Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 10, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Excel Corp | |
Entity Central Index Key | 1,512,890 | |
Trading Symbol | EXCC | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,017 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 102,460,336 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Current Assets | ||
Cash and cash equivalents | $ 381,579 | $ 1,586,207 |
Accounts receivable | 1,105,516 | 1,220,759 |
Note receivable | 675,000 | 675,000 |
Prepaid expenses | 82,169 | 105,995 |
Other current assets | 89,550 | 89,050 |
Total current assets | 2,333,814 | 3,677,011 |
Other Assets | ||
Property and equipment, net of depreciation | 172,136 | 170,442 |
Goodwill | 7,914,269 | 7,914,269 |
Equity investment | 171,469 | 171,469 |
Residual portfolios | 1,966,010 | 2,147,488 |
Other long-term assets | 703,271 | 631,271 |
Total other assets | 10,927,155 | 11,034,939 |
Total assets | 13,260,969 | 14,711,950 |
Current Liabilities | ||
Accounts payable | 1,431,723 | 577,220 |
Accrued compensation | 18,004 | 704,888 |
Payroll tax payable | 519,679 | 349,644 |
Other accrued liabilities | 476,807 | 551,447 |
Notes payable - current portion, net of deferred financing costs | 12,567,194 | 12,809,252 |
Accrued costs of disposal of discontinued operations | 50,000 | |
Total current liabilities | 15,013,407 | 15,042,451 |
Long-term liabilities | ||
Other long-term liabilities | 37,469 | 41,705 |
Total long-term liabilities | 37,469 | 41,705 |
Commitments and contingencies | ||
STOCKHOLDERS' DEFICIT | ||
Preferred stock, value | ||
Common stock, $.0001 par value, 200,000,000 shares authorized 102,460,336 and 97,759,070 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively | 10,246 | 9,776 |
Additional paid-in capital | 4,834,340 | 4,814,348 |
Accumulated deficit | (6,634,493) | (5,196,790) |
Total stockholders' deficit | (1,789,907) | (372,206) |
Total Liabilities and Stockholders' Deficit | 13,260,969 | 14,711,950 |
Series B preferred stock | ||
STOCKHOLDERS' DEFICIT | ||
Preferred stock, value | $ 460 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) (Unaudited) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 102,460,336 | 97,759,070 |
Common stock, shares outstanding | 102,460,336 | 97,759,070 |
Series B preferred stock | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued | 4,600,000 | |
Preferred stock, shares outstanding | 4,600,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Revenues | ||||
Transaction and processing fees | $ 4,082,036 | $ 4,390,222 | $ 8,003,494 | $ 8,356,075 |
Merchant cash advance revenue and other | 87,370 | 56,069 | 179,960 | 109,874 |
Total revenues | 4,169,406 | 4,446,291 | 8,183,454 | 8,465,949 |
Costs and expenses | ||||
Processing and servicing costs | 2,051,751 | 1,863,167 | 4,048,195 | 3,489,421 |
Salaries and wages | 884,078 | 898,945 | 1,805,239 | 1,875,217 |
Outside commissions | 602,029 | 458,440 | 1,197,440 | 982,156 |
Other selling general and administrative expenses | 1,223,342 | 280,591 | 1,709,789 | 629,115 |
Total costs and expenses | 4,761,200 | 3,501,143 | 8,760,663 | 6,975,909 |
Income (loss) from operations | (591,794) | 945,148 | (577,209) | 1,490,040 |
Interest expense, net | 784,860 | 278,039 | 1,469,847 | 606,655 |
Other, net | 609,354 | 609,354 | ||
Net income (loss) from continuing operations before income taxes | (767,300) | 667,109 | (1,437,702) | 883,385 |
Income tax expense (benefit) | ||||
Current | (283,901) | 246,830 | (531,950) | 326,852 |
Deferred | 283,901 | (246,830) | 531,950 | (326,852) |
Income tax expense | ||||
Net income (loss) from continuing operations | (767,300) | 667,109 | (1,437,702) | 883,385 |
Loss from discontinued operations, net of tax | (661,655) | (2,008,684) | ||
Loss on disposal of operations | (840,641) | |||
Net income (loss) | $ (767,300) | $ 5,454 | $ (1,437,702) | $ (1,965,940) |
Basic earnings per share | ||||
Income (loss) from continuing operations | $ (0.008) | $ 0.007 | $ (0.015) | $ 0.009 |
Loss from discontinued operations, net of tax | (0.007) | (0.029) | ||
Net income (loss) | (0.008) | 0 | (0.015) | (0.020) |
Diluted earnings per share | ||||
Income (loss) from continuing operations | (0.008) | 0.007 | (0.015) | 0.009 |
Loss from discontinued operations, net of tax | (0.007) | (0.029) | ||
Net income (loss) | $ (0.008) | $ 0 | $ (0.015) | $ (0.020) |
Weighted Average Shares Outstanding | ||||
Basic | 98,320,336 | 96,759,070 | 98,040,266 | 96,907,422 |
Diluted | 98,320,336 | 101,359,070 | 98,040,266 | 99,474,273 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Operating activities: | ||
Net loss | $ (1,437,702) | $ (1,965,940) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 401,523 | 243,998 |
Paid in kind interest | 341,961 | |
Stock based compensation | 20,002 | 112,423 |
Income in investment accounted for under the equity method | (23,350) | |
Loss on disposal of operations | 840,641 | |
Decrease (increase) | ||
Accounts receivable | 115,243 | (147,925) |
Prepaid expenses | 23,826 | 36,581 |
Other current assets | (500) | (91,368) |
Other long term assets | (72,000) | 77,131 |
Increase (decrease) | ||
Accounts payable | 854,503 | (670,695) |
Accrued compensation | (686,884) | 255,142 |
Payroll tax payable | 170,035 | 113,987 |
Other accrued liabilities | (74,640) | 437,525 |
Other long-term liabilities | (4,236) | 678,296 |
Net cash used in operating activities | (348,869) | (103,554) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (44,899) | (22,907) |
Payments due to disposal of operations | (50,000) | |
Net cash used in investing activities | (94,899) | (22,907) |
Cash flows from financing activities: | ||
Deferred financing costs | (248,276) | |
Issuance of preferred stock | 230,000 | |
Note and debt payments | (512,583) | (212,730) |
Net cash provided by (used in) financing activities | (760,859) | 17,270 |
Net decrease in cash | (1,204,627) | (109,191) |
Cash - Beginning of period | 1,586,207 | 362,130 |
Cash - End of period | 381,579 | 252,939 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | $ 991,755 | $ 606,655 |
Organization and Operations
Organization and Operations | 6 Months Ended |
Jun. 30, 2017 | |
Organization and Operations [Abstract] | |
ORGANIZATION AND OPERATIONS | 1. ORGANIZATION AND OPERATIONS Excel Corporation (the “Company”) was organized on November 13, 2010 as a Delaware corporation. The Company has three wholly owned subsidiaries, Excel Business Solutions, Inc. (d/b/a eVance Capital), Payprotec Oregon, LLC (d/b/a Securus Payments), (“Securus”), and eVance Processing Inc. (“eVance”). We sell integrated financial and transaction processing services to businesses throughout the United States. We provide these services through our wholly-owned subsidiaries, eVance and Securus. Through our eVance subsidiary, we provide an integrated suite of third-party merchant payment processing services and related proprietary software enabling products that deliver credit and debit card-based internet payments processing solutions primarily to small and mid-sized merchants operating in physical “brick and mortar” business environments, on the internet and in retail settings requiring both wired and wireless mobile payment solutions. We operate as an independent sales organization (“ISO”) generating individual merchant processing contracts in exchange for future residual payments. As a wholesale ISO, eVance has a direct contractual relationship with the merchants and takes greater responsibility in the approval and monitoring of merchants than do retail ISOs and we receive additional consideration for this service and risk. Securus operates as a retail ISO and receives residual income as commission for merchants it places with third party processors. On November 30, 2015, eVance entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Calpian, Inc. (“Calpian”), Calpian Residual Acquisition, LLC (“CRA”) and Calpian Commerce, Inc., a wholly owned subsidiary of Calpian (“CCI,” and collectively with Calpian and CRA, the “Sellers”). Pursuant to the Purchase Agreement, eVance acquired substantially all of the U.S. assets and operations of the Sellers. In consideration for the acquired assets, eVance assumed certain of the Sellers’ liabilities, including an aggregate of $9,000,000 of notes payable and certain of the Sellers’ outstanding contractual obligations. On April 12, 2016, eVance entered into an agreement with the Sellers and a cancellation of securities acknowledgement with one of eVance’s note-holders whereby the noteholder cancelled its note in the amount of $720,084 and Calpian issued eVance a note in the amount of $675,000 in exchange for eVance and the Sellers mutually waiving any claims either party has or could have under the Purchase Agreement against the other. The $675,000 note bears simple interest of 12% per annum payable monthly and matures on November 30, 2017. As part of the Purchase Agreement, eVance acquired several residual portfolios including the supporting contracts (residual purchase agreements). eVance, as successor under one of these residual purchase agreements, has sued a third party for breach of contract on the residual purchase agreement between the third party and Seller and claimed damages in excess of $1,500,000. eVance has agreed to apply any recovery from such litigation (less costs) against the principal balance of the $675,000 note up to a maximum of $675,000. The Company reflected the reduction in the assumed debt by $720,084 as a reduction in goodwill and a reduction in the debt assumed. In addition, the noteholder returned a warrant to purchase 360,042 shares of the Company’s common stock. As a result of this agreement, the $9,000,000 of notes payable was reduced to $8,279,916. On April 30, 2016, Securus entered into a Purchase and Sale Agreement (the “2016 Purchase Agreement”) with Chyp LLC (“Chyp”). In connection with the 2016 Purchase Agreement, Chyp executed a three-year preferred marketing agreement with eVance. Chyp acquired substantially all of the operations of Securus including its sales and marketing operations located in Portland, Oregon and West Palm Beach, Florida. Securus retained the approximately 5,000 merchants and related merchant processing residual portfolios. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, these unaudited consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the results of the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2017. These unaudited consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Principles of Consolidation The consolidated financial statements include the accounts of Excel Corporation and subsidiaries in which the Company has a controlling financial interest. All intercompany transactions and account balances between Excel Corporation and its subsidiaries have been eliminated in consolidation. Transactions with its consolidated subsidiaries are generally settled in cash. Investments in unconsolidated affiliated entities are accounted for under the equity method and are included in “Equity investment” in the accompanying consolidated balance sheets. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the evaluation of deferred tax assets, purchase accounting, allowances, and equity investments. |
Going Concern
Going Concern | 6 Months Ended |
Jun. 30, 2017 | |
Going Concern [Abstract] | |
GOING CONCERN | 3. GOING CONCERN As shown in the accompanying consolidated financial statements, the Company has generated a net loss of $1,437,702 and an accumulated deficit of $6,634,493 as of June 30, 2017. On November 2, 2016, the Company and certain of the Company’s subsidiaries entered into a Loan and Security Agreement (the “Loan Agreement”) with GACP Finance Co. LLC (“GACP”) as administrative agent (“Agent”) and the other lenders as from time to time party thereto. The Loan Agreement has a three-year term and provides for term loan commitments of up to $25,000,000 consisting of an Initial Term Loan in the amount of $13,500,000 and a Delayed Draw Term Loan in the amount of $11,500,000 (each a “Loan” or together “Loans”). The Loan Agreement contains customary events of default, non-payment of principal or other amounts under the Loan Agreement, breach of covenants and other bankruptcy events. The Loan Agreement also contains certain financial covenants including maintenance of certain EBITDA levels and minimum liquidity. If any event of default occurs and is continuing, the Lender may declare all amounts owed to be due (except for a bankruptcy event of default), in which case such amounts will automatically become due and payable. On May 5, 2017, the Company received a written notice from GACP that it was in default under the terms of the Loan Agreement for a breach of covenants. As a result of the default, the Lender increased the cash interest payable on the loan from 13% per annum to 16% per annum (the “Default Rate”). In addition, as of April 30, 2017, the principal due under the Loan Agreement was $13,783,602. The April 30, 2017 loan balance was in excess of the borrowing base as calculated under the Loan Agreement and the Company made a principal payment on May 8, 2017 of $512,583 to reduce the loan balance to be within the borrowing base as defined in the Loan Agreement. The Lender also terminated its commitment to lend or extend credit under the Loan Agreement. As such, the note is classified as current on the accompanying consolidated balance sheets in accordance with ASC 470-10-45. In accordance with ASU 205-40, the classification of the debt as current, continuing losses, and accumulated deficit raises substantial doubt about the Company’s ability to continue as a going concern. The Company is discussing a resolution of the default with the Lender and working towards a forbearance agreement. The Company believes that, if required by the Lender, it would be able to refinance the Loan with a different lender. The Company also has identified potential transactions and acquisitions which, if completed, would be expected to improve income from operations and the ability to service debt. In addition, the Company could also sell a portion of its residual portfolio and use the proceeds to pay down all or a portion of the Loan. Although the Company believes that it will be able to resolve the default with the Lender or if it is unable to do so, either refinance the Loan or sell a portion of its residual portfolio to repay the Loan or some combination of all of these options., there can be no assurance that the Company will be able to resolve the matter with the Lender or execute on any applicable contingency plans in the event it is unable to resolve the matter with the Lender. As of August 11, 2017, the Lender has not accelerated the remaining principal balance. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company plans to improve its financial condition through its strategy which includes raising equity and acquisitions of residual portfolios. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2017 | |
Recent Accounting Pronouncements [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | 4. RECENT ACCOUNTING PRONOUNCEMENTS In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers Topic 606 (“ASU 2014-09”) which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. Revenue recorded under ASU 2014-09 will depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance is effective for the Company’s fiscal year beginning January 1, 2018 and early adoption is not permitted. The Company is currently evaluating the potential effect of this standard on its consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. ASU 2016-02 supersedes the previous leases standard, Leases (Topic 840). The standard is effective on January 1, 2019, with early adoption permitted. The Company is currently evaluating the potential effect of this standard on its consolidated financial statements. On August 26, 2016, the FASB issued ASU 2016-15, “ Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments (Topic 230) ● Debt prepayment or debt extinguishment costs. ● Settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing. ● Contingent consideration payments made after a business combination. ● Proceeds from the settlement of insurance claims. ● Proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies. ● Distributions received from equity method investees. ● Beneficial interests in securitization transactions. ● Separately identifiable cash flows and application of the predominance principle. The guidance in the ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company has evaluated the potential effect of this standard on its consolidated financial statements and determined this standard does not impact the financial position at June 30, 2017. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350) (“ASU 2017-04”), which currently requires an entity that has not elected the private company alternative for goodwill to perform a two-step test to determine the amount, if any, of goodwill impairment. In Step 1, an entity compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, the entity performs Step 2 and compares the implied fair value of goodwill with the carrying amount of that goodwill for that reporting unit. An impairment charge equal to the amount by which the carrying amount of goodwill for the reporting unit exceeds the implied fair value of that goodwill is recorded, limited to the amount of goodwill allocated to that reporting unit. To address concerns over the cost and complexity of the two-step goodwill impairment test, the amendments in this pronouncement remove the second step of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. The guidance in the ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, early adoption is permitted. The Company is currently evaluating the potential effect of this standard on its consolidated financial statements. Accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption. |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Jun. 30, 2017 | |
Discontinued Operations [Abstract] | |
DISCONTINUED OPERATIONS | 5. DISCONTINUED OPERATIONS On April 30, 2016, Securus entered into the 2016 Purchase Agreement with Chyp. In connection with the 2016 Purchase Agreement with Chyp, Chyp executed a three-year preferred marketing agreement with eVance. Pursuant to the 2016 Purchase Agreement with Chyp, Chyp acquired substantially all of the operations of Securus including its sales and marketing operations located in Portland, Oregon and West Palm Beach, Florida. Securus retained its approximately 5,000 merchants and related merchant processing residual portfolio. Securus also retained substantially all of its liabilities, including but not limited to, its note payable with Blue Acre Ventures (BAV), trade payables as well as liabilities to merchants. Pursuant to the 2016 Purchase Agreement with Chyp, Securus provided financial assistance to Chyp in the form of a forgivable loan to support the transition of Securus’ operations to Chyp. Under the terms of the loan, Securus advanced Chyp $500,000 during 2016 and $50,000 in January 2017 for a total of $550,000. Accordingly, Chyp executed a $550,000 promissory note (the “Chyp Note”) in favor of Securus. The Chyp Note bears an interest rate of 12% per annum with both the principal and interest due on May 1, 2017. The Company does not believe that Chyp was in material compliance with the 2016 Purchase Agreement with Chyp and has not cancelled the Chyp Note. The Company and Chyp are in discussions concerning a resolution of the matter. Securus will also reimburse Chyp for commissions payable to Chyp employees and agents on Securus’ residual portfolio as if those agents and employees were still employed by Securus. Chyp is owned by Steven Lemma and Mychol Robirds, who are former executives of Securus. We accounted for the sale of the Securus operations to Chyp in accordance with ASC 205-20-45-1 and have classified the assets and operations sold to Chyp as discontinued operations. In 2016, the Company recorded a loss on disposal of $840,641 related to the transaction. The charge includes a $290,641 write-off of the net assets acquired by Chyp and $550,000 for the financial assistance to be provided to Chyp. A summary of results of discontinued operations is as follows: Six Months Ended June 30, 2016 Revenues $ 2,027,113 Operating expenses (4,035,797 ) Pre-tax loss from discontinued operations (2,008,684 ) Loss from discontinued operations, net of tax $ (2,008,684 ) |
Other Income (Expenses)
Other Income (Expenses) | 6 Months Ended |
Jun. 30, 2017 | |
Other Income (Expenses) [Abstract] | |
OTHER INCOME (EXPENSES) | 6. OTHER INCOME (EXPENSES) Other income (expenses) consists of the following for the six months ended: June 30, June 30, 2017 2016 Accrued compensation $ 669,529 $ - Settlement on lawsuit 50,000 - Account payable Calpian adjustment (110,175 ) - Other, net $ 609,354 $ - On July 6, 2017, eVance Processing Inc. received $50,000 pertaining to a one-time settlement of a legal matter. Refer to Note 11 in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information on accrued compensation. |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2017 | |
Property and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | 7. PROPERTY AND EQUIPMENT Property and equipment consists of the following as of June 30, 2017 and December 31, 2016: June 30, December 31, Computer software $ 63,692 $ 38,607 Equipment 183,444 163,394 Furniture & fixtures 38,682 38,882 Leasehold improvements 16,503 16,538 Total cost 302,321 257,421 Less accumulated depreciation (130,185 ) (86,979 ) Property and equipment – net $ 172,136 $ 170,442 |
Leases
Leases | 6 Months Ended |
Jun. 30, 2017 | |
Leases [Abstract] | |
LEASES | 8. LEASES The Company executed a lease for its corporate offices in Irving Texas. The lease began on November 1, 2014 and has a term of 63 months with monthly payments ranging from $0 to $6,428. eVance leases its Georgia office facilities under an operating lease expiring in November 2019. Monthly lease payments range from $8,278 to $9,046 throughout the term of the lease. Total rent expense for the six month ended June 30, 2017 was $98,916, compared to $167,969 for the six month ended June 30, 2016. The future minimum lease payments required under long-term operating leases as of June 30, 2017 are as follows: 2017 $ 88,344 2018 179,489 2019 174,946 2020 6,430 2021 and after - Total $ 449,209 |
Notes Payable
Notes Payable | 6 Months Ended |
Jun. 30, 2017 | |
Notes Payable [Abstract] | |
NOTES PAYABLE | 9. NOTES PAYABLE The following summarizes the Company’s outstanding notes payable: June 30, December 31, 2016 Term loan due November 2019, bearing interest at 18%, secured by substantially all of the assets of the Company 12,567,194 12,809,252 Less current portion (12,567,194 ) (12,809,252 ) Long-term portion of notes payable $ - $ - On November 2, 2016, the Company and certain of the Company’s subsidiaries entered into a Loan and Security Agreement with GACP Finance Co. LLC and the other lenders as from time to time party thereto. The Loan Agreement has a three-year term and provides for term loan commitments of up to $25,000,000 consisting of an Initial Term Loan in the amount of $13,500,000 and a Delayed Draw Term Loan in the amount of $11,500,000. The Company used the proceeds from the Initial Term Loan to repay all of its existing secured debt. Before the default described within Note 3 in Part I, Item 1 of this Quarterly Report on Form 10-, the Loan accrued interest of 18% per annum of which 13% was payable in cash monthly and 5% is payable in kind (PIK). Due to the default and pursuant to the Loan Agreement, the cash interest has been increased from 13% to 16%. Pursuant to the Loan Agreement, the Loan is secured by substantially all of the assets of the Company including but not limited to the Company’s residual portfolios. In addition, certain of Excel’s subsidiaries are guarantors under the Loan Agreement. The Company incurred financing costs in the amount of $1,099,021 in connection with the Loan Agreement. These costs are shown as a reduction of the loan amount on the accompanying consolidated balance sheets as of June 30, 2017, and December 31, 2016, and are being amortized as interest expense over the term of the Loan. In addition, the interest that is payable in kind is added to the Loan balance. The following chart summarizes the amount outstanding under the Loan. June 30, Term loan $ 13,500,000 Net deferred financing costs (874,918 ) Principal paydown (512,583 ) Accrued interest payable in kind 454,695 Note payable $ 12,567,194 |
Payroll Tax Payable
Payroll Tax Payable | 6 Months Ended |
Jun. 30, 2017 | |
Payroll Tax Payable [Abstract] | |
PAYROLL TAX PAYABLE | 10. PAYROLL TAX PAYABLE Management identified an issue with the reporting and payment of federal payroll taxes primarily pertaining to four employees in the corporate office. Former management no longer employed by the Company failed to report and remit federal payroll taxes of $349,266 consisting of $250,818 in employee withholdings and $98,448 in employer FICA. On June 30, 2017, management accrued $160,000 for estimated fees, penalties and interest. Management has engaged an outside tax advisor to bring current late reporting and payment of federal payroll taxes for the years ended 2014, 2015 and 2016. Payroll taxes were properly accrued in prior applicable periods. The Company is current with reporting and payment of 2017 payroll taxes. In July 2017, a third-party payroll processor was retained to increase controls over reporting and payment of federal and state payroll taxes. As of July 31, 2017, payroll tax reporting and processing for the Company and each reporting subsidiary are currently being processed by a third-party payroll processor. |
Accrued Compensation
Accrued Compensation | 6 Months Ended |
Jun. 30, 2017 | |
Accrued Compensation [Abstract] | |
ACCRUED COMPENSATION | 11. ACCRUED COMPENSATION On June 19, 2017, the District Court held the Injunction Hearing as further described in Note 14 in Part I, Item 1 of this Quarterly Report on Form 10-Q. On June 20, 2017, the District Court granted the application for a temporary injunction against former officers of the Company and found that the officers violated their fiduciary duties (including their duty of loyalty) owed to the Company by causing payments of $750,000 in bonuses to be paid to themselves, and that the Company’s board of directors had terminated both officers’ employment agreements and removed both officers from their positions as officers and as employees of the Company. The Company evaluated the officers employment agreements and determined 2016 and 2017 accrued executive bonuses were not earned and no further obligations were due to the two former officers. The Company reversed the accrual and reduced current year bonus expense by $90,423 and recorded a gain of $669,529 for the expense recorded in the prior year. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2017 | |
Income Taxes [Abstract] | |
INCOME TAXES | 12. INCOME TAXES The Company accounts for income taxes in accordance with FASB Accounting Standards Codification Topic 740-10 which requires the Company to provide a net deferred tax asset/liability equal to the expected future tax benefit/expense of temporary reporting differences between book and tax accounting methods and any available operating loss or tax credit carryforwards. At June 30, 2017 and December 31, 2016, the Company had available unused operating loss carryforwards of $6,216,483 and $4,194,335, respectively, which generated a deferred tax benefits of $2,300,099 and $1,551,904, respectively. The Company had a 100% valuation allowance on the deferred tax assets at June 30, 2017. The net operating loss carryforwards will begin to expire in 2036. After analyzing our forecasted tax position at June 30, 2017, we currently expect to utilize all of our net operating loss carryforwards prior to their expiration dates. The Company accounts for uncertainties in income taxes in accordance with FASB ASC Topic 740 “Accounting for Uncertainty in Income Taxes”. The Company has determined that there are no significant uncertain tax positions requiring recognition in its financial statements. In the event the Company is assessed for interest and/or penalties by taxing authorities, such assessed amounts will be classified in the financial statements as income tax expense. Tax years 2014 through 2016 remain subject to examination by Federal and state taxing authorities. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2017 | |
Stockholders' Equity [Abstract] | |
STOCKHOLDERS' EQUITY | 13. STOCKHOLDERS’ EQUITY On March 18, 2016, the Company issued 2,300,000 Shares of Series B Convertible Preferred Stock (“Series B Shares”) to each of Thomas A. Hyde Jr. and Robert L. Winspear (each a “Holder” and collectively the “Holders”) at a price of $0.05 per share pursuant to subscription agreements between the Company and the Holders. The Series B Shares were designated and issued in March 2016. The Company has subsequently taken the position that each of the creation of the Series B Shares, and the issuance of the Series B Shares to Mr. Hyde and Mr. Winspear, were in violation of the prohibition in the Company’s bylaws against interested director transactions and were not valid corporate actions taken by the Board of Directors, due to (a) Mr. Hyde’s service on the Board of Directors at such time as the Board voted to designate and issue the Series B Shares, (b) Mr. Hyde’s failure to recuse himself in the action taken by the Board of Directors to designate and issue the Series B Shares, and (c) without Mr. Hyde’s vote, a majority of the remainder of the board of directors did not vote to issue the Series B shares. The Series B Shares were convertible into shares of the Company’s common stock on a ratio of one-to-one, subject to adjustment for stock splits and stock dividends. The Series B Shares ranked senior to the common stock and other preferred shares and carried a liquidation preference of $.05 per share. Holders were also entitled to receive dividends declared on the Company’s common stock on an as-converted basis. Each Series B Share entitled a Holder to 20 votes per share on all matters subject to voting by holders of the Company’s common stock, which collectively entitled the Holders to vote a combined 92,000,000 shares of common stock. Under the terms of the Series B Shares, the Company had the right to, among other things, require a Holder to convert the Series B Shares into common stock at any time after the Holder resigned, was terminated or otherwise ceased to be an officer of the Company. In connection with the issuance of the Series B Shares, the Company and the Holders also executed a Stockholders Agreement (the “Stockholders Agreement”) whereby the Holders agreed not to initiate directly or indirectly, any stockholder vote or action, by written consent or otherwise, to increase the size or structure of the Company’s board of directors or remove any existing director, nor initiate directly or indirectly any stockholder vote or action by written consent or otherwise, to affect Holders’ executive compensation, bonus criteria and amounts, or other similar action. The Holders also agreed to convert the Series B Shares immediately upon termination, whether voluntary or involuntary, or upon their resignation for any reason. On June 4, 2017, the Board of Directors terminated for cause (the “Terminations”) each of Mr. Hyde and Mr. Winspear. In connection with and immediately following the Terminations, the Company exercised its rights under the Stockholders Agreement to convert the Series B Shares into 4,600,000 shares of common stock (the “Series B Conversion”). As a result of the Series B Conversion, no Series B Shares remain outstanding. The table below lists outstanding warrants as of June 30, 2017: Shares Exercise Price Warrants Warrants issued November 30, 2015 5,452,458 $ 0.05 November 30, 2025 Warrants issued April 12, 2016 500,000 $ 0.06 October 12, 2017 Warrants outstanding June 30, 2017 5,952,458 — The Company has no stock options outstanding as of June 30, 2017. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 14. COMMITMENTS AND CONTINGENCIES The Company is a party to routine litigation and administrative complaints incidental to its business. The Company does not believe that any or all of such routine litigation and administrative complaints is likely to have a material adverse effect on the Company’s financial condition or results of operations, except as noted below. Litigation with Former Management On May 11, 2017, the Company appointed an independent committee (the “Special Committee”) of the board of directors to conduct an investigation into certain of the Company’s past business practices encompassing each of (a) Thomas A. Hyde, Jr., the Company’s then-President and Chief Executive Officer, and (b) Robert L. Winspear, the Company’s then-Chief Financial Officer, Vice President and Secretary and certain matters relating to the Company’s obligations under its credit facility with GACP Finance Co. After conducting its investigation, the Special Committee determined that (i) Mr. Hyde and Mr. Winspear made payments to themselves of deferred compensation in contravention of the Loan Agreement, (ii) such bonus payments violated a prohibition under the Loan Agreement of making any payments of Subordinated Indebtedness (as defined in the Loan Agreement), and (iii) as a result of such bonus payments, the Company did not have a sufficient cash balance on hand to meet the financial covenants under the Loan Agreement. On May 15, 2017, following the completion of their investigation, the Special Committee resolved to terminate each of Mr. Hyde and Mr. Winspear, effective immediately, and on May 17, 2017, the Company delivered to each of Mr. Hyde and Mr. Winspear a letter terminating their employment and their status as officers. Mr. Hyde and Mr. Winspear informed the Company that they disputed the Special Committee’s authority to terminate each of their respective employments and officer status, alleging the termination was not a valid action taken by the Company and refusing to recognize the termination letters. On June 4, 2017, Mr. Hyde and Mr. Winspear were formally terminated again for cause at a meeting of the Company’s board of directors. Notwithstanding the formal termination, Mr. Hyde and Mr. Winspear ignored the directive of the Company’s board of directors and continued to report to work at the Company’s offices and to act as executive management, including holding themselves out as such to the Company’s lenders, employees and third parties. On June 4, 2017, the Company filed an Original Petition and Application for Temporary Restraining Order and Temporary and Permanent Injunctions (the “Pleading”) to initiate a lawsuit against Mr. Hyde and Mr. Winspear in the 134 th On June 19, 2017, the District Court held the Injunction Hearing. On June 20, 2017, the District Court (a) granted the Company’s application for a temporary injunction against the Defendants (the “Injunction”), and (b) found that the Defendants violated their fiduciary duties (including their duty of loyalty) owed to the Company by causing payments of $750,000 in bonuses to themselves, and that the Company’s board of directors had terminated both Defendants’ employment agreements and removed both Defendants from their positions as officers. The Injunction also enjoins the Defendants from, among other things, (a) coming within 100 feet of any property owned, leased or occupied by the Company; (b) accessing any of the Company’s computer systems equipment, bank accounts or other assets; and (c) holding themselves out as the Company’s employees or officers to any of the Company’s regulators, investors, shareholders, employees, customers, suppliers, lenders or vendors. On June 30, 2017, the Defendants filed their Original Answer, in which they generally denied the allegations contained in the Company’s Pleadings. The District Court set the date for a full trial on the merits of the Company’s claims against the Defendants for March 2018. The Company intends to vigorously pursue this matter and to protect the integrity of the actions of its board of directors. The Company has incurred significant expenses related to this lawsuit to date and may continue to incur expenses related to this lawsuit. The Company cannot predict the outcome of this lawsuit or for how long it will remain active. |
Reclassifications
Reclassifications | 6 Months Ended |
Jun. 30, 2017 | |
Reclassifications [Abstract] | |
RECLASSIFICATIONS | 15. RECLASSIFICATIONS Certain reclassifications have been made to the prior period to conform with the current period’s presentation. These include; payroll tax payable, accrued compensation, processing and servicing costs, salaries and wages, outside commissions and other selling general and administrative expenses. There was no impact on total assets, total shareholders’ equity, accumulated deficit, total expenses or net income (loss) resulting from these reclassifications. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, these unaudited consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the results of the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2017. These unaudited consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Excel Corporation and subsidiaries in which the Company has a controlling financial interest. All intercompany transactions and account balances between Excel Corporation and its subsidiaries have been eliminated in consolidation. Transactions with its consolidated subsidiaries are generally settled in cash. Investments in unconsolidated affiliated entities are accounted for under the equity method and are included in “Equity investment” in the accompanying consolidated balance sheets. |
Use of Estimates in the Preparation of Financial Statements | Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the evaluation of deferred tax assets, purchase accounting, allowances, and equity investments. |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Discontinued Operations [Abstract] | |
Schedule of discontinued operations | Six Months Ended June 30, 2016 Revenues $ 2,027,113 Operating expenses (4,035,797 ) Pre-tax loss from discontinued operations (2,008,684 ) Loss from discontinued operations, net of tax $ (2,008,684 ) |
Other Income (Expenses) (Tables
Other Income (Expenses) (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Other Income (Expenses) [Abstract] | |
Schedule of other incone (expenses) | June 30, June 30, 2017 2016 Accrued compensation $ 669,529 $ - Settlement on lawsuit 50,000 - Account payable Calpian adjustment (110,175 ) - Other, net $ 609,354 $ - |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Property and Equipment [Abstract] | |
Schedule of property and equipment | June 30, December 31, Computer software $ 63,692 $ 38,607 Equipment 183,444 163,394 Furniture & fixtures 38,682 38,882 Leasehold improvements 16,503 16,538 Total cost 302,321 257,421 Less accumulated depreciation (130,185 ) (86,979 ) Property and equipment – net $ 172,136 $ 170,442 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Leases [Abstract] | |
Schedule of future minimum lease payments | 2017 $ 88,344 2018 179,489 2019 174,946 2020 6,430 2021 and after - Total $ 449,209 |
Notes Payable (Tables)
Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Notes Payable [Abstract] | |
Schedule of outstanding notes payable | June 30, December 31, 2016 Term loan due November 2019, bearing interest at 18%, secured by substantially all of the assets of the Company 12,567,194 12,809,252 Less current portion (12,567,194 ) (12,809,252 ) Long-term portion of notes payable $ - $ - |
Schedule of amount outstanding under the Loan | June 30, Term loan $ 13,500,000 Net deferred financing costs (874,918 ) Principal paydown (512,583 ) Accrued interest payable in kind 454,695 Note payable $ 12,567,194 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Stockholders' Equity [Abstract] | |
Schedule of outstanding warrants | Shares Exercise Price Warrants Warrants issued November 30, 2015 5,452,458 $ 0.05 November 30, 2025 Warrants issued April 12, 2016 500,000 $ 0.06 October 12, 2017 Warrants outstanding June 30, 2017 5,952,458 — |
Organization and Operations (De
Organization and Operations (Details) | Apr. 30, 2016Merchants | Apr. 12, 2016USD ($)shares | Jun. 30, 2017Subsidiary | Nov. 30, 2015USD ($) |
Organization and Operations (Textual) | ||||
Notes payable | $ 9,000,000 | $ 9,000,000 | ||
Number of wholly owned subsidiaries | Subsidiary | 3 | |||
eVance Processing Inc. [Member] | ||||
Organization and Operations (Textual) | ||||
Cancelled noteholder amount | 720,084 | |||
Notes payable | 675,000 | |||
Litigation cost | $ 675,000 | |||
Bears simple interest rate | 12.00% | |||
Damages claim amount | $ 1,500,000 | |||
Principal amount | 675,000 | |||
Reduction of note principal value | $ 720,084 | |||
Warrant purchase to common stock | shares | 360,042 | |||
Notes payable reduced | $ 8,279,916 | |||
Chyp [Member] | ||||
Organization and Operations (Textual) | ||||
Bears simple interest rate | 12.00% | |||
Number of merchants | Merchants | 5,000 | |||
Description of purchase and sale agreement | Securus entered into a Purchase and Sale Agreement (the "2016 Purchase Agreement") with Chyp LLC ("Chyp"). In connection with the 2016 Purchase Agreement, Chyp executed a three-year preferred marketing agreement with eVance. Chyp acquired substantially all of the operations of Securus including its sales and marketing operations located in Portland, Oregon and West Palm Beach, Florida. Securus retained the approximately 5,000 merchants and related merchant processing residual portfolios. | |||
Promissory note due | Nov. 30, 2017 |
Going Concern (Details)
Going Concern (Details) - USD ($) | Nov. 02, 2016 | Apr. 30, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | May 05, 2017 | Dec. 31, 2016 |
Going Concern (Textual) | ||||||||
Net loss | $ (767,300) | $ 5,454 | $ (1,437,702) | $ (1,965,940) | ||||
Accumulated deficit | $ (6,634,493) | $ (6,634,493) | $ (5,196,790) | |||||
Loan agreement, description | The Loan Agreement has a three-year term and provides for term loan commitments of up to $25,000,000 consisting of an Initial Term Loan in the amount of $13,500,000 and a Delayed Draw Term Loan in the amount of $11,500,000 (each a "Loan" or together "Loans"). | The principal due under the Loan Agreement was $13,783,602. The April 30, 2017 loan balance was in excess of the borrowing base as calculated under the Loan Agreement and the Company made a principal payment on May 8, 2017 of $512,583 to reduce the loan balance to be within the borrowing base. | ||||||
Loan agreement term | 3 years | |||||||
Minimum [Member] | ||||||||
Going Concern (Textual) | ||||||||
Interest rate | 13.00% | |||||||
Maximum [Member] | ||||||||
Going Concern (Textual) | ||||||||
Interest rate | 16.00% |
Discontinued Operations (Detail
Discontinued Operations (Details) | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Discontinued Operations [Abstract] | |
Revenues | $ 2,027,113 |
Operating expenses | (4,035,797) |
Pre-tax loss from discontinued operations | (2,008,684) |
Loss from discontinued operations, net of tax | $ (2,008,684) |
Discontinued Operations (Deta31
Discontinued Operations (Details Textual) - Chyp [Member] | Apr. 30, 2016USD ($)Merchants |
Discontinued Operations (Textual) | |
Preferred marketing agreement term | 3 years |
Number of merchants | Merchants | 5,000 |
Description of discontinued operations | Pursuant to the 2016 Purchase Agreement with Chyp, Securus provided financial assistance to Chyp in the form of a forgivable loan to support the transition of Securus' operations to Chyp. Under the terms of the loan, Securus advanced Chyp $500,000 during 2016 and $50,000 in January 2017 for a total of $550,000. Accordingly, Chyp executed a $550,000 promissory note (the "Chyp Note") in favor of Securus. |
Percentage of interest rate | 12.00% |
Promissory note due | May 1, 2017 |
Loss on disposal of operations | $ 840,641 |
Charge on discontinued operations | 290,641 |
Financial assistance | $ 550,000 |
Other Income (Expenses) (Detail
Other Income (Expenses) (Details) - USD ($) | Jun. 30, 2017 | Jun. 30, 2016 |
Other Income (Expenses) [Abstract] | ||
Accrued compensation | $ 669,529 | |
Settlement on lawsuit | 50,000 | |
Account payable Calpian adjustment | (110,175) | |
Other, net | $ 609,354 |
Other Income (Expenses) (Deta33
Other Income (Expenses) (Details Textual) | Jul. 06, 2017USD ($) |
Subsequent Event [Member] | |
Other income (expenses) (Textual) | |
Other income expenses received | $ 50,000 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Line Items] | ||
Total cost | $ 302,321 | $ 257,421 |
Less accumulated depreciation | (130,185) | (86,979) |
Property and equipment - net | 172,136 | 170,442 |
Computer software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 63,692 | 38,607 |
Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 183,444 | 163,394 |
Furniture & fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 38,682 | 38,882 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | $ 16,503 | $ 16,538 |
Leases (Details)
Leases (Details) | Jun. 30, 2017USD ($) |
Future Minimum Lease Payments | |
2,017 | $ 88,344 |
2,018 | 179,489 |
2,019 | 174,946 |
2,020 | 6,430 |
2021 and after | |
Total | $ 449,209 |
Leases (Details Textual)
Leases (Details Textual) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Leases (Textual) | ||
Rent expense | $ 98,916 | $ 167,969 |
Operating lease term | 63 months | |
Irving Texas [Member] | ||
Leases (Textual) | ||
Operating lease expiration date | Nov. 1, 2014 | |
Irving Texas [Member] | Maximum [Member] | ||
Leases (Textual) | ||
Monthly lease payments | $ 6,428 | |
Irving Texas [Member] | Minimum [Member] | ||
Leases (Textual) | ||
Monthly lease payments | $ 0 | |
Georgia [Member] | ||
Leases (Textual) | ||
Operating lease expiration date | Nov. 30, 2019 | |
Georgia [Member] | Maximum [Member] | ||
Leases (Textual) | ||
Monthly lease payments | $ 9,046 | |
Georgia [Member] | Minimum [Member] | ||
Leases (Textual) | ||
Monthly lease payments | $ 8,278 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Notes Payable [Abstract] | ||
Term loan due November 2019, bearing interest at 18%, secured by substantially all of the assets of the Company | $ 12,567,194 | $ 12,809,252 |
Less current portion | (12,567,194) | (12,809,252) |
Long-term portion of notes payable |
Notes Payable (Details 1)
Notes Payable (Details 1) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Notes Payable [Abstract] | ||
Term loan | $ 13,500,000 | |
Net deferred financing costs | (874,918) | |
Principal paydown | (512,583) | |
Accrued interest payable in kind | 454,695 | |
Note payable | $ (12,567,194) | $ (12,809,252) |
Notes Payable (Details Textual)
Notes Payable (Details Textual) - USD ($) | 6 Months Ended | ||
Jun. 30, 2017 | Dec. 31, 2016 | Nov. 02, 2016 | |
Notes Payable (Textual) | |||
Accrue interest, description | Before the default described within Note 3 in Part I, Item 1 of this Quarterly Report on Form 10-, the Loan accrued interest of 18% per annum of which 13% was payable in cash monthly and 5% is payable in kind (PIK). Due to the default and pursuant to the Loan Agreement, the cash interest has been increased from 13% to 16%. | ||
Financing costs | $ 1,099,021 | $ 1,099,021 | |
Loan Agreement [Member] | |||
Notes Payable (Textual) | |||
Term loan commitments | $ 25,000,000 | ||
Term Loan [Member] | |||
Notes Payable (Textual) | |||
Term Loan due date | Nov. 30, 2019 | ||
Interest rate | 18.00% | ||
Term Loan [Member] | Loan Agreement [Member] | |||
Notes Payable (Textual) | |||
Term loan commitments | 11,500,000 | ||
Initial Term Loan [Member] | Loan Agreement [Member] | |||
Notes Payable (Textual) | |||
Term loan commitments | $ 13,500,000 |
Payroll Tax Payable (Details)
Payroll Tax Payable (Details) | Jun. 30, 2017USD ($) |
Payroll Tax Payable (Textual) | |
Payroll taxes | $ 349,266 |
Payroll taxes consisting | 250,818 |
Employee withholdings | 98,448 |
Management accrued fees | 160,000 |
Accrued interest | $ 160,000 |
Accrued Compensation (Details)
Accrued Compensation (Details) | 6 Months Ended | |
Jun. 30, 2017USD ($)Officers | Jun. 20, 2017USD ($) | |
Accrued Compensation (Textual) | ||
Payments of bonuses | $ 750,000 | |
Gain of adjusted balance sheet | $ 669,529 | |
Bonus expense | $ 90,423 | |
Number of former officers | Officers | 2 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Income Taxes (Textual) | ||
Net operating loss carryforwards | $ 6,216,483 | $ 4,194,335 |
Percentage of valuation allowance on deferred tax benefit | 100.00% | |
Deferred tax benefits | $ 2,300,099 | $ 1,551,904 |
Net operating loss carryforwards, Expiration date | Dec. 31, 2036 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) | 6 Months Ended |
Jun. 30, 2017$ / sharesshares | |
Stockholders' Equity [Abstract] | |
Warrants issued November 30, 2015, Shares | 5,452,458 |
Warrants issued, Exercise Price | $ / shares | $ 0.05 |
Warrants issued, Warrants Expire | Nov. 30, 2025 |
Warrants issued April 12, 2016, Shares | 500,000 |
Warrants issued, Exercise Price One | $ / shares | $ 0.06 |
Warrants issued, Warrants Expire One | Oct. 12, 2017 |
Warrants outstanding June 30 | 5,952,458 |
Stockholders' Equity (Details T
Stockholders' Equity (Details Textual) - $ / shares | Jun. 04, 2017 | Mar. 18, 2016 | Jun. 30, 2017 |
Series B Shares [Member] | |||
Stockholders' Equity (Textual) | |||
Stock splits | one-to-one | ||
Liquidation preference per share | $ 0.05 | ||
Holders common stock vote combined shares | 92,000,000 | ||
Subscription agreements, description | (a) Mr. Hyde's service on the Board of Directors at such time as the Board voted to designate and issue the Series B Shares, (b) Mr. Hyde's failure to recuse himself in the action taken by the Board of Directors to designate and issue the Series B Shares, and (c) without Mr. Hyde's vote, a majority the remainder of the board of directors did not vote to issue the Series B shares. | ||
Holders votes, description | Each Series B Share entitled a Holder to 20 votes per share on all matters subject to voting by holders of the Company's common stock. | ||
Series B Shares [Member] | Thomas A. Hyde Jr. [Member] | |||
Stockholders' Equity (Textual) | |||
Convertible preferred shares issued | 2,300,000 | ||
Shares issued, price per share | $ 0.05 | ||
Series B Shares [Member] | Robert L. Winspear [Member] | |||
Stockholders' Equity (Textual) | |||
Convertible preferred shares issued | 2,300,000 | ||
Shares issued, price per share | $ 0.05 | ||
Series B Conversion [Member] | |||
Stockholders' Equity (Textual) | |||
Common stock exercised | 4,600,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | May 11, 2017 | Jun. 20, 2017 |
Commitments and Contingencies (Textual) | ||
Contingencies, description | (a) granted the Company's application for a temporary injunction against the Defendants (the "Injunction"), and (b) found that the Defendants violated their fiduciary duties (including their duty of loyalty) owed to the Company by causing payments of $750,000 in bonuses to themselves, and that the Company's board of directors had terminated both Defendants' employment agreements and removed both Defendants from their positions as officers. The Injunction also enjoins the Defendants from, among other things, (a) coming within 100 feet of any property owned, leased or occupied by the Company; (b) accessing any of the Company's computer systems equipment, bank accounts or other assets; and (c) holding themselves out as the Company's employees or officers to any of the Company's regulators, investors, shareholders, employees, customers, suppliers, lenders or vendors. | |
Deferred compensation, description | (i) Mr. Hyde and Mr. Winspear made payments to themselves of deferred compensation in contravention of the Loan Agreement, (ii) such bonus payments violated a prohibition under the Loan Agreement of making any payments of Subordinated Indebtedness (as defined in the Loan Agreement), and (iii) as a result of such bonus payments, the Company did not have a sufficient cash balance on hand to meet the financial covenants under the Loan Agreement. |