Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 20, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | Duos Technologies Group, Inc. | |
Entity Central Index Key | 1,396,536 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer | No | |
Is Entity a Voluntary Filer | No | |
Is Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 1,901,670 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
CURRENT ASSETS: | ||
Cash | $ 250 | $ 174,376 |
Accounts receivable | 583,149 | 256,989 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 345,085 | 476,673 |
Prepaid expenses and other current assets | 136,230 | 135,964 |
Total Current Assets | 1,064,714 | 1,044,002 |
Property and equipment, net | 56,609 | 66,491 |
OTHER ASSETS: | ||
Patents and trademarks, net | 47,335 | 51,423 |
Total Other Assets | 47,335 | 51,423 |
TOTAL ASSETS | 1,168,658 | 1,161,916 |
CURRENT LIABILITIES: | ||
Bank overdraft | 688 | |
Accounts payable | 1,469,519 | 842,787 |
Accounts payable - related parties | 41,374 | 40,136 |
Commercial insurance/office equipment financing | 101,073 | 46,368 |
Notes payable - related parties | 516,327 | 529,485 |
Notes payable, net of discounts | 2,124,371 | 87,210 |
Convertible notes payable, including premiums | 193,950 | |
Warrant derivative liability | 938,228 | 793,099 |
Line of credit | 34,233 | 38,019 |
Payroll taxes payable | 1,178,666 | 444,476 |
Accrued expenses | 1,653,188 | 1,218,105 |
Billings in excess of costs and estimated earnings on uncompleted contracts | 242,846 | 219,625 |
Deferred revenue | 341,545 | 675,171 |
Total Current Liabilities | 8,642,058 | 5,128,431 |
Notes payable - related party | 41,478 | 48,231 |
Notes payable, net of discounts | 1,404,348 | 1,206,522 |
Total Liabilities | 10,087,884 | 6,383,184 |
Series A redeemable convertible cumulative preferred stock, $10 stated value per share, 500,000 shares designated, 29,600 shares issued and outstanding at September 30, 2017 and December 31, 2016 ($319,680 and $301,920 liquidation value at September 30, 2017 and December 31, 2016, respectively) | 319,680 | 301,920 |
Commitments and Contingencies (Note 5) | ||
STOCKHOLDERS' DEFICIT: | ||
Preferred stock, $0.001 par value, 10,000,000 authorized, 9,500,000 available to be issued | ||
Common stock: $0.001 par value; 500,000,000 shares authorized, 1,901,670 and 1,892,020 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 1,902 | 1,892 |
Additional paid-in capital | 18,181,620 | 18,141,629 |
Total paid-in-capital | 18,183,522 | 18,143,521 |
Accumulated deficit | (27,274,428) | (23,518,709) |
Sub-total | (9,090,906) | (5,375,188) |
Less: Treasury stock (3,280 shares of common stock) | (148,000) | (148,000) |
Total Stockholders' Deficit | (9,238,906) | (5,523,188) |
Total Liabilities and Stockholders' Deficit | $ 1,168,658 | $ 1,161,916 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Series A redeemable convertible cumulative preferred stock, stated value per share | $ 10 | $ 10 |
Series A redeemable convertible cumulative preferred stock, shares designated | 500,000 | 500,000 |
Series A redeemable convertible cumulative preferred stock, shares issued | 29,600 | 29,600 |
Series A redeemable convertible cumulative preferred stock, shares outstanding | 29,600 | 29,600 |
Series A redeemable convertible cumulative preferred stock, liquidation value | $ 319,680 | $ 301,920 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 9,500,000 | 9,500,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 1,901,670 | 1,892,020 |
Common stock, shares outstanding | 1,901,670 | 1,892,020 |
Treasury stock shares | 3,280 | 3,280 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
REVENUES: | ||||
Project | $ 561,022 | $ 594,096 | $ 1,512,628 | $ 1,707,177 |
Maintenance and technical support | 288,137 | 618,682 | 914,438 | 1,829,595 |
IT asset management services | 196,576 | 154,391 | 816,903 | 481,783 |
Total Revenues | 1,045,735 | 1,367,169 | 3,243,969 | 4,018,555 |
COST OF REVENUES: | ||||
Project | 458,337 | 303,126 | 1,180,193 | 821,264 |
Maintenance and technical support | 131,363 | 262,830 | 366,357 | 727,529 |
IT asset management services | 68,691 | 79,199 | 328,730 | 254,730 |
Total Cost of Revenues | 658,391 | 645,155 | 1,875,280 | 1,803,523 |
GROSS PROFIT | 387,344 | 722,014 | 1,368,689 | 2,215,032 |
OPERATING EXPENSES: | ||||
Selling and marketing expenses | 27,104 | 62,116 | 146,031 | 227,785 |
Salaries, wages and contract labor | 784,012 | 758,685 | 2,359,899 | 2,583,419 |
Research and development | 65,984 | 72,288 | 225,982 | 201,668 |
Professional fees | 87,366 | 59,803 | 292,099 | 229,277 |
General and administrative expenses | 210,398 | 198,715 | 768,606 | 622,851 |
Total Operating Expenses | 1,174,864 | 1,151,607 | 3,792,617 | 3,865,000 |
LOSS FROM OPERATIONS | (787,520) | (429,593) | (2,423,928) | (1,649,968) |
OTHER INCOME (EXPENSES): | ||||
Interest expense | (1,525,894) | (161,515) | (3,279,898) | (443,929) |
Gain on settlement of debt | 64,647 | |||
Warrant derivative gain (loss) | 2,188,546 | 1,901,219 | ||
Other income, net | 34 | 1 | 1,339 | |
Total Other Income (Expense) | 662,652 | (161,481) | (1,314,031) | (442,590) |
NET LOSS | (124,868) | (591,074) | (3,737,959) | (2,092,558) |
Series A preferred stock dividends | (5,920) | (17,760) | ||
Net loss applicable to common stock | $ (130,788) | $ (591,074) | $ (3,755,719) | $ (2,092,558) |
NET LOSS APPLICABLE TO COMMON STOCK PER COMMON SHARE: | ||||
Basic & Diluted | $ (0.07) | $ (0.31) | $ (1.98) | $ (1.11) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||
Basic & Diluted | 1,899,716 | 1,886,457 | 1,896,578 | 1,881,266 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash from operating activities: | ||
Net Loss | $ (3,737,959) | $ (2,092,558) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 36,519 | 35,262 |
Gain on settlement of debt | (64,647) | |
Stock issued for services | 40,000 | 125,036 |
Interest expense related to debt discounts of notes payable | 3,064,086 | 131,884 |
Amortization of stock based prepaid consulting fees | 418,119 | |
Loss related to warrants exchanged for stock | 630 | |
Warrant derivative gain | (1,901,219) | |
Changes in assets and liabilities: | ||
Accounts receivable | (326,160) | (274,054) |
Costs and estimated earnings on uncompleted contracts | 131,587 | 76,686 |
Prepaid expenses and other current assets | 207,936 | 108,347 |
Accounts payable | 622,946 | 150,544 |
Accounts payable-related party | 1,238 | 6,330 |
Payroll taxes payable | 734,190 | 111,971 |
Accrued expenses | 455,780 | 157,638 |
Contingent lawsuit liability | (550,000) | |
Billings in excess of costs and earnings on uncompleted contracts | 23,221 | 238,772 |
Deferred revenue | (333,626) | (162,955) |
Net cash used in operating activities | (1,046,108) | (1,518,348) |
Cash flows from investing activities: | ||
Purchase of patents/trademarks | (70) | |
Purchase of fixed assets | (22,549) | (32,411) |
Net cash used in investing activities | (22,549) | (32,481) |
Cash flows from financing activities: | ||
Bank overdraft | 688 | |
Proceeds of advance payments-stock repurchase | 140,000 | |
Proceeds from related party notes | 221,570 | |
Repayments of related party notes | (19,911) | (97,182) |
Repayments of insurance and equipment financing | (153,496) | (154,621) |
Repayments of notes payable | (172,500) | (147,500) |
Proceeds of notes payable, net of $185,250 cash fees | 1,239,750 | 1,518,000 |
Net cash provided by financing activities | 894,531 | 1,480,267 |
Net decrease in cash | (174,126) | (70,562) |
Cash, beginning of period | 174,376 | 140,129 |
Cash, end of period | 250 | 69,567 |
Supplemental Disclosure of Cash Flow Information: | ||
Interest paid | 110,919 | 125,687 |
Taxes paid | 10,149 | |
Supplemental Non-Cash Investing and Financing Activities: | ||
Common stock issued for prepaid consulting services | 301,100 | |
Increase in debt discount and paid-in capital for warrants issued with debt | 509,303 | |
Accrued interest forgiven related to note payable settlement | 20,697 | |
Debt discount related to notes payable | 1,571,250 | 282,000 |
Note issued for financing of insurance premiums | $ 208,201 | $ 198,089 |
CONSOLIDATED STATEMENTS OF CAS6
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Parenthetical) | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Statement of Cash Flows [Abstract] | |
Cash fees | $ 185,250 |
NOTE 1 - NATURE OF OPERATIONS,
NOTE 1 - NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NOTE 1 - NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Duos Technologies Group, Inc. (“Company”), through its operating subsidiary “Duos Technologies, Inc. (“duostech”) is primarily engaged in the design and deployment of state-of-the-art, artificial intelligence driven intelligent technologies systems. duostech converges traditional security measures with information technologies to create “actionable intelligence.” duostech’s IP is built upon two of its core technology platforms (praes i ® t i ® t The Company’s strategy includes expansion of its technology base through organic development efforts, strategic partnerships, and growth through strategic acquisitions. duostech’s primary target industry sectors include transportation, with emphasis on freight and transit railroad owners/operators, petro-chemical, utilities and healthcare. As reported previously, Duos Technologies Group, Inc. is the result of the reverse merger between duostech and a wholly owned subsidiary of Information Systems Associates, Inc., a Florida corporation (“ISA”), which became effective as of April 1, 2015 and as a result of which duostech became a wholly owned subsidiary of the merged entity. The merger was followed by a corporate name change to Duos Technologies Group, Inc., a symbol change from IOSA to DUOT and up-listing from OTC Pink to OTCQB. ISA’s original business of IT Asset Management (ITAM) services for large data centers is now operated as a division of the Company that continues its sales efforts through large strategic partners. ISA developed a methodology for the efficient data collection of assets contained within large data centers and was awarded a patent in 2010 for specific methods to collect and audit data. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (all of which are of a normal recurring nature) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2017 are not indicative of the results that may be expected for the year ending December 31, 2017 or for any other future period. These unaudited consolidated financial statements and the unaudited condensed notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission (the “SEC”) on March 30, 2017. All share and per share amounts have been presented to give retroactive effect to a 1 for 35 reverse-stock split that occurred in May 2017. Reclassification Certain amounts in the 2016 balance sheet have been reclassified from notes payable related parties - current to notes payable related parties - long-term to conform to the 2017 presentation. This reclassification caused notes payable related parties – long-term in 2016 to be increased by $48,231 and notes payable related parties – current to be decreased by the same amount. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, duostech and TrueVue 360, Inc (in-active). All inter-company transactions and balances are eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates. The most significant estimates in the accompanying unaudited consolidated financial statements include the allowance on accounts receivable, valuation of deferred tax assets, valuation of assets acquired and liabilities assumed in business combinations, valuation of intangible and other long-lived assets, estimates of percentage completion on projects and related revenues, valuation of stock-based compensation, valuation of derivatives, valuation of warrants issued with debt, valuation of beneficial conversion features in convertible debt, valuation of stock-based awards and valuation of loss contingencies. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Concentrations Cash Concentrations Cash is maintained at financial institutions and at times, balances may exceed federally insured limits. We have not experienced any losses related to these balances. There were no amounts on deposit in excess of federally insured limits at September 30, 2017. Significant Customers and Concentration of Credit Risk Major Customers and Accounts Receivable The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, as follows: For the nine months ended September 30, 2017, three customers accounted for 25%, 19% and 19% of revenues. For the nine months ended September 30, 2016, five customers accounted for 31%, 20%, 16%, 16% and 11% of revenues. At September 30, 2017, two customers accounted for 53% and 12% of accounts receivable. At December 31, 2016, Geographic Concentration Approximately 4.5% of revenue is generated from a customer outside of the United States. Derivative Instruments ASC Topic 815, Derivatives and Hedging Fair Value of Financial Instruments and Fair Value Measurements We measure our financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, the carrying amounts approximate fair value due to their short maturities. Amounts recorded for notes payable, net of discount, and loans payable also approximate fair value because current interest rates available to us for debt with similar terms and maturities are substantially the same. We follow accounting guidance for financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs, other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. Earnings (Loss) Per Share Basic earnings per share (EPS) are computed by dividing net loss applicable to common stock by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss applicable to common stock by the weighted average number of common shares outstanding for the period and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options, stock warrants, convertible debt instruments, convertible preferred stock or other common stock equivalents. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. At September 30, 2017, outstanding warrants to purchase an aggregate of 526,947 shares of common stock; at September 30, 2017, 50,743 shares issuable upon conversion of Series A preferred stock were excluded from the computation of dilutive earnings per share because the inclusion would have been anti-dilutive. Segment Information The Company operates in one reportable segment. Recent Issued Accounting Standards ASU 2017-01 In January 2017, the Financial Accounting Standards Board issued Accounting Standards Update No. 2017-01: "Business Combinations (Topic 805)” - ASU 2017-04 In January 2017, the Financial Accounting Standards Board issued Accounting Standards Update No. 2017-04: "Intangibles - Goodwill and Other (Topic 350)” - ASU 2017-05 In February 2017, the Financial Accounting Standards Board issued Accounting Standards Update No. 2017-05: "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20)” - ASU 2017-08 In March 2017, the Financial Accounting Standards Board issued Accounting Standards Update No. 2017-08: “Receivables – Non-Refundable fees and Other Costs (Subtopic 310-20)” ASU 2016-15 In August 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-02 In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. 2016-02: “Leases (Topic 842)” ASU 2014-09 In May 2014, the Financial Accounting Standards Board issued Update No. 2014-09: “Revenue from Contracts with Customers (Topic 606)” which requires that an entity recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Since the issuance of the original standard, the FASB has issued several updates to the standard which i) clarify the application of the principal versus agent guidance; ii) clarify the guidance relating to performance obligations and licensing; iii) clarify assessment of the collectability criterion, presentation of sales taxes, measurement date for non-cash consideration and completed contracts at transaction; and iv) clarify narrow aspects of ASC 606 or corrects unintended application of the guidance. The new revenue recognition standard, amended by the updates, becomes effective in the first quarter of 2018 and is to be applied retrospectively using one of two prescribed methods. Early adoption is permitted. The Company currently plans to adopt the new standard effective January 1, 2018 and does not believe the adoption of this standard will have a material impact on the amount or timing of its revenues. |
NOTE 2 - GOING CONCERN
NOTE 2 - GOING CONCERN | 9 Months Ended |
Sep. 30, 2017 | |
NOTE 2 - GOING CONCERN [Abstract] | |
NOTE 2 - GOING CONCERN | NOTE 2 – GOING CONCERN As reflected in the accompanying unaudited consolidated financial statements, the Company had a net loss of $3,737,959 for the nine months ended September 30, 2017. During the same period, cash used in operating activities was $1,046,108. The working capital deficit, stockholders’ deficit and accumulated deficit as of September 30, 2017 were $7,577,344, $9,238,906 and $27,274,428. In addition, the Company is in technical default on several promissory notes although the lenders in each case are working with the company to resolve the defaults (see Note 3). Management believes that these matters raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the date this report is issued. The ability of the Company to continue as a going concern is dependent on the Company’s ability to further implement its business plan, raise additional capital and become profitable. Management embarked on a business growth strategy in 2014 to engage with private companies in or related to its market space with the intention of a merger or acquisition. In April 2015, the Company completed a reverse triangular merger whereby duostech became a wholly owned subsidiary of the Company. The two companies are now integrated and the merged company continues to implement a growth strategy for its business in all the markets where they have previously operated. On December 20, 2016, the Company signed a Securities Purchase Agreement and Promissory Note in the aggregate principal amount of up to $2,500,000 of which $575,000 was remitted by the investor upon signing. The Company was able to draw further amounts upon achieving certain milestones related to a planned registered raise of at least $10M. At September 30, 2017, the Company has achieved the scheduled milestones and received the second through tenth draws on January 25, 2017, February 8, 2017, February 27, 2017, March 6, 2017, March 14, 2017, April 25, 2017, June 1, 2017, June 27, 2017 and August 22, 2017 in the amounts of $150,000, $100,000, $250,000, $150,000, $250,000, $75,000, $100,000, $100,000 and $250,000 respectively. The Company was also in the process of pursuing a public offering (“Initial Offering”) of its securities to raise sufficient capital, expected to be between $11 million and $15 million, to fund the Company’s working capital deficit, provide sufficient funding to further the Company’s growth objectives and qualify to be listed on a national stock exchange. On August 16, 2017, the Company withdrew its registration statement for the public offering. While no assurance can be provided, management believes that these actions provide the opportunity for the Company to continue as a going concern and to grow its business and achieve profitability. Ultimately however, the continuation of the Company as a going concern is dependent upon the ability of the Company to execute the plan described above, generate sufficient revenue and to attain profitable operations. These unaudited consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
NOTE 3 - DEBT
NOTE 3 - DEBT | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
NOTE 3 - DEBT | NOTE 3 – DEBT Notes Payable - Financing Agreements The Company’s notes payable relating to financing agreements classified as current liabilities consist of the following as of: September 30, 2017 December 31, 2016 Notes Payable Principal Interest Principal Interest Third Party - Insurance Note 1 $ 4,412 10.30 % $ 25,075 9.75 % Third Party - Insurance Note 2 19,065 10.00 % 9,861 10.00 % Third Party - Insurance Note 3 52,105 8.30 % — 8.05 % Third Party - Insurance Note 4 25,491 9.95 % 11,432 9.24 % Total $ 101,073 $ 46,368 The Company entered into an agreement on December 23, 2016 with its insurance provider by executing a $25,075 note payable (Insurance Note 1) issued to purchase an insurance policy, secured by that policy with an annual interest rate of 10.30% payable in monthly installments of principal and interest totaling $2,234 through October 23, 2017. The note balance as of September 30, 2017 and December 31, 2016 was $4,412 and $25,075, respectively. The Company entered into an agreement on September 15, 2017 with its insurance provider by executing a $19,065 note payable (Insurance Note 2) issued to renew an insurance policy, secured by that policy, with an annual interest rate of 10.00% payable in monthly installments of principal and interest totaling $1,702 through June 15, 2018. At September 30, 2017 and December 31, 2016, the note payable balance was $19,065 and $9,861, respectively. The Company entered into an agreement on February 3, 2017 with its insurance provider by executing a $127,620 note payable (Insurance Note 3) issued to purchase an insurance policy, secured by that policy with an annual interest rate of 8.30% payable in monthly installments of principal and interest totaling $13,252 through December 31, 2017. At September 30, 2017 and December 31, 2016, the note payable balance was $52,105 and zero, respectively. The Company entered into an agreement on April 1, 2016 with its insurance provider by executing a $65,000 note payable (Insurance Note 4) issued to purchase an insurance policy, secured by that policy with an annual interest rate of 9.24% payable in monthly installments of principal and interest totaling $5,782 through February 1, 2017. The insurance policy was renewed on April 15, 2017 with a note payable in the amount $49,000 with an annual interest rate of 9.95% payable in monthly installments of principal and interest totaling $4,373 through February 15, 2018. At September 30, 2017 and December 31, 2016, the note payable balance was $25,491 and $11,432, respectively. Notes Payable - Related Parties The Company’s notes payable to related parties classified as current liabilities consist of the following as of: September 30, 2017 December 31, 2016 Notes Payable Principal Interest Principal Interest Shareholder $ 65,000 9 % $ 65,000 9 % Related party 13,369 8 % 13,369 8 % Related party — — 10,504 — Related party 56,500 8 % 56,500 8 % Related Party — — 3,170 — Related Party 8,431 8 % 8,431 8 % CFO 31,973 8 % 31,973 8 % Shareholder 226,936 6 % 226,936 6 % CEO 8,899 8 % 8,383 8 % Shareholder 105,219 8 % 105,219 8 % Sub-total current portion 516,327 529,485 Add long-term portion-CEO 41,478 48,231 Total $ 557,805 $ 577,716 On May 28, 2008, a shareholder who is indirectly invested in the Company with the Chief Executive Officer (CEO) through another entity, loaned the Company the sum of $65,000 accruing interest at 9% per annum. There was an accrued interest balance of $53,618 and $49,231 as of September 30, 2017 and December 31, 2016, respectively. The note was repayable on or before September 15, 2008 although no demand for repayment has been received from the holder. There is no formal written agreement and the terms are documented on a letter from a former Chief Financial Officer (CFO) of the Company. The terms contain no default clauses and as of the time of this report, no demand for repayment has been made or expected. The Company intends to either negotiate a conversion to common stock or to repay the loan when sufficient working capital permits such action. Upon the consummation of the merger on April 1, 2015, the Company assumed an Original Issue Discount (OID) promissory note with a remaining principal balance of $15,000 accruing interest at 18% per annum. On November 30, 2015, there was an outstanding principal balance of $15,000 and an accrued interest balance of $2,651 in which the promissory note was restructured into a note due on or before December 15, 2016 for a total of $17,651 principal balance, accruing interest at 8% per annum and monthly payments of $1,535 commencing January 15, 2016. The Company made payments during the first quarter of 2016 in the amount of $4,282 and will resume payments in the fourth quarter of 2017. As of September 30, 2017, the loan had an outstanding amount of $13,369 and there was an accrued interest balance of $1,604. Upon the consummation of the merger on April 1, 2015, the Company assumed two promissory notes due to an entity which had previously extended credit on a revolving basis for working capital. The total principal balance was $212,693 at the time of the merger and carried total interest and extension fees of 30% per annum. On September 30, 2015, the note and accrued interest for a total of $275,660 was exchanged for 1,002,401 common shares. The Company recorded a loss on settlement in the amount of $115,139. The same lender had extended further credit to the Company’s TrueVue360 subsidiary which on September 30, 2015 had a principal balance of $28,040 and accrued interest balance of $9,777 totaling $37,817. The note can be extended each time for a further 30 days on payment of a 1% extension fee in addition to the 1.5% interest cost which can be accrued. The Company agreed to convert this note to an 18-month term loan with 0% interest and monthly payments of $2,100 starting November 1, 2015. The Company also issued 14,321 five-year warrants with a strike price of $9.80 as consideration for the conversion of the larger note and the zero-interest feature of the extended payment plan. As of September 30, 2017 and December 31, 2016, the balance was zero and $10,504, respectively. On December 12, 2013, the wife of the CEO loaned the Company the sum of $10,000 at an annual percentage rate of 8%. On January 29, 2015, March 3, 2015 and September 30, 2015 the wife of the CEO loaned the Company an additional $12,000, $5,000 and $9,500 respectively. On January 24, 2016, an additional $20,000 was loaned to the Company. The total principal due at September 30, 2017 and December 31, 2016 was $56,500 and $56,500, respectively. There was accrued interest balance of $10,864 and $7,474 as of September 30, 2017 and December 31, 2016, respectively. The note is repayable on demand of the holder. As of the time of this report, no such demand has been made. Upon the consummation of the merger on April 1, 2015, the Company assumed a promissory note with a remaining principal balance of $30,378 due to the former CEO of ISA. These amounts are non-interest bearing and are due on demand. The Company pays these loans as sufficient funds become available. At September 30, 2017 and December 31, 2016, the loan had an outstanding balance of zero and $3,170, respectively. Upon the consummation of the merger on April 1, 2015, the Company assumed an OID promissory note with a remaining principal and accrued interest balance of $10,593. During the third quarter of 2015, interest payments of $1,500 were paid. At November 30, 2015, the principal balance of the note was $10,000, and an accrued interest balance of $1,131 at a rate of 30% per annum was restructured into a note due on or before December 15, 2016 for a total of $11,131 principal balance, accruing interest at 8% per annum and monthly payments of $968 commencing January 15, 2016. The Company made payments during the first quarter of 2016 in the amount of $2,700 and plans to resume payments in the fourth quarter of 2017. At September 30, 2017, the loan had an outstanding balance of $8,431 and there was an accrued interest balance of $1,012. Upon the consummation of the merger on April 1, 2015, the Company assumed two promissory notes with a total principal balance of $8,783 due to the Company’s CFO. During the second quarter of 2015, the CFO loaned the Company an additional $365 and the Company made payments to the CFO during the same period in the amount of $1,307. These advances do not incur any interest and will be paid by the Company when sufficient funds are available. On January 28, 2016, the CFO loaned the Company $30,000, accruing interest at 8% per annum which is repayable by the Company when sufficient funds are available. At September 30, 2017, the outstanding loan balance was $31,973 and there was an accrued interest balance of $4,020 at September 30, 2017. On April 8, 2015, the Company received a $310,000 loan from a related party principal shareholder. The note accrues interest at the rate of 6% per annum and was repayable on or before October 31, 2015. There was accrued interest balance of $8,616 as of September 30, 2015. The Company and shareholder have agreed to replace the note with a new note in the amount of $320,166, which includes principal and accrued interest through October 31, 2015. Repayment shall occur with eleven monthly payments of $27,750 plus one final payment of $27,007 (including interest of 6%) beginning on or before December 31, 2015. As of September 30, 2017, the Company is eighteen payments in arrears and the outstanding balance was $226,936. On July 19, 2016, the Company received a $60,000 loan less fees of $75 for a related party loan with proceeds of $59,925 from the Company’s CEO. The promissory note carries an annual interest rate of 7.99% with a monthly installment payment of $1,052 through July 19, 2022. As of September 30, 2017 and December 31, 2016, the outstanding balance was $50,377 and $56,614, respectively. On August 11, 2016, the Company received an $111,645 loan from a related party principal shareholder. The note accrues interest at the rate of 8% per annum and is repayable on or before February 11, 2017. As of September 30, 2017, the outstanding balance was $105,219. The note is currently in technical default. However, as of the time of this report, the lender has agreed not to pursue any default remedies and has informally agreed to work with us until such time as the note can be repaid. Notes Payable September 30, 2017 December 31, 2016 Payable To Principal Interest Principal Interest Shareholder $ 19,108 — $ 19,108 — Vendor — — 22,500 — Total $ 19,108 $ 41,608 Upon the consummation of the merger on April 1, 2015, the Company assumed a promissory note with a remaining principal balance of $19,108 due to an unrelated party investor and shareholder of the Company. The $19,108 is non-interest bearing and currently due, although the note holder has not made any demand for payment at this time. On August 10, 2015, the Company entered into an agreement with FacilityTeam of Ontario, Canada to settle a dispute that had arisen concerning payments for software development services. The Company agreed to pay to FacilityTeam $2,500 per month starting October 1, 2015 for 24 months and, pursuant thereto, took a charge in the third quarter of 2015 for the settlement amount of $60,000. At September 30, 2017 and December 31, 2016, the outstanding balance was zero and $22,500, respectively. Convertible Notes, Including Premiums September 30, 2017 December 31, 2016 Payable To Principal Premium Principal, Including Premium Principal Premium Principal, Including Premium Vendor $ — $ — $ — $ 50,000 $ 50,000 $ 100,000 Vendor — — — 46,975 46,975 93,950 Total $ — $ — $ — $ 96,975 $ 96,975 $ 193,950 Upon the consummation of the merger on April 1, 2015, the Company assumed a convertible promissory note of $50,000 due to a vendor of the Company which included a premium of $50,000 relating to its treatment as stock settled debt under ASC 480. The $50,000 convertible note accrues interest at 1% per month and is convertible into the Company’s common stock at a 50% discount to the average closing bid prices for the company’s common stock for the five days immediately preceding the conversion date. An interest payment was made on January 11, 2016 in the amount of $3,230. The outstanding note balance at December 31, 2016 and 2015 was $50,000 and $50,000, respectively and accrued interest on December 31, 2016 and 2015 was $7,511 and $4,723, respectively. As previously disclosed, on May 23, 2016, the Company filed a lawsuit against, the holder of this note and another convertible note described below. The Company owes the principal and interest due under the notes and has sought to pay principal and interest of the note which first came due but its offer was rejected. Payment was made on March 7, 2017 and a gain on settlement of $64,647 was recorded by the Company. Upon the consummation of the merger on April 1, 2015, the Company assumed a promissory note with a remaining principal balance of $44,325 bearing interest at 1.5% per month. The note holder gave 30-day notice to the Company on May 1, 2015 for the note to be repaid in full plus any interest due. On June 30, 2015, an Addendum to Promissory Note was executed providing that the payment of $46,975, $44,325 plus accrued interest of $2,650, in connection with the Debt Purchase Agreement represents the total settlement of the Note. Also, on June 30, 2015 a current shareholder and services provider agreed to assume the new $46,975 note with the existing terms and conditions and an addendum was signed for the assumption and making the note convertible into the Company’s common stock at a 50% discount to the average price of the Company’s common stock for the five trading days preceding conversion and the new Note is non-interest bearing. The addendum was treated as a debt extinguishment. The Company recorded a premium of $46,975 since the note was convertible at a fixed rate to a fixed monetary amount equal to $93,950 pursuant to ASC 480. On each of December 31, 2016 and 2015, the outstanding balance on the note was $93,950 which includes the $46,975 premium and there was accrued interest on December 31, 2016 and 2015 of $12,682 and $4,228, respectively. During the previous quarter, the new holder attempted a conversion into stock of a portion of the note. The Company determined that the conversion notice was invalid in several respects and rejected the conversion. As previously disclosed, on May 23, 2016, the Company filed a lawsuit against, the holder of this note and another convertible note described above. The Company owes the principal and interest due under the notes and has sought to pay principal and interest of the note which first came due but its offer was rejected. Payment was made on March 7, 2017. Notes Payable – Third Party September 30, 2017 December 31, 2016 Payable To Principal Less Unamortized Discounts Principal, Less Unamortized Discounts Principal Less Unamortized Discounts Principal, Less Unamortized Discounts Note 1-non-current $ 1,800,000 $ 395,652 $ 1,404,348 $ 1,800,000 $ 593,478 $ 1,206,522 Note 2-current 2,105,263 — 2,105,263 605,263 559,661 45,602 Total $ 3,905,263 $ 395,652 $ 3,509,611 $ 2,405,263 $ 1,153,139 $ 1,252,124 Note 1 On March 31, 2016, the Company entered into a Securities Purchase Agreement with an institutional investor, which, together with the transaction documents referenced therein, provides for the terms in the following paragraph. The Company closed the transaction on April 1, 2016. The transaction amount was $1,800,000 less a 5% original issue discount. The note is a senior debt obligation secured by substantially all assets of the Company and shares of all current and future subsidiaries as well as being guaranteed by each subsidiary but is not convertible into the Company’s stock. The senior secured note also contains certain default provisions and is subject to standard covenants such as restrictions on issuing new debt. In conjunction with the note, the Company issued a warrant exercisable for 71,249 shares of common stock exercisable for five years at an exercise price of $12.25 per share. The warrants also contain certain anti-dilution provisions that apply in connection with any stock split, stock dividend, stock combination, recapitalization or similar transactions as well as a potential adjustment to the exercise price based on certain events. The relative fair value of the warrants of $466,031 was recorded as a debt discount and is being amortized to interest expense over the term of the debt. The note will mature three years from the closing date and will accrue interest at the rate of 14% per annum, payable monthly. The note will accrue additional interest at the rate of 2% per annum, compounding monthly, payable annually in arrears. The Company may choose to begin amortizing the principal at any time subject to prepayment premiums. Also, the Company agreed to an amended placement agent’s fee with respect to the placement of such loan which differed from the original terms agreed with the Placement Agent as that agreement had expired. The amendment included (a) postponement of payment of the cash fee of $5,000 to 15 days after execution of the term sheet, (b) the closing fee was fixed to $137,000 (based on a $1.8 million debt funding) and three-year warrants for 5,715 shares at an exercise price of $14 per share and valued at their fair value of $43,272. Other closing expenses totaled $40,000 plus another $10,000 of legal fees previously paid. Total cash issue costs of $192,000, the original issue discount of $90,000, the warrant relative fair value of $466,031 and warrant fair value of $43,272 were recorded as debt discounts to be amortized over the three-year term of the debt. Net proceeds were $1,518,000 after all issue costs. Additionally, at closing, certain previously recorded obligations of the Company totaling $690,110, as discussed below, were paid directly from the lender reducing the actual proceeds to the Company. On April 1, 2016, in conjunction with the closing of the aforementioned Securities Purchase Agreement, the sum of $558,032 was remitted out of the proceeds in final settlement of the litigation with CW Electric. This amount consisted of $550,000 of the agreed settlement, which was previously accrued as of December 31, 2015, plus $8,032 of accrued interest. This represents full and final settlement of this matter, which is now closed. On April 1, 2016, the Company directed the sum of $132,078 to be paid out of proceeds of the Securities Purchase agreement to a shareholder who held a note secured against part of the Company’s assets. The payment of $125,000 in principal and $7,078 of accrued interest represents full payment of the note and the noteholder no longer holds any security against the assets. On April 1, 2016, the Company made a payment of $142,000 (part of the $192,000 discussed above) to a placement agent as compensation for arrangement of financing through the aforementioned Securities Purchase Agreement. The payment was deducted from proceeds of that agreement. As discussed above, the Company also issued 5,715 three-year warrants with an exercise price of $14 to the agent as additional compensation. These amounts are broadly in line with the anticipated compensation agreed within the original placement agency agreement which was terminated in December 2015. GPB Debt Holdings II, LLC Letter Agreement On August 1, 2017, the Company entered into a letter agreement with GPB Debt Holdings II LLC (“GPB”), whereby GPB agreed to convert $212,077 due and owing to it under that certain senior secured note issued by the Company on April 1, 2016 (“GPB Debt Obligation”) into common stock of the Company, contingent upon the completion of the Initial Offering (the “GPB Letter Agreement”). Pursuant to the GPB Letter Agreement, the GPB Debt Obligation will automatically convert upon consummation of the Initial Offering into such number of restricted shares of the Company’s common stock calculated by dividing the GPB Debt Obligation by the price per share of common stock paid by the investors in the Initial Offering. GPB has agreed to enter into a lock-up agreement prohibiting the sale or other transfer of all securities of the Company owned by him for a period of 6 months. Pursuant to the terms and conditions of the Note, the Company was to continue to make its monthly interest payments beginning on September 1, 2017 with a payment of $63,633 representing July 2017, August 2017 and September 2017 interest payments and payments thereafter until the Maturity Date. On the Maturity Date (as defined in the Note), GPB shall have the right, but not the obligation, to “put” to the Company any Conversion Shares issued to GPB pursuant to the Automatic Conversion that have not been sold for redemption in cash, in the amount equal to the number of such put Conversion Shares multiplied by the Conversion Price, payable within five days of the Company’s receipt of written notice indicating such election by GPB. Additionally, GPB will also be issued warrants, on the same terms and in substantially the same form offered to investors in the Initial Offering (the “Warrants”), except that such Warrants will be restricted securities, and will not trade on the OTC Markets OTCQB. On August 16, 2017, the company withdrew its registration statement and this letter agreement is no longer in effect. The Company has made no further interest payments on the note and has entered into a forbearance agreement with the lender. Note 2 On December 20, 2016, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") with JMJ Financial, ("JMJ," and together with the Company, the "Parties") and borrowed an initial principal amount of $605,263 from the total available as discussed below. Pursuant to the Purchase Agreement, JMJ purchased from the Company (i) a Promissory Note in the aggregate principal amount of up to $2,500,000 (the "Note") for consideration of up to $2,350,000 net of an original issue discount of 5%, due and payable on the earlier of May 15, 2017 or the third business day after the closing of the Initial Offering (as defined therein), and (ii) a Common Stock Purchase Warrant (the "Warrant") to purchase 115,289 shares of the Company's common stock ("Common Stock") at an exercise price per share equal to the lesser of (i) 80% of the per share price of the Common Stock in the Company's contemplated Initial Offering of securities (the "Initial Offering"), (ii) $5.25 per share, (iii) the lowest daily closing price of the Common Stock during the ten days prior to the Initial Offering (subject to adjustment), (iv) the lowest daily closing price of the Common Stock during the ten days prior to the Maturity Date (subject to adjustment), (v) 80% of the unit price in the Initial Offering (if applicable), or (vi) 80% of the exercise price of any warrants issued in the Initial Offering. Additionally, pursuant to the Purchase Agreement, the Company will issue JMJ shares of Common Stock equal to 30% of the principal sum of the Note ("Origination Shares") on the 5th trading day after the pricing of the Initial Offering, but in no event later than May 30, 2017. The number of Origination Shares will equal the principal sum of the Note divided by the lowest of (i) the lowest daily closing price of the Common Stock during the ten days prior to delivery of the Origination Shares or during the ten days prior to the date of the On January 25, 2017, the Company borrowed an additional $157,895 and received a net amount of $130,500 representing the second draw against the Securities Purchase agreement with JMJ Financial. The total cash issue costs of $12,000, the original issue discount of $7,895, legal fees of $7,500 and a discount relating to the warrants of $138,000 were recorded as debt discounts and have been fully amortized as of September 30, 2017. Warrants in the amount of 30,075 were issued as per the agreement. On February 8, 2017, the Company borrowed an additional $105,263 and received a net amount of $87,000 representing the third draw against the Securities Purchase agreement with JMJ Financial. The total cash issue costs of $8,000, the original issue discount of $5,263, legal fees of $5,000 and a discount relating to the warrants of $92,000 were recorded as debt discounts and have been fully amortized as of September 30, 2017. Warrants in the amount of 20,050 were issued as per the agreement. On February 27, 2017, the Company borrowed an additional $263,158 and received a net amount of $217,500 representing the fourth draw against the Securities Purchase agreement with JMJ Financial. The total cash issue costs of $20,000, the original issue discount of $13,158, legal fees of $12,500 and a discount relating to the warrants of $230,000 were recorded as debt discounts and have been fully amortized as of September 30, 2017. Warrants in the amount of 50,138 were issued as per the agreement. On March 6, 2017, the Company borrowed an additional $157,895 and received a net amount of $130,500 representing the fifth draw against the Securities Purchase agreement with JMJ Financial. The total cash issue costs of $12,000, the original issue discount of $7,895, legal fees of $7,500 and a discount relating to the warrants of $138,000 were recorded as debt discounts and have been fully amortized as of September 30, 2017. Warrants in the amount of 30,075 were issued as per the agreement. On March 14, 2017, the Company borrowed an additional $263,158 and received a net amount of $217,500 representing the sixth draw against the Securities Purchase agreement with JMJ Financial. The total cash issue costs of $20,000, the original issue discount of $13,158, legal fees of $12,500 and a discount relating to the warrants of $230,000 were recorded as debt discounts and have been fully amortized as of September 30, 2017. Warrants in the amount of 50,138 were issued as per the agreement. On April 25, 2017, the Company borrowed an additional $78,947 and received a net amount of $65,250 representing the seventh draw against the Securities Purchase agreement with JMJ Financial. The total cash issue costs of $6,000, the original issue discount of $3,947, legal fees of $3,750 and a discount relating to the warrants of $69,000 were recorded as debt discounts and have been fully amortized as of September 30, 2017. Warrants in the amount of 15,038 were issued as per the agreement. On June 1, 2017, the Company borrowed an additional $105,263 and received a net amount of $87,000 representing the eighth draw against the Securities Purchase agreement with JMJ Financial. The total cash issue costs of $8,000, the original issue discount of $5,263, legal fees of $5,000 and a discount relating to the warrants of $92,000 were recorded as debt discounts and have been fully amortized as of September 30, 2017. Warrants in the amount of 20,050 were issued as per the agreement. On June 27, 2017, the Company borrowed an additional $105,263 and received a net amount of $87,000 representing the ninth draw against the Securities Purchase agreement with JMJ Financial. The total cash issue costs of $8,000, the original issue discount of $5,263, legal fees of $5,000 and a discount relating to the warrants of $92,000 were recorded as debt discounts and have been fully amortized as of September 30, 2017. Warrants in the amount of 20,050 were issued as per the agreement. On August 22, 2017, the Company borrowed an additional $263,158 and received a net amount of $217,500 representing the tenth draw against the Securities Purchase agreement with JMJ Financial. The total cash issue costs of $20,000, the original issue discount of $13,158, legal fees of $12,500 and a discount relating to the warrants of $230,000 were recorded as debt discounts and have been fully amortized as of September 30, 2017. Warrants in the amount of 50,125 were issued as per the agreement. Amendment to $2,500,000 Promissory Note On May 15, 2017, the Company was obligated to repay the principal due to a lender on a bridge loan totaling $1,627,632. On May 22, 2017, the Company obtained an amendment #1 to the Securities Purchase Agreement (“SPA”) and the $2,500,000 Promissory Note (“Note”). This amendment extended the original Maturity Date for the Promissory Note from May 15, 2017 to June 15, 2017 (“Extended Maturity Date”) and extended the Origination Shares issuance date in the Stock Purchase Agreement from May 30, 2017 to June 15, 2017. On July 12, 2017, the Company was obligated to repay the principal due to a lender on a bridge loan totaling $1,842,105. The Company obtained a second amendment (#2) to the Securities Purchase Agreement (“SPA”) and the $2,500,000 Promissory Note (“Note”). This amendment extended the original Maturity Date for the Promissory Note from June 15, 2017 to July 31, 2017 (“Extended Maturity Date”) and extended the Origination Shares issuance date in the Stock Purchase Agreement from May 30, 2017 to July 31, 2017. On August 14, 2017, the Company obtained a further amendment #3 to the Securities Purchase Agreement (“SPA”) and the $2,500,000 Promissory Note (“Note”). This amendment extended the original Maturity Date for the Promissory Note from July 31, 2017 to August 31, 2017 (“Extended Maturity Date”) and extended the Origination Shares issuance date in the Stock Purchase Agreement from May 30, 2017 to August 31, 2017. On August 16, 2017, the Company withdrew its registration statement for the Initial Offering that was a condition of this bridge loan and the amounts advanced under the loan agreement. The lender continues to work with the Company by granting extensions to the note. On November 14, 2017, the Company obtained a further amendment #4 to the Securities Purchase Agreement (“SPA”) and the $2,500,000 Promissory Note (“Note”). This amendment extended the original Maturity Date for the Promissory Note from August 31, 2017 to November 16, 2017 (“Extended Maturity Date”) and extended the Origination Shares issuance date in the Stock Purchase Agreement from August 31, 2017 to November 16, 2017. On November 16, 2017, the Company obtained a further amendment #5 to the Securities Purchase Agreement (“SPA”) and the $2,500,000 Promissory Note (“Note”). This amendment extended the original Maturity Date for the Promissory Note from November 16, 2017 to November 18, 2017 (“Extended Maturity Date”) and extended the Origination Shares issuance date in the Stock Purchase Agreement from November 16, 2017 to November 18, 2017. On November 20, 2017, the Company obtained a further amendment #6 to the Securities Purchase Agreement ("SPA") and the $2,500,000 Promissory Note ("Note"). This amendment extended the original Maturity Date for the Promissory Note from November 18, 2017 to November 22, 2017 ("Extended Maturity Date") and extended the Origination Shares issuance date in the Stock Purchase Agreement from November 18, 2017 to November 22, 2017. The Investor conditionally waived the defaults for the Company's failure to meet the original Maturity Date of the Note and delivery date for the Origination Shares. The Investor waived any damages, fees, penalties, liquidated damages, or other amounts or remedies otherwise resulting from such defaults through the Extended Maturity Date, and such conditional waiver is conditioned on the Issuer's not being in default of and not breaching any term of the Note or the SPA or any other Transaction Document at any time subsequent to the date of the Amendment. If the Company triggers an event of default or breaches any term of the Note, the SPA, or the Transaction Documents at any time subsequent to the date of the Amendment, the Investor may issue a notice of default for the Company’s failure to meet the original Maturity Date of the Note and original delivery date of the Origination Shares. |
NOTE 4 - LINE OF CREDIT
NOTE 4 - LINE OF CREDIT | 9 Months Ended |
Sep. 30, 2017 | |
NOTE 4 - LINE OF CREDIT [Abstract] | |
NOTE 4 - LINE OF CREDIT | NOTE 4 – LINE OF CREDIT The Company assumed a line of credit with Wells Fargo Bank upon merger with ISA on April 1, 2015. The line of credit provided for borrowings up to $40,000, but is now closed to future borrowing. The balance as of September 30, 2017 and December 31, 2016, was $34,233 and $38,019, respectively, including accrued interest. This line of credit has no maturity date. The annual interest rate is 10.75% at September 30, 2017. The former CEO of ISA is the personal guarantor. |
NOTE 5 - COMMITMENTS AND CONTIN
NOTE 5 - COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
NOTE 5 - COMMITMENTS AND CONTINGENCIES | NOTE 5 – COMMITMENTS AND CONTINGENCIES Litigation On August 10, 2015, the Company entered into an agreement with FacilityTeam of Ontario, Canada to settle a dispute that had arisen concerning payments for software development services. The Company strongly believed that FacilityTeam did not deliver the products promised and felt that we would prevail in arbitration called for by the contract between the parties. Ultimately, the Company opted to settle the matter for the cost of the litigation which was estimated be at least $60,000; rather than spend further resources on defending the claim and pursuing the counterclaim against FacilityTeam. The Company agreed to pay to FacilityTeam $2,500 per month starting October 1, 2015 for 24 months and taking a charge in the third quarter of 2015 for the settlement amount of $60,000. On December 12, 2016, the Company was notified that it was in breach of settlement with a previous vendor, FacilityTeam based in in Ontario, Canada alleging failure to make payments against that settlement. On December 28, 2016, the Company subsequently agreed to a modified payment schedule as part of a post judgement settlement for the amounts still outstanding. The final payment of $5,000 was made on March 7, 2017. On May 12, 2016, in Broward County, Florida, the holder of two convertible notes entered into in March and June 2015 in the amount of $50,000 and $46,975 respectively sued the company alleging that the Company was in default for not making scheduled principal and interest payment and failing to convert a portion of the notes into the Company’s common stock. As previously reported, on May 23, 2016, we filed a lawsuit in Broward County, Florida against, Greentree Financial Group, Inc., the holder of $96,975 aggregate principal amount of our convertible notes. The suit alleges, amongst other things, that the officers and directors of Greentree that entered into the notes, failed to disclose legal facts with respect to their personal conduct in the past, which, had the Company known, would have made it unlikely that such transaction would have been consummated. The Company owes the principal and interest due under the notes and sought to pay principal and interest of the note which first came due, but its offer was rejected. Delinquent Payroll Taxes Payable As reported previously, the Company has a delinquent payroll tax payable at September 30, 2017 and December 31, 2016 in the amount of $1,149,189 and $400,076, respectively. The delinquent portion is included in the payroll taxes payable balance of $1,178,666 and $444,476, respectively, as shown on the Company’s consolidated balance sheet. The IRS has accepted the Company’s offer of a monthly installment agreement in the amount of $25,000 commencing March 28, 2016. The monthly installment payments made as of September 30, 2017 totals $250,000. |
NOTE 6 - RELATED PARTIES
NOTE 6 - RELATED PARTIES | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
NOTE 6 - RELATED PARTIES | NOTE 6 – RELATED PARTIES Letter Agreements On June 9, 2017, the Company entered into a letter agreement with Mr. Gianni Arcaini, the Chief Executive Officer and a Director of the Company (the “Arcaini Letter Agreement”), whereby Mr. Arcaini agreed to convert all deferred compensation owed to him under his Employment Agreement (“Arcaini Debt Obligation”) into common stock of the Company, contingent upon the completion of the Initial Offering. The aggregate amount of $700,543 (“Arcaini Obligation”) will be owed to Mr. Arcaini under the Arcaini Debt Obligation including interest through June 30, 2017. Pursuant to the Arcaini Letter Agreement, the Arcaini Debt Obligation will automatically convert upon consummation of the Initial Offering into such number of restricted shares of the Company’s common stock calculated by dividing the Arcaini Debt Obligation by $5.00 or 140,109 shares. The Company anticipates amending the Arcaini Letter Agreement to issue Mr. Arcaini 140,109 warrants upon the consummation of the Initial Offering. Mr. Arcaini has agreed to enter into a lock-up agreement prohibiting the sale or other transfer of all securities of the Company owned by him for a period of 6 months. On August 16, 2017, the Company withdrew its registration statement on Form S-1 for the Initial Offering. Upon such withdrawal, the Arcaini Letter Agreement was terminated in accordance with the terms and conditions therein. On June 9, 2017, the Company entered into a letter agreement with Mr. Adrian Goldfarb, the Chief Financial Officer of the Company (the “Goldfarb Letter Agreement”), whereby Mr. Goldfarb agreed to convert all amounts due and owing to him under that certain promissory note issued by the Company (“Goldfarb Debt Obligation”) into common stock of the Company, contingent upon the completion of the Initial Offering. The aggregate amount of $33,620 (“Goldfarb Obligation”) will be owed to Mr. Goldfarb under the Goldfarb Debt Obligation including interest through June 30, 2017. Pursuant to the Goldfarb Letter Agreement, the Goldfarb Debt Obligation will automatically convert upon consummation of the Initial Offering into such number of restricted shares of the Company’s common stock calculated by dividing the Goldfarb Debt Obligation by $5.00 or 6,724 shares. The Company anticipates amending the Goldfarb Letter Agreement to issue Mr. Goldfarb 6,724 warrants upon consummation of the Initial Offering. Mr. Goldfarb has agreed to enter into a lock-up agreement prohibiting the sale or other transfer of all securities of the Company owned by him for a period of 6 months. On August 16, 2017, the Company withdrew its registration statement on Form S-1 for the Initial Offering. Upon such withdrawal, the Goldfarb Letter Agreement was terminated in accordance with the terms and conditions therein. As of September 30, 2017 and December 31, 2016, there were various notes and loans payable to related parties totaling $557,805 and $577,716, respectively, with related unpaid interest of $92,036 and $62,959 respectively (see Note 3). The Company also has accounts payable-related party’s due to an officer for expense reimbursement and due to an affiliate for services in the total amount of $41,374 and $40,136 at September 30, 2017 and December 31, 2016, respectively. |
NOTE 7 - FAIR VALUE MEASUREMENT
NOTE 7 - FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
NOTE 7 - FAIR VALUE MEASUREMENTS | NOTE 7 – FAIR VALUE MEASUREMENTS We currently measure and report at fair value the liability for warrant derivative instruments. The fair value liabilities for price adjustable warrants have been recorded as determined utilizing the BSM option pricing model and Monte Carlo simulations. The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2017: Balance at September 30, 2017 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (Level 1) (Level 2) (Level 3) Liabilities: Fair value of liability for warrant derivative instruments $ 938,228 $ — $ — $ 938,228 The following is a roll forward through September 30, 2017 of the fair value liability of warrant derivative instruments: Fair Value of Liability for Warrant Derivative Instruments Balance at December 31, 2016 $ 793,099 Initial fair value of warrant liability 2,046,348 Change in fair value included in other (income) loss (1,901,219 ) Balance at September 30, 2017 $ 938,228 The Company calculated the estimated fair values of the liabilities for warrant derivative instruments at March 31, June 30 and August 22, 2017 BSM Inputs Warrants For the Period January 25, to September 30, 2017 Expected Volatility 58-142% Expected Remaining Term 4.22-4.89 years Risk Free Interest Rate 1.978-1.939% |
NOTE 8 - STOCKHOLDERS' DEFICIT
NOTE 8 - STOCKHOLDERS' DEFICIT | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
NOTE 8 - STOCKHOLDERS' DEFICIT | NOTE 8 – STOCKHOLDERS’ DEFICIT Common stock issued for services During the first quarter of 2017, the Company issued 2,903 shares of common stock for services valued at the quoted trading price on respective grant dates resulting in a consulting expense of $15,000. The Company was obligated to issue 6,747 shares of common stock during the third quarter of 2017 for services valued at the quoted trading price on respective grant dates resulting in a consulting expense of $25,000. These shares were issued in November 2017. |
NOTE 9 - COMMON STOCK PURCHASE
NOTE 9 - COMMON STOCK PURCHASE WARRANTS | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
NOTE 9 - COMMON STOCK PURCHASE WARRANTS | NOTE 9 – COMMON STOCK PURCHASE WARRANTS Warrants The following is a summary of activity for warrants to purchase common stock for the nine months ended September 30, 2017: September 30, 2017 Number of Warrants Weighted Avg. Exercise Price Remaining Contractual Life (Years) Outstanding at the beginning of the year 218,764 $ 8.40 3.8 Warrants expired (375 ) 233.45 Warrants issued with debt 308,558 5.25 4.5 Outstanding at end of period 526,947 6.61 4.2 Exercisable at end of period 526,947 $ 6.61 4.2 During the first quarter of 2017, 194,888 warrants were issued with the Securities Purchase Agreement and the amended Placement Agent Agreement. During the same period, 375 warrants expired. During the second quarter of 2017, 59,548 warrants were issued with the Securities Purchase Agreement and the amended Placement Agent Agreement. During the third quarter of 2017, 54,122 warrants were issued with the Securities Purchase Agreement and the amended Placement Agent Agreement. |
NOTE 10 - SUBSEQUENT EVENTS
NOTE 10 - SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
NOTE 10 - SUBSEQUENT EVENTS | NOTE 10 – SUBSEQUENT EVENTS On October 20, 2017, the Company received a short-term unsecured loan in the amount of $50,000 from JMJ Financial. The note was issued with a 20% Original Issue Discount (OID) and a 10% one-time interest charge. The note has a maturity of the earlier of 12 months or closing of a funding of at least $500,000. On October 30, 2017, the Company received a short-term unsecured loan in the amount of $25,000 from JMJ Financial. The note was issued with a 20% Original Issue Discount (OID) and a 10% one-time interest charge. The note has a maturity of the earlier of 12 months or closing of a funding of at least $500,000. On November 14, 2017, the Company obtained a further amendment #4 to the Securities Purchase Agreement (“SPA”) and the $2,500,000 Promissory Note (“Note”). This amendment extended the original Maturity Date for the Promissory Note from August 31, 2017 to November 16, 2017 (“Extended Maturity Date”) and extended the Origination Shares issuance date in the Stock Purchase Agreement from August 31, 2017 to November 16, 2017. On November 16, 2017, the Company obtained a further amendment #5 to the Securities Purchase Agreement (“SPA”) and the $2,500,000 Promissory Note (“Note”). This amendment extended the original Maturity Date for the Promissory Note from November 16, 2017 to November 18, 2017 (“Extended Maturity Date”) and extended the Origination Shares issuance date in the Stock Purchase Agreement from November 16, 2017 to November 18, 2017. On November 20, 2017, the Company obtained a further amendment #6 to the Securities Purchase Agreement ("SPA") and the $2,500,000 Promissory Note ("Note"). This amendment extended the original Maturity Date for the Promissory Note from November 18, 2017 to November 22, 2017 ("Extended Maturity Date") and extended the Origination Shares issuance date in the Stock Purchase Agreement from November 18, 2017 to November 22, 2017. |
NOTE 1 - NATURE OF OPERATIONS17
NOTE 1 - NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | Nature of Operations Duos Technologies Group, Inc. (“Company”), through its operating subsidiary “Duos Technologies, Inc. (“duostech”) is primarily engaged in the design and deployment of state-of-the-art, artificial intelligence driven intelligent technologies systems. duostech converges traditional security measures with information technologies to create “actionable intelligence.” duostech’s IP is built upon two of its core technology platforms (praes i ® t i ® t The Company’s strategy includes expansion of its technology base through organic development efforts, strategic partnerships, and growth through strategic acquisitions. duostech’s primary target industry sectors include transportation, with emphasis on freight and transit railroad owners/operators, petro-chemical, utilities and healthcare. As reported previously, Duos Technologies Group, Inc. is the result of the reverse merger between duostech and a wholly owned subsidiary of Information Systems Associates, Inc., a Florida corporation (“ISA”), which became effective as of April 1, 2015 and as a result of which duostech became a wholly owned subsidiary of the merged entity. The merger was followed by a corporate name change to Duos Technologies Group, Inc., a symbol change from IOSA to DUOT and up-listing from OTC Pink to OTCQB. ISA’s original business of IT Asset Management (ITAM) services for large data centers is now operated as a division of the Company that continues its sales efforts through large strategic partners. ISA developed a methodology for the efficient data collection of assets contained within large data centers and was awarded a patent in 2010 for specific methods to collect and audit data. |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (all of which are of a normal recurring nature) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2017 are not indicative of the results that may be expected for the year ending December 31, 2017 or for any other future period. These unaudited consolidated financial statements and the unaudited condensed notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission (the “SEC”) on March 30, 2017. All share and per share amounts have been presented to give retroactive effect to a 1 for 35 reverse-stock split that occurred in May 2017. |
Reclassification | Reclassification Certain amounts in the 2016 balance sheet have been reclassified from notes payable related parties - current to notes payable related parties - long-term to conform to the 2017 presentation. This reclassification caused notes payable related parties – long-term in 2016 to be increased by $48,231 and notes payable related parties – current to be decreased by the same amount. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, duostech and TrueVue 360, Inc (in-active). All inter-company transactions and balances are eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates. The most significant estimates in the accompanying unaudited consolidated financial statements include the allowance on accounts receivable, valuation of deferred tax assets, valuation of assets acquired and liabilities assumed in business combinations, valuation of intangible and other long-lived assets, estimates of percentage completion on projects and related revenues, valuation of stock-based compensation, valuation of derivatives, valuation of warrants issued with debt, valuation of beneficial conversion features in convertible debt, valuation of stock-based awards and valuation of loss contingencies. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. |
Concentrations | Concentrations Cash Concentrations Cash is maintained at financial institutions and at times, balances may exceed federally insured limits. We have not experienced any losses related to these balances. There were no amounts on deposit in excess of federally insured limits at September 30, 2017. Significant Customers and Concentration of Credit Risk Major Customers and Accounts Receivable The Company had certain customers whose revenue individually represented 10% or more of the CompanyÂ’s total revenue, or whose accounts receivable balances individually represented 10% or more of the CompanyÂ’s total accounts receivable, as follows: For the nine months ended September 30, 2017, three customers accounted for 25%, 19% and 19% of revenues. For the nine months ended September 30, 2016, five customers accounted for 31%, 20%, 16%, 16% and 11% of revenues. At September 30, 2017, two customers accounted for 53% and 12% of accounts receivable. At December 31, 2016, Geographic Concentration Approximately 4.5% of revenue is generated from a customer outside of the United States. |
Derivative Instruments | Derivative Instruments ASC Topic 815, Derivatives and Hedging |
Fair Value of Financial Instruments and Fair Value Measurements | Fair Value of Financial Instruments and Fair Value Measurements We measure our financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, the carrying amounts approximate fair value due to their short maturities. Amounts recorded for notes payable, net of discount, and loans payable also approximate fair value because current interest rates available to us for debt with similar terms and maturities are substantially the same. We follow accounting guidance for financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs, other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings per share (EPS) are computed by dividing net loss applicable to common stock by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss applicable to common stock by the weighted average number of common shares outstanding for the period and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options, stock warrants, convertible debt instruments, convertible preferred stock or other common stock equivalents. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. At September 30, 2017, outstanding warrants to purchase an aggregate of 526,947 shares of common stock; at September 30, 2017, 50,743 shares issuable upon conversion of Series A preferred stock were excluded from the computation of dilutive earnings per share because the inclusion would have been anti-dilutive. |
Segment Information | Segment Information The Company operates in one reportable segment. |
Recent Issued Accounting Standards | Recent Issued Accounting Standards ASU 2017-01 In January 2017, the Financial Accounting Standards Board issued Accounting Standards Update No. 2017-01: "Business Combinations (Topic 805)” - ASU 2017-04 In January 2017, the Financial Accounting Standards Board issued Accounting Standards Update No. 2017-04: "Intangibles - Goodwill and Other (Topic 350)” - ASU 2017-05 In February 2017, the Financial Accounting Standards Board issued Accounting Standards Update No. 2017-05: "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20)” - ASU 2017-08 In March 2017, the Financial Accounting Standards Board issued Accounting Standards Update No. 2017-08: “Receivables – Non-Refundable fees and Other Costs (Subtopic 310-20)” ASU 2016-15 In August 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-02 In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. 2016-02: “Leases (Topic 842)” ASU 2014-09 In May 2014, the Financial Accounting Standards Board issued Update No. 2014-09: “Revenue from Contracts with Customers (Topic 606)” which requires that an entity recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Since the issuance of the original standard, the FASB has issued several updates to the standard which i) clarify the application of the principal versus agent guidance; ii) clarify the guidance relating to performance obligations and licensing; iii) clarify assessment of the collectability criterion, presentation of sales taxes, measurement date for non-cash consideration and completed contracts at transaction; and iv) clarify narrow aspects of ASC 606 or corrects unintended application of the guidance. The new revenue recognition standard, amended by the updates, becomes effective in the first quarter of 2018 and is to be applied retrospectively using one of two prescribed methods. Early adoption is permitted. The Company currently plans to adopt the new standard effective January 1, 2018 and does not believe the adoption of this standard will have a material impact on the amount or timing of its revenues. |
NOTE 3 - DEBT (Tables)
NOTE 3 - DEBT (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable - Financing Agreements | The Company’s notes payable relating to financing agreements classified as current liabilities consist of the following as of: September 30, 2017 December 31, 2016 Notes Payable Principal Interest Principal Interest Third Party - Insurance Note 1 $ 4,412 10.30 % $ 25,075 9.75 % Third Party - Insurance Note 2 19,065 10.00 % 9,861 10.00 % Third Party - Insurance Note 3 52,105 8.30 % — 8.05 % Third Party - Insurance Note 4 25,491 9.95 % 11,432 9.24 % Total $ 101,073 $ 46,368 |
Schedule of Notes Payable - Related Parties | The Company’s notes payable to related parties classified as current liabilities consist of the following as of: September 30, 2017 December 31, 2016 Notes Payable Principal Interest Principal Interest Shareholder $ 65,000 9 % $ 65,000 9 % Related party 13,369 8 % 13,369 8 % Related party — — 10,504 — Related party 56,500 8 % 56,500 8 % Related Party — — 3,170 — Related Party 8,431 8 % 8,431 8 % CFO 31,973 8 % 31,973 8 % Shareholder 226,936 6 % 226,936 6 % CEO 8,899 8 % 8,383 8 % Shareholder 105,219 8 % 105,219 8 % Sub-total current portion 516,327 529,485 Add long-term portion-CEO 41,478 48,231 Total $ 557,805 $ 577,716 |
Schedule of Notes Payable | September 30, 2017 December 31, 2016 Payable To Principal Interest Principal Interest Shareholder $ 19,108 — $ 19,108 — Vendor — — 22,500 — Total $ 19,108 $ 41,608 |
Schedule of Convertible Notes Payable | September 30, 2017 December 31, 2016 Payable To Principal Premium Principal, Including Premium Principal Premium Principal, Including Premium Vendor $ — $ — $ — $ 50,000 $ 50,000 $ 100,000 Vendor — — — 46,975 46,975 93,950 Total $ — $ — $ — $ 96,975 $ 96,975 $ 193,950 |
Schedule of Notes Payable - Third Party | September 30, 2017 December 31, 2016 Payable To Principal Less Unamortized Discounts Principal, Less Unamortized Discounts Principal Less Unamortized Discounts Principal, Less Unamortized Discounts Note 1-non-current $ 1,800,000 $ 395,652 $ 1,404,348 $ 1,800,000 $ 593,478 $ 1,206,522 Note 2-current 2,105,263 — 2,105,263 605,263 559,661 45,602 Total $ 3,905,263 $ 395,652 $ 3,509,611 $ 2,405,263 $ 1,153,139 $ 1,252,124 |
NOTE 7 - FAIR VALUE MEASUREME19
NOTE 7 - FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Summary of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2017: Balance at September 30, 2017 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (Level 1) (Level 2) (Level 3) Liabilities: Fair value of liability for warrant derivative instruments $ 938,228 $ — $ — $ 938,228 |
Schedule of Fair Value Liability of Warrant Derivative Instruments | The following is a roll forward through September 30, 2017 of the fair value liability of warrant derivative instruments: Fair Value of Liability for Warrant Derivative Instruments Balance at December 31, 2016 $ 793,099 Initial fair value of warrant liability 2,046,348 Change in fair value included in other (income) loss (1,901,219 ) Balance at September 30, 2017 $ 938,228 |
Schedule of Fair Value Assumptions Used to Value Warrants | Thus, for the nine months ended September 30, 2017, the Company recognized a gain from the change in derivative liability of $1,901,219 included in the statement of operations under Other Income (Expense), Warrant Derivative Gain related to these warrant derivative instruments. BSM Inputs Warrants For the Period January 25, to September 30, 2017 Expected Volatility 58-142% Expected Remaining Term 4.22-4.89 years Risk Free Interest Rate 1.978-1.939% |
NOTE 9 - COMMON STOCK PURCHAS20
NOTE 9 - COMMON STOCK PURCHASE WARRANTS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Warrant Activity | The following is a summary of activity for warrants to purchase common stock for the nine months ended September 30, 2017: September 30, 2017 Number of Warrants Weighted Avg. Exercise Price Remaining Contractual Life (Years) Outstanding at the beginning of the year 218,764 $ 8.40 3.8 Warrants expired (375 ) 233.45 Warrants issued with debt 308,558 5.25 4.5 Outstanding at end of period 526,947 6.61 4.2 Exercisable at end of period 526,947 $ 6.61 4.2 |
NOTE 1 - NATURE OF OPERATIONS21
NOTE 1 - NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) - USD ($) | 1 Months Ended | |
May 31, 2017 | Sep. 30, 2017 | |
Number of Warrants Outstanding | 526,947 | |
Reverse split | 1 for 35 | |
Increase to notes payable from related parties, non-current portion, due to reclassification adjustment | $ 48,231 | |
Series A Preferred Stock [Member] | ||
Number of Shares upon Conversion | 50,743 |
NOTE 1 - NATURE OF OPERATIONS22
NOTE 1 - NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Credit Risk) (Details) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Revenue [Member] | Outside of the US [Member] | |||
Concentration of Credit Risk | 4.50% | ||
Customer A [Member] | Revenue [Member] | |||
Concentration of Credit Risk | 25.00% | 31.00% | |
Customer A [Member] | Accounts Receivable | |||
Concentration of Credit Risk | 53.00% | 50.00% | |
Customer B [Member] | Revenue [Member] | |||
Concentration of Credit Risk | 19.00% | 20.00% | |
Customer B [Member] | Accounts Receivable | |||
Concentration of Credit Risk | 12.00% | 26.00% | |
Customer C [Member] | Revenue [Member] | |||
Concentration of Credit Risk | 19.00% | 16.00% | |
Customer C [Member] | Accounts Receivable | |||
Concentration of Credit Risk | 14.00% | ||
Customer D [Member] | Revenue [Member] | |||
Concentration of Credit Risk | 16.00% | ||
Customer E [Member] | Revenue [Member] | |||
Concentration of Credit Risk | 11.00% |
NOTE 2 - GOING CONCERN (Details
NOTE 2 - GOING CONCERN (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||||||||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Aug. 22, 2017 | Jun. 27, 2017 | Jun. 01, 2017 | Apr. 25, 2017 | Mar. 14, 2017 | Mar. 06, 2017 | Feb. 27, 2017 | Feb. 08, 2017 | Jan. 25, 2017 | Dec. 31, 2016 | Dec. 20, 2016 | |
Net loss | $ 124,868 | $ 591,074 | $ 3,737,959 | $ 2,092,558 | |||||||||||
Net cash used in operations | 1,046,108 | $ 1,518,348 | |||||||||||||
Working capital deficit | 7,577,344 | 7,577,344 | |||||||||||||
Stockholders' Deficit | 9,238,906 | 9,238,906 | $ 5,523,188 | ||||||||||||
Accumulated deficit | $ 27,274,428 | $ 27,274,428 | $ 23,518,709 | ||||||||||||
Aggregate principal amount Promissory Note | $ 250,000 | $ 100,000 | $ 100,000 | $ 75,000 | $ 250,000 | $ 150,000 | $ 250,000 | $ 100,000 | $ 150,000 | $ 2,500,000 | |||||
Remitted by the investor upon signing amount | 575,000 | ||||||||||||||
Futher Debt amount raised as per milestones | 10,000,000 | ||||||||||||||
Termination date of Registration Statement | Aug. 16, 2017 | ||||||||||||||
Minimum [Member] | |||||||||||||||
Expected capital from investment banking engagement | 11,000,000 | ||||||||||||||
Maximum [Member] | |||||||||||||||
Expected capital from investment banking engagement | $ 15,000,000 |
NOTE 3 - DEBT (Narrative) (Deta
NOTE 3 - DEBT (Narrative) (Details) - USD ($) | Nov. 20, 2017 | Nov. 16, 2017 | Nov. 14, 2017 | Aug. 14, 2017 | Aug. 12, 2017 | Aug. 01, 2017 | Jul. 12, 2017 | Jul. 11, 2017 | Jun. 01, 2017 | May 15, 2017 | May 13, 2017 | Mar. 14, 2017 | Mar. 06, 2017 | Feb. 08, 2017 | Dec. 20, 2016 | Aug. 11, 2016 | Apr. 02, 2016 | Jan. 11, 2016 | Aug. 10, 2015 | Apr. 08, 2015 | Mar. 03, 2015 | Dec. 12, 2013 | Aug. 31, 2017 | Aug. 22, 2017 | Jun. 27, 2017 | Apr. 25, 2017 | Apr. 15, 2017 | Feb. 27, 2017 | Feb. 02, 2017 | Jan. 25, 2017 | Jan. 23, 2017 | Dec. 20, 2016 | Jul. 19, 2016 | Mar. 31, 2016 | Jan. 28, 2016 | Jan. 24, 2016 | Nov. 30, 2015 | Sep. 30, 2015 | Jan. 29, 2015 | Mar. 31, 2016 | Sep. 30, 2015 | Jun. 30, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Sep. 15, 2017 | Mar. 31, 2017 | Feb. 03, 2017 | Dec. 23, 2016 | Dec. 31, 2015 | Apr. 02, 2015 | May 28, 2008 |
Amount of borrowing | $ 1,239,750 | $ 1,518,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Monthly installments of principal and interest | 250,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense debt | 3,064,086 | 131,884 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Interest payment | 110,919 | 125,687 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debenture issued | $ 208,201 | $ 198,089 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants issued to placement agent | 526,947 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Total amount due to shareholder | $ 41,374 | $ 40,136 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument amount | $ 100,000 | $ 250,000 | $ 150,000 | $ 100,000 | $ 2,500,000 | $ 250,000 | $ 100,000 | $ 75,000 | $ 250,000 | $ 150,000 | $ 2,500,000 | |||||||||||||||||||||||||||||||||||||||||
Maturity date | Aug. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Subsequent Event [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument amount | $ 2,500,000 | $ 2,500,000 | $ 2,500,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Maturity date | Nov. 22, 2017 | Nov. 18, 2017 | Nov. 16, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Notes Payable [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Maturity date | Nov. 20, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of convertible debt | $ 212,077 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Amount of monthly interest payment required to be paid on convertible debt through maturity date | $ 63,633 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Bridge Loan [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument amount | $ 2,500,000 | $ 2,500,000 | $ 2,500,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Payment obligation | $ 1,842,105 | $ 1,627,632 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Maturity date | Aug. 31, 2017 | Jul. 31, 2017 | Jul. 31, 2017 | Jun. 15, 2017 | Jun. 15, 2017 | May 15, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||
Placement Agent [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Expiration period | 3 years | |||||||||||||||||||||||||||||||||||||||||||||||||||
Payment to placement agent | $ 142,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Strike price | $ 14 | |||||||||||||||||||||||||||||||||||||||||||||||||||
CW Electric [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued interest balance | $ 8,032 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Remitted amount out of proceeds in final settlement | 558,032 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Agreed settlement amount | 550,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Related party principal shareholder [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate | 6.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued interest balance | $ 8,616 | $ 8,616 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount of note | $ 310,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Maturity date | Oct. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. Adrian Goldfarb [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | 31,973 | $ 8,783 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued interest balance | 4,020 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Monthly interest rate | 8.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount of note | $ 30,000 | $ 365 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Repayments of debt | 1,307 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory new note [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Monthly installments of principal and interest | $ 27,750 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate | 6.00% | 6.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | $ 320,166 | $ 320,166 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Repayments of debt | 27,007 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. Gianni Arcaini [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate | 9.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | $ 65,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued interest balance | 53,618 | 49,231 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Third Party - Insurance Note 4 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Monthly installments of principal and interest | $ 4,373 | $ 5,782 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate | 9.95% | 9.24% | ||||||||||||||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | $ 49,000 | 25,491 | 11,432 | $ 65,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Third Party - Insurance Note 3 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Monthly installments of principal and interest | 13,252 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate | 8.30% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | 52,105 | 0 | $ 127,620 | |||||||||||||||||||||||||||||||||||||||||||||||||
Third Party - Insurance Note 2 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Monthly installments of principal and interest | 1,702 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate | 10.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | 19,065 | 9,861 | $ 19,065 | |||||||||||||||||||||||||||||||||||||||||||||||||
Third Party - Insurance Note 1 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Monthly installments of principal and interest | 2,234 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate | 10.30% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | 4,412 | 25,075 | $ 25,075 | |||||||||||||||||||||||||||||||||||||||||||||||||
JMJ Financial [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Amount of borrowing | 105,263 | 263,158 | 157,895 | 105,263 | 263,158 | 105,263 | 78,947 | 263,158 | 157,895 | |||||||||||||||||||||||||||||||||||||||||||
Net amount received | 87,000 | 217,500 | 130,500 | 87,000 | 217,500 | 87,000 | 65,250 | 217,500 | 130,500 | |||||||||||||||||||||||||||||||||||||||||||
Interest rate | 5.00% | 5.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount of note | $ 2,500,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants issued to placement agent, fair value | $ 115,289 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | 5,263 | 13,158 | 7,895 | 5,263 | 13,158 | 5,263 | 3,947 | 13,158 | 7,895 | |||||||||||||||||||||||||||||||||||||||||||
Legal fees | 5,000 | 12,500 | 7,500 | 5,000 | 12,500 | 5,000 | 3,750 | 12,500 | 7,500 | |||||||||||||||||||||||||||||||||||||||||||
Total cash issue costs | 8,000 | 20,000 | 12,000 | 8,000 | 20,000 | 8,000 | 6,000 | 20,000 | 12,000 | |||||||||||||||||||||||||||||||||||||||||||
Debt discounts | 92,000 | 230,000 | 138,000 | 92,000 | 230,000 | 92,000 | 69,000 | 230,000 | 138,000 | |||||||||||||||||||||||||||||||||||||||||||
Warrant Value issued | $ 20,050 | $ 50,138 | $ 30,075 | $ 20,050 | $ 50,125 | $ 20,050 | $ 15,038 | $ 50,138 | $ 30,075 | |||||||||||||||||||||||||||||||||||||||||||
Sale of Common stock per share | $ 5.25 | $ 5.25 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Initial principal amount | $ 605,263 | $ 605,263 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Consideration amount | 2,350,000 | $ 2,350,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage of per share price to pubic offering | 80.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Cash closing expenses | $ 46,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Vendor [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | 50,000 | $ 50,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Settlement amount | 150,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued interest balance | $ 7,511 | $ 4,723 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Interest payment | $ 3,230 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Gain loss on settlement | 64,647 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Monthly interest rate | 1.00% | 1.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||
Wife of CEO [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate | 8.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | 56,500 | $ 56,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued interest balance | 10,864 | 7,474 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from loan | $ 5,000 | $ 10,000 | $ 20,000 | 9,500 | $ 12,000 | |||||||||||||||||||||||||||||||||||||||||||||||
Facility Team of Ontario [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Monthly installments of principal and interest | $ 2,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | 0 | 22,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Settlement amount | $ 60,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Related party principal shareholder [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate | 8.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | 105,219 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from loan | $ 111,645 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Maturity date | Feb. 11, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Related party loan from CEO [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Monthly installments of principal and interest | $ 1,052 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate | 7.99% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | $ 59,925 | 50,377 | 56,614 | |||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from loan | 60,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Fees on loan proceeds | $ 75 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Private Placement [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount of note | $ 1,800,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | 5.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Senior secured and warrant exercisable securities, shares | 71,249 | 71,249 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Expiration period | 5 years | |||||||||||||||||||||||||||||||||||||||||||||||||||
Warrant exercise price | $ 12.25 | $ 12.25 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of the warrants | $ 466,031 | $ 466,031 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued interest rate | 14.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Additional accrued interest rate | 2.00% | 2.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||
Postponement payment | $ 5,000 | $ 5,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Placement agents fees | $ 28,750 | 137,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total debt funding | $ 1,800,000 | $ 1,800,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants issued to placement agent | 9,224 | 9,224 | 5,715 | 5,715 | ||||||||||||||||||||||||||||||||||||||||||||||||
Warrants issued to placement agent, fair value | $ 43,272 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Payment of additional obligations at closing | 690,110 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net proceeds from placement agreement | $ 529,000 | 1,518,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt issuance expenses | 40,000 | $ 40,000 | 20,000 | $ 30,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 30,263 | 30,263 | 90,000 | 90,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Payment to placement agent | $ 50,000 | $ 50,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Legal fees | 10,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Total cash issue costs | $ 192,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid balance of debt | 20,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Greentree Financial Group, Inc [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Agreed settlement amount | $ 150,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Original Issue Discount (OID) promissory note [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Monthly installments of principal and interest | $ 1,535 | 4,282 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate | 18.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | 15,000 | 13,369 | $ 15,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Accrued interest balance | $ 2,651 | 1,604 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Monthly interest rate | 8.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount of note | $ 17,651 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Maturity date | Dec. 15, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||
OID promissory note [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Monthly installments of principal and interest | $ 968 | $ 2,700 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate | 30.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | $ 10,000 | 8,431 | 10,593 | |||||||||||||||||||||||||||||||||||||||||||||||||
Accrued interest balance | $ 1,131 | 1,012 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Interest payment | $ 1,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Monthly interest rate | 8.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount of note | $ 11,131 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Maturity date | Dec. 15, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||
TrueVue360, Inc. [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Monthly installments of principal and interest | $ 2,100 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate | 1.50% | 1.50% | ||||||||||||||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | $ 28,040 | $ 28,040 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued interest balance | $ 9,777 | $ 9,777 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Monthly interest rate | 0.00% | 0.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount of note | $ 37,817 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Warrant exercise price | $ 9.80 | $ 9.80 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants issued to placement agent | 14,321 | 14,321 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Two promissory notes [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | $ 275,660 | $ 275,660 | 0 | 10,504 | $ 212,693 | |||||||||||||||||||||||||||||||||||||||||||||||
Loss on conversion | $ 115,139 | $ 115,139 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Monthly interest rate | 30.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Shares exchanged in debt | 1,002,401 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Purchase Agreement [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate | 1.50% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | 44,325 | 93,950 | $ 93,950 | $ 44,325 | ||||||||||||||||||||||||||||||||||||||||||||||||
Settlement amount | 150,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued interest balance | 2,650 | 12,682 | $ 4,228 | |||||||||||||||||||||||||||||||||||||||||||||||||
Premium | $ 46,975 | 46,975 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Former CEO of ISA [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | 0 | 3,170 | $ 30,378 | |||||||||||||||||||||||||||||||||||||||||||||||||
Shareholder [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | 226,936 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued interest balance | 7,078 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount paid | 125,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Total amount due to shareholder | 132,078 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Third Party [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | 395,652 | 1,153,139 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Note 2-current [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | 559,661 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Note 1-non-current [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 395,652 | $ 593,478 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Unrelated party investor [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes payable outstanding balance | $ 19,108 |
NOTE 3 - DEBT (Schedule of Note
NOTE 3 - DEBT (Schedule of Notes Payable - Financing Agreements) (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Notes Payable, Principal | $ 101,073 | $ 46,368 |
Third Party - Insurance Note 1 [Member] | ||
Notes Payable, Principal | $ 4,412 | $ 25,075 |
Notes Payable, Interest | 10.30% | 9.75% |
Third Party - Insurance Note 2 [Member] | ||
Notes Payable, Principal | $ 19,065 | $ 9,861 |
Notes Payable, Interest | 10.00% | 10.00% |
Third Party - Insurance Note 3 [Member] | ||
Notes Payable, Principal | $ 52,105 | |
Notes Payable, Interest | 8.30% | 8.05% |
Third Party - Insurance Note 4 [Member] | ||
Notes Payable, Principal | $ 25,491 | $ 11,432 |
Notes Payable, Interest | 9.95% | 9.24% |
NOTE 3 - DEBT (Schedule of No26
NOTE 3 - DEBT (Schedule of Notes Payable - Related Parties) (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Notes Payable - Related Parties, Principal Amount | $ 557,805 | $ 577,716 |
Add long-term portion-CEO | 41,478 | 48,231 |
Total | 516,327 | 529,485 |
Shareholder [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 65,000 | $ 65,000 |
Notes Payable - Related Parties, Interest Rate | 9.00% | 9.00% |
Related Party [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 13,369 | $ 13,369 |
Notes Payable - Related Parties, Interest Rate | 8.00% | 8.00% |
Related Party [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 10,504 | |
Notes Payable - Related Parties, Interest Rate | ||
Related Party [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 56,500 | $ 56,500 |
Notes Payable - Related Parties, Interest Rate | 8.00% | 8.00% |
Related Party [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 3,170 | |
Notes Payable - Related Parties, Interest Rate | ||
Related Party [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 8,431 | $ 8,431 |
Notes Payable - Related Parties, Interest Rate | 8.00% | 8.00% |
Mr. Adrian Goldfarb [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 31,973 | $ 31,973 |
Notes Payable - Related Parties, Interest Rate | 8.00% | 8.00% |
Shareholder [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 226,936 | $ 226,936 |
Notes Payable - Related Parties, Interest Rate | 6.00% | 6.00% |
Mr. Gianni Arcaini [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 8,899 | $ 8,383 |
Notes Payable - Related Parties, Interest Rate | 8.00% | 8.00% |
Shareholder [Member] | ||
Notes Payable - Related Parties, Principal Amount | $ 105,219 | $ 105,219 |
Notes Payable - Related Parties, Interest Rate | 8.00% | 8.00% |
NOTE 3 - DEBT (Schedule of No27
NOTE 3 - DEBT (Schedule of Notes Payable) (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Notes Payable-Net of Discounts, Principal Amount | $ 19,108 | $ 41,608 |
Shareholder [Member] | ||
Notes Payable-Net of Discounts, Principal Amount | $ 19,108 | $ 19,108 |
Notes Payable-Net of Discounts, Interest | ||
Vendor [Member] | ||
Notes Payable-Net of Discounts, Principal Amount | $ 22,500 | |
Notes Payable-Net of Discounts, Interest |
NOTE 3 - DEBT (Schedule of Conv
NOTE 3 - DEBT (Schedule of Convertible Notes Payable) (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Convertible Notes Payable, Principal Amount | $ 96,975 | |
Convertible Notes Payable, Premium | 96,975 | |
Principal, Including Premium | 193,950 | |
Vendor [Member] | ||
Convertible Notes Payable, Principal Amount | 50,000 | |
Convertible Notes Payable, Premium | 50,000 | |
Principal, Including Premium | 100,000 | |
Vendor [Member] | ||
Convertible Notes Payable, Principal Amount | 46,975 | |
Convertible Notes Payable, Premium | 46,975 | |
Principal, Including Premium | $ 93,950 |
NOTE 3 - DEBT (Schedule of No29
NOTE 3 - DEBT (Schedule of Notes Payable - Third Party) (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Principal, Less Unamortized Discounts | $ 19,108 | $ 41,608 |
Note 1-non-current [Member] | ||
Principal Amount | 1,800,000 | 1,800,000 |
Less unamortized discounts | 395,652 | 593,478 |
Principal, Less Unamortized Discounts | 1,404,348 | 1,206,522 |
Note 2-current [Member] | ||
Principal Amount | 2,105,263 | 605,263 |
Less unamortized discounts | 559,661 | |
Principal, Less Unamortized Discounts | 2,105,263 | 45,602 |
Third Party [Member] | ||
Principal Amount | 3,905,263 | 2,405,263 |
Less unamortized discounts | 395,652 | 1,153,139 |
Principal, Less Unamortized Discounts | $ 3,509,611 | $ 1,252,124 |
NOTE 4 - LINE OF CREDIT (Detail
NOTE 4 - LINE OF CREDIT (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 | Apr. 02, 2015 |
Line of Credit - Wells Fargo Bank | $ 34,233 | $ 38,019 | |
Line of Credit - Wells Fargo Bank [Member] | |||
Line of Credit - Wells Fargo Bank | $ 34,233 | $ 38,019 | $ 40,000 |
Interest rate | 10.75% |
NOTE 5 - COMMITMENTS AND CONT31
NOTE 5 - COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Mar. 31, 2017 | Jan. 23, 2017 | Sep. 30, 2015 | Sep. 30, 2017 | Dec. 31, 2016 | May 23, 2016 | Mar. 28, 2016 | Jun. 30, 2015 | Mar. 31, 2015 | |
Aggregate principal Convertible Notes payable | $ 96,975 | ||||||||
Delinquent portion | 1,178,666 | 444,476 | |||||||
Delinquent portion of payroll taxes payable | 1,149,189 | $ 400,076 | |||||||
Monthly payroll installment agreement amount | $ 25,000 | ||||||||
Monthly installment payments | $ 250,000 | ||||||||
Convertible Notes Payable [Member] | |||||||||
Convertible notes | $ 46,975 | $ 50,000 | |||||||
Facility Team [Member] | |||||||||
Initial amount paid to consultant | $ 2,500 | ||||||||
Settlement amount | $ 60,000 | ||||||||
Final payment made for settlement of litigation matter | $ 5,000 | ||||||||
Greentree Financial Group, Inc [Member] | |||||||||
Aggregate principal Convertible Notes payable | $ 96,975 | ||||||||
Settlement amount | $ 150,000 |
NOTE 6 - RELATED PARTIES (Narra
NOTE 6 - RELATED PARTIES (Narrative) (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Related Party Transaction [Line Items] | ||
Notes and loans payable to related parties | $ 557,805 | $ 577,716 |
Unpaid interest | 92,036 | 62,959 |
Due to the former parent | 41,374 | 40,136 |
Mr. Gianni Arcaini [Member] | ||
Related Party Transaction [Line Items] | ||
Notes and loans payable to related parties | 8,899 | 8,383 |
Mr. Adrian Goldfarb [Member] | ||
Related Party Transaction [Line Items] | ||
Notes and loans payable to related parties | 31,973 | $ 31,973 |
June 2017 Arcaini Letter Agreement [Member] | Mr. Gianni Arcaini [Member] | ||
Related Party Transaction [Line Items] | ||
Amount owed to related party from conversion of deferred compensation into common stock | $ 700,543 | |
Warrants to be issued to related party upon consumation of Offering | 140,109 | |
Termination date of Letter Agreement with related party | Aug. 16, 2017 | |
June 2017 Goldfarb Letter Agreement [Member] | Mr. Adrian Goldfarb [Member] | ||
Related Party Transaction [Line Items] | ||
Amount owed to related party from conversion of deferred compensation into common stock | $ 33,620 | |
Warrants to be issued to related party upon consumation of Offering | 6,724 | |
Termination date of Letter Agreement with related party | Aug. 16, 2017 |
NOTE 7 - FAIR VALUE MEASUREME33
NOTE 7 - FAIR VALUE MEASUREMENTS (Summary of Financial Assets and Liabilities at Fair Value) (Details) | Sep. 30, 2017USD ($) |
Liabilities: | |
Fair value of liability for warrant derivative instruments | $ 938,228 |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | |
Liabilities: | |
Fair value of liability for warrant derivative instruments | |
Significant Other Observable Inputs (Level 2) [Member] | |
Liabilities: | |
Fair value of liability for warrant derivative instruments | |
Significant Unobservable Inputs (Level 3) [Member] | |
Liabilities: | |
Fair value of liability for warrant derivative instruments | $ 938,228 |
NOTE 7 - FAIR VALUE MEASUREME34
NOTE 7 - FAIR VALUE MEASUREMENTS (Schedule of Fair Value Liability of Warrant Derivative Instruments) (Details) | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Fair Value Disclosures [Abstract] | |
Begining Balance | $ 793,099 |
Initial fair value of warrant liability | 2,046,348 |
Change in fair value included in other (income) loss | (1,901,219) |
Ending Balance | $ 938,228 |
NOTE 7 - FAIR VALUE MEASUREME35
NOTE 7 - FAIR VALUE MEASUREMENTS (Schedule of Fair Value Assumptions Used to Value Warrants) (Details) - Warrant [Member] | 8 Months Ended |
Sep. 30, 2017$ / shares | |
Minimum [Member] | |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | |
Expected Volatility | 58.00% |
Expected Remaining Term | 4 years 2 months 19 days |
Risk Free Interest Rate | 1.978% |
Closing prices of common stock | $ 1.05 |
Maximum [Member] | |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | |
Expected Volatility | 142.00% |
Expected Remaining Term | 4 years 10 months 21 days |
Risk Free Interest Rate | 1.939% |
Closing prices of common stock | $ 8.75 |
NOTE 8 - STOCKHOLDERS' DEFICIT
NOTE 8 - STOCKHOLDERS' DEFICIT (Details) - USD ($) | 1 Months Ended | 3 Months Ended |
Nov. 17, 2017 | Mar. 31, 2017 | |
Subsequent Event [Line Items] | ||
Common stock issued for services, shares | 2,903 | |
Common stock issued for services, value | $ 15,000 | |
Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ||
Common stock issued for services, shares | 6,747 | |
Common stock issued for services, value | $ 25,000 |
NOTE 9 - COMMON STOCK PURCHAS37
NOTE 9 - COMMON STOCK PURCHASE WARRANTS (Narrative) (Details) - shares | 3 Months Ended | ||
Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Warrants issued | 54,122 | 59,548 | 194,888 |
Warrants expired | 375 |
NOTE 9 - COMMON STOCK PURCHAS38
NOTE 9 - COMMON STOCK PURCHASE WARRANTS (Summary of Warrant Activity) (Details) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2017 | |
Number of Warrants | ||||
Warrants issued with debt | 54,122 | 59,548 | 194,888 | |
Warrant [Member] | ||||
Number of Warrants | ||||
Outstanding at the beginning of the year | 218,764 | 218,764 | ||
Warrants expired | (375) | |||
Warrants issued with debt | 308,558 | |||
Outstanding at end of period | 526,947 | 526,947 | ||
Exercisable at end of period | 526,947 | 526,947 | ||
Weighted Avg. Exercise Price | ||||
Outstanding at the beginning of the year | $ 8.40 | $ 8.40 | ||
Warrants expired | 233.45 | |||
Warrants issued with debt | 5.25 | |||
Outstanding at end of period | $ 6.61 | 6.61 | ||
Exercisable at end of period | $ 6.61 | $ 6.61 | ||
Remaining Contractual Life (Years) | ||||
Outstanding at the beginning of the year | 3 years 9 months 18 days | |||
Warrants issued with debt | 4 years 6 months | |||
Outstanding at end of period | 4 years 2 months 12 days | |||
Exercisable at end of period | 4 years 2 months 12 days |
NOTE 10 - SUBSEQUENT EVENTS (De
NOTE 10 - SUBSEQUENT EVENTS (Details) - USD ($) | Nov. 20, 2017 | Nov. 16, 2017 | Nov. 14, 2017 | Oct. 30, 2017 | Oct. 20, 2017 | Aug. 31, 2017 | Aug. 22, 2017 | Jun. 27, 2017 | Jun. 01, 2017 | Apr. 25, 2017 | Mar. 14, 2017 | Mar. 06, 2017 | Feb. 27, 2017 | Feb. 08, 2017 | Jan. 25, 2017 | Dec. 20, 2016 |
Subsequent Event [Line Items] | ||||||||||||||||
Debt instrument amount | $ 250,000 | $ 100,000 | $ 100,000 | $ 75,000 | $ 250,000 | $ 150,000 | $ 250,000 | $ 100,000 | $ 150,000 | $ 2,500,000 | ||||||
Maturity date | Aug. 31, 2017 | |||||||||||||||
Subsequent Event [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Debt instrument amount | $ 2,500,000 | $ 2,500,000 | $ 2,500,000 | |||||||||||||
Maturity date | Nov. 22, 2017 | Nov. 18, 2017 | Nov. 16, 2017 | |||||||||||||
Subsequent Event [Member] | JMJ Financial [Member] | Unsecured Loan [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Proceeds from short term loan | $ 25,000 | $ 50,000 | ||||||||||||||
Percentage of Original Issue Discount | 20.00% | 20.00% | ||||||||||||||
Interest rate | 10.00% | 10.00% | ||||||||||||||
Maturity | The note has a maturity of the earlier of 12 months or closing of a funding of at least $500,000. | The note has a maturity of the earlier of 12 months or closing of a funding of at least $500,000. |