Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Oct. 26, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | Transportation & Logistics Systems, Inc. | |
Entity Central Index Key | 1,463,208 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 4,220,106 | |
Trading Symbol | TLSS | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
CURRENT ASSETS: | ||
Cash | $ 684,589 | $ 106,576 |
Accounts receivable, net | 1,813,031 | 254,150 |
Prepaid expenses and other current assets | 143,921 | 663 |
Total Current Assets | 2,641,541 | 361,389 |
OTHER ASSETS: | ||
Property, plant and equipment, net | 618,724 | |
Intangible asset, net | 4,954,641 | |
Total Other Assets | 5,573,365 | |
TOTAL ASSETS | 8,214,906 | 361,389 |
CURRENT LIABILITIES: | ||
Convertible notes payable, net of debt discounts | 500,918 | 272,616 |
Notes payable | 1,432,712 | |
Accounts payable | 329,169 | 224,194 |
Accrued expenses | 422,367 | |
Insurance payable | 515,315 | |
Derivative liability | 11,594,755 | 601,615 |
Deferred revenue | 2,950 | 1,500 |
Due to related parties | 477,204 | 23,551 |
Accrued compensation and related benefits | 464,455 | 13,050 |
Total Current Liabilities | 15,739,845 | 1,136,526 |
LONG-TERM LIABILITIES: | ||
Convertible notes payable, net of debt discounts | 104,063 | |
Notes payable | 180,124 | |
Total Long-term Liabilities | 284,187 | |
Total Liabilities | 16,024,032 | 1,136,526 |
Commitments and Contingencies (See Note 9) | ||
SHAREHOLDERS' DEFICIT: | ||
Series A Convertible Preferred stock, par value $0.001 per share; authorized 4,000,000 shares; issued and outstanding 4,000,000 shares (Liquidation value $4,000,000) | 4,000 | 4,000 |
Common stock, par value $0.001 per share; authorized 500,000,000 shares; issued and outstanding 4,170,106 and 570,106 at June 30, 2018 and December 31, 2017, respectively | 4,170 | 570 |
Additional paid-in capital | 7,377,472 | (34,928) |
Accumulated deficit | (15,194,768) | (744,779) |
Total Shareholders' Deficit | (7,809,126) | (775,137) |
Total Liabilities and Shareholders' Deficit | $ 8,214,906 | $ 361,389 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Series A convertible preferred stock, par value | $ 0.001 | $ 0.001 |
Series A convertible preferred stock, shares authorized | 4,000,000 | 4,000,000 |
Series A convertible preferred stock, shares issued | 4,000,000 | 4,000,000 |
Series A convertible preferred stock, shares outstanding | 4,000,000 | 4,000,000 |
Series A convertible preferred stock, liquidation value | $ 4,000,000 | $ 4,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 4,170,106 | 570,106 |
Common stock, shares outstanding | 4,170,106 | 570,106 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Statement [Abstract] | ||||
REVENUES | $ 1,758,828 | $ 150,874 | $ 2,936,591 | $ 177,146 |
COST OF REVENUES | ||||
Third party | 1,394,224 | 110,048 | 2,287,179 | 127,948 |
Related party | 1,800 | 5,400 | ||
Total Cost of Revenues | 1,396,024 | 110,048 | 2,292,579 | 127,948 |
GROSS PROFIT | 362,804 | 40,826 | 644,012 | 49,198 |
OPERATING EXPENSES: | ||||
Compensation and related benefits | 3,336,722 | 3,557,361 | ||
Legal and professional | 1,328,658 | 83,319 | 1,373,993 | 114,969 |
Rent | 6,048 | 12,096 | ||
Rent - affiliate | 900 | 1,800 | ||
General and administrative expenses | 237,188 | 30,752 | 253,644 | 33,286 |
Total Operating Expenses | 4,908,616 | 114,971 | 5,197,094 | 150,055 |
LOSS FROM OPERATIONS | (4,545,812) | (74,145) | (4,553,082) | (100,857) |
OTHER EXPENSES: | ||||
Interest expense | (36,691) | (3,189) | (59,191) | (3,191) |
Amortization of debt discount | (206,611) | (28,248) | (332,364) | (28,283) |
Derivative expense | (9,721,800) | (613,261) | (9,505,352) | (613,170) |
Total Other Expenses | (9,965,102) | (644,698) | (9,896,907) | (644,644) |
NET LOSS | $ (14,510,914) | $ (718,843) | $ (14,449,989) | $ (745,501) |
NET LOSS PER COMMON SHARE: | ||||
Basic and diluted | $ (13.89) | $ (1.26) | $ (17.87) | $ (1.45) |
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING: | ||||
Basic and diluted | 1,044,831 | 570,106 | 808,780 | 514,088 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (14,449,989) | $ (745,501) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization expense | 173,629 | |
Bad debt expense (recovery) | (3,054) | |
Amortization of debt discount to interest expense | 332,364 | 28,283 |
Stock-based compensation and consulting fees | 4,326,000 | |
Derivative expense | 9,505,352 | 613,170 |
Change in operating assets and liabilities: | ||
Accounts receivable | (415,570) | (39,594) |
Prepaid expenses and other current assets | 1,963 | |
Accounts payable and accrued expenses | 22,170 | 82,142 |
Insurance payable | (5,108) | |
Deferred revenue | 1,450 | (2,800) |
Accrued compensation and related benefits | 197,690 | (2,107) |
NET CASH USED IN OPERATING ACTIVITIES | (315,066) | (64,444) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Restricted cash acquired | 10,000 | |
Cash received in acquisition | 38,198 | |
Cash paid for acquisition | (489,174) | |
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | (450,976) | 10,000 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from convertible notes payable | 2,497,503 | 180,000 |
Debt issue costs paid | (1,009,714) | |
Repayment of notes payable | (611,406) | |
Net proceeds from related parties | 467,672 | |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 1,344,055 | 180,000 |
NET INCREASE IN CASH | 578,013 | 125,556 |
CASH, beginning of period | 106,576 | 11,725 |
CASH, end of period | 684,589 | 137,281 |
Cash paid for: | ||
Interest | ||
Income taxes | ||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Debt discounts recorded | 1,487,788 | 425,000 |
Liabilities assumed in acquisition | 3,503,552 | |
Less: assets acquired in acquisition | 1,959,655 | |
Net liabilities assumed | 1,543,897 | |
Fair value of shares for acquisition | 3,090,000 | |
Increase in intangible assets - non-cash | $ 4,633,897 |
Organization and Business Opera
Organization and Business Operations | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business Operations | NOTE 1 – ORGANIZATION AND BUSINESS OPERATIONS Transportation and Logistics Systems, Inc. (“TLSI”), formerly PetroTerra Corp., was incorporated under the laws of the State of Nevada, on July 25, 2008 and prior to the reverse merger discussed below, was inactive. On March 30, 2017 (the “Closing Date”), TLSI and Save On Transport Inc. (“Save On”) entered into a Share Exchange Agreement, dated as of the same date (the “Share Exchange Agreement”). Pursuant to the terms of the Share Exchange Agreement, on the Closing Date, Save On became a wholly-owned subsidiary of TLSI (the “Reverse Merger”). Save On was incorporated in the state of Florida and started business on July 12, 2016 (“Inception Date”). Save On is a provider of integrated transportation management solutions consisting of brokerage and logistic services such as transportation scheduling, routing and other value added services related to the transportation of automobiles and other freight. As an early stage company, TLSI’s current operations are subject to all risks inherent in the establishment of a new business enterprise The Share Exchange was treated as a reverse merger and recapitalization of Save On for financial reporting purposes since the Save On shareholders retained an approximate 80% controlling interest in the post-merger consolidated entity. Save On was considered the acquirer for accounting purposes, and the Company’s historical financial statements before the Merger was replaced with the historical financial statements of Save On before the Merger. The balance sheets at their historical cost basis of both entities were combined at the merger date and the results of operations from the merger date forward include the historical results of Save On and results of TLSI from the merger date forward. The Merger was intended to be treated as a tax-free reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended. On June 18, 2018 (the “Acquisition Date”), the Company completed the acquisition of 100% of the issued and outstanding membership interests of Prime EFS, LLC, a New Jersey limited liability company (“Prime”), from its members pursuant to the terms and conditions of a Stock Purchase Agreement entered into among the Company and the Prime members on the Closing Date (the “SPA”) (See Note 3). Prime is a New Jersey based transportation company with a focus on deliveries for on-line retailers in New York, New Jersey and Pennsylvania. TLSI and its wholly-owned subsidiaries, Save On and Prime are hereafter referred to as the “Company”. On July 16, 2018, the Company filed a Certificate of Amendment to the Amended and Restated Articles of Incorporation (the “Certificate of Amendment”) with the Secretary of State of the State of Nevada to (1) change the name of the Company from PetroTerra Corp. to Transportation and Logistics Systems, Inc., (2) authorize an increase of the shares of the preferred stock to 10,000,000 shares, par value $0.001 per share and (3) effect a 1-for-250 reverse stock split (the “Reverse Stock Split”) with respect to the outstanding shares of the Company’s common stock. The Certificate of Amendment became effective on July 17, 2018. The corporate name change, increase of authorized shares of preferred stock and Reverse Stock Split were previously approved by the sole director and the majority of stockholders of the Company. The corporate name change and the Reverse Stock Split were deemed effective at the open of business on July 18, 2018. All share and per share data in the accompanying consolidated financial statements have been retroactively restated to reflect the effect of the recapitalization. |
Summary of Significant Accounti
Summary of Significant Accounting Policies and Basis of Presentation | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies and Basis of Presentation | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION Basis of presentation and principles of consolidation The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and disclosures necessary for comprehensive presentation of financial position, results of operations or cash flow. However, these unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these unaudited interim consolidated financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2017, and notes thereto included in the Company’s annual report on Form 10-K, filed on April 17, 2018. The Company follows the same accounting policies in the preparation of its annual and interim reports. The results of operations in interim periods are not necessarily an indication of operating results to be expected for the full year. The unaudited condensed consolidated financial statements of the Company include the accounts of TLSI and its wholly owned subsidiaries, Save On and Prime. All intercompany accounts and transactions have been eliminated in consolidation. Going concern The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. As reflected in the accompanying condensed consolidated financial statements, the Company had a net loss of $14,449,989 for the six months ended June 30, 2018. The net cash used in operations was $315,066 for the six months ended June 30, 2018. Additionally, the Company had an accumulated deficit, shareholders’ deficit, and a working capital deficit of $15,194,768, $7,809,126 and $13,098,304, respectively, at June 30, 2018. Furthermore, the Company failed to make a required maturity date payment of principal and interest on certain of its convertible debt instruments. As of the date of this report the lender has not notified the Company of default and has not exercised any of its remedies provided for in these notes. One of the remedies the lender may request is an immediate repayment of the loan at 125% of the principal balance, which would result in the recording of $106,250 of penalty expense and the related liability. Additionally, as of July 18, 2018 the Company is in default on a convertible note due to the late filing of this report on Form 10-Q among other events of default on this convertible note. Remedies this lender may request is an immediate repayment of the loan at 125% of the principal and interest balance, which would result in the recording of approximately $650,000 of penalty expense and the related liability and an increase in the interest rate to 24% annually. As of the date of this report this lender has not notified the Company of its intent to exercise any of its remedies provided for in this note. It is management’s opinion that these factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the issuance date of this report. Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. The Company is seeking to raise capital through additional debt and/or equity financings to fund its operations in the future. Although the Company has historically raised capital from sales of common shares and from the issuance of convertible promissory notes, there is no assurance that it will be able to continue to do so. If the Company is unable to raise additional capital or secure additional lending in the near future, management expects that the Company will need to curtail its operations. These consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Use of estimates The preparation of the unaudited condensed consolidated financial statements, in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Significant estimates included in the accompanying consolidated financial statements and footnotes include the valuation of accounts receivable, the useful life of property and equipment, the valuation of intangible assets, assumptions used in assessing impairment of long-lived assets, estimates of current and deferred income taxes and deferred tax valuation allowances, the fair value of non-cash equity transactions, the valuation of derivative liabilities, and the fair value of assets acquired and liabilities assumed in the business acquisition. Fair value of financial instruments FASB ASC 820 — Fair Value Measurements and Disclosures , ● Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. ● Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. ● Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. The Company measures certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows at June 30, 2018 and December 31, 2017: At June 30, 2018 At December 31, 2017 Description Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Derivative liabilities — — $ 11,594,755 — — $ 601,615 A roll forward of the level 3 valuation financial instruments is as follows: For the Six Months ended June 30, 2018 Balance at December 31, 2017 $ 601,615 Initial valuation of derivative liabilities included in debt discount 1,487,788 Initial valuation of derivative liabilities included in derivative expense 6,839,065 Change in fair value included in derivative expense 2,666,287 Balance at June 30, 2018 $ 11,594,755 The Company accounts for its derivative financial instruments, consisting of certain conversion options embedded in our convertible instruments and warrants, at fair value using level 3 inputs. The Company determined the fair value of these derivative liabilities using the Black-Scholes option pricing model, binomial lattice models, or other accepted valuation practices. When determining the fair value of its financial assets and liabilities using these methods, the Company is required to use various estimates and unobservable inputs, including, among other things, expected terms of the instruments, expected volatility of its stock price, expected dividends, and the risk-free interest rate. Changes in any of the assumptions related to the unobservable inputs identified above may change the fair value of the instrument. Increases in expected term, anticipated volatility and expected dividends generally result in increases in fair value, while decreases in the unobservable inputs generally result in decreases in fair value. ASC 825-10 “Financial Instruments The carrying amounts reported in the balance sheets for cash, accounts receivable, accounts payable and accrued expenses approximate their fair values based on the short-term maturity of these instruments. The carrying amount of the Company’s convertible notes payable and promissory note obligations approximate fair value, as the terms of these instruments are consistent with terms available in the market for instruments with similar risk. Cash and cash equivalents For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents. At June 30, 2018 and December 31, 2017, the Company did not have any cash equivalents. The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. At June 30, 2018, the Company had approximately $316,000 of cash in excess of FDIC limits. There were no balances in excess of FDIC insured levels as of December 31, 2017. The Company has not experienced any losses in such accounts through June 30, 2018. Accounts receivable Accounts receivable are presented net of an allowance for doubtful accounts. The Company maintains allowances for doubtful accounts for estimated losses. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, a customer’s historical payment history, its current credit-worthiness and current economic trends. Accounts are written off after exhaustive efforts at collection. Property and equipment Property are stated at cost and are depreciated using the straight-line method over their estimated useful lives of five years. Leasehold improvements are depreciated over the shorter of the useful life or lease term including scheduled renewal terms. Maintenance and repairs are charged to expense as incurred. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company examines the possibility of decreases in the value of these assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. Impairment of long-lived assets In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. Segment reporting The Company uses “the management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operating decision maker is the chief executive officer of the Company, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Derivative financial instruments The Company has certain financial instruments that are embedded derivatives associated with capital raises. The Company evaluates all its financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 810-10-05-4 and 815-40. This accounting treatment requires that the carrying amount of any embedded derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with the Company, the change in the fair value during the period is recorded as either other income or expense. Upon conversion, exercise or repayment, the respective derivative liability is marked to fair value at the conversion, repayment or exercise date and then the related fair value amount is reclassified to other income or expense as part of gain or loss on extinguishment. Revenue recognition and cost of revenue On January 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) Topic 605, Revenue Recognition. This ASC is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASC also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer service orders, including significant judgments. For the Company’s Save On business activities, the Company recognizes revenues and the related direct costs of such revenue which includes carrier fees and dispatch costs as of the date the freight is delivered by the carrier which is when the performance obligation is satisfied. Customer payments received prior to delivery are recorded as a deferred revenue liability and related carrier fees if paid prior to delivery are recorded as a deferred expense asset. In accordance with ASC Topic 606, the Company recognizes revenue on a gross basis. Our payment terms for corporate customers are net 30 days from acceptance of delivery and individual customers generally must pay in advance. The Company does not incur incremental costs obtaining service orders from our Save On customers, however, if the Company did, because all of the Save On customer’s contracts are less than a year in duration, any contract costs incurred would be expensed rather than capitalized. The Company’s adoption of this ASC, resulted in no cumulative effect at January 1, 2018 and no change prospectively to the Company’s results of operations or financial condition. The revenue that the Company recognizes arises from service orders it receives from its Save On customers. The Company’s performance obligations under these service orders correspond to each delivery of a vehicle that the Company makes for its customer under the service orders; as a result, each service order generally contains only one performance obligation based on the delivery to be completed. For the Company’s Prime business activities, the Company recognizes revenues and the related direct costs of such revenue which generally include compensation and related benefits, gas costs, insurance, parking and tolls, truck rental fees, and maintenance fees as of the date the freight is delivered which is when the performance obligation is satisfied. In accordance with ASC Topic 606, the Company recognizes revenue on a gross basis. Our payment terms are net seven days from acceptance of delivery. The Company does not incur incremental costs obtaining service orders from its Prime customers, however, if the Company did, because all of Prime’s customer contracts are less than a year in duration, any contract costs incurred would be expensed rather than capitalized. The revenue that the Company recognizes arises from deliveries of packages to business and residential locations on behalf of retailers. Primarily, the Company’s performance obligations under these service orders correspond to each delivery of packages that the Company makes to recipients on behalf of the retailers under the service agreements. Control of the delivery transfers to the recipient upon delivery. Once this occurs, the Company has satisfied its performance obligation and the Company recognizes revenue. Stock-based compensation Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Through March 31, 2018, pursuant to ASC 505-50 – “Equity-Based Payments to Non-Employees”, all share-based payments to non-employees, including grants of stock options, were recognized in the consolidated financial statements as compensation expense over the service period of the consulting arrangement or until performance conditions are expected to be met. Using a Black-Scholes valuation model, the Company periodically reassessed the fair value of non-employee options until service conditions are met, which generally aligns with the vesting period of the options, and the Company adjusts the expense recognized in the consolidated financial statements accordingly. In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which simplifies several aspects of the accounting for nonemployee share-based payment transactions by expanding the scope of the stock-based compensation guidance in ASC 718 to include share-based payment transactions for acquiring goods and services from non-employees. ASU No. 2018-07 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted, but entities may not adopt prior to adopting the new revenue recognition guidance in ASC 606. The Company early adopted ASU No. 2018-07 in the second quarter of 2018, and the adoption did not have any impact on its consolidated financial statements. Basic and diluted loss per share Pursuant to ASC 260-10-45, basic loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the periods presented. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Potentially dilutive common shares consist of common stock issuable for stock warrants (using the treasury stock method) and shares issuable for convertible debt (using the as-if converted method). These common stock equivalents may be dilutive in the future. Potentially dilutive common shares were excluded from the computation of diluted shares outstanding as they would have an anti-dilutive impact on the Company’s net losses and consisted of the following: June 30, 2018 June 30, 2017 Stock warrants 1,329,548 0 Convertible debt 3,158,465 135,091 Series A convertible preferred stock 6,666,667 198,800 Recent Accounting Pronouncements On February 25, 2016, the FASB issued ASU No. 2016-02 (“ASU 2016-02”) to amend the accounting guidance for leases. The accounting applied by a lessor is largely unchanged under ASU 2016-02. However, the standard requires lessees to recognize lease assets and lease liabilities for leases classified as operating leases on the balance sheet. Lessees will recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it will recognize lease expense for such leases generally on a straight-line basis over the lease term. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and early adoption is permitted. The Company is currently assessing the impact of the guidance on its consolidated financial statements and notes to its consolidated financial statements. In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments in Part I of this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments in Part II of this Update do not require any transition guidance because those amendments do not have an accounting effect. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. There are currently no other accounting standards that have been issued but not yet adopted that we believe will have a significant impact on our consolidated financial position, results of operations or cash flows upon adoption. |
Acquisition
Acquisition | 6 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisition | NOTE 3 – ACQUISITION On June 18, 2018, (the “Closing Date”), the Company completed the acquisition of 100% of the issued and outstanding membership interests of Prime from its members pursuant to the terms and conditions of a SPA entered into among the Company and the Prime members on the Closing Date. Prime is a New Jersey based transportation company with a focus on deliveries for on-line retailers in New York, New Jersey and Pennsylvania. The Company’s acquisition of Prime diversified the Company’s revenue sources and gives the Company access to the growing market of on line retail deliveries. Pursuant to the terms of the SPA, as amended in September 2018 to correct the purchase price error in the original SPA, the Company agreed to pay $489,174 in cash which under the SPA was loaned back to Prime and therefore is included in due to related parties at June 30, 2018, and the Company issued 1,500,000 shares of its common stock in exchange for 100% of the issued and outstanding membership units of Prime. Additionally, the Company shall issue additional shares of its common stock intended to true-up the Purchase Interests such that the aggregate value of the Purchase Interests would be equal to the trailing twelve-month gross profit of the Company (the “True-Up Value”), to be calculated as of December 31, 2018 (the “True-up Stock”). On April 15, 2019, the Company shall issue to the sellers such aggregate number of True-up Stock equal to (i) the True-Up Value minus $3,750,000 divided by (ii) the lower of (A) $2.50, (B) the closing price of the Company’s common stock on April 15, 2019 or (C) the lowest price per share (as adjusted for any stock splits) paid upon conversion of the Company’s series A convertible preferred stock on or prior to April 15, 2019. Based on management’s estimate of 2018 gross profit, the Company believes that no additional True-up stock will be issued and therefore, no additional contingent consideration was recorded. Prime became a wholly owned subsidiary of the Company as of the Closing Date. On June 18, 2018, the Company entered into an employment agreement with a party related to the majority selling member of Prime which did not represent additional purchase consideration. In connection with the acquisition, the Company issued 1,500,000 unregistered shares of its common stock valued at $3,090,000, or $2.06 per share, the fair value of the Company’s common stock based on the quoted closing price of the Company’s common stock on the Closing Date. The fair value of the assets acquired and liabilities assumed were based on management’s initial estimates of the fair values on June 18, 2018. Based upon the purchase price allocation, the following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition: Cash $ 38,198 Accounts receivable 1,140,257 Prepaid expensed and other current assets 143,258 Due from related party 14,019 Property and equipment, net 623,923 Intangible asset 5,123,071 Total assets acquired at fair value 7,082,726 Notes payable 2,224,242 Accounts payable and accrued expenses 758,887 Insurance payable 520,423 Total liabilities assumed 3,503,552 Total purchase consideration $ 3,579,174 The assets acquired and liabilities assumed are recorded at their initial estimated fair values on the acquisition date with subsequent changes recognized in earnings or loss. These estimates are inherently uncertain and are subject to refinement. Management develops estimates based on assumptions as a part of the purchase price allocation process to value the assets acquired and liabilities assumed as of the business combination date. As a result, during the purchase price measurement period, which may be up to one year from the business acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed based on completion of valuations, with the corresponding offset to goodwill. After the purchase price measurement period, the Company will record adjustments to assets acquired or liabilities assumed in operating expenses in the period in which the adjustments were determined. The purchase price exceeded the fair value of the net assets acquired by $5,123,071, which was initially allocated in its entirely to a customer contract. Any goodwill assigned as of the expiration of the measurement period shall represent the amount of consideration transferred in excess of the fair value assigned to identifiable assets acquired and liabilities assumed. Any goodwill recorded is not expected to be deductible for U.S. income tax purposes. The Company shall record acquisition and transaction related expenses in the period in which they are incurred. During the six months ended June 30, 2018, acquisition and transaction related expenses primarily consisted of legal fees of approximately $24,000 and $1,236,000 of stock-based professional fees from the granting of 600,000 shares of the Company’s common stock to two consultants for services rendered in connection with the acquisition. Additionally, debt issue costs were incurred relating to a loan in which a portion of the proceeds were used to pay the cash portion of the purchase consideration (see note 7 “Bellridge Capital LLC”) In the event of Buyer’s failure to satisfy the conditions set forth in the SPA, the former majority member, (the “Manager”), acting in her sole discretion on behalf of the Sellers, shall have the right, for the one year period following the Closing, to unwind the transactions and return the Purchase Price in exchange for 90% of the Interests of Prime. Conditions include: 1) Within twelve months from the Closing Date, the Company shall apply (the “Application”) to have its common stock listed and trading on the (i) New York Stock Exchange, (ii) NASDAQ Global Select Market, (iii) NASDAQ Global Market, (iv) NASDAQ Capital Market, or (v) NYSE American (each, a “Selected Market”). At the time of submitting the Application, the Company shall meet all of the quantitative initial listing standards and corporate governance standards of such Selected Market. The Company shall use its best efforts to have its application approved by the Selected Market. 2) The Company covenants and agrees that, from and after the Closing Date for a period of twelve months, the Company shall not sell, transfer, assign and convey its interests in Prime without the prior written consent of the Manager. 3) The Sellers shall have the right to appoint one nominee to the Board of Directors of the Company for a period of three years beginning on the Closing Date. 4) The Company shall provide at least $267,000 of cash in additional working capital to the Company within six months from the Closing Date. The following unaudited pro forma consolidated results of operations have been prepared as if the acquisition of Prime had occurred as of the beginning of the following periods: Six Months Ended June 30, 2018 Six Months Ended June 30, 2017 Net Revenues $ 7,121,711 $ 2,260,514 Net Loss $ (15,828,180 ) $ (1,099,815 ) Net Loss per Share $ (7.86 ) $ (0.53 ) Pro forma data does not purport to be indicative of the results that would have been obtained had these events actually occurred at the beginning of the periods presented and is not intended to be a projection of future results. |
Accounts Receivable
Accounts Receivable | 6 Months Ended |
Jun. 30, 2018 | |
Receivables [Abstract] | |
Accounts Receivable | NOTE 4 – ACCOUNTS RECEIVABLE The following table presents the accounts receivable: June 30, 2018 December 31, 2017 Accounts receivable $ 1,813,031 $ 254,150 Allowance for doubtful accounts - - Accounts Receivable $ 1,813,031 $ 254,150 |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | NOTE 5 - PROPERTY AND EQUIPMENT At June 30, 2018 and December 31, 2017, property and equipment consisted of the following: Useful Life 2018 2017 Delivery trucks and vehicles 5 years $ 623,923 $ - Less: accumulated depreciation (5,199 ) - Property and equipment, net $ 618,724 $ - For the six months ended June 30, 2018 and 2017, depreciation expense is included in general and administrative expenses and amounted to $5,199 and $0, respectively. |
Intangible Asset
Intangible Asset | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Asset | NOTE 6 – INTANGIBLE ASSET At June 30, 2018 and December 31, 2017, intangible asset consisted of the following: Useful life June 30, 2018 December 31, 2017 Customer contract 1 year $ 5,123,071 - 5,123,071 - Less: accumulated amortization (168,430 ) - $ 4,954,641 $ - Amortization of intangible assets attributable to future periods is as follows: Year ending June 30: Amount 2019 $ 4,954,641 $ 4,954,641 |
Convertible Promissory Notes Pa
Convertible Promissory Notes Payable | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Convertible Promissory Notes Payable | NOTE 7 – CONVERTIBLE PROMISSORY NOTES PAYABLE Red Diamond Partners LLC On April 25, 2017, the Company entered into a Securities Purchase Agreement with RedDiamond Partners LLC (“RedDiamond”) pursuant to which the Company would issue to RedDiamond Convertible Promissory Notes in an aggregate principal amount of up to $355,000, which includes a purchase price of $350,000 and transaction costs of $5,000. Pursuant to this securities purchase agreement, on April 25, 2017, the Company entered into a convertible promissory note in the aggregate principal amount of $100,000 and the Company received $95,000 after giving effect to the original issue discount of $5,000. This note matured on April 25, 2018 and each tranche will mature 1 year after the date of such funding. The second Tranche was received on June 2, 2017 for $85,000 and the third Tranche for $85,000 was received on August 8, 2017 upon filing of the Registration Statement. The fourth Tranche will be for $85,000 and was to occur ninety days after the First Closing, however, as of the date of this filing, the fourth tranche has not yet been received. The Purchaser shall not be required to fund any Tranche subsequent to the first Tranche if there is an event of default as described in the promissory notes. The RedDiamond Notes bear interest at a rate of 12% per annum and are convertible into shares of the Company’s common stock at RedDiamond’s option at 65% of the lowest VWAP for the previous ten trading days preceding the conversion. On April 25, 2018 and June 2, 2018, the Company failed to make its required maturity date payments of principal and interest on a Convertible Promissory Note of $100,000 of $85,000, respectively. In accordance with these notes, the Company entered into default on April 27, 2018 and June 2, 2018, which increased the interest rate to 1.5% per month. As of the date of this report the lender has not notified the Company of default and has not exercised any of its remedies provided for in the note. One of the remedies the lender may request is an immediate repayment of the loans at 125% of the principal balance, which would result in the recording of penalty expenses of $46,250 and the related liability. In connection with the issuance of the Convertible Promissory Note above, the Company determined that the terms of the Convertible Promissory Note included a down-round provision under which the conversion price could be affected by future equity offerings undertaken by the Company. These convertible promissory notes contain cross default provisions whereby a default in any one note greater than $25,000 will cause a default in all the notes, however, this provision is only effective if there is a formal notice of default by the lender. We evaluated these convertible promissory note transactions in accordance with ASC Topic 815, Derivatives and Hedging, and determined that the conversion feature of the convertible promissory notes were not afforded the exemption for conventional convertible instruments due to their respective variable conversion rate and price protection provision. Accordingly, under the provisions of FASB ASC Topic No. 815-40, “Derivatives and Hedging – Contracts in an Entity’s Own Stock”, the embedded conversion option contained in the convertible instruments were accounted for as derivative liabilities at the date of issuance and shall be adjusted to fair value through earnings at each reporting date. The fair value of the embedded conversion option derivatives were determined using the Black-Scholes valuation model. During 2017, on the initial measurement dates of each tranche received, the fair value of the embedded conversion option derivatives of $376,841 was recorded as derivative liabilities and was allocated as a debt discount up to the net proceeds of the Convertible Promissory Notes of $265,000 with the remainder of $111,841 charged as initial derivative expense. The balance of the note payable as of June 30, 2018 and December 31, 2017 amounted to $260,918 and $151,630, comprised of principal balance of $270,000 and $270,000, net of debt discount relating to the bifurcated derivative of $9,082 and $118,370, respectively. RDW Capital, LLC. On June 30, 2017, the Company issued RDW Capital, LLC a senior convertible note in the aggregate principal amount of $240,000, for an aggregate purchase price of $30,000 of which $15,000 had been recorded as advance from lender as of March 31, 2017 and the remaining $15,000 received on June 30, 2017. The principal due under the Note accrues interest at a rate of 12% per annum. All principal and accrued interest under the Note was due six months following the issue date of the Note, and is convertible into shares of the Company’s common stock, at a conversion price equal to fifty (50%) of the lowest volume-weighted average price for the previous ten trading days immediately preceding the conversion. The Note includes anti-dilution protection, including a down-round provision under which the conversion price could be affected by future equity offerings undertaken by the Company, as well as customary events of default, including non-payment of the principal or accrued interest due on the Note. Upon an event of default, all obligations under the Note will become immediately due and payable and the Company will be required to make certain payments to the Lender. On December 31, 2017 the Company failed to make its required maturity date payment of principal and interest. In accordance with the note, the Company entered into default on January 3, 2018, which increased the interest rate to 2% per month. As of the date of this report the lender has not notified the Company of default and has not exercised any of its remedies provided for in the note. One of the remedies the lender may request is an immediate repayment of the loan at 125% of the principal balance, which would result in the recording of $60,000 penalty expense and the related liability. Under the provisions of FASB ASC Topic No. 815-40, “Derivatives and Hedging – Contracts in an Entity’s Own Stock”, the embedded conversion option contained in this convertible instruments were accounted for as derivative liabilities at the date of issuance and shall be adjusted to fair value through earnings at each reporting date. The fair value of the embedded conversion option derivatives were determined using the Black-Scholes valuation model. On June 30, 2017, on the initial measurement date, the fair value of the embedded conversion option derivatives of $527,477 was recorded as derivative liabilities and was allocated as a debt discount up to the net proceeds of the Convertible Promissory Notes of $30,000 with the remainder of $497,477 charged as initial derivative expense. The balance as of June 30, 2018 and December 31, 2017 amounted to $240,000 and $120,986, comprised of principal balance of $240,000 and $240,000, net of Original Issue Discount (OID) of $0 and $104,137 and debt discount relating to the bifurcated derivative of $0 and $14,877, respectively. Bellridge Capital, LLC. On June 18, 2018, the Company entered into a securities purchase agreement (the “Purchase Agreement”), whereby it issued to an institutional investor (the “Lender”) a senior secured convertible note in the aggregate principal amount of $2,497,503 (the “Note”), for an aggregate purchase price of $1,665,000, net of an original issue discount of $832,503. In addition, the Company paid issue costs of $177,212. The original issue discount and issue costs were recorded as a debt discount to be amortized over the Note term. The principal due under the Note accrues interest at a rate of 10% per annum. Interest of $20,813 is payable monthly beginning on July 18, 2018 and is due monthly over the term of the Note in cash or common stock of the Company, at the Lender’s discretion. The principal amount of the Note is due on December 18, 2019. All principal and accrued interest under the Note is convertible into shares of the Company’s common stock, at a conversion price equal to the lower of $1.50 and 65% of the lowest traded price during the fifteen trading days immediately prior to the conversion date. The Note includes anti-dilution protection, as well as customary events of default, including, but not limited to, non-payment of the principal or accrued interest due on the Note and cross default provisions on other Company obligations or contracts. Upon an event of default, all obligations under the Note will become immediately due and payable and the Company will be required to make certain payments to the Lender. In addition, the Lender was issued a warrant, with a term of two years, to purchase up to 4.75% of the fully-diluted outstanding Common Stock of the Company, for an aggregate purchase price of $100 (the “Warrant”). The Lender was granted a right of first refusal on future financing transactions of the Company while the Note remains outstanding, plus an additional three months thereafter. In connection with the issuance of the Note, the Company entered into a security agreement with the Lender (the “Security Agreement”) pursuant to which the Company agreed that obligations under the Note and related documents will be secured by all of the assets of the Company. In addition, all of the Company’s subsidiaries are guarantors of the Company’s obligations to the Lender pursuant to the Note and have granted a similar security interest over substantially all of their assets. A portion of the proceeds of the Note were used to acquire 100% of the membership interests of Prime (See Note 3). During the term of this Note, in the event that the Company consummates any public or private offering or other financing or capital raising transaction of any kind ( each a “Subsequent Offering”), in which the Company receives, in one or more contemporaneous transactions, gross proceeds of at least $5,000,000, at any time upon ten (10) days written notice to the Holder, but subject to the Holder’s conversion rights set forth in the Purchase Agreement, then the Company shall use 20% of the gross proceeds of the Subsquent Offering and shall make payment to the Holder of an amount in cash equal to the product of (i) the sum of (x) the then outstanding principal amount of this Note and (y) all accrued but unpaid interest, multiplied by (ii) (x) 110%, if the Prepayment Date is within 90 days of the date hereof the Closing Date (as defined in the Purchase Agreement), or (y) 125%, if the Prepayment Date is after the 90th day following the Closing Date, to which calculated amount the Company shall add all other amounts owed pursuant to this Note, including, but not limited to, all Late Fees and liquidated damages. On connection with the Purchase agreement, the Company entered into a registration rights agreement which, among other things, required the Company to file a registration statement with the Securities and Exchange Commission no later than 120 days after June 18, 2018. The Company failed to file such registration statement. Accordingly, in addition to any other rights the Holders may have hereunder or under applicable law, on the default date and on each monthly anniversary of each such default date (if the applicable event shall not have been cured by such date) until the ninetieth day from such Event Date, the Company shall pay to each Holder an amount in cash, as partial liquidated damages and not as a penalty, equal to the product of one percent (1%) multiplied by the aggregate subscription amount paid by the Holder pursuant to the Purchase Agreement. Subsequent to the ninetieth day from such default date, the one percent (1%) penalty described in the foregoing sentence shall increase to two percent (2%), with an aggregate cap of twenty percent (20%) per annum. If the Company fails to pay any of these partial liquidated damages in full within seven (7) days after the date payable, the Company will pay interest thereon at a rate of 18% per annum to the Holder, accruing daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. The partial liquidated damages pursuant to the terms hereof shall apply on a daily pro rata basis for any portion of a month prior to the cure of an Event. In connection with this Purchase Agreement, the Company paid a placement agent $120,000 in cash which is included in issue costs previously discussed above and this placement agent was issued a warrant, with a term of two years, to purchase up to 4.75% of the fully-diluted outstanding Common Stock of the Company, for an aggregate purchase price of $100 (the “Placement Warrant”). Subsequent to June 30, 2018, the Company defaulted on this Note due to i) default on the payment of monthly interest payments due, ii) default caused by the late filing of the Company’s report on Form 10-Q for the period ended June 30, 2018, and iii) default of filing of a registration statement. Upon an event of default, all principal, accrued interest, and liquating damages and penalties are due upon request of the lender at 125% of such amounts. As of the date of this report, the lender has not notified the Company of any amounts due under the default remedies provisions of the promissory note. Summary of derivative liabilities In connection with the issuance of this Note, Warrant, and Placement Warrant, the Company determined that this Note and both Warrants contains terms that are not fixed monetary amounts at inception. Accordingly, under the provisions of FASB ASC Topic No. 815-40, “Derivatives and Hedging – Contracts in an Entity’s Own Stock”, the embedded conversion option contained in the convertible instrument and the Warrant and Placement Warrant were accounted for as derivative liabilities at the date of issuance and shall be adjusted to fair value through earnings at each reporting date. The fair value of this embedded conversion option derivative, and the Warrant and Placement Warrant were determined using the Binomial valuation model and Monte-Carlo simulation model, respectively. In connection with the issuance of this Note, Warrant and Placement Warrant, on June 18, 2018, the initial measurement date, the fair values of the embedded conversion option derivative and warrant derivatives of $8,326,853 was recorded as derivative liabilities and was allocated as a debt discount of $1,487,788, with the remainder of $6,839,065 charged to current period operations as initial derivative expense. During the six months ended June 30, 2018, the fair value of the derivative liabilities was estimated using the Black-Sholes valuation model, Binomial valuation model, and the Monte-Carlo simulation model with the following assumptions: Dividend rate 0 Term (in years) 0.01 to 2.00 years Volatility 261.2% to 307.7 % Risk-free interest rate 1.32% to 2.11 % At June 30, 2018 and December 31, 2017, convertible promissory notes are as follows: June 30, 2018 December 31, 2017 Principal amounts $ 3,007,503 $ 510,000 Less: unamortized debt discount (2,402,522 ) (237,384 ) Convertible notes payable, net 604,981 272,616 Less: current portion of convertible notes payable (500,918 ) - Convertible notes payable, net – long-term $ 104,063 $ 272,616 For the six months ended June 30, 2018 and 2017, amortization of debt discounts related to these convertible notes amounted to $332,364 and $28,283, respectively, which has been included in interest expense on the accompanying consolidated statements of operations. The weighted average interest rate during the six months ended June 30, 2018 and 2017 was approximately 21.2% and 10.0%, respectively. |
Notes Payable
Notes Payable | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Notes Payable | NOTE 8 – NOTES PAYABLE Secured merchant loans In connection with the acquisition of Prime (See Note 3), the Company assumed several notes payable liabilities amounting to $944,281 pursuant to secured merchant agreements (the “Secured Merchant Loans”). Pursuant to the Secured Merchant Loans, the Company is required to repay the noteholders by making daily payments on each business day or on demand payments until the loans amounts are paid in full. Each payment is deducted directly from the Company’s bank accounts. The Secured Merchant Loans are secured by the assets of Prime, and are personally guaranteed by the former majority member of Prime. During the period from acquisition date of Prime (June 18, 2018) to June 30, 2018, the Company repaid $79,152 of these notes. At June 30, 2018, notes payable related to Secured Merchant Loans amounted to $865,129. Subsequent to June 30, 2018, the Company repaid $315,130 of these Secured Merchant Loans. Promissory notes In connection with the acquisition of Prime (See Note 3), the Company assumed several notes payable liabilities due to former members of Prime amounting to $459,750 (the “Member Notes”). The Member Notes have effective interest rates ranging from 7% to 10%, and are unsecured. During the period from acquisition date of Prime (June 18, 2018) to June 30, 2018, the Company repaid $459,750 of these notes. At June 30, 2018, notes payable related to Member Notes amounted to $0. In connection with the acquisition of Prime (See Note 3), the Company assumed several notes payable liabilities due to entities or individuals amounting to $297,005 (the “Note”). These notes have effective interest rates ranging from 7% to 10%, and are unsecured. During the period from acquisition date of Prime (June 18, 2018) to June 30, 2018, the Company repaid $65,000 of these notes. At June 30, 2018, notes payable to these entities or individuals amounted to $232,005. Subsequent to June 30, 2018, the Company repaid $114,980 of these notes. Equipment notes payable In connection with the acquisition of Prime (See Note 3), the Company assumed several equipment notes payable liabilities due to entities amounting to $523,207 (the “Equipment Notes”). These Equipment Notes have effective interest rates ranging from 6.0% to 9.4%, and are secured by the underlying van or trucks. During the period from acquisition date of Prime (June 18, 2018) to June 30, 2018, the Company repaid $7,505 of these Equipment Notes. At June 30, 2018, equipment notes payable to these entities amounted to $515,701. Subsequent to June 30, 2018, the Company repaid $56,852 of these Equipment Notes. At June 30, 2018 and December 31, 2017, notes payable consisted of the following: June 30, 2018 December 31, 2017 Principal amounts $ 1,612,836 $ - Less: current portion of notes payable (1,432,712 ) - Notes payable – long-term $ 180,124 $ - |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 9 – COMMITMENTS AND CONTINGENCIES Related party – lease The Company executed a sublease agreement with an affiliate for office space for a one-year term. The sublease commenced on August 1, 2016 at a rate of $300 per month. The sublease was extended on August 1, 2017 and terminated on December 14, 2017, at which point the Company signed a new one-year term lease with the third-party landlord directly for the entire space previously occupied by the affiliate. The monthly rent under the renewed lease is $1,600 plus maintenance charges and taxes. Common stock ownership As a result of the Company’s non-effectiveness of the 1 for 30 reverse stock-split, which was previously represented to have been effective prior to the March 30, 2017 reverse merger, the Company’s Chief Executive Officer’s post reverse merger common stock ownership percentage has been reduced from approximately 99% to approximately 80%. The Company and the Chief Executive Officer are exploring remedies, which may include capital stock or other consideration, to correct this situation. Employment agreement On June 18, 2018, the Company entered into an employment agreement with the chief operating officer of Prime. The Company shall pay to this executive a base salary of $520,000 per year, payable in accordance with the Company’s usual pay practices. The executive’s base salary will increase by $260,000 per year upon (i) Prime achieving revenue of $20 million on an annualized basis (the “Initial Target Goal”) for four consecutive weeks; and (ii) each time Prime achieves revenue of an additional $10 million increment above the Initial Target Goal (i.e., $30 million, $40 million, $50 million, etc.) on an annualized basis for four consecutive weeks. Executive’s base salary shall be subject to review annually by the Manager and may be increased (but not decreased). The executive shall be entitled to participate in any bonus plan that the Manager or its designee may approve for the senior executives of the Company and shall be entitled to participate in benefits under the Company’s benefit plans, profit sharing and arrangements, including, without limitation, any employee benefit plan or arrangement made available in the future by the Company to its employees or senior executives, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements. Notwithstanding the foregoing, during the Employment, the Company will provide, at the Company’s expense, health and major medical insurance benefits to the Executive and his family members which are at least equal to the benefits provided to the Executive and his family members immediately prior to the Effective Date. The term of this Agreement (as it may be extended by the following sentence or terminated earlier pursuant to terms in the employment agreement shall begin on the Effective Date and end on the close of business on May 31, 2023. The Employment Term shall be automatically extended for additional one-year periods unless, at least sixty (60) days prior to the end of the expiration of the Employment Term. Other From time to time, we may be involved in litigation relating to claims arising out of our operation in the normal course of business. As of June 30, 2018, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on results of our operations. |
Stockholders' Deficit
Stockholders' Deficit | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Stockholders' Deficit | NOTE 10– STOCKHOLDERS’ DEFICIT Preferred stock The preferred stock is designated Series A Convertible Preferred Stock. Each share of preferred stock has a par value of $.001 and a stated value of $1.00. Dividends are payable at the rate per share of 7% per annum cumulative based on the stated value. The Series A preferred shares have no voting rights, except as required by law. Each share of preferred stock is convertible based on the stated value at a conversion price of $20.83 at the option of the holder; provided, however, if a triggering event occurs, as defined in the document, the conversion price shall thereafter be reduced, and only reduced, to equal forty percent of the lowest VWAP during the thirty consecutive trading day period prior to the conversion date. As of June 30, 2018, the Company believes a triggering event has occurred. The beneficial ownership limitation attached to conversion is 4.99%, which can be decreased or increased, upon not less than 61 day’s notice to the Company, but in no event exceeding 19.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of common stock upon conversion of the preferred stock. After 36 months the Company has the right to redeem all, but not less than all, of the outstanding preferred shares in cash at a price equal to 130% of the stated value plus any accrued but unpaid dividends thereon. Undeclared cumulative preferred stock dividends were approximately $420,000 as of June 30, 2018. Common stock issued for services On June 18, 2018, the Company granted 1,500,000 shares of its common stock to the Company chief executive officer for services rendered. The shares were valued at $3,090,000, or $2.06 per share, based on the quoted trading price on the date of grant. In connection with these shares, the Company recorded stock-based compensation of $3,090,000. On June 18, 2018, the Company granted 600,000 shares of its common stock to two consultants for services rendered. The shares were valued at $1,236,000, or $2.06 per share, based on the quoted trading price on the date of grant. In connection with these shares, the Company recorded stock-based professional fees of $1,236,000. Common stock issued for acquisition In connection with the acquisition (See Note 3), the Company issued 1,500,000 unregistered shares of its common stock valued at $3,090,000, or $2.06 per share, the fair value of the Company’s common stock based on the quoted closing price of the Company’s common stock on the Closing Date. Warrants In connection with the Purchase Agreement (See Note 7 under Bellridge), the Lender was issued a warrant, with a term of two years, to purchase up to 4.75% of the fully-diluted outstanding Common Stock of the Company, for an aggregate purchase price of $100. Additionally, the placement agent was issued a warrant, with a term of two years, to purchase up to 4.75% of the fully-diluted outstanding Common Stock of the Company, for an aggregate purchase price of $100. Warrant activities for the six months ended June 30, 2018 are summarized as follows: Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Balance Outstanding December 31, 2017 - $ - - $ - Granted 1,329,548 0.00 1.97 Balance Outstanding June 30, 2018 1,329,548 $ 0.00 1.97 $ 3,988,644 Exercisable, June 30, 2018 1,329,548 $ 0.00 1.97 $ 3,988,644 |
Related Party Transactions and
Related Party Transactions and Balances | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions and Balances | NOTE 11– RELATED PARTY TRANSACTIONS AND BALANCES The Company executed a sublease agreement with an affiliate for office space for a one-year term. The sublease commenced on August 1, 2016 at a rate of $300 per month. The sublease was extended on August 1, 2017 and terminated on December 14, 2017, at which point the Company signed a new one-year term lease with the third-party landlord directly for the entire space previously occupied by the affiliate. Rent expense to the affiliate was $0 and $1,800 for the six months ended June 30, 2018 and 2017, respectively. The Company utilized an affiliate as one of the carriers, providing auto transportation, in the normal course of business. The carrier fees incurred to the affiliate were $5,400 for the six months ended June 30, 2018. At June 30, 2018, amount due to this affiliate amounted to $4,600 and is included in due to related parties on the accompanying consolidated balance sheets. During 2017 certain revenue and related costs initially recorded by the Company were deemed as affiliate revenue and related costs and were therefore reversed. This was caused by either customers who had not yet approved the Company as a vendor or remittances which were made to the affiliate directly. Such remittances were then remitted from the affiliate back to the Company. The outcome resulted in a net due to affiliate of $2,450 as of June 30, 2018 and $23,551 as of December 31, 2017. The Company utilized various ancillary services of the affiliate including software and certain technology without any charge by the affiliate. In connection with the acquisition of Prime (See Note 3), the Company acquired a balance of $14,019 that was due from the former majority owner of Prime. Pursuant to the terms of the SPA, the Company agreed to pay $489,174 in cash to the former majority owner of Prime who then advanced back the $489,174 to Prime. Additionally, during the period from acquisition date of Prime (June 18, 2018) to June 30, 2018, the Company repaid $5,000 of this advance. This advance is non-interest bearing and is due on demand. At June 30, 2018, amount due to related party amounted to $470,155. Subsequent to June 30, 2018, the Company repaid $200,900 of these advances. |
Concentrations
Concentrations | 6 Months Ended |
Jun. 30, 2018 | |
Risks and Uncertainties [Abstract] | |
Concentrations | NOTE 12 – CONCENTRATIONS For the six months ended June 30, 2018, two customers represented 32.3% (11.2% and 21.1%, respectively) of the Company’s total net revenues. The customer which amounts 21.1% of total revenues represents revenue from one Prime customer for the period from June 19, 2018 to June 30, 2018. For the six months ended June 30, 2017, no single customer accounted for more than 10% of the Company’s total net revenues. At June 30, 2018, one customer represented 80.5% of the Company’s net accounts receivable. As of December 31, 2017, two customers represented 12% and 10% of the Company’s net accounts receivable. For the six months ended June 30, 2018 and 2017, the Company had no carriers that were in excess of 10% of carrier fees. However, one carrier was approximately 20% of accounts payable. All revenues are derived from customers in the United States. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | NOTE 13 – SEGMENT INFORMATION During the three and six months ended June 30, 2017, and for the period from January 1, 2018 to June 18, 2018, the Company operated in one reportable business segment consisting of brokerage and logistic services such as transportation scheduling, routing and other value added services related to the transportation of automobiles and other freight. Since June 18, 2018, the Company operated in two reportable business segments - (1) the transportation of automobiles and other freight (the “Save On” segment) and (2) a segment which concentrates on deliveries for on-line retailers in New York, New Jersey and Pennsylvania (the “Prime” segment). The Company’s reportable segments were strategic business units that offered different products. They were managed separately based on the fundamental differences in their operations and locations. Information with respect to these reportable business segments for the three and six months ended June 30, 2018 and 2017 was as follows: For the Three Months ended June 30, For the Six Months ended June 30, 2018 2017 2018 2017 Revenues: Save On 1,132,008 $ 150,874 $ 2,309,771 $ 177,146 Prime 626,820 - 626,820 - 1,758,828 150,874 2,936,591 177,146 Depreciation and amortization: Save On - - - - Prime 173,629 - 173,629 - 173,629 - 173,629 - Interest expense Save On - - - - Prime 5,046 - 5,046 - Other (a) 238,256 31,437 386,509 31,474 243,302 31,437 391,555 31,474 Net loss Save On (107,545 ) (718,843 ) (46,620 ) (745,501 ) Prime (185,508 ) - (185,508 ) - Other (a) (14,217,861 ) - (14,217,861 ) - $ (14,510,914 ) $ (718,843 ) $ (14,449,989 ) $ (745,501 ) June 30, 2018 December 31, 2017 Identifiable long-lived tangible assets at June 30, 2018 and December 31, 2017 by segment Save On $ - $ - Prime 618,724 - $ 618,724 $ - (a) The Company does not allocate any general and administrative expense of its holding company activities to its reportable segments, because these activities are managed at the corporate level. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 14 – SUBSEQUENT EVENTS On July 25, 2018, the Company entered into a 10% Promissory Note with the spouse of the Company’s chief executive officer. Pursuant to this promissory note, the Company borrowed $270,000 and received net proceeds of $250,000, net of original issue discount of $20,000. This promissory note was repaid in August 2018. In August and September 2018, the Company borrowed an additional $440,000 from the Company’s chief executive officer and received net proceeds of $400,000, net of original issue discount of $40,000. This promissory note was repaid in September and October 2018. On August 1, 2018, the Company entered into a 10% Original Discount Senior Secured Demand Promissory Note with an investor (the “Promissory Note”). Pursuant to the Promissory Note, the Company borrowed $165,000 and received net proceeds of $150,000. The Note is payable on demand at any time prior to September 30, 2018. The Promissory Note is secured by the Company’s assets. On August 20, 2018, the Company repaid principal amounts of $165,000. Secured merchant loans On September 20, 2018, the Company entered into a secured Merchant Loan in the amount of $521,250 and received net proceeds of $375,000, net of original issue discount of $146,250. Pursuant to this Secured Merchant Loan, the Company is required to repay the noteholders by making daily payments of $3,724 on each business day until the loans amounts are paid in full. Each payment is deducted directly from the Company’s bank accounts. This Secured Merchant Loans is secured by the Company’s assets and are personally guaranteed by the former majority member of Prime. On September 27, 2018, the Company entered into a secured Merchant Loan in the amount of $209,850 and received net proceeds of $150,000, net of original issue discount of $59,850. Pursuant to this Secured Merchant Loan, the Company is required to repay the noteholders by making daily payments of $1,749 on each business day until the loans amounts are paid in full. Each payment is deducted directly from the Company’s bank accounts. This Secured Merchant Loans is secured by the Company’s assets and are personally guaranteed by the former majority member of Prime. On October 11, 2018, the Company entered into a secured Merchant Loan in the amount of $420,000 and received net proceeds of $300,000, net of original issue discount of $120,000. Pursuant to this Secured Merchant Loan, the Company is required to repay the noteholder by making daily payments of $3,000 on each business day until the loans amounts are paid in full. Each payment is deducted directly from the Company’s bank accounts. This Secured Merchant Loans is secured by the Company’s assets and are personally guaranteed by the former majority member of Prime. In October 2018, the Company issued 50,000 shares of its common stock to the related party lender in connection with loans made between July and October 2018. Subsequent to June 30, 2018, the Company defaulted on a convertible note payable (See Note 7) due to: i) default on the payment of monthly interest payments due, ii) default caused by the late filing of the Company’s report on Form 10-Q for the period ended June 30, 2018, and iii) default of filing of a registration statement. Upon an event of default, all principal, accrued interest, and liquating damages and penalties are due upon request of the lender at 125% of such amounts. As of the date of this report, the lender has not notified the Company of any amounts due under the default remedies provisions of the promissory note. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies and Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of presentation and principles of consolidation The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and disclosures necessary for comprehensive presentation of financial position, results of operations or cash flow. However, these unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these unaudited interim consolidated financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2017, and notes thereto included in the Company’s annual report on Form 10-K, filed on April 17, 2018. The Company follows the same accounting policies in the preparation of its annual and interim reports. The results of operations in interim periods are not necessarily an indication of operating results to be expected for the full year. The unaudited condensed consolidated financial statements of the Company include the accounts of TLSI and its wholly owned subsidiaries, Save On and Prime. All intercompany accounts and transactions have been eliminated in consolidation. |
Going Concern | Going concern The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. As reflected in the accompanying condensed consolidated financial statements, the Company had a net loss of $14,449,989 for the six months ended June 30, 2018. The net cash used in operations was $315,066 for the six months ended June 30, 2018. Additionally, the Company had an accumulated deficit, shareholders’ deficit, and a working capital deficit of $15,194,768, $7,809,126 and $13,098,304, respectively, at June 30, 2018. Furthermore, the Company failed to make a required maturity date payment of principal and interest on certain of its convertible debt instruments. As of the date of this report the lender has not notified the Company of default and has not exercised any of its remedies provided for in these notes. One of the remedies the lender may request is an immediate repayment of the loan at 125% of the principal balance, which would result in the recording of $106,250 of penalty expense and the related liability. Additionally, as of July 18, 2018 the Company is in default on a convertible note due to the late filing of this report on Form 10-Q among other events of default on this convertible note. Remedies this lender may request is an immediate repayment of the loan at 125% of the principal and interest balance, which would result in the recording of approximately $650,000 of penalty expense and the related liability and an increase in the interest rate to 24% annually. As of the date of this report this lender has not notified the Company of its intent to exercise any of its remedies provided for in this note. It is management’s opinion that these factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the issuance date of this report. Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. The Company is seeking to raise capital through additional debt and/or equity financings to fund its operations in the future. Although the Company has historically raised capital from sales of common shares and from the issuance of convertible promissory notes, there is no assurance that it will be able to continue to do so. If the Company is unable to raise additional capital or secure additional lending in the near future, management expects that the Company will need to curtail its operations. These consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
Use of Estimates | Use of estimates The preparation of the unaudited condensed consolidated financial statements, in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Significant estimates included in the accompanying consolidated financial statements and footnotes include the valuation of accounts receivable, the useful life of property and equipment, the valuation of intangible assets, assumptions used in assessing impairment of long-lived assets, estimates of current and deferred income taxes and deferred tax valuation allowances, the fair value of non-cash equity transactions, the valuation of derivative liabilities, and the fair value of assets acquired and liabilities assumed in the business acquisition. |
Fair Value of Financial Instruments | Fair value of financial instruments FASB ASC 820 — Fair Value Measurements and Disclosures , ● Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. ● Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. ● Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. The Company measures certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows at June 30, 2018 and December 31, 2017: At June 30, 2018 At December 31, 2017 Description Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Derivative liabilities — — $ 11,594,755 — — $ 601,615 A roll forward of the level 3 valuation financial instruments is as follows: For the Six Months ended June 30, 2018 Balance at December 31, 2017 $ 601,615 Initial valuation of derivative liabilities included in debt discount 1,487,788 Initial valuation of derivative liabilities included in derivative expense 6,839,065 Change in fair value included in derivative expense 2,666,287 Balance at June 30, 2018 $ 11,594,755 The Company accounts for its derivative financial instruments, consisting of certain conversion options embedded in our convertible instruments and warrants, at fair value using level 3 inputs. The Company determined the fair value of these derivative liabilities using the Black-Scholes option pricing model, binomial lattice models, or other accepted valuation practices. When determining the fair value of its financial assets and liabilities using these methods, the Company is required to use various estimates and unobservable inputs, including, among other things, expected terms of the instruments, expected volatility of its stock price, expected dividends, and the risk-free interest rate. Changes in any of the assumptions related to the unobservable inputs identified above may change the fair value of the instrument. Increases in expected term, anticipated volatility and expected dividends generally result in increases in fair value, while decreases in the unobservable inputs generally result in decreases in fair value. ASC 825-10 “Financial Instruments The carrying amounts reported in the balance sheets for cash, accounts receivable, accounts payable and accrued expenses approximate their fair values based on the short-term maturity of these instruments. The carrying amount of the Company’s convertible notes payable and promissory note obligations approximate fair value, as the terms of these instruments are consistent with terms available in the market for instruments with similar risk. |
Cash and Cash Equivalents | Cash and cash equivalents For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents. At June 30, 2018 and December 31, 2017, the Company did not have any cash equivalents. The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. At June 30, 2018, the Company had approximately $316,000 of cash in excess of FDIC limits. There were no balances in excess of FDIC insured levels as of December 31, 2017. The Company has not experienced any losses in such accounts through June 30, 2018. |
Accounts Receivable | Accounts receivable Accounts receivable are presented net of an allowance for doubtful accounts. The Company maintains allowances for doubtful accounts for estimated losses. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, a customer’s historical payment history, its current credit-worthiness and current economic trends. Accounts are written off after exhaustive efforts at collection. |
Property and Equipment | Property and equipment Property are stated at cost and are depreciated using the straight-line method over their estimated useful lives of five years. Leasehold improvements are depreciated over the shorter of the useful life or lease term including scheduled renewal terms. Maintenance and repairs are charged to expense as incurred. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company examines the possibility of decreases in the value of these assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. |
Impairment of Long-lived Assets | Impairment of long-lived assets In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. |
Segment Reporting | Segment reporting The Company uses “the management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operating decision maker is the chief executive officer of the Company, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. |
Derivative Financial Instruments | Derivative financial instruments The Company has certain financial instruments that are embedded derivatives associated with capital raises. The Company evaluates all its financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 810-10-05-4 and 815-40. This accounting treatment requires that the carrying amount of any embedded derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with the Company, the change in the fair value during the period is recorded as either other income or expense. Upon conversion, exercise or repayment, the respective derivative liability is marked to fair value at the conversion, repayment or exercise date and then the related fair value amount is reclassified to other income or expense as part of gain or loss on extinguishment. |
Revenue Recognition and Cost of Revenue | Revenue recognition and cost of revenue On January 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) Topic 605, Revenue Recognition. This ASC is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASC also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer service orders, including significant judgments. For the Company’s Save On business activities, the Company recognizes revenues and the related direct costs of such revenue which includes carrier fees and dispatch costs as of the date the freight is delivered by the carrier which is when the performance obligation is satisfied. Customer payments received prior to delivery are recorded as a deferred revenue liability and related carrier fees if paid prior to delivery are recorded as a deferred expense asset. In accordance with ASC Topic 606, the Company recognizes revenue on a gross basis. Our payment terms for corporate customers are net 30 days from acceptance of delivery and individual customers generally must pay in advance. The Company does not incur incremental costs obtaining service orders from our Save On customers, however, if the Company did, because all of the Save On customer’s contracts are less than a year in duration, any contract costs incurred would be expensed rather than capitalized. The Company’s adoption of this ASC, resulted in no cumulative effect at January 1, 2018 and no change prospectively to the Company’s results of operations or financial condition. The revenue that the Company recognizes arises from service orders it receives from its Save On customers. The Company’s performance obligations under these service orders correspond to each delivery of a vehicle that the Company makes for its customer under the service orders; as a result, each service order generally contains only one performance obligation based on the delivery to be completed. For the Company’s Prime business activities, the Company recognizes revenues and the related direct costs of such revenue which generally include compensation and related benefits, gas costs, insurance, parking and tolls, truck rental fees, and maintenance fees as of the date the freight is delivered which is when the performance obligation is satisfied. In accordance with ASC Topic 606, the Company recognizes revenue on a gross basis. Our payment terms are net seven days from acceptance of delivery. The Company does not incur incremental costs obtaining service orders from its Prime customers, however, if the Company did, because all of Prime’s customer contracts are less than a year in duration, any contract costs incurred would be expensed rather than capitalized. The revenue that the Company recognizes arises from deliveries of packages to business and residential locations on behalf of retailers. Primarily, the Company’s performance obligations under these service orders correspond to each delivery of packages that the Company makes to recipients on behalf of the retailers under the service agreements. Control of the delivery transfers to the recipient upon delivery. Once this occurs, the Company has satisfied its performance obligation and the Company recognizes revenue. |
Stock-based Compensation | Stock-based compensation Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Through March 31, 2018, pursuant to ASC 505-50 – “Equity-Based Payments to Non-Employees”, all share-based payments to non-employees, including grants of stock options, were recognized in the consolidated financial statements as compensation expense over the service period of the consulting arrangement or until performance conditions are expected to be met. Using a Black-Scholes valuation model, the Company periodically reassessed the fair value of non-employee options until service conditions are met, which generally aligns with the vesting period of the options, and the Company adjusts the expense recognized in the consolidated financial statements accordingly. In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which simplifies several aspects of the accounting for nonemployee share-based payment transactions by expanding the scope of the stock-based compensation guidance in ASC 718 to include share-based payment transactions for acquiring goods and services from non-employees. ASU No. 2018-07 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted, but entities may not adopt prior to adopting the new revenue recognition guidance in ASC 606. The Company early adopted ASU No. 2018-07 in the second quarter of 2018, and the adoption did not have any impact on its consolidated financial statements. |
Basic and Diluted Loss Per Share | Basic and diluted loss per share Pursuant to ASC 260-10-45, basic loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the periods presented. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Potentially dilutive common shares consist of common stock issuable for stock warrants (using the treasury stock method) and shares issuable for convertible debt (using the as-if converted method). These common stock equivalents may be dilutive in the future. Potentially dilutive common shares were excluded from the computation of diluted shares outstanding as they would have an anti-dilutive impact on the Company’s net losses and consisted of the following: June 30, 2018 June 30, 2017 Stock warrants 1,329,548 0 Convertible debt 3,158,465 135,091 Series A convertible preferred stock 6,666,667 198,800 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements On February 25, 2016, the FASB issued ASU No. 2016-02 (“ASU 2016-02”) to amend the accounting guidance for leases. The accounting applied by a lessor is largely unchanged under ASU 2016-02. However, the standard requires lessees to recognize lease assets and lease liabilities for leases classified as operating leases on the balance sheet. Lessees will recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it will recognize lease expense for such leases generally on a straight-line basis over the lease term. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and early adoption is permitted. The Company is currently assessing the impact of the guidance on its consolidated financial statements and notes to its consolidated financial statements. In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments in Part I of this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments in Part II of this Update do not require any transition guidance because those amendments do not have an accounting effect. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. There are currently no other accounting standards that have been issued but not yet adopted that we believe will have a significant impact on our consolidated financial position, results of operations or cash flows upon adoption. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies and Basis of Presentation (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis | The Company measures certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows at June 30, 2018 and December 31, 2017: At June 30, 2018 At December 31, 2017 Description Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Derivative liabilities — — $ 11,594,755 — — $ 601,615 |
Schedule of Reconciliation of Derivative Liability for Level 3 Inputs | A roll forward of the level 3 valuation financial instruments is as follows: For the Six Months ended June 30, 2018 Balance at December 31, 2017 $ 601,615 Initial valuation of derivative liabilities included in debt discount 1,487,788 Initial valuation of derivative liabilities included in derivative expense 6,839,065 Change in fair value included in derivative expense 2,666,287 Balance at June 30, 2018 $ 11,594,755 |
Schedule of Potentially Dilutive Shares Excluded from Computation of Diluted Shares Outstanding | Potentially dilutive common shares were excluded from the computation of diluted shares outstanding as they would have an anti-dilutive impact on the Company’s net losses and consisted of the following: June 30, 2018 June 30, 2017 Stock warrants 1,329,548 0 Convertible debt 3,158,465 135,091 Series A convertible preferred stock 6,666,667 198,800 |
Acquisition (Tables)
Acquisition (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Schedule of Fair Value of Assets and Liabilities Assumed | Based upon the purchase price allocation, the following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition: Cash $ 38,198 Accounts receivable 1,140,257 Prepaid expensed and other current assets 143,258 Due from related party 14,019 Property and equipment, net 623,923 Intangible asset 5,123,071 Total assets acquired at fair value 7,082,726 Notes payable 2,224,242 Accounts payable and accrued expenses 758,887 Insurance payable 520,423 Total liabilities assumed 3,503,552 Total purchase consideration $ 3,579,174 |
Schedule of Pro Forma Consolidated Results of Operations | The following unaudited pro forma consolidated results of operations have been prepared as if the acquisition of Prime had occurred as of the beginning of the following periods: Six Months Ended June 30, 2018 Six Months Ended June 30, 2017 Net Revenues $ 7,121,711 $ 2,260,514 Net Loss $ (15,828,180 ) $ (1,099,815 ) Net Loss per Share $ (7.86 ) $ (0.53 ) |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable | The following table presents the accounts receivable: June 30, 2018 December 31, 2017 Accounts receivable $ 1,813,031 $ 254,150 Allowance for doubtful accounts - - Accounts Receivable $ 1,813,031 $ 254,150 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | At June 30, 2018 and December 31, 2017, property and equipment consisted of the following: Useful Life 2018 2017 Delivery trucks and vehicles 5 years $ 623,923 $ - Less: accumulated depreciation (5,199 ) - Property and equipment, net $ 618,724 $ - |
Intangible Asset (Tables)
Intangible Asset (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Asset | At June 30, 2018 and December 31, 2017, intangible asset consisted of the following: Useful life June 30, 2018 December 31, 2017 Customer contract 1 year $ 5,123,071 - 5,123,071 - Less: accumulated amortization (168,430 ) - $ 4,954,641 $ - |
Schedule of Future Amortization Expense | Amortization of intangible assets attributable to future periods is as follows: Year ending June 30: Amount 2019 $ 4,954,641 $ 4,954,641 |
Convertible Promissory Notes _2
Convertible Promissory Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Fair Value of Derivative Liabilities Estimated Using Black-Sholes Valuation Model | During the six months ended June 30, 2018, the fair value of the derivative liabilities was estimated using the Black-Sholes valuation model, Binomial valuation model, and the Monte-Carlo simulation model with the following assumptions: Dividend rate 0 Term (in years) 0.01 to 2.00 years Volatility 261.2% to 307.7 % Risk-free interest rate 1.32% to 2.11 % |
Schedule of Convertible Promissory Notes | At June 30, 2018 and December 31, 2017, convertible promissory notes are as follows: June 30, 2018 December 31, 2017 Principal amounts $ 3,007,503 $ 510,000 Less: unamortized debt discount (2,402,522 ) (237,384 ) Convertible notes payable, net 604,981 272,616 Less: current portion of convertible notes payable (500,918 ) - Convertible notes payable, net – long-term $ 104,063 $ 272,616 |
Notes Payable (Tables)
Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | At June 30, 2018 and December 31, 2017, notes payable consisted of the following: June 30, 2018 December 31, 2017 Principal amounts $ 1,612,836 $ - Less: current portion of notes payable (1,432,712 ) - Notes payable – long-term $ 180,124 $ - |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Summary of Warrant Activities | Warrant activities for the six months ended June 30, 2018 are summarized as follows: Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Balance Outstanding December 31, 2017 - $ - - $ - Granted 1,329,548 0.00 1.97 Balance Outstanding June 30, 2018 1,329,548 $ 0.00 1.97 $ 3,988,644 Exercisable, June 30, 2018 1,329,548 $ 0.00 1.97 $ 3,988,644 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Information by Reportable Segment | Information with respect to these reportable business segments for the three and six months ended June 30, 2018 and 2017 was as follows: For the Three Months ended June 30, For the Six Months ended June 30, 2018 2017 2018 2017 Revenues: Save On 1,132,008 $ 150,874 $ 2,309,771 $ 177,146 Prime 626,820 - 626,820 - 1,758,828 150,874 2,936,591 177,146 Depreciation and amortization: Save On - - - - Prime 173,629 - 173,629 - 173,629 - 173,629 - Interest expense Save On - - - - Prime 5,046 - 5,046 - Other (a) 238,256 31,437 386,509 31,474 243,302 31,437 391,555 31,474 Net loss Save On (107,545 ) (718,843 ) (46,620 ) (745,501 ) Prime (185,508 ) - (185,508 ) - Other (a) (14,217,861 ) - (14,217,861 ) - $ (14,510,914 ) $ (718,843 ) $ (14,449,989 ) $ (745,501 ) June 30, 2018 December 31, 2017 Identifiable long-lived tangible assets at June 30, 2018 and December 31, 2017 by segment Save On $ - $ - Prime 618,724 - $ 618,724 $ - (a) The Company does not allocate any general and administrative expense of its holding company activities to its reportable segments, because these activities are managed at the corporate level. |
Organization and Business Ope_2
Organization and Business Operations (Details Narrative) - $ / shares | Mar. 30, 2017 | Jun. 30, 2018 | Jun. 18, 2018 | Dec. 31, 2017 |
Percentage of controlling interest retained | 80.00% | |||
Acquisition of business entity, percentage | 100.00% | |||
Proposed increase of preferred stock, par value | $ 0.001 | $ 0.001 | ||
Reverse stock split, ratio | 1 for 30 | |||
July 16, 2018 [Member] | ||||
Proposed increase of preferred stock | 1,000,000 | |||
Proposed increase of preferred stock, par value | $ 0.001 | |||
Reverse stock split, ratio | 1-for-250 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies and Basis of Presentation (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Net loss | $ (14,510,914) | $ (718,843) | $ (14,449,989) | $ (745,501) | |
Net cash used in operations | (315,066) | $ (64,444) | |||
Accumulated deficit | (15,194,768) | (15,194,768) | $ (744,779) | ||
Shareholders' deficit | (7,809,126) | (7,809,126) | $ (775,137) | ||
Working capital deficit | $ 13,098,304 | $ 13,098,304 | |||
Principal balance immediate repayment percentage | 125.00% | 125.00% | |||
Penalty expense | $ 106,250 | ||||
Cash in excess of FDIC limits | $ 316,000 | $ 316,000 | |||
Property and equipment, estimated useful lives | 5 years | ||||
Lender [Member] | |||||
Principal balance immediate repayment percentage | 125.00% | 125.00% | |||
Penalty expense | $ 650,000 | ||||
Increased interest rate | 24.00% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies and Basis of Presentation - Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Derivative liabilities | $ 11,594,755 | $ 601,615 |
Level 1 [Member] | ||
Derivative liabilities | ||
Level 2 [Member] | ||
Derivative liabilities | ||
Level 3 [Member] | ||
Derivative liabilities | $ 11,594,755 | $ 601,615 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies and Basis of Presentation - Schedule of Reconciliation of Derivative Liability for Level 3 Inputs (Details) - Level 3 [Member] | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Balance at December 31, 2017 | $ 601,615 |
Initial valuation of derivative liabilities included in debt discount | 1,487,788 |
Initial valuation of derivative liabilities included in derivative expense | 6,839,065 |
Change in fair value included in derivative expense | 2,666,287 |
Balance at June 30, 2018 | $ 11,594,755 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies and Basis of Presentation - Schedule of Potentially Dilutive Shares Excluded from Computation of Diluted Shares Outstanding (Details) - shares | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Stock Warrants [Member] | ||
Antidilutive securities excluded from computation of earnings per share | 1,329,548 | 0 |
Convertible Debt [Member] | ||
Antidilutive securities excluded from computation of earnings per share | 3,158,465 | 135,091 |
Series A Convertible Preferred Stockt [Member] | ||
Antidilutive securities excluded from computation of earnings per share | 6,666,667 | 198,800 |
Acquisition (Details Narrative)
Acquisition (Details Narrative) - USD ($) | Jun. 18, 2018 | Jun. 30, 2018 |
Business Combinations [Abstract] | ||
Acquisition of business entity, percentage | 100.00% | |
Payment of cash under SPA | $ 489,174 | |
Number of shares issued in exchange | 1,500,000 | |
Shares issued to sellers, description | On April 15, 2019, the Company shall issue to the sellers such aggregate number of True-up Stock equal to (i) the True-Up Value minus $3,750,000 divided by (ii) the lower of (A) $2.50, (B) the closing price of the Company's common stock on April 15, 2019 or (C) the lowest price per share (as adjusted for any stock splits) paid upon conversion of the Company's series A convertible preferred stock on or prior to April 15, 2019 | |
Number of unregistered shares issued for acquistion | 1,500,000 | |
Number of unregistered shares issued for acquistion, value | $ 3,090,000 | |
Number of shares issued price per share | $ 2.06 | |
Purchase price paid in excess of assets acquired | $ 5,123,071 | |
Legal fees related to acquisition | 24,000 | |
Professional fees related to acquisition | $ 1,236,000 | |
Shares issued for services in connection with acquisition | 600,000 | |
Percentage of voting interest in exchange | 90.00% | |
Cash in additional working capital | $ 267,000 |
Acquisition - Schedule of Fair
Acquisition - Schedule of Fair Value of Assets and Liabilities Assumed (Details) - USD ($) | Jun. 18, 2018 | Jun. 30, 2018 |
Business Combinations [Abstract] | ||
Cash | $ 38,198 | |
Accounts receivable | 1,140,257 | |
Prepaid expenses and other current assets | 143,258 | |
Due from related party | 14,019 | $ 14,019 |
Property and equipment, net | 623,923 | |
Intangible asset | 5,123,071 | |
Total assets acquired at fair value | 7,082,726 | |
Notes payable | 2,224,242 | |
Accounts payable and accrued expenses | 758,887 | |
Insurance payable | 520,423 | |
Total liabilities assumed | 3,503,552 | |
Total purchase consideration | $ 3,579,174 |
Acquisition - Schedule of Pro F
Acquisition - Schedule of Pro Forma Consolidated Results of Operations (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Business Combinations [Abstract] | ||
Net Revenues | $ 7,121,711 | $ 2,260,514 |
Net Loss | $ (15,828,180) | $ (1,099,815) |
Net Loss per Share | $ (7.86) | $ (0.53) |
Accounts Receivable - Schedule
Accounts Receivable - Schedule of Accounts Receivable (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Receivables [Abstract] | ||
Accounts receivable | $ 1,813,031 | $ 254,150 |
Allowance for doubtful accounts | ||
Accounts Receivable | $ 1,813,031 | $ 254,150 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 5,199 | $ 0 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Property and equipment, useful life | 5 years | |
Less: accumulated depreciation | $ (5,199) | |
Property and equipment, net | 618,724 | |
Delivery Trucks and Vehicles [Member] | ||
Property and equipment, gross | $ 623,923 |
Intangible Asset - Schedule of
Intangible Asset - Schedule of Intangible Asset (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Intangible assets, gross | $ 5,123,071 | |
Less: accumulated amortization | (168,430) | |
Intangible assets, net | $ 4,954,641 | |
Customer Contract [Member] | ||
Intangible assets, useful life | 1 year | |
Intangible assets, gross | $ 5,123,071 |
Intangible Asset - Schedule o_2
Intangible Asset - Schedule of Future Amortization Expense (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2,019 | $ 4,954,641 | |
Amortization of intangible assets | $ 4,954,641 |
Convertible Promissory Notes _3
Convertible Promissory Notes Payable (Details Narrative) - USD ($) | Jun. 18, 2018 | Jun. 02, 2018 | Apr. 25, 2018 | Jan. 03, 2018 | Jun. 30, 2017 | Apr. 25, 2017 | Mar. 31, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Aug. 08, 2017 | Jun. 02, 2017 |
Proceeds from convertible promissory note | $ 2,497,503 | $ 180,000 | ||||||||||||
Initial derivative expense | $ (9,721,800) | $ (613,261) | (9,505,352) | (613,170) | ||||||||||
Notes payable | 1,612,836 | 1,612,836 | ||||||||||||
Payments of debt issuance costs | 1,009,714 | |||||||||||||
Amortization of debt discounts | 206,611 | 28,248 | $ 332,364 | $ 28,283 | ||||||||||
Weighted average interest rate | 21.20% | 10.00% | ||||||||||||
RDW Capital, LLC [Member] | ||||||||||||||
Debt, principal balance | $ 240,000 | 240,000 | 240,000 | $ 240,000 | $ 240,000 | 240,000 | ||||||||
Purchase price | 30,000 | $ 30,000 | $ 30,000 | |||||||||||
Proceeds from convertible promissory note | $ 30,000 | |||||||||||||
Debt original issue discount | 0 | 0 | 104,137 | |||||||||||
Debt instrument interest rate | 12.00% | 12.00% | 12.00% | |||||||||||
Percentage of common stock option of lowest VWAP | 50.00% | |||||||||||||
Increased interest rate per month | 2.00% | |||||||||||||
Repayment of loan percentage | 125.00% | |||||||||||||
Penalty expenses and related liability | $ 60,000 | |||||||||||||
Fair value of embedded conversion option derivatives | $ 527,477 | $ 527,477 | $ 527,477 | |||||||||||
Advance from lender | 15,000 | $ 15,000 | ||||||||||||
Derivative liabilities | $ 497,477 | $ 497,477 | $ 497,477 | |||||||||||
Convertible promissory notes | 240,000 | 240,000 | 120,986 | |||||||||||
Debt discount relating to bifurcated derivative | 0 | 0 | 14,877 | |||||||||||
Note, Warrant and Placement Warrant [Member] | Bellridge Capital, LLC. [Member] | ||||||||||||||
Debt original issue discount | $ 1,487,788 | |||||||||||||
Fair value of embedded conversion option derivatives | 8,326,853 | |||||||||||||
Initial derivative expense | 6,839,065 | |||||||||||||
Red Diamond Partners, LLC [Member] | ||||||||||||||
Debt, principal balance | 270,000 | 270,000 | 270,000 | |||||||||||
Debt original issue discount | 9,082 | 9,082 | 118,370 | |||||||||||
Increased interest rate per month | 1.50% | 1.50% | ||||||||||||
Repayment of loan percentage | 125.00% | |||||||||||||
Notes payable | $ 260,918 | $ 260,918 | 151,630 | |||||||||||
Red Diamond Partners, LLC [Member] | Convertible Promissory Note [Member] | ||||||||||||||
Payment of principal and interest | $ 85,000 | $ 100,000 | ||||||||||||
Penalty expenses and related liability | $ 46,250 | |||||||||||||
Securities Purchase Agreement [Member] | Red Diamond Partners, LLC [Member] | ||||||||||||||
Purchase price | $ 350,000 | |||||||||||||
Transaction costs | $ 5,000 | |||||||||||||
Proceeds from convertible promissory note | 265,000 | |||||||||||||
Debt instrument interest rate | 12.00% | |||||||||||||
Percentage of common stock option of lowest VWAP | 65.00% | |||||||||||||
Convertible promissory notes default amount | $ 25,000 | |||||||||||||
Fair value of embedded conversion option derivatives | 376,841 | |||||||||||||
Initial derivative expense | $ 111,841 | |||||||||||||
Securities Purchase Agreement [Member] | Red Diamond Partners, LLC [Member] | Maximum [Member] | ||||||||||||||
Debt, principal balance | 355,000 | |||||||||||||
Securities Purchase Agreement [Member] | Red Diamond Partners, LLC [Member] | Initial Tranche [Member] | ||||||||||||||
Debt, principal balance | 100,000 | |||||||||||||
Proceeds from convertible promissory note | 95,000 | |||||||||||||
Debt original issue discount | $ 5,000 | |||||||||||||
Note maturity date | Apr. 25, 2018 | |||||||||||||
Each tranche matures term | Each tranche will matures 1 year after the date of such funding. | |||||||||||||
Securities Purchase Agreement [Member] | Red Diamond Partners, LLC [Member] | Second Tranche [Member] | ||||||||||||||
Debt, principal balance | $ 85,000 | |||||||||||||
Securities Purchase Agreement [Member] | Red Diamond Partners, LLC [Member] | Third Tranche [Member] | ||||||||||||||
Debt, principal balance | $ 85,000 | |||||||||||||
Securities Purchase Agreement [Member] | Red Diamond Partners, LLC [Member] | Fourth Tranche [Member] | ||||||||||||||
Debt, principal balance | $ 85,000 | |||||||||||||
Securities Purchase Agreement [Member] | Lender [Member] | Bellridge Capital, LLC. [Member] | ||||||||||||||
Debt, principal balance | 2,497,503 | |||||||||||||
Purchase price | 1,665,000 | |||||||||||||
Debt original issue discount | $ 832,503 | |||||||||||||
Note maturity date | Dec. 18, 2019 | |||||||||||||
Debt instrument interest rate | 10.00% | |||||||||||||
Percentage of common stock option of lowest VWAP | 65.00% | |||||||||||||
Payments of debt issuance costs | $ 177,212 | |||||||||||||
Debt interest monthly payments | $ 20,813 | |||||||||||||
Debt conversion price per share | $ 1.50 | |||||||||||||
Warrant term | 2 years | |||||||||||||
Percentage of warrant purchase | 4.75% | |||||||||||||
Aggregate purchase price of warrant | $ 100 | |||||||||||||
Proceeds from subsequent offering | $ 5,000,000 | |||||||||||||
Proceeds from subsequent offering description | Gross proceeds of at least $5,000,000, at any time upon ten (10) days written notice to the Holder, but subject to the Holder's conversion rights set forth in the Purchase Agreement, then the Company shall use 20% of the gross proceeds of the Subsquent Offering and shall make payment to the Holder of an amount in cash equal to the product of (i) the sum of (x) the then outstanding principal amount of this Note and (y) all accrued but unpaid interest, multiplied by (ii) (x) 110%, if the Prepayment Date is within 90 days of the date hereof the Closing Date (as defined in the Purchase Agreement), or (y) 125%, if the Prepayment Date is after the 90th day following the Closing Date, to which calculated amount the Company shall add all other amounts owed pursuant to this Note, including, but not limited to, all Late Fees and liquidated damages. | |||||||||||||
Registration rights agreement description | Company shall pay to each Holder an amount in cash, as partial liquidated damages and not as a penalty, equal to the product of one percent (1%) multiplied by the aggregate subscription amount paid by the Holder pursuant to the Purchase Agreement. Subsequent to the ninetieth day from such default date, the one percent (1%) penalty described in the foregoing sentence shall increase to two percent (2%), with an aggregate cap of twenty percent (20%) per annum. If the Company fails to pay any of these partial liquidated damages in full within seven (7) days after the date payable, the Company will pay interest thereon at a rate of 18% per annum to the Holder, | |||||||||||||
Securities Purchase Agreement [Member] | Placement Agent [Member] | Bellridge Capital, LLC. [Member] | ||||||||||||||
Payments of debt issuance costs | $ 120,000 | |||||||||||||
Warrant term | 2 years | |||||||||||||
Percentage of warrant purchase | 4.75% | |||||||||||||
Aggregate purchase price of warrant | $ 100 |
Convertible Promissory Notes _4
Convertible Promissory Notes Payable - Schedule of Fair Value of Derivative Liabilities Estimated Using Black-Sholes Valuation Model (Details) | 6 Months Ended |
Jun. 30, 2018 | |
Dividend Rate [Member] | |
Fair value derivative liabilities percentage | 0.00% |
Expected Term [Member] | Minimum [Member] | |
Fair value derivative liabilities term | 4 days |
Expected Term [Member] | Maximum [Member] | |
Fair value derivative liabilities term | 2 years |
Volatility [Member] | Minimum [Member] | |
Fair value derivative liabilities percentage | 261.20% |
Volatility [Member] | Maximum [Member] | |
Fair value derivative liabilities percentage | 307.70% |
Risk Free Interest Rate [Member] | Minimum [Member] | |
Fair value derivative liabilities percentage | 1.32% |
Risk Free Interest Rate [Member] | Maximum [Member] | |
Fair value derivative liabilities percentage | 2.11% |
Convertible Promissory Notes _5
Convertible Promissory Notes Payable - Schedule of Convertible Promissory Notes (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Less: current portion of convertible notes payable | $ (500,918) | $ (272,616) |
Convertible notes payable, net – long-term | 104,063 | |
Convertible Promissory Notes [Member] | ||
Principal amounts | 3,007,503 | 510,000 |
Less: unamortized debt discount | (2,402,522) | (237,384) |
Convertible notes payable, net | 604,981 | 272,616 |
Less: current portion of convertible notes payable | (500,918) | |
Convertible notes payable, net – long-term | $ 104,063 | $ 272,616 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | Jun. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 18, 2018 | Dec. 31, 2017 |
Notes payable liabilities assumed | $ 3,503,552 | ||||
Payment of notes payable | $ 611,406 | ||||
Repayment of related party notes | $ 5,000 | ||||
Notes payable | 1,612,836 | 1,612,836 | |||
Secured Merchant Loans [Member] | |||||
Notes payable liabilities assumed | 944,281 | 944,281 | |||
Payment of notes payable | 79,152 | ||||
Notes payable, related parties | 865,129 | 865,129 | |||
Repayment of related party notes | 315,130 | ||||
Promissory Notes [Member] | Former Members of Prime [Member] | |||||
Notes payable liabilities assumed | 459,750 | 459,750 | |||
Payment of notes payable | 459,750 | ||||
Notes payable, related parties | 0 | 0 | |||
Promissory Notes [Member] | Entities or Individuals [Member] | |||||
Notes payable liabilities assumed | 297,005 | 297,005 | |||
Payment of notes payable | 65,000 | 114,980 | |||
Notes payable | $ 232,005 | $ 232,005 | |||
Promissory Notes [Member] | Minimum [Member] | Former Members of Prime [Member] | |||||
Effective interest rate | 7.00% | 7.00% | |||
Promissory Notes [Member] | Minimum [Member] | Entities or Individuals [Member] | |||||
Effective interest rate | 7.00% | 7.00% | |||
Promissory Notes [Member] | Maximum [Member] | Former Members of Prime [Member] | |||||
Effective interest rate | 10.00% | 10.00% | |||
Promissory Notes [Member] | Maximum [Member] | Entities or Individuals [Member] | |||||
Effective interest rate | 10.00% | 10.00% | |||
Equipment Notes Payable [Member] | |||||
Notes payable liabilities assumed | $ 523,207 | $ 523,207 | |||
Payment of notes payable | 7,505 | 56,852 | |||
Notes payable | $ 515,701 | $ 515,701 | |||
Equipment Notes Payable [Member] | Minimum [Member] | |||||
Effective interest rate | 6.00% | 6.00% | |||
Equipment Notes Payable [Member] | Maximum [Member] | |||||
Effective interest rate | 9.40% | 9.40% |
Notes Payable - Schedule of Not
Notes Payable - Schedule of Notes Payable (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Debt Disclosure [Abstract] | ||
Principal amounts | $ 1,612,836 | |
Less: current portion of notes payable | (1,432,712) | |
Notes payable – long-term | $ 180,124 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | Jun. 18, 2018 | Jun. 30, 2018 |
Sublease agreement office space, term | 1 year | |
Sublease commenced per month value | $ 300 | |
Lease extended date | Aug. 1, 2017 | |
Lease expiration date | Dec. 14, 2017 | |
Monthly rent under the renewed lease plus maintenance charges and taxes | $ 1,600 | |
Reverse stock-split | 1 for 30 | |
Employment Agreement [Member] | ||
Executive's base salary | $ 520,000 | |
Executive's base salary description | The executive's base salary will increase by $260,000 per year upon (i) Prime achieving revenue of $20 million on an annualized basis (the "Initial Target Goal") for four consecutive weeks; and (ii) each time Prime achieves revenue of an additional $10 million increment above the Initial Target Goal (i.e., $30 million, $40 million, $50 million, etc.) on an annualized basis for four consecutive weeks. Executive's base salary shall be subject to review annually by the Manager and may be increased (but not decreased). | |
Maximum [Member] | ||
Common stock ownership, percentage | 99.00% | |
Minimum [Member] | ||
Common stock ownership, percentage | 80.00% |
Stockholders' Deficit (Details
Stockholders' Deficit (Details Narrative) - USD ($) | Jun. 18, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 |
Preferred stock, stated value | $ 0.001 | $ 0.001 | $ 0.001 | |||
Number of stock issued for service rendered | 600,000 | |||||
Shares issued, price per share | $ 2.06 | |||||
Stock-based professional fees | $ 1,328,658 | $ 83,319 | $ 1,373,993 | $ 114,969 | ||
Number of unregistered shares issued for acquistion | 1,500,000 | |||||
Value of shares issued for acquisition | $ 3,090,000 | |||||
Chief Executive Officer [Member] | ||||||
Number of stock issued for service rendered | 1,500,000 | |||||
Value of stock issued for service rendered | $ 3,090,000 | |||||
Shares issued, price per share | $ 2.06 | |||||
Stock-based compensation | $ 3,090,000 | |||||
Two Consultants [Member] | ||||||
Number of stock issued for service rendered | 600,000 | |||||
Value of stock issued for service rendered | $ 1,236,000 | |||||
Shares issued, price per share | $ 2.06 | |||||
Stock-based professional fees | $ 1,236,000 | |||||
Lender [Member] | Purchase Agreement [Member] | ||||||
Warrants expiration term | 2 years | |||||
Aggregate purchase price of warrants | $ 100 | |||||
Lender [Member] | Purchase Agreement [Member] | Maximum [Member] | ||||||
Percentage of fully diluted outstanding common stock | 4.75% | |||||
Placement Agent [Member] | Purchase Agreement [Member] | ||||||
Warrants expiration term | 2 years | |||||
Aggregate purchase price of warrants | $ 100 | |||||
Placement Agent [Member] | Purchase Agreement [Member] | Maximum [Member] | ||||||
Percentage of fully diluted outstanding common stock | 4.75% | |||||
Series A Convertible Preferred Stock [Member] | ||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | ||||
Preferred stock, stated value | $ 1 | $ 1 | ||||
Dividends payable rate | 7.00% | 7.00% | ||||
Preferred Stock [Member] | ||||||
Dividends payable rate | 130.00% | 130.00% | ||||
Debt conversion price, per share | $ 20.83 | $ 20.83 | ||||
Debt conversion beneficial ownership, percent | 4.99% | |||||
Common Stock [Member] | ||||||
Debt conversion beneficial ownership, percent | 19.99% | |||||
Cumulative Preferred Stock [Member] | ||||||
Undeclared cumulative preferred stock dividends | $ 420,000 |
Stockholders' Defecit - Summary
Stockholders' Defecit - Summary of Warrant Activities (Details) - Warrant [Member] | 6 Months Ended |
Jun. 30, 2018USD ($)$ / sharesshares | |
Number of Warrants Balance Outstanding December 31, 2017 | shares | |
Number of Warrants Granted | shares | 1,329,548 |
Number of Warrants Balance Outstanding June 30, 2018 | shares | 1,329,548 |
Number of Warrants Exercisable, June 30, 2018 | shares | 1,329,548 |
Weighted Average Exercise Price Balance Outstanding December 31, 2017 | $ / shares | |
Weighted Average Exercise Price Granted | $ / shares | 0 |
Weighted Average Exercise Price Balance Outstanding June 30, 2018 | $ / shares | 0 |
Weighted Average Exercise Price Exercisable, June 30, 2018 | $ / shares | $ 0 |
Weighted Average Remaining Contractual Term (Years) Balance Outstanding December 31, 2017 | 0 years |
Weighted Average Remaining Contractual Term (Years) Granted | 1 year 11 months 19 days |
Weighted Average Remaining Contractual Term (Years) Balance Outstanding June 30, 2018 | 1 year 11 months 19 days |
Weighted Average Remaining Contractual Term (Years) Exercisable, June 30, 2018 | 1 year 11 months 19 days |
Aggregate Intrinsic Value Balance Outstanding December 31, 2017 | $ | |
Aggregate Intrinsic Value Balance Outstanding June 30, 2018 | $ | 3,988,644 |
Aggregate Intrinsic Value Exercisable, June 30, 2018 | $ | $ 3,988,644 |
Related Party Transactions an_2
Related Party Transactions and Balances (Details Narrative) - USD ($) | Jun. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 18, 2018 | Dec. 31, 2017 |
Related Party Transactions [Abstract] | |||||||
Sublease agreement office space, term | 1 year | ||||||
Sublease commenced per month value | $ 300 | ||||||
Lease extended date | Aug. 1, 2017 | ||||||
Lease expiration date | Dec. 14, 2017 | ||||||
Rent expenses - affiliate | $ 900 | $ 1,800 | |||||
Carrier fees - related party affiliate | 5,400 | ||||||
Due to affiliate, current | $ 4,600 | 4,600 | 4,600 | ||||
Due to affiliate, net | 2,450 | 2,450 | 2,450 | $ 23,551 | |||
Acquired balance due from former majority owner | 14,019 | 14,019 | 14,019 | $ 14,019 | |||
Payment of cash acquired | 489,174 | ||||||
Cash paid for acquisition | 489,174 | ||||||
Repayment of related party debt | 5,000 | ||||||
Due to related party | 470,155 | 470,155 | 470,155 | ||||
Advance amount paid to related party | $ 200,900 | $ 200,900 | $ 200,900 |
Concentrations (Details Narrati
Concentrations (Details Narrative) | Jun. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 |
Accounts Payable [Member] | ||||
Concentration risk, percentage | 10.00% | 10.00% | ||
Two Customer [Member] | Sales Revenue, Net [Member] | ||||
Concentration risk, percentage | 32.30% | |||
Customer One [Member] | Sales Revenue, Net [Member] | ||||
Concentration risk, percentage | 11.20% | |||
Customer One [Member] | Accounts Receivable [Member] | ||||
Concentration risk, percentage | 12.00% | |||
Customer Two [Member] | Sales Revenue, Net [Member] | ||||
Concentration risk, percentage | 21.10% | |||
One Prime Customer [Member] | Sales Revenue, Net [Member] | ||||
Concentration risk, percentage | 21.10% | |||
No Single Customer [Member] | Sales Revenue, Net [Member] | ||||
Concentration risk, percentage | 10.00% | |||
One Customer [Member] | Accounts Receivable [Member] | ||||
Concentration risk, percentage | 80.50% | |||
Customer Two [Member] | Accounts Receivable [Member] | ||||
Concentration risk, percentage | 10.00% | |||
One Carrier [Member] | Accounts Payable [Member] | ||||
Concentration risk, percentage | 20.00% |
Segment Information (Details Na
Segment Information (Details Narrative) - Integer | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2018 | Jun. 18, 2018 | Jun. 30, 2017 | |
Number of reportable segments | 1 | 1 | 1 | |
Since June 18, 2018 [Member] | ||||
Number of reportable segments | 2 |
Segment Information - Schedule
Segment Information - Schedule of Information by Reportable Segment (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | ||
Revenues | $ 1,758,828 | $ 150,874 | $ 2,936,591 | $ 177,146 | ||
Depreciation and amortization | 173,629 | 173,629 | ||||
Interest expense | 243,302 | 31,437 | 391,555 | 31,474 | ||
Net loss | (14,510,914) | (718,843) | (14,449,989) | (745,501) | ||
Identifiable long-lived tangible assets | 618,724 | 618,724 | ||||
Save On [Member] | ||||||
Revenues | 1,132,008 | 150,874 | 2,309,771 | 177,146 | ||
Depreciation and amortization | ||||||
Interest expense | ||||||
Net loss | (107,545) | (718,843) | (46,620) | (745,501) | ||
Identifiable long-lived tangible assets | ||||||
Prime [Member] | ||||||
Revenues | 626,820 | 626,820 | ||||
Depreciation and amortization | 173,629 | 173,629 | ||||
Interest expense | 5,046 | 5,046 | ||||
Net loss | (185,508) | (185,508) | ||||
Identifiable long-lived tangible assets | 618,724 | 618,724 | ||||
Other [Member] | ||||||
Interest expense | [1] | 238,256 | 31,437 | 386,509 | 31,474 | |
Net loss | [1] | $ (14,217,861) | $ (14,217,861) | |||
[1] | The Company does not allocate any general and administrative expense of its holding company activities to its reportable segments, because these activities are managed at the corporate level. |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Oct. 11, 2018 | Sep. 27, 2018 | Sep. 20, 2018 | Aug. 20, 2018 | Aug. 02, 2018 | Jul. 25, 2018 | Oct. 31, 2018 | Sep. 30, 2018 | Aug. 31, 2018 | Jun. 30, 2018 |
Debt instrument, debt default, description | The Company defaulted on a convertible note payable (See Note 7) due to: i) default on the payment of monthly interest payments due, ii) default caused by the late filing of the Company's report on Form 10-Q for the period ended June 30, 2018, and iii) default of filing of a registration statement. Upon an event of default, all principal, accrued interest, and liquating damages and penalties are due upon request of the lender at 125% of such amounts. As of the date of this report, the lender has not notified the Company of any amounts due under the default remedies provisions of the promissory note. | |||||||||
Subsequent Event [Member] | 10% Promissory Note [Member] | Spouse of Company's CEO [Member] | ||||||||||
Debt instrument interest rate | 10.00% | |||||||||
Convertible promissory notes | $ 270,000 | |||||||||
Proceeds from promissory notes | 250,000 | |||||||||
Debt original issue discount | $ 20,000 | |||||||||
Note maturity description | This promissory note was repaid in August 2018. | |||||||||
Subsequent Event [Member] | 10% Promissory Note [Member] | Chief Executive Officer [Member] | ||||||||||
Convertible promissory notes | $ 440,000 | $ 440,000 | ||||||||
Proceeds from promissory notes | 400,000 | 400,000 | ||||||||
Debt original issue discount | $ 40,000 | $ 40,000 | ||||||||
Note maturity description | This promissory note was repaid in September and October 2018. | This promissory note was repaid in September and October 2018. | ||||||||
Subsequent Event [Member] | 10% Original Discount Senior Secured Demand Promissory Note [Member] | ||||||||||
Debt instrument interest rate | 10.00% | |||||||||
Convertible promissory notes | $ 165,000 | |||||||||
Proceeds from promissory notes | $ 150,000 | |||||||||
Note maturity description | The Company is payable on demand at any time prior to September 30, 2018. | |||||||||
Repayment of principal amount | $ 165,000 | |||||||||
Subsequent Event [Member] | Secured Merchant Loan [Member] | ||||||||||
Convertible promissory notes | $ 420,000 | $ 209,850 | $ 521,250 | |||||||
Proceeds from promissory notes | 300,000 | 150,000 | 375,000 | |||||||
Debt original issue discount | 120,000 | 59,850 | 146,250 | |||||||
Debt instrument, periodic payment | $ 3,000 | $ 1,749 | $ 3,724 | |||||||
Subsequent Event [Member] | Secured Merchant Loan [Member] | Related Party Lender [Member] | ||||||||||
Number of shares issued during period | 50,000 |