Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Apr. 13, 2019 | Jun. 30, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | Transportation & Logistics Systems, Inc. | ||
Entity Central Index Key | 0001463208 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity's Reporting Status Current | No | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business Flag | true | ||
Entity Emerging Growth Company | false | ||
Entity Ex Transition Period | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 4,324,575 | ||
Entity Common Stock, Shares Outstanding | 10,191,525 | ||
Trading Symbol | TLSS | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS: | ||
Cash | $ 296,196 | $ 106,576 |
Accounts receivable | 775,772 | 254,150 |
Prepaid expenses and other current assets | 510,687 | 663 |
Total Current Assets | 1,582,655 | 361,389 |
OTHER ASSETS: | ||
Security deposit | 5,000 | |
Property and equipment, net | 936,831 | |
Intangible asset, net | 4,668,334 | |
Total Other Assets | 5,610,165 | |
TOTAL ASSETS | 7,192,820 | 361,389 |
CURRENT LIABILITIES: | ||
Convertible notes payable, net of debt discounts of $1,595,627 and $237,384, respectively | 1,411,876 | 272,616 |
Notes payable, net of debt discount of $255,843 | 1,509,804 | |
Notes payable - related party, net of debt discount of $6,383 | 213,617 | |
Accounts payable | 1,064,236 | 224,194 |
Accounts payable - related party | 3,700 | |
Accrued expenses | 572,274 | |
Insurance payable | 1,108,368 | |
Derivative liability | 7,888,684 | 601,615 |
Deferred revenue | 1,500 | |
Due to related parties | 275,300 | 23,551 |
Accrued compensation and related benefits | 458,236 | 13,050 |
Total Current Liabilities | 14,506,095 | 1,136,526 |
LONG-TERM LIABILITIES: | ||
Notes payable | 424,019 | |
Total Long-term Liabilities | 424,019 | |
Total Liabilities | 14,930,114 | 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 4,220,837 and 570,106 at December 31, 2018 and 2017, respectively | 4,220 | 570 |
Additional paid-in capital | 7,477,422 | (34,928) |
Accumulated deficit | (15,222,936) | (744,779) |
Total Shareholders' Deficit | (7,737,294) | (775,137) |
Total Liabilities and Shareholders' Deficit | $ 7,192,820 | $ 361,389 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Net of debt discounts - Convertible notes | $ 1,595,627 | $ 237,384 |
Net of debt discounts - Notes payable | 255,843 | |
Net of debt discounts - Notes payable related party | $ 6,383 | |
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 | 4,220,837 | 570,106 |
Common stock, shares outstanding | 4,220,837 | 570,106 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | ||
REVENUES | $ 18,118,659 | $ 1,301,332 |
COST OF REVENUES | ||
Third party | 16,173,356 | 979,164 |
Related party | 50,625 | 13,350 |
Total Cost of Revenues | 16,223,981 | 992,514 |
GROSS PROFIT | 1,894,678 | 308,818 |
OPERATING EXPENSES: | ||
Compensation and related benefits | 5,350,595 | 57,209 |
Legal and professional | 1,993,130 | 200,600 |
Rent | 45,275 | 2,016 |
Rent - affiliate | 3,300 | |
Impairment expense | 36,500 | |
General and administrative expenses | 1,474,449 | 142,230 |
Total Operating Expenses | 8,863,449 | 441,855 |
LOSS FROM OPERATIONS | (6,968,771) | (133,037) |
OTHER (EXPENSES) INCOME: | ||
Interest expense | (1,720,075) | (312,416) |
Interest expense - related party | (193,617) | |
Gain on extinguishment of debt | 10,169 | |
Bargain purchase gain | 203,588 | |
Derivative expense | (5,799,282) | (309,521) |
Total Other Expenses | (7,509,386) | (611,768) |
NET LOSS | $ (14,478,157) | $ (744,805) |
NET LOSS PER COMMON SHARE: | ||
Basic and diluted | $ (5.75) | $ (1.37) |
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING: | ||
Basic and diluted | 2,516,059 | 542,481 |
Consolidated Statements of Chan
Consolidated Statements of Changes In Shareholders' Equity (Deficit) - USD ($) | Preferred Stock Series A [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings (Accumulated Deficit) [Member] | Total |
Balance at Dec. 31, 2016 | $ 457 | $ 7,643 | $ 26 | $ 8,126 | |
Balance, shares at Dec. 31, 2016 | 456,812 | ||||
Recapitalization | $ 4,000 | $ 113 | (42,571) | (38,458) | |
Recapitalization, shares | 4,000,000 | 113,294 | |||
Net loss | (744,805) | (744,805) | |||
Balance at Dec. 31, 2017 | $ 4,000 | $ 570 | (34,928) | (744,779) | (775,137) |
Balance, shares at Dec. 31, 2017 | 4,000,000 | 570,106 | |||
Shares issued for services | $ 2,100 | $ 4,323,900 | $ 4,326,000 | ||
Shares issued for services, shares | 2,100,000 | ||||
Rounding pursuant to reverse split, shares | 731 | ||||
Shares issued for acquisition | $ 1,500 | $ 3,088,500 | $ 3,090,000 | ||
Shares issued for acquisition, shares | 1,500,000 | ||||
Shares issued related to debt - related party | $ 50 | 99,950 | 100,000 | ||
Shares issued related to debt - related party, shares | 50,000 | ||||
Net loss | (14,478,157) | (14,478,157) | |||
Balance at Dec. 31, 2018 | $ 4,000 | $ 4,220 | $ 7,477,422 | $ (15,222,936) | $ (7,737,294) |
Balance, shares at Dec. 31, 2018 | 4,000,000 | 4,220,837 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (14,478,157) | $ (744,805) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization expense | 664,350 | |
Bad debt expense | 2,450 | 1,300 |
Amortization of debt discount to interest expense | 1,466,847 | 277,951 |
Amortization of debt discount to interest expense - related party | 100,000 | |
Stock-based compensation and consulting fees | 4,326,000 | |
Derivative expense | 5,799,282 | 309,521 |
Gain on extinguishment of debt | (10,169) | |
Impairment loss | 36,500 | |
Loss on disposal of property and equipment | 14,816 | |
Bargain purchase gain | (203,588) | |
Change in operating assets and liabilities: | ||
Accounts receivable | 707,329 | (255,450) |
Prepaid expenses and other current assets | (366,766) | 1,963 |
Security deposit | (5,000) | |
Accounts payable and accrued expenses | 907,143 | 197,810 |
Accounts payable - related party | 3,700 | |
Insurance payable | 587,945 | |
Deferred revenue | (1,500) | (1,300) |
Due to affiliate | 23,551 | |
Accrued compensation and related benefits | 191,471 | 10,943 |
NET CASH USED IN OPERATING ACTIVITIES | (283,678) | (152,185) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Restricted cash acquired | 10,000 | |
Investment in license | (36,500) | |
Purchase of property and equipment | (481,826) | |
Cash received in acquisition | 38,198 | |
Cash paid for acquisition | (489,174) | |
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES | (932,802) | (26,500) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from convertible notes payable | 2,497,503 | 280,000 |
Debt issue costs paid | (1,009,714) | |
Repayment of convertible notes payable | (6,464) | |
Proceeds from notes payable | 2,409,898 | |
Repayment of notes payable | (2,877,355) | |
Proceeds from notes payable - related party | 1,050,000 | |
Repayment of notes payable - related party | (930,000) | |
Net proceeds from related parties | 265,768 | |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 1,406,100 | 273,536 |
NET INCREASE IN CASH | 189,620 | 94,851 |
CASH, beginning of year | 106,576 | 11,725 |
CASH, end of year | 296,196 | 106,576 |
Cash paid for: | ||
Interest | 1,962,095 | 342 |
Income taxes | ||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Debt discounts recorded | 1,487,787 | 510,000 |
Transfer of advance from lender to convertible note | 15,000 | |
Liabilities assumed in acquisition | 3,503,552 | 38,458 |
Less: assets acquired in acquisition | 2,050,799 | |
Net liabilities assumed | 1,452,753 | 38,458 |
Fair value of shares for acquisition | 3,090,000 | |
Increase in intangible assets - non-cash | $ 4,542,753 | $ 38,458 |
Organization and Business Opera
Organization and Business Operations | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business Operations | NOTE 1 – ORGANIZATION AND BUSINESS OPERATIONS Transportation and Logistics Systems, Inc. (“TLSS”), formerly PetroTerra Corp., was incorporated under the laws of the State of Nevada, on July 25, 2008. On March 30, 2017 (the “Closing Date”), TLSS 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 TLSS (the “Reverse Merger”). Save On was incorporated in the state of Florida and started business on July 12, 2016. 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, TLSS’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 TLSS 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. On July 24, 2018, the Company formed Shypdirect LLC (“Shypdirect”), a company organized under the laws of New Jersey. Shypdirect is a transportation company with a focus on tractor trailer and box truck deliveries of product on the east coast of the United States from one distributor’s warehouse to another warehouse or from a distributor’s warehouse to the post office. TLSS and its wholly-owned subsidiaries, Save On, Prime and Shypdirect 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 | 12 Months Ended |
Dec. 31, 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 include the accounts of TLSS and its wholly-owned subsidiaries, Save On, Prime and Shypdirect. All intercompany accounts and transactions have been eliminated in consolidation. Going concern The accompanying 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 consolidated financial statements, for the years ended December 31, 2018 and 2017, the Company had a net loss of $14,478,157 and $744,805 and net cash used in operations was $283,678 and $152,185, respectively. Additionally, the Company had an accumulated deficit, shareholders’ deficit, and a working capital deficit of $15,222,936, $7,737,294 and $12,923,440, respectively, at December 31, 2018. Furthermore, the Company failed to make required payments of principal and interest on its convertible debt instruments and defaulted on other provisions in these Notes. On April 9, 2019, the Company entered into agreements with these lenders that modified these Notes (See Note 15 – Subsequent Events). 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 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 , The three levels of the fair value hierarchy are as follows: ● 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 December 31, 2018 and 2017: At December 31, 2018 At December 31, 2017 Description Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Derivative liabilities — — $ 7,888,684 — — $ 601,615 A roll forward of the level 3 valuation financial instruments is as follows: For the Year ended December 31, 2018 For the Year ended December 31, 2017 Balance at beginning of year $ 601,615 $ - Fair value of derivative liabilities assumed in merger - 7,263 Initial valuation of derivative liabilities included in debt discount 1,487,787 295,000 Initial valuation of derivative liabilities included in derivative expense 6,839,065 609,318 Gain on extinguishment of debt - (10,169 ) Change in fair value included in derivative expense (1,039,783 ) (299,797 ) Balance at end of year $ 7,888,684 $ 601,615 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 December 31, 2018 and 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. There were no balances in excess of FDIC insured levels as of December 31, 2018 and 2017. The Company has not experienced any losses in such accounts through December 31, 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. Intangible asset Intangible assets are carried at cost less accumulated amortization, computed using the straight-line method over the estimated useful life. In November 2017 the Company acquired a Motor Carrier number (MC) and a Department of Transportation number (DOT) from a third party for $36,500. The Company reviews its intangible assets for impairment annually and determined that the carrying value was not recoverable in accordance with ASC 350, Intangibles - Goodwill and Other. During the year ended December 31, 2017, an impairment loss of $36.500 was recorded for the entire amount. At December 31, 2018, intangible asset consists of a customer relationship acquired on June 18, 2018 which is being amortized over a period of five years. 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. Bargain purchase gain In connection with the acquisition of Prime, the Company allocated the purchase price to the acquired assets and intangible asset and assumed liabilities of Prime based on their estimated fair values as of the acquisition date. The excess of the estimated fair values of net assets acquired over the acquisition consideration paid was recorded as a bargain purchase gain in other income in the consolidated statements of operations. The determination of the fair values of the assets acquired and liabilities assumed requires significant judgment, including valuation estimates relating to the value of the acquired customer relationship. 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 and Shypdirect 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 and Shypdirect 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 on behalf of the Company’s customers. Primarily, the Company’s performance obligations under these service orders correspond to each delivery of packages that the Company makes under the service agreements. Control of the package transfers to the recipient upon delivery. Once this occurs, the Company has satisfied its performance obligation and the Company recognizes revenue. Revenue disaggregation disclosure required pursuant to ASC 606 are disclosed in Note 14– Segment Information. 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 there was no cumulative effect of adoption. 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: December 31, 2018 December 31, 2017 Stock warrants 1,648,570 0 Convertible debt 3,158,465 339,340 Series A convertible preferred stock 6,666,667 205,522 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 adoption of ASU 2016-02 is not expected to have a material impact on the Company’s consolidated financial position, results of operations and cash flows. 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 Non-controlling 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. In August 2018, the FASB issued ASU 2018-13 to modify the disclosure requirements on fair value measurements. The amendments are effective beginning after December 15, 2019. An entity is permitted to early adopt any removed or modified disclosures and delay adoption of the additional disclosures until the effective date. Most amendments should be applied retrospectively, but certain amendments will be applied prospectively. The Company is in the process of assessing the impact of the standard on the Company’s fair value disclosures. However, the standard is not expected to have an impact on the Company’s consolidated financial position, results of operations and cash flows. 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 | 12 Months Ended |
Dec. 31, 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 paid $489,174 in cash which under the SPA was loaned back to Prime and therefore was included, net of repayments, in due to related parties at December 31, 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. These shares were 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. 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 Prime’s initial estimate of the 2018 gross profit, no contingent consideration was recorded on the acquisition date. Based on actual 2018 gross profit, no additional True-up stock will be issued and therefore, no additional contingent consideration was recorded as of December 31, 2018. 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. The fair value of the assets acquired and liabilities assumed are based on management’s initial estimates of the fair values on June 18, 2018 and on subsequent measurement adjustments as of December 31, 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: Assets acquired: Cash $ 38,198 Accounts receivable 1,231,401 Prepaid expensed and other current assets 143,258 Due from related party 14,019 Property and equipment, net 623,923 Intangible asset 5,235,515 Total assets acquired at fair value 7,286,314 Liabilities assumed: Notes payable 2,224,242 Accounts payable and accrued expenses 758,887 Insurance payable 520,423 Total liabilities assumed 3,503,552 Net assets acquired 3,782,762 Purchase consideration paid: Cash 489,174 Common stock 3,090,000 Total purchase consideration paid 3,579,174 Gain on bargain purchase $ 203,588 In connection with the acquisition, the Company recognized $203,588 of bargain purchase gain and a $5,235,515 intangible asset related to the acquisition of a customer relationship. The bargain purchase gain of $203,588 represents the amount by which the acquisition-date fair value of the net assets acquired exceeded the fair value of the consideration paid. The bargain purchase gain is reported as other income in the consolidated statements of operations. Prior to recognizing a bargain purchase, management reassessed whether all assets acquired and liabilities assumed had been correctly identified, and reviewed the key valuation assumptions and business combination accounting procedures for this acquisition. After careful consideration and review, management concluded that the recognition of a bargain purchase gain was appropriate for this acquisition. The assets acquired and liabilities assumed are recorded at their estimated fair values on the acquisition date as adjusted during the measurement period 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 acquisition 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 or bargain purchase gain. 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 Company shall record acquisition and transaction related expenses in the period in which they are incurred. During the year ended December 31, 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: Year Ended December 31, 2018 Year Ended December 31, 2017 Net Revenues $ 22,384,456 $ 6,928,646 Net Loss $ (16,705,685 ) $ (2,195,035 ) Net Loss per Share $ (6.64 ) $ (1.06 ) 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 | 12 Months Ended |
Dec. 31, 2018 | |
Receivables [Abstract] | |
Accounts Receivable | NOTE 4 – ACCOUNTS RECEIVABLE At December 31, 2018 and 2017, accounts receivable, net consisted of the following: December 31, 2018 December 31, 2017 Accounts receivable $ 775,772 $ 254,150 Allowance for doubtful accounts - - Accounts receivable, net $ 775,772 $ 254,150 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | NOTE 5 - PROPERTY AND EQUIPMENT At December 31, 2018 and 2017, property and equipment consisted of the following: Useful Life 2018 2017 Delivery trucks and vehicles 5 years $ 1,033,397 $ - Less: accumulated depreciation (96,566 ) - Property and equipment, net $ 936,831 $ - For the years ended December 31, 2018 and 2017, depreciation expense is included in general and administrative expenses and amounted to $97,169 and $0, respectively. During the year ended December 31, 2018, the Company traded in delivery trucks and vehicles of $72,342 with related accumulated depreciation of $603 and reduced notes payable of $56,933, resulting in a loss of $14,816 which is included in general and administrative expenses on the accompanying consolidated statement of operations. |
Intangible Asset
Intangible Asset | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Asset | NOTE 6 – INTANGIBLE ASSET At December 31, 2018 and 2017, intangible asset consisted of the following: Useful life December 31, 2018 December 31, 2017 Customer relationship 5 year $ 5,235,515 $ - Less: accumulated amortization (567,181 ) - $ 4,668,334 $ - For the years ended December 31, 2018 and 2017, amortization of intangible assets amounted to $567,181 and $0, respectively. Amortization of intangible assets attributable to future periods is as follows: Year ending December 31: Amount 2019 $ 1,047,103 2020 1,047,103 2021 1,047,103 2022 1,047,103 2023 479,922 $ 4,668,334 |
Convertible Promissory Notes Pa
Convertible Promissory Notes Payable | 12 Months Ended |
Dec. 31, 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 was to 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. Through date of default, the RedDiamond Notes bore 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. During 2018, the Company failed to make its required maturity date payments of principal and interest on a Convertible Promissory Notes of $270,000. In accordance with these notes, the Company entered into default on April 27, 2018, June 2, 2018 and August 8, 2018, which increased the interest rate to 18.0% per annum. 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 $67,500 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 in 2017 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 December 31, 2018 and 2017 amounted to $270,000 and $151,630, comprised of principal balance of $270,000 and $270,000, respectively, net of debt discount relating to the bifurcated derivative of $0 and $118,370, respectively. On April 9, 2019, the Company entered into a new agreement with this lender that modified these Notes (See Note 15 – Subsequent Events). 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. Through date of default, the principal due under the Note accrued 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 24% per annum. 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 in 2017 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 December 31, 2018 and 2017 amounted to $240,000 and $120,986, comprised of principal balance of $240,000 and $240,000, respectively, 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. On April 9, 2019, the Company entered into a new agreement with this lender that modified these Notes (See Note 15 – Subsequent Events). 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. Principal and interest payments of $232,940 were payable monthly beginning on December 18, 2018 and were due monthly over the term of the Note in cash or common stock of the Company, at the Lender’s discretion. In August 2018, the Company defaulted on its convertible note payable with Bellridge 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 periods ended June 30, 2018 and September 30, 2018 and (iii) default of filing of a registration statement (See Note 7). Upon an event of default, all principal, accrued interest, and liquating damages and penalties were due upon request of the lender at 125% of such amounts. On December 27, 2018, the lender waived any and all defaults in existence on the Note and the Company agreed to issue a warrant that is convertible into 2% of the issued and outstanding shares existing as the time the Company files a registration statement or makes an application to up list to a national stock exchange. Additionally, the principal interest amount due under the Note was modified with a monthly payment of principal and interests due beginning on January 18, 2019 of $156,219 with all remaining principal and interest amounts on the Note due on December 18, 2019. This modification was not considered a debt extinguishment, On April 9, 2019, the Company entered into a new agreement with this lender that modified these Notes (See Note 15 – Subsequent Events). Pursuant to the warrant, at any time on or before the date that the Company files a registration statement on form S-l or applies for up-listing to a National Exchange, and on or prior to the close of business on the early of the first year anniversary of the issuance of December 27, 2018 (the “Termination Date”), Bellridge can to subscribe for and purchase from the Company up to 2% in shares (as subject to adjustment as defined in the warrant (the “Warrant Shares”) of common stock for an aggregate exercise price of $100. In connection with the issuance of this Warrant, the Company determined that this Warrant contains terms that are not fixed monetary amounts at inception. Accordingly, under the provisions of ASC Topic No. 815-40, “Derivatives and Hedging – Contracts in an Entity’s Own Stock”, the embedded conversion option contained in this Warrant shall be 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 Warrant shall be determined using the Monte-Carlo simulation model. On April 9, 2019, the Company entered into a new agreement with this lender that cancelled these warrants (See Note 15 – Subsequent Events). 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, on June 18, 2018, 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”). On April 9, 2019, the Company entered into a new agreement with this lender that cancelled these warrants (See Note 15 – Subsequent Events). 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 Subsequent 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. In 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 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. On December 27, 2018, the lender waived any and all defaults. 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”). In connection with the issuance of this Note, Warrants, and Placement Warrant, the Company determined that this Note and there 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, Initial 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. Summary of derivative liabilities At the end of the period, the Company revalued the embedded conversion option and warrant derivative liabilities. In connection with these revaluations and the initial derivative expense, the Company recorded derivative expense of $5,799,282 and $309,521 for the years ended December 31, 2018 and 2017, respectively During the years ended December 31, 2018 and 2017, 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: 2018 2017 Expected dividend rate 0 0 Expected term (in years) 0.01 to 2.00 0.38 to 1.00 Volatility 261.2% to 307.7 % 258.6% to 526.5 % Risk-free interest rate 1.32% to 2.63 % 0.66% to 1.76 % At December 31, 2018 and 2017, convertible promissory notes are as follows: December 31, 2018 December 31, 2017 Principal amounts $ 3,007,503 $ 510,000 Less: unamortized debt discount (1,595,627 ) (237,384 ) Convertible notes payable, net 1,411,876 272,616 Less: current portion of convertible notes payable (1,411,876 ) (272,616 ) Convertible notes payable, net – long-term $ - $ - For the years ended December 31, 2018 and 2017, amortization of debt discounts related to these convertible notes amounted to $1,139,259 and $277,951, respectively, which has been included in interest expense on the accompanying consolidated statements of operations. The weighted average interest rate during the year ended December 31, 2018 and 2017 was approximately 21.2% and 10.0%, respectively. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 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 “Assumed Secured Merchant Loans”). Pursuant to the Assumed 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 Assumed 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 December 31, 2018, the Company repaid $786,330 of these notes. At December 31, 2018, notes payable related to Assumed Secured Merchant Loans amounted to $157,951. 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 Loan is secured by the Company’s assets and are personally guaranteed by the former majority member of Prime. During the period from September 20, 2018 to December 31, 2018, the Company repaid $256,956 of this note. At December 31, 2018, note payable related to this Secured Merchant Loan amounted to $190,125, which is net of unamortized debt discount of $74,169. On October 1, 2018, the Company entered into a secured Merchant Loan in the amount of $209,850 and received net proceeds of $137,962, net of original issue discount of $59,850 and net of origination fees of $12,038. 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. Additionally, on October 1, 2018, the Company entered into a second secured Merchant Loan in the amount of $139,900 and received net proceeds of $92,000, net of original issue discount of $39,900 and net of origination fees of $8,000. Pursuant to this Secured Merchant Loan, the Company is required to repay the noteholders by making daily payments of $1,166 on each business day until the loans amounts are paid in full. Each payment is deducted directly from the Company’s bank accounts. These Secured Merchant Loans are secured by the Company’s assets and are personally guaranteed by the former majority member of Prime. During the period from October 1, 2018 to December 31, 2018, the Company repaid $169,653 of these notes. At December 31, 2018, notes payable related to these Secured Merchant Loans amounted to $128,726, which is net of unamortized debt discount of $51,371. On October 12, 2018, the Company entered into a secured Merchant Loan in the amount of $420,000. The Company simultaneously repaid a prior loan of $31,634, paid an origination fee of $10,500 and received net proceeds of $254,552, net of original issue discount of $123,314. 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. During the period from October 12, 2018 to December 31, 2018, the Company repaid $162,000 of this note. At December 31, 2018, note payable related to this Secured Merchant Loan amounted to $171,752, which is net of unamortized debt discount of $86,248. 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 December 31, 2018, the Company repaid $459,750 of these notes. At December 31, 2018, notes payable related to former 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 December 31, 2018, the Company borrowed an addition $50,000 and repaid $217,005 of these notes. At December 31, 2018, notes payable to these entities or individuals amounted to $130,000. On August 1, 2018, the Company entered into a 10% Original Discount Senior Secured Demand Promissory Note with an investor. Pursuant to this promissory note, the Company borrowed $165,000 and received net proceeds of $150,000. The promissory note is payable on demand at any time prior to December 31, 2018. The promissory note was secured by the Company’s assets. On August 20, 2018, the Company repaid this promissory note of $165,000. Additionally, from October 31, 2018 to December 31, 2018, the Company entered into additional Original Discount Senior Secured Demand Promissory Notes with an investor (the “Promissory Note”). Pursuant to the Promissory Notes, the Company borrowed an aggregate of $770,000 and received net proceeds of $699,955, net of original issue discount of $70,000 and fees of $45. In December 2018, the Company repaid $220,000 of these promissory notes. At December 31, 2018, notes payable to this entity amounted to $505,945, which is net of unamortized debt discount of $44,055. The remaining notes are payable on demand at any time prior to March 15, 2019. These promissory notes are secured by the Company’s assets. In October 2018, the Company entered into a promissory notes with an individual totaling $110,000 and received net proceeds of $100,000, net of original issue discount of $10,000. In December 2018, the Company repaid this note. From November 2018 to December 2018, the Company entered into separate promissory notes with two individual totaling $215,000 and received net proceeds of $200,000, net of original issue discounts of $15,000. In December 2018, the Company repaid these loans. Equipment and auto 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 December 31, 2018, the Company borrowed funds pursuant to Equipment Note agreements of $135,845, repaid $113,830 of these Equipment Notes, and reduce Equipment Notes by $56,933 related to the trade in of certain vans. At December 31, 2018, equipment notes payable to these entities amounted to $488,289. During October and November 2018, the Company entered into auto financing agreements in the amount of $162,868. During the period from October 2018 to December 31, 2018, the Company repaid $1,832 of these notes. At December 31, 2018, auto notes payable to these entities amounted to $161,036. At December 31, 2018 and 2017, notes payable consisted of the following: December 31, 2018 December 31, 2017 Principal amounts $ 2,189,666 $ - Less: unamortized debt discount (255,843 ) - Principal amounts, net 1,933,823 - Less: current portion of notes payable (1,509,804 ) - Notes payable – long-term $ 424,019 $ - |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 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. Operating lease agreements On November 30, 2018, the Company entered into a commercial lease agreement for the lease of sixty parking spaces under an operating lease through November 2023 for a monthly rental fee of $6,000. Either party can cancel this lease on the annual anniversary date of the lease provided that the party who wishes to terminate provides the other party with at least 30-day prior written notice of such termination. In December 2018, the Company entered into a lease agreement for the lease of office and warehouse space and parking spaces under a non-cancelable operating lease through December 2023. From the lease commencement date until the last day of the second lease year, monthly rent shall be $14,000. At the beginning of the 30 th At December 31, 2018, future minimum lease payments due under operating leases is as follows: Year Amount 2019 $ 168,000 2020 168,000 2021 173,040 2022 173,040 2023 173,040 Total $ 855,120 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 December 31, 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 | 12 Months Ended |
Dec. 31, 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 December 31, 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 days’ 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 $560,000 as of December 31, 2018. Recapitalization On March 30, 2017, the Company closed the Share Exchange Agreement between Save-On and the Company was deemed to have issued 4,000,000 Series A convertible preferred shares and 113,294 common shares to the original shareholders of the Company. In connection with the recapitalization, the Company acquired assets of $10,000 and assumed liabilities of $48,458. 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. Common stock issued as loan fee 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. The shares were valued at $100,000, or $2.00 per share, based on the quoted trading price on the date of grant. In connection with these shares, the Company recorded interest expense – related party of $100,000. 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. On December 27, 2018, the lender waived any and all defaults in existence on the Note and the Company agreed to issue a warrant that is convertible into 2% of the issued and outstanding shares existing as the time the Company files a registration statement or makes an application to up list to a national stock exchange (See Note 7 under Bellridge). Warrant activities for the year ended December 31, 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 1,648,570 0.00 1.47 Balance Outstanding December 31, 2018 1,648,570 $ 0.00 1.47 $ 2,472,655 Exercisable, December 31, 2018 1,648,570 $ 0.00 1.47 $ 2,472,655 |
Related Party Transactions and
Related Party Transactions and Balances | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions and Balances | NOTE 11– RELATED PARTY TRANSACTIONS AND BALANCES In 2016, 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 $3,300 for the year ended December 31, 2018 and 2017, respectively. In 2017, the Company utilized various ancillary services of the affiliate including software and certain technology without any charge by the affiliate. Additionally, in 2017, the Company utilized certain employees of the affiliate without any charge by the affiliate. As a result the Company did not incur any labor charges for the period January 1, 2017 through December 15, 2017, except the salary of the Chief Executive Officer. Accounts payable – related party In 2018 and 2017, the Company utilized an affiliate company as one of the carriers, providing auto transportation, in the normal course of business. The carrier fees incurred to this affiliate were $50,625 and $13,350 for the years ended December 31, 2018 and 2017, respectively. At December 31, 2018, amount due to this affiliate amounted to $3,700 and is included in accounts payable – related party on the accompanying consolidated balance sheets. Due to related parties During 2018 and 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 $0 and $23,551 as of December 31, 2018 and 2017, respectively. 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. During the period from acquisition date of Prime (June 18, 2018) to December 31, 2018, the Company repaid $216,155 of this advance. This advance is non-interest bearing and is due on demand. At December 31, 2018, amount due to this related party amounted to $259,000. During the period from acquisition date of Prime (June 18, 2018) to December 31, 2018, an employee of Prime who exerts significant influence over the business of Prime, paid costs and expenses of $56,507 on behalf of the Company and was reimbursed $40,207 by the company. These advances are non-interest bearing and is due on demand. At December 31, 2018, amounts due to this related party amounted to $16,300. Notes payable – related party From July 25, 2018 through December 31, 2018, the Company entered into a Promissory Notes with the Company’s chief executive office or the spouse of the Company’s chief executive officer. Pursuant to these promissory notes, the Company borrowed an aggregate of $1,150,000 and received net proceeds of $1,050,000, net of original issue discounts of $100,000. From July 25, 2018 through December 31, 2018, $930,000 of these loans were repaid. At December 31, 2018, notes payable – related party amounted to $213,617, which is net of unamortized debt discount of $6,383. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes | |
Income Taxes | NOTE 12 – INCOME TAXES The Company accounts for income tax using the liability method prescribed by ASC 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The deferred tax assets at December 31, 2018 and 2017 consist only of net operating loss carryforwards. The net deferred tax asset has been fully offset by a valuation allowance because of the uncertainty of the attainment of future taxable income. On December 22, 2017, the Tax Cuts and Jobs Act (“the Act”) was signed into law, a tax reform bill which, among other items, reduces the current federal income tax rate to 21% from 34%. The rate reduction is effective January 1, 2018, and is permanent. The Act has caused the Company’s deferred income taxes to be revalued. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through income tax expense. Pursuant to the guidance within SEC Staff Accounting Bulletin No. 118 (“SAB 118”), as of December 31, 2017, the Company recognized the provisional effects of the enactment of the Act for which measurement could be reasonably estimated. Since the Company has provided a full valuation allowance against its deferred tax assets, the revaluation of the deferred tax assets did not have a material impact on any period presented. The ultimate impact of the Act may differ from these estimates due to the Company’s continued analysis or further regulatory guidance that may be issued as a result of the Act. The items accounting for the difference between income taxes at the effective statutory rate and the Company’s effective tax rate for the years ended December 31, 2018 and 2017 were as follows: Year Ended December 31, 2018 Year Ended December 31, 2017 Income tax benefit at U.S. statutory rate 21.00 % 34.00 % Income tax benefit - State 4.18 % 3.65 % Permanent items (18.19 )% (31.55 )% Effect of change in valuation allowance (6.99 )% (4.11 )% Effect of change in effective rate from the Act - (1.99 )% Effective income tax rate 0.00 % 0.00 % The Company’s approximate net deferred tax asset as of December 31, 2018 and 2017 was as follows: December 31, 2018 December 31, 2017 Deferred Tax Asset: Net operating loss carryover $ 1,042,542 $ 30,600 Less: valuation allowance (1,042,542 ) (30,600 ) Net deferred tax asset $ - $ - The net operating loss carryforward was approximately $4,139,807 at December 31, 2018. The Company provided a valuation allowance equal to the net deferred income tax asset as of December 31, 2018 because it was not known whether future taxable income will be sufficient to utilize the loss carryforward. During the year ended December 31, 2018, the valuation allowance increased by $1,011,942. Additionally, the future utilization of the net operating loss carryforward to offset future taxable income is subject to an annual limitation as a result of ownership changes that may occur in the future. The 2017 estimated loss carry forward of $120,600 expires on December 31, 2037. The 2018 estimated loss carry forward may be carried forward indefinitely subject to annual usage limitations. The Company does not have any uncertain tax positions or events leading to uncertainty in a tax position. The Company’s 2015 to 2018 Corporate Income Tax Returns are subject to Internal Revenue Service examination. |
Concentrations
Concentrations | 12 Months Ended |
Dec. 31, 2018 | |
Risks and Uncertainties [Abstract] | |
Concentrations | NOTE 13 – CONCENTRATIONS For the year ended December 31, 2018, one customer represented 74.1% of the Company’s total net revenues. This revenue is from one Prime customer for the period from June 19, 2018 to December 31, 2018. For the year ended December 31, 2017, two customers represented 23% and 12% respectively of the Company’s total net revenues. At December 31, 2018, one customer represented 54.5% of the Company’s accounts receivable balance. As of December 31, 2017, two customers represented 12% and 10% of the Company’s accounts receivable balance. For the year ended December 31, 2018 and 2017, the Company had no carriers that were in excess of 10% of carrier fees. During the period from June 19, 2018 and December 31, 2018, the Company rented delivery vans from one vendor. Any shortage of supply of vans available to rent to the Company could have a material adverse effect on the Company’s business, financial condition and results of operations. All revenues are derived from customers in the United States. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | NOTE 14 – SEGMENT INFORMATION During the year ended December 31, 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 three reportable business segments - (1) the transportation of automobiles and other freight (the “Save On” segment), (2) a segment which concentrates on deliveries for on-line retailers in New York, New Jersey and Pennsylvania (the “Prime” segment), and (3) a segment with a focus on tractor trailer and box truck deliveries of product on the east coast of the United States from one distributor’s warehouse to another warehouse or from a distributor’s warehouse to the post office. 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 years ended December 31, 2018 and 2017 was as follows: For the Year ended December 31, 2018 2017 Revenues: Save On $ 4,498,499 $ 1,301,332 Prime 13,411,210 - Shypdirect 208,950 - 18,118,659 1,301,332 Depreciation and amortization: Save On - - Prime 664,350 - Shypdirect - - 664,350 - Interest expense Save On - - Prime 413,424 - Shypdirect - - Other (a) 1,500,268 312,416 1,913,692 312,416 Net loss Save On 172,125 133,037 Prime 2,482,599 - Shypdirect 197,883 - Other (a) 11,625,550 611,768 $ 14,478,157 $ 744,805 December 31, 2018 December 31, 2017 Identifiable long-lived tangible assets at December 31, 2018 and 2017 by segment Save On $ - $ - Prime 936,831 - Shypdirect - - $ 936,831 $ - (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 | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 15 – SUBSEQUENT EVENTS Secured merchant loans On January 14, 2019, the Company entered into a secured Merchant Loan in the amount of $764,500. The Company simultaneously repaid a prior loan of $223,329 which was entered into during September 2018, paid an origination fee of $10,034 and received net proceeds of $316,637, net of original issue discount of $214,500. Pursuant to this Secured Merchant Loan, the Company is required to repay the noteholders by making daily payments of $6,371 on each business day until the loans amounts are paid in full. Each payment is deducted directly from the Company’s bank account. This Secured Merchant Loans is secured by the Company’s assets and are personally guaranteed by the former majority member of Prime. On January 24, 2019, the Company entered into a secured Merchant Loan in the amount of $417,000. The Company simultaneously paid an origination fee of $7,998 and received net proceeds of $292,002, net of original issue discount of $117,000. Pursuant to this Secured Merchant Loan, the Company is required to repay the noteholders by making daily payments of $3,972 on each business day until the loans amounts are paid in full. Each payment is deducted directly from the Company’s bank account. This Secured Merchant Loans is secured by the Company’s assets and are personally guaranteed by the former majority member of Prime. On January 28, 2019, the Company entered into a secured Merchant Loan in the amount of $759,000 and received net cash of $315,097 after paying origination fee of $25,750, an original issue discount of $209,000, and the repayment of previous loans and interest due to this lender of $209,153. Pursuant to this Secured Merchant Loan, the Company is required to repay the noteholders by making daily payments of $4,897 on each business day until the loans amounts are paid in full. Each payment is deducted directly from the Company’s bank account. This Secured Merchant Loans is secured by the Company’s assets and are personally guaranteed by the former majority member of Prime. From February 25, 2019 to March 6, 2019, the Company entered into four secured Merchant Loans in the aggregate amount of $1,199,200. The Company simultaneously repaid prior loans of $69,327 which were entered into during October 2018, paid origination fees totaling $78,286 and received net proceeds of $652,387, net of original issue discounts of $399,200. Pursuant to these four secured Merchant Loans, the Company was required to pay the noteholders by make daily payments aggregating $11,993 on each business day until the loan amounts were paid in full. Each payment was deducted from the Company’s bank account. On April 10, 2019, the Company paid off these secured Merchant Loans in full by paying an aggregate amount of $703,899. As a result of paying off these loans early, the noteholders reduced the origination fees and debt discounts by $229,195 in the aggregate. Promissory Notes From January 2019 to April 2019, the Company entered into separate promissory notes with seven individuals totaling $1,616,250 and received net proceeds of $1,435,000, net of original issue discounts of $181,250. These Notes are due between 45 and 273 days from the respective Note date. Other than the original issue discount, no additional interest is due to the holders. In connection with these promissory notes, the Company issued 53,000 warrants to purchase 53,000 shares of the Company’s common stock at an exercise price of $1.00 per share. The warrants are exercisable over a five year period. During January 2019, the Company entered into a separate promissory note with an individual totaling $26,900 at a simple annual interest rate of 15% bring the total promissory note balance to $77,090 for this individual. From February 2019 to April 2019, the Company repaid $60,000 of these promissory notes. In connection with this promissory note, the Company issued warrants to purchase 1,000 shares of the Company’s common stock at an exercise price of $1.00 per share. The warrants are exercisable over a five year period. During March 2019, the Company entered into two separate promissory notes with an entity totaling $165,000 and received net proceeds of $150,000, net of original issue discounts of $15,000. During March 2019, the Company repaid $55,000 of these promissory notes. Notes payable – related parties During January 2019, the Company repaid an existing promissory note totaling $220,000 with the spouse of the Company’s chief executive officer. In addition, during February 2019, the Company entered into another promissory note with the spouse of the chief executive officer totaling $230,000, net of an original issue discount of $30,000. Convertible debt and related warrants On April 9, 2019, the Company entered into an agreement with Bellridge Capital, L.P. (“Bellridge”) that modifies its existing obligations to Bellridge (See Note 7) as follows: ● the overall principal amount of that certain Convertible Promissory Note, dated June 18, 2018, issued by the Company in favor of Bellridge (the “Note”) was reduced from $2,497,502 to $1,800,000, in exchange for the issuance to Bellridge of 800,000 shares of restricted common stock, which shall be delivered to Bellridge, either in whole or in part, at such time or times as when the beneficial ownership of such shares by Bellridge will not result in Bellridge’s beneficial ownership of more than the Beneficial Ownership Limitation and such shares will be issued within three business days of the date the Bellridge has represented to the Company that it is below the Beneficial Ownership Limitation. Such issuances will occur in increments of no fewer than the lesser of (i) 50,000 shares and (ii) the balance of the 800,000 shares owed. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock issuable pursuant to this Agreement. As of April 15, 2019, 100,000 of these shares have been issued; ● the maturity date of the Note was extended to August 31, 2020; ● the interest rate was reduced from 10% to 5% per annum; ● if the Company completes an offering of equity or equity linked securities (including warrants, convertible preferred stock, convertible debentures or convertible promissory note) which results in gross proceeds to the Company of at least $4,000,000, then the Company shall use a portion of the proceeds thereof to repay not less than half of the obligations then outstanding pursuant to the Note; ● if the Company completes an offering of debt which results in gross proceeds to the Company of at least $3,000,000, then the Company shall use a portion of the proceeds thereof to repay any remaining obligations then outstanding pursuant to the Note; ● the convertibility of the Note will now be amended such that the Note shall only be convertible at a conversion price to be mutually agreed upon between the Company and the Holder; ● the registration rights previously granted to Bellridge have now been eliminated; and ● those certain Warrants, dated June 18, 2018 and December 27, 2018, respectively, issued by the Company in favor of Bellridge shall be cancelled and of no further force or effect. In exchange, the Company will issue Bellridge 360,000 shares of restricted common stock. In addition, on April 9, 2019, warrant holders holding warrants exercisable into an aggregate of 4.75% of the outstanding common stock of the Company all agreed to exercise such warrants for an aggregate of 240,000 shares of common stock of the Company. On April 9, 2019, the Company entered into agreements with another institutional investor, RedDiamond Partners LLC, holding convertible notes representing an aggregate principal amount of $510,000, and agreed with such holder to: ● extend the maturity date of the notes to December 31, 2020; ● remove all convertibility features of the notes; and ● if the Company completes an offering of equity or equity linked securities (including warrants, convertible preferred stock, convertible debentures or convertible promissory note) which results in gross proceeds to the Company of at least $4,000,000, then the Company shall use a portion of the proceeds thereof to repay not less than half of the obligations then outstanding pursuant to the notes. On March 13, 2019, the Company entered into a convertible note agreement with an individual in the amount of $500,000. Commencing on April 11, 2019, and continuing on the eleventh day of each month thereafter, payments of interest only on the outstanding principal balance of this Note of $7,500 shall be due and payable. Commencing on October 11, 2019 and continuing on the eleventh day of each month thereafter through April 11, 2021, payments of principal and interest of $31,902 shall be made, if not sooner converted as provided in the note agreement. The payment of all or any portion of the principal and accrued interest may be paid prior to the April 11, 2021. Interest shall accrue with respect to the unpaid principal sum identified above until such principal is paid or converted as provided below at a rate equal to 18% per annum compounded annually. All past due principal and interest on this Note shall bear interest from maturity of such principal or interest (in wha1ever manner same may be brought about) until paid at the lesser of (i) 20% per annum, or (ii) the highest non-usurious rate allowed by applicable law. This Note may be converted by Holder at any time in principal amounts of $100,000 in accordance with the terms by delivery of written notice to the Company, into that number of shares of common stock equal to the amount obtained by dividing the portion of the aggregate principal amount of this Note that is being converted by $1.37. On April 11, 2019, the Company entered into a convertible note agreement with an entity in the amount of $2,000,000. Commencing on May 11, 2019, and continuing on the eleventh day of each month thereafter, payments of interest only on the outstanding principal balance of this Note of $30,000 shall be due and payable. Commencing on November 11, 2019 and continuing on the eleventh day of each month thereafter through April 11, 2021, payments of principal and interest of $117,611, if not sooner converted as provided in the note agreement. The payment of all or any portion of the principal and accrued interest may be paid prior to the April 11, 2021. Interest shall accrue with respect to the unpaid principal sum identified above until such principal is paid or converted as provided below at a rate equal to 18% per annum compounded annually. All past due principal and interest on this Note shall bear interest from maturity of such principal or interest (in wha1ever manner same may be brought about) until paid at the lesser of (i) 20% per annum, or (ii) the highest non-usurious rate allowed by applicable law. This Note may be converted by Holder at any time in principal amounts of $100,000 in accordance with the terms by delivery of written notice to the Company, into that number of shares of common stock equal to the amount obtained by dividing the portion of the aggregate principal amount of this Note that is being converted by $11.81. Series A preferred stock On April 9, 2019, the Company entered into agreements with all holders of their Series A Convertible Preferred Stock to exchange all 4,000,000 outstanding shares of preferred stock for an aggregate of 2,600,000 shares of restricted common stock. Shares issued for services On February 25, 2019, the Company granted an aggregate of 2,670,688 shares of its common stock to an executive officer, employees and consultants of the Company for services rendered. The shares were valued at $2,750,809, or $1.03 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 $2,750,809. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies and Basis of Presentation (Policies) | 12 Months Ended |
Dec. 31, 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 include the accounts of TLSS and its wholly-owned subsidiaries, Save On, Prime and Shypdirect. All intercompany accounts and transactions have been eliminated in consolidation. |
Going Concern | Going concern The accompanying 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 consolidated financial statements, for the years ended December 31, 2018 and 2017, the Company had a net loss of $14,478,157 and $744,805 and net cash used in operations was $283,678 and $152,185, respectively. Additionally, the Company had an accumulated deficit, shareholders’ deficit, and a working capital deficit of $15,222,936, $7,737,294 and $12,923,440, respectively, at December 31, 2018. Furthermore, the Company failed to make required payments of principal and interest on its convertible debt instruments and defaulted on other provisions in these Notes. On April 9, 2019, the Company entered into agreements with these lenders that modified these Notes (See Note 15 – Subsequent Events). 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 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 , The three levels of the fair value hierarchy are as follows: ● 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 December 31, 2018 and 2017: At December 31, 2018 At December 31, 2017 Description Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Derivative liabilities — — $ 7,888,684 — — $ 601,615 A roll forward of the level 3 valuation financial instruments is as follows: For the Year ended December 31, 2018 For the Year ended December 31, 2017 Balance at beginning of year $ 601,615 $ - Fair value of derivative liabilities assumed in merger - 7,263 Initial valuation of derivative liabilities included in debt discount 1,487,787 295,000 Initial valuation of derivative liabilities included in derivative expense 6,839,065 609,318 Gain on extinguishment of debt - (10,169 ) Change in fair value included in derivative expense (1,039,783 ) (299,797 ) Balance at end of year $ 7,888,684 $ 601,615 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 December 31, 2018 and 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. There were no balances in excess of FDIC insured levels as of December 31, 2018 and 2017. The Company has not experienced any losses in such accounts through December 31, 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. |
Intangible asset | Intangible asset Intangible assets are carried at cost less accumulated amortization, computed using the straight-line method over the estimated useful life. In November 2017 the Company acquired a Motor Carrier number (MC) and a Department of Transportation number (DOT) from a third party for $36,500. The Company reviews its intangible assets for impairment annually and determined that the carrying value was not recoverable in accordance with ASC 350, Intangibles - Goodwill and Other. During the year ended December 31, 2017, an impairment loss of $36.500 was recorded for the entire amount. At December 31, 2018, intangible asset consists of a customer relationship acquired on June 18, 2018 which is being amortized over a period of five years. |
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. |
Bargain Purchase Gain | Bargain purchase gain In connection with the acquisition of Prime, the Company allocated the purchase price to the acquired assets and intangible asset and assumed liabilities of Prime based on their estimated fair values as of the acquisition date. The excess of the estimated fair values of net assets acquired over the acquisition consideration paid was recorded as a bargain purchase gain in other income in the consolidated statements of operations. The determination of the fair values of the assets acquired and liabilities assumed requires significant judgment, including valuation estimates relating to the value of the acquired customer relationship. |
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 and Shypdirect 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 and Shypdirect 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 on behalf of the Company’s customers. Primarily, the Company’s performance obligations under these service orders correspond to each delivery of packages that the Company makes under the service agreements. Control of the package transfers to the recipient upon delivery. Once this occurs, the Company has satisfied its performance obligation and the Company recognizes revenue. Revenue disaggregation disclosure required pursuant to ASC 606 are disclosed in Note 14– Segment Information. |
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 there was no cumulative effect of adoption. |
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: December 31, 2018 December 31, 2017 Stock warrants 1,648,570 0 Convertible debt 3,158,465 339,340 Series A convertible preferred stock 6,666,667 205,522 |
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 adoption of ASU 2016-02 is not expected to have a material impact on the Company’s consolidated financial position, results of operations and cash flows. 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 Non-controlling 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. In August 2018, the FASB issued ASU 2018-13 to modify the disclosure requirements on fair value measurements. The amendments are effective beginning after December 15, 2019. An entity is permitted to early adopt any removed or modified disclosures and delay adoption of the additional disclosures until the effective date. Most amendments should be applied retrospectively, but certain amendments will be applied prospectively. The Company is in the process of assessing the impact of the standard on the Company’s fair value disclosures. However, the standard is not expected to have an impact on the Company’s consolidated financial position, results of operations and cash flows. 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) | 12 Months Ended |
Dec. 31, 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 December 31, 2018 and 2017: At December 31, 2018 At December 31, 2017 Description Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Derivative liabilities — — $ 7,888,684 — — $ 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 Year ended December 31, 2018 For the Year ended December 31, 2017 Balance at beginning of year $ 601,615 $ - Fair value of derivative liabilities assumed in merger - 7,263 Initial valuation of derivative liabilities included in debt discount 1,487,787 295,000 Initial valuation of derivative liabilities included in derivative expense 6,839,065 609,318 Gain on extinguishment of debt - (10,169 ) Change in fair value included in derivative expense (1,039,783 ) (299,797 ) Balance at end of year $ 7,888,684 $ 601,615 |
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: December 31, 2018 December 31, 2017 Stock warrants 1,648,570 0 Convertible debt 3,158,465 339,340 Series A convertible preferred stock 6,666,667 205,522 |
Acquisition (Tables)
Acquisition (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Schedule of Fair Value of Assets Acquired 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: Assets acquired: Cash $ 38,198 Accounts receivable 1,231,401 Prepaid expensed and other current assets 143,258 Due from related party 14,019 Property and equipment, net 623,923 Intangible asset 5,235,515 Total assets acquired at fair value 7,286,314 Liabilities assumed: Notes payable 2,224,242 Accounts payable and accrued expenses 758,887 Insurance payable 520,423 Total liabilities assumed 3,503,552 Net assets acquired 3,782,762 Purchase consideration paid: Cash 489,174 Common stock 3,090,000 Total purchase consideration paid 3,579,174 Gain on bargain purchase $ 203,588 |
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: Year Ended December 31, 2018 Year Ended December 31, 2017 Net Revenues $ 22,384,456 $ 6,928,646 Net Loss $ (16,705,685 ) $ (2,195,035 ) Net Loss per Share $ (6.64 ) $ (1.06 ) |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable | At December 31, 2018 and 2017, accounts receivable, net consisted of the following: December 31, 2018 December 31, 2017 Accounts receivable $ 775,772 $ 254,150 Allowance for doubtful accounts - - Accounts receivable, net $ 775,772 $ 254,150 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | At December 31, 2018 and 2017, property and equipment consisted of the following: Useful Life 2018 2017 Delivery trucks and vehicles 5 years $ 1,033,397 $ - Less: accumulated depreciation (96,566 ) - Property and equipment, net $ 936,831 $ - |
Intangible Asset (Tables)
Intangible Asset (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Asset | At December 31, 2018 and 2017, intangible asset consisted of the following: Useful life December 31, 2018 December 31, 2017 Customer relationship 5 year $ 5,235,515 $ - Less: accumulated amortization (567,181 ) - $ 4,668,334 $ - |
Schedule of Future Amortization Expense | For the years ended December 31, 2018 and 2017, amortization of intangible assets amounted to $567,181 and $0, respectively. Amortization of intangible assets attributable to future periods is as follows: Year ending December 31: Amount 2019 $ 1,047,103 2020 1,047,103 2021 1,047,103 2022 1,047,103 2023 479,922 $ 4,668,334 |
Convertible Promissory Notes _2
Convertible Promissory Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Fair Value of Derivative Liabilities Estimated Using Black-Sholes Valuation Model | During the years ended December 31, 2018 and 2017, 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: 2018 2017 Expected dividend rate 0 0 Expected term (in years) 0.01 to 2.00 0.38 to 1.00 Volatility 261.2% to 307.7 % 258.6% to 526.5 % Risk-free interest rate 1.32% to 2.63 % 0.66% to 1.76 % |
Schedule of Convertible Promissory Notes | At December 31, 2018 and 2017, convertible promissory notes are as follows: December 31, 2018 December 31, 2017 Principal amounts $ 3,007,503 $ 510,000 Less: unamortized debt discount (1,595,627 ) (237,384 ) Convertible notes payable, net 1,411,876 272,616 Less: current portion of convertible notes payable (1,411,876 ) (272,616 ) Convertible notes payable, net – long-term $ - $ - |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | At December 31, 2018 and 2017, notes payable consisted of the following: December 31, 2018 December 31, 2017 Principal amounts $ 2,189,666 $ - Less: unamortized debt discount (255,843 ) - Principal amounts, net 1,933,823 - Less: current portion of notes payable (1,509,804 ) - Notes payable – long-term $ 424,019 $ - |
Commitments and Contingencies (
Commitments and Contingencies (Tables) (USD $) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments And Contingencies Tables | |
Schedule of Lease Payments Due Under Operating Leases | At December 31, 2018, future minimum lease payments due under operating leases is as follows: Year Amount 2019 $ 168,000 2020 168,000 2021 173,040 2022 173,040 2023 173,040 Total $ 855,120 |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Summary of Warrant Activities | Warrant activities for the year ended December 31, 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 1,648,570 0.00 1.47 Balance Outstanding December 31, 2018 1,648,570 $ 0.00 1.47 $ 2,472,655 Exercisable, December 31, 2018 1,648,570 $ 0.00 1.47 $ 2,472,655 |
Income Taxes (Table)
Income Taxes (Table) | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes Table Abstract | |
Schedule of Reconciliation of Effective Income Tax Rate | The items accounting for the difference between income taxes at the effective statutory rate and the Company’s effective tax rate for the years ended December 31, 2018 and 2017 were as follows: Year Ended December 31, 2018 Year Ended December 31, 2017 Income tax benefit at U.S. statutory rate 21.00 % 34.00 % Income tax benefit - State 4.18 % 3.65 % Permanent items (18.19 )% (31.55 )% Effect of change in valuation allowance (6.99 )% (4.11 )% Effect of change in effective rate from the Act - (1.99 )% Effective income tax rate 0.00 % 0.00 % |
Schedule of Components of Deferred Tax Assets | The Company’s approximate net deferred tax asset as of December 31, 2018 and 2017 was as follows: December 31, 2018 December 31, 2017 Deferred Tax Asset: Net operating loss carryover $ 1,042,542 $ 30,600 Less: valuation allowance (1,042,542 ) (30,600 ) Net deferred tax asset $ - $ - |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Information by Reportable Segment | Information with respect to these reportable business segments for the years ended December 31, 2018 and 2017 was as follows: For the Year ended December 31, 2018 2017 Revenues: Save On $ 4,498,499 $ 1,301,332 Prime 13,411,210 - Shypdirect 208,950 - 18,118,659 1,301,332 Depreciation and amortization: Save On - - Prime 664,350 - Shypdirect - - 664,350 - Interest expense Save On - - Prime 413,424 - Shypdirect - - Other (a) 1,500,268 312,416 1,913,692 312,416 Net loss Save On 172,125 133,037 Prime 2,482,599 - Shypdirect 197,883 - Other (a) 11,625,550 611,768 $ 14,478,157 $ 744,805 December 31, 2018 December 31, 2017 Identifiable long-lived tangible assets at December 31, 2018 and 2017 by segment Save On $ - $ - Prime 936,831 - Shypdirect - - $ 936,831 $ - (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 | Jul. 16, 2018 | Mar. 30, 2017 | Dec. 31, 2018 | Jun. 18, 2018 | Dec. 31, 2017 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Percentage of controlling interest retained | 80.00% | ||||
Acquisition of business entity, percentage | 100.00% | ||||
Proposed increase of preferred stock | 10,000,000 | ||||
Proposed increase of preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | ||
Reverse stock split, ratio | 1-for-250 | 1 for 30 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies and Basis of Presentation (Details Narrative) - USD ($) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Nov. 30, 2017 | Dec. 31, 2016 | |
Net loss | $ (14,478,157) | $ (744,805) | ||
Net cash used in operations | (283,678) | (152,185) | ||
Accumulated deficit | (15,222,936) | (744,779) | ||
Shareholders' deficit | (7,737,294) | (775,137) | $ 8,126 | |
Working capital deficit | 12,923,440 | |||
Cash equivalents | ||||
Cash in excess of FDIC limits | ||||
Property and equipment, estimated useful lives | 5 years | |||
Impairment loss | $ 36,500 | |||
Amortized period | 5 years | |||
Third Party [Member] | ||||
Business acquisitions | $ 36,500 |
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 ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Derivative liabilities | $ 7,888,684 | $ 601,615 |
Level 1 [Member] | ||
Derivative liabilities | ||
Level 2 [Member] | ||
Derivative liabilities | ||
Level 3 [Member] | ||
Derivative liabilities | $ 7,888,684 | $ 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) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Gain on extinguishment of debt | $ 10,169 | |
Level 3 [Member] | ||
Balance at beginning of year | 601,615 | |
Fair value of derivative liabilities assumed in merger | 7,263 | |
Initial valuation of derivative liabilities included in debt discount | 1,487,787 | 295,000 |
Initial valuation of derivative liabilities included in derivative expense | 6,839,065 | 609,318 |
Gain on extinguishment of debt | (10,169) | |
Change in fair value included in derivative expense | (1,039,783) | (299,797) |
Balance at end of year | $ 7,888,684 | $ 601,615 |
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 | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Stock Warrants [Member] | ||
Antidilutive securities excluded from computation of earnings per share | 1,648,570 | 0 |
Convertible Debt [Member] | ||
Antidilutive securities excluded from computation of earnings per share | 3,158,465 | 339,340 |
Series A Convertible Preferred Stock [Member] | ||
Antidilutive securities excluded from computation of earnings per share | 6,666,667 | 205,522 |
Acquisition (Details Narrative)
Acquisition (Details Narrative) - USD ($) | Jun. 18, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Acquisition of business entity, percentage | 100.00% | ||
Payment of cash under SPA | $ 489,174 | ||
Number of shares issued in exchange | 1,500,000 | ||
Number of unregistered shares issued for acquistion | 1,500,000 | ||
Number of unregistered shares issued for acquistion, value | $ 3,090,000 | $ 3,090,000 | |
Number of shares issued price per share | $ 2.06 | ||
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 | ||
Bargain purchase gain | $ 203,588 | $ 203,588 | |
Intangible asset | 5,235,515 | ||
Purchase price paid in excess of assets acquired | $ 203,588 | ||
Percentage of voting interest in exchange | 90.00% | ||
Cash in additional working capital | $ 267,000 | ||
Two Consultants [Member] | |||
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 | 600,000 |
Acquisition - Schedule of Fair
Acquisition - Schedule of Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) | Jun. 18, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Business Combinations [Abstract] | |||
Cash | $ 38,198 | ||
Accounts receivable | 1,231,401 | ||
Prepaid expensed and other current assets | 143,258 | ||
Due from related party | 14,019 | ||
Property and equipment, net | 623,923 | ||
Intangible asset | 5,235,515 | ||
Total assets acquired at fair value | 7,286,314 | ||
Notes payable | 2,224,242 | ||
Accounts payable and accrued expenses | 758,887 | ||
Insurance payable | 520,423 | ||
Total liabilities assumed | 3,503,552 | ||
Net assets acquired | 3,782,762 | ||
Cash | 489,174 | ||
Common stock | 3,090,000 | ||
Total purchase consideration paid | 3,579,174 | ||
Gain on bargain purchase | $ 203,588 | $ 203,588 |
Acquisition - Schedule of Pro F
Acquisition - Schedule of Pro Forma Consolidated Results of Operations (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Business Combinations [Abstract] | ||
Net Revenues | $ 22,384,456 | $ 6,928,646 |
Net Loss | $ (16,705,685) | $ (2,195,035) |
Net Loss per Share | $ (6.64) | $ (1.06) |
Accounts Receivable - Schedule
Accounts Receivable - Schedule of Accounts Receivable (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Receivables [Abstract] | ||
Accounts receivable | $ 775,772 | $ 254,150 |
Allowance for doubtful accounts | ||
Accounts receivable, net | $ 775,772 | $ 254,150 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Depreciation expense | $ 97,169 | $ 0 |
Delivery trucks and vehicles | 72,342 | |
Accumulated depreciation | 603 | |
Notes payable | 56,933 | |
Impairment loss | $ 36,500 | |
General and Administrative Expenses [Member] | ||
Impairment loss | $ 14,816 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property and equipment, useful life | 5 years | |
Less: accumulated depreciation | $ (96,566) | |
Property and equipment, net | $ 936,831 | |
Delivery Trucks and Vehicles [Member] | ||
Property and equipment, useful life | 5 years | |
Property and equipment, gross | $ 1,033,397 |
Intangible Asset (Details Narra
Intangible Asset (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of intangible assets | $ 567,181 | $ 0 |
Intangible Asset - Schedule of
Intangible Asset - Schedule of Intangible Asset (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Intangible assets, gross | ||
Less: accumulated amortization | $ (567,181) | |
Intangible assets, net | $ 4,668,334 | |
Customer Relationships [Member] | ||
Intangible assets, useful life | 5 years | |
Intangible assets, gross | $ 5,235,515 |
Intangible Asset - Schedule o_2
Intangible Asset - Schedule of Future Amortization Expense (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2019 | $ 1,047,103 | |
2020 | 1,047,103 | |
2021 | 1,047,103 | |
2022 | 1,047,103 | |
2023 | 479,922 | |
Amortization of intangible assets | $ 4,668,334 |
Convertible Promissory Notes _3
Convertible Promissory Notes Payable (Details Narrative) - USD ($) | Dec. 27, 2018 | Aug. 08, 2018 | Jun. 18, 2018 | Jun. 02, 2018 | Apr. 27, 2018 | Apr. 25, 2018 | Jan. 03, 2018 | Jun. 30, 2017 | Apr. 25, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Aug. 31, 2018 | Aug. 08, 2017 | Jun. 02, 2017 |
Proceeds from convertible promissory note | $ 2,497,503 | $ 280,000 | |||||||||||||
Initial derivative expense | (5,799,282) | (309,521) | |||||||||||||
Notes payable | 56,933 | ||||||||||||||
Derivative liability expense | 5,799,282 | 309,521 | |||||||||||||
Payments of debt issuance costs | $ 1,009,714 | ||||||||||||||
Weighted average interest rate | 21.20% | 10.00% | |||||||||||||
RDW Capital, LLC [Member] | |||||||||||||||
Debt, principal balance | $ 240,000 | $ 240,000 | $ 240,000 | ||||||||||||
Purchase price | 30,000 | ||||||||||||||
Proceeds from convertible promissory note | $ 30,000 | ||||||||||||||
Debt original issue discount | 0 | 104,137 | |||||||||||||
Debt instrument interest rate | 12.00% | ||||||||||||||
Percentage of common stock option of lowest VWAP | 50.00% | ||||||||||||||
Increased interest rate per month | 24.00% | ||||||||||||||
Repayment of loan percentage | 125.00% | ||||||||||||||
Penalty expenses and related liability | $ 60,000 | ||||||||||||||
Fair value of embedded conversion option derivatives | $ 527,477 | ||||||||||||||
Advance from lender | 15,000 | $ 15,000 | |||||||||||||
Derivative liability expense | $ 497,477 | ||||||||||||||
Convertible promissory notes | 240,000 | 120,986 | |||||||||||||
Debt discount relating to bifurcated derivative | $ 0 | 14,877 | |||||||||||||
Convertible Debt [Member] | Bellridge Capital, LLC. [Member] | |||||||||||||||
Percentage of warrant purchase | 2.00% | ||||||||||||||
Warrant exercise price | $ 100 | ||||||||||||||
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 | ||||||||||||||
Maximum [Member] | |||||||||||||||
Percentage on membership interests | 99.00% | ||||||||||||||
Red Diamond Partners, LLC [Member] | |||||||||||||||
Debt, principal balance | $ 270,000 | 270,000 | |||||||||||||
Debt original issue discount | 0 | 118,370 | |||||||||||||
Repayment of loan percentage | 125.00% | ||||||||||||||
Notes payable | 270,000 | 151,630 | |||||||||||||
Red Diamond Partners, LLC [Member] | Convertible Promissory Note [Member] | |||||||||||||||
Payment of principal and interest | $ 270,000 | ||||||||||||||
Increased interest rate per month | 18.00% | 18.00% | 18.00% | ||||||||||||
Penalty expenses and related liability | $ 67,500 | ||||||||||||||
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] | 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 mature 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] | Red Diamond Partners, LLC [Member] | Maximum [Member] | |||||||||||||||
Debt, principal balance | $ 355,000 | ||||||||||||||
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% | ||||||||||||||
Repayment of loan percentage | 125.00% | ||||||||||||||
Payments of debt issuance costs | $ 177,212 | ||||||||||||||
Debt interest monthly payments | $ 156,219 | $ 232,940 | |||||||||||||
Debt converted conversion percentage | 2.00% | ||||||||||||||
Percentage of warrant purchase | 4.75% | ||||||||||||||
Debt conversion price per share | $ 1.50 | ||||||||||||||
Warrant term | 2 years | ||||||||||||||
Percentage on membership interests | 100.00% | ||||||||||||||
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 Subsequent 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 | ||||||||||||||
Percentage of warrant purchase | 4.75% | ||||||||||||||
Warrant term | 2 years | ||||||||||||||
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) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Dividend Rate [Member] | ||
Fair value derivative liabilities percentage | 0.00% | 0.00% |
Expected Term [Member] | Minimum [Member] | ||
Fair value derivative liabilities term (in years) | 4 days | 4 months 17 days |
Expected Term [Member] | Maximum [Member] | ||
Fair value derivative liabilities term (in years) | 2 years | 1 year |
Volatility [Member] | Minimum [Member] | ||
Fair value derivative liabilities percentage | 261.20% | 258.60% |
Volatility [Member] | Maximum [Member] | ||
Fair value derivative liabilities percentage | 307.70% | 526.50% |
Risk Free Interest Rate [Member] | Minimum [Member] | ||
Fair value derivative liabilities percentage | 1.32% | 0.66% |
Risk Free Interest Rate [Member] | Maximum [Member] | ||
Fair value derivative liabilities percentage | 2.63% | 1.76% |
Convertible Promissory Notes _5
Convertible Promissory Notes Payable - Schedule of Convertible Promissory Notes (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Less: current portion of convertible notes payable | $ (1,411,876) | $ (272,616) |
Convertible Promissory Notes [Member] | ||
Principal amounts | 3,007,503 | 510,000 |
Less: unamortized debt discount | (1,595,627) | (237,384) |
Convertible notes payable, net | 1,411,876 | 272,616 |
Less: current portion of convertible notes payable | (1,411,876) | (272,616) |
Convertible notes payable, net - long-term |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | Oct. 12, 2018 | Oct. 02, 2018 | Sep. 20, 2018 | Aug. 20, 2018 | Aug. 02, 2018 | Nov. 30, 2018 | Oct. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Oct. 30, 2018 | Jun. 18, 2018 |
Notes payable liabilities assumed | $ 3,503,552 | |||||||||||||||||
Payment of notes payable | $ 2,877,355 | |||||||||||||||||
Notes payable | $ 56,933 | $ 56,933 | $ 56,933 | $ 56,933 | $ 56,933 | $ 56,933 | $ 56,933 | 56,933 | ||||||||||
Proceeds from promissory notes | 2,409,898 | |||||||||||||||||
Secured Merchant Loans [Member] | ||||||||||||||||||
Notes payable liabilities assumed | 944,281 | 944,281 | 944,281 | 944,281 | 944,281 | 944,281 | 944,281 | 944,281 | ||||||||||
Payment of notes payable | 786,330 | 256,956 | ||||||||||||||||
Notes payable, related parties | 157,951 | 157,951 | 157,951 | 157,951 | 157,951 | 157,951 | 157,951 | 157,951 | ||||||||||
Proceeds from promissory notes | $ 375,000 | |||||||||||||||||
Debt instrument, periodic payment | 3,724 | |||||||||||||||||
Repayment of related party notes | 190,125 | |||||||||||||||||
Unamortized debt discount | 74,169 | 74,169 | 74,169 | 74,169 | 74,169 | 74,169 | 74,169 | 74,169 | ||||||||||
Secured Merchant Loan [Member] | ||||||||||||||||||
Notes payable | $ 420,000 | $ 209,850 | 521,250 | |||||||||||||||
Proceeds from promissory notes | 254,552 | 137,962 | ||||||||||||||||
Debt original issue discount | 123,314 | 59,850 | $ 146,250 | |||||||||||||||
Debt instrument, periodic payment | 3,000 | 1,749 | 162,000 | |||||||||||||||
Unamortized debt discount | 86,248 | 86,248 | 86,248 | 86,248 | 86,248 | 86,248 | 86,248 | 86,248 | ||||||||||
Origination fees | 10,500 | 12,038 | ||||||||||||||||
Notes and loans payable | 171,752 | 171,752 | 171,752 | 171,752 | 171,752 | 171,752 | 171,752 | 171,752 | ||||||||||
Repayment of principal amount | $ 31,634 | |||||||||||||||||
Secured Merchant Loan One [Member] | ||||||||||||||||||
Notes payable | 139,900 | |||||||||||||||||
Proceeds from promissory notes | 92,000 | |||||||||||||||||
Debt original issue discount | 39,900 | |||||||||||||||||
Debt instrument, periodic payment | 1,166 | 169,653 | ||||||||||||||||
Unamortized debt discount | 51,371 | 51,371 | 51,371 | 51,371 | 51,371 | 51,371 | 51,371 | 51,371 | ||||||||||
Origination fees | $ 8,000 | |||||||||||||||||
Notes and loans payable | 128,726 | 128,726 | 128,726 | 128,726 | 128,726 | 128,726 | 128,726 | 128,726 | ||||||||||
Promissory Notes [Member] | Former Members of Prime [Member] | ||||||||||||||||||
Notes payable liabilities assumed | 459,750 | 459,750 | 459,750 | 459,750 | 459,750 | 459,750 | 459,750 | 459,750 | ||||||||||
Payment of notes payable | 459,750 | |||||||||||||||||
Notes payable, related parties | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | ||||||||||
Promissory Notes [Member] | Former Members of Prime [Member] | Minimum [Member] | ||||||||||||||||||
Debt instrument interest rate | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | ||||||||||
Promissory Notes [Member] | Former Members of Prime [Member] | Maximum [Member] | ||||||||||||||||||
Debt instrument interest rate | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | ||||||||||
Promissory Notes [Member] | Entities or Individuals [Member] | ||||||||||||||||||
Notes payable liabilities assumed | $ 297,005 | $ 297,005 | $ 297,005 | $ 297,005 | $ 297,005 | $ 297,005 | $ 297,005 | $ 297,005 | ||||||||||
Payment of notes payable | 217,005 | |||||||||||||||||
Notes and loans payable | 130,000 | 130,000 | 130,000 | 130,000 | 130,000 | 130,000 | 130,000 | 130,000 | ||||||||||
Additional notes payable borrowed | $ 50,000 | $ 50,000 | $ 50,000 | $ 50,000 | $ 50,000 | $ 50,000 | $ 50,000 | $ 50,000 | ||||||||||
Promissory Notes [Member] | Entities or Individuals [Member] | Minimum [Member] | ||||||||||||||||||
Debt instrument interest rate | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | ||||||||||
Promissory Notes [Member] | Entities or Individuals [Member] | Maximum [Member] | ||||||||||||||||||
Debt instrument interest rate | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | ||||||||||
Promissory Notes [Member] | Individuals One [Member] | ||||||||||||||||||
Notes payable | $ 110,000 | |||||||||||||||||
Proceeds from promissory notes | 100,000 | |||||||||||||||||
Unamortized debt discount | $ 10,000 | |||||||||||||||||
Promissory Notes [Member] | Individuals Two [Member] | ||||||||||||||||||
Notes payable | $ 215,000 | |||||||||||||||||
Proceeds from promissory notes | 200,000 | |||||||||||||||||
Unamortized debt discount | 15,000 | |||||||||||||||||
10% Original Discount Senior Secured Demand Promissory Note [Member] | ||||||||||||||||||
Payment of notes payable | $ 165,000 | |||||||||||||||||
Proceeds from promissory notes | $ 150,000 | |||||||||||||||||
Notes and loans payable | $ 165,000 | |||||||||||||||||
Debt instrument interest rate | 10.00% | |||||||||||||||||
Senior Secured Demand Promissory Notes [Member] | ||||||||||||||||||
Proceeds from promissory notes | $ 699,955 | |||||||||||||||||
Debt original issue discount | 70,000 | $ 70,000 | $ 70,000 | $ 70,000 | $ 70,000 | $ 70,000 | $ 70,000 | $ 70,000 | ||||||||||
Debt instrument, periodic payment | 220,000 | |||||||||||||||||
Origination fees | 45 | |||||||||||||||||
Additional notes payable borrowed | 770,000 | 770,000 | 770,000 | 770,000 | 770,000 | 770,000 | 770,000 | 770,000 | ||||||||||
Senior Secured Demand Promissory Notes [Member] | Entities or Individuals [Member] | ||||||||||||||||||
Notes payable | 505,945 | 505,945 | 505,945 | 505,945 | 505,945 | 505,945 | 505,945 | 505,945 | ||||||||||
Unamortized debt discount | 44,055 | 44,055 | 44,055 | 44,055 | 44,055 | 44,055 | 44,055 | 44,055 | ||||||||||
Equipment Notes Payable [Member] | ||||||||||||||||||
Notes payable liabilities assumed | 523,207 | 523,207 | 523,207 | 523,207 | 523,207 | 523,207 | 523,207 | 523,207 | ||||||||||
Payment of notes payable | 113,830 | |||||||||||||||||
Notes and loans payable | 488,289 | 488,289 | 488,289 | 488,289 | 488,289 | 488,289 | 488,289 | 488,289 | ||||||||||
Additional notes payable borrowed | 135,845 | 135,845 | 135,845 | 135,845 | 135,845 | 135,845 | 135,845 | 135,845 | ||||||||||
Reduction in notes payable | 56,933 | |||||||||||||||||
Equipment Notes Payable [Member] | Auto Financing Agreement [Member] | ||||||||||||||||||
Notes payable liabilities assumed | $ 162,868 | $ 162,868 | ||||||||||||||||
Payment of notes payable | 1,832 | |||||||||||||||||
Notes and loans payable | $ 161,036 | $ 161,036 | $ 161,036 | $ 161,036 | $ 161,036 | $ 161,036 | $ 161,036 | $ 161,036 | ||||||||||
Equipment Notes Payable [Member] | Minimum [Member] | ||||||||||||||||||
Debt instrument interest rate | 6.00% | 6.00% | 6.00% | 6.00% | 6.00% | 6.00% | 6.00% | 6.00% | ||||||||||
Equipment Notes Payable [Member] | Maximum [Member] | ||||||||||||||||||
Debt instrument interest rate | 9.40% | 9.40% | 9.40% | 9.40% | 9.40% | 9.40% | 9.40% | 9.40% |
Notes Payable - Schedule of Not
Notes Payable - Schedule of Notes Payable (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Principal amounts, net | $ 56,933 | |
Less: current portion of notes payable | (1,509,804) | |
Notes payable - long-term | 424,019 | |
Notes Payable [Member] | ||
Principal amounts | 2,189,666 | |
Less: unamortized debt discount | (255,843) | |
Principal amounts, net | 1,933,823 | |
Less: current portion of notes payable | (1,509,804) | |
Notes payable - long-term | $ 424,019 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) | Nov. 30, 2018USD ($) | Jul. 16, 2018 | Jun. 18, 2018USD ($) | Dec. 31, 2018USD ($)Integer | Dec. 31, 2018USD ($)Integer | Dec. 31, 2017USD ($) |
Sublease commenced per month value | $ 300 | |||||
Monthly rent under the renewed lease plus maintenance charges and taxes | $ 1,600 | |||||
Reverse stock-split | 1-for-250 | 1 for 30 | ||||
Monthly rental fee | $ 45,275 | $ 2,016 | ||||
Number of lawsuits, pending | Integer | 0 | 0 | ||||
January 18, 2019 [Member] | ||||||
Payment of security deposit | $ 28,000 | $ 28,000 | ||||
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). | |||||
Agreement expiration date | May 31, 2023 | |||||
Commercial Lease Agreement [Member] | ||||||
Monthly rental fee | $ 6,000 | |||||
Lease expiration, month and year | 2023-11 | |||||
Operating lease description | The Company entered into a commercial lease agreement for the lease of sixty parking spaces under an operating lease through November 2023 for a monthly rental fee of $6,000. Either party can cancel this lease on the annual anniversary date of the lease provided that the party who wishes to terminate provides the other party with at least 30-day prior written notice of such termination. | |||||
Lease Agreement [Member] | ||||||
Operating lease term | 5 years | 5 years | ||||
Lease Agreement [Member] | Commencement Date to Second Lease Year [Member] | ||||||
Monthly rental fee | $ 14,000 | |||||
Lease expiration, month and year | 2023-12 | |||||
Operating lease description | The Company entered into a lease agreement for the lease of office and warehouse space and parking spaces under a non-cancelable operating lease through December 2023 | |||||
Maximum [Member] | ||||||
Common stock ownership, percentage | 99.00% | 99.00% | ||||
Minimum [Member] | ||||||
Common stock ownership, percentage | 80.00% | 80.00% | ||||
Minimum [Member] | Lease Agreement [Member] | Following Commencement Date Through End of Term [Member] | ||||||
Monthly rental fee | $ 14,420 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Lease Payments Due Under Operating Leases (Details) | Dec. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 168,000 |
2020 | 168,000 |
2021 | 173,040 |
2022 | 173,040 |
2023 | 173,040 |
Total | $ 855,120 |
Stockholders' Deficit (Details
Stockholders' Deficit (Details Narrative) - USD ($) | Dec. 27, 2018 | Jun. 18, 2018 | Mar. 30, 2017 | Oct. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Jul. 16, 2018 |
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | ||||
Acquired assets | $ 10,000 | $ 2,050,799 | |||||
Assumed liabilities | $ 48,458 | 1,452,753 | 38,458 | ||||
Value of stock issued for service rendered | 4,326,000 | ||||||
Shares issued, price per share | $ 2.06 | ||||||
Stock-based professional fees | 1,993,130 | 200,600 | |||||
Number of unregistered shares issued for acquisition | 1,500,000 | ||||||
Value of shares issued for acquisition | $ 3,090,000 | 3,090,000 | |||||
Interest expense - related party | $ 193,617 | ||||||
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 | 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 | ||||||
Related Party Lender [Member] | Purchase Agreement [Member] | |||||||
Number of common stock shares issued during the period | 50,000 | ||||||
Shares issued, price per share | $ 2 | ||||||
Value of common stock shares issued during the period | $ 100,000 | ||||||
Interest expense - related party | $ 100,000 | ||||||
Lender [Member] | Purchase Agreement [Member] | |||||||
Warrants expiration term | 2 years | ||||||
Percentage of fully diluted outstanding common stock | 2.00% | ||||||
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% | ||||||
Common Stock [Member] | |||||||
Number of common stock shares issued during the period | 113,294 | ||||||
Number of stock issued for service rendered | 2,100,000 | ||||||
Value of stock issued for service rendered | $ 2,100 | ||||||
Number of unregistered shares issued for acquisition | 1,500,000 | ||||||
Value of shares issued for acquisition | $ 1,500 | ||||||
Series A Convertible Preferred Stock [Member] | |||||||
Preferred stock, par value | $ 0.001 | ||||||
Preferred stock, stated value | $ 1 | ||||||
Dividends payable rate | 7.00% | ||||||
Number of common stock shares issued during the period | 4,000,000 | ||||||
Preferred Stock [Member] | |||||||
Dividends payable rate | 130.00% | ||||||
Debt conversion price, per share | $ 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 | $ 560,000 |
Stockholders' Deficit - Summary
Stockholders' Deficit - Summary of Warrant Activities (Details) - Warrant [Member] | 12 Months Ended |
Dec. 31, 2018USD ($)$ / sharesshares | |
Number of Warrants Balance Outstanding Beginning | shares | |
Number of Warrants Granted | shares | 1,648,570 |
Number of Warrants Balance Outstanding Ending | shares | 1,648,570 |
Number of Warrants Exercisable Ending Balance | shares | 1,648,570 |
Weighted Average Exercise Price Balance Outstanding Beginning | $ / shares | |
Weighted Average Exercise Price Granted | $ / shares | 0 |
Weighted Average Exercise Price Balance Outstanding Ending | $ / shares | 0 |
Weighted Average Exercise Price Exercisable Ending Balance | $ / shares | $ 0 |
Weighted Average Remaining Contractual Term (Years) Balance Outstanding Beginning | 0 years |
Weighted Average Remaining Contractual Term (Years) Granted | 1 year 5 months 20 days |
Weighted Average Remaining Contractual Term (Years) Balance Outstanding Ending | 1 year 5 months 20 days |
Weighted Average Remaining Contractual Term (Years) Exercisable Ending Balance | 1 year 5 months 20 days |
Aggregate Intrinsic Value Balance Outstanding Beginning | $ | |
Aggregate Intrinsic Value Balance Outstanding Ending | $ | 2,472,655 |
Aggregate Intrinsic Value Exercisable Ending Balance | $ | $ 2,472,655 |
Related Party Transactions an_2
Related Party Transactions and Balances (Details Narrative) - USD ($) | 5 Months Ended | 6 Months Ended | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Jul. 25, 2018 | Jun. 18, 2018 | |
Sublease commenced per month value | $ 300 | |||||
Rent expenses | 45,275 | $ 2,016 | ||||
Acquired balance due from former majority owner | $ 14,019 | |||||
Payment of cash acquired | 489,174 | |||||
Proceeds from promissory notes | 2,409,898 | |||||
Former Majority Owner [Member] | ||||||
Acquired balance due from former majority owner | $ 14,019 | $ 14,019 | 14,019 | |||
Payment of cash acquired | 489,174 | |||||
Cash paid for acquisition | 489,174 | |||||
Repayment of related party debt | 216,155 | |||||
Due to related party | 259,000 | 259,000 | 259,000 | |||
Employee [Member] | ||||||
Due to related party | 16,300 | 16,300 | 16,300 | |||
Costs and expenses | 56,507 | |||||
Reimbursed expenses | 40,207 | |||||
Spouse of Company's CEO [Member] | Promissory Notes [Member] | ||||||
Repayment of related party debt | 930,000 | |||||
Due to related party | $ 213,617 | |||||
Convertible promissory notes | 1,150,000 | |||||
Proceeds from promissory notes | 1,050,000 | |||||
Debt original issue discount | 6,383 | 6,383 | $ 6,383 | $ 100,000 | ||
Sublease Agreement [Member] | Affiliate [Member] | ||||||
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 | $ 0 | 3,300 | ||||
Carrier fees - related party affiliate | 50,625 | 13,350 | ||||
Due to affiliate, current | 3,700 | 3,700 | 3,700 | |||
Due to affiliate, net | $ 0 | $ 0 | $ 0 | $ 23,551 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income tax rate | 0.00% | 0.00% |
Net operating loss carry forwards | $ 4,139,807 | $ 120,600 |
Valuation allowance | $ 1,011,942 | |
Operating loss carry forward expiration year | 2037 | |
Tax Cuts and Jobs Act [Member] | ||
Income tax rate | 21.00% | 34.00% |
Income tax reconciliation description | On December 22, 2017, the Tax Cuts and Jobs Act (“the Act”) was signed into law, a tax reform bill which, among other items, reduces the current federal income tax rate to 21% from 34%. The rate reduction is effective January 1, 2018, and is permanent. |
Income Taxes - Schedule of Reco
Income Taxes - Schedule of Reconciliation of Effective Income Tax Rate (Details) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Income tax benefit at U.S. statutory rate | 21.00% | 34.00% |
Income tax benefit - State | 4.18% | 3.65% |
Permanent items | (18.19%) | (31.55%) |
Effect of change in valuation allowance | (6.99%) | (4.11%) |
Effect of change in effective rate from the Act | 0.00% | (1.99%) |
Effective income tax rate | 0.00% | 0.00% |
Income Taxes - Schedule of Comp
Income Taxes - Schedule of Components of Deferred Tax Assets (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryover | $ 1,042,542 | $ 30,600 |
Less: valuation allowance | (1,042,542) | (30,600) |
Net deferred tax asset |
Concentrations (Details Narrati
Concentrations (Details Narrative) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Sales Revenue, Net [Member] | One Customer [Member] | ||
Concentration risk, percentage | 74.10% | 23.00% |
Sales Revenue, Net [Member] | Two Customer [Member] | ||
Concentration risk, percentage | 12.00% | |
Accounts Receivable [Member] | One Customer [Member] | ||
Concentration risk, percentage | 54.50% | |
Accounts Receivable [Member] | Customer One [Member] | ||
Concentration risk, percentage | 12.00% | |
Accounts Receivable [Member] | Customer Two [Member] | ||
Concentration risk, percentage | 10.00% | |
Accounts Payable [Member] | One Carrier [Member] | ||
Concentration risk, percentage | 10.00% | 10.00% |
Segment Information (Details Na
Segment Information (Details Narrative) - Integer | 6 Months Ended | |
Dec. 31, 2018 | Jun. 18, 2018 | |
Segment Reporting [Abstract] | ||
Number of reportable segments | 3 | 1 |
Segment Information - Schedule
Segment Information - Schedule of Information by Reportable Segment (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Revenues | $ 18,118,659 | $ 1,301,332 | |
Depreciation and amortization | 664,350 | ||
Net loss | (14,478,157) | (744,805) | |
Identifiable long-lived tangible assets | 936,831 | ||
Operating Segments [Member] | |||
Revenues | 18,118,659 | 1,301,332 | |
Depreciation and amortization | 664,350 | ||
Interest expense | 1,913,692 | 312,416 | |
Net loss | 14,478,157 | 744,805 | |
Identifiable long-lived tangible assets | 936,831 | ||
Operating Segments [Member] | Save On [Member] | |||
Revenues | 4,498,499 | 1,301,332 | |
Depreciation and amortization | |||
Interest expense | |||
Net loss | 172,125 | 133,037 | |
Identifiable long-lived tangible assets | |||
Operating Segments [Member] | Prime [Member] | |||
Revenues | 13,411,210 | ||
Depreciation and amortization | 664,350 | ||
Interest expense | 413,424 | ||
Net loss | 2,482,599 | ||
Identifiable long-lived tangible assets | 936,831 | ||
Operating Segments [Member] | Shypdirect [Member] | |||
Revenues | 208,950 | ||
Depreciation and amortization | |||
Interest expense | |||
Net loss | 197,883 | ||
Identifiable long-lived tangible assets | |||
Operating Segments [Member] | Other [Member] | |||
Interest expense | [1] | 1,500,268 | 312,416 |
Net loss | [1] | $ 11,625,550 | $ 611,768 |
[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 ($) | Apr. 15, 2019 | Apr. 11, 2019 | Apr. 10, 2019 | Apr. 09, 2019 | Mar. 13, 2019 | Mar. 06, 2019 | Feb. 25, 2019 | Jan. 28, 2019 | Jan. 24, 2019 | Jan. 14, 2019 | Mar. 30, 2017 | Mar. 31, 2019 | Feb. 28, 2019 | Jan. 31, 2019 | Apr. 14, 2019 | Apr. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Jul. 25, 2018 | Jun. 18, 2018 |
Notes payable | $ 56,933 | $ 56,933 | |||||||||||||||||||
Proceeds from promissory notes | 2,409,898 | ||||||||||||||||||||
Number of common stock issued for services, value | $ 4,326,000 | ||||||||||||||||||||
Shares issued price per shares | $ 2.06 | ||||||||||||||||||||
Series A Convertible Preferred Stock [Member] | |||||||||||||||||||||
Debt instrument interest rate | 7.00% | 7.00% | |||||||||||||||||||
Number of common stock issued | 4,000,000 | ||||||||||||||||||||
Promissory Notes [Member] | Spouse of Company's CEO [Member] | |||||||||||||||||||||
Proceeds from promissory notes | $ 1,050,000 | ||||||||||||||||||||
Debt original issue discount | $ 6,383 | $ 6,383 | $ 100,000 | ||||||||||||||||||
Subsequent Event [Member] | Executive Officer, Employees and Consultants [Member] | |||||||||||||||||||||
Number of stock issued for service rendered | 2,670,688 | ||||||||||||||||||||
Number of common stock issued for services, value | $ 2,750,809 | ||||||||||||||||||||
Shares issued price per shares | $ 1.03 | ||||||||||||||||||||
Stock issued during period stock-based compensation | $ 2,750,809 | ||||||||||||||||||||
Subsequent Event [Member] | Series A Convertible Preferred Stock [Member] | |||||||||||||||||||||
Number of restricted common stock issued | 2,600,000 | ||||||||||||||||||||
Debt conversion shares | 4,000,000 | ||||||||||||||||||||
Subsequent Event [Member] | Convertible Note Agreement [Member] | |||||||||||||||||||||
Notes payable | $ 2,000,000 | ||||||||||||||||||||
Debt instrument, periodic payment | 117,611 | ||||||||||||||||||||
Convertible debt | $ 30,000 | ||||||||||||||||||||
Conversion description | All past due principal and interest on this Note shall bear interest from maturity of such principal or interest (in wha1ever manner same may be brought about) until paid at the lesser of (i) 20% per annum, or (ii) the highest non-usurious rate allowed by applicable law. This Note may be converted by Holder at any time in principal amounts of $100,000 in accordance with the terms by delivery of written notice to the Company, into that number of shares of common stock equal to the amount obtained by dividing the portion of the aggregate principal amount of this Note that is being converted by $11.81. | ||||||||||||||||||||
Debt instrument, description | Commencing on May 11, 2019, and continuing on the eleventh day of each month thereafter, payments of interest only on the outstanding principal balance of this Note of $30,000 shall be due and payable. Commencing on November 11, 2019 and continuing on the eleventh day of each month thereafter through April 11, 2021, payments of principal and interest of $117,611, if not sooner converted as provided in the note agreement. | ||||||||||||||||||||
Debt converted conversion percentage | 18.00% | ||||||||||||||||||||
Debt coversion amount | $ 100,000 | ||||||||||||||||||||
Debt conversion price per share | $ 11.81 | ||||||||||||||||||||
Subsequent Event [Member] | Offering of Equity [Member] | |||||||||||||||||||||
Proceeds from promissory notes | $ 4,000,000 | ||||||||||||||||||||
Debt instrument, description | If the Company completes an offering of equity or equity linked securities (including warrants, convertible preferred stock, convertible debentures or convertible promissory note) which results in gross proceeds to the Company of at least $4,000,000, then the Company shall use a portion of the proceeds thereof to repay not less than half of the obligations then outstanding pursuant to the Note | ||||||||||||||||||||
Subsequent Event [Member] | Offering of Debt [Member] | |||||||||||||||||||||
Proceeds from promissory notes | $ 3,000,000 | ||||||||||||||||||||
Debt instrument, description | If the Company completes an offering of debt which results in gross proceeds to the Company of at least $3,000,000, then the Company shall use a portion of the proceeds thereof to repay any remaining obligations then outstanding pursuant to the Note | ||||||||||||||||||||
Subsequent Event [Member] | Bellridge Capital, L.P [Member] | |||||||||||||||||||||
Debt instrument interest rate | 10.00% | ||||||||||||||||||||
Convertible debt | $ 2,497,502 | ||||||||||||||||||||
Reduction of convertible promissory debt | $ 1,800,000 | ||||||||||||||||||||
Number of restricted common stock issued | 800,000 | ||||||||||||||||||||
Beneficial ownership limitation, description | Such issuances will occur in increments of no fewer than the lesser of (i) 50,000 shares and (ii) the balance of the 800,000 shares owed. The "Beneficial Ownership Limitation" shall be 4.99% of the number of shares of the Company's common stock outstanding immediately after giving effect to the issuance of shares of common stock issuable pursuant to this Agreement. | ||||||||||||||||||||
Number of owed shares | 800,000 | ||||||||||||||||||||
Percentage for beneficial ownership limitation | 4.99% | ||||||||||||||||||||
Number of common stock issued | 100,000 | ||||||||||||||||||||
Note maturity date | Aug. 31, 2020 | ||||||||||||||||||||
Reduction of interest rate | 5.00% | ||||||||||||||||||||
Subsequent Event [Member] | Bellridge Capital, L.P [Member] | Warrants [Member] | |||||||||||||||||||||
Number of restricted common stock issued | 360,000 | ||||||||||||||||||||
Common stock outstanding percentage | 4.75% | ||||||||||||||||||||
Number of warrants exercised | 240,000 | ||||||||||||||||||||
Subsequent Event [Member] | RedDiamond Partners LLC [Member] | |||||||||||||||||||||
Proceeds from promissory notes | $ 4,000,000 | ||||||||||||||||||||
Convertible debt | $ 510,000 | ||||||||||||||||||||
Note maturity date | Dec. 31, 2020 | ||||||||||||||||||||
Debt instrument, description | If the Company completes an offering of equity or equity linked securities (including warrants, convertible preferred stock, convertible debentures or convertible promissory note) which results in gross proceeds to the Company of at least $4,000,000, then the Company shall use a portion of the proceeds thereof to repay not less than half of the obligations then outstanding pursuant to the notes. | ||||||||||||||||||||
Subsequent Event [Member] | Individual [Member] | Convertible Note Agreement [Member] | |||||||||||||||||||||
Notes payable | $ 500,000 | ||||||||||||||||||||
Debt instrument, periodic payment | 31,902 | ||||||||||||||||||||
Convertible debt | $ 7,500 | ||||||||||||||||||||
Conversion description | All past due principal and interest on this Note shall bear interest from maturity of such principal or interest (in wha1ever manner same may be brought about) until paid at the lesser of (i) 20% per annum, or (ii) the highest non-usurious rate allowed by applicable law. This Note may be converted by Holder at any time in principal amounts of $100,000 in accordance with the terms by delivery of written notice to the Company, into that number of shares of common stock equal to the amount obtained by dividing the portion of the aggregate principal amount of this Note that is being converted by $1.37 | ||||||||||||||||||||
Debt instrument, description | Commencing on April 11, 2019, and continuing on the eleventh day of each month thereafter, payments of interest only on the outstanding principal balance of this Note of $7,500 shall be due and payable. Commencing on October 11, 2019 and continuing on the eleventh day of each month thereafter through April 11, 2021, payments of principal and interest of $31,902 shall be made, if not sooner converted as provided in the note agreement. | ||||||||||||||||||||
Debt converted conversion percentage | 18.00% | ||||||||||||||||||||
Debt coversion amount | $ 100,000 | ||||||||||||||||||||
Debt conversion price per share | $ 1.37 | ||||||||||||||||||||
Subsequent Event [Member] | One Secured Merchant Loan [Member] | |||||||||||||||||||||
Notes payable | $ 764,500 | ||||||||||||||||||||
Repayment of principal amount | 223,329 | ||||||||||||||||||||
Origination fees | 10,034 | ||||||||||||||||||||
Proceeds from promissory notes | 316,637 | ||||||||||||||||||||
Debt original issue discount | 214,500 | ||||||||||||||||||||
Debt instrument, periodic payment | $ 6,371 | ||||||||||||||||||||
Subsequent Event [Member] | Second Secured Merchant Loan [Member] | |||||||||||||||||||||
Notes payable | $ 417,000 | ||||||||||||||||||||
Origination fees | 7,998 | ||||||||||||||||||||
Proceeds from promissory notes | 292,002 | ||||||||||||||||||||
Debt original issue discount | 117,000 | ||||||||||||||||||||
Debt instrument, periodic payment | $ 3,972 | ||||||||||||||||||||
Subsequent Event [Member] | Third Secured Merchant Loan [Member] | |||||||||||||||||||||
Notes payable | $ 759,000 | ||||||||||||||||||||
Repayment of principal amount | 209,153 | ||||||||||||||||||||
Origination fees | 25,750 | ||||||||||||||||||||
Proceeds from promissory notes | 315,097 | ||||||||||||||||||||
Debt original issue discount | 209,000 | ||||||||||||||||||||
Debt instrument, periodic payment | $ 4,897 | ||||||||||||||||||||
Subsequent Event [Member] | Fourth Secured Merchant Loan [Member] | |||||||||||||||||||||
Notes payable | $ 1,199,200 | ||||||||||||||||||||
Repayment of principal amount | $ 703,899 | 69,327 | |||||||||||||||||||
Origination fees | 78,286 | ||||||||||||||||||||
Proceeds from promissory notes | 652,387 | ||||||||||||||||||||
Debt original issue discount | 399,200 | ||||||||||||||||||||
Debt instrument, periodic payment | $ 11,993 | ||||||||||||||||||||
Reduction of origination fees and debt discounts | $ 229,195 | ||||||||||||||||||||
Subsequent Event [Member] | Promissory Notes [Member] | Seven Individuals [Member] | |||||||||||||||||||||
Notes payable | $ 1,616,250 | ||||||||||||||||||||
Proceeds from promissory notes | 1,435,000 | ||||||||||||||||||||
Debt original issue discount | $ 181,250 | ||||||||||||||||||||
Debt due date, description | These Notes are due between 45 and 273 days from the respective Note date. | ||||||||||||||||||||
Warrant purchase of shares | 53,000 | ||||||||||||||||||||
Purchase of common stock awards | 53,000 | ||||||||||||||||||||
Warrant exercise price | $ 1 | ||||||||||||||||||||
Warrant term | 5 years | ||||||||||||||||||||
Subsequent Event [Member] | Promissory Notes [Member] | Individuals [Member] | |||||||||||||||||||||
Notes payable | $ 165,000 | $ 26,900 | |||||||||||||||||||
Repayment of principal amount | 55,000 | $ 60,000 | |||||||||||||||||||
Proceeds from promissory notes | 150,000 | ||||||||||||||||||||
Debt original issue discount | $ 15,000 | ||||||||||||||||||||
Warrant purchase of shares | 1,000 | ||||||||||||||||||||
Warrant exercise price | $ 1 | ||||||||||||||||||||
Warrant term | 5 years | ||||||||||||||||||||
Debt instrument interest rate | 15.00% | ||||||||||||||||||||
Convertible debt | $ 77,090 | ||||||||||||||||||||
Subsequent Event [Member] | Promissory Notes [Member] | Spouse of Company's CEO [Member] | |||||||||||||||||||||
Repayment of principal amount | $ 230,000 | $ 220,000 | |||||||||||||||||||
Debt original issue discount | $ 30,000 |