Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | May 11, 2020 | Jun. 28, 2019 | |
Document And Entity Information | |||
Entity Registrant Name | Surge Holdings, Inc. | ||
Entity Central Index Key | 0001392694 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-Known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 12,293,280 | ||
Entity Common Stock, Shares Outstanding | 103,519,030 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 346,040 | $ 444,612 |
Accounts receivable, less allowance for doubtful accounts of $774,841 and $17,000, respectively | 3,056,213 | 206,679 |
Notes receivable | 14,959 | 190,000 |
Lifeline revenue due from USAC | 60,790 | 850,966 |
Customer phone supply | 1,356,701 | |
Prepaid expenses | 96,883 | 10,862 |
Total current assets | 3,574,885 | 3,059,820 |
Property and Equipment, less accumulated depreciation of $38,656 and $13,782, respectively | 294,616 | 30,990 |
Intangible assets less accumulated amortization of $519,404 and $319,375, respectively | 4,769,117 | 65,269 |
Goodwill | 866,782 | 866,782 |
Investment in Centercom | 203,700 | |
Operating least right of use asset, net | 210,816 | |
Other long-term assets | 66,457 | 61,457 |
Total assets | 9,986,373 | 4,084,318 |
Current liabilities: | ||
Accounts payable and accrued expenses - others | 3,637,577 | 3,104,234 |
Accounts payable and accrued expenses - related party | 998,517 | 149,901 |
Credit card liability | 449,158 | 394,840 |
Loss contingency | 38,040 | 70,000 |
Deferred revenue | 50,000 | |
Derivative liability | 190,846 | 51,058 |
Operating lease liability | 90,944 | |
Line of credit | 912,870 | |
Advance from related party | 389,502 | |
Notes payable and current portion of long-term debt, net | 736,172 | 582,500 |
Total current liabilities | 7,054,124 | 4,792,035 |
Long-term debt less current portion - related party | 2,205,440 | 680,000 |
Operating lease liability - net | 119,872 | |
Trade payables - long term | 869,868 | 600,516 |
Convertible promissory notes payable - net | 4,436,684 | |
Total liabilities | 14,685,988 | 6,072,551 |
Commitments and contingencies | ||
Stockholders' deficit: | ||
Common stock: $0.001 par value; 500,000,000 shares authorized; 102,193,579 shares and 88,046,391 shares issued and outstanding at December 31, 2019 and 2018, respectively | 102,193 | 88,047 |
Additional paid in capital | 6,055,042 | 333,623 |
Accumulated deficit | (10,870,572) | (2,423,546) |
Total stockholders' deficit | (4,699,615) | (1,988,233) |
Total liabilities and stockholders' deficit | 9,986,373 | 4,084,318 |
Series A Preferred [Member] | ||
Stockholders' deficit: | ||
Preferred stock, value | 13,000 | 13,000 |
Total stockholders' deficit | 13,000 | 13,000 |
Series C Convertible Preferred Stock [Member] | ||
Stockholders' deficit: | ||
Preferred stock, value | 722 | 643 |
Total stockholders' deficit | $ 722 | $ 643 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Allowance for doubtful accounts | $ 774,841 | $ 17,000 |
Accumulated depreciation of property and equipment | 38,656 | 13,782 |
Accumulated amortization of intangible assets | $ 519,404 | $ 319,375 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 102,193,579 | 88,046,391 |
Common stock, shares outstanding | 102,193,579 | 88,046,391 |
Series A Preferred [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | 13,000,000 | 13,000,000 |
Preferred stock, shares outstanding | 13,000,000 | 13,000,000 |
Series C Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 721,598 | 643,366 |
Preferred stock, shares outstanding | 721,598 | 643,366 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Statement [Abstract] | ||
Revenue | $ 25,742,941 | $ 15,244,155 |
Cost of revenue | 20,305,453 | 8,570,240 |
Gross profit | 5,437,488 | 6,673,915 |
Cost and expenses | ||
Depreciation and amortization | 227,322 | 149,642 |
Selling, general and administrative | 12,978,194 | 8,059,742 |
Total costs and expenses | 13,205,516 | 8,209,384 |
Operating loss | (7,768,028) | (1,535,469) |
Other expense (income): | ||
Interest expense, net | (227,016) | (140,457) |
Change in fair value of derivative liability | 4,013 | (4,105) |
Change in fair value of LTC cryptocurrency | (95,387) | |
Gain on sale of assets | 273,453 | |
Gain on investment in Centercom | 25,192 | |
(Gain)/loss on settlement of liabilities | (481,187) | 43,117 |
Total other expense (income) | (678,998) | 76,621 |
Net loss before provision for income taxes | (8,447,026) | (1,458,848) |
Provision for income taxes | 82,230 | |
Net loss | $ (8,447,026) | $ (1,541,078) |
Net loss per common share, basic and diluted | $ (0.09) | $ (0.02) |
Weighted average common shares outstanding - basic and diluted | 96,186,742 | 81,566,892 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Deficit - USD ($) | Series A Preferred [Member] | Series C Preferred [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2017 | $ 3,000 | $ 152,555 | $ (155,555) | $ (617,240) | $ (617,240) | |
Balance, shares at Dec. 31, 2017 | 3,000,000 | 152,555,416 | ||||
Recapitalization in reverse merger | $ 10,000 | $ 79,889 | (3,687,835) | (265,228) | (3,863,174) | |
Recapitalization in reverse merger, shares | 10,000,000 | 79,888,784 | ||||
Issuance of Common Stock and options for services rendered | $ 528 | 157,380 | $ 157,908 | |||
Issuance of Common Stock and options for services rendered, shares | 528,000 | 48,000 | ||||
Issuance of Common Stock for settlement of accounts payable | $ 1,207 | 249,328 | $ 250,535 | |||
Issuance of Common Stock for settlement of accounts payable, shares | 1,206,741 | |||||
Issuance of Common Stock for settlement of debt and accrued interest | $ 2,609 | 597,303 | 599,912 | |||
Issuance of Common Stock for settlement of debt and accrued interest, shares | 2,608,981 | |||||
Issuance of Series C Preferred Stock for conversion of promissory note and accrued interest | $ 48 | 3,024,856 | 3,024,904 | |||
Issuance of Series C Preferred Stock for conversion of promissory note and accrued interest, shares | 48,400 | |||||
Issuance of Series C Preferred Stock in exchange for Common Stock | $ 595 | $ (148,741) | 148,146 | |||
Issuance of Series C Preferred Stock in exchange for Common Stock, shares | 594,966 | (148,741,531) | ||||
Net loss | (1,541,078) | (1,541,078) | ||||
Balance at Dec. 31, 2018 | $ 13,000 | $ 643 | $ 88,047 | (333,623) | (2,423,546) | (1,988,233) |
Balance, shares at Dec. 31, 2018 | 13,000,000 | 643,366 | 88,046,391 | |||
Recapitalization in reverse merger, shares | 10,000,000 | |||||
Issuance of Common Stock and options for services rendered | $ 666 | 328,908 | 329,574 | |||
Issuance of Common Stock and options for services rendered, shares | 666,000 | |||||
Issuance of Common Stock for settlement of accounts payable | $ 875 | 506,625 | 507,500 | |||
Issuance of Common Stock for settlement of accounts payable, shares | 875,000 | |||||
Issuance of Common Stock and warrants with debt | $ 100 | 119,960 | 120,060 | |||
Issuance of Common Stock and warrants with debt, shares | 100,000 | |||||
Sale of Common Stock and warrants | $ 9,172 | 3,201,328 | 3,210,500 | |||
Sale of Common Stock and warrants, shares | 9,172,855 | |||||
Issuance of Common Stock for asset purchase | $ 3,333 | 996,667 | 1,000,000 | |||
Issuance of Common Stock for asset purchase, shares | 3,333,333 | |||||
Issuance of Series C Preferred Stock for investment in Centercom | $ 72 | 178,436 | 178,508 | |||
Issuance of Series C Preferred Stock for investment in Centercom, shares | 72,000 | |||||
Issuance of Series C Preferred Stock for conversion of related party advances | $ 7 | 389,495 | 389,502 | |||
Issuance of Series C Preferred Stock for conversion of related party advances, shares | 6,232 | |||||
Net loss | (8,447,026) | (8,447,026) | ||||
Balance at Dec. 31, 2019 | $ 13,000 | $ 722 | $ 102,193 | $ 6,055,042 | $ (10,870,572) | $ (4,699,615) |
Balance, shares at Dec. 31, 2019 | 13,000,000 | 721,598 | 102,193,579 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Operating activities | ||
Net loss | $ (8,447,026) | $ (1,541,078) |
Adjustments to reconcile net income loss to net cash used in operating activities: | ||
Depreciation and amortization | 227,322 | 149,642 |
Amortization of right of use assets | 55,608 | |
Amortization of debt discount | 68,764 | |
Stock-based compensation | 329,574 | 157,907 |
Bad debt expense | 977,792 | |
Change in fair value of LTC cryptocurrency coins | 63,487 | |
Change in fair value of derivative liability | (4,013) | 4,105 |
Loss (gain) on settlement of liabilities | 474,953 | (61,709) |
Loss on settlement of debt | 14,667 | |
Gain on equity investment in Centercom | (25,192) | |
Accrued interest on note receivable | (38,471) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (3,599,534) | (102,815) |
Lifeline revenue due from USAC | 790,176 | 319,603 |
Customer phone supply | 1,356,701 | (836,536) |
LTC Cryptocurrency coins | (96,992) | |
Prepaid expenses | (86,021) | 40,465 |
Other assets | (4,999) | |
Credit card liability | 54,317 | |
Deferred revenue | (50,000) | (171,500) |
Loss contingency | (31,960) | 120,000 |
Current portion of operating lease liability | (55,608) | |
Accounts payable and accrued expenses | 1,474,476 | 925,140 |
Net cash used in operating activities | (6,533,141) | (1,015,614) |
Investing activities | ||
Purchase of equipment | (227,630) | (331,803) |
Advances under notes receivable | (14,959) | (190,000) |
Net cash received in business combination | 210,348 | 243,768 |
Net cash used in investing activities | (32,241) | (278,035) |
Financing activities | ||
Issuance of Common Stock and warrants | 3,210,500 | |
Due from related party - net | 17,554 | |
Note payable - borrowings | 250,000 | (31,250) |
Note payable - repayments | (70,000) | |
Convertible promissory notes - borrowings | 638,000 | |
Line of credit - advances | 1,130,000 | 1,441,029 |
Line of credit - repayments | (217,130) | (1,441,029) |
Loan proceeds under related party financing arrangement | 2,199,440 | 1,653,500 |
Loan repayments under related party financing arrangement | (674,000) | (1,175,703) |
Net cash provided by financing activities | 6,466,810 | 464,101 |
Net decrease in cash and cash equivalents | (98,572) | (829,548) |
Cash and cash equivalents, beginning of period | 444,612 | 1,274,160 |
Cash and cash equivalents, end of period | 346,040 | 444,612 |
Cash paid for interest and income taxes: | ||
Interest | 77,825 | 10,580 |
Income taxes | 82,230 | |
Non-cash investing and financing activities: | ||
Exchange of related party advances for Series C Preferred Stock | 389,502 | |
Exchange of investment in CenterCom for Series C Preferred Stock | 178,508 | |
Operating lease liability | 266,424 | |
Common Stock issued in asset purchase | 1,000,000 | |
Debt acquired in asset purchase | 4,000,000 | |
Common Stock and warrants issued with debt recorded as debt discount | 120,060 | |
Derivative liability on convertible notes recorded as debt discount | 176,348 | |
Debt acquired in business combination | 3,000,000 | |
Exchange of Common Stock for Series C Preferred Stock | 148,741 | |
Liabilities settled in Common Stock | $ 3,875,352 |
Business
Business | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Business | 1 BUSINESS The accompanying consolidated financial statements include the accounts of Surge Holdings, Inc. (“Surge”), formerly Ksix Media Holdings, Inc., incorporated in Nevada on August 18, 2006, and its wholly owned subsidiaries, Ksix Media, Inc. (“Media”), incorporated in Nevada on November 5, 2014; Ksix, LLC (“KSIX”), a Nevada limited liability company that was formed on September 14, 2011; Surge Blockchain, LLC (“Blockchain”), formerly Blvd. Media Group, LLC (“BLVD”), a Nevada limited liability company that was formed on January 29, 2009; DigitizeIQ, LLC (“DIQ”) an Illinois limited liability company that was formed on July 23, 2014; Surge Cryptocurrency Mining, Inc. (“Crypto”), formerly North American Exploration, Inc. (“NAE”), a Nevada corporation that was incorporated on August 18, 2006 (since January 1, 2019, this has been a dormant entity that does not own any assets); Surge Logics Inc (“Logics”), an Nevada corporation that was formed on October 2, 2018; SurgePays Fintech Inc (“Tech”), an Nevada corporation that was formed on August 22, 2019; Surge Payments LLC (“Payments”), an Nevada corporation that was formed on December 17, 2018; SurgePhone Wireless LLC (“Surge Phone”), an Nevada corporation that was formed on August 29, 2019 and True Wireless, Inc., an Oklahoma corporation (formerly True Wireless, LLC) (“TW”), (collectively the “Company” or “we”). All significant intercompany balances and transactions have been eliminated in consolidation. Recent Developments As reported on Form 8-K filed with the SEC on April 16, 2018, on April 11, 2018, the Company closed the merger transaction (the “Merger”) that was the subject of that certain Agreement and Plan of Reorganization (the “Merger Agreement”) with True Wireless, Inc., an Oklahoma corporation (“TW”) dated as of April 11, 2018. At closing, in accordance with the Merger Agreement, TW merged with and into TW Acquisition Corporation, a Nevada corporation (“Merger Sub”), a wholly-owned subsidiary of Surge Holdings, Inc., with TW being the surviving corporation. As a result of the Merger, TW became a wholly-owned subsidiary of the Company. As a result of the controlling financial interest of the former members of TW, for financial statement reporting purposes, the merger between the Company and TW has been treated as a reverse acquisition with TW deemed the accounting acquirer and the Company deemed the accounting acquiree under the acquisition method of accounting in accordance with section 805-10-55 of the FASB Accounting Standards Codification. The reverse acquisition is deemed a capital transaction and the net assets of TW (the accounting acquirer) are carried forward to the Company (the legal acquirer and the reporting entity) at their carrying value before the acquisition. The acquisition process utilizes the capital structure of the Company and the assets and liabilities of TW which are recorded at their historical cost. The equity of the Company is the historical equity of TW retroactively restated to reflect the number of shares issued by the Company in the transaction. See Note 4. On January 17, 2019, the Company announced the completion of an agreement to acquire a 40% equity ownership of Centercom Global, S.A. de C.V (“Centercom”). Centercom is a dynamic operations center currently providing Surge sales support, customer service, IT infrastructure design, graphic media, database programming, software development, revenue assurance, lead generation, and other various operational support services. Anthony N. Nuzzo, a director and officer and a 10% shareholder of the Company’s voting equity has a controlling interest in CenterCom Global. Centercom also provides call center support for various third-party clients. Centercom is involved with: ● On-boarding the SurgePays Portal into over 40,000 retail locations and subsequent ongoing support; ● Aggressively marketing the Company’s new “Free Wireless Service” program to substantially grow customer base while enhancing customer service; ● Supporting the Company’s IT infrastructure including database management; and ● Upselling-related FinTech products to our existing customer base to increase revenue. On September 30, 2019, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) with GBT Technologies Inc., a Nevada corporation (“GBT”). Under the Purchase Agreement, the Company has purchased substantially all of the assets, and specified liabilities, of GBT’s ECS Prepaid business, Electronic Check Services business, and the Central State Legal Services business (collectively the “ECS Business”). The Purchase Agreement provides that the Company assumed GBT’s liabilities incurred after the effective date of the Purchase Agreement, but only to the extent such obligations and liabilities were not caused by or related to any action or inaction by GBT prior to the effective date of the Purchase Agreement. The Purchase Agreement provides, among other things, that on the terms and subject to the conditions set forth therein, the Company acquired substantially all of the assets related to the ECS Business for total consideration of five million dollars ($5,000,000). The Purchase Agreement provides that the consideration is to be paid by the Company through the issuance of a convertible promissory note in the amount of four million dollars ($4,000,000) to GBT (the “Note”), and through the issuance of three million three hundred thirty-three thousand three hundred thirty-three (3,333,333) restricted shares of the Company’s Common Stock to GBT (the “Shares”). GBT may not convert the Note to the extent that such conversion would result in beneficial ownership by GBT and/or its affiliates of more than 4.99% of the issued and outstanding Common Stock of the Company. Business Overview Surge Holdings, Inc. (“Surge Holdings” or “the Company”), incorporated in Nevada on August 18, 2006, is a company focused on Telecom, Media, and FinTech applications serving customers worldwide online and across social media, gaming and mobile platforms. The Company’s current focus is the provision of financial and telecommunications services to the financially underserved (i.e. persons who have little or no access to credit) within the population. The Company provides a suite of services which are primarily marketed through small retail establishments which are utilized by members of its target market. Commencing in 2018, the Company has significantly expanded its suite of services to include the pursuit of the following business models: Surge Telecom SurgePhone Wireless Additionally, through the use of the SurgeRewardsApp, the Company is able to more aggressively rollout the SurgePhoneWireless service. Customers earn rewards from the ad impressions while unlocking their phone and also by opening the SurgeRewardsApp to watch videos and ads, as well as participate in short surveys in order to receive reward points that can be converted into statement credits for free cell phone service or cash. True Wireless The SurgePhone Android Volt 5XL Surge Fintech SurgePays Visa Surge Software SurgePays Portal Surge Digital Media Surge Logics Through the launch of Surge Intake Logistics (“InTake”), a proprietary CRM software solution that delivers signed retainer services to clients, InTake is proving to be a direct benefit to clients that do not have the staff and infrastructure to handle the volume of leads Surge Logics generates. Surge Logics has taken this a step further to provide qualified leads utilizing a strategic partnership with Centercom to be first in class for online lead generation This partnership and new software have significantly contributed to Surge Logic’s revenue which has grown to approximately $7.2 million for the year ended December 31, 2019. Lead generation Pay-per-call Media buying A call center Centercom Global, S.A. de C.V. On January 17, 2019, the Company announced the completion of an agreement to acquire a 40% equity ownership of Centercom Global, S.A. de C.V (“Centercom”). Centercom is a dynamic operations center currently providing Surge sales support, customer service, IT infrastructure design, graphic media, database programming, software development, revenue assurance, lead generation, and other various operational support services. Anthony N. Nuzzo, a director and officer and a 10% shareholder of the Company’s voting equity has a controlling interest in CenterCom Global. Centercom also provides call center support for various third-party clients. Centercom is involved with: ● On-boarding the SurgePays Portal into over 40,000 retail locations and subsequent ongoing support; ● Aggressively marketing the Company’s new “Free Wireless Service” program to substantially grow customer base while enhancing customer service; ● Supporting the Company’s IT infrastructure including database management; and ● Upselling-related FinTech products to our existing customer base to increase revenue. Due to the fact that a director, officer, and minority owner of the Company has a controlling interest in CenterCom Global, the Company recorded its investment in Centercom of $178,508, which is the Company’s 40% ownership of Centercom’s net book value upon close of the completion of the transaction, as “Investment in Centercom” in long term assets on the accompanying consolidated balance sheets. The Company recorded its equity interest in Centercom’s results of operations as “Gain on investment in Centercom” in other income (expense) on the accompanying consolidated statements of operations. The Company periodically reviews its investment in Centercom for impairment. Management has determined that no impairment was required as of December 31, 2019. ECS Business On September 30, 2019, the Company entered into the Purchase Agreement with GBT Technologies Inc. (“GBT”) of the ECS Prepaid business, Electronic Check Services business and the Central States Legal Services business (collectively, “ECS”). Through its proprietary Fintech software platform, ECS is a leading provider of prepaid wireless load and top-ups, check cashing and wireless SIM activation to convenience stores and bodegas nationwide. Since 2008, ECS has grown to a network of over 9,800 retail locations and 160 independent sales organizations (“ISO”) processing over 18,000 transactions per day. Surge will integrate the ECS software with its SurgePays Network in order to offer both wholesale products from third-party manufacturers, as well as Surge products, including the SurgePays Reloadable Debit Card, SurgePhone Wireless and SIM Starter Kits. See Note 5. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Risks and Uncertainties The Company operates in an industry that is subject to intense competition and change in consumer demand. The Company’s operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure. The Company has experienced, and in the future expects to continue to experience, variability in sales and earnings. The factors expected to contribute to this variability include, among others, (i) the cyclical nature of the industry, (ii) general economic conditions in the various local markets in which the Company competes, including a potential general downturn in the economy, and (iii) the volatility of prices in connection with the Company’s distribution of the product. These factors, among others, make it difficult to project the Company’s operating results on a consistent basis. Concentration of Credit Risk Financial instruments that potentially expose the Company to credit risk consist of cash and cash equivalents, and accounts receivable. The Company is exposed to credit risk on its cash and cash equivalents in the event of default by the financial institutions to the extent account balances exceed the amount insured by the FDIC, which is $250,000. Accounts receivables potentially subject the Company to concentrations of credit risk. Company closely monitors extensions of credit. Estimated credit losses have been recorded in the consolidated financial statements. Recent credit losses have been within management’s expectations. One customer accounted for more than 16% of revenues in 2019. No customer accounted for more than 10% of revenues in 2018. Method of Accounting Investments held in stock of entities other than subsidiaries, namely corporate joint ventures and other non-controlled entities usually are accounted for by one of three methods: (i) the fair value method (addressed in Topic 320), (ii) the equity method (addressed in Topic 323), or (iii) the cost method (addressed in Subtopic 325-20). Pursuant to Paragraph 323-10-05-5, the equity method tends to be most appropriate if an investment enables the investor to influence the operating or financial policies of the investee. Cash and Cash Equivalents The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. The Company held no cash equivalents at December 31, 2019 and 2018. The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company generally does not require collateral to support customer receivables. The Company provides an allowance for doubtful accounts based upon a review of the outstanding accounts receivable, historical collection information and existing economic conditions. The Company determines if receivables are past due based on days outstanding, and amounts are written off when determined to be uncollectible by management. As of December 31, 2019 and 2018, the Company had reserves of $774,841 and 17,000, respectively. Concentrations As of December 31, 2019 and 2018, one customer represented approximately 80% and 22% of total gross outstanding receivables, respectively. Fair value measurements The Company adopted the provisions of ASC Topic 820, “ Fair Value Measurements and Disclosures The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of our short and long term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes 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 — quoted prices for similar assets and liabilities in active markets or inputs that are observable. ● Level 3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions). Derivative Liabilities The Company evaluates its options, warrants, convertible notes, or other contracts, if any, to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with paragraph 815-10-05-4 and Section 815-40-25 of the FASB Accounting Standards Codification. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as either an asset or a liability. The change in fair value is recorded in the consolidated statement of operations as other income or expense. Upon conversion, exercise or cancellation of a derivative instrument, the instrument is marked to fair value at the date of conversion, exercise or cancellation and then the related fair value is reclassified to equity. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date. The Company adopted Section 815-40-15 of the FASB Accounting Standards Codification (“ Section 815-40-15 The Company utilizes a binomial option pricing model to compute the fair value of the derivative liability and to mark to market the fair value of the derivative at each balance sheet date. The Company records the change in the fair value of the derivative as other income or expense in the consolidated statements of operations. The Company had derivative liabilities of $190,846 and $51,058 as of December 31, 2019 and 2018, respectively. Revenue recognition The Company adopted ASC 606 effective January 1, 2018 using the modified retrospective method which would require a cumulative effect adjustment for initially applying the new revenue standard as an adjustment to the opening balance of retained earnings and the comparative information would not require to be restated and continue to be reported under the accounting standards in effect for those periods. Based on the Company’s analysis the Company did not identify a cumulative effect adjustment for initially applying the new revenue standards. The Company principally generates revenue through providing product, services and licensing revenue. The adoption of ASC 606 represents a change in accounting principle that will more closely align revenue recognition with the delivery of the Company’s services and will provide financial statement readers with enhanced disclosures. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services. To achieve this core principle, the Company applies the following five steps: 1) Identify the contract with a customer A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer. 2) Identify the performance obligations in the contract Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation. 3) Determine the transaction price The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company’s contracts as of December 31, 2019 contained a significant financing component. 4) Allocate the transaction price to performance obligations in the contract If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. For example, a bonus or penalty may be associated with one or more, but not all, distinct services promised in a series of distinct services that forms part of a single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. 5) Recognize revenue when or as the Company satisfies a performance obligation The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer. Disaggregation of Revenue from Contracts with Customers. For the Year Ended December 31, 2019 December 31, 2018 True Wireless, Inc. $ 3,446,003 $ 12,798,687 Surge Blockchain, LLC 4,233,263 1,036,650 Surge Logics, Inc. 7,234,366 374,679 ECS 10,767,138 - Other 62,171 1,034,139 Total revenue $ 25,742,941 $ 15,244,155 True Wireless is licensed to provide wireless services to qualifying low income customers in five states. Revenues are recognized when the services have been provided and the government subsidy has been earned. Surge Blockchain revenues are generated through the SurgePaysPortal multi-purpose software are recognized when the goods and services have been delivered and earned. Surge Logics is a full-service digital advertising agency and revenues are recognized at a period in time once performance obligations are met and services are provided as customer deposits are received in advance. ECS is a leading provider of prepaid wireless load and top-ups, check cashing and wireless SIM activation to convenience stores and bodegas nationwide. Income taxes We use the asset and liability method of accounting for income taxes in accordance with Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes”. Through December 23, 2014, KSIX and BLVD operated as limited liability companies and all income and losses were passed through to the owners. Through October 12, 2015, DIQ operated as a limited liability company and all income and losses were passed through to its owner. Subsequent to the acquisition dates, these limited liability companies were owned by Surge and became subject to income tax. Through April 1, 2018, TW operated as a limited liability company and all income and losses were passed through to the owners. In order to facilitate the merger discussed above, TW converted from a limited liability company to a Subchapter C Corporation. ASC Topic 740-10-30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740-10-40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented. The Company is no longer subject to tax examinations by tax authorities for years prior to 2016. Reclassifications Certain prior period amounts have been reclassified to conform to the current year’s presentation. Recent adopted accounting pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, “ Leases (Topic 842) Leases, Topic 842: Targeted Improvement, In May 2017, the FASB issued ASU 2017-09, “ Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting,” In July 2017, the FASB issued ASU 2017-11, “ Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception” Recent announced accounting pronouncements In June 2018, the FASB issued Accounting Standards Update (ASU) No. 2018-07, Compensation – Stock Compensation (Topic718): Improvements to Nonemployee Share-Based Payment Accounting Revenue from Contracts with Customers Revenue Recognition In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement”. Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements. |
Liquidity
Liquidity | 12 Months Ended |
Dec. 31, 2019 | |
Liquidity | |
Liquidity | 3 LIQUIDITY The Company had a net loss of approximately $8.4 million for the year ended December 31, 2019. As of December 31, 2019, the Company had cash and working capital deficit of approximately $346,000 and $3.5 million, respectively. Management’s 2019 strategic decision to invest and allocate millions of dollars into software development, product development and its infrastructure has enabled the company to be position for immediate rapid growth. The Company continues to add stores to the ECS and Wholesale Marketplace platforms while aggressively exploring new distribution channels and acquisitions. This is enabling the addition of products from manufacturers in market specific categories in conjunction with national rollouts of proprietary brands such as LocoRabbit Wireless, Max CBD and Essential products needed in today’s world. The 3rd quarter asset purchase agreement of the ECS Business gives the Company access to a network of over 9,800 retail locations and 160 independent salespeople processing over 18,000 transactions per day (see Note 1). ECS generates approximately $46,500,000 in annualized revenue through third party wireless services. During the year ended December 31, 2019, the Surge software development team has successfully implemented the merging of the SurgePays and ECS software to more efficiently and cost effectively increase synergized revenue and profitability moving forward. In addition, management made the decision to expedite programming, software development and integration to enable the successful launch of the SurgePays Prepaid Visa card. The development of the Surge Logistics Intake software and the infrastructure at CenterCom BPO have enabled rapid scaling growth and evidenced in Surge Logics revenue trajectory. To support the significant growth inflection, the Company has reorganized its human resources department, including building the administrative, legal and finance office in Bartlett, TN and the operations center in El Salvador which will be able to now host 300 employees. Management believes the Company now has the ability to scale to support its expected growth in 2020, which was a major goal for fiscal year 2019. During the year ended December 31, 2019, the Company was able to continue the utilization of the internal controls and operating procedures and techniques employed by the Company’s management in order to enhance the business by creating operating efficiencies and controlling costs. Lastly, the Company has significantly restructured its balance sheet to be an effective platform for growth as the Company continues to work towards listing on the Nasdaq Capital Market in the near term. In March of 2020, the World Health Organization declared COVID-19 a pandemic. COVID-19 could disrupt the economy, the Company’s supply chain, and access to capital sources thus adversely affecting the Company’s ability to continue its operations. Management’s evaluation of the events and conditions and management’s plans regarding those matters are described in Note 3 to the consolidated financial statements. These factors, among others, were addressed by management in determining whether the Company could continue as a going concern. The Company projects that it should be cash flow positive by the end of Quarter 3 2020 through increased cash flow from ongoing operations the collection of outstanding receivables and the restructuring of the current debt burden. While management believes it is more likely than not the Company has the ability to continue as a going concern, this is dependent upon the ability to further implement the business plan, generate sufficient revenues and to control operating expenses. Additionally, if necessary, based on the Company’s history of being able to raise capital from both internal and external sources coupled with current favorable market conditions, management believes that debt and/or equity financing can be obtained from both related parties (management and members of the Board of Directors of the Company) and external sources to pay down existing debt obligations, cover short term shortfalls, meet the shareholders equity requirements for Nasdaq, and complete proposed acquisitions. Although the Company believes in the viability of management’s strategy to generate sufficient revenue, control costs and the ability to raise additional funds if necessary, there can be no assurances to that effect. Therefore, the accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. |
Merger Agreement
Merger Agreement | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Merger Agreement | 4 MERGER AGREEMENT As discussed in Note 1, the Company closed the merger transaction that was the subject of the Merger Agreement with True Wireless, Inc., dated as of April 11, 2018. At closing, in accordance with the Merger Agreement, TW merged with and into TW Acquisition Corporation, with TW being the surviving corporation. As a result of the Merger, TW became a wholly-owned subsidiary of the Company. Pursuant to the terms of the Merger Agreement, TW merged into Acquisition Sub in a transaction where TW was the surviving company and become a wholly-owned subsidiary of the Company. The transaction was structured as a tax-free reverse triangular merger. In addition to the 12,000,000 shares of Company Common Stock and $500,000 cash which has been previously paid to the shareholders of TW, at the closing of the merger transaction, the shareholders of TW received the following as additional merger consideration: ● 152,555,416 shares of newly-issued Company Common Stock, which gave the shareholders of TW, on a proforma basis, a 69.5% interest in the Company’s total Common Shares. ● An additional number of shares of Company Common Stock, if any, which were necessary to vest 69.5% of the aggregate issued and outstanding Common Stock in the shareholders of TW at the Closing. ● A promissory note in the original face amount of $3,000,000, bearing interest at 3% per annum maturing on December 31, 2018. ● 3,000,000 shares of newly-issued Company Series A Preferred Stock Following the closing of the merger transaction the Company’s investment in TW consisted of the following: Shares Amount Consideration paid prior to Closing: Cash paid $ 500,000 Common stock issued 12,000,000 1,200,000 Total consideration paid 12,000,000 $ 1,700,000 Consideration paid at Closing: Common stock to be issued at closing (1) 152,555,416 $ 60,683,006 Series A Preferred Stock to be issued at closing 3,000,000 120,000 Note payable due December 31, 2018 3,000,000 Total consideration to be paid $ 63,803,006 Total consideration $ 65,503,006 (1) The common shares issued at closing of the merger transaction had a closing price of approximately $0.40 per share on the date of the transaction. Following the closing of the merger transaction, TW’s financial statements as of the closing were consolidated with the consolidated financial statements of the Company. The following presents the unaudited pro-forma combined results of operations of the Company with the TW Business as if the entities were combined on January 1, 2018. Year Ended December 31, 2018 Revenues, net $ 15,684,032 Net loss $ (1,541,078 ) Net loss per share $ (0.02 ) Weighted average number of shares outstanding 81,566,892 The unaudited pro-forma results of operations are presented for information purposes only. The unaudited pro-forma results of operations are not intended to present actual results that would have been attained had the acquisitions been completed as of January 1, 2018 or to project potential operating results as of any future date or for any future periods. The Company consolidated TW as of the closing date of the agreement, and the results of operations of the Company include that of TW. |
Asset Purchase Agreement
Asset Purchase Agreement | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Asset Purchase Agreement | 5 ASSET PURCHASE AGREEMENT On September 30, 2019, the Company entered into the Purchase Agreement with GBT. Under the Purchase Agreement, the Company has purchased substantially all of the assets, and specified liabilities, of GBT’s ECS Prepaid business, Electronic Check Services business, and the Central State Legal Services business. The Purchase Agreement provides that the Company assumed GBT’s liabilities incurred after the effective date of the Purchase Agreement, but only to the extent such obligations and liabilities were not caused by or related to any action or inaction by GBT prior to the effective date of the Purchase Agreement. The Purchase Agreement provides, among other things, that on the terms and subject to the conditions set forth therein, the Company acquired substantially all of the assets related to the ECS Business for total consideration of five million dollars ($5,000,000). The Purchase Agreement provides that the consideration is to be paid by the Company through the issuance of a convertible promissory note in the amount of four million dollars ($4,000,000) to GBT, and through the issuance of three million three hundred thirty-three thousand three hundred thirty-three (3,333,333) restricted shares of the Company’s Common Stock to GBT. As of the date of this report, the purchase price allocation has yet to be valued. GBT may not convert the Note to the extent that such conversion would result in beneficial ownership by GBT and/or its affiliates of more than 4.99% of the issued and outstanding Common Stock of the Company. The Note has an effective date of September 27, 2019 and has a term of eighteen (18) months until the maturity date. The Note shall not bear interest and shall be convertible at the option of GBT starting from the sixth month anniversary of the effective date. The conversion price of the Note shall equal the volume weighted average price of the Company’s Common Stock on the trading market which the common stock is then trading over the previous twenty (20) days prior to the conversion date, provided that the conversion price shall never be lower than $0.10 or higher than $0.70. The Note provides that the Company retains the right to prepay all or any portion of the principal without any prepayment penalty. In addition, in connection with the issuance of the Note, GBT agreed that, for the eighteen (18) months following the effective date, GBT will not dispose of the Shares or shares issued as a result of the conversion of the Note, in an amount greater than seven and one-half percent (7.5%) of the trading volume of the Company’s shares of Common Stock during the previous month. Following the closing of the merger transaction, the Company’s investment in ECS consisted of the following: Purchase Price Convertible note $ 4,000,000 Common stock 1,000,000 Total purchase price $ 5,000,000 Allocation of purchase price Cash $ 210,348 Equipment 63,289 Intangibles 4,903,876 Accounts payable and accrued expenses (177,513 ) Total allocation of purchase price $ 5,000,000 (1) The 3,333,333 restricted shares of the Company’s Common Stock issued at closing of the merger transaction had a closing price of approximately $0.30 per share on the date of the transaction. Following the closing of the merger transaction, TW’s financial statements as of the closing were consolidated with the consolidated financial statements of the Company. The following presents the unaudited pro-forma combined results of operations of the Company with the ECS Business as if the entities were combined on January 1, 2018. Year Ended December 31, 2019 Revenues, net $ 59,064,637 Net loss $ (8,902,134 ) Net loss per share $ (0.09 ) Weighted average number of shares outstanding 96,186,742 Year Ended December 31, 2018 Revenues, net $ 64,260,116 Net loss $ (1,069,810 ) Net loss per share $ (0.01 ) Weighted average number of shares outstanding 81,566,892 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 6 PROPERTY AND EQUIPMENT Property and equipment stated at cost, less accumulated depreciation, consisted of the following: December 31, 2019 December 31, 2018 Computer Equipment and Software $ 309,080 $ 15,263 Furniture and Fixtures 1,416 7,996 Leasehold Improvements 25,193 25,513 335,689 48,771 Less: Accumulated Depreciation (41,073 ) (13,782 ) $ 294,616 $ 30,990 Depreciation expense was $27,293 and $112,990 for the year ended December 31, 2019 and 2018, respectively. |
Cryptocurrency Asset Sale
Cryptocurrency Asset Sale | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Cryptocurrency Asset Sale | 7 CRYPTOCURRENCY ASSET SALE In December 2018, the Company executed an agreement with a related party for the sale of Cryptocurrency assets for proceeds of $891,192. In exchange for the purchased assets with a net book value of $523,743, the related party would assume the liabilities of the entity consisting of accounts payable of $40,235 and outstanding debt and accrued interest of $808,600. The Company recognized a gain on sale totaling $273,453. The Company is no longer engaged in any line of business involving cryptocurrencies or digital assets. The Company previously announced an intention to issue Surge Utility Tokens in the future. The Company still plans on utilizing tokens as a reward program; however, these tokens will have no monetary value and will not involve cryptocurrency or blockchain technology. These tokens will not be able to be bought, sold, invested, or traded. Rather, these tokens will only be awarded by the Company to existing users of the Company’s products and will then only be able to be redeemed for rewards using a Surge Rewards website set up by the Company. The Company has not issued any Surge Utility Tokens to date and this name will not be utilized for any rewards tokens used as part of a future Surge Rewards program. |
Credit Card Liability
Credit Card Liability | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Credit Card Liability | 8 CREDIT CARD LIABILITY The Company previously utilized a credit card issued in the name of DIQ to pay for certain of its trade obligations. During the year ended December 31, 2019 and 2018, the Company utilized a credit card issued in the name of Surge Holdings, Inc. to pay certain trade obligations totaling $1,191,424 and $55,185, respectively. At December 31, 2019 and 2018, the Company’s total credit card liability was $449,157 and $394,840, respectively. |
Notes Payable - Related Party
Notes Payable - Related Party | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Notes Payable - Related Party | 9 NOTES PAYABLE – RELATED PARTY In December 2018, the Company executed a promissory note payable agreement with SMDMM Funding, LLC (“SMDMM”), an entity that is owned by the Company’s chief executive officer. The promissory note was for a principal sum up to $1.0 million at an annual interest rate of 6%, due on December 27, 2021. During the year ended December 31, 2019, the Company drew net advances on the note totaling $425,000. As part of the Cryptocurrency transaction discussed in Note 6 above, $80,000 of the outstanding balance under the promissory note was assumed by the purchaser. In August 2019, the Company executed a promissory note payable agreement with SMDMM. The promissory note was for a principal sum up to $217,000 at an annual interest rate of 6%, due on August 15, 2022. As of December 31, 2019, the Company drew advances on the note totaling $217,000. During the fourth quarter 2019, the Company executed a promissory note payable agreement with SMDMM. The promissory note was for a principal sum up to $883,00 at an annual interest rate of 15%, due on November 21, 2022. As of December 31, 2019, the Company drew advances on the note totaling $883,000. During the year ended December 31, 2019, the Company made principal and accrued interest payments of $674,000 and $25,955, respectively. The outstanding principal balance under the promissory notes due to SMDMM was $2,205,440 and $680,000 at December 31, 2019 and 2018, respectively. Accrued interest owed to SMDMM was $64,741 and $10,718 at December 31, 2019 and 2018, respectively. |
Notes Payable and Long-Term Deb
Notes Payable and Long-Term Debt | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Notes Payable and Long-Term Debt | 10 NOTES PAYABLE AND LONG-TERM DEBT As of December 31, 2019 and 2018, notes payable and long-term debt consists of: December 31, 2019 December 31, 2018 Note payable to former officer due in four equal annual installments of $25,313 on April 28 of each year; past due in 2016 and 2017; accruing interest at 6% per annum since April 28, 2016 on the past due portion $ - $ 70,000 Notes payable to seller of DigitizeIQ, LLC due as noted below 1 485,000 485,000 Convertible note payable to River North Equity LLC dated July 13, 2016 with interest at 10% per annum; due April 13, 2017; convertible into Common Stock 2 27,500 27,500 Promissory note payable to a lender dated November 4, 2019; accruing interest at 18% per annum; due November 3, 2020; 100,000 shares of restricted Common Stock granted on execution recorded as a debt discount – net of debt discount of $26,328 3 223,672 - $ 736,172 $ 582,500 1 Notes due seller of DigitizeIQ, LLC ● A second non-interest-bearing promissory note made payable to the seller in the amount of $250,000, which was due on January 12, 2016; (Balance at December 31, 2019 and 2018 - $235,000). ● A third non-interest-bearing promissory note made payable to the seller in the amount of $250,000, which was due on March 12, 2016 and remains unpaid as of December 31, 2019. The Company is renegotiating the terms of the notes. The notes bear interest at 5% per annum when in default (after the due date). The notes were non-interest bearing until due. Accordingly, a debt discount at 5% per annum was calculated for the notes and was amortized to interest expense until the due date of the notes. 2 The Company has determined that the conversion feature embedded in the notes referred to above that contain a potential variable conversion amount constitutes a derivative which has been bifurcated from the note and recorded as a derivative liability, with a corresponding discount recorded to the associated debt. The excess of the derivative value over the face amount of the note, if any, is recorded immediately to interest expense at inception. As noted above, the Company reached an agreement with a debt holder to convert outstanding debt and interest into shares of Common Stock. As a result, the Company wrote-off the existing derivative liability of $34,556. In addition, the Company wrote-off outstanding principal balance on the note totaling $32,547. 3 |
Convertible Promissory Notes
Convertible Promissory Notes | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Convertible Promissory Notes | 11 CONVERTIBLE PROMISSORY NOTES As of December 31, 2019 and 2018, convertible promissory notes payable consists of: December 31, 2019 December 31, 2018 Convertible note payable to GBT Technologies Inc. dated September 27, 2019 with no interest; due March 27, 2021; convertible into Common Stock 1 $ 4,000,000 $ - Convertible note payable to Power Up Lending Group Ltd. dated September 18, 2019 with at 12% per annum; due September 18, 2020; convertible into Common Stock 2 233,000 - Convertible note payable to BHP Capital NY dated October 7, 2019 with interest at 18% per annum; due April 7, 2021; convertible into shares of Common Stock 3 135,000 - Convertible note payable to Armada Capital Partners LLC dated October 7, 2019 with interest at 18% per annum; due April 7, 2021; convertible into shares of Common Stock 3 135,000 - Convertible note payable to Jefferson Street Capital LLC dated October 7, 2019 with interest at 18% per annum; due April 7, 2021; convertible into shares of Common Stock 3 135,000 - Less: Debt discount (201,316 ) $ 4,436,684 $ - 1 2 3 Pursuant to the SPA, each of the Buyers purchased from the Company, for a purchase price of $125,000, a convertible promissory note, in the principal amount of $135,000. The purchase of each note was accompanied by the Company’s issuance of a warrant to purchase 125,000 shares of the Company’s Common Stock to each Buyer. On October 7, 2019, each Buyer delivered the purchase price to the Company as payment for each note. Each note became effective as of October 7, 2019 and is due and payable on April 7, 2021. The notes entitle the Buyers to 8% interest per annum. Upon an Event of Default (as defined in the notes), the notes entitle the Buyers to interest at the rate of 18% per annum. The notes may be converted into shares of the Company’s Common Stock at a conversion price equal to 0.75 (representing a 25% discount) multiplied by the lesser of (i) the lowest one day volume weighted average price (“VWAP”) for the Common Stock during the ten (10) trading day period ending on the latest complete trading day prior to the conversion date, and (ii) the lowest one day VWAP for the Common Stock during the ten (10) trading day period ending on the latest complete trading day prior to the issue date. In the event of a default, without demand, presentment or notice, the note shall become immediately due and payable. The warrants were issued to the Buyers by the Company on October 7, 2019 in connection with the SPA. The warrants entitle the Buyers, respectively, to exercise purchase rights represented by the warrants up to 125,000 shares per warrant. The warrants permit the Buyers to exercise the purchase rights at any time on or after October 7, 2019 through October 7, 2022. Each warrant contains an exercise price per share of $0.80, subject to adjustment, and also contains a provision permitting the cashless exercise of such exercise rights as defined therein. The Company has maintained the right to redeem each warrant in full at any time following payment in full of the amounts owing under each respective note. The Company valued the warrants using the Black-Scholes Option Pricing model and accounted for it as debt discount on the consolidated balance sheet. The debt discount is amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt, using the effective interest method. The amortization of debt discount is included as a component of interest expense in the consolidated statements of operations. There was unamortized debt discount of $201,316 as of December 31, 2019. During the year ended December 31, 2019, the Company recorded amortization of debt discount related to these warrants totaling $13,782. Future maturities of all debt (excluding debt discount discussed above in Notes 10 and 11) are as follows: For the Years Ending December 31, 2020 $ 1,908,370 2021 5,510,000 2022 1,100,440 $ 8,518,810 |
Derivative Liabilities
Derivative Liabilities | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Liability [Abstract] | |
Derivative Liabilities | 12 DERIVATIVE LIABLIITES As discussed above in Note 11, The Company executed a convertible note with Power Up Lending Group on September 18, 2019 and received gross proceeds of $233,000. The Company identified certain features embedded in the note requiring the Company to classify the feature as a derivative liability. The conversion price of the note are subject to adjustment for issuances of the Company’s Common Stock or any equity linked instruments or securities convertible into the Company’s Common Stock at a purchase price of less than the prevailing conversion price or exercise price. Such adjustment shall result in the conversion price and exercise price being reduced to such lower purchase price. During the year ended December 31, 2019, the fair value of the derivative feature was calculated using the following weighted average assumptions: December 31, 2019 Risk-free interest rate 1.59 – 1.87 % Expected life of grants 1 year Expected volatility of underlying stock 88 - 100 % Dividends 0 % As of December 31, 2019, the derivative liability of the warrants was $190,846. In addition, for the year ended December 31, 2019, the Company recorded $4,013 as a gain on the change in fair value of the derivative on the statement of operations. |
Line of Credit
Line of Credit | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Line of Credit | 13 LINE OF CREDIT On January 25, 2018 the Company obtained a $500,000 line of credit (LOC) with a Bank. The LOC bears interest at 5% per annum and is secured by essentially all of the Company’s assets. The note is personally guaranteed by the owner of the majority of the Company’s voting shares. On December 21, 2018, the Company and the bank agreed to increase the LOC to $1,000,000 at an interest rate of 6% per annum. During the year ended December 31, 2019, total advances and repayments under the LOC were $1,130,000 and $217,130, respectively. As of December 31, 2019 and 2018, the outstanding balance on the LOC was $912,870 and $0, respectively. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Leases | 14 LEASES The Company determines if an arrangement contains a lease at inception. Right of use (“ROU”) assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The Company leases office space in Memphis, TN and a call center space in El Salvador. The term of the office is for 2 years beginning on November 1, 2019 commencing with monthly payments of $1,600. The term of the call center lease is for 3 years beginning on March 1, 2019 commencing with monthly payments of $6,680. During the years ended December 31, 2019 and 2018, the Company paid lease obligations of $87,762 and $30,480, respectively, under the leases. The Company utilized a portfolio approach in determining the discount rate. The portfolio approach takes into consideration the range of the term, the range of the lease payments, the category of the underlying asset and the Company’s estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments. The Company also considered its recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating the incremental borrowing rates. The lease terms include options to extend the leases when it is reasonably certain that the Company will exercise that option. These operating leases contain renewal options for periods ranging from three to five years that expire at various dates with no residual value guarantees. Future obligations relating to the exercise of renewal options is included in the measurement if, based on the judgment of management, the renewal option is reasonably certain to be exercised. Factors in determining whether an option is reasonably certain of exercise include, but are not limited to, the value of leasehold improvements, the value of the renewal rate compared to market rates, and the presence of factors that would cause a significant economic penalty to the Company if the option is not exercised. Management reasonably plans to exercise all options, and as such, all renewal options are included in the measurement of the right-of-use assets and operating lease liabilities. Leases with a term of 12 months or less are not recorded on the balance sheet, per the election of the practical expedient noted above. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company recognizes variable lease payments in the period in which the obligation for those payments is incurred. Variable lease payments that depend on an index or a rate are initially measured using the index or rate at the commencement date, otherwise variable lease payments are recognized in the period incurred. The components of lease expense were as follows: Year Ended December 31, 2019 Operating leases $ 80,760 Interest on lease liabilities 7,002 Total net lease cost $ 87,762 Supplemental balance sheet information related to leases was as follows: December 31, 2019 Operating leases: Operating lease ROU assets - net $ 210,816 Current operating lease liabilities, included in current liabilities $ 90,944 Noncurrent operating lease liabilities, included in long-term liabilities 119,872 Total operating lease liabilities $ 210,816 Supplemental cash flow and other information related to leases was as follows: Year Ended December 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 55,608 ROU assets obtained in exchange for lease liabilities: Operating leases $ 266,424 Weighted average remaining lease term (in years): Operating leases 2.12 Weighted average discount rate: Operating leases 5.5 % Total future minimum payments required under the lease obligations as of December 31, 2019 are as follows: Twelve Months Ending December 31, 2020 (thereafter) $ 99,360 2021 99,160 2022 27,040 Total lease payments $ 222,560 Less: amounts representing interest (11,744 ) Total lease obligations $ 210,816 |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | 15 STOCKHOLDERS’ EQUITY Preferred Stock Series “A” Preferred Stock The Company, pursuant to the consent of the Board of Directors filed a Certificate of Designation with the Nevada Secretary of State which designated 10,000,000 shares of the Company’s authorized preferred stock as Series “A” Preferred Stock, par value $0.001. The Series “A” Preferred Stock has the following attributes: ● Ranks senior only to any other class or series of designated and outstanding preferred shares of the Company; ● Bears no dividend; ● Has no liquidation preference, other than the ability to convert to Common Stock of the Company; ● The Company does not have any rights of redemption; ● Voting rights equal to ten shares of Common Stock for each share of Series “A” Preferred Stock; ● Entitled to same notice of meeting provisions as common stockholders; ● Protective provisions require approval of 75% of the Series “A” Preferred Shares outstanding to modify the provisions or increase the authorized Series “A” Preferred Shares; and ● Each one Series “A” Preferred Shares can be converted into ten common shares at the option of the holder. On April 11, 2018, the Company issued 3,000,000 shares of Series A Preferred Stock as consideration for the True Wireless, Inc. merger. As discussed in Note 1, the equity of the Company is the historical equity of TW retroactively restated to reflect the number of shares issued by the Company in the transaction. These preferred shares were recorded as a retroactive 2017 transaction as incentive to complete the merger. Upon close of the merger, the Company recorded 10,000,000 shares of Series A Preferred Stock as a part of the recapitalization transaction for services previously rendered by the Company’s former Chief Executive Officer and Chairman of the Board of Directors. As of December 31, 2019 and 2018, there were 13,000,000 shares of Series A issued and outstanding. Series “C” Convertible Preferred Stock On June 22, 2018, the Board of Directors approved a Certificate of Designation for Company Series C Convertible Preferred stock, which was filed with the Secretary of State of the State of Nevada on that date. The Certificate of Designations approved the creation of a new series of preferred stock consisting of 1,000,000 shares of Series C Convertible Preferred Stock par value $0.001 (“Series C Preferred Stock”) with an original issue price of $100.00 per share. The Series “C” Preferred Stock has the following attributes: ● Ranks junior only to any other class or series of designated and outstanding preferred shares of the Company; ● Bears a dividend per share of Series C Preferred Stock equal to the per share amount (as converted), and in the same form as, the dividend payable to the holders of the Common Stock; ● With respect to such liquidation, dissolution or winding up, the holders of Series C Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the holders of Junior Securities but after distribution of such assets among, or payment thereof to holders of any Senior Preferred Stock, an amount equal to the Series C Original Issue Price for each share of Series C Preferred Stock plus an amount equal to all declared but unpaid dividends on Series C Preferred Stock; ● The Company does not have any rights of redemption; ● Voting rights equal to 250 shares of Common Stock for each share of Series “C” Preferred Stock; ● Entitled to same notice of meeting provisions as common stockholders; ● Protective provisions require approval of 75% of the Series “C” Preferred Shares outstanding to modify the provisions or increase the authorized Series “C” Preferred Shares; and ● Each one Series “C” Preferred Shares can be converted into ten common shares at the option of the holder. As noted above, each share of Series C Preferred Stock is convertible into 250 shares of Company Common Stock (the same conversion rate utilized in the exchange transaction), but is only convertible on the first to occur of the following events: (i) The Volume Weighted Average Price (“VWAP”) of the Company’s Common Stock during any then consecutive trading days is at least $2.00 per share; or (ii) June 30, 2019. On June 29, 2018, each of Kevin Brian Cox (“Cox”), the Company’s Chief Executive Officer, and Thirteen Nevada LLC (“13”) entered into separate Exchange Agreements with the Company whereby the Shareholders agreed to exchange an aggregate of 148,741,531 shares of previously issued Company Common Stock for an aggregate of 594,966 shares of newly-issued Company Series C Convertible Preferred Stock. The calculation of weighted average shares was retroactively restated in order to properly account for the above noted share exchange. During the year ended December 31, 2018, the Company issued 48,400 shares of Series C Preferred in exchange for the conversion of a note payable of $3,000,000 and accrued interest of $24,952. As discussed above in Note 1, on January 17, 2019, the Company announced the completion of an agreement to acquire a 40% equity ownership of Centercom. Upon execution of the agreement, the Company issued 72,000 shares of Preferred C stock (convertible into 18,000,000 shares of Common Stock) to a director, officer and minority owner of the Company who has a controlling interest in Centercom. The Company recorded its investment in Centercom of $178,508, which is the Company’s 40% ownership of Centercom’s net book value upon close of the completion of the transaction, as “Investment in Centercom” in long term assets on the accompanying consolidated balance sheets. On February 15, 2019, Carter Matzinger elected to exchange outstanding non-interest-bearing debt totaling $389,502 owed by the Company into 6,232 shares of Preferred C stock. As of December 31, 2019 and 2018, there were 721,598 and 643,366 shares of Series C issued and outstanding, respectively. Common Stock On March 8, 2018, the Company granted a consultant 48,000 restricted shares for services rendered. On April 11, 2018, the Company issued 152,555,416 shares of Common Stock as consideration for the True Wireless, Inc. merger. As discussed in Note 1, the equity of the Company is the historical equity of TW retroactively restated to reflect the number of shares issued by the Company in the transaction. These common shares were recorded as a retroactive 2017 transaction as incentive to complete the merger. On April 25, 2018, the Company issued an aggregate of 480,000 shares of Common Stock to two consultants valued at $0.27 per share. In July 2018, the Company issued an aggregate of 1,156,587 shares of Common Stock valued at $0.20 per share to nine parties in settlement of certain disputes between TW and Benson Communications, S.A. de C.V. The settlement had been previously reached on September 29, 2017. In August 2018, the Company reached a settlement with the debt holder and issued 2,175,000 in full settlement of the outstanding debt totaling $435,000. During the year ended December 31, 2019, the Company granted consultants 96,000 restricted shares for services pursuant to consulting agreements. On March 27, 2019, the Company reached a settlement with a consultant to issue 875,000 shares for services rendered. Upon execution of the settlement, the Company recorded a loss on settlement of $507,500. As discussed above in Note 5, on September 30, 2019, the Company entered into a Purchase Agreement with GBT Technologies Inc. Pursuant to the agreement, the Company acquired substantially all of the assets related to the ECS Business for total consideration of five million dollars ($5,000,000). The Purchase Agreement provides that the consideration is to be paid by the Company through the issuance of a convertible promissory note in the amount of $4,000,000 and through the issuance of 3,333,333 restricted shares of the Company’s Common Stock. In October 2019, the Company issued 70,000 shares of Common Stock to a consultant valued at $0.31 per share. On November 4, 2019, the Company granted 100,000 shares of Common Stock pursuant to a debt agreement executed with a lender. The shares were valued at $0.31 per share and was recorded as a debt discount. During the year ended December 31, 2019, the Company sold an aggregate of 9,172,855 shares of Common Stock and 4,462,135 warrants, with each warrant exercisable for one share of Common Stock at an exercise price of $0.75, resulting in gross proceeds to the Company of $3,210,500. During the year ended December 31, 2019 and 2018, the Company recorded total stock-based compensation expense of $295,900 and $146,000, respectively, in relation to shares issued for services. As of December 31, 2019 and 2018, there were 102,193,579 and 88,046,391 shares of Common Stock issued and outstanding, respectively. Stock Warrants On March 8, 2018, the Company granted its former Chief Financial Officer 50,000 warrants to purchase the Company’s Common Stock with an exercise price of $0.41 per share, a term of 5 years, and a vesting period of 1 year. The warrants have an aggregated fair value of approximately $14,700 that was calculated using the Black-Scholes option-pricing model. On February 15, 2019, the Company executed a consulting agreement with a third party for professional services. Upon execution of the agreement, the Company agreed to issue 100,000 warrants to purchase the Company’s Common Stock with an exercise price of $3.00 per share, a term of 3 years, and immediate vesting. In addition, the consultant is eligible to receive 150,000 warrants upon achievement of certain milestones as discussed in the agreement. The 250,000 warrants have an aggregated fair value of approximately $30,782 that was calculated using the Black-Scholes. For the year ended December 31, 2019 and 2018, when computing fair value of share-based payments, the Company has considered the following variables: December 31, 2019 December 31, 2018 Risk-free interest rate 2.50 % 2.03 % Expected life of grants 3 years 1.5 years Expected volatility of underlying stock 168.71 % 173.02 % Dividends 0 % 0 % The estimated warrant life was determined based on the “simplified method,” giving consideration to the overall vesting period and the contractual terms of the award. During the year ended December 31, 2019 and 2018, the Company recorded total stock-based compensation expense related to the warrants of approximately $33,700 and $11,800, respectively. The unrecognized compensation expense at December 31, 2019 was approximately $0. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 16 RELATED PARTY TRANSACTIONS The Company’s former chief executive officer has advanced the Company various amounts on a non-interest-bearing basis, which is being used for working capital. The advance has no fixed maturity. As noted, Mr. Matzinger elected to exchange outstanding non-interest-bearing debt totaling $389,502 owed by the Company into 6,232 shares of Preferred C stock. As of December 31, 2019 and 2018, the outstanding balance due was $0 and $389,502, respectively. For the year ended December 31, 2019 and 2018, outsourced management services fees of $1,020,000 was paid to Axia Management, LLC (“Axia”) as compensation for services provided. These costs are included in Selling, general and administrative expenses in the Consolidated Statements of Operations. Axia is owned by the majority owner of the Company. At December 31, 2019 and 2018, the Company had trade payables to Axia of $666,112 and $66,535, respectively. For the year ended December 31, 2019 and 2018, the Company purchased telecom services and access to wireless networks from 321 Communications in the amount of $704,683 and $1,016,393, respectively. These costs are included in Cost of revenue in the Statements of Operations. The owner of the majority of the Company’s voting shares is a minority owner of 321 Communications. At December 31, 2019 and 2018, the Company had trade payables to 321 Communications of $140,923 and $52,161, respectively. The Company contracted with CenterCom Global, S.A. de C.V. At December 31, 2019 and 2018, the Company had trade payables to CenterCom Global of $282,159 and $175,000, respectively. See Note 5 for long-term debt due to related parties. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 17 COMMITMENTS AND CONTINGENCIES On November 1, 2013, The Federal Communications Commission (“FCC”) issued a Notice of Apparent Liability for Forfeiture to the Company for requesting and/or receiving support for ineligible subscriber lines between the months of October 2012 and May 2013 and proposed a monetary forfeiture of $5,501,285. The Company has annual compliance audits with FCC approved audit firms that have found no compliance deficiencies. Management believes the proposed monetary forfeiture is without merit and if anything should result from this notice, the amount would not materially affect the financial position of the Company. In October 2018, the Company signed an agreement with Pastime Foods (“Pastime”) in order to expand the Company’s distribution network for its SurgePays portal. The agreement will initiate distribution and sales to over 15,000 convenience and retail locations with a long-term target of greater than 40,000 locations. According to the agreement, Pastime commits to selling more than an average required minimum of $1,500 of monthly sales revenue per location. The Company will fund the initial placement costs and expenses with a total initial advance of $190,000 as well as fees of $10,000. Any advances will be offset by the sharing of distribution revenues for shipments paid by retailers directly to Pastime and the Company. The sharing percentage will be 100% of the net distribution profit until the advances have been covered. As of December 31, 2018, the outstanding receivable due to the Company pursuant to the agreement is $190,000 and is shown as Note Receivable on the consolidated balance sheet. In November 2018, the Company entered into a settlement agreement with West Publishing Corporation (“West”) to remedy an outstanding civil action filed by West. Pursuant to the agreement, the Company will pay West the principal amount of $125,000 plus interest accruing at the annual rate of 7%. As of December 31, 2019, all payments were made as required in the settlement agreement. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 18 INCOME TAXES Deferred Tax Assets On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Reform Bill”) was signed into law. Prior to the enactment of the Tax Reform Bill, the Company measured its deferred tax assets at the federal rate of 34%. The Tax Reform Bill reduced the federal tax rate to 21% resulting in the re-measurement of the deferred tax asset as of December 31, 2017. Beginning January 1, 2018, the lower tax rate of 21% will be used to calculate the amount of any federal income tax due on taxable income earned during 2018. For the periods from inception through the date of conversion to a C corporation in April 2018, the Company reported its income under True Wireless LLC, a limited liability company. As a result, the Company’s income for federal and state income tax purposes were reportable on the tax returns of the individual partners. Accordingly, no recognition has been made for federal or state income taxes in the accompanying financial statements of the Company through the date of conversion. At December 31, 2019, the Company has available for U.S. federal income tax purposes a net operating loss (“NOL”) carry-forwards of approximately $8.3 million that may be used to offset future taxable income through the fiscal year ending December 31, 2039. If not used, these NOLs may be subject to limitation under Internal Revenue Code Section 382 should there be a greater than 50% ownership change as determined under the regulations. The Company plans on undertaking a detailed analysis of any historical and/or current Section 382 ownership changes that may limit the utilization of the net operating loss carryovers. No tax benefit has been reported with respect to these net operating loss carry-forwards in the accompanying consolidated financial statements since the Company believes that the realization of its net deferred tax asset of approximately $1,749,000 was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are fully offset by a valuation allowance of $1,749,000. Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realizability. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon future generation for taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all the information available, Management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. The valuation allowance increased by approximately $1,711,000 and $290,000 for the year ended December 31, 2019 and 2018, respectively. The Company evaluated the provisions of ASC 740 related to the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. ASC 740 prescribes a comprehensive model for how a company should recognize, present, and disclose uncertain positions that the Company has taken or expects to take in its tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return and the net benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits.” A liability is recognized (or amount of net operating loss carry forward or amount of tax refundable is reduced) for unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC 740. If applicable, interest costs related to the unrecognized tax benefits are required to be calculated and would be classified as “Other expenses – Interest expense” in the statement of operations. Penalties would be recognized as a component of “General and administrative.” No material interest or penalties on unpaid tax were recorded during the year ended December 31, 2019 and 2018. As of December 31, 2019 and 2018, no liability for unrecognized tax benefits was required to be reported. The Company does not expect any significant changes in its unrecognized tax benefits in the next year. Components of deferred tax assets are as follows: December 31, December 31, Net deferred tax assets – Non-current: Expected income tax benefit from NOL carry-forwards $ 2,002,427 $ 291,359 Less valuation allowance (2,002,427 ) (291,359 ) Deferred tax assets, net of valuation allowance $ - $ - Income Tax Provision in the Consolidated Statements of Operations A reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes is as follows: For the Year For the Year Federal statutory income tax rate 21.0 % 21.0 % Change in valuation allowance on net operating loss carry-forwards (21.0 )% (21.0 )% Effective income tax rate 0.0 % 0.0 % |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment Information | 19 SEGMENT INFORMATION Operating segments are defined as components of an enterprise about which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision–making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is its Chief Executive Officer. The Company evaluated performance of its operating segments based on revenue and operating profit (loss). Segment information for the year ended December 31, 2019 and 2018 and as of December 31, 2019 and 2018, are as follows: Surge TW ECS Total Year ended December 31, 2019 Revenue $ 9,558,415 $ 5,417,388 $ 10,767,138 $ 25,742,941 Cost of revenue (5,916,947 ) (3,998,410 ) (10,390,096 ) (20,305,453 ) Gross margin 3,641,468 1,418,978 377,042 5,437,488 Costs and expenses (9,199,277 ) (3,597,229 ) (409,010 ) (13,205,516 ) Operating loss (5,557,809 ) (2,178,251 ) (31,968 ) (7,768,028 ) Year ended December 31, 2018 Revenue $ 2,445,468 $ 12,798,687 $ - $ 15,244,155 Cost of revenue (1,864,727 ) (6,705,513 ) - (8,570,240 ) Gross margin 580,741 6,093,174 - 6,673,915 Costs and expenses (2,558,156 ) (5,651,228 ) - (8,209,384 ) Operating loss (1,977,415 ) 441,946 - (1,535,469 ) December 31, 2019 Total assets $ 3,636,624 $ 1,339,577 $ 5,010,172 $ 9,986,373 Total liabilities 10,850,674 3,815,175 20,139 14,685,988 December 31, 2018 Total assets $ 947,550 $ 3,136,768 $ - $ 4,084,318 Total liabilities 2,694,258 3,378,293 - 6,072,551 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | 20 SUBSEQUENT EVENTS Membership Interest Purchase Agreement On January 30, 2020, the Company entered into a Membership Interest Purchase Agreement (the “MIPA”) by and among the Company, ECS Prepaid, LLC, a Missouri limited liability company (“ECS Prepaid”), Dennis R. Winfrey, an individual, and Peggy S. Winfrey, an individual (together, the “Winfreys”), whereby the Company purchased from the Winfreys all of the Membership Interests of ECS Prepaid owned by the Winfreys (the “ECS Prepaid Membership Interests”). In consideration for the ECS Prepaid Membership Interests, the Company issued to Suray Holdings LLC, an entity jointly controlled by the Winfreys, 450,000 shares of Common Stock of the Company. ECS and CSLS Stock Purchase Agreement On January 30, 2020, the Company entered into a Stock Purchase Agreement (the “ECS and CSLS SPA”) by and among the Company, Electronic Check Services, Inc., a Missouri corporation (“ECS”), Central States Legal Services, Inc., a Missouri corporation (“CSLS”), and the Winfreys, whereby the Company purchased from the Winfreys all of the issued and outstanding stock of each of ECS and CSLS (the “ECS and CSLS Stock”). In consideration for the ECS and CSLS Stock, the Company issued 50,000 shares of Common Stock to Suray (the “ECS and CLS Purchase Share Issuance”). January SPAs and Notes On January 30, 2020, the Company entered into Securities Purchase Agreements (the “January 2020 SPAs”), with three (3) accredited investors (the “January 2020 Investors”), pursuant to which the January 2020 Investors purchased from the Company, for an aggregate purchase price of $500,000 (the “January 2020 Purchase Price”), Promissory Notes in the aggregate principal amount of $540,000 (the “January 2020 Notes”). The January 2020 Notes will be repaid according to a schedule of fixed interest and principal payments beginning in August 2020. As additional consideration for the January 2020 Investors loaning the January 2020 Purchase Price to the Company, the Company issued to each of the January 2020 Investors 250,000 shares of Common Stock for a total of 750,000 shares (the “January 2020 Share Issuance”). The January 2020 Notes shall accrue interest at a rate of fourteen percent (14%) per annum and will mature on February 5, 2021. No payments of principal or interest are due through July 2020 (five (5) months following issuance) and then there are seven (7) fixed payments of principal and interest due on a monthly basis until maturity. Settlement Agreement On January 15, 2020, the Company and Carter Matzinger (a member of the Company’s Board of Directors) (collectively, the “Surge Party”), and the former owners of the Company’s wholly-owned subsidiary, DigitizeIQ, LLC (collectively, the “DigitizeIQ Party” and, together with the Surge Party, the “Parties”), entered into a settlement agreement (the “DigitizeIQ Settlement Agreement”) to settle any claims the Parties may have had against each other. The parties made claims against each other with regard to alleged breaches of an Exchange Agreement, a Non-Compete Agreement, and promissory notes issued by the Company to the DigitzeIQ Party (the “DigitzeIQ Promissory Notes”). Pursuant to the DigitizeIQ Settlement Agreement, the Parties, in addition to releasing all claims against each other, agreed to cooperate to ensure the complete transfer and assignment of the domain “digitizeiq.com” to the Company and agreed that the DigitizeIQ Promissory Notes are deemed terminated. As a result of the DigitizeIQ Promissory Notes being terminated, on an unaudited basis, the Company reduced its liabilities by approximately $580,000. February SPAs and Note On February 3 and February 6, 2020, the Company entered into Securities Purchase Agreements (the “February 2020 SPAs”), with two (2) accredited investor (the “February 2020 Investors”), pursuant to which the February 2020 Investors purchased from the Company, for an aggregate purchase price of $400,000 (the “February 2020 Purchase Price”), Promissory Notes in the principal amount of $432,000 (the “February 2020 Notes”). The February 2020 Notes will be repaid according to a schedule of fixed interest and principal payments beginning in August 2020. As additional consideration for the February 2020 Investors loaning the February 2020 Purchase Price to the Company, the Company issued to each of the February 2020 Investors 300,000 shares of Common Stock for a total of 600,000 shares (the “February Share Issuance”). The terms of the February 2020 Notes are substantially the same as the terms of the January 2020 Notes. Anthony Evers Employment Agreement On March 1, 2020, in connection with Mr. Evers’ appointment as Chief Financial Officer of the Company, the Company and Mr. Evers entered into an employment agreement (the “Evers Employment Agreement”), whereby as compensation for his services, the Company shall pay Mr. Evers a salary of $270,000 per year. Pursuant to the terms of the Evers Employment Agreement, the Company will pay the full cost of Mr. Evers’ health insurance premiums. In the event Mr. Evers’ employment with the Company shall terminate, Mr. Evers shall be entitled to a severance payment of a full year of salary and benefits. March SPA and Note On March 5, 2020, the Company entered into a Securities Purchase Agreement (the “March 2020 SPA”), with an accredited investor (the “March 2020 Investor”), pursuant to which the March 2020 Investor purchased from the Company, for an aggregate purchase price of $350,000 (the “March 2020 Purchase Price”), a Promissory Note in the principal amount of $378,000 (the “March 2020 Note”). The March 2020 Note will be repaid according to a schedule of fixed interest and principal payments beginning in September 2020. As additional consideration for the March 2020 Investor loaning the March 2020 Purchase Price to the Company, the Company issued to the March 2020 Investor 400,000 shares of Common Stock of the Company. The March 2020 Note shall accrue interest at a rate of fourteen percent (14%) per annum and will mature on March 5, 2021. No payments of principal or interest are due through August 2020 (five (5) months following issuance) and then there are seven (7) fixed payments of principal and interest due on a monthly basis until maturity. April SPA and Note On April 1, 2020, the Company entered into a Securities Purchase Agreement (the “April 2020 SPA”), with an accredited investor (the “April 2020 Investor”), pursuant to which the April 2020 Investor purchased from the Company, for an aggregate purchase price of $150,000 (the “April 2020 Purchase Price”), a Promissory Note in the principal amount of $162,000 (the “April 2020 Note”). The April 2020 Note will be repaid according to a schedule of fixed interest and principal payments beginning in September 2020. As additional consideration for the April 2020 Investor loaning the April 2020 Purchase Price to the Company, the Company issued to the April 2020 Investor 172,000 shares of Common Stock of the Company. The April 2020 Note shall accrue interest at a rate of fourteen percent (14%) per annum and will mature on March 15, 2021. No payments of principal or interest are due through August 2020 (five (5) months following issuance) and then there are seven (7) fixed payments of principal and interest due on a monthly basis until maturity. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions | Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. |
Risks and Uncertainties | Risks and Uncertainties The Company operates in an industry that is subject to intense competition and change in consumer demand. The Company’s operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure. The Company has experienced, and in the future expects to continue to experience, variability in sales and earnings. The factors expected to contribute to this variability include, among others, (i) the cyclical nature of the industry, (ii) general economic conditions in the various local markets in which the Company competes, including a potential general downturn in the economy, and (iii) the volatility of prices in connection with the Company’s distribution of the product. These factors, among others, make it difficult to project the Company’s operating results on a consistent basis. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially expose the Company to credit risk consist of cash and cash equivalents, and accounts receivable. The Company is exposed to credit risk on its cash and cash equivalents in the event of default by the financial institutions to the extent account balances exceed the amount insured by the FDIC, which is $250,000. Accounts receivables potentially subject the Company to concentrations of credit risk. Company closely monitors extensions of credit. Estimated credit losses have been recorded in the consolidated financial statements. Recent credit losses have been within management’s expectations. One customer accounted for more than 16% of revenues in 2019. No customer accounted for more than 10% of revenues in 2018. |
Method of Accounting | Method of Accounting Investments held in stock of entities other than subsidiaries, namely corporate joint ventures and other non-controlled entities usually are accounted for by one of three methods: (i) the fair value method (addressed in Topic 320), (ii) the equity method (addressed in Topic 323), or (iii) the cost method (addressed in Subtopic 325-20). Pursuant to Paragraph 323-10-05-5, the equity method tends to be most appropriate if an investment enables the investor to influence the operating or financial policies of the investee. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. The Company held no cash equivalents at December 31, 2019 and 2018. The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company generally does not require collateral to support customer receivables. The Company provides an allowance for doubtful accounts based upon a review of the outstanding accounts receivable, historical collection information and existing economic conditions. The Company determines if receivables are past due based on days outstanding, and amounts are written off when determined to be uncollectible by management. As of December 31, 2019 and 2018, the Company had reserves of $774,841 and 17,000, respectively. Concentrations As of December 31, 2019 and 2018, one customer represented approximately 80% and 22% of total gross outstanding receivables, respectively. |
Fair Value Measurements | Fair value measurements The Company adopted the provisions of ASC Topic 820, “ Fair Value Measurements and Disclosures The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of our short and long term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes 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 — quoted prices for similar assets and liabilities in active markets or inputs that are observable. ● Level 3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions). |
Derivative Liabilities | Derivative Liabilities The Company evaluates its options, warrants, convertible notes, or other contracts, if any, to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with paragraph 815-10-05-4 and Section 815-40-25 of the FASB Accounting Standards Codification. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as either an asset or a liability. The change in fair value is recorded in the consolidated statement of operations as other income or expense. Upon conversion, exercise or cancellation of a derivative instrument, the instrument is marked to fair value at the date of conversion, exercise or cancellation and then the related fair value is reclassified to equity. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date. The Company adopted Section 815-40-15 of the FASB Accounting Standards Codification (“ Section 815-40-15 The Company utilizes a binomial option pricing model to compute the fair value of the derivative liability and to mark to market the fair value of the derivative at each balance sheet date. The Company records the change in the fair value of the derivative as other income or expense in the consolidated statements of operations. The Company had derivative liabilities of $190,846 and $51,058 as of December 31, 2019 and 2018, respectively. |
Revenue Recognition | Revenue recognition The Company adopted ASC 606 effective January 1, 2018 using the modified retrospective method which would require a cumulative effect adjustment for initially applying the new revenue standard as an adjustment to the opening balance of retained earnings and the comparative information would not require to be restated and continue to be reported under the accounting standards in effect for those periods. Based on the Company’s analysis the Company did not identify a cumulative effect adjustment for initially applying the new revenue standards. The Company principally generates revenue through providing product, services and licensing revenue. The adoption of ASC 606 represents a change in accounting principle that will more closely align revenue recognition with the delivery of the Company’s services and will provide financial statement readers with enhanced disclosures. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services. To achieve this core principle, the Company applies the following five steps: 1) Identify the contract with a customer A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer. 2) Identify the performance obligations in the contract Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation. 3) Determine the transaction price The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company’s contracts as of December 31, 2019 contained a significant financing component. 4) Allocate the transaction price to performance obligations in the contract If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. For example, a bonus or penalty may be associated with one or more, but not all, distinct services promised in a series of distinct services that forms part of a single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. 5) Recognize revenue when or as the Company satisfies a performance obligation The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer. Disaggregation of Revenue from Contracts with Customers. For the Year Ended December 31, 2019 December 31, 2018 True Wireless, Inc. $ 3,446,003 $ 12,798,687 Surge Blockchain, LLC 4,233,263 1,036,650 Surge Logics, Inc. 7,234,366 374,679 ECS 10,767,138 - Other 62,171 1,034,139 Total revenue $ 25,742,941 $ 15,244,155 True Wireless is licensed to provide wireless services to qualifying low income customers in five states. Revenues are recognized when the services have been provided and the government subsidy has been earned. Surge Blockchain revenues are generated through the SurgePaysPortal multi-purpose software are recognized when the goods and services have been delivered and earned. Surge Logics is a full-service digital advertising agency and revenues are recognized at a period in time once performance obligations are met and services are provided as customer deposits are received in advance. ECS is a leading provider of prepaid wireless load and top-ups, check cashing and wireless SIM activation to convenience stores and bodegas nationwide. |
Income Taxes | Income taxes We use the asset and liability method of accounting for income taxes in accordance with Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes”. Through December 23, 2014, KSIX and BLVD operated as limited liability companies and all income and losses were passed through to the owners. Through October 12, 2015, DIQ operated as a limited liability company and all income and losses were passed through to its owner. Subsequent to the acquisition dates, these limited liability companies were owned by Surge and became subject to income tax. Through April 1, 2018, TW operated as a limited liability company and all income and losses were passed through to the owners. In order to facilitate the merger discussed above, TW converted from a limited liability company to a Subchapter C Corporation. ASC Topic 740-10-30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740-10-40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented. The Company is no longer subject to tax examinations by tax authorities for years prior to 2016. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the current year’s presentation. |
Recent Adopted Accounting Pronouncements | Recent adopted accounting pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, “ Leases (Topic 842) Leases, Topic 842: Targeted Improvement, In May 2017, the FASB issued ASU 2017-09, “ Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting,” In July 2017, the FASB issued ASU 2017-11, “ Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception” Recent announced accounting pronouncements In June 2018, the FASB issued Accounting Standards Update (ASU) No. 2018-07, Compensation – Stock Compensation (Topic718): Improvements to Nonemployee Share-Based Payment Accounting Revenue from Contracts with Customers Revenue Recognition In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement”. Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Disaggregation of Revenue from Contracts with Customers | The following table disaggregates gross revenue by entity for the year ended December 31, 2019 and 2018: For the Year Ended December 31, 2019 December 31, 2018 True Wireless, Inc. $ 3,446,003 $ 12,798,687 Surge Blockchain, LLC 4,233,263 1,036,650 Surge Logics, Inc. 7,234,366 374,679 ECS 10,767,138 - Other 62,171 1,034,139 Total revenue $ 25,742,941 $ 15,244,155 |
Merger Agreement (Tables)
Merger Agreement (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Schedule of Merger Transaction Investment | Following the closing of the merger transaction the Company’s investment in TW consisted of the following: Shares Amount Consideration paid prior to Closing: Cash paid $ 500,000 Common stock issued 12,000,000 1,200,000 Total consideration paid 12,000,000 $ 1,700,000 Consideration paid at Closing: Common stock to be issued at closing (1) 152,555,416 $ 60,683,006 Series A Preferred Stock to be issued at closing 3,000,000 120,000 Note payable due December 31, 2018 3,000,000 Total consideration to be paid $ 63,803,006 Total consideration $ 65,503,006 (1) The common shares issued at closing of the merger transaction had a closing price of approximately $0.40 per share on the date of the transaction. |
Schedule of Unaudited Pro-forma Combined Results of Operations | The following presents the unaudited pro-forma combined results of operations of the Company with the TW Business as if the entities were combined on January 1, 2018. Year Ended December 31, 2018 Revenues, net $ 15,684,032 Net loss $ (1,541,078 ) Net loss per share $ (0.02 ) Weighted average number of shares outstanding 81,566,892 |
Asset Purchase Agreement (Table
Asset Purchase Agreement (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Schedule of Merger Transaction Investment | Following the closing of the merger transaction the Company’s investment in TW consisted of the following: Shares Amount Consideration paid prior to Closing: Cash paid $ 500,000 Common stock issued 12,000,000 1,200,000 Total consideration paid 12,000,000 $ 1,700,000 Consideration paid at Closing: Common stock to be issued at closing (1) 152,555,416 $ 60,683,006 Series A Preferred Stock to be issued at closing 3,000,000 120,000 Note payable due December 31, 2018 3,000,000 Total consideration to be paid $ 63,803,006 Total consideration $ 65,503,006 (1) The common shares issued at closing of the merger transaction had a closing price of approximately $0.40 per share on the date of the transaction. |
Schedule of Unaudited Pro-forma Combined Results of Operations | The following presents the unaudited pro-forma combined results of operations of the Company with the TW Business as if the entities were combined on January 1, 2018. Year Ended December 31, 2018 Revenues, net $ 15,684,032 Net loss $ (1,541,078 ) Net loss per share $ (0.02 ) Weighted average number of shares outstanding 81,566,892 |
ECS Business [Member] | |
Schedule of Merger Transaction Investment | Following the closing of the merger transaction, the Company’s investment in ECS consisted of the following: Purchase Price Convertible note $ 4,000,000 Common stock 1,000,000 Total purchase price $ 5,000,000 Allocation of purchase price Cash $ 210,348 Equipment 63,289 Intangibles 4,903,876 Accounts payable and accrued expenses (177,513 ) Total allocation of purchase price $ 5,000,000 (1) The 3,333,333 restricted shares of the Company’s Common Stock issued at closing of the merger transaction had a closing price of approximately $0.30 per share on the date of the transaction. |
Schedule of Unaudited Pro-forma Combined Results of Operations | The following presents the unaudited pro-forma combined results of operations of the Company with the ECS Business as if the entities were combined on January 1, 2018. Year Ended December 31, 2019 Revenues, net $ 59,064,637 Net loss $ (8,902,134 ) Net loss per share $ (0.09 ) Weighted average number of shares outstanding 96,186,742 Year Ended December 31, 2018 Revenues, net $ 64,260,116 Net loss $ (1,069,810 ) Net loss per share $ (0.01 ) Weighted average number of shares outstanding 81,566,892 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment stated at cost, less accumulated depreciation, consisted of the following: December 31, 2019 December 31, 2018 Computer Equipment and Software $ 309,080 $ 15,263 Furniture and Fixtures 1,416 7,996 Leasehold Improvements 25,193 25,513 335,689 48,771 Less: Accumulated Depreciation (41,073 ) (13,782 ) $ 294,616 $ 30,990 |
Notes Payable and Long-Term D_2
Notes Payable and Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable and Long-Term Debt | As of December 31, 2019 and 2018, notes payable and long-term debt consists of: December 31, 2019 December 31, 2018 Note payable to former officer due in four equal annual installments of $25,313 on April 28 of each year; past due in 2016 and 2017; accruing interest at 6% per annum since April 28, 2016 on the past due portion $ - $ 70,000 Notes payable to seller of DigitizeIQ, LLC due as noted below 1 485,000 485,000 Convertible note payable to River North Equity LLC dated July 13, 2016 with interest at 10% per annum; due April 13, 2017; convertible into Common Stock 2 27,500 27,500 Promissory note payable to a lender dated November 4, 2019; accruing interest at 18% per annum; due November 3, 2020; 100,000 shares of restricted Common Stock granted on execution recorded as a debt discount – net of debt discount of $26,328 3 223,672 - $ 736,172 $ 582,500 1 Notes due seller of DigitizeIQ, LLC ● A second non-interest-bearing promissory note made payable to the seller in the amount of $250,000, which was due on January 12, 2016; (Balance at December 31, 2019 and 2018 - $235,000). ● A third non-interest-bearing promissory note made payable to the seller in the amount of $250,000, which was due on March 12, 2016 and remains unpaid as of December 31, 2019. The Company is renegotiating the terms of the notes. The notes bear interest at 5% per annum when in default (after the due date). The notes were non-interest bearing until due. Accordingly, a debt discount at 5% per annum was calculated for the notes and was amortized to interest expense until the due date of the notes. 2 The Company has determined that the conversion feature embedded in the notes referred to above that contain a potential variable conversion amount constitutes a derivative which has been bifurcated from the note and recorded as a derivative liability, with a corresponding discount recorded to the associated debt. The excess of the derivative value over the face amount of the note, if any, is recorded immediately to interest expense at inception. As noted above, the Company reached an agreement with a debt holder to convert outstanding debt and interest into shares of Common Stock. As a result, the Company wrote-off the existing derivative liability of $34,556. In addition, the Company wrote-off outstanding principal balance on the note totaling $32,547. 3 |
Convertible Promissory Notes (T
Convertible Promissory Notes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Convertible Promissory Notes | As of December 31, 2019 and 2018, convertible promissory notes payable consists of: December 31, 2019 December 31, 2018 Convertible note payable to GBT Technologies Inc. dated September 27, 2019 with no interest; due March 27, 2021; convertible into Common Stock 1 $ 4,000,000 $ - Convertible note payable to Power Up Lending Group Ltd. dated September 18, 2019 with at 12% per annum; due September 18, 2020; convertible into Common Stock 2 233,000 - Convertible note payable to BHP Capital NY dated October 7, 2019 with interest at 18% per annum; due April 7, 2021; convertible into shares of Common Stock 3 135,000 - Convertible note payable to Armada Capital Partners LLC dated October 7, 2019 with interest at 18% per annum; due April 7, 2021; convertible into shares of Common Stock 3 135,000 - Convertible note payable to Jefferson Street Capital LLC dated October 7, 2019 with interest at 18% per annum; due April 7, 2021; convertible into shares of Common Stock 3 135,000 - Less: Debt discount (201,316 ) $ 4,436,684 $ - 1 2 3 On October 7, 2019, the Company entered into a Securities Purchase Agreement (the “SPA”), severally and not jointly, with BHP Capital NY Inc., a New York Corporation (“BHP”), Armada Capital Partners LLC, a Delaware limited liability company (“Armada”), and Jefferson Street Capital LLC, a New Jersey limited liability company (“Jefferson”), (“Buyer” or collectively the “Buyers”). In connection with the SPA, the Company issued three (3) notes, one to each Buyer, and three (3) warrants to purchase the Company’s Common Stock, one to each Buyer. The aggregate purchase price of the notes is $375,000 and the aggregate principal amount of the notes is $405,000. |
Schedule of Future Maturities of Debt | Future maturities of all debt (excluding debt discount discussed above in Notes 10 and 11) are as follows: For the Years Ending December 31, 2020 $ 1,908,370 2021 5,510,000 2022 1,100,440 $ 8,518,810 |
Derivative Liabilities (Tables)
Derivative Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Liability [Abstract] | |
Schedule of Weighted Average Assumptions | During the year ended December 31, 2019, the fair value of the derivative feature was calculated using the following weighted average assumptions: December 31, 2019 Risk-free interest rate 1.59 – 1.87 % Expected life of grants 1 year Expected volatility of underlying stock 88 - 100 % Dividends 0 % |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Schedule of Lease Expense | The components of lease expense were as follows: Year Ended December 31, 2019 Operating leases $ 80,760 Interest on lease liabilities 7,002 Total net lease cost $ 87,762 |
Schedule of Supplemental Information Related to Leases | Supplemental balance sheet information related to leases was as follows: December 31, 2019 Operating leases: Operating lease ROU assets - net $ 210,816 Current operating lease liabilities, included in current liabilities $ 90,944 Noncurrent operating lease liabilities, included in long-term liabilities 119,872 Total operating lease liabilities $ 210,816 Supplemental cash flow and other information related to leases was as follows: Year Ended December 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 55,608 ROU assets obtained in exchange for lease liabilities: Operating leases $ 266,424 Weighted average remaining lease term (in years): Operating leases 2.12 Weighted average discount rate: Operating leases 5.5 % |
Schedule of Future Minimum Payments | Total future minimum payments required under the lease obligations as of December 31, 2019 are as follows: Twelve Months Ending December 31, 2020 (thereafter) $ 99,360 2021 99,160 2022 27,040 Total lease payments $ 222,560 Less: amounts representing interest (11,744 ) Total lease obligations $ 210,816 |
Stockholder's Equity (Tables)
Stockholder's Equity (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Schedule of Assumption Used Value of Options | For the year ended December 31, 2019 and 2018, when computing fair value of share-based payments, the Company has considered the following variables: December 31, 2019 December 31, 2018 Risk-free interest rate 2.50 % 2.03 % Expected life of grants 3 years 1.5 years Expected volatility of underlying stock 168.71 % 173.02 % Dividends 0 % 0 % |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Deferred Tax Assets | Components of deferred tax assets are as follows: December 31, December 31, Net deferred tax assets – Non-current: Expected income tax benefit from NOL carry-forwards $ 2,002,427 $ 291,359 Less valuation allowance (2,002,427 ) (291,359 ) Deferred tax assets, net of valuation allowance $ - $ - |
Schedule of Effective Income Tax Rate | A reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes is as follows: For the Year For the Year Federal statutory income tax rate 21.0 % 21.0 % Change in valuation allowance on net operating loss carry-forwards (21.0 )% (21.0 )% Effective income tax rate 0.0 % 0.0 % |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Operating Segments | The Company evaluated performance of its operating segments based on revenue and operating profit (loss). Segment information for the year ended December 31, 2019 and 2018 and as of December 31, 2019 and 2018, are as follows: Surge TW ECS Total Year ended December 31, 2019 Revenue $ 9,558,415 $ 5,417,388 $ 10,767,138 $ 25,742,941 Cost of revenue (5,916,947 ) (3,998,410 ) (10,390,096 ) (20,305,453 ) Gross margin 3,641,468 1,418,978 377,042 5,437,488 Costs and expenses (9,199,277 ) (3,597,229 ) (409,010 ) (13,205,516 ) Operating loss (5,557,809 ) (2,178,251 ) (31,968 ) (7,768,028 ) Year ended December 31, 2018 Revenue $ 2,445,468 $ 12,798,687 $ - $ 15,244,155 Cost of revenue (1,864,727 ) (6,705,513 ) - (8,570,240 ) Gross margin 580,741 6,093,174 - 6,673,915 Costs and expenses (2,558,156 ) (5,651,228 ) - (8,209,384 ) Operating loss (1,977,415 ) 441,946 - (1,535,469 ) December 31, 2019 Total assets $ 3,636,624 $ 1,339,577 $ 5,010,172 $ 9,986,373 Total liabilities 10,850,674 3,815,175 20,139 14,685,988 December 31, 2018 Total assets $ 947,550 $ 3,136,768 $ - $ 4,084,318 Total liabilities 2,694,258 3,378,293 - 6,072,551 |
Business (Details Narrative)
Business (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Jan. 17, 2019 | |
Surge telecom description | SurgePhone Wireless offers discounted talk, text, and 4G LTE data wireless plans at prices that average 30% - 50% lower than competitors. | ||
Revenue | $ 25,742,941 | $ 15,244,155 | |
Investment | 203,700 | ||
ECS Business [Member] | |||
Revenue | 10,767,138 | ||
Surge Intake Logistics [Member] | |||
Revenue | 7,200,000 | ||
Asset Purchase Agreement [Member] | ECS Business [Member] | |||
Business consideration | 5,000,000 | ||
Asset Purchase Agreement [Member] | GBT Technologies Inc [Member] | Convertible Promissory Note [Member] | |||
Debt conversion, amount | $ 4,000,000 | ||
Debt conversion, shares issued | 3,333,333 | ||
Minimum percentage of beneficial ownership for debt conversion | 4.99% | ||
Centercom Global, S.A. de C.V [Member] | |||
Ownership percentage | 40.00% | ||
Investment | $ 178,508 | ||
Centercom Global, S.A. de C.V [Member] | Anthony N. Nuzzo [Member] | |||
Voting rights, percentage | 10.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash insured by FDIC | $ 250,000 | |
Cash equivalents | ||
Allowance for doubtful accounts | 774,841 | 17,000 |
Derivative liability | $ 190,846 | $ 51,058 |
One Customer [Member] | Sales Revenue [Member] | ||
Concentration of credit risk percentage | 16.00% | |
One Customer [Member] | Accounts Receivable [Member] | ||
Concentration of credit risk percentage | 80.00% | 22.00% |
No Customer [Member] | Sales Revenue [Member] | ||
Concentration of credit risk percentage | 10.00% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Disaggregation of Revenue from Contracts with Customers (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Total revenue | $ 25,742,941 | $ 15,244,155 |
True Wireless Inc [Member] | ||
Total revenue | 3,446,003 | 12,798,687 |
Surge Blockchain LLC [Member] | ||
Total revenue | 4,233,263 | 1,036,650 |
Surge Logics Inc [Member] | ||
Total revenue | 7,234,366 | 374,679 |
ECS [Member] | ||
Total revenue | 10,767,138 | |
Other [Member] | ||
Total revenue | $ 62,171 | $ 1,034,139 |
Liquidity (Details Narrative)
Liquidity (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Net loss | $ (8,447,026) | $ (1,541,078) | |
Cash | 346,000 | ||
Working capital deficit | $ 3,500,000 | ||
ECS Business [Member] | |||
Annualized revenue | $ 46,500,000 |
Merger Agreement (Details Narra
Merger Agreement (Details Narrative) - USD ($) | Apr. 11, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Cash | $ 210,348 | $ 243,768 | |
True Wireless Shareholders [Member] | |||
Voting interest in the company by TW shareholders | 69.50% | ||
Promissory note, face amount included in merger consideration | $ 3,000,000 | ||
Promissory note, interest percentage | 3.00% | ||
Promissory note maturing date | Dec. 31, 2018 | ||
True Wireless Shareholders [Member] | Prior To Closing [Member] | |||
Cash | $ 500,000 | ||
True Wireless Shareholders [Member] | Common Stock [Member] | |||
Shares issued to TW shareholders under merger agreement | 152,555,416 | ||
Voting interest in the company by TW shareholders | 69.50% | ||
True Wireless Shareholders [Member] | Common Stock [Member] | Prior To Closing [Member] | |||
Shares issued to TW shareholders under merger agreement | 12,000,000 | ||
True Wireless Shareholders [Member] | Series A Preferred [Member] | |||
Shares issued to TW shareholders under merger agreement | 3,000,000 |
Merger Agreement - Schedule of
Merger Agreement - Schedule of Merger Transaction Investment (Details) - USD ($) | Apr. 11, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash paid | $ 210,348 | $ 243,768 | ||
True Wireless, Inc., [Member] | ||||
Total consideration paid | $ 1,700,000 | |||
Note payable due December 31, 2018 | 3,000,000 | |||
Total consideration to be paid | 63,803,006 | |||
Total consideration | $ 63,803,006 | |||
True Wireless, Inc., [Member] | Common Stock [Member] | ||||
Common stock issued, shares | [1] | 152,555,416 | ||
Common stock issued, value | [1] | $ 60,683,006 | ||
True Wireless, Inc., [Member] | Series A Preferred [Member] | ||||
Common stock issued, shares | 3,000,000 | |||
Common stock issued, value | $ 120,000 | |||
True Wireless, Inc., [Member] | Prior To Closing [Member] | ||||
Cash paid | $ 500,000 | |||
Common stock issued, shares | 12,000,000 | |||
True Wireless, Inc., [Member] | Prior To Closing [Member] | Common Stock [Member] | ||||
Common stock issued, shares | 12,000,000 | |||
Common stock issued, value | $ 1,200,000 | |||
[1] | The common shares issued at closing of the merger transaction had a closing price of approximately $0.40 per share on the date of the transaction. |
Merger Agreement - Schedule o_2
Merger Agreement - Schedule of Merger Transaction Investment (Details) (Parenthetical) | Apr. 11, 2018$ / shares |
Merger Transaction [Member] | |
Merger transaction per share price | $ 0.40 |
Merger Agreement - Schedule o_3
Merger Agreement - Schedule of Unaudited Pro-forma Combined Results of Operations (Details) - TW Business [Member] | 12 Months Ended |
Dec. 31, 2019USD ($)$ / sharesshares | |
Revenues, net | $ 15,684,032 |
Net loss | $ (1,541,078) |
Net loss per share | $ / shares | $ (0.02) |
Weighted average number of shares outstanding | shares | 81,566,892 |
Asset Purchase Agreement (Detai
Asset Purchase Agreement (Details Narrative) - Asset Purchase Agreement [Member] - USD ($) | Sep. 27, 2019 | Dec. 31, 2019 |
ECS Business [Member] | ||
Business consideration | $ 5,000,000 | |
ECS Business [Member] | Minimum [Member] | ||
Debt conversion, price | $ 0.10 | |
ECS Business [Member] | Maximum [Member] | ||
Debt conversion, price | $ 0.70 | |
Disposal of trading volume, percentage | 7.50% | |
GBT Technologies Inc [Member] | ||
Debt instrument, term | 18 months | |
GBT Technologies Inc [Member] | Convertible Promissory Note [Member] | ||
Debt conversion, amount | $ 4,000,000 | |
Debt conversion, shares issued | 3,333,333 | |
Minimum percentage of beneficial ownership for debt conversion | 4.99% | |
GBT Technologies Inc [Member] | Convertible Promissory Note [Member] | Minimum [Member] | ||
Debt conversion, price | $ 0.10 | |
GBT Technologies Inc [Member] | Convertible Promissory Note [Member] | Maximum [Member] | ||
Debt conversion, price | $ 0.70 |
Asset Purchase Agreement - Sche
Asset Purchase Agreement - Schedule of Merger Transaction Investment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Purchase Price: Convertible note | $ 4,000,000 | |
ECS Business [Member] | ||
Purchase Price: Convertible note | 4,000,000 | |
Purchase Price: Common stock | 1,000,000 | |
Total purchase price | 5,000,000 | |
Allocation of purchase price: Cash | 210,348 | |
Allocation of purchase price: Equipment | 63,289 | |
Allocation of purchase price: Intangibles | 4,903,876 | |
Allocation of purchase price: Accounts payable and accrued expenses | (177,513) | |
Total allocation of purchase price | $ 5,000,000 |
Asset Purchase Agreement - Sc_2
Asset Purchase Agreement - Schedule of Merger Transaction Investment (Details) (Parenthetical) - ECS Business [Member] - Restricted Stock [Member] | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Debt conversion, shares issued | shares | 3,333,333 |
Merger transaction per share price | $ / shares | $ 0.30 |
Asset Purchase Agreement - Sc_3
Asset Purchase Agreement - Schedule of Unaudited Pro-Forma Combined Results of Operations Company (Details) - ECS Business [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Revenues, net | $ 59,064,637 | $ 64,260,116 |
Net income (loss) | $ (8,902,134) | $ (1,069,810) |
Net income (loss) per share | $ (0.09) | $ (0.01) |
Weighted average number of shares outstanding | 96,186,742 | 81,566,892 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 27,293 | $ 112,990 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Abstract] | ||
Computer Equipment and Software | $ 309,080 | $ 15,263 |
Furniture and Fixtures | 1,416 | 7,996 |
Leasehold Improvements | 25,193 | 25,513 |
Property and equipment, gross | 335,689 | 48,771 |
Less: Accumulated Depreciation | (38,656) | (13,782) |
Property and equipment, net | $ 294,616 | $ 30,990 |
Cryptocurrency Asset Sale (Deta
Cryptocurrency Asset Sale (Details Narrative) | 1 Months Ended |
Dec. 31, 2018USD ($) | |
Debt Disclosure [Abstract] | |
Proceeds of sale of cryptocurrency assets | $ 891,192 |
Payments of assets | 523,743 |
Accounts payable | 40,235 |
Outstanding debt and accrued interest | 808,600 |
Gain on sale of assets | $ 273,453 |
Credit Card Liability (Details
Credit Card Liability (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Debt Disclosure [Abstract] | ||
Trade obligations | $ 1,191,424 | $ 55,185 |
Credit card liability | $ 449,158 | $ 394,840 |
Notes Payable - Related Party (
Notes Payable - Related Party (Details Narrative) - SMDMM Funding, LLC [Member] - USD ($) | 1 Months Ended | 12 Months Ended | |
Aug. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Promissory note of annual payments | $ 80,000 | ||
Promissory note, interest percentage | 6.00% | 15.00% | 6.00% |
Debt due date | Aug. 15, 2022 | Nov. 21, 2022 | Dec. 27, 2021 |
Due advances on notes payable | $ 425,000 | ||
Payments of principal amount | 674,000 | ||
Payments of accrued interest | 25,955 | ||
Debt outstanding balance | 2,205,440 | $ 680,000 | |
Accrued interest | 64,741 | 10,718 | |
Promissory Note Two [Member] | |||
Due advances on notes payable | 217,000 | ||
Maximum [Member] | |||
Promissory note of annual payments | $ 217,000 | 88,300 | $ 1,000,000 |
Due advances on notes payable | $ 883,000 |
Notes Payable and Long-Term D_3
Notes Payable and Long-Term Debt (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Debt discount, amount | $ 26,328 | |
Derivative liability | 34,556 | |
Wrote-off outstanding principal | 32,547 | |
Amortization of debt discount | 68,764 | |
River North Equity, LLC [Member] | ||
Debt discount, amount | $ 23,190 | |
Notes [Member] | ||
Debt instrument, interest per annum | 5.00% | |
Debt discount, percentage | 5.00% | |
Promissory Note [Member] | ||
Debt discount, amount | $ 31,200 | |
Restricted shares of common stock granted | 100,000 | |
Amortization of debt discount | $ 4,872 | |
Second Non Interest Bearing Promissory Note Payable [Member] | ||
Payable in equal monthly installments | 235,000 | $ 235,000 |
Second Non Interest Bearing Promissory Note Payable [Member] | Seller [Member] | ||
Payable in equal monthly installments | $ 250,000 | |
Debt instrument, maturity date | Jan. 12, 2016 | |
Third Non Interest Bearing Promissory Note Payable [Member] | Seller [Member] | ||
Payable in equal monthly installments | $ 250,000 | |
Debt instrument, maturity date | Mar. 12, 2016 |
Notes Payable and Long-Term D_4
Notes Payable and Long-Term Debt - Schedule of Notes Payable and Long-Term Debt (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 | |
Long term debt gross | $ 736,172 | $ 582,500 | |
Notes Payable To Former Officer [Member] | |||
Long term debt gross | 70,000 | ||
Notes Payable To Seller of DigitizeIQ, LLC [Member] | |||
Long term debt gross | [1] | 485,000 | 485,000 |
Convertible Note Payable To River North Equity LLC [Member] | |||
Long term debt gross | [2] | 27,500 | 27,500 |
Promissory Note Payable to Lender [Member] | |||
Long term debt gross | [3] | $ 223,672 | |
[1] | Notes due seller of DigitizeIQ, LLC includes a series of notes as follows: A second non-interest-bearing promissory note made payable to the seller in the amount of $250,000, which was due on January 12, 2016; (Balance at December 31, 2019 and 2018 - $235,000). A third non-interest-bearing promissory note made payable to the seller in the amount of $250,000, which was due on March 12, 2016 and remains unpaid as of December 31, 2019. | ||
[2] | Convertible note payable to River North Equity, LLC ("RNE") - The Company evaluated the embedded conversion for derivative treatment and recorded an initial derivative liability and debt discount of $23,190. The debt discount is fully amortized. In February 2020, the Company and RNE settled the outstanding debt. The Company has determined that the conversion feature embedded in the notes referred to above that contain a potential variable conversion amount constitutes a derivative which has been bifurcated from the note and recorded as a derivative liability, with a corresponding discount recorded to the associated debt. The excess of the derivative value over the face amount of the note, if any, is recorded immediately to interest expense at inception. As noted above, the Company reached an agreement with a debt holder to convert outstanding debt and interest into shares of Common Stock. As a result, the Company wrote-off the existing derivative liability of $34,556. In addition, the Company wrote-off outstanding principal balance on the note totaling $32,547. | ||
[3] | Promissory note - The Company evaluated the 100,000 restricted shares of the Company's Common Stock granted with the note and recorded a debt discount of $31,200. The debt discount is amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt, using the effective interest method. The amortization of debt discount is included as a component of interest expense in the consolidated statements of operations. There was unamortized debt discount of $26,328 as of December 31, 2019. During the year ended December 31, 2019, the Company recorded amortization of debt discount totaling $4,872. |
Notes Payable and Long-Term D_5
Notes Payable and Long-Term Debt - Schedule of Notes Payable and Long-Term Debt (Details) (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Debt discount, amount | $ 26,328 | |
Notes Payable To Former Officer [Member] | ||
Payable in equal monthly installments | $ 25,313 | $ 25,313 |
Debt instrument, interest per annum | 6.00% | 6.00% |
Debt instrument, maturity date | Apr. 28, 2016 | Apr. 28, 2016 |
Convertible Note Payable To River North Equity LLC [Member] | ||
Debt instrument, interest per annum | 10.00% | 10.00% |
Debt instrument, maturity date | Apr. 13, 2017 | Apr. 13, 2017 |
Promissory Note Payable to Lender [Member] | ||
Debt instrument, interest per annum | 18.00% | 18.00% |
Debt instrument, maturity date | Nov. 3, 2020 | Nov. 3, 2020 |
Restricted shares of common stock granted | 100,000 | 100,000 |
Debt discount, amount | $ 26,328 | $ 26,328 |
Convertible Promissory Notes (D
Convertible Promissory Notes (Details Narrative) | Mar. 06, 2020USD ($) | Oct. 07, 2019USD ($)Integer$ / sharesshares | Dec. 31, 2019USD ($)Integer$ / sharesshares | Dec. 31, 2018USD ($) |
Debt discount, amount | $ 26,328 | |||
Amortization of debt discount related to warrants | 68,764 | |||
Convertible Promissory Note [Member] | ||||
Debt discount, amount | 201,316 | |||
Amortization of debt discount related to warrants | 13,782 | |||
Asset Purchase Agreement [Member] | GBT Technologies Inc [Member] | Convertible Promissory Note [Member] | ||||
Debt conversion, amount | $ 4,000,000 | |||
Debt conversion, shares issued | shares | 3,333,333 | |||
Asset Purchase Agreement [Member] | GBT Technologies Inc [Member] | Convertible Promissory Note [Member] | Minimum [Member] | ||||
Debt conversion, price | $ / shares | $ 0.10 | |||
Asset Purchase Agreement [Member] | GBT Technologies Inc [Member] | Convertible Promissory Note [Member] | Maximum [Member] | ||||
Debt conversion, price | $ / shares | $ 0.70 | |||
Asset Purchase Agreement [Member] | Power Up Lending Group Ltd. [Member] | Convertible Promissory Note [Member] | ||||
Debt instrument, average price | 65.00% | |||
Trading days | Integer | 20 | |||
Asset Purchase Agreement [Member] | Power Up Lending Group Ltd. [Member] | Convertible Promissory Note [Member] | Subsequent Event [Member] | ||||
Prepayment amount | $ 332,027 | |||
Debt instrument, maturity date | Sep. 18, 2020 | |||
Securities Purchase Agreement [Member] | Buyers [Member] | ||||
Aggregate purchase price | $ 375,000 | |||
Promissory note, face amount | $ 405,000 | |||
Securities Purchase Agreement [Member] | Convertible Promissory Note [Member] | Buyers [Member] | ||||
Debt conversion, price | $ / shares | $ 0.75 | |||
Debt instrument, average price | 25.00% | |||
Trading days | Integer | 10 | |||
Debt instrument, maturity date | Apr. 7, 2021 | |||
Aggregate purchase price | $ 125,000 | |||
Promissory note, face amount | $ 135,000 | |||
Warrant to purchase | shares | 125,000 | |||
Debt instrument, interest per annum | 8.00% | |||
Debt instrument, default interest rate | 18.00% | |||
Debt instrument, description | The warrants permit the Buyers to exercise the purchase rights at any time on or after October 7, 2019 through October 7, 2022. | |||
Warrant exercise price per share | $ / shares | $ 0.80 |
Convertible Promissory Notes -
Convertible Promissory Notes - Schedule of Convertible Promissory Notes (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 | ||
Convertible note payable | $ 4,436,684 | |||
Less: Debt discount | (26,328) | |||
Convertible Notes Payable [Member] | ||||
Convertible note payable | 4,436,684 | |||
Less: Debt discount | (201,316) | |||
Notes Payable To GBT Technologies Inc [Member] | ||||
Convertible note payable | 4,000,000 | [1] | ||
Notes Payable To Power Up Lending Group Ltd [Member] | ||||
Convertible note payable | [2] | 233,000 | ||
Notes Payable To BHP Capital NY [Member] | ||||
Convertible note payable | [3] | 135,000 | ||
Notes Payable To Armada Capital Partners LLC [Member] | ||||
Convertible note payable | [3] | 135,000 | ||
Notes Payable To Jefferson Street Capital LLC [Member] | ||||
Convertible note payable | [3] | $ 135,000 | ||
[1] | As discussed above in Note 5, the Purchase Agreement provides that the consideration is to be paid by the Company through the issuance of a convertible promissory note in the amount of $4,000,000 to GBT, and through the issuance of three million three hundred thirty-three thousand three hundred thirty-three restricted shares of the Company's Common Stock. The conversion price of the note shall equal the volume weighted average price of the Company's Common Stock on the trading market which the Common Stock is then trading over the previous twenty (20) days prior to the conversion date, provided that the conversion price shall never be lower than $0.10 or higher than $0.70. The note provides that the Company retains the right to prepay all or any portion of the principal without any prepayment penalty. | |||
[2] | The Company executed a convertible note with Power Up Lending Group ("PowerUp") on September 18, 2019 and identified certain features embedded in the conversion feature of the note requiring the Company to classify it as a derivative liability. The conversion price of the note shall equal 65% the average price of the two lowest trading prices of the Company's Common Stock on the trading market which the Common Stock is then trading over the previous twenty (20) days prior to the conversion date (See Note 12 below). On March 6, 2020, Surge Holdings, Inc. the Company prepaid $332,027 in cash to fully satisfy the note which would have matured on September 18, 2020. No shares of the Company's Common Stock were issued or conveyed to PowerUp as a result of the prepayment. | |||
[3] | On October 7, 2019, the Company entered into a Securities Purchase Agreement (the "SPA"), severally and not jointly, with BHP Capital NY Inc., a New York Corporation ("BHP"), Armada Capital Partners LLC, a Delaware limited liability company ("Armada"), and Jefferson Street Capital LLC, a New Jersey limited liability company ("Jefferson"), ("Buyer" or collectively the "Buyers"). In connection with the SPA, the Company issued three (3) notes, one to each Buyer, and three (3) warrants to purchase the Company's Common Stock, one to each Buyer. The aggregate purchase price of the notes is $375,000 and the aggregate principal amount of the notes is $405,000. |
Convertible Promissory Notes _2
Convertible Promissory Notes - Schedule of Convertible Promissory Notes (Details) (Parenthetical) | Oct. 07, 2019 | Sep. 27, 2019 | Sep. 18, 2019 |
Notes Payable To GBT Technologies Inc [Member] | |||
Debt instrument, interest per annum | |||
Debt instrument, maturity date | Mar. 27, 2021 | ||
Notes Payable To Power Up Lending Group Ltd [Member] | |||
Debt instrument, interest per annum | 12.00% | ||
Debt instrument, maturity date | Sep. 18, 2020 | ||
Notes Payable To BHP Capital NY [Member] | |||
Debt instrument, interest per annum | 18.00% | ||
Debt instrument, maturity date | Apr. 7, 2021 | ||
Notes Payable To Armada Capital Partners LLC [Member] | |||
Debt instrument, interest per annum | 18.00% | ||
Debt instrument, maturity date | Apr. 7, 2021 | ||
Notes Payable To Jefferson Street Capital LLC [Member] | |||
Debt instrument, interest per annum | 18.00% | ||
Debt instrument, maturity date | Apr. 7, 2021 |
Convertible Promissory Notes _3
Convertible Promissory Notes - Schedule of Future Maturities of Debt (Details) | Dec. 31, 2019USD ($) |
Debt Disclosure [Abstract] | |
2020 | $ 1,908,370 |
2021 | 5,510,000 |
2022 | 1,100,440 |
Future maturities of debt (excluding debt discount) | $ 8,518,810 |
Derivative Liabilities (Details
Derivative Liabilities (Details Narrative) - USD ($) | Sep. 18, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Gross proceeds from convertible note | $ 638,000 | ||
Derivative liability | 190,846 | 51,058 | |
Change in fair value of derivative liability | $ 4,013 | $ (4,105) | |
Notes Payable To Power Up Lending Group Ltd [Member] | |||
Gross proceeds from convertible note | $ 233,000 |
Derivative Liabilities - Schedu
Derivative Liabilities - Schedule of Weighted Average Assumptions (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Risk Free Interest Rate [Member] | Minimum [Member] | |
Fair value assumptions, measurement input, percentages | 1.59 |
Risk Free Interest Rate [Member] | Maximum [Member] | |
Fair value assumptions, measurement input, percentages | 1.87 |
Expected life of Grants [Member] | |
Fair value assumptions, measurement input, term | 1 year |
Expected volatility of underlying stock [Member] | Minimum [Member] | |
Fair value assumptions, measurement input, percentages | 88 |
Expected volatility of underlying stock [Member] | Maximum [Member] | |
Fair value assumptions, measurement input, percentages | 100 |
Dividends [Member] | |
Fair value assumptions, measurement input, percentages | 0 |
Line of Credit (Details Narrati
Line of Credit (Details Narrative) - USD ($) | Dec. 21, 2018 | Jan. 25, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||||
Line of credit, obtained value | $ 500,000 | |||
Line of credit, interest rate | 6.00% | 5.00% | ||
Line of credit, increased value | $ 1,000,000 | |||
Line of credit advances | $ 1,130,000 | $ 1,441,029 | ||
Line of credit repayments | 217,130 | 1,441,029 | ||
Line of credit, outstanding | $ 912,870 | $ 0 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | Nov. 01, 2019 | Mar. 01, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Leases [Abstract] | ||||
Operating lease, term | 2 years | 3 years | ||
Monthly payments of rent | $ 1,600 | $ 6,680 | ||
Lease obligations | $ 87,762 | $ 30,480 |
Leases - Schedule of Lease Expe
Leases - Schedule of Lease Expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Leases [Abstract] | ||
Operating leases | $ 80,760 | |
Interest on lease liabilities | 7,002 | |
Total net lease cost | $ 87,762 | $ 30,480 |
Leases - Schedule of Supplement
Leases - Schedule of Supplemental Information Related to Leases (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Leases [Abstract] | ||
Operating lease ROU assets - net | $ 210,816 | |
Current operating lease liabilities, included in current liabilities | 90,944 | |
Noncurrent operating lease liabilities, included in long-term liabilities | 119,872 | |
Total operating lease liabilities | 210,816 | |
Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases | 55,608 | |
ROU assets obtained in exchange for lease liabilities: Operating leases | $ 266,424 | |
Weighted average remaining lease term (in years): Operating leases | 2 years 1 month 13 days | |
Weighted average discount rate: Operating leases | 5.50% |
Leases - Schedule of Future Min
Leases - Schedule of Future Minimum Payments (Details) | Dec. 31, 2019USD ($) |
Leases [Abstract] | |
2020 | $ 99,360 |
2021 | 99,160 |
2022 | 27,040 |
Total lease payments | 222,560 |
Less: amounts representing interest | (11,744) |
Total lease obligations | $ 210,816 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Nov. 04, 2019 | Mar. 27, 2019 | Feb. 15, 2019 | Jan. 17, 2019 | Jun. 29, 2018 | Jun. 22, 2018 | Apr. 25, 2018 | Apr. 11, 2018 | Apr. 11, 2018 | Mar. 08, 2018 | Oct. 31, 2019 | Aug. 31, 2018 | Jul. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Voting rights | As noted above, each share of Series C Preferred Stock is convertible into 250 shares of Company Common Stock (the same conversion rate utilized in the exchange transaction), but is only convertible on the first to occur of the following events: (i) The Volume Weighted Average Price ("VWAP") of the Company's Common Stock during any then consecutive trading days is at least $2.00 per share; or (ii) June 30, 2019. | ||||||||||||||
Number of shares issued for services rendered | 48,000 | ||||||||||||||
Number of shares on settlement of debt | 2,175,000 | ||||||||||||||
Settlement of debt, value | $ 435,000 | ||||||||||||||
Loss on settlement | $ (14,667) | ||||||||||||||
Number of common stock sold | 9,172,855 | ||||||||||||||
Proceeds from common stock and warrants | $ 3,210,500 | ||||||||||||||
Stock-based compensation expense | $ 295,900 | $ 146,000 | |||||||||||||
Common stock, shares issued | 102,193,579 | 88,046,391 | |||||||||||||
Common stock, shares outstanding | 102,193,579 | 88,046,391 | |||||||||||||
Warrants [Member] | |||||||||||||||
Warrants to purchase shares | 4,462,135 | ||||||||||||||
Warrants exercise price | $ 0.75 | ||||||||||||||
Stock-based compensation expense | $ 33,700 | $ 11,800 | |||||||||||||
Unrecognized compensation expense | $ 0 | ||||||||||||||
Consultants [Member] | Restricted Stock [Member] | |||||||||||||||
Number of shares issued for services rendered | 48,000 | 96,000 | |||||||||||||
True Wireless Shareholders [Member] | |||||||||||||||
Equity ownership percentage | 69.50% | 69.50% | |||||||||||||
Consultant [Member] | |||||||||||||||
Number of shares issued for services rendered | 875,000 | 70,000 | |||||||||||||
Share issued price per shares | $ 0.31 | ||||||||||||||
Loss on settlement | $ 507,500 | ||||||||||||||
Consultant [Member] | Warrants [Member] | |||||||||||||||
Warrants to purchase shares | 100,000 | 50,000 | |||||||||||||
Warrants exercise price | $ 3 | $ 0.41 | |||||||||||||
Warrant term | 3 years | 5 years | |||||||||||||
Warrant vesting period | 1 year | ||||||||||||||
Fair value of warrant | $ 30,782 | $ 14,700 | |||||||||||||
Number of warrant upon achievement of certain milestones | 150,000 | ||||||||||||||
Number of warrants issued upon execution | 250,000 | ||||||||||||||
Lender [Member] | Debt Agreement [Member] | |||||||||||||||
Number of common stock issued | 100,000 | ||||||||||||||
Share issued price per shares | $ 0.31 | ||||||||||||||
True Wireless, LLC [Member] | Two Consultants [Member] | |||||||||||||||
Number of common stock issued | 480,000 | ||||||||||||||
Share issued price per shares | $ 0.27 | ||||||||||||||
ECS Business [Member] | Asset Purchase Agreement [Member] | |||||||||||||||
Business consideration | $ 5,000,000 | ||||||||||||||
ECS Business [Member] | Restricted Stock [Member] | |||||||||||||||
Debt converted into shares | 3,333,333 | ||||||||||||||
GBT Technologies Inc [Member] | Asset Purchase Agreement [Member] | Convertible Promissory Note [Member] | |||||||||||||||
Conversion of note payable | $ 4,000,000 | ||||||||||||||
Debt converted into shares | 3,333,333 | ||||||||||||||
Series A Preferred [Member] | |||||||||||||||
Preferred stock, shares authorized | 100,000,000 | 100,000,000 | |||||||||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | |||||||||||||
Preferred shares outstanding to modify shares description | Protective provisions require approval of 75% of the Series "A" Preferred Shares outstanding to modify the provisions or increase the authorized Series "A" Preferred Shares | ||||||||||||||
Number of preferred shares issued | 3,000,000 | ||||||||||||||
Recapitalization in reverse merger, shares | 10,000,000 | 10,000,000 | |||||||||||||
Preferred stock, shares issued | 13,000,000 | 13,000,000 | |||||||||||||
Preferred stock, shares outstanding | 13,000,000 | 13,000,000 | |||||||||||||
Number of shares issued for services rendered | |||||||||||||||
Number of common stock issued | |||||||||||||||
Number of shares on settlement of debt | |||||||||||||||
Series A Preferred [Member] | True Wireless Shareholders [Member] | |||||||||||||||
Stock issued under merger agreement | 3,000,000 | ||||||||||||||
Series C Convertible Preferred Stock [Member] | |||||||||||||||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 | 1,000,000 | ||||||||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||||||
Preferred shares outstanding to modify shares description | Protective provisions require approval of 75% of the Series "C" Preferred Shares outstanding to modify the provisions or increase the authorized Series "C" Preferred Shares; and | ||||||||||||||
Preferred stock, shares issued | 721,598 | 643,366 | |||||||||||||
Preferred stock, shares outstanding | 721,598 | 643,366 | |||||||||||||
Preferred stock, original issue price | $ 100 | ||||||||||||||
Voting rights | Voting rights equal to 250 shares of common stock for each share of Series "C" Preferred Stock | ||||||||||||||
Issuance of series c preferred stock in exchange for common stock, shares | 594,966 | ||||||||||||||
Series C Convertible Preferred Stock [Member] | Carter Matzinger [Member] | |||||||||||||||
Conversion of note payable | $ 389,502 | $ 389,502 | |||||||||||||
Debt converted into shares | 6,232 | 6,232 | |||||||||||||
Series C Convertible Preferred Stock [Member] | CenterCom Global [Member] | |||||||||||||||
Equity ownership percentage | 40.00% | ||||||||||||||
Number of stock issued for acquisition | 72,000 | ||||||||||||||
Preferred stock converted into common stock | 18,000,000 | ||||||||||||||
Payments to acquire investment | $ 178,508 | ||||||||||||||
Common Stock [Member] | |||||||||||||||
Issuance of series c preferred stock in exchange for common stock, shares | 148,741,531 | ||||||||||||||
Number of common stock issued | 1,156,587 | ||||||||||||||
Share issued price per shares | $ 0.20 | ||||||||||||||
Common Stock [Member] | True Wireless Shareholders [Member] | |||||||||||||||
Equity ownership percentage | 69.50% | 69.50% | |||||||||||||
Stock issued under merger agreement | 152,555,416 | ||||||||||||||
Series C Preferred [Member] | |||||||||||||||
Issuance of series c preferred stock for conversion of promissory note and accrued interest, shares | 48,400 | ||||||||||||||
Conversion of note payable | $ 3,000,000 | ||||||||||||||
Accrued interest | $ 24,952 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Assumption Used Value of Options (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Equity [Abstract] | ||
Risk-free interest rate | 2.50% | 2.03% |
Expected life of grants | 3 years | 1 year 6 months |
Expected volatility of underlying stock | 168.71% | 173.02% |
Dividends | 0.00% | 0.00% |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | Feb. 15, 2019 | Jan. 17, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Advance from related party | $ 389,502 | |||
Axia [Member] | ||||
Management service fees | 1,020,000 | 1,020,000 | ||
Trade payables | 666,112 | 66,535 | ||
321 Communications [Member] | ||||
Trade payables | 140,923 | 52,161 | ||
Communication expenses | 704,683 | 1,016,393 | ||
CenterCom Global [Member] | ||||
Trade payables | 282,159 | 175,000 | ||
Communication expenses | 2,384,780 | $ 2,129,546 | ||
Series C Convertible Preferred Stock [Member] | CenterCom Global [Member] | ||||
Equity ownership percentage | 40.00% | |||
Payments to acquire investment | $ 178,508 | |||
Series C Convertible Preferred Stock [Member] | Carter Matzinger [Member] | ||||
Debt converted into shares, value | $ 389,502 | $ 389,502 | ||
Debt converted into shares | 6,232 | 6,232 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | 1 Months Ended | ||||
Nov. 30, 2018 | Oct. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Nov. 01, 2013 | |
Proposed monetary forfeiture | $ 5,501,285 | ||||
Initial placement costs and expenses | $ 190,000 | ||||
Value funded for fees | $ 10,000 | ||||
Distribution of profit net, percentage | 100.00% | ||||
Distribution of profit, description | The sharing percentage will be 100% of the net distribution profit until the advances have been covered. | ||||
Note receivable, outstanding | $ 14,959 | $ 190,000 | |||
West Publishing Corporation [Member] | |||||
Repayment of debt | $ 125,000 | ||||
Note payable interest rate per annum | 7.00% | ||||
Sales Revenue [Member] | Minimum [Member] | |||||
Revenues, per location | $ 1,500 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | Dec. 22, 2017 | Dec. 31, 2019 | Dec. 31, 2018 |
Income Tax Disclosure [Abstract] | |||
Income tax examination description | On December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Reform Bill") was signed into law. Prior to the enactment of the Tax Reform Bill, the Company measured its deferred tax assets at the federal rate of 34%. The Tax Reform Bill reduced the federal tax rate to 21% resulting in the re-measurement of the deferred tax asset as of December 31, 2017. Beginning January 1, 2018, the lower tax rate of 21% will be used to calculate the amount of any federal income tax due on taxable income earned during 2018. | ||
Federal income tax rate | 34.00% | 21.00% | 21.00% |
Net operating loss carry-forwards | $ 8,300,000 | ||
Operating loss carryforwards, limitations on use | The Company has available for U.S. federal income tax purposes a net operating loss ("NOL") carry-forwards of approximately $8.3 million that may be used to offset future taxable income through the fiscal year ending December 31, 2039. If not used, these NOLs may be subject to limitation under Internal Revenue Code Section 382 should there be a greater than 50% ownership change as determined under the regulations. | ||
Deferred tax assets | $ 1,749,000 | ||
Deferred tax assets valuation allowance | 1,749,000 | ||
Increase in valuation alllowance | 1,711,000 | $ 290,000 | |
Interest or penalties | |||
Unrecognized tax benefits |
Income Taxes - Schedule of Comp
Income Taxes - Schedule of Components of Deferred Tax Assets (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Income Tax Disclosure [Abstract] | ||
Expected income tax benefit from NOL carry-forwards | $ 2,002,427 | $ 291,359 |
Less valuation allowance | (2,002,427) | (291,359) |
Deferred tax assets, net of valuation allowance |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Income Tax Rate (Details) | Dec. 22, 2017 | Dec. 31, 2019 | Dec. 31, 2018 |
Income Tax Disclosure [Abstract] | |||
Federal statutory income tax rate | 34.00% | 21.00% | 21.00% |
Change in valuation allowance on net operating loss carry-forwards | (21.00%) | (21.00%) | |
Effective income tax rate | 0.00% | 0.00% |
Segment Information - Schedule
Segment Information - Schedule of Operating Segments (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue | $ 25,742,941 | $ 15,244,155 |
Cost of revenue | (20,305,453) | (8,570,240) |
Gross margin | 5,437,488 | 6,673,915 |
Costs and expenses | (13,205,516) | (8,209,384) |
Operating loss | (7,768,028) | (1,535,469) |
Total assets | 9,986,373 | 4,084,318 |
Total liabilities | 14,685,988 | 6,072,551 |
Surge [Member] | ||
Revenue | 9,558,415 | 2,445,468 |
Cost of revenue | (5,916,947) | (1,864,727) |
Gross margin | 3,641,468 | 580,741 |
Costs and expenses | (9,199,277) | (2,558,156) |
Operating loss | (5,557,809) | (1,977,415) |
Total assets | 3,636,624 | 947,550 |
Total liabilities | 10,828,674 | 2,694,258 |
True Wireless, Inc., [Member] | ||
Revenue | 5,417,388 | 12,798,687 |
Cost of revenue | (3,998,410) | (6,705,513) |
Gross margin | 1,418,978 | 6,093,174 |
Costs and expenses | (3,597,229) | (5,651,228) |
Operating loss | (2,178,251) | 441,946 |
Total assets | 1,339,577 | 3,136,768 |
Total liabilities | 3,815,175 | 3,378,293 |
ECS Business [Member] | ||
Revenue | 10,767,138 | |
Cost of revenue | (10,390,096) | |
Gross margin | 377,042 | |
Costs and expenses | (409,010) | |
Operating loss | (31,968) | |
Total assets | 5,010,172 | |
Total liabilities | $ 20,139 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] - USD ($) | Apr. 01, 2020 | Mar. 05, 2020 | Mar. 01, 2020 | Feb. 06, 2020 | Feb. 06, 2020 | Feb. 03, 2020 | Jan. 30, 2020 | Jan. 15, 2020 |
Membership Interest Purchase Agreement [Member] | Suray Holdings LLC [Member] | Winfreys [Member] | ||||||||
Number of common stock issued | 450,000 | |||||||
ECS and CSLS Stock Purchase Agreement [Member] | Suray Holdings LLC [Member] | ||||||||
Number of common stock issued | 50,000 | |||||||
Securities Purchase Agreements [Member] | Three Accredited Investors [Member] | ||||||||
Number of common stock issued | 750,000 | |||||||
Aggregate purchase price | $ 500,000 | |||||||
Promissory note, face amount | $ 540,000 | |||||||
Debt instrument, interest per annum | 14.00% | |||||||
Debt instrument, maturity date | Feb. 5, 2021 | |||||||
Debt instrument, description | The January 2020 Notes shall accrue interest at a rate of fourteen percent (14%) per annum and will mature on February 5, 2021. No payments of principal or interest are due through July 2020 (five (5) months following issuance) and then there are seven (7) fixed payments of principal and interest due on a monthly basis until maturity. | |||||||
Securities Purchase Agreements [Member] | Accredited Investors One [Member] | ||||||||
Number of common stock issued | 300,000 | 250,000 | ||||||
Securities Purchase Agreements [Member] | Accredited Investors Two [Member] | ||||||||
Number of common stock issued | 300,000 | 250,000 | ||||||
Securities Purchase Agreements [Member] | Accredited Investors Three [Member] | ||||||||
Number of common stock issued | 250,000 | |||||||
Securities Purchase Agreements [Member] | Two Accredited Investors [Member] | ||||||||
Number of common stock issued | 600,000 | |||||||
Aggregate purchase price | $ 400,000 | |||||||
Promissory note, face amount | $ 432,000 | $ 432,000 | ||||||
Securities Purchase Agreements [Member] | Accredited Investors [Member] | ||||||||
Number of common stock issued | 172,000 | 400,000 | ||||||
Aggregate purchase price | $ 150,000 | $ 350,000 | ||||||
Promissory note, face amount | $ 162,000 | $ 378,000 | ||||||
Debt instrument, interest per annum | 14.00% | 14.00% | ||||||
Debt instrument, maturity date | Mar. 15, 2021 | Mar. 5, 2021 | ||||||
Debt instrument, description | The April 2020 Note shall accrue interest at a rate of fourteen percent (14%) per annum and will mature on March 15, 2021. No payments of principal or interest are due through August 2020 (five (5) months following issuance) and then there are seven (7) fixed payments of principal and interest due on a monthly basis until maturity. | The March 2020 Note shall accrue interest at a rate of fourteen percent (14%) per annum and will mature on March 5, 2021. No payments of principal or interest are due through August 2020 (five (5) months following issuance) and then there are seven (7) fixed payments of principal and interest due on a monthly basis until maturity. | ||||||
DigitizeIQ Settlement Agreement [Member] | ||||||||
Liabilities has reduced | $ 580,000 | |||||||
Anthony Evers Employment Agreement [Member] | ||||||||
Salary | $ 270,000 |