Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 13, 2018 | |
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, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 158,681,243 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | |
Current assets: | |||
Cash | $ 522,445 | $ 1,305,062 | |
Accounts receivable | 856,244 | 41,947 | |
Inventory | 287,975 | 262,749 | |
Prepaid expenses | 49,000 | ||
Total current assets | 1,715,664 | 1,609,758 | |
Property and equipment, net | 281,476 | 263,082 | |
Intangible assets, net | 3,270,474 | 6,666,667 | |
Investment in Mobiquity Technologies, Inc. | 9,806,352 | 1,979 | |
Goodwill | 925,877 | 950,619 | |
Total assets | 15,999,843 | 9,492,105 | |
Current liabilities: | |||
Accounts payable and accrued expenses (including related parties of $296,625 and $51,167) | 2,029,260 | 1,199,215 | |
Unearned revenue | 261,726 | ||
Due to Guardian LLC (related party) | 737,330 | 1,350,262 | |
Convertible notes payable, net of discount of $948,175 and $54,377 | 795,425 | 25,623 | |
Note payable, net of discount of $7,381 | 392,619 | ||
Derivative liability | 2,778,052 | 95,164 | |
Total current liabilities | 6,994,412 | 2,670,264 | |
Note payable | 2,600,000 | 2,600,000 | |
Total liabilities | 9,594,412 | 5,270,264 | |
Contingencies | |||
Stockholders' Equity | |||
Common stock, $0.00001 par value; 500,000,000 shares authorized; 158,038,132 and 58,215,406 shares issued and outstanding at September 30, 2018 and December 31, 2017 | 3,580 | 2,582 | |
Treasury stock, at cost; 1,040 shares at September 30, 2018 and December 31, 2017 | (643,059) | (643,059) | |
Additional Paid In Capital | 67,869,039 | 19,243,959 | |
Accumulated deficit | (60,824,129) | (14,381,662) | |
Total stockholders' equity | 6,405,431 | 4,221,841 | |
Total liabilities and stockholders' equity | 15,999,843 | 9,492,105 | |
Series B Convertible Preferred Stock [Member] | |||
Stockholders' Equity | |||
Preferred stock value | [1] | ||
Series C Convertible Preferred Stock [Member] | |||
Stockholders' Equity | |||
Preferred stock value | [2] | ||
Series D Convertible Preferred Stock [Member] | |||
Stockholders' Equity | |||
Preferred stock value | [3] | 1 | |
Series G Convertible Preferred Stock [Member] | |||
Stockholders' Equity | |||
Preferred stock value | [4] | $ 20 | |
[1] | Series B Preferred stock, $0.00001 par value; 20,000,000 shares authorized; 45,000 and 45,000 shares issued and outstanding at September 30, 2018 and December 31, 2017 | ||
[2] | Series C Preferred stock, $0.00001 par value; 10,000 shares authorized; 700 and 700 shares issued and outstanding at September 30, 2018 and December 31, 2017 | ||
[3] | Series D Preferred stock, $0.00001 par value; 100,000 shares authorized; 0 and 66,000 shares issued and outstanding at September 30, 2018 and December 31, 2017 | ||
[4] | Series G Preferred stock, $0.00001 par value; 2,000,000 shares authorized; 0 and 2,000,000 shares issued and outstanding at September 30, 2018 and December 31, 2017 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Accounts payable and accrued expenses related party | $ 296,625 | $ 51,167 |
Discount | $ 948,175 | $ 54,377 |
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock, authorized | 500,000,000 | 500,000,000 |
Common stock, issued | 158,038,132 | 58,215,406 |
Common stock, outstanding | 158,038,132 | 58,215,406 |
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 |
Preferred stock, Outstanding | 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 |
Preferred stock, Outstanding | 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 | 0 | 66,000 |
Preferred stock, Outstanding | 0 | 66,000 |
Series G Convertible Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, authorized | 2,000,000 | 2,000,000 |
Preferred stock, issued | 0 | 2,000,000 |
Preferred stock, Outstanding | 0 | 2,000,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Sales: | ||||
Sales | $ 15,491,196 | $ 4,426,626 | $ 36,772,212 | $ 4,426,626 |
Related party sales | 45,000 | 45,000 | 135,000 | 135,000 |
Total sales | 15,536,196 | 4,471,626 | 36,907,212 | 4,561,626 |
Cost of goods sold | 14,692,250 | 4,174,374 | 35,316,203 | 4,174,374 |
Gross profit | 843,946 | 297,252 | 1,591,009 | 387,252 |
Operating expenses: | ||||
General and administrative expenses | 3,540,659 | 1,850,055 | 14,035,900 | 2,323,713 |
Marketing expenses | 106,305 | 36,302 | 376,806 | 154,216 |
Acquisition costs | 4,050,819 | 10,966,791 | 4,050,819 | |
Buyout of joint venture agreement (related party) | 11,750,000 | 11,750,000 | ||
Impairment of assets | 7,132,286 | 7,132,286 | ||
Total operating expenses | 22,529,250 | 5,937,176 | 44,261,783 | 6,528,748 |
Loss from operations | (21,685,304) | (5,639,924) | (42,670,774) | (6,141,496) |
Other income (expense): | ||||
Amortization of debt discount | 379,679 | 171,110 | 849,802 | 221,323 |
Change in fair value of derivative liability | (2,440,383) | 51,151 | (2,458,506) | 547,188 |
Interest expense and financing costs | 160,726 | 180,844 | 289,737 | 1,700,663 |
Equity loss in Mobiquity Technologies, Inc. | (173,648) | (173,648) | ||
Total other income (expense) | (3,154,436) | (300,803) | (3,771,693) | (1,374,798) |
Loss before income taxes | (24,839,740) | (5,940,727) | (46,442,467) | (7,516,294) |
Income tax expense | ||||
Net loss | $ (24,839,740) | $ (5,940,727) | $ (46,442,467) | $ (7,516,294) |
Weighted average number of common shares outstanding: | ||||
Basic and diluted | 136,347,915 | 47,382,329 | 118,587,766 | 43,901,965 |
Net loss per share: | ||||
Basic and diluted | $ (0.18) | $ (0.13) | $ (0.39) | $ (0.17) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash Flows From Operating Activities: | ||
Net loss | $ (46,442,467) | $ (7,516,294) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation of property and equipment | 79,814 | 6,538 |
Amortization of intangible assets | 1,029,526 | |
Amortization of debt discount | 849,802 | 221,323 |
Change in fair value of derivative liability | 2,458,506 | (547,188) |
Financing cost | 134,669 | 1,655,046 |
Shares issued for services | 12,831,225 | 766,500 |
Shares issued for buyout of joint venture agreement | 11,750,000 | |
Warrant issued for services | 7,570,668 | 4,782,297 |
Impairment of assets | 7,132,286 | |
Equity loss in Mobiquity Technologies, Inc. | 173,648 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (814,297) | (734,164) |
Inventory | (25,226) | (50,977) |
Prepaid expenses | (49,000) | 5,248 |
Other assets | 4,977 | |
Accounts payable and accrued expenses | 830,045 | 541,706 |
Unearned revenue | 261,726 | |
Due to Guardian, LLC | (612,932) | 649,583 |
Accrued interest on convertible notes payable | ||
Net cash used in operating activities | (2,842,007) | (215,405) |
Cash Flows From Investing Activities: | ||
Purchase of property and equipment | (33,208) | (13,021) |
Cash paid for acquisition | (200,000) | |
Cash paid for investment in Spare | (265,000) | |
Other | 1,979 | |
Net cash used in investing activities | (496,229) | (13,021) |
Cash flows from financing activities: | ||
Issuance of convertible notes | 1,703,000 | 250,000 |
Repayment of convertible notes | (80,000) | |
Payment on acquisition note | (567,381) | |
Issuance of common stock | 1,500,000 | |
Net cash provided by financing activities | 2,555,619 | 250,000 |
Net decrease in cash | (782,617) | 21,574 |
Cash, beginning of period | 1,305,062 | 5,096 |
Cash, end of period | 522,445 | 26,670 |
Cash paid for interest | ||
Cash paid for income taxes | 36,695 | |
Supplemental non-cash investing and financing activities | ||
Debt discount | 1,743,600 | 1,060,132 |
Transfer of derivative liability to equity | 113,287 | |
Shares issued to reduce notes payable | 25,217 | |
Reclassification of a payable to Guardian LLC to a convertible note payable | 660,132 | |
Accrued interest to convertible note payable | 1,756 | |
Shares issued for equity interest in Mobiquity Technologies, Inc. | $ 9,980,000 |
Organization and Nature of Busi
Organization and Nature of Business | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Nature of Business | Note 1 - Organization and Basis of Presentation Organization and Line of Business Gopher Protocol Inc. (the “Company”, “Gopher”, “Gopher Protocol” or “GOPH”) was incorporated on July 22, 2009 under the laws of the State of Nevada. Gopher is a development stage company that is creating and patenting innovative mobile microchip (ICs) and software technologies based on the 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, 2018 are not necessarily indicative of the results expected for the year ending December 31, 2018. 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 25, 2018, the Company entered into an agreement with Guardian LLC pursuant to which the Company purchased Guardian LLC’s 50% interest previously entered between the parties in March 2016 covering the Guardian Patch, Puzpix and Epsilon. In consideration, the Company issued Guardian 12,500,000 shares of common stock. 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. On March 16, 2018, the Company entered into and closed an asset purchase agreement dated March 1, 2018 with ECS Prepaid LLC (“ECS”), a Missouri limited liability company, pursuant to which the Company purchased certain assets from ECS, including, but not limited to, the processing prepaid platform, servers, POS terminals, customer list, and a processing software program. On April 2, 2018, the Company entered into and closed an asset purchase agreement with Electronic Check Services Inc. (“Electronic Check”), a Missouri corporation, pursuant to which the Company purchased certain assets from Electronic Check, including, but not limited to, assets associated with software that validates written check authenticity. On April 2, 2018, the Company entered into and closed an asset purchase agreement with Central State Legal Services Inc. (“CSLS”), a Missouri corporation, pursuant to which the Company purchased certain assets from CSLS, including, but not limited to, assets associated with the a system to recover funds from returned checks. Basis of Presentation The accompanying consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Significant estimates in the accompanying financial statements include useful lives of property and equipment, useful lives of intangible assets, valuation of beneficial conversion feature debt discounts, valuation of derivatives, and the valuation allowance on deferred tax assets. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, UGopherServices Corp, since the date of acquisition (September 1, 2017), Ugopherservices Limited (since its date of formation of February 1, 2018), an England and Wales a private limited company that is currently inactive and ECS, Electronic Check and CSLS since their respective dates of acquisition (March 1, 2018, April 2, 2018 and April 2, 2018). All significant intercompany transactions and balances have been eliminated. Cash Equivalents For the purpose of the statement of cash flows, cash equivalents include time deposits, certificate of deposits, and all highly-liquid debt instruments with original maturities of three months or less. Accounts Receivable The Company grants credit to establishments (such as convenience stores) that sell the Company’s products under credit terms that it believes are customary in the industry and do not require collateral to support customer receivables. The accounts receivable balances are generally collected within 10 days of the product sale and the Company has minimal bad debts. 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, 2018 and December 31, 2017, 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, 2018 and December 31, 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 the provisions of ASC Topic 360, Property, Plant, and Equipment Intangible Assets The Company’s intangible assets were acquired with the acquisition of certain RWJ assets in 2017, and the acquisition of certain ECS, Electronic Check and CSLS assets in 2018 are being amortized over 60-120 months. The Company performs a test for impairment annually. As of September 30, 2018 and December 31, 2017, the Company performed the required impairment analysis. At September 30, 2018, the Company determined that the intangible assets associated with the acquisition of certain RWJ assets was impaired and took a charge to earnings of $5,916,667. Goodwill Goodwill represents the excess of purchase price over the underlying book value of the net assets of the businesses that were acquired. Under accounting requirements, goodwill is not amortized, but is subject to annual impairment tests. The Company recorded goodwill of $950,619 related to its acquisition of certain RWJ assets in 2017, and $646,291, $254,586 and $25,000, respectively, related to its acquisition of certain ECS, Electronic Check and CSLS assets in 2018. At September 30, 2018, the Company determined that the goodwill associated with the acquisition of certain RWJ assets was impaired and took a charge to earnings of $950,619. 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, 2018 and December 31, 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 of Financial Instruments For certain of the Company’s financial instruments, including cash and equivalents, restricted cash, accounts receivable, advances to suppliers, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities. FASB ASC Topic 820, Fair Value Measurements and Disclosures Financial Instruments ● 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, quoted prices for identical or similar assets in inactive 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 us one or more unobservable inputs which are significant to the fair value measurement. The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic 480, Distinguishing Liabilities from Equity Derivatives and Hedging For certain financial instruments, the carrying amounts reported in the balance sheets for cash and current liabilities, including convertible notes payable, each qualify as a financial instrument, 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, 2018 and December 31, 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, 2018 Description September 30, 2018 Using Fair Value Hierarchy Level 1 Level 2 Level 3 Conversion feature on convertible notes $ 2,778,052 $ — $ 2,778,052 $ — Total $ 2,778,052 $ — $ 2,778,052 $ — Fair Value Fair Value Measurements at As of December 31, 2017 Description December 31, 2017 Using Fair Value Hierarchy Level 1 Level 2 Level 3 Conversion feature on convertible notes $ 95,164 $ — $ 95,164 $ — Total $ 95,164 $ — $ 95,164 $ — 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. Revenue Recognition ASU No. 2014-09 Revenue from Contracts with Customers Topic 606. Topic 605, Revenue Recognition Revenue from providing IT services, sale of phones, phone card products, prepaid cellular phone minutes and cellular activation services are recognized under Topic 606 ● executed contracts with the Company’s customers that it believes are legally enforceable; ● identification of performance obligations in the respective contract; ● determination of the transaction price for each performance obligation in the respective contract; ● allocation the transaction price to each performance obligation; and ● recognition of revenue only when the Company satisfies each performance obligation. These five elements, as applied to each of the Company’s revenue category, is summarized below: ● IT services - revenue is recorded on a monthly basis as services are provided; ● Sale of phones, phone card products, prepaid cellular phone minutes and cellular activation – revenue is recognized at the time of sale to the customer; and ● License fees and Royalties – revenue is recognized based on the terms of the agreement with its customer. Cost of Goods Sold Cost of goods sold represents the cost of the phone, phone card products and prepaid cellular phone minutes sold by the Company. Cost of goods sold relates to products sold by the Company’s new acquired acquisitions in September 2017, March 2018 and April 2018. Unearned revenue Unearned revenue represents the amount received for the purchase of products that have not seen shipped to the Company’s customers. In 2018, the Company ran a pre-sales campaign for its pet tracker product and received $61,726 in unearned revenue as of September 30, 2018. In addition, as of September 30, 2018, the Company received $200,000 in connection with an intellectual property license and royalty agreement (See Note 12). Income Taxes The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company has no material uncertain tax positions for any of the reporting periods presented. Basic and Diluted Earnings Per Share Earnings per share is calculated in accordance with ASC Topic 260, Earnings Per Share September 30, September 30, 2018 2017 Series B preferred stock 3,000 3,000 Series C preferred stock 770 770 Series D preferred stock — 66,000,000 Warrants 28,410,416 22,093,750 Convertible notes 4,316,607 12,158,358 Total 32,730,793 100,255,878 Recent Accounting Pronouncements In June 2018, the FASB issued Accounting Standards Update (“ASU”) ASU 2018-07, Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory In August 2016, the FASB issued ASU 2016-15 , Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisitions | Note 3 - Acquisitions On March 16, 2018, the Company entered into and closed an asset purchase agreement dated March 1, 2018 with ECS, a Missouri limited liability company, pursuant to which the Company purchased certain assets from ECS, including, but not limited to, the processing prepaid platform, servers, POS terminals, customer list, a processing software program and goodwill, in consideration of $1,100,000 of which $100,000 was paid on the Closing Date and the balance is to be paid pursuant to a secured promissory note in the amount of $1,000,000. In addition, the Company issued 500,000 shares of common stock of the Company and warrants to purchase 500,000 shares of common stock that are exercisable for a period of five years at a fixed exercise price of $1.85 per share. The note is secured by the assets acquired by the Company from ECS and the Company is required to make ten equal principal payments of $100,000 commencing on April 15, 2018. The Company may prepay the note at any time without penalty. On April 2, 2018, the Company entered into and closed an asset purchase agreement with Electronic Check, a Missouri corporation, pursuant to which the Company purchased certain assets from Electronic Check, including, but not limited to, assets associated with software that validates written check authenticity. The purchase price was $75,000 in cash, and the Company issued 250,000 shares of common stock of the Company and warrants to purchase 250,000 shares of common stock that are exercisable for a period of five years at a fixed exercise price of $2.70 per share. On April 2, 2018, the Company entered into and closed an asset purchase agreement with CSLS, a Missouri corporation, pursuant to which the Company purchased certain assets from CSLS, including, but not limited to, assets associated with a system to recover funds from returned checks, for $25,000 in cash. The Company entered into these asset purchase agreements to acquire the software needed to process transactions for its prepaid business, and to acquire additional terminal locations by which the Company will deploy its technology. A summary of the purchase price and the purchase price allocations at fair value is shown below. Electronic ECS Check CSLS Total Purchase price Cash $ 100,000 $ 75,000 $ 25,000 $ 200,000 Shares of common stock 1,010,000 a 695,000 c — 1,705,000 Secured promissory note 960,000 — — 960,000 Warrants 992,958 b 682,919 d — 1,675,877 $ 3,062,958 $ 1,452,919 $ 25,000 $ 4,540,877 Allocation of purchase price Property and equipment $ 50,000 $ 15,000 $ — $ 65,000 Technology 826,667 413,333 — 1,240,000 Tradename 546,667 273,333 — 820,000 Customer relationships 993,333 496,667 — 1,490,000 Goodwill 646,291 254,586 25,000 925,877 Purchase price $ 3,062,958 $ 1,452,919 $ 25,000 $ 4,540,877 a. the fair value of the 500,000 shares of common stock was calculated based on the closing market price of the Company’s common stock at the date of acquisition. b. the fair value of the 500,000 warrants was determined using the Black-Scholes option pricing model with the following assumptions: ● Expected life of 5.0 years ● Volatility of 210%; ● Dividend yield of 0%; ● Risk free interest rate of 2.65% c. the fair value of the 250,000 shares of common stock was calculated based on the closing market price of the Company’s common stock at the date of acquisition. d. the fair value of the 250,000 warrants was determined using the Black-Scholes option pricing model with the following assumptions: ● Expected life of 5.0 years ● Volatility of 210%; ● Dividend yield of 0%; ● Risk free interest rate of 2.65% The revenue from the acquisition of assets included in the results of operations from the date of acquisition to September 30, 2018 was $18,877,936. The unaudited pro forma information below present statement of operations data as if the acquisition of assets had taken place on January 1, 2017. Nine Months Ended September 30, 2018 2017 Sales $ 42,270,074 $ 24,733,037 Cost of goods sold 40,554,398 23,968,637 Gross profit 1,715,676 764,400 Operating expenses 44,430,055 7,309,785 Loss from operations (42,714,379 ) (6,545,385 ) Net loss (46,486,072 ) (7,887,893 ) Loss per share (0.39 ) (0.18 ) |
Property and Equipment, Net
Property and Equipment, Net | 9 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Note 4 - Property and Equipment, Net Property and equipment consisted of the following as of September 30, 2018 and December 31, 2017: September 30, December 31, 2018 2017 Furniture $ 33,739 $ 33,740 Computers and equipment 62,662 22,816 POSA machines 312,328 253,965 408,729 310,521 Less accumulated depreciation (127,253 ) (47,439 ) Property and equipment, net $ 281,476 $ 263,082 Depreciation expense for the nine months ended September 30, 2018 and 2017 was $79,814 and $6,538 respectively. |
Intangible Assets, Net
Intangible Assets, Net | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, Net | Note 5 – Intangible Assets, Net The following are the intangible assets at September 30, 2018 and December 31, 2017: September 30 December 31, 2018 2017 Leased locations $ — $ 7,000,000 Technology 1,240,000 — Tradename 820,000 — Customer relationships 1,490,000 — 3,550,000 7,000,000 Less accumulated amortization (279,526 ) (333,333 ) Intangible assets, net $ 3,270,474 $ 6,666,667 Intangible assets are being amortized as follows: Leased locations - 84 months; Technology – 60 months; and Tradename and Customer relationships – 120 months. Amortization expense for the nine months ended September 30, 2018 and 2017 was $1,029,526 and $0, respectively. At September 30, 2018, the Company determined that the intangible assets associated with the acquisition of certain RWJ assets was impaired and took a charge to earnings of $5,916,667. The estimated future amortization expense related to intangible assets is as follows: Twelve months ending September 30, 2019 $ 479,000 2020 479,000 2021 479,000 2022 479,000 2023 479,000 Thereafter 875,474 $ 3,270,474 |
Investment in Mobiquity Technol
Investment in Mobiquity Technologies, Inc. | 9 Months Ended |
Sep. 30, 2018 | |
Notes to Financial Statements | |
Investment in Mobiquity Technologies, Inc. | Note 6 – Investment in Mobiquity Technologies, Inc. On September 4, 2018, the Company and Mobiquity Technologies, Inc., a New York corporation (“Mobiquity”) entered an agreement pursuant to which the parties exchanged equity interest in each of the companies. In accordance with the agreement, the Company received 1,000 shares of Mobiquity’s restricted Series AAAA Preferred Stock (the “Mobiquity Preferred Stock”) in consideration of Company’s concurrent sale and issuance to Mobiquity of 10,000,000 shares of Company’s common stock. The shares of Mobiquity Preferred Stock are convertible into an aggregate of up to 100,000,000 shares of Mobiquity common stock (the “Mobiquity Common Stock”) and 150,000,000 common stock purchase warrants (the “Mobiquity Warrants”). The Mobiquity Warrants shall have a term of 5-years from the date of grant and shall be exercisable at a price of $0.12 per share and the shares of Mobiquity Preferred Stock shall not be convertible into shares of Mobiquity Common Stock and the Mobiquity Warrants shall not be contemporaneously granted until after Mobiquity’s Board of Directors and stockholders shall have increased the authorized number of shares of Mobiquity’s common stock to a number sufficient to accommodate a reserve in the Company’s favor of 250,000,000 shares of Mobiquity’s common stock. The Mobiquity Preferred Stock shall have immediate voting rights equal to the number of shares of Mobiquity Common Stock into which they may be converted, not including the shares of Mobiquity’s common stock underlying the Mobiquity Warrants. As a result of this transaction, the Company has an approximate 21% interest in Mobiquity. The Company accounts for its investment in Mobiquity using the equity method of accounting. Information regarding Mobiquity as of and for the nine months ended September 30, 2018 is below: Current assets $ 299,179 Total assets 14,016,179 Current liabilities 17,234,537 Total liabilities 17,234,537 Preferred stock 11,552,513 Total stockholders’ deficit (14,770,871 ) Revenue $ 453,717 Cost of revenue 543,096 Operating expenses 4,692,146 Other expenses 18,277,503 Loss from continuing operations (23,059,028 ) |
Convertible Notes Payable
Convertible Notes Payable | 9 Months Ended |
Sep. 30, 2018 | |
Notes Payable [Abstract] | |
Convertible Notes Payable | Note 7 – Convertible Notes Payable Convertible notes payable at September 30, 2018 and December 31, 2017 consist of the following: September 30, December 31, 2018 2017 Convertible notes payable to Power Up $ 243,600 $ 80,000 Convertible notes payable to Bellridge Capital 1,500,000 — Total convertible notes payable 1,743,600 80,000 Unamortized debt discount (948,175 ) (54,377 ) Convertible notes payable $ 795,425 $ 25,623 Power Up Lending Group Ltd. 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 No. 1”) in the aggregate principal amount of $80,000. The Power Note No. 1 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 No. 1 at the rate of ten percent (10%) per annum from the date on which the Power Note No. 1 is issued 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 No. 1. The outstanding principal amount of the Power Note No. 1 is convertible at any time and from time to time at the election of Power Up during the period beginning on the date that is 180 days following the issue date into shares of the Company’s common stock at a conversion price equal to 61% of the lowest trading price with a 15 day look back immediately preceding the date of conversion. In addition, upon the occurrence and during the continuation of an Event of Default (as defined in the Power Note), the Power Note No. 1 shall become immediately due and payable and the Company shall pay to Power Up, in full satisfaction of its obligations hereunder, additional amounts as set forth in the Power Note No. 1. As of March 6, 2018, the Company has paid off in full all principal, interest and penalties with respect to the Power Up Note No. 1, and there are no further obligations owed with respect to such note. On September 28, 2018, the Company entered into a Securities Purchase Agreement with Power Up pursuant to which the Company issued to Power Up a Convertible Promissory Note (the “Power Note No. 2”) in the aggregate principal amount of $243,600 for a purchase price of $203,000. The Power Note No. 2 has a maturity date of December 24, 2019 and the Company has agreed to pay interest on the unpaid principal balance of the Power Note No. 2 at the rate of six percent (6%) per annum from the date on which the Power Note No. 2 is issued 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 No. 2, provided it makes a payment to Power Up as set forth in the Power Note No. 2. The outstanding principal amount of the Power Note No. 2 may not be converted prior to the period beginning on the date that is 180 days following the issue date. Following the 180 th Bellridge Capital LLC On March 2, 2018, the Company entered into and closed a Securities Purchase Agreement with Bellridge Capital, LLC (“Bellridge”) pursuant to which Bellridge invested $750,000 into the Company in consideration of a 10% Convertible Debenture (the “Bellridge Debenture”) and common stock purchase warrants to acquire an aggregate of 500,000 shares of common stock exercisable for a period of five years at an exercise price of $2.35 per share. The Bellridge Debenture bears interest of 10% and is payable March 1, 2019. The Bellridge Debenture is convertible into shares of common stock at $0.90 per share subject to antidilution protection. During an event of default, the conversion price in effect on any conversion date means, as of any conversion date or other date of determination, shall be 35% of the lowest trading price for the Company’s common stock during the 20 trading Days immediately preceding the delivery of a notice of conversion. Bellridge has agreed to restrict its ability to convert the Bellridge Debenture or exercise its Common Stock Purchase Warrants and receive shares of common stock such that the number of shares of common stock held by it and its affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock. On March 2, 2018, the Company delivered 1,000,000 shares of Common Stock to an escrow agent. The 1,000,000 escrow shares are to be utilized for the purpose of limited price protection. If, beginning on the 7 th (($1.00 – closing price on 1 st st th st As long as the Company is not in default of the Bellridge Debenture or in breach of the Securities Purchase Agreement, at any time during which Bellridge owns the Bellridge Debenture, Bellridge commits to limit in the aggregate all sales of the shares of common stock issued upon conversion of the Bellridge Debenture and the related Common Stock Purchase Warrant to the greater of not more than (i) 10.00% of the daily trading volume for the Company’s common stock as reported for that day or (ii) $35,000. Breach of this leak-out provision will be considered a material breach by Bellridge. In connection with the Bellridge Debenture, the Company issued 500,000 warrants to purchase shares of the Company’s common stock with an exercise price of $2.35. The Company first determined the value of the convertible note and the fair value of the detachable warrants issued in connection with this transaction. The estimated value of the warrants of $827,428 and was determined using the Black-Scholes option pricing model with the following assumptions: ● Expected life of 5.0 years ● Volatility of 210%; ● Dividend yield of 0%; ● Risk free interest rate of 2.65% The face amount of the convertible note of $750,000 was proportionately allocated to the convertible note and the warrant in the amount of $356,593 and $393,407, respectively. The amount allocated to the warrants of $393,407 was recorded as a discount to the convertible note and as additional paid in capital. The value of the convertible note was then allocated between the convertible note and the beneficial conversion feature, which amounted to $0 and $356,593, respectively. The combined total discount is $750,000, and will be amortized over the year life of the convertible note. On April 9, 2018, Bellridge elected to exercise the Bellridge Option, and as such the Company and Bellridge closed the second financing as contemplated by the Securities Purchase Agreement entered with Bellridge pursuant to which Bellridge invested an additional $750,000 into the Company in consideration of a 10% Convertible Debenture (the “Second Bellridge Debenture” and together with the First Bellridge Debenture, the “Bellridge Debenture”) and common stock purchase warrants to acquire an aggregate of 500,000 shares of common stock exercisable for a period of five years at an exercise price of $2.35 per share (the “Second Bellridge Warrant” and together with the First Bellridge Warrant, the “Bellridge Warrant”) The Bellridge Debenture bears interest of 10% and is payable one year from issuance. The First Bellridge Debenture and the Second Bellridge Debenture are convertible into shares of common stock at $0.90 per share and $1.00 per share, respectively, subject to limited antidilution protection. During an event of default, the conversion price for the Bellridge Debenture in effect on any conversion date means, as of any conversion date or other date of determination, shall be 35% of the lowest trading price for the Company’s common stock during the 20 trading Days immediately preceding the delivery of a notice of conversion. Bellridge has agreed to restrict its ability to convert the Bellridge Debenture or exercise the Bellridge Warrant and receive shares of common stock such that the number of shares of common stock held by it and its affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock. In connection with both closings, the Company delivered 1,000,000 shares of common stock to an escrow agent. The escrow shares are to be utilized for the purpose of limited price protection. If, beginning on the 7 th (($1.00 – closing price on 1 st st th st As long as the Company is not in default of the Bellridge Debenture or in breach of the Securities Purchase Agreement, at any time during which Bellridge owns the Bellridge Debenture, Bellridge commits to limit in the aggregate all sales of the shares of common stock issued upon conversion of the Bellridge Debenture and the related Common Stock Purchase Warrant to the greater of not more than (i) 10.00% of the daily trading volume for the Company’s common stock as reported for that day or (ii) $35,000. Breach of this leak-out provision will be considered a material breach by Bellridge. In connection with the Second Bellridge Debenture, the Company issued 500,000 warrants to purchase shares of the Company’s common stock with an exercise price of $2.35. The Company first determined the value of the convertible note and the fair value of the detachable warrants issued in connection with this transaction. The estimated value of the warrants of $2,037,713 and was determined using the Black-Scholes option pricing model with the following assumptions: ● Expected life of 5.0 years ● Volatility of 210%; ● Dividend yield of 0%; ● Risk free interest rate of 2.60% The face amount of the convertible note of $750,000 was proportionately allocated to the convertible note and the warrant in the amount of $548,222 and $201,778, respectively. The amount allocated to the warrants of $548,222 was recorded as a discount to the convertible note and as additional paid in capital. The value of the convertible note was then allocated between the convertible note and the beneficial conversion feature, which amounted to $0 and $201,778, respectively. The combined total discount is $750,000, and will be amortized over the year life of the convertible note. The Bellridge debentures prohibit the Company from entering into variable rate transactions. The issuance of the Power Up note on September 28, 2018 may have resulted in an event of default on the Bellridge debentures which would result in the conversion price on the Bellridge debentures going from a fixed rate conversion price to a variable conversion price. The variable conversion price in effect until an event of default can be cured is a 35% discount to the lowest trading price 20 days prior to conversion. As of the date of this filing, the Company had not received a notice of default from Bellridge. At September 30, 2018, the Company accounted for the Bellridge debentures using a variable conversion price and recorded a derivative liability of $2,440,719 related to the Bellridge debentures. Discounts on convertible notes The Company recognized interest expense of $849,802 during the nine months ended September 30, 2018 related to the amortization of the debt discount. The unamortized debt discount at September 30, 2018 is $948,175. A roll-forward of the convertible note from December 31, 2017 to September 30, 2018 is below: Convertible notes, December 31, 2017 $ 25,623 Issued for cash 1,703,000 Original issue discount 40,600 Repayment in cash (80,000 ) Debt discount related to new convertible notes (1,743,600 ) Amortization of debt discounts 849,802 Convertible notes, September 30, 2018 $ 795,425 |
Derivative Liability
Derivative Liability | 9 Months Ended |
Sep. 30, 2018 | |
Notes to Financial Statements | |
Derivative Liability | Note 8 - Derivative Liability Certain of the convertible notes payable discussed in Note 7 have 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, 2018 and December 31, 2017: September 30, December 31, 2018 2017 Stock price $ 0.95 $ 1.12 Risk free rate 2.59 % 1.76 % Volatility 165 % 175 % Conversion/ Exercise price $ 0.51 $ 0.60 Dividend rate 0 % 0 % The following table represents the Company’s derivative liability activity for the nine months ended September 30, 2018: Derivative liability balance, December 31, 2017 $ 95,164 Issuance of derivative liability during the period 337,669 Fair value of beneficial conversion feature of debt repaid (113,287 ) Change in derivative liability during the period 2,458,506 Derivative liability balance, September 30, 2018 $ 2,778,052 |
Note Payable
Note Payable | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Note Payable | Note 9- Note Payable In connection with the acquisition RWJ in September 2017, the Company issued a note payable. The note accrues interest at 3.5% per annum is due on December 31, 2019 and is secured by the assets purchased in the acquisition. This note payable of $2,600,000 is classified as long-term in the accompanying consolidated balance sheet. In connection with the acquisition of ECS as discussed in Note 3, the Company issued a note payable. The note is to be repaid in monthly installment payments of $100,000 with the final payment due on January 15, 2019. As of September 30, 2018, seven such payments have occurred. This note with a remaining balance of $400,000 at September 30, 2018 is secured by the assets purchased in the acquisition and is classified as short-term in the accompanying consolidated balance sheet. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Note 10- Stockholders’ Equity Common Stock During the nine months ended September 30, 2018, the Company had the following transactions in its common stock: ● issued 66,000,000 shares in connection with the conversion of 66,000 shares of Series D Preferred Stock; ● issued 2,000,000 shares in connection with the conversion of 2,000,000 shares of Series G Preferred Stock; ● issued 250,000 shares to a consultant for professional services rendered valued at $123,725. The value of the common stock was determined based on the closing stock price of the Company’s common stock on the dates that the shares earned based on the agreement; ● issued an aggregate of 1,800,000 shares to employees and board members as part of their agreements with the Company. The value of the common stock of $4,404,500 was determined based on the closing stock price of the Company’s common stock on the date of the respective agreements; ● issued 3,000,000 to a consultant for services related to assisting the Company with the acquisition of the RWJ assets. The 3,000,000 shares were earned when the operations of the RWJ assets produced revenue in excess of $10,000,000. The value of the common stock of $4,590,000 was determined based on the closing stock price of the Company’s common stock on the date of the shares were earned. ● issued aggregate of 1,250,000 shares to a consultant for services rendered valued at $2,715,000. The services, which include business development, analysis, and interaction with professionals, were principally related to assisting the Company with the acquisition of the ECS and Electronic Check assets (see Note 3). The value of the common stock was determined based on the closing stock price of the Company’s common stock on the closing date of acquisition of ECS and Electronic Check; ● issued 500,000 shares for the acquisition of the ECS assets valued at $1,010,000. The value of the common stock was determined based on the closing stock price of the Company’s common stock on the acquisition date; ● issued 250,000 shares for the acquisition of the Electronic Check valued at $695,000. The value of the common stock was determined based on the closing stock price of the Company’s common stock on the acquisition date; ● issued aggregate of 10,000,000 shares in connection with its equity interest in Mobiquity valued at $9,980,000 (See Note 6). The value of the common stock was determined based on the closing stock price of the Company’s common stock on the closing date of the Mobiquity transaction; ● issued aggregate of 1,000,000 shares to a consultant for services rendered valued at $998,000. The services, which include business development, analysis, and interaction with professionals, were principally related to assisting the Company with the acquisition of its equity interest in Mobiquity. The value of the common stock was determined based on the closing stock price of the Company’s common stock on the closing date of Mobiquity transaction; ● issued aggregate of 12,500,000 shares to Guardian LLC in connection the termination of its 50% interest in the profits of certain of the Company’s products (See Note 11). The shares were valued at $11,750,000 which was determined based on the closing stock price of the Company’s common stock at the date of the agreement; and ● issued 1,272,726 shares of common stock to an investor for cash proceeds of $1,500,000 (See discussion below). Eagle Equities, LLC On December 29, 2017, the Company entered into a Securities Purchase Agreement with Eagle Equities, LLC (“Eagle”) pursuant to which Eagle agreed to purchase up to 2,000,000 shares of the Company’s common stock for a purchase price of $1,500,000 or $0.75 per share. The closing occurred on December 29, 2017 with respect to the funding of $1,000,000 resulting in the issuance of 1,333,334 shares of common stock (the “First Closing Shares”). Eagle agreed to potentially purchase an additional 666,666 shares of common stock (the “Second Closing Shares”) on or before September 30, 2018 for a purchase price of $500,000 subject to various closing conditions. On March 21, 2018, Eagle purchased an additional 666,666 shares of common stock for a purchase price of $500,000. The Company placed an aggregate of 2,000,000 shares of common stock (the “Escrow Shares”) in escrow to be utilized for the purpose of limited price protection. If, beginning on the seventh month anniversary of the issuance of the First Closing Shares and Second Closing Shares, Eagle has sold any of the First Closing Shares or the Second Closing Shares at a sales price of less than $0.72 per share, then that number of Escrow Shares shall be released from escrow to Eagle as a limited make whole which shall be determined by using the following formula: ($0.72 – Closing Price) / Closing Price) * number of shares sold at a price less than $0.72. Closing Price is price on the first day of each monthly anniversary beginning on the first day of the 7th month (and continuing monthly until the earlier of January 31, 2019 or until all shares are sold). The Company shall deposit an additional 2,000,000 shares of common stock into escrow which shares shall only be released to Eagle, if, prior to January 31, 2019 (while Eagle continues to hold shares), the Company issues shares at an issue price of less than $0.30 per share. The Company also issued Eagle a Common Stock Purchase Warrant to acquire 666,666 shares of common stock exercisable for three years at an exercise price of $2.00 per share (the “Eagle Warrant”). Unless otherwise agreed in writing by both the Company and Eagle, at no time will Eagle exercise any amount of the Eagle Warrant to purchase common stock that would result in Eagle owning more than 9.9% of the common stock outstanding of the Company. The Eagle Warrant contains standard anti-dilution protections. On May 4, 2018, the Company entered into a Securities Purchase Agreement with Eagle pursuant to which Eagle agreed to purchase up to 1,212,120 shares of the Company’s common stock for an aggregate purchase price of $2,000,000 or $1.65 per share. The closing occurred on May 4, 2018 with respect to the funding of $500,000 resulting in the issuance of 303,030 shares of common stock and on May 25, 2018 with respect to the funding of $500,000 resulting in the issuance of an additional 303,030 shares of common stock. Additional closings of $500,000 for 303,030 shares are scheduled to close on June 15, 2018 and July 5, 2018 each. The additional closings on June 15, 2018 and July 5, 2018 have not occurred. The Company agreed to place 303,030 shares of common stock each tranche (the “Escrow Shares”) in escrow to be utilized for the purpose of limited price protection. If, beginning on the seventh month anniversary of the closing of each tranche, Eagle has sold any of its shares of common stock at a sales price of less than $1.65 per share, then that number of Escrow Shares shall be released from escrow to Eagle as a limited make whole which shall be determined by using the following formula: ($1.65 – Closing Price) / Closing Price) * number of shares sold at a price less than $1.65. Closing Price is price on the first day of each monthly anniversary beginning on the first day of the 7th month (and continuing monthly until the earlier of June 4, 2019 or until all shares are sold. Series D Preferred Shares Per the terms of the Exclusive License Agreement and in consideration of the licensing agreement signed between the Company and Hermes Roll LLC, the Company issued 100,000 shares of Series D Preferred Stock of the Company (the “Preferred Shares”). The preferred stock has a value of $ 1,000 based upon the cost of the license; due to the holder of license is the related party of the Company. The Preferred Shares have no liquidation rights. The Holder of the Preferred Shares will be entitled to vote on all matters submitted to shareholders of the Company on an as-converted basis. The Preferred Shares have a conversion price of $0.01 (the “Conversion Price”) and a stated value of $10.00 per share (the “Stated Value”). Each Preferred Share is convertible, at the option of the Holder, into such number of shares of common stock of the Company as determined by dividing the Stated Value by the Conversion Price. On January 23, 2018, Reko Holdings, LLC converted 66,000 shares of its Series D Preferred Stock into 66,000,000 restricted common shares. As of September 30, 2018 and December 31, 2017, there are 0 and 66,000 shares of Series D Preferred Shares outstanding, respectively. Series G Preferred Shares On December 29, 2017, Guardian LLC converted all of the principal and interest of the Note, into 2,000,000 shares of Series G Preferred Stock. The Series G Preferred Stock is entitled to vote on an as-converted basis, automatically converts to common stock upon any liquidation, dissolution or winding up and the Company may not declare a dividend until the Series G Preferred Stock has received a dividend. Each share of Series G Preferred Stock is convertible into one shares of common stock of the Company and contain standard anti-dilution rights. On August 30, 2018, Guardian LLC converted the 2,000,000 shares of Series G Preferred Stock into 2,000,000 shares of common stock. As of September 30, 2018 and December 31, 2017, there are 0 and 2,000,000 shares of Series G Preferred Shares outstanding, respectively. Warrants The following is a summary of warrant activity since December 31, 2017: Weighted Weighted Average Average Remaining Aggregate Warrants Exercise Contractual Intrinsic Outstanding Price Life Value Outstanding, December 31, 2017 22,760,416 $ 0.55 4.67 $ 13,640,000 Granted 5,650,000 2.17 Forfeited 0 Exercised 0 Outstanding, September 30, 2018 28,410,416 $ 0.87 3.99 $ 9,812,000 Exercisable, September 30, 2018 27,910,416 $ 0.89 3.98 $ 9,812,000 The exercise price for warrant outstanding and exercisable at September 30, 2018: Outstanding Exercisable Number of Exercise Number of Exercise Warrants Price Warrants Price 22,000,000 $ 0.50 22,000,000 $ 0.50 3,000,000 1.85 3,000,000 1.85 666,666 2.00 666,666 2.00 93,750 2.25 93,750 2.25 1,000,000 2.35 1,000,000 2.35 650,000 2.50 650,000 2.50 500,000 2.70 500,000 2.70 500,000 2.80 — 2.80 28,410,416 27,910,416 During the nine months ended September 30, 2018, the Company issued: ● 1,000,000 warrants in connection with two convertible notes payable; ● 500,000 warrants as consideration for the acquisition of the ECS assets (see Note 3) valued at $992,958; ● 250,000 warrants as consideration for the acquisition of the Electronic Check assets (see Note 3) valued at $682,919; ● 2,150,000 warrants to shares to employees and board members as part of their agreements with the Company valued at $5,276,656; ● 1,750,000 warrants to a consultant 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 ECS and Electronic Check assets (see Note 3) valued at $3,661,791. The fair value of the warrants listed above was determined using the Black-Scholes option pricing model with the following assumptions: ● Expected life of 5.0 years ● Volatility of 210%; ● Dividend yield of 0%; ● Risk free interest rate of 2.60% to 2.94% |
Related Parties
Related Parties | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Parties | Note 11 - 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 for the nine months ended September 30, 2017 and $135,000 of the Company’s revenue for the nine months ended September 30, 2018 is from IT services delivered to a single customer, Guardian LLC, which is a related party to the Company. The revenue generated from Guardian LLC was paid to the Company via a reduction in the amount that the Company owes Guardian LLC that is classified as Due to Guardian LLC in the accompanying consolidated balance sheet. 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. 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 Roll, LLC (“Hermes”), which is the basis for the Company’s current operations. Mr. Murray was the owner of 9,900 shares of Series D Preferred Stock of the Company that was 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. The agreement with Dr. Rittman was 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, which is 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. 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. 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 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 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. 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. On April 6, 2018, the Company and Danny Rittman, Chief Technology Officer and a Director of the Company, agreed to amend his employment agreement pursuant to which he will receive salary at the rate of $250,000 annually payable in equal increments of $15,000 per month. An additional $70,000 shall be payable within 15 days of the end of the calendar year. 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 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. 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 Guardian LLC as consideration for the JV. Guardian LLC has commenced development of the products. Certain private investors will provide all initial funding to the Company via the LLC for product development. Guardian 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 Guardian LLC, the Company and Guardian LLC have formed a Joint Venture (“JV”) for the purposes of developing and marketing the Patch. Guardian 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 Guardian LLC. Moreover, Guardian 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 Guardian LLC, with which the Company is a JV partner, but is not equity member. The Company has agreed with Guardian LLC that the same JV principles of the Guardian LLC 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, 2018 and 2017, $135,000 and $135,000, respectively, 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. On July 21, 2016 members of the Guardian 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 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 beginning in 2018, 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. On September 25, 2018, the Company entered into a Joint Venture Interest Purchase Agreement with Guardian, LLC pursuant to which the Company purchased Guardian LLC’s 50% interest in a joint venture (the “JV Interest”) previously entered between the parties in March 2016 covering the Guardian Patch, Puzpix and Epsilon. In consideration for the JV Interest, the Company issued Guardian 12,500,000 shares of common stock. During the nine months ended September 30, 2018, the Company took a charge to earnings of $11,750,000 related to the purchase of Guardian LLC’s 50% JV Interest. On September 14, 2018, the Company and Dr. Rittman entered into a letter agreement confirming that the Company is the owner of all intellectual property developed by Dr. Rittman relating to the Internet of Things (IoT) and Artificial Intelligence enabled mobile technologies, including a global platform with both mobile and fixed solutions, commencing June 16, 2015 and continuing until Dr. Rittman’s employment agreement is terminated. 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 $1,979 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. Effective August 15, 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, 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. 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 December 29, 2017, all the principal and accrued interest were converted into 2,000,000 share of Series G preferred stock. 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. In May 2018, Mr. Bauer’s resigned as Chief Executive Officer and director of the Company. The Company and Guardian 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. Regulatory 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. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Loss Contingency [Abstract] | |
Contingencies | Note 12 - 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 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 vested 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 each subsequent quarterly installment was to vest each quarter thereafter. The Company believes that Waterford is in default of its agreement, as it failed to perform or provide any services under the agreement. As such, the Company put Waterford on notice in writing that the Company did not issue shares or warrants during the third or fourth fiscal quarters of 2016 due to the default. 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. In October 2018, this matter was resolved in favor of the Company; accordingly the Company will void the shares and warrants that are currently held by Waterford. 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. This matter has been resolved amicably, and the Company continues its relationship with the TA. Spare CS, Inc. On January 14, 2018, the Company entered into an Initial Term Agreement (the “ITA”) with Spare CS Inc. (“Spare”), a Delaware corporation, pursuant to which the Company agreed to acquire 50% of the equity of Spare. Spare is a mobile banking app that allows customers to access cash with no ATM, no debit or credit card, and no purchase required from participating merchants. During the nine months ended September 30, 2018, the Company terminated the ITA with Spare and wrote off the $265,000 that has been advanced to Spare. The $265,000 in included as part of the impairment of assets in the accompanying consolidated statement of operations. GBT Technologies, S.A. On June 12, 2018, the Company entered into a Letter of Intent (the “LOI”) with Gopher Protocol Costa Rica, S.R.L. (“Gopher CR”), a partially owned subsidiary of the Company, GBT Technologies, S.A., a Costa Rican company (“GBT”) and Tokenize-IT, S.A. (“Tokenize”). The LOI contemplates the acquisition of Tokenize by Gopher CR and the issuance of 20 million shares of common stock of the Company (the “GOPH Shares”) to Tokenize. Concurrent with the acquisition, Tokenize will enter into a joint venture agreement with GBT pursuant to which Tokenize will transfer and assign the GOPH Shares to GBT and issue equity securities of Tokenize providing GBT with 50% equity ownership in Tokenize with the balance owned by Gopher CR in consideration of GBT providing Tokenize with access to its currency trading platform that is a fully licensed and Central Bank regulated “Currency Exchange” in Costa Rica. No assurance can be given that a definitive agreement will be entered into, that the appropriate governing bodies including the Company’s board of directors will approve such transactions, that the proposed transactions contemplated above will be consummated, or that Tokenize will be able to obtain adequate funds needed to fund its business plan. On September 14, 2018, the Company entered into an Exclusive Intellectual Property License and Royalty Agreement (the “GBT License Agreement”) with GBT, a fully compliant and regulated cryptocurrency exchange platform that currently operates in Costa Rica as a decentralized cryptocurrency platform, pursuant to which, among other things, the Company granted to GBT an exclusive, royalty-bearing right and license relating intellectual property relating to systems and methods of converting electronic transmissions into digital currency as reflected in that certain patent filed with the United Stated Patent and Trademark Office on or about June 14, 2018 (EFS ID: 32893586; Application Number: 16008069; Type: Utility under 35 USC 111(a); Confirmation Number: 6787)(collectively, the “Digital Currently Technology”). Pursuant to the GBT License Agreement, the Company granted GBT an exclusive worldwide license to use the Digital Currency Technology to make, use, sell, lease or otherwise commercialize and dispose of products and devices utilizing the Digital Currently Technology. Under the terms of the GBT License Agreement, the Company is entitled to receive a royalty payment of 2% of gross revenue of each licensed product sold by GBT during the period starting in which revenue is first generated using the licensed products and continuing for five years thereafter. Upon signing the GBT License Agreement, GBT paid the Company $300,000 which is nonrefundable. The Company has recognized the $300,000 as revenue during the nine months ended September 30, 2018. Upon GBT making available for sale (the “Commercial Event”) an ICO (Initial Coin Offering) (the “Coin”), GBT will make a payment to the Company in the amount of $5,000,000. Further, upon the Commercial Event, GBT will grant the Company the ability to acquire 30% of the Coin at a 30% discount of such offering price of the Coin. The GBT License Agreement commenced as of the signing date and, unless terminated in accordance with the termination provisions of the GBT License Agreement, shall remain in force until the expiration of the patent pertaining to the Digital Currency Technology; provided that the right to use trade secrets shall survive the expiration of the GBT License Agreement provided the Company has not terminated. Prior to the signing of the GBT License Agreement, GBT advanced $200,000 to the Company, which the parties have agreed will be applied toward the $5,000,000 fee when it becomes due. The $200,000 is recorded as unearned revenue at September 30, 2018 in the accompanying consolidated balance sheet. |
Concentrations
Concentrations | 9 Months Ended |
Sep. 30, 2018 | |
Risks and Uncertainties [Abstract] | |
Concentrations | Note 13 – Concentrations Concentration of Credit Risk Financial instruments, which potentially subject the Company to a concentration of credit risk, consist principally of temporary cash investments. There have been no losses in these accounts through September 30, 2018. In 2017, the Company had one customer that contributed 100% of its revenues. Per the terms of the JV with Guardian LLC, Guardian LLC has committed to fund all Company’s needs, as well as needs of the JV. Failure of Guardian LLC to provide the Company or the JV with said funding would represent a significant Credit Risk. As of September 30, 2018 and December 31, 2017 the Company has a payable to Guardian LLC of $737,330 and $1,350,262, respectively. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 14 - Subsequent Events Management has evaluated events that occurred subsequent to the end of the reporting period shown herein: On October 2, 2018, Bellridge Capital LLC converted $125,000 of principal and $7,295 of accrued interest into 146,994 shares of common stock. On October 26, 2018, Bellridge Capital LLC converted $150,000 of principal and $9,781 of accrued interest into 177,534 shares of common stock. On November 2, 2018, the Company issued 318,583 shares of common stock to Bellridge in connection with the price protection (See Note 7). On October 15, 2018, the Company issued 3,000,000 warrants to a consultant. The warrants have an exercise price of $0.60 per share and expire on October 15, 2023. On October 12, 2018, the Waterford legal matter discussed in Note 12 was settled in favor of the Company that resulted in the cancelation of Waterford’s 93,750 warrants and the cancelation of 50,000 shares of the Company’s common stock owned by Waterford. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Significant estimates in the accompanying financial statements include useful lives of property and equipment, useful lives of intangible assets, valuation of beneficial conversion feature debt discounts, valuation of derivatives, and the valuation allowance on deferred tax assets. |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, UGopherServices Corp, since the date of acquisition (September 1, 2017), Ugopherservices Limited (since its date of formation of February 1, 2018), an England and Wales a private limited company that is currently inactive and ECS, Electronic Check and CSLS since their respective dates of acquisition (March 1, 2018, April 2, 2018 and April 2, 2018). All significant intercompany transactions and balances have been eliminated. |
Cash Equivalents | Cash Equivalents For the purpose of the statement of cash flows, cash equivalents include time deposits, certificate of deposits, and all highly-liquid debt instruments with original maturities of three months or less. |
Accounts Receivable | Accounts Receivable The Company grants credit to establishments (such as convenience stores) that sell the Company’s products under credit terms that it believes are customary in the industry and do not require collateral to support customer receivables. The accounts receivable balances are generally collected within 10 days of the product sale and the Company has minimal bad debts. 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, 2018 and December 31, 2017, 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, 2018 and December 31, 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 the provisions of ASC Topic 360, Property, Plant, and Equipment |
Intangible Assets | Intangible Assets The Company’s intangible assets were acquired with the acquisition of certain RWJ assets in 2017, and the acquisition of certain ECS, Electronic Check and CSLS assets in 2018 are being amortized over 60-120 months. The Company performs a test for impairment annually. As of September 30, 2018 and December 31, 2017, the Company performed the required impairment analysis. At September 30, 2018, the Company determined that the intangible assets associated with the acquisition of certain RWJ assets was impaired and took a charge to earnings of $5,916,667. |
Goodwill | Goodwill Goodwill represents the excess of purchase price over the underlying book value of the net assets of the businesses that were acquired. Under accounting requirements, goodwill is not amortized, but is subject to annual impairment tests. The Company recorded goodwill of $950,619 related to its acquisition of certain RWJ assets in 2017, and $646,291, $254,586 and $25,000, respectively, related to its acquisition of certain ECS, Electronic Check and CSLS assets in 2018. At September 30, 2018, the Company determined that the goodwill associated with the acquisition of certain RWJ assets was impaired and took a charge to earnings of $950,619. |
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, 2018 and December 31, 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 of Financial Instruments For certain of the Company’s financial instruments, including cash and equivalents, restricted cash, accounts receivable, advances to suppliers, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities. FASB ASC Topic 820, Fair Value Measurements and Disclosures Financial Instruments ● 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, quoted prices for identical or similar assets in inactive 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 us one or more unobservable inputs which are significant to the fair value measurement. The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic 480, Distinguishing Liabilities from Equity Derivatives and Hedging For certain financial instruments, the carrying amounts reported in the balance sheets for cash and current liabilities, including convertible notes payable, each qualify as a financial instrument, 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, 2018 and December 31, 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, 2018 Description September 30, 2018 Using Fair Value Hierarchy Level 1 Level 2 Level 3 Conversion feature on convertible notes $ 2,778,052 $ — $ 2,778,052 $ — Total $ 2,778,052 $ — $ 2,778,052 $ — Fair Value Fair Value Measurements at As of December 31, 2017 Description December 31, 2017 Using Fair Value Hierarchy Level 1 Level 2 Level 3 Conversion feature on convertible notes $ 95,164 $ — $ 95,164 $ — Total $ 95,164 $ — $ 95,164 $ — |
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. |
Revenue Recognition | Revenue Recognition ASU No. 2014-09 Revenue from Contracts with Customers Topic 606. Topic 605, Revenue Recognition Revenue from providing IT services, sale of phones, phone card products, prepaid cellular phone minutes and cellular activation services are recognized under Topic 606 ● executed contracts with the Company’s customers that it believes are legally enforceable; ● identification of performance obligations in the respective contract; ● determination of the transaction price for each performance obligation in the respective contract; ● allocation the transaction price to each performance obligation; and ● recognition of revenue only when the Company satisfies each performance obligation. These five elements, as applied to each of the Company’s revenue category, is summarized below: ● IT services - revenue is recorded on a monthly basis as services are provided; ● Sale of phones, phone card products, prepaid cellular phone minutes and cellular activation – revenue is recognized at the time of sale to the customer; and ● License fees and Royalties – revenue is recognized based on the terms of the agreement with its customer. |
Cost of Goods Sold | Cost of Goods Sold Cost of goods sold represents the cost of the phone, phone card products and prepaid cellular phone minutes sold by the Company. Cost of goods sold relates to products sold by the Company’s new acquired acquisitions in September 2017, March 2018 and April 2018. |
Unearned revenue | Unearned revenue Unearned revenue represents the amount received for the purchase of products that have not seen shipped to the Company’s customers. In 2018, the Company ran a pre-sales campaign for its pet tracker product and received $61,726 in unearned revenue as of September 30, 2018. In addition, as of September 30, 2018, the Company received $200,000 in connection with an intellectual property license and royalty agreement (See Note 12). |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company has no material uncertain tax positions for any of the reporting periods presented. |
Basic and Diluted Earnings Per Share | Basic and Diluted Earnings Per Share Earnings per share is calculated in accordance with ASC Topic 260, Earnings Per Share September 30, September 30, 2018 2017 Series B preferred stock 3,000 3,000 Series C preferred stock 770 770 Series D preferred stock — 66,000,000 Warrants 28,410,416 22,093,750 Convertible notes 4,316,607 12,158,358 Total 32,730,793 100,255,878 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2018, the FASB issued Accounting Standards Update (“ASU”) ASU 2018-07, Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory In August 2016, the FASB issued ASU 2016-15 , Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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, 2018 and December 31, 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, 2018 Description September 30, 2018 Using Fair Value Hierarchy Level 1 Level 2 Level 3 Conversion feature on convertible notes $ 2,778,052 $ — $ 2,778,052 $ — Total $ 2,778,052 $ — $ 2,778,052 $ — Fair Value Fair Value Measurements at As of December 31, 2017 Description December 31, 2017 Using Fair Value Hierarchy Level 1 Level 2 Level 3 Conversion feature on convertible notes $ 95,164 $ — $ 95,164 $ — Total $ 95,164 $ — $ 95,164 $ — |
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, 2018 2017 Series B preferred stock 3,000 3,000 Series C preferred stock 770 770 Series D preferred stock — 66,000,000 Warrants 28,410,416 22,093,750 Convertible notes 4,316,607 12,158,358 Total 32,730,793 100,255,878 |
Acquisition (Tables)
Acquisition (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Summary of purchase price | Electronic ECS Check CSLS Total Purchase price Cash $ 100,000 $ 75,000 $ 25,000 $ 200,000 Shares of common stock 1,010,000 a 695,000 c — 1,705,000 Secured promissory note 960,000 — — 960,000 Warrants 992,958 b 682,919 d — 1,675,877 $ 3,062,958 $ 1,452,919 $ 25,000 $ 4,540,877 Allocation of purchase price Property and equipment $ 50,000 $ 15,000 $ — $ 65,000 Technology 826,667 413,333 — 1,240,000 Tradename 546,667 273,333 — 820,000 Customer relationships 993,333 496,667 — 1,490,000 Goodwill 646,291 254,586 25,000 925,877 Purchase price $ 3,062,958 $ 1,452,919 $ 25,000 $ 4,540,877 |
Summary of Pro Forma Financial Information | The unaudited pro forma information below present statement of operations data as if the acquisition of assets had taken place on January 1, 2017. Nine Months Ended September 30, 2018 2017 Sales $ 42,270,074 $ 24,733,037 Cost of goods sold 40,554,398 23,968,637 Gross profit 1,715,676 764,400 Operating expenses 44,430,055 7,309,785 Loss from operations (42,714,379 ) (6,545,385 ) Net loss (46,486,072 ) (7,887,893 ) Loss per share (0.39 ) (0.18 ) |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consisted of the following as of September 30, 2018 and December 31, 2017: September 30, December 31, 2018 2017 Furniture $ 33,739 $ 33,740 Computers and equipment 62,662 22,816 POSA machines 312,328 253,965 408,729 310,521 Less accumulated depreciation (127,253 ) (47,439 ) Property and equipment, net $ 281,476 $ 263,082 |
Intangible Assets, Net (Table)
Intangible Assets, Net (Table) | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | The following are the intangible assets at September 30, 2018 and December 31, 2017: September 30 December 31, 2018 2017 Leased locations $ — $ 7,000,000 Technology 1,240,000 — Tradename 820,000 — Customer relationships 1,490,000 — 3,550,000 7,000,000 Less accumulated amortization (279,526 ) (333,333 ) Intangible assets, net $ 3,270,474 $ 6,666,667 |
Schedule of Intangible Assets, Future Amortization Expense | The estimated future amortization expense related to intangible assets is as follows: Twelve months ending September 30, 2019 $ 479,000 2020 479,000 2021 479,000 2022 479,000 2023 479,000 Thereafter 875,474 $ 3,270,474 |
Investment in Mobiquity Techn_2
Investment in Mobiquity Technologies, Inc (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Notes to Financial Statements | |
Schedule of equity method of accounting | Information regarding Mobiquity as of and for the nine months ended September 30, 2018 is below: Current assets $ 299,179 Total assets 14,016,179 Current liabilities 17,234,537 Total liabilities 17,234,537 Preferred stock 11,552,513 Total stockholders’ deficit (14,770,871 ) Revenue $ 453,717 Cost of revenue 543,096 Operating expenses 4,692,146 Other expenses 18,277,503 Loss from continuing operations (23,059,028 ) |
Convertible Notes Payable (Tabl
Convertible Notes Payable (Table) | 9 Months Ended |
Sep. 30, 2018 | |
Notes Payable [Abstract] | |
Summary of Convertible notes payable | Convertible notes payable at September 30, 2018 and December 31, 2017 consist of the following: September 30, December 31, 2018 2017 Convertible notes payable to Power Up $ 243,600 $ 80,000 Convertible notes payable to Bellridge Capital 1,500,000 — Total convertible notes payable 1,743,600 80,000 Unamortized debt discount (948,175 ) (54,377 ) Convertible notes payable $ 795,425 $ 25,623 |
Rollfoward of convertible note | A roll-forward of the convertible note from December 31, 2017 to September 30, 2018 is below: Convertible notes, December 31, 2017 $ 25,623 Issued for cash 1,703,000 Original issue discount 40,600 Repayment in cash (80,000 ) Debt discount related to new convertible notes (1,743,600 ) Amortization of debt discounts 849,802 Convertible notes, September 30, 2018 $ 795,425 |
Derivative Liability (Tables)
Derivative Liability (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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, 2018 and December 31, 2017: September 30, December 31, 2018 2017 Stock price $ 0.95 $ 1.12 Risk free rate 2.59 % 1.76 % Volatility 165 % 175 % Conversion/ Exercise price $ 0.51 $ 0.60 Dividend rate 0 % 0 % |
Schedule of Derivative Liabilities at Fair Value | The following table represents the Company’s derivative liability activity for the nine months ended September 30, 2018: Derivative liability balance, December 31, 2017 $ 95,164 Issuance of derivative liability during the period 337,669 Fair value of beneficial conversion feature of debt repaid (113,287 ) Change in derivative liability during the period 2,458,506 Derivative liability balance, September 30, 2018 $ 2,778,052 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
Summary of warrant activity | The following is a summary of warrant activity since December 31, 2017: Weighted Weighted Average Average Remaining Aggregate Warrants Exercise Contractual Intrinsic Outstanding Price Life Value Outstanding, December 31, 2017 22,760,416 $ 0.55 4.67 $ 13,640,000 Granted 5,650,000 2.17 Forfeited 0 Exercised 0 Outstanding, September 30, 2018 28,410,416 $ 0.87 3.99 $ 9,812,000 Exercisable, September 30, 2018 27,910,416 $ 0.89 3.98 $ 9,812,000 |
Summary of exercise price for warrant outstanding | The exercise price for warrant outstanding and exercisable at September 30, 2018: Outstanding Exercisable Number of Exercise Number of Exercise Warrants Price Warrants Price 22,000,000 $ 0.50 22,000,000 $ 0.50 3,000,000 1.85 3,000,000 1.85 666,666 2.00 666,666 2.00 93,750 2.25 93,750 2.25 1,000,000 2.35 1,000,000 2.35 650,000 2.50 650,000 2.50 500,000 2.70 500,000 2.70 500,000 2.80 — 2.80 28,410,416 27,910,416 |
Organization and Nature of Bu_2
Organization and Nature of Business (Details Narrative) - Guardian LLC [Member] | 1 Months Ended |
Sep. 25, 2018shares | |
Percentage of interest owned | 50.00% |
Issuance of common stock | 12,500,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | 9 Months Ended |
Sep. 30, 2018 | |
Furniture [Member] | |
Useful life | 7 years |
Computer And Equipment [Member] | |
Useful life | 3 years |
POSA machines [Member] | |
Useful life | 3 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Conversion feature on convertible notes | $ 2,778,052 | $ 95,164 |
Total | 2,778,052 | 95,164 |
Fair Value, Inputs, Level 1 [Member] | ||
Conversion feature on convertible notes | ||
Total | ||
Fair Value, Inputs, Level 2 [Member] | ||
Conversion feature on convertible notes | 2,778,052 | 95,164 |
Total | 2,778,052 | 95,164 |
Fair Value, Inputs, Level 3 [Member] | ||
Conversion feature on convertible notes | ||
Total |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) - shares | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Convertible note | 4,316,607 | 12,158,358 |
Number of potentially dilutive securities | 32,730,793 | 100,255,878 |
Warrant [Member] | ||
Number of potentially dilutive securities | 28,410,416 | 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 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2011 | |
Allowance for doubtful accounts | $ 0 | $ 0 | ||
Impairment Losses | 0 | $ 0 | ||
Derivative financial instruments | 0 | |||
Unearned revenue | 261,726 | |||
Uncertain tax positions | 0 | 0 | ||
Cash received in connection with intellectual property license and royalty agreement | 200,000 | |||
RWJ Advanced Marketing, LLC | ||||
Impairment Losses | 5,916,667 | |||
Goodwill Acquired | $ 950,619 | |||
RWJ Advanced Marketing, LLC | Goodwill [Member] | ||||
Impairment Losses | 950,619 | |||
ECS Prepaid LLC [Member] | ||||
Goodwill Acquired | 646,291 | |||
Electronic Check [Member] | ||||
Goodwill Acquired | 254,586 | |||
Central State Legal Services [Member] | ||||
Goodwill Acquired | $ 25,000 | |||
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, 2018 | Apr. 02, 2018 | Mar. 16, 2018 | Dec. 31, 2017 |
Allocation of purchase price | ||||
Goodwill | $ 925,877 | $ 950,619 | ||
ECS Prepaid LLC [Member] | ||||
Purchase price | ||||
Cash | $ 100,000 | |||
Shares of common stock | 1,010,000 | |||
Secured promissory note | 960,000 | |||
Warrants | 992,958 | |||
Purchase price | 3,062,958 | |||
Allocation of purchase price | ||||
Property and equipment | 50,000 | |||
Technology | 826,667 | |||
Tradename | 546,667 | |||
Software | 993,333 | |||
Goodwill | 646,291 | |||
Purchase price | $ 3,062,958 | |||
Electronic Check [Member] | ||||
Purchase price | ||||
Cash | $ 75,000 | |||
Shares of common stock | 695,000 | |||
Secured promissory note | ||||
Warrants | 682,919 | |||
Purchase price | 1,452,919 | |||
Allocation of purchase price | ||||
Property and equipment | 15,000 | |||
Technology | 413,333 | |||
Tradename | 273,333 | |||
Software | 496,667 | |||
Goodwill | 254,586 | |||
Purchase price | 1,452,919 | |||
CSLS [Member] | ||||
Purchase price | ||||
Cash | 25,000 | |||
Shares of common stock | ||||
Secured promissory note | ||||
Warrants | ||||
Purchase price | 25,000 | |||
Allocation of purchase price | ||||
Property and equipment | ||||
Technology | ||||
Tradename | ||||
Software | ||||
Goodwill | 25,000 | |||
Purchase price | $ 25,000 | |||
Total [Member] | ||||
Purchase price | ||||
Cash | 200,000 | |||
Shares of common stock | 1,705,000 | |||
Secured promissory note | 960,000 | |||
Warrants | 1,675,877 | |||
Purchase price | 4,540,877 | |||
Allocation of purchase price | ||||
Property and equipment | 65,000 | |||
Technology | 1,240,000 | |||
Tradename | 820,000 | |||
Software | 1,490,000 | |||
Goodwill | 925,877 | |||
Purchase price | $ 4,540,877 |
Acquisition (Details 1)
Acquisition (Details 1) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Business Combinations [Abstract] | ||
Sales | $ 42,270,074 | $ 24,733,037 |
Cost of goods sold | 40,554,398 | 23,968,637 |
Gross profit | 1,715,676 | 764,400 |
Operating expenses | 44,430,055 | 7,309,785 |
Loss from operations | (42,714,379) | (6,545,385) |
Net loss | $ (46,486,072) | $ (7,887,893) |
Loss per share | $ (0.39) | $ (0.18) |
Acquisition (Details Narrative)
Acquisition (Details Narrative) - USD ($) | Sep. 30, 2018 | Apr. 02, 2018 | Mar. 16, 2018 | Sep. 30, 2018 | Dec. 31, 2017 |
Volatility | 165.00% | 175.00% | |||
Risk free interest rate | 2.59% | 1.76% | |||
ECS Prepaid LLC [Member] | |||||
Warrants fixed exercise price | $ 1.85 | ||||
Cash | $ 100,000 | ||||
Secured promissory note | $ 960,000 | ||||
Purchase of warrants | 500,000 | ||||
Purchase of common stock | 500,000 | ||||
Principal periodic payments | $ 100,000 | ||||
Revenue from acquisition | $ 18,877,936 | ||||
Determination method | Black-Scholes option pricing model | ||||
Expected life | 5 years | ||||
Volatility | 210.00% | ||||
Dividend yield | 0.00% | ||||
Risk free interest rate | 2.65% | ||||
Electronic Check [Member] | |||||
Warrants fixed exercise price | $ 2.70 | ||||
Cash | $ 75,000 | ||||
Secured promissory note | |||||
Purchase of warrants | 250,000 | ||||
Purchase of common stock | 250,000 | ||||
Determination method | Black-Scholes option pricing model | ||||
Expected life | 5 years | ||||
Volatility | 210.00% | ||||
Dividend yield | 0.00% | ||||
Risk free interest rate | 2.65% |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 408,729 | $ 310,521 |
Less accumulated depreciation | (127,253) | (47,439) |
Property and equipment, net | 281,476 | 263,082 |
Furniture [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 33,739 | 33,740 |
Computer And Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 62,662 | 22,816 |
POSA machines [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 312,328 | $ 253,965 |
Property and Equipment, Net (_2
Property and Equipment, Net (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expenses | $ 79,814 | $ 6,538 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Intangible assets, Gross | $ 3,550,000 | $ 7,000,000 |
Less accumulated amortization | (279,526) | (333,333) |
Intangible assets, net | 3,270,474 | 6,666,667 |
Leased locations [Member] | ||
Intangible assets, Gross | 7,000,000 | |
Technology [Member] | ||
Intangible assets, Gross | 1,240,000 | |
Tradename [Member] | ||
Intangible assets, Gross | 820,000 | |
Customer Relationships [Member] | ||
Intangible assets, Gross | $ 1,490,000 |
Intangible Assets, Net (Detai_2
Intangible Assets, Net (Details 1) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2,019 | $ 479,000 | |
2,020 | 479,000 | |
2,021 | 479,000 | |
2,022 | 479,000 | |
2,023 | 479,000 | |
Thereafter | 875,474 | |
Intangible assets, net | $ 3,270,474 | $ 6,666,667 |
Intangible Assets, Net (Detai_3
Intangible Assets, Net (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Amortization expense | $ 1,029,526 | |
Impairment Losses | $ 0 | $ 0 |
Leased locations [Member] | ||
Amortization of intangible asstes | 84 months | |
Technology [Member] | ||
Amortization of intangible asstes | 60 months | |
Tradenames and Customer Relationships [Member] | ||
Amortization of intangible asstes | 120 months |
Investment in Mobiquity Techn_3
Investment in Mobiquity Technologies, Inc (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Current assets | $ 1,715,664 | $ 1,715,664 | $ 1,609,758 | ||
Total assets | 15,999,843 | 15,999,843 | 9,492,105 | ||
Current liabilities | 6,994,412 | 6,994,412 | 2,670,264 | ||
Total liabilities | 9,594,412 | 9,594,412 | 5,270,264 | ||
Total stockholders' deficit | 6,405,431 | 6,405,431 | $ 4,221,841 | ||
Revenue | 15,536,196 | $ 4,471,626 | 36,907,212 | $ 4,561,626 | |
Cost of revenue | 14,692,250 | 4,174,374 | 35,316,203 | 4,174,374 | |
Operating expenses | 22,529,250 | $ 5,937,176 | 44,261,783 | $ 6,528,748 | |
Mobiquity [Member] | |||||
Current assets | 299,179 | 299,179 | |||
Total assets | 14,016,179 | 14,016,179 | |||
Current liabilities | 17,234,537 | 17,234,537 | |||
Total liabilities | 17,234,537 | 17,234,537 | |||
Preferred stock | 11,552,513 | 11,552,513 | |||
Total stockholders' deficit | $ (14,770,871) | (14,770,871) | |||
Revenue | 453,717 | ||||
Cost of revenue | 543,096 | ||||
Operating expenses | 4,692,146 | ||||
Other expenses | 18,277,503 | ||||
Loss from continuing operations | $ (23,059,028) |
Investment in Mobiquity Techn_4
Investment in Mobiquity Technologies, Inc (Details Narrative) - $ / shares | Sep. 04, 2018 | Sep. 30, 2018 | Dec. 31, 2017 |
Common stock shares authorised | 500,000,000 | 500,000,000 | |
Mobiquity [Member] | |||
Number of restricted Series AAAA Preferred Stock received | 1,000 | ||
Issuance of common stock | 10,000,000 | ||
Number of shares converted | 100,000,000 | ||
Common stock purchase warrants issued | 150,000,000 | ||
Exercise Price | $ 0.12 | ||
Term | 5 years | ||
Common stock shares authorised | 250,000,000 |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Convertible note payable | $ 1,743,600 | $ 80,000 |
Unamortized debt discount | (948,175) | (54,377) |
Convertible notes payable | 795,425 | 25,623 |
Power Up Lending Group Ltd. | ||
Convertible note payable | 243,600 | 80,000 |
Bellridge Capital LLC | ||
Convertible note payable | $ 1,500,000 |
Convertible Notes Payable (De_2
Convertible Notes Payable (Details 1) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Notes Payable [Abstract] | ||
Convertible notes at beginning | $ 25,623 | |
Issued for cash | 1,703,000 | |
Original issue discount | 40,600 | |
Repayment in cash | (80,000) | |
Debt discount related to new convertible notes | (1,743,600) | |
Amortization of debt discounts | 849,802 | $ 221,323 |
Convertible notes, at end | $ 795,425 |
Convertible Notes Payable (De_3
Convertible Notes Payable (Detail Narrative) | Apr. 09, 2018USD ($)Number$ / sharesshares | Mar. 02, 2018USD ($)Number$ / sharesshares | Oct. 02, 2017USD ($) | Sep. 28, 2018USD ($) | Sep. 30, 2018USD ($)$ / shares | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($)$ / shares |
Debt Instrument [Line Items] | |||||||
Conversion price (in dollars per share) | $ / shares | $ 0.51 | $ 0.60 | |||||
Volatility | 165.00% | 175.00% | |||||
Risk free interest rate | 2.59% | 1.76% | |||||
Beneficial conversion feature | $ 113,287 | ||||||
Amortization of debt discount | 849,802 | $ 221,323 | |||||
Unamortized debt discount | 948,175 | $ 54,377 | |||||
Derivative liability | $ 2,778,052 | $ 95,164 | |||||
Warrant [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Determination method | Black-Scholes option pricing model | ||||||
Expected life | 5 years | ||||||
Volatility | 210.00% | ||||||
Dividend yield | 0.00% | ||||||
Convertible Notes Payable 2 ("Power Up Lending Group Ltd") [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Note payable, principal amount | $ 80,000 | ||||||
Note payable, interest rate | 10.00% | ||||||
Note maturity date | Jul. 10, 2018 | ||||||
Convertible Notes Payable ("Bellridge Capital LLC ") [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Note payable, principal amount | $ 750,000 | $ 750,000 | |||||
Note payable, interest rate | 10.00% | 10.00% | |||||
Note maturity date | Mar. 1, 2019 | ||||||
Purchase of warrants | shares | 500,000 | 500,000 | |||||
Exercise Price | $ / shares | $ 2.35 | $ 2.35 | |||||
Term | 5 years | 5 years | |||||
Common stock issued to escrow agent | shares | 1,000,000 | 1,000,000 | |||||
Closing price | $ / shares | $ 1 | $ 1.10 | |||||
Value of share converted | $ 750,000 | $ 750,000 | |||||
Trading Days | Number | 20 | 20 | |||||
Fair Value of warrants | $ 2,037,713 | $ 827,428 | |||||
Determination method | Black-Scholes option pricing model | Black-Scholes option pricing model | |||||
Expected life | 5 years | 5 years | |||||
Volatility | 210.00% | 210.00% | |||||
Dividend yield | 0.00% | 0.00% | |||||
Risk free interest rate | 2.60% | 2.65% | |||||
Discount on convertible note | $ 548,222 | $ 393,407 | |||||
Beneficial conversion feature | 201,778 | 356,593 | |||||
Debt Discount | 750,000 | 750,000 | |||||
Derivative liability | $ 2,440,719 | ||||||
Convertible Notes Payable ("Bellridge Capital LLC ") [Member] | Convertible Note | |||||||
Debt Instrument [Line Items] | |||||||
Note payable, principal amount | 548,222 | 356,593 | |||||
Convertible Notes Payable ("Bellridge Capital LLC ") [Member] | Warrant [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Note payable, principal amount | $ 201,778 | $ 393,407 | |||||
Securities Purchase Agreement | Convertible Notes Payable 2 ("Power Up Lending Group Ltd") [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Note payable, principal amount | $ 243,600 | ||||||
Note payable, interest rate | 6.00% | ||||||
Note maturity date | Dec. 24, 2019 | ||||||
Purchase price | $ 203,000 |
Derivative Liability (Details)
Derivative Liability (Details) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Notes to Financial Statements | ||
Stock price | $ 0.95 | $ 1.12 |
Risk free rate | 2.59% | 1.76% |
Volatility | 165.00% | 175.00% |
Conversion/ Exercise price | $ 0.51 | $ 0.60 |
Dividend rate | 0.00% | 0.00% |
Derivative Liability (Details 1
Derivative Liability (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Notes to Financial Statements | ||||
Derivative liability balance, Beginning | $ 95,164 | |||
Issuance of derivative liability | 337,669 | |||
Fair value of beneficial conversion feature of debt repaid/converted | (113,287) | |||
Change in derivative liability during the period | $ 2,440,383 | $ (51,151) | 2,458,506 | $ (547,188) |
Derivative liability balance, end | $ 2,778,052 | $ 2,778,052 |
Note Payable (Details Narrative
Note Payable (Details Narrative) - USD ($) | 1 Months Ended | |||
Mar. 16, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Dec. 31, 2017 | |
Note payable | $ 2,600,000 | $ 2,600,000 | ||
RWJ Advanced Marketing, LLC | ||||
Interest rate | 3.50% | |||
Interst payable date | Dec. 31, 2019 | |||
ECS Prepaid LLC [Member] | ||||
Interst payable date | Jan. 15, 2019 | |||
Principal periodic payments | $ 100,000 | |||
Note payable | $ 400,000 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Stockholders' Equity Note [Abstract] | ||
Warrants Outstanding, Beginning | 22,760,416 | |
Warrants Granted | 5,650,000 | |
Warrants Forfeited | 0 | |
Warrants Exercised | 0 | |
Warrants Outstanding, End | 28,410,416 | 22,760,416 |
Warrants Exercisable, End | 27,910,416 | |
Weighted Average Exercise Price Warrants Outstanding, Beginning | $ 0.55 | |
Weighted Average Exercise Price Warrants Granted | 2.17 | |
Weighted Average Exercise Price Warrants Outstanding, End | 0.87 | |
Weighted Average Exercise Price Warrants Exercisable at End | $ 0.89 | |
Weighted Average Remaining Contractual Life, Outstanding | 3 years 11 months 26 days | 4 years 8 months 2 days |
Weighted Average Remaining Contractual Life Exercisable at End | 3 years 11 months 23 days | |
Aggregate Intrinsic Value Outstanding, Beginning | $ 13,640,000 | |
Aggregate Intrinsic Value Outstanding, End | 9,812,000 | $ 13,640,000 |
Aggregate Intrinsic Value Outstanding, Exercisable at End | $ 9,812,000 |
Stockholders' Equity (Details 1
Stockholders' Equity (Details 1) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Number of warrants Outstanding | 28,410,416 | 22,760,416 |
Number of warrants Exercisable | 27,910,416 | |
Exercise price of warrants Outstanding | $ 27,910,416 | |
$ 0.50 | ||
Number of warrants Outstanding | 22,000,000 | |
Number of warrants Exercisable | 0.50 | |
Exercise price of warrants Outstanding | $ 22,000,000 | |
Exercise price of warrants Exercisable | $ 0.50 | |
$ 1.85 | ||
Number of warrants Outstanding | 3,000,000 | |
Number of warrants Exercisable | 1.85 | |
Exercise price of warrants Outstanding | $ 3,000,000 | |
Exercise price of warrants Exercisable | $ 1.85 | |
$ 2 | ||
Number of warrants Outstanding | 666,666 | |
Number of warrants Exercisable | 2 | |
Exercise price of warrants Outstanding | $ 666,666 | |
Exercise price of warrants Exercisable | $ 2 | |
$ 2.25 | ||
Number of warrants Outstanding | 93,750 | |
Number of warrants Exercisable | 2.25 | |
Exercise price of warrants Outstanding | $ 93,750 | |
Exercise price of warrants Exercisable | $ 2.25 | |
$ 2.35 | ||
Number of warrants Outstanding | 1,000,000 | |
Number of warrants Exercisable | 2.35 | |
Exercise price of warrants Outstanding | $ 1,000,000 | |
Exercise price of warrants Exercisable | $ 2.35 | |
$ 2.50 | ||
Number of warrants Outstanding | 650,000 | |
Number of warrants Exercisable | 2.50 | |
Exercise price of warrants Outstanding | $ 650,000 | |
Exercise price of warrants Exercisable | $ 2.50 | |
$ 2.70 | ||
Number of warrants Outstanding | 500,000 | |
Number of warrants Exercisable | 2.70 | |
Exercise price of warrants Outstanding | $ 500,000 | |
Exercise price of warrants Exercisable | $ 2.70 | |
$ 2.80 | ||
Number of warrants Outstanding | 500,000 | |
Number of warrants Exercisable | 2.80 | |
Exercise price of warrants Outstanding | ||
Exercise price of warrants Exercisable | $ 2.80 |
Stockholders Equity (Details Na
Stockholders Equity (Details Narrative) - USD ($) | May 04, 2018 | Apr. 02, 2018 | Mar. 16, 2018 | Jan. 23, 2018 | Dec. 29, 2017 | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 04, 2018 | Mar. 04, 2015 | |
Common stock, authorized | 500,000,000 | 500,000,000 | ||||||||
Conversion price (in dollars per share) | $ 0.51 | $ 0.60 | ||||||||
Volatility | 165.00% | 175.00% | ||||||||
Risk free interest rate | 2.59% | 1.76% | ||||||||
Convertible note payable | ||||||||||
Number of warrants issued | 1,000,000 | |||||||||
Guardian LLC [Member] | ||||||||||
tock issued in comnnection with termination, Shares | 12,500,000 | |||||||||
tock issued in comnnection with termination, Value | $ 11,750,000 | |||||||||
Percentage of interest | 50.00% | |||||||||
Mobiquity [Member] | ||||||||||
Stock issued in connection with equity interest, Shares | 10,000,000 | |||||||||
Stock issued in connection with equity interest, Value | $ 9,980,000 | |||||||||
Common stock, authorized | 250,000,000 | |||||||||
Preferred stock, value | $ 11,552,513 | |||||||||
ECS Prepaid LLC [Member] | ||||||||||
Stock Issued for Acquisitions, Shares | 500,000 | |||||||||
Stock Issued for Acquisitions, Value | $ 1,010,000 | |||||||||
Warrants issued for acquisition, Shares | 500,000 | |||||||||
Warrants issued for acquisition, Value | $ 992,958 | |||||||||
Determination method | Black-Scholes option pricing model | |||||||||
Expected life | 5 years | |||||||||
Volatility | 210.00% | |||||||||
Dividend yield | 0.00% | |||||||||
Risk free interest rate | 2.65% | |||||||||
Electronic Check [Member] | ||||||||||
Stock Issued for Acquisitions, Shares | 250,000 | |||||||||
Stock Issued for Acquisitions, Value | $ 695,000 | |||||||||
Warrants issued for acquisition, Shares | 250,000 | |||||||||
Warrants issued for acquisition, Value | $ 682,919 | |||||||||
Determination method | Black-Scholes option pricing model | |||||||||
Expected life | 5 years | |||||||||
Volatility | 210.00% | |||||||||
Dividend yield | 0.00% | |||||||||
Risk free interest rate | 2.65% | |||||||||
Securities Purchase Agreement | ||||||||||
Stock issued for Services, Shares | 303,030 | 666,666 | ||||||||
Stock issued for Services, Value | $ 500,000 | $ 500,000 | ||||||||
Stock issued for cash, Shares | 303,030 | 1,333,334 | ||||||||
Stock issued for cash, Value | $ 500,000 | $ 1,000,000 | ||||||||
Securities Purchase Agreement | Eagle Equities, LLC | ||||||||||
Stock issued for Services, Shares | 1,212,120 | 2,000,000 | ||||||||
Stock issued for Services, Value | $ 2,000,000 | $ 1,500,000 | ||||||||
Closing price | $ 1.65 | $ 0.72 | ||||||||
Exercise Price | $ 2 | |||||||||
Series D Convertible Preferred Stock [Member] | ||||||||||
Number of shares converted | 66,000 | |||||||||
Number of common stock converted | 66,000,000 | |||||||||
Preferred stock, value | [1] | $ 1 | ||||||||
Preferred stock, issued | 0 | 66,000 | ||||||||
Preferred stock, Outstanding | 0 | 66,000 | ||||||||
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | ||||||||
Series D Convertible Preferred Stock [Member] | RekoHoldingsLLC | ||||||||||
Number of shares converted | 66,000 | |||||||||
Number of restricted shares | 66,000,000 | |||||||||
Series D Convertible Preferred Stock [Member] | Hermes Roll LLC (Territorial License Agreement) [Member] | Hermes Roll LLC [Member] | ||||||||||
Common stock, authorized | 500,000,000 | |||||||||
Preferred stock, value | $ 1,000 | |||||||||
Preferred stock, issued | 100,000 | |||||||||
Preferred stock, par value (in dollars per share) | $ 10 | |||||||||
Conversion price (in dollars per share) | $ 0.01 | |||||||||
Series E Convertible Preferred Stock [Member] | ||||||||||
Number of shares converted | 2,000,000 | |||||||||
Number of common stock converted | 2,000,000 | |||||||||
Series G Convertible Preferred Stock [Member] | ||||||||||
Preferred stock, value | [2] | $ 20 | ||||||||
Preferred stock, issued | 0 | 2,000,000 | ||||||||
Preferred stock, Outstanding | 0 | 2,000,000 | ||||||||
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | ||||||||
Series G Convertible Preferred Stock [Member] | Guardian LLC [Member] | ||||||||||
Number of shares converted | 2,000,000 | |||||||||
Number of restricted shares | 2,000,000 | |||||||||
Consultants one [Member] | ||||||||||
Stock issued for Services, Shares | 1,000,000 | |||||||||
Stock issued for Services, Value | $ 998,000 | |||||||||
Consultants | ||||||||||
Stock issued for Services, Shares | 250,000 | |||||||||
Stock issued for Services, Value | $ 123,725 | |||||||||
Stock Issued for Acquisitions, Shares | 3,000,000 | |||||||||
Stock Issued for Acquisitions, Value | $ 4,590,000 | |||||||||
Employees and board members | Employment agreements | ||||||||||
Stock issued for Services, Shares | 1,800,000 | |||||||||
Stock issued for Services, Value | $ 4,404,500 | |||||||||
Warrants issued for services, Shares | 2,150,000 | |||||||||
Warrants issued for services, Value | $ 5,276,656 | |||||||||
Consultants | ||||||||||
Stock issued for Services, Shares | 1,250,000 | |||||||||
Stock issued for Services, Value | $ 2,715,000 | |||||||||
Warrants issued for services, Shares | 1,750,000 | |||||||||
Warrants issued for services, Value | $ 3,661,791 | |||||||||
Investor | ||||||||||
Stock issued for cash, Shares | 1,272,726 | |||||||||
Stock issued for cash, Value | $ 1,500,000 | |||||||||
Warrant [Member] | ||||||||||
Determination method | Black-Scholes option pricing model | |||||||||
Expected life | 5 years | |||||||||
Volatility | 210.00% | |||||||||
Dividend yield | 0.00% | |||||||||
Warrant [Member] | Minimum [Member] | ||||||||||
Risk free interest rate | 2.60% | |||||||||
Warrant [Member] | Maximum [Member] | ||||||||||
Risk free interest rate | 2.94% | |||||||||
[1] | Series D Preferred stock, $0.00001 par value; 100,000 shares authorized; 0 and 66,000 shares issued and outstanding at September 30, 2018 and December 31, 2017 | |||||||||
[2] | Series G Preferred stock, $0.00001 par value; 2,000,000 shares authorized; 0 and 2,000,000 shares issued and outstanding at September 30, 2018 and December 31, 2017 |
Related Parties (Details Narrat
Related Parties (Details Narrative) - USD ($) | Apr. 06, 2018 | Sep. 01, 2017 | Aug. 15, 2016 | Aug. 09, 2016 | Jun. 20, 2016 | Sep. 25, 2018 | Dec. 29, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Aug. 15, 2017 | Dec. 31, 2016 | Apr. 30, 2016 | Sep. 30, 2015 | Apr. 22, 2015 |
Related Party Transaction [Line Items] | |||||||||||||||||
Revenue for providng IT services | $ 45,000 | $ 45,000 | $ 135,000 | $ 135,000 | |||||||||||||
Rent for office space | $ 5,000 | ||||||||||||||||
Security deposit | $ 1,979 | ||||||||||||||||
Due to Related Parties | $ 67,000 | ||||||||||||||||
impairment charges | $ 0 | 0 | |||||||||||||||
Director [Member] | |||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||
Base Salary | $ 250,000 | ||||||||||||||||
Additional salary payable | $ 70,000 | ||||||||||||||||
Series D Convertible Preferred Stock [Member] | |||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||
Preferred stock, outstanding | 0 | 0 | 66,000 | ||||||||||||||
Number of shares converted | 66,000 | ||||||||||||||||
Series G Convertible Preferred Stock [Member] | |||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||
Preferred stock, outstanding | 0 | 0 | 2,000,000 | ||||||||||||||
Principal and accrued interest converted into Shares | 2,000,000 | ||||||||||||||||
Michael Murray [Member] | |||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||
Preferred stock, outstanding | 9,900,000 | ||||||||||||||||
Warrants issued for acquisition, Shares | 4,000,000 | ||||||||||||||||
Michael Murray [Member] | Series D Convertible Preferred Stock [Member] | |||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||
Preferred stock, outstanding | 9,900 | ||||||||||||||||
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 | ||||||||||||||||
Dr. Rittman Services | |||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||
Revenue for providng IT services | $ 135,000 | $ 135,000 | |||||||||||||||
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 | |||||||||||||||
Director [Member] | Employment Agreement [Member] | |||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||
Description of compensation and other benefits | <font style="font: 10pt Times New Roman, Times, Serif">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. </font></p>" id="sjs-D43"><p style="margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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. </font></p> | ||||||||||||||||
Guardian LLC [Member] | |||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||
Convertible Promissory Note | $ 660,132 | ||||||||||||||||
Percentage of interest owned | 50.00% | ||||||||||||||||
Issuance of common stock | 12,500,000 | ||||||||||||||||
impairment charges | $ 11,750,000 | ||||||||||||||||
Guardian LLC [Member] | Series G Convertible Preferred Stock [Member] | |||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||
Number of shares converted | 2,000,000 | ||||||||||||||||
RWJ Advanced Marketing, LLC | |||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||
Base Salary | $ 250,000 | ||||||||||||||||
Related party description | 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 $100,000 working capital designated to UGopherServices Corp. The parties have agreed to negotiate and finalize the terms of such loans in the near future. |
Contingencies (Details Narrativ
Contingencies (Details Narrative) | Jun. 12, 2018shares | Apr. 10, 2017USD ($) | Jun. 10, 2016$ / sharesshares | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2016Numbershares | Dec. 31, 2017USD ($) | Feb. 09, 2017USD ($) |
Legal Fees | $ 11,500 | |||||||||
Revenues | $ 15,536,196 | $ 4,471,626 | $ 36,907,212 | $ 4,561,626 | ||||||
Unearned revenue | 261,726 | 261,726 | ||||||||
GBT Technologies [Member] | ||||||||||
Common stock issued | shares | 20,000,000 | |||||||||
Revenues | 300,000 | |||||||||
Payment for expenses | 5,000,000 | |||||||||
Unearned revenue | $ 200,000 | 200,000 | ||||||||
Initial Term Agreement [Member] | ||||||||||
Spare Write off | 265,000 | |||||||||
Impairment of assets | $ 265,000 | |||||||||
Consulting Agreement [Member] | Waterford Group LLC [Member] | ||||||||||
Deposits | $ 42,875 | |||||||||
Consulting Agreement [Member] | Waterford Group LLC [Member] | Warrant [Member] | ||||||||||
Stock issued during period, shares, new issues | shares | 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, issued for services (in shares) | shares | 100,000 | 50,000 |
Concentrations (Details Narrati
Concentrations (Details Narrative) | 12 Months Ended | ||
Dec. 31, 2017USD ($)Number | Sep. 30, 2018USD ($) | Dec. 31, 2016Number | |
Guardian LLC [Member] | |||
Concentration Risk [Line Items] | |||
Trade payable | $ | $ 1,350,262 | $ 737,330 | |
Revenue & Accounts Receivable [Member] | |||
Concentration Risk [Line Items] | |||
Number of customers | Number | 1 | 1 | |
Revenue & Accounts Receivable [Member] | One Customer | |||
Concentration Risk [Line Items] | |||
Concentration of revenue and accounts receivable | 100.00% |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] - USD ($) | Nov. 12, 2018 | Nov. 02, 2018 | Oct. 15, 2018 | Oct. 02, 2018 | Oct. 26, 2018 |
Common stock cancelled | 50,000 | ||||
Consultants | |||||
Warrants issued | 3,000,000 | ||||
Exercise Price | $ 0.60 | ||||
Expire date | Oct. 15, 2023 | ||||
Bellridge Capital LLC | |||||
Number of shares converted | 146,994 | 177,534 | |||
Common stock issued | 318,583 | ||||
Bellridge Capital LLC | Principal [Member] | |||||
Value of share converted | $ 125,000 | $ 150,000 | |||
Bellridge Capital LLC | Accrued Interest [Member] | |||||
Value of share converted | $ 7,295 | $ 9,781 | |||
Waterford Group LLC [Member] | |||||
Common stock cancelled | 93,750 |