion agreement | On September 19, 2017 (the "Exchange Date") $5,820,000 of the principle balance of this noted had already been converted to shares of the Company's common stock when the Company and the Investor entered into an Amendment and Exchange Agreement. Pursuant to this agreement, the Company exercised a mandatory conversion of $890,000 of the remaining $900,000 in principal of the December 2016 Notes in exchange for 445,367 shares of the Company's common stock and an Investor prepayment of $670,000 of the December 2016 Investor Note. The principal balance converted contained an original issuance discount related to placement agent warrants issued in conjunction with the financing and a derivative liability associated with the embedded conversion feature. Upon exercise of the mandatory conversion, the outstanding balance of the original issuance discount was derecognized through interest expense. On the Exchange Date the Company issued to the Investor a Senior Convertible Note in the principal amount of $697,000 (the "Exchange Note") in exchange for the remaining $10,000 outstanding principal amount of the December 2016 Notes. With the issuance of the Exchange Note, the resulting cash flows of the remaining December 2016 Notes were considered to be significantly modified within the context of ASC 470 and a loss on extinguishment was recognized in the amount of $683,885. The Exchange Note was a non-interest-bearing note and was convertible into shares of the Company's common stock at a price of $3.00 per share. | ||||||||||||
December Notes [Member] | Placement Agent Notes and Warrants [Member] | |||||||||||||
Securities Purchase Agreement (Textual) | |||||||||||||
Warrants issued to purchase common stock | shares | 22,000 | 84,735 | |||||||||||
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 December Placement Agent 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] | |||||||||||||
Securities Purchase Agreement (Textual) | |||||||||||||
Balance at period end | |||||||||||||
Number of instruments issued | ConvertibleNotes | 2 | ||||||||||||
Principal amount | $ 5,681,818 | ||||||||||||
Interest percentage | 6.00% | ||||||||||||
Interest expenses | $ 173,963 | ||||||||||||
Notes, maturity date | Oct. 8, 2017 | ||||||||||||
Maturity date, description | The maturity date of any New Note was 45 days following the issuance of the New Note, and the conversion price of the New Notes was $4.50, or, at the election of the Investor, the Investor could convert at the Alternate Conversion Price. The Alternate Conversion Price was 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. | ||||||||||||
Common stock issued upon convertible notes | shares | 1,852,886 | ||||||||||||
Floor price variances | The Floor Price was defined as $3.00 through October 4, 2017 and $0.50 following October 4, 2017. | ||||||||||||
Principal amount | $ 681,818 | ||||||||||||
Interest amount of common stock | 49,000 | ||||||||||||
February 2017 Notes [Member] | Placement Agent Notes and Warrants [Member] | |||||||||||||
Securities Purchase Agreement (Textual) | |||||||||||||
Interest percentage | 8.00% | ||||||||||||
Warrants issued to purchase common stock | shares | 133,334 | ||||||||||||
Warrants exercise price | $ / shares | $ 3 | ||||||||||||
Warrant term | 5 years | ||||||||||||
August 2017 Notes [Member] | |||||||||||||
Securities Purchase Agreement (Textual) | |||||||||||||
Balance at period end | $ 2,061,072 | ||||||||||||
Number of instruments issued | ConvertibleNotes | 3 | ||||||||||||
Principal amount | $ 10,300,000 | ||||||||||||
Interest percentage | 6.00% | ||||||||||||
Notes, maturity date | Aug. 16, 2018 | ||||||||||||
Principal amount | $ 8,800,000 | ||||||||||||
Description of convertible debt | 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. | ||||||||||||
August 2017 Notes [Member] | Placement Agent Notes and Warrants [Member] | |||||||||||||
Securities Purchase Agreement (Textual) | |||||||||||||
Consideration received in cash for convertible note | 8,800,000 | ||||||||||||
Principal amount | $ 9,050,000 | ||||||||||||
Interest percentage | 8.00% | ||||||||||||
Warrants issued to purchase common stock | shares | 176,000 | ||||||||||||
Warrant term | 5 years | ||||||||||||
August 2017 Notes [Member] | Minimum [Member] | Placement Agent Notes and Warrants [Member] | |||||||||||||
Securities Purchase Agreement (Textual) | |||||||||||||
Common stock at exercise prices | $ / shares | $ 3 | ||||||||||||
August 2017 Notes [Member] | Maximum [Member] | Placement Agent Notes and Warrants [Member] | |||||||||||||
Securities Purchase Agreement (Textual) | |||||||||||||
Common stock at exercise prices | $ / shares | $ 14.27 | ||||||||||||
Investor Note [Member] | |||||||||||||
Securities Purchase Agreement (Textual) | |||||||||||||
Interest percentage | 6.00% | ||||||||||||
Common stock issued upon convertible notes | shares | 83,306 | 804,401 | |||||||||||
February 2017 Investor Note [Member] | |||||||||||||
Securities Purchase Agreement (Textual) | |||||||||||||
Description of notes conversion agreement | To effect an exchange (the "Share Exchange") of 841,250 shares of the Company's common stock (the "Exchange Shares") 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 was 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] | |||||||||||||
Securities Purchase Agreement (Textual) | |||||||||||||
Consideration received in cash for convertible note | $ 220,000 | ||||||||||||
Principal amount | $ 697,000 | ||||||||||||
Warrants issued to purchase common stock | shares | 10,000 | 1,892,972 | 1,715,006 | ||||||||||
Interest expenses | $ 12,878,864 | ||||||||||||
Warrants value | $ 977,142 | ||||||||||||
Investor additional shares of common stock | shares | 325,714 | ||||||||||||
Warrants exercise price | $ / shares | $ 14.31 | $ 3.25 | $ 3.25 | ||||||||||
Warrant expiration date | Nov. 21, 2022 | Apr. 16, 2022 | |||||||||||
Warrant expiration term | 5 years | ||||||||||||
Convertible debt contract description | The $220,000 secured promissory note payable by the Investor is issued in exchange for a $250,000 Senior Secured Convertible Note, therefore a discount of $30,000 is recognized upon issuance and accreted into interest expense over the life of the note using the effective interest method. Upon issuance, the Investor Warrants were recorded at fair value and accounted for as an original issuance discount to the August 2017 Notes. | ||||||||||||
Investor Warrant [Member] | Minimum [Member] | |||||||||||||
Securities Purchase Agreement (Textual) | |||||||||||||
Warrants issued to purchase common stock | shares | 1,892,972 | ||||||||||||
Warrants exercise price | $ / shares | $ 3 | ||||||||||||
Investor Warrant [Member] | Maximum [Member] | |||||||||||||
Securities Purchase Agreement (Textual) | |||||||||||||
Warrants issued to purchase common stock | shares | 2,050,720 | ||||||||||||
Warrants exercise price | $ / shares | $ 3.25 | ||||||||||||
October 2017 [Member] | |||||||||||||
Securities Purchase Agreement (Textual) | |||||||||||||
Common stock issued upon convertible notes | shares | 1,500,000 | ||||||||||||
November 2017 Notes [Member] | |||||||||||||
Securities Purchase Agreement (Textual) | |||||||||||||
Principal amount | $ 100,000,000 | ||||||||||||
Interest expenses | $ 4,714,723 | ||||||||||||
Notes, maturity date | Nov. 7, 2019 | ||||||||||||
Description of convertible debt | The November Notes consist of a Senior Secured Convertible Note in the amount of $5,000,000 (the “November Initial Note”) and a Senior Secured Convertible Note in the amount of $95,000,000 (the “November Additional Note”) in exchange for an upfront cash payment of $5,000,000 and a senior secured promissory note of $95,000,000 (the “November 2017 Investor Note”) to aid in the funding of the acquisition of the MoviePass Shares. As of December 31, 2017, the investors prepaid $15,650,000 of the November 2017 Investor Note with the remaining principal being subject to master netting agreements between the Company and the Investors. | ||||||||||||
Convertible debt contract description | The contracted conversion prices for the November 2017 Notes, which include both the November Initial Note and November Additional Note, were $12.06. As of December 31, 2017, the Investors had converted $0 of the November 2017 Notes into shares of the Company's common stock. On any unfunded principal balance of the November 2017 Investor Notes the Company owed to the Investors a 5.25% interest obligation which is due quarterly and calculated on a 360-day basis. For the funded portion of the November 2017 Notes the Company has a 10% interest obligation. | ||||||||||||
Outstanding balance | $ 2,943,069 | ||||||||||||
Accrued amount | 633,873 | ||||||||||||
November 2017 Notes [Member] | Placement Agent Notes and Warrants [Member] | |||||||||||||
Securities Purchase Agreement (Textual) | |||||||||||||
Consideration received in cash for convertible note | 11,400,000 | ||||||||||||
Principal amount | $ 100,000,000 | ||||||||||||
Interest percentage | 8.00% | ||||||||||||
Warrants issued to purchase common stock | shares | 75,618 | ||||||||||||
Common stock at exercise prices | $ / shares | $ 12.06 | ||||||||||||
Warrant term | 5 years | ||||||||||||
Exchange Note [Member] | |||||||||||||
Securities Purchase Agreement (Textual) | |||||||||||||
New note shares of common stock | shares | 947,218 | ||||||||||||
Trading price | $ 19,950,000 | ||||||||||||
Zone Technologies [Member] | |||||||||||||
Securities Purchase Agreement (Textual) | |||||||||||||
Business acquisition related expenses | $ 5,000,000 | ||||||||||||
Investor [Member] | |||||||||||||
Securities Purchase Agreement (Textual) | |||||||||||||
Principal amount | $ 19,215,378 | ||||||||||||
Interest amount of common stock | 154,577 | ||||||||||||
Investor converted total | 5,577,605 | ||||||||||||
Investor [Member] | August 2017 Notes [Member] | |||||||||||||
Securities Purchase Agreement (Textual) | |||||||||||||
Interest expenses | $ 115,096 | ||||||||||||
Description of convertible debt | The Investor had fully prepaid the August 2017 Investor Note and subsequently converted $5,794,560 in principal amount, plus accrued interest, of the August 2017 Notes into 1,482,639 shares of the Company's common stock. As of December 31, 2017, the unpaid principal amount of the August 2017 Notes owed to the Investor was $4,505,440. 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. | ||||||||||||
Accrued amount | $ 68,572 |
Fair Value of Financial Asset65
Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Liabilities | ||
Derivative liability - warrants | $ 67,288,800 | $ 230,663 |
Derivative liability - conversion feature | 4,834,462 | 997,129 |
Total | 72,123,262 | 1,207,792 |
Level 1 [Member] | ||
Liabilities | ||
Derivative liability - warrants | ||
Derivative liability - conversion feature | ||
Total | ||
Level 2 [Member] | ||
Liabilities | ||
Derivative liability - warrants | ||
Derivative liability - conversion feature | ||
Total | ||
Level 3 [Member] | ||
Liabilities | ||
Derivative liability - warrants | 67,288,800 | 230,663 |
Derivative liability - conversion feature | 4,834,462 | 997,129 |
Total | $ 72,123,262 | $ 1,207,792 |
Fair Value of Financial Asset66
Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis (Details 1) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis [Abstract] | |
Beginning balance | $ 1,207,792 |
Purchases, issuances and settlements | 119,670,364 |
Conversions to paid in capital | (14,009,654) |
Warrant exercises | (26,851,565) |
Change in fair value of warrant liabilities | 20,409,937 |
Change in fair value of derivative liabilities | (28,303,612) |
Ending balance | $ 72,123,262 |
Fair Value of Financial Asset67
Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis (Details 2) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Dividend yield | 0.00% | 0.00% |
Minimum [Member] | ||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Expected volatility | 45.00% | 154.00% |
Risk free interest rate | 1.06% | 0.82% |
Contractual term (in years) | 2 months 8 days | 8 months 2 days |
Exercise price | $ 0.001 | $ 4 |
Maximum [Member] | ||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Expected volatility | 270.00% | 230.00% |
Risk free interest rate | 2.20% | 1.12% |
Contractual term (in years) | 5 years | 5 years |
Exercise price | $ 14.310 | $ 9.360 |
Stock Based Compensation (Detai
Stock Based Compensation (Details) - 2011 Plan [Member] - MoviePass, Inc. [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options/ Warrants, Outstanding/exercisable | 17,553,242 | |
Options for common shares, granted | 12,477,623 | |
Options for Common Shares, Exercised | (193,583) | |
Options for Common Shares, Forfeited, cancelled, expired | (1,440,854) | |
Total, Warrant Shares | 28,396,428 | 17,553,242 |
Weighted Average Exercise Price, Outstanding | $ 0.04 | |
Weighted Average Exercise Price, Granted | 0.26 | |
Weighted Average Exercise Price, Exercised | 0.06 | |
Weighted Average Exercise Price, Forfeited, cancelled, expired | 0.04 | |
Total, Weighted Average Exercise Price | $ 0.14 | $ 0.04 |
Weighted Average Remaining Contractual Term, Outstanding | 9 years 1 month 16 days | 9 years 7 months 13 days |
Aggregate Intrinsic Value, Outstanding | $ 8,313,684 |
Stock Based Compensation (Det69
Stock Based Compensation (Details 1) - 2011 Plan [Member] - MoviePass, Inc. [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vested Options outstanding, Number of Options | 13,038,234 | |
Vested Options outstanding, Aggregate Intrinsic Value | $ 4,938,075 | |
All Options Outstanding, Number of Options | 28,396,428 | 17,553,242 |
All Options Outstanding, Weighted Average Remaining Term | 9 years 1 month 16 days | 9 years 7 months 13 days |
All Options Outstanding, Aggregate Intrinsic Value | $ 8,313,684 | |
Exercise Price 0.240 [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vested Options outstanding, Exercise Price | $ 0.240 | |
Vested Options outstanding, Number of Options | 241,818 | |
Vested Options outstanding, Weighted Average Remaining Term | 5 years 5 months 9 days | |
Vested Options outstanding, Aggregate Intrinsic Value | $ 45,945 | |
All Options Outstanding, Number of Options | 241,818 | |
All Options Outstanding, Weighted Average Remaining Term | 5 years 5 months 9 days | |
All Options Outstanding, Aggregate Intrinsic Value | $ 45,945 | |
Exercise Price 0.040 [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vested Options outstanding, Exercise Price | $ 0.040 | |
Vested Options outstanding, Number of Options | 10,278,210 | |
Vested Options outstanding, Weighted Average Remaining Term | 8 years 9 months 22 days | |
Vested Options outstanding, Aggregate Intrinsic Value | $ 4,008,502 | |
All Options Outstanding, Number of Options | 16,308,570 | |
All Options Outstanding, Weighted Average Remaining Term | 8 years 9 months 22 days | |
All Options Outstanding, Aggregate Intrinsic Value | $ 6,360,342 | |
Exercise Price 0.430 [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vested Options outstanding, Exercise Price | $ 0.430 | |
Vested Options outstanding, Number of Options | ||
Vested Options outstanding, Weighted Average Remaining Term | 0 years | |
Vested Options outstanding, Aggregate Intrinsic Value | ||
All Options Outstanding, Number of Options | 6,430,182 | |
All Options Outstanding, Weighted Average Remaining Term | 9 years 11 months 4 days | |
All Options Outstanding, Aggregate Intrinsic Value | ||
Exercise Price 0.048 [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vested Options outstanding, Exercise Price | $ 0.048 | |
Vested Options outstanding, Number of Options | 70,481 | |
Vested Options outstanding, Weighted Average Remaining Term | 5 years 29 days | |
Vested Options outstanding, Aggregate Intrinsic Value | $ 26,924 | |
All Options Outstanding, Number of Options | 370,198 | |
All Options Outstanding, Weighted Average Remaining Term | 4 years 5 months 20 days | |
All Options Outstanding, Aggregate Intrinsic Value | $ 141,416 | |
Exercise Price 0.080 [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vested Options outstanding, Exercise Price | $ 0.080 | |
Vested Options outstanding, Number of Options | 2,447,725 | |
Vested Options outstanding, Weighted Average Remaining Term | 9 years 7 months 13 days | |
Vested Options outstanding, Aggregate Intrinsic Value | $ 856,704 | |
All Options Outstanding, Number of Options | 5,045,660 | |
All Options Outstanding, Weighted Average Remaining Term | 9 years 7 months 13 days | |
All Options Outstanding, Aggregate Intrinsic Value | $ 1,765,981 |
Stock Based Compensation (Det70
Stock Based Compensation (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Aug. 10, 2017 | Mar. 03, 2014 | |
Stock Based Compensation (Textual) | |||
Shares issued to plan | 240,000 | ||
Recognized value to related stock compensation expense | $ 841,200 | ||
Unamortized stock compensation expense | 2,885,278 | ||
MoviePass, Inc. [Member] | |||
Stock Based Compensation (Textual) | |||
Recognized value to related stock compensation expense | $ 204,685 | ||
Minimum [Member] | |||
Stock Based Compensation (Textual) | |||
Award date ranging from agreement | 18 months | ||
Maximum [Member] | |||
Stock Based Compensation (Textual) | |||
Award date ranging from agreement | 24 months | ||
Consultant [Member] | |||
Stock Based Compensation (Textual) | |||
Shares issued to plan | 908,333 | ||
Recognized value to related stock compensation expense | $ 1,553,722 | ||
Employees [Member] | Consultant [Member] | |||
Stock Based Compensation (Textual) | |||
Shares issued to plan | 2,242,167 | ||
2014 Equity Incentive Plan [Member] | |||
Stock Based Compensation (Textual) | |||
Reserved shares of common stock | 885,000 | 1,125,000 | 400,000 |
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. | ||
Recognized value to related stock compensation expense | $ 21,320,705 | ||
Terminate date | Mar. 3, 2024 | ||
2011 Plan [Member] | MoviePass, Inc. [Member] | |||
Stock Based Compensation (Textual) | |||
Common stock for issuance grant | 46,200,097 | ||
Stock options granted pursuant to the term, description | Stock options granted pursuant to the terms of the 2011 Plan generally cannot be granted with an exercise price of less than 100% of the fair market value on the date of grant. The term of the options granted under the 2011 Plan cannot be greater than 10 years. Options vest at varying rates generally over three to five years along with performance based options. |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details) | 12 Months Ended | |
Dec. 31, 2017CustomersVendors | Dec. 31, 2016CustomersVendors | |
Consulting revenue [Member] | ||
Concentration of Credit Risk (Textual) | ||
Number of customers | Customers | 4 | 4 |
Concentration risk, percentage | 90.10% | 91.30% |
Consulting accounts receivables [Member] | ||
Concentration of Credit Risk (Textual) | ||
Number of customers | Customers | 4 | 3 |
Concentration risk, percentage | 62.60% | 62.20% |
Consulting accounts payables [Member] | ||
Concentration of Credit Risk (Textual) | ||
Number of vendors | Vendors | 3 | 1 |
Concentration risk, percentage | 82.70% | 88.70% |
Technology accounts payables [Member] | ||
Concentration of Credit Risk (Textual) | ||
Number of vendors | Vendors | 3 | 4 |
Concentration risk, percentage | 60.80% | 90.80% |
Subscription accounts receivables [Member] | ||
Concentration of Credit Risk (Textual) | ||
Number of customers | Customers | 2 | 2 |
Concentration risk, percentage | 100.00% | 100.00% |
Subscription accounts payables [Member] | ||
Concentration of Credit Risk (Textual) | ||
Number of vendors | Vendors | 1 | 4 |
Concentration risk, percentage | 41.00% | 63.60% |
Commitments and Contingencies72
Commitments and Contingencies (Details) | Dec. 31, 2017USD ($) |
Commitments and Contingencies [Abstract] | |
Less than 1 year | $ 73,503 |
1 to 3 years | 844,174 |
3 to 5 years | 347,985 |
Thereafter | |
Total | $ 1,265,662 |
Commitments and Contingencies73
Commitments and Contingencies (Details Textual) - USD ($) | Dec. 07, 2016 | Apr. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Aug. 24, 2016 |
Commitments and Contingencies (Textual) | |||||
Rent expense | $ 298,758 | $ 261,016 | |||
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 | Apr. 30, 2020 | Jun. 30, 2022 |
Transactions with Related Par74
Transactions with Related Parties (Details) - USD ($) | Oct. 05, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2010 |
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 | |||||
Consulting Agreement [Member] | ||||||
Transactions with Related Parties (Textual) | ||||||
Servicing fees | $ 18,750 | |||||
Mr. Gadiyaram [Member] | ||||||
Transactions with Related Parties (Textual) | ||||||
Servicing fees | $ 18,750 |
Warrants (Details)
Warrants (Details) - Warrant [Member] | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options/ Warrants, Outstanding/exercisable | shares | 70,714 |
Warrant Shares, Granted | shares | 12,755,539 |
Warrant Shares, Exercised | shares | (3,194,665) |
Total, Warrant Shares | shares | 9,631,588 |
Weighted Average Exercise Price, Outstanding | $ / shares | $ 6.26 |
Weighted Average Exercise Price, Granted | $ / shares | 6.47 |
Weighted Average Exercise Price, Exercised | $ / shares | 4.33 |
Total, Weighted Average Exercise Price | $ / shares | $ 6.04 |
Weighted Average Remaining Contractual Life Years, Outstanding/exercisable, Beginning | 4 years 10 months 14 days |
Weighted Average Remaining Contractual Life Years, Outstanding/exercisable, Granted | 4 years 10 months 25 days |
Weighted Average Remaining Contractual Life Years, Outstanding/exercisable, Exercised | 4 years 8 months 16 days |
Total, Weighted Average Remaining Contractual Life Years | 4 years 10 months 10 days |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | |||
Revenue | $ 10,441,567 | $ 6,759,700 | |
Cost of Revenue | 20,538,709 | 4,860,927 | |
Gross profit | (10,097,142) | 1,898,773 | |
Total operating expenses | 45,919,642 | 3,995,108 | |
Loss from operations | (56,016,784) | (2,096,335) | |
Total other expense | (94,754,526) | (5,299,401) | |
Income tax provision and tax benefit | 53,532 | (14,665) | |
Total net loss | (145,974,534) | (7,381,071) | |
Cash and cash equivalents | 24,949,393 | 2,747,240 | $ 898,477 |
Accounts receivable | 27,470,219 | 410,106 | |
Unbilled receivables | 45,207 | ||
Prepaid expenses and other current assets | 3,557,811 | 597,171 | |
Property and equipment | 234,035 | 45,212 | |
Intangible assets, net | 28,536,782 | 6,004,691 | |
Goodwill | 79,137,177 | 4,599,969 | |
Deposits and other assets | 147,171 | 59,189 | |
Accounts payable and accrued expenses | 13,144,003 | 1,331,118 | |
Liabilities to be settled in stock | 21,320,705 | ||
Convertible note payable | 6,970,000 | ||
Derivative liability | 72,123,262 | 1,207,792 | |
Consulting [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenue | 4,512,300 | 6,759,700 | |
Cost of Revenue | 3,678,294 | 4,860,927 | |
Gross profit | 834,006 | 1,898,773 | |
Total operating expenses | 28,364,072 | 3,437,283 | |
Loss from operations | (27,530,066) | (1,538,510) | |
Total other expense | (94,686,108) | (5,299,401) | |
Income tax provision and tax benefit | 49,932 | 14,665 | |
Total net loss | (122,266,106) | ||
Cash and cash equivalents | 569,886 | 1,095,732 | |
Accounts receivable | 332,753 | 410,106 | |
Unbilled receivables | 45,207 | ||
Prepaid expenses and other current assets | 3,382,127 | 554,338 | |
Property and equipment | 96,464 | 34,368 | |
Intangible assets, net | |||
Deposits and other assets | 129,119 | 59,189 | |
Accounts payable and accrued expenses | 1,196,668 | ||
Liabilities to be settled in stock | 20,875,045 | ||
Convertible note payable | 3,611,627 | ||
Warrant liability | 67,288,800 | 31,425,000,000 | |
Derivative liability | 58,890,323 | 1,134,342 | |
Deferred revenue | 977,129 | ||
Technology [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenue | |||
Cost of Revenue | |||
Gross profit | |||
Total operating expenses | 15,587,592 | 557,825 | |
Loss from operations | (15,587,592) | (557,825) | |
Total other expense | (67,958) | ||
Income tax provision and tax benefit | |||
Total net loss | (15,655,550) | ||
Cash and cash equivalents | 21,933,765 | 1,651,508 | |
Prepaid expenses and other current assets | 21,666 | 42,833 | |
Property and equipment | 95,301 | 10,844 | |
Intangible assets, net | 2,829,295 | 6,004,691 | |
Goodwill | 4,599,969 | ||
Deposits and other assets | 10,052 | ||
Liabilities to be settled in stock | 445,660 | ||
Subscription [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenue | 5,929,267 | ||
Cost of Revenue | 16,860,415 | ||
Gross profit | (10,931,148) | ||
Total operating expenses | 1,967,978 | ||
Loss from operations | (12,899,126) | ||
Total other expense | (460) | ||
Income tax provision and tax benefit | (3,600) | ||
Total net loss | (12,903,186) | ||
Cash and cash equivalents | 2,445,742 | ||
Accounts receivable | 27,137,466 | ||
Prepaid expenses and other current assets | 154,018 | ||
Property and equipment | 42,270 | ||
Intangible assets, net | 25,707,487 | ||
Goodwill | 79,137,177 | ||
Deposits and other assets | 8,000 | ||
Liabilities to be settled in stock | |||
Deferred revenue | $ 54,425,630 |
Segment Reporting (Details Text
Segment Reporting (Details Textual) | 12 Months Ended |
Dec. 31, 2017segments | |
Segment Reporting (Textual) | |
Number of operating segments | 3 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Income Taxes [Abstract] | ||
Licensing revenues | $ 4,144,000 | $ (7,000) |
Accounts receivable reserve | 1,000 | 194,000 |
Depreciation and amortization | (7,212,000) | 353,000 |
Investments | 928,000 | |
Other | 132,000 | 1,141,000 |
Tax credits | 120,000 | |
Net operating losses | 46,126,000 | 9,427,000 |
Subtotal | 43,311,000 | 12,036,000 |
Valuation allowance | (43,311,000) | (12,036,000) |
Total |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Current | ||
Federal | ||
State and local | 14,000 | 12,000 |
Foreign | 39,532 | (26,665) |
Total current | 53,532 | (14,665) |
Deferred: | ||
Federal | ||
State and local | ||
Foreign | ||
Total deferred | ||
Total | $ 53,532 | $ (14,665) |
Income Taxes (Details 2)
Income Taxes (Details 2) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes [Abstract] | ||
Federal statutory rate | 34.00% | 34.00% |
State and local taxes net of federal tax benefit | (0.10%) | (0.10%) |
Non-deductible expenses | (16.80%) | 18.90% |
Foreign tax expense | 0.10% | (0.70%) |
Non-deductible expenses | (19.20%) | 18.90% |
Change in valuation allowance | 1.90% | (51.90%) |
Total | (0.10%) | 19.10% |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes (Textual) | ||
Federal corporate rate | 34.00% | 34.00% |
Valuation allowance | $ 31,275,000 | $ 4,514,000 |
Federal net operating loss carry-forward, description | Generally, this occurs when a greater than 50 percentage point change in ownership occurs. On September 5, 2016, HMIT acquired a greater than 50 percent ownership of the Company. Additionally, on December 11, 2017 the Company completed its acquisition of a majority interest in MoviePass, a Delaware corporation with approximately $73 million in federal and state net operating losses. | The Company has total federal net operating loss carry-forwards of approximately $168 million, approximately $83 million attributed to the Company, and approximately $90 million attributed to MoviePass, which will begin to expire in 2020. |
Decrease in valuation allowance | $ 20,500,000 | |
Minimum [Member] | ||
Income Taxes (Textual) | ||
Federal corporate rate | 21.00% | |
Maximum [Member] | ||
Income Taxes (Textual) | ||
Federal corporate rate | 35.00% |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Apr. 04, 2018 | Mar. 08, 2018 | Feb. 05, 2018 | Apr. 16, 2018 | Feb. 15, 2018 | Feb. 13, 2018 | Jan. 23, 2018 | Jan. 18, 2018 | Feb. 20, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Subsequent Events (Textual) | |||||||||||
Exercise price of warrants | $ 3.40 | $ 6.26 | |||||||||
Common stock exercise price per share | $ 0.01 | $ 0.01 | |||||||||
Common stock, shares authorized | 100,000,000 | 100,000,000 | |||||||||
Common stock shares authorized prior to amendment | 500,000,000 | ||||||||||
Performance bonus compensation, description | Mr. Benson will receive a performance bonus consisting of (i) cash in the amount of $150,000, payable no later than January 31, 2018; (ii) 300,000 shares of the Company's common stock for extraordinary services related to the Company's acquisition of a majority stake in MoviePass Inc.; and (iii) 100,000 shares of the Company's common stock for outstanding performance of his general duties in 2017. The shares of common stock will vest in their entirety on February 15, 2019 and will be issued no later than March 15, 2018. For each subsequent year of the term, Mr. Benson may receive an annual bonus, made up of cash and shares of the Company's common stock, as determined in the sole discretion of the Board based on its assessment of Company and individual performance in relation to performance targets, a subjective evaluation of Mr. Benson's performance or such other criteria as may be established by the Board. The annual cash target bonus will be 50% of Mr. Benson's base salary and, if granted, the annual award of shares of the Company's common stock will be as follows: (i) for services rendered during 2018, 300,000 shares; (ii) for services rendered during 2019, 325,000 shares; and (iii) for services rendered during 2020, 400,000 shares. The shares of common stock included in the annual bonus, if any, will vest ratably at the end of each of the six calendar quarters subsequent to the calendar quarter in which the grant is made. | ||||||||||
2014 Equity Incentive Plan [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Interest payment date | Mar. 3, 2024 | ||||||||||
Investor Note [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Interest percentage | 75.00% | ||||||||||
Accrues interest at an annual rate | 0.61% | ||||||||||
Investor Note [Member] | Canaccord Genuity, Inc. [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Amount of aggregate gross proceeds received | $ 25,000,000 | ||||||||||
Percentage of gross proceeds | 4.00% | ||||||||||
Payment of Interest [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Interest payment date | Apr. 1, 2018 | ||||||||||
Event of default interest rate, description | In the event of an event of default interest under the Notes may be increased to 15% during the first 30 days following the occurrence and continuance of an event of default and to 18% thereafter (the "Default Rate"). | ||||||||||
Conversion of the Notes [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Conversion price | $ 11.44 | ||||||||||
Redemption of the Notes [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Redemption price, percentage | 115.00% | ||||||||||
Financing Fees [Member] | Canaccord Genuity, Inc. [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Amount of aggregate gross proceeds received | $ 25,000,000 | ||||||||||
Percentage of gross proceeds | 4.00% | ||||||||||
Financing Fees [Member] | Palladium Capital Advisors, LLC [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Percentage of gross proceeds | 4.00% | ||||||||||
Percentage of warrants to purchase common stock | 8.00% | ||||||||||
Subsequent Event [Member] | 2014 Equity Incentive Plan [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Equity Incentive Plan, description | (i) increase the aggregate number of shares of common stock authorized for issuance thereunder by 1,875,000 to an aggregate of 3,000,000 shares and (ii) account for an annual automatic increase in the number of shares of common stock authorized for issuance thereunder by the lesser of (A) 3,000,000 shares of the Company's common stock or the equivalent of such number of shares after the administrator of the 2014 Plan, in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction; (B) a number of shares of common stock equal to 5% of the Company's common stock outstanding on January 2nd of each year; and (C) an amount determined by the Company's Board of Directors (Proposal 1). | ||||||||||
Subsequent Event [Member] | Mr. Benson's [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Options for common shares, granted | 600,000 | ||||||||||
Base salary per year | $ 275,000 | ||||||||||
Subsequent Event [Member] | Series A-1 Note [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Principal amount | $ 25,000,000 | ||||||||||
Interest percentage | 10.00% | ||||||||||
Subsequent Event [Member] | New Subscription Agreement with Moviepass [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Total amount advanced by Helios | $ 55,525,000 | ||||||||||
Description of subscription agreement | The Company agreed to accept, an amount of MoviePass Common Stock equal to 18.79% of the total then outstanding MoviePass Common Stock (excluding shares underlying MoviePass options and warrants) (the "March 2018 MoviePass Purchased Shares"), based on a pre-money valuation of MoviePass of $240,000,000 as of December 31, 2017. Pursuant to the March 2018 Agreement, MoviePass also agreed to issue to Helios, in addition to the March 2018 MoviePass Purchased Shares, without payment of additional consideration by Helios, for purposes of providing Helios with anti-dilution protection with respect to Helios' prior equity investments in MoviePass, an amount of shares of MoviePass Common Stock that caused Helios' total ownership of the outstanding shares of MoviePass Common Stock (excluding shares underlying MoviePass options and warrants), together with the March 2018 MoviePass Purchased Shares, to equal 81.2% as of March 8, 2018. | The Company entered into an additional Subscription Agreement with MoviePass (the "April 2018 Agreement"), pursuant to which, in lieu of repayment of the Second Advance, MoviePass agreed to sell to the Company an amount of MoviePass Common Stock equal to 10.6% of the total then outstanding MoviePass Common Stock (excluding shares underlying MoviePass options and warrants) (the "April 2018 MoviePass Purchased Shares"), based on a pre-money valuation of MoviePass of $295,000,000 as of March 31, 2018. Pursuant to the April 2018 Agreement, MoviePass also agreed to issue to the Company, in addition to the April 2018 MoviePass Purchased Shares, without payment of additional consideration by the Company, for purposes of anti-dilution, an amount of shares of MoviePass Common Stock that caused the Company's total ownership of the outstanding shares of MoviePass Common Stock (excluding shares underlying MoviePass options and warrants), together with the April 2018 MoviePass Purchased Shares, to equal 91.8% as of March 8, 2018. | |||||||||
Subsequent Event [Member] | Moviefone Acquisition [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Exercise price of warrants | $ 5.50 | ||||||||||
Cash | $ 1,000,000 | ||||||||||
Issuance of common stock | 2,550,154 | ||||||||||
Warrants to purchase common stock | 2,550,154 | ||||||||||
Subsequent Event [Member] | Restricted Principal [Member] | Series B-1 Note [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Interest percentage | 5.25% | ||||||||||
Subsequent Event [Member] | Unrestricted Principal [Member] | Series B-1 Note [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Interest percentage | 10.00% | ||||||||||
Subsequent Event [Member] | Securities Purchase Agreement [Member] | Senior Convertible Bridge Note Financing [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Principal amount | $ 60,000,000 | ||||||||||
Subsequent Event [Member] | Securities Purchase Agreement [Member] | Senior Convertible Bridge Note Financing [Member] | Series A-1 Note [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Principal amount | 25,000,000 | ||||||||||
Subsequent Event [Member] | Securities Purchase Agreement [Member] | Senior Convertible Bridge Note Financing [Member] | Series B-1 Note [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Principal amount | 35,000,000 | ||||||||||
Subsequent Event [Member] | Securities Purchase Agreement [Member] | Senior Convertible Bridge Note Financing [Member] | Cash Amount [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Principal amount | 25,000,000 | ||||||||||
Subsequent Event [Member] | Securities Purchase Agreement [Member] | Senior Convertible Bridge Note Financing [Member] | Financing [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Consideration received in cash for convertible note | $ 35,000,000 | ||||||||||
Subsequent Event [Member] | February Public Offering [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Common stock exercise price per share | $ 0.001 | ||||||||||
Warrants term | 5 years | ||||||||||
Net proceeds from sale of the units | $ 96,817,200 | ||||||||||
Deducting underwriting discounts and commissions | 5,882,800 | ||||||||||
Estimated offering expenses | $ 450,000 | ||||||||||
Subsequent Event [Member] | February Public Offering [Member] | Series A-1 Warrant [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Exercise price of warrants | $ 6.50 | ||||||||||
Subsequent Event [Member] | February Public Offering [Member] | Series B-1 Warrant [Member] | |||||||||||
Subsequent Events (Textual) | |||||||||||
Exercise price of warrants | $ 5.50 |