Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 14, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | DEBT RESOLVE INC | |
Entity Central Index Key | 1,106,645 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 126,700,152 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,017 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash | $ 301,862 | $ 593,101 |
Accounts receivable, net | 1,971,598 | 3,913,945 |
Prepaid expenses | 17,850 | 33,054 |
Total current assets | 2,291,310 | 4,540,100 |
Long term assets: | ||
Accounts receivable, net | 6,609,628 | 3,060,190 |
Total assets | 8,900,938 | 7,600,290 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 4,485,563 | 4,178,384 |
Due to shareholders | 289,451 | 303,721 |
Deferred revenue | 1,997,615 | 1,442,949 |
Due to factor | 7,265,363 | 6,162,722 |
Notes payable, current portion | 659,311 | 686,083 |
Notes payable-related party, net of unamortized discount of $65,705 and $47,598 as of June 30, 2017 and December 31, 2016, respectively | 1,085,016 | 828,123 |
Convertible Short-term notes, net of deferred debt discount of $91,472 and $39,667 as of June 30, 2017 and December 31, 2016, respectively | 2,043,528 | 1,433,833 |
Lines of credit, related parties | 409,339 | 459,337 |
Total current liabilities | 18,235,186 | 15,495,152 |
Long term debt: | ||
Notes payable, related party, net of unamortized debt discount of $0 and $51,370 as of June 30, 2017 and December 31, 2016, respectively | 30,000 | 278,630 |
Convertible long-term notes, net of deferred debt discount of $19,363 and $162,841 as of June 30, 2017 and December 31, 2016, respectively | 500,637 | 1,113,659 |
Total liabilities | 18,765,823 | 16,887,441 |
Stockholders' deficiency: | ||
Common stock, $0.001 par value, 500,000,000 shares authorized; 126,700,152 and 121,264,809 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively | 126,700 | 121,265 |
Additional paid in capital | 67,910,052 | 67,736,961 |
Accumulated deficit | (77,171,407) | (76,585,871) |
Stockholders' deficiency attributable to Debt Resolve, Inc. | (9,134,655) | (8,727,645) |
Non-controlling interest | (730,230) | (559,506) |
Total stockholders' deficiency | (9,864,885) | (9,287,151) |
Total liabilities and stockholders' deficiency | 8,900,938 | 7,600,290 |
Series A convertible preferred stock [Member] | ||
Stockholders' deficiency: | ||
Preferred stock |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Current liabilities: | ||
Notes payable, related party, net of unamortized debt discount | $ 65,705 | $ 47,598 |
Convertible Short-term notes, net of deferred debt discount | 91,472 | 39,667 |
Long term debt: | ||
Notes payable, related party, net of unamortized debt discount | 0 | 51,370 |
Convertible long-term notes, net of deferred debt discount | $ 19,363 | $ 162,841 |
Stockholders' deficiency: | ||
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock shares authorized | 10,000,000 | 10,000,000 |
Common stock par value | $ 0.001 | $ 0.001 |
Common stock shares authorized | 500,000,000 | 500,000,000 |
Common stock shares issued | 126,700,152 | 121,264,809 |
Common stock shares outstanding | 126,700,152 | 121,264,809 |
Series A convertible preferred stock [Member] | ||
Stockholders' deficiency: | ||
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock, shares designated | 5,000,000 | 5,000,000 |
Preferred stock designated shares issued | 0 | 0 |
Preferred stock designated shares outstanding | 0 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Condensed Consolidated Statements Of Operations | ||||
Revenues: | $ 2,044,542 | $ 347,830 | $ 4,205,916 | $ 1,005,474 |
Costs and expenses: | ||||
Payroll, payroll taxes, penalties and related expenses | 547,612 | 300,912 | 1,196,743 | 615,566 |
Selling and marketing expenses | 407,062 | 793,734 | 124,500 | |
General and administrative expenses | 855,083 | 458,585 | 1,631,100 | 1,200,133 |
Total costs and expenses | 1,809,757 | 759,497 | 3,621,577 | 1,940,199 |
Income (loss) from operations | 234,785 | (411,667) | 584,339 | (934,725) |
Other income (expense): | ||||
Gain on change in fair value of derivative liabilities | 157,458 | 153,218 | ||
Interest expense | (393,699) | (197,240) | (828,978) | (448,949) |
Amortization of debt discounts | (55,489) | (52,771) | (124,937) | (83,010) |
Total other income (expense) | (449,188) | (92,553) | (953,915) | (378,741) |
Net loss before provision for income taxes | (214,403) | (504,220) | (369,576) | (1,313,466) |
Income tax (benefit) | ||||
Net loss | (214,403) | (504,220) | (369,576) | (1,313,466) |
Net (income) loss attributable to non-controlling interest | (65,211) | 98,589 | (215,960) | 284,118 |
NET LOSS ATTRIBUTABLE TO DEBT RESOLVE, INC. | $ (279,614) | $ (405,631) | $ (585,536) | $ (1,029,348) |
Net loss per common share -basic and diluted | $ 0 | $ 0 | $ 0 | $ (0.01) |
Weighted average number of common shares outstanding, basic and diluted | 126,689,163 | 104,612,082 | 124,964,204 | 104,612,082 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY - 6 months ended Jun. 30, 2017 - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Noncontrolling Interest | Total |
Beginning Balance, Shares at Dec. 31, 2016 | 121,264,809 | ||||
Beginning Balance, Amount at Dec. 31, 2016 | $ 121,265 | $ 67,736,961 | $ (76,585,871) | $ (559,506) | $ (9,287,151) |
Common shares issued upon in conversion of notes payable and accrued interest, Shares | 3,685,343 | ||||
Common shares issued upon in conversion of notes payable and accrued interest, Amount | $ 3,685 | 106,080 | $ 109,765 | ||
Common stock issued for services, Shares | 1,750,000 | 1,750,000 | |||
Common stock issued for services, Amount | $ 1,750 | 21,000 | $ 22,750 | ||
Fair value of warrants issued for services | 29,628 | 29,628 | |||
Fair value of vesting options issued to employees for services | 16,383 | 16,383 | |||
Capital withdrawal by non-controlling interest | (386,684) | (386,684) | |||
Net loss | (585,536) | 215,960 | (369,576) | ||
Ending Balance, Shares at Jun. 30, 2017 | 126,700,152 | ||||
Ending Balance, Amount at Jun. 30, 2017 | $ 126,700 | $ 67,910,052 | $ (77,171,407) | $ (730,230) | $ (9,864,885) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (369,576) | $ (1,313,466) |
Adjustments to reconcile net loss to net cash (used in) operating activities: | ||
Amortization of debt discounts | 124,937 | 83,010 |
Bad debts | 785,756 | 230,245 |
Stock based compensation | 68,761 | 154,079 |
Change in fair value of derivative liability | (153,218) | |
Loss on warrant modifications | 31,346 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (2,392,847) | 656,631 |
Prepaid expenses | 15,204 | 20,912 |
Accounts payable and accrued liabilities | 321,943 | 465,513 |
Deferred revenue | 554,666 | (221,153) |
Net cash (used in) operating activities | (891,156) | (46,101) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net (repayments) proceeds from shareholders | (14,270) | 58,625 |
Net proceeds (repayments) to factor | 1,102,641 | (481,023) |
(Repayments) proceeds from short term notes | 129,723 | |
(Repayments) proceeds from short term notes, related party | (25,000) | 38,785 |
Net repayments from line of credit, related parties | (49,998) | |
Repayment of short term notes | (26,772) | |
Proceeds from long term notes | 272,000 | |
Distributed capital to non-controlling interest | (386,684) | 56,761 |
Net cash provided by financing activities | 599,917 | 74,871 |
Net (decrease) increase in cash and cash equivalents | (291,239) | 28,770 |
Cash at beginning of period | 593,101 | 30,480 |
Cash at end of period | 301,862 | 59,250 |
Supplemental Disclosures of Cash Flow Information: | ||
Cash paid during period for interest | 33,822 | 12,933 |
Cash paid during period for taxes | ||
Non-cash financing and investing transactions: | ||
Beneficial conversion feature on convertible notes | 16,619 | |
Convertible notes issued for settlement of accounts payable | 75,000 | |
Convertible notes issued for settlement of compensation | 75,000 | |
Reclassification on non-recourse financing agreement to full recourse agreement | 1,128,701 | |
Common stock issued in settlement of convertible notes and accrued interest | $ 109,765 |
BASIS AND BUSINESS PRESENTATION
BASIS AND BUSINESS PRESENTATION | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
NOTE 1 - BASIS AND BUSINESS PRESENTATION | Debt Resolve, Inc. (the “Company”) was incorporated under the laws of the State of Delaware on April 21, 1997. The Company offers its service as a Software-as-a-Service (SaaS) model, enabling clients to introduce this collection or payment software option with no modifications to their existing collections computer systems. Its products capitalize on using the Internet as a tool for communication, resolution, settlement and payment of delinquent or defaulted consumer debt and as part of a complete accounts receivable management solution for consumer creditors. In December 2014, the Company, jointly with LSH, LLC, organized Progress Advocates LLC, a Delaware limited liability company for the purpose to provide services in the student loan document preparation industry with ownership interests of 51% and 49% for the Company and LSH, LLC, respectively. In February 2016, the Company, jointly with Patient Online Services, LLC, organized Payment Resolution Systems LLC, a Delaware limited liability company for the purpose of assisting Medical Groups and Hospitals in the online negotiation and settlement of delinquent accounts, with ownership interests of 51% and 49% for the Company and Patient Online Services, LLC, respectively. In May 2016, the Company, jointly with Hutton Ventures LLC, organized Student Loan Care LLC, a Delaware limited liability company for the purpose of providing document preparation services for holders of Federal Direct Student Loans, with ownership interests of 51% and 49% for the Company and Hutton Ventures LLC, respectively. The Company operates Payment Resolution Systems within Debt Resolve, Inc., whereas Progress Advocates LLC and Student Loan Care LLC operate as independent subsidiaries. Basis of Presentation These unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to the Form 10-Q and Article 10 of Regulation S-X, and therefore, do not include all the information necessary for a fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the three and six months ended June 30, 2017 are not necessarily indicative of the results that may be expected for the fiscal year ended December 31, 2017. The unaudited condensed financial statements should be read in conjunction with the consolidated December 31, 2016 financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC"). The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation. The non-controlling interest represents the minority owners' share of its net operating results. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES | A summary of the significant accounting policies applied in the presentation of the accompanying unaudited condensed consolidated financial statements follows: Revenue Recognition In recognition of the principles expressed in Accounting Standards Codification subtopic 605-10, Revenue should not be recognized until it is realized or realizable and earned, and given the element of doubt associated with collectability of an agreed settlement on past due debt, the Company postpones recognition of all contingent revenue until the client receives payment from the debtor. As is required by SAB 104, revenues are considered to have been earned when the Company has substantially accomplished the agreed-upon deliverables to be entitled to payment by the client. For most current active clients, these deliverables consist of the successful collection of past due debts using the Company’s system and/or, for clients under a flat fee arrangement, the successful availability of the Company’s system to its customers. Revenues for the preparation of student loan documentation are earned when the Company has substantially accomplished the agreed-upon deliverables to be entitled to payment by the client. For most current active clients, these deliverables consist of the completed, delivered and accepted student loan package. The Company may sell its products separately or in various bundles that include multiple elements such as initial application, monitoring and other services. The Company also earns revenue from collection agencies, healthcare providers and lenders that implemented our online system. The Company’s current contracts provide for revenue based on a percentage of the amount of debt collected, a fee per settlement or through a flat monthly fee. Although other revenue models have been proposed, most revenue earned to date has been determined using these methods, and such revenue is recognized when the settlement amount of debt is collected by the client or at the beginning of the month for a flat fee. While the percent of debt collected will continue to be a revenue recognition method going forward, other payment models are also being offered to clients. Dependent upon the structure of future contracts, revenue may be derived from a combination of set up fees or flat monthly or annual fees with transaction fees upon debt settlement, fees per account loaded or fees per settlement. Payment Resolution Systems, the Company’s 51% owned subsidiary, works as an extended business office to medical groups around the U.S. Revenue is earned in this business by the online negotiations and collection of group’s accounts receivable and paid via a service fee. Revenues for set-up fees, percentage contingent collection fees, fixed settlement fees, monthly fees, etc. are accounted for as Multiple-Element Arrangements under ASC 605-10 which incorporates Accounting Standards Codification subtopic 605-25, Multiple-Element Arrangements (“ASC 605-25”). ASC 605-25 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. The Company defers any revenue for which the product or service has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required. At June 30, 2017 and December 31, 2016, the Company had deferred revenues of $1,997,615 and $1,442,949, respectively. Estimates The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities, revenues and expenses and certain disclosures. The most significant estimates are those used in determination of the carrying value of accounts receivable, revenue recognition and stock compensation. Accordingly, actual results could differ from those estimates. Concentrations and Credit Risk The Company’s financial instruments that are exposed to a concentration of credit risk are cash and accounts receivable. Generally, the Company’s cash and cash equivalents in non-interest-bearing accounts may exceed FDIC insurance limits. The financial stability of these institutions is periodically reviewed by senior management. The Company extends credit to large, mid-size and small companies for collection services. The Company did not have a concentration in receivables in 2017 or 2016. The Company does not generally require collateral or other security to support customer receivables. Accounts receivable are carried at their estimated collectible amounts. Accounts receivable are periodically evaluated for collectability and the allowance for doubtful accounts is adjusted accordingly. Management determines collectability based on their experience and knowledge of the customers. As of June 30, 2017 and December 31, 2016, allowance for doubtful accounts was $1,856,838 and $1,622,208, respectively. The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. Net Loss per Common Share, basic and diluted The Company computes earnings (loss) per share under Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”). Net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable. The computation of basic and diluted income (loss) per share as of June 30, 2017 and 2016 excludes potentially dilutive securities when their inclusion would be anti-dilutive, or if their exercise prices were greater than the average market price of the common stock during the period. Potentially dilutive securities excluded from the computation of basic and diluted net loss per share are as follows: June 30, 2017 June 30, 2016 Convertible notes payable 58,228,077 59,271,667 Options to purchase common stock 12,050,000 17,742,434 Warrants to purchase common stock 100,025,000 108,225,000 Warrants to purchase Series A preferred stock 23,295,000 25,245,000 Totals 193,598,077 210,484,101 Stock-based compensation The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Stock-based compensation expense is recorded by the Company in the same expense classifications in the statements of operations, as if such amounts were paid in cash. As of June 30, 2017, there were outstanding stock options to purchase 12,050,000 shares of common stock, 9,233,334 shares of which were vested. Defined Contribution (401k) Plan The Company maintains a defined contribution (401k) plan for our employees. The plan provides for a company match in the amount of 100% of the first 3% of pre-tax salary contributed and 50% of the next 3% of pre-tax salary contributed. Due to the severe cash limitations that the Company has experienced, the match was suspended from mid-2008 to the present and will only be re-instated when business conditions warrant. Income taxes Income tax provisions or benefits for interim periods are computed based on the Company’s estimated annual effective tax rate. Based on the Company’s historical losses and its expectation of continuation of losses for the foreseeable future, the Company has determined that it is more likely than not that deferred tax assets will not be realized and, accordingly, has provided a full valuation allowance. As the Company anticipates or anticipated that its net deferred tax assets at December 31, 2017 and 2016 would be fully offset by a valuation allowance, there is no federal or state income tax benefit for the periods ended June 30, 2017 and 2016 related to losses incurred during such periods. Fair value Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes three levels of inputs that may be used to measure fair value: · Level 1 - Quoted prices in active markets for identical assets or liabilities. · Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. · Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement. The carrying value of the Company’s cash, accounts receivable, accounts payable, short-term borrowings (including lines of credit and notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity. As of June 30, 2017 and December 31, 2016, the Company did not have any items that would be classified as level 1, 2 or 3 disclosures. Recent accounting pronouncements There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s financial position, results of operations or cash flows. |
LIQUIDITY
LIQUIDITY | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
NOTE 3 - LIQUIDITY | The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying unaudited condensed consolidated financial statements, the Company incurred a net loss of $585,536 for the six months ended June 30, 2017. Additionally, the Company has negative working capital (total current liabilities exceeded total current assets) of $15,943,876 as of June 30, 2017. These factors among others raise substantial doubt about the CompanyÂ’s ability to continue as a going concern. The Company has undertaken further steps as part of a plan to improve operations with the goal of sustaining our operations for the next twelve months and beyond to address its lack of liquidity by raising additional funds, either in the form of debt or equity or some combination thereof. However, there can be no assurance that the Company can successfully accomplish these steps and or business plans, and it is uncertain that the Company will achieve a profitable level of operations and be able to obtain additional financing. The CompanyÂ’s continued existence is dependent upon managementÂ’s ability to develop profitable operations and resolve its liquidity problems. There can be no assurance that any additional financings will be available to the Company on satisfactory terms and conditions, if at all. In the event that the Company is unable to continue as a going concern, it may elect or be required to seek protection from its creditors by filing a voluntary petition in bankruptcy or may be subject to an involuntary petition in bankruptcy. The accompanying unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern. |
ACCOUNTS RECEIVABLE AND DUE TO
ACCOUNTS RECEIVABLE AND DUE TO FACTOR | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
NOTE 4 - ACCOUNTS RECEIVABLE AND DUE TO FACTOR | Accounts receivable are receivables generated from sales to customers and progress billings on performance type contracts. Amounts included in accounts receivable are deemed to be collectible within the CompanyÂ’s operating cycle. Management provides an allowance for doubtful accounts based on the CompanyÂ’s historical losses, specific customer circumstances, and general economic conditions. Periodically, management reviews accounts receivable and adjusts the allowance based on current circumstances and charges off uncollectible receivables when all attempts to collect have been exhausted and the prospects for recovery are remote. As of June 30, 2017 and December 31, 2016, the CompanyÂ’s accounts receivable was $8,581,226 and $6,974,135, net of allowance for doubtful accounts of $1,856,838 and $1,622,208, respectively. The CompanyÂ’s majority owned subsidiaries, Progress Advocates LLC and Student Loan Care, LLC entered into factoring agreements which had certain provisions that factor advances were based on a recourse basis. The Progress AdvocatesÂ’ recourse agreements provide for the Company to receive an advance of between 30% - 96% of any accounts receivable that it factors with 62% - 0% held in reserve. The average amount received from these recourse agreements was 50.9% and the average amount reserved was 42.1%. The factoring agreements also provide for discount fees of 4% - 8% of the face value of any accounts receivable factored, plus additional charges for other transaction fees. The agreements may be terminated by either party at any time and will continue unless either party formally cancels. The CompanyÂ’s majority owned subsidiary, Student Loan Care LLC, entered into a similar recourse factoring agreement during the second quarter of 2016. This agreement provides for the Company to receive an advance of between 45% - 90% of any accounts receivable that it factors with 45% - 5% held in reserve. The average amount received was 64% and the average amount reserved was 30%. The factoring agreement also provides for discount fees of 3% - 6% of the face value of any accounts receivable factored, plus additional charges for other transaction fees. The agreement may be terminated by either party at any time and will continue unless either party formally cancels. As of June 30, 2017 and December 31, 2016, the CompanyÂ’s outstanding obligation under the factoring agreements was $7,265,363 and $6,162,722, respectively. |
ACCOUNTS PAYABLE AND ACCRUED LI
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
NOTE 5 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | Accounts payable and accrued liabilities as of June 30, 2017 and December 31, 2016 are comprised of the following: June 30, 2017 December 31, 2016 Accounts payable $ 834.243 $ 698,435 Accrued interest 2,664,830 2,419,165 Payroll and related accruals, net of advance to employees 986,490 1,060,784 Total $ 4,485,563 $ 4,178,384 |
NOTES PAYABLE
NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
NOTE 6 - NOTES PAYABLE | As of June 30, 2017 and December 31, 2016, short term notes are as follows: June 30, 2017 December 31, 2016 Note payable, dated June 1, 2015, in default 41,667 41,667 Note payable, dated July 2, 2015, in default 12,500 12,500 Note payable, dated August 28, 2015, in default 32,967 32,967 Note payable, dated December 17, 2015, in default 50,000 50,000 Note payable, dated January 13, 2016, in default 50,000 50,000 Note payable, dated February 16, 2016, in default 25,000 25,000 Note payable, dated July 14, 2016 47,000 47,000 Equitable promissory note, dated March 1, 2016 22,310 49,082 Investor notes payable, 12% per annum, in default 377,867 377,867 Total 659,311 686,083 Less current portion 659,311 686,083 Long term portion $ -0- $ -0- |
NOTES PAYABLE, RELATED PARTIES
NOTES PAYABLE, RELATED PARTIES | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
NOTE 7 - NOTES PAYABLE, RELATED PARTIES | As of June 30, 2017 and December 31, 2016, notes payable, related parties are as follows: June 30, 2017 December 31, 2016 Convertible note payable dated July 22, 2010, in default $ 15,000 $ 15,000 Note payable dated January 14, 2011, in default 6,000 6,000 Note payable dated April 14, 2011, in default 25,000 25,000 Note payable dated April 15, 2011, in default 25,000 25,000 Note payable dated January 18, 2012, in default 5,000 5,000 Note payable dated January 20, 2012, in default 5,000 5,000 Note payable dated May 21, 2012, in default 15,000 15,000 Note payable dated May 30, 2012, in default 20,000 20,000 Series A Convertible note, in default 20,000 20,000 Convertible notes payable, dated July 6, 2012, in default 30,000 30,000 Convertible note payable, dated July 10, 2012, in default 15,000 15,000 Note payable, dated September 14, 2012, in default 6,000 6,000 Convertible note payable, dated September 7, 2012, in default 43,000 43,000 Convertible note payable, dated October 4, 2012, in default 50,000 50,000 Convertible note payable, dated September 5, 2013, in default 10,000 10,000 Convertible note payable, dated September 16, 2013, in default 3,000 3,000 Note payable dated September 17, 2013, in default 5,221 5,221 Note payable, dated October 24, 2013, in default 30,000 30,000 Note payable, dated November 7, 2013 40,000 40,000 Note payable. dated December 6, 2013, in default 5,000 5,000 Note payable, dated December 18, 2013 30,000 30,000 Note payable, dated January 9, 2014, in default 25,000 25,000 Convertible note payable, dated February 28, 2014 200,000 200,000 Convertible note payable, dated April 24, 2014 25,000 25,000 Convertible note payable, dated November 7, 2014 25,000 25,000 Convertible notes payable, dated December 4, 2014, in default 50,000 50,000 Note payable, dated January 25, 2015, in default 25,000 25,000 Convertible note payable, dated March 3, 2015, net of unamortized debt discount of $-0- and $391, respectively, in default 50,000 49,609 Convertible note payable, dated May 12, 2015, net of unamortized debt discount of $0 and $199, respectively 20,000 19,801 Note payable, dated June 18, 2015, in default 25,000 25,000 Note payable, dated July 13, 2015, in default 12,500 12,500 Note payable, dated August 5, 2015, in default 25,000 25,000 Note payable, dated August 19, 2015, in default 50,000 50,000 Convertible note payable, dated May 15, 2016, net of unamortized debt discount of $32,774 and $51,370, respectively 42,226 23,630 Note payable, dated June 9, 2016 15,000 15,000 Note payable, dated June 22, 2016 30,000 30,000 Note payable, dated June 30, 2016 25,000 25,000 Notes payable, dated September 28, 2016, net of unamortized debt discount of $32,931 and $47,008, respectively 67,069 77,992 Total 1,115,016 1,106,753 Less current portion (1,085,016 ) (828,123 ) Long term portion $ 30,000 $ 278,630 For the three and six months ended June 30, 2017, the Company amortized $16,490 and $33,263 of debt discount to operations as interest expense. For the three and six months ended June 30, 2016, the Company amortized $6,516 and $10,821 of debt discount to operations as interest expense. Total unpaid accrued interest on the notes payable to related parties as of June 30, 2017 and December 31, 2016 was $397,485 and $337,020, respectively. During the six months ended June 30, 2017 and 2016, the Company recorded interest expense of $55,677 and $50,336, respectively, in connection with the notes payable to related parties. |
LINE OF CREDIT- RELATED PARTY
LINE OF CREDIT- RELATED PARTY | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
NOTE 8 - LINE OF CREDIT- RELATED PARTY | On January 25, 2015, the Company issued an unsecured promissory note to certain members of the CompanyÂ’s board of directors who provided the Company a line of credit up to $400,000 for working capital over a term of four years with an annualized interest rate of 5.25%. The promissory note is due 30 days upon written demand however, the Company is obligated to make monthly payments of principal and interest necessary to meet the minimal monthly principal and interest payments required by the bank on loans the lenders obtained to provide the financing. As of June 30, 2017 and December 31, 2016, the outstanding balance on this loan was $258,339 and 308,337, respectively. On September 24, 2009, the Company entered into an unsecured short term loan with a stockholder for $150,000 to be used to discharge the bridge loans of another investor. Borrowings under the loan bear interest at 12% per annum, with interest accrued and payable on maturity. The Note was due on November 24, 2009 and is still outstanding. In conjunction with this line of credit, the Company also issued a warrant to purchase 150,000 shares of common stock at an exercise price of $0.15 per share with an expiration date of September 24, 2014. On April 6, 2010, a partial repayment of $25,000 of principal was paid. Also, as a result of the delinquent repayment of the note, a penalty of $69,000 was incurred on April 15, 2010. On August 17, 2010, a partial payment of $50,000 of principal was made on the line of credit. Unpaid accrued interest on this loan as of June 30, 2017 and December 31, 2016 was $146.395 and $137,409, respectively. As of June 30, 2017 and December 31, 2016, the outstanding balance on this loan was $151,000. Since the loan matured on November 24, 2009, it is currently in default. During the six months ended June 30, 2017 and 2016, the Company recorded $8,985 and $8,986, respectively, as interest expense. |
CONVERTIBLE NOTES
CONVERTIBLE NOTES | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
NOTE 9 - CONVERTIBLE NOTES | Convertible notes of non-related party investors are comprised of the following: June 30, 2017 December 31, 2016 Series A Convertible Notes $ 817,000 $ 817,000 Series B Convertible Notes 225,000 225,000 Series C Convertible Notes 245,000 245,000 Series D Convertible Notes 21,000 21,000 Bridge 2014 Convertible Notes 750,000 750,000 Bridge 2015 Convertible Notes, net of unamortized debt discount of $8,909 and $27,685, respectively 266,091 297,315 Bridge 2016 Convertible Notes, net of unamortized debt discount of $4,879 and $8,901, respectively 67,121 63,099 Bridge 2 (2016) Convertible Notes, net of unamortized debt discount of $97,047 and $153,940, respectively 152,953 96,060 Convertible promissory notes, net of unamortized debt discount of $11,982 - 33,018 Total 2,544,165 2,547,492 Less: Current portion (2,043,528 ) (1,433,833 ) Long term portion $ 500,637 $ 1,113,659 During the six months ended June 30, 2017, the Company issued an aggregate of 3,685,343 shares of its common stock in settlement of $95,000 of convertible notes payable and $14,765 accrued interest. For the six months ended June 30, 2017 and 2016, the Company amortized $91,674 and $72,188 of debt discount to current period operations as interest expense. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
Note 10 - STOCKHOLDERS' EQUITY | Preferred Stock At June 30, 2017 and December 31, 2016, the Company has authorized 10,000,000 shares of Series A convertible preferred stock, par value $0.001, of which none are issued and outstanding as of June 30, 2017 and December 31, 2016. The Series A convertible preferred stock which has rank senior to common and all other preferred stock of the corporation and equal or junior to any preferred stock that may be issued in regard to liquidation; not entitled to dividends and is convertible, at the holdersÂ’ option, at 10 shares of common stock for each share of Series A preferred stock. Common stock At June 30, 2017, and December 31, 2016, the Company has authorized 500,000,000 shares of common stock, par value $0.001, of which 126,700,152 and 121,264,809 are issued and outstanding as of June 30, 2017 and December 31, 2016, respectively. During the six months ended June 30, 2017, the Company issued 1,750,000 shares of its common stock for services valued at $22,750. |
WARRANTS AND OPTIONS
WARRANTS AND OPTIONS | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
NOTE 11 - WARRANTS AND OPTIONS | Common stock warrants The following table summarizes warrants outstanding and related prices for the shares of the CompanyÂ’s common stock issued to shareholders at June 30, 2017: Exercise Price Number Outstanding Warrants Outstanding Weighted Average Remaining Contractual Life (years) Weighted Average Exercise price Number Exercisable Warrants Exercisable Weighted Average Exercise Price $ 0.01 to 0.10 88,650,000 3.10 $ 0.08 58,650,000 $ 0.10 0.11 to 0.20 7,875,000 0.72 0.15 7,875,000 0.15 0.21 to 0.30 3,500,000 0.22 0.25 3,500,000 0.25 Total 100,025,000 2.81 $ .09 70,025,000 $ 0.11 Transactions involving the CompanyÂ’s warrant issuance for the six months ended June 30, 2017 are summarized as follows: Number of Shares Weighted Average Price Per Share Outstanding at December 31, 2016 101,825,000 0.10 Issued 2,000,000 0.08 Exercised - - Expired (3,800,000 ) (0.23 ) Outstanding at June 30, 2017 100,025,000 $ 0.09 During the six months ended June 30, 2017, the Company issued 1,000,000 common stock warrants in connection with services provided. The warrants are exercisable for five years from the date of issuance at an exercise price of $0.05 per common share. The warrants were valued using the Black Sholes option pricing method with the following assumptions: dividend yield $-0-, volatility of 339.59 %, risk free rate of 1.87% and expected life of 5.00 years. The determined estimated fair value of $14,996 was charged to operations during the six months ended June 30 2017. During the six months ended June 30, 2017, the Company issued 1,000,000 common stock warrants in connection with services provided. The warrants are exercisable till August 7, 2019 at an exercise price of $0.10 per common share. The warrants were valued using the Black Sholes option pricing method with the following assumptions: dividend yield $-0-, volatility of 339.59 %, risk free rate of 1.29% and expected life of 2.29 years. The determined estimated fair value of $14,632 was charged to operations during the six months ended June 30 2017. Total stock-based compensation expense for warrants for the six months ended June 30, 2017 and 2016 amounted to $29,628 and $1,860, respectively. Preferred stock warrants The following table summarizes warrants outstanding and related prices for the shares of the CompanyÂ’s Series A convertible preferred stock issued at June 30, 2017: Exercise Price Number Outstanding Warrants Outstanding Weighted Average Remaining Contractual Life (years) Weighted Average Exercise price Number Exercisable Warrants Exercisable Weighted Average Exercise Price $ 0.50 2,120,000 2.55 $ 0.50 1,120,000 $ 0.50 1.00 36,000 0.57 1.00 36,000 1.00 1.50 173,500 1.03 1.50 173,500 1.50 Total 2,329,500 2.41 $ 0.58 1,329,500 $ 0.64 Transactions involving the CompanyÂ’s preferred warrant issuance for the six months ended June 30, 2017 are summarized as follows: Number of Shares Weighted Average Price Per Share Outstanding at December 31, 2016 2,564,500 0.66 Issued - - Exercised - - Expired (235,000 ) 1.42 Outstanding at June 30, 2017 2,329,500 $ 0.58 Options The following table summarizes options outstanding and related prices for the shares of the CompanyÂ’s common stock issued at June 30, 2017: Exercise Price Number Outstanding Option Outstanding Options Average Remaining Contractual Life (years) Weighted Average Exercise price Number Exercisable Options Exercisable Weighted Average Exercise price $ 0.015 7,000,000 3.60 $ 0.015 4,333,334 $ 0.015 0.02 400,000 5.50 0.02 250,000 0.02 0.025 250,000 5.15 0.025 250,000 0.025 0.06 3,000,000 0.92 0.06 3,000,000 0.06 0.09 250,000 1.43 0.09 250,000 0.09 0.095 500,000 1.55 0.095 500,000 0.095 0.10 650,000 0.69 0.10 650,000 0.10 Total 12,050,000 1.85 $ 0.036 9,233,334 $ 0.045 Transactions involving the CompanyÂ’s option issuance for the six months ended June 30, 2017 are summarized as follows: Number of Shares Weighted Average Price Per Share Outstanding at December 31, 2016 17,225,000 0.08 Issued - -- Exercised -- -- Expired (5,175,000 ) 0.17 Outstanding at June 30, 2017 12,050,000 $ 0.036 Total stock-based compensation expense for options for the six months ended June 30, 2017 and 2016 amounted to $16,383 and $7,500, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
NOTE 12 - COMMITMENTS AND CONTINGENCIES | Litigation: On April 11, 2016, a Decision was entered in the matter of a noteholder's claim (as described in Part 1, Item 3 (under "Lawsuits from Noteholders") against Debt Resolve Inc., granting the noteholder's motion for summary judgment in part, and denying it in part, and denying Debt Resolve's cross motion for summary judgment. A stipulation with respect to damages was entered by the Court on August 29, 2016 providing that the total outstanding principal and interest due the noteholder as of July 31, 2016 is $322,152. The noteholder is seeking an award of his attorneys' fees from the Court. On April 20, 2017, the Court awarded the plaintiff $115,516 in attorneyÂ’s fees and costs, therefore the Company has accrued, as of June 30, 2017, the liability which is included as accounts payable and accrued expenses in the accompanying financial statements. On May 4, 2017, the Company was notified that this claim became property of the NoteholderÂ’s bankruptcy estate which was converted to chapter 7. The CompanyÂ’s counsel has been in contact with the chapter 7 trustee. From time to time, the Company is involved in various litigation matters in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the CompanyÂ’s consolidated financial position or results of operations. Payroll and Payroll taxes Due to a lack of capital, the Company has been unable to pay all of the compensation owed to its employees. In addition, in 2011, 2012 and the first quarter of 2013, the Company did not pay certain federal and state payroll tax obligations due for employeesÂ’ compensation, and they have become delinquent. As a result, the Company has included in accrued expenses an amount of approximately $52,500 at June 30, 2017 that represents an estimate that could be expected upon settlement of these payroll taxes with the respective taxing authorities. In April, 2015, an agreement was reached with the IRS that details an agreed upon amount owed and a 17 month payment plan for same. All payments have been made and the IRS liability has been satisfied. In addition, the Company has contacted the state involved and anticipates settlement discussions in the near future. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
NOTE 13 - RELATED PARTY TRANSACTIONS | During the year ended December 31, 2016, certain Company directors personally guarantee the CompanyÂ’s notes payable and itsÂ’ bank loan (Note 8). Also, certain directors and officers made short-term or longer term loans as discussed in Note 7 and 8. Total interest expense in connection with notes payable to related parties and related party lines of credit amounted $64,662 and $59,371 for the six months ended June 30, 2017 and 2016, respectively. Progress Advocates The Company reimburses the 49% owner (non-controlling interest party) for payroll, marketing and general expenses incurred by Progress Advocates. For the three and six months ended June 30, 2017 and 2016, the Company reimbursed approximately $-0- and $289,311 in incurred costs, respectively. Included in accounts payable and accrued liabilities at June 30, 2017 and December 31, 2016 is $73,807 and $73,807, respectively. |
NON CONTROLLING INTEREST
NON CONTROLLING INTEREST | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
NOTE 14 - NON CONTROLLING INTEREST | In December 2014, the Company organized Progress Advocates, LLC, a Delaware limited liability company for the purpose to provide services in the student loan document preparation industry. At the time of formation, Progress Advocates, LLC did not have any significant assets or liabilities. In connection with entering into the Progress Advocates LLC joint venture with LSH, LLC (minority owner), the Company issued to LSH, LLC two five-year warrants to purchase an aggregate of 1,500,000 shares of series A convertible preferred stock of Debt Resolve at an exercise price of $0.50 per preferred share. In February 2016, the Company, jointly with Patient Online Services, LLC, organized Payment Resolution Systems LLC, a Delaware limited liability company for the purpose of assisting Medical Groups and Hospitals in the online negotiation and settlement of delinquent accounts, with ownership interests of 51% and 49% for the Company and Patient Online Services, LLC, respectively. In May 2016, the Company, jointly with Hutton Ventures LLC, organized Student Loan Care LLC, a Delaware limited liability company for the purpose of providing document preparation services for holders of Federal Direct Student Loans, with ownership interests of 51% and 49% for the Company and Hutton Ventures LLC, respectively. In connection with entering into the Student Loan Care LLC joint venture with Hutton Ventures, LLC, the Company issued to Hutton Ventures LLC three seven-year warrants to purchase an aggregate of 30,000,000 shares of common stock of the Company at an exercise price of $0.05 per share. The first warrant for 5,000,000 shares of Debt Resolve common stock vests and becomes exercisable upon the achievement by Student Loan Care of specific increasing revenue goals. The second warrant for 20,000,000 shares of Debt Resolve common stock vests and becomes exercisable when Student Loan Care achieves specific cumulative “operating income” goals. The third warrant for 5,000,000 shares of Debt Resolve common stock vests and becomes exercisable upon the achievement by Student Loan Care and affiliates of revenue for the year ending December 31, 2018 equal to or greater than 75% of Debt Resolve’s total revenue for the year ending December 31, 2018. A reconciliation of the non-controlling income (loss) attributable to the Company: Net loss attributable to non-controlling interest for the three months ended June 30, 2017: Patient Progress Student Loan Online Advocates, Inc. Care LLC Services, LLC Net income (loss) $ 90,508 $ 42,892 $ (317 ) Average Non-controlling interest percentage 49 % 49 % 49 % Net Income ( loss) attributable to the non-controlling interest $ 44,349 $ 21,017 $ (155 ) Net loss attributable to non-controlling interest for the six months ended June 30, 2017: Patient Progress Student Loan Online Advocates, Inc. Care LLC Services, LLC Net income (loss) $ (71,111 ) $ 512,681 $ (835 ) Average Non-controlling interest percentage 49 % 49 % 49 % Net Income ( loss) attributable to the non-controlling interest $ (34,844 ) $ 251,213 $ (409 ) Net loss attributable to non-controlling interest for the three months ended June 30, 2016: Patient Progress Student Loan Online Advocates, Inc. Care LLC Services, LLC Net income (loss) $ (24,591 ) $ (170,305 ) $ (6,305 ) Average Non-controlling interest percentage 49 % 49 % 49 % Net Income ( loss) attributable to the non-controlling interest $ (12,051 ) $ (83,449 ) $ (3,089 ) Net loss attributable to non-controlling interest for the six months ended June 30, 2016: Patient Progress Student Loan Online Advocates, Inc. Care LLC Services, LLC Net income (loss) $ (403,223 ) $ (170,305 ) $ (6,305 ) Average Non-controlling interest percentage 49 % 49 % 49 % Net Income ( loss) attributable to the non-controlling interest $ (197,580 ) $ (83,449 ) $ (3,089 ) The following table summarizes the changes in non-controlling interest from January 1, 2017 to June 30, 2017: Patient Progress Student Loan Online Advocates Care, LLC Services, Inc. Total Balance, December 31, 2016 (561,325 ) 4,692 (2,873 ) (559,506 ) Net capital withdrawal by non-controlling interest - (386,684 ) - (386,684 ) Net income (loss) attributable to the non-controlling interest (34,844 ) 251,213 (409 ) 215,960 Balance, June 30, 2017 $ (596,169 ) $ (130,779 ) $ (3,282 ) $ (730,230 ) |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
NOTE 15 - SUBSEQUENT EVENTS | In accordance with ASC 855-10, Subsequent events, we have analyzed our operations subsequent to June 30, 2017, through the date financial statements were available to be issued, and have determined that there were no material subsequent events to disclose in these financial statements. |
SIGNIFICANT ACCOUNTING POLICI22
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Significant Accounting Policies Policies | |
Revenue Recognition | In recognition of the principles expressed in Accounting Standards Codification subtopic 605-10, Revenue should not be recognized until it is realized or realizable and earned, and given the element of doubt associated with collectability of an agreed settlement on past due debt, the Company postpones recognition of all contingent revenue until the client receives payment from the debtor. As is required by SAB 104, revenues are considered to have been earned when the Company has substantially accomplished the agreed-upon deliverables to be entitled to payment by the client. For most current active clients, these deliverables consist of the successful collection of past due debts using the Company’s system and/or, for clients under a flat fee arrangement, the successful availability of the Company’s system to its customers. Revenues for the preparation of student loan documentation are earned when the Company has substantially accomplished the agreed-upon deliverables to be entitled to payment by the client. For most current active clients, these deliverables consist of the completed, delivered and accepted student loan package. The Company may sell its products separately or in various bundles that include multiple elements such as initial application, monitoring and other services. The Company also earns revenue from collection agencies, healthcare providers and lenders that implemented our online system. The Company’s current contracts provide for revenue based on a percentage of the amount of debt collected, a fee per settlement or through a flat monthly fee. Although other revenue models have been proposed, most revenue earned to date has been determined using these methods, and such revenue is recognized when the settlement amount of debt is collected by the client or at the beginning of the month for a flat fee. While the percent of debt collected will continue to be a revenue recognition method going forward, other payment models are also being offered to clients. Dependent upon the structure of future contracts, revenue may be derived from a combination of set up fees or flat monthly or annual fees with transaction fees upon debt settlement, fees per account loaded or fees per settlement. Payment Resolution Systems, the Company’s 51% owned subsidiary, works as an extended business office to medical groups around the U.S. Revenue is earned in this business by the online negotiations and collection of group’s accounts receivable and paid via a service fee. Revenues for set-up fees, percentage contingent collection fees, fixed settlement fees, monthly fees, etc. are accounted for as Multiple-Element Arrangements under ASC 605-10 which incorporates Accounting Standards Codification subtopic 605-25, Multiple-Element Arrangements (“ASC 605-25”). ASC 605-25 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. The Company defers any revenue for which the product or service has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required. At June 30, 2017 and December 31, 2016, the Company had deferred revenues of $1,997,615 and $1,442,949, respectively. |
Estimates | The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities, revenues and expenses and certain disclosures. The most significant estimates are those used in determination of the carrying value of accounts receivable, revenue recognition and stock compensation. Accordingly, actual results could differ from those estimates. |
Concentrations of Credit Risk | The CompanyÂ’s financial instruments that are exposed to a concentration of credit risk are cash and accounts receivable. Generally, the CompanyÂ’s cash and cash equivalents in non-interest-bearing accounts may exceed FDIC insurance limits. The financial stability of these institutions is periodically reviewed by senior management. The Company extends credit to large, mid-size and small companies for collection services. The Company did not have a concentration in receivables in 2017 or 2016. The Company does not generally require collateral or other security to support customer receivables. Accounts receivable are carried at their estimated collectible amounts. Accounts receivable are periodically evaluated for collectability and the allowance for doubtful accounts is adjusted accordingly. Management determines collectability based on their experience and knowledge of the customers. As of June 30, 2017 and December 31, 2016, allowance for doubtful accounts was $1,856,838 and $1,622,208, respectively. The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. |
Net Loss per Common Share, basic and diluted | The Company computes earnings (loss) per share under Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”). Net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable. The computation of basic and diluted income (loss) per share as of June 30, 2017 and 2016 excludes potentially dilutive securities when their inclusion would be anti-dilutive, or if their exercise prices were greater than the average market price of the common stock during the period. Potentially dilutive securities excluded from the computation of basic and diluted net loss per share are as follows: June 30, 2017 June 30, 2016 Convertible notes payable 58,228,077 59,271,667 Options to purchase common stock 12,050,000 17,742,434 Warrants to purchase common stock 100,025,000 108,225,000 Warrants to purchase Series A preferred stock 23,295,000 25,245,000 Totals 193,598,077 210,484,101 |
Stock-based compensation | The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Stock-based compensation expense is recorded by the Company in the same expense classifications in the statements of operations, as if such amounts were paid in cash. As of June 30, 2017, there were outstanding stock options to purchase 12,050,000 shares of common stock, 9,233,334 shares of which were vested. |
Defined Contribution (401k) Plan | The Company maintains a defined contribution (401k) plan for our employees. The plan provides for a company match in the amount of 100% of the first 3% of pre-tax salary contributed and 50% of the next 3% of pre-tax salary contributed. Due to the severe cash limitations that the Company has experienced, the match was suspended from mid-2008 to the present and will only be re-instated when business conditions warrant. |
Income Taxes | Income tax provisions or benefits for interim periods are computed based on the CompanyÂ’s estimated annual effective tax rate. Based on the CompanyÂ’s historical losses and its expectation of continuation of losses for the foreseeable future, the Company has determined that it is more likely than not that deferred tax assets will not be realized and, accordingly, has provided a full valuation allowance. As the Company anticipates or anticipated that its net deferred tax assets at December 31, 2017 and 2016 would be fully offset by a valuation allowance, there is no federal or state income tax benefit for the periods ended June 30, 2017 and 2016 related to losses incurred during such periods. |
Fair Values | Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes three levels of inputs that may be used to measure fair value: · Level 1 - Quoted prices in active markets for identical assets or liabilities. · Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. · Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement. The carrying value of the Company’s cash, accounts receivable, accounts payable, short-term borrowings (including lines of credit and notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity. As of June 30, 2017 and December 31, 2016, the Company did not have any items that would be classified as level 1, 2 or 3 disclosures. |
Recent accounting pronouncements | There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the CompanyÂ’s financial position, results of operations or cash flows. |
SIGNIFICANT ACCOUNTING POLICI23
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Significant Accounting Policies Tables | |
Net Loss per Common Share, basic and diluted | June 30, 2017 June 30, 2016 Convertible notes payable 58,228,077 59,271,667 Options to purchase common stock 12,050,000 17,742,434 Warrants to purchase common stock 100,025,000 108,225,000 Warrants to purchase Series A preferred stock 23,295,000 25,245,000 Totals 193,598,077 210,484,101 |
ACCOUNTS PAYABLE AND ACCRUED 24
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Accounts Payable And Accrued Liabilities Tables | |
Accounts payable and accrued liabilities | June 30, 2017 December 31, 2016 Accounts payable $ 834.243 $ 698,435 Accrued interest 2,664,830 2,419,165 Payroll and related accruals, net of advance to employees 986,490 1,060,784 Total $ 4,485,563 $ 4,178,384 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Notes Payable Tables | |
Short term notes | June 30, 2017 December 31, 2016 Note payable, dated June 1, 2015, in default 41,667 41,667 Note payable, dated July 2, 2015, in default 12,500 12,500 Note payable, dated August 28, 2015, in default 32,967 32,967 Note payable, dated December 17, 2015, in default 50,000 50,000 Note payable, dated January 13, 2016, in default 50,000 50,000 Note payable, dated February 16, 2016, in default 25,000 25,000 Note payable, dated July 14, 2016 47,000 47,000 Equitable promissory note, dated March 1, 2016 22,310 49,082 Investor notes payable, 12% per annum, in default 377,867 377,867 Total 659,311 686,083 Less current portion 659,311 686,083 Long term portion $ -0- $ -0- |
NOTES PAYABLE, RELATED PARTIES
NOTES PAYABLE, RELATED PARTIES (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Notes Payable Related Parties Tables | |
Notes payable, related parties | June 30, 2017 December 31, 2016 Convertible note payable dated July 22, 2010, in default $ 15,000 $ 15,000 Note payable dated January 14, 2011, in default 6,000 6,000 Note payable dated April 14, 2011, in default 25,000 25,000 Note payable dated April 15, 2011, in default 25,000 25,000 Note payable dated January 18, 2012, in default 5,000 5,000 Note payable dated January 20, 2012, in default 5,000 5,000 Note payable dated May 21, 2012, in default 15,000 15,000 Note payable dated May 30, 2012, in default 20,000 20,000 Series A Convertible note, in default 20,000 20,000 Convertible notes payable, dated July 6, 2012, in default 30,000 30,000 Convertible note payable, dated July 10, 2012, in default 15,000 15,000 Note payable, dated September 14, 2012, in default 6,000 6,000 Convertible note payable, dated September 7, 2012, in default 43,000 43,000 Convertible note payable, dated October 4, 2012, in default 50,000 50,000 Convertible note payable, dated September 5, 2013, in default 10,000 10,000 Convertible note payable, dated September 16, 2013, in default 3,000 3,000 Note payable dated September 17, 2013, in default 5,221 5,221 Note payable, dated October 24, 2013, in default 30,000 30,000 Note payable, dated November 7, 2013 40,000 40,000 Note payable. dated December 6, 2013, in default 5,000 5,000 Note payable, dated December 18, 2013 30,000 30,000 Note payable, dated January 9, 2014, in default 25,000 25,000 Convertible note payable, dated February 28, 2014 200,000 200,000 Convertible note payable, dated April 24, 2014 25,000 25,000 Convertible note payable, dated November 7, 2014 25,000 25,000 Convertible notes payable, dated December 4, 2014, in default 50,000 50,000 Note payable, dated January 25, 2015, in default 25,000 25,000 Convertible note payable, dated March 3, 2015, net of unamortized debt discount of $-0- and $391, respectively, in default 50,000 49,609 Convertible note payable, dated May 12, 2015, net of unamortized debt discount of $0 and $199, respectively 20,000 19,801 Note payable, dated June 18, 2015, in default 25,000 25,000 Note payable, dated July 13, 2015, in default 12,500 12,500 Note payable, dated August 5, 2015, in default 25,000 25,000 Note payable, dated August 19, 2015, in default 50,000 50,000 Convertible note payable, dated May 15, 2016, net of unamortized debt discount of $32,774 and $51,370, respectively 42,226 23,630 Note payable, dated June 9, 2016 15,000 15,000 Note payable, dated June 22, 2016 30,000 30,000 Note payable, dated June 30, 2016 25,000 25,000 Notes payable, dated September 28, 2016, net of unamortized debt discount of $32,931 and $47,008, respectively 67,069 77,992 Total 1,115,016 1,106,753 Less current portion (1,085,016 ) (828,123 ) Long term portion $ 30,000 $ 278,630 |
CONVERTIBLE NOTES (Tables)
CONVERTIBLE NOTES (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Convertible Notes Tables | |
Convertible notes | June 30, 2017 December 31, 2016 Series A Convertible Notes $ 817,000 $ 817,000 Series B Convertible Notes 225,000 225,000 Series C Convertible Notes 245,000 245,000 Series D Convertible Notes 21,000 21,000 Bridge 2014 Convertible Notes 750,000 750,000 Bridge 2015 Convertible Notes, net of unamortized debt discount of $8,909 and $27,685, respectively 266,091 297,315 Bridge 2016 Convertible Notes, net of unamortized debt discount of $4,879 and $8,901, respectively 67,121 63,099 Bridge 2 (2016) Convertible Notes, net of unamortized debt discount of $97,047 and $153,940, respectively 152,953 96,060 Convertible promissory notes, net of unamortized debt discount of $11,982 - 33,018 Total 2,544,165 2,547,492 Less: Current portion (2,043,528 ) (1,433,833 ) Long term portion $ 500,637 $ 1,113,659 |
WARRANTS AND OPTIONS (Tables)
WARRANTS AND OPTIONS (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Preferred stock warrants [Member] | |
Summary of warrants outstanding and related prices | Exercise Price Number Outstanding Warrants Outstanding Weighted Average Remaining Contractual Life (years) Weighted Average Exercise price Number Exercisable Warrants Exercisable Weighted Average Exercise Price $ 0.50 2,120,000 2.55 $ 0.50 1,120,000 $ 0.50 1.00 36,000 0.57 1.00 36,000 1.00 1.50 173,500 1.03 1.50 173,500 1.50 Total 2,329,500 2.41 $ 0.58 1,329,500 $ 0.64 |
Transactions involving the Company's warrant issuance | Number of Shares Weighted Average Price Per Share Outstanding at December 31, 2016 2,564,500 0.66 Issued - - Exercised - - Expired (235,000 ) 1.42 Outstanding at June 30, 2017 2,329,500 $ 0.58 |
Options [Member] | |
Summary of warrants outstanding and related prices | Exercise Price Number Outstanding Option Outstanding Options Average Remaining Contractual Life (years) Weighted Average Exercise price Number Exercisable Options Exercisable Weighted Average Exercise price $ 0.015 7,000,000 3.60 $ 0.015 4,333,334 $ 0.015 0.02 400,000 5.50 0.02 250,000 0.02 0.025 250,000 5.15 0.025 250,000 0.025 0.06 3,000,000 0.92 0.06 3,000,000 0.06 0.09 250,000 1.43 0.09 250,000 0.09 0.095 500,000 1.55 0.095 500,000 0.095 0.10 650,000 0.69 0.10 650,000 0.10 Total 12,050,000 1.85 $ 0.036 9,233,334 $ 0.045 |
Transactions involving the Company's warrant issuance | Number of Shares Weighted Average Price Per Share Outstanding at December 31, 2016 17,225,000 0.08 Issued - -- Exercised -- -- Expired (5,175,000 ) 0.17 Outstanding at June 30, 2017 12,050,000 $ 0.036 |
Warrants [Member] | |
Summary of warrants outstanding and related prices | Exercise Price Number Outstanding Warrants Outstanding Weighted Average Remaining Contractual Life (years) Weighted Average Exercise price Number Exercisable Warrants Exercisable Weighted Average Exercise Price $ 0.01 to 0.10 88,650,000 3.10 $ 0.08 58,650,000 $ 0.10 0.11 to 0.20 7,875,000 0.72 0.15 7,875,000 0.15 0.21 to 0.30 3,500,000 0.22 0.25 3,500,000 0.25 Total 100,025,000 2.81 $ .09 70,025,000 $ 0.11 |
Transactions involving the Company's warrant issuance | Number of Shares Weighted Average Price Per Share Outstanding at December 31, 2016 101,825,000 0.10 Issued 2,000,000 0.08 Exercised - - Expired (3,800,000 ) (0.23 ) Outstanding at June 30, 2017 100,025,000 $ 0.09 |
NON CONTROLLING INTEREST (Table
NON CONTROLLING INTEREST (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Non Controlling Interest Tables | |
Net loss attributable to non-controlling interest | Net loss attributable to non-controlling interest for the three months ended June 30, 2017: Patient Progress Student Loan Online Advocates, Inc. Care LLC Services, LLC Net income (loss) $ 90,508 $ 42,892 $ (317 ) Average Non-controlling interest percentage 49 % 49 % 49 % Net Income ( loss) attributable to the non-controlling interest $ 44,349 $ 21,017 $ (155 ) Net loss attributable to non-controlling interest for the six months ended June 30, 2017: Patient Progress Student Loan Online Advocates, Inc. Care LLC Services, LLC Net income (loss) $ (71,111 ) $ 512,681 $ (835 ) Average Non-controlling interest percentage 49 % 49 % 49 % Net Income ( loss) attributable to the non-controlling interest $ (34,844 ) $ 251,213 $ (409 ) Net loss attributable to non-controlling interest for the three months ended June 30, 2016: Patient Progress Student Loan Online Advocates, Inc. Care LLC Services, LLC Net income (loss) $ (24,591 ) $ (170,305 ) $ (6,305 ) Average Non-controlling interest percentage 49 % 49 % 49 % Net Income ( loss) attributable to the non-controlling interest $ (12,051 ) $ (83,449 ) $ (3,089 ) Net loss attributable to non-controlling interest for the six months ended June 30, 2016: Patient Progress Student Loan Online Advocates, Inc. Care LLC Services, LLC Net income (loss) $ (403,223 ) $ (170,305 ) $ (6,305 ) Average Non-controlling interest percentage 49 % 49 % 49 % Net Income ( loss) attributable to the non-controlling interest $ (197,580 ) $ (83,449 ) $ (3,089 ) |
Summarizes the changes in non-controlling interest | Patient Progress Student Loan Online Advocates Care, LLC Services, Inc. Total Balance, December 31, 2016 (561,325 ) 4,692 (2,873 ) (559,506 ) Net capital withdrawal by non-controlling interest - (386,684 ) - (386,684 ) Net income (loss) attributable to the non-controlling interest (34,844 ) 251,213 (409 ) 215,960 Balance, June 30, 2017 $ (596,169 ) $ (130,779 ) $ (3,282 ) $ (730,230 ) |
BASIS AND BUSINESS PRESENTATI30
BASIS AND BUSINESS PRESENTATION (Details Narrative) | 6 Months Ended | |||
Jun. 30, 2017 | May 31, 2016 | Feb. 29, 2016 | Dec. 31, 2014 | |
State of incorporation | Delaware | |||
Date of incorporation | Apr. 21, 1997 | |||
Parent Company [Member] | Progress Advocates, Inc [Member] | ||||
Ownership interests | 51.00% | |||
Parent Company [Member] | Payment Resolution Systems LLC [Member] | ||||
Ownership interests | 51.00% | |||
Parent Company [Member] | Student Loan Care LLC [Member] | ||||
Ownership interests | 51.00% | |||
LSH, LLC [Member] | Progress Advocates, Inc [Member] | ||||
Ownership interests | 49.00% | |||
Patient Online Services, LLC [Member] | Payment Resolution Systems LLC [Member] | ||||
Ownership interests | 49.00% | |||
Hutton Ventures LLC [Member] | Student Loan Care LLC [Member] | ||||
Ownership interests | 49.00% |
SIGNIFICANT ACCOUNTING POLICI31
SIGNIFICANT ACCOUNTING POLICIES (Details) - shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2017 | Dec. 31, 2016 | |
Totals | 193,598,077 | 210,484,101 |
Convertible notes payable | ||
Totals | 58,228,077 | 59,271,667 |
Options to purchase common stock | ||
Totals | 12,050,000 | 17,742,434 |
Warrants to purchase common stock | ||
Totals | 100,025,000 | 108,225,000 |
Warrants to purchase Series A preferred stock | ||
Totals | 23,295,000 | 25,245,000 |
SIGNIFICANT ACCOUNTING POLICI32
SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Deferred revenue | $ 1,997,615 | $ 1,442,949 |
Allowance for doubtful accounts | $ 1,856,838 | $ 1,622,208 |
Shares issuable upon exercise of stock options | 12,050,000 | |
Stock options vested | 9,233,334 | |
Defined Contribution description | The plan provides for a company match in the amount of 100% of the first 3% of pre-tax salary contributed and 50% of the next 3% of pre-tax salary contributed. | |
Payment Resolution Systems [Members] | ||
Ownership interests | 51.00% |
LIQUIDITY (Details Narrative)
LIQUIDITY (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Liquidity Details Narrative | ||||
Net loss | $ (279,614) | $ (405,631) | $ (585,536) | $ (1,029,348) |
Working capital deficit | $ (15,943,876) | $ (15,943,876) |
ACCOUNTS RECEIVABLE AND DUE T34
ACCOUNTS RECEIVABLE AND DUE TO FACTOR (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Accounts receivable | $ 8,581,226 | $ 6,974,135 |
Allowance for doubtful accounts | 1,856,838 | 1,622,208 |
Due to factor | $ 7,265,363 | $ 6,162,722 |
Average amount receivable percentage | 50.90% | |
Average amount reserved percentage | 42.10% | |
Minimum [Member] | ||
Advance accounts receivable percentage | 30.00% | |
Advance accounts receivable reserve percentage | 0.00% | |
Discount fees percentage | 4.00% | |
Maximum [Member] | ||
Advance accounts receivable percentage | 96.00% | |
Advance accounts receivable reserve percentage | 62.00% | |
Discount fees percentage | 8.00% | |
Progress Advocates LLC and Student Loan Care [Member] | ||
Average amount receivable percentage | 50.90% | |
Average amount reserved percentage | 42.10% | |
Student Loan Care LLC [Member] | ||
Average amount receivable percentage | 64.00% | |
Average amount reserved percentage | 30.00% | |
Student Loan Care LLC [Member] | Minimum [Member] | ||
Advance accounts receivable percentage | 45.00% | |
Advance accounts receivable reserve percentage | 5.00% | |
Discount fees percentage | 3.00% | |
Student Loan Care LLC [Member] | Maximum [Member] | ||
Advance accounts receivable percentage | 90.00% | |
Advance accounts receivable reserve percentage | 45.00% | |
Discount fees percentage | 6.00% |
ACCOUNTS PAYABLE AND ACCRUED 35
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Accounts Payable And Accrued Liabilities Details | ||
Accounts payable | $ 834,243 | $ 698,435 |
Accrued interest | 2,664,830 | 2,419,165 |
Payroll and related accruals, net of advance to employees | 986,490 | 1,060,784 |
Total | $ 4,485,563 | $ 4,178,384 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Total | $ 659,311 | $ 686,083 |
Less current portion | 659,311 | 686,083 |
Long term portion | 0 | 0 |
Note payable, dated June 1, 2015 [Member] | ||
Total | 41,667 | 41,667 |
Note payable, dated July 2, 2015 [Member] | ||
Total | 12,500 | 12,500 |
Note payable, dated August 28, 2015 [Member] | ||
Total | 32,967 | 32,967 |
Note payable, dated December 17, 2015 [Member] | ||
Total | 50,000 | 50,000 |
Note payable, dated January 13, 2016 [Member] | ||
Total | 50,000 | 50,000 |
Note payable, dated February 16, 2016 [Member] | ||
Total | 25,000 | 25,000 |
Note payable, dated July 14, 2016 [Member] | ||
Total | 47,000 | 47,000 |
Equitable promissory note, dated March 1, 2016 [Member] | ||
Total | 22,310 | 49,082 |
Investor notes payable [Member] | ||
Total | $ 377,867 | $ 377,867 |
NOTES PAYABLE, RELATED PARTIE37
NOTES PAYABLE, RELATED PARTIES (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Total | $ 1,115,016 | $ 1,106,753 |
Less current portion | (1,085,016) | (828,123) |
Long term portion | 30,000 | 278,630 |
Convertible notes payable | ||
Total | 15,000 | 15,000 |
Note payable [Member] | ||
Total | 6,000 | 6,000 |
Note payable 1 [Member] | ||
Total | 25,000 | 25,000 |
Note payable 2 [Member] | ||
Total | 25,000 | 25,000 |
Note payable 3 [Member] | ||
Total | 5,000 | 5,000 |
Note payable 4 [Member] | ||
Total | 5,000 | 5,000 |
Note payable 5 [Member] | ||
Total | 15,000 | 15,000 |
Note payable 6 [Member] | ||
Total | 20,000 | 20,000 |
Series A Convertible note [Member] | ||
Total | 20,000 | 20,000 |
Convertible note payable 1 [Member] | ||
Total | 30,000 | 30,000 |
Convertible note payable 2 [Member] | ||
Total | 15,000 | 15,000 |
Note payable 7 [Member] | ||
Total | 6,000 | 6,000 |
Convertible note payable 3 [Member] | ||
Total | 43,000 | 43,000 |
Convertible note payable 4 [Member] | ||
Total | 50,000 | 50,000 |
Convertible note payable 5 [Member] | ||
Total | 10,000 | 10,000 |
Convertible note payable 6 [Member] | ||
Total | 3,000 | 3,000 |
Note payable 8 [Member] | ||
Total | 5,221 | 5,221 |
Note payable 9 [Member] | ||
Total | 30,000 | 30,000 |
Note payable 10 [Member] | ||
Total | 40,000 | 40,000 |
Note payable 11 [Member] | ||
Total | 5,000 | 5,000 |
Note payable 12 [Member] | ||
Total | 30,000 | 30,000 |
Note payable 13 [Member] | ||
Total | 25,000 | 25,000 |
Convertible note payable 7 [Member] | ||
Total | 200,000 | 200,000 |
Convertible note payable 8 [Member] | ||
Total | 25,000 | 25,000 |
Convertible note payable 9 [Member] | ||
Total | 25,000 | 25,000 |
Convertible note payable 10 [Member] | ||
Total | 50,000 | 50,000 |
Note payable 14 [Member] | ||
Total | 25,000 | 25,000 |
Convertible note payable 11 [Member] | ||
Total | 50,000 | 49,609 |
Convertible note payable 12 [Member] | ||
Total | 20,000 | 19,801 |
Note payable 15 [Member] | ||
Total | 25,000 | 25,000 |
Note payable 16 [Member] | ||
Total | 12,500 | 12,500 |
Note payable 17 [Member] | ||
Total | 25,000 | 25,000 |
Note payable 18 [Member] | ||
Total | 50,000 | 50,000 |
Convertible note payable 13 [Member] | ||
Total | 42,226 | 23,630 |
Note payable 19 [Member] | ||
Total | 15,000 | 15,000 |
Note payable 20 [Member] | ||
Total | 30,000 | 30,000 |
Note payable 21 [Member] | ||
Total | 25,000 | 25,000 |
Note payable 22 [Member] | ||
Total | $ 67,069 | $ 77,992 |
NOTES PAYABLE, RELATED PARTIE38
NOTES PAYABLE, RELATED PARTIES (Details) (Parenthetical) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Convertible note payable 11 [Member] | ||
Unamortized debt discount | $ 0 | $ 391 |
Convertible note payable 12 [Member] | ||
Unamortized debt discount | 0 | 199 |
Convertible note payable 13 [Member] | ||
Unamortized debt discount | 32,774 | 51,370 |
Note payable 22 [Member] | ||
Unamortized debt discount | $ 32,931 | $ 47,008 |
NOTES PAYABLE, RELATED PARTIE39
NOTES PAYABLE, RELATED PARTIES (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Amortization of debt discounts | $ 55,489 | $ 52,771 | $ 124,937 | $ 83,010 | |
Interest expense | 393,699 | 197,240 | 828,978 | 448,949 | |
Unpaid accrued interest on notes payable to related parties | 397,485 | 397,485 | $ 337,020 | ||
Notes payable to related parties [Member] | |||||
Amortization of debt discounts | $ 16,490 | $ 6,516 | 33,263 | 10,821 | |
Interest expense | $ 55,677 | $ 50,336 |
LINE OF CREDIT- RELATED PARTY (
LINE OF CREDIT- RELATED PARTY (Details Narative) - USD ($) | Apr. 06, 2010 | Jan. 25, 2015 | Aug. 17, 2010 | Apr. 15, 2010 | Sep. 24, 2009 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 |
Unpaid accrued interest on line of credit | $ 146,395 | $ 137,409 | ||||||
Line of credit outstanding balance | 151,000 | 151,000 | ||||||
Interest expense | $ 8,985 | $ 8,986 | ||||||
Maturity date | Nov. 24, 2009 | |||||||
Unsecured promissory note [Member] | ||||||||
Line of credit outstanding balance | $ 400,000 | $ 258,339 | $ 308,337 | |||||
Interest rate | 5.25% | |||||||
Note due date description | The promissory note is due 30 days upon written demand however, the Company is obligated to make monthly payments of principal and interest necessary to meet the minimal monthly principal and interest payments required by the bank on loans the lenders obtained to provide the financing. | |||||||
Stockholder [Member] | ||||||||
Interest rate | 12.00% | |||||||
Proceeds from unsecured note payable | $ 150,000 | |||||||
Maturity date | Nov. 24, 2009 | |||||||
Purchase of warrants | 150,000 | |||||||
Warrant exercise price | $ 0.15 | |||||||
Line Of Credit Payment Principal | $ 25,000 | $ 50,000 | ||||||
Delinquent payment penalty | $ 69,000 | |||||||
Expiration date | Sep. 24, 2014 |
CONVERTIBLE NOTES (Details)
CONVERTIBLE NOTES (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
CONVERTIBLE NOTES | ||
Convertible Notes | $ 2,544,165 | $ 2,547,492 |
Less: Current portion | (2,043,528) | (1,433,833) |
Long term portion | 500,637 | 1,113,659 |
Series A Convertible Notes [Member] | ||
CONVERTIBLE NOTES | ||
Convertible Notes | 817,000 | 817,000 |
Series B Convertible Notes [Member] | ||
CONVERTIBLE NOTES | ||
Convertible Notes | 225,000 | 225,000 |
Series C Convertible Notes [Member] | ||
CONVERTIBLE NOTES | ||
Convertible Notes | 245,000 | 245,000 |
Series D Convertible Notes [Member] | ||
CONVERTIBLE NOTES | ||
Convertible Notes | 21,000 | 21,000 |
Bridge 2014 Convertible Notes [Member] | ||
CONVERTIBLE NOTES | ||
Convertible Notes | 750,000 | 750,000 |
Bridge 2015 Convertible Notes [Member] | ||
CONVERTIBLE NOTES | ||
Convertible Notes | 266,091 | 297,315 |
Bridge 2016 Convertible Notes [Member] | ||
CONVERTIBLE NOTES | ||
Convertible Notes | 67,121 | 63,099 |
Bridge 2 (2016) Convertible Notes [Member] | ||
CONVERTIBLE NOTES | ||
Convertible Notes | 152,953 | 96,060 |
Convertible promissory note [Member] | ||
CONVERTIBLE NOTES | ||
Convertible Notes | $ 33,018 |
CONVERTIBLE NOTES (Details) (Pa
CONVERTIBLE NOTES (Details) (Parenthetical) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Bridge 2015 Convertible Notes [Member] | ||
Unamortized debt discount | $ 8,909 | $ 27,685 |
Bridge 2016 Convertible Notes [Member] | ||
Unamortized debt discount | 4,879 | 8,901 |
Bridge 2 (2016) Convertible Notes [Member] | ||
Unamortized debt discount | 97,047 | 153,940 |
Convertible promissory note [Member] | ||
Unamortized debt discount | $ 11,982 | $ 11,982 |
CONVERTIBLE NOTES (Details Narr
CONVERTIBLE NOTES (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Convertible Notes Details Narrative | ||
Amortization of debt discounts | $ 91,674 | $ 72,188 |
Common stock in settlement | 3,685,343 | |
Debt settlement amount | $ 95,000 | |
Note payable and related accrued interest | $ 14,765 |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Stockholders Equity Details Narrative | ||
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock shares authorized | 10,000,000 | 10,000,000 |
Common stock par value | $ 0.001 | $ 0.001 |
Common stock shares authorized | 500,000,000 | 500,000,000 |
Common stock shares issued | 126,700,152 | 121,264,809 |
Common stock shares outstanding | 126,700,152 | 121,264,809 |
Common stock issued for services, Shares | 1,750,000 | |
Common stock issued for services, Amount | $ 22,750 |
WARRANTS AND OPTIONS (Details)
WARRANTS AND OPTIONS (Details) | 6 Months Ended |
Jun. 30, 2017$ / sharesshares | |
0.01 to 0.10 [Member] | |
Number Outstanding | shares | 86,650,000 |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 3 years 1 month 6 days |
Weighted Average Exercise price | $ / shares | $ 0.08 |
Number Exercisable | shares | 58,650,000 |
Warrants Exercisable Weighted Average Exercise Price | $ / shares | $ 0.10 |
0.11 to 0.20 [Member] | |
Number Outstanding | shares | 7,875,000 |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 8 months 19 days |
Weighted Average Exercise price | $ / shares | $ 0.15 |
Number Exercisable | shares | 7,875,000 |
Warrants Exercisable Weighted Average Exercise Price | $ / shares | $ 0.15 |
0.21 to 0.30 [Member] | |
Number Outstanding | shares | 3,500,000 |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 2 months 19 days |
Weighted Average Exercise price | $ / shares | $ 0.25 |
Number Exercisable | shares | 3,500,000 |
Warrants Exercisable Weighted Average Exercise Price | $ / shares | $ 0.25 |
Warrants [Member] | |
Number Outstanding | shares | 100,025,000 |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 2 years 9 months 22 days |
Weighted Average Exercise price | $ / shares | $ .09 |
Number Exercisable | shares | 70,025,000 |
Warrants Exercisable Weighted Average Exercise Price | $ / shares | $ 0.11 |
WARRANTS AND OPTIONS (Details 1
WARRANTS AND OPTIONS (Details 1) - Warrant Issuance | 6 Months Ended |
Jun. 30, 2017$ / sharesshares | |
Number of Shares | |
Beginning Balance | shares | 101,825,000 |
Issued | shares | 2,000,000 |
Exercised | shares | |
Expired | shares | (3,800,000) |
Ending Balance | shares | 100,025,000 |
Weighted Average Exercise Price | |
Beginning Balance | $ / shares | $ 0.10 |
Issued | $ / shares | 0.08 |
Exercised | $ / shares | |
Expired | $ / shares | (0.23) |
Ending Balance | $ / shares | $ 0.09 |
WARRANTS AND OPTIONS (Details 2
WARRANTS AND OPTIONS (Details 2) - $ / shares | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Preferred stock warrants [Member] | ||
Number Outstanding | 2,329,500 | 2,564,500 |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 2 years 4 months 28 days | |
Weighted Average Exercise price | $ 0.58 | $ 0.66 |
Number Exercisable | 1,329,500 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.64 | |
0.50 Preferred stock warrants [Member] | ||
Number Outstanding | 2,120,000 | |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 2 years 6 months 18 days | |
Weighted Average Exercise price | $ 0.5 | |
Number Exercisable | 1,120,000 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.5 | |
1.00 Preferred stock warrants [Member] | ||
Number Outstanding | 36,000 | |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 6 months 25 days | |
Weighted Average Exercise price | $ 1 | |
Number Exercisable | 36,000 | |
Warrants Exercisable Weighted Average Exercise Price | $ 1 | |
1.50 Preferred stock warrants [Member] | ||
Number Outstanding | 173,500 | |
Warrants Outstanding Weighted Average Remaining Contractual Life (years) | 1 year 11 days | |
Weighted Average Exercise price | $ 1.5 | |
Number Exercisable | 173,500 | |
Warrants Exercisable Weighted Average Exercise Price | $ 1.5 |
WARRANTS AND OPTIONS (Details 3
WARRANTS AND OPTIONS (Details 3) - Preferred stock warrants [Member] | 6 Months Ended |
Jun. 30, 2017$ / sharesshares | |
Number of Shares | |
Beginning Balance | shares | 2,564,500 |
Issued | shares | |
Exercised | shares | |
Expired | shares | (235,000) |
Ending Balance | shares | 2,329,500 |
Weighted Average Exercise Price | |
Beginning Balance | $ / shares | $ 0.66 |
Weighted Average Exercise Price Per Share Issued | $ / shares | |
Exercised | $ / shares | |
Expired | $ / shares | 1.42 |
Ending Balance | $ / shares | $ 0.58 |
WARRANTS AND OPTIONS (Details 4
WARRANTS AND OPTIONS (Details 4) - $ / shares | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Options [Member] | ||
Number Outstanding | 12,050,000 | 17,225,000 |
Option Outstanding Options Average Remaining Contractual Life (years) | 1 year 10 months 6 days | |
Weighted Average Exercise price | $ 0.036 | $ 0.08 |
Number Exercisable | 9,233,334 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.045 | |
0.015 | ||
Number Outstanding | 7,000,000 | |
Option Outstanding Options Average Remaining Contractual Life (years) | 3 years 7 months 6 days | |
Weighted Average Exercise price | $ 0.015 | |
Number Exercisable | 4,333,334 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.015 | |
0.02 | ||
Number Outstanding | 400,000 | |
Option Outstanding Options Average Remaining Contractual Life (years) | 5 years 6 months | |
Weighted Average Exercise price | $ 0.02 | |
Number Exercisable | 250,000 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.02 | |
0.025 | ||
Number Outstanding | 250,000 | |
Option Outstanding Options Average Remaining Contractual Life (years) | 5 years 1 month 24 days | |
Weighted Average Exercise price | $ 0.025 | |
Number Exercisable | 250,000 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.025 | |
0.06 | ||
Number Outstanding | 3,000,000 | |
Option Outstanding Options Average Remaining Contractual Life (years) | 11 months 1 day | |
Weighted Average Exercise price | $ 0.06 | |
Number Exercisable | 3,000,000 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.06 | |
0.09 | ||
Number Outstanding | 250,000 | |
Option Outstanding Options Average Remaining Contractual Life (years) | 1 year 5 months 5 days | |
Weighted Average Exercise price | $ 0.09 | |
Number Exercisable | 250,000 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.09 | |
0.095 | ||
Number Outstanding | 500,000 | |
Option Outstanding Options Average Remaining Contractual Life (years) | 1 year 6 months 18 days | |
Weighted Average Exercise price | $ 0.095 | |
Number Exercisable | 500,000 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.095 | |
0.10 | ||
Number Outstanding | 650,000 | |
Option Outstanding Options Average Remaining Contractual Life (years) | 8 months 9 days | |
Weighted Average Exercise price | $ 0.10 | |
Number Exercisable | 650,000 | |
Warrants Exercisable Weighted Average Exercise Price | $ 0.10 |
WARRANTS AND OPTIONS (Details 5
WARRANTS AND OPTIONS (Details 5) - Options [Member] | 6 Months Ended |
Jun. 30, 2017$ / sharesshares | |
Number of Shares | |
Beginning Balance | shares | 17,225,000 |
Issued | shares | |
Exercised | shares | |
Expired | shares | (5,175,000) |
Ending Balance | shares | 12,050,000 |
Weighted Average Exercise Price | |
Beginning Balance | $ / shares | $ 0.08 |
Issued | $ / shares | |
Exercised | $ / shares | |
Expired | $ / shares | 0.17 |
Ending Balance | $ / shares | $ 0.036 |
WARRANTS AND OPTIONS (Details N
WARRANTS AND OPTIONS (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Warrants [Member] | ||
Stock based compensation expense | $ 29,628 | $ 1,860 |
Warrants issued for purchase of shares | 1,000,000 | 1,000,000 |
Investment warrants, exercise price | $ 0.05 | $ 0.10 |
Estimated fair value of warrants | $ 14,996 | $ 14,632 |
Dividend yield | 0.00% | 0.00% |
Risk free rate | 1.87% | 1.29% |
Volatility | 339.59% | 339.59% |
Fair value assumptions expected term | 5 years | 2 years 3 months 15 days |
Debt term | 5 years | |
Options [Member] | ||
Stock based compensation expense | $ 16,383 | $ 7,500 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | Jun. 30, 2017 | Jul. 31, 2016 |
Notes to Financial Statements | ||
Total outstanding principal and interest due | $ 322,152 | |
Fees and costs | $ 115,516 | |
Accrued expenses | $ 52,500 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Related Party Transactions Details Narrative | |||
Interest expense in connection with notes payable to related parties and related party line of credits amount | $ 64,662 | $ 59,371 | |
Incurred costs | 0 | $ 289,311 | |
Accounts payable and accrued liabilities | $ 73,807 | $ 73,807 | |
Payroll, marketing and general expenses reimbursement percentage | 49.00% |
NON CONTROLLING INTEREST (Detai
NON CONTROLLING INTEREST (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Net Income (loss) attributable to the non-controlling interest | $ 65,211 | $ (98,589) | $ 215,960 | $ (284,118) |
Progress Advocates, Inc [Member] | ||||
Net income (loss) | $ 90,508 | $ (24,591) | $ (71,111) | $ (403,223) |
Average Non-controlling interest percentage | 49.00% | 49.00% | 49.00% | 49.00% |
Net Income (loss) attributable to the non-controlling interest | $ 44,349 | $ (12,051) | $ (34,844) | $ (197,580) |
Student Loan Care LLC [Member] | ||||
Net income (loss) | $ 42,892 | $ (170,305) | $ 512,681 | $ (170,305) |
Average Non-controlling interest percentage | 49.00% | 49.00% | 49.00% | 49.00% |
Net Income (loss) attributable to the non-controlling interest | $ 21,017 | $ (83,449) | $ 251,213 | $ (83,449) |
Patient Online Services, LLC [Member] | ||||
Net income (loss) | $ (317) | $ (6,305) | $ (835) | $ (6,305) |
Average Non-controlling interest percentage | 49.00% | 49.00% | 49.00% | 49.00% |
Net Income (loss) attributable to the non-controlling interest | $ (155) | $ (3,089) | $ (409) | $ (3,089) |
NON CONTROLLING INTEREST (Det55
NON CONTROLLING INTEREST (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Non controlling interest, Beginning | $ (559,506) | |||
Net capital withdrawal by non-controlling interest | (386,684) | |||
Net income (loss) attributable to the non-controlling interest | $ 65,211 | $ (98,589) | 215,960 | $ (284,118) |
Non controlling interest, Ending | (730,230) | (730,230) | ||
Progress Advocates, Inc [Member] | ||||
Non controlling interest, Beginning | (561,325) | |||
Net capital withdrawal by non-controlling interest | ||||
Net income (loss) attributable to the non-controlling interest | 44,349 | (12,051) | (34,844) | (197,580) |
Non controlling interest, Ending | (596,169) | (596,169) | ||
Student Loan Care LLC [Member] | ||||
Non controlling interest, Beginning | 4,692 | |||
Net capital withdrawal by non-controlling interest | (386,684) | |||
Net income (loss) attributable to the non-controlling interest | 21,017 | (83,449) | 251,213 | (83,449) |
Non controlling interest, Ending | (130,779) | (130,779) | ||
Patient Online Services, LLC [Member] | ||||
Non controlling interest, Beginning | (2,873) | |||
Net capital withdrawal by non-controlling interest | ||||
Net income (loss) attributable to the non-controlling interest | (155) | $ (3,089) | (409) | $ (3,089) |
Non controlling interest, Ending | $ (3,282) | $ (3,282) |
NON CONTROLLING INTEREST (Det56
NON CONTROLLING INTEREST (Details Narrative) - $ / shares | 1 Months Ended | 12 Months Ended | ||
May 31, 2017 | Dec. 31, 2014 | May 31, 2016 | Feb. 29, 2016 | |
Hutton Ventures LLC One [Details Narrative] | ||||
Warrant for common stock vests and exercisable | 20,000,000 | |||
Hutton Ventures LLC Two [Details Narrative] | ||||
Warrant for common stock vests and exercisable | 5,000,000 | |||
Common stock vests and becomes exercisable description | Student Loan Care and affiliates of revenue for the year ending December 31, 2018 equal to or greater than 75% of Debt Resolves total revenue for the year ending December 31, 2018. | |||
Hutton Ventures LLC [Member] | ||||
Warrants issued for purchase of shares | 30,000,000 | |||
Investment Warrants, Exercise Price | $ 0.05 | |||
Debt term | 7 years | |||
Warrant for common stock vests and exercisable | 5,000,000 | |||
Hutton Ventures LLC [Member] | Student Loan Care LLC [Member] | ||||
Ownership interests | 49.00% | |||
LSH, LLC [Member] | ||||
Warrants issued for purchase of shares | 1,500,000 | |||
Investment Warrants, Exercise Price | $ 0.50 | |||
Debt term | 5 years | |||
Parent Company [Member] | Payment Resolution Systems LLC [Member] | ||||
Ownership interests | 51.00% | |||
Parent Company [Member] | Student Loan Care LLC [Member] | ||||
Ownership interests | 51.00% | |||
Patient Online Services, LLC [Member] | Payment Resolution Systems LLC [Member] | ||||
Ownership interests | 49.00% |