Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 20, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | Gopher Protocol Inc. | |
Entity Central Index Key | 1,471,781 | |
Document Type | 10-Q | |
Trading Symbol | GOPH | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity a Well-known Seasoned Issuer | No | |
Entity a Voluntary Filer | No | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 51,795,372 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 | |
Current assets: | |||
Cash | $ 26,670 | $ 5,096 | |
Accounts receivable | 734,164 | ||
Inventory | 449,128 | ||
Prepaid expenses | 5,248 | ||
Total current assets | 1,209,962 | 10,344 | |
Property and equipment, net | 217,382 | 699 | |
Other assets | 2,523 | 7,500 | |
Goodwill | 7,950,619 | ||
Total assets | 9,380,486 | 18,543 | |
Current liabilities: | |||
Accounts payable and accrued expenses | 2,095,273 | 767,721 | |
Convertible notes payable, net of discount | 101,716 | ||
Derivative liability | 2,167,990 | ||
Total current liabilities | 4,364,979 | 767,721 | |
Convertible note payable, net of debt discount | 53,852 | ||
Note payable | 2,600,000 | ||
Total liabilities | 6,964,979 | 821,573 | |
Contingencies (Note 11) | |||
Stockholders' Equity (Deficit): | |||
Preferred stock value | 1 | 1 | |
Common stock, $0.00001 par value, 500,000,000 shares authorized; 51,795,372 and 41,420,372 shares issued and outstanding at September 30, 2017 and December 31, 2016 | 2,518 | 2,414 | |
Treasury stock, at cost; 1,040 shares at September 30, 2017 and December 31, 2016 | (643,059) | (643,059) | |
Additional Paid In Capital | 14,666,713 | 3,931,986 | |
Accumulated deficit | (11,610,666) | (4,094,372) | |
Total stockholders' equity (deficit) | 2,415,507 | (803,030) | |
Total liabilities and stockholders' equity (deficit) | 9,380,486 | 18,543 | |
Series B Convertible Preferred Stock [Member] | |||
Stockholders' Equity (Deficit): | |||
Preferred stock value | [1] | ||
Series C Convertible Preferred Stock [Member] | |||
Stockholders' Equity (Deficit): | |||
Preferred stock value | [2] | ||
Series D Convertible Preferred Stock [Member] | |||
Stockholders' Equity (Deficit): | |||
Preferred stock value | [3] | $ 1 | $ 1 |
[1] | Series B Preferred stock, $0.00001 par value; 20,000,000 shares authorized; 45,000 shares issued and outstanding at September 30, 2017 and December 31, 2016 | ||
[2] | Series C Preferred stock, $0.00001 par value; 10,000 shares authorized; 700 shares issued and outstanding at September 30, 2017 and December 31, 2016 | ||
[3] | Series D Preferred stock, $0.00001 par value; 100,000 shares authorized; 66,000 shares issued and outstanding at September 30, 2017 and December 31, 2016 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock, authorized | 500,000,000 | 500,000,000 |
Common stock, issued | 51,795,372 | 41,420,372 |
Common stock, outstanding | 51,795,372 | 41,420,372 |
Treasury stock | 1,040 | 1,040 |
Series B Convertible Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, authorized | 20,000,000 | 20,000,000 |
Preferred stock, issued | 45,000 | 45,000 |
Series C Convertible Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, authorized | 10,000 | 10,000 |
Preferred stock, issued | 700 | 700 |
Series D Convertible Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, authorized | 100,000 | 100,000 |
Preferred stock, issued | 66,000 | 66,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
Sales | $ 4,471,626 | $ 45,000 | $ 4,561,626 | $ 120,000 |
Cost of goods sold | 4,174,374 | 4,174,374 | ||
Gross profit | 297,252 | 45,000 | 387,252 | 120,000 |
Operating expenses: | ||||
General and administrative expenses | 1,850,055 | 727,172 | 2,323,713 | 1,214,145 |
Marketing expenses | 36,302 | 154,216 | 182,017 | |
Acquisition costs | 4,050,819 | 4,050,819 | ||
Total expenses | 5,937,176 | 727,172 | 6,528,748 | 1,396,162 |
Loss from operations | (5,639,924) | (682,172) | (6,141,496) | (1,276,162) |
Other income (expense): | ||||
Amortization of debt discount | (171,110) | 17,651 | (221,323) | |
Change in fair market value of derivative liability | 51,151 | 547,188 | ||
Interest expense and financing costs | (180,844) | (22,451) | (1,700,663) | (24,178) |
Total other income (expense) | (300,803) | (4,800) | (1,374,798) | (24,178) |
Loss before income taxes | (5,940,727) | (686,972) | (7,516,294) | (1,300,340) |
Income tax expense | ||||
Net loss | $ (5,940,727) | $ (686,972) | $ (7,516,294) | $ (1,300,340) |
Weighted average number of common shares outstanding: | ||||
Basic and diluted | 47,382,329 | 25,695,452 | 43,901,965 | 16,284,454 |
Net loss per share: | ||||
Basic and diluted | $ (0.13) | $ (0.03) | $ (0.17) | $ (0.08) |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash Flows Used by Operating Activities: | ||
Net loss | $ (7,516,294) | $ (1,300,340) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation of property and equipment | 6,538 | 1,010 |
Amortization of debt discount | 221,323 | 21,369 |
Change in fair market value of derivative liability | (547,188) | |
Financing cost | 1,655,046 | |
Amortization of prepaid filing fees | 3,500 | |
Shares issued for services | 766,500 | 688,944 |
Warrant issued for services | 4,782,297 | 177,062 |
Changes in assets and liabilities: | ||
Other (non-current) assets | 4,977 | 4,750 |
Accounts receivable | (734,164) | 25,974 |
Inventory | (50,977) | |
Prepaid expenses | 5,248 | (10,500) |
Accounts payable and accrued expenses | 1,191,289 | 411,304 |
Accrued interest on convertible notes payable | 2,809 | |
Net cash provided by (used in) operating activities | (215,405) | 25,882 |
Cash Flows From Investing Activities: | ||
Purchase of property and equipment | (13,021) | |
Net cash used in investingactivities | (13,021) | |
Cash flows from financing activities: | ||
Issuance of convertible notes | 250,000 | |
Net cash provided by financing activities | 250,000 | |
Net increase (decrease) in cash | 21,574 | 25,882 |
Cash, beginning of period | 5,096 | 21,051 |
Cash, end of period | 26,670 | 46,933 |
Cash paid for interest | ||
Cash paid for income taxes | ||
Supplemental non-cash investing and financing activities | ||
Shares issued to reduce notes payable | 25,215 | 16,757 |
Reduction of note payable through conversion | 16,757 | |
Debt discount | 1,060,132 | |
Reclassifications of a payable to Guardian LLC to a convertible note payable | 660,132 | |
Accrued interest to convertible note payable | $ 1,756 |
Organization and Nature of Busi
Organization and Nature of Business | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Nature of Business | Note 1 - Organization and Nature of Business Gopher Protocol Inc. (the “Company”, “we”, “us”, “our”, “Gopher”, “Gopher Protocol” or “GOPH”) was incorporated on July 22, 2009 under the laws of the State of Nevada and relocated its headquarters to Santa Monica, California in 2016. Gopher is a development stage company that is creating innovative mobile microchip (ICs) and software technologies based on GopherInsight ™ The unaudited consolidated financial statements are prepared by the Company, pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”). The information furnished herein reflects all adjustments, consisting only of normal recurring adjustments, which in the opinion of management, are necessary to fairly state the Company’s financial position, the results of its operations, and cash flows for the periods presented. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America were omitted pursuant to such rules and regulations. The results of operations for the nine months ended September 30, 2017 are not necessarily indicative of the results expected for the year ending December 31, 2017. GopherInsight ™ ™ ™ ™ On March 29, 2016, the Company contributed all of its rights relating to its proprietary microchip that is within a sticky patch package (the “Patch”) to Guardian LLC in consideration of 50% of the profit generated by Guardian LLC and a commitment from Guardian LLC that it is responsible for investing all needed funds for the purpose of developing the Patch and related products to the Patch, as well as funding the working capital needs of the Company. On September 1, 2017, the Company entered into an Asset Purchase Agreement with a third party, RWJ Advanced Marketing, LLC, a Georgia corporation. The Company entered into this Asset Purchase Agreement to acquire terminals in approximately 15,000 locations by which the Company will deploy its technology. The operations consist primarily of the sale of phones and phone card products, including PINS for cell minutes, SIM cards for cell minutes, as well as gift cards. The Company incorporated a wholly-owned subsidiary, UGopherServices Corp., to operate the acquired assets. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting Policies Presentation of Financial Statements The accompanying financial statements include the accounts of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, UGopherServices Corp, since the date of acquisition (September 1, 2017) All significant intercompany transactions and balances have been eliminated. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompanying financial statements include depreciable lives of property and equipment, valuation of beneficial conversion feature debt discounts, valuation of derivatives, and the valuation allowance on deferred tax assets. Cash and Cash Equivalents The Company considers all highly liquid financial instruments purchased with an original maturity of three months or less to be cash equivalents. Accounts Receivable The Company grants credit to establishments (such as convenient stores) who sell the Company’s products under credit terms that it believes are customary in the industry and does not require collateral to support customer receivables. The Company currently does not provide an allowance for doubtful collections, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. Normal receivable terms vary from 7-30 days after the issuance of the invoice and typically would be considered past due when the term expires. Delinquent receivables are written off based on individual credit evaluation and specific circumstances of the customer. The Company’s allowance for doubtful accounts was $0 and $0 at September 30, 2017 and December 31, 2016, respectively. Inventory Inventory is valued at the lower of the inventory’s cost (first in, first out basis) or the current market price of the inventory. Management compares the cost of inventory with its market value and an allowance is made to write down inventory to market value, if lower. At September 30, 2017, all of the Company’s inventory was finished goods inventory which consisted principally of phones and phone card products, including PINS for cell minutes, SIM cards for cell minutes, as well as gift cards. Property and Equipment Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method for substantially all assets with estimated lives as follows: Furniture 7 years Computers and equipment 3 years POSA machines 3 years Long-Lived Assets The Company applies ASC Topic 360, Property, Plant, and Equipment Goodwill Goodwill represents the excess of purchase price over the underlying net assets of businesses acquired. Under accounting requirements, goodwill is not amortized but is subject to annual impairment tests. The Company recorded goodwill of $7,950,619 related to its acquisition of certain RWJ assets (see Note 4) in 2017. Derivative Financial Instruments The Company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a weighted average Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. As of September 30, 2017, the Company’s only derivative financial instrument was an embedded conversion feature associated with convertible notes payable due to certain provisions that allow for a change in the conversion price based on a percentage of the Company’s stock price at the date of conversion. Fair Value Measurements The Company applies the provisions of ASC 820-10, “Fair Value Measurements and Disclosures.” ● Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets. ● Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. For certain financial instruments, the carrying amounts reported in the balance sheets for cash and current liabilities, including convertible notes payable, each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The Company uses Level 2 inputs for its valuation methodology for derivative liabilities as their fair values were determined by using the Black-Scholes-Merton pricing model based on various assumptions. The Company’s derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjustments to fair value of derivatives. At September 30, 2017, the Company identified the following liabilities that are required to be presented on the balance sheet at fair value: Fair Value Fair Value Measurements at As of September 30, 2017 Description September 30, 2017 Using Fair Value Hierarchy Level 1 Level 2 Level 3 Derivative liability $ 2,167,990 $ — $ 2,167,990 $ — Total $ 2,167,990 $ — $ 2,167,990 $ — The Company did not identify any other non-recurring assets and liabilities that are required to be presented in the consolidated balance sheets at fair value in accordance with ASC 815. Treasury Stock Treasury stock is recorded at cost. The re-issuance of treasury shares is accounted for on a first in, first-out basis and any difference between the cost of treasury shares and the re-issuance proceeds are charged or credited to additional paid-in capital. During 2011, the Company bought back 8 post-split shares (38,000 pre-split) shares of its own shares. Income Taxes The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”) Income Taxes. Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount of tax benefits expected to be realized. U.S. GAAP requires that, in applying the liability method, the financial statement effects of an uncertain tax position be recognized based on the outcome that is more likely than not to occur. Under this criterion, the most likely resolution of an uncertain tax position should be analyzed based on technical merits and on the outcome that would likely be sustained under examination. The Company had no uncertain tax positions as of September 30, 2017. Revenue Recognition The Company recognized revenue on arrangements in accordance with FASB Codification Topic 605, “Revenue Recognition” (“ASC Topic 605”). Under ASC Topic 605, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. The Company recognizes revenue from the sale of phones and phone card products at the time of sale to the customer. The Company recognizes revenue from IT-related services at the time the services are performed. Cost of Goods Sold Cost of goods sold represents the cost of the phone and phone card products sold by the Company. In 2016 the Company did not have cost of goods sold since all of its revenue was generated from consulting income. In 2017, the entire cost of goods sold relates to products sold by the Company’s new acquired acquisition as described in Note 4. (Loss) Per Share In accordance with accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share,” Basic earnings per share (“EPS”) is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants), and convertible debt or convertible preferred stock, using the if-converted method. Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive. The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive. September 30, September 30, 2017 2016 Series B preferred stock 3,000 3,000 Series C preferred stock 770 770 Series D preferred stock 66,000,000 66,000,000 Warrants 22,093,750 — Convertible notes 12,158,358 6,156,757 Total 100,255,878 72,160,527 |
Liquidity and Going Concern
Liquidity and Going Concern | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Liquidity and Going Concern | Note 3 - Liquidity and Going Concern The Company sustained net losses of $7,516,294 during the nine months ended September 30, 2017, and our operating activities used cash of $215,405. The Company had a working capital deficit of $3,155,017, and accumulated deficit of $11,610,666 at September 30, 2017. This raises substantial doubt about its ability to continue as a going concern. The Company is dependent upon its ability to generate revenues and its ability to continue receiving investment capital and loans from third parties to sustain its current level of operations. No assurance can be given that the Company will be successful in these efforts. Pursuant to the Joint Venture Agreement, Guardian LLC has committed to provide the Company with all its working capital needs. In lieu of entering series of short terms notes with third parties, the LLC took upon itself a lock-up and leakage agreement, described below. Certain third parties defaulted on their commitment to the Company for funding. The Company entered a negotiation with Guardian LLC to replace these defaulted investors. There is no guarantee that the LLC will agree to continue to provide funding, which raises substantial doubt about the Company’s ability to continue as a going concern. We plan to raise working capital that will allow us to conduct our business for the next 12 months. There is no guarantee regarding our ability to raise that capital. We expect to use the proceeds to fund our short-term capital requirements including paying administrative expenses associated with maintaining our public company’s filings for the next 12 months. In order to implement our business plan and pay various administrative expenses on a minimal basis for the next 12 months, we expect that we will need approximately $1,200,000, based on our expectation of monthly expenses of approximately $100,000. The Company expects that its operating results will fluctuate significantly from quarter to quarter in the future, and will depend on a number of factors including the state of the worldwide economy and financial markets, which are outside the Company’s control. Guardian Patch, LLC, the Company’s JV partner, has committed in the past to support the Company’s working capital needs, by providing the Company with short terms loans. The Company may also pursue capital through the issuance of high-yield debt that will likely be convertible into equity, at either a fixed or a variable conversion rate. Our financing plans and the exact type of debt that we seek will largely be contingent on our pre-sales campaign for the Sphere. |
Acquisition
Acquisition | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Acquisition | Note 4 - Acquisition On September 1, 2017, the Company entered into and closed an Asset Purchase Agreement (the “Purchase Agreement”) with RWJ Advanced Marketing, LLC (“RWJ”), a Georgia corporation, pursuant to which the Company purchased certain assets from RWJ, including inventory, terminals, licenses and permits and intangible assets, in consideration of $400,000, an aggregate 5,000,000 shares of common stock of the Company, secured promissory note in the amount of $2,600,000, and warrants to purchase 9,000,000 shares of common stock and the assumption of certain liabilities incurred by RWJ after the effective date as set forth in the RWJ Agreement. The RWJ Warrants are exercisable for a period of five years at a fixed exercise price of $0.50 per share and non-dilutive anti-dilution protection. If, prior to the exercise of the RJW Warrants, the Company (i) declares, makes or issues, or fixes a record date for the determination of holders of common stock entitled to receive, a dividend or other distribution payable in shares of its capital stock, (ii) subdivides the outstanding shares, (iii) combines the outstanding shares (including a reverse stock split), (iv) issues any shares of its capital stock by reclassification of the shares, capital reorganization or otherwise (including any such reclassification or reorganization in connection with a consolidation or merger or and sale of all or substantially all of the Company’s assets to any person), then, notwithstanding any such action the exercise price, and the number and kind of shares receivable upon exercise, in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification shall remain fixed so that the holder of the RJW Warrants exercised after such time shall be entitled to receive the number and kind of shares which, if the RJW Warrants had been exercised immediately prior to such time, the holder would have owned upon such exercise and been entitled to receive. The RWJ Note accrues interest at the rate of 3.5% interest per annum and is payable in full on December 31, 2019. The Company may prepay this note at any time without penalty. The Company incorporated a wholly-owned subsidiary, UGopherServices Corp., to operate the acquired assets. The Company entered into this Purchase Agreement to acquire terminals in approximately 15,000 locations by which the Company will deploy its technology. A summary of the purchase price and the purchase price allocations at fair value is below. The purchase price allocation is a preliminary and subject to change. The Company has not yet completed its analysis to determine the fair value of the assets acquired on the acquisition date. Once this analysis is complete, the Company will adjust, if necessary, the provisional amounts assigned to the assets purchased in the accounting period in which the analysis is completed. Purchase price Cash (1) $ 400,000 5,000,000 shares of common stock (2) 1,850,000 Secured promissory note 2,600,000 9,000,000 warrants (3) 3,310,819 $ 8,160,819 Allocation of purchase price Inventory $ 398,151 Property and equipment 210,200 Assumed liabilities (398,151 ) Goodwill 7,950,619 Purchase price $ 8,160,819 (1) – the $400,000 cash was advanced to the Company by Guardian LLC and is included in accounts payable and accrued expenses on the accompanying consolidated balance sheet. (2) – the fair value of the common stock was calculated based on the closing market price of the Company’s common stock at the date of acquisition. (3) the fair value of the 9,000,000 warrants was determined using the Black-Scholes option pricing model with the following assumptions: ● Expected life of 5.0 years ● Volatility of 250%; ● Dividend yield of 0%; ● Risk free interest rate of 1.73% The revenue from the acquisition of the RWJ assets included in the results of operations from the date of acquisition on to September 30, 2017 was $4,426,626. The unaudited pro forma information below present statement of operations data as if the acquisition of the RWJ assets took place on January 1, 2016. Nine Months Ended September 30, 2017 2016 Sales $ 42,441,702 50,078,135 Cost of goods sold 40,273,563 47,623,277 Gross profit 2,168,139 2,454,858 Operating expenses 8,492,340 4,013,055 Loss from operations (6,324,201 ) (1,558,197 ) Net loss (7,720,712 ) (1,604,377 ) Loss per share (0.16 ) (0.08 ) |
Property and Equipment, Net
Property and Equipment, Net | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Note 5 - Property and Equipment, Net Property and equipment consisted of the following as of September 30, 2017 and December 31, 2016: September 30, December 31, 2017 2016 Furniture $ 33,740 $ 9,431 Computers and equipment 20,621 12,539 POSA machines 190,829 — 245,190 21,970 Less accumulated depreciation (27,808 ) (21,271 ) Property and equipment, net $ 217,382 $ 699 Depreciation expense for the nine months ended September 30, 2017 and 2016 was $6,538 and 1,010, respectively. |
Convertible Notes Payable
Convertible Notes Payable | 9 Months Ended |
Sep. 30, 2017 | |
Notes Payable [Abstract] | |
Convertible Notes Payable | Note 6 – Convertible Notes Payable Convertible notes payable at September 30, 2017 and December 31, 2016 consist of the following: September 30, December 31, 2017 2016 Convertible note payable to PTPI dated January 22, 2015 (A) $ 30,393 $ 53,852 Convertible note payable to Guardian Patch I LLC dated May 23, 2017 (B) 660,132 Convertible notes payable to Crown Bridge Partners LLC dated June 9, 2017 (C) 100,000 — Convertible notes payable to Eagle Equity LLC dated June 8, 2017 (D) 100,000 — Convertible notes payable to JSJ Investments, Inc. dated June 7, 2017 and June 29, 2017 (E) 100,000 — Convertible notes payable to Eagle Equity LLC dated September 13, 2017 (F) 100,000 — Total convertible notes payable 1,090,525 53,852 Unamortized debt discount (838,809 ) — Convertible notes payable, net of discount 251,716 53,852 Less notes receivable collateralized by convertible notes payable (150,000 ) — Convertible notes payable $ 101,716 $ 53,852 (A) On January 22, 2015, the Company entered into an Exchange Agreement with Stanley Hills, the original holder (the “Holder”) of the PTPI Note pursuant to which PTPI Note exchanged $75,273 in debt into a 10% Convertible Debenture in the principal amount of $75,273 (the “Note”). The PTPI Note matured January 21, 2017 (the “Maturity Date”) and interest associated with the Note I Note is 10% per annum, which is payable on the Maturity Date. The PTPI Note is convertible into shares of common stock of the Company, at the option of Note I, at a fixed conversion price of $0.00752734. The Holder has agreed to restrict its ability to convert the PTPI Note and receive shares of common stock such that the number of shares of common stock held by it in the aggregate and its affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock. In addition, on March 2, 2015, the Company and the Holder amended that certain 10% Convertible Debenture (the “PTPI Note I Debenture”) which debt underlying the PTPI Note I Debenture was initially incurred on October 6, 2009 and exchanged for the Note I Debenture on January 19, 2014. The parties agreed that the conversion price in the PTPI Note I Debenture would not be impacted by the 1:1,000 stock split implemented by the Company on February 24, 2015 and will remain $0.0075273. The Company is under default per the terms of the PTPI Note, as at maturity in January 2017, the Company did not have sufficient free cash to pay off the note. The Company is in negotiations with the Holder in good faith to resolve the situation. The Company cannot predict the result of such negotiations. The current note balance is $30,393, which includes $14,870 of accrued interest. The balance at that time was $53,852, which included accrued interest of $13,112, and was net of debt discount. (B) Guardian Patch I LLC (the “Note Holder”) understands that the Company may be seeking additional capital or funding and believes that the lock-up and leak-out restrictions and provisions, as further described herein, will improve the Company’s prospects for obtaining additional financing and thus improving the overall financial condition of the Company. As such on or around June 26, 2017 the Company and the Note Holder entered into a lock-up and leak-out: 1. Subject to the terms of this Agreement, the Note Holder agrees that for a period of nine (9) months from the Effective Date of this Agreement (the “Lock-Up Period”), the Note Holder shall not convert the Note into Common Stock for safe keeping or, directly or indirectly, sell, offer to sell, contract to sell, assign, pledge, hypothecate, encumber or otherwise transfer, or enter into any contract, option or other arrangement or understanding with respect to the sale, assignment, pledge or other disposition of (each a “Transfer”) any beneficial rights with respect to the Note. 2. Leak-Out Provisions. Subject to the terms of this Agreement, the Note Holder agrees that for a period beginning immediately upon the end of the Lock-Up Period and ending fifteen (15) months from the Effective Date of this Agreement (the “Leak-Out Period”), the Note Holder shall have the right to sell the lessor of (i) five (5%) percent of the previous day’s traded volume of the Company’s Common Stock, or (ii) Five Thousand (5,000) shares of the Common Stock on a per daily basis. On May 23, 2017, the Company entered into a conversion agreement with the Note Holder pursuant to which the parties agreed to convert the amounts provided by the Note Holder to the Company, previously recorded in accounts payable and accrued expenses, into a convertible note payable in the amount of $660,132. The note bears interest at 6%, matures May 30, 2019 and is convertible into the Company’s common stock, at the Note Holder’s option, at a conversion price equal to 50% of the lowest closing price for the common stock on the principal market during the ten consecutive trading days immediately preceding the conversion date, which, in no event, will be less than $0.01 per share. The Note Holder has agreed to restrict their ability to convert the note and receive shares of common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 4.9% of the then issued and outstanding shares of common stock. (C) On June 9, 2017, the Company entered into a securities purchase agreement with Crown Bridge Partners, LLC (“CBP”), providing for the purchase of two convertible notes payable in the aggregate amount of $100,000 with the first note being in the amount of $50,000 and the second note being in the amount of $50,000 each accruing interest at 8% per annum and due on June 9, 2018. The first note was funded in cash. With respect to second note CBP issued a note payable to the Company in the amount of $50,000 to offset second note. The funding of second note is subject to certain conditions. CBP is required to pay the principal amount of the note payable to the Company in cash and in full prior to executing any conversions under second note. The CBP notes may be converted by CBP at any time into shares of Company’s common stock calculated at the time of conversion, except as set forth above, at a conversion price equal to 55% of the average of the three lowest trading prices of the Company’s common stock as reported on the National Quotations Bureau OTC Markets which the Company’s shares are traded or any exchange upon which the common stock may be traded in the future, for the twenty (20) prior trading days including the day upon which a notice of conversion is received by the Company. In the event the Company experiences a DTC “Chill” on its shares or the market price is below $0.25, the conversion price shall be decreased to 45%. If the Company fails to maintain its status as “DTC Eligible” for any reason, or, if the conversion price is equal to or lower than $0.01, then an additional 15% discount shall be factored into the conversion price until the CBP notes are no longer outstanding. During the first nine months, the CBP notes is in effect, the Company may redeem the CBP notes by paying to an amount equal to 135% of the face amount plus any accrued interest during the first 90 days after issuance and 150% of the face amount plus any accrued interest from day 91 through day 180 after issuance. The CBP Notes may not be prepaid after the six-month anniversary. (D) On June 8, 2017, the Company entered into a securities purchase agreement with Eagle Equities, LLC (“Eagle”), providing for the purchase of two convertible notes payable in the aggregate amount of $100,000 with the first note being in the amount of $50,000 and the second note being in the amount of $50,000 each accruing interest at 8% per annum and due on June 8, 2018. The first note was funded in cash. With respect to second note, Eagle issued a note payable to the Company in the amount of $50,000 to offset second note. The funding of second note is subject to certain conditions. Eagle is required to pay the principal amount of the note payable to the Company in cash and in full prior to executing any conversions under second note. Eagle may convert the outstanding principal on the Eagle notes into shares of the Company’s common stock at the conversion price per share equal to 55% of the lowest daily closing bid with a twenty (20) day look back immediately preceding and including the date of conversion. In the event the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to 45% instead of 55% while that “Chill” is in effect. The Company has the right to repay the Eagle notes at any time during the first nine months of the notes at a rate of 130% of the unpaid principal amount during the first 90 days, 135% of the unpaid principal amount between days 91 and 120, and 140% of the unpaid principal amount between days 121 and 180. The Eagle Notes may not be prepaid after the 180 day. (E) On June 8, 2017, the Company closed a financing with JSJ Investments Inc. (“JSJ”), whereby the Company issued a convertible note payable dated June 7, 2017 in the aggregate principal amount of $50,000 with interest accruing at 8% per annum and is due on March 7, 2018. JSJ may converted the note at any time into shares of Company’s common stock at a price equal a 45% discount to the lowest trading prices of the Company’s common stock as reported on the OTCQB for the 20 prior trading days including the day upon which a notice of conversion is received by the Company or its transfer agent. The Company may pay the JSJ Note in full, together with any and all accrued and unpaid interest, plus any applicable pre-payment premium at any time on or prior to the date which occurs 180 days after the issuance date hereof. Until the 90th day after the issuance date the Company may pay the principal at a cash redemption premium of 135%, in addition to outstanding interest, without the note holder’s consent. From the 91 st th On June 29, 2017, the Company closed another financing with JSJ for $50,000 with the exact terms and the JSJ note describe above except the note is due on March 29, 2018. (F) On September 13, 2017, the Company entered into a securities purchase agreement with Eagle, providing for the purchase of two convertible notes payable in the aggregate amount of $100,000 with the first note being in the amount of $50,000 and the second note being in the amount of $50,000 each accruing interest at 8% per annum and due on September 18, 2018. The first note was funded in cash. With respect to second note, Eagle issued a note payable to the Company in the amount of $50,000 to offset second note. The funding of second note is subject to certain conditions. Eagle is required to pay the principal amount of the note payable to the Company in cash and in full prior to executing any conversions under second note. Eagle may convert the outstanding principal on the Eagle notes into shares of the Company’s common stock at the conversion price per share equal to 55% of the lowest daily closing bid with a twenty (20) day look back immediately preceding and including the date of conversion. In the event the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to 45% instead of 55% while that “Chill” is in effect. The Company has the right to repay the Eagle notes at any time during the first nine months of the notes at a rate of 130% of the unpaid principal amount during the first 90 days, 135% of the unpaid principal amount between days 91 and 120, and 140% of the unpaid principal amount between days 121 and 180. The Eagle Notes may not be prepaid after the 180 day. Due to the potential adjustment in the conversion price associated with some of the convertible notes payable described above based on the Company’s stock price, the Company has determined that the conversion feature is considered a derivative liability. The embedded conversion feature was initially calculated to be $2,715,178 which are recorded as a derivative liability as of the date of issuance. The derivative liability was first recorded as a debt discount to the convertible notes payable up to the face amount of the convertible notes payable of $1,060,132 with the excess of $1,655,046 being recorded as a derivative expense. The debt discount of $1,060,132 is being amortized over the terms of the convertible notes payable. The Company recognized interest expense of $221,323 during the nine months ended September 30, 2017 related to the amortization of the debt discount. The debt discount at September 30, 2017 is $838,809. Since the note payable to the Company as described in items (C) ,(D) and (F) above were issued to the Company as payment for a second convertible notes payable, the Company has not presented these notes receivable as an asset, but as an offset to the convertible notes payable balance. A roll-forward of the convertible note from December 31, 2016 to September 30, 2017 is below: Convertible notes, December 31, 2016 $ 53,852 Issued for cash 250,000 Issued for accounts payable and accrued expenses 660,132 Increase due to accrued interest 1,756 Conversion to common stock (25,215 ) Debt discount related to new convertible notes (1,060,132 ) Amortization of debt discounts 221,323 Convertible notes, September 30, 2017 $ 101,716 |
Derivative Liability
Derivative Liability | 9 Months Ended |
Sep. 30, 2017 | |
Notes to Financial Statements | |
Derivative Liability | Note 7: Derivative Liability The convertible notes payable discussed in Note 6 has a conversion price that can be adjusted based on the Company’s stock price which results in the conversion feature being recorded as a derivative liability. The fair value of the derivative liability is recorded and shown separately under current liabilities. Changes in the fair value of the derivative liability is recorded in the statement of operations under other income (expense). The Company uses a weighted average Black-Scholes-Merton option pricing model with the following assumptions to measure the fair value of derivative liability at September 30, 2017: Stock price $0.32 Risk free rate 1.31% Volatility 200% Conversion/ Exercise price $0.12 to $0.13 Dividend rate 0% Term (years) 5.0 years The following table represents the Company’s derivative liability activity for the nine months ended September 30, 2017: Derivative liability balance, December 31, 2016 $ – Issuance of derivative liability during the period 2,715,178 Change in derivative liability during the period (547,188 ) Derivative liability balance, September 30, 2017 $ 2,167,990 |
Note Payable
Note Payable | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Note Payable | Note 8: Note Payable In connection with the acquisition discussed in Note 4, the Company issued a note payable. The note bears interest at 3.5% per annum is due on December 31, 2019 and is secured by the assets purchased in the acquisition. |
Stockholders' Equity (Deficit i
Stockholders' Equity (Deficit in prior periods) | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Deficit | Note 9 - Stockholders’ Equity (Deficit in prior periods) Common Stock: During the nine months ended September 30, 2017, the Company had the following transactions in its common stock: ● issued 3,350,000 shares to, the PTPI note holder upon the conversion of $25,215 of their convertible note; ● issued an aggregate of 2,025,000 shares to two consultants for services rendered valued at $766,500. The services, which include business development, analysis, and interaction with professionals, were principally related to assisting the Company with the acquisition of the RWJ assets (see Note 4). The value of the common stock was determined based on the closing stock price of the Company’s common stock on the date of grant; and ● issued 5,000,000 shares for the acquisition of the RWJ assets valued at $1,850,000. The value of the common stock was determined based on the closing stock price of the Company’s common stock on the acquisition date. Warrants The following is a summary of warrant activity: Warrants Outstanding Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value Outstanding, December 31, 2016 93,750 $ $ 0.00 Granted 22,000,000 0.50 Forfeited — Exercised — Outstanding, September 30, 2017 22,093,750 $ 0.51 Exercisable, September 30, 2017 22,093,750 $ 0.51 4.92 $ 0.00 The exercise price for warrant outstanding and exercisable at September 30, 2017: Outstanding and Exercisable Number of Exercise Warrants Price 22,000,000 $ 0.50 93,750 2.25 22,093,750 The Company issued 9,000,000 warrants as consideration for the acquisition of the RWJ assets (see Note 4) and issued an aggregate of 13,000,000 warrants to two consultants for services rendered. The services, which include business development, analysis, and interaction with professionals, were principally related to assisting the Company with the acquisition of the RWJ assets (see Note 4). The fair value of the 13,000,000 warrants of $4,782,297 was determined using the Black-Scholes option pricing model with the following assumptions: ● Expected life of 5.0 years ● Volatility of 250%; ● Dividend yield of 0%; ● Risk free interest rate of 1.73% |
Related Parties
Related Parties | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Parties | Note 10 - Related Parties Related parties are natural persons or other entities that have the ability, directly or indirectly, to control another party or exercise significant influence over the party in making financial and operating decisions. Related parties include other parties that are subject to common control or that are subject to common significant influences. All of the Company’s revenue in 2016 is from IT services delivered to a single customer, Guardian LLC, which is a related party to the Company. The Company had revenue of $45,000 and $45,000 for the fiscal quarters ended September 30, 2017 and 2016, respectively. All expenses in the Company’s operations were incurred as a consequence of delivering Company’s obligations under the joint venture agreement between the parties to commercialize the technology that is being developed by the LLC. The Company had operating expenses of $227,177 and $122,132 for the fiscal quarters ended September 30, 2017 and 2016, respectively. On April 22, 2015, Michael Murray was appointed by the Company as the Chairman of the Board, CEO, and President of the Company. Mr. Murray resigned as an executive officer on September 1, 2017. On March 4, 2015, the Company entered into a Territorial License Agreement with Hermes, which is the basis for the Company’s current operations. Mr. Murray is the owner of 9,900 shares of Series D Preferred Stock of the Company that is convertible at Mr. Murray’s election into 9,900,000 shares of common stock. To date, Mr. Murray has converted all of his Series D Preferred Stock into common shares of the Company. On June 30, 2015, the Company appointed Dr. Danny Rittman as Chief Technical Officer and a board member. On August 20, 2015, the Company entered into an agreement with Dr. Rittman pursuant to which the parties agreed that (i) all inventions, improvements and developments made or conceived by Dr. Rittman, either solely or in collaboration with others pertaining to Company’s business, will be the property of Company, and (ii) Dr. Rittman will assign to the Company any and all intellectual property related to the Company’s consumer heuristic technology platform. Said agreement is contingent upon the Company funding its commitments per the June 16, 2015 - Amended and Restated Territorial License Agreement. Failure of the Company providing this funding, in full, or partially, will automatically terminate any GOPH ownership of the intellectual properties. Dr. Rittman is the Chief Technology Officer and a director of the Company as well as the Chairman of the Company’s Advisory Board, in formation. Dr. Rittman and Mr. Murray jointly own 9,900 shares of Series D Preferred Stock of the Company that is convertible at Dr. Rittman’s or Mr. Murray’s election into 9,900,000 shares of common stock. To date, Mr. Rittman has converted all of his Series D Preferred Stock into common shares of the Company. 16 On August 20, 2015, the Company entered into an agreement with Dr. Rittman pursuant to which the parties agreed that (i) all inventions, improvements and developments made or conceived by Dr. Rittman, either solely or in collaboration with others pertaining to Company’s business, will be the property of Company, and (ii) Dr. Rittman agreed to assign to the Company any and all intellectual property related to the Company’s consumer heuristic technology platform, subject to certain conditions, which as of September 30, 2017 have not been met. As of the end of the fiscal year, the intellectual property developed by Dr. Rittman had not been assigned to the Company. The Company has expensed the stated value of that intellectual property in these financial statements. On or around March 18, 2016 the Company and Dr. Danny Rittman entered into an agreement intended to clarify the relationship between Dr. Rittman and the Company and the ownership of certain technology in connection with certain agreements previously entered into between Company and Dr. Rittman and with third parties. Specifically, the Company entered into that certain Territorial License Agreement with Hermes Roll LLC dated March 4, 2015, which such agreement was amended to expand the related territorial license to a worldwide license pursuant to that certain Amended and Restated Territorial License Agreement dated June 16, 2015 (the “Amended and Restated Territorial License Agreement”), and that certain Letter Agreement (the “Letter Agreement”) entered into between Dr. Rittman and the Company dated August 20, 2015. The aforementioned agreements were tied to the funding of the Company in the minimum amount of $5,000,000 (the “Required Funding”) and the assignment to the Company and/or ownership by the Company of all past, present and future technology in the form of intellectual property, including, but not limited to patents, trademarks, domains, applications, social media pages (e.g. Twitter, LinkedIn and landing pages) (collectively, the “IP”), which such IP was paid for exclusively by Dr. Rittman and/or his affiliated companies, was contingent upon the Company obtaining the Required Funding by no later than October 30, 2015 (the “Contingency”). Accordingly, it was agreed to by the parties that (i) all inventions, improvements and developments made or conceived by the Dr. Rittman, either solely or in collaboration with others pertaining to Company’s business, would be the property of the Company subject to the Contingency. In the event the Contingency was not met, the Letter Agreement would be cancelled and rendered null and void. The Company acknowledged that the Company did not meet the Contingency, technically resulting in the cancellation of the Letter Agreement and rendering the Letter Agreement null and void. Moreover, the Company failed to meet its obligations under the Amended and Restated Territorial License Agreement, including the further development of the consumer heuristic technology platform, thereby creating a vacuum in its development in all aspects, including the ability to obtain funding, resulting in the need for Dr. Rittman’s partners to perform the necessary development work related to the above agreements. The original License Agreement will remain in place, while other agreements will be terminated and rendered null and void. Dr. Rittman will resign as an officer of the Company, but will remain as Director and technical consultant of the Company, and will accommodate the needs of the Company in return for compensation to be agreed by the parties. All intellectual property will remain in the possession of Dr. Rittman and his private partners, and the Company shall remain a licensee per the terms of the original Territorial License Agreement, and will develop the first product with Dr. Rittman and his partners. The Company is the exclusive license holder for certain intellectual property relating to GopherInsight technology. The Company has assigned all its rights as they relate to the Guardian Patch to the LLC as consideration for the JV. Dr. Rittman’s partners have commenced development of the product via a private LLC that has been incorporated under the name “Guardian Patch LLC” (“LLC”). Certain private investors will provide all initial funding to the Company via the LLC for product development. The LLC will fund the development, and the Company will provide IT services via Dr. Rittman for a monthly fee. Dr. Rittman has signed an amendment employment agreement with the Company. As the Company is not a member of the LLC, the Company and the LLC have formed a Joint Venture (“JV”) for the purposes of developing and marketing the Patch. The LLC will be responsible for funding the development of the Patch. The Company will not need be required to invest funds in said JV. The Company responsibilities will be limited to the marketing of the product, where the marketing budget will be funded by the LLC. Moreover, the LLC has committed to provide the Company with working capital as needed. The Company has assigned and pledged to the LLC all its license derivative rights as they pertain to the Patch only. Dr. Rittman may be offered membership rights at some point in the future with the LLC, with which the Company is a JV partner, but is not equity member. The Company has agreed with the LLC that the same JV principles of the GPLLC for the patch will apply for the other two products (Epsilon and Puzpix) which will be vested under designated LLCs that will be incorporated by the LLC members. During the nine months ended September 30, 2017, $135,000 of the Company’s revenue was related to IT service provided to the LLC for Dr. Rittman services, in connection with the development of the Patch. In March 2016, the Company and Dr. Danny Rittman, Co-Chairman, CTO and a shareholder, entered into an agreement intended to clarify the relationship between Dr. Rittman and the Company and the ownership of certain technology in connection with certain agreements previously entered into between Company and Dr. Rittman and with third parties. Prior to these agreements, the Company is the exclusive license holder for certain intellectual property relating to Hermes’ system and method for scheduling categorized deliverables, according to demand, at the customer’s location based on smartphone application and/or via the internet. As a result of these agreements, the Company shall remain an exclusive licensee per the terms of the original License Agreement and will develop the first products with Dr. Rittman and his partners. 17 On March 29, 2016, Gopher contributed all of its rights relating to its proprietary microchip that is within a sticky patch package (the “Patch”) to Guardian Patch, LLC (the “Guardian LLC”) in consideration of 50% of the profit generated by Guardian LLC (the “Joint Venture”). Guardian LLC is responsible for investing all needed funds for the purpose of developing the Patch and related products to the Patch. In addition, Guardian LLC is required to provide short term loans to Gopher on an as needed basis secured by Gopher’s economic interest in the Joint Venture. The Company will provide IT services to Guardian LLC for a monthly fee. Dr. Rittman has signed an amendment employment agreement with the Company. On July 21, 2016 members of the Guardian Patch LLC, together with Dr. Rittman, incorporated Alpha EDA, LLC (“Alpha”). The members of the LLC appointed Dr. Rittman as the manager of Alpha. The Company, the LLC and Alpha have agreed that all Epsilon Rights, as well as Puzpix rights, will be assigned to Alpha. Alpha and the Company entered into a JV agreement similar to the Patch Joint Venture agreement (as described above), whereby Alpha will fund all of its operational and developmental needs (software development, support, marketing and administrative), and the profits of Alpha will be distributed equally to the two equal Joint venture partners, Guardian Patch LLC and the Company. Alpha will hold all intellectual property rights related to software. Currently, three products will be owned by Alpha – the Epsilon software, the Puzpix social game and the Guardian Pack application. The Company and its technology licensing partners, Guardian LLC and Alpha, are preparing to introduce said new products (Epsilon, Guardian Pack & PuzPix) to the market this year, and the Sphere during the second half of fiscal 2017. Certain problems caused by the need to miniaturize both the chip design and the battery caused a delay in the rollout from its planned launch during the first half of the year. The Epsilon product will be presented for time-based license agreements utilizing a designated website on top of customary distributing channels for the product. Epsilon is under confidential evaluation agreement with third party. During 2016, the Company relocated its headquarters to 2500 Broadway, Suite F-125, Santa Monica, California. The Company paid approximately $5,000 per month in rent for this office space, and paid a $7,500 security deposit that is classified in our financial statements contained herein as a prepaid expense. The lease is being paid for by the Guardian LLC via reimbursement. The Company moved into smaller office space during the quarter, and its security deposit was adjusted downward to cover the smaller space in April 2016. The Company believes its current facilities will be adequate for the foreseeable future. The Company has commenced development, and the Company has completed the Statement of Work (SOW) for the Federal Communications Commission (“FCC”) survey to deploy the Company’s Guardian Global Tracking Device within the continental US. The Company has also completed their transmitters/transceivers modules feasibility research. Although the Company can use open channels, and therefore is not required to comply with various FCC regulations relevant to the system, the Company has chosen to comply, and is complying with FCC regulations. The FCC regulates the limits of potentially harmful interference to licensed transmitters due to low power unlicensed transmitters. The Guardian Patch/Sphere system consists of advanced security protocols in order to maintain the global, private, fully-secured network. In addition, the Guardian Patch device needs to perform communication tasks across the globe providing breakthrough tracking features. The Company and its technology licensing partner, Guardian LLC, successfully completed thorough research that involved security, performance and FCC regulations compliance. Based on this research, a set of particular frequencies was chosen to be used by Guardian LLC. By the end of this year, the Company completed the design and construction of the Guardian Patch/Sphere circuit prototype device. The Company has completed the construction of 10 prototype units, and performed intensive testing program to be tested as a complete system in designated areas by the Company. On December 1, 2016, Guardian LLC issued Statement of Work for the Placement and Development of Guardian Sphere and its Base System. For this project, Guardian LLC has assembled a team of eight, including a Project Manager, CTO, digital and software engineers, a specialist algorithm mathematician and project leader. This team was assembled by Guardian LLC, and is based in the USA, Europe and Asia. Per the Joint Venture agreement, Guardian LLC is funding the SOW project through its sources, while the Company’s portion of the cost is $67,000 and due to the vendor on August 15, 2017. Guardian took full responsibility for all amounts due to this vendor. The Company intends to enter a new SOW for the purpose of creating fully-commercial products utilizing the manufacturers that it has identified. On June 20, 2016, two holders (the “Preferred Stock Holders”) of an aggregate of 2,400 shares of Series D Preferred Stock (the “Preferred Shares”) of the Company converted the Preferred Shares into an aggregate of 2,400,000 shares of common stock of the Company at $0.01 per share. The Preferred Stock Holders are executive officers and directors of the Company. On August 9, 2016, two holders (the “Preferred Stock Holders”) of an aggregate of 17,400 shares of Series D Preferred Stock (the “Preferred Shares”) of the Company executed conversion notices to convert the Preferred Shares into an aggregate of 17,400,000 shares of common stock of the Company at $0.01 per share. The Preferred Stock Holders are executive officers and directors of the Company. 18 Effective August15, 2016, the Employment Agreement of Mansour Khatib, our CMO, was amended and restated as follows: Upon the Company generating $1,000,000 in revenue during any three (3) month period (the “Threshold Requirement”), the Executive will receive salary at the rate of $100,000 annually (the “Base Salary”); provided, however, that that Company shall pay to Executive $5,000 per month (the “Monthly Salary Advance”) commencing on August 15, 2016, which such Monthly Salary Advance shall be an advance on the Base Salary and shall continue to be paid to Executive until such time that the Company launches its GopherInsight™ technology into the consumer markets. Once the Threshold Requirement is met, the Base Salary will be payable in equal increments not less often than monthly in arrears and in any event consistent with the Company’s payroll policy and practices. The Base Salary of the Executive may from time to time be increased, but not decreased, by the Board, in its absolute discretion, including potential bonuses.” Since April 2016, Guardian LLC has provided loans to the Company for the Company’s working capital purposes, outside of its commitment to develop the Patch, in the aggregate amount of $660,132 (the “Loans”). On May 23, 2017, as described in Note 6, the Company entered into a Conversion Agreement with Guardian LLC pursuant to which the parties agreed to convert the Loans provided by Guardian LLC to the Company into a Convertible Promissory Note in the principal amount of $660,132 (the “Note”). The Note bears interest at 6%, matures May 30, 2019 and is convertible into the Company’s common stock, at Guardian LLC’s option, at a conversion price equal to 50% of the lowest closing price for the common stock on the principal market during the ten consecutive trading days immediately preceding the conversion date, which, in no event, will be less than $0.01 per share. Guardian LLC has agreed to restrict their ability to convert the Note and receive shares of common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 4.9% of the then issued and outstanding shares of common stock. At September 30, 2017, the Note has a balance of $660,132. Guardian LLC (the “Note Holder”) understands that the Company may be seeking additional capital or funding and believes that the lock-up and leak-out restrictions and provisions, as further described herein, will improve the Company’s prospects for obtaining additional financing and thus improving the overall financial condition of the Company. As such on or around June 26, 2017 the Company and the Note Holder entered into a lock-up and leak-out: 1. Subject to the terms of this Agreement, the Note Holder agrees that for a period of nine (9) months from the Effective Date of this Agreement (the “Lock-Up Period”), the Note Holder shall not convert the Note into Common Stock for safe keeping or, directly or indirectly, sell, offer to sell, contract to sell, assign, pledge, hypothecate, encumber or otherwise transfer, or enter into any contract, option or other arrangement or understanding with respect to the sale, assignment, pledge or other disposition of (each a “Transfer”) any beneficial rights with respect to the Note. 2. Leak-Out Provisions. Subject to the terms of this Agreement, the Note Holder agrees that for a period beginning immediately upon the end of the Lock-Up Period and ending fifteen (15) months from the Effective Date of this Agreement (the “Leak-Out Period”), the Note Holder shall have the right to sell the lessor of (i) five (5%) percent of the previous day’s traded volume of the Company’s Common Stock, or (ii) Five Thousand (5,000) shares of the Common Stock on a per daily basis. On September 1, 2017, the Company entered into and closed an Asset Purchase Agreement with a third party, RWJ Advanced Marketing, LLC (“RWJ”), a Georgia corporation, pursuant to which the Company purchased certain assets from RWJ, including inventory, terminals, licenses and permits and intangible assets. At closing, the Company and Mr. Greg Bauer entered into an Employment Agreement pursuant to which Mr. Bauer was retained as Chief Executive Officer for a term of one year, subject to an automatic extension, unless terminated, in consideration of a base salary of $250,000 and a bonus of 10% of net profit generated by the assets acquired. Mr. Bauer was also appointed to the Board of Directors of the Company. As of the closing date, Mr. Murray resigned as Chief Executive Officer of the Company but will remain as a director of the Company. Mr. Bauer, since 2004 through present, has served as executive director with W.L. Petrey Wholesale, Inc. where he was in charge of the UGO/Preway operations. Mr. Bauer holds a Bachelor of Science degree from University of Maryland College Park. Mr. Bauer is veteran of the United States Navy and was honorably discharged in 1983. He held the title of United States Navy Surface Warfare Qualified. 19 The Company and Guardian Patch, LLC, which assisted structuring and negotiating the Purchase Agreement and related asset purchase, entered into a Consulting Agreement dated September 1, 2017. In consideration for the services, the Company issued Guardian 2,000,000 shares of common stock and warrants to purchase 9,000,000 shares of common stock. The warrants contain identical terms to the RJW Warrants. If and when the assets acquired under the Purchase Agreement generate revenues of $10,000,000, the Company shall issue Guardian an additional 3,000,000 shares of common stock. The consulting agreement was effective August 1, 2017 and terminates November 30, 2017. Guardian, pursuant to its existing joint venture agreement, agreed to provide the $400,000 in funding needed for the cash purchase price under the Purchase Agreement. Guardian also agreed to provide the needed $100,000 working capital designated to UGopherServices Corp. The parties have agreed to negotiate and finalize the terms of such loans in the near future. In order to facilitate the transition of the Company, the Company and Michael Murray have agreed to enter into an employment agreement in which Mr. Murray will serve as Executive Vice President in charge of business development. As consideration, the Company issued a warrant to acquire 4,000,000 shares of common stock to Mr. Murray. The warrants contain identical terms to the RJW Warrants. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Loss Contingency [Abstract] | |
Contingencies | Note 11 - Contingencies Legal Proceedings From time to time, the Company may be involved in various litigation matters, which arise in the ordinary course of business. There is currently no litigation that management believes will have a material impact on the financial position of the Company. On August 26, 2015, the Company finalized a consulting agreement that it entered into on August 11, 2015 with Michael Korsunsky (“Consultant”) pursuant to which Consultant was engaged by the Company to (i) provide introductions to strategic business alliances, (ii) advise on exposure and risk in the operation of smart phone applications and (iii) advise on market fluctuations within the different categories of the smart phone application delivery services sector, in consideration of 100,000 restricted shares of common stock of the Company, which shares were issued on or around August 26, 2015. On or around November 17, 2016, the Company filed a complaint against Consultant in Superior Court of the State of California, County of Riverside, for Breach of Contract and Breach of Implied Covenant of Good Faith and Fair Dealing. The Consultant been served, surrender his certificate but to date has not filed a defense. This case has been dismissed. On June 10, 2016, the Company entered into a consulting agreement with Waterford Group LLC (“Waterford”) pursuant to which the Company engaged Waterford to provide sales and marketing consulting and advisory services to the Company in consideration of 100,000 shares of restricted common stock of the Company (the “Shares”) and a common stock purchase warrant (the “Warrant”) to acquire 750,000 shares of restricted common stock of the Company at an exercise price of $2.25 per share for a period of five (5) years. 50,000 of the Shares were issued to Waterford upon the execution of the Agreement. The Warrant vests on a quarterly basis in eight (8) equal quarterly installments each in the amount of 93,750 shares each quarter during the term of the Agreement. The first quarterly installment vested upon the execution of the Agreement and covers Q2 2016 and each subsequent quarterly installment vests each quarter thereafter. The warrant has been recorded as adjusting equity during this quarter. The Company believes that this agreement is in default, as the counterparty failed to perform or provide any services under the agreement. As such, the Company put Waterford on notice in writing during in the third fiscal quarter, that the Company did not issue shares or warrants during the third or fourth fiscal quarters, and does not intend to issue those items as it believes that Waterford is in default under its agreement. On or around January 23, 2017, the Company filed a complaint against Waterford and the Company’s Transfer Agent, in Superior Court of the State of California, County of Riverside. On February 1, 2017, the Company obtained a temporary restraining order that prohibits Waterford from (x) lifting the restricted legend from the 50,000 shares that it received in connection with signing the Agreement; (y) selling the 50,000 shares to another party; and, (z) from exercising the warrant on 93,750 shares that was issued and vested upon the execution of the Agreement. As ordered by the court, on February 9, 2017, the Company deposited a Corporate Surety Bond in the amount of $42,875 to secure the temporary restraining order. The Company agreed with Waterford to go to binding arbitration, which is currently being scheduled. On or around February 27, 2017, the Company was issued a stay of the temporary restraining order barring its transfer agent from providing shares in connection with the exercise of the first Waterford warrant on 93,750 shares that was provided to Waterford in connection with the execution of the engagement letter that was executed by the parties on or around June 10, 2016. On or around April 10, 2017, the Company was billed by its transfer agent (“TA”) for approximately $11,500 for legal fees (“TA Charges”) in connection with a lawsuit brought by one of the Company’s shareholders against the TA. The Company is not a named party in this litigation. The Company disputes the TA Charges, as the Company’s position is that the TA Charges are not covered under the indemnification section of the Company’s agreement with its TA. As the TA refused to provide further services, the Company paid the fees, and booked it as an expense in this quarter. Effective August 15, 2017, Reko Holdings, LLC (“Reko”) converted 6,000 shares of its Series D Preferred Stock into 6,000,000 restricted common shares. TA refuses to issue Reko said shares in lieu of litigation between TA and Reko in which the Company is not a named party. As such, the Company did not book the conversion, and is trying to mediate the issue between the TA and Reko. SEC Matters On July 29, 2016, the staff of the Atlanta Regional Office of the U.S. Securities and Exchange Commission (the “SEC” and the “Commission”) advised the Company in a telephone conversation, followed by a written “Wells” notice, that it is has made a preliminary determination to recommend that the Commission file an enforcement action against the Company alleging violations of Section 13(a) of the Securities and Exchange Act of 1934 and Rules 13a-11, 13a-13 and 12b-20 thereunder. A Wells Notice is neither a formal allegation of wrongdoing nor a finding that any violations of law have occurred. Rather, it provides the Company with an opportunity to respond to issues raised by the Commission and offer its perspective prior to any SEC decision to institute proceedings. These proceedings could result in the Company being subject to an injunction and cease and desist order from further violations of the securities laws as well as monetary penalties of disgorgement, pre-judgment interest and a civil penalty. On September 20, 2016, the Company filed an amended and restated 10-Q for the period ended June 30, 2014. In February 2017, the SEC advised that it concluded its investigation and that it does not intend to recommend an enforcement action by the SEC against the Company. Reserved Shares In connection with the derivative notes, the Company has reserved with its transfer agent common shares for each note held by the holders. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 12 - Subsequent Events Management has evaluated events that occurred subsequent to the end of the reporting period shown herein: On October 2, 2017, the Company entered into a Securities Purchase Agreement with Power Up Lending Group Ltd., an accredited investor (“Power Up”) pursuant to which the Company issued to Power Up a Convertible Promissory Note (the “Power Note”) in the aggregate principal amount of $80,000. The Power Note has a maturity date of July 10, 2018 and the Company has agreed to pay interest on the unpaid principal balance of the Power Note at the rate of ten percent (10%) per annum from the date on which the Power Note is issued (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company shall have the right to prepay the Power Note, provided it makes a payment to Power Up as set forth in the Power Note. The transactions described above closed on October 4, 2017. The outstanding principal amount of the Power Note is convertible the Company’s at a conversion price In no event shall Power Up be allowed to effect a conversion if such conversion, along with all other shares of Company common stock beneficially owned by Power Up and its affiliates would exceed 4.9% of the outstanding shares of the common stock of the Company. On June 9, 2017, the Company entered into a Securities Purchase Agreement (“CROWN SPA”) with Crown Bridge Partners, LLC (“CBP”), providing for the purchase of two Convertible Redeemable Notes in the aggregate principal amount of $100,000 (the “CBP Notes”), with the first note being in the amount of $50,000 (“CBP First Note”) and the second note being in the amount of $50,000 (“CBP Back End Note”), each with an 8% original issue discount. CBP First Note was funded, with the Company receiving $42,500, net of the 10% original issue discount and legal fees. With respect to CBP Back End Note, also with a 10% original issue discount, CBP issued a note to the Company in the amount of $50,000 to offset CBP Back End Note, secured by CBP Back End Note (“Secured Note”). On October 23, 2017, Guardian Patch, LLC purchased the CBP First Note from CBP. Further, on October 23, 2017, the Company and CBP entered into a Rescission Agreement whereby the CBP Back End Note and the Secured Note were cancelled and rescinded. On October 26, 2017, the Company entered into a Securities Purchase Agreement with Labrys Fund, LP, an accredited investor (“Labrys”) pursuant to which the Company issued to Labrys a Convertible Promissory Note (the “Labrys Note”) in the aggregate principal amount of $110,000. The Labrys Note has a maturity date of July 26, 2018 and the Company has agreed to pay interest on the unpaid principal balance of the Labrys Note at the rate of ten percent (10%) per annum from the date on which the Labrys Note is issued (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company shall have the right to prepay the Labrys Note, provided it makes a payment to Labrys at a premium as set forth in the Labrys Note. The transactions described above closed on October 26, 2017. The outstanding principal amount of the Labrys Note is convertible at any time and from time to time at the election of Labrys into shares of the Company’s at a conversion price In no event shall Labrys be allowed to effect a conversion if such conversion, along with all other shares of Company common stock beneficially owned by Labrys and its affiliates would exceed 4.9% of the outstanding shares of the common stock of the Company. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Presentation of Financial Statements | Presentation of Financial Statements The accompanying financial statements include the accounts of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, UGopherServices Corp, since the date of acquisition (September 1, 2017) All significant intercompany transactions and balances have been eliminated. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompanying financial statements include depreciable lives of property and equipment, valuation of beneficial conversion feature debt discounts, valuation of derivatives, and the valuation allowance on deferred tax assets. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid financial instruments purchased with an original maturity of three months or less to be cash equivalents. |
Accounts Receivable | Accounts Receivable The Company grants credit to establishments (such as convenient stores) who sell the Company’s products under credit terms that it believes are customary in the industry and does not require collateral to support customer receivables. The Company currently does not provide an allowance for doubtful collections, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. Normal receivable terms vary from 7-30 days after the issuance of the invoice and typically would be considered past due when the term expires. Delinquent receivables are written off based on individual credit evaluation and specific circumstances of the customer. The Company’s allowance for doubtful accounts was $0 and $0 at September 30, 2017 and December 31, 2016, respectively. |
Inventory | Inventory Inventory is valued at the lower of the inventory’s cost (first in, first out basis) or the current market price of the inventory. Management compares the cost of inventory with its market value and an allowance is made to write down inventory to market value, if lower. At September 30, 2017, all of the Company’s inventory was finished goods inventory which consisted principally of phones and phone card products, including PINS for cell minutes, SIM cards for cell minutes, as well as gift cards. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method for substantially all assets with estimated lives as follows: Furniture 7 years Computers and equipment 3 years POSA machines 3 years |
Long-Lived Assets | Long-Lived Assets The Company applies ASC Topic 360, Property, Plant, and Equipment |
Goodwill | Goodwill Goodwill represents the excess of purchase price over the underlying net assets of businesses acquired. Under accounting requirements, goodwill is not amortized but is subject to annual impairment tests. The Company recorded goodwill of $7,950,619 related to its acquisition of certain RWJ assets (see Note 4) in 2017. |
Derivative Financial Instruments | Derivative Financial Instruments The Company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a weighted average Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. As of September 30, 2017, the Company’s only derivative financial instrument was an embedded conversion feature associated with convertible notes payable due to certain provisions that allow for a change in the conversion price based on a percentage of the Company’s stock price at the date of conversion. |
Fair value measurements | Fair Value Measurements The Company applies the provisions of ASC 820-10, “Fair Value Measurements and Disclosures.” ● Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets. ● Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. For certain financial instruments, the carrying amounts reported in the balance sheets for cash and current liabilities, including convertible notes payable, each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The Company uses Level 2 inputs for its valuation methodology for derivative liabilities as their fair values were determined by using the Black-Scholes-Merton pricing model based on various assumptions. The Company’s derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjustments to fair value of derivatives. At September 30, 2017, the Company identified the following liabilities that are required to be presented on the balance sheet at fair value: Fair Value Fair Value Measurements at As of September 30, 2017 Description September 30, 2017 Using Fair Value Hierarchy Level 1 Level 2 Level 3 Derivative liability $ 2,167,990 $ — $ 2,167,990 $ — Total $ 2,167,990 $ — $ 2,167,990 $ — The Company did not identify any other non-recurring assets and liabilities that are required to be presented in the consolidated balance sheets at fair value in accordance with ASC 815. |
Treasury Stock | Treasury Stock Treasury stock is recorded at cost. The re-issuance of treasury shares is accounted for on a first in, first-out basis and any difference between the cost of treasury shares and the re-issuance proceeds are charged or credited to additional paid-in capital. During 2011, the Company bought back 8 post-split shares (38,000 pre-split) shares of its own shares. |
Income Taxes | Income Taxes The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”) Income Taxes. Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount of tax benefits expected to be realized. U.S. GAAP requires that, in applying the liability method, the financial statement effects of an uncertain tax position be recognized based on the outcome that is more likely than not to occur. Under this criterion, the most likely resolution of an uncertain tax position should be analyzed based on technical merits and on the outcome that would likely be sustained under examination. The Company had no uncertain tax positions as of September 30, 2017. |
Revenue Recognition | Revenue Recognition The Company recognized revenue on arrangements in accordance with FASB Codification Topic 605, “Revenue Recognition” (“ASC Topic 605”). Under ASC Topic 605, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. The Company recognizes revenue from the sale of phones and phone card products at the time of sale to the customer. The Company recognizes revenue from IT-related services at the time the services are performed. |
Cost of Goods Sold | Cost of Goods Sold Cost of goods sold represents the cost of the phone and phone card products sold by the Company. In 2016 the Company did not have cost of goods sold since all of its revenue was generated from consulting income. In 2017, the entire cost of goods sold relates to products sold by the Company’s new acquired acquisition as described in Note 4. |
(Loss) Per Share | (Loss) Per Share In accordance with accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share,” Basic earnings per share (“EPS”) is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants), and convertible debt or convertible preferred stock, using the if-converted method. Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive. The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive. September 30, September 30, 2017 2016 Series B preferred stock 3,000 3,000 Series C preferred stock 770 770 Series D preferred stock 66,000,000 66,000,000 Warrants 22,093,750 — Convertible notes 12,158,358 6,156,757 Total 100,255,878 72,160,527 |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Schedule of estimated lives of property and equipment | Depreciation of property and equipment is provided using the straight-line method for substantially all assets with estimated lives as follows: Furniture 7 years Computers and equipment 3 years POSA machines 3 years |
Schedule of Fair Value Measurements | At September 30, 2017, the Company identified the following liabilities that are required to be presented on the balance sheet at fair value: Fair Value Fair Value Measurements at As of September 30, 2017 Description September 30, 2017 Using Fair Value Hierarchy Level 1 Level 2 Level 3 Derivative liability $ 2,167,990 $ — $ 2,167,990 $ — Total $ 2,167,990 $ — $ 2,167,990 $ — |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive. September 30, September 30, 2017 2016 Series B preferred stock 3,000 3,000 Series C preferred stock 770 770 Series D preferred stock 66,000,000 66,000,000 Warrants 22,093,750 — Convertible notes 12,158,358 6,156,757 Total 100,255,878 72,160,527 |
Acquisition (Tables)
Acquisition (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Summary of purchase price | Purchase price Cash (1) $ 400,000 5,000,000 shares of common stock (2) 1,850,000 Secured promissory note 2,600,000 9,000,000 warrants (3) 3,310,819 $ 8,160,819 Allocation of purchase price Inventory $ 398,151 Property and equipment 210,200 Assumed liabilities (398,151 ) Goodwill 7,950,619 Purchase price $ 8,160,819 |
Summary of Pro Forma Financial Information | Nine Months Ended September 30, 2017 2016 Sales $ 42,441,702 50,078,135 Cost of goods sold 40,273,563 47,623,277 Gross profit 2,168,139 2,454,858 Operating expenses 8,492,340 4,013,055 Loss from operations (6,324,201 ) (1,558,197 ) Net loss (7,720,712 ) (1,604,377 ) Loss per share (0.16 ) (0.08 ) |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consisted of the following as of September 30, 2017 and December 31, 2016: September 30, December 31, 2017 2016 Furniture $ 33,740 $ 9,431 Computers and equipment 20,621 12,539 POSA machines 190,829 — 245,190 21,970 Less accumulated depreciation (27,808 ) (21,271 ) Property and equipment, net $ 217,382 $ 699 |
Convertible Notes Payable (Tabl
Convertible Notes Payable (Table) | 9 Months Ended |
Sep. 30, 2017 | |
Notes Payable [Abstract] | |
Summary of Convertible notes payable | Convertible notes payable at September 30, 2017 and December 31, 2016 consist of the following: September 30, December 31, 2017 2016 Convertible note payable to PTPI dated January 22, 2015 (A) $ 30,393 $ 53,852 Convertible note payable to Guardian Patch I LLC dated May 23, 2017 (B) 660,132 Convertible notes payable to Crown Bridge Partners LLC dated June 9, 2017 (C) 100,000 — Convertible notes payable to Eagle Equity LLC dated June 8, 2017 (D) 100,000 — Convertible notes payable to JSJ Investments, Inc. dated June 7, 2017 and June 29, 2017 (E) 100,000 — Convertible notes payable to Eagle Equity LLC dated September 13, 2017 (F) 100,000 — Total convertible notes payable 1,090,525 53,852 Unamortized debt discount (838,809 ) — Convertible notes payable, net of discount 251,716 53,852 Less notes receivable collateralized by convertible notes payable (150,000 ) — Convertible notes payable $ 101,716 $ 53,852 |
Rollfoward of convertible note | A roll-forward of the convertible note from December 31, 2016 to September 30, 2017 is below: Convertible notes, December 31, 2016 $ 53,852 Issued for cash 250,000 Issued for accounts payable and accrued expenses 660,132 Increase due to accrued interest 1,756 Conversion to common stock (25,215 ) Debt discount related to new convertible notes (1,060,132 ) Amortization of debt discounts 221,323 Convertible notes, September 30, 2017 $ 101,716 |
Derivative Liability (Tables)
Derivative Liability (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Notes to Financial Statements | |
Assumptions to measure fair value | The Company uses a weighted average Black-Scholes-Merton option pricing model with the following assumptions to measure the fair value of derivative liability at September 30, 2017: Stock price $0.32 Risk free rate 1.31% Volatility 200% Conversion/ Exercise price $0.12 to $0.13 Dividend rate 0% Term (years) 5.0 years |
Schedule of Derivative Liabilities at Fair Value | The following table represents the Company’s derivative liability activity for the nine months ended September 30, 2017: Derivative liability balance, December 31, 2016 $ – Issuance of derivative liability during the period 2,715,178 Change in derivative liability during the period (547,188 ) Derivative liability balance, September 30, 2017 $ 2,167,990 |
Stockholders' Equity (Deficit24
Stockholders' Equity (Deficit in prior periods) (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Summary of warrant activity | The following is a summary of warrant activity: Warrants Outstanding Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value Outstanding, December 31, 2016 93,750 $ $ 0.00 Granted 22,000,000 0.50 Forfeited — Exercised — Outstanding, September 30, 2017 22,093,750 $ 0.51 Exercisable, September 30, 2017 22,093,750 $ 0.51 4.92 $ 0.00 |
Summary of exercise price for warrant outstanding | The exercise price for warrant outstanding and exercisable at September 30, 2017: Outstanding and Exercisable Number of Exercise Warrants Price 22,000,000 $ 0.50 93,750 2.25 22,093,750 |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Details) | 9 Months Ended |
Sep. 30, 2017 | |
Furniture [Member] | |
Useful life | 7 years |
Computer And Equipment [Member] | |
Useful life | 3 years |
POSA machines [Member] | |
Useful life | 3 years |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Details 1) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Derivative liability at June 30, 2017 | $ 2,167,990 | |
Total | 2,167,990 | |
Fair Value, Inputs, Level 1 [Member] | ||
Derivative liability at June 30, 2017 | ||
Total | ||
Fair Value, Inputs, Level 2 [Member] | ||
Derivative liability at June 30, 2017 | 2,167,990 | |
Total | 2,167,990 | |
Fair Value, Inputs, Level 3 [Member] | ||
Derivative liability at June 30, 2017 | ||
Total |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Details 2) - shares | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Convertible note | 12,158,358 | 6,156,757 |
Number of potentially dilutive securities | 100,255,878 | 72,160,527 |
Warrant [Member] | ||
Number of potentially dilutive securities | 22,093,750 | |
Series B Convertible Preferred Stock [Member] | ||
Preferred shares | 3,000 | 3,000 |
Series C Convertible Preferred Stock [Member] | ||
Preferred shares | 770 | 770 |
Series D Convertible Preferred Stock [Member] | ||
Preferred shares | 66,000,000 | 66,000,000 |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2011 | Dec. 31, 2016 | |
Allowance for doubtful accounts | $ 0 | $ 0 | ||
Impairment Losses | 0 | $ 0 | ||
Goodwill | 7,950,619 | |||
Uncertain tax positions | $ 0 | $ 0 | ||
Treasury Stock [Member] | ||||
Stock issued during period, shares, stock splits | 8 | |||
Number of shares bought back | 38,000 |
Acquisition (Details)
Acquisition (Details) - USD ($) | Sep. 30, 2017 | Sep. 01, 2017 | Dec. 31, 2016 |
Allocation of purchase price | |||
Goodwill | $ 7,950,619 | ||
RWJ Advanced Marketing, LLC | |||
Purchase price | |||
Cash | $ 400,000 | ||
5,000,000 shares of common stock | 1,850,000 | ||
Secured promissory note | 2,600,000 | ||
9,000,000 warrants | 3,310,819 | ||
Purchase price | 8,160,819 | ||
Allocation of purchase price | |||
Inventory | 398,151 | ||
Property and equipment | 210,200 | ||
Assumed liabilities | (398,151) | ||
Goodwill | 7,950,619 | ||
Purchase price | $ 8,160,819 |
Acquisition (Details 1)
Acquisition (Details 1) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Business Combinations [Abstract] | ||
Sales | $ 42,441,702 | $ 50,078,135 |
Cost of goods sold | 40,273,563 | 47,623,277 |
Gross profit | 2,168,139 | 2,454,858 |
Operating expenses | 8,492,340 | 4,013,055 |
Loss from operations | (6,324,201) | (1,558,197) |
Net loss | $ (7,720,712) | $ (1,604,377) |
Loss per share | $ (0.16) | $ (0.08) |
Acquisition (Details Narrative)
Acquisition (Details Narrative) - USD ($) | Sep. 01, 2017 | Sep. 30, 2017 |
Advance from related party | $ 400,000 | |
Fair Value of warrants | $ 9,000,000 | |
Determination method | Black-Scholes option pricing model | |
Expected life | 5 years | |
Volatility | 250.00% | |
Dividend yield | 0.00% | |
Risk free interest rate | 1.73% | |
RWJ Advanced Marketing, LLC | ||
Warrants fixed exercise price | $ 0.50 | |
Cash | $ 400,000 | |
Secured promissory note | $ 2,600,000 | |
Purchase of warrants | 9,000,000 | |
Purchase of common stock | 5,000,000 | |
Interest rate | 3.50% | |
Interst payable date | Dec. 31, 2019 |
Liquidity and Going Concern (De
Liquidity and Going Concern (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Net losses | $ (5,940,727) | $ (686,972) | $ (7,516,294) | $ (1,300,340) | |
Cash provided for operating activities | (215,405) | $ 25,882 | |||
Working capital deficit | (3,155,017) | ||||
Stockholders' deficit | (2,415,507) | (2,415,507) | $ 803,030 | ||
Accumulated deficit | $ (11,610,666) | (11,610,666) | $ (4,094,372) | ||
Administrative expenses | $ 1,200,000 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 |
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 245,190 | $ 21,970 | |
Less accumulated depreciation | (27,808) | (21,271) | |
Property and equipment, net | 217,382 | $ 699 | 699 |
Furniture [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 33,740 | 9,431 | |
Computer And Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 20,621 | 12,539 | |
POSA machines [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 190,829 |
Property and Equipment, Net (34
Property and Equipment, Net (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expenses | $ 6,538 | $ 1,010 |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 |
Convertible note payable | $ 1,090,525 | $ 53,852 | |
Unamortized debt discount | (838,809) | ||
Convertible notes payable, net of discount | 251,716 | 53,852 | |
Less notes receivable collateralized by convertible notes payable | (150,000) | ||
Convertible notes payable | 101,716 | ||
PTPI | |||
Convertible note payable | 30,393 | 53,852 | |
Accrued interest | 14,870 | 13,112 | |
Guardian Patch I LLC | |||
Convertible note payable | 660,132 | ||
Crown Bridge Partners LLC | |||
Convertible note payable | 100,000 | ||
Eagle Equity LLC | |||
Convertible note payable | 100,000 | ||
JSJ Investments Inc | |||
Convertible note payable | 100,000 | ||
Eagle Equity LLC | |||
Convertible note payable | $ 100,000 |
Convertible Notes Payable (De36
Convertible Notes Payable (Details 1) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Notes Payable [Abstract] | ||
Convertible notes at beginning | $ 53,852 | |
Issued for cash | 250,000 | |
Issued for accounts payable and accrued expenses | 660,132 | |
Increase due to accrued interest | 1,756 | |
Conversion to common stock | (25,215) | |
Debt discount related to new convertible notes | (1,060,132) | |
Amortization of debt discounts | 221,323 | $ 21,369 |
Convertible notes, at end | $ 101,716 |
Convertible Notes Payable (De37
Convertible Notes Payable (Detail Narrative) - USD ($) | Sep. 13, 2017 | Jun. 08, 2017 | Jun. 06, 2017 | Jan. 22, 2015 | May 23, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Jun. 09, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | |||||||||
Description of debt conversion price | Impacted by the 1:1,000 stock split implemented by the Company on February 24, 2015 and will remain $0.0075273. | ||||||||
Embedded conversion feature | $ 2,715,178 | ||||||||
Derivative liability | 1,060,132 | ||||||||
Derivative expense | 1,655,046 | ||||||||
Amortization of debt discount | 221,323 | $ 21,369 | |||||||
Debt Discount | 838,809 | ||||||||
Convertible Notes Payable ("Note I") [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Note payable, principal amount | $ 75,273 | $ 30,393 | $ 53,852 | ||||||
Note payable, interest rate | 10.00% | ||||||||
Conversion price (in dollars per share) | $ 0.00752734 | ||||||||
Note maturity date | Jan. 21, 2017 | ||||||||
Convertible Notes Payable ("Note II") [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Note payable, principal amount | $ 660,132 | ||||||||
Note payable, interest rate | 6.00% | ||||||||
Note maturity date | May 30, 2019 | ||||||||
Convertible Notes Payable ("Note III") [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Note payable, principal amount | $ 100,000 | ||||||||
Note payable, interest rate | 8.00% | ||||||||
Note maturity date | Jun. 9, 2018 | ||||||||
Convertible Notes Payable ("Note IV") [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Note payable, principal amount | $ 100,000 | ||||||||
Note payable, interest rate | 8.00% | ||||||||
Note maturity date | Jun. 8, 2018 | ||||||||
Convertible Notes Payable ("Note V") [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Note payable, principal amount | $ 50,000 | ||||||||
Note payable, interest rate | 8.00% | ||||||||
Note maturity date | Mar. 7, 2018 | ||||||||
Convertible Notes Payable ("Note VI") [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Note payable, principal amount | $ 100,000 | ||||||||
Note payable, interest rate | 8.00% | ||||||||
Note maturity date | Sep. 18, 2018 |
Derivative Liability (Details)
Derivative Liability (Details) | 9 Months Ended |
Sep. 30, 2017$ / shares | |
Stock price | $ 0.32 |
Risk free rate | 1.31% |
Volatility | 250.00% |
Dividend rate | 0.00% |
Term (years) | 5 years |
Minimum [Member] | |
Conversion/ Exercise price | $ 0.12 |
Maximum [Member] | |
Conversion/ Exercise price | $ 0.13 |
Derivative Liability (Details 1
Derivative Liability (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Notes to Financial Statements | ||||
Derivative liability balance, Beginning | ||||
Issuance of derivative liability during the period | 2,715,178 | |||
Change in derivative liability during the period | $ (51,151) | (547,188) | ||
Derivative liability balance, end | $ 2,167,990 | $ 2,167,990 |
Note Payable (Details Narrative
Note Payable (Details Narrative) - RWJ Advanced Marketing, LLC | Sep. 01, 2017 |
Interest rate | 3.50% |
Interst payable date | Dec. 31, 2019 |
Stockholders' Equity (Deficit41
Stockholders' Equity (Deficit in prior periods) (Details) | 9 Months Ended |
Sep. 30, 2017USD ($)$ / sharesshares | |
Stockholders' Equity Note [Abstract] | |
Warrants Outstanding, Beginning | 93,750 |
Warrants Granted | 22,000,000 |
Warrants Forfeited | |
Warrants Exercised | |
Warrants Outstanding, End | 22,093,750 |
Warrants Exercisable, End | 22,093,750 |
Weighted Average Exercise Price Warrants Granted | $ / shares | $ 0.5 |
Weighted Average Exercise Price Warrants Outstanding, End | $ / shares | 0.51 |
Weighted Average Exercise Price Warrants Exercisable at End | $ / shares | $ 0.51 |
Weighted Average Remaining Contractual Life Exercisable at End | 4 years 11 months 1 day |
Aggregate Intrinsic Value Outstanding, Beginning | $ | $ 0 |
Aggregate Intrinsic Value Outstanding, Exercisable at End | $ | $ 0 |
Stockholders' Equity (Deficit42
Stockholders' Equity (Deficit in prior periods) (Details 1) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Number of warrants Outstanding | 22,093,750 | 93,750 |
Number of warrants Exercisable | 22,093,750 | |
$ 0.50 | ||
Number of warrants Outstanding | 22,000,000 | |
Number of warrants Exercisable | 22,000,000 | |
Exercise price of warrants Outstanding | $ 0.50 | |
Exercise price of warrants Exercisable | $ 0.50 | |
$ 2.25 | ||
Number of warrants Outstanding | 93,750 | |
Number of warrants Exercisable | 93,750 | |
Exercise price of warrants Outstanding | $ 2.25 | |
Exercise price of warrants Exercisable | $ 2.25 |
Stockholders_ Equity (Deficit i
Stockholders’ Equity (Deficit in prior periods) (Details Narrative) - USD ($) | Sep. 01, 2017 | Jun. 17, 2016 | Sep. 30, 2017 |
Stock Issued During Period, Shares, Issued for Services | 900,000 | ||
Stock Issued During Period, Value, Issued for Services | $ 233,982 | ||
Stock Issued During Period, Shares, Acquisitions | 5,000,000 | ||
Stock Issued During Period, Value, Acquisitions | $ 1,850,000 | ||
Fair Value of warrants | $ 9,000,000 | ||
Determination method | Black-Scholes option pricing model | ||
Expected life | 5 years | ||
Volatility | 250.00% | ||
Dividend yield | 0.00% | ||
Risk free interest rate | 1.73% | ||
Two Consultants | |||
Stock Issued During Period, Shares, Issued for Services | 2,025,000 | ||
Stock Issued During Period, Value, Issued for Services | $ 766,500 | ||
Warrants issued | 13,000,000 | ||
Fair Value of warrants | $ 4,782,297 | ||
PTPI | |||
Number of shares converted | 3,350,000 | ||
Common shares issued from conversion, Value | $ 25,215 | ||
RWJ Advanced Marketing, LLC | |||
Warrants issued | 9,000,000 |
Related Parties (Details Narrat
Related Parties (Details Narrative) - USD ($) | Aug. 15, 2016 | Aug. 09, 2016 | Jun. 20, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Aug. 15, 2017 | Dec. 31, 2016 | Sep. 30, 2015 | Apr. 22, 2015 | Nov. 02, 2011 |
Related Party Transaction [Line Items] | ||||||||||||
Revenue for providng IT services | $ 45,000 | $ 45,000 | ||||||||||
Rent for office space | $ 5,000 | |||||||||||
Security deposit | $ 2,523 | 2,523 | $ 7,500 | |||||||||
Operating expenses | 5,937,176 | $ 727,172 | 6,528,748 | $ 1,396,162 | ||||||||
Convertible Promissory Note | $ 660,132 | $ 660,132 | ||||||||||
Due to Related Parties | $ 67,000 | |||||||||||
Series D Convertible Preferred Stock [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Preferred stock, outstanding | 66,000 | 66,000 | 66,000 | |||||||||
Series B Convertible Preferred Stock [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Preferred stock, outstanding | 45,000 | 45,000 | 45,000 | |||||||||
Number of common shares issued from conversion | 3,000 | |||||||||||
Mr. Mansour Khatib [Member] | Employment Agreement [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Description of compensation and other benefits | Upon the Company generating $1,000,000 in revenue during any three (3) month period (the “Threshold Requirement”), the Executive will receive salary at the rate of $100,000 annually (the “Base Salary”); provided, however, that that Company shall pay to Executive $5,000 per month (the "Monthly Salary Advance") commencing on August 15, 2016, which such Monthly Salary Advance shall be an advance on the Base Salary and shall continue to be paid to Executive until such time that the Company launches its GopherInsight™ technology into the consumer markets. | |||||||||||
Preferred Stock Holders [Member] | Series D Convertible Preferred Stock [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Number of shares converted | 17,400 | 2,400 | ||||||||||
Number of common shares issued from conversion | 17,400,000 | 2,400,000 | ||||||||||
Shares price (in dollars per shares) | $ 0.01 | $ 0.01 | ||||||||||
Third Party [Member] | Convertible Notes Payable ("Note I") [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Number of common shares issued from conversion | 1,500,000 | 1,500,000 | ||||||||||
Advisory Board [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Preferred stock, outstanding | 9,900,000 | |||||||||||
Advisory Board [Member] | Series D Convertible Preferred Stock [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Preferred stock, outstanding | 9,900 | |||||||||||
Michael Murray [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Preferred stock, outstanding | 9,900,000 | |||||||||||
Michael Murray [Member] | Series D Convertible Preferred Stock [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Preferred stock, outstanding | 9,900 | |||||||||||
Dr. Rittman Services | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Revenue for providng IT services | $ 135,000 |
Contingencies (Details Narrativ
Contingencies (Details Narrative) | Aug. 15, 2017shares | Apr. 10, 2017USD ($) | Jun. 17, 2016USD ($)shares | Jun. 10, 2016$ / sharesshares | Jun. 16, 2014shares | Sep. 25, 2012shares | Sep. 30, 2017shares | Sep. 30, 2016shares | Sep. 30, 2015shares | Dec. 31, 2016Numbershares |
Stock issued during period, shares, issued for services (in shares) | 900,000 | |||||||||
Stock issued during period value, issued for services | $ | $ 233,982 | |||||||||
Legal Fees | $ | $ 11,500 | |||||||||
Treasury Stock [Member] | ||||||||||
Stock issued during period, shares, issued for services (in shares) | 32,000 | |||||||||
Series C Convertible Preferred Stock [Member] | ||||||||||
Stock issued during period, shares, new issues | 10,000 | 10,000 | ||||||||
Reko Holdings, LLC [Member] | Series D Convertible Preferred Stock [Member] | ||||||||||
Number of shares converted | 6,000 | |||||||||
Reko Holdings, LLC [Member] | Restricted Common Stock [Member] | ||||||||||
Number of common shares issued from conversion | 6,000,000 | |||||||||
Consulting Agreement [Member] | Waterford Group LLC [Member] | Warrant [Member] | ||||||||||
Stock issued during period, shares, new issues | 750,000 | 93,750 | ||||||||
Number of quarterly installments | Number | 8 | |||||||||
Exercise price (in dollars per share) | $ / shares | $ 2.25 | |||||||||
Warrant term | 5 years | |||||||||
Consulting Agreement [Member] | Waterford Group LLC [Member] | Restricted Common Stock [Member] | ||||||||||
Stock issued during period, shares, issued for services (in shares) | 100,000 | 50,000 | ||||||||
5% Convertible Promissory Note Due December 16, 2014 [Member] | Blackbridge Capital, LLC [Member] | ||||||||||
Number of shares for equity line commitment | 90,000,000 | |||||||||
Gv Global Communications Inc [Member] | Series C Convertible Preferred Stock [Member] | ||||||||||
Stock issued during period, shares, new issues | 10,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] - Securities Purchase Agreement [Member] - USD ($) | Oct. 02, 2017 | Oct. 26, 2017 | Jun. 09, 2017 |
Power Up Lending Group Ltd [Member] | Convertible Promissory Note[Member] | |||
Note payable, principal amount | $ 80,000 | ||
Note payable, interest rate | 10.00% | ||
Note maturity date | Jul. 10, 2018 | ||
Crown Bridge Partners LLC | CBP Notes [Member] | |||
Note payable, principal amount | $ 100,000 | ||
Crown Bridge Partners LLC | CBP First Note [Member] | |||
Note payable, principal amount | $ 50,000 | ||
Original issue discount | 10.00% | ||
Crown Bridge Partners LLC | CBP Back End Note [Member] | |||
Note payable, principal amount | $ 50,000 | ||
Original issue discount | 10.00% | ||
Crown Bridge Partners LLC | Labrys Note[Member] | |||
Note payable, principal amount | $ 110,000 | ||
Note payable, interest rate | 10.00% | ||
Note maturity date | Jul. 26, 2018 |