Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Jul. 31, 2020 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Ipsidy Inc. | |
Entity Central Index Key | 0001534154 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 000-54545 | |
Entity Incorporation, State or Country Code | DE | |
Entity Reporting Status Current | Yes | |
Entity Interactive Data Current | Yes | |
Entity Small Business | true | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 546,654,196 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Current Assets: | ||
Cash | $ 814,950 | $ 567,081 |
Accounts receivable, net | 158,635 | 125,859 |
Stock subscription receivable | 965,033 | |
Current portion of net investment in direct financing lease | 68,909 | 65,333 |
Inventory, net | 162,435 | 173,575 |
Other current assets | 379,139 | 753,505 |
Total current assets | 2,549,101 | 1,685,353 |
Property and equipment, net | 113,815 | 161,820 |
Other assets | 241,600 | 383,066 |
Intangible assets, net | 5,272,041 | 5,593,612 |
Goodwill | 4,183,232 | 5,218,861 |
Net investment in direct financing lease, net of current portion | 459,331 | 494,703 |
Total assets | 12,819,120 | 13,537,415 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 2,655,107 | 2,215,912 |
Notes payable, current portion | 5,635 | 5,341 |
Capital lease obligation, current portion | 36,958 | 34,816 |
Deferred revenue | 454,086 | 425,276 |
Total current liabilities | 3,151,786 | 2,681,345 |
Long-term liabilities: | ||
Notes payable, net of discounts and current portion | 490,392 | 1,970,937 |
Convertible debt, net of discounts | 5,563,538 | 428,000 |
Capital lease obligation, net of current portion | 30,764 | 49,794 |
Operating lease liabilities | 92,503 | 131,568 |
Total liabilities | 9,328,983 | 5,261,644 |
Commitments and Contingencies (Note 12) | ||
Stockholders' Equity: | ||
Common stock, $0.0001 par value, 1,000,000,000 shares authorized; 546,654,196 and 518,125,454 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively | 54,665 | 51,812 |
Additional paid in capital | 97,528,578 | 94,982,167 |
Accumulated deficit | (94,234,462) | (86,935,593) |
Accumulated comprehensive income | 141,356 | 177,385 |
Total stockholders' equity | 3,490,137 | 8,275,771 |
Total liabilities and stockholders' equity | $ 12,819,120 | $ 13,537,415 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, issued | 546,654,196 | 518,125,454 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenues: | ||||
Products and services | $ 306,692 | $ 628,905 | $ 1,085,630 | $ 1,352,846 |
Lease income | 14,427 | 16,056 | 29,278 | 32,493 |
Total revenues, net | 321,119 | 644,961 | 1,114,908 | 1,385,339 |
Operating Expenses: | ||||
Cost of sales | 61,798 | 189,261 | 417,521 | 365,724 |
General and administrative | 2,389,794 | 2,007,038 | 3,872,916 | 4,147,869 |
Research and development | 190,339 | 366,292 | 620,740 | 796,962 |
Impairment loss | 163,822 | 1,035,629 | ||
Depreciation and amortization | 321,987 | 166,908 | 647,331 | 327,696 |
Total operating expenses | 3,127,740 | 2,729,499 | 6,594,137 | 5,638,251 |
Loss from operations | (2,806,621) | (2,084,538) | (5,479,229) | (4,252,912) |
Other Income (Expense): | ||||
Interest expense | (310,153) | (93,260) | (489,203) | (180,150) |
Other (expense) income, net | (342,082) | 6,271 | (1,317,971) | 12,497 |
Other expense, net | (652,235) | (86,989) | (1,807,174) | (167,653) |
Loss before income taxes | (3,458,856) | (2,171,527) | (7,286,403) | (4,420,565) |
Income tax expense | (3,592) | (4,264) | (12,466) | (17,965) |
Net loss | $ (3,462,448) | $ (2,175,791) | $ (7,298,869) | $ (4,438,530) |
Net loss per share - Basic and Diluted | $ (0.01) | $ 0 | $ (0.01) | $ (0.01) |
Weighted Average Shares Outstanding - Basic and Diluted | 523,234,921 | 479,787,679 | 524,207,499 | 476,369,338 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Statement of Other Comprehensive Income [Abstract] | ||||
Net Loss | $ (3,462,448) | $ (2,175,791) | $ (7,298,869) | $ (4,438,530) |
Foreign currency translation gain (loss) | 80,235 | (10,526) | (36,029) | 13,702 |
Comprehensive loss | $ (3,382,213) | $ (2,186,317) | $ (7,334,898) | $ (4,424,828) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($) | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total |
Balance, beginning at Dec. 31, 2018 | $ 47,895 | $ 90,770,682 | $ (76,435,235) | $ 207,754 | $ 14,591,096 |
Balance, beginning (in shares) at Dec. 31, 2018 | 478,950,996 | ||||
Sale of common stock for cash | $ 3,876 | 2,828,276 | 2,832,152 | ||
Sale of common stock for cash (in shares) | 38,763,750 | ||||
Common stock issued for services | $ 41 | 41,071 | 41,112 | ||
Common stock issued for services (in shares) | 410,708 | ||||
Stock-based compensation | 787,720 | 787,720 | |||
Net loss | (4,438,530) | (4,438,530) | |||
Foreign currency translation | 13,702 | 13,702 | |||
Balance, ending at Jun. 30, 2019 | $ 51,812 | 94,427,749 | (80,873,765) | 221,456 | 13,827,252 |
Balance, ending (in shares) at Jun. 30, 2019 | 518,125,454 | ||||
Balance, beginning at Mar. 31, 2019 | $ 47,895 | 91,186,061 | (78,697,974) | 231,982 | 12,767,964 |
Balance, beginning (in shares) at Mar. 31, 2019 | 478,950,996 | ||||
Sale of common stock for cash | $ 3,876 | 2,828,276 | 2,832,152 | ||
Sale of common stock for cash (in shares) | 38,763,750 | ||||
Common stock issued for services | $ 41 | 41,071 | 41,112 | ||
Common stock issued for services (in shares) | 410,708 | ||||
Stock-based compensation | 372,341 | 372,341 | |||
Net loss | (2,175,791) | (2,175,791) | |||
Foreign currency translation | (10,526) | (10,526) | |||
Balance, ending at Jun. 30, 2019 | $ 51,812 | 94,427,749 | (80,873,765) | 221,456 | 13,827,252 |
Balance, ending (in shares) at Jun. 30, 2019 | 518,125,454 | ||||
Balance, beginning at Dec. 31, 2019 | $ 51,812 | 94,982,167 | (86,935,593) | 177,385 | 8,275,771 |
Balance, beginning (in shares) at Dec. 31, 2019 | 518,125,454 | ||||
Sale of common stock for cash | $ 344 | 199,656 | 200,000 | ||
Sale of common stock for cash (in shares) | 3,441,558 | ||||
Warrant exercise | $ 2,048 | 1,246,935 | 283,950 | ||
Warrant exercise (in shares) | 20,480,992 | ||||
Modification of warrants issued with debt | 95,223 | 95,223 | |||
Warrant exercise inducement | 366,795 | 366,795 | |||
Stock-based compensation | $ 450 | 629,543 | 629,993 | ||
Stock-based compensation (in shares) | 4,500,000 | ||||
Common stock issued for services | $ 11 | 8,259 | 8,270 | ||
Common stock issued for services (in shares) | 106,192 | ||||
Net loss | $ (7,298,869) | (7,298,869) | |||
Foreign currency translation | (36,029) | (36,029) | |||
Balance, ending at Jun. 30, 2020 | $ 54,665 | 97,528,578 | (94,234,462) | 141,356 | 3,490,137 |
Balance, ending (in shares) at Jun. 30, 2020 | 546,654,196 | ||||
Balance, beginning at Mar. 31, 2020 | $ 52,273 | 95,254,309 | (90,772,014) | 61,121 | 4,595,689 |
Balance, beginning (in shares) at Mar. 31, 2020 | 522,731,646 | ||||
Sale of common stock for cash | $ 344 | 199,656 | 200,000 | ||
Sale of common stock for cash (in shares) | 3,441,558 | ||||
Warrant exercise | $ 2,048 | 1,246,935 | 1,248,983 | ||
Warrant exercise (in shares) | 20,480,992 | ||||
Warrant exercise inducement | 366,795 | 366,795 | |||
Stock-based compensation | 460,883 | 460,883 | |||
Net loss | (3,462,448) | (3,462,448) | |||
Foreign currency translation | 80,235 | 80,235 | |||
Balance, ending at Jun. 30, 2020 | $ 54,665 | $ 97,528,578 | $ (94,234,462) | $ 141,356 | $ 3,490,137 |
Balance, ending (in shares) at Jun. 30, 2020 | 546,654,196 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (7,298,869) | $ (4,438,530) |
Adjustments to reconcile net loss with cash used in operations: | ||
Depreciation and amortization expense | 600,978 | 327,696 |
Stock-based compensation | 629,993 | 787,720 |
Extinguishment of note payable | 985,481 | |
Amortization of debt discount and debt issuance costs, net | 214,668 | 54,882 |
Common stock issued for services | 41,112 | |
Warrant exercise inducement expense | 366,795 | |
Impairment loss/write-off of assets | 1,059,495 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (23,217) | (63,869) |
Net investment in direct financing lease | 31,796 | 28,581 |
Inventory | 21,984 | (60,818) |
Other current assets | 374,366 | 155,035 |
Accounts payable and accrued expenses | 1,056,433 | 324,076 |
Deferred revenue | 28,810 | 173,518 |
Net cash flows from operating activities | (1,951,287) | (2,670,597) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (2,394) | (14,902) |
Decrease in other assets | 13,462 | |
Investment in other assets including work in process | (124,870) | (940,068) |
Net cash flows from investing activities | (113,802) | (954,970) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of convertible note payable | 1,510,000 | |
Payment of debt issuance costs | (104,800) | |
Proceeds from sale of common stock offering, net of offering costs | 200,000 | 2,832,152 |
Proceeds from the exercise of warrants | 283,950 | |
Proceeds from the payroll protection loan | 485,760 | |
Principal payments on capital lease obligations and notes payable | (19,487) | (14,987) |
Net cash flows from financing activities | 2,355,423 | 2,817,165 |
Effect of foreign currencies exchange on cash | (42,465) | 20,291 |
Net change in Cash | 247,869 | (788,111) |
Cash, Beginning of Period | 567,081 | 4,972,331 |
Cash, End of Period | 814,950 | 4,184,220 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for interest | 5,296 | 4,223 |
Cash paid for income taxes | 12,466 | 13,701 |
Non-cash Investing and Financing Activities: | ||
Modification of warrants issued with convertible debt | 95,223 | |
Exchange of notes payable and accrued interest for convertible notes payable | 2,662,000 | |
Warrant exercise with a subscription receivable | 965,033 | |
Settlement of accounts payable with common stock | 8,270 | |
Purchase of vehicle with note payable | 16,510 | |
Recognition of lease right to use assets and labilities | 514,473 | |
Reclassification of software development to intangible costs | $ 252,875 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | NOTE 1 – BASIS OF PRESENTATION In the opinion of Management, the accompanying unaudited condensed consolidated financial statements are prepared in accordance with instructions for Form 10-Q, include all adjustments (consisting only of normal recurring accruals) which we considered as necessary for a fair presentation of the results for the periods presented. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2019. The results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of the results to be expected for future periods or the full year. The condensed consolidated financial statements include the accounts of Ipsidy Inc. and its wholly-owned subsidiaries MultiPay S.A.S., ID Global LATAM, IDGS S.A.S., ID Solutions, Inc., FIN Holdings Inc., Ipsidy Enterprises Limited, Cards Plus Pty Ltd. and Ipsidy Peru S.A.C. (collectively the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation. Going Concern As of June 30, 2020, the Company had an accumulated deficit of approximately $94.2 million. For the six months ended June 30, 2020 the Company earned revenue of approximately $1.1 million and incurred a loss from operations of approximately $5.5 million. The reports of our independent registered public accounting firm on our consolidated financial statements for the years ended December 31, 2019 and 2018 contained an explanatory paragraph regarding our ability to continue as a going concern based upon our net losses. These unaudited condensed consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to meet its obligations and continue its operations for the next fiscal year. The continuation of the Company as a going concern is dependent upon financial support from the Company's current shareholders, the ability of the Company to obtain additional financing to continue operations, the Company's ability to generate sufficient cash flows from operations, successfully locating and negotiating with other business entities for potential acquisition and /or acquiring new clients to generate revenues and cash flows. On February 14, 2020, the Company entered into Securities Purchase Agreements with several accredited investors (the "2020 Note Investors") providing for the sale by the Company to the 2020 Note Investors of 15% Senior Secured Convertible Notes in the aggregate amount of $1,510,000 (the "2020 Notes"). In connection with this private offering, the Company paid Network 1 Financial Securities, Inc., a registered broker-dealer, a cash fee of approximately $104,800. In May 2020, the Company received a loan of approximately $485,000 under the Paycheck Protection Program of the U.S. Small Business Association related to its U.S. operations. The Company anticipates subject to approval by the Small Business Administration, if certain requirements are met the loan proceeds may be forgiven. Any amounts not forgiven will be required to be repaid. In June 2020, the Company entered into Subscription Agreements with two accredited investors (the "June 2020 Accredited Investors") pursuant to which the June 2020 Accredited Investors purchased 3,441,558 shares of common stock at an average price of $0.06 cents per share for $200,000. Additionally, on June 30, 2020, the Company entered into and consummated private transactions pursuant to which a portion of the Company's warrants exercisable at various prices were exercised at an average exercise price of $0.06 per share for approximately $1,249,000. The Company received cash proceeds of $283,950 and a stock subscription receivable for $965,033 which was received in full subsequent to June 30, 2020. There is no assurance that the Company will ever be profitable or be able to secure funding or generate sufficient revenues to sustain operations. As such, there is substantial doubt about the Company's ability to continue as a going concern. These unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern. Covid-19 A novel strain of coronavirus ("Covid-19") emerged globally in December 2019 and has been declared a pandemic. The extent to which Covid-19 will impact our customers, business, results and financial condition will depend on current and future developments, which are highly uncertain and cannot be predicted at this time. The Company's day-to-day operations beginning March 2020 have been impacted differently depending on geographic location and services that are being performed. The Cards Plus business located in South Africa did not have any operations in April 2020 and has had limitations on its operations starting in May 2020, as the Company is following the guidance and requirements of the South African government. Our operations in the United States and Colombia have suffered less immediate impact as most staff can work remotely and can continue to develop our product offerings. That said we have seen our business opportunities develop more slowly as business partners and potential customers are dealing with Covid-19 issues, working remotely and these issues are causing delays in decision making and finalization of negotiations and agreements. However, the level of inquiries about our services has increased during the last three months, as our products are designed to serve an increasingly mobile economy and workforce. Net Loss per Common Share The Company computes net loss per share in accordance with FASB ASC 260, "Earnings per Share". ASC 260 requires presentation of both basic and diluted earnings per share ("EPS") on the face of the statement of operations. Basic EPS is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible notes and stock warrants, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options, warrants and conversion of convertible notes. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. The following potentially dilutive securities were excluded from the calculation of diluted loss per share for the six months ended June 30, 2020 and 2019 because their effect was antidilutive: Security 2020 2019 Stock Options 159,744,061 106,600,006 Warrants 29,130,069 47,453,227 Total 188,874,130 154,053,233 Inventories Inventories of kiosks held by IDGS S.A.S are stated at the lower of cost (using the first-in, first-out method) or net realizable value. The kiosks provide electronic ticketing for transit systems. Inventory of plastic/ID cards, digital printing material, which are held by Cards Plus Pty Ltd., are at the lower of cost (using the average method) or market. The Plastic/ID cards and digital printing material are used to provide plastic loyal ID and other types of cards. Inventories at June 30, 2020 consist solely of the cards inventory. As of December 31, 2019, inventory consisted of kiosks that were not placed into service and were held for sale and cards inventory. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period. As of December 31, 2019, the Company had an inventory valuation allowance of approximately $236,000 to reflect net realizable value of the kiosks that are being held for sale and the Company believed no valuation allowance was necessary regarding the cards inventory. As of June 30, 2020, the Company did not believe a valuation allowance was necessary for the cards inventory. Revenue Recognition Below is the Company's revenue recognition policy determined by revenue stream for its significant revenue generating activities during the period ended June 30, 2020. Cards Plus - The Company recognizes revenue for the design and production of cards when products are shipped, or services have been performed due to the short-term nature of the contracts. Payment Processing – The Company recognizes revenue for variable fees generated for payment processing solutions that are earned on a usage fee over time based on monthly transaction volumes or on a monthly flat fee rate. Additionally, the Company also sells certain equipment from time to time for which revenue is recognized upon delivery to the customer. Identity Solutions Software – The Company recognizes revenue based on the identified performance obligations over the performance period for fixed consideration and for variable fees generated that are earned on a usage fee based over time based on monthly transaction volumes or on a monthly flat fee rate. The Company had a deferred revenue contract liability of approximately $454,000 and $425,000 as of June 30, 2020 and December 31, 2019 for certain revenue that will be earned in future periods. The majority of the $425,000 of deferred revenue contract liability as of December 31, 2019 was earned in the first three months of 2020. The $454,000 of deferred revenue contract liability as of June 30, 2020 will be earned over the ensuing four quarters. We have allocated the selling price in the contract to one customer which has multiple performance obligations based on the contract selling price that we believe represents a fair market price for the service rendered. All contracts are reviewed for their respective performance obligations and related revenue and expense recognition implications. Certain of the revenues are derived from the identity services could include multiple performance obligations. A performance obligation under the revenue standard is defined as a promise to provide a "distinct" good or service to a customer. The Company has determined that one possible treatment under the standard is that these services will represent a stand-ready series of distinct daily services that are substantially the same, with the same pattern of transfer to the customer. Further, the Company has determined that the performance obligation to provide account access and facilitate transactions may meet the criteria for the "as invoiced" practical expedient, in that the Company has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the Company's performance completed to date. As a result, the Company anticipates it may recognize revenue in the amount to which the Company has a right to invoice, based on completed performance at the relevant date. Additionally, the contracts could include implementation services, or support on an "as needed" basis and we will review each contract and determine whether such performance obligations are separate and distinct and apply the standard accordingly to the revenue and expense derived from or related to each such service. Additionally, the Company capitalizes the incremental costs of acquiring and fulfilling a contract with a customer if the Company expects to recover those costs. The incremental costs of acquiring and fulfilling a contract are those that the Company incurs to acquire and fulfill a contract with a customer that it would not have incurred if the contract had not been acquired (for example, a sales commission or specific incremental costs associated with the contract). The Company capitalizes the costs incurred to acquire and fulfill a contract only if those costs meet all the following criteria: a. The costs relate directly to a contract or to an anticipated contract that the Company can specifically identify. b. The costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy) performance obligations in the future. c. The costs are expected to be recovered. The Company will capitalize contract acquisition and fulfillment costs related to signing or renewing contracts that meet the above criteria, which will be classified as contract cost assets in the Company's Consolidated Balance Sheets. Contract cost assets will be amortized using the straight-line method over the expected period of benefit beginning at the time revenue begins to be realized. The amortization of contract fulfillment cost assets associated with facilitating transactions will be recorded as cost of sales in the Company's Consolidated Statements of Operations. The amortization of contract acquisition cost assets associated with sales commissions that qualify for capitalization will be recorded as general and administrative expense in the Company's Consolidated Statements of Operations. As of June 30, 2020, the Company had deferred contract costs, represented by contract cost assets of approximately $3,750 which are included in other currents assets for certain costs incurred for the future delivery of election support services. The performance obligation will be met over the next year and the costs will be expensed as the associated revenue is recognized as the Company performances its obligations. Revenue related to direct financing leases is outside the scope of Topic 606 and is recognized over the term of the lease using the effective interest method. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 6 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | NOTE 2 – PROPERTY AND EQUIPMENT, NET Property and equipment consisted of the following as of June 30, 2020 and December 31, 2019: 2020 2019 Property and equipment $ 284,710 $ 282,316 Equipment under capital lease (see Note 10) 156,867 156,867 441,577 439,183 Less: accumulated depreciation (327,762 ) (277,363 ) Property and equipment, net $ 113,815 $ 161,820 Depreciation expense totaled $26,533 and $45,203 for the six months ended June 30, 2020 and 2019, respectively. |
OTHER ASSETS
OTHER ASSETS | 6 Months Ended |
Jun. 30, 2020 | |
Other Assets [Abstract] | |
OTHER ASSETS | NOTE 3 – OTHER ASSETS Other assets consisted of the following at June 30, 2020 and December 31, 2019: June 30, 2020 December 31, 2019 Software and development costs $ - $ 128,005 Operating lease right of use assets 89,210 171,141 Other 152,390 83,920 $ 241,600 $ 383,066 |
INTANGIBLE ASSETS, NET (OTHER T
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) | NOTE 4 – INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) The Company's intangible assets consist of acquired and developed software and intellectual property acquired from MultiPay and FIN and are amortized over their estimated useful lives as indicated below. The following is a summary of activity related to intangible assets for the three months ended June 30, 2020: Acquired Customer Developed Intellectual Patents Relationships Software Property Pending Total Useful Lives 10 Years 5 Years 10 Years N/A Carrying Value at December 31, 2019 $ 970,019 $ 3,651,924 $ 862,792 $ 108,877 $ 5,593,612 Additions - 252,875 - 4,925 257,800 Amortization (79,358 ) (425,821 ) (74,192 ) - (579,371 ) Carrying Value at June 30 ,2020 $ 890,661 $ 3,478,978 $ 788,600 $ 113,802 $ 5,272,041 The following is a summary of intangible assets as of June 30, 2020: Acquired Customer Developed Intellectual Patents Relationships Software Property Pending Total Cost $ 1,587,159 $ 4,324,425 $ 1,498,364 $ 113,802 $ 7,537,837 Accumulated amortization (696,498 ) (845,446 ) (709,764 ) - (2,265,796 ) Carrying Value at June 30, 2020 $ 890,661 $ 3,478,980 $ 788,600 $ 113,802 $ 5,272,041 Amortization expense totaled $579,371 and $282,493 for the six months ended June 30, 2020 and 2019, respectively. Future expected amortization of intangible assets is as follows: Fiscal Year Ending December 31, Remainder of 2020 $ 604,658 2021 1,209,317 2022 1,115,983 2023 1,064,994 2024 841,492 Thereafter 435,597 $ 5,272,041 |
ACCOUNTS PAYABLE AND ACCRUED EX
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 6 Months Ended |
Jun. 30, 2020 | |
Payables and Accruals [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | NOTE 5 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consisted of the following as of June 30, 2020 and December 31, 2019: June 30, December 31, Trade payables $ 663,254 $ 621,292 Accrued interest 241,072 641,834 Accrued payroll and related obligations 1,062,246 386,165 Current portion of operating lease liabilities 145,259 242,650 Other 543,276 323,971 Total $ 2,655,107 $ 2,215,912 |
NOTES PAYABLE, NET
NOTES PAYABLE, NET | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE, NET | NOTE 6 - NOTES PAYABLE, NET The following is a summary of notes payable as of June 30, 2020 and December 31, 2019: June 30, December 31, Senior Unsecured Note $ - $ 2,000,000 Paycheck Protection Program 485,760 - Installment loan payable related to a vehicle acquisition payable in monthly payments of $539 per month at an interest rate of 10.8% per annum payable for 36 months 10,267 12,866 Total Principal Outstanding $ 496,027 $ 2,012,866 Unamortized Deferred Debt Discount - (26,722 ) Unamortized Deferred Debt Issuance Costs - (9,866 ) Notes Payable, Net $ 496,027 $ 1,976,278 Notes Payable, current portion, net of discounts and current portion $ 5,635 $ 5,341 Notes Payable, net of discounts and current portion 490,392 1,970,937 $ 496,027 $ 1,976,278 In January 2017, the Company issued a Senior Unsecured Note ("Note") a face value of $3,000,000, payable two years from issuance, along with an aggregate of 4,500,000 shares of Common Stock, with a fair value of $1,147,500. The Company allocated the proceeds to the note payable and common stock based on their relative fair value and recorded a discount of $830,018 to be amortized into interest expense over the two-year term of the note. The Company also paid debt issuance costs consisting of a cash fee of $120,000 and 1,020,000 shares of common stock of the Company with a fair value of $306,000. On April 30, 2018, the Company and the Noteholder agreed to extend the due date of the note until April 30, 2020 for an extension fee of 1,500,000 shares of the Common Stock issued to the Noteholder. The April 2018 change in terms of the Note payable has been determined to be a debt extinguishment in accordance with ASC 470. The reported amounts under the debt extinguishment are not significantly different than that of the Company's reported amounts. The Note was amended on February 14, 2020 to conform to the terms of the 2020 Convertible Notes Payable offering. The Company and the Theodore Stern Revocable Trust, the ("Stern Trust") entered an Amended and Restated Promissory Note (the "Restated Stern Note") providing that the $2,000,000 Note will be due and payable on the same terms (bearing interest at 15% per annum) and on the same maturity date as the 2020 Notes and that the interest due under the Note as of January 31, 2020 in the amount of $662,000 will remain due and payable on the same terms as exist in the Note prior to modification provided that the maturity of such interest shall be extended to the same maturity date as the 2020 Notes detailed in Note 7. The Company accounted for the Restated Stern Note as an extinguishment of the Note and recorded a charge of $985,000 included in Other expenses in accompanying condensed consolidated statements of operations. Paycheck Protection Program Loan - In May 2020, the Company received a loan of $485,760 under the Paycheck Protection Program of the U.S. Small Business Association related to its U.S. Operations. The Company anticipates subject to approval by the Small Business Administration, if certain requirements are met the loan proceeds may be forgiven. Any amounts not forgiven will be required to be repaid. The loan bears interest at an annual rate 1% per annum and matures on May 5, 2022. The following is a roll-forward of the Company's notes payable and related discounts for the six months ended June 30, 2020: Principal Balance Debt Discounts Debt Issuance Costs Total Balance at December 31, 2019 $ 2,012,866 $ (9,866 ) $ (26,722 ) $ 1,976,278 Proceeds 485,760 -- 485,760 Payments (2,599 ) - - (2,599 ) Conversion of note payable to convertible notes payable (2,000,000 ) - - (2,000,000 ) Amortization - 9,866 26,722 36,588 Balance at June 30, 2020 $ 496,027 $ - $ - $ 496,027 See Note 7 with the respect to the conversion of the $2,000,000 Senior Unsecured Note. |
CONVERTIBLE NOTES PAYABLE
CONVERTIBLE NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES PAYABLE | NOTE 7 – CONVERTIBLE NOTES PAYABLE On December 13, 2019, the Company entered into Securities Purchase Agreements with several accredited investors (the "8% Note Investors") providing for the sale by the Company to the Investors of 8% Convertible Notes in the aggregate amount of $428,000 (the "8% Notes"). The 8% Notes were to mature on November 30, 2021 and were a general unsecured obligation of the Company. The Company can prepay all or a portion of the 8% Notes at any time. The Company shall pay any interest on the 8% Notes at the rate of 8.0% per annum payable at the earlier of the maturity date or conversion date, in cash or, at the holder's option, shares of common stock of the Company. At the option of the 8% Note investors, all or a portion of the 8% Notes may be converted into shares of common stock of the Company at a conversion price of $0.08 per share. If the holders of the 8% Notes owning outstanding 8.0% Notes representing in excess of half of the aggregate outstanding principal amount of all 8% Notes provide notice to the Company of their intent to convert their 8% Notes, then all 8% Notes plus unpaid interest and other amounts owing to each of the holders shall be automatically converted. In February 2020, the Company and the holders of the 8% Notes entered into an amendment agreement pursuant to which the principal and interest due under the 8% Notes will remain due and payable on the same terms as exist in the 8% Notes prior to modification, that the maturity shall be extended to the same maturity date as the 2020 Notes, namely February 28, 2022 and the 8% Notes became a secured obligation of the Company. On February 14, 2020 the Company, entered into Securities Purchase Agreements with several accredited investors (the "2020 Note Investors") providing for the sale by the Company to the 2020 Note Investors of 15% Senior Secured Convertible Notes in the aggregate amount of $1,510,000 (the "2020 Notes"). Philip D. Beck, Chief Executive Officer and Chairman of the Board, invested $50,000 in consideration of a 2020 Note in the principal amount of $50,000 paid by a deduction from his salary. Theodore Stern, a director of the Company, invested $50,000 in consideration of a 2020 Note in the principal amount of $50,000. Herbert Selzer, a director of the Company invested $100,000 in consideration of a 2020 Note in the principal amount of $100,000. Mr. Selzer provided $50,000 on the closing date and provided the balance of the funding in April 2020. The 2020 Notes mature February 28, 2022 and are a secured obligation of the Company. The Company can prepay all or a portion of the 2020 Notes at any time provided that such amount prepaid shall be equal to 150% of the principal due. The Company shall pay interest on the 2020 Notes at the rate of 15% per annum payable at the earlier of the maturity date or conversion date, in cash or, at the investor's option, shares of common stock of the Company. If the Company prepays all or a portion of the 2020 Note prior to the one-year anniversary of the 2020 Note issuance date (the ("2020 Note Anniversary"), then the Company will be required to pay interest on the principal prepaid or paid at maturity through the 2020 Note Anniversary. Further, upon maturity or in the event of default and/or bankruptcy of the 2020 Notes, the Company will be required to pay 150% of the principal due under the 2020 Notes. At the option of the 2020 Note Investors, they may at any time convert the 2020 Notes. The number of shares delivered shall be equal to 150% of the amount of the principal converted divided by the conversion price of $0.20 per share. Following the 2020 Note Anniversary, the Company may require that the 2020 Note Investors convert all or a portion of the 2020 Notes, if the Company's volume weighted average price for any preceding 20-day period is equal to or greater than $0.30. The 2020 Note Investors are entitled to nominate, and the Company will not unreasonably reject the appointment of a new member to the Company's Board of Directors. The Company and FIN Holdings, Inc. and ID Solutions, Inc., two of the Company's subsidiaries, entered into a security agreement with the 2020 Note Investors ("Security Agreement"), the holders of the 8% Notes and the Promissory Note in the principal amount of $2,000,000 the principal and accrued but unpaid interest under the 2020 Notes, 8% Notes and Stern Note is paid in full or converted pursuant to their terms, the Company's obligations under the 2020 Notes, 8% Notes and Stern Note will be secured by a lien on all assets of the Company. The security interest granted to the holders of the 2020 Notes, 8% Notes and Stern Note ranks pari passu Further, the Company and the Stern Trust entered an Amended and Restated Promissory Note (the "Restated Stern Note") providing that the $2,000,000 principal of the Stern Note will be due and payable on the same terms (bearing interest at 15% per annum) and on the same maturity date as the 2020 Notes and that the interest due under the Stern Note as of January 31, 2020 in the amount of $662,000 will remain due and payable on the same terms as exist in the Stern Note prior to modification provided that the maturity of such interest shall be extended to the same maturity date as the 2020 Notes. In connection with this private offering, the Company paid Network 1 Financial Securities, Inc., a registered broker-dealer, a cash fee of approximately $104,800. In February 2020, the Company offered all warrant holders holding warrants to purchase shares of Company common stock issued in July 2015 ("2015 Warrants") the right to extend the term of the 2015 Warrants for a period of two years, subject to an increase in the Exercise Price (as defined therein) to $0.06 per share, providing that such warrant holders invested a minimum $100,000 in the 2020 Note private offering. As a result, a portion of the 2015 Warrant holders participated in the 2020 Note offering and the Company extended the exercise period two years for the 2015 Warrants representing the right to acquire 6,380,000 shares of common stock. The fair market value of the modification of warrants extended was approximately $95,000. Vista Associates, L.P. ("Vista") of which, Mr. Selzer, a director of the Company is the General Partner, held 2015 Warrants to acquire 880,000 shares of common stock, which were also extended as a result of his investment and in June 2020, Vista exercised its 2015 Warrants and converted into 880,000 shares of common stock. The following is a summary of the convertible notes payable outstanding at June 30, 2020: 8% convertible notes payable issued December 2019 $ 428,000 15% convertible notes payable issued February 2020 5,265,000 10% convertible notes payable issued February 2020 662,000 Unamortized discount on convertible notes (705,911 ) Unamortized debt issuance costs (85,551 ) $ 5,563,538 Future maturities of convertible notes payable are as follows: 2020 $ - 2021 - 2022 6,355,000 $ 6,355,000 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 8 – RELATED PARTY TRANSACTIONS Appointment of Executive Officers Mr. Phillip Kumnick and Mr. Philip Broenniman, two of the Company's Director's became employed by the Company as Chief Executive Officer and President and Chief Operating Officer effective May 22, 2020. Mr. Kumnick will earn an initial base salary of $250,000 per annum subject to review after one year. Mr. Kumnick was granted options to acquire 33,333,334 shares of common stock of which 20% vest at grant and the balance vest subject to performance conditions. Mr. Broenniman will earn an initial base salary of $175,000 per annum subject to review after one year. Mr. Broenniman was granted options to acquire 16,666,666 shares of common stock of which 20% vest at grant and the balance vest subject to performance conditions. Issuance of Common Stock During the six months ended June 30, 2020, the Company granted 1,500,000 shares of Restricted Common Stock to each of Phillip Kumnick and Philip Broenniman, new members of our Board of Directors, in connection with their compensation for service as Board Members. The restricted stock vests upon the achievement of certain performance criteria. The performance criteria have not been met as of June 30, 2020, but as the Company believes it is probable that these performance obligations will be met, the grant date fair value of the restricted stock will be ratably recognized over the expected service period. Warrant Exercises On June 30, 2020, Company entered into and consummated a private transaction pursuant to which a portion of the Company's warrants exercisable at per share price of $0.10 (the "$0.10 Warrants") were exercised for cash at an exercise price of $0.07 per share. In addition, the holders that exercised the $0.10 Warrants received a warrant exercisable for two years to acquire one share of common stock at an exercise price of $0.15 per share (the $0.15 Warrants") for every four $0.10 Warrants exercised. Mr. Theodore Stern, a director of the Company, participated in the private transaction resulting in the issuance of 1,000,000 shares of common stock and 250,000 $0.15 Warrants in consideration of $70,000; and Varana Capital Focused, LP ("VCFLP"), participated in the private transaction resulting in the issuance of 3,716,667 shares of common stock and 929,167 $0.15 Warrants , in consideration of $260,167. Mr. Philip Broenniman, a director, the President and COO of the Company is the investment manager of VCFLP. On June 30, 2020, Company entered into and consummated a private transaction pursuant to which a portion of the Company's warrants exercisable at per share price of $0.06 (the "$0.06 Warrants") were exercised. In addition, the holders that exercised the $0.06 Warrants also received a $0.15 Warrant for every two $0.06 Warrants exercised. Vista Associates, L.P., ("Vista") of which, Mr. Herbert Selzer a director of the Company, is the General Partner, participated in the private transaction resulting in the issuance of 880,000 shares of common stock and 440,000 $0.15 Warrants , in consideration of $52,800. Sale of Common Stock On June 30, 2020, the Company also entered into a Subscription Agreement with VCFLP pursuant to which VCFLP purchased 714,285 shares of common stock in consideration of $50,000. Convertible Notes Payable Theodore Stern and Philip Beck, members of the board of directors of the Company, invested $50,000 each in consideration of the 2020 Notes. Another director, Herbert Selzer invested $100,000 in consideration of a 2020 Note in the principal amount of $100,000. Vista held 880,000 2015 Warrants, which were also extended as a result of Mr. Selzer's investment and as noted above were exercised for cash on June 30, 2020. See Note 7 Further, the Company and the Stern Trust entered the Restated Stern Note providing that the $2,000,000 principal of the Stern Note will be due and payable on the same terms (bearing interest at 15% per annum) and on the same maturity date as the 2020 Notes and subject to the same Security Agreement and that the interest due under the Stern Note as of January 31, 2020 in the amount of $662,000 will remain due and payable on the same terms as exist in the Stern Note prior to modification provided that the maturity of such interest shall be extended to the same maturity date as the 2020 Notes. The Restated Stern Note Other In connection with the offering of the 2020 Notes, the Company paid Network 1 Financial Securities, Inc., a registered broker-dealer ("Network 1"), a cash fee of approximately $104,800. A former member of the Company's Board of Director's maintains a partnership with a principal of Network 1. Additionally, the Company rents office space in Long Beach, New York at a monthly cost of $5,000 (as of January 1, 2020). The agreement is month to month and can be terminated on 30 days' notice. The agreement is between the Company and Bridgeworks LLC, an entity principally owned by Mr. Beck, a member of the Board of Director's and his family. During each of the six months ended June 30, 2020 and 2019, the Company paid rent of $30,000 and $44,450, respectively. On May 22, 2020, the Company and Mr. Beck entered into a separation letter agreement, which provided for payment to Mr. Beck of one year's severance in the amount of $350,000 as well as certain employee benefits, payable in accordance with the terms of Mr. Beck's Retention Agreement. Mr. Beck's severance is expected to be paid over a one-year period. Furthermore, the company will start recording the expense associated with |
STOCKHOLDER'S EQUITY
STOCKHOLDER'S EQUITY | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
STOCKHOLDER'S EQUITY | NOTE 9 STOCKHOLDER'S EQUITY Common Stock During the six months ended June 30, 2020, the Company granted 4,500,000 shares of Restricted Common Stock of which 3,000,000 shares were granted to two new members of our Board of Directors in connection with their compensation for service as Board Members and 1,500,000 to an employee in connection with his employment compensation. The shares were valued at the fair market value at the date of grant. The restricted stock vests upon the achievement of certain performance criteria. During the six months ended June 30, 2020, the Company issued approximately 106,000 shares of common stock to a third-party provider of services in lieu of cash compensation. In June 2020, the Company entered into Subscription Agreements with two accredited investors (the "June 2020 Accredited Investors") pursuant to which the June 2020 Accredited Investors agreed to purchase 3,441,558 shares of common stock for $200,000. On June 30, 2020, Company entered into and consummated a private transaction pursuant to which a portion of the Company's $0.10 Warrants were exercised for cash at an exercise price of $0.07 per share. In addition, the holders that exercised the $0.10 Warrants received a $0.15 Warrant for every four $0.10 Warrants exercised. As a result, the Company issued 10,008,333 shares of common stock and 2,502,085 $0.15 Warrants in consideration of $700,583. In June 30, 2020, Company entered into and consummated a private transaction pursuant to which a portion of the Company's $0.05 Warrants were exercised for cash. In addition, the holders that exercised the $0.05 Warrants received a $0.15 Warrant for every two $0.05 Warrants exercised. As a result, the Company issued 4,632,000 shares of common stock and 2,316,000 $0.15 Warrants, in consideration of $231,600. Separately, certain holders of the $0.05 Warrants to acquire 1,770,000 shares of common stock exercised on a cashless basis resulting in the issuance of 560,659 shares of common stock. In June 30, 2020, Company entered into and consummated a private transaction pursuant to which a portion of the Company's $0.06 Warrants were exercised. In addition, the holders that exercised the $0.06 Warrants also received $0.15 Warrant for every two $0.06 Warrants exercised. As a result, the Company issued 5,280,000 shares of common stock and 2,640,000 $0.15 Warrants in consideration of $316,800. The June 2020 subscriptions and warrant exercise transactions resulted in the issuance of approximately 23.9 million shares of common stock for approximately $1.45 million, including a stock subscription receivable of approximately $0.97 million which was collected in full subsequent to June 30, 2020. The Company recorded a charge of approximately $367,000 in connection with an inducement to the warrant holders who exercised their outstanding warrants. Warrants The following is a summary of the Company's warrant activity for the six months ended June 30, 2020: Number of Weighted Weighted Outstanding at December 31, 2019 47,453,227 $ 0.08 1.4 Years Granted 7,458,085 0.15 2.0 Years Exercised/Cancelled (25,781,243 ) 0.06 0.8 Years Outstanding at June 30, 2020 29,130,069 $ 0.12 1.6 Years During the six months ended June 30, 2020, certain of the 2015 Warrant holders participated in the 2020 Note offering and the Company extended the exercise period by two years, subject to an increase in the Exercise Price from $0.05 per share (as defined therein) to $0.06 per share of 2015 Warrants representing the right to acquire 6,380,000 shares of common stock. As noted above a portion of the 2015 Warrants (or $0.06 Warrants) were exercised for cash on June 30, 2020. Vista of which Mr. Selzer, a director of the Company, is the General Partner held 880,000 2015 Warrants, which were also extended as a result of his investment and were exercised for cash on June 30, 2020. The fair market value of the modification of warrants extended was approximately $95,000. Stock Options During the six months ended June 30, 2020, the Company determined the grant date fair value of the options granted using the Black Scholes Method. The following assumptions were used in the six months ended June 30 ,2020: Expected Volatility – 68-75% Expected Term – 5.0 Years Risk Free Rate – 0.30- 0.34% Dividend Rate – 0.00% Activity related to stock options for the six months ended June 30, 2020 is summarized as follows: Weighted Weighted Aggregate Number of Exercise Contractual Intrinsic Shares Price Term (Yrs.) Value Outstanding as of December 31, 2019 109,400,006 $ 0.20 6.5 $ 280,000 Granted 51,044,054 0.07 10.0 200,000 Forfeitures (699,999 ) 0.23 - - Outstanding as of June 30, 2020 159,744,061 0.19 7.6 $ 104,650 Exercisable as of June 30, 2020 113,750,727 $ 0.15 6.8 $ 104,650 The following table summarizes stock option information as of June 30, 2020: Exercise Outstanding Weighted Avg. Exercisable $ 0.0001 3,500,000 6.00 3,500,000 $ 0.05 35,700,006 6.85 31,950,006 $ 0.06 1,044,054 9.60 1,044,054 $ 0.07 50,000,000 9.90 10,000,000 $ 0.10 27,200,000 6.75 27,200,000 $ 0.119 400,001 9.22 200,000 $ 0.124 600,000 8.75 390,000 $ 0.130 250,000 7.80 166,667 $ 0.15 2,800,000 5.85 2,800,000 $ 0.22 2,583,333 8.05 1,500,000 $ 0.250 2,500,000 7.85 1,833,333 $ 0.260 166,667 8.30 166,667 $ 0.290 1,000,000 7.30 1,000,000 $ 0.400 1,000,000 6.17 1,000,000 $ 0.450 31,000,000 5.85 31,000,000 159,744,061 7.63 113,750,727 See related party information with respect to the grant of stock options to Messrs. Kumnick and Broenniman. During the six months ended June 30, 2020, the Company recognized approximately $561,000 of stock option based compensation expense related to options of which non-employees' expense was approximately $13,000. As of June 30, 2020, there was approximately $448,000 of unrecognized compensation costs related to stock options outstanding of which approximately $13,000 is related to non-employees and will be expensed through 2022. |
DIRECT FINANCING LEASE
DIRECT FINANCING LEASE | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
DIRECT FINANCING LEASE | NOTE 10 – DIRECT FINANCING LEASE In September 2015, the Company and an entity in Colombia entered into a rental contract for the rental of 78 kiosks to provide cash collection and fare services at transportation stations. The lease term began in May 2016 when the kiosk was installed and operational and when the lease commenced. The term of the rental contract is ten years at an approximate monthly rental of $11,900. The lease has the option at the end of the lease term to purchase each unit for approximately $40. The term of the lease approximates the expected economic life of the kiosks. The lease was accounted for as a direct financing lease. The Company has recorded the transaction as it net investment in the lease and will receive monthly payments of $11,856 before estimated executory costs, or $142,272 annually, to reduce investment in the lease and record income associated with the related amount due. Executory costs are estimated to be $1,677 per month and initial direct costs are not considered significant. The transaction resulted in incremental revenue in the six months ended June 30, 2020 of approximately $30,000. The equipment is subject to direct lease valued at approximately $748,000. At the inception of the lease term, the aggregate minimum future lease payments to be received is approximately $1,422,000 before executory cost. Unearned income recorded at the inception of this lease was approximately $474,000 and will be recorded over the term of the lease using the effective income rate method. Future minimum lease payments to be received under the lease for the next five years and thereafter are as follows: Year ending December 31 Remainder 2020 $ 61,074 2021 122,148 2022 122,148 2023 122,148 2024 122,148 Thereafter 162,864 Sub-total 712,530 Less deferred revenue (184,290 ) Net investment in lease $ 528,240 |
LEASE OBLIGATION PAYABLE
LEASE OBLIGATION PAYABLE | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
LEASE OBLIGATION PAYABLE | NOTE 11 – LEASE OBLIGATION PAYABLE The Company entered into a lease in March 2017 for the rental of its printer for its secured plastic and credential card products business under an arrangement that is classified as a finance lease. The leased equipment is amortized on a straight-line basis over its lease term including the last payment (61 payments) which would transfer ownership to the Company. Total amortization related to the lease equipment as of June 30, 2020 is $107,152. The following is a schedule showing the future minimum lease payments under finance lease by year and the present value of the minimum lease payments as of June 30, 2020. The interest rate related to the lease obligation is 12% and the maturity date is March 2022. Year ending December 31 Remainder of 2020 $ 21,548 2021 43,096 2022 10,774 Total minimum lease payments 75,418 Less: Amount representing interest (7,696 ) Present value of minimum lease payments $ 67,722 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 12 – COMMITMENTS AND CONTINGENCIES Legal Matters From time to time, the Company is a party to various legal or administrative proceedings arising in the ordinary course of our business. While any litigation contains an element of uncertainty, we have no reason to believe the outcome of such proceedings will have a material adverse effect on the financial condition or results of operations of the Company. Leases For the six months ended June 30, 2020, lease expense was approximately $165,000 inclusive of short-term leases. The lease related balances included in the Condensed Consolidated Balance Sheet as of June 30, 2020 were as follows: Assets: Current portion of operating lease ROU assets - included in other current assets $ 190,268 Operating lease ROU assets – included in other Assets 89,210 Total operating lease assets $ 279,478 Liabilities: Current portion of ROU liabilities – included in accounts payable and accrued expenses $ 145,259 Long-term portion of ROU liabilities – included in other liabilities 92,503 Total operating lease liabilities $ 237,762 The weighted average lease term is 1.8 years and weighted average discount rate used in the calculations were 13.55%. The following table presents the maturity of the Company's operating lease liabilities as of June 30, 2020: Remainder of 2020 $ 132,017 2021 96,607 2022 49,716 Total operating lease payments 278,340 Less: imputed interest (40,578 ) Total operating lease liabilities $ 237,762 The Company leases approximately 2,100 square feet of office space in Plantation, Florida. Monthly rental is approximately $2,700 per month with a 3% increase on each annual anniversary. The Company terminated its lease and will pay its final obligations under the lease by August 2020. In October 2018, the Company entered into an office lease in Alpharetta, Ga. for approximately $3,800 per month. The Company did not renew its lease at the end of the lease term in March 2020. Additionally, the Company rents office space in Long Beach, New York at a monthly cost of $5,000. The agreement is month to month and can be terminated on 30 days' notice. The agreement is between the Company and Bridgeworks LLC, an entity principally owned by Mr. Beck, a member of the Board of Directors. The Company leases an office location in Bogota, Colombia. In April 2017, MultiPay S.A.S. entered an office lease beginning April 22, 2017. The lease cost is approximately $8,500 per month with an inflation adjustment after one year. The lease is automatically extended for one additional year unless written notice to the contrary is provided at least six months in advance. The Company extended the lease through April 2021. Furthermore, the Company leased an apartment at approximately $2,000 a month for one of the management team which has now been terminated. The Company also leases space for its operation in South Africa. The current lease is through June 30, 2022 and the approximate monthly rent is $8,000. On May 22, 2020, the Company and Mr. Beck entered into a separation letter agreement, which provided payment to the Mr. Beck of one year's severance in the amount of $350,000 as well as certain employee benefits, payable in accordance with the terms of Mr. Beck's Retention Agreement. The amounts recorded in connection with the aforementioned agreement are accrued in accrued payroll and related obligations. |
IMPAIRMENT LOSS
IMPAIRMENT LOSS | 6 Months Ended |
Jun. 30, 2020 | |
Restructuring and Related Activities [Abstract] | |
IMPAIRMENT LOSS | NOTE 13- IMPAIRMENT LOSS Goodwill Goodwill is recorded when the purchase price paid for an acquisition exceeds the fair value of net identified tangible and intangible assets acquired. The Company performs an annual impairment test of goodwill and further periodic tests to the extent indicators of impairment develop between annual impairment tests. The Company's impairment review process compares the fair value of the reporting unit to its carrying value, including the goodwill related to the reporting unit utilizing qualitative considerations. To determine the fair value of the reporting unit, the Company may use various approaches including an asset or cost approach, market approach or income approach or any combination thereof. These approaches may require the Company to make certain estimates and assumptions including future cash flows, revenue and expenses. These estimates and assumptions are reviewed each time the Company tests goodwill for impairment and are typically developed as part of the Company's routine business planning and forecasting process. While the Company believes its estimates and assumptions are reasonable, variations from those estimates could produce materially different results. As a result of the current pandemic and its potential impact on future results, the Company updated its reporting unit projections, and it indicated a goodwill impairment at Cards Plus as the carrying value may not be recovered as revenue assumptions and related revenue were revised downward. The fair value of the reporting unit was determined using discounted cash flow as well as future realizable value. The goodwill impairment loss for the six months ended June 30, 2020 was approximately $1,035,000. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | NOTE 14 – SEGMENT INFORMATION General information The segment and geographic information provided in the table below is being reported consistent with the Company's method of internal reporting. Operating segments are defined as components of an enterprise for which separate financial information is available and which is evaluated regularly by the chief operating decision maker ("CODM") in deciding how to allocate resources and in assessing performance. The CODM regularly reviews net revenue and gross profit by geographic regions. The Company's products and services operate in two reportable segments; identity management and payment processing. Information about revenue, profit/loss and assets The CODM evaluates performance and allocates resources based on net revenue and operating results of the geographic region as the current operations of each geography are either primarily identity management or payment processing. Identity management revenue is generated in North America and Africa and payment processing revenue is earned in South America which are the three geographic regions of the Company. We have included the lease income in payment processing as the leases are related to unattended ticketing kiosks. Long lived assets are in North America, South America and Africa. Most assets are intangible assets recorded from the acquisition of MultiPay (South America) in 2015 and FIN Holdings (North America and Africa) in 2016. Assets for North America, South America and Africa amounted to approximately $8.9 million, $0.3 million and $0.3 million. Analysis of revenue by segment and geographic region and reconciliation to consolidated revenue, gross profit, and net loss are provided below. The Company has included in the schedule below an allocation of corporate overhead based on management's estimate of resource requirements. (unaudited) Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2020 2019 2020 2019 Net Revenues: North America $ 135,698 $ 146,583 $ 269,252 $ 373,624 South America 72,133 120,613 185,757 245,941 Africa 113,288 377,765 659,899 765,774 321,119 644,961 1,114,908 1,385,339 Identity Management 248,986 524,348 929,151 1,139,398 Payment Processing 72,133 120,613 185,757 245,941 321,119 644,961 1,114,908 1,385,339 Loss From Operations North America (670,183 ) (681,690 ) (1,076,575 ) (1,419,652 ) South America (1,803,784 ) (1,220,869 ) (3,015,936 ) (2,477,821 ) Africa (332,654 ) (181,979 ) (1,386,718 ) (355,439 ) (2,806,621 ) (2,084,538 ) (5,479,229 ) (4,252,912 ) Identity Management (1,002,837 ) (863,669 ) (2,463,293 ) (1,775,091 ) Payment Processing (1,803,784 ) (1,220,869 ) (3,015,936 ) (2,477,821 ) (2,806,621 ) (2,084,538 ) (5,479,229 ) (4,252,912 ) Interest Expense (310,153 ) (93,260 ) (489,203 ) (180,150 ) Other income/(expense) (342,082 ) 6,271 (1,317,971 ) 12,497 Loss before income taxes (3,458,856 ) (2,171,527 ) (7,286,403 ) (4,420,565 ) Income tax expense (3,592 ) (4,264 ) (12,466 ) (17,965 ) Net loss $ (3,462,448 ) $ (2,175,791 ) $ (7,298,869 ) $ (4,438,530 ) |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Going Concern | Going Concern As of June 30, 2020, the Company had an accumulated deficit of approximately $94.2 million. For the six months ended June 30, 2020 the Company earned revenue of approximately $1.1 million and incurred a loss from operations of approximately $5.5 million. The reports of our independent registered public accounting firm on our consolidated financial statements for the years ended December 31, 2019 and 2018 contained an explanatory paragraph regarding our ability to continue as a going concern based upon our net losses. These unaudited condensed consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to meet its obligations and continue its operations for the next fiscal year. The continuation of the Company as a going concern is dependent upon financial support from the Company's current shareholders, the ability of the Company to obtain additional financing to continue operations, the Company's ability to generate sufficient cash flows from operations, successfully locating and negotiating with other business entities for potential acquisition and /or acquiring new clients to generate revenues and cash flows. On February 14, 2020, the Company entered into Securities Purchase Agreements with several accredited investors (the "2020 Note Investors") providing for the sale by the Company to the 2020 Note Investors of 15% Senior Secured Convertible Notes in the aggregate amount of $1,510,000 (the "2020 Notes"). In connection with this private offering, the Company paid Network 1 Financial Securities, Inc., a registered broker-dealer, a cash fee of approximately $104,800. In May 2020, the Company received a loan of approximately $485,000 under the Paycheck Protection Program of the U.S. Small Business Association related to its U.S. operations. The Company anticipates most of the loan will be forgiven in accordance with the provisions of the program. In June 2020, the Company entered into Subscription Agreements with two accredited investors (the "June 2020 Accredited Investors") pursuant to which the June 2020 Accredited Investors purchased 3,441,558 shares of common stock at an average price of $0.06 cents per share for $200,000. Additionally, on June 30, 2020, the Company entered into and consummated private transactions pursuant to which a portion of the Company's warrants exercisable at various prices were exercised at an average exercise price of $0.06 per share for approximately $1,249,000. The Company received cash proceeds of $283,950 and a stock subscription receivable for $965,033 which was received in full subsequent to June 30, 2020. There is no assurance that the Company will ever be profitable or be able to secure funding or generate sufficient revenues to sustain operations. As such, there is substantial doubt about the Company's ability to continue as a going concern. These unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern. Covid-19 A novel strain of coronavirus ("Covid-19") emerged globally in December 2019 and has been declared a pandemic. The extent to which Covid-19 will impact our customers, business, results and financial condition will depend on current and future developments, which are highly uncertain and cannot be predicted at this time. The Company's day-to-day operations beginning March 2020 have been impacted differently depending on geographic location and services that are being performed. The Cards Plus business located in South Africa did not have any operations in April 2020 and has had limitations on its operations starting in May 2020, as the Company is following the guidance and requirements of the South African government. Our operations in the United States and Colombia have suffered less immediate impact as most staff can work remotely and can continue to develop our product offerings. That said we have seen our business opportunities develop more slowly as business partners and potential customers are dealing with Covid-19 issues, working remotely and these issues are causing delays in decision making and finalization of negotiations and agreements. However, the level of inquiries about our services has increased during the last three months, as our products are designed to serve an increasingly mobile economy and workforce. |
Net Loss per Common Share | Net Loss per Common Share The Company computes net loss per share in accordance with FASB ASC 260, "Earnings per Share". ASC 260 requires presentation of both basic and diluted earnings per share ("EPS") on the face of the statement of operations. Basic EPS is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible notes and stock warrants, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options, warrants and conversion of convertible notes. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. The following potentially dilutive securities were excluded from the calculation of diluted loss per share for the six months ended June 30, 2020 and 2019 because their effect was antidilutive: Security 2020 2019 Stock Options 159,744,061 106,600,006 Warrants 29,130,069 47,453,227 Total 188,874,130 154,053,233 |
Inventories | Inventories Inventories of kiosks held by IDGS S.A.S are stated at the lower of cost (using the first-in, first-out method) or net realizable value. The kiosks provide electronic ticketing for transit systems. Inventory of plastic/ID cards, digital printing material, which are held by Cards Plus Pty Ltd., are at the lower of cost (using the average method) or market. The Plastic/ID cards and digital printing material are used to provide plastic loyal ID and other types of cards. Inventories at June 30, 2020 consist solely of the cards inventory. As of December 31, 2019, inventory consisted of kiosks that were not placed into service and were held for sale and cards inventory. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period. As of December 31, 2019, the Company had an inventory valuation allowance of approximately $236,000 to reflect net realizable value of the kiosks that are being held for sale and the Company believed no valuation allowance was necessary regarding the cards inventory. As of June 30, 2020, the Company did not believe a valuation allowance was necessary for the cards inventory. |
Revenue Recognition | Revenue Recognition Below is the Company's revenue recognition policy determined by revenue stream for its significant revenue generating activities during the period ended June 30, 2020. Cards Plus - The Company recognizes revenue for the design and production of cards when products are shipped, or services have been performed due to the short-term nature of the contracts. Payment Processing – The Company recognizes revenue for variable fees generated for payment processing solutions that are earned on a usage fee over time based on monthly transaction volumes or on a monthly flat fee rate. Additionally, the Company also sells certain equipment from time to time for which revenue is recognized upon delivery to the customer. Identity Solutions Software – The Company recognizes revenue based on the identified performance obligations over the performance period for fixed consideration and for variable fees generated that are earned on a usage fee based over time based on monthly transaction volumes or on a monthly flat fee rate. The Company had a deferred revenue contract liability of approximately $454,000 and $425,000 as of June 30, 2020 and December 31, 2019 for certain revenue that will be earned in future periods. The majority of the $425,000 of deferred revenue contract liability as of December 31, 2019 was earned in the first three months of 2020. The $454,000 of deferred revenue contract liability as of June 30, 2020 will be earned over the ensuing four quarters. We have allocated the selling price in the contract to one customer which has multiple performance obligations based on the contract selling price that we believe represents a fair market price for the service rendered. All contracts are reviewed for their respective performance obligations and related revenue and expense recognition implications. Certain of the revenues are derived from the identity services could include multiple performance obligations. A performance obligation under the revenue standard is defined as a promise to provide a "distinct" good or service to a customer. The Company has determined that one possible treatment under the standard is that these services will represent a stand-ready series of distinct daily services that are substantially the same, with the same pattern of transfer to the customer. Further, the Company has determined that the performance obligation to provide account access and facilitate transactions may meet the criteria for the "as invoiced" practical expedient, in that the Company has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the Company's performance completed to date. As a result, the Company anticipates it may recognize revenue in the amount to which the Company has a right to invoice, based on completed performance at the relevant date. Additionally, the contracts could include implementation services, or support on an "as needed" basis and we will review each contract and determine whether such performance obligations are separate and distinct and apply the standard accordingly to the revenue and expense derived from or related to each such service. Additionally, the Company capitalizes the incremental costs of acquiring and fulfilling a contract with a customer if the Company expects to recover those costs. The incremental costs of acquiring and fulfilling a contract are those that the Company incurs to acquire and fulfill a contract with a customer that it would not have incurred if the contract had not been acquired (for example, a sales commission or specific incremental costs associated with the contract). The Company capitalizes the costs incurred to acquire and fulfill a contract only if those costs meet all the following criteria: a. The costs relate directly to a contract or to an anticipated contract that the Company can specifically identify. b. The costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy) performance obligations in the future. c. The costs are expected to be recovered. The Company will capitalize contract acquisition and fulfillment costs related to signing or renewing contracts that meet the above criteria, which will be classified as contract cost assets in the Company's Consolidated Balance Sheets. Contract cost assets will be amortized using the straight-line method over the expected period of benefit beginning at the time revenue begins to be realized. The amortization of contract fulfillment cost assets associated with facilitating transactions will be recorded as cost of sales in the Company's Consolidated Statements of Operations. The amortization of contract acquisition cost assets associated with sales commissions that qualify for capitalization will be recorded as general and administrative expense in the Company's Consolidated Statements of Operations. As of June 30, 2020, the Company had deferred contract costs, represented by contract cost assets of approximately $3,750 which are included in other currents assets for certain costs incurred for the future delivery of election support services. The performance obligation will be met over the next year and the costs will be expensed as the associated revenue is recognized as the Company performances its obligations. Revenue related to direct financing leases is outside the scope of Topic 606 and is recognized over the term of the lease using the effective interest method. |
BASIS OF PRESENTATION (Tables)
BASIS OF PRESENTATION (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of potentially dilutive securities | Security 2020 2019 Stock Options 159,744,061 106,600,006 Warrants 29,130,069 47,453,227 Total 188,874,130 154,053,233 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment, net | 2020 2019 Property and equipment $ 284,710 $ 282,316 Equipment under capital lease (see Note 10) 156,867 156,867 441,577 439,183 Less: accumulated depreciation (327,762 ) (277,363 ) Property and equipment, net $ 113,815 $ 161,820 |
OTHER ASSETS (Tables)
OTHER ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Other Assets [Abstract] | |
Schedule of other assets | June 30, 2020 December 31, 2019 Software and development costs $ - $ 128,005 Operating lease right of use assets 89,210 171,141 Other 152,390 83,920 $ 241,600 $ 383,066 |
INTANGIBLE ASSETS, NET (OTHER_2
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets, net (other than goodwill) | Acquired Customer Developed Intellectual Patents Relationships Software Property Pending Total Useful Lives 10 Years 5 Years 10 Years N/A Carrying Value at December 31, 2019 $ 970,019 $ 3,651,924 $ 862,792 $ 108,877 $ 5,593,612 Additions - 252,875 - 4,925 257,800 Amortization (79,358 ) (425,821 ) (74,192 ) - (579,371 ) Carrying Value at June 30 ,2020 $ 890,661 $ 3,478,978 $ 788,600 $ 113,802 $ 5,272,041 The following is a summary of intangible assets as of June 30, 2020: Acquired Customer Developed Intellectual Patents Relationships Software Property Pending Total Cost $ 1,587,159 $ 4,324,425 $ 1,498,364 $ 113,802 $ 7,537,837 Accumulated amortization (696,498 ) (845,446 ) (709,764 ) - (2,265,796 ) Carrying Value at June 30, 2020 $ 890,661 $ 3,478,980 $ 788,600 $ 113,802 $ 5,272,041 |
Schedule of future amortization expense of intangible assets | Fiscal Year Ending December 31, Remainder of 2020 $ 604,658 2021 1,209,317 2022 1,115,983 2023 1,064,994 2024 841,492 Thereafter 435,597 $ 5,272,041 |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of accounts payable and accrued expenses | June 30, December 31, Trade payables $ 663,254 $ 621,292 Accrued interest 241,072 641,834 Accrued payroll and related obligations 1,062,246 386,165 Current portion of operating lease liabilities 145,259 242,650 Other 543,276 323,971 Total $ 2,655,107 $ 2,215,912 |
NOTES PAYABLE, NET (Tables)
NOTES PAYABLE, NET (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable | June 30, December 31, Senior Unsecured Note $ - $ 2,000,000 Paycheck Protection Program 485,760 - Installment loan payable related to a vehicle acquisition payable in monthly payments of $539 per month at an interest rate of 10.8% per annum payable for 36 months 10,267 12,866 Total Principal Outstanding $ 496,027 $ 2,012,866 Unamortized Deferred Debt Discount - (26,722 ) Unamortized Deferred Debt Issuance Costs - (9,866 ) Notes Payable, Net $ 496,027 $ 1,976,278 Notes Payable, current portion, net of discounts and current portion $ 5,635 $ 5,341 Notes Payable, net of discounts and current portion 490,392 1,970,937 $ 496,027 $ 1,976,278 In January 2017, the Company issued a Senior Unsecured Note ("Note") a face value of $3,000,000, payable two years from issuance, along with an aggregate of 4,500,000 shares of Common Stock, with a fair value of $1,147,500. The Company allocated the proceeds to the note payable and common stock based on their relative fair value and recorded a discount of $830,018 to be amortized into interest expense over the two-year term of the note. The Company also paid debt issuance costs consisting of a cash fee of $120,000 and 1,020,000 shares of common stock of the Company with a fair value of $306,000. On April 30, 2018, the Company and the Noteholder agreed to extend the due date of the note until April 30, 2020 for an extension fee of 1,500,000 shares of the Common Stock issued to the Noteholder. The April 2018 change in terms of the Note payable has been determined to be a debt extinguishment in accordance with ASC 470. The reported amounts under the debt extinguishment are not significantly different than that of the Company's reported amounts. The Note was amended on February 14, 2020 to conform to the terms of the 2020 Convertible Notes Payable offering. |
Schedule of notes payable and related discounts | Principal Balance Debt Discounts Debt Issuance Costs Total Balance at December 31, 2019 $ 2,012,866 $ (9,866 ) $ (26,722 ) $ 1,976,278 Proceeds 485,760 -- 485,760 Payments (2,599 ) - - (2,599 ) Conversion of note payable to convertible notes payable (2,000,000 ) - - (2,000,000 ) Amortization - 9,866 26,722 36,588 Balance at June 30, 2020 $ 496,027 $ - $ - $ 496,027 |
CONVERTIBLE NOTES PAYABLE (Tabl
CONVERTIBLE NOTES PAYABLE (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of rollforward of the convertible notes payable outstanding | 8% convertible notes payable issued December 2019 $ 428,000 15% convertible notes payable issued February 2020 5,265,000 10% convertible notes payable issued February 2020 662,000 Unamortized discount on convertible notes (705,911 ) Unamortized debt issuance costs (85,551 ) |
Schedule of future maturities of convertible debt | 2020 $ - 2021 - 2022 6,355,000 $ 6,355,000 |
STOCKHOLDER'S EQUITY (Tables)
STOCKHOLDER'S EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Schedule of granted warrants | Number of Weighted Weighted Outstanding at December 31, 2019 47,453,227 $ 0.08 1.4 Years Granted 7,458,085 0.15 2.0 Years Exercised/Cancelled (25,781,243 ) 0.06 0.8 Years Outstanding at June 30, 2020 29,130,069 $ 0.12 1.6 Years |
Schedule of black - scholes option-pricing model valuation assumption | Expected Volatility – 68-75% Expected Term – 5.0 Years Risk Free Rate – 0.30- 0.34% Dividend Rate – 0.00% |
Schedule of outstanding stock options | Weighted Weighted Aggregate Number of Exercise Contractual Intrinsic Shares Price Term (Yrs.) Value Outstanding as of December 31, 2019 109,400,006 $ 0.20 6.5 $ 280,000 Granted 51,044,054 0.07 10.0 200,000 Forfeitures (699,999 ) 0.23 - - Outstanding as of June 30, 2020 159,744,061 0.19 7.6 $ 104,650 Exercisable as of June 30, 2020 113,750,727 $ 0.15 6.8 $ 104,650 |
Schedule of stock option | Exercise Outstanding Weighted Avg. Exercisable $ 0.0001 3,500,000 6.00 3,500,000 $ 0.05 35,700,006 6.85 31,950,006 $ 0.06 1,044,054 9.60 1,044,054 $ 0.07 50,000,000 9.90 10,000,000 $ 0.10 27,200,000 6.75 27,200,000 $ 0.119 400,001 9.22 200,000 $ 0.124 600,000 8.75 390,000 $ 0.130 250,000 7.80 166,667 $ 0.15 2,800,000 5.85 2,800,000 $ 0.22 2,583,333 8.05 1,500,000 $ 0.250 2,500,000 7.85 1,833,333 $ 0.260 166,667 8.30 166,667 $ 0.290 1,000,000 7.30 1,000,000 $ 0.400 1,000,000 6.17 1,000,000 $ 0.450 31,000,000 5.85 31,000,000 159,744,061 7.63 113,750,727 |
DIRECT FINANCING LEASE (Tables)
DIRECT FINANCING LEASE (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Schedule of future minimum lease payments to be received | Year ending December 31 Remainder 2020 $ 61,074 2021 122,148 2022 122,148 2023 122,148 2024 122,148 Thereafter 162,864 Sub-total 712,530 Less deferred revenue (184,290 ) Net investment in lease $ 528,240 |
LEASE OBLIGATION PAYABLE (Table
LEASE OBLIGATION PAYABLE (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Schedule of lease obligation payable | Year ending December 31 Remainder of 2020 $ 21,548 2021 43,096 2022 10,774 Total minimum lease payments 75,418 Less: Amount representing interest (7,696 ) Present value of minimum lease payments $ 67,722 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of related lease balance | Assets: Current portion of operating lease ROU assets - included in other current assets $ 190,268 Operating lease ROU assets – included in other Assets 89,210 Total operating lease assets $ 279,478 Liabilities: Current portion of ROU liabilities – included in accounts payable and accrued expenses $ 145,259 Long-term portion of ROU liabilities – included in other liabilities 92,503 Total operating lease liabilities $ 237,762 |
Schedule of future minimum lease payments required under non convertible operating leases | Remainder of 2020 $ 132,017 2021 96,607 2022 49,716 Total operating lease payments 278,340 Less: imputed interest (40,578 ) Total operating lease liabilities $ 237,762 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of geographic region | (unaudited) Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2020 2019 2020 2019 Net Revenues: North America $ 135,698 $ 146,583 $ 269,252 $ 373,624 South America 72,133 120,613 185,757 245,941 Africa 113,288 377,765 659,899 765,774 321,119 644,961 1,114,908 1,385,339 Identity Management 248,986 524,348 929,151 1,139,398 Payment Processing 72,133 120,613 185,757 245,941 321,119 644,961 1,114,908 1,385,339 Loss From Operations North America (670,183 ) (681,690 ) (1,076,575 ) (1,419,652 ) South America (1,803,784 ) (1,220,869 ) (3,015,936 ) (2,477,821 ) Africa (332,654 ) (181,979 ) (1,386,718 ) (355,439 ) (2,806,621 ) (2,084,538 ) (5,479,229 ) (4,252,912 ) Identity Management (1,002,837 ) (863,669 ) (2,463,293 ) (1,775,091 ) Payment Processing (1,803,784 ) (1,220,869 ) (3,015,936 ) (2,477,821 ) (2,806,621 ) (2,084,538 ) (5,479,229 ) (4,252,912 ) Interest Expense (310,153 ) (93,260 ) (489,203 ) (180,150 ) Other income/(expense) (342,082 ) 6,271 (1,317,971 ) 12,497 Loss before income taxes (3,458,856 ) (2,171,527 ) (7,286,403 ) (4,420,565 ) Income tax expense (3,592 ) (4,264 ) (12,466 ) (17,965 ) Net loss $ (3,462,448 ) $ (2,175,791 ) $ (7,298,869 ) $ (4,438,530 ) |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) - shares | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Number of shares | 188,874,130 | 154,053,233 |
Stock Option [Member] | ||
Number of shares | 159,744,061 | 106,600,006 |
Warrants [Member] | ||
Number of shares | 29,130,069 | 47,453,227 |
BASIS OF PRESENTATION (Details
BASIS OF PRESENTATION (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | May 31, 2020 | Feb. 14, 2020 | Dec. 31, 2019 | |
Basis of Presentation (Textual) | |||||||
Accumulated deficit | $ (94,234,462) | $ (94,234,462) | $ (86,935,593) | ||||
Revenue | 321,119 | $ 644,961 | 1,114,908 | $ 1,385,339 | |||
Loss from operations | (2,806,621) | $ (2,084,538) | (5,479,229) | $ (4,252,912) | |||
Inventory valuation allowance | 236,000 | ||||||
Deferred revenue contract liability | 454,000 | 454,000 | $ 425,000 | ||||
Deferred contract costs | $ 3,750 | $ 3,750 | |||||
Loans receivable | $ 485,000 | ||||||
Share per value | $ 0.06 | $ 0.06 | |||||
Warrant exercise price | $ 0.06 | $ 0.06 | |||||
Stock subscription receivable | $ 283,950 | $ 283,950 | |||||
Cash proceeds | 965,033 | ||||||
Warrants value | $ 1,249,000 | ||||||
June 2020 Accredited Investors [Member] | |||||||
Basis of Presentation (Textual) | |||||||
Number of common stock purchased, shares | 3,441,558 | ||||||
Share per value | $ 0.06 | $ 0.06 | |||||
Share value | $ 200,000 | ||||||
Senior Secured Convertible Notes [Member] | |||||||
Basis of Presentation (Textual) | |||||||
Senior secured convertible notes interest rate | 15.00% | ||||||
Senior secured convertible notes aggregate amount | $ 1,510,000 | ||||||
Cash fee | $ 104,800 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 441,577 | $ 439,183 |
Less Accumulated depreciation | (327,762) | (277,363) |
Property and equipment, net | 113,815 | 161,820 |
Property and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 284,710 | 282,316 |
Equipment under capital lease [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 156,867 | $ 156,867 |
PROPERTY AND EQUIPMENT, NET (_2
PROPERTY AND EQUIPMENT, NET (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Property and Equipment, Net (Textual) | ||
Depreciation expense | $ 26,533 | $ 45,203 |
OTHER ASSETS (Details)
OTHER ASSETS (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Other Assets [Abstract] | ||
Software and development costs | $ 128,005 | |
Operating Lease right of use assets | 89,210 | 171,141 |
Other | 152,390 | 83,920 |
Other assets | $ 241,600 | $ 383,066 |
INTANGIBLE ASSETS, NET (OTHER_3
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Details) | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |
Carrying Value at beginning | $ 5,593,612 |
Additions | 257,800 |
Amortization | (579,371) |
Carrying Value at ending | $ 5,272,041 |
Customer Relationships [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Useful Lives | 10 years |
Carrying Value at beginning | $ 970,019 |
Additions | |
Amortization | (79,358) |
Carrying Value at ending | $ 890,661 |
Acquired and Developed Software [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Useful Lives | 5 years |
Carrying Value at beginning | $ 3,651,924 |
Additions | 252,875 |
Amortization | (425,821) |
Carrying Value at ending | $ 3,478,978 |
Intellectual Property [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Useful Lives | 10 years |
Carrying Value at beginning | $ 862,792 |
Additions | |
Amortization | (74,192) |
Carrying Value at ending | 788,600 |
Patents Pending [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Carrying Value at beginning | 108,877 |
Additions | 4,925 |
Amortization | |
Carrying Value at ending | $ 113,802 |
INTANGIBLE ASSETS, NET (OTHER_4
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Details 1) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 7,537,837 | |
Accumulated amortization | (2,265,796) | |
Carrying Value | 5,272,041 | $ 5,593,612 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 1,587,159 | |
Accumulated amortization | (696,498) | |
Carrying Value | 890,661 | 970,019 |
Acquired and Developed Software [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 4,324,425 | |
Accumulated amortization | (845,446) | |
Carrying Value | 3,478,978 | 3,651,924 |
Intellectual Property [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 1,498,364 | |
Accumulated amortization | (709,764) | |
Carrying Value | 788,600 | 862,792 |
Patents Pending [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 113,802 | |
Accumulated amortization | ||
Carrying Value | $ 113,802 | $ 108,877 |
INTANGIBLE ASSETS, NET (OTHER_5
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Details 2) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remainder of 2020 | $ 604,658 | |
2021 | 1,209,317 | |
2022 | 1,115,983 | |
2023 | 1,064,994 | |
2024 | 841,492 | |
Thereafter | 435,597 | |
Total | $ 5,272,041 | $ 5,593,612 |
INTANGIBLE ASSETS, NET (OTHER_6
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 579,371 | $ 282,493 |
ACCOUNTS PAYABLE AND ACCRUED _3
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Trade payables | $ 663,254 | $ 621,292 |
Accrued interest | 241,072 | 641,834 |
Accrued payroll and related obligations | 1,062,246 | 386,165 |
Current portion of operating lease liabilities | 145,259 | 242,650 |
Other | 543,276 | 323,971 |
Total | $ 2,655,107 | $ 2,215,912 |
NOTES PAYABLE, NET (Details)
NOTES PAYABLE, NET (Details) - USD ($) | Dec. 31, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
Short-term Debt [Line Items] | |||
Total Principal Outstanding | $ 10,267 | $ 12,866 | |
Senior Unsecured Note | 2,000,000 | ||
Paycheck Protection Program | 485,760 | ||
Unamortized Deferred Debt Discount | (26,722) | ||
Unamortized Deferred Debt Issuance Costs | (9,866) | ||
Notes Payable, Net | 496,027 | 1,976,278 | |
Notes Payable, current portion, net of discount, issuance costs and current portion | 5,635 | 5,341 | |
Notes Payable, net of discounts and current portion | 490,392 | 1,970,937 | |
Total | $ 496,027 | 1,976,278 | |
Vehicle [Member] | |||
Short-term Debt [Line Items] | |||
Total Principal Outstanding | $ 496,027 | $ 2,012,866 |
NOTES PAYABLE, NET (Details 1)
NOTES PAYABLE, NET (Details 1) | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Principal Balance | |
Beginning Balance | $ 2,012,866 |
Payments | 485,760 |
Proceeds | (2,599) |
Conversion of note payable to convertible notes payable | (2,000,000) |
Amortization | |
Ending Balance | 496,027 |
Debt Issuance Costs | |
Beginning Balance | (9,866) |
Payments | |
Proceeds | |
Conversion of note payable to convertible notes payable | |
Amortization | 9,866 |
Ending Balance | |
Debt Discounts | |
Beginning Balance | (26,722) |
Payments | |
Proceeds | |
Conversion of note payable to convertible notes payable | |
Amortization | 26,722 |
Ending Balance | (811,798) |
Total | |
Beginning Balance | 1,976,278 |
Payments | 485,760 |
Proceeds | (2,599) |
Conversion of note payable to convertible notes payable | (2,000,000) |
Amortization | 36,588 |
Ending Balance | $ 496,027 |
NOTES PAYABLE, NET (Details Nar
NOTES PAYABLE, NET (Details Narrative) - USD ($) | Apr. 30, 2018 | Jan. 31, 2017 | May 31, 2020 | Jun. 30, 2020 |
Short-term Debt [Line Items] | ||||
Senior unsecured note | $ 2,000,000 | |||
Notes payable description | The Company and the Theodore Stern Revocable Trust, the ("Stern Trust") entered an Amended and Restated Promissory Note (the "Restated Stern Note") providing that the $2,000,000 Note will be due and payable on the same terms (bearing interest at 15% per annum) and on the same maturity date as the 2020 Notes and that the interest due under the Note as of January 31, 2020 in the amount of $662,000 will remain due and payable on the same terms as exist in the Note prior to modification provided that the maturity of such interest shall be extended to the same maturity date as the 2020 Notes detailed in Note 7. The Company accounted for the Restated Stern Note as an extinguishment of the Note and recorded a charge of $985,000 included in Other expenses in accompanying condensed consolidated statements of operations. | |||
Senior Unsecured Note [Member] | ||||
Short-term Debt [Line Items] | ||||
Debt term | 2 years | |||
Interest rate | 1.00% | |||
Debt discount | $ 830,018 | |||
Debt issuance costs consisting value | $ 306,000 | |||
Debt issuance costs consisting shares | 1,020,000 | |||
Common stock issued to the noteholder | $ 1,500,000 | |||
Face amount | $ 3,000,000 | |||
Cash fee | 120,000 | |||
Common stock issues value | $ 1,147,500 | |||
Common stock issues shares | 4,500,000 | |||
Loan amount | $ 485,760 | |||
Maturity date | May 5, 2022 | |||
Vehicle [Member] | ||||
Short-term Debt [Line Items] | ||||
Debt term | 36 months | |||
Interest rate | 10.80% | |||
Monthly payments | $ 539 |
CONVERTIBLE NOTES PAYABLE (Deta
CONVERTIBLE NOTES PAYABLE (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Convertible notes payable | $ 5,563,538 | |
Unamortized discount on convertible notes | (811,798) | $ (26,722) |
Unamortized debt issuance costs | (85,551) | |
8% convertible notes payable issued December 2019 [Member] | ||
Convertible notes payable | 428,000 | |
15% convertible notes payable issued February 2020 [Member] | ||
Convertible notes payable | 5,265,000 | |
10% convertible notes payable issued February 2020 [Member] | ||
Convertible notes payable | $ 662,000 |
CONVERTIBLE NOTES PAYABLE (De_2
CONVERTIBLE NOTES PAYABLE (Details 1) | Jun. 30, 2020USD ($) |
Debt Disclosure [Abstract] | |
2020 | |
2021 | |
2022 | 6,355,000 |
Future moblities | $ 6,355,000 |
CONVERTIBLE NOTES PAYABLE (De_3
CONVERTIBLE NOTES PAYABLE (Details Narrative) - USD ($) | Dec. 13, 2019 | Feb. 14, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
Convertible notes aggregate amount | $ 5,563,538 | $ 428,000 | ||
Interest rate | 15.00% | 15.00% | ||
Convertible note description | If the Company prepays all or a portion of the 2020 Note prior to the one-year anniversary of the 2020 Note issuance date (the ("2020 Note Anniversary"), then the Company will be required to pay interest on the principal prepaid or paid at maturity through the 2020 Note Anniversary. Further, upon maturity or in the event of default and/or bankruptcy of the 2020 Notes, the Company will be required to pay 150% of the principal due under the 2020 Notes. | |||
Aggregate amount | $ 1,510,000 | |||
Principal amount | $ 50,000 | |||
Principal prepaid amount | 150.00% | |||
Required to pay | 150.00% | |||
Conversion price per share | $ 0.20 | |||
Weighted average price, description | If the Company's volume weighted average price for any preceding 20-day period is equal to or greater than $0.30. | |||
Amendment agreement, description | The Company's subsidiaries, entered into a security agreement with the 2020 Note Investors ("Security Agreement"), the holders of the 8% Notes and the Stern Trust, which is the holder of the Promissory Note in the principal amount of $2,000,000 (the "Stern Note"). The Security Agreement provides that until the principal and accrued but unpaid interest under the 2020 Notes, 8% Notes and Stern Note is paid in full or converted pursuant to their terms, the Company's obligations under the 2020 Notes, 8% Notes and Stern Note will be secured by a lien on all assets of the Company. The security interest granted to the holders of the 2020 Notes, 8% Notes and Stern Note ranks pari passu. The Security Agreement permits sales of assets up to a value of $1,000,000 which proceeds may be used for working capital purposes and the secured parties will take such steps as may be reasonably necessary to release its security interest and enable such sales in such circumstances. Each of the secured parties appointed Mr. Stern and a third-party investor as joint collateral agents. Mr. Stern, a director of the Company, is the trustee of the Stern Trust Further, the Company and the Stern Trust entered an Amended and Restated Promissory Note (the "Restated Stern Note") providing that the $2,000,000 principal of the Stern Note will be due and payable on the same terms (bearing interest at 15% per annum) and on the same maturity date as the 2020 Notes and that the interest due under the Stern Note as of January 31, 2020 in the amount of $662,000 will remain due and payable on the same terms as exist in the Stern Note prior to modification provided that the maturity of such interest shall be extended to the same maturity date as the 2020 Notes. | |||
Cash fee of approximately | $ 104,800 | |||
Warrant holders participated, description | The Exercise Price (as defined therein) to $0.06 per share, providing that such warrant holders invested a minimum $100,000 in the 2020 Note private offering. As a result, a portion of the 2015 Warrant holders participated in the 2020 Note offering and the Company extended the exercise period two years for the 2015 Warrants representing the right to acquire 6,380,000 shares of common stock. The fair market value of the modification of warrants extended was approximately $95,000. Vista Associates, L.P. ("Vista") of which, Mr. Selzer, a director of the Company is the General Partner, held Mr. Selzer 2015 Warrants to acquire 880,000 shares of common stock, which were also extended as a result of his investment in June 2020, exercised his 2015 Warrants and converted into 880,000 shares of common stock. | |||
Investor [Member] | ||||
Convertible notes aggregate amount | $ 428,000 | |||
Interest rate | 8.00% | |||
Notes maturity date | Nov. 30, 2021 | |||
Convertible note description | The Company can prepay all or a portion of the 8% Notes at any time. The Company shall pay any interest on the 8% Notes at the rate of 8.0% per annum payable at the earlier of the maturity date or conversion date, in cash or, at the holder’s option, shares of common stock of the Company. At the option of the 8% Note investors, all or a portion of the 8% Notes may be converted into shares of common stock of the Company at a conversion price of $0.08 per share. If the holders of the 8% Notes owning outstanding 8.0% Notes representing in excess of half of the aggregate outstanding principal amount of all 8% Notes provide notice to the Company of their intent to convert their 8% Notes, then all 8% Notes plus unpaid interest and other amounts owing to each of the holders shall be automatically converted. | |||
Philip D. Beck [Member] | ||||
Principal amount | $ 50,000 | |||
Theodore Stern [Member] | ||||
Principal amount | 50,000 | |||
Herbert Selzer [Member] | ||||
Principal amount | 100,000 | |||
Mr. Selzer [Member] | ||||
Principal amount | $ 50,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 1 Months Ended | 6 Months Ended | ||
May 22, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Sep. 29, 2017 | |
Related Party Transactions (Textual) | ||||
Restricted common stock | 15,000,000 | |||
Rent paid | $ 30,000 | $ 44,450 | ||
Severance cost | $ 350,000 | |||
Subscription Agreement [Member] | ||||
Related Party Transactions (Textual) | ||||
Number of common stock purchased, shares | 714,285 | |||
Common stock issues value | $ 50,000 | |||
New Office Facilities [Member] | Long Beach, New York [Member] | ||||
Related Party Transactions (Textual) | ||||
Additional monthly rental payments | $ 5,000 | |||
Agreement term | 30 days | |||
Network 1 Financial Securities Inc [Member] | ||||
Related Party Transactions (Textual) | ||||
Fees incurred | $ 104,800 | |||
Convertible Notes Payable [Member] | ||||
Related Party Transactions (Textual) | ||||
Convertible notes payable, description | The Company and the Stern Trust entered the Restated Stern Note providing that the $2,000,000 principal of the Stern Note will be due and payable on the same terms (bearing interest at 15% per annum) and on the same maturity date as the 2020 Notes and subject to the same Security Agreement and that the interest due under the Stern Note as of January 31, 2020 in the amount of $662,000 will remain due and payable on the same terms as exist in the Stern Note prior to modification provided that the maturity of such interest shall be extended to the same maturity date as the 2020 Notes. The Restated Stern Note includes a 50% repayment premium. Mr. Stern, the Trustee of the Stern Trust also entered into the Security Agreement as one of the joint collateral agents. | |||
Mr. Phillip Kumnick [Member] | ||||
Related Party Transactions (Textual) | ||||
Related party transactions, description | Mr. Kumnick will earn an initial base salary of $250,000 per annum subject to review after one year. Mr. Kumnick was granted options to acquire 33,333,334 shares of common stock of which 20% vest at grant and the balance vest subject to performance conditions. Mr. Broenniman will earn an initial base salary of $175,000 per annum subject to review after one year. Mr. Broenniman was granted options to acquire 16,666,666 shares of common stock of which 20% vest at grant and the balance vest subject to performance conditions. | |||
Herbert Selzer [Member] | Convertible Notes Payable [Member] | ||||
Related Party Transactions (Textual) | ||||
Related party transactions, description | The Company, invested $50,000 each in consideration of the 2020 Notes. Another director, Herbert Selzer invested $100,000 in consideration of a 2020 Note in the principal amount of $100,000. Vista held 880,000 2015 Warrants, which were also extended as a result of Mr. Selzer's investment and as noted above were exercised for cash on June 30, 2020. | |||
Common Stock [Member] | ||||
Related Party Transactions (Textual) | ||||
Restricted common stock | 3,000,000 | |||
Number of common stock purchased, shares | 106,000 | |||
Common stock issues value | $ 50,000 | |||
Common Stock [Member] | Mr. Phillip Kumnick [Member] | ||||
Related Party Transactions (Textual) | ||||
Restricted common stock | 1,500,000 | |||
Common Stock [Member] | Mr. Philip Broenniman [Member] | ||||
Related Party Transactions (Textual) | ||||
Restricted common stock | 1,500,000 | |||
Warrant [Member] | Theodore Stern [Member] | ||||
Related Party Transactions (Textual) | ||||
Warrants exercise price per share, description | Company entered into and consummated a private transaction pursuant to which a portion of the Company's warrants exercisable at per share price of $0.10 (the "$0.10 Warrants") were exercised for cash at an exercise price of $0.07 per share. In addition, the holders that exercised the $0.10 Warrants received a warrant exercisable for two years to acquire one share of common stock at an exercise price of $0.15 per share (the $0.15 Warrants") for every four $0.10 Warrants exercised. | |||
Private transaction, description | Mr. Theodore Stern, a director of the Company, participated in the private transaction resulting in the issuance of 1,000,000 shares of common stock and 250,000 $0.15 Warrants in consideration of $70,000; and Varana Capital Focused, LP ("VCFLP"), participated in the private transaction resulting in the issuance of 3,716,667 shares of common stock and 929,167 $0.15 Warrants , in consideration of $260,167. Mr. Philip Broenniman, a director, the President and COO of the Company is the investment manager of VCFLP. | |||
Warrant [Member] | Herbert Selzer [Member] | ||||
Related Party Transactions (Textual) | ||||
Warrants exercise price per share, description | Company entered into and consummated a private transaction pursuant to which a portion of the Company's warrants exercisable at per share price of $0.06 (the "$0.06 Warrants") were exercised. In addition, the holders that exercised the $0.06 Warrants also received a $0.15 Warrant for every two $0.06 Warrants exercised. | |||
Private transaction, description | Vista Associates, L.P., ("Vista") of which, Mr. Herbert Selzer a director of the Company, is the General Partner, participated in the private transaction resulting in the issuance of 880,000 shares of common stock and 440,000 $0.15 Warrants , in consideration of $52,800. |
STOCKHOLDER'S EQUITY (Details)
STOCKHOLDER'S EQUITY (Details) | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Outstanding balance at beginning | shares | 47,453,227 |
Granted | shares | 7,458,085 |
Exercised/Cancelled | shares | (25,781,243) |
Outstanding balance at ending | shares | 29,130,069 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Weighted Average Exercise Price [Roll Forward] | |
Beginning Balance Outstanding | $ / shares | $ 0.08 |
Granted | $ / shares | 0.15 |
Exercised/Cancelled | $ / shares | 0.06 |
Ending Balance Outstanding | $ / shares | $ 0.12 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Weighted Average Remaining Life [Roll Forward] | |
Beginning Balance Outstanding | 1 year 4 months 24 days |
Granted | 2 years |
Exercised/Cancelled | 9 months 18 days |
Ending Balance Outstanding | 1 year 7 months 6 days |
STOCKHOLDER'S EQUITY (Details 1
STOCKHOLDER'S EQUITY (Details 1) | 6 Months Ended |
Jun. 30, 2020 | |
Minimum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected Volatility | 68.00% |
Expected Term | 5 years |
Risk Free Rate | 0.30% |
Dividend Rate | 0.00% |
Maximum[Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected Volatility | 75.00% |
Risk Free Rate | 0.34% |
Dividend Rate | 0.00% |
STOCKHOLDER'S EQUITY (Details 2
STOCKHOLDER'S EQUITY (Details 2) | 6 Months Ended |
Jun. 30, 2020USD ($)$ / sharesshares | |
Number of Shares | |
Outstanding at beginning | shares | 109,400,006 |
Granted | shares | 51,044,054 |
Exercised/Forfeited | shares | (699,999) |
Outstanding at ending | shares | 159,744,061 |
Exercisable at ending | shares | 113,750,727 |
Weighted Average Exercise Price | |
Outstanding at beginning | $ / shares | $ 0.20 |
Granted | $ / shares | 0.07 |
Forfeited | $ / shares | 0.23 |
Outstanding at ending | $ / shares | 0.19 |
Exercisable at ending | $ / shares | $ 0.15 |
Weighted Average Contractual Term (Yrs.) | |
Outstanding at beginning | 6 years 6 months |
Granted | 10 years |
Forfeited | |
Outstanding at ending | 7 years 7 months 6 days |
Exercisable at ending | 6 years 9 months 18 days |
Aggregate Intrinsic Value | |
Outstanding at beginning | $ | $ 280,000 |
Granted | $ | 200,000 |
Forfeited | $ | |
Outstanding at ending | $ | 104,650 |
Exercisable at ending | $ | $ 104,650 |
STOCKHOLDER'S EQUITY (Details 3
STOCKHOLDER'S EQUITY (Details 3) | 6 Months Ended |
Jun. 30, 2020shares | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 159,744,061 |
Weighted Average Contractual Life (Yrs.) | 7 years 7 months 17 days |
Exercisable | 113,750,727 |
Exercise Price $0.00001 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 3,500,000 |
Weighted Average Contractual Life (Yrs.) | 6 years |
Exercisable | 3,500,000 |
Exercise Price $0.05 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 35,700,006 |
Weighted Average Contractual Life (Yrs.) | 6 years 10 months 6 days |
Exercisable | 31,950,006 |
Exercise Price $0.06 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 1,044,054 |
Weighted Average Contractual Life (Yrs.) | 9 years 7 months 6 days |
Exercisable | 1,044,054 |
Exercise Price $0.07 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 50,000,000 |
Weighted Average Contractual Life (Yrs.) | 9 years 10 months 25 days |
Exercisable | 10,000,000 |
Exercise Price $0.10 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 27,200,000 |
Weighted Average Contractual Life (Yrs.) | 6 years 9 months |
Exercisable | 27,200,000 |
Exercise Price $0.119 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 400,001 |
Weighted Average Contractual Life (Yrs.) | 9 years 2 months 19 days |
Exercisable | 200,000 |
Exercise Price $0.124 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 600,000 |
Weighted Average Contractual Life (Yrs.) | 8 years 9 months |
Exercisable | 390,000 |
Exercise Price $0.130 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 250,000 |
Weighted Average Contractual Life (Yrs.) | 7 years 9 months 18 days |
Exercisable | 166,667 |
Exercise Price $0.15 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 2,800,000 |
Weighted Average Contractual Life (Yrs.) | 5 years 10 months 6 days |
Exercisable | 2,800,000 |
Exercise Price $0.22 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 2,583,333 |
Weighted Average Contractual Life (Yrs.) | 8 years 18 days |
Exercisable | 1,500,000 |
Exercise Price $0.250 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 2,500,000 |
Weighted Average Contractual Life (Yrs.) | 7 years 10 months 6 days |
Exercisable | 1,833,333 |
Exercise Price $0.260 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 166,667 |
Weighted Average Contractual Life (Yrs.) | 8 years 3 months 19 days |
Exercisable | 166,667 |
Exercise Price $0.290 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 1,000,000 |
Weighted Average Contractual Life (Yrs.) | 7 years 3 months 19 days |
Exercisable | 1,000,000 |
Exercise Price $0.400 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 1,000,000 |
Weighted Average Contractual Life (Yrs.) | 6 years 2 months 1 day |
Exercisable | 1,000,000 |
Exercise Price $0.400 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding | 31,000,000 |
Weighted Average Contractual Life (Yrs.) | 5 years 10 months 6 days |
Exercisable | 31,000,000 |
STOCKHOLDER'S EQUITY (Details N
STOCKHOLDER'S EQUITY (Details Narrative) - USD ($) | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Sep. 29, 2017 | |
Stock based compensation | $ 629,993 | $ 787,720 | |
Restricted Common Stock | 15,000,000 | ||
Number of options granted | 51,044,054 | ||
Non Employee Stock Option [Member] | |||
Stock based compensation | $ 13,000 | ||
Unrecognized compensation costs | 448,000 | ||
Compensation costs related to stock options outstanding | 13,000 | ||
Non Employee Stock Option [Member] | |||
Stock based compensation | $ 561,000 | ||
Common Stock [Member] | |||
Employment compensation shares | 1,500,000 | ||
Restricted Common Stock | 3,000,000 | ||
Number of common stock purchased, shares | 106,000 | ||
Number of common shares issued, amount | $ 50,000 | ||
Number of options granted | 4,500,000 | ||
Common Stock [Member] | Subscription Agreements [Member] | Accredited Investors 2020 [Member] | |||
Number of common stock purchased, shares | 3,441,558 | ||
Number of common shares issued, amount | $ 200,000 | ||
Warrants [Member] | |||
Warrants outstanding amount | $ 367,000 | ||
Warrants exercised for cash per share | $ 0.10 | ||
Exercise price per share | 0.07 | ||
Holders exercised | 0.10 | ||
Warrants received | 0.15 | ||
Warrants exercised price per share | $ 0.10 | ||
Warrants, description | As a result, the Company issued 10,008,333 shares of common stock and 2,502,085 $0.15 Warrants in consideration of $700,583. | ||
Fair value of warrants | $ 95,000 | ||
Warrants [Member] | Subscription Agreements [Member] | |||
Number of common shares issued, amount | 1,450,000 | ||
Stock subscription receivable | $ 970,000 | ||
Warrant exercise transactions issuance | 23,900,000 | ||
Warrant1Member | |||
Warrants exercised for cash per share | $ 0.05 | ||
Warrants received | 0.05 | ||
Warrants exercised price per share | $ 0.05 | ||
Warrants, description | As a result, the Company issued 4,632,000 shares of common stock and 2,316,000 $0.15 Warrants, in consideration of $231,600. Separately, certain holders of the $0.05 Warrants to acquire 1,770,000 shares of common stock exercised on a cashless basis resulting in the issuance of 560,659 shares of common stock. | ||
Warrant1Member | Mr Selzer [Member] | |||
Warrants, description | Certain of the 2015 Warrant holders participated in the 2020 Note offering and the Company extended the exercise period by two years, subject to an increase in the Exercise Price from $0.05 per share (as defined therein) to $0.06 per share of 2015 Warrants representing the right to acquire 6,380,000 shares of common stock. As noted above a portion of the 2015 Warrants (or $0.06 Warrants) were exercised for cash on June 30, 2020. Vista of which Mr. Selzer, a director of the Company, is the General Partner held 880,000 2015 Warrants, which were also extended as a result of his investment and were exercised for cash on June 30, 2020. | ||
Warrant Two [Member] | |||
Warrants, description | Company entered into and consummated a private transaction pursuant to which a portion of the Company's $0.06 Warrants were exercised. In addition, the holders that exercised the $0.06 Warrants also received $0.15 Warrant for every two $0.06 Warrants exercised. As a result, the Company issued 5,280,000 shares of common stock and 2,640,000 $0.15 Warrants in consideration of $316,800. |
DIRECT FINANCING LEASE (Details
DIRECT FINANCING LEASE (Details) | Jun. 30, 2020USD ($) |
Leases [Abstract] | |
Remainder 2020 | $ 61,074 |
2021 | 122,148 |
2022 | 122,148 |
2023 | 122,148 |
2024 | 122,148 |
Thereafter | 162,864 |
Sub-total | 712,530 |
Less deferred revenue | (184,290) |
Net investment in lease | $ 528,240 |
DIRECT FINANCING LEASE (Detai_2
DIRECT FINANCING LEASE (Details Narrative) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2016USD ($)Kiosks$ / shares | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | |
Direct Financing Lease (Textual) | |||||
Revenue | $ 321,119 | $ 644,961 | $ 1,114,908 | $ 1,385,339 | |
Equipment under capital lease | 748,000 | 748,000 | |||
Aggregate minimum future lease payments | $ 1,422,000 | 1,422,000 | |||
Unearned income | $ 474,000 | ||||
Cash Collection and Services [Member] | |||||
Direct Financing Lease (Textual) | |||||
Number of kiosks | Kiosks | 78 | ||||
Lease contract term | 10 years | ||||
Lease monthly rental | $ 11,900 | ||||
Lease rent expense | 142,272 | ||||
Estimated executory costs | $ 1,677 | ||||
Purchase price at the end of lease term (in dollars per unit) | $ / shares | $ 40 | ||||
Receive monthly payments | $ 11,856 |
LEASE OBLIGATION PAYABLE (Detai
LEASE OBLIGATION PAYABLE (Details) | Jun. 30, 2020USD ($) |
Year ending December 31 | |
Remainder of 2020 | $ 21,548 |
2021 | 43,096 |
2022 | 10,774 |
Total minimum lease payments | 75,418 |
Less: Amount representing interest | (7,696) |
Present value of minimum lease payments | $ 67,722 |
LEASE OBLIGATION PAYABLE (Det_2
LEASE OBLIGATION PAYABLE (Details Narrative) | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Leases [Abstract] | |
Amortization of lease equipment | $ 107,152 |
Lease obligation interest rate | 12.00% |
Lease obligation maturity date | Mar. 31, 2022 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) | Jun. 30, 2020USD ($) |
Assets: | |
Current portion of operating lease ROU assets - included in other current assets | $ 190,268 |
Operating lease ROU assets - included in Other Assets | 89,210 |
Total operating lease assets | 279,478 |
Liabilities: | |
Current portion of ROU liabilities - included in Accounts payable and accrued expenses | 145,259 |
Long-term portion of ROU liabilities - included in Other liabilities | 92,503 |
Total operating lease liabilities | $ 237,762 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Details 1) | Jun. 30, 2020USD ($) |
Operating Leases Year Ending March 31: | |
Remainder of 2020 | $ 132,017 |
2021 | 96,607 |
2022 | 49,716 |
Total operating lease payments | 278,340 |
Less: Imputed interest | (40,578) |
Total operating lease liabilities | $ 237,762 |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES (Details Narrative) | 1 Months Ended | 6 Months Ended | ||
Oct. 31, 2018USD ($) | Apr. 30, 2017USD ($) | Jun. 30, 2020USD ($)ft² | May 22, 2020USD ($) | |
Lease expense | $ 165,000 | |||
Area of land for rent | ft² | 2,100 | |||
Weighted average lease term | 1 year 9 months 18 days | |||
Weighted average discount rate | 13.55% | |||
Employee benefits, payable | $ 350,000 | |||
New Office Facilities [Member] | South Africa [Member] | ||||
Monthly rental payments | $ 8,000 | |||
New Office Facilities [Member] | COLOMBIA [Member] | MultiPay S.A.S [Member] | ||||
Monthly rental payments | $ 8,500 | |||
Agreement term | 2 years | |||
New Office Facilities [Member] | Alpharetta Georgia [Member] | ||||
Monthly rental payments | $ 3,800 | |||
New Office Facilities [Member] | Long Beach, New York [Member] | ||||
Additional monthly rental payments | $ 5,000 | |||
Agreement term | 30 days | |||
New Office Facilities [Member] | Plantation [Member] | ||||
Monthly rental payments | $ 2,700 | |||
Apartment [Member] | COLOMBIA [Member] | ||||
Monthly rental payments | $ 2,000 | |||
Weighted average discount rate | 3.00% |
IMPAIRMENT LOSS (Details)
IMPAIRMENT LOSS (Details) | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Restructuring and Related Activities [Abstract] | |
Goodwill impairment loss | $ 1,035,000 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Net Revenues | $ 321,119 | $ 644,961 | $ 1,114,908 | $ 1,385,339 |
Loss From Operations | (2,806,621) | (2,084,538) | (5,479,229) | (4,252,912) |
Interest Expense | (310,153) | (93,260) | (489,203) | (180,150) |
Other income/(expense) | 342,082 | 6,271 | 1,317,971 | 12,497 |
Loss before income taxes | (3,458,856) | (2,171,527) | (7,286,403) | (4,420,565) |
Income tax expense | (3,592) | (4,264) | (12,466) | (17,965) |
Net loss | (3,462,448) | (2,175,791) | (7,298,869) | (4,438,530) |
Payment Processing [Member] | ||||
Net Revenues | 248,986 | 524,348 | 929,151 | 1,139,398 |
Loss From Operations | (1,002,837) | (863,669) | (2,463,293) | (1,775,091) |
Identity Management [Member] | ||||
Net Revenues | 72,133 | 120,613 | 185,757 | 245,941 |
Loss From Operations | (1,803,784) | (1,220,869) | (3,015,936) | (2,477,821) |
North America [Member] | ||||
Net Revenues | 135,698 | 146,583 | 269,252 | 373,624 |
Loss From Operations | (670,183) | (681,690) | (1,076,575) | (1,419,652) |
South America [Member] | ||||
Net Revenues | 72,133 | 120,613 | 185,757 | 245,941 |
Loss From Operations | (1,803,784) | (1,220,869) | (3,015,936) | (2,477,821) |
Africa [Member] | ||||
Net Revenues | 113,288 | 377,765 | 659,899 | 765,774 |
Loss From Operations | $ (332,654) | $ (181,979) | $ (1,386,718) | $ (355,439) |
SEGMENT INFORMATION (Details Na
SEGMENT INFORMATION (Details Narrative) | 6 Months Ended |
Jun. 30, 2020USD ($)Segment | |
Number of reportable segments | Segment | 2 |
North America [Member] | |
Gross long lived assets | $ 8,900,000 |
South America [Member] | |
Gross long lived assets | 300,000 |
Africa [Member] | |
Gross long lived assets | $ 300,000 |