Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2021 | Aug. 25, 2021 | |
Document Information Line Items | ||
Entity Registrant Name | HWN, INC. | |
Trading Symbol | SGSI | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 31,808,366 | |
Amendment Flag | false | |
Entity Central Index Key | 0001413891 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Jun. 30, 2021 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 000-53461 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 81-5055489 | |
Entity Address, Address Line One | 980 North Federal Highway | |
Entity Address, Address Line Two | Suite 304 | |
Entity Address, City or Town | Boca Raton | |
Entity Address, State or Province | FL | |
Entity Address, Postal Zip Code | 32432 | |
Title of 12(b) Security | Common stock | |
City Area Code | 407 | |
Entity Interactive Data Current | Yes | |
Local Phone Number | 512-9102 | |
Security Exchange Name | NYSE |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Current Assets: | ||
Cash | $ 2,195,227 | $ 436,448 |
Restricted cash | 2,000,000 | |
Accounts receivable, net of allowances of $38,881 and $0 | 6,209,809 | 2,519,271 |
Contract assets | 1,066,386 | |
Prepaid expenses and deposits | 315,800 | 229,408 |
Total current assets | 11,787,222 | 3,185,127 |
Property and equipment, net of accumulated depreciation of $355,099 and $294,045, respectively | 365,146 | 384,109 |
Goodwill | 18,742,064 | 5,169,719 |
Intangible assets, net of accumulated amortization of $18,464 and $0 | 6,396,974 | |
Operating lease right-of-use assets | 294,974 | 239,489 |
Other assets | 709,545 | |
Total assets | 38,295,925 | 8,978,444 |
Current Liabilities: | ||
Accounts payable and accrued liabilities | 5,252,461 | 1,479,119 |
Contract liabilities | 827,533 | 464,450 |
Loans payable to related parties, current portion | 2,547,252 | |
Loans payable, current portion | 1,101,616 | 82,425 |
Convertible debentures, current portion, net of discount of $642,267 and $0, respectively | 671,270 | |
Factor financing | 2,329,524 | |
Derivative liabilities, current portion | 9,216,517 | |
Operating lease liabilities | 344,227 | 283,104 |
Total current liabilities | 22,290,400 | 2,309,098 |
Long-term liabilities: | ||
Loans payable, net of current portion | 4,830,586 | 2,886,796 |
Total long-term liabilities | 4,830,586 | 2,886,796 |
Total liabilities | 27,120,986 | 5,195,894 |
Commitments and Contingencies | ||
Total mezzanine equity | 2,085,984 | |
Common stock; $0.00001 par value; 1,000,000,000 shares authorized; 28,278,545 and 0 issued and 28,276,474 and 0 outstanding as of June 30, 2021 and December 31, 2020, respectively | 283 | |
Additional paid-in capital | 7,048,852 | |
Retained earnings | 358,381 | 2,896,346 |
Total HWN, Inc. stockholders’ deficit | 7,407,516 | 2,896,436 |
Non controlling interest | 1,681,439 | 886,204 |
Total stockholders’ equity | 9,088,955 | 3,782,550 |
Total liabilities and stockholders’ deficit | 38,295,925 | 8,978,444 |
Series A Preferred Stock | ||
Long-term liabilities: | ||
Preferred stock value | 814,984 | |
Series D Preferred Stock | ||
Long-term liabilities: | ||
Preferred stock value | $ 1,271,000 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Accounts receivable, net of allowances (in Dollars) | $ 38,881 | $ 0 |
Accumulated depreciation (in Dollars) | 355,099 | 294,045 |
Tradenames (net accumulated amortization) (in Dollars) | 18,464 | 0 |
Convertible debentures, net of discount (in Dollars) | $ 642,267 | $ 0 |
Common stock, par value (in Dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 28,278,545 | 0 |
Common stock, shares outstanding | 28,276,474 | 0 |
Series A Preferred Stock | ||
Preferred stock, par value (in Dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 8,000,000 | 8,000,000 |
Preferred stock, shares issued | 400,000 | 0 |
Preferred stock, shares outstanding | 400,000 | 0 |
Series D Preferred Stock | ||
Preferred stock, par value (in Dollars per share) | $ 10,000 | $ 10,000 |
Preferred stock, shares authorized | 1,590 | 1,590 |
Preferred stock, shares issued | 690 | 690 |
Preferred stock, shares outstanding | 690 | 690 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Income Statement [Abstract] | ||||
Revenue | $ 7,794,068 | $ 3,134,899 | $ 12,867,904 | $ 8,744,510 |
Operating expenses: | ||||
Cost of revenues | 5,340,448 | 2,071,726 | 8,318,993 | 5,394,313 |
Depreciation and amortization | 48,939 | 25,968 | 77,927 | 48,203 |
Salaries and wages | 2,144,435 | 1,125,272 | 3,400,430 | 2,514,957 |
General and administrative | 790,104 | 450,445 | 1,403,826 | 1,109,754 |
Total operating expenses | 8,324,436 | 3,673,411 | 13,201,176 | 9,067,227 |
Income (loss) from operations | (530,368) | (538,512) | (333,272) | (322,717) |
Other income (expenses): | ||||
Interest expense | (57,984) | (39,398) | (102,411) | (68,416) |
Loss) on settlement of debt | (127,643) | (127,643) | ||
Amortization of discounts on convertible debentures and loans payable | 123,730 | 123,730 | ||
Gain (loss) on change in fair value of derivatives | (1,576,315) | (1,576,315) | ||
Exchange gain | 10,503 | 10,502 | ||
Gain on settlement of warrants | 5,072 | 5,072 | ||
Management fee income | 208,668 | 208,668 | ||
Other income | 284,604 | 469 | 284,938 | 687 |
Gain on PPP loan forgiveness | 250,800 | |||
Total other income (expense) | (1,129,365) | (38,929) | (922,659) | (67,729) |
Net loss before income taxes | (1,659,733) | (577,441) | (1,225,971) | (390,446) |
Provision for income taxes | ||||
Net (loss) before non-controlling interest | (1,659,733) | (577,441) | (1,225,971) | (390,446) |
Less: Net income attributable to non -controlling interest | (291,857) | (19,429) | (795,234) | (127,853) |
Net (loss) attributable to HWN, Inc. common stockholders | $ (1,951,590) | $ (596,870) | $ (2,051,165) | $ (518,299) |
(Loss) per share attributable to HWNs, Inc. common stockholders basic and diluted: | ||||
Net (loss) basic and diluted (in Dollars per share) | $ (0.36) | $ (0.55) | ||
Weighted average common shares outstanding: | ||||
Basic and diluted (in Shares) | 4,557,157 | 2,291,167 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholder’s Deficit (Unaudited) - USD ($) | Common stock | Additional paid-in capital | Accumulated deficit | Non controlling interest | Total |
Balance at Dec. 31, 2019 | $ 3,509,870 | $ 1,240,840 | $ 4,750,710 | ||
Balance (in Shares) at Dec. 31, 2019 | |||||
Distributions to shareholders | (6,954) | (351,968) | (358,922) | ||
Net loss for the period | 78,571 | 108,425 | 186,996 | ||
Balance at Mar. 31, 2020 | 3,581,487 | 997,297 | 4,578,784 | ||
Balance (in Shares) at Mar. 31, 2020 | |||||
Net loss for the period | (596,870) | 19,429 | (577,441) | ||
Balance at Jun. 30, 2020 | 2,984,617 | 1,016,726 | 4,001,343 | ||
Balance (in Shares) at Jun. 30, 2020 | |||||
Balance at Dec. 31, 2020 | 2,896,346 | 886,204 | 3,782,550 | ||
Balance (in Shares) at Dec. 31, 2020 | |||||
Net loss for the period | (99,575) | 503,378 | 403,803 | ||
Balance at Mar. 31, 2021 | 2,796,771 | 1,389,582 | 4,186,353 | ||
Balance (in Shares) at Mar. 31, 2021 | |||||
Issuance of shares for reverse merger | $ 255 | 5,561,720 | 5,561,975 | ||
Issuance of shares for reverse merger (in Shares) | 25,474,625 | ||||
Stock compensation in connection with reverse merger | 729,292 | 729,292 | |||
Fair value of convertible debt issued to HWN shareholders | (486,800) | (486,800) | |||
Issuance of common stock to Cobra Equities upon conversion of a convertible debenture | $ 11 | 306,500 | 306,511 | ||
Issuance of common stock to Cobra Equities upon conversion of a convertible debenture (in Shares) | 1,086,917 | ||||
Issuance of common stock to Efrat Ioldersnvestments upon conversion of a convertible debenture | $ 6 | 223,733 | 223,739 | ||
Issuance of common stock to Efrat Ioldersnvestments upon conversion of a convertible debenture (in Shares) | 660,000 | ||||
Issuance of common stock to Dominion upon conversion of Series A preferred stock | $ 10 | 209,006 | 209,016 | ||
Issuance of common stock to Dominion upon conversion of Series A preferred stock (in Shares) | 985,651 | ||||
Issuance of common stock to Pawn Funding upon exercise of warrants | $ 1 | 18,601 | 18,602 | ||
Issuance of common stock to Pawn Funding upon exercise of warrants (in Shares) | 69,281 | ||||
Net loss for the period | (1,951,590) | 291,857 | (1,659,733) | ||
Balance at Jun. 30, 2021 | $ 283 | $ 7,048,852 | $ 358,381 | $ 1,681,439 | $ 9,088,955 |
Balance (in Shares) at Jun. 30, 2021 | 28,276,474 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Statement of Cash Flows [Abstract] | ||
Net loss | $ (2,051,165) | $ (518,299) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Loss on change in fair value of derivative liability | 1,576,315 | |
Loss on settlement of debt | (127,320) | |
Depreciation and amortization | 77,927 | 48,203 |
Amortization of operating right-of-use assets | 45,284 | 41,629 |
Amortization of operating right-of-use liabilities | (45,492) | (35,753) |
Stock compensation | 729,292 | |
Loss on settlement of debt | 127,643 | |
Gain of forgiveness of Cares Act loan | (250,800) | |
Gain on settlement of warrants | (5,072) | |
Gain on settlement of debt | 38,250 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (929,055) | 890,460 |
Contract assets | (941,372) | 410,047 |
Prepaid expenses and deposits | (54,921) | (137,856) |
Other assets | (383,668) | |
Accounts payable and accrued liabilities | 979,983 | (228,496) |
Contract liabilities | 361,083 | 79,064 |
Net cash provided by (used) in operating activities | (853,087) | 548,999 |
Cash flows from investing activities: | ||
Cash acquired in reverse acquisition | 2,155,707 | |
Purchase of equipment | (30,000) | (80,320) |
Net cash provided by (used in) investing activities | 2,125,707 | (80,320) |
Cash flows from financing activities: | ||
Repayments of loans payable | (26,598) | (277,003) |
Proceeds from loans payable to related parties | ||
Distributions to shareholders | (231,172) | |
Proceeds from Cares Act loans | 873,465 | 1,124,200 |
Proceeds from convertible debentures | ||
Repayments of convertible debentures | ||
Proceeds from factor financing | 480,972 | |
Repayments of factor financing | (841,680) | |
Net cash provided by financing activities | 486,159 | 615,025 |
Net increase in cash | 1,758,779 | 1,084,704 |
Cash, beginning of period | 436,448 | 917,790 |
Restricted cash, beginning of period | ||
Cash and restricted cash, beginning of period | 436,448 | 917,790 |
Cash, end of period | 2,195,227 | 2,002,494 |
Restricted cash, end of period | 2,000,000 | |
Cash and restricted cash, end of period | 4,195,227 | 2,002,494 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 6,758 | 6,758 |
Cash paid for income taxes | ||
Non-cash investing and financing activities: | ||
Common stock issued for conversion of convertible debentures | 530,250 | |
Common stock issued for conversion of Series A preferred stock | 209,016 | |
Common stock issued upon cashless exercise of warrants | 5,072 | |
Common stock issued for conversion of warrants | 18,602 | |
Related party note issued | 100,000 | |
Convertible debentures issued | $ 250,000 |
Organization
Organization | 6 Months Ended |
Jun. 30, 2021 | |
Organization and Going Concern [Abstract] | |
Organization | 1. Organization Spectrum Global Solutions, Inc., (“Spectrum”) (f/k/a Mantra Venture Group Ltd.) was incorporated in the State of Nevada on January 22, 2007 to acquire and commercially exploit various new energy related technologies through licenses and purchases. On December 8, 2008, Spectrum reincorporated in the province of British Columbia, Canada. On April 25, 2017, Spectrum entered into and closed on an Asset Purchase Agreement with InterCloud Systems, Inc. (“InterCloud”). Pursuant to the terms of the Asset Purchase Agreement, Spectrum purchased 80.1% of the assets associated with InterCloud’s AW Solutions, Inc., AW Solutions Puerto Rico, LLC (“AWS PR”), and Tropical Communications, Inc. (“Tropical”) (collectively “AWS” or the “AWS Entities”) subsidiaries. On November 15, 2017, Spectrum changed its name to “Spectrum Global Solutions, Inc.” and reincorporated in the state of Nevada. On February 14, 2018, Spectrum entered into an agreement with InterCloud providing for the sale, transfer, conveyance and delivery to Spectrum of the remaining 19.9% of the assets associated with InterCloud’s AWS business not already purchased by Spectrum. On February 6, 2018, Spectrum entered into and closed on a Stock Purchase Agreement with InterCloud Systems, Inc. (“InterCloud”). Pursuant to the terms of the Stock Purchase Agreement Spectrum purchased all of the issued and outstanding capital stock and membership interests of ADEX Corporation, ADEX Puerto Rico LLC, ADEX Towers, Inc. and ADEX Telecom, Inc. (collectively “ADEX” or the “ADEX Entities”). Spectrum completed the acquisition on February 27, 2018. On May 18, 2018, Spectrum transferred all of its ownership interests in and to its subsidiaries Carbon Commodity Corporation, Mantra China Limited, Mantra Media Corp., Mantra NextGen Power Inc., Mantra Wind Inc., Climate ESCO Ltd. and Mantra Energy Alternatives Ltd. to an entity controlled by Mantra’s former Chief Executive Officer, Larry Kristof. The new owner of the aforementioned entities assumed all liabilities and obligations with respect to such entities. On January 4, 2019, Spectrum entered into a Stock Purchase Agreement with InterCloud. Pursuant to the terms of the Purchase Agreement, InterCloud agreed to sell, and Spectrum agreed to purchase, all of the issued and outstanding capital stock of TNS, Inc. (“TNS”), an Illinois corporation. During September 2019, Spectrum formed ADEX Canada, which is included in the ADEX Entities. On September 30, 2020, Spectrum sold its TNS subsidiary. On December 31, 2020, Spectrum sold its AWS subsidiary. HWN, Inc., (d/b/a High Wire Network Solutions, Inc.) (“High Wire” or the “Company”) was incorporated in Delaware on January 20, 2017. The Company is a global provider of managed security, professional services and commercial/industrial electrical solutions delivered exclusively through a channel sales model. The Company’s Overwatch managed security platform-as-a-service offers organizations end-to-end protection for networks, data, endpoints and users via multiyear recurring revenue contracts in this fast-growing technology segment. On February 7, 2019, High Wire and JTM Electrical Contractors, Inc. (“JTM”), an Illinois Corporation, entered into an operating agreement through which High Wire owns 50% of JTM. On June 16, 2021, the Company completed a merger with Spectrum. The merger was accounted for as a reverse merger (refer to Note 3, Reverse Merger, for additional detail). At the time of the reverse merger, Spectrum’s subsidiaries included ADEX Corporation, ADEX Puerto Rico LLC, ADEX Towers, Inc. and ADEX Telecom, Inc. (collectively “ADEX” or the “ADEX Entities”), AW Solutions Puerto Rico, LLC (“AWS PR”), and Tropical Communications, Inc. (“Tropical”). Spectrum is in process of legally changing its name to HWN, but for accounting purposes, HWN is the surviving entity and is referred to throughout as “HWN”, “High Wire”, or “the Company”. The Company’s AWS PR and Tropical subsidiaries are professional, multi-service line, telecommunications infrastructure companies that provide outsourced services to the wireless and wireline industry. The Company’s ADEX Entities are a leading outsource provider of engineering and installation services, staffing solutions and other services which include consulting to the telecommunications industry, service providers and enterprise customers domestically and internationally. |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | 2. Significant Accounting Policies Condensed Financial Statements In the opinion of management, the accompanying financial statements reflect all adjustments of a recurring nature considered necessary to present fairly the Company’s financial position and the results of its operations and its cash flows for the periods shown. The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. The results of operations and cash flows for the periods shown are not necessarily indicative of the results to be expected for the full year. Basis of Presentation/Principles of Consolidation These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States. These consolidated financial statements include the accounts of the Company and JTM, as well as Spectrum and its subsidiaries, the ADEX Entities, AWS PR, and Tropical. All subsidiaries are wholly-owned, with the exception of JTM, which is 50% owned. All inter-company balances and transactions have been eliminated. Reverse Merger On January 27, 2021, Spectrum Global Solutions, Inc. HW Merger Sub, Inc., HWN, Inc. and the stockholders of HWN, Inc. (the “Stockholders”) entered into an Agreement and Plan of Merger (the “Agreement”) whereby the Stockholders agreed to sell to the Company all of the capital stock of HWN, Inc.. On June 16, 2021, the transaction contemplated by the Agreement closed, and HWN, Inc. became a wholly-owned subsidiary of Spectrum Global Solutions, Inc. As previously disclosed, as part of the consideration for the transaction, Spectrum Global Solutions, Inc. issued shares of a newly established Series D Preferred Stock. The merger has been accounted for as a reverse merger in accordance with US GAAP. This determination was primarily based on High Wire’s business comprising the ongoing operations of the Company following the Merger, High Wire’s senior management comprising the senior management of the Company and High Wire’s stockholders having a majority of the voting power of the Company. For accounting purposes, Spectrum is considered the “acquired” company and High Wire is considered the “acquirer.” Accordingly, for accounting purposes, the Merger is treated as the equivalent of High Wire issuing stock for the net assets of Spectrum, accompanied by a recapitalization. The net assets of Spectrum have been remeasured at fair value and applied against the purchase price resulting in goodwill or other intangible assets recorded. The consolidated assets, liabilities and results of operations prior to the Closing Date of the merger are those of High Wire, and Spectrum’s assets, liabilities and results of operations are consolidated with High Wire beginning on the Closing Date. The shares and corresponding capital amounts and earnings per share available to common stockholders, pre-merger, have been retroactively restated as shares reflecting the exchange ratio in the merger. The historical financial information and operating results of Spectrum prior to the merger have not been separately presented in these condensed consolidated financial statements. Impact of the COVID-19 Pandemic The extent to which the coronavirus (“COVID-19”) outbreak and measures taken in response thereto impact the Company’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted. Global health concerns relating to the COVID-19 outbreak have been weighing on the macroeconomic environment, and the outbreak has significantly increased economic uncertainty. Risks related to consumers and businesses lowering or changing spending, which impact domestic and international spend. The outbreak has resulted in authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders, and business shutdowns. These measures have not only negatively impacted consumer spending and business spending habits, they have also adversely impacted and may further impact the Company’s workforce and operations and the operations of its customers, suppliers and business partners. These measures may remain in place for a significant period of time and they are likely to continue to adversely affect the Company’s business, results of operations and financial condition. The spread of COVID-19 has caused the Company to modify its business practices (including employee travel, employee work locations, and cancellation of physical participation in meetings, events and conferences), and the Company may take further actions as may be required by government authorities or that the Company determines are in the best interests of its employees, customers and business partners. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus or otherwise be satisfactory to government authorities. The extent to which the COVID-19 outbreak impacts the Company’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume. Even after the COVID-19 outbreak has subsided, the Company may continue to experience materially adverse impacts to its business as a result of its global economic impact, including any recession that has occurred or may occur in the future. There are no comparable recent events which may provide guidance as to the effect of the spread of COVID-19 and a global pandemic, and, as a result, the ultimate impact of the COVID-19 outbreak or a similar health epidemic is highly uncertain and subject to change. The Company does not yet know the full extent of the impacts on its business, its operations or the global economy as a whole. However, the effects could have a material impact on the Company’s results of operations, and the Company will continue to monitor the COVID-19 situation closely. As of August 2021, multiple variants of the COVID-19 virus are circulating globally that are highly transmissible, and there is uncertainty around vaccine effectiveness on the new strains of the virus. Uncertainty around vaccine distribution, supply and effectiveness will impact when the negative economic effects as a result of COVID-19 will abate or end and the timing of such recovery may affect the Company’s financial condition. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to allowance for doubtful accounts, the estimated useful lives and recoverability of long-lived assets, equity component of convertible debt, stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Cash and Cash Equivalents The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. Restricted Cash As of June 30, 2021, the Company had $2,000,000 of restricted cash related to the CARES Act Loan discussed in Note 7, Loans Payable. On July 26, 2021, the cash was no longer restricted and was released into the Company’s operating account (refer to Note 17, Subsequent Events for additional detail). Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company records unbilled receivables for services performed but not billed. Management reviews a customer’s credit history before extending credit. The Company maintains an allowance for doubtful accounts for estimated losses. Estimates of uncollectible amounts are reviewed each period, and changes are recorded in the period in which they become known. Management analyzes the collectability of accounts receivable each period. This review considers the aging of account balances, historical bad debt experience, and changes in customer creditworthiness, current economic trends, customer payment activity and other relevant factors. Should any of these factors change, the estimate made by management may also change. The allowance for doubtful accounts at June 30, 2021 and December 31, 2020 was $38,881 and $0, respectively. Property and Equipment Property and equipment are stated at cost. The Company depreciates the cost of property and equipment over their estimated useful lives at the following annual rates: Automotive 3-5 years straight-line basis Computer equipment and software 3-7 years straight-line basis Leasehold improvements 5 years straight-line basis Office equipment and furniture 5 years straight-line basis Software 5 years straight-line basis Machinery and equipment 5 years straight-line basis Goodwill Goodwill was initially generated through the acquisition of JTM in 2019, and the reverse merger with Spectrum in 2021, as the total consideration paid exceeded the fair value of the net assets acquired. The Company tests its goodwill for impairment at least annually on December 31st and whenever events or circumstances change that indicate impairment may have occurred. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a significant decline in the Company’s expected future cash flows; a significant adverse change in legal factors or in the business climate; unanticipated competition; and slower growth rates. Any adverse change in these factors could have a significant impact on the recoverability of goodwill and the Company’s consolidated financial results. The Company tests goodwill by estimating fair value using a Discounted Cash Flow (“DCF”) model. The key assumptions used in the DCF model to determine the highest and best use of estimated future cash flows include revenue growth rates and profit margins based on internal forecasts, terminal value and an estimate of a market participant’s weighted-average cost of capital used to discount future cash flows to their present value. There were no impairment charges during the three and six months ended June 30, 2021 and 2020. Intangible Assets At June 30, 2021 and December 31, 2020, definite-lived intangible assets consist of tradenames and customer relationships which are being amortized over their estimated useful lives of 15 years. The Company periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removed from the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques. The Company has no intangibles with indefinite lives. For long-lived assets, impairment losses are only recorded if the asset’s carrying amount is not recoverable through its undiscounted, probability-weighted future cash flows. The Company measures the impairment loss based on the difference between the carrying amount and the estimated fair value. When an impairment exists, the related assets are written down to fair value. There were no impairment charges during the three and six months ended June 30, 2021 and 2020. Long-lived Assets In accordance with ASC 360, “Property, Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. There were no impairment charges recorded during the three and six months ended June 30, 2021 and 2020. Foreign Currency Translation Transactions in foreign currencies are translated into the currency of measurement at the exchange rates in effect on the transaction date. Monetary balance sheet items expressed in foreign currencies are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. The resulting foreign exchange gains and losses are recognized in income. The Company’s integrated foreign subsidiaries are financially or operationally dependent on the Company. The Company uses the temporal method to translate the accounts of its integrated operations into U.S. dollars. Monetary assets and liabilities are translated at the exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at average rates for the period, except for amortization, which is translated on the same basis as the related asset. The resulting foreign exchange gains or losses are recognized in income. Income Taxes The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “ Accounting for Income Taxes The Company conducts business, and files federal and state income, franchise or net worth, tax returns in Canada, the United States, in various states within the United States and the Commonwealth of Puerto Rico. The Company determines it’s filing obligations in a jurisdiction in accordance with existing statutory and case law. The Company may be subject to a reassessment of federal and provincial income taxes by Canadian tax authorities for a period of three years from the date of the original notice of assessment in respect of any particular taxation year. For Canadian and U.S. income tax returns, the open taxation years range from 2010 to 2020. In certain circumstances, the U.S. federal statute of limitations can reach beyond the standard three year period. U.S. state statutes of limitations for income tax assessment vary from state to state. Tax authorities of Canada and U.S. have not audited any of the Company’s, or its subsidiaries’, income tax returns for the open taxation years noted above. Significant management judgment is required in determining the provision for income taxes, and in particular, any valuation allowance recorded against the Company’s deferred tax assets. Deferred tax assets are regularly reviewed for recoverability. The Company currently has significant deferred tax assets resulting from net operating loss carryforwards and deductible temporary differences, which should reduce taxable income in future periods. The realization of these assets is dependent on generating future taxable income. The Company follows the guidance set forth within ASC Topic 740, “ Income Taxes AWS PR received a tax notice from the Puerto Rican government requesting payment of taxes related to 2014. The amount due as of June 30, 2021 was $156,711 plus penalties and interest of $140,319 for a total obligation due of $297,030. During June 2021, AWS PR was notified that the Puerto Rican government would settle the outstanding debt for $11,105, which the Company paid during July 2021. Revenue Recognition Adoption of New Accounting Guidance on Revenue Recognition The Company recognizes revenue based on the five criteria for revenue recognition established under Topic 606: 1) identify the contract, 2) identify separate performance obligations, 3) determine the transaction price, 4) allocate the transaction price among the performance obligations, and 5) recognize revenue as the performance obligations are satisfied. Contract Types The Company’s contracts fall under three main types: 1) unit-price, 2) fixed-price, and 3) time-and-materials. Unit-price contracts relate to services being performed and paid on a unit basis, such as per mile of construction completed. Fixed-price contracts are based on purchase order line items that are billed on individual invoices as the project progresses and milestones are reached. Time-and-materials contracts include employees working permanently at customer locations and materials costs incurred by those employees. A significant portion of the Company’s revenues come from customers with whom the Company has a master service agreement (“MSA”). These MSA’s generally contain customer specific service requirements. Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in the new revenue standard. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. For the Company’s different revenue service types the performance obligation is satisfied at different times. For professional services revenue, the performance obligation is met when the work is performed. In certain cases this may be each day, or each week depending on the customer. For construction services, the performance obligation is met when the work is completed and the customer has approved the work. Contract assets include unbilled amounts for costs of services incurred on contracts with open performance obligations. These amounts are included in contract assets on the consolidated balance sheets. Contract liabilities include costs incurred and are included in contract liabilities on the consolidated balance sheets. Revenue Service Types The following is a description of the Company’s revenue service types, which include professional services and construction: ● Professional services are services provided to the clients where the Company delivers distinct contractual deliverables and/or services. Deliverables may include but are not limited to: engineering drawings, designs, reports and specification. Services may include, but are not limited to: consulting or professional staffing to support our client’s objectives. Consulting or professional staffing services may be provided remotely or on client premises and under their direction and supervision. ● Construction Services are services provided to the client where the Company may self-perform or subcontract services that require the physical construction of infrastructure or installation of equipment and materials. Disaggregation of Revenues The Company disaggregates its revenue from contracts with customers by service type, contract type, contract duration, and timing of transfer of goods or services. See the below tables: Revenue by service type Three months Three months Six months Six months June 30, Professional Services $ 4,366,938 $ 3,134,899 $ 6,828,881 $ 8,744,510 Construction 3,427,130 + 6,039,023 + Total $ 7,794,068 $ 3,134,899 $ 12,867,904 $ 8,744,510 Revenue by contract duration Three months Three months Six months Six months Short-term $ 6,949,081 $ 3,134,899 $ 12,022,917 $ 8,744,510 Long-term 844,987 - 844,987 - Total $ 7,794,068 $ 3,134,899 $ 12,867,904 $ 8,744,510 Revenue by contract type Three months Three months Six months Six months June 30, Fixed-price $ 7,698,572.00 3,131,899 $ 12,772,408 $ 8,744,510.00 Time-and-materials 95,496 - 95,496 - Total $ 7,794,068 $ 3,131,899 $ 12,867,904 $ 8,744,510 The Company also disaggregates its revenue by operating segment and geographic location (refer to Note 15, Segment Disclosures, for additional information). Accounts Receivable Accounts receivable include amounts from work completed in which the Company has billed. The amounts due are stated at their net estimated realizable value. The Company maintains an allowance for doubtful accounts to provide for the estimated amount of receivables that will not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables and collateral to the extent applicable. Contract Assets and Liabilities Contract assets include costs and services incurred on contracts with open performance obligations. These amounts are included in contract assets on the consolidated balance sheets. At June 30, 2021 and December 31, 2020, contract assets totaled $1,066,386 and $0, respectively. Contract liabilities include payment received for incomplete performance obligations and are included in contract liabilities on the consolidated balance sheets. At June 30, 2021 and December 31, 2020, contract liabilities totaled $827,533 and $464,450, respectively. Cost of Revenues Cost of revenues includes all direct costs of providing services under the Company’s contracts, including costs for direct labor provided by employees, services by independent subcontractors, operation of capital equipment (excluding depreciation and amortization), direct materials, insurance claims and other direct costs. Research and Development Costs Research and development costs are expensed as incurred. Stock-based Compensation The Company records stock-based compensation in accordance with ASC 718, “ Compensation – Stock Compensation The Company accounts for stock-based compensation awards issued to non-employees for services, as prescribed by ASC 718-10, at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in ASU 2018-07. The Company uses the Black-Scholes option pricing model to calculate the fair value of stock-based awards. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the consolidated statement of operations over the requisite service period. Loss per Share The Company computes (loss) per share in accordance with ASC 260, “Earnings per Share” which requires presentation of both basic and diluted (loss) per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing the (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of June 30, 2021 and December 31, 2020, respectively, the Company had 53,736,513 and 0 common stock equivalents outstanding. Leases The Company adopted FASB Accounting Standards Codification, Topic 842, Leases (“ASC 842”) on January 1, 2019. The new leasing standard requires recognition of leases on the consolidated balance sheets as right-of-use (“ROU”) assets and lease liabilities. ROU assets represent the Company’s right to use underlying assets for the lease terms and lease liabilities represent the Company’s obligation to make lease payments arising from the leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value and future minimum lease payments over the lease term at commencement date. As the Company’s leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. A number of the Company’s lease agreements contain options to renew and options to terminate the leases early. The lease term used to calculate ROU assets and lease liabilities only includes renewal and termination options that are deemed reasonably certain to be exercised. The Company recognized lease liabilities, with corresponding ROU assets, based on the present value of unpaid lease payments for existing operating leases longer than twelve months as of January 1, 2019. The ROU assets were adjusted per ASC 842 transition guidance for existing lease-related balances of accrued and prepaid rent, unamortized lease incentives provided by lessors, and restructuring liabilities, Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term and is recorded in selling, general and administrative expenses. Variable lease payments for common area maintenance, property taxes and other operating expenses are recognized as expense in the period when the changes in facts and circumstances on which the variable lease payments are based occur. The Company has elected not to separate lease and non-lease components for all property leases for the purposes of calculating ROU assets and lease liabilities. Going Concern Assessment Management assesses going concern uncertainty in the Company’s consolidated financial statements to determine whether there is sufficient cash on hand and working capital, including available borrowings on loans, to operate for a period of at least one year from the date the unaudited consolidated financial statements are issued or available to be issued, which is referred to as the “look-forward period”, as defined in GAAP. As part of this assessment, based on conditions that are known and reasonably knowable to management, management will consider various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected cash expenditures or programs, its ability to delay or curtail expenditures or programs and its ability to raise additional capital, if necessary, among other factors. Based on this assessment, as necessary or applicable, management makes certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent it deems probable those implementations can be achieved and management has the proper authority to execute them within the look-forward period. The Company has generated losses since its inception and has relied on cash on hand, sales of securities, external bank lines of credit, and issuance of third-party and related party debt to support cashflow from operations. For the six months ended June 30, 2021, the Company had operating income of $396,020 (before deducting losses attributable to non-controlling interests, cash flows used in operations of $853,087 and negative working capital of $10,503,178 capital Management has prepared estimates of operations for fiscal year 2021 and believes that sufficient funds will be generated from operations to fund its operations and to service its debt obligations for one year from the date of the filing of the unaudited consolidated financial statements in the Company’s Quarterly Report on Form 10-Q, which indicate improved operations and the Company’s ability to continue operations as a going concern. The impact of COVID-19 on the Company’s business has been considered in these assumptions; however, it is too early to know the full impact of COVID-19 or its timing on a return to more normal operations. Further, the recently enacted CARES Act provides for economic assistance loans through the SBA. As of June 30, 2021, HWN had $873,465 and ADEX had $2,000,000 of PPP loans outstanding from the SBA under the CARES Act. The PPP provides that the PPP loans may be partially or wholly forgiven if the funds are used for certain qualifying expenses as described in the CARES Act. On August 6, 2021, HWN was notified that its $873,465 PPP loan was forgiven. See Note 17, Subsequent Events. ADEX used the proceeds from the PPP loans for qualifying expenses and is applying for forgiveness of the PPP loans in accordance with the terms of the CARES Act. The accompanying unaudited consolidated financial statements have been prepared on a going concern basis under which the Company is expected to be able to realize its assets and satisfy its liabilities in the normal course of business. Management believes that based on relevant conditions and events that are known and reasonably knowable that its forecasts for one year from the date of the filing of the unaudited consolidated financial statements in the Company’s Quarterly Report on Form 10-Q indicate improved operations and the Company’s ability to continue operations as a going concern. The Company has contingency plans to reduce or defer expenses and cash outlays should operations not improve in the look forward period. Recent Accounting Pronouncements The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or result of operations. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivables. The Company maintains its cash balances with high-credit-quality financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. These deposits may be withdrawn upon demand and therefore bear minimal risk. The Company provides credit to customers on an uncollateralized basis after evaluating client creditworthiness. For the six months ended June 30, 2021, three customers accounted for 32%, 17% and 17%, respectively, of consolidated revenues for the period. In addition, amounts due from these customers represented 16%, 9% and 11%, respectively, of trade accounts receivable as of June 30, 2021. For the six months ended June 30, 2020, three customers accounted for 18%, 17% and 17%, respectively, of consolidated revenues for the period. In addition, amounts due from these customers represented 37%, 16% and 0%, respectively, of trade accounts receivable as of June 30, 2020. The Company’s customers are primarily located within the domestic United States of America, Puerto Rico, and Canada. Revenues generated within the domestic United States of America accounted for approximately 99% of consolidated revenues for the six months ended June 30, 2021. Revenues generated from customers in Puerto Rico and Canada accounted for approximately 1% of consolidated revenues for the six months ended June 30, 2021. Revenues generated within the domestic United States of America accounted for 100% of con |
Reverse Merger
Reverse Merger | 6 Months Ended |
Jun. 30, 2021 | |
Disclosure Text Block Supplement [Abstract] | |
Reverse Merger | 3. Reverse Merger As noted in Note 2, on June 16, 2021, the Company consummated a reverse merger in which HWN, Inc. became a legal subsidiary of Spectrum Global Solutions, Inc., but HWN, Inc. was deemed to be the accounting acquirer. HWN shareholders exchanged 100% of the common stock of HWN for 340 shares newly issued shares of the Company’s Series D preferred stock and 1,000 shares of the Company’s previously issued Series B preferred stock (formerly held by management of legacy Spectrum Global Solutions, Inc.). The purpose of the acquisition was to continue to increase revenue. Goodwill recognized represents $13,562,296. The acquisition was accounted for under the acquisition method of accounting which requires the consideration given, assets acquired, and liabilities assumed to be measured at fair value. In measuring the consideration transferred, since this was a reverse merger between a public company (as the legal acquirer) and a private company (as the accounting acquirer), the fair value of the legal acquirer’s public stock generally was more reliably determinable than the fair value of the accounting acquirer’s private stock. As such, the determination and measurement of the consideration transferred was based on the fair value of the legal acquirer’s stock rather than the fair value of the accounting acquirer’s stock. Further, since this was a reverse merger for accounting purposes, the consideration transferred consists of the equity-based instruments retained by the legacy shareholders of Spectrum Global Solutions, Inc. The fair value of the assets acquired, liabilities assumed and consideration transferred denoted below are provisional in nature and based on the management’s best estimates using information that it has obtained as of the reporting date. The Company is awaiting additional valuation information and expects to finalize the purchase price allocation before the end of the fiscal year. The fair value of the consideration transferred (provisional), liabilities assumed (provisional) are as follows: Provisional Purchase consideration Fair Value Common stock $ 5,561,975 Convertible debt 944,000 Derivative liabilities 6,929,000 Loans payable 2,377,400 Loans payable, related parties 2,447,252 Lease liabilities 106,615 Fair value of stock options 204,715 Fair value of warrants 362,687 Fair value of Series A Preferred 1,024,000 Fair value of Series D Preferred 1,271,000 Total provisional purchase price $ 21,228,644 The fair value of the net assets acquired (provisional) are as follows: Allocation of provisional purchase consideration Working capital $ 781,470 Other assets 12,893 Contract assets 426,647 Provisional goodwill 13,562,296 Customer lists 4,720,863 Tradenames 1,724,475 Total provisional enterprise value $ 21,228,644 The preliminary allocation of consideration to the assets acquired and liabilities assumed at their estimated acquisition date fair values are considered preliminary and may change within the permissible measurement period, not to exceed one year. The following shows pro forma results for the three and six month periods ended June 30, 2021 and 2020, as if the transaction had occurred on January 1, 2020. Three months ended Six months ended Three months ended Six months ended As Reported Pro Forma As Reported Pro Forma As Reported Pro Forma As Reported Pro Forma Revenue $ 7,794,068 $ 10,823,947 $ 12,867,904 $ 19,963,773 $ 3,134,899 $ 7,778,186 $ 8,744,560 $ 18,708,412 Net income (loss) attributable to HWN, Inc. common shareholders $(1,591,590 ) $1,161,189 $(2,051,165 ) $(8,945,874 ) $(569,870 ) $(2,040,559 ) $(518,299 ) $(4,917,156 ) Income (loss) per common share, basic and diluted: ($0.36) ) $0.25 ($0.55) ) ($3.90) ) |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 4. Property and Equipment Property and equipment as of June 30, 2021 and December 31, 2020 consisted of the following: June 30, December 31, 2021 2020 Computers and office equipment $ 45,541 $ 41,564 Vehicles 194,506 188,906 Leasehold improvements 8,626 6,113 Software 396,774 366,773 Machinery and equipment 74,798 74,798 Total 720,245 678,154 Less: accumulated depreciation (355,099 ) (294,045 ) Equipment, net $ 365,146 $ 384,109 During the six months ended June 30, 2021 and 2020, the Company recorded depreciation expense of $40,576 and $32,115, respectively. |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | 5. Intangible Assets Intangible assets as of June 30, 2021 and December 31, 2020 consisted of the following: Cost Accumulated Impairment Net carrying Net carrying Customer relationship and lists $ 4,720,863 $ 14,339 $ - $ 4,706,524 $ - Trade names 1,694,475 4,025 - 1,690,450 - Total intangible assets $ 6,415,338 $ 18,364 $ - $ 6,396,974 $ - During the six months ended June 30, 2021 and 2020, the Company recorded amortization expense of $18,363 and $0, respectively. The estimated future amortization expense for the next five years and thereafter is as follows: Year ending December 31, 2021 214,845 2022 429,689 2023 429,689 2024 429,689 2025 429,689 Thereafter 4,459,123 Total $ 6,396,974 |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 6. Related Party Transactions Exchange of Shares of Common Stock for Series B Preferred Stock On June 16, 2021, in connection with the merger transaction discussed in Note 3, Reverse Merger, the Company’s Chief Executive Officer, Mark Porter, exchanged 350 shares of Series D Preferred Stock for 1,000 shares of Series B Preferred Stock from Roger Ponder and Keith Hayter, the former Chief Executive Officer and President, respectively, of Spectrum. This resulted in an increase to additional paid in capital of $1,271,000. Loans Payable to Related Parties As of June 30, 2021 and December 31, 2020, the Company had outstanding the following loans payable to related parties: June 30, December 31, 2021 2020 Convertible promissory note issued to Keith Hayter, 10% interest, unsecured, matures August 31, 2022, debt premium of $1,792,413 $ 2,346,444 $ - Convertible promissory note issued to Roger Ponder, 10% interest, unsecured, matures August 31, 2022, debt premium of $76,914 100,808 - Promissory note issued to Mark Porter, 9% interest, unsecured, matures December 15, 2021 100,000 - Total $ 2,547,252 $ - Less: Long-term portion of loans payable to related parties (2,447,252 ) - Loans payable to related parties, current portion $ 100,000 $ - The Company’s loans payable to related parties have an effective interest rate range of 8.3% to 11.2%. Convertible promissory note, Roger Ponder, 10% interest, unsecured, matures August 31, 2022 On June 15, 2021, in connection with the merger transaction discussed in Note 3, Reverse Merger, the Company assumed Spectrum’s convertible promissory note issued to Roger Ponder. The note was originally issued on August 31, 2020 in the principal amount of $23,894. Interest accrues at 10% per annum. All principal and accrued but unpaid interest under the note is due on August 31, 2022. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.06 per share, subject to adjustment based on the terms of the note. The embedded conversion option does not qualify for derivative accounting. As a result of the conversion price being fixed at $0.06, the note has a conversion premium of $76,914, and the fair value of the note is $100,808. As of June 30, 2021, the Company owed $23,894 pursuant to this agreement. Convertible promissory note, Keith Hayter, 10% interest, unsecured, matures August 31, 2022 On June 15, 2021, in connection with the merger transaction discussed in Note 3, Reverse Merger, the Company assumed Spectrum’s convertible promissory note issued to Keith Hayter. The note was originally issued on August 31, 2020 in the principal amount of $554,031. Interest accrues at 10% per annum. All principal and accrued but unpaid interest under the note is due on August 31, 2022. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.06 per share, subject to adjustment based on the terms of the note. The embedded conversion option does not qualify for derivative accounting. As a result of the conversion price being fixed at $0.06, the note has a conversion premium of $1,792,413, and the fair value of the note is $2,346,444. As of June 30, 2021, the Company owed $554,031 pursuant to this agreement. Promissory note, Mark Porter, 9% interest, unsecured, matures December 15, 2021 On June 15, 2021, the Company issued a $100,000 promissory note to the Chief Executive Officer of the Company in connection with the merger transaction discussed in Note 3, Reverse Merger. The note is due on December 15, 2021 and bears interest at a rate of 9% per annum. As of June 30, 2021, the Company owed $100,000 pursuant to this agreement. |
Loans Payable
Loans Payable | 6 Months Ended |
Jun. 30, 2021 | |
Loans Payable [Abstract] | |
Loans Payable | 7. Loans Payable As of June 30, 2021 and December 31, 2020, the Company had outstanding the following loans payable: June 30, December 31, 2021 2020 Promissory note issued to the Mark Munro 1996 Charitable Remainder UniTrust, 5.5% interest, unsecured, due February 27, 2022 $ 2,292,971 * $ 2,292,971 Promissory note issued to Cornerstone National Bank & Trust, 4.5% interest, unsecured, matures on October 9, 2024 331,745 358,343 Bank of America auto loan, matures on March 31, 2025 45,870 52,051 Ailco equipment financing - 15,056 CARES Act Loans 3,033,465 250,800 Promissory note issued to InterCloud Systems, Inc., non-interest bearing, unsecured and due on demand 217,400 - Total 5,921,451 2,969,221 Less: Long-term portion of loans payable (44,830,586 ) (2,886,796 ) Loans payable, current portion, net of debt discount $ 1,090,865 $ 82,425 * During the six months ended June 30, 2021, this note was assigned to the Mark Munro 1996 Charitable Remainder UniTrust by Jeffrey Gardner and James Marsh. Promissory note issued to Jeffrey Gardner and James Marsh, 5.5% interest, matures February 27, 2022 On February 17, 2019, the Company issued a promissory note to Jeffrey Gardner and James Marsh with an original principal amount of $4,000,000. The note accrues interest at a rate of 5.5% per annum and the maturity date is February 27, 2022. On January 1, 2021, this note was assigned by Jeffrey Gardner and James Marsh to the Mark Munro 1996 Charitable Remainder UniTrust. During the six months ended June 30, 2021, the Company did not make any cash payments for principal. During the year ended December 31, 2020, the Company made cash payments for principal of $321,487. As of June 30, 2021, the Company owed $2,292,971 pursuant to this agreement. Auto loan with Bank of America, 4.7% interest, matures December 23, 2025 On September 23, 2019, the Company entered into an auto loan with Bank of America. The total amount financed was $66,855, with a finance charge of $10,406 related to the annual percentage rate of 4.7%. The total of the payments due under the note at issuance was $77,261. The Company is to make 75 monthly payments of $1,030.15. The first payment was due on October 23, 2019, and the final payment is due on December 23, 2025. During the six months ended June 30, 2021, the Company made cash payments of $6,181. During the year ended December 31, 2020, the Company made cash payments of $12,362. As of June 30, 2021, the Company owed $45,871 pursuant to this auto loan. Promissory note issued to Cornerstone National Bank & Trust, 4.5% interest, matures October 9, 2024 On October 21, 2019, the Company issued a promissory note to Cornerstone National Bank & Trust with an original principal amount of $420,000. The note bears interest at a rate of 4.5% per annum and the maturity date is October 9, 2024. The Company is to make monthly payments of principal and interest of $5,851, with a final balloon payment of $139,033 due on October 9, 2024. During the six months ended June 30, 2021, the Company made cash payments for principal of $27,212. During the year ended December 31, 2020, the Company made cash payments for principal of $52,509. As of June 30, 2021, the Company owed $331,745 pursuant to this agreement. Promissory note issued to InterCloud Systems, Inc., non-interest bearing, unsecured and due on demand On June 15, 2021, in connection with the merger transaction discussed in Note 3, Reverse Merger, the Company assumed Spectrum’s promissory note issued to InterCloud Systems, Inc. The note was originally issued on February 27, 2018 in the principal amount of $500,000. As of June 15, 2021, $217,400 remained outstanding. The note is non-interest bearing and is due on demand. As of June 30, 2021, the Company owed $217,400 pursuant to this agreement. CARES Act Loans On April 8, 2020 and March 31, 2021, High Wire received $873,400 and $873,465, respectively. On April 14, 2020, JTM received $250,800. On June 15, 2021, in connection with the merger transaction described in Note 3, Reverse Merger, the Company assumed CARES Act Loans totaling $2,160,000 that were originally received by ADEX. Collectively, these amounts are the “PPP Funds.” These loan agreements were pursuant to the CARES Act. The CARES Act was established in order to enable small businesses to pay employees during the economic slowdown caused by COVID-19 by providing forgivable loans to qualifying businesses for up to 2.5 times their average monthly payroll costs. The amount borrowed under the CARES Act is eligible to be forgiven provided that (a) the Company uses the PPP Funds during the eight week period after receipt thereof, and (b) the PPP Funds are only used to cover payroll costs (including benefits), rent, mortgage interest, and utility costs. The amount of loan forgiveness will be reduced if, among other reasons, the Company does not maintain staffing or payroll levels. Principal and interest payments on any unforgiven portion of the PPP Funds will be deferred for six months and will accrue interest at a fixed annual rate of 1.0% and carry a two year maturity date. There is no prepayment penalty on the CARES Act Loan. On November 4, 2020, High Wire received approval for forgiveness of its $873,400 CARES Act Loan. On March 30, 2021, JTM received approval for forgiveness of its $250,800 CARES Act Loan. As a result, the Company recorded a gain on PPP loan forgiveness to the unaudited condensed consolidated statement of operations for the six months ended June 30, 2021. As of June 30, 2021 and December 31, 2020, the aggregate balance of these loans was $3,033,465 and $250,800, respectively, and is included in loans payable on the unaudited condensed consolidated balance sheets. |
Convertible Debentures
Convertible Debentures | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
Convertible Debentures | 8. Convertible Debentures As of June 30, 2021 and December 31, 2020, the Company had outstanding the following convertible debentures: June 30, December 31, 2021 2020 Convertible promissory note, Cobra Equities SPV, LLC, 18% interest, unsecured, matured June 1, 2019 $ 184,362 $ - Convertible promissory note, SCS Capital Partners, LLC, 12% interest, secured, matures December 30, 2021 235,989 - Convertible promissory note, SCS Capital Partners, LLC, 10% interest, secured, matures December 31, 2021, net of debt discount of $168,125 51,816 - Convertible promissory note, IQ Financial Inc., Tranche 1, 9% interest, secured, matures January 1, 2023, net of debt discount of $209,887 79,587 - Convertible promissory note, IQ Financial Inc., Tranche 2, 9% interest, secured, matures January 1, 2023, net of debt discount of $264,255 77,850 - Convertible promissory note, Jeffrey Gardner, 6% interest, unsecured, matures September 15, 2021, net of debt discount of $104,167 20,833 - Convertible promissory note, James Marsh, 6% interest, unsecured, matures September 15, 2021, net of debt discount of $104,167 20,833 - Total 671,270 - Less: Long-term portion of convertible debentures, net of debt discount - - Convertible debentures, current portion, net of debt discount $ 671,270 $ - The Company’s convertible debentures have an effective interest rate range of 4.9% to 77.4%. Convertible promissory note, Cobra Equities SPV, LLC, 18% interest, unsecured, matured June 1, 2019 On June 15, 2021, in connection with the merger transaction discussed in Note 3, Reverse Merger, the Company assumed a convertible promissory note issued to Cobra Equities SPV, LLC. The note had been previously assigned to Cobra Equities SPV, LLC by another lender. The amount outstanding as of June 15, 2021 was $300,362, with accrued interest of $16,030. Interest accrues on the note at 18% per annum. The note is convertible into shares of the Company’s common stock at a conversion price equal to 60% of the lowest VWAP for the 10 consecutive trading days immediately preceding the conversion. The embedded conversion option qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 “Derivatives and Hedging.” During the period of June 16, 2021 through June 30, 2021, the holder of the note converted $116,000 of principal and $2,300 of accrued interest into shares of the Company’s common stock (refer to Note 11, Common Stock, for additional detail). As a result of these conversions, the Company recorded a loss on settlement of debt of $188,211 to the unaudited condensed consolidated statement of operations for the three and six months ended June 30, 2021. The Company owed $184,362 as of June 30, 2021. Convertible promissory note, SCS Capital Partners, LLC, 12% interest, secured, matures December 30, 2021 On June 15, 2021, in connection with the merger transaction discussed in Note 3, Reverse Merger, the Company assumed a convertible promissory note issued to SCS, LLC. The note had been previously assigned to SCS, LLC by another lender. The amount outstanding as of June 15, 2021 was $235,989, with accrued interest of $16,763. The interest on the outstanding principal due under the note accrues at a rate of 12% per annum. All principal and accrued but unpaid interest under the note is due on December 30, 2021. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.0275 per share. On or after the date of the closing of a subsequent offering, the fixed conversion price shall be 105% of the price of the common stock issued in the subsequent offering. The embedded conversion option qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 “Derivatives and Hedging.” At June 30, 2021, the Company owed $235,989 pursuant to this agreement. Convertible promissory note, SCS Capital Partners, LLC, 10% interest, secured, matures December 31, 2021 On June 15, 2021, in connection with the merger transaction discussed in Note 3, Reverse Merger, the Company assumed a convertible promissory note issued to SCS, LLC. The amount outstanding as of June 15, 2021 was $219,941, with accrued interest of $7,991. The note was originally issued on December 29, 2020 in the principal amount of $175,000. The interest on the outstanding principal due under the note accrues at a rate of 10% per annum. All principal and accrued but unpaid interest under the note is due on December 31, 2021. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.04 per share. The embedded conversion option qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 “Derivatives and Hedging.” At June 30, 2021, the Company owed $219,940 pursuant to this agreement and will record accretion equal to the debt discount of $168,125 over the remaining term of the note. Convertible promissory note, IQ Financial Inc., 9% interest, secured, matures January 1, 2023 On June 15, 2021, in connection with the merger transaction discussed in Note 3, Reverse Merger, the Company assumed a convertible promissory note issued to IQ Financial Inc. The amount outstanding for Tranche 1 as of June 15, 2021 was $289,473, with accrued interest of $11,202. The amount outstanding for Tranche 2 as of June 15, 2021 was $342,105, with accrued interest of $10,446. The note was originally issued on January 27, 2021 in the aggregate principal amount of $631,579. The funds were received in two disbursements – $275,000 on January 28, 2021 and $325,000 on March 1, 2021 (refer to the “Convertible promissory note, IQ Financial Inc. Tranche 1, 9% interest, secured, matures January 1, 2023” and “Convertible promissory note, IQ Financial Inc. Tranche 2, 9% interest, secured, matures January 1, 2023” sections below for additional detail. Convertible promissory note, IQ Financial Inc. Tranche 1, 9% interest, secured, matures January 1, 2023 On January 28, 2021, Spectrum received the first tranche of the note discussed in the “Convertible promissory note, IQ Financial Inc., 9% interest, secured, matures January 1, 2023” above. Spectrum received $275,000, with an original issue discount of $14,474. The interest on the outstanding principal due under the secured note accrues at a rate of 9% per annum. All principal and accrued but unpaid interest under the secured note is due on January 1, 2023. The holder may begin converting the note into shares of the Company’s common stock six months after issuance when it is Rule 144 eligible. The conversion price is fixed at $0.05 per share. The embedded conversion option qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 “Derivatives and Hedging.” At June 30, 2021, the Company owed $289,474 pursuant to this agreement and will record accretion equal to the debt discount of $209,887 over the remaining term of the note. Convertible promissory note, IQ Financial Inc. Tranche 2, 9% interest, secured, matures January 1, 2023 On March 1, 2021, Spectrum received the second tranche of the note discussed in the “Convertible promissory note, IQ Financial Inc., 9% interest, secured, matures January 1, 2023” above. Spectrum received $325,000, with an original issue discount of $17,105. The interest on the outstanding principal due under the secured note accrues at a rate of 9% per annum. All principal and accrued but unpaid interest under the secured note is due on January 1, 2023. The holder may begin converting the note into shares of the Company’s common stock six months after issuance when it is Rule 144 eligible. The conversion price is fixed at $0.05 per share. The embedded conversion option qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 “Derivatives and Hedging.” At June 30, 2021, the Company owed $342,105 pursuant to this agreement and will record accretion equal to the debt discount of $264,255 over the remaining term of the note. Convertible promissory note, Jeffrey Gardner, 6% interest, unsecured, matures September 15, 2021 On June 15, 2021 the Company issued to Jeffrey Gardner an unsecured convertible promissory note in the aggregate principal amount of $125,000 in connection with the merger transaction discussed in Note 3, Reverse Merger. The interest on the outstanding principal due under the note accrues at a rate of 6% per annum. All principal and accrued but unpaid interest under the note is due on September 15, 2021. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.075 per share. The embedded conversion option qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 “Derivatives and Hedging.” At June 30, 2021, the Company owed $125,000 pursuant to this agreement and will record accretion equal to the debt discount of $104,167 over the remaining term of the note. Convertible promissory note, James Marsh, 6% interest, unsecured, matures September 15, 2021 On June 15, 2021 the Company issued to James Marsh an unsecured convertible promissory note in the aggregate principal amount of $125,000 in connection with the merger transaction discussed in Note 3, Reverse Merger. The interest on the outstanding principal due under the note accrues at a rate of 6% per annum. All principal and accrued but unpaid interest under the note is due on September 15, 2021. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.075 per share. The embedded conversion option qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 “Derivatives and Hedging.” At June 30, 2021, the Company owed $125,000 pursuant to this agreement and will record accretion equal to the debt discount of $104,167 over the remaining term of the note. Convertible promissory note, Efrat Investments LLC, 10% interest, secured, matures October 5, 2021 On June 15, 2021, in connection with the merger transaction discussed in Note 3, Reverse Merger, the Company assumed a convertible promissory note issued to Efrat Investments, LLC. The amount outstanding as of June 15, 2021 was $33,000, with accrued interest of $8,282. The note was originally issued on September 14, 2020 in the aggregate principal amount of $165,000 for an aggregate purchase price of $146,000. The Company also assumed a warrant issued equal to the face amount of the note with a term of two years to purchase 1,650,000 shares of common stock at an exercise price of $0.10 per share. The interest on the outstanding principal due under the note accrued at a rate of 10% per annum. All principal and accrued but unpaid interest under the note was due on October 5, 2021. The note was convertible into shares of the Company’s common stock at a fixed conversion price of $0.05 per share. The embedded conversion option and warrant qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 “Derivatives and Hedging.” During the period of June 16, 2021 through June 30, 2021, the holder of the note converted $33,000 of principal into shares of the Company’s common stock (refer to Note 11, Common Stock, for additional information). As a result of these conversions, the amount owed at June 30, 2021 was $0. The Company recorded a gain on settlement of debt of $208,567 to the unaudited condensed consolidated statement of operations for the three and six months ended June 30, 2021. |
Factor Financing
Factor Financing | 6 Months Ended |
Jun. 30, 2021 | |
Factor Financing Disclosure [Abstract] | |
Factor Financing | 9. Factor Financing On June 15, 2021, in connection with the merger transaction discussed in Note 3, Reverse Merger, the Company assumed a factor financing agreement between ADEX and Bay View Funding. The amount outstanding as of June 15, 2021 was $1,968,816. The agreement began on February 11, 2020 when, pursuant to an assignment and consent agreement, Bay View Funding purchased and received all of a previous lender’s right, title, and interest in the loan and security agreement with Spectrum’s wholly-owned subsidiary, ADEX. In connection with the agreement, Spectrum received $3,024,532 from Bay View Funding. This money was used to pay off the amounts owed to the previous lender at the time of the assignment and consent agreement. The initial term of the factoring agreement is twelve months from the initial funding date. Under the factoring agreement, Spectrum’s ADEX subsidiary may borrow up to the lesser of $5,000,000 or an amount equal to the sum of all undisputed purchased receivables multiplied by the advance percentage, less any funds in reserve. ADEX will pay to Bay View Funding a factoring fee upon purchase of receivables by Bay View Funding equal to 0.75% of the gross face value of the purchased receivable for the first 30 day period from the date said purchased receivable is first purchased by Bay View Funding, and a factoring fee of 0.35% per 15 days thereafter until the date said purchased receivable is paid in full or otherwise repurchased by ADEX or otherwise written off by Bay View Funding within the write off period. ADEX will also pay a finance fee to Bay View Funding on the outstanding advances under the agreement at a floating rate per annum equal to the Prime Rate plus 3%. The finance rate will increase or decrease monthly, on the first day of each month, by the amount of any increase or decrease in the Prime Rate, but at no time will the finance fee be less than 7.75%. During the period of June 16, 2021 through June 30, 2021, the Company paid $17,490 in factoring fees. These amounts are included within general and administrative expenses on the unaudited condensed consolidated statement of operations. During the period of June 16, 2021 through June 30, 2021, the Company received an aggregate of $841,680 and repaid an aggregate of $480,972. The Company owed $2,329,524 under the agreement as of June 30, 2021. |
Derivative Liabilities
Derivative Liabilities | 6 Months Ended |
Jun. 30, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liabilities | 10. Derivative Liabilities On June 15, 2021, in connection with the merger transaction discussed in Note 3, Reverse Merger, the Company assumed Spectrum’s derivative liabilities. As of June 15, 2021, the derivative liability balance of $7,520,076 was comprised of $6,952,674 of derivatives related to Spectrum’s convertible debentures, and $567,402 of derivatives related to Spectrum’s share purchase warrants and stock options. The embedded conversion options of the convertible debentures described in Note 8, Convertible Debentures, which were assumed as part of the merger transaction, contain conversion features that qualify for embedded derivative classification. The fair value of the liability is re-measured at the end of every reporting period and the change in fair value is reported in the statement of operations as a gain or loss on change in fair value of derivatives. Derivative liabilities also include the fair value of the Company’s share purchase warrants and stock options discussed in Note 13, Share Purchase Warrants and Stock Options. As of June 30, 2021, the derivative liability balance of $9,216,517 was comprised of $8,532,614 of derivatives related to the Company’s convertible debentures, and $683,903 of derivatives related to the Company’s share purchase warrants and stock options. The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities for the period of June 16, 2021 through June 30, 2021: June 30, 2021 Balance at the beginning of the period $ - Initial value of derivatives after reverse merger 7,520,076 Change in fair value of embedded conversion option 1,576,315 Initial value of derivatives upon issuance 486,800 Conversion of derivative liability (343,000 ) Fair value of warrant exercises (23,674 ) Balance at the end of the period $ 9,216,517 The Company uses Level 3 inputs for its valuation methodology for the embedded conversion option liabilities as their fair values were determined by using Monte-Carlo model based on various assumptions. Significant changes in any of these inputs in isolation would result in a significant change in the fair value measurement. As required, these are classified based on the lowest level of input that is significant to the fair value measurement. The following table shows the assumptions used in the calculations: Expected volatility Risk-free interest rate Expected dividend yield Expected life (in years) At June 30, 2021 145 - 282 % 0.05 - 0.25 % 0 % 0.28 - 2.48 |
Common Stock
Common Stock | 6 Months Ended |
Jun. 30, 2021 | |
Stockholders' Equity Note [Abstract] | |
Common Stock | 11. Common Stock Authorized Shares The Company has 750,000,000 common shares authorized with a par value of $0.00001. Issuance of shares pursuant to a Cobra Equities SPV, LLC convertible debenture On June 16, 2021, the Company issued 1,086,917 shares of common stock to Cobra Equities SPV, LLC upon the conversion of $116,000 of principal and $2,300 of accrued interest pursuant to the convertible debenture described in Note 8, Convertible Debentures. The shares had a fair value of $306,510, resulting in a loss on debt conversion of $188,211. Issuance of shares pursuant to an Efrat Investments LLC convertible debenture On June 17, 2021, the Company issued 660,000 shares of common stock to Efrat Investments LLC upon the conversion of $33,000 of principal and $8,307 of accrued interest pursuant to the convertible debenture described in Note 8, Convertible Debentures. There was also a derivative of $330,000 associated with the note. The shares had a fair value of $223,740, resulting in a gain of debt conversion of $160,567. Issuance of Shares Pursuant to Conversion of Series A Preferred Stock On June 24, 2021, the Company issued 985,651 shares of common stock to Dominion Capital upon the conversion of 96,101 shares of Series A preferred stock with a stated value of $1 per share. The shares had a fair value of $209,016, which was the carrying value of the Series A preferred converted. Issuance of shares pursuant to a Pawn Funding warrant On June 29, 2021, the Company issued 69,281 shares of common stock to Pawn Funding upon the cashless exercise of a warrant. Issuance of convertible debt to HWN shareholders On June 16, 2021, the Company issued $250,000 aggregate principal amount of convertible notes to Jeffrey Gardner and James Marsh., who are shareholders of HWN. The debt had a fair value of $486,400, which was recorded as a reduction to retained earnings. |
Preferred Stock
Preferred Stock | 6 Months Ended |
Jun. 30, 2021 | |
Equity [Abstract] | |
Preferred Stock | 12. Preferred Stock On June 15, 2021, in connection with the merger transaction discussed in Note 3, Reverse Merger, the Company assumed Spectrum’s Series A preferred stock obligations. Additionally, the holders of Spectrum’s Series B preferred stock transferred their shares to the Company’s Chief Executive Officer. Lastly, a new class of preferred stock, Series D, was designated and issued. At the time of the merger transaction, the fair value of the Series A and Series B preferred stock was $1,024,000 and $0, respectively. The fair value of the Series D preferred stock which was received in the exchange was $1,271,000, which was recorded as additional paid in capital. See below for a description of each of the Company’s outstanding classes of preferred stock, including historical and current information. Series A On November 15, 2017, Spectrum created one series of the 20,000,000 preferred shares it is authorized to issue, consisting of 8,000,000 shares, to be designated as Series A preferred stock. On October 29, 2018, Spectrum made the first amendment to the Certificate of Designation of its Series A convertible preferred stock. This amendment updated the conversion price to be equal to the greater of 75% of the lowest VWAP during the ten trading day period immediately preceding the date a conversion notice is delivered or $120.00, subject to adjustment for any subdivision or combination of the Company’s outstanding shares of common stock. On August 16, 2019, Spectrum made the second amendment to the Certificate of Designation of its Series A convertible preferred stock. As a result of this amendment, the Company recorded a deemed dividend in accordance with ASC 260-10-599-2. On April 8, 2020, Spectrum made the third amendment to the Certificate of Designation of its Series A preferred stock which lowered the fixed conversion price and the conversion price floor to $3.00 per share. On June 18, 2020, Spectrum made the fourth amendment to the Certificate of Designation of its Series A preferred stock, which lowered the fixed conversion price to $0.20 per share and the conversion price floor to $0.01 per share. On January 27, 2021, Spectrum made the fifth amendment to the Certificate of Designation of its Series A preferred stock which lowered the fixed conversion price to $0.0975 per share. Spectrum accounted for the amendment as an extinguishment and recorded a deemed dividend in accordance with ASC 260-10-599-2. Subsequent to the fifth amendment, the principal terms of the Series A preferred stock shares are as follows: Voting rights Dividend rights Conversion rights Liquidation rights On June 24, 2021, the Company issued 985,651 shares of common stock to Dominion Capital upon the conversion of 96,101 shares of Series A preferred stock with a stated value of $1 per share. The shares had a fair value of $209,016, which was the carrying value of the Series A preferred converted. As a result of the conversion, on June 30, 2021, the fair value of the Series A Preferred Stock was $814,984. In accordance with ASC 480 Distinguishing Liabilities from Equity Series B On April 16, 2018, Spectrum designated 1,000 shares of Series B preferred stock with a stated value of $3,500 per share. The Series B preferred stock is neither redeemable nor convertible into common stock. The principal terms of the Series B preferred stock shares are as follows: Issue Price - Redemption - Dividends - Preference of Liquidation - Voting - Conversion - In accordance with ASC 480 Distinguishing Liabilities from Equity On June 30, 2021, the fair value of the Series A Preferred Stock was calculated to be $814,914. Series D On June 14, 2021, Spectrum designated 1,590 shares of Series D preferred stock with a stated value of $10,000 per share. The Series D preferred stock is not redeemable. The principal terms of the Series D preferred stock shares are as follows: Issue Price - Redemption - Dividends - Preference of Liquidation - Voting - Conversion - Vote to Change the Terms of or Issuance of Series D On June 30, 2021, the fair value of the Series D Preferred Stock was $1,271,000 In accordance with ASC 480 Distinguishing Liabilities from Equity |
Share Purchase Warrants and Sto
Share Purchase Warrants and Stock Options | 6 Months Ended |
Jun. 30, 2021 | |
Share Purchase Warrants and Stock Options [Abstract] | |
Share Purchase Warrants and Stock Options | 13. Share Purchase Warrants and Stock Options On June 15, 2021, in connection with the merger transaction discussed in Note 3, Reverse Merger, the Company assumed Spectrum’s share purchase warrants and stock options. As of June 15, 2021, the total fair value of Spectrum’s share purchase warrants and stock options was $1,320,087. The total fair value of the Company’s share purchase warrants and stock options was $1,559,263 as of June 30, 2021. This amount is included in derivative liabilities on the unaudited condensed consolidated balance sheet. The valuation methodology, including the assumptions used in the valuation, are discussed in Note 10, Derivative Liabilities. The weighted-average remaining life on the share purchase warrants as of June 30, 2021 was 2.3 years. The weighted-average remaining life on the stock options as of June 30, 2021 was 4.9 years. The stock options outstanding at June 30, 2021 were not subject to any vesting terms. The following table summarizes the activity of share purchase warrants for the period of June 16, 2021 through June 30, 2021: Number of warrants Weighted average exercise price Intrinsic Balance at December 31, 2020 - $ - $ - Assumed in merger transaction 1,722,161 0.22 386,686 Issued - - - Exercised (69,281 ) 0.34 18,601 Expired - - - Balance at June 30, 2021 1,652,880 $ 0.22 $ 437,004 As of June 30, 2021, the following share purchase warrants were outstanding: Number of Exercise price Issuance Date Expiry date Remaining life 380 324.00 10/10/2018 10/10/2021 0.28 2,500 30.00 11/21/2019 11/21/2022 1.39 1,650,000 0.10 10/5/2020 10/5/2023 2.27 1,652,880 The following table summarizes the activity of stock options for the period of June 16, 2021 through June 30, 2021: Number of stock options Weighted average exercise price Intrinsic Balance at December 31, 2020 - $ - $ - Assumed in merger transaction 966,330 0.62 246,899 Issued 3,318,584 0.25 875,708- Exercised - - - Expired - - - Balance at June 30, 2021 4,284,914 $ 0.47 $ 1,122,607 As of June 30, 2021, the following stock options were outstanding: Number of stock Exercise price Issuance Date Expiry date Remaining Life 5,000 9.00 11/25/2019 11/25/2021 0.41 323,763 0.58 2/23/2021 2/23/2026 4.65 482,393 0.58 2/23/2021 2/23/2026 4.65 77,587 0.58 2/23/2021 2/23/2026 4.65 77,587 0.58 2/23/2021 2/23/2026 4.65 3,318,584 0.25 6/16/2021 6/16/2026 4.96 4,284,914 |
Leases
Leases | 6 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
Leases | 14. Leases The Company leases certain office space and equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. The depreciable lives of operating lease assets and leasehold improvements are limited by the expected lease term. The Company’s leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The following table sets forth the operating lease right of use (“ROU”) assets and liabilities as of June 30, 2021 and December 31, 2020: June 30, December 31, 2021 2020 Operating lease assets $ 294,974 $ 239,489 Operating lease liabilities: Current operating lease liabilities 344,227 283,104 Total operating lease liabilities $ 344,227 $ 283,104 Expense related to leases is recorded on a straight-line basis over the lease term, including rent holidays. During the three and six months ended June 30, 2021, the Company recognized operating lease expense of $25,136 and $50,272, respectively. During the three and six months ended June 30, 2020, the Company recognized operating lease expense of $25,136 and $50,272, respectively. Operating lease costs are included within selling, administrative and other expenses on the condensed consolidated statements of income and comprehensive income. During the three and six months ended June 30, 2021, short-term lease costs were $2,646. The Company did not incur any short-term lease costs during the three and six months ended June 30, 2020. Cash paid for amounts included in the measurement of operating lease liabilities were $25,198 and $50,396, respectively, for the three and six months ended June 30, 2021. Cash paid for amounts included in the measurement of operating lease liabilities were $22,198 and $44,396, respectively, for the three and six months ended June 30, 2020. These amounts are included in operating activities in the condensed consolidated statements of cash flows. During the three and six months ended June 30, 2021, the Company reduced its operating lease liabilities by $22,023 and $43,772, respectively, for cash paid. During the three and six months ended June 30, 2020, the Company reduced its operating lease liabilities by $17,988 and $35,753, respectively, for cash paid. The operating lease liabilities as of June 30, 2021 reflect a weighted average discount rate of 19%. The weighted average remaining term of the leases is 2.0 years. Remaining lease payments as of June 30, 2021 are as follows: Year ending December 31, 2021 104,863 2022 207,767 2023 96,839 Total lease payments 409,469 Less: imputed interest (65,242 ) Total $ 344,227 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 15. Commitments and Contingencies Leases The Company leases certain of its properties under leases that expire on various dates through 2023. Some of these agreements include escalation clauses and provide for renewal options ranging from one to five years. Leases with an initial term of 12 months or less and immaterial leases are not recorded on the balance sheet (refer to Note 14, Leases, for amounts expensed during the three and six months ended June 30, 2021 and 2020). Proposed acquisition On April 13, 2021, Spectrum, SVC, Inc., Secure Voice Corp. (“SVC”) and Telecom Assets Corp. (the “Seller”) entered into a Stock Purchase Agreement (the “Agreement”) whereby the Seller agreed to sell SVC to Spectrum, in exchange for $2,500,000 in cash and up to $6,500,000 (less up to $2,000,000 in assumed liabilities) of a newly established series of convertible preferred stock of Spectrum. The closing of the transaction contemplated by the Agreement is subject to certain closing conditions, as set forth in the Agreement. The business being purchased by Spectrum is a wholesale network services provider with network footprint and licenses in the Northeast and Southeast United States as well as Texas. This network carries VoIP and other traffic for other service providers. A transition services agreement will be entered into in order to begin the integration process prior to the closing of the transaction. As of June 30, 2021, HWN has a receivables balance from SVC of $709,545, which is included in other assets. |
Segment Disclosures
Segment Disclosures | 6 Months Ended |
Jun. 30, 2021 | |
Segment Reporting [Abstract] | |
Segment Disclosures | 16. Segment Disclosures During the three and six months ended June 30, 2021, the Company had three operating segments including: ● Technology. which is comprised of the ADEX Entities, AWS PR, and High Wire. ● Construction, which is comprised of JTM and Tropical ● Spectrum Global Solutions (SGS), which consists of the rest of the Company’s operations. During the three and six months ended June 30, 2020, the Company had two operating segments including: ● Technology, comprised of High Wire ● Construction, comprised of JTM. Factors used to identify the Company’s reportable segments include the organizational structure of the Company and the financial information available for evaluation by the chief operating decision-maker in making decisions about how to allocate resources and assess performance. The Company’s operating segments have been broken out based on similar economic and other qualitative criteria. The Company operates the SGS reporting segment and the JTM segment in one geographical area (the United States) and the ADEX/AWS PR/TROP/High Wire operating segment in three geographical areas (the United States, Puerto Rico and Canada). Financial statement information by operating segment for the three and six months ended June 30, 2021 is presented below: Three Months Ended June 30, 2021 Six Months Ended June 30, 2021 Spectrum Global Technology Construction Total Spectrum Global Technology Construction Total Net sales $ - $ 4,314,074 $ 3,479,994 $ 7,794,068 $ - $ 6,776,017 $ 6,091,887 $ 12,867,904 Operating income (loss) (790,333 ) (295,411 ) 555,376 (530,368) (790,333 ) (854,270 ) 1,311,331 (333.272) Interest expense 12,264 45,322 - 57,586 12,264 89,749 - 102,013 Depreciation and amortization - 48,580 6,310 54,890 - 77,648 12,552 90,200 Total assets as of June 30, 2021 564,541 34,244,845 3,486,539 38,295,925 564,541 24,244,845 3,486,539 38,295,925 Geographic information for the three and six months ended and as of June 30, 2021 is presented below: Revenues Three Months Six Months Long-lived Puerto Rico and Canada $ 105,161 $ 105,161 $ - United States 7,688,907 12,762,743 26,508,703 Consolidated total 7,794,068 12,867,904 26,508,703 Financial statement information by operating segment for the three and six months ended June 30, 2020 is presented below: Three Months Ended June 30, 2020 Six Months Ended June 30, 2020 Technology Construction Total Technology Construction Total Net sales $ 1,703,960 $ 1,430,939 $ 3,134,899 $ 5,706,026 $ 3,038,484 $ 8,744,510 Operating (loss) income (642,227 ) 38,857 (603,370 ) (708,652 ) 255,707 (452,945 ) Interest expense 39,398 - 39,398 68,416 - 68,416 Depreciation and amortization 65,114 - 65,114 - - - Total assets as of December 31, 2020 7,086,369 1,892,077 8,978,446 5,566,255 2,392,077 7,958,332 Geographic information for the six months ended June 30, 2020 and as of December 31, 2020 is presented below: Revenues Three Months Six Months Long-lived Puerto Rico $ - $ - $ - United States 3,134,899 8,744,510 5,793,317 Consolidated total 3,134,899 8,744,510 5,793,317 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | 17. Subsequent Events Issuance of shares pursuant to Cobra Equities SPV, LLC convertible debentures On July 15, 2021, the Company issued 688,069 shares of common stock to Cobra Equities SPV, LLC upon the conversion of $90,000 of principal and $1,320 of accrued interest pursuant to a convertible debenture. On August 12, 2021, the Company issued 1,818,182 shares of common stock to Cobra Equities SPV, LLC upon the conversion of $50,000 of accrued interest pursuant to a convertible debenture. Restricted Cash On July 26, 2021, the Company’s restricted cash balance of $2,000,000 was no longer restricted and was released into the Company’s operating account. Assignment of portion of convertible debenture On August 12, 2021, SCS, LLC assigned $50,000 of accrued interest on a convertible note to Cobra Equities SPV, LLC. The principal balance of the note was $235,989 as of June 30, 2021. Cobra Equities SPV, LLC immediately converted the assigned accrued interest into shares of the Company’s common stock (refer to the “Issuance of shares pursuant to Cobra Equities SPV, LLC convertible debentures” section above). CARES Act Loan forgiveness On August 6, 2021, HWN received approval for forgiveness of its $873,465 CARES Act Loan. Issuance of Shares Pursuant to Conversion of Series A Preferred Stock On August 12, 2021, the Company issued 1,025,641 shares of common stock to Dominion Capital upon the conversion of 100,000 shares of Series A preferred stock with a stated value of $1 per share. Grant of Stock Options On August 18, 2021, the Company granted 6,228,232 options to purchase shares of its common stock at an exercise price of $0.2545 per share. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Condensed Financial Statements | Condensed Financial Statements In the opinion of management, the accompanying financial statements reflect all adjustments of a recurring nature considered necessary to present fairly the Company’s financial position and the results of its operations and its cash flows for the periods shown. The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. The results of operations and cash flows for the periods shown are not necessarily indicative of the results to be expected for the full year. |
Basis of Presentation/Principles of Consolidation | Basis of Presentation/Principles of Consolidation These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States. These consolidated financial statements include the accounts of the Company and JTM, as well as Spectrum and its subsidiaries, the ADEX Entities, AWS PR, and Tropical. All subsidiaries are wholly-owned, with the exception of JTM, which is 50% owned. All inter-company balances and transactions have been eliminated. |
Reverse Stock Split | Reverse Merger On January 27, 2021, Spectrum Global Solutions, Inc. HW Merger Sub, Inc., HWN, Inc. and the stockholders of HWN, Inc. (the “Stockholders”) entered into an Agreement and Plan of Merger (the “Agreement”) whereby the Stockholders agreed to sell to the Company all of the capital stock of HWN, Inc.. On June 16, 2021, the transaction contemplated by the Agreement closed, and HWN, Inc. became a wholly-owned subsidiary of Spectrum Global Solutions, Inc. As previously disclosed, as part of the consideration for the transaction, Spectrum Global Solutions, Inc. issued shares of a newly established Series D Preferred Stock. The merger has been accounted for as a reverse merger in accordance with US GAAP. This determination was primarily based on High Wire’s business comprising the ongoing operations of the Company following the Merger, High Wire’s senior management comprising the senior management of the Company and High Wire’s stockholders having a majority of the voting power of the Company. For accounting purposes, Spectrum is considered the “acquired” company and High Wire is considered the “acquirer.” Accordingly, for accounting purposes, the Merger is treated as the equivalent of High Wire issuing stock for the net assets of Spectrum, accompanied by a recapitalization. The net assets of Spectrum have been remeasured at fair value and applied against the purchase price resulting in goodwill or other intangible assets recorded. The consolidated assets, liabilities and results of operations prior to the Closing Date of the merger are those of High Wire, and Spectrum’s assets, liabilities and results of operations are consolidated with High Wire beginning on the Closing Date. The shares and corresponding capital amounts and earnings per share available to common stockholders, pre-merger, have been retroactively restated as shares reflecting the exchange ratio in the merger. The historical financial information and operating results of Spectrum prior to the merger have not been separately presented in these condensed consolidated financial statements. |
Impact of the COVID-19 Pandemic | Impact of the COVID-19 Pandemic The extent to which the coronavirus (“COVID-19”) outbreak and measures taken in response thereto impact the Company’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted. Global health concerns relating to the COVID-19 outbreak have been weighing on the macroeconomic environment, and the outbreak has significantly increased economic uncertainty. Risks related to consumers and businesses lowering or changing spending, which impact domestic and international spend. The outbreak has resulted in authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders, and business shutdowns. These measures have not only negatively impacted consumer spending and business spending habits, they have also adversely impacted and may further impact the Company’s workforce and operations and the operations of its customers, suppliers and business partners. These measures may remain in place for a significant period of time and they are likely to continue to adversely affect the Company’s business, results of operations and financial condition. The spread of COVID-19 has caused the Company to modify its business practices (including employee travel, employee work locations, and cancellation of physical participation in meetings, events and conferences), and the Company may take further actions as may be required by government authorities or that the Company determines are in the best interests of its employees, customers and business partners. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus or otherwise be satisfactory to government authorities. The extent to which the COVID-19 outbreak impacts the Company’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume. Even after the COVID-19 outbreak has subsided, the Company may continue to experience materially adverse impacts to its business as a result of its global economic impact, including any recession that has occurred or may occur in the future. There are no comparable recent events which may provide guidance as to the effect of the spread of COVID-19 and a global pandemic, and, as a result, the ultimate impact of the COVID-19 outbreak or a similar health epidemic is highly uncertain and subject to change. The Company does not yet know the full extent of the impacts on its business, its operations or the global economy as a whole. However, the effects could have a material impact on the Company’s results of operations, and the Company will continue to monitor the COVID-19 situation closely. As of August 2021, multiple variants of the COVID-19 virus are circulating globally that are highly transmissible, and there is uncertainty around vaccine effectiveness on the new strains of the virus. Uncertainty around vaccine distribution, supply and effectiveness will impact when the negative economic effects as a result of COVID-19 will abate or end and the timing of such recovery may affect the Company’s financial condition. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to allowance for doubtful accounts, the estimated useful lives and recoverability of long-lived assets, equity component of convertible debt, stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. |
Restricted Cash | Restricted Cash As of June 30, 2021, the Company had $2,000,000 of restricted cash related to the CARES Act Loan discussed in Note 7, Loans Payable. On July 26, 2021, the cash was no longer restricted and was released into the Company’s operating account (refer to Note 17, Subsequent Events for additional detail). |
Accounts Receivable | Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company records unbilled receivables for services performed but not billed. Management reviews a customer’s credit history before extending credit. The Company maintains an allowance for doubtful accounts for estimated losses. Estimates of uncollectible amounts are reviewed each period, and changes are recorded in the period in which they become known. Management analyzes the collectability of accounts receivable each period. This review considers the aging of account balances, historical bad debt experience, and changes in customer creditworthiness, current economic trends, customer payment activity and other relevant factors. Should any of these factors change, the estimate made by management may also change. The allowance for doubtful accounts at June 30, 2021 and December 31, 2020 was $38,881 and $0, respectively. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. The Company depreciates the cost of property and equipment over their estimated useful lives at the following annual rates: Automotive 3-5 years straight-line basis Computer equipment and software 3-7 years straight-line basis Leasehold improvements 5 years straight-line basis Office equipment and furniture 5 years straight-line basis Software 5 years straight-line basis Machinery and equipment 5 years straight-line basis |
Goodwill | Goodwill Goodwill was initially generated through the acquisition of JTM in 2019, and the reverse merger with Spectrum in 2021, as the total consideration paid exceeded the fair value of the net assets acquired. The Company tests its goodwill for impairment at least annually on December 31st and whenever events or circumstances change that indicate impairment may have occurred. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a significant decline in the Company’s expected future cash flows; a significant adverse change in legal factors or in the business climate; unanticipated competition; and slower growth rates. Any adverse change in these factors could have a significant impact on the recoverability of goodwill and the Company’s consolidated financial results. The Company tests goodwill by estimating fair value using a Discounted Cash Flow (“DCF”) model. The key assumptions used in the DCF model to determine the highest and best use of estimated future cash flows include revenue growth rates and profit margins based on internal forecasts, terminal value and an estimate of a market participant’s weighted-average cost of capital used to discount future cash flows to their present value. There were no impairment charges during the three and six months ended June 30, 2021 and 2020. |
Intangible Assets | Intangible Assets At June 30, 2021 and December 31, 2020, definite-lived intangible assets consist of tradenames and customer relationships which are being amortized over their estimated useful lives of 15 years. The Company periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removed from the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques. The Company has no intangibles with indefinite lives. For long-lived assets, impairment losses are only recorded if the asset’s carrying amount is not recoverable through its undiscounted, probability-weighted future cash flows. The Company measures the impairment loss based on the difference between the carrying amount and the estimated fair value. When an impairment exists, the related assets are written down to fair value. There were no impairment charges during the three and six months ended June 30, 2021 and 2020. |
Long-lived Assets | Long-lived Assets In accordance with ASC 360, “Property, Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. There were no impairment charges recorded during the three and six months ended June 30, 2021 and 2020. |
Foreign Currency Translation | Foreign Currency Translation Transactions in foreign currencies are translated into the currency of measurement at the exchange rates in effect on the transaction date. Monetary balance sheet items expressed in foreign currencies are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. The resulting foreign exchange gains and losses are recognized in income. The Company’s integrated foreign subsidiaries are financially or operationally dependent on the Company. The Company uses the temporal method to translate the accounts of its integrated operations into U.S. dollars. Monetary assets and liabilities are translated at the exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at average rates for the period, except for amortization, which is translated on the same basis as the related asset. The resulting foreign exchange gains or losses are recognized in income. |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “ Accounting for Income Taxes The Company conducts business, and files federal and state income, franchise or net worth, tax returns in Canada, the United States, in various states within the United States and the Commonwealth of Puerto Rico. The Company determines it’s filing obligations in a jurisdiction in accordance with existing statutory and case law. The Company may be subject to a reassessment of federal and provincial income taxes by Canadian tax authorities for a period of three years from the date of the original notice of assessment in respect of any particular taxation year. For Canadian and U.S. income tax returns, the open taxation years range from 2010 to 2020. In certain circumstances, the U.S. federal statute of limitations can reach beyond the standard three year period. U.S. state statutes of limitations for income tax assessment vary from state to state. Tax authorities of Canada and U.S. have not audited any of the Company’s, or its subsidiaries’, income tax returns for the open taxation years noted above. Significant management judgment is required in determining the provision for income taxes, and in particular, any valuation allowance recorded against the Company’s deferred tax assets. Deferred tax assets are regularly reviewed for recoverability. The Company currently has significant deferred tax assets resulting from net operating loss carryforwards and deductible temporary differences, which should reduce taxable income in future periods. The realization of these assets is dependent on generating future taxable income. The Company follows the guidance set forth within ASC Topic 740, “ Income Taxes AWS PR received a tax notice from the Puerto Rican government requesting payment of taxes related to 2014. The amount due as of June 30, 2021 was $156,711 plus penalties and interest of $140,319 for a total obligation due of $297,030. During June 2021, AWS PR was notified that the Puerto Rican government would settle the outstanding debt for $11,105, which the Company paid during July 2021. |
Revenue Recognition | Revenue Recognition Adoption of New Accounting Guidance on Revenue Recognition The Company recognizes revenue based on the five criteria for revenue recognition established under Topic 606: 1) identify the contract, 2) identify separate performance obligations, 3) determine the transaction price, 4) allocate the transaction price among the performance obligations, and 5) recognize revenue as the performance obligations are satisfied. Contract Types The Company’s contracts fall under three main types: 1) unit-price, 2) fixed-price, and 3) time-and-materials. Unit-price contracts relate to services being performed and paid on a unit basis, such as per mile of construction completed. Fixed-price contracts are based on purchase order line items that are billed on individual invoices as the project progresses and milestones are reached. Time-and-materials contracts include employees working permanently at customer locations and materials costs incurred by those employees. A significant portion of the Company’s revenues come from customers with whom the Company has a master service agreement (“MSA”). These MSA’s generally contain customer specific service requirements. Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in the new revenue standard. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. For the Company’s different revenue service types the performance obligation is satisfied at different times. For professional services revenue, the performance obligation is met when the work is performed. In certain cases this may be each day, or each week depending on the customer. For construction services, the performance obligation is met when the work is completed and the customer has approved the work. Contract assets include unbilled amounts for costs of services incurred on contracts with open performance obligations. These amounts are included in contract assets on the consolidated balance sheets. Contract liabilities include costs incurred and are included in contract liabilities on the consolidated balance sheets. Revenue Service Types The following is a description of the Company’s revenue service types, which include professional services and construction: ● Professional services are services provided to the clients where the Company delivers distinct contractual deliverables and/or services. Deliverables may include but are not limited to: engineering drawings, designs, reports and specification. Services may include, but are not limited to: consulting or professional staffing to support our client’s objectives. Consulting or professional staffing services may be provided remotely or on client premises and under their direction and supervision. ● Construction Services are services provided to the client where the Company may self-perform or subcontract services that require the physical construction of infrastructure or installation of equipment and materials. Disaggregation of Revenues The Company disaggregates its revenue from contracts with customers by service type, contract type, contract duration, and timing of transfer of goods or services. See the below tables: Revenue by service type Three months Three months Six months Six months June 30, Professional Services $ 4,366,938 $ 3,134,899 $ 6,828,881 $ 8,744,510 Construction 3,427,130 + 6,039,023 + Total $ 7,794,068 $ 3,134,899 $ 12,867,904 $ 8,744,510 Revenue by contract duration Three months Three months Six months Six months Short-term $ 6,949,081 $ 3,134,899 $ 12,022,917 $ 8,744,510 Long-term 844,987 - 844,987 - Total $ 7,794,068 $ 3,134,899 $ 12,867,904 $ 8,744,510 Revenue by contract type Three months Three months Six months Six months June 30, Fixed-price $ 7,698,572.00 3,131,899 $ 12,772,408 $ 8,744,510.00 Time-and-materials 95,496 - 95,496 - Total $ 7,794,068 $ 3,131,899 $ 12,867,904 $ 8,744,510 The Company also disaggregates its revenue by operating segment and geographic location (refer to Note 15, Segment Disclosures, for additional information). Accounts Receivable Accounts receivable include amounts from work completed in which the Company has billed. The amounts due are stated at their net estimated realizable value. The Company maintains an allowance for doubtful accounts to provide for the estimated amount of receivables that will not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables and collateral to the extent applicable. Contract Assets and Liabilities Contract assets include costs and services incurred on contracts with open performance obligations. These amounts are included in contract assets on the consolidated balance sheets. At June 30, 2021 and December 31, 2020, contract assets totaled $1,066,386 and $0, respectively. Contract liabilities include payment received for incomplete performance obligations and are included in contract liabilities on the consolidated balance sheets. At June 30, 2021 and December 31, 2020, contract liabilities totaled $827,533 and $464,450, respectively. |
Cost of Revenues | Cost of Revenues Cost of revenues includes all direct costs of providing services under the Company’s contracts, including costs for direct labor provided by employees, services by independent subcontractors, operation of capital equipment (excluding depreciation and amortization), direct materials, insurance claims and other direct costs. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred. |
Stock-based Compensation | Stock-based Compensation The Company records stock-based compensation in accordance with ASC 718, “ Compensation – Stock Compensation The Company accounts for stock-based compensation awards issued to non-employees for services, as prescribed by ASC 718-10, at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in ASU 2018-07. The Company uses the Black-Scholes option pricing model to calculate the fair value of stock-based awards. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the consolidated statement of operations over the requisite service period. |
Loss per Share | Loss per Share The Company computes (loss) per share in accordance with ASC 260, “Earnings per Share” which requires presentation of both basic and diluted (loss) per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing the (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of June 30, 2021 and December 31, 2020, respectively, the Company had 53,736,513 and 0 common stock equivalents outstanding. |
Leases | Leases The Company adopted FASB Accounting Standards Codification, Topic 842, Leases (“ASC 842”) on January 1, 2019. The new leasing standard requires recognition of leases on the consolidated balance sheets as right-of-use (“ROU”) assets and lease liabilities. ROU assets represent the Company’s right to use underlying assets for the lease terms and lease liabilities represent the Company’s obligation to make lease payments arising from the leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value and future minimum lease payments over the lease term at commencement date. As the Company’s leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. A number of the Company’s lease agreements contain options to renew and options to terminate the leases early. The lease term used to calculate ROU assets and lease liabilities only includes renewal and termination options that are deemed reasonably certain to be exercised. The Company recognized lease liabilities, with corresponding ROU assets, based on the present value of unpaid lease payments for existing operating leases longer than twelve months as of January 1, 2019. The ROU assets were adjusted per ASC 842 transition guidance for existing lease-related balances of accrued and prepaid rent, unamortized lease incentives provided by lessors, and restructuring liabilities, Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term and is recorded in selling, general and administrative expenses. Variable lease payments for common area maintenance, property taxes and other operating expenses are recognized as expense in the period when the changes in facts and circumstances on which the variable lease payments are based occur. The Company has elected not to separate lease and non-lease components for all property leases for the purposes of calculating ROU assets and lease liabilities. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or result of operations. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivables. The Company maintains its cash balances with high-credit-quality financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. These deposits may be withdrawn upon demand and therefore bear minimal risk. The Company provides credit to customers on an uncollateralized basis after evaluating client creditworthiness. For the six months ended June 30, 2021, three customers accounted for 32%, 17% and 17%, respectively, of consolidated revenues for the period. In addition, amounts due from these customers represented 16%, 9% and 11%, respectively, of trade accounts receivable as of June 30, 2021. For the six months ended June 30, 2020, three customers accounted for 18%, 17% and 17%, respectively, of consolidated revenues for the period. In addition, amounts due from these customers represented 37%, 16% and 0%, respectively, of trade accounts receivable as of June 30, 2020. The Company’s customers are primarily located within the domestic United States of America, Puerto Rico, and Canada. Revenues generated within the domestic United States of America accounted for approximately 99% of consolidated revenues for the six months ended June 30, 2021. Revenues generated from customers in Puerto Rico and Canada accounted for approximately 1% of consolidated revenues for the six months ended June 30, 2021. Revenues generated within the domestic United States of America accounted for 100% of consolidated revenues for the six months ended June 30, 2020. |
Fair Value Measurements | Fair Value Measurements The Company measures and discloses the estimated fair value of financial assets and liabilities using the fair value hierarchy prescribed by US generally accepted accounting principles. The fair value hierarchy has three levels, which are based on reliable available inputs of observable data. The hierarchy requires the use of observable market data when available. The three-level hierarchy is defined as follows: Level 1 – quoted prices for identical instruments in active markets; Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which significant inputs and significant value drivers are observable in active markets; and Level 3 – fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Financial instruments consist principally of cash and cash equivalents, accounts receivable, restricted cash, accounts payable, loans payable and convertible debentures. Derivative liabilities are determined based on “Level 3” inputs, which are significant and unobservable and have the lowest priority. There were no transfers into or out of “Level 3” during the six months ended June 30, 2021 or the year ended December 31, 2020. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations. The Company’s financial assets and liabilities carried at fair value measured on a recurring basis as of June 30, 2021 and December 31, 2020 consisted of the following: Total fair value Quoted prices in Significant Significant Derivative liability (1) $ 9,216,517 $ - $ - $ 9,216,517 Total fair value Quoted prices in Quoted prices in Quoted prices in Derivative liability (1) $ - $ - $ - $ - (1) The Company has estimated the fair value of these derivatives using the Monte-Carlo model. Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial statement. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Refer to Note 10, Derivative Liabilities, for additional information. |
Derivative Liabilities | Derivative Liabilities The Company accounts for derivative instruments in accordance with ASC Topic 815, “ Derivatives and Hedging |
Sequencing Policy | Sequencing Policy Under ASC 815-40-35, the Company has adopted a sequencing policy whereby, in the event that reclassification of contracts from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient authorized shares as a result of certain securities with a potentially indeterminable number of shares, shares will be allocated on the basis of the earliest issuance date of potentially dilutive instruments, with the earliest grants receiving the first allocation of shares. Pursuant to ASC 815, issuance of securities to the Company’s employees or directors are not subject to the sequencing policy. |
Going Concern Assessment | Going Concern Assessment Management assesses going concern uncertainty in the Company’s consolidated financial statements to determine whether there is sufficient cash on hand and working capital, including available borrowings on loans, to operate for a period of at least one year from the date the unaudited consolidated financial statements are issued or available to be issued, which is referred to as the “look-forward period”, as defined in GAAP. As part of this assessment, based on conditions that are known and reasonably knowable to management, management will consider various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected cash expenditures or programs, its ability to delay or curtail expenditures or programs and its ability to raise additional capital, if necessary, among other factors. Based on this assessment, as necessary or applicable, management makes certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent it deems probable those implementations can be achieved and management has the proper authority to execute them within the look-forward period. The Company has generated losses since its inception and has relied on cash on hand, sales of securities, external bank lines of credit, and issuance of third-party and related party debt to support cashflow from operations. For the six months ended June 30, 2021, the Company had operating income of $396,020 (before deducting losses attributable to non-controlling interests, cash flows used in operations of $853,087 and negative working capital of $10,503,178 capital Management has prepared estimates of operations for fiscal year 2021 and believes that sufficient funds will be generated from operations to fund its operations and to service its debt obligations for one year from the date of the filing of the unaudited consolidated financial statements in the Company’s Quarterly Report on Form 10-Q, which indicate improved operations and the Company’s ability to continue operations as a going concern. The impact of COVID-19 on the Company’s business has been considered in these assumptions; however, it is too early to know the full impact of COVID-19 or its timing on a return to more normal operations. Further, the recently enacted CARES Act provides for economic assistance loans through the SBA. As of June 30, 2021, HWN had $873,465 and ADEX had $2,000,000 of PPP loans outstanding from the SBA under the CARES Act. The PPP provides that the PPP loans may be partially or wholly forgiven if the funds are used for certain qualifying expenses as described in the CARES Act. On August 6, 2021, HWN was notified that its $873,465 PPP loan was forgiven. See Note 17, Subsequent Events. ADEX used the proceeds from the PPP loans for qualifying expenses and is applying for forgiveness of the PPP loans in accordance with the terms of the CARES Act. The accompanying unaudited consolidated financial statements have been prepared on a going concern basis under which the Company is expected to be able to realize its assets and satisfy its liabilities in the normal course of business. Management believes that based on relevant conditions and events that are known and reasonably knowable that its forecasts for one year from the date of the filing of the unaudited consolidated financial statements in the Company’s Quarterly Report on Form 10-Q indicate improved operations and the Company’s ability to continue operations as a going concern. The Company has contingency plans to reduce or defer expenses and cash outlays should operations not improve in the look forward period. |
Significant Accounting Polici_2
Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Schedule of property and equipment estimated useful lives | Automotive 3-5 years straight-line basis Computer equipment and software 3-7 years straight-line basis Leasehold improvements 5 years straight-line basis Office equipment and furniture 5 years straight-line basis Software 5 years straight-line basis Machinery and equipment 5 years straight-line basis |
Schedule of disaggregates its revenue from contracts with customers by service type | Revenue by service type Three months Three months Six months Six months June 30, Professional Services $ 4,366,938 $ 3,134,899 $ 6,828,881 $ 8,744,510 Construction 3,427,130 + 6,039,023 + Total $ 7,794,068 $ 3,134,899 $ 12,867,904 $ 8,744,510 Revenue by contract duration Three months Three months Six months Six months Short-term $ 6,949,081 $ 3,134,899 $ 12,022,917 $ 8,744,510 Long-term 844,987 - 844,987 - Total $ 7,794,068 $ 3,134,899 $ 12,867,904 $ 8,744,510 Revenue by contract type Three months Three months Six months Six months June 30, Fixed-price $ 7,698,572.00 3,131,899 $ 12,772,408 $ 8,744,510.00 Time-and-materials 95,496 - 95,496 - Total $ 7,794,068 $ 3,131,899 $ 12,867,904 $ 8,744,510 |
Schedule of financial assets and liabilities fair value measured on a recurring basis | Total fair value Quoted prices in Significant Significant Derivative liability (1) $ 9,216,517 $ - $ - $ 9,216,517 Total fair value Quoted prices in Quoted prices in Quoted prices in Derivative liability (1) $ - $ - $ - $ - |
Reverse Merger (Tables)
Reverse Merger (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Disclosure Text Block Supplement [Abstract] | |
Schedule of estimates and valuations of management | Provisional Purchase consideration Fair Value Common stock $ 5,561,975 Convertible debt 944,000 Derivative liabilities 6,929,000 Loans payable 2,377,400 Loans payable, related parties 2,447,252 Lease liabilities 106,615 Fair value of stock options 204,715 Fair value of warrants 362,687 Fair value of Series A Preferred 1,024,000 Fair value of Series D Preferred 1,271,000 Total provisional purchase price $ 21,228,644 Allocation of provisional purchase consideration Working capital $ 781,470 Other assets 12,893 Contract assets 426,647 Provisional goodwill 13,562,296 Customer lists 4,720,863 Tradenames 1,724,475 Total provisional enterprise value $ 21,228,644 |
Schedule of estimated acquisition date fair values | Three months ended Six months ended Three months ended Six months ended As Reported Pro Forma As Reported Pro Forma As Reported Pro Forma As Reported Pro Forma Revenue $ 7,794,068 $ 10,823,947 $ 12,867,904 $ 19,963,773 $ 3,134,899 $ 7,778,186 $ 8,744,560 $ 18,708,412 Net income (loss) attributable to HWN, Inc. common shareholders $(1,591,590 ) $1,161,189 $(2,051,165 ) $(8,945,874 ) $(569,870 ) $(2,040,559 ) $(518,299 ) $(4,917,156 ) Income (loss) per common share, basic and diluted: ($0.36) ) $0.25 ($0.55) ) ($3.90) ) |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | June 30, December 31, 2021 2020 Computers and office equipment $ 45,541 $ 41,564 Vehicles 194,506 188,906 Leasehold improvements 8,626 6,113 Software 396,774 366,773 Machinery and equipment 74,798 74,798 Total 720,245 678,154 Less: accumulated depreciation (355,099 ) (294,045 ) Equipment, net $ 365,146 $ 384,109 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | Cost Accumulated Impairment Net carrying Net carrying Customer relationship and lists $ 4,720,863 $ 14,339 $ - $ 4,706,524 $ - Trade names 1,694,475 4,025 - 1,690,450 - Total intangible assets $ 6,415,338 $ 18,364 $ - $ 6,396,974 $ - |
Schedule of estimated future amortization expense | Year ending December 31, 2021 214,845 2022 429,689 2023 429,689 2024 429,689 2025 429,689 Thereafter 4,459,123 Total $ 6,396,974 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Related Party Transactions [Abstract] | |
Schedule of related party transactions | June 30, December 31, 2021 2020 Convertible promissory note issued to Keith Hayter, 10% interest, unsecured, matures August 31, 2022, debt premium of $1,792,413 $ 2,346,444 $ - Convertible promissory note issued to Roger Ponder, 10% interest, unsecured, matures August 31, 2022, debt premium of $76,914 100,808 - Promissory note issued to Mark Porter, 9% interest, unsecured, matures December 15, 2021 100,000 - Total $ 2,547,252 $ - Less: Long-term portion of loans payable to related parties (2,447,252 ) - Loans payable to related parties, current portion $ 100,000 $ - |
Loans Payable (Tables)
Loans Payable (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Loans Payable [Abstract] | |
Schedule of loans payable | June 30, December 31, 2021 2020 Promissory note issued to the Mark Munro 1996 Charitable Remainder UniTrust, 5.5% interest, unsecured, due February 27, 2022 $ 2,292,971 * $ 2,292,971 Promissory note issued to Cornerstone National Bank & Trust, 4.5% interest, unsecured, matures on October 9, 2024 331,745 358,343 Bank of America auto loan, matures on March 31, 2025 45,870 52,051 Ailco equipment financing - 15,056 CARES Act Loans 3,033,465 250,800 Promissory note issued to InterCloud Systems, Inc., non-interest bearing, unsecured and due on demand 217,400 - Total 5,921,451 2,969,221 Less: Long-term portion of loans payable (44,830,586 ) (2,886,796 ) Loans payable, current portion, net of debt discount $ 1,090,865 $ 82,425 |
Convertible Debentures (Tables)
Convertible Debentures (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of convertible promissory note | June 30, December 31, 2021 2020 Convertible promissory note, Cobra Equities SPV, LLC, 18% interest, unsecured, matured June 1, 2019 $ 184,362 $ - Convertible promissory note, SCS Capital Partners, LLC, 12% interest, secured, matures December 30, 2021 235,989 - Convertible promissory note, SCS Capital Partners, LLC, 10% interest, secured, matures December 31, 2021, net of debt discount of $168,125 51,816 - Convertible promissory note, IQ Financial Inc., Tranche 1, 9% interest, secured, matures January 1, 2023, net of debt discount of $209,887 79,587 - Convertible promissory note, IQ Financial Inc., Tranche 2, 9% interest, secured, matures January 1, 2023, net of debt discount of $264,255 77,850 - Convertible promissory note, Jeffrey Gardner, 6% interest, unsecured, matures September 15, 2021, net of debt discount of $104,167 20,833 - Convertible promissory note, James Marsh, 6% interest, unsecured, matures September 15, 2021, net of debt discount of $104,167 20,833 - Total 671,270 - Less: Long-term portion of convertible debentures, net of debt discount - - Convertible debentures, current portion, net of debt discount $ 671,270 $ - |
Derivative Liabilities (Tables)
Derivative Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of changes in the fair value of the Company's Level 3 financial liabilities | June 30, 2021 Balance at the beginning of the period $ - Initial value of derivatives after reverse merger 7,520,076 Change in fair value of embedded conversion option 1,576,315 Initial value of derivatives upon issuance 486,800 Conversion of derivative liability (343,000 ) Fair value of warrant exercises (23,674 ) Balance at the end of the period $ 9,216,517 |
Schedule of fair value measurement | Expected volatility Risk-free interest rate Expected dividend yield Expected life (in years) At June 30, 2021 145 - 282 % 0.05 - 0.25 % 0 % 0.28 - 2.48 |
Share Purchase Warrants and S_2
Share Purchase Warrants and Stock Options (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Share Purchase Warrants And Stock Options [Abstract] | |
Schedule of share purchase warrants | Number of warrants Weighted average exercise price Intrinsic Balance at December 31, 2020 - $ - $ - Assumed in merger transaction 1,722,161 0.22 386,686 Issued - - - Exercised (69,281 ) 0.34 18,601 Expired - - - Balance at June 30, 2021 1,652,880 $ 0.22 $ 437,004 |
Schedule of share purchase warrants outstanding | Number of Exercise price Issuance Date Expiry date Remaining life 380 324.00 10/10/2018 10/10/2021 0.28 2,500 30.00 11/21/2019 11/21/2022 1.39 1,650,000 0.10 10/5/2020 10/5/2023 2.27 1,652,880 |
Schedule of activity of stock options | Number of stock options Weighted average exercise price Intrinsic Balance at December 31, 2020 - $ - $ - Assumed in merger transaction 966,330 0.62 246,899 Issued 3,318,584 0.25 875,708- Exercised - - - Expired - - - Balance at June 30, 2021 4,284,914 $ 0.47 $ 1,122,607 |
Schedule of stock options outstanding | Number of stock Exercise price Issuance Date Expiry date Remaining Life 5,000 9.00 11/25/2019 11/25/2021 0.41 323,763 0.58 2/23/2021 2/23/2026 4.65 482,393 0.58 2/23/2021 2/23/2026 4.65 77,587 0.58 2/23/2021 2/23/2026 4.65 77,587 0.58 2/23/2021 2/23/2026 4.65 3,318,584 0.25 6/16/2021 6/16/2026 4.96 4,284,914 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
Schedule of operating leases related to assets and liabilities | June 30, December 31, 2021 2020 Operating lease assets $ 294,974 $ 239,489 Operating lease liabilities: Current operating lease liabilities 344,227 283,104 Total operating lease liabilities $ 344,227 $ 283,104 |
Schedule of operating lease liabilities | Year ending December 31, 2021 104,863 2022 207,767 2023 96,839 Total lease payments 409,469 Less: imputed interest (65,242 ) Total $ 344,227 |
Segment Disclosures (Tables)
Segment Disclosures (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Segment Reporting [Abstract] | |
Schedule of information by operating segment | Three Months Ended June 30, 2021 Six Months Ended June 30, 2021 Spectrum Global Technology Construction Total Spectrum Global Technology Construction Total Net sales $ - $ 4,314,074 $ 3,479,994 $ 7,794,068 $ - $ 6,776,017 $ 6,091,887 $ 12,867,904 Operating income (loss) (790,333 ) (295,411 ) 555,376 (530,368) (790,333 ) (854,270 ) 1,311,331 (333.272) Interest expense 12,264 45,322 - 57,586 12,264 89,749 - 102,013 Depreciation and amortization - 48,580 6,310 54,890 - 77,648 12,552 90,200 Total assets as of June 30, 2021 564,541 34,244,845 3,486,539 38,295,925 564,541 24,244,845 3,486,539 38,295,925 Three Months Ended June 30, 2020 Six Months Ended June 30, 2020 Technology Construction Total Technology Construction Total Net sales $ 1,703,960 $ 1,430,939 $ 3,134,899 $ 5,706,026 $ 3,038,484 $ 8,744,510 Operating (loss) income (642,227 ) 38,857 (603,370 ) (708,652 ) 255,707 (452,945 ) Interest expense 39,398 - 39,398 68,416 - 68,416 Depreciation and amortization 65,114 - 65,114 - - - Total assets as of December 31, 2020 7,086,369 1,892,077 8,978,446 5,566,255 2,392,077 7,958,332 |
Schedule of geographic information | Revenues Three Months Six Months Long-lived Puerto Rico and Canada $ 105,161 $ 105,161 $ - United States 7,688,907 12,762,743 26,508,703 Consolidated total 7,794,068 12,867,904 26,508,703 Revenues Three Months Six Months Long-lived Puerto Rico $ - $ - $ - United States 3,134,899 8,744,510 5,793,317 Consolidated total 3,134,899 8,744,510 5,793,317 |
Organization (Details)
Organization (Details) - Asset Purchase Agreement [Member] | Feb. 07, 2019 | Feb. 14, 2018 | Apr. 25, 2017 |
Organization (Details) [Line Items] | |||
Purchased assets percentage | 19.90% | 80.10% | |
Business Member [Axis] | |||
Organization (Details) [Line Items] | |||
Business acquisition, percentage | 50.00% |
Significant Accounting Polici_3
Significant Accounting Policies (Details) - USD ($) | Aug. 06, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 |
Significant Accounting Policies (Details) [Line Items] | ||||
Restricted Cash | $ 2,000,000 | |||
Allowance for doubtful accounts | $ 38,881 | $ 0 | ||
Definite-lived intangible assets useful lives | 15 years | |||
Income tax and penalties amount | $ 156,711 | $ 11,105 | ||
Interest expense | 140,319 | |||
Income tax obligations due | 297,030 | |||
Contract assets | 1,066,386 | 0 | ||
Contract liabilities | $ 827,533 | $ 464,450 | ||
Shares outstanding (in Shares) | 53,736,513 | 0 | ||
Operating income | $ 396,020 | |||
Cash flow used in operations | 853,087 | |||
Negative working capital | 10,503,178 | |||
Customers risk, percentage | 100.00% | |||
Derivative liability | 9,216,517 | $ 0 | ||
HWN [Member] | ||||
Significant Accounting Policies (Details) [Line Items] | ||||
PPP loans outstanding | 873,465 | |||
PPP loan forgiven | $ 873,465 | |||
ADEX [Member] | ||||
Significant Accounting Policies (Details) [Line Items] | ||||
PPP loans outstanding | $ 2,000,000 | |||
Revenue [Member] | ||||
Significant Accounting Policies (Details) [Line Items] | ||||
Customers risk, percentage | 99.00% | |||
Customer One [Member] | Accounts Receivable [Member] | ||||
Significant Accounting Policies (Details) [Line Items] | ||||
Customers risk, percentage | 16.00% | 37.00% | ||
Customer Two [Member] | Accounts Receivable [Member] | ||||
Significant Accounting Policies (Details) [Line Items] | ||||
Customers risk, percentage | 9.00% | 16.00% | ||
Customer Three [Member] | Accounts Receivable [Member] | ||||
Significant Accounting Policies (Details) [Line Items] | ||||
Customers risk, percentage | 11.00% | 0.00% | ||
Customer Four [Member] | Accounts Receivable [Member] | ||||
Significant Accounting Policies (Details) [Line Items] | ||||
Customers risk, percentage | 1.00% | |||
JTM [Member] | ||||
Significant Accounting Policies (Details) [Line Items] | ||||
Owned percentage | 50.00% | |||
Customer Concentration Risk [Member] | Customer One [Member] | Revenue [Member] | ||||
Significant Accounting Policies (Details) [Line Items] | ||||
Customers risk, percentage | 32.00% | 18.00% | ||
Customer Concentration Risk [Member] | Customer Two [Member] | Revenue [Member] | ||||
Significant Accounting Policies (Details) [Line Items] | ||||
Customers risk, percentage | 17.00% | 17.00% | ||
Customer Concentration Risk [Member] | Customer Three [Member] | Revenue [Member] | ||||
Significant Accounting Policies (Details) [Line Items] | ||||
Customers risk, percentage | 17.00% | 17.00% |
Significant Accounting Polici_4
Significant Accounting Policies (Details) - Schedule of property and equipment estimated useful lives | 6 Months Ended |
Jun. 30, 2021 | |
Leasehold improvements [Member] | |
Significant Accounting Policies (Details) - Schedule of property and equipment estimated useful lives [Line Items] | |
Property and equipment, useful lives | 5 years |
Office equipment and furniture [Member] | |
Significant Accounting Policies (Details) - Schedule of property and equipment estimated useful lives [Line Items] | |
Property and equipment, useful lives | 5 years |
Software [Member] | |
Significant Accounting Policies (Details) - Schedule of property and equipment estimated useful lives [Line Items] | |
Property and equipment, useful lives | 5 years |
Machinery and Equipment [Member] | |
Significant Accounting Policies (Details) - Schedule of property and equipment estimated useful lives [Line Items] | |
Property and equipment, useful lives | 5 years |
Minimum [Member] | Automotive [Member] | |
Significant Accounting Policies (Details) - Schedule of property and equipment estimated useful lives [Line Items] | |
Property and equipment, useful lives | 3 years |
Minimum [Member] | Computer equipment and software [Member] | |
Significant Accounting Policies (Details) - Schedule of property and equipment estimated useful lives [Line Items] | |
Property and equipment, useful lives | 3 years |
Maximum [Member] | Automotive [Member] | |
Significant Accounting Policies (Details) - Schedule of property and equipment estimated useful lives [Line Items] | |
Property and equipment, useful lives | 5 years |
Maximum [Member] | Computer equipment and software [Member] | |
Significant Accounting Policies (Details) - Schedule of property and equipment estimated useful lives [Line Items] | |
Property and equipment, useful lives | 7 years |
Significant Accounting Polici_5
Significant Accounting Policies (Details) - Schedule of disaggregates its revenue from contracts with customers by service type - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Professional Services [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 4,366,938 | $ 3,134,899 | $ 6,828,881 | $ 8,744,510 |
Construction [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 3,427,130 | 6,039,023 | ||
Revenue by service type [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 7,794,068 | 3,134,899 | 12,867,904 | 8,744,510 |
Short-term [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 6,949,081 | 3,134,899 | 12,022,917 | 8,744,510 |
Long-term [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 844,987 | 844,987 | ||
Revenue by contract duration [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 7,794,068 | 3,134,899 | 12,867,904 | 8,744,510 |
Fixed-price [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 7,698,572 | 3,131,899 | 12,772,408 | 8,744,510 |
Time-and-materials [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 95,496 | 95,496 | ||
Revenue by contract type [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 7,794,068 | $ 3,131,899 | $ 12,867,904 | $ 8,744,510 |
Significant Accounting Polici_6
Significant Accounting Policies (Details) - Schedule of financial assets and liabilities fair value measured on a recurring basis - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 | |
Significant Accounting Policies (Details) - Schedule of financial assets and liabilities fair value measured on a recurring basis [Line Items] | |||
Derivative liability | [1] | $ 9,216,517 | |
Quoted prices in active markets (Level 1) [Member] | |||
Significant Accounting Policies (Details) - Schedule of financial assets and liabilities fair value measured on a recurring basis [Line Items] | |||
Derivative liability | [1] | ||
Quoted prices in active markets (Level 2) [Member] | |||
Significant Accounting Policies (Details) - Schedule of financial assets and liabilities fair value measured on a recurring basis [Line Items] | |||
Derivative liability | [1] | ||
Quoted prices in active markets (Level 3) [Member] | |||
Significant Accounting Policies (Details) - Schedule of financial assets and liabilities fair value measured on a recurring basis [Line Items] | |||
Derivative liability | [1] | $ 9,216,517 | |
[1] | The Company has estimated the fair value of these derivatives using the Monte-Carlo model. |
Reverse Merger (Details)
Reverse Merger (Details) | Jun. 16, 2021USD ($) |
Disclosure Text Block Supplement [Abstract] | |
Merger transaction, description | HWN shareholders exchanged 100% of the common stock of HWN for 340 shares newly issued shares of the Company’s Series D preferred stock and 1,000 shares of the Company’s previously issued Series B preferred stock (formerly held by management of legacy Spectrum Global Solutions, Inc.). |
purchase consideration | $ 13,562,296 |
Reverse Merger (Details) - Sche
Reverse Merger (Details) - Schedule of estimates and valuations of management | 6 Months Ended |
Jun. 30, 2021USD ($)$ / shares | |
Schedule of estimates and valuations of management [Abstract] | |
Common stock | $ 5,561,975 |
Convertible debt | 944,000 |
Derivative liabilities | 6,929,000 |
Loans payable | 2,377,400 |
Loans payable, related parties | 2,447,252 |
Lease liabilities | $ 106,615 |
Fair value of stock options (in Dollars per share) | $ / shares | $ 204,715 |
Fair value of warrants | $ 362,687 |
Fair value of Series A Preferred | 1,024,000 |
Fair value of Series D Preferred | 1,271,000 |
Total provisional purchase price | 21,228,644 |
Working capital | 781,470 |
Other assets | 12,893 |
Contract assets | 426,647 |
Provisional goodwill | 13,562,296 |
Customer lists | 4,720,863 |
Tradenames | 1,724,475 |
Total provisional enterprise value | $ 21,228,644 |
Reverse Merger (Details) - Sc_2
Reverse Merger (Details) - Schedule of estimated acquisition date fair values - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
As Reported [Member] | ||||
Condensed Income Statements, Captions [Line Items] | ||||
Revenue | $ 7,794,068 | $ 3,134,899 | $ 12,867,904 | $ 8,744,560 |
Net income (loss) attributable to HWN, Inc. common shareholders | (1,591,590) | (569,870) | (2,051,165) | (518,299) |
Pro Forma [Member] | ||||
Condensed Income Statements, Captions [Line Items] | ||||
Revenue | 10,823,947 | 7,778,186 | 19,963,773 | 18,708,412 |
Net income (loss) attributable to HWN, Inc. common shareholders | $ 1,161,189 | $ (2,040,559) | $ (8,945,874) | $ (4,917,156) |
Income (loss) per common share, basic and diluted: (in Dollars per share) | $ 0.25 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Property and Equipment (Textual) | ||
Depreciation expense | $ 40,576 | $ 32,115 |
Property and Equipment (Detai_2
Property and Equipment (Details) - Schedule of property and equipment - Property, Plant and Equipment [Member] - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Total | $ 720,245 | $ 678,154 |
Less: accumulated depreciation | (355,099) | (294,045) |
Equipment, net | 365,146 | 384,109 |
Computers and office equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | 45,541 | 41,564 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | 194,506 | 188,906 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | 8,626 | 6,113 |
Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | 396,774 | 366,773 |
Machinery and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 74,798 | $ 74,798 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Intangible Assets (Textual) | ||
Amortization expense | $ 18,363 | $ 0 |
Intangible Assets (Details) - S
Intangible Assets (Details) - Schedule of intangible assets - USD ($) | 6 Months Ended | |
Dec. 31, 2020 | Jun. 30, 2021 | |
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 6,415,338 | |
Accumulated Amortization | 18,364 | |
Impairment | ||
Net carrying value | $ 6,396,974 | |
Customer relationship and lists [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 4,720,863 | |
Accumulated Amortization | 14,339 | |
Impairment | ||
Net carrying value | 4,706,524 | |
Trade names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 1,694,475 | |
Accumulated Amortization | 4,025 | |
Impairment | ||
Net carrying value | $ 1,690,450 |
Intangible Assets (Details) -_2
Intangible Assets (Details) - Schedule of estimated future amortization expense | Dec. 31, 2020USD ($) |
Schedule of estimated future amortization expense [Abstract] | |
2021 | $ 214,845 |
2022 | 429,689 |
2023 | 429,689 |
2024 | 429,689 |
2025 | 429,689 |
Thereafter | 4,459,123 |
Total | $ 6,396,974 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Dec. 15, 2021 | Mar. 01, 2021 | Jun. 16, 2021 | Jun. 15, 2021 | Aug. 31, 2020 | Jun. 30, 2021 | Dec. 31, 2020 |
Related Party Transactions (Textual) | |||||||
Increase to additional paid in capital | $ 1,271,000 | ||||||
Principal amount of promissory note | $ 2,447,252 | ||||||
Conversion price per share (in Dollars per share) | $ 0.06 | ||||||
Amount of conversion premium | $ 76,914 | ||||||
Fair value of note | 100,808 | ||||||
Owed to the agreement | 23,894 | ||||||
Bearing interest rate, per annum | 9.00% | ||||||
Fair value of the conversion feature | 2,346,444 | ||||||
President [Member] | |||||||
Related Party Transactions (Textual) | |||||||
Bearing interest rate, per annum | 9.00% | ||||||
President One [Member] | |||||||
Related Party Transactions (Textual) | |||||||
Proceeds from issuance of promissory notes | $ 554,031 | ||||||
Chief Executive Officer [Member] | |||||||
Related Party Transactions (Textual) | |||||||
Proceeds from issuance of promissory notes | $ 100,000 | ||||||
Roger Ponder [Member] | |||||||
Related Party Transactions (Textual) | |||||||
Interest | 10.00% | ||||||
Principal amount of promissory note | $ 23,894 | ||||||
Debt conversion rate | 10.00% | ||||||
Debt convertible promissory note, description | All principal and accrued but unpaid interest under the note is due on August 31, 2022. | ||||||
Keith Hayter [Member] | |||||||
Related Party Transactions (Textual) | |||||||
Amount of conversion premium | $ 1,792,413 | ||||||
Convertible Promissory Notes [Member] | |||||||
Related Party Transactions (Textual) | |||||||
Owed to the agreement | $ 100,000 | ||||||
Series B Preferred Stock [Member] | |||||||
Related Party Transactions (Textual) | |||||||
Common stock exchanged, shares (in Shares) | 350 | ||||||
Common stock aggregate, shares (in Shares) | 1,000 | ||||||
Convertible Promissory Note [Member] | President [Member] | |||||||
Related Party Transactions (Textual) | |||||||
Principal amount | $ 554,031 | ||||||
Interest accrued percentage | 10.00% | ||||||
Bearing interest rate, per annum | 0.06% | ||||||
Minimum [Member] | |||||||
Related Party Transactions (Textual) | |||||||
Effective interest rate | 8.30% | ||||||
Maximum [Member] | |||||||
Related Party Transactions (Textual) | |||||||
Effective interest rate | 11.20% |
Related Party Transactions (D_2
Related Party Transactions (Details) - Schedule of related party transactions - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Related Party Transaction [Line Items] | ||
Total | $ 2,547,252 | |
Less: Long-term portion of loans payable to related parties | (2,447,252) | |
Loans payable to related parties, current portion | 100,000 | |
Convertible promissory note issued to Keith Hayter [Member] | ||
Related Party Transaction [Line Items] | ||
Total | 2,346,444 | |
Convertible promissory note issued to Roger Ponder [Member] | ||
Related Party Transaction [Line Items] | ||
Total | 100,808 | |
Promissory note issued to Mark Porter [Member] | ||
Related Party Transaction [Line Items] | ||
Total | $ 100,000 |
Related Party Transactions (D_3
Related Party Transactions (Details) - Schedule of related party transactions (Parentheticals) | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Convertible promissory note issued to Keith Hayter [Member] | |
Related Party Transaction [Line Items] | |
Interest rate | 10.00% |
Maturity date | Aug. 31, 2022 |
Debt premium | $ 1,792,413 |
Convertible promissory note issued to Roger Ponder [Member] | |
Related Party Transaction [Line Items] | |
Interest rate | 10.00% |
Maturity date | Aug. 31, 2022 |
Debt premium | $ 76,914 |
Promissory note issued to Mark Porter [Member] | |
Related Party Transaction [Line Items] | |
Interest rate | 9.00% |
Maturity date | Dec. 15, 2021 |
Loans Payable (Details)
Loans Payable (Details) - USD ($) | 1 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Jun. 15, 2021 | Oct. 21, 2019 | Sep. 23, 2019 | Jun. 30, 2021 | Dec. 31, 2020 | Mar. 31, 2021 | Apr. 08, 2020 | Feb. 17, 2019 | Feb. 27, 2018 | |
Loans Payable (Details) [Line Items] | |||||||||
Aggregate amount | $ 77,261 | $ 500,000 | |||||||
Accrued interest rate | 4.50% | 5.50% | |||||||
Original balance | $ 321,487 | ||||||||
Owed value | $ 2,292,971 | ||||||||
Finance charge | $ 10,406 | ||||||||
Annual percentage rate | 4.70% | ||||||||
Cash | 2,195,227 | 436,448 | |||||||
Principal amount | 217,400 | ||||||||
Principal and interest | $ 5,851 | ||||||||
Payments of Loan Costs | 139,033 | ||||||||
Cash payments | 27,212 | ||||||||
Agreement owed amount | 331,745 | ||||||||
Loan received | $ 873,465 | $ 873,400 | |||||||
Aggregate balance of loan | $ 3,033,465 | 250,800 | |||||||
Auto Loan With Bank of America [Member] | |||||||||
Loans Payable (Details) [Line Items] | |||||||||
Aggregate amount | $ 66,855 | $ 4,000,000 | |||||||
Loan interest | 4.70% | ||||||||
Unsecured Debt [Member] | Promissory note issued to Old Main Capital LLC [Member] | |||||||||
Loans Payable (Details) [Line Items] | |||||||||
Interest rate | 5.50% | ||||||||
Promissory Note [Member] | |||||||||
Loans Payable (Details) [Line Items] | |||||||||
Principal amount | $ 420,000 | ||||||||
CARES Act Loans [Member] | |||||||||
Loans Payable (Details) [Line Items] | |||||||||
Repaid on aggregate amount | 52,509 | ||||||||
Outstanding principal | $ 217,400 | ||||||||
CARES Act Loans [Member] | |||||||||
Loans Payable (Details) [Line Items] | |||||||||
Description of loan payable | On June 15, 2021, in connection with the merger transaction described in Note 3, Reverse Merger, the Company assumed CARES Act Loans totaling $2,160,000 that were originally received by ADEX. Collectively, these amounts are the “PPP Funds.”These loan agreements were pursuant to the CARES Act. The CARES Act was established in order to enable small businesses to pay employees during the economic slowdown caused by COVID-19 by providing forgivable loans to qualifying businesses for up to 2.5 times their average monthly payroll costs. The amount borrowed under the CARES Act is eligible to be forgiven provided that (a) the Company uses the PPP Funds during the eight week period after receipt thereof, and (b) the PPP Funds are only used to cover payroll costs (including benefits), rent, mortgage interest, and utility costs. The amount of loan forgiveness will be reduced if, among other reasons, the Company does not maintain staffing or payroll levels. Principal and interest payments on any unforgiven portion of the PPP Funds will be deferred for six months and will accrue interest at a fixed annual rate of 1.0% and carry a two year maturity date. There is no prepayment penalty on the CARES Act Loan. On November 4, 2020, High Wire received approval for forgiveness of its $873,400 CARES Act Loan. On March 30, 2021, JTM received approval for forgiveness of its $250,800 CARES Act Loan. As a result, the Company recorded a gain on PPP loan forgiveness to the unaudited condensed consolidated statement of operations for the six months ended June 30, 2021. As of June 30, 2021 and December 31, 2020, the aggregate balance of these loans was $3,033,465 and $250,800, respectively, and is included in loans payable on the unaudited condensed consolidated balance sheets. | ||||||||
Promissory Note [Member] | |||||||||
Loans Payable (Details) [Line Items] | |||||||||
Interest rate | 4.50% | ||||||||
Financing Agreement [Member] | |||||||||
Loans Payable (Details) [Line Items] | |||||||||
Original balance | $ 12,362 | ||||||||
Debt discount | $ 1,030.15 | ||||||||
Cash | $ 6,181 | ||||||||
Auto loan | $ 45,871 |
Loans Payable (Details) - Sched
Loans Payable (Details) - Schedule of loans payable - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Jun. 30, 2021 | ||
Dividends Payable [Line Items] | |||
Total | $ 2,969,221 | $ 5,921,451 | |
Less: Long-term portion of loans payable | (2,886,796) | (44,830,586) | |
Loans payable, current portion, net of debt discount | 82,425 | 1,090,865 | |
Ailco = equipment financing | 15,056 | ||
Promissory note issued to the Mark Munro [Member] | |||
Dividends Payable [Line Items] | |||
Total | 2,292,971 | 2,292,971 | [1] |
Promissory note issued to Cornerstone National Bank & Trust [Member] | |||
Dividends Payable [Line Items] | |||
Total | 358,343 | 331,745 | |
Bank of America auto loan [Member] | |||
Dividends Payable [Line Items] | |||
Total | 52,051 | 45,870 | |
CARES Act Loans [Member] | |||
Dividends Payable [Line Items] | |||
Total | 250,800 | 3,033,465 | |
Promissory note issued to InterCloud Systems, Inc. [Member] | |||
Dividends Payable [Line Items] | |||
Total | $ 217,400 | ||
[1] | During the six months ended June 30, 2021, this note was assigned to the Mark Munro 1996 Charitable Remainder UniTrust by Jeffrey Gardner and James Marsh. |
Loans Payable (Details) - Sch_2
Loans Payable (Details) - Schedule of loans payable (Parentheticals) | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Promissory note issued to the Mark Munro [Member] | |
Dividends Payable [Line Items] | |
Interest bearing, maturity date | Feb. 27, 2022 |
Unsecured, interest | $ 0.055 |
Promissory note issued to Cornerstone National Bank & Trust [Member] | |
Dividends Payable [Line Items] | |
Interest bearing, maturity date | Oct. 9, 2024 |
Unsecured, interest | $ 0.045 |
Bank of America auto loan [Member] | |
Dividends Payable [Line Items] | |
loan, maturity Date | Mar. 31, 2025 |
Convertible Debentures (Details
Convertible Debentures (Details) - USD ($) | Jun. 30, 2021 | Jun. 15, 2021 | Mar. 01, 2021 | Jan. 28, 2021 | Jan. 27, 2021 | Sep. 14, 2020 | Dec. 29, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 17, 2021 | Jun. 16, 2021 | Dec. 31, 2020 | Jun. 18, 2020 | Oct. 21, 2019 | Feb. 17, 2019 |
Convertible Debentures (Textual) | |||||||||||||||||
Accrued interest, percentage | 4.50% | 5.50% | |||||||||||||||
Accrued interest | $ 8,307 | ||||||||||||||||
Exercise price (in Dollars per share) | $ 0.01 | ||||||||||||||||
Aggregate principal amount | $ 2,447,252 | $ 2,447,252 | $ 2,447,252 | ||||||||||||||
Aggregate principal amount | $ 250,000 | ||||||||||||||||
Promissory note interest rate | 9.00% | ||||||||||||||||
Accrues rate | 6.00% | ||||||||||||||||
Fixed price per share (in Dollars per share) | $ 0.075 | ||||||||||||||||
Pursuant agreement amount | 125,000 | ||||||||||||||||
Debt discount | 104,167 | ||||||||||||||||
Loss on settlement of debt | $ (127,643) | $ (127,643) | |||||||||||||||
Warrant term | 2 years 3 months 18 days | 2 years 3 months 18 days | 2 years 3 months 18 days | ||||||||||||||
Cobra Equities SPV, LLC [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Convertible promissory note, description | As a result of these conversions, the Company recorded a loss on settlement of debt of $188,211 to the unaudited condensed consolidated statement of operations for the three and six months ended June 30, 2021. | ||||||||||||||||
Owned amount | $ 184,362 | ||||||||||||||||
SCS Capital Partners, LLC [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Convertible promissory note percentage | 10.00% | ||||||||||||||||
Efrat Investments, LLC [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Accrued interest | $ 8,282 | ||||||||||||||||
Principal and accrued but unpaid interest, description | As a result of these conversions, the amount owed at June 30, 2021 was $0. The Company recorded a gain on settlement of debt of $208,567 to the unaudited condensed consolidated statement of operations for the three and six months ended June 30, 2021. | ||||||||||||||||
Efrat Investments, LLC [Member] | Securities Purchase Agreement One [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Convertible, net of discount | $ 168,125 | $ 168,125 | $ 168,125 | ||||||||||||||
Efrat Investments, LLC [Member] | Convertible Note Six [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Fixed price per share (in Dollars per share) | $ 0.05 | ||||||||||||||||
Warrant term | 2 years | ||||||||||||||||
Purchase shares of common stock | $ 1,650,000 | ||||||||||||||||
IQ Financial Inc. [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Debt Instrument, description | The interest on the outstanding principal due under the secured note accrues at a rate of 9% per annum. All principal and accrued but unpaid interest under the secured note is due on January 1, 2023. The holder may begin converting the note into shares of the Company’s common stock six months after issuance when it is Rule 144 eligible. The conversion price is fixed at $0.05 per share. | ||||||||||||||||
Convertible promissory note, description | The funds were received in two disbursements – $275,000 on January 28, 2021 and $325,000 on March 1, 2021 (refer to the “Convertible promissory note, IQ Financial Inc. Tranche 1, 9% interest, secured, matures January 1, 2023” and “Convertible promissory note, IQ Financial Inc. Tranche 2, 9% interest, secured, matures January 1, 2023” sections below for additional detail. | ||||||||||||||||
Owned amount | 289,474 | ||||||||||||||||
Face owed amount | $ 209,887 | $ 209,887 | $ 209,887 | ||||||||||||||
Convertible, net of discount | $ 14,474 | ||||||||||||||||
Promissory note interest rate | 9.00% | ||||||||||||||||
Company received notes | $ 275,000 | ||||||||||||||||
Accrues rate | 9.00% | 9.00% | 9.00% | ||||||||||||||
Fixed price per share (in Dollars per share) | $ 0.05 | $ 0.05 | $ 0.05 | ||||||||||||||
Convertible Note Nine [Member] | FJ Vulis and Associates LLC [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Aggregate principal amount | 165,000 | ||||||||||||||||
Convertible Note Nine [Member] | Efrat Investments, LLC [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Aggregate purchase price | $ 146,000 | ||||||||||||||||
Convertible Note Nine [Member] | Cobra Equities SPV, LLC [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Accrued interest, percentage | 18.00% | 18.00% | 18.00% | ||||||||||||||
Convertible Note Nine [Member] | IQ Financial Inc. [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Convertible promissory note percentage | 9.00% | ||||||||||||||||
Convertible, net of discount | $ 17,105 | ||||||||||||||||
Notes receivable | $ 325,000 | ||||||||||||||||
Convertible Note One [Member] | SCS, LLC One [Member] | Securities Purchase Agreement One [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Accruing interest rate | 9.00% | 9.00% | 9.00% | ||||||||||||||
Debt instrument of purchase price | 289,473 | ||||||||||||||||
Original issue discount | 11,202 | ||||||||||||||||
Notes payable | 342,105 | ||||||||||||||||
Debt discount | $ 10,446 | ||||||||||||||||
Aggregate principal amount | $ 631,579 | ||||||||||||||||
Convertible Note Two [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Debt Instrument, description | Interest accrues on the note at 18% per annum. The note is convertible into shares of the Company’s common stock at a conversion price equal to 60% of the lowest VWAP for the 10 consecutive trading days immediately preceding the conversion. | ||||||||||||||||
Convertible Note Two [Member] | Cobra Equities SPV, LLC [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Modification Fee, description | During the period of June 16, 2021 through June 30, 2021, the holder of the note converted $116,000 of principal and $2,300 of accrued interest into shares of the Company’s common stock (refer to Note 11, Common Stock, for additional detail). | ||||||||||||||||
Convertible Note Two [Member] | SCS, LLC [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Accrued interest | $ 16,763 | ||||||||||||||||
Debt instrument, interest rate | 12.00% | 12.00% | 12.00% | ||||||||||||||
Convertible Note Two [Member] | SCS, LLC One [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Principal amount | 235,989 | ||||||||||||||||
Convertible Note Four [Member] | SCS, LLC [Member] | Securities Purchase Agreement One [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Accrued rate per annum | 12.00% | ||||||||||||||||
Exercise price (in Dollars per share) | $ 0.0275 | $ 0.0275 | $ 0.0275 | ||||||||||||||
Convertible Note Six [Member] | SCS, LLC [Member] | Securities Purchase Agreement One [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Fixed conversion percentage | 105.00% | 105.00% | 105.00% | ||||||||||||||
Convertible Note Six [Member] | Efrat Investments, LLC [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Purchase shares of common stock (in Shares) | 33,000 | ||||||||||||||||
Exercise price per share (in Dollars per share) | $ 0.10 | ||||||||||||||||
Convertible Note Three [Member] | SCS, LLC [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Face owed amount | $ 235,989 | $ 235,989 | $ 235,989 | ||||||||||||||
Convertible Note Seven[Member] | Securities Purchase Agreement One [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Principal note | $ 175,000 | ||||||||||||||||
Convertible Note Seven[Member] | SCS Capital Partners, LLC [Member] | Securities Purchase Agreement One [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Aggregate principal amount | 219,941 | ||||||||||||||||
Aggregate purchase price | 7,991 | ||||||||||||||||
Convertible Note [Member] | Efrat Investments, LLC [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Debt Instrument, description | The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.04 per share | ||||||||||||||||
Convertible Note [Member] | Efrat Investments, LLC [Member] | Securities Purchase Agreement One [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Owned to related party | 219,940 | 219,940 | $ 219,940 | ||||||||||||||
Convertible Note Eight [Member] | IQ Financial Inc. [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Debt Instrument, description | The interest on the outstanding principal due under the secured note accrues at a rate of 9% per annum. All principal and accrued but unpaid interest under the secured note is due on January 1, 2023. The holder may begin converting the note into shares of the Company’s common stock six months after issuance when it is Rule 144 eligible. The conversion price is fixed at $0.05 per share. | ||||||||||||||||
Convertible promissory note percentage | 9.00% | ||||||||||||||||
Convertible Note Eight [Member] | CCAG Investments, LLC [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Loss on settlement of debt | $ 0.06 | ||||||||||||||||
Convertible Note Eight [Member] | CCAG Investments, LLC [Member] | Securities Purchase Agreement One [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Debt Instrument, description | The interest on the outstanding principal due under the note accrued at a rate of 10% per annum. | ||||||||||||||||
Aggregate principal amount | $ 125,000 | ||||||||||||||||
Convertible Note Eight [Member] | CCAG Investments, LLC [Member] | Convertible Note Six [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Convertible promissory note percentage | 6.00% | ||||||||||||||||
Convertible Note Eleven [Member] | IQ Financial Inc. [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Face owed amount | $ 342,105 | $ 342,105 | $ 342,105 | ||||||||||||||
Debt discount | $ 264,255 | ||||||||||||||||
Convertible Notes Payable [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Convertible promissory note, description | The interest on the outstanding principal due under the note accrues at a rate of 6% per annum. | ||||||||||||||||
Convertible Note Ten [Member] | Efrat Investments, LLC [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Purchase shares of common stock (in Shares) | 33,000 | ||||||||||||||||
Derivative and Hedging [Member] | Convertible Note One [Member] | Cobra Equities SPV, LLC [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Principal amount | $ 300,362 | ||||||||||||||||
Accrued interest | $ 16,030 | ||||||||||||||||
Minimum [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Effective interest rate | 4.90% | 4.90% | 4.90% | ||||||||||||||
Maximum [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Effective interest rate | 77.40% | 77.40% | 77.40% | ||||||||||||||
Convertible promissory note [Member] | |||||||||||||||||
Convertible Debentures (Textual) | |||||||||||||||||
Pursuant agreement amount | $ 125,000 | ||||||||||||||||
Debt discount | $ 104,167 |
Convertible Debentures (Detai_2
Convertible Debentures (Details) - Schedule of convertible promissory note - Convertible promissory note [Member] - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Convertible Debentures (Details) - Schedule of convertible promissory note [Line Items] | ||
Total | $ 671,270 | |
Less: Long-term portion of convertible debentures, net of debt discount | ||
Convertible debentures, current portion, net of debt discount | 671,270 | |
Cobra Equities SPV, LLC [Member] | ||
Convertible Debentures (Details) - Schedule of convertible promissory note [Line Items] | ||
Total | 184,362 | |
SCS Capital Partners, LLC [Member] | ||
Convertible Debentures (Details) - Schedule of convertible promissory note [Line Items] | ||
Total | 235,989 | |
SCS Capital Partners, LLC [Member] | ||
Convertible Debentures (Details) - Schedule of convertible promissory note [Line Items] | ||
Total | 51,816 | |
IQ Financial Inc. [Member] | ||
Convertible Debentures (Details) - Schedule of convertible promissory note [Line Items] | ||
Total | 79,587 | |
IQ Financial Inc [Member] | ||
Convertible Debentures (Details) - Schedule of convertible promissory note [Line Items] | ||
Total | 77,850 | |
Jeffrey Gardner [Member] | ||
Convertible Debentures (Details) - Schedule of convertible promissory note [Line Items] | ||
Total | 20,833 | |
James Marsh [Member] | ||
Convertible Debentures (Details) - Schedule of convertible promissory note [Line Items] | ||
Total | $ 20,833 |
Convertible Debentures (Detai_3
Convertible Debentures (Details) - Schedule of convertible promissory note (Parentheticals) - Convertible promissory note [Member] | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Cobra Equities SPV, LLC [Member] | |
Convertible Debentures (Details) - Schedule of convertible promissory note (Parentheticals) [Line Items] | |
Debt instrument, interest rate | 18.00% |
Debt instrument maturity date | Jun. 1, 2019 |
SCS Capital Partners, LLC [Member] | |
Convertible Debentures (Details) - Schedule of convertible promissory note (Parentheticals) [Line Items] | |
Debt instrument, interest rate | 12.00% |
Debt instrument maturity date | Dec. 30, 2021 |
SCS Capital Partners, LLC [Member] | |
Convertible Debentures (Details) - Schedule of convertible promissory note (Parentheticals) [Line Items] | |
Debt instrument, interest rate | 10.00% |
Debt instrument maturity date | Dec. 31, 2021 |
Convertible debentures, net of discount | $ 168,125 |
IQ Financial Inc. [Member] | |
Convertible Debentures (Details) - Schedule of convertible promissory note (Parentheticals) [Line Items] | |
Debt instrument, interest rate | 9.00% |
Debt instrument maturity date | Jan. 1, 2023 |
Convertible debentures, net of discount | $ 209,887 |
IQ Financial Inc [Member] | |
Convertible Debentures (Details) - Schedule of convertible promissory note (Parentheticals) [Line Items] | |
Debt instrument, interest rate | 9.00% |
Debt instrument maturity date | Jan. 1, 2023 |
Convertible debentures, net of discount | $ 264,255 |
Jeffrey Gardner [Member] | |
Convertible Debentures (Details) - Schedule of convertible promissory note (Parentheticals) [Line Items] | |
Debt instrument, interest rate | 6.00% |
Debt instrument maturity date | Sep. 15, 2021 |
Convertible debentures, net of discount | $ 104,167 |
James Marsh [Member] | |
Convertible Debentures (Details) - Schedule of convertible promissory note (Parentheticals) [Line Items] | |
Debt instrument, interest rate | 6.00% |
Debt instrument maturity date | Sep. 15, 2021 |
Convertible debentures, net of discount | $ 104,167 |
Factor Financing (Details)
Factor Financing (Details) - USD ($) | Jun. 30, 2021 | Feb. 11, 2020 | Jun. 15, 2021 | Jun. 30, 2021 | Jun. 30, 2020 |
Factor Financing (Details) [Line Items] | |||||
Outstanding amount | $ 1,968,816 | ||||
Amount from bay view funding | $ 3,024,532 | ||||
Factoring fees | $ 17,490 | ||||
Debt received | 841,680 | $ 841,680 | |||
Proceeds from factoring financing | 480,972 | 480,972 | |||
Company owed amount | $ 2,329,524 | $ 2,329,524 | |||
ADEX [Member] | |||||
Factor Financing (Details) [Line Items] | |||||
Factor agreement, description | the factoring agreement, Spectrum’s ADEX subsidiary may borrow up to the lesser of $5,000,000 or an amount equal to the sum of all undisputed purchased receivables multiplied by the advance percentage, less any funds in reserve. ADEX will pay to Bay View Funding a factoring fee upon purchase of receivables by Bay View Funding equal to 0.75% of the gross face value of the purchased receivable for the first 30 day period from the date said purchased receivable is first purchased by Bay View Funding, and a factoring fee of 0.35% per 15 days thereafter until the date said purchased receivable is paid in full or otherwise repurchased by ADEX or otherwise written off by Bay View Funding within the write off period. ADEX will also pay a finance fee to Bay View Funding on the outstanding advances under the agreement at a floating rate per annum equal to the Prime Rate plus 3%. The finance rate will increase or decrease monthly, on the first day of each month, by the amount of any increase or decrease in the Prime Rate, but at no time will the finance fee be less than 7.75%. |
Derivative Liabilities (Details
Derivative Liabilities (Details) - USD ($) | 1 Months Ended | 6 Months Ended |
Jun. 15, 2021 | Jun. 30, 2021 | |
Derivative Liabilities (Textual) | ||
Derivative Liability | $ 7,520,076 | |
Convertible Debt | 6,952,674 | |
Share purchase warrants | $ 567,402 | |
Derivative liabilities, description | As of June 30, 2021, the derivative liability balance of $9,216,517 was comprised of $8,532,614 of derivatives related to the Company’s convertible debentures, and $683,903 of derivatives related to the Company’s share purchase warrants and stock options. |
Derivative Liabilities (Detai_2
Derivative Liabilities (Details) - Schedule of changes in the fair value of the Company's Level 3 financial liabilities | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Schedule of changes in the fair value of the Company's Level 3 financial liabilities [Abstract] | |
Balance at the beginning of the period | |
Initial value of derivatives after reverse merger | 7,520,076 |
Change in fair value of embedded conversion option | 1,576,315 |
Initial value of derivatives upon issuance | 486,800 |
Conversion of derivative liability | (343,000) |
Fair value of warrant exercises | (23,674) |
Balance at the end of the period | $ 9,216,517 |
Derivative Liabilities (Detai_3
Derivative Liabilities (Details) - Schedule of fair value measurement | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Expected dividend yield | 0.00% |
Minimum [Member] | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Expected volatility | 145.00% |
Risk-free interest rate | 0.05% |
Expected life (in years) | 3 months 10 days |
Maximum [Member] | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Expected volatility | 282.00% |
Risk-free interest rate | 0.25% |
Expected life (in years) | 2 years 5 months 23 days |
Common Stock (Details)
Common Stock (Details) - USD ($) | Jun. 24, 2021 | Jun. 17, 2021 | Jun. 16, 2021 | Jun. 29, 2021 | Jun. 30, 2021 | Dec. 31, 2020 |
Common Stock (Textual) | ||||||
Common stock, shares authorized (in Shares) | 1,000,000,000 | 1,000,000,000 | ||||
Common stock price (in Dollars per share) | $ 0.00001 | $ 0.00001 | ||||
Common stock, shares issued (in Shares) | 69,281 | |||||
Conversion of principal amount | $ 217,400 | |||||
Fair value | $ 209,016 | $ 223,740 | $ 306,510 | |||
Loss on debt conversion | 188,211 | |||||
Accrued interest | 8,307 | |||||
Derivative value | 330,000 | |||||
Gain of debt conversion | $ 160,567 | |||||
Aggregate principal amount | 250,000 | |||||
Fair value | $ 486,400 | |||||
Convertible Note Six [Member] | ||||||
Common Stock (Textual) | ||||||
Common stock, shares issued (in Shares) | 985,651 | |||||
Common Stock [Member] | ||||||
Common Stock (Textual) | ||||||
Common stock, shares authorized (in Shares) | 750,000,000 | |||||
Common stock price (in Dollars per share) | $ 0.00001 | |||||
Cobra Equities SPV, LLC [Member] | Common Stock [Member] | ||||||
Common Stock (Textual) | ||||||
Common stock, shares issued (in Shares) | 1,086,917 | |||||
Conversion of principal amount | $ 116,000 | |||||
Accrued interest | $ 2,300 | |||||
Efrat Investments, LLC [Member] | Common Stock [Member] | ||||||
Common Stock (Textual) | ||||||
Common stock, shares issued (in Shares) | 660,000 | |||||
Conversion of principal amount | $ 33,000 | |||||
Series A Preferred Stock [Member] | ||||||
Common Stock (Textual) | ||||||
Conversion of shares (in Shares) | 96,101 | |||||
Stated value per share (in Dollars per share) | $ 1 | |||||
Fair value | $ 209,016 | $ 814,984 |
Preferred Stock (Details)
Preferred Stock (Details) - USD ($) | 1 Months Ended | 6 Months Ended | |||||||||||
Jun. 24, 2021 | Oct. 29, 2018 | Jun. 30, 2021 | Jun. 16, 2021 | Jun. 15, 2021 | Jan. 27, 2021 | Dec. 31, 2020 | Jun. 18, 2020 | Apr. 14, 2020 | Apr. 08, 2020 | Nov. 14, 2019 | Apr. 16, 2018 | Nov. 15, 2017 | |
Preferred Stock (Textual) | |||||||||||||
Conversion price | $ 0.01 | ||||||||||||
Common stock shares issued (in Shares) | 28,278,545 | 0 | |||||||||||
Fair value (in Dollars) | $ 486,400 | ||||||||||||
Stated value per share | $ 3,500 | ||||||||||||
Series B preferred stock voting, description | Voting - The holders of shares of Series B preferred stock shall be voted together with the shares of common stock such that the aggregate voting power of the Series B preferred stock is equal to 51% of the total voting power of the Company. | ||||||||||||
Preferred stock, description | Voting - Except as otherwise provided in the agreement or as required by law, the Series D shall be voted together with the shares of common stock, par value $0.00001 per share of the Corporation (“Common Stock”), and any other series of preferred stock then outstanding that have voting rights, and except as provided in Section 7, not as a separate class, at any annual or special meeting of stockholders of the Corporation, with respect to any question or matter upon which the holders of Common Stock have the right to vote, such that the voting power of each share of Series D is equal to the voting power of the shares of Common Stock that each such share of Series D would be convertible into pursuant to Section 6 if the Series D Conversion Date was the date of the vote. | ||||||||||||
Common stock, par value | $ 0.00001 | $ 0.00001 | |||||||||||
Percentage of conversion | 51.00% | ||||||||||||
Series A preferred stock [Member] | |||||||||||||
Preferred Stock (Textual) | |||||||||||||
Fair value (in Dollars) | $ 814,914 | $ 1,024,000 | |||||||||||
Preferred stock, shares authorized (in Shares) | 8,000,000 | 8,000,000 | 20,000,000 | ||||||||||
Preferred stock shares designated (in Shares) | 8,000,000 | ||||||||||||
Preferred stock conversion, description | On October 29, 2018, Spectrum made the first amendment to the Certificate of Designation of its Series A convertible preferred stock. This amendment updated the conversion price to be equal to the greater of 75% of the lowest VWAP during the ten trading day period immediately preceding the date a conversion notice is delivered or $120.00, subject to adjustment for any subdivision or combination of the Company’s outstanding shares of common stock. | ||||||||||||
Conversion price | $ 0.0975 | $ 0.20 | $ 3 | ||||||||||
Conversion rights, description | The number of shares of common stock into which each share of the Series A preferred stock shares may be converted shall be determined by dividing the sum of the stated value of the Series A preferred stock shares ($1.00 per share) being converted and any accrued and unpaid dividends by the conversion price in effect at the time of the conversion. The Series A preferred stock shares may be converted at a fixed conversion price of $0.0975, subject to adjustment for any subdivision or combination of the Company’s outstanding shares of common stock. The conversion price has a floor of $0.01 per share. | ||||||||||||
Conversion shares (in Shares) | 96,101 | ||||||||||||
Stated value per share | $ 1 | ||||||||||||
Fair value (in Dollars) | $ 209,016 | $ 814,984 | |||||||||||
Preferred stock, stated value | $ 0.00001 | $ 0.00001 | |||||||||||
Series B Preferred Stock [Member] | |||||||||||||
Preferred Stock (Textual) | |||||||||||||
Fair value (in Dollars) | $ 0 | ||||||||||||
Preferred stock shares designated (in Shares) | 1,000 | ||||||||||||
Stated value per share | $ 3,500 | $ 3,500 | |||||||||||
Series D Preferred Stock [Member] | |||||||||||||
Preferred Stock (Textual) | |||||||||||||
Fair value (in Dollars) | $ 1,271,000 | ||||||||||||
Preferred stock, shares authorized (in Shares) | 1,590 | 1,590 | |||||||||||
Preferred stock, stated value | $ 10,000 | $ 10,000 | |||||||||||
Dominion Capital [Member] | |||||||||||||
Preferred Stock (Textual) | |||||||||||||
Common stock shares issued (in Shares) | 985,651 | ||||||||||||
Series C Preferred Stock [Member] | |||||||||||||
Preferred Stock (Textual) | |||||||||||||
Preferred stock shares designated (in Shares) | 1,590 | ||||||||||||
Conversion rights, description | On the earlier of the (i) two hundred (200) day anniversary of the date of issuance and (ii) the business day immediately preceding the listing of the Common Stock on a national securities exchange (the “Automatic Series D Conversion Date”), without any further action, all remaining outstanding shares of Series D shall automatically convert into an aggregate number of shares of Common Stock equal to $15,900,000 (minus the value at the time of conversion, as determined above, of any Series D that has already been converted) divided by the Average Price (as defined below). | ||||||||||||
Stated value per share | $ 10,000 | $ 10,000 | |||||||||||
Preferred stock, stated value | $ 10,000 | ||||||||||||
Percentage of conversion | 10.00% |
Share Purchase Warrants and S_3
Share Purchase Warrants and Stock Options (Details) - USD ($) | 1 Months Ended | 6 Months Ended |
Jun. 15, 2021 | Jun. 30, 2021 | |
Share Purchase Warrants (Textual) | ||
Share purchase warrants | $ 1,320,087 | |
Fair value warrants | $ 1,559,263 | |
Share purchase warrants | 2 years 3 months 18 days | |
Weighted-average remaining life | 4 years 10 months 24 days |
Share Purchase Warrants and S_4
Share Purchase Warrants and Stock Options (Details) - Schedule of share purchase warrants | 6 Months Ended |
Jun. 30, 2021USD ($)$ / sharesshares | |
Schedule of share purchase warrants [Abstract] | |
Number of warrants, Beginning Balance | shares | |
Weighted average exercise price, Beginning Balance | $ / shares | |
Intrinsic value, Beginning Balance | $ | |
Number of warrants, Assumed in merger transaction | shares | 1,722,161 |
Weighted average exercise price, Assumed in merger transaction | $ / shares | $ 0.22 |
Intrinsic value, Assumed in merger transaction | $ | $ 386,686 |
Number of warrants, Issued | shares | |
Weighted average exercise price, Issued | $ / shares | |
Intrinsic value, Issued | $ | |
Number of warrants, Exercised | shares | (69,281) |
Weighted average exercise price, Exercised | $ / shares | $ 0.34 |
Intrinsic value, Exercised | $ | $ 18,601 |
Number of warrants, Expired | shares | |
Weighted average exercise price, Expired | $ / shares | |
Intrinsic value, Expired | $ | |
Number of warrants, Ending Balance | shares | 1,652,880 |
Weighted average exercise price, Ending Balance | $ / shares | $ 0.22 |
Intrinsic value, Ending Balance | $ | $ 437,004 |
Share Purchase Warrants and S_5
Share Purchase Warrants and Stock Options (Details) - Schedule of share purchase warrants outstanding | 6 Months Ended |
Jun. 30, 2021shares | |
Class of Warrant or Right [Line Items] | |
Number of warrants | 1,652,880 |
Warrant Expiry Date One [Member] | |
Class of Warrant or Right [Line Items] | |
Number of warrants | 380 |
Exercise Price | 324 |
Issuance date | 10/10/2018 |
Expiry date | 10/10/2021 |
Remaining life | 3 months 10 days |
Warrant Expiry Date Two [Member] | |
Class of Warrant or Right [Line Items] | |
Number of warrants | 2,500 |
Exercise Price | 30 |
Issuance date | 11/21/2019 |
Expiry date | 11/21/2022 |
Remaining life | 1 year 4 months 20 days |
Warrant Expiry Date Three [Member] | |
Class of Warrant or Right [Line Items] | |
Number of warrants | 1,650,000 |
Exercise Price | 0.10 |
Issuance date | 10/5/2020 |
Expiry date | 10/5/2023 |
Remaining life | 2 years 3 months 7 days |
Share Purchase Warrants and S_6
Share Purchase Warrants and Stock Options (Details) - Schedule of activity of stock options | 6 Months Ended |
Jun. 30, 2021USD ($)$ / sharesshares | |
Schedule of activity of stock options [Abstract] | |
Number of stock options, Beginning Balance | |
Weighted average exercise price, Beginning Balance (in Dollars per share) | $ / shares | |
Intrinsic value184, Beginning Balance (in Dollars) | $ | |
Number of stock options, Assumed in merger transaction | 966,330 |
Weighted average exercise price, Assumed in merger transaction (in Dollars) | $ | $ 0.62 |
Intrinsic value184, Assumed in merger transaction (in Dollars) | $ | $ 246,899,000,000 |
Number of stock options, Issued | 3,318,584 |
Weighted average exercise price, Issued (in Dollars per share) | $ / shares | $ 0.25 |
Intrinsic value184, Issued | 0 |
Number of stock options, Exercised | |
Weighted average exercise price, Exercised | |
Intrinsic value184, Exercised | |
Number of stock options, Expired | |
Weighted average exercise price, Expired (in Dollars per share) | $ / shares | |
Intrinsic value184, Expired | |
Number of stock options, Ending Balance | 4,284,914 |
Weighted average exercise price, Ending Balance (in Dollars per share) | $ / shares | $ 0.47 |
Intrinsic value184, Ending Balance (in Dollars) | $ | $ 1,122,607 |
Share Purchase Warrants and S_7
Share Purchase Warrants and Stock Options (Details) - Schedule of stock options outstanding | 6 Months Ended |
Jun. 30, 2021$ / sharesshares | |
Share Purchase Warrants and Stock Options (Details) - Schedule of stock options outstanding [Line Items] | |
Number of stock options | 4,284,914 |
Stock Options One [Member] | |
Share Purchase Warrants and Stock Options (Details) - Schedule of stock options outstanding [Line Items] | |
Number of stock options | 5,000 |
Exercise price | $ / shares | $ 9 |
Issuance Date | Nov. 25, 2019 |
Expiry date | Nov. 25, 2021 |
Remaining Life | 4 months 28 days |
Stock Options Two [Member] | |
Share Purchase Warrants and Stock Options (Details) - Schedule of stock options outstanding [Line Items] | |
Number of stock options | 323,763 |
Exercise price | $ / shares | $ 0.58 |
Issuance Date | Feb. 23, 2021 |
Expiry date | Feb. 23, 2026 |
Remaining Life | 4 years 7 months 24 days |
Stock Options Three [Member] | |
Share Purchase Warrants and Stock Options (Details) - Schedule of stock options outstanding [Line Items] | |
Number of stock options | 482,393 |
Exercise price | $ / shares | $ 0.58 |
Issuance Date | Feb. 23, 2021 |
Expiry date | Feb. 23, 2026 |
Remaining Life | 4 years 7 months 24 days |
Stock Options Four [Member] | |
Share Purchase Warrants and Stock Options (Details) - Schedule of stock options outstanding [Line Items] | |
Number of stock options | 77,587 |
Exercise price | $ / shares | $ 0.58 |
Issuance Date | Feb. 23, 2021 |
Expiry date | Feb. 23, 2026 |
Remaining Life | 4 years 7 months 24 days |
Stock Options Five [Member] | |
Share Purchase Warrants and Stock Options (Details) - Schedule of stock options outstanding [Line Items] | |
Number of stock options | 77,587 |
Exercise price | $ / shares | $ 0.58 |
Issuance Date | Feb. 23, 2021 |
Expiry date | Feb. 23, 2026 |
Remaining Life | 4 years 7 months 24 days |
Stock Options Six [Member] | |
Share Purchase Warrants and Stock Options (Details) - Schedule of stock options outstanding [Line Items] | |
Number of stock options | 3,318,584 |
Exercise price | $ / shares | $ 0.25 |
Issuance Date | Jun. 16, 2021 |
Expiry date | Jun. 16, 2026 |
Remaining Life | 4 years 11 months 15 days |
Leases (Details)
Leases (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Leases (Textual) | ||||
Operating lease expense | $ 25,136 | $ 25,136 | $ 50,272 | $ 50,272 |
Short-term lease costs | 2,646 | 2,646 | ||
Measurement of operating lease liabilities | 25,198 | 50,396 | ||
Operating lease value | 22,198 | $ 17,988 | $ 35,753 | |
Operating lease liabilities | 44,396 | 44,396 | ||
Right of use operating lease liabilities | $ 22,023 | $ 43,772 | ||
Weighted average discount rate | 19.00% | 19.00% | ||
Weighted average remaining term | 2 years |
Leases (Details) - Schedule of
Leases (Details) - Schedule of operating leases related to assets and liabilities - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Schedule of operating leases related to assets and liabilities [Abstract] | ||
Operating lease assets | $ 294,974 | $ 239,489 |
Operating lease liabilities: | ||
Current operating lease liabilities | 344,227 | 283,104 |
Total operating lease liabilities | $ 344,227 | $ 283,104 |
Leases (Details) - Schedule o_2
Leases (Details) - Schedule of operating lease liabilities | Jun. 30, 2021USD ($) |
Schedule of operating lease liabilities [Abstract] | |
2021 | $ 104,863 |
2022 | 207,767 |
2023 | 96,839 |
Total lease payments | 409,469 |
Less: imputed interest | (65,242) |
Total | $ 344,227 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | Apr. 13, 2021 | Jun. 30, 2021 |
Commitments and Contingencies Disclosure [Abstract] | ||
Lease term, description | The Company leases certain of its properties under leases that expire on various dates through 2023. Some of these agreements include escalation clauses and provide for renewal options ranging from one to five years. Leases with an initial term of 12 months or less and immaterial leases are not recorded on the balance sheet (refer to Note 14, Leases, for amounts expensed during the three and six months ended June 30, 2021 and 2020). | |
Commitments, description | (the “Seller”) entered into a Stock Purchase Agreement (the “Agreement”) whereby the Seller agreed to sell SVC to Spectrum, in exchange for $2,500,000 in cash and up to $6,500,000 (less up to $2,000,000 in assumed liabilities) of a newly established series of convertible preferred stock of Spectrum. | |
Purchase agreement, description | The closing of the transaction contemplated by the Agreement is subject to certain closing conditions, as set forth in the Agreement. | |
Cash receivable | $ 709,545 |
Segment Disclosures (Details)
Segment Disclosures (Details) | 6 Months Ended |
Jun. 30, 2021 | |
Segment Reporting [Abstract] | |
Segment reporting, description | The Company operates the SGS reporting segment and the JTM segment in one geographical area (the United States) and the ADEX/AWS PR/TROP/High Wire operating segment in three geographical areas (the United States, Puerto Rico and Canada). |
Segment Disclosures (Details) -
Segment Disclosures (Details) - Schedule of information by operating segment - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Segment Reporting Information [Line Items] | ||||
Net sales | $ 7,794,068 | $ 3,134,899 | $ 12,867,904 | $ 8,744,510 |
Operating income (loss) | (530,368) | (603,370) | (333.272) | (452,945) |
Interest expense | 57,586 | 39,398 | 102,013 | 68,416 |
Depreciation and amortization | 54,890 | 65,114 | 90,200 | |
Total assets | 38,295,925 | 8,978,446 | 38,295,925 | 7,958,332 |
Spectrum Global [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | ||||
Operating income (loss) | (790,333) | (790,333) | ||
Interest expense | 12,264 | 12,264 | ||
Depreciation and amortization | ||||
Total assets | 564,541 | 564,541 | ||
Technology [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 4,314,074 | 1,703,960 | 6,776,017 | 5,706,026 |
Operating income (loss) | (295,411) | (642,227) | (854,270) | (708,652) |
Interest expense | 45,322 | 39,398 | 89,749 | 68,416 |
Depreciation and amortization | 48,580 | 65,114 | 77,648 | |
Total assets | 34,244,845 | 7,086,369 | 24,244,845 | 5,566,255 |
Construction [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 3,479,994 | 1,430,939 | 6,091,887 | 3,038,484 |
Operating income (loss) | 555,376 | 38,857 | 1,311,331 | 255,707 |
Interest expense | ||||
Depreciation and amortization | 6,310 | 12,552 | ||
Total assets | $ 3,486,539 | $ 1,892,077 | $ 3,486,539 | $ 2,392,077 |
Segment Disclosures (Details)_2
Segment Disclosures (Details) - Schedule of geographic information - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | $ 7,794,068 | $ 3,134,899 | $ 12,867,904 | $ 8,744,510 | |
Long-lived Assets | 26,508,703 | 26,508,703 | $ 5,793,317 | ||
Puerto Rico and Canada [Member] | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 105,161 | 105,161 | |||
Long-lived Assets | |||||
United States [Member] | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 7,688,907 | $ 3,134,899 | 12,762,743 | $ 8,744,510 | |
Long-lived Assets | $ 26,508,703 | $ 26,508,703 | $ 5,793,317 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Aug. 12, 2021 | Jul. 15, 2021 | Jun. 15, 2021 | Aug. 18, 2021 | Jul. 26, 2021 | Jun. 30, 2021 | Apr. 06, 2021 | Dec. 31, 2020 |
Subsequent Events (Details) [Line Items] | ||||||||
Conversion value | $ 76,914 | |||||||
Common stock shares issued (in Shares) | 28,278,545 | 0 | ||||||
Restricted cash | $ 2,000,000 | |||||||
Principal balance | $ 235,989 | |||||||
Forgiveness loan | $ 873,465 | |||||||
Subsequent Event [Member] | ||||||||
Subsequent Events (Details) [Line Items] | ||||||||
Stock issued (in Shares) | 688,069 | |||||||
Conversion value | $ 90,000 | |||||||
Accrued interest | $ 1,320 | |||||||
Common stock shares issued (in Shares) | 1,818,182 | |||||||
Conversion of principal | $ 50,000 | |||||||
Restricted cash | $ 2,000,000 | |||||||
Options granted (in Shares) | 6,228,232 | |||||||
Exercise price (in Dollars per share) | $ 0.2545 | |||||||
Convertible Promissory Notes [Member] | ||||||||
Subsequent Events (Details) [Line Items] | ||||||||
Issuance of common stock (in Shares) | 1,025,641 | |||||||
Subsequent Event [Member] | SCS, LLC [Member] | ||||||||
Subsequent Events (Details) [Line Items] | ||||||||
Accrued interest on convertible note | $ 50,000 | |||||||
Series A Preferred Stock [Member] | Subsequent Event [Member] | ||||||||
Subsequent Events (Details) [Line Items] | ||||||||
Dominion capital upon conversion shares (in Shares) | 100,000 | |||||||
Preferred stock stated value (in Dollars per share) | $ 1 |