Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 14, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | Transportation & Logistics Systems, Inc. | |
Entity Central Index Key | 0001463208 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
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 Common Stock, Shares Outstanding | 11,739,236 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
CURRENT ASSETS: | ||
Cash | $ 6,742 | $ 296,196 |
Accounts receivable | 589,193 | 441,497 |
Prepaid expenses and other current assets | 683,721 | 509,068 |
Assets of discontinued operations | 335,894 | |
Due from related party | 89,873 | |
Total Current Assets | 1,369,529 | 1,582,655 |
OTHER ASSETS: | ||
Security deposit | 103,100 | 5,000 |
Property and equipment, net | 258,719 | 936,831 |
Right of use assets, net | 1,887,119 | |
Intangible asset, net | 2,200,758 | 4,668,334 |
Total Other Assets | 4,449,696 | 5,610,165 |
TOTAL ASSETS | 5,819,225 | 7,192,820 |
CURRENT LIABILITIES: | ||
Convertible notes payable, net of debt discounts of $2,305,184 and $1,595,627, respectively | 1,321,213 | 1,411,876 |
Notes payable, net of debt discount of $4,485 and $255,843, respectively | 1,812,296 | 1,509,804 |
Notes payable - related party, net of debt discount of $0 and $6,383, respectively | 500,000 | 213,617 |
Accounts payable | 1,425,198 | 655,183 |
Accrued expenses | 1,076,496 | 566,574 |
Insurance payable | 1,340,622 | 1,108,368 |
Lease liabilities | 337,487 | |
Liabilities of discontinued operations | 440,745 | |
Derivative liability | 1,917,888 | 7,888,684 |
Due to related parties | 269,760 | 275,300 |
Accrued compensation and related benefits | 287,421 | 435,944 |
Total Current Liabilities | 10,288,381 | 14,506,095 |
LONG-TERM LIABILITIES: | ||
Lease liability | 1,570,276 | |
Convertible notes payable | 443,443 | |
Notes payable - related party | 510,000 | |
Notes payable | 89,088 | 424,019 |
Total Long-term Liabilities | 2,612,807 | 424,019 |
Total Liabilities | 12,901,188 | 14,930,114 |
Commitments and Contingencies (See Note 10) | ||
SHAREHOLDERS' DEFICIT: | ||
Common stock, par value $0.001 per share; authorized 500,000,000 shares; issued and outstanding 11,445,236 and 4,220,837 at September 30, 2019 and December 31, 2018, respectively | 11,445 | 4,220 |
Common stock issuable, par value $0.001 per share; 50,000 and 0 shares | 50 | |
Additional paid-in capital | 46,626,335 | 7,477,422 |
Accumulated deficit | (53,721,493) | (15,222,936) |
Total Shareholders' Deficit | (7,081,963) | (7,737,294) |
Total Liabilities and Shareholders' Deficit | 5,812,225 | 7,192,820 |
Series A Convertible Preferred Stock [Member] | ||
SHAREHOLDERS' DEFICIT: | ||
Preferred stock, par value $0.001; authorized 10,000,000 shares: | 4,000 | |
Series B Convertible Preferred Stock [Member] | ||
SHAREHOLDERS' DEFICIT: | ||
Preferred stock, par value $0.001; authorized 10,000,000 shares: | $ 1,700 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Convertible notes payable, debt discounts | $ 2,305,184 | $ 1,595,627 |
Notes payable, net of debt discount | 4,485 | 255,843 |
Notes payable - related party, net of debt discount | $ 0 | $ 6,383 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 11,445,236 | 4,220,837 |
Common stock, shares outstanding | 11,445,236 | 4,220,837 |
Common stock issuable, par value | $ 0.001 | $ 0.001 |
Common stock issuable, shares | 50,000 | 0 |
Series A Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 4,000,000 | 4,000,000 |
Preferred stock, shares issued | 0 | 4,000,000 |
Preferred stock, shares outstanding | 0 | 4,000,000 |
Preferred stock, liquidation value | $ 0 | $ 4,000,000 |
Series B Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,700,000 | 1,700,000 |
Preferred stock, shares issued | 1,700,000 | 0 |
Preferred stock, shares outstanding | 1,700,000 | 0 |
Preferred stock, liquidation value | $ 1,700 | $ 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
REVENUES | $ 7,759,451 | $ 4,831,952 | $ 21,664,070 | $ 5,458,772 |
COST OF REVENUES | 6,293,699 | 4,806,605 | 19,366,374 | 5,342,550 |
GROSS PROFIT | 1,465,752 | 25,347 | 2,297,696 | 116,222 |
OPERATING EXPENSES: | ||||
Compensation and related benefits | 3,433,741 | 459,186 | 11,150,955 | 3,608,962 |
Legal and professional fees | 517,277 | 306,613 | 1,588,359 | 1,680,606 |
Rent | 83,911 | 269,148 | ||
General and administrative expenses | 720,481 | 1,663,865 | 2,316,016 | 1,867,654 |
Impairment loss | 1,724,591 | |||
Total Operating Expenses | 4,755,410 | 2,429,664 | 17,049,069 | 7,157,222 |
LOSS FROM OPERATIONS | (3,289,658) | (2,404,317) | (14,751,373) | (7,041,000) |
OTHER (EXPENSES) INCOME: | ||||
Interest expense | (2,339,508) | (914,093) | (4,936,951) | (1,305,648) |
Interest expense - related parties | (35,753) | (40,000) | (183,392) | (40,000) |
Loan fees | (601,121) | |||
(Loss) gain on debt extinguishment, net | (4,714,751) | 39,203,017 | ||
Derivative expense | (981,244) | (5,123,985) | (56,018,849) | (14,629,337) |
Total Other (Expenses) Income | (8,071,256) | (6,078,078) | (22,537,296) | (15,974,985) |
LOSS FROM CONTINUING OPERATIONS | (11,360,914) | (8,482,395) | (37,288,669) | (23,015,985) |
(LOSS) INCOME FROM DISCONTINUED OPERATIONS: | ||||
(Loss) income from discontinued operations | 13,250 | (681,426) | 96,851 | |
NET LOSS | (11,360,914) | (8,469,145) | (37,970,095) | (22,919,134) |
Deemed dividend | (981,548) | (981,548) | ||
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS' | $ (12,342,462) | $ (8,469,145) | $ (38,951,643) | $ (22,919,134) |
NET LOSS PER COMMON SHARE - BASIC AND DILUTED | ||||
Net loss from continuing operations | $ (1.10) | $ (2.03) | $ (4.34) | $ (7.86) |
Net (loss) income from discontinued operations | 0 | (0.08) | 0.03 | |
Net loss per common share - basic and diluted | $ (1.10) | $ (2.03) | $ (4.42) | $ (7.83) |
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING: | ||||
Basic and diluted | 11,247,054 | 4,170,106 | 8,811,489 | 2,928,392 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Shareholders' Deficit (Unaudited) - USD ($) | Preferred Stock Series A [Member] | Preferred Stock Series B [Member] | Common Stock [Member] | Common Stock Issuable [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Total |
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 | |||||
Net loss | 60,925 | 60,925 | |||||
Balance at Mar. 31, 2018 | $ 4,000 | $ 570 | (34,928) | (683,854) | (714,212) | ||
Balance, shares at Mar. 31, 2018 | 4,000,000 | 570,106 | |||||
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 | |||||
Net loss | (22,919,134) | ||||||
Balance at Sep. 30, 2018 | $ 4,000 | $ 4,170 | 7,377,472 | (23,663,913) | (16,278,271) | ||
Balance, shares at Sep. 30, 2018 | 4,000,000 | 4,170,106 | |||||
Balance at Mar. 31, 2018 | $ 4,000 | $ 570 | (34,928) | (683,854) | (714,212) | ||
Balance, shares at Mar. 31, 2018 | 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 | ||||||
Shares issued for acquisition | $ 1,500 | 3,088,500 | 3,090,000 | ||||
Shares issued for acquisition, shares | 1,500,000 | ||||||
Net loss | (14,510,914) | (14,510,914) | |||||
Balance at Jun. 30, 2018 | $ 4,000 | $ 4,170 | 7,377,472 | (15,194,768) | (7,809,126) | ||
Balance, shares at Jun. 30, 2018 | 4,000,000 | 4,170,106 | |||||
Net loss | (8,469,145) | (8,469,145) | |||||
Balance at Sep. 30, 2018 | $ 4,000 | $ 4,170 | 7,377,472 | (23,663,913) | (16,278,271) | ||
Balance, shares at Sep. 30, 2018 | 4,000,000 | 4,170,106 | |||||
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 | |||||
Shares issued for services | $ 2,671 | 2,748,137 | 2,750,808 | ||||
Shares issued for services, shares | 2,670,688 | ||||||
Warrants issued in connection with debt | 63,581 | 63,581 | |||||
Cumulative effect adjustment for change in derivative accounting | 453,086 | 453,086 | |||||
Net loss | (19,647,723) | (19,647,723) | |||||
Balance at Mar. 31, 2019 | $ 4,000 | $ 6,891 | 10,289,140 | (34,417,573) | (24,117,542) | ||
Balance, shares at Mar. 31, 2019 | 4,000,000 | 6,891,525 | |||||
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 | |||||
Net loss | (37,970,095) | ||||||
Balance at Sep. 30, 2019 | $ 1,700 | $ 11,445 | $ 50 | 46,626,335 | (53,721,493) | (7,081,963) | |
Balance, shares at Sep. 30, 2019 | 1,700,000 | 11,445,236 | 50,000 | ||||
Balance at Mar. 31, 2019 | $ 4,000 | $ 6,891 | 10,289,140 | (34,417,573) | (24,117,542) | ||
Balance, shares at Mar. 31, 2019 | 4,000,000 | 6,891,525 | |||||
Shares issued for services | $ 230 | 2,465,270 | 2,465,500 | ||||
Shares issued for services, shares | 230,000 | ||||||
Warrants issued in connection with debt | 672,864 | 672,864 | |||||
Shares issued for debt and warrant modifications | $ 700 | $ 700 | 17,932,600 | 17,934,000 | |||
Shares issued for debt and warrant modifications, shares | 700,000 | 700,000 | |||||
Shares issued for conversion of preferred shares | $ (4,000) | $ 2,600 | 1,400 | ||||
Shares issued for conversion of preferred shares, shares | (4,000,000) | 2,600,000 | |||||
Return and cancellation of shares for disposal of Save On | $ (1,000) | 57,987 | 56,987 | ||||
Return and cancellation of shares for disposal of Save On, shares | (1,000,000) | ||||||
Stock options granted to employees of discontinued operations | 700,816 | 700,816 | |||||
Net loss | (6,961,458) | (6,961,458) | |||||
Balance at Jun. 30, 2019 | $ 9,421 | $ 700 | 32,120,077 | (41,379,031) | (9,248,833) | ||
Balance, shares at Jun. 30, 2019 | 9,421,525 | 700,000 | |||||
Shares issued for services | $ 1,000 | $ 50 | 2,527,596 | 2,528,646 | |||
Shares issued for services, shares | 1,000,000 | 50,000 | |||||
Common stock issued for cash and warrants | $ 585 | 1,461,915 | 1,462,500 | ||||
Common stock issued for cash and warrants, shares | 585,000 | ||||||
Common stock issued for debt conversion | $ 1,439 | 3,595,339 | 3,596,778 | ||||
Common stock issued for debt conversion, shares | 1,438,711 | ||||||
Issuance of Series B preferred stock to settle common shares issuable | $ 700 | $ (700) | |||||
Issuance of Series B preferred stock to settle common shares issuable, shares | 700,000 | (700,000) | |||||
Warrants issued in connection with debt conversion | 3,550,531 | 3,550,531 | |||||
Relative fair value of warrants issued in connection with convertible debt | 1,225,109 | 1,225,109 | |||||
Adjustment of conversion for debt extinguishment | 1,164,220 | 1,164,220 | |||||
Deemed dividend related to price protection | 981,548 | (981,548) | |||||
Net loss | (11,360,914) | (11,360,914) | |||||
Balance at Sep. 30, 2019 | $ 1,700 | $ 11,445 | $ 50 | $ 46,626,335 | $ (53,721,493) | $ (7,081,963) | |
Balance, shares at Sep. 30, 2019 | 1,700,000 | 11,445,236 | 50,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (37,970,095) | $ (22,919,134) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization expense | 873,020 | 1,498,285 |
Amortization of debt discount to interest expense | 3,991,061 | 1,045,000 |
Amortization of debt discount to interest expense - related party | 26,383 | |
Stock-based compensation and consulting fees | 7,744,954 | 4,326,000 |
Stock-based compensation discontinued operations | 700,816 | |
Non-cash loan fees | 601,121 | |
Derivative expense (income) | 56,018,849 | 14,629,337 |
Non-cash components of gain on extinguishment of debt, net | (39,316,359) | |
Deferred rent | 20,644 | |
Loss on disposal of property and equipment | 195,624 | 14,816 |
Impairment loss | 1,724,591 | |
Change in operating assets and liabilities: | ||
Accounts receivable | (147,696) | 426,801 |
Prepaid expenses and other current assets | (174,653) | (91,611) |
Assets of discontinued operations | (53,193) | (104,999) |
Due from related party | (89,873) | |
Security deposit | (98,100) | |
Accounts payable and accrued expenses | 1,626,306 | 97,864 |
Insurance payable | 232,254 | 309,363 |
Liabilities of discontinued operations | 10,954 | 256,904 |
Accrued compensation and related benefits | (148,523) | 275,531 |
NET CASH USED IN OPERATING ACTIVITIES | (4,231,915) | (235,843) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Cash received in acquisition | 38,198 | |
Cash paid for acquisition | (489,174) | |
Decrease in cash from disposal of subsidiary | (5,625) | |
Purchase of property and equipment | (59,256) | (303,958) |
Proceeds from sale of property and equipment | 81,000 | |
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | 16,119 | (754,934) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from sale of common stock and warrants | 1,462,500 | |
Proceeds from convertible notes payable - related party | 2,500,000 | 2,497,503 |
Debt issue costs paid | (1,009,714) | |
Proceeds from convertible notes payable | 1,938,900 | |
Repayment of convertible notes payable | (473,579) | |
Net proceeds from notes payable | 7,791,020 | 710,845 |
Repayment of notes payable | (9,584,459) | (1,568,708) |
Net proceeds from notes payable - related party | 755,000 | 650,000 |
Repayment of notes payable - related party | (495,000) | (490,000) |
Net proceeds from related parties | 31,960 | 258,493 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 3,926,342 | 1,048,419 |
NET (DECREASE) INCREASE IN CASH | (289,454) | 57,642 |
CASH, beginning of period | 296,196 | 106,576 |
CASH, end of period | 6,742 | 164,218 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Interest | 4,147,828 | 100,895 |
Income taxes | ||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Debt discounts recorded | 1,288,690 | 1,487,788 |
Increase in derivative liability and equity | 936,645 | |
Increase in right of use asset and lease liability | 1,984,320 | |
Conversion of debt and accrued interest for common stock | 3,596,777 | |
Liabilities assumed in acquisition | 3,503,552 | |
Less: assets acquired in acquisition | 1,959,655 | |
Net liabilities assumed | 1,543,897 | |
Fair value of shares for acquisition | 3,090,000 | |
Increase in intangible assets - non-cash | $ 4,633,897 |
Organization and Business Opera
Organization and Business Operations | 9 Months Ended |
Sep. 30, 2019 | |
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. 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 May 1, 2019, the Company entered into a Share Exchange Agreement with Save On and Steven Yariv, whereby the Company returned all of the stock of Save On to Steven Yariv in exchange for Mr. Yariv conveying 1,000,000 shares of common stock of the Company back to the Company. In addition, the Company granted an aggregate of 80,000 options to certain employees of Save On. Mr. Yariv ceased to be an officer or director of the Company effective with the filing of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 as filed with the Securities and Exchange Commission of April 16, 2019. 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”). 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, 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 | 9 Months Ended |
Sep. 30, 2019 | |
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 condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and disclosures necessary for comprehensive presentation of financial position, results of operations or cash flow. However, these unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments and a non-recurring adjustment for the impairment of intangible assets, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these unaudited interim condensed consolidated financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2018, and notes thereto included in the Company’s annual report on Form 10-K, filed on April 16, 2019. The Company follows the same accounting policies in the preparation of its annual and interim reports. The results of operations in interim periods are not necessarily an indication of operating results to be expected for the full year. The unaudited condensed consolidated financial statements of the Company include the accounts of TLSS and its wholly owned subsidiaries, Save On (through April 30, 2019), Prime and Shypdirect. All intercompany accounts and transactions have been eliminated in consolidation. On May 1, 2019, the Company entered into a Share Exchange Agreement with Save On and Steven Yariv, whereby the Company returned all of the stock of Save On to Steven Yariv in exchange for Mr. Yariv conveying 1,000,000 shares of common stock of the Company back to the Company. Pursuant to Accounting Standard Codification (“ASC”) 205-20-45, the financial statement in which net income or loss of a business entity is reported shall report the results of operations of the discontinued operation in the period in which a discontinued operation either has been disposed of or is classified as held for sale. Accordingly, beginning in the second quarter of 2019, the period that Save On was disposed of, the Company reflects Save On as a discontinued operation and such presentation is retroactively applied to all periods presented in the accompany condensed consolidated financial statements. Going concern The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. As reflected in the accompanying condensed consolidated financial statements, for the nine months ended September 30, 2019, the Company had a net loss of $37,970,095 and net cash used in operations was $4,231,915, respectively. Additionally, the Company had an accumulated deficit, shareholders’ deficit, and a working capital deficit of $53,721,493, $7,081,963 and $8,918,852, respectively, at September 30, 2019. Furthermore, the Company failed to make required payments of principal and interest on certain of 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 7). 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, 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 and notes payable, 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 condensed consolidated financial statements, in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Significant estimates included in the accompanying unaudited condensed consolidated financial statements and footnotes include the valuation of accounts receivable, the useful life of property and equipment, the valuation of intangible assets, the valuation of right of use assets and related liabilities, 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, the value of claims against the Company, and the fair value of assets acquired and liabilities assumed in business acquisitions. Fair value of financial instruments The Financial Accounting Standards Board (“FASB”) issued 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 September 30, 2019 and December 31, 2018: At September 30, 2019 At December 31, 2018 Description Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Derivative liabilities — — $ 1,917,888 — — $ 7,888,684 A roll forward of the level 3 valuation financial instruments is as follows: For the Nine Balance at beginning of period $ 7,888,684 Initial valuation of derivative liabilities included in debt discount 936,644 Initial valuation of derivative liabilities included in derivative expense 1,017,323 Gain on extinguishment of debt related to repayment of debt (246,110 ) Gain on extinguishment of debt related to April 9, 2019 modifications (61,841,708 ) Cumulative effect adjustment for change in derivative accounting (838,471 ) Change in fair value included in derivative expense 55,001,526 Balance at end of period $ 1,917,888 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 September 30, 2019 and December 31, 2018, 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 September 30, 2019 and December 31, 2018. The Company has not experienced any losses in such accounts through September 30, 2019. 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 to six 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, less any impairment charges. At September 30, 2019 and 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. Leases In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The updated guidance requires lessees to recognize lease assets and lease liabilities for most operating leases. In addition, the updated guidance requires that lessors separate lease and non-lease components in a contract in accordance with the new revenue guidance in ASC 606. The updated guidance is effective for interim and annual periods beginning after December 15, 2018. On January 1, 2019, the Company adopted ASU No. 2016-02, applying the package of practical expedients to leases that commenced before the effective date whereby the Company elected to not reassess the following: (i) whether any expired or existing contracts contain leases and; (ii) initial direct costs for any existing leases. For contracts entered into on or after the effective date, at the inception of a contract the Company assessed whether the contract is, or contains, a lease. The Company’s assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether it has the right to direct the use of the asset. The Company will allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments. The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less. Operating lease ROU assets represents the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company use an incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Lease expense for minimum lease payments is amortized on a straight-line basis over the lease term and is included in general and administrative expenses in the condensed consolidated statements of operations. 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. On May 1, 2019, the Company disposed of its Save On business segment and the results of operations of Save On are included in discontinued operations. Accordingly, during the nine months ended September 30, 2019 and 2018, the Company believes that it operates in one operating segment related to deliveries for on-line retailers in New York, New Jersey and Pennsylvania and 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. 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 815-10-05-4, Derivatives and Hedging Contracts in Entity’s Own Equity In July 2017, FASB issued ASU No. 2017-11, Earnings Per Share Distinguishing Liabilities from Equity Derivatives and Hedging Accounting for Certain Financial Instruments with Down Round Features 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 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. For the Company’s Save On business activities, through the date of disposition on May 1, 2019, the Company recognized 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. Management has reviewed the revenue disaggregation disclosure requirements pursuant to ASC 606 and determined that no further disaggregation disclosure is required to be presented. Basic and diluted loss per share Pursuant to ASC 260-10-45, basic loss per common share is computed by dividing net loss attributable to common shareholders 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 attributable to common shareholders 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: September 30, 2019 September 30, 2018 Stock warrants 3,520,827 1,442,434 Stock options 80,000 - Convertible debt 987,936 7,912,857 Series A convertible preferred stock - 7,912,857 Series B convertible preferred stock 1,700,000 - 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. Recent Accounting Pronouncements In July 2017, FASB issued ASU No. 2017-11, Earnings Per Share Distinguishing Liabilities from Equity Derivatives and Hedging Accounting for Certain Financial Instruments with Down Round Features In August 2018, the FASB issued ASU 2018-13 to modify the disclosure requirements on fair value measurements. The amendments are effective for years 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. |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Sep. 30, 2019 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | NOTE 3 – DISCONTINUED OPERATIONS On May 1, 2019, the Company entered into a Share Exchange Agreement with Save On and Steven Yariv, whereby the Company returned all of the stock of Save On to Steven Yariv in exchange for Mr. Yariv conveying 1,000,000 shares of common stock of the Company back to the Company. In addition, the Company granted an aggregate of 80,000 options to certain employees of Save On. Mr. Yariv ceased to be an officer or director of the Company effective with the filing of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 as filed with the Securities and Exchange Commission of April 16, 2019. Pursuant to Accounting Standard Codification (“ASC”) 205-20-45, the financial statement in which net income or loss of a business entity is reported shall report the results of operations of the discontinued operation in the period in which a discontinued operation either has been disposed of or is classified as held for sale. Accordingly, the Company shall reflect Save On as a discontinued operations beginning in the second quarter of 2019, the period that Save On was disposed of and retroactively for all periods presented in the accompanying condensed consolidated financial statements. The business of Save On are considered discontinued operations because: (a) the operations and cash flows of Save On were eliminated from the Company’s operations; and (b) the Company has no interest in the divested operations. The assets and liabilities classified as discontinued operations in the Company’s condensed consolidated financial statements as of September 30, 2019 and December 31, 2018, and for the three and nine months ended September 30, 2019 and 2018 is set forth below. September 30, 2019 December 31, 2018 Assets: Current assets: Accounts receivable, net $ - $ 334,275 Prepaid expenses and other - 1,619 Total current assets - 335,894 Total assets $ - $ 335,894 Liabilities: Current liabilities: Accounts payable $ - $ 409,053 Accounts payable – related party - 3,700 Accrued expenses and other liabilities - 27,992 Total current liabilities - 440,745 Total liabilities $ - $ 440,745 The summarized operating result of discontinued operations included in the Company’s condensed consolidated statements of operations is as follows: Three Months Ended Nine months Ended September 30, September 30, 2019 2018 2019 2018 Revenues $ - $ 1,063,208 $ 1,491,253 $ 3,372,979 Cost of revenues - 836,990 1,114,269 2,593,624 Gross profit - 226,218 376,984 779,355 Operating expenses - 212,968 1,058,410 682,504 Loss from discontinued operations - 13,250 (681,426 ) 96,851 Loss on disposal of discontinued operations - - - - Loss from discontinued operations, net of income taxes $ - $ 13,250 $ (681,426 ) $ 96,851 |
Accounts Receivable
Accounts Receivable | 9 Months Ended |
Sep. 30, 2019 | |
Receivables [Abstract] | |
Accounts Receivable | NOTE 4 – ACCOUNTS RECEIVABLE At September 30, 2019 and December 31, 2018, accounts receivable, net consisted of the following: September 30, 2019 December 31, 2018 Accounts receivable $ 589,193 $ 441,497 Allowance for doubtful accounts - - Accounts receivable, net $ 589,193 $ 441,497 |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | NOTE 5 - PROPERTY AND EQUIPMENT At September 30, 2019 and December 31, 2018, property and equipment consisted of the following: Useful Life September 30, 2019 December 31, 2018 Delivery trucks and vehicles 5 - 6 years $ 301,142 $ 1,033,397 Equipment 8,000 - Subtotal 309,142 1,033,397 Less: accumulated depreciation (50,423 ) (96,566 ) Property and equipment, net $ 258,719 $ 936,831 For the nine months ended September 30, 2019 and 2018, depreciation expense is included in general and administrative expenses and amounted to $130,035 and $48,485, respectively. During the nine months ended September 30, 2019, the Company traded in, sold or disposed of delivery trucks and vehicles of $783,511 with related accumulated depreciation of $176,178, and received cash of $81,000 and reduced notes payable of $330,709, resulting in a loss of $195,624 which is included in general and administrative expenses on the accompanying condensed consolidated statement of operations. |
Intangible Asset
Intangible Asset | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Asset | NOTE 6 – INTANGIBLE ASSET At September 30, 2019 and December 31, 2018, intangible asset consisted of the following: Useful life September 30, 2019 December 31, 2018 Customer relationship 5 year $ 2,420,191 $ 5,235,515 Less: accumulated amortization (219,433 ) (567,181 ) $ 2,200,758 $ 4,668,334 For the nine months ended September 30, 2019 and 2018, amortization of intangible assets amounted to $742,985 and $1,449,197, respectively. At June 30, 2019, the Company conducted an impairment assessment on intangible assets based on the guidelines established in ASC Topic 360 to determine the estimated fair market value of intangible assets as of June 30, 2019. Such analysis considered future cash flows and other industry factors. Upon completion of this impairment analysis, the Company determined that the carrying value exceeded the fair market value of intangible assets. Accordingly, in connection with the impairment of such intangible assets, the Company recorded an impairment charge of $1,724,591 for the six months ended September 30, 2019, which was included in operating expenses on the accompanying condensed consolidated statements of operations. The analysis was updated as of September 30, 2019 and no additional impairment was recognized. Amortization of intangible assets attributable to future periods is as follows: Year ending September 30: Amount 2020 $ 611,417 2021 611,417 2022 611,417 2023 366,507 $ 2,200,758 |
Convertible Promissory Notes Pa
Convertible Promissory Notes Payable and Notes Payable | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Convertible Promissory Notes Payable and Notes Payable | NOTE 7 – CONVERTIBLE PROMISSORY NOTES PAYABLE AND NOTES PAYABLE Red Diamond Partners LLC and RDW Capital, 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 matured one 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, however, as of the date of this filing, the fourth tranche has not yet been received. The Purchaser is not 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 were 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 Convertible Promissory Notes of $270,000. In accordance with these notes, the Company entered into default in 2018, which increased the interest rate to 18.0% per annum. 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. 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. In connection with the issuance of these Convertible Promissory Notes above, the Company determined that the terms of these Convertible Promissory Notes included a down-round provision under which the conversion price could be affected by future equity offerings undertaken by the Company. The Company evaluated these convertible promissory note transactions in accordance with ASC Topic 815, Derivatives and Hedging. Through December 31, 2018, the Company determined that the conversion feature of the convertible promissory notes was not afforded the exemption for conventional convertible instruments due to their respective variable conversion rate and price protection provision. Accordingly, through December 31, 2018, 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. On January 1, 2019, the Company adopted ASU No. 2017-11, Earnings Per Share Distinguishing Liabilities from Equity Derivatives and Hedging Accounting for Certain Financial Instruments with Down Round Features, On April 9, 2019, the Company entered into agreements with RedDiamond, holding these 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. The aggregate principal amounts due as of September 30, 2019 and December 31, 2018 amounted to $510,000 and $510,000, respectively. At December 31, 2018, the principal balance of $510,000 was included in convertible notes payable, a current liability, on the accompanying consolidated balance sheet. At September 30, 2019, the principal balance of $510,000 was included in notes payable – related party, a long-term liability, on the accompanying consolidated balance sheet since on April 9, 2019, the conversion features on the notes were removed and RedDiamond became a principal shareholder of the Company when they converted their preferred shares to common stock (See Note 9). In connection with this debt modification, the Company recorded a gain on debt extinguishment of $432,589, which consists of the removal of debt put premium of $385,385 since the debt is no longer convertible, and $47,205 related to the reversal of default interest payable. 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 connection with the Purchase Agreement, 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. 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. 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. Pursuant to this 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 could have chosen to subscribe for and purchase from the Company up to 2% in shares of common stock for an aggregate exercise price of $100. 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 and cancelled these warrants (see below). Through April 9, 2019, all principal and accrued interest under the Note was 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. 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. 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 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. 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”). On April 9, 2019, the Company entered into an agreement with this placement agent that cancelled the Placement Warrant. In connection with the issuance of this Note, Warrants, and Placement Warrant, the Company determined that this Note and the Warrants 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 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. Convertible debt modifications and warrant cancellations On April 9, 2019 (the “Modification Date”), the Company entered into an agreement with Bellridge Capital, L.P. (“Bellridge”) that modifies its existing obligations to Bellridge 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 the original principal amount of $2,497,502 (principal amount was $2,223,918 at April 9, 2019) 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 August 19, 2019, 100,000 of these shares have been issued and on August 16, 2019, the Company issued 700,000 shares of Series B Preferred shares upon settlement of 700,000 shares of issuable common shares as discussed in Note 9. ● 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. As of the date of this report, the Company and Holder have not mutually agreed on a conversion price, Since the conversion terms are unknown, the Company will account for this conversion feature when the contingency is resolved; ● 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 issued Bellridge 360,000 shares of restricted common stock. In addition, on the Modification Date, 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. In connection with the modification of the Bellridge Note and the cancellation of the related warrants, 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 the convertible instrument and the Warrant and Placement Warrant were adjusted to fair value through earnings on the Modification 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. For the period from April 1, 2019 to April 9, 2019, the change of fair value of derivative liabilities associated with these instruments amounted to $41,653,345, which was recorded as derivative expense on the Modification date. The increase in derivative liabilities was caused by an increase in the Company’s stock price, as quoted on OTC Markets. Additionally, on the Modification Date, the Company analyzed the Bellridge Note modification and the cancellation of the warrants and pursuant to ASC 470-50, the modifications were treated as a debt extinguishment. August 30, 2019 convertible debt and related warrants On August 30, 2019, the Company closed Securities Purchase Agreements (the “Purchase Agreement”) with accredited investors. Pursuant to the terms of the Purchase Agreements, the Company issued and sold to investors convertible promissory notes in the aggregate principal amount of $2,469,840 (the “Notes”), and warrants to purchase up to 987,940 shares of the Company’s common stock (the “Warrant”). The Company received net proceeds of $295,534, which is net of a 10% original issue discounts of $246,984 and origination fees of $61,101, and is net of $1,643,367 for the repayment of notes payable (See Note 8), and net of $222,854 related to the conversion of existing notes payable already outstanding to these lenders into these August 30, 2019 convertible notes (see Note 8). The Notes bears interest at 10% per annum and becomes due and payable on November 30, 2020. During the existence of an Event of Default, interest shall accrue at the lesser of (i) the rate of 18% per annum, or (ii) the maximum amount permitted by law. Commencing on the four month anniversary of these Notes, monthly payments of interest and monthly principal payments, based on a 12 month amortization schedule (each, an “Amortization Payment”), shall be due and payable, until the Maturity Date, at which time all outstanding principal, accrued and unpaid interest and all other amounts due and payable hereunder shall be immediately due and payable. The Amortization Payments shall be made in cash unless the investor requests it to be issued in the Company’s common stock in lieu of a cash payment (“Stock Payment”). If the investor requests a Stock Payment, the number of shares of common stock issued shall be based on the amount of the applicable Amortization Payment divided by 80% of the lowest VWAP during the five Trading Day period prior to the due date of the Amortization Payment. The Notes may be prepaid, provided that equity conditions, as defined in the Notes, have been met (or any such failure to meet the Equity Conditions have been waived): (i) from Original Issuance Date until and through the day that falls on the third month anniversary of the Original Issue Date (the “3 Month Anniversary”) at an amount equal to 105% of the aggregate of the outstanding principal balance of the Note and accrued and unpaid interest, and (ii) after the 3 Month Anniversary at an amount equal to 115% of the aggregate of the outstanding principal balance of the Note and accrued and unpaid interest. In the event that the Company closes a registered public offering of securities for its own account (a “Public Offering”), the Holder may elect to: (x) have its principal and accrued interest prepaid directly from the Public Offering Proceeds at the prices set forth above, or (y) exchange its Note at the closing of the Public Offering for the securities being issued in the Public Offering at the Public Offering prices based upon the outstanding principal, accrued interest and other charges, or (z) continue to hold the Note. Except for a Public Offering and Amortization Payments, in order to prepay the Note, the Company shall provide at least 20 days’ prior written notice to the Holder, during which time the Holder may convert the Note in whole or in part at the Conversion Price. For avoidance of doubt, the Amortization Payments shall be prepayments and are subject to prepayment penalties equal to 115% of the Amortization payment. In the event the Company consummates a Public Offering while the Notes are outstanding, then 25% of the net proceeds of such offering shall, within two business days of the closing of such public offering, be applied to reduce the outstanding obligations pursuant to the Notes. In connection with the Debt Offering, the Company entered into a Registration Rights Agreement, pursuant to which the Company agreed to file a registration statement on Form S-1 to register the resale of the shares issuable to the Debt Investors in the Debt Offering. After the original issue date until the Notes are no longer outstanding, the Notes shall be convertible, in whole or in part, at any time, and from time to time, into shares of Common Stock at the option of the investor. The “Conversion Price” in effect on any Conversion Date means, as of any Conversion Date or other date of determination, the lower of: (i) $2.50 per share and (ii) the price per share paid by investors in the contemplated equity offering of up to $1,000,000. If an Event of Default has occurred, regardless of whether such Event of Default has been cured or remains ongoing, these Notes shall be convertible at the lower of: (i) $2.50 and (ii) 70% of the second lowest closing price of the Common Stock as reported on the Trading Market during the 20 consecutive Trading Day period ending and including the Trading Day immediately preceding the delivery or deemed delivery of the applicable Notice of Conversion (the “Default Conversion Price”). All such Conversion Price determinations are to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the Common Stock. The Warrants are exercisable at any time on or after the date of the issuance and entitles the investors to purchase shares of the Company’s common stock for a period of five years from the initial date the warrants become exercisable. Under the terms of the Warrant, the investors are entitled to exercise the Warrants to purchase up to 987,840 shares of the Company’s common stock at an initial exercise price of $3.50, subject to adjustment as detailed in the respective Warrant. These Notes and related Warrants include a down-round provision under which the Note conversion price and warrant exercise price could be affected, on a full-ratchet basis, by future equity offerings undertaken by the Company. On September 6, 2019, the Company sold its common shares at $2.50 per share and accordingly, the warrant down-round provisions were triggered. As a result, the number of warrants was increased to 1,383,116 warrants and the exercise price was lowered to $2.50. As a result, the Company recorded a deemed dividend of $981,548 which represents the fair value transferred to the Warrant holders from the Down Round feature being triggered. The Company calculated the difference between the warrants fair value on the date the down round feature was triggered using the original exercise price and the new exercise price and the new number of warrants. The deemed dividend was recorded as a reduction of accumulated deficit and increase in paid-in capital and increased the net loss to common shareholders by the same amount. Gain on debt extinguishment In connections with the RedDiamond and Bellridge debt modifications and warrants cancellations discussed above and other debt modifications as discussed below, on the Modification Dates or repayment dates, for the nine months ended September 30, 2019, the Company recorded an aggregate gain on debt extinguishment of $39,203,017 which consists of the following. Gain on Other Total gain (loss) Gain from reversal of derivative liabilities on Modification Date or repayment date $ 61,841,708 $ 246,111 $ 61,841,708 Fair value of common shares issued on Modification Date (17,934,000 ) - (17,934,000 ) Fair value of warrants issued on modification dates - (3,550,531 ) (3,550,531 ) Conversion inducement expense - (1,164,220 ) (1,164,220 ) Write-off of remaining debt discount (1,013,118 ) (152,240 ) (1,165,359 ) Reversal of put premium on stock-settled debt related to cancellation of conversion terms 385,385 - 385,385 Reduction of principal and interest balances due 543,922 - Gain (loss) of debt extinguishment $ 43,823,897 $ (4,620,880 ) $ 39,203,017 Summary of derivative liabilities Through April 9, 2019, the Company revalued the embedded conversion option and warrant derivative liabilities related to the RedDiamond and Bellridge debt. In connection with these revaluations, the Company recorded derivative expense of $55,037,605 and $9,505,352 for the nine months ended September 30, 2019 and 2018, respectively. In connection with the issuance of the August 30, 2019 Notes, the Company determined that various terms of the Note, including the Stock Payment terms discussed above, caused derivative treatment of the embedded conversion options. Accordingly, under the provisions of ASC 815-40 - Derivatives and Hedging – Contracts in an Entity’s Own Stock In connection with the warrants issued in connection with the August 30, 2019 Notes, the Company determined that the terms of the warrants contain terms that are fixed monetary amounts at inception and, accordingly, the warrants were not considered derivatives. The fair value of the warrants was determined using the Binomial valuation model. In connection with the issuance of the warrants, on the initial measurement date, the relative fair value of the warrants of $1,225,109 was recorded as a debt discount and an increase in paid-in capital. During the nine months ended September 30, 2019 and 2018, the fair value of the derivative liabilities, warrants and conversion option was estimated using the Black-Sholes valuation model, Binomial valuation model, and the Monte-Carlo simulation model with the following assumptions: 2019 2018 Expected dividend rate - - Expected term (in years) 0.05 to 5.00 0.01 to 2.00 Volatility 217.6% to 228.7 % 261.2% to 307.75 % Risk-free interest rate 1.39% to 2.40 % 1.32% to 2.11 % Convertible note payable – related parties On March 13, 2019, the Company entered into a convertible note agreement with an individual, who is affiliated to the Company’s chief executive officer, 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 whatever 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. In connection with the issuance of this Note, the Company determined that this Note contains terms that are fixed monetary amounts at inception. Since the conversion price of $1.37 was equal to the quoted closing of the Company’s common shares on the note date, no beneficial feature conversion was recorded. On July 12, 2019, the Company entered into a Note Conversion Agreement with this individual. In connection with this Note Conversion Agreement, the Company issued 203,000 shares of its common stock at $2.50 per share for the conversion of convertible note payable of $500,000 and accrued interest payable of $7,500. In connection with the conversion of this convertible notes, the Company issued the entity warrants to purchase 203,000 shares of the Company’s common stock at an exercise price of $1.81 per share for a period of five years. On April 11, 2019, the Company entered into a convertible note agreement with an entity affiliated with the Company’s chief executive officer 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 are due, if the note is not sooner converted as provided in the note agreement. The payment of all or any portion of the principal and accrued interest may be prepaid prior to 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 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 |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Notes Payable | NOTE 8 – NOTES PAYABLE Secured merchant loans In connection with the acquisition of Prime in 2018, 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 loan 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 January 2019, the Company entered into a separate promissory note with one of these individuals and borrowed an additional $26,900 at a simple annual interest rate of 15% bringing the total promissory note balance to $77,090 for this individual. During the nine months ended September 30, 2019, the Company repaid $59,359 of these notes. At September 30, 2019 and December 31, 2018, notes payable related to Assumed Secured Merchant Loans and a new promissory note amounted to $98,592 and $157,951, respectively. In connection with the January 2019 promissory note, the Company issued 1,000 warrants to purchase 1,000 shares of the Company’s common stock at an exercise price of $1.00 per share. The warrant is exercisable over a five-year period. On September 20, 2018, the Company entered into a secured Merchant Loan with a lender 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 repaid the noteholders by making daily payments of $3,724 on each business day which was deducted directly from the Company’s bank accounts. On January 14, 2019, the Company entered into a new secured Merchant Loan with this lender in the amount of $764,500. The Company simultaneously repaid the September 20, 2018 loan which had a remaining principal balance of $223,329, 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 repaid the noteholders by making daily payments of $6,371 on each business day which was deducted directly from the Company’s bank account. On January 24, 2019, the Company entered into another secured Merchant Loan with this lender 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 repaid the noteholders by making daily payments of $3,972 on each business day which was deducted directly from the Company’s bank account. On May 8, 2019, the Company entered into another secured Merchant Loan with this merchant in the principal amount of $1,242,000. The Company simultaneously repaid prior loans of $362,961 which were entered into during January 2019, paid origination fees totaling $9,000 and paid an original issue discount of $342,000, and received net proceeds of $528,039. Pursuant to this secured Merchant Loan, the Company repaid the noteholder by making daily payments of $10,265 on each business day which deducted from the Company’s bank account. During the nine months ended September 30, 2019, the Company repaid an aggregate of $2,503,044 of the loans and on August 28, 2019, the remaining note balance of $184,750 was converted into a new Note. Pursuant to the new Note, the Company shall pay the lender in twelve monthly installments of $17,705 beginning on November 25, 2019 to the maturity date of November 25, 2020. The new Note shall bear interest at 15% per annum. These Secured Merchant Loans are secured by the Company’s assets and are personally guaranteed by the former majority member of Prime. At September 30, 2019 and December 31, 2018, secured merchant notes payable related to these Secured Merchant Loans amounted to $184,750 and $190,125, which is net of unamortized debt discount of $0 and $74,169, respectively. 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 was required to repay the noteholders by making daily payments of $1,749 on each business day which was 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 was required to repay the noteholders by making daily payments of $1,166 on each business day which was deducted directly from the Company’s bank accounts. These Secured Merchant Loans were secured by the Company’s assets and are personally guaranteed by the former majority member of Prime. During the nine months ended September 30, 2019, the Company repaid all of these notes. At September 30, 2019 and December 31, 2018, notes payable related to these Secured Merchant Loans amounted to $0 and $128,726, which is net of unamortized debt discount of $0 and $51,371, respectively. On October 12, 2018, the Company entered into a secured Merchant Loan with a lender 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 repaid the noteholder by making daily payments of $3,000 on each business which was deducted directly from the Company’s bank accounts. On January 28, 2019, the Company entered into a new secured Merchant Loan with this lender 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 October 12, 2018 remaining loan and interest due to this lender of $209,153. Pursuant to this Secured Merchant Loan, the Company repaid the noteholders by making daily payments of $4,897 on each business day which was deducted directly from the Company’s bank account. On September 2, 2019, the Company repaid the remaining note payable. These Secured Merchant Loans were secured by the Company’s assets and were personally guaranteed by the former majority member of Prime. At September 30, 2019 and December 31, 2018, note payable related to these Secured Merchant Loans amounted to $0 and $171,752, which is net of unamortized debt discount of $0 and $86,248, respectively. 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 making 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. On April 17, 2019, the Company entered into a secured Merchant Loan in the principal amount of $650,000 and received net proceeds of $500,000, net of original issue discounts of $150,000. Pursuant to this secured Merchant Loan, the Company is required to pay the noteholders by making three monthly installments of $216,667 beginning in June 2019 to August 2019. During the three months ended September 30, 2019, the Company repaid this Secured Merchant Loan. At September 30, 2019, notes payable related to this Secured Merchant Loan amounted to $0. From May 21, 2019 to July 16, 2019, the Company entered into several secured Merchant Loans in the aggregate amount of $2,099,500. The Company received net proceeds of $1,239,500, net of original issue discounts and origination fees of $860,000. Pursuant to these several secured Merchant Loans, the Company was required to pay the noteholders by making daily payments aggregating $27,498 on each business day until the loan amounts were paid in full. Each payment was deducted from the Company’s bank account. During the nine months ended September 30, 2019, the Company repaid an aggregate of $1,837,870 of the loans and on August 28, 2019, the remaining note balances of $261,630 were converted into new notes payable. At September 30, 2019, notes payable related to these Secured Merchant Loans amounted to $261,630, which is net of unamortized debt discount of $0. From June 19, 2019 to July 30, 2019, the Company entered into three secured Merchant Loans in the aggregate amount of $1,011,825. The Company received net proceeds of $630,000, net of original issue discounts and origination fees of $381,825. Pursuant to these two secured Merchant Loans, the Company was required to pay the noteholders by making daily payments aggregating $8,000 on each business day and a weekly payment of $28,500 until the loan amounts were paid in full. Each payment was deducted from the Company’s bank account. During the nine months ended September 30, 2019, the Company repaid an aggregate of $788,971 of the loans and on August 28, 2019, the remaining note balances of $222,854 were converted into new convertible notes payable (See Note 7). Promissory notes In connection with the acquisition of Prime, 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 nine months ended September 30, 2019, the Company repaid $25,000 of these notes and $40,000 of these notes was rolled into a new note. In August 2019, the Company issued 12,455 shares of its common stock and 12,455 five year warrants exercisable at $2.50 per share for the conversion of notes payable of $25,000 and accrued interest of $6,137. At September 30, 2019 and December 31, 2018, notes payable to these entities or individuals amounted to $40,000 and $130,000, respectively. From October 31, 2018 to December 31, 2018, the Company entered into 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. During the nine months ended September 30, 2019, the Company repaid $200,000 of these promissory notes. At September 30, 2019 and December 31, 2018, notes payable to this entity amounted to $350,000 and $505,945, which is net of unamortized debt discount of $0 and $44,055, respectively. The remaining notes were payable on demand. These promissory notes are secured by the Company’s assets. From January 2019 to September 30, 2019, the Company entered into separate promissory notes with several individuals totaling $2,352,150, including $40,000 of a previous note rolled into these new notes, and received net proceeds of $2,048,900, net of original issue discounts of $263,250. 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 58,000 warrants to purchase 58,000 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 the three months ended September 30, 2019, the Company issued 411,256 shares of its common stock and 411,256 five year warrants exercisable at $2.50 per share upon conversion of notes payable of $921,250 and accrued interest of $106,890 at a conversion price of $2.50 per share. Since the conversion price of $2.50 was equal to the fair value of the shares as determined by recent sales of the Company’s common shares, no beneficial feature conversion was recorded. At September 30, 2019, notes payable to these individuals amounted to $687,500, which is net of debt discount of $1,758. During March 2019 and August 2019, the Company entered into three separate promissory notes with an entity totaling $220,000 and received net proceeds of $200,000, net of original issue discounts of $20,000. During the nine months ended September 30, 2019, the Company repaid $190,000 of these promissory notes. At September 30, 2019, notes payable to this entity amounted to $27,273, which is net of debt discount of $2,727. Equipment and auto notes payable In connection with the acquisition of Prime, 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 three months ended September 30, 2019, the Company returned or abandoned trucks and reduced equipment notes payable by $292,778. At September 30, 2019 and December 31, 2018, equipment notes payable to these entities amounted to $60,286 and $488,289, respectively. During October and November 2018, the Company entered into several auto financing agreements. At September 30, 2019 and December 31, 2018, auto notes payable related to auto financing agreements amounted to $193,111 and $161,036, respectively. At September 30, 2019 and December 31, 2018, notes payable consisted of the following: September 30, 2019 December 31, 2018 Principal amounts $ 1,905,869 $ 2,189,666 Less: unamortized debt discount (4,485 ) (255,843 ) Principal amounts, net 1,901,384 1,933,823 Less: current portion of notes payable (1,812,296 ) (1,509,804 ) Notes payable – long-term $ 89,088 $ 424,019 |
Stockholders' Deficit
Stockholders' Deficit | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Stockholders' Deficit | NOTE 9– STOCKHOLDERS’ DEFICIT Preferred stock Series A preferred stock The Company increased its authorized preferred shares to 10,000,000 shares in July 2018. Preferred stock of 4,000,000 shares is designated Series A Convertible Preferred Stock. Each share of Series A preferred stock has a par value of $0.001 and a stated value of $1.00. Dividends are payable on Series A preferred shares 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 September 30, 2019, 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. On April 9, 2019, the Company entered into agreements with all holders of its 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. Series B preferred shares In August 2019, the Company designated Series B Preferred Shares consisting of 1,700,000 shares with a par value of $0.001 and a stated value of $0.001. The Series B preferred shares have no voting rights and are not redeemable. Each share of Series B Preferred stock is convertible into one share of common stock at the option of the holder subject to beneficial ownership limitation. On August 16, 2019, the Company issued 1,000,000 Series B preferred shares for services rendered to the former member of Prime EFS who is considered a related party. The shares were valued at $2.50 per shares on an as if converted basis to common shares based on recent sales of the Company’s common stock of $2.50 per share. In connection with the issuance of these Series B Preferred shares, the Company recorded stock-based compensation of $2,500,000. On August 16, 2019, the Company issued 700,000 shares of Series B Preferred shares upon settlement of 700,000 shares of issuable common shares as discussed below in “Shares issued in connection with debt modification”. Common stock 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 $2,750,808, 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 $2,750,808. On May 1, 2019, the Company granted an aggregate of 30,000 shares of its common stock to consultants for business development and investor relations services rendered. The shares were valued at $265,500, or $8.85 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 $265,500. On June 14, 2019, the Company granted 200,000 shares of its common stock to an employee of the Company for services rendered. The shares were valued at $2,200,000, or $11.00 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 $2,200,000. On July 8, 2019, pursuant to a one-year consulting agreement, the Company agreed to issue 50,000 shares of its common stock to a consultant for investor relations services to be rendered. These shares were valued at $125,000, or $2.50 per common share, based on contemporaneous common share sales. 25,000 of these shares will vest on January 8, 2020 and 25,000 shares will vest on July 8, 2020. In connection with these shares, the Company shall record stock-based consulting fees over the vest period of one year. During the nine months ended September 30, 2019, aggregate accretion of stock-based professional fees on granted non-vested shares amounted to $28,646 respectively. Total unrecognized professional fees related to these unvested common shares at September 30, 2019 amounted to $96,354 which will be amortized over the remaining vesting period. The 50,000 shares are reflected as common stock issuable on the accompanying condensed consolidated balance sheet. Cancellation of common shares On May 1, 2019, the Company entered into a Share Exchange Agreement with Save On and Steven Yariv, whereby the Company returned all of the stock of Save On to Steven Yariv in exchange for Mr. Yariv conveying 1,000,000 shares of common stock of the Company back to the Company and the shares were cancelled. In connection with the disposal of Save On, the Company recorded an increase in equity of $56,987 related to the amount of net liabilities disposed of in a transaction with the former chief executive officer of the Company since the CEO is still a related party after this transaction as he remained a principal shareholder (see Note 3). Shares issued in connection with debt modification On April 9, 2019, the Company entered into an agreement with Bellridge that modifies its existing obligations to Bellridge. In connection with this modification, principal balance of the Bellridge Note was reduced 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 June 30, 2019, 100,000 of these shares were issued and 700,000 shares were issuable. These 800,000 shares issued and issuable were valued at $10,248,000, or $12.81 per share, based on the quoted trading price on the date of grant. In connection with these shares, the Company recorded a loss on debt extinguishment of $10,248,000 (See Note 7). On August 16, 2019, the 700,000 shares issuable were converted into 700,000 shares of Series B preferred shares. Sale of common shares During the three months ended September 30, 2019, the Company issued 585,000 shares of its common stock and 585,000 five-year warrants to purchase common shares for an exercise price of $2.50 per common share to investors for cash proceeds of $1,462,500 or $2.50 per share, pursuant to unit subscription agreements. Shares issued in connection with conversion of debt During the three months ended September 30, 2019, the Company issued 423,711 shares of its common stock and 423,711 warrants at an exercise price of $2.50 per share in connection with the conversion of notes payable of $946,250 and accrued interest of $113,027 (see Note 8). These shares were valued at $1,059,277, or $2.50 per common share, based on contemporaneous common share sales. Since the conversion price of $2.50 was equal to the fair value of the shares as determined by recent sales of the Company’s common shares, no beneficial feature conversion was recorded. In connection with a Note Conversion Agreement dated July 12, 2019, (see Note 7), the Company issued 203,000 shares of its common stock at $2.50 per share for the conversion of a related party convertible note payable of $500,000 and accrued interest payable of $7,500. In connection with the conversion of this convertible note, the Company issued the entity warrants to purchase 203,000 shares of the Company’s common stock at an exercise price of $1.81 per share for a period of five years. In connection with a Note Conversion Agreement dated July 12, 2019 (see Note 7), the Company issued 812,000 shares of its common stock at $2.50 per share for the conversion of related party convertible note payable of $2,000,000 and accrued interest payable of $30,000. In connection with the conversion of this convertible notes, the Company issued the entity warrants to purchase 812,000 shares of the Company’s common stock at an exercise price of $2.50 per share for a period of five years. In connection with the modification of the related convertible notes, the Company changed the conversion price of the notes to $2.50 per share and issued an aggregate if 1,015,000 warrants as discussed above. The Company accounted for the full conversion of these related party convertible notes pursuant to the guidance of ASC 470-20, Debt with Conversion and Other Options. Stock options In connection the disposal of Save On, on May 1, 2019, the Company granted an aggregate of 80,000 options to certain employees of Save On. The options are exercisable at $8.85 per share for a period of five years. 25% of the options vest on January 1, 2020 and 25% shall vest annually thereafter. On May 1, 2019, the Company calculated the fair value of these options of $700,816 which was calculated using the Black-Sholes option pricing model with the following assumptions: expected dividend rate, 0%; expected term of 5 years; volatility of 228.1% and risk-free interest rate of 2.31%. During the nine months ended September 30, 2019, the Company recorded stock-based compensation of $700,816 related to these options which has been included in loss from discontinued operations on the accompany statement of operations. Stock option activities for the nine months ended September 30, 2019 are summarized as follows: Number of Options Weighted Weighted Average Remaining Aggregate Balance Outstanding December 31, 2018 - $ - - $ - Granted 80,000 8.84 Cancelled - - Balance Outstanding September 30, 2019 80,000 $ 8.84 4.58 $ 0 Exercisable, September 30, 2019 - $ - - $ - Warrants In connection with the Purchase Agreement in 2018 (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. Also, 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. On April 9, 2019, the Company entered into an agreement with Bellridge and the Placement Agent that cancelled these warrants in exchange for an aggregate of 600,000 common shares of the Company. These shares were valued at $7,686,000, or $12.81 per share, based on the quoted trading price on the date of grant. In connection with these shares, the Company recorded a loss on debt extinguishment of $7,686,000 (See Note 7). In connection with several promissory notes payable (see Note 8), during the nine months ended September 30, 2019, the Company issued 59,000 warrants to purchase 59,000 shares of common at an exercise price of $1.00 per share. During the nine months ended September 30, 2019, the Company calculated the relative fair value of these warrants of $135,324 which was amortized into interest expense over the loan terms and was estimated using the Binomial valuation model with the following assumptions: expected dividend rate, 0%; expected term (in years), 5 years; volatility of 228.1% and risk-free interest rate ranging from 2.28% to 2.40%. In connection with previous promissory notes payable (see Note 8), on June 11, 2019, the Company issued 55,000 warrants to purchase 55,000 shares of common at an exercise price of $1.00 per share. On June 11, 2019, the Company calculated the fair value of these warrants of $601,121 which was expensed and included in loan fees on the accompanying condensed consolidated statement of operations. The fair value of these warrants was estimated using the Binomial valuation model with the following assumptions: expected dividend rate, 0%; expected term (in years), 5 years; volatility of 228.1% and risk-free interest rate of 1.92%. On August 30, 2019, the Company closed Securities Purchase Agreements with accredited investors. Pursuant to the terms of the Purchase Agreements, the Company issued warrants to purchase up to 987,940 shares of the Company’s common stock (See Note 7). The Warrants are exercisable at any time on or after the date of the issuance and entitles the investors to purchase shares of the Company’s common stock for a period of five years from the initial date the warrants become exercisable. Under the terms of the Warrant, the investors are entitled to exercise the Warrants to purchase up to 987,940 shares of the Company’s common stock at an initial exercise price of $3.50, subject to adjustment as detailed in the respective Warrant. These Warrants include a down-round provision under which the warrant exercise price could be affected, on a full-ratchet basis, by future equity offerings undertaken by the Company. The Company calculated the relative fair value of these warrants in the amount of $1,225,109 which was added to debt discount and will be amortized over the term of the notes (see Note 7). The fair value of these warrants was estimated using the Binomial valuation model with the assumptions as outlined in Note 7. On September 6, 2019, the Company sold its common shares at $2.50 per share and accordingly, the warrant down-round provisions were triggered. As a result, the number of warrants was increased by 395,176 to 1,383,116 warrants and the exercise price was lowered to $2.50. As a result, the Company recorded a deemed dividend of $981,548 which represents the fair value transferred to the Warrant holders from the Down Round feature being triggered. The Company calculated the difference between the warrants fair value on the date the down round feature was triggered using the original exercise price and the new exercise price and the new number of warrants. The deemed dividend was recorded as a reduction of accumulated deficit and increase in paid-in capital and increased the net loss to common shareholders by the same amount. During the three months ended September 30, 2019, in connection with the sale of 585,000 shares of its common stock, the Company issued 585,000 five-year warrants to purchase common shares for an exercise price of $2.50 per common share to investors. During the three months ended September 30, 2019, in connection with the conversion of notes payable and accrued interest (see Note 8), the Company issued 423,711 five-year warrants to purchase 423,711 shares of common stock at an exercise price of $2.50 per share. The Company calculated the fair value of these warrants of $1,045,384 which was expensed and included in gain (loss) on debt extinguishment on the accompanying condensed consolidated statement of operations. The fair value of these warrants was estimated using the Binomial valuation model with the assumptions as outlined in Note 7. During the three months ended September 30, 2019, in connection with the conversion of related party convertible notes payable (see Note 7), the Company issued 1,015,000 five-year warrants to purchase 1,015,000 shares of common stock at an exercise price of $2.50 per share. The Company calculated the fair Warrant activities for the nine months ended September 30, 2019 are summarized as follows: Number of Warrants Weighted Weighted Average Remaining Contractual Term (Years) Aggregate Balance Outstanding December 31, 2018 1,648,570 $ 0.00 1.47 $ 2,472,655 Granted 3,125,651 2.41 Cancellations (1,421,059 ) 0.00 Increase in warrants related to price protection 395,176 2.50 Change in warrants related to dilutive rights (227,511 ) 0.00 Balance Outstanding September 30, 2019 3,520,827 $ 2.41 4.91 $ 311,070 Exercisable, September 30, 2019 3,520,827 $ 2.41 4.91 $ 311,070 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 10 – COMMITMENTS AND CONTINGENCIES 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. Placement agent agreement In August 2019, the Company engaged a placement agent, on a non-exclusive basis, to advise and assist the Company with respect to the introductions new investors and the restructuring of existing debt, The Company shall pay the placement agent a fee (the “Advisor’s Fee”) comprised of a cash fee and warrant fee. Any Advisor’s Fee payable is contingent upon the closing on future capital raises. 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 September 30, 2019, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on results of our operations. |
Related Party Transactions and
Related Party Transactions and Balances | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions and Balances | NOTE 11– RELATED PARTY TRANSACTIONS AND BALANCES Due from/to related parties In connection with the acquisition of Prime, 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 nine months ended September 30, 2019, the Company repaid $50,000 of this advance. This advance is non-interest bearing and is due on demand. At September 30, 2019 and December 31, 2018, amount due to this related party amounted to $209,000 and $259,000. During the period from acquisition date of Prime (June 18, 2018) to June 30, 2019, an employee of Prime who exerts significant influence over the business of Prime, paid costs and expenses and was reimbursed funds by the Company. These advances are non-interest bearing and are due on demand. At September 30, 2019 and December 31, 2018, amounts due from (to) this related party amounted to $89,873 and $(16,300), respectively. At September 30, 2019, accrued interest payable due to related parties amounted to $60,760 and is included in due to related parties on the accompanying condensed consolidated balance sheet. Notes payable – related parties From July 25, 2018 through December 31, 2018, the Company entered into several Promissory Notes with the Company’s former chief executive officer or the spouse of the Company’s former 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 and during January 2019, the Company repaid the remaining 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 $220,000, net of an original issue discount of $20,000. In April 2019, the Company repaid this promissory note. During the nine months ended September 30, 2019, amortization of debt discount related to these notes amounted to $26,383 and is included in interest expense – related parties on the accompanying condensed consolidated statement of operations. On April 9, 2019, certain noteholders who were not considered related parties became related parties since they became beneficial owners of the Company’s common stock. Accordingly, notes payable amounting to $510,000 were reclassified from notes payable to note payable – related party (See Note 7). On July 3. 2019, the Company entered into a note agreement with an entity, who is affiliated to the Company’s chief executive officer, in the amount of $500,000. Commencing on September 3, 2019, and continuing on the third day of each month thereafter, payments of interest only on the outstanding principal balance of this Note shall be due and payable. Commencing on January 3, 2020 and continuing on the third day of each month thereafter through January 3, 2021, equal payments of principal and interest shall made. The principal amount of this Note and all accrued, but unpaid interest hereunder shall be due and payable on the earlier to occur of (i) January 3, 2021 (the “ Maturity Date In August 2019, the Company’s chief executive officer advanced to the Company and was repaid $50,000, The advance was non-interest bearing and payable on demand. At September 30, 2019, notes payable – related parties amounted to $500,000 (current) and $510,000 (non-current). At December 31, 2018, notes payable – related parties amounted to $213,617 (current), which is net of unamortized debt discount of $6,383. Convertible note payable – related parties On March 13, 2019, the Company entered into a convertible note agreement with an individual, who is affiliated to the Company’s chief executive officer, in the amount of $500,000 (See Note 7). In April 2019, the Company entered into a convertible note agreement with a company, who is affiliated to the Company’s chief executive officer, in the amount of $2,000,000 (See Note 7). During the nine months ended September 30, 2019, interest expense related to these notes amounted to $143,260 and is included in interest expense – related parties on the accompanying condensed consolidated statement of operations. |
Operating Lease Right-of-Use ('
Operating Lease Right-of-Use ('ROU') Assets and Operating Lease Liabilities | 9 Months Ended |
Sep. 30, 2019 | |
Lessee Disclosure [Abstract] | |
Operating Lease Right-of-Use ("ROU") Assets and Operating Lease Liabilities | NOTE 12 – OPERATING LEASE RIGHT-OF-USE (“ROU”) ASSETS AND OPERATING LEASE LIABILITIES In December 2018, the Company entered into a five-year lease agreement for the lease of office and warehouse space and parking spaces under a non-cancelable operating lease through January 2024. 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 25 th In July 2019, the Company entered into a 4.5-year lease agreement for the lease of office and warehouse space and parking spaces under a non-cancelable operating lease through February 2024. From the lease commencement date until the last day of the second lease year, monthly rent shall be $10,000. At the beginning of the 25 th In July 2019, the Company entered into a five-year lease agreement for the lease of office and warehouse space and parking spaces under a non-cancelable operating lease through August 2024. During the first year on the lease term, the base monthly rent shall be $18,000 and shall increase by 3% each lease year. Additionally, the Company shall pay its portion of operating expenses. The Company shall have one option to renew the term of this lease for an additional five years. As of September 30, 2019, the Company paid a security deposit of $18,000. In adopting ASC Topic 842, Leases (Topic 842), the Company has elected the ‘package of practical expedients’, which permit it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs (see Note 2). In addition, the Company elected not to apply ASC Topic 842 to arrangements with lease terms of 12 month or less. On January 1, 2019, upon adoption of ASC Topic 842, the Company recorded right-of-use assets and lease liabilities of $631,723. During the nine months ended September 30, 2019 and 2018, in connection with these operating leases, the Company recorded rent expense of $123,589 and $0, respectively, which is expensed during the period and included in operating expenses on the accompanying condensed consolidated statements of operations. The significant assumption used to determine the present value of the lease liability was a discount rate of 12% which was based on the Company’s estimated incremental borrowing rate. At September 30, 2019, right-of-use asset (“ROU”) is summarized as follows: September 30, 2019 Office leases right of use assets $ 1,984,320 Less: accumulated amortization into rent expense (97,201 ) Balance of ROU assets as of September 30, 2019 $ 1,887,119 At September 30, 2019, operating lease liabilities related to the ROU assets are summarized as follows: September 30, 2019 Lease liabilities related to office leases right of use assets $ 1,907,763 Less: current portion of lease liabilities (337,487 ) Lease liabilities – long-term $ 1,570,276 At September 30, 2019, future minimum base lease payments due under non-cancelable operating leases are as follows: Year ended September 30, Amount 2020 $ 522,540 2021 515,316 2022 528,767 2023 535,659 2024 318,611 Total minimum non-cancelable operating lease payments 2,420,893 Less: discount to fair value (513,130 ) Total lease liability at September 30, 2019 $ 1,907,763 |
Concentrations
Concentrations | 9 Months Ended |
Sep. 30, 2019 | |
Risks and Uncertainties [Abstract] | |
Concentrations | NOTE 13 – CONCENTRATIONS For the nine months ended September 30, 2019, one customer represented 99.1% of the Company’s total net revenues. This revenue is from one Prime customer. For the nine months ended September 30, 2018, one customer represented 98.8% of the Company’s total net revenues. At September 30, 2019, one customer represented 80.0% of the Company’s accounts receivable balance. During the nine months ended September 30, 2019, the Company rented delivery vans from three vendors. As of September 30, 2019, the Company only leases vans from two vendors. 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. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 14 – SUBSEQUENT EVENTS Sale of common stock During October and November 2019, the Company issued 294,000 shares of its common stock and 294,000 five-year warrants to purchase common shares for an exercise price of $2.50 per common share to investors for cash proceeds of $735,000 or $2.50 per share, pursuant to unit subscription agreements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies and Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of presentation and principles of consolidation The condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and disclosures necessary for comprehensive presentation of financial position, results of operations or cash flow. However, these unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments and a non-recurring adjustment for the impairment of intangible assets, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these unaudited interim condensed consolidated financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2018, and notes thereto included in the Company’s annual report on Form 10-K, filed on April 16, 2019. The Company follows the same accounting policies in the preparation of its annual and interim reports. The results of operations in interim periods are not necessarily an indication of operating results to be expected for the full year. The unaudited condensed consolidated financial statements of the Company include the accounts of TLSS and its wholly owned subsidiaries, Save On (through April 30, 2019), Prime and Shypdirect. All intercompany accounts and transactions have been eliminated in consolidation. On May 1, 2019, the Company entered into a Share Exchange Agreement with Save On and Steven Yariv, whereby the Company returned all of the stock of Save On to Steven Yariv in exchange for Mr. Yariv conveying 1,000,000 shares of common stock of the Company back to the Company. Pursuant to Accounting Standard Codification (“ASC”) 205-20-45, the financial statement in which net income or loss of a business entity is reported shall report the results of operations of the discontinued operation in the period in which a discontinued operation either has been disposed of or is classified as held for sale. Accordingly, beginning in the second quarter of 2019, the period that Save On was disposed of, the Company reflects Save On as a discontinued operation and such presentation is retroactively applied to all periods presented in the accompany condensed consolidated financial statements. |
Going Concern | Going concern The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. As reflected in the accompanying condensed consolidated financial statements, for the nine months ended September 30, 2019, the Company had a net loss of $37,970,095 and net cash used in operations was $4,231,915, respectively. Additionally, the Company had an accumulated deficit, shareholders’ deficit, and a working capital deficit of $53,721,493, $7,081,963 and $8,918,852, respectively, at September 30, 2019. Furthermore, the Company failed to make required payments of principal and interest on certain of 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 7). 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, 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 and notes payable, 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 condensed consolidated financial statements, in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Significant estimates included in the accompanying unaudited condensed consolidated financial statements and footnotes include the valuation of accounts receivable, the useful life of property and equipment, the valuation of intangible assets, the valuation of right of use assets and related liabilities, 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, the value of claims against the Company, and the fair value of assets acquired and liabilities assumed in business acquisitions. |
Fair Value of Financial Instruments | Fair value of financial instruments The Financial Accounting Standards Board (“FASB”) issued 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 September 30, 2019 and December 31, 2018: At September 30, 2019 At December 31, 2018 Description Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Derivative liabilities — — $ 1,917,888 — — $ 7,888,684 A roll forward of the level 3 valuation financial instruments is as follows: For the Nine Balance at beginning of period $ 7,888,684 Initial valuation of derivative liabilities included in debt discount 936,644 Initial valuation of derivative liabilities included in derivative expense 1,017,323 Gain on extinguishment of debt related to repayment of debt (246,110 ) Gain on extinguishment of debt related to April 9, 2019 modifications (61,841,708 ) Cumulative effect adjustment for change in derivative accounting (838,471 ) Change in fair value included in derivative expense 55,001,526 Balance at end of period $ 1,917,888 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 September 30, 2019 and December 31, 2018, 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 September 30, 2019 and December 31, 2018. The Company has not experienced any losses in such accounts through September 30, 2019. |
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 to six 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, less any impairment charges. At September 30, 2019 and 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. |
Leases | Leases In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The updated guidance requires lessees to recognize lease assets and lease liabilities for most operating leases. In addition, the updated guidance requires that lessors separate lease and non-lease components in a contract in accordance with the new revenue guidance in ASC 606. The updated guidance is effective for interim and annual periods beginning after December 15, 2018. On January 1, 2019, the Company adopted ASU No. 2016-02, applying the package of practical expedients to leases that commenced before the effective date whereby the Company elected to not reassess the following: (i) whether any expired or existing contracts contain leases and; (ii) initial direct costs for any existing leases. For contracts entered into on or after the effective date, at the inception of a contract the Company assessed whether the contract is, or contains, a lease. The Company’s assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether it has the right to direct the use of the asset. The Company will allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments. The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less. Operating lease ROU assets represents the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company use an incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Lease expense for minimum lease payments is amortized on a straight-line basis over the lease term and is included in general and administrative expenses in the condensed consolidated statements of operations. |
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. On May 1, 2019, the Company disposed of its Save On business segment and the results of operations of Save On are included in discontinued operations. Accordingly, during the nine months ended September 30, 2019 and 2018, the Company believes that it operates in one operating segment related to deliveries for on-line retailers in New York, New Jersey and Pennsylvania and 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. |
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 815-10-05-4, Derivatives and Hedging Contracts in Entity’s Own Equity In July 2017, FASB issued ASU No. 2017-11, Earnings Per Share Distinguishing Liabilities from Equity Derivatives and Hedging Accounting for Certain Financial Instruments with Down Round Features |
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 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. For the Company’s Save On business activities, through the date of disposition on May 1, 2019, the Company recognized 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. Management has reviewed the revenue disaggregation disclosure requirements pursuant to ASC 606 and determined that no further disaggregation disclosure is required to be presented. |
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 attributable to common shareholders 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 attributable to common shareholders 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: September 30, 2019 September 30, 2018 Stock warrants 3,520,827 1,442,434 Stock options 80,000 - Convertible debt 987,936 7,912,857 Series A convertible preferred stock - 7,912,857 Series B convertible preferred stock 1,700,000 - |
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. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In July 2017, FASB issued ASU No. 2017-11, Earnings Per Share Distinguishing Liabilities from Equity Derivatives and Hedging Accounting for Certain Financial Instruments with Down Round Features In August 2018, the FASB issued ASU 2018-13 to modify the disclosure requirements on fair value measurements. The amendments are effective for years 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) | 9 Months Ended |
Sep. 30, 2019 | |
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 September 30, 2019 and December 31, 2018: At September 30, 2019 At December 31, 2018 Description Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Derivative liabilities — — $ 1,917,888 — — $ 7,888,684 |
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 Nine Balance at beginning of period $ 7,888,684 Initial valuation of derivative liabilities included in debt discount 936,644 Initial valuation of derivative liabilities included in derivative expense 1,017,323 Gain on extinguishment of debt related to repayment of debt (246,110 ) Gain on extinguishment of debt related to April 9, 2019 modifications (61,841,708 ) Cumulative effect adjustment for change in derivative accounting (838,471 ) Change in fair value included in derivative expense 55,001,526 Balance at end of period $ 1,917,888 |
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: September 30, 2019 September 30, 2018 Stock warrants 3,520,827 1,442,434 Stock options 80,000 - Convertible debt 987,936 7,912,857 Series A convertible preferred stock - 7,912,857 Series B convertible preferred stock 1,700,000 - |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Condensed Consolidated Financial Statements and Statements of Operations for Discontinued Operations | The assets and liabilities classified as discontinued operations in the Company’s condensed consolidated financial statements as of September 30, 2019 and December 31, 2018, and for the three and nine months ended September 30, 2019 and 2018 is set forth below. September 30, 2019 December 31, 2018 Assets: Current assets: Accounts receivable, net $ - $ 334,275 Prepaid expenses and other - 1,619 Total current assets - 335,894 Total assets $ - $ 335,894 Liabilities: Current liabilities: Accounts payable $ - $ 409,053 Accounts payable – related party - 3,700 Accrued expenses and other liabilities - 27,992 Total current liabilities - 440,745 Total liabilities $ - $ 440,745 The summarized operating result of discontinued operations included in the Company’s condensed consolidated statements of operations is as follows: Three Months Ended Nine months Ended September 30, September 30, 2019 2018 2019 2018 Revenues $ - $ 1,063,208 $ 1,491,253 $ 3,372,979 Cost of revenues - 836,990 1,114,269 2,593,624 Gross profit - 226,218 376,984 779,355 Operating expenses - 212,968 1,058,410 682,504 Loss from discontinued operations - 13,250 (681,426 ) 96,851 Loss on disposal of discontinued operations - - - - Loss from discontinued operations, net of income taxes $ - $ 13,250 $ (681,426 ) $ 96,851 |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable | At September 30, 2019 and December 31, 2018, accounts receivable, net consisted of the following: September 30, 2019 December 31, 2018 Accounts receivable $ 589,193 $ 441,497 Allowance for doubtful accounts - - Accounts receivable, net $ 589,193 $ 441,497 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | At September 30, 2019 and December 31, 2018, property and equipment consisted of the following: Useful Life September 30, 2019 December 31, 2018 Delivery trucks and vehicles 5 - 6 years $ 301,142 $ 1,033,397 Equipment 8,000 - Subtotal 309,142 1,033,397 Less: accumulated depreciation (50,423 ) (96,566 ) Property and equipment, net $ 258,719 $ 936,831 |
Intangible Asset (Tables)
Intangible Asset (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Asset | At September 30, 2019 and December 31, 2018, intangible asset consisted of the following: Useful life September 30, 2019 December 31, 2018 Customer relationship 5 year $ 2,420,191 $ 5,235,515 Less: accumulated amortization (219,433 ) (567,181 ) $ 2,200,758 $ 4,668,334 |
Schedule of Future Amortization Expense | Amortization of intangible assets attributable to future periods is as follows: Year ending September 30: Amount 2020 $ 611,417 2021 611,417 2022 611,417 2023 366,507 $ 2,200,758 |
Convertible Promissory Notes _2
Convertible Promissory Notes Payable and Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Gain on Debt Extinguishment | In connections with the RedDiamond and Bellridge debt modifications and warrants cancellations discussed above and other debt modifications as discussed below, on the Modification Dates or repayment dates, for the nine months ended September 30, 2019, the Company recorded an aggregate gain on debt extinguishment of $39,203,017 which consists of the following. Gain on Other Total gain (loss) Gain from reversal of derivative liabilities on Modification Date or repayment date $ 61,841,708 $ 246,111 $ 61,841,708 Fair value of common shares issued on Modification Date (17,934,000 ) - (17,934,000 ) Fair value of warrants issued on modification dates - (3,550,531 ) (3,550,531 ) Conversion inducement expense - (1,164,220 ) (1,164,220 ) Write-off of remaining debt discount (1,013,118 ) (152,240 ) (1,165,359 ) Reversal of put premium on stock-settled debt related to cancellation of conversion terms 385,385 - 385,385 Reduction of principal and interest balances due 543,922 - Gain (loss) of debt extinguishment $ 43,823,897 $ (4,620,880 ) $ 39,203,017 |
Schedule of Fair Value of Derivative Liabilities Estimated Using Black-Sholes Valuation Model | During the nine months ended September 30, 2019 and 2018, the fair value of the derivative liabilities, warrants and conversion option was estimated using the Black-Sholes valuation model, Binomial valuation model, and the Monte-Carlo simulation model with the following assumptions: 2019 2018 Expected dividend rate - - Expected term (in years) 0.05 to 5.00 0.01 to 2.00 Volatility 217.6% to 228.7 % 261.2% to 307.75 % Risk-free interest rate 1.39% to 2.40 % 1.32% to 2.11 % |
Schedule of Convertible Promissory Notes | At September 30, 2019 and December 31, 2018, convertible promissory notes are as follows: September 30, 2019 December 31, 2018 Principal amount $ 4,069,840 $ 3,007,503 Less: unamortized debt discount (2,305,184 ) (1,595,627 ) Convertible notes payable, net 1,764,656 1,411,876 Less: current portion of convertible notes payable (1,321,213 ) (1,411,876 ) Convertible notes payable, net – long-term $ 443,443 $ - |
Notes Payable (Tables)
Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | At September 30, 2019 and December 31, 2018, notes payable consisted of the following: September 30, 2019 December 31, 2018 Principal amounts $ 1,905,869 $ 2,189,666 Less: unamortized debt discount (4,485 ) (255,843 ) Principal amounts, net 1,901,384 1,933,823 Less: current portion of notes payable (1,812,296 ) (1,509,804 ) Notes payable – long-term $ 89,088 $ 424,019 |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Summary of Stock Option Activities | Stock option activities for the nine months ended September 30, 2019 are summarized as follows: Number of Options Weighted Weighted Average Remaining Aggregate Balance Outstanding December 31, 2018 - $ - - $ - Granted 80,000 8.84 Cancelled - - Balance Outstanding September 30, 2019 80,000 $ 8.84 4.58 $ 0 Exercisable, September 30, 2019 - $ - - $ - |
Summary of Warrant Activities | Warrant activities for the nine months ended September 30, 2019 are summarized as follows: Number of Warrants Weighted Weighted Average Remaining Contractual Term (Years) Aggregate Balance Outstanding December 31, 2018 1,648,570 $ 0.00 1.47 $ 2,472,655 Granted 3,125,651 2.41 Cancellations (1,421,059 ) 0.00 Increase in warrants related to price protection 395,176 2.50 Change in warrants related to dilutive rights (227,511 ) 0.00 Balance Outstanding September 30, 2019 3,520,827 $ 2.41 4.91 $ 311,070 Exercisable, September 30, 2019 3,520,827 $ 2.41 4.91 $ 311,070 |
Operating Lease Right-of-Use _2
Operating Lease Right-of-Use ('ROU') Assets and Operating Lease Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Lessee Disclosure [Abstract] | |
Schedule of Right of Use Asset | At September 30, 2019, right-of-use asset (“ROU”) is summarized as follows: September 30, 2019 Office leases right of use assets $ 1,984,320 Less: accumulated amortization into rent expense (97,201 ) Balance of ROU assets as of September 30, 2019 $ 1,887,119 |
Schedule of Operating Lease Liability Related to ROU Asset | At September 30, 2019, operating lease liabilities related to the ROU assets are summarized as follows: September 30, 2019 Lease liabilities related to office leases right of use assets $ 1,907,763 Less: current portion of lease liabilities (337,487 ) Lease liabilities – long-term $ 1,570,276 |
Schedule of Lease Payments Due Under Operating Leases | At September 30, 2019, future minimum base lease payments due under non-cancelable operating leases are as follows: Year ended September 30, Amount 2020 $ 522,540 2021 515,316 2022 528,767 2023 535,659 2024 318,611 Total minimum non-cancelable operating lease payments 2,420,893 Less: discount to fair value (513,130 ) Total lease liability at September 30, 2019 $ 1,907,763 |
Organization and Business Ope_2
Organization and Business Operations (Details Narrative) - $ / shares | May 01, 2019 | Jul. 16, 2018 | Mar. 30, 2017 | Sep. 30, 2019 | Dec. 31, 2018 | Jun. 18, 2018 |
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 | |||||
Share Exchange Agreement [Member] | Steven Yariv [Member] | ||||||
Number of common stock shares return | 1,000,000 | |||||
Number of options granted to employees | 80,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies and Basis of Presentation (Details Narrative) | May 01, 2019shares | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Sep. 30, 2019USD ($)Integer | Sep. 30, 2018USD ($)Integer | Dec. 31, 2018USD ($) | Jan. 02, 2019USD ($) | Dec. 31, 2017USD ($) |
Net loss | $ (11,360,914) | $ (6,961,458) | $ (19,647,723) | $ (8,469,145) | $ (14,510,914) | $ 60,925 | $ (37,970,095) | $ (22,919,134) | ||||
Net cash used in operations | (4,231,915) | (235,843) | ||||||||||
Accumulated deficit | (53,721,493) | (53,721,493) | $ (15,222,936) | |||||||||
Shareholders' deficit | (7,081,963) | $ (9,248,833) | $ (24,117,542) | $ (16,278,271) | $ (7,809,126) | $ (714,212) | (7,081,963) | $ (16,278,271) | (7,737,294) | $ (775,137) | ||
Working capital deficit | 8,918,852 | 8,918,852 | ||||||||||
Cash equivalents | ||||||||||||
Cash in excess of FDIC limits | ||||||||||||
Amortized period | 5 years | 5 years | ||||||||||
Number of operating segment | Integer | 1 | 1 | ||||||||||
Fair value of derivative liabilities | $ 838,471 | |||||||||||
Premium liability | $ 385,385 | |||||||||||
Cumulative adjustment to accumulated deficit | $ 453,086 | |||||||||||
Minimum [Member] | ||||||||||||
Property and equipment, estimated useful lives | 5 years | |||||||||||
Maximum [Member] | ||||||||||||
Property and equipment, estimated useful lives | 6 years | |||||||||||
Share Exchange Agreement [Member] | Steven Yariv [Member] | ||||||||||||
Number of common stock shares return | shares | 1,000,000 |
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 ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Derivative liabilities | $ 1,917,888 | $ 7,888,684 |
Level 1 [Member] | ||
Derivative liabilities | ||
Level 2 [Member] | ||
Derivative liabilities | ||
Level 3 [Member] | ||
Derivative liabilities | $ 1,917,888 | $ 7,888,684 |
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 ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Gain on extinguishment of debt related to April 9, 2019 modifications | $ (4,714,751) | $ 39,203,017 | ||
Level 3 [Member] | ||||
Balance at beginning of period | 7,888,684 | |||
Initial valuation of derivative liabilities included in debt discount | 936,644 | |||
Initial valuation of derivative liabilities included in derivative expense | 1,017,323 | |||
Gain on extinguishment of debt related to repayment of debt | (246,110) | |||
Gain on extinguishment of debt related to April 9, 2019 modifications | (61,841,708) | |||
Cumulative effect adjustment for change in derivative accounting | (838,471) | |||
Change in fair value included in derivative expense | 55,001,526 | |||
Balance at end of period | $ 1,917,888 | $ 1,917,888 |
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 | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Stock Warrants [Member] | ||
Antidilutive securities excluded from computation of earnings per share | 3,520,827 | 1,442,434 |
Stock Options [Member] | ||
Antidilutive securities excluded from computation of earnings per share | 80,000 | |
Convertible Debt [Member] | ||
Antidilutive securities excluded from computation of earnings per share | 987,936 | 7,912,857 |
Series A Convertible Preferred Stock [Member] | ||
Antidilutive securities excluded from computation of earnings per share | 7,912,857 | |
Series B Convertible Preferred Stock [Member] | ||
Antidilutive securities excluded from computation of earnings per share | 1,700,000 |
Discontinued Operations (Detail
Discontinued Operations (Details Narrative) - Share Exchange Agreement [Member] - Steven Yariv [Member] | May 01, 2019shares |
Number of common stock shares return | 1,000,000 |
Number of options granted to employees | 80,000 |
Discontinued Operations - Sched
Discontinued Operations - Schedule of Condensed Consolidated Financial Statements and Statements of Operations for Discontinued Operations (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |||||
Accounts receivable, net | $ 334,275 | ||||
Prepaid expenses and other | 1,619 | ||||
Total current assets | 335,894 | ||||
Total assets | 335,894 | ||||
Accounts payable | 409,053 | ||||
Accounts payable - related party | 3,700 | ||||
Accrued expenses and other liabilities | 27,992 | ||||
Total current liabilities | 440,745 | ||||
Total liabilities | $ 440,745 | ||||
Revenues | $ 1,063,208 | 1,491,253 | $ 3,372,979 | ||
Cost of revenues | 836,990 | 1,114,269 | 2,593,624 | ||
Gross profit | 226,218 | 376,984 | 779,355 | ||
Operating expenses | 212,968 | 1,058,410 | 682,504 | ||
Loss from discontinued operations | 13,250 | (681,426) | 96,851 | ||
Loss on disposal of discontinued operations | |||||
Loss from discontinued operations, net of income taxes | $ 13,250 | $ (681,426) | $ 96,851 |
Accounts Receivable - Schedule
Accounts Receivable - Schedule of Accounts Receivable (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Receivables [Abstract] | ||
Accounts receivable | $ 589,193 | $ 441,497 |
Allowance for doubtful accounts | ||
Accounts receivable, net | $ 589,193 | $ 441,497 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 130,035 | $ 48,485 |
Delivery trucks and vehicles | 783,511 | |
Accumulated depreciation | 176,178 | |
Proceeds from sale of property and equipment | 81,000 | |
Reduction in notes payable | 330,709 | |
Loss on disposal of property and equipment | $ 195,624 | $ 14,816 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2019 | Dec. 31, 2018 | Dec. 30, 2018 | |
Subtotal | $ 309,142 | $ 1,033,397 | |
Less: accumulated depreciation | (50,423) | (96,566) | |
Property and equipment, net | $ 258,719 | 936,831 | |
Minimum [Member] | |||
Property and equipment, useful life | 5 years | ||
Maximum [Member] | |||
Property and equipment, useful life | 6 years | ||
Delivery Trucks and Vehicles [Member] | |||
Subtotal | $ 301,142 | $ 1,033,397 | |
Delivery Trucks and Vehicles [Member] | Minimum [Member] | |||
Property and equipment, useful life | 5 years | ||
Delivery Trucks and Vehicles [Member] | Maximum [Member] | |||
Property and equipment, useful life | 6 years | ||
Equipment [Member] | |||
Subtotal | $ 8,000 |
Intangible Asset (Details Narra
Intangible Asset (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of intangible assets | $ 742,985 | $ 1,449,197 | ||
Impairment charges | $ 1,724,591 |
Intangible Asset - Schedule of
Intangible Asset - Schedule of Intangible Asset (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Intangible assets, gross | $ 2,420,191 | $ 5,235,515 |
Less: accumulated amortization | (219,433) | (567,181) |
Intangible assets, net | $ 2,200,758 | $ 4,668,334 |
Customer Relationship [Member] | ||
Intangible assets, useful life | 5 years |
Intangible Asset - Schedule o_2
Intangible Asset - Schedule of Future Amortization Expense (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2020 | $ 611,417 | |
2021 | 611,417 | |
2022 | 611,417 | |
2023 | 366,507 | |
Amortization of intangible assets | $ 2,200,758 | $ 4,668,334 |
Convertible Promissory Notes _3
Convertible Promissory Notes Payable and Notes Payable (Details Narrative) - USD ($) | Sep. 06, 2019 | Aug. 30, 2019 | Aug. 19, 2019 | Aug. 16, 2019 | Jul. 12, 2019 | Apr. 11, 2019 | Apr. 09, 2019 | Mar. 13, 2019 | Dec. 31, 2018 | Dec. 27, 2018 | Jun. 18, 2018 | Jan. 03, 2018 | Apr. 25, 2017 | Mar. 31, 2017 | Jun. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Aug. 31, 2018 | Aug. 08, 2017 | Jun. 30, 2017 | Jun. 02, 2017 |
Proceeds from convertible promissory note | $ 2,500,000 | $ 2,497,503 | ||||||||||||||||||||||
Debt original issue discount | $ 6,383 | $ 6,383 | ||||||||||||||||||||||
Proceeds from promissory notes | 7,791,020 | 710,845 | ||||||||||||||||||||||
Convertible notes payable | 1,411,876 | $ 1,321,213 | 1,321,213 | 1,411,876 | ||||||||||||||||||||
Notes payable - related party | 510,000 | 510,000 | ||||||||||||||||||||||
Gain on debt extinguishment, net | (4,714,751) | 39,203,017 | ||||||||||||||||||||||
Payments of debt issuance costs | 1,009,714 | |||||||||||||||||||||||
Aggregate purchase price of warrant | (3,550,531) | |||||||||||||||||||||||
Amortization of debt discount | 430,268 | 332,364 | ||||||||||||||||||||||
Derivative expense | 55,037,605 | 9,505,352 | ||||||||||||||||||||||
Repayment of notes payable | 9,584,459 | 1,568,708 | ||||||||||||||||||||||
Deemed dividend | (981,548) | (981,548) | ||||||||||||||||||||||
Embedded conversion option derivative | 1,953,968 | |||||||||||||||||||||||
Amortization of Debt Discount | 3,991,061 | 1,045,000 | ||||||||||||||||||||||
Gain on derivative liability | (981,244) | $ (5,123,985) | (56,018,849) | $ (14,629,337) | ||||||||||||||||||||
Derivative expenses | $ 1,017,323 | 1,017,323 | ||||||||||||||||||||||
Aggregate derivative expense | $ 981,244 | |||||||||||||||||||||||
Warrant Holders [Member] | ||||||||||||||||||||||||
Percentage of warrant purchase | 4.75% | |||||||||||||||||||||||
Number of common stock issued | 240,000 | |||||||||||||||||||||||
Offering of Equity [Member] | ||||||||||||||||||||||||
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 | |||||||||||||||||||||||
Proceeds from promissory notes | $ 4,000,000 | |||||||||||||||||||||||
Offering of Debt [Member] | ||||||||||||||||||||||||
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 | |||||||||||||||||||||||
Proceeds from promissory notes | $ 3,000,000 | |||||||||||||||||||||||
Warrant [Member] | ||||||||||||||||||||||||
Warrant exercise price | $ 2.50 | $ 3.50 | $ 3.50 | |||||||||||||||||||||
Warrants Purchase | 1,383,116 | 987,940 | 987,840 | 987,840 | ||||||||||||||||||||
Warrants proceeds | $ 295,534 | |||||||||||||||||||||||
Warrant description | On August 30, 2019, the Company closed Securities Purchase Agreements (the "Purchase Agreement") with accredited investors. Pursuant to the terms of the Purchase Agreements, the Company issued and sold to investors convertible promissory notes in the aggregate principal amount of $2,469,840 (the "Notes"), and warrants to purchase up to 987,940 shares of the Company's common stock (the "Warrant"). The Company received net proceeds of $295,534, which is net of a 10% original issue discounts of $246,984 and origination fees of $61,101, and is net of $1,643,367 for the repayment of notes payable (See Note 8), and net of $222,854 related to the conversion of existing notes payable already outstanding to these lenders into these August 30, 2019 convertible notes (see Note 8). The Notes bears interest at 10% per annum and becomes due and payable on November 30, 2020. During the existence of an Event of Default, interest shall accrue at the lesser of (i) the rate of 18% per annum, or (ii) the maximum amount permitted by law. Commencing on the four month anniversary of these Notes, monthly payments of interest and monthly principal payments, based on a 12 month amortization schedule (each, an "Amortization Payment"), shall be due and payable, until the Maturity Date, at which time all outstanding principal, accrued and unpaid interest and all other amounts due and payable hereunder shall be immediately due and payable. The Amortization Payments shall be made in cash unless the investor requests it to be issued in the Company's common stock in lieu of a cash payment ("Stock Payment"). If the investor requests a Stock Payment, the number of shares of common stock issued shall be based on the amount of the applicable Amortization Payment divided by 80% of the lowest VWAP during the five Trading Day period prior to the due date of the Amortization Payment. The Notes may be prepaid, provided that equity conditions, as defined in the Notes, have been met (or any such failure to meet the Equity Conditions have been waived): (i) from Original Issuance Date until and through the day that falls on the third month anniversary of the Original Issue Date (the "3 Month Anniversary") at an amount equal to 105% of the aggregate of the outstanding principal balance of the Note and accrued and unpaid interest, and (ii) after the 3 Month Anniversary at an amount equal to 115% of the aggregate of the outstanding principal balance of the Note and accrued and unpaid interest. In the event that the Company closes a registered public offering of securities for its own account (a "Public Offering"), the Holder may elect to: (x) have its principal and accrued interest prepaid directly from the Public Offering Proceeds at the prices set forth above, or (y) exchange its Note at the closing of the Public Offering for the securities being issued in the Public Offering at the Public Offering prices based upon the outstanding principal, accrued interest and other charges, or (z) continue to hold the Note. Except for a Public Offering and Amortization Payments, in order to prepay the Note, the Company shall provide at least 20 days' prior written notice to the Holder, during which time the Holder may convert the Note in whole or in part at the Conversion Price. For avoidance of doubt, the Amortization Payments shall be prepayments and are subject to prepayment penalties equal to 115% of the Amortization payment. In the event the Company consummates a Public Offering while the Notes are outstanding, then 25% of the net proceeds of such offering shall, within two business days of the closing of such public offering, be applied to reduce the outstanding obligations pursuant to the Notes. In connection with the Debt Offering, the Company entered into a Registration Rights Agreement, pursuant to which the Company agreed to file a registration statement on Form S-1 to register the resale of the shares issuable to the Debt Investors in the Debt Offering. After the original issue date until the Notes are no longer outstanding, the Notes shall be convertible, in whole or in part, at any time, and from time to time, into shares of Common Stock at the option of the investor. The "Conversion Price" in effect on any Conversion Date means, as of any Conversion Date or other date of determination, the lower of: (i) $2.50 per share and (ii) the price per share paid by investors in the contemplated equity offering of up to $1,000,000. If an Event of Default has occurred, regardless of whether such Event of Default has been cured or remains ongoing, these Notes shall be convertible at the lower of: (i) $2.50 and (ii) 70% of the second lowest closing price of the Common Stock as reported on the Trading Market during the 20 consecutive Trading Day period ending and including the Trading Day immediately preceding the delivery or deemed delivery of the applicable Notice of Conversion (the "Default Conversion Price"). All such Conversion Price determinations are to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the Common Stock. | |||||||||||||||||||||||
Warrant issued | $ 246,984 | |||||||||||||||||||||||
Origination fees | 61,101 | |||||||||||||||||||||||
Repayment of notes payable | 1,643,367 | |||||||||||||||||||||||
Deemed dividend | $ 981,548 | |||||||||||||||||||||||
Warrant [Member] | Individual [Member] | ||||||||||||||||||||||||
Number of common stock issued | 203,000 | |||||||||||||||||||||||
Share Price | $ 11.81 | |||||||||||||||||||||||
Warrant [Member] | Individual 1 [Member] | ||||||||||||||||||||||||
Number of common stock issued | 812,000 | |||||||||||||||||||||||
Share Price | $ 2.50 | |||||||||||||||||||||||
RDW Capital, LLC [Member] | ||||||||||||||||||||||||
Debt, principal balance | 510,000 | $ 510,000 | $ 510,000 | 510,000 | $ 240,000 | |||||||||||||||||||
Purchase price | $ 30,000 | |||||||||||||||||||||||
Debt instrument interest rate | 12.00% | |||||||||||||||||||||||
Increased interest rate per month | 24.00% | |||||||||||||||||||||||
Advance from lender | $ 15,000 | |||||||||||||||||||||||
Convertible notes payable | $ 510,000 | 510,000 | ||||||||||||||||||||||
Notes payable - related party | $ 510,000 | 510,000 | ||||||||||||||||||||||
Bellridge Capital, L.P [Member] | ||||||||||||||||||||||||
Note maturity date | Aug. 31, 2020 | |||||||||||||||||||||||
Debt instrument interest rate | 10.00% | |||||||||||||||||||||||
Gain on debt extinguishment, net | $ 10,248,000 | |||||||||||||||||||||||
Notes payable | 2,223,918 | |||||||||||||||||||||||
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 | 100,000 | ||||||||||||||||||||||
Reduction of interest rate | 5.00% | |||||||||||||||||||||||
Derivative expense | $ 41,653,345 | |||||||||||||||||||||||
Bellridge Capital, L.P [Member] | Series B Preferred Stock [Member] | ||||||||||||||||||||||||
Number of common stock issued | 700,000 | |||||||||||||||||||||||
Bellridge Capital, L.P [Member] | Common Stock [Member] | ||||||||||||||||||||||||
Number of common stock issued | 700,000 | |||||||||||||||||||||||
Bellridge Capital, L.P [Member] | Warrants [Member] | ||||||||||||||||||||||||
Number of restricted common stock issued | 360,000 | 360,000 | ||||||||||||||||||||||
Convertible Debt [Member] | Bellridge Capital, LLC. [Member] | ||||||||||||||||||||||||
Percentage of warrant purchase | 2.00% | |||||||||||||||||||||||
Warrant exercise price | $ 100 | |||||||||||||||||||||||
Notes [Member] | ||||||||||||||||||||||||
Proceeds from promissory notes | 2,469,840 | |||||||||||||||||||||||
Amortization of Debt Discount | 1,225,109 | 936,645 | ||||||||||||||||||||||
Maximum [Member] | ||||||||||||||||||||||||
Offering cost | $ 1,000,000 | |||||||||||||||||||||||
Gain on derivative liability | $ 36,079 | |||||||||||||||||||||||
Red Diamond Partners, LLC [Member] | ||||||||||||||||||||||||
Debt, principal balance | $ 510,000 | |||||||||||||||||||||||
Note maturity date | Dec. 31, 2020 | |||||||||||||||||||||||
Percentage of common stock option of lowest VWAP | 65.00% | |||||||||||||||||||||||
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. | |||||||||||||||||||||||
Proceeds from promissory notes | $ 4,000,000 | |||||||||||||||||||||||
Gain on debt extinguishment, net | 432,589 | |||||||||||||||||||||||
Debt put premium | 385,385 | |||||||||||||||||||||||
Reversal of default interest payable | $ 47,205 | |||||||||||||||||||||||
Debt conversion price per share | $ 1.50 | |||||||||||||||||||||||
Red Diamond Partners, LLC [Member] | Convertible Promissory Note [Member] | ||||||||||||||||||||||||
Payment of principal and interest | $ 270,000 | |||||||||||||||||||||||
Increased interest rate per month | 18.00% | |||||||||||||||||||||||
Securities Purchase Agreement [Member] | ||||||||||||||||||||||||
Warrant exercise price | $ 2.50 | $ 3.50 | $ 2.50 | $ 2.50 | ||||||||||||||||||||
Warrant term | 5 years | 5 years | ||||||||||||||||||||||
Deemed dividend | $ 981,548 | |||||||||||||||||||||||
Securities Purchase Agreement [Member] | Red Diamond Partners, LLC [Member] | ||||||||||||||||||||||||
Purchase price | $ 350,000 | |||||||||||||||||||||||
Transaction costs | $ 5,000 | |||||||||||||||||||||||
Debt instrument interest rate | 12.00% | |||||||||||||||||||||||
Percentage of common stock option of lowest VWAP | 65.00% | |||||||||||||||||||||||
Convertible promissory notes default amount | $ 25,000 | |||||||||||||||||||||||
Securities Purchase Agreement [Member] | Red Diamond Partners, LLC [Member] | Initial Tranche [Member] | ||||||||||||||||||||||||
Debt, principal balance | 100,000 | |||||||||||||||||||||||
Proceeds from convertible promissory note | 95,000 | |||||||||||||||||||||||
Debt original issue discount | $ 5,000 | |||||||||||||||||||||||
Note maturity date | Apr. 25, 2018 | |||||||||||||||||||||||
Each tranche matures term | Each tranche will 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% | |||||||||||||||||||||||
Payments of debt issuance costs | $ 177,212 | |||||||||||||||||||||||
Debt interest monthly payments | $ 156,219 | $ 232,940 | ||||||||||||||||||||||
Percentage of warrant purchase | 4.75% | |||||||||||||||||||||||
Repayment of loan percentage | 125.00% | |||||||||||||||||||||||
Debt converted conversion percentage | 2.00% | |||||||||||||||||||||||
Percentage on membership interests | 100.00% | |||||||||||||||||||||||
Proceeds from subsequent offering | $ 5,000,000 | |||||||||||||||||||||||
Proceeds from subsequent offering description | 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 | 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. | |||||||||||||||||||||||
Aggregate purchase price of warrant | $ 100 | |||||||||||||||||||||||
Warrant term | 2 years | |||||||||||||||||||||||
Securities Purchase Agreement [Member] | Lender [Member] | Bellridge Capital, LLC. [Member] | Warrant [Member] | ||||||||||||||||||||||||
Percentage of warrant purchase | 4.75% | |||||||||||||||||||||||
Aggregate purchase price of warrant | $ 100 | |||||||||||||||||||||||
Warrant term | 2 years | |||||||||||||||||||||||
Securities Purchase Agreement [Member] | Placement Agent [Member] | Bellridge Capital, LLC. [Member] | ||||||||||||||||||||||||
Payments of debt issuance costs | $ 120,000 | |||||||||||||||||||||||
Percentage of warrant purchase | 4.75% | |||||||||||||||||||||||
Aggregate purchase price of warrant | $ 100 | |||||||||||||||||||||||
Warrant term | 2 years | |||||||||||||||||||||||
Convertible Note Agreement [Member] | ||||||||||||||||||||||||
Convertible notes payable | $ 1,015,000 | |||||||||||||||||||||||
Gain on debt extinguishment, net | $ 3,669,367 | |||||||||||||||||||||||
Debt conversion price per share | $ 2.50 | |||||||||||||||||||||||
Debt conversion amount | $ 1,164,220 | |||||||||||||||||||||||
Fair value of Common stock | 2,505,147 | |||||||||||||||||||||||
Convertible Note Agreement [Member] | Individual [Member] | ||||||||||||||||||||||||
Payment of principal and interest | $ 117,611 | $ 31,902 | ||||||||||||||||||||||
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 are due, if the note is not sooner converted as provided in the note agreement. | 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% | 18.00% | ||||||||||||||||||||||
Notes payable | $ 500,000 | $ 2,000,000 | $ 500,000 | |||||||||||||||||||||
Convertible debt | $ 30,000 | $ 7,500 | ||||||||||||||||||||||
Debt conversion price per share | $ 11.81 | $ 1.37 | ||||||||||||||||||||||
Debt conversion amount | $ 100,000 | $ 100,000 | ||||||||||||||||||||||
Conversion description | All past due principal and interest on this Note shall bear interest from maturity of such principal or interest 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. | All past due principal and interest on this Note shall bear interest from maturity of such principal or interest (in whatever 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. | ||||||||||||||||||||||
Warrant issued | $ 203,000 | |||||||||||||||||||||||
Share Price | $ 2.50 | |||||||||||||||||||||||
Accrued Interest | $ 7,500 | |||||||||||||||||||||||
Convertible Note Agreement [Member] | Individual 1 [Member] | ||||||||||||||||||||||||
Notes payable | $ 2,000,000 | |||||||||||||||||||||||
Number of common stock issued | 812,000 | |||||||||||||||||||||||
Share Price | $ 2.50 | |||||||||||||||||||||||
Accrued Interest | $ 30,000 |
Convertible Promissory Notes _4
Convertible Promissory Notes Payable and Notes Payable - Schedule of Gain on Debt Extinguishment (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Gain from reversal of derivative liabilities on Modification Date or repayment date | $ 61,841,708 | |||
Fair value of common shares issued on Modification Date | (17,934,000) | |||
Fair value of warrants issued on modification dates | (3,550,531) | |||
Conversion inducement expense | (1,164,220) | |||
Write-off of remaining debt discount | (1,165,359) | |||
Reversal of put premium on stock-settled debt related to cancellation of conversion terms | 385,385 | |||
Reduction of principal and interest balances due | ||||
Gain (loss) of debt extinguishment | $ (4,714,751) | 39,203,017 | ||
Gain on Extinguishment on Modification Date [Member] | ||||
Gain from reversal of derivative liabilities on Modification Date or repayment date | 61,841,708 | |||
Fair value of common shares issued on Modification Date | (17,934,000) | |||
Fair value of warrants issued on modification dates | ||||
Conversion inducement expense | ||||
Write-off of remaining debt discount | (1,013,118) | |||
Reversal of put premium on stock-settled debt related to cancellation of conversion terms | 385,385 | |||
Reduction of principal and interest balances due | 385,385 | |||
Gain (loss) of debt extinguishment | 43,823,897 | |||
Other [Member] | ||||
Gain from reversal of derivative liabilities on Modification Date or repayment date | 246,111 | |||
Fair value of common shares issued on Modification Date | ||||
Fair value of warrants issued on modification dates | (3,550,531) | |||
Conversion inducement expense | (1,164,220) | |||
Write-off of remaining debt discount | (152,240) | |||
Reversal of put premium on stock-settled debt related to cancellation of conversion terms | ||||
Reduction of principal and interest balances due | ||||
Gain (loss) of debt extinguishment | $ (4,620,880) |
Convertible Promissory Notes _5
Convertible Promissory Notes Payable and Notes Payable - Schedule of Fair Value of Derivative Liabilities Estimated Using Black-Sholes Valuation Model (Details) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Expected Dividend Rate [Member] | ||
Fair value measurement, percentage | 0 | 0 |
Expected Term [Member] | Minimum [Member] | ||
Fair value derivative liabilities term (in years) | 18 days | 4 days |
Expected Term [Member] | Maximum [Member] | ||
Fair value derivative liabilities term (in years) | 5 years | 2 years |
Volatility [Member] | Minimum [Member] | ||
Fair value measurement, percentage | 217.6 | 261.2 |
Volatility [Member] | Maximum [Member] | ||
Fair value measurement, percentage | 228.7 | 307.75 |
Risk Free Interest Rate [Member] | Minimum [Member] | ||
Fair value measurement, percentage | 1.39 | 1.32 |
Risk Free Interest Rate [Member] | Maximum [Member] | ||
Fair value measurement, percentage | 2.40 | 2.11 |
Convertible Promissory Notes _6
Convertible Promissory Notes Payable and Notes Payable - Schedule of Convertible Promissory Notes (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Less: unamortized debt discount | $ (6,383) | |
Less: current portion of convertible notes payable | $ (1,321,213) | (1,411,876) |
Convertible notes payable, net - long-term | 443,443 | |
Convertible Promissory Notes [Member] | ||
Principal amount | 4,069,840 | 3,007,503 |
Less: unamortized debt discount | (2,305,184) | (1,595,627) |
Convertible notes payable, net | 1,764,656 | 1,411,876 |
Less: current portion of convertible notes payable | (1,321,213) | (1,411,876) |
Convertible notes payable, net - long-term | $ 443,443 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) | Aug. 28, 2019USD ($)Integer | May 08, 2019USD ($) | Apr. 17, 2019USD ($) | Apr. 10, 2019USD ($) | Mar. 06, 2019USD ($) | Jan. 31, 2019USD ($)$ / sharesshares | Jan. 28, 2019USD ($) | Jan. 24, 2019USD ($) | Jan. 14, 2019USD ($) | Oct. 12, 2018USD ($) | Oct. 01, 2018USD ($) | Sep. 20, 2018USD ($) | Sep. 30, 2019USD ($)$ / sharesshares | Aug. 31, 2019USD ($)$ / sharesshares | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Sep. 30, 2019USD ($)$ / sharesshares | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)Integer$ / sharesshares | Sep. 30, 2018USD ($) |
Payment of notes payable | $ 9,584,459 | $ 1,568,708 | ||||||||||||||||||
Proceeds from promissory notes | 7,791,020 | 710,845 | ||||||||||||||||||
Origination fees | 601,121 | |||||||||||||||||||
Unamortized debt discount | $ 6,383 | |||||||||||||||||||
Secured Merchant Loans [Member] | ||||||||||||||||||||
Notes payable liabilities assumed | $ 944,281 | 944,281 | 944,281 | |||||||||||||||||
Notes payable | $ 521,250 | |||||||||||||||||||
Payment of notes payable | 59,359 | |||||||||||||||||||
Notes payable, related parties | 98,592 | 157,951 | 98,592 | 98,592 | ||||||||||||||||
Proceeds from promissory notes | 375,000 | |||||||||||||||||||
Debt original issue discount | 146,250 | |||||||||||||||||||
Debt instrument, periodic payment | $ 3,724 | |||||||||||||||||||
Promissory Notes [Member] | ||||||||||||||||||||
Unamortized debt discount | 0 | 0 | 0 | |||||||||||||||||
Promissory Notes [Member] | Individuals [Member] | ||||||||||||||||||||
Notes payable | $ 26,900 | |||||||||||||||||||
Debt instrument interest rate | 15.00% | |||||||||||||||||||
Convertible debt | $ 77,090 | |||||||||||||||||||
Warrant issued | shares | 1,000 | |||||||||||||||||||
Number of warrants to purchase shares of common stock | shares | 1,000 | |||||||||||||||||||
Warrant exercise price | $ / shares | $ 1 | |||||||||||||||||||
Warrant term | 5 years | |||||||||||||||||||
Promissory Notes [Member] | Seven Individuals [Member] | ||||||||||||||||||||
Notes payable | $ 2,352,150 | $ 2,352,150 | $ 2,352,150 | |||||||||||||||||
Warrant issued | shares | 58,000 | |||||||||||||||||||
Number of warrants to purchase shares of common stock | shares | 58,000 | 58,000 | 58,000 | |||||||||||||||||
Warrant exercise price | $ / shares | $ 1 | $ 1 | $ 1 | |||||||||||||||||
Warrant term | 5 years | 5 years | 5 years | |||||||||||||||||
Proceeds from promissory notes | $ 2,048,900 | |||||||||||||||||||
Unamortized debt discount | $ 263,250 | $ 263,250 | $ 263,250 | |||||||||||||||||
Debt due date, description | These Notes are due between 45 and 273 days from the respective Note date. | |||||||||||||||||||
Number of common stock issued | shares | 411,256 | |||||||||||||||||||
Promissory Notes [Member] | Individual [Member] | ||||||||||||||||||||
Notes payable | 1,638,480 | 1,638,480 | $ 1,638,480 | |||||||||||||||||
Unamortized debt discount | 21,365 | 21,365 | 21,365 | |||||||||||||||||
One Secured Merchant Loan [Member] | ||||||||||||||||||||
Notes payable | $ 650,000 | $ 764,500 | 184,750 | 190,125 | 184,750 | 184,750 | ||||||||||||||
Debt instrument interest rate | 15.00% | |||||||||||||||||||
Payment of notes payable | $ 184,750 | 2,503,044 | ||||||||||||||||||
Proceeds from promissory notes | 500,000 | 316,637 | ||||||||||||||||||
Debt original issue discount | 150,000 | |||||||||||||||||||
Debt instrument, periodic payment | 6,371 | |||||||||||||||||||
Repayment of principal amount | 223,329 | |||||||||||||||||||
Origination fees | 10,034 | |||||||||||||||||||
Unamortized debt discount | $ 214,500 | 0 | 74,169 | 0 | 0 | |||||||||||||||
Number of installments | Integer | 12 | |||||||||||||||||||
Debt due date, description | Pursuant to the new Note, the Company shall pay the lender in twelve monthly installments of $17,705 beginning on November 25, 2019 to the maturity date of November 25, 2020. | |||||||||||||||||||
One Secured Merchant Loan [Member] | June 2019 to August 2019 [Member] | ||||||||||||||||||||
Debt instrument, periodic payment | $ 216,667 | |||||||||||||||||||
Second Secured Merchant Loan [Member] | ||||||||||||||||||||
Notes payable | $ 417,000 | 0 | 0 | 0 | ||||||||||||||||
Payment of notes payable | $ 1,837,870 | |||||||||||||||||||
Proceeds from promissory notes | 292,002 | |||||||||||||||||||
Debt instrument, periodic payment | 3,972 | |||||||||||||||||||
Origination fees | 7,998 | |||||||||||||||||||
Unamortized debt discount | $ 117,000 | |||||||||||||||||||
Number of installments | Integer | 3 | |||||||||||||||||||
Debt instrument, payment terms | Making three monthly installments of $216,667 beginning in June 2019 to August 2019. | |||||||||||||||||||
Second Secured Merchant Loan [Member] | Noteholders [Member] | ||||||||||||||||||||
Payment of notes payable | $ 27,498 | |||||||||||||||||||
Third Secured Merchant Loan [Member] | ||||||||||||||||||||
Notes payable | $ 1,242,000 | $ 759,000 | 2,099,500 | 2,099,500 | 2,099,500 | |||||||||||||||
Notes payable, related parties | $ 261,630 | 261,630 | 261,630 | 261,630 | ||||||||||||||||
Proceeds from promissory notes | 528,039 | 315,097 | 1,239,500 | |||||||||||||||||
Debt original issue discount | 342,000 | |||||||||||||||||||
Debt instrument, periodic payment | 10,265 | 4,897 | 8,000 | |||||||||||||||||
Repayment of principal amount | 362,961 | 209,153 | ||||||||||||||||||
Origination fees | $ 9,000 | 25,750 | 860,000 | |||||||||||||||||
Unamortized debt discount | $ 0 | $ 209,000 | ||||||||||||||||||
Debt instrument, weekly periodic payments | 28,500 | |||||||||||||||||||
Secured Merchant Loan [Member] | ||||||||||||||||||||
Notes payable | $ 420,000 | $ 209,850 | ||||||||||||||||||
Proceeds from promissory notes | 254,552 | 137,962 | ||||||||||||||||||
Debt original issue discount | 123,314 | 59,850 | ||||||||||||||||||
Debt instrument, periodic payment | 3,000 | 1,749 | ||||||||||||||||||
Repayment of principal amount | 31,634 | |||||||||||||||||||
Origination fees | $ 10,500 | 12,038 | ||||||||||||||||||
Unamortized debt discount | 0 | 86,248 | 0 | 0 | ||||||||||||||||
Notes and loans payable | 0 | 171,752 | 0 | 0 | ||||||||||||||||
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 | |||||||||||||||||||
Origination fees | $ 8,000 | |||||||||||||||||||
Unamortized debt discount | 0 | 51,371 | 0 | 0 | ||||||||||||||||
Notes and loans payable | 0 | 128,726 | 0 | 0 | ||||||||||||||||
Fourth Secured Merchant Loan [Member] | ||||||||||||||||||||
Notes payable | $ 1,199,200 | |||||||||||||||||||
Proceeds from promissory notes | 652,387 | |||||||||||||||||||
Debt original issue discount | 399,200 | |||||||||||||||||||
Debt instrument, periodic payment | 11,993 | |||||||||||||||||||
Repayment of principal amount | $ 703,899 | 69,327 | ||||||||||||||||||
Origination fees | $ 78,286 | |||||||||||||||||||
Unamortized debt discount | 229,195 | 229,195 | 229,195 | |||||||||||||||||
Fifth Secured Merchant Loan [Member] | ||||||||||||||||||||
Notes payable | 1,011,825 | 1,011,825 | 1,011,825 | |||||||||||||||||
Payment of notes payable | 788,971 | |||||||||||||||||||
Notes payable, related parties | 222,854 | 222,854 | 222,854 | |||||||||||||||||
Proceeds from promissory notes | 630,000 | |||||||||||||||||||
Origination fees | 381,825 | |||||||||||||||||||
Fifth Secured Merchant Loan [Member] | Noteholders [Member] | ||||||||||||||||||||
Payment of notes payable | 8,000 | |||||||||||||||||||
Promissory Notes [Member] | Entities or Individuals [Member] | ||||||||||||||||||||
Notes payable liabilities assumed | 297,005 | 297,005 | 297,005 | |||||||||||||||||
Payment of notes payable | 25,000 | |||||||||||||||||||
Notes and loans payable | $ 65,000 | 130,000 | $ 65,000 | $ 65,000 | ||||||||||||||||
Promissory Notes [Member] | Entities or Individuals [Member] | Minimum [Member] | ||||||||||||||||||||
Debt instrument interest rate | 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% | |||||||||||||||||
New Promissory Notes [Member] | Entities or Individuals [Member] | ||||||||||||||||||||
Notes payable | $ 40,000 | 130,000 | $ 40,000 | $ 40,000 | ||||||||||||||||
Payment of notes payable | 40,000 | |||||||||||||||||||
Warrant exercise price | $ / shares | $ 2.50 | |||||||||||||||||||
Warrant term | 5 years | |||||||||||||||||||
Number of common stock issued | shares | 12,455 | |||||||||||||||||||
Conversion of notes payable | $ 25,000 | |||||||||||||||||||
Accrued interest | 6,137 | |||||||||||||||||||
Senior Secured Demand Promissory Notes [Member] | ||||||||||||||||||||
Proceeds from promissory notes | 699,955 | |||||||||||||||||||
Debt original issue discount | 70,000 | |||||||||||||||||||
Debt instrument, periodic payment | 220,000 | 200,000 | ||||||||||||||||||
Origination fees | 45 | |||||||||||||||||||
Additional notes payable borrowed | 770,000 | |||||||||||||||||||
Senior Secured Demand Promissory Notes [Member] | Entities or Individuals [Member] | ||||||||||||||||||||
Notes payable | 350,000 | 505,945 | 350,000 | 350,000 | ||||||||||||||||
Unamortized debt discount | 0 | 44,055 | 0 | 0 | ||||||||||||||||
Previous Promissory Notes [Member] | Seven Individuals [Member] | ||||||||||||||||||||
Notes payable liabilities assumed | 687,500 | 687,500 | 687,500 | |||||||||||||||||
Notes payable | $ 40,000 | $ 40,000 | $ 40,000 | |||||||||||||||||
Number of warrants to purchase shares of common stock | shares | 411,256 | 411,256 | 411,256 | |||||||||||||||||
Warrant exercise price | $ / shares | $ 2.50 | $ 2.50 | $ 2.50 | |||||||||||||||||
Unamortized debt discount | $ 1,758 | $ 1,758 | $ 1,758 | |||||||||||||||||
Conversion of notes payable | 921,250 | 921,250 | 921,250 | |||||||||||||||||
Accrued interest | 106,890 | 106,890 | 106,890 | |||||||||||||||||
Two Separate Promissory Notes [Member] | ||||||||||||||||||||
Notes payable | 27,273 | 220,000 | $ 220,000 | 27,273 | 27,273 | |||||||||||||||
Payment of notes payable | 190,000 | |||||||||||||||||||
Proceeds from promissory notes | 200,000 | 200,000 | ||||||||||||||||||
Debt original issue discount | $ 20,000 | $ 20,000 | ||||||||||||||||||
Unamortized debt discount | 2,727 | 2,727 | 2,727 | |||||||||||||||||
Equipment Notes Payable [Member] | ||||||||||||||||||||
Notes payable liabilities assumed | 523,207 | 523,207 | 523,207 | |||||||||||||||||
Notes payable | 292,778 | 292,778 | 292,778 | |||||||||||||||||
Notes and loans payable | 60,286 | 488,289 | 60,286 | 60,286 | ||||||||||||||||
Equipment Notes Payable [Member] | Auto Financing Agreement [Member] | ||||||||||||||||||||
Notes and loans payable | $ 193,111 | $ 161,036 | $ 193,111 | $ 193,111 | ||||||||||||||||
Equipment Notes Payable [Member] | Minimum [Member] | ||||||||||||||||||||
Debt instrument interest rate | 6.00% | 6.00% | 6.00% | |||||||||||||||||
Equipment Notes Payable [Member] | Maximum [Member] | ||||||||||||||||||||
Debt instrument interest rate | 9.40% | 9.40% | 9.40% |
Notes Payable - Schedule of Not
Notes Payable - Schedule of Notes Payable (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Less: unamortized debt discount | $ (6,383) | |
Less: current portion of notes payable | $ (1,812,296) | (1,509,804) |
Notes payable - long-term | 89,088 | 424,019 |
Notes Payable [Member] | ||
Principal amounts | 1,905,869 | 2,189,666 |
Less: unamortized debt discount | (4,485) | (255,843) |
Principal amounts, net | 1,901,384 | 1,933,823 |
Less: current portion of notes payable | (1,812,296) | (1,509,804) |
Notes payable - long-term | $ 89,088 | $ 424,019 |
Stockholders' Deficit (Details
Stockholders' Deficit (Details Narrative) | Sep. 06, 2019USD ($)$ / sharesshares | Aug. 19, 2019shares | Aug. 16, 2019USD ($)$ / sharesshares | Jul. 12, 2019USD ($)$ / sharesshares | Jul. 08, 2019USD ($)$ / sharesshares | Jun. 14, 2019USD ($)$ / sharesshares | Jun. 11, 2019USD ($)$ / sharesshares | May 01, 2019USD ($)$ / sharesshares | Apr. 09, 2019USD ($)$ / sharesshares | Feb. 25, 2019USD ($)$ / sharesshares | Dec. 27, 2018 | Jun. 30, 2019shares | Sep. 30, 2019USD ($)$ / sharesshares | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Sep. 30, 2019USD ($)$ / sharesshares | Sep. 30, 2018USD ($) | Aug. 31, 2019$ / sharesshares | Aug. 30, 2019USD ($)$ / sharesshares | Dec. 31, 2018$ / sharesshares | Jul. 31, 2018shares | Jul. 16, 2018$ / shares |
Preferred stock, authorized | shares | 10,000,000 | 10,000,000 | 10,000,000 | 10,000,000 | ||||||||||||||||||||
Preferred stock, par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||||||||||||||
Common stock issuable, shares | shares | 50,000 | 50,000 | 0 | |||||||||||||||||||||
Value of stock issued for service rendered | $ 2,528,646 | $ 2,465,500 | $ 2,750,808 | $ 4,326,000 | ||||||||||||||||||||
Gain on debt extinguishment, net | $ (4,714,751) | $ 39,203,017 | ||||||||||||||||||||||
Number of options granted | shares | 80,000 | |||||||||||||||||||||||
Options exercisable for the period | $ / shares | ||||||||||||||||||||||||
Stock-based compensation and consulting fees - discontinued operations | $ 700,816 | |||||||||||||||||||||||
Deemed dividend | $ (981,548) | $ (981,548) | ||||||||||||||||||||||
Expected Dividend Rate [Member] | ||||||||||||||||||||||||
Fair value of valuation assumptions | 0 | 0 | 0 | |||||||||||||||||||||
Volatility [Member] | ||||||||||||||||||||||||
Fair value of valuation assumptions | 2.281 | 2.281 | 2.281 | |||||||||||||||||||||
Risk Free Interest Rate [Member] | ||||||||||||||||||||||||
Fair value of valuation assumptions | 0.0192 | |||||||||||||||||||||||
Maximum [Member] | Risk Free Interest Rate [Member] | ||||||||||||||||||||||||
Fair value of valuation assumptions | 0.0240 | 0.0240 | ||||||||||||||||||||||
Minimum [Member] | Risk Free Interest Rate [Member] | ||||||||||||||||||||||||
Fair value of valuation assumptions | 0.0228 | 0.0228 | ||||||||||||||||||||||
Conversion Debt [Member] | ||||||||||||||||||||||||
Warrant exercise price | $ / shares | $ 2.50 | $ 2.50 | ||||||||||||||||||||||
Debt conversion, converted instrument, shares issued | shares | 423,711 | |||||||||||||||||||||||
Notes payable | $ 946,250 | $ 946,250 | ||||||||||||||||||||||
Accrued interest | 113,027 | $ 113,027 | ||||||||||||||||||||||
Debt conversion, original debt, amount | $ 1,059,277 | |||||||||||||||||||||||
Promissory Notes Payable [Member] | ||||||||||||||||||||||||
Warrants expiration term | 5 years | 5 years | 5 years | |||||||||||||||||||||
Warrant issued | shares | 55,000 | 59,000 | ||||||||||||||||||||||
Warrant to purchase shares of common stock | shares | 55,000 | 59,000 | 59,000 | |||||||||||||||||||||
Warrant exercise price | $ / shares | $ 1 | $ 1 | $ 1 | |||||||||||||||||||||
Fair value of warrants | $ 601,121 | $ 135,324 | $ 135,324 | |||||||||||||||||||||
Sale of Common Shares [Member] | ||||||||||||||||||||||||
Warrants expiration term | 5 years | 5 years | ||||||||||||||||||||||
Warrant exercise price | $ / shares | $ 2.50 | $ 2.50 | ||||||||||||||||||||||
Number of shares issued in transaction | shares | 585,000 | |||||||||||||||||||||||
Cash proceeds | $ 1,462,500 | |||||||||||||||||||||||
Note Conversion Agreement [Member] | ||||||||||||||||||||||||
Debt conversion price, per share | $ / shares | $ 2.50 | |||||||||||||||||||||||
Warrants expiration term | 5 years | |||||||||||||||||||||||
Warrant to purchase shares of common stock | shares | 203,000 | |||||||||||||||||||||||
Warrant exercise price | $ / shares | $ 1.81 | |||||||||||||||||||||||
Debt conversion, converted instrument, shares issued | shares | 203,000 | |||||||||||||||||||||||
Notes payable | $ 500,000 | |||||||||||||||||||||||
Accrued interest | $ 7,500 | |||||||||||||||||||||||
Note Conversion Agreement 1 [Member] | ||||||||||||||||||||||||
Debt conversion price, per share | $ / shares | $ 2.50 | |||||||||||||||||||||||
Warrants expiration term | 5 years | |||||||||||||||||||||||
Warrant to purchase shares of common stock | shares | 812,000 | |||||||||||||||||||||||
Warrant exercise price | $ / shares | $ 2.50 | |||||||||||||||||||||||
Debt conversion, converted instrument, shares issued | shares | 812,000 | |||||||||||||||||||||||
Notes payable | $ 2,000,000 | |||||||||||||||||||||||
Accrued interest | $ 30,000 | |||||||||||||||||||||||
Note Conversion Agreement 3 [Member] | ||||||||||||||||||||||||
Debt conversion price, per share | $ / shares | $ 2.50 | $ 2.50 | ||||||||||||||||||||||
Gain on debt extinguishment, net | $ 3,669,367 | |||||||||||||||||||||||
Warrant issued | shares | 1,015,000 | |||||||||||||||||||||||
Fair value of warrants | $ 2,505,147 | $ 2,505,147 | ||||||||||||||||||||||
Debt conversion, original debt, amount | $ 1,164,220 | |||||||||||||||||||||||
Securities Purchase Agreement [Member] | ||||||||||||||||||||||||
Warrants expiration term | 5 years | 5 years | ||||||||||||||||||||||
Warrant to purchase shares of common stock | shares | 585,000 | 585,000 | ||||||||||||||||||||||
Warrant exercise price | $ / shares | $ 2.50 | $ 2.50 | $ 2.50 | $ 3.50 | ||||||||||||||||||||
Fair value of warrants | $ 1,225,109 | |||||||||||||||||||||||
Number of shares issued in transaction | shares | 585,000 | |||||||||||||||||||||||
Sale of stock, price per share | $ / shares | $ 2.50 | |||||||||||||||||||||||
Deemed dividend | $ 981,548 | |||||||||||||||||||||||
Securities Purchase Agreement [Member] | Maximum [Member] | ||||||||||||||||||||||||
Warrant to purchase shares of common stock | shares | 395,176 | 987,940 | ||||||||||||||||||||||
Securities Purchase Agreement [Member] | Minimum [Member] | ||||||||||||||||||||||||
Warrant to purchase shares of common stock | shares | 1,383,116 | |||||||||||||||||||||||
Securities Purchase Agreement 2 [Member] | ||||||||||||||||||||||||
Warrants expiration term | 5 years | 5 years | ||||||||||||||||||||||
Warrant to purchase shares of common stock | shares | 423,711 | 423,711 | ||||||||||||||||||||||
Warrant exercise price | $ / shares | $ 2.50 | $ 2.50 | ||||||||||||||||||||||
Fair value of warrants | $ 1,045,384 | $ 1,045,384 | ||||||||||||||||||||||
Securities Purchase Agreement 3 [Member] | ||||||||||||||||||||||||
Warrants expiration term | 5 years | 5 years | ||||||||||||||||||||||
Warrant to purchase shares of common stock | shares | 1,015,000 | 1,015,000 | ||||||||||||||||||||||
Warrant exercise price | $ / shares | $ 2.50 | $ 2.50 | ||||||||||||||||||||||
Fair value of warrants | $ 2,505,147 | $ 2,505,147 | ||||||||||||||||||||||
Chief Executive Officer [Member] | ||||||||||||||||||||||||
Number of stock issued for service rendered | shares | 2,670,688 | |||||||||||||||||||||||
Shares issued, price per share | $ / shares | $ 1.03 | |||||||||||||||||||||||
Stock-based compensation | $ 2,750,808 | |||||||||||||||||||||||
Value of stock issued for service rendered | $ 2,750,808 | |||||||||||||||||||||||
Consultants [Member] | ||||||||||||||||||||||||
Number of stock issued for service rendered | shares | 30,000 | |||||||||||||||||||||||
Shares issued, price per share | $ / shares | $ 8.85 | |||||||||||||||||||||||
Stock-based compensation | $ 265,500 | |||||||||||||||||||||||
Value of stock issued for service rendered | $ 265,500 | |||||||||||||||||||||||
Consultants [Member] | Consulting Agreement [Member] | ||||||||||||||||||||||||
Number of stock issued for service rendered | shares | 50,000 | |||||||||||||||||||||||
Shares issued, price per share | $ / shares | $ 2.50 | |||||||||||||||||||||||
Common stock issuable, shares | shares | 50,000 | 50,000 | ||||||||||||||||||||||
Value of stock issued for service rendered | $ 125,000 | |||||||||||||||||||||||
Agreement term | 1 year | |||||||||||||||||||||||
Accretion of stock-based professional fees | $ 28,646 | |||||||||||||||||||||||
Unrecognized professional fees | 96,354 | |||||||||||||||||||||||
Consultants [Member] | Consulting Agreement [Member] | January 8, 2020 [Member] | ||||||||||||||||||||||||
Number of shares vested | shares | 25,000 | |||||||||||||||||||||||
Consultants [Member] | Consulting Agreement [Member] | July 8, 2020 [Member] | ||||||||||||||||||||||||
Number of shares vested | shares | 25,000 | |||||||||||||||||||||||
Employees [Member] | ||||||||||||||||||||||||
Number of stock issued for service rendered | shares | 200,000 | |||||||||||||||||||||||
Shares issued, price per share | $ / shares | $ 11 | |||||||||||||||||||||||
Stock-based compensation | $ 2,200,000 | |||||||||||||||||||||||
Value of stock issued for service rendered | $ 2,200,000 | |||||||||||||||||||||||
Number of options granted | shares | 80,000 | |||||||||||||||||||||||
Options exercisable for the period | $ / shares | $ 8.85 | |||||||||||||||||||||||
Options exercisable term | 5 years | |||||||||||||||||||||||
Options vesting percentage | 25.00% | |||||||||||||||||||||||
Options vesting date | Jan. 1, 2020 | |||||||||||||||||||||||
Fair value of options | $ 700,816 | |||||||||||||||||||||||
Employees [Member] | Stock Options [Member] | ||||||||||||||||||||||||
Gain on debt extinguishment, net | $ 7,686,000 | |||||||||||||||||||||||
Expected dividend rate | 0.00% | |||||||||||||||||||||||
Expected term (in years) | 5 years | |||||||||||||||||||||||
Volatility | 228.10% | |||||||||||||||||||||||
Risk-free interest rate | 2.31% | |||||||||||||||||||||||
Stock-based compensation and consulting fees - discontinued operations | $ 700,816 | |||||||||||||||||||||||
Steven Yariv [Member] | ||||||||||||||||||||||||
Stock repurchased in exchange for common stock and cancellation of shares | shares | 1,000,000 | |||||||||||||||||||||||
Former Chief Executive Officer [Member] | ||||||||||||||||||||||||
Increase in equity related to disposal of net liabilities | $ 56,987 | |||||||||||||||||||||||
Lender [Member] | Purchase Agreement [Member] | ||||||||||||||||||||||||
Percentage of fully diluted outstanding common stock | 2.00% | |||||||||||||||||||||||
Warrants expiration term | 2 years | 2 years | ||||||||||||||||||||||
Aggregate purchase price of warrants | $ 100 | |||||||||||||||||||||||
Lender [Member] | Purchase Agreement [Member] | Maximum [Member] | ||||||||||||||||||||||||
Percentage of fully diluted outstanding common stock | 4.75% | |||||||||||||||||||||||
Placement Agent [Member] | Purchase Agreement [Member] | ||||||||||||||||||||||||
Warrants expiration term | 2 years | 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% | |||||||||||||||||||||||
Bellridge Capital, L.P [Member] | ||||||||||||||||||||||||
Dividends payable rate | 10.00% | |||||||||||||||||||||||
Number of preferred shares agreed to exchange into restricted common stock | shares | 700,000 | |||||||||||||||||||||||
Number of restricted common stock issued | shares | 800,000 | |||||||||||||||||||||||
Shares issued, price per share | $ / shares | $ 12.81 | |||||||||||||||||||||||
Common stock issuable, shares | shares | 700,000 | |||||||||||||||||||||||
Reduction of convertible promissory debt | $ 1,800,000 | |||||||||||||||||||||||
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 | shares | 800,000 | |||||||||||||||||||||||
Percentage for beneficial ownership limitation | 4.99% | |||||||||||||||||||||||
Number of common stock issued | shares | 100,000 | 100,000 | ||||||||||||||||||||||
Number of stock issued and to be issued during the period | $ 10,248,000 | |||||||||||||||||||||||
Gain on debt extinguishment, net | 10,248,000 | |||||||||||||||||||||||
Notes payable | $ 2,223,918 | |||||||||||||||||||||||
Bellridge Capital, L.P [Member] | Placement Agent [Member] | ||||||||||||||||||||||||
Shares issued, price per share | $ / shares | $ 12.81 | |||||||||||||||||||||||
Number of warrants cancelled in exchange for common stock, shares | shares | 600,000 | |||||||||||||||||||||||
Number of warrants cancelled in exchange for common stock | $ 7,686,000 | |||||||||||||||||||||||
Series A Convertible Preferred Stock [Member] | ||||||||||||||||||||||||
Preferred stock, authorized | shares | 4,000,000 | 4,000,000 | 4,000,000 | |||||||||||||||||||||
Preferred stock, par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||||||||||||||||||||
Preferred stock, stated value | $ / shares | $ 1 | $ 1 | ||||||||||||||||||||||
Dividends payable rate | 7.00% | 7.00% | ||||||||||||||||||||||
Number of preferred shares agreed to exchange into restricted common stock | shares | 4,000,000 | |||||||||||||||||||||||
Number of restricted common stock issued | shares | 2,600,000 | |||||||||||||||||||||||
Preferred Stock [Member] | ||||||||||||||||||||||||
Dividends payable rate | 130.00% | 130.00% | ||||||||||||||||||||||
Debt conversion price, per share | $ / shares | $ 20.83 | $ 20.83 | ||||||||||||||||||||||
Debt conversion beneficial ownership, percent | 4.99% | |||||||||||||||||||||||
Common Stock [Member] | ||||||||||||||||||||||||
Debt conversion beneficial ownership, percent | 19.99% | |||||||||||||||||||||||
Series B Convertible Preferred Stock [Member] | ||||||||||||||||||||||||
Preferred stock, authorized | shares | 1,700,000 | 1,700,000 | 1,700,000 | 1,700,000 | ||||||||||||||||||||
Preferred stock, par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||||||||||||||
Preferred stock, stated value | $ / shares | $ 0.001 | |||||||||||||||||||||||
Number of preferred shares agreed to exchange into restricted common stock | shares | 700,000 | |||||||||||||||||||||||
Common stock issuable, shares | shares | 700,000 | |||||||||||||||||||||||
Series B Convertible Preferred Stock [Member] | Prime EFS, LLC [Member] | ||||||||||||||||||||||||
Number of stock issued for service rendered | shares | 1,000,000 | |||||||||||||||||||||||
Shares issued, price per share | $ / shares | $ 2.50 | |||||||||||||||||||||||
Stock-based compensation | $ 2,500,000 |
Stockholders' Deficit - Summary
Stockholders' Deficit - Summary of Stock Option Activities (Details) | 9 Months Ended |
Sep. 30, 2019USD ($)$ / sharesshares | |
Equity [Abstract] | |
Number of Options Outstanding, beginning balance | shares | |
Number of Options Outstanding, Granted | shares | 80,000 |
Number of Options Outstanding, Cancelled | shares | |
Number of Options Outstanding, ending balance | shares | 80,000 |
Number of Options Outstanding, Exercisable | shares | |
Weighted Average Exercise Price, beginning balance | $ / shares | |
Weighted Average Exercise Price, Granted | $ / shares | 8.84 |
Weighted Average Exercise Price, Cancelled | $ / shares | |
Weighted Average Exercise Price, ending balance | $ / shares | 8.84 |
Weighted Average Exercise Price, Exercisable | $ / shares | |
Weighted Average Remaining Contractual Term (Years), beginning balance | 0 years |
Weighted Average Remaining Contractual Term (Years), ending balance | 4 years 6 months 29 days |
Aggregate Intrinsic Value, beginning balance | $ | |
Aggregate Intrinsic Value, ending balance | $ | |
Aggregate Intrinsic Value, exercisable | $ |
Stockholders' Deficit - Summa_2
Stockholders' Deficit - Summary of Warrant Activities (Details) - Warrant [Member] | 9 Months Ended |
Sep. 30, 2019USD ($)$ / sharesshares | |
Number of Warrants Balance Outstanding Beginning | shares | 1,648,570 |
Number of Warrants Granted | shares | 3,125,651 |
Number of Warrants Cancellations | shares | (1,421,059) |
Number of Warrants Increase in warrants related to price protection | shares | 395,176 |
Number of Warrants Change in warrants related to dilutive rights | shares | (227,511) |
Number of Warrants Balance Outstanding Ending | shares | 3,520,827 |
Number of Warrants Exercisable Ending Balance | shares | 3,520,827 |
Weighted Average Exercise Price Balance Outstanding Beginning | $ / shares | $ 0 |
Weighted Average Exercise Price Granted | $ / shares | 2.41 |
Weighted Average Exercise Price Cancellations | $ / shares | 0 |
Weighted Average Exercise Price Increase in warrants related to price protection | $ / shares | 2.50 |
Weighted Average Change in warrants related to dilutive rights | $ / shares | 0 |
Weighted Average Exercise Price Balance Outstanding Ending | $ / shares | 2.41 |
Weighted Average Exercise Price Exercisable Ending Balance | $ / shares | $ 2.41 |
Weighted Average Remaining Contractual Term (Years) Balance Outstanding Beginning | 1 year 5 months 20 days |
Weighted Average Remaining Contractual Term (Years) Balance Outstanding Ending | 4 years 10 months 28 days |
Weighted Average Remaining Contractual Term (Years) Exercisable Ending Balance | 4 years 10 months 28 days |
Aggregate Intrinsic Value Balance Outstanding Beginning | $ | $ 2,472,655 |
Aggregate Intrinsic Value Balance Outstanding Ending | $ | 311,070 |
Aggregate Intrinsic Value Exercisable Ending Balance | $ | $ 311,070 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | Jun. 18, 2018USD ($) | Sep. 30, 2019Integer |
Number of lawsuits, pending | Integer | 0 | |
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, $50 million, etc.) on an annualized basis for four consecutive weeks. Executive's base salary shall be subject to review annually by the Manager and may be increased (but not decreased). | |
Agreement expiration date | May 31, 2023 | |
Operating lease, description | The Employment Term shall be automatically extended for additional one-year periods unless, at least sixty (60) days prior to the end of the expiration of the Employment Term. |
Related Party Transactions an_2
Related Party Transactions and Balances (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 5 Months Ended | 9 Months Ended | ||||||||
Jan. 31, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Jul. 03, 2019 | Apr. 30, 2019 | Apr. 09, 2019 | Mar. 13, 2019 | Feb. 28, 2019 | Jul. 25, 2018 | |
Cash paid for acquisition | $ 38,198 | |||||||||||
Proceeds from promissory notes | 7,791,020 | 710,845 | ||||||||||
Debt original issue discount | $ 6,383 | |||||||||||
Notes payable - related party, current | $ 500,000 | 213,617 | 500,000 | |||||||||
Notes payable, related parties, noncurrent | 510,000 | 510,000 | ||||||||||
Amortization of debt discount | 3,991,061 | 1,045,000 | ||||||||||
Interest expense, related party debt | 35,753 | $ 40,000 | 183,392 | $ 40,000 | ||||||||
Promissory Notes [Member] | ||||||||||||
Due to related party | $ 500,000 | |||||||||||
Debt original issue discount | 0 | 0 | ||||||||||
Notes payable, related parties, noncurrent | 510,000 | 510,000 | 510,000 | $ 510,000 | ||||||||
Interest Rate | 20.00% | |||||||||||
Promissory Notes 1 [Member] | ||||||||||||
Interest Rate | 18.00% | |||||||||||
Former Majority Owner [Member] | ||||||||||||
Acquired balance due from former majority owner | 14,019 | 14,019 | ||||||||||
Payment of cash acquired | 489,174 | |||||||||||
Cash paid for acquisition | 489,174 | |||||||||||
Repayment of related party debt | 50,000 | |||||||||||
Due to related party | 209,000 | 259,000 | 209,000 | |||||||||
Employee [Member] | ||||||||||||
Due to related party | 89,873 | (16,300) | 89,873 | |||||||||
Related Parties [Member] | ||||||||||||
Accrued interest payable | 60,760 | 60,760 | ||||||||||
Spouse of Company's CEO [Member] | Promissory Notes [Member] | ||||||||||||
Repayment of related party debt | $ 220,000 | 930,000 | ||||||||||
Convertible promissory notes | 1,150,000 | $ 220,000 | ||||||||||
Proceeds from promissory notes | $ 1,050,000 | |||||||||||
Debt original issue discount | $ 20,000 | $ 100,000 | ||||||||||
Notes payable - related party, current | $ 213,617 | 213,617 | ||||||||||
Amortization of debt discount | 26,383 | |||||||||||
Convertible Note Agreement [Member] | ||||||||||||
Interest expense, related party debt | $ 143,260 | |||||||||||
Convertible Note Agreement [Member] | Individual [Member] | ||||||||||||
Due to related party | $ 500,000 | |||||||||||
Convertible Note Agreement [Member] | Company [Member] | ||||||||||||
Due to related party | $ 2,000,000 |
Operating Lease Right-of-Use _3
Operating Lease Right-of-Use ('ROU') Assets and Operating Lease Liabilities (Details Narrative) - USD ($) | Jan. 02, 2019 | Jul. 31, 2019 | Dec. 31, 2018 | Jul. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Jul. 31, 2019 |
Operating lease, rent expense | $ 123,589 | $ 0 | |||||
Lease liability, discount rate | 12.00% | ||||||
ASU 2016-02 [Member] | |||||||
Operating lease, right-of-use asset and lease liabilities | $ 631,723 | ||||||
Lease Agreement [Member] | |||||||
Operating lease, expiration date | Feb. 28, 2024 | Jan. 30, 2024 | |||||
Operating lease, monthly rent | $ 10,000 | ||||||
Operating lease, renewal term | 4 years 6 months | 5 years | 4 years 6 months | ||||
Payments for security deposit | $ 28,000 | $ 20,000 | |||||
Lease Agreement [Member] | From Lease Commencement Date to Last Day of Second Lease Year [Member] | |||||||
Operating lease, monthly rent | $ 14,000 | ||||||
Lease Agreement [Member] | Twenty Fifth Month of Commencement Date [Member] | |||||||
Operating lease, monthly rent | $ 14,420 | $ 10,500 | |||||
Lease Agreement 1 [Member] | |||||||
Operating lease, expiration date | Aug. 31, 2024 | ||||||
Operating lease, monthly rent | $ 18,000 | ||||||
Operating lease, renewal term | 5 years | 5 years | |||||
Payments for security deposit | $ 18,000 | ||||||
Lease Agreement 1 [Member] | Twenty Fifth Month of Commencement Date [Member] | |||||||
Lease description | increase by 3% each lease year |
Operating Lease Right-of-Use _4
Operating Lease Right-of-Use ('ROU') Assets and Operating Lease Liabilities - Schedule of Right of Use Asset (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Leases [Abstract] | ||
Office leases right of use assets | $ 1,984,320 | |
Less: accumulated amortization into rent expense | (97,201) | |
Right of use asset, net | 1,887,119 | |
Lease liabilities related to office leases right of use assets | 1,907,763 | |
Less: current portion of lease liabilities | (337,487) | |
Lease liabilities - long-term | $ 1,570,276 |
Operating Lease Right-of-Use _5
Operating Lease Right-of-Use ('ROU') Assets and Operating Lease Liabilities - Schedule of Lease Payments Due Under Operating Leases (Details) | Sep. 30, 2019USD ($) |
Leases [Abstract] | |
2020 | $ 522,540 |
2021 | 515,316 |
2022 | 528,767 |
2023 | 535,659 |
2024 | 318,611 |
Total minimum non-cancelable operating lease payments | 2,420,893 |
Less: discount to fair value | (513,130) |
Total lease liability | $ 1,907,763 |
Concentrations (Details Narrati
Concentrations (Details Narrative) - One Customer [Member] | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Sales Revenue, Net [Member] | ||
Concentration risk, percentage | 99.10% | 98.80% |
Accounts Receivable [Member] | ||
Concentration risk, percentage | 80.00% |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] - Forecast [Member] - Subscription Agreement [Member] - $ / shares | 1 Months Ended | |
Nov. 30, 2019 | Oct. 31, 2019 | |
Exercisable price of warrants | $ 2.50 | $ 2.50 |
Common Stock [Member] | ||
Sale of stock, number of shares issued in transaction | 294,000 | 294,000 |