Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Apr. 16, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | Ipsidy Inc. | |
Entity Central Index Key | 1,534,154 | |
Document Type | 10-Q | |
Trading Symbol | IDGS | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity a Well-known Seasoned Issuer | No | |
Entity a Voluntary Filer | No | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 343,894,409 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,016 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Current Assets: | ||
Cash | $ 234,812 | $ 349,873 |
Accounts receivable, net | 695,080 | 509,027 |
Current portion of net investment in direct financing lease | 46,205 | |
Inventory | 119,702 | 516,663 |
Other current assets | 147,153 | 134,224 |
Total current assets | 1,242,952 | 1,509,787 |
Property and Equipment, net | 115,249 | 37,775 |
Other Assets | 216,958 | 319,592 |
Intangible Assets, net | 3,508,617 | 1,436,534 |
Goodwill | 6,736,043 | 166,689 |
Net investment in direct financing lease, net of current portion | 683,894 | |
Total assets | 12,503,714 | 3,470,377 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 1,228,803 | 717,500 |
Convertible notes payable, net | 2,339,375 | 383,346 |
Derivative liability | 9,319,015 | 25,445,645 |
Contingent purchase consideration (Notes 10, 12) | 310,445 | 370,125 |
Notes payable, net | 1,983,215 | 634,069 |
Deferred revenue | 476,457 | |
Total current liabilities | 15,657,310 | 27,550,685 |
Stockholders' Deficit: | ||
Common stock, $0.0001 par value, 500,000,000 shares authorized; 231,551,155 and 187,854,139 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively | 23,155 | 18,785 |
Additional paid in capital | 33,216,756 | 14,923,936 |
Accumulated deficit | (36,547,807) | (39,074,590) |
Accumulated other comprehensive income | 154,300 | 51,561 |
Total stockholders' deficit | (3,153,596) | (24,080,308) |
Total liabilities and stockholders' deficit | $ 12,503,714 | $ 3,470,377 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 500,000,000 | 500,000,000 |
Common stock, issued | 231,551,155 | 187,854,139 |
Common stock, outstanding | 231,551,155 | 187,854,139 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2016 | Sep. 30, 2015 | [1] | Sep. 30, 2016 | Sep. 30, 2015 | [1] | |
Revenues | ||||||
Products and services | $ 576,466 | $ 75,312 | $ 1,373,892 | $ 86,358 | ||
Lease income | 19,735 | 33,050 | ||||
Revenues, net | 596,201 | 75,312 | 1,406,942 | 86,358 | ||
Operating Expenses: | ||||||
Cost of Sales | 116,376 | 349,034 | ||||
General and administrative | 2,171,627 | 3,732,887 | 10,711,942 | 4,664,251 | ||
Research and development | 65,582 | 387,246 | 224,853 | |||
Depreciation and amortization | 127,473 | 42,684 | 388,233 | 99,410 | ||
Total operating expenses | 2,481,058 | 3,775,571 | 11,836,455 | 4,988,514 | ||
Loss from operations | (1,884,857) | (3,700,259) | (10,429,513) | (4,902,156) | ||
Other Income (Expense): | ||||||
(Loss)/gain on derivative liabilities | (1,594,636) | (24,246,627) | 16,082,616 | (27,111,980) | ||
Interest expense | (853,543) | (468,790) | (3,126,320) | (505,161) | ||
Other income | 9,315 | 9,315 | ||||
Other income (expense), net | (2,448,179) | (24,706,102) | 12,956,296 | (27,607,826) | ||
(Loss)/income before income taxes | (4,333,036) | (28,406,361) | 2,526,783 | (32,509,982) | ||
Income Taxes | ||||||
Net income (loss) | $ (4,333,036) | $ (28,406,361) | $ 2,526,783 | $ (32,509,982) | ||
Net Income (Loss) Per Share: | ||||||
Basic (in dollars per share) | $ 0.01 | $ (0.17) | $ 0.01 | $ (0.20) | ||
Diluted (in dollars per share) | $ (0.04) | |||||
Weighted Average Shares Outstanding: | ||||||
Basic (in shares) | 226,796,302 | 163,724,678 | 212,790,554 | 163,724,678 | ||
Diluted (in shares) | 289,858,911 | |||||
[1] | Restated |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |||
Statement of Comprehensive Income [Abstract] | ||||||
Net Income (Loss) | $ (4,333,036) | $ (28,406,361) | [1] | $ 2,526,783 | $ (32,509,982) | [1] |
Foreign currency translation gains (losses) | (18,304) | 102,739 | ||||
Comprehensive income (loss) | $ (4,351,340) | $ (28,406,361) | [1] | $ 2,629,522 | $ (32,509,982) | [1] |
[1] | Restated |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT (Unaudited) - 9 months ended Sep. 30, 2016 - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Income [Member] | Total |
Balance, beginning at Dec. 31, 2015 | $ 18,785 | $ 14,923,936 | $ (39,074,590) | $ 51,561 | $ (24,080,308) |
Balance, beginning (in shares) at Dec. 31, 2015 | 187,854,139 | 187,854,139 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Reclassification of derivative liabilities upon conversion of convertible debt | 692,850 | $ 692,850 | |||
Issuance of common stock upon conversion of convertible debt | $ 70 | 21,152 | 21,222 | ||
Issuance of common stock upon conversion of convertible debt (in shares) | 704,074 | ||||
Stock-based compensation | 6,805,776 | 6,805,776 | |||
Common stock issued for services | $ 77 | 285,150 | 285,227 | ||
Common stock issued for services (in shares) | 769,068 | ||||
Common stock issued in settlement of contingent liability | $ 26 | 59,655 | $ 59,681 | ||
Common stock issued in settlement of contingent liability (in shares) | 260,537 | 260,537 | |||
Common stock issued for debt issuance costs | $ 144 | 168,981 | $ 169,125 | ||
Common stock issued for debt issuance costs (in shares) | 1,430,000 | 1,430,000 | |||
Common stock issued with convertible debt | $ 103 | 54,367 | $ 54,470 | ||
Common stock issued with convertible debt (in shares) | 1,033,337 | ||||
Common stock issued for acquisition of FIN Holdings | $ 2,250 | 8,997,750 | 9,000,000 | ||
Common stock issued for acquisition of FIN Holdings (in shares) | 22,500,000 | ||||
Common stock issued for cash | $ 2,500 | 1,247,500 | 1,250,000 | ||
Common stock issued for cash (in shares) | 25,000,000 | ||||
Common stock issuance costs | $ 200 | (120,442) | (120,242) | ||
Common stock issuance costs (in shares) | 2,000,000 | ||||
Common stock cancelled | $ (1,000) | 1,000 | |||
Common stock cancelled (in shares) | (10,000,000) | ||||
Warrants issued for inventory | 79,081 | 79,081 | |||
Net income | 2,526,783 | 2,526,783 | |||
Foreign currency translation | 102,739 | 102,739 | |||
Balance, ending at Sep. 30, 2016 | $ 23,155 | $ 33,216,756 | $ (36,547,807) | $ 154,300 | $ (3,153,596) |
Balance, ending (in shares) at Sep. 30, 2016 | 231,551,155 | 231,551,155 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | ||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income (loss) | $ 2,526,783 | $ (32,509,982) | [1] |
Adjustments to reconcile net income(loss) with cash flows from operating activities: | |||
Depreciation and amortization expense | 388,233 | 496,785 | [1] |
Stock-based compensation | 6,805,776 | 3,524,294 | [1] |
Common stock issued for services | 285,227 | [1] | |
Amortization of debt discount | 2,191,786 | [1] | |
Amortization of debt issuance costs | 549,867 | 134,824 | [1] |
(Gain) loss on derivative liabilities | (16,082,616) | 27,111,980 | [1] |
Write-off abandoned product | 225,862 | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | (125,814) | [1] | |
Lease receivable | 17,845 | ||
Other current assets | (12,929) | (333,135) | [1] |
Inventory | (159,494) | (126,535) | [1] |
Accounts payable and accrued expenses | (401,465) | 221,202 | [1] |
Deferred revenue | 476,457 | [1] | |
Net cash flows from operating activities | (3,062,854) | (1,480,567) | [1] |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchase of property and equipment | (23,309) | (83,736) | [1] |
Investment in other assets | (136,162) | (38,017) | [1] |
Cash acquired in acquisitions | 419,042 | 31,435 | [1] |
Net cash flows from investing activities | 259,571 | (90,318) | [1] |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from issuance of convertible notes payable, warrants and common stock | 1,550,000 | 2,040,000 | [1] |
Proceeds from the issuance of notes payable and warrants | 100,000 | ||
Payment of debt issuance costs | (133,400) | [1] | |
Proceeds from issuance of notes payable and warrants, related parties | 365,773 | [1] | |
Proceeds from sale of common stock | 1,250,000 | 150,500 | [1] |
Payment of equity issuance costs | (120,242) | [1] | |
Advances from related parties | 67,120 | [1] | |
Principal payments on notes payable to related parties | (255,000) | [1] | |
Principal payments on notes payable | (60,875) | (47,816) | [1] |
Net cash flows from financing activities | 2,585,483 | 2,320,577 | [1] |
Effect of Foreign Currencies | 102,739 | [1] | |
Net Change in Cash | (115,061) | 749,692 | [1] |
Cash, Beginning of the Period | 349,873 | 159,296 | [1] |
Cash, End of the Period | 234,812 | 908,988 | [1] |
Supplemental Disclosure of Cash Flow Information: | |||
Cash paid for interest | [1] | ||
Cash paid for income taxes | [1] | ||
Non-cash Investing and Financing Activities: | |||
Issuance of common stock for conversion of convertible debt and accrued interest | 21,222 | [1] | |
Issuance of common stock in settlement of contingent liability | 59,681 | ||
Reclassification of derivative liabilities upon conversion of convertible debt into common stock | 692,850 | [1] | |
Issuance of common stock for debt issuance costs | 169,125 | [1] | |
Issuance of warrants for inventory | 79,081 | [1] | |
Issuance common stock with convertible debt | 54,470 | [1] | |
Reclassification of inventory to net investment in direct financing lease | 747,944 | [1] | |
Acquisition of FIN Holdings (2016) and Multi Pay (2015), respectively: | |||
Issuance of common stock as consideration | 9,000,000 | 610,151 | [1] |
Assumed liabilities | 914,218 | 732,209 | [1] |
Inventory | (112,408) | [1] | |
Accounts receivable | (311,867) | (230,151) | [1] |
Property and equipment | (100,339) | (20,000) | [1] |
Intangible assets | (8,970,562) | (1,054,333) | [1] |
Cash acquired | $ 419,042 | $ 37,876 | [1] |
[1] | Restated |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | NOTE 1 – BASIS OF PRESENTATION In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements are prepared in accordance with instructions for Form 10-Q, and include all adjustments (consisting only of normal recurring accruals) which it 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, 2015. The results of operations for the three and nine months ended September 30, 2016 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. and Cards Plus Pty Ltd. (the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation. Net Loss per Common Share The Company computes net income or 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 income (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 table illustrates the computation of basic and diluted EPS: For the nine-months Per-Share Income Shares Amount Basic EPS Income available to stockholders $ 2,526,783 212,790,554 $ .01 Effect of Dilutive Securities Stock Options - 17,037,007 Warrants - 21,350,729 Convertible Debt (15,333,674 ) 38,680,621 Diluted EPS Income available to stockholders plus assumed conversions $ (12,806,891 ) 289,858,911 $ (0.04 ) Going concern As of September 30, 2016, the Company has a working capital and accumulated deficit of approximately $14.4 million, and $36.5 million, respectively. For the nine months ended September 30, 2016 the Company earned revenue of approximately $1.4 million and incurred a loss from operations of approximately $10.4 million. These 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 equity 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. There is no assurance that the Company will ever be profitable. These 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. 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 market. 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 September 30, 2016 consist solely of cards inventory as the kiosks were deployed in the second quarter of 2016 subject to a direct financing lease. Income Taxes The Company accounts for income taxes under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740 “Income Taxes.” Under the asset and liability method of FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. For the three and nine months ending September 30, 2016, there is no provision for income tax as the Company had a tax loss for United States and foreign activities and the Company’s net deferred tax assets which consist primarily of net operating loss carryforwards have a full valuation allowance. The Company’s gain on derivative liability during the three and nine months ended September 30, 2016 and 2015, is not taxable. Leases All leases are classified at the inception as direct finance leases or operating leases based on whether the lease transfers substantially all the risks and rewards of ownership. Leases that transfer to the lessee substantially all of the risks and rewards incidental to ownership of the asset are classified as direct finance leases. Revenue Recognition The Company recognizes revenue when products are shipped or services have been performed. Revenue related to direct financing leases is recognized over the term of the lease using the effective interest method. |
FIN HOLDINGS ACQUISITION
FIN HOLDINGS ACQUISITION | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
FIN HOLDINGS ACQUISITION | NOTE 2 FIN HOLDINGS ACQUISITION On February 8, 2016, the Company entered into a Share Exchange Agreement with Fin Holdings, Inc., a Florida corporation ("FIN"), and all of the FIN shareholders (the "FIN Shareholders"), pursuant to which the Company acquired 100% of the issued and outstanding shares of FIN (the "FIN Shares") and FIN's two wholly-owned subsidiaries, ID Solutions, Inc. and Cards Plus Pty Ltd. (collectively, the "Subsidiaries"), from the FIN Shareholders. One of the FIN shareholders was the Company’s Chief Operating Officer and owned approximately 1.7% of the Company’s outstanding common stock at the acquisition date. In consideration for the FIN Shares, the Company issued and sold to the FIN Shareholders an aggregate of 22,500,000 shares of common stock of the Company (the "Purchase Shares") at a per share price of $0.40 which is equivalent to $9,000,000. The closing occurred on February 8, 2016. In accordance with ASC 805, “Business Combinations”, the Company accounted for the acquisition of FIN as a business combination of FIN using the acquisition method of accounting. The purchase price was allocated to specific identifiable tangible and intangible assets at their respective fair values at the date of acquisition. The following table summarizes the total fair value of the consideration transferred as well as the fair values of the assets and liabilities assumed. Common stock consideration $ 9,000,000 Liabilities assumed 914,218 Total purchase consideration 9,914,218 Current assets (843,317 ) Property and equipment (100,339 ) Customer relationships (1,587,159 ) Intellectual property (814,049 ) Goodwill $ 6,569,354 Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the expected revenue and benefits of the combined company. FIN was acquired on February 8, 2016 pursuant to a Share Exchange Agreement at which time control was achieved through a restructuring of the reporting hierarchy to Company management. The condensed consolidated financial statements for the nine months ended September 30, 2016 include FIN’s results for the period from the date of acquisition to September 30, 2016. FIN Holdings Revenue and operating income in the consolidated results of operations for the nine months ended September 30, 2016, was approximately $1,118,000 and $264,000 respectively. The following unaudited proforma financial information gives effect to the Company’s acquisition of FIN as if the acquisition had occurred on January 1, 2015 and had been included in the Company’s consolidated statement of operations for the nine months ended September 30, 2016 and September June 30, 2016. Nine months ended September 30 2016 2015 Proforma net revenues $ 1,528,498 $ 1,577,701 Proforma net income (loss) $ 2,519,242 $ (32,385,487 ) |
INTANGIBLE ASSETS, NET (OTHER T
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) | NOTE 3 – INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) The Company’s intangible assets consist of intellectual property acquired from MultiPay in April 2015 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 nine months ended September 30, 2016: Customer Intellectual Non- Useful Lives 10 Years 7 Years 5 Years Total Carrying Value at December 31, 2015 $ - $ 1,423,537 $ 12,997 $ 1,436,534 Additions 1,587,159 826,983 - 2,414,142 Amortization (101,314 ) (238,633 ) (2,112 ) (342,059 ) Carrying Value at September 30, 2016 $ 1,485,845 $ 2,011,887 $ 10,885 $ 3,508,617 The following is a summary of intangible assets as of September 30, 2016: Customer Intellectual Non- Total Cost $ 1,587,159 $ 2,457,581 $ 14,088 $ 4,058,828 Accumulated amortization (101,314 ) (445,694 ) (3,203 ) (550,211 ) Carrying Value at September 30, 2016 $ 1,485,845 $ 2,011,887 $ 10,885 $ 3,508,617 Future expected amortization of intangible assets is as follows: Fiscal Year Ending December 31, 2016 $ 124,355 2017 497,421 2018 497,421 2019 497,421 2020 491,824 2021 489,963 Thereafter 910,212 $ 3,508,617 |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 9 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | NOTE 4 – PROPERTY AND EQUIPMENT, NET Property and equipment consisted of the following as of September 30, 2016 and December 31, 2015: 2016 2015 Computers and equipment $ 101,378 $ 88,047 Furniture and fixtures 179,485 69,168 280,863 157,215 Less Accumulated depreciation 165,614 119,440 Property and equipment, net $ 115,249 $ 37,775 Depreciation expense totaled $46,174 and $12,505 for the nine months ended September 30, 2016 and 2015, respectively. |
ACCOUNTS PAYABLE AND ACCRUED EX
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 9 Months Ended |
Sep. 30, 2016 | |
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 September 30, 2016 and December 31, 2015: 2016 2015 Trade payables $ 359,358 $ 301,455 Accrued interest 462,152 96,579 Accrued payroll and related 292,939 204,125 Other accrued expenses 114,354 115,341 Total $ 1,228,803 $ 717,500 |
NOTES PAYABLE, NET
NOTES PAYABLE, NET | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE, NET | NOTE 6 - NOTES PAYABLE, NET The following is a summary of notes payable as of September 30, 2016 and December 31, 2015: 2016 2015 In connection with the acquisition of MultiPay in 2015, the Company assumed three promissory notes. At September 30, 2016, the remaining outstanding note carried an outstanding balance of approximately $62,794. Payments of $6,300 including principal and interest are due monthly. The Notes accrue interest at an annual rate of 15.47%. Total outstanding principal and interest is due on September 16, 2017. $ 62,794 $ 96,669 The below Notes Payable were not initially convertible; except the accrued interest portion which was convertible into common stock of the Company. All principal and interest are due at maturity. Further, in January 2017, the below notes, which were being renegotiated, respective outstanding principal and related accrued interest were converted into common stock of the Company (see note 13). In August 2015, the Company issued a 12% note in the amount of $27,000. The note is secured by the assets of the Company, matured in August 2016, and accrued interest is convertible into common stock of the Company at a rate of $0.10 per share. In connection with the issuance of this notes, the Company also issued warrants for the purchase of 180,000 shares of the Company’s common stock at an exercise price of $0.15 per share for a period of five years. The Company also incurred debt issuance costs of $148,160, which are presented as a discount against the note and amortized into interest expense over the term of the note. The entire principle balance of the note was repaid in September 2016. - 27,000 In September 2015, the Company issued 12% note in the amount of $973,000. The notes are secured by the assets of the Company, matured in September 2016, and accrued interest is convertible into common stock of the Company at a rate of $0.10 per share. In connection with the issuance of these notes, the Company also issued warrants for the purchase of 6,486,667 shares of the Company’s common stock at an exercise price of $0.15 per share for a period of five years. The Company also incurred debt issuance costs of $77,480, which are presented as a discount against the notes and amortized into interest expense over the terms of the notes. 973,000 973,000 In October 2015, the Company issued 12% notes in the amount of $225,000. The notes are secured by the assets of the Company, matured in October 2016, and accrued interest is convertible into common stock of the Company at a rate of $0.10 per share. In connection with the issuance of these notes, the Company also issued warrants for the purchase of 1,500,000 shares of the Company’s common stock at an exercise price of $0.15 per share for a period of five years. The Company also incurred debt issuance costs of $36,400, which are presented as a discount against the note and amortized into interest expense over the terms of the notes. 225,000 225,000 In November 2015, the Company issued a 12% note in the amount of $25,000. The note is secured by the assets of the Company, matured in October 2016, and accrued interest is convertible into common stock of the Company at a rate of $0.10 per share. In connection with the issuance of this note, the Company also issued warrants for the purchase of 166,667 shares of the Company’s common stock at an exercise price of $0.15 per share for a period of five years. The Company also incurred debt issuance costs of $94,400, which are presented as a discount against the note and amortized into interest expense over the term of the note. 25,000 25,000 In December 2015, the Company issued 12% notes in the amount of $850,000. The notes are secured by the assets of the Company and matured in December 2016. Any unpaid accrued interest on the note is convertible into common stock of the Company at a rate of $0.48 per share. In connection with the issuance of these notes, the Company also issued warrants for the purchase of 1,770,834 shares of the Company’s common stock at an exercise price of $0.48 per share for a period of five years. The conversion rate on the accrued interest and the exercise price on the warrants provide the holders with anti-dilution protection that requires these features to be bifurcated and presented as derivative liabilities at their fair values. See Note 8. 850,000 850,000 In January 2016, the Company issued a 12% note in the amount of $100,000. The note is secured by the assets of the Company, matured in January 2017, and accrued interest is convertible into common stock of the Company at a rate of $0.48 per share. In connection with the issuance of these notes, the Company also issued warrants for the purchase of 208,332 shares of the Company’s common stock at an exercise price of $0.48 per share for a period of five years. The conversion rate on the accrued interest and the warrants provide the holders with anti-dilution protection that requires these features to be bifurcated and presented as derivative liabilities at their fair values. See Note 8 100,000 - Total Principal Outstanding $ 2,235,794 $ 2,196,669 Unamortized Deferred Debt Discounts (148,501 ) (1,193,947 ) Unamortized Deferred Debt Issuance Costs (104,078 ) (368,653 ) Convertible Notes, Net $ 1,983,215 $ 634,069 The following is a roll-forward of the Company’s notes payable and related discounts for the nine months ended September 30, 2016: Principal Debt Debt Total Balance at December 31, 2015 $ 2,196,669 $ (368,653 ) $ (1,193,947 ) $ 634,069 New issuances 100,000 - (66,830 ) 33,170 Payments (60,875 ) - - (60,875 ) Amortization - 264,575 1,112,276 1,376,851 Balance at September 30, 2016 $ 2,235,794 $ (104,078 ) $ (148,501 ) $ 1,983,215 |
CONVERTIBLE NOTES PAYABLE, NET
CONVERTIBLE NOTES PAYABLE, NET | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES PAYABLE, NET | NOTE 7 - CONVERTIBLE NOTES PAYABLE, NET Convertible notes consisted of the following as of September 30, 2016 and December 31, 2015: 2016 2015 In January 2017, the below notes, which were being renegotiated, and related accrued interest were converted into common stock of the Company (see note 13). All principal and interest are due at maturity. In June 2015, the Company issued 10% convertible notes in the aggregate principal amount of $700,000. The notes are secured by the assets of the Company, matured in June 2016, and are convertible into common stock of the Company at a conversion rate of $0.03 per share, subject to adjustment. In connection with the issuance of these notes, the Company also issued warrants for the purchase of 15,400,000 shares of the Company’s common stock at an exercise price of $0.05 per share for a period of five years. The conversion rate on the notes and exercise price of the warrants are subject to adjustment for anti-dilution protection that requires these features to be bifurcated and presented as derivative liabilities at their fair values. See Note 8. The Company also incurred debt issuance costs of $124,000, which are presented as a discount against the note and amortized into interest expense over the term of the note. During the nine months ended September 30, 2016, one note holder elected to convert principal and accrued interest totaling $21,222 into 704,074 shares of common stock. $ 680,000 $ 700,000 In July 2015, the Company issued 10% convertible notes with in the aggregate principal amount of $190,000. The notes are secured by the assets of the Company, matured in July 2016, and are convertible into common stock of the Company at a conversion rate of $0.03 per share, subject to adjustment. In connection with the issuance of these notes, the Company also issued warrants for the purchase of 4,180,000 shares of the Company’s common stock at an exercise price of $0.05 per share for a period of five years. The conversion rate on the notes and exercise price of the warrants are subject for adjustment to anti-dilution protection that requires these features to be bifurcated and presented as derivative liabilities at their fair values. See Note 8. The Company also incurred debt issuance costs of $16,200, which are presented as a discount against the note and amortized into interest expense over the term of the note. 166,000 166,000 In February 2016, the Company re-issued a 12% convertible note in the amount of $172,095. The note is secured by the assets of the Company, originally maturing in September 2016, and is convertible into common stock of the Company at a rate of $0.10 per share. 172,095 172,095 In April 2016, the Company issued 12% convertible notes in the amount of $1,550,000. The notes are secured by the assets of the Company, mature in October 2016, and are convertible into common stock of the Company at a rate of $0.25 per share. In connection with the issuance of these notes, the Company also issued 1,033,337 shares of common stock and warrants for the purchase of 6,200,000 shares of the Company’s common stock at an exercise price of $0.25 per share for a period of five years. The conversion rate on the notes and exercise price of the warrants are subject to adjustment for anti-dilution protection that requires these features to be bifurcated and presented as derivative liabilities at their fair values. See Note 8. The portion of the remaining proceeds attributable to the notes and common stock were allocated to the instruments based on their relative fair values. See Notes 8 and 10. The Company also incurred debt issuance costs of $226,400, which are presented as a discount against the note and amortized into interest expense over the term of the note. In August 2016, the Company entered into an agreement with the April 2016 Accredited Investors to reduce the exercise price on the embedded conversion feature and the warrants to $.10 and to increase the number of warrants to 15,500,000. The August 2016 change in the terms of these convertible notes has been determined to be a loan extinguishment in accordance with ASC 470, Debt. The reported amounts under a loan extinguishment are not significantly different than that of the Company’s reported amounts. See notes 8 and 10. 1,550,000 - Total Principal Outstanding $ 2,568,095 $ 1,038,095 Unamortized Discounts – Deferred Debt Discounts (139,912 ) (583,049 ) Unamortized Deferred – Debt issuance costs (88,808 ) (71,700 ) Convertible Notes, Net $ 2,339,375 $ 383,346 The following is a roll-forward of the Company’s convertible notes and related discounts for the nine months ended September 30, 2016: Principal Debt Debt Total Balance at December 31, 2015 $ 1,038,095 $ (71,700 ) $ (583,049 ) $ 383,346 New issuances 1,550,000 (226,400 ) (636,373 ) 687,227 Conversions (20,000 ) - - (20,000 ) Amortization - 209,292 1,079,510 1,288,802 Balance at September 30, 2016 $ 2,568,095 $ (88,808 ) $ (139,912 ) $ 2,339,375 |
DERIVATIVE LIABILITY
DERIVATIVE LIABILITY | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE LIABILITY | NOTE 8 –DERIVATIVE LIABILITY Due to the potential adjustment in the conversion price associated with certain of the convertible debentures and the potential adjustment in the exercise price of certain of the warrants, the Company has determined that certain conversion features and warrants are derivative liabilities. The fair values of the embedded conversion features and the warrants are estimated and recorded as derivative liabilities on the date of issuance, offset by a discount on the related convertible note payable up to the face amount of the note, with any excess fair value recorded as derivative expense on the date of issuance. The Company’s convertible debt is convertible into common stock at conversion rates that vary based on the trading prices of the Company’s common stock. Accordingly, the conversion feature is required to be presented at fair value on the dates of issuance, settlement, and at each reporting date. The Company also has warrants to purchase common stock outstanding that provide for adjustments to the exercise prices upon the future dilutive issuances. The Company utilizes Monte Carlo simulations and stochastic forecasting to estimate the fair value of the warrants and conversion options. The ranges of assumptions utilized in estimating the fair value of the warrants and conversion options during the nine months ended September 30, 2016, are as follows: Expected Volatility 70% to 87% Expected Term 0.5 to 5.0 Years Risk Free Rate 0.20% to 1.14% Dividend Rate 0.00% Triggering Capital Raise Probabilities 50% - 75% A summary of derivative activity for the nine months ended September 30, 2016 is as follows: Balance at December 31, 2015 $ 25,445,645 New issuances 648,836 Conversions feature reclassified to equity upon conversion of related notes payable (692,850 ) Change in fair value (16,082,616 ) Balance at September 30, 2016 $ 9,319,015 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 9 – RELATED PARTY TRANSACTIONS Acquisition of FIN: As discussed in Note 2, the Company acquired all of the issued and outstanding shares of FIN in February 2016. The Company’s Chief Operating Officer and then 1.7% shareholder in the Company was also a significant shareholder in FIN at the time of the acquisition. Convertible Notes Payable As of September 30, 2016, the Company has outstanding convertible notes payable to certain members of the Company’s Board of Directors. Total amount due to the related parties amounted to $150,000 at September 30, 2016. See Note 7. Other In connection with the Company’s ability to secure third-party financing, the Company paid Network 1 Financial Securities, Inc. (“Network 1”), a registered broker-dealer, a cash fee of $224,000 and issued Network 1 3,430,000 shares of common stock of the Company in accordance with its agreement during the nine months ended September 30, 2016. A member of the Company’s Board of Directors previously maintained a partnership with a key principal of Network 1. The agreement calls for Network 1 to receive a 16% commission, in cash and stock, of the total amount of proceeds from any financing it secures for the Company (8% in cash and 8% in stock). |
STOCKHOLDER'S EQUITY
STOCKHOLDER'S EQUITY | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
STOCKHOLDER'S EQUITY | NOTE 10 STOCKHOLDER’S DEFICIT Common Stock During the nine months ended September 30, 2016, the Company issued 704,074 shares of common stock upon the conversion of principal and interest on convertible debt totaling $21,222. During the nine months ended September 30, 2016, the Company issued 94,068 shares of common stock as consideration for information technology services. The fair value of the shares, totaling $15,227, was estimated based on the publicly quoted trading price and recorded as expense. During the nine months ended September 30, 2016, the Company issued 675,000 shares of common stock as consideration for services related to its acquisition of FIN Holdings. The fair value of the shares, totaling $270,000, was estimated based on the publicly quoted trading price and recorded as expense. During the nine months ended September 30, 2016, the Company issued 260,537 shares of common stock in partial settlement of a contingent liability of $59,681 related to its acquisition of MultiPay. See Note 12. During the nine months ended September 30, 2016, the Company issued 1,430,000 shares of common stock as consideration for debt issuance costs. The fair value of the shares, totaling $169,125, was estimated based on publicly quoted trading prices and recorded as debt issuance costs to be amortized into interest expense over the terms of the respective debt agreements. During the nine months ended September 30, 2016, the Company issued 1,033,337 shares of common stock in connection with the April 2016 convertible notes (See Note 7) of which $54,470 of the proceeds from the issuance of convertible notes was attributed to the common stock based on their relative fair value to that of the note and recorded as a debt discount to be amortized into interest expense over the terms of the respective debt agreements. During the nine months ended September 30, 2016, the Company issued 22,500,000 shares of common stock as consideration for the acquisition of FIN Holdings. See Note 2. On August 10, 2016 through August 26, 2016, the Company entered into and closed Subscription Agreements with several accredited investors (the "August 2016 Accredited Investors") pursuant to which the August 2016 Accredited Investors purchased an aggregate of 25,000,000 shares of the Company's common stock (the "2016 Subscription Shares") for an aggregate purchase price of $1,250,000. In order to reduce the dilution to the other shareholders as a result of this private offering, certain shareholders of the Company including the Chief Executive Officer, directors and others agreed to return to the Company 10,000,000 shares of common stock in the aggregate for cancellation. As of September 30, 2016, only 3,345,616 had been returned. The majority of the remaining 6,654,384 were returned and cancelled in the first quarter of 2017. In connection with this private offering, the Company paid Network 1 Financial Securities, Inc., a registered broker-dealer, a cash fee of $100,000 and issued 2,000,000 shares of common stock of the Company. Warrants During the nine months ended September 30, 2016, in connection with the issuance of debt and the purchase of inventory, the Company issued warrants to acquire 15,966,953 shares of common stock over five-year terms. Warrants to acquire 208,332, 258,621 and 1,550,000 shares of common stock are exercisable for an exercise price of $0.48 per share, $0.58 per share and $0.10 (previously $0.25) per share, respectively. On August 10, 2016, the Company and the April 2016 Accredited Investors entered into a letter agreement whereby the conversion price of the secured convertible debentures was reduced to $0.10 in consideration of the modification of the price protection features. Furthermore, the exercise price of the common stock purchase warrants was reduced to $0.10 per share and the number of shares issuable upon exercise of the common stock purchase warrants was increased from 6,200,000 to 15,500,000. The following is a summary of the Company’s warrant activity for the nine months ended September 30, 2016: Number of Weighted Weighted Outstanding at December 31, 2015 35,171,744 $ 0.10 3.83 Years Granted 15,966,953 $ 0.11 4.55 Years Outstanding at September 30, 2016 51,138,697 $ 0.11 4.05 Years Stock Options During the six months ended June 30, 2016, the Company granted to employees, options to acquire 3,000,000 shares of common stock, of which 1,000,000 are exercisable at an exercise price of $0.45 per share vesting over two years, 1,000,000 are exercisable at an exercise price of $0.40 per share vesting on the date of grant, 500,000 are exercisable at an exercise price of $0.25 per share with 100,000 exercisable immediately and the balance vesting over two years, and 500,000 are exercisable at an exercise price of $0.10 per share vesting over two years. On August 10, 2016, the Company issued to several of its employees and consultants stock options (the "Plan Options") under its Equity Compensation Plan to acquire an aggregate of 17,000,000 shares of common stock of the Company exercisable at $0.05 per share. The Plan Options contain vesting periods over 12 quarters commencing on October 1, 2016 as well as various vesting milestones. The Plan Options are exercisable for a period of ten years. Further, the Company amended existing stock options to acquire 50,800,000 shares of common stock under its Equity Compensation Plan to extend the term from five years to 10 years. On August 10, 2016, the Company entered into an amended agreement (the "Amendment") with Parity Labs, LLC ("Parity") to amend the compensation section of an existing Advisory Agreement previously entered into between the Company and Parity on November 16, 2015 for the provision of strategic advisory services. The Amendment calls for the Company to issue to Parity the option (the "Parity Option") to acquire 20,000,000 shares of common stock of the Company, exercisable at $0.05 per share for a period of ten years. The Parity Option vests as to 10,000,000 options immediately and then in 12 equal tranches of 833,333 options per month commencing on September 1, 2016. Parity options vested in entirety upon Mr. Beck becoming Chief Executive Officer of Ipsidy, Inc. in January 2017. Mr. Beck is the manager of Parity. The Company determined the grant date fair value of the options granted during the nine months ended September 30, 2016 using the Black Scholes Method and the following assumptions: Expected Volatility – 79% to 93% Expected Term – 2.5 – 5.9 Years Risk Free Rate – 1.16% - 1.49% Dividend Rate – 0.00% Activity related to stock options for the nine months ended September 30, 2016 is summarized as follows: Number of Weighted Weighted Aggregate Outstanding as of December 31, 2015 47,800,000 $ 0.32 3.99 $ 924,650 Granted 40,000,000 $ 0.09 9.89 $ 3,725,000 Outstanding as of September 30, 2016 87,800,000 $ 0.21 9.40 $ 4,649,650 Exercisable as of September 30, 2016 51,258,333 $ 0.30 9.19 $ 1,570,658 The following table summarizes stock option information as of September 30, 2016: Exercise Prices Outstanding Weighted Exercisable $ 0.0001 3,500,000 9.0 Years 1,750,000 $ 0.05 37,000,000 9.93 Yeas 10,833,333 $ 0.10 8,500,000 8.98 Years 4,500,000 $ 0.15 6,300,000 9.0 Years 2,825,000 $ 0.25 500,000 9.51 Years 100,000 $ 0.40 1,000,000 9.42 Years 1,000,000 $ 0.45 31,000,000 9.01Years 30,250,000 Total 87,800,000 9.19 Years 51,258,333 As highlighted on the previous page, the term of all options was extended for all previous awards to ten years from the original grant date and therefore the remaining contractual term in the table above is now 9.19 years. The incremental cost associated with the term extension was approximately $402,000. During the nine months ended September 30, 2016, the Company recognized approximately $6,806,000 of stock-based compensation expense. As of September 30, 2016, there was approximately $3,111,000 of unrecognized compensation costs related to stock options outstanding which will be expensed through 2019. |
DIRECT FINANCING LEASE
DIRECT FINANCING LEASE | 9 Months Ended |
Sep. 30, 2016 | |
Direct Financing Lease | |
DIRECT FINANCING LEASE | NOTES 11 – 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 kiosks were installed and operational. The term of the rental contract is ten years at an approximate monthly rate of $11,900. The lessee has the option at the end of the lease term to purchase each unit for approximately $40. The term of the lease approximates the economic life of the kiosks. The kiosks were installed and operational in the second quarter of 2016; which is when the lease commenced. The Company has recorded the transaction at its net investment in the lease and will receive monthly payments of $11,856, or $142,272 annually, to reduce the receivable and record income associated with the related amount due. The transaction resulted in incremental revenue for the nine months ended September 30, 2016 of $33,050. The equipment under capital lease is valued at approximately $748,000. The aggregate minimum future lease payments to be received is approximately $1,422,000. Unearned income recorded in connection with this lease is approximately $474,000 and will be recorded over the term of the lease using the effective interest method. Future minimum lease payments to be received under this lease are as follows; Year Ending December 31, 2016 $ 30,537 2017 122,145 2018 122,145 2019 122,145 2020 122,145 2021 122,145 Thereafter 529,323 1,170,585 Less Deferred income (440,486 ) Net investment lease $ 730,099 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 12 COMMITMENTS AND CONTINGENCIES Contingent Purchase Consideration The Company has recorded a contingent liability of approximately $370,000 related to the acquisition of Multipay because of the contingency of the shares to be issued and debt to be released upon the payment of certain liabilities by the Multipay Shareholders. During the nine months ended September 30, 2016, the Company issued 260,537 shares of common stock in settlement of $59,681 of the contingent liability. The remaining balance as of September 30, 2016 was $310,445. Legal Matters From time to time, claims are made against the Company in the ordinary course of business, which could result in litigation. Claims and associated litigation are subject to inherent uncertainties and unfavorable outcomes could occur, such as monetary damages, fines, penalties or injunctions prohibiting the Company from selling one or more products or engaging in other activities. The occurrence of an unfavorable outcome in any specific period could have a material adverse effect on the Company’s results of operations for that period or future periods. The Company is not presently a party to any pending or threatened legal proceedings. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 13 – SUBSEQUENT EVENTS From December 1, 2016 through December 27, 2016, the Company entered into and closed Securities Purchase Agreements with several accredited investors (the "December 2016 Accredited Investors") pursuant to which the December 2016 Accredited Investors invested an aggregate of $1,275,000 (the "Offering") into the Company in consideration of Promissory Notes (the "Notes") and an aggregate of 1,912,500 shares of common stock. The Notes are payable one year from the date of issuance and bear interest of 10% per annum for the initial six months of the term of the Notes and 15% per annum for the remaining six months of the term of the Notes. The Notes could be prepaid in whole or in part by the Company at any time without penalty; provided, that any partial payment of principal must be accompanied by payment of accrued interest to the date of prepayment. Any payment made to the December 2016 Accredited Investors which is not a full payment of all principal and interest on all of the Notes will be made pro rata to the December 2016 Accredited Investors based on the respective principal amounts of the Notes. The Notes were converted into shares of common stock on January 31, 2017 as more fully described below. On December 30, 2016, ID Global LATAM S.A.S. (“IDG LATAM”), a wholly owned subsidiary of the Company, entered into a Contract for the Provision of Cash Collection Services (the "Contract") with Recaudo Bogota S.A.S. ("RB"), a Colombian company, pursuant to which the Company agreed to supply, maintain and provide platform services for 740 unattended payment collection and fare ticketing kiosks, in consideration of approximately $30 million dollars (excluding VAT) payable over the ten year period of the Contract. Pursuant to the contract IDG LATAM is required to obtain a performance bond from a financial institution in the amount of $6 million dollars. In addition, IDG LATAM will need to obtain financing for the cost of the equipment to be supplied but has not as of the date hereof entered into a definitive agreement for such financing nor has the required performance bond been obtained. The parties are currently re-negotiating the terms of the Contract including a potential phased delivery and a reduction in the number of kiosks. If the negotiation is formalized in a definitive agreement, this would potentially result in a reduction in the consideration paid over the ten year period of the Contract and reduce the required performance bond. On January 31, 2017, the Company converted the outstanding debt and accrued interest amount of approximately $6.3 million into approximately 84.8 million shares of common stock, $.0001 par value per share (“Common Stock’), at a conversion price of $0.10 per share unless the debt conversion price was initially priced at less than the $0.10 per share. Additionally, the exercise price of approximately 11.7 million warrants to acquire shares of Common Stock were reduced to $.10 per share and certain price protection and anti-dilution provisions were removed. See Notes 6 and 7 related to the Company’s convertible debt and outstanding notes payable. On January 31, 2017, the Company entered into and closed a Securities Purchase Agreement with an accredited investor pursuant to which the Company borrowed $3,000,000 into the Company in consideration of a Senior Unsecured Note and an aggregate of 4,500,000 shares of Common Stock. The Senior Unsecured Note matures in January 2019 and bears interest at a rate of 10%. In connection with this private offering, the Company paid Network 1 Financial Securities, Inc., a registered broker-dealer, a cash fee of $120,000 and issued 1,020,000 shares of common stock of the Company. On January 31, 2017, the Company engaged Philip D. Beck as Chief Executive Officer, President and Chairman of the Board of Directors and Stuart P. Stoller as Chief Financial Officer. In addition, Andras Vago, David Jones and Charles Albanese resigned as directors of the Company and Mr. Albanese also resigned as Chief Financial Officer. Thomas Szoke reigned as Chief Executive Officer and was engaged as Chief Technology Officer. Douglas Solomon resigned as Chief Operating Officer and was engaged as Executive Director, Government Relations and Enterprise Security. In connection with the engagement of Philip D. Beck and Stuart P. Stoller, the Company granted Mr. Beck and Mr. Stoller, stock options to acquire 15 million shares and 5 million shares of common stock of the Company, respectively, at an exercise price of $0.10 per share for a period of ten years. Further, upon the Company being legally entitled to do so, the Company has agreed to enter into Restricted Stock Purchase Agreements with Mr. Beck and Mr. Stoller to sell 15 million shares and 5 million shares, respectively, of common stock at a per share price of $0.0001, which shares of common stock vest upon achieving a performance threshold. Effective February 1, 2017, the Company amended its certificate of incorporation to change its legal name to “Ipsidy Inc.” from ID Global Solutions Corporation. The name change was effected pursuant to Section 242 of the Delaware Corporation Law (the “DGCL”). Under the DGCL, the amendment to the Company’s certificate of incorporation to effect the name change did not require stockholder approval. The name change does not affect the rights of the Company’s security holders. There were no other changes to the Company’s incorporation in connection with the name change. On March 22, 2017, Ipsidy Inc. (the “Company”) entered into Subscription Agreements with several accredited investors (the "March 2017 Accredited Investors") pursuant to which the March 2017 Accredited Investors agreed to purchase an aggregate of 20,000,000 shares of the Company’s common stock for an aggregate purchase price of $4,000,000. The Company has received proceeds of $3,170,000 as of March 22, 2017. An individual March 2017 Accredited Investor has agreed to fund $830,000 by April 30, 2017. In connection with this private offering, the Company paid Network 1 Financial Securities, Inc. (“Network”), a registered broker-dealer, a cash fee of $240,000 and agreed to issue Network 1,000,000 shares of common stock of the Company upon increasing its authorized shares of common stock. |
RESTATEMENT FOR THE THREE AND N
RESTATEMENT FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Changes and Error Corrections [Abstract] | |
RESTATEMENT FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 | NOTE 14 – RESTATEMENT FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 During the preparation of its consolidated financial statements for the year ended December 31, 2015, the Company determined that for the three and nine-months ended September 30, 2015 it had previously (1) used incorrect valuations for the fair value of intangible assets acquired; (2) capitalized internal use software, which should have been expensed in accordance with US GAAP; (3) used incorrect valuations for derivative liabilities; (4) used incorrect valuations for stock options issued for compensation; (5) recorded certain costs related to the issuance of its convertible and other notes payable incorrectly as general and administrative expenses; and (6) classified certain expenses and named certain accounts incorrectly. The Company has adjusted those intangible assets, derivative liabilities and compensation related to stock options using correct valuations. In addition and in accordance with US GAAP, the Company has now capitalized the costs related to the issuance of its convertible and other notes payable as debt issuance costs as a reduction of the debt principal and expensed the previously capitalized internal use software costs. The following summarizes the adjustments made to the Company’s previously reported amounts for the three and nine months ended September 30, 2015. Condensed Consolidated Statements of Operations: Three Months Ended September 30, 2015 As Reported Reclassifications As Reclassified Adjustments As Restated Revenue $ 75,312 $ - $ 75,312 $ - $ 75,312 Operating Expenses: Depreciation and amortization 10,135 - 10,135 32,549 (1) 42,684 Research and development - - - - - General and administrative 840,199 4,849,740 5,689,939 (1,957,052 )(4)(5) 3,732,887 Total operating expenses 850,334 4,849,740 5,700,074 (1,924,503 ) 3,775,571 Loss from operations (775,022 ) (4,849,740 ) (5,624,762 ) 1,924,503 (3,700,259 ) Derivative expense (20,478,790 ) - (20,478,790 ) (3,767,837 )(3) (24,246,627 ) Stock compensation expense (4,849,740 ) 4,849,740 - - - Financing Costs of debentures (1,357,917 ) - (1,357,917 ) 1,357,917 - Amortizaton of debt discounts (358,705 ) 358,705 - - - Interest expense (98,166 ) (358,705 ) (456,871 ) (11,919 )(3) (468,790 ) Other income 9,315 - 9,315 - 9,315 Net loss $ (27,909,025 ) $ - $ (27,909,025 ) $ (497,336 ) $ (28,406,361 ) Net loss per share: Basic and Diluted $ (0.16 ) $ - $ (0.16 ) $ (0.00 ) $ (0.17 ) Nine Months Ended September 30, 2015 As Reported Reclassifications As Reclassified Adjustments As Reclassified Revenue $ 86,358 $ - $ 86,358 $ - $ 86,358 Operating Expenses: Depreciation and amortization 34,312 - 34,312 65,098 (1) 99,410 Research and development 24,853 - 24,853 200,000 (2) 224,853 General and administrative 1,817,906 4,849,740 6,667,646 (2,003,395 )(4)(5) 4,664,251 Total operating expenses 1,877,071 4,849,740 6,726,811 (1,738,297 ) 4,988,514 Loss from operations (1,790,713 ) (4,849,740 ) (6,640,453 ) 1,738,297 (4,902,156 ) Derivative expense (20,979,041 ) - (20,979,041 ) (6,132,939 )(3) (27,111,980 ) Stock compensation expense (4,849,740 ) 4,849,740 - - - Financing Costs (4,538,040 ) - (4,538,040 ) 4,538,040 - Amortizaton of debt discounts (421,524 ) 421,524 - - - Interest expense (112,304 ) (421,524 ) (533,828 ) 28,667 (3) (505,161 ) Other income 9,315 - 9,315 - 9,315 Net loss $ (32,682,047 ) $ - $ (32,682,047 ) $ 172,065 $ (32,509,982 ) Net loss per share: Basic and Diluted $ (0.20 ) $ - $ (0.20 ) $ 0.00 $ (0.20 ) (1) Fair Value of Intangible Assets In Connection with Business Acquisition. (2) Intangible Assets—Capitalized Software. (3) Derivative Liability. (4) Stock-Based Compensation. (5) Debt Issuance Costs. (6) Reclassifications. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Basis Of Presentation Policies | |
Net Loss per Common Share | Net Loss per Common Share The Company computes net income or 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 income (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 table illustrates the computation of basic and diluted EPS: For the nine-months ended September 30, 2016 Per-Share Income Shares Amount Basic EPS Income available to stockholders $ 2,526,783 212,790,554 $ .01 Effect of Dilutive Securities Stock Options - 17,037,007 Warrants - 21,350,729 Convertible Debt (15,333,674 ) 38,680,621 Diluted EPS Income available to stockholders plus assumed conversions $ (12,806,891 ) 289,858,911 $ (0.04 ) |
Going concern | Going concern As of September 30, 2016, the Company has a working capital and accumulated deficit of approximately $14.4 million, and $36.5 million, respectively. For the nine months ended September 30, 2016 the Company earned revenue of approximately $1.4 million and incurred a loss from operations of approximately $10.4 million. These 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 equity 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. There is no assurance that the Company will ever be profitable. These 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. |
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 market. 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 September 30, 2016 consist solely of cards inventory as the kiosks were deployed in the second quarter of 2016 subject to a direct financing lease. |
Income Taxes | Income Taxes The Company accounts for income taxes under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740 “Income Taxes.” Under the asset and liability method of FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. For the three and nine months ending September 30, 2016, there is no provision for income tax as the Company had a tax loss for United States and foreign activities and the Company’s net deferred tax assets which consist primarily of net operating loss carryforwards have a full valuation allowance. The Company’s gain on derivative liability during the three and nine months ended September 30, 2016 and 2015, is not taxable. |
Leases | Leases All leases are classified at the inception as direct finance leases or operating leases based on whether the lease transfers substantially all the risks and rewards of ownership. Leases that transfer to the lessee substantially all of the risks and rewards incidental to ownership of the asset are classified as direct finance leases. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue when products are shipped or services have been performed. Revenue related to direct financing leases is recognized over the term of the lease using the effective interest method. |
BASIS OF PRESENTATION (Tables)
BASIS OF PRESENTATION (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of potentially dilutive securities | The following table illustrates the computation of basic and diluted EPS: For the nine-months ended September 30, 2016 Per-Share Income Shares Amount Basic EPS Income available to stockholders $ 2,526,783 212,790,554 $ .01 Effect of Dilutive Securities Stock Options - 17,037,007 Warrants - 21,350,729 Convertible Debt (15,333,674 ) 38,680,621 Diluted EPS Income available to stockholders plus assumed conversions $ (12,806,891 ) 289,858,911 $ (0.04 ) |
FIN HOLDINGS ACQUISITION (Table
FIN HOLDINGS ACQUISITION (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Schedule of fair values of assets and liabilities | The following table summarizes the total fair value of the consideration transferred as well as the fair values of the assets and liabilities assumed. Common stock consideration $ 9,000,000 Liabilities assumed 914,218 Total purchase consideration 9,914,218 Current assets (843,317 ) Property and equipment (100,339 ) Customer relationships (1,587,159 ) Intellectual property (814,049 ) Goodwill $ 6,569,354 |
Schedule of pro forma financial information | The following unaudited proforma financial information gives effect to the Company’s acquisition of FIN as if the acquisition had occurred on January 1, 2015 and had been included in the Company’s consolidated statement of operations for the nine months ended September 30, 2016 and September June 30, 2016. Nine months ended September 30 2016 2015 Proforma net revenues $ 1,528,498 $ 1,577,701 Proforma net income (loss) $ 2,519,242 $ (32,385,487 ) |
INTANGIBLE ASSETS, NET (OTHER25
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | The Company’s intangible assets consist of intellectual property acquired from MultiPay in April 2015 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 nine months ended September 30, 2016: Customer Intellectual Non- Useful Lives 10 Years 7 Years 5 Years Total Carrying Value at December 31, 2015 $ - $ 1,423,537 $ 12,997 $ 1,436,534 Additions 1,587,159 826,983 - 2,414,142 Amortization (101,314 ) (238,633 ) (2,112 ) (342,059 ) Carrying Value at September 30, 2016 $ 1,485,845 $ 2,011,887 $ 10,885 $ 3,508,617 The following is a summary of intangible assets as of September 30, 2016: Customer Intellectual Non- Total Cost $ 1,587,159 $ 2,457,581 $ 14,088 $ 4,058,828 Accumulated amortization (101,314 ) (445,694 ) (3,203 ) (550,211 ) Carrying Value at September 30, 2016 $ 1,485,845 $ 2,011,887 $ 10,885 $ 3,508,617 |
Schedule of future amortization expense of intangible assets | Future expected amortization of intangible assets is as follows: Fiscal Year Ending December 31, 2016 $ 124,355 2017 497,421 2018 497,421 2019 497,421 2020 491,824 2021 489,963 Thereafter 910,212 $ 3,508,617 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consisted of the following as of September 30, 2016 and December 31, 2015: 2016 2015 Computers and equipment $ 101,378 $ 88,047 Furniture and fixtures 179,485 69,168 280,863 157,215 Less Accumulated depreciation 165,614 119,440 Property and equipment, net $ 115,249 $ 37,775 |
ACCOUNTS PAYABLE AND ACCRUED 27
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Payables and Accruals [Abstract] | |
Schedule of accounts payable and accrued expenses | Accounts payable and accrued expenses consisted of the following as of September 30, 2016 and December 31, 2015: 2016 2015 Trade payables $ 359,358 $ 301,455 Accrued interest 462,152 96,579 Accrued payroll and related 292,939 204,125 Other accrued expenses 114,354 115,341 Total $ 1,228,803 $ 717,500 |
NOTES PAYABLE, NET (Tables)
NOTES PAYABLE, NET (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable | The following is a summary of notes payable as of September 30, 2016 and December 31, 2015: 2016 2015 In connection with the acquisition of MultiPay in 2015, the Company assumed three promissory notes. At September 30, 2016, the remaining outstanding note carried an outstanding balance of approximately $62,794. Payments of $6,300 including principal and interest are due monthly. The Notes accrue interest at an annual rate of 15.47%. Total outstanding principal and interest is due on September 16, 2017. $ 62,794 $ 96,669 The below Notes Payable were not initially convertible; except the accrued interest portion which was convertible into common stock of the Company. All principal and interest are due at maturity. Further, in January 2017, the below notes, which were being renegotiated, respective outstanding principal and related accrued interest were converted into common stock of the Company (see note 13). In August 2015, the Company issued a 12% note in the amount of $27,000. The note is secured by the assets of the Company, matured in August 2016, and accrued interest is convertible into common stock of the Company at a rate of $0.10 per share. In connection with the issuance of this notes, the Company also issued warrants for the purchase of 180,000 shares of the Company’s common stock at an exercise price of $0.15 per share for a period of five years. The Company also incurred debt issuance costs of $148,160, which are presented as a discount against the note and amortized into interest expense over the term of the note. The entire principle balance of the note was repaid in September 2016. - 27,000 In September 2015, the Company issued 12% note in the amount of $973,000. The notes are secured by the assets of the Company, matured in September 2016, and accrued interest is convertible into common stock of the Company at a rate of $0.10 per share. In connection with the issuance of these notes, the Company also issued warrants for the purchase of 6,486,667 shares of the Company’s common stock at an exercise price of $0.15 per share for a period of five years. The Company also incurred debt issuance costs of $77,480, which are presented as a discount against the notes and amortized into interest expense over the terms of the notes. 973,000 973,000 In October 2015, the Company issued 12% notes in the amount of $225,000. The notes are secured by the assets of the Company, matured in October 2016, and accrued interest is convertible into common stock of the Company at a rate of $0.10 per share. In connection with the issuance of these notes, the Company also issued warrants for the purchase of 1,500,000 shares of the Company’s common stock at an exercise price of $0.15 per share for a period of five years. The Company also incurred debt issuance costs of $36,400, which are presented as a discount against the note and amortized into interest expense over the terms of the notes. 225,000 225,000 In November 2015, the Company issued a 12% note in the amount of $25,000. The note is secured by the assets of the Company, matured in October 2016, and accrued interest is convertible into common stock of the Company at a rate of $0.10 per share. In connection with the issuance of this note, the Company also issued warrants for the purchase of 166,667 shares of the Company’s common stock at an exercise price of $0.15 per share for a period of five years. The Company also incurred debt issuance costs of $94,400, which are presented as a discount against the note and amortized into interest expense over the term of the note. 25,000 25,000 In December 2015, the Company issued 12% notes in the amount of $850,000. The notes are secured by the assets of the Company and matured in December 2016. Any unpaid accrued interest on the note is convertible into common stock of the Company at a rate of $0.48 per share. In connection with the issuance of these notes, the Company also issued warrants for the purchase of 1,770,834 shares of the Company’s common stock at an exercise price of $0.48 per share for a period of five years. The conversion rate on the accrued interest and the exercise price on the warrants provide the holders with anti-dilution protection that requires these features to be bifurcated and presented as derivative liabilities at their fair values. See Note 8. 850,000 850,000 In January 2016, the Company issued a 12% note in the amount of $100,000. The note is secured by the assets of the Company, matured in January 2017, and accrued interest is convertible into common stock of the Company at a rate of $0.48 per share. In connection with the issuance of these notes, the Company also issued warrants for the purchase of 208,332 shares of the Company’s common stock at an exercise price of $0.48 per share for a period of five years. The conversion rate on the accrued interest and the warrants provide the holders with anti-dilution protection that requires these features to be bifurcated and presented as derivative liabilities at their fair values. See Note 8 100,000 - Total Principal Outstanding $ 2,235,794 $ 2,196,669 Unamortized Deferred Debt Discounts (148,501 ) (1,193,947 ) Unamortized Deferred Debt Issuance Costs (104,078 ) (368,653 ) Convertible Notes, Net $ 1,983,215 $ 634,069 |
Schedule of notes payable and related discounts | The following is a roll-forward of the Company’s notes payable and related discounts for the nine months ended September 30, 2016: Principal Debt Debt Total Balance at December 31, 2015 $ 2,196,669 $ (368,653 ) $ (1,193,947 ) $ 634,069 New issuances 100,000 - (66,830 ) 33,170 Payments (60,875 ) - - (60,875 ) Amortization - 264,575 1,112,276 1,376,851 Balance at September 30, 2016 $ 2,235,794 $ (104,078 ) $ (148,501 ) $ 1,983,215 |
CONVERTIBLE NOTES PAYABLE, NET
CONVERTIBLE NOTES PAYABLE, NET (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of convertible notes payable outstanding | Convertible notes consisted of the following as of September 30, 2016 and December 31, 2015: 2016 2015 In January 2017, the below notes, which were being renegotiated, and related accrued interest were converted into common stock of the Company (see note 13). All principal and interest are due at maturity. In June 2015, the Company issued 10% convertible notes in the aggregate principal amount of $700,000. The notes are secured by the assets of the Company, matured in June 2016, and are convertible into common stock of the Company at a conversion rate of $0.03 per share, subject to adjustment. In connection with the issuance of these notes, the Company also issued warrants for the purchase of 15,400,000 shares of the Company’s common stock at an exercise price of $0.05 per share for a period of five years. The conversion rate on the notes and exercise price of the warrants are subject to adjustment for anti-dilution protection that requires these features to be bifurcated and presented as derivative liabilities at their fair values. See Note 8. The Company also incurred debt issuance costs of $124,000, which are presented as a discount against the note and amortized into interest expense over the term of the note. During the nine months ended September 30, 2016, one note holder elected to convert principal and accrued interest totaling $21,222 into 704,074 shares of common stock. $ 680,000 $ 700,000 In July 2015, the Company issued 10% convertible notes with in the aggregate principal amount of $190,000. The notes are secured by the assets of the Company, matured in July 2016, and are convertible into common stock of the Company at a conversion rate of $0.03 per share, subject to adjustment. In connection with the issuance of these notes, the Company also issued warrants for the purchase of 4,180,000 shares of the Company’s common stock at an exercise price of $0.05 per share for a period of five years. The conversion rate on the notes and exercise price of the warrants are subject for adjustment to anti-dilution protection that requires these features to be bifurcated and presented as derivative liabilities at their fair values. See Note 8. The Company also incurred debt issuance costs of $16,200, which are presented as a discount against the note and amortized into interest expense over the term of the note. 166,000 166,000 In February 2016, the Company re-issued a 12% convertible note in the amount of $172,095. The note is secured by the assets of the Company, originally maturing in September 2016, and is convertible into common stock of the Company at a rate of $0.10 per share. 172,095 172,095 In April 2016, the Company issued 12% convertible notes in the amount of $1,550,000. The notes are secured by the assets of the Company, mature in October 2016, and are convertible into common stock of the Company at a rate of $0.25 per share. In connection with the issuance of these notes, the Company also issued 1,033,337 shares of common stock and warrants for the purchase of 6,200,000 shares of the Company’s common stock at an exercise price of $0.25 per share for a period of five years. The conversion rate on the notes and exercise price of the warrants are subject to adjustment for anti-dilution protection that requires these features to be bifurcated and presented as derivative liabilities at their fair values. See Note 8. The portion of the remaining proceeds attributable to the notes and common stock were allocated to the instruments based on their relative fair values. See Notes 8 and 10. The Company also incurred debt issuance costs of $226,400, which are presented as a discount against the note and amortized into interest expense over the term of the note. In August 2016, the Company entered into an agreement with the April 2016 Accredited Investors to reduce the exercise price on the embedded conversion feature and the warrants to $.10 and to increase the number of warrants to 15,500,000. The August 2016 change in the terms of these convertible notes has been determined to be a loan extinguishment in accordance with ASC 470, Debt. The reported amounts under a loan extinguishment are not significantly different than that of the Company’s reported amounts. See notes 8 and 10. 1,550,000 - Total Principal Outstanding $ 2,568,095 $ 1,038,095 Unamortized Discounts – Deferred Debt Discounts (139,912 ) (583,049 ) Unamortized Deferred – Debt issuance costs (88,808 ) (71,700 ) Convertible Notes, Net $ 2,339,375 $ 383,346 |
Schedule of convertible notes and related discounts | The following is a roll-forward of the Company’s convertible notes and related discounts for the nine months ended September 30, 2016: Principal Debt Debt Total Balance at December 31, 2015 $ 1,038,095 $ (71,700 ) $ (583,049 ) $ 383,346 New issuances 1,550,000 (226,400 ) (636,373 ) 687,227 Conversions (20,000 ) - - (20,000 ) Amortization - 209,292 1,079,510 1,288,802 Balance at September 30, 2016 $ 2,568,095 $ (88,808 ) $ (139,912 ) $ 2,339,375 |
DERIVATIVE LIABLITY (Tables)
DERIVATIVE LIABLITY (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of ranges of assumptions utilized in estimating fair value of conversion options and warrants | The ranges of assumptions utilized in estimating the fair value of the warrants and conversion options during the nine months ended September 30, 2016, are as follows: Expected Volatility 70% to 87% Expected Term 0.5 to 5.0 Years Risk Free Rate 0.20% to 1.14% Dividend Rate 0.00% Triggering Capital Raise Probabilities 50% - 75% |
Schedule of derivative activity | A summary of derivative activity for the nine months ended September 30, 2016 is as follows: Balance at December 31, 2015 $ 25,445,645 New issuances 648,836 Conversions feature reclassified to equity upon conversion of related notes payable (692,850 ) Change in fair value (16,082,616 ) Balance at September 30, 2016 $ 9,319,015 |
STOCKHOLDER'S EQUITY (Tables)
STOCKHOLDER'S EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Schedule of warrant activity | The following is a summary of the Company’s warrant activity for the nine months ended September 30, 2016: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Life Outstanding at December 31, 2015 35,171,744 $ 0.10 3.83 Years Granted 15,966,953 $ 0.11 4.55 Years Outstanding at September 30, 2016 51,138,697 $ 0.11 4.05 Years |
Schedule of black - scholes option-pricing model valuation assumption | The Company determined the grant date fair value of the options granted during the nine months ended September 30, 2016 using the Black Scholes Method and the following assumptions: Expected Volatility – 79% to 93% Expected Term – 2.5 – 5.9 Years Risk Free Rate – 1.16% - 1.49% Dividend Rate – 0.00% |
Schedule of outstanding stock options | Activity related to stock options for the nine months ended September 30, 2016 is summarized as follows: Number of Weighted Weighted Aggregate Outstanding as of December 31, 2015 47,800,000 $ 0.32 3.99 $ 924,650 Granted 40,000,000 $ 0.09 9.89 $ 3,725,000 Outstanding as of September 30, 2016 87,800,000 $ 0.21 9.40 $ 4,649,650 Exercisable as of September 30, 2016 51,258,333 $ 0.30 9.19 $ 1,570,658 |
Schedule of stock option | The following table summarizes stock option information as of September 30, 2016: Exercise Prices Outstanding Weighted Exercisable $ 0.0001 3,500,000 9.0 Years 1,750,000 $ 0.05 37,000,000 9.93 Yeas 10,833,333 $ 0.10 8,500,000 8.98 Years 4,500,000 $ 0.15 6,300,000 9.0 Years 2,825,000 $ 0.25 500,000 9.51 Years 100,000 $ 0.40 1,000,000 9.42 Years 1,000,000 $ 0.45 31,000,000 9.01Years 30,250,000 Total 87,800,000 9.19 Years 51,258,333 |
DIRECT FINANCING LEASE (Tables)
DIRECT FINANCING LEASE (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Direct Financing Lease Tables | |
Schedule of future minimum lease payments to be received | Future minimum lease payments to be received under this lease are as follows; Year Ending December 31, 2016 $ 30,537 2017 122,145 2018 122,145 2019 122,145 2020 122,145 2021 122,145 Thereafter 529,323 1,170,585 Less Deferred income (440,486 ) Net investment lease $ 730,099 |
RESTATEMENT FOR THE THREE AND33
RESTATEMENT FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Restatement For Three And Nine Months Ended September 30 2015 Tables | |
Schedule of restatement of consolidated financial statements | The following summarizes the adjustments made to the Company’s previously reported amounts for the three and nine months ended September 30, 2015. Condensed Consolidated Statements of Operations: Three Months Ended September 30, 2015 As Reported Reclassifications As Reclassified Adjustments As Restated Revenue $ 75,312 $ - $ 75,312 $ - $ 75,312 Operating Expenses: Depreciation and amortization 10,135 - 10,135 32,549 (1) 42,684 Research and development - - - - - General and administrative 840,199 4,849,740 5,689,939 (1,957,052 )(4)(5) 3,732,887 Total operating expenses 850,334 4,849,740 5,700,074 (1,924,503 ) 3,775,571 Loss from operations (775,022 ) (4,849,740 ) (5,624,762 ) 1,924,503 (3,700,259 ) Derivative expense (20,478,790 ) - (20,478,790 ) (3,767,837 )(3) (24,246,627 ) Stock compensation expense (4,849,740 ) 4,849,740 - - - Financing Costs of debentures (1,357,917 ) - (1,357,917 ) 1,357,917 - Amortizaton of debt discounts (358,705 ) 358,705 - - - Interest expense (98,166 ) (358,705 ) (456,871 ) (11,919 )(3) (468,790 ) Other income 9,315 - 9,315 - 9,315 Net loss $ (27,909,025 ) $ - $ (27,909,025 ) $ (497,336 ) $ (28,406,361 ) Net loss per share: Basic and Diluted $ (0.16 ) $ - $ (0.16 ) $ (0.00 ) $ (0.17 ) Nine Months Ended September 30, 2015 As Reported Reclassifications As Reclassified Adjustments As Reclassified Revenue $ 86,358 $ - $ 86,358 $ - $ 86,358 Operating Expenses: Depreciation and amortization 34,312 - 34,312 65,098 (1) 99,410 Research and development 24,853 - 24,853 200,000 (2) 224,853 General and administrative 1,817,906 4,849,740 6,667,646 (2,003,395 )(4)(5) 4,664,251 Total operating expenses 1,877,071 4,849,740 6,726,811 (1,738,297 ) 4,988,514 Loss from operations (1,790,713 ) (4,849,740 ) (6,640,453 ) 1,738,297 (4,902,156 ) Derivative expense (20,979,041 ) - (20,979,041 ) (6,132,939 )(3) (27,111,980 ) Stock compensation expense (4,849,740 ) 4,849,740 - - - Financing Costs (4,538,040 ) - (4,538,040 ) 4,538,040 - Amortizaton of debt discounts (421,524 ) 421,524 - - - Interest expense (112,304 ) (421,524 ) (533,828 ) 28,667 (3) (505,161 ) Other income 9,315 - 9,315 - 9,315 Net loss $ (32,682,047 ) $ - $ (32,682,047 ) $ 172,065 $ (32,509,982 ) Net loss per share: Basic and Diluted $ (0.20 ) $ - $ (0.20 ) $ 0.00 $ (0.20 ) (1) Fair Value of Intangible Assets In Connection with Business Acquisition. (2) Intangible Assets—Capitalized Software. (3) Derivative Liability. (4) Stock-Based Compensation. (5) Debt Issuance Costs. (6) Reclassifications. |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) | 9 Months Ended |
Sep. 30, 2016USD ($)$ / sharesshares | |
Basic EPS | |
Income available to stockholders, Income | $ | $ 2,526,783 |
Income available to stockholders, Shares | shares | 212,790,554 |
Income available to stockholders, Per-Share Amount | $ / shares | $ .01 |
Diluted EPS | |
Income available to stockholders plus assumed conversions, Income | $ | $ (12,806,891) |
Income available to stockholders plus assumed conversions, Shares | shares | 289,858,911 |
Income available to stockholders plus assumed conversions, Per-Share Amount | $ / shares | $ (0.05) |
Stock Options [Member] | |
Effect of Dilutive Securities | |
Antidilutive securities, Income | $ | |
Antidilutive securities, Shares | shares | 17,037,007 |
Warrant [Member] | |
Effect of Dilutive Securities | |
Antidilutive securities, Income | $ | |
Antidilutive securities, Shares | shares | 21,350,729 |
Convertible Debt [Member] | |
Effect of Dilutive Securities | |
Antidilutive securities, Income | $ | $ (15,333,674) |
Antidilutive securities, Shares | shares | 38,680,621 |
BASIS OF PRESENTATION (Details
BASIS OF PRESENTATION (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2016 | Sep. 30, 2015 | [1] | Sep. 30, 2016 | Sep. 30, 2015 | [1] | Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||
Working capital deficit | $ (14,400,000) | $ (14,400,000) | |||||
Accumulated deficit | (36,547,807) | (36,547,807) | $ (39,074,590) | ||||
Revenue | 596,201 | $ 75,312 | 1,406,942 | $ 86,358 | |||
Loss from operations | $ (1,884,857) | $ (3,700,259) | $ (10,429,513) | $ (4,902,156) | |||
[1] | Restated |
FIN HOLDINGS ACQUISITION (Detai
FIN HOLDINGS ACQUISITION (Details) - USD ($) | Feb. 08, 2016 | Sep. 30, 2016 | Dec. 31, 2015 |
Business Acquisition [Line Items] | |||
Goodwill | $ 6,736,043 | $ 166,689 | |
Fin Holdings, Inc. [Member] | |||
Business Acquisition [Line Items] | |||
Common stock consideration | $ 9,000,000 | ||
Liabilities assumed | 914,218 | ||
Total purchase consideration | 9,914,218 | ||
Current assets | (843,317) | ||
Property and equipment | (100,339) | ||
Customer relationships | (1,587,159) | ||
Intellectual property | (814,049) | ||
Goodwill | $ 6,569,354 |
FIN HOLDINGS ACQUISITION (Det37
FIN HOLDINGS ACQUISITION (Details 1) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Business Combinations [Abstract] | ||
Pro forma net revenues | $ 1,528,498 | $ 1,577,701 |
Pro forma net income (loss) | $ 2,519,242 | $ (32,385,487) |
FIN HOLDINGS ACQUISITION (Det38
FIN HOLDINGS ACQUISITION (Details Narrative) - USD ($) | Feb. 08, 2016 | Sep. 30, 2016 | Sep. 30, 2015 |
Business Acquisition [Line Items] | |||
Revenue | $ 1,528,498 | $ 1,577,701 | |
Fin Holdings, Inc. [Member] | |||
Business Acquisition [Line Items] | |||
Revenue | 1,118,000 | ||
Operating income | $ 264,000 | ||
Fin Holdings, Inc. [Member] | Chief Operating Officer [Member] | |||
Business Acquisition [Line Items] | |||
Percentage of common stock owned | 1.70% | ||
Fin Holdings, Inc. [Member] | Share Exchange Agreement [Member] | |||
Business Acquisition [Line Items] | |||
Percentage of common stock owned | 100.00% | ||
Number of shares issued | 22,500,000 | ||
Share issued price per share | $ 0.40 | ||
Value for number of shares issued | $ 9,000,000 |
INTANGIBLE ASSETS, NET (OTHER39
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Details) | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |
Carrying Value at beginning | $ 1,436,534 |
Additions | 2,414,142 |
Amortization | (342,059) |
Carrying Value at June 30, 2016 | $ 3,508,617 |
Customer Relationships [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Useful Lives | 10 years |
Carrying Value at beginning | |
Additions | 1,587,159 |
Amortization | (101,314) |
Carrying Value at June 30, 2016 | $ 1,485,845 |
Intellectual Property [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Useful Lives | 7 years |
Carrying Value at beginning | $ 1,423,537 |
Additions | 826,983 |
Amortization | (238,633) |
Carrying Value at June 30, 2016 | $ 2,011,887 |
Non-Compete [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Useful Lives | 5 years |
Carrying Value at beginning | $ 12,997 |
Additions | |
Amortization | (2,112) |
Carrying Value at June 30, 2016 | $ 10,885 |
INTANGIBLE ASSETS, NET (OTHER40
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Details 1) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 4,058,828 | |
Accumulated amortization | (550,211) | |
Carrying Value | 3,508,617 | $ 1,436,534 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 1,587,159 | |
Accumulated amortization | (101,314) | |
Carrying Value | 1,485,845 | |
Intellectual Property [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 2,457,581 | |
Accumulated amortization | (445,694) | |
Carrying Value | 2,011,887 | 1,423,537 |
Non-Compete [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 14,088 | |
Accumulated amortization | (3,203) | |
Carrying Value | $ 10,885 | $ 12,997 |
INTANGIBLE ASSETS, NET (OTHER41
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Details 2) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2,016 | $ 124,355 | |
2,017 | 497,421 | |
2,018 | 497,421 | |
2,019 | 497,421 | |
2,020 | 491,824 | |
2,021 | 489,963 | |
Thereafter | 910,212 | |
Carrying Value | $ 3,508,617 | $ 1,436,534 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 280,863 | $ 157,215 |
Less Accumulated depreciation | 165,614 | 119,440 |
Property and equipment, net | 115,249 | 37,775 |
Computer and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 101,378 | 88,047 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 179,485 | $ 69,168 |
PROPERTY AND EQUIPMENT, NET (43
PROPERTY AND EQUIPMENT, NET (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 46,174 | $ 12,505 |
ACCOUNTS PAYABLE AND ACCRUED 44
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Payables and Accruals [Abstract] | ||
Trade payables | $ 359,358 | $ 301,455 |
Accrued interest | 462,152 | 96,579 |
Accrued payroll and related | 292,939 | 204,125 |
Other accrued expenses | 114,354 | 115,341 |
Total | $ 1,228,803 | $ 717,500 |
NOTES PAYABLE, NET (Details)
NOTES PAYABLE, NET (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Short-term Debt [Line Items] | ||
Total Principal Outstanding | $ 2,235,794 | $ 2,196,669 |
Unamortized Deferred Debt Discounts | (148,501) | (1,193,947) |
Unamortized Deferred Debt Issuance Costs | (104,078) | (368,653) |
Convertible Notes, Net | 1,983,215 | 634,069 |
15.47% Promissory Note [Member] | ||
Short-term Debt [Line Items] | ||
Total Principal Outstanding | 62,794 | 96,669 |
12% Note Due August 2016 [Member] | ||
Short-term Debt [Line Items] | ||
Total Principal Outstanding | 27,000 | |
12% Note Due September 2016 [Member] | ||
Short-term Debt [Line Items] | ||
Total Principal Outstanding | 973,000 | 973,000 |
12% Note Due October 2016 [Member] | ||
Short-term Debt [Line Items] | ||
Total Principal Outstanding | 225,000 | 225,000 |
12% Note Due October 2016 [Member] | ||
Short-term Debt [Line Items] | ||
Total Principal Outstanding | 25,000 | 25,000 |
12% Note Due December 2016 [Member] | ||
Short-term Debt [Line Items] | ||
Total Principal Outstanding | 850,000 | 850,000 |
12% Note Due January 2017 [Member] | ||
Short-term Debt [Line Items] | ||
Total Principal Outstanding | $ 100,000 |
NOTES PAYABLE, NET (Details 1)
NOTES PAYABLE, NET (Details 1) | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Principal Balance | |
Balance at beginning | $ 2,196,669 |
New issuances | 100,000 |
Payments | (60,875) |
Amortization | |
Balance at end | 2,235,794 |
Debt Issuance Costs | |
Balance at beginning | (368,653) |
New issuances | |
Payments | |
Amortization | 264,575 |
Balance at end | (104,078) |
Debt Discounts | |
Balance at beginning | (1,193,947) |
New issuances | (66,830) |
Payments | |
Amortization | 1,112,276 |
Balance at end | (148,501) |
Total | |
Balance at beginning | 634,069 |
New issuances | 33,170 |
Payments | (60,875) |
Amortization | 1,376,851 |
Balance at end | $ 1,983,215 |
NOTES PAYABLE, NET (Details Nar
NOTES PAYABLE, NET (Details Narrative) | 1 Months Ended | 9 Months Ended | |||||
Jan. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | Nov. 30, 2015USD ($)$ / sharesshares | Oct. 31, 2015USD ($)$ / sharesshares | Sep. 30, 2015USD ($)$ / sharesshares | Aug. 31, 2015USD ($)$ / sharesshares | Sep. 30, 2016USD ($)Noteshares | |
Short-term Debt [Line Items] | |||||||
Total Principal Outstanding | $ 2,196,669 | $ 2,235,794 | |||||
15.47% Promissory Note [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Number of notes issued | Note | 3 | ||||||
Total Principal Outstanding | 96,669 | $ 62,794 | |||||
Amount of principal and interest payment | $ 6,300 | ||||||
Interest rate | 15.47% | ||||||
12% Note Due August 2016 [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Face amount | $ 27,000 | ||||||
Total Principal Outstanding | 27,000 | ||||||
Interest rate | 12.00% | ||||||
Description of collateral | assets of the Company | ||||||
Conversion price (in dollars per share) | $ / shares | $ 0.10 | ||||||
Debt issuance costs | $ 148,160 | ||||||
12% Note Due August 2016 [Member] | Warrant [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Number of common shares purchased | shares | 180,000 | ||||||
Exercise price (in dollars per share) | $ / shares | $ 0.15 | ||||||
Warrant term | 5 years | ||||||
12% Note Due September 2016 [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Face amount | $ 973,000 | ||||||
Total Principal Outstanding | 973,000 | 973,000 | |||||
Interest rate | 12.00% | ||||||
Description of collateral | assets of the Company | ||||||
Conversion price (in dollars per share) | $ / shares | $ 0.10 | ||||||
Debt issuance costs | $ 77,480 | ||||||
12% Note Due September 2016 [Member] | Warrant [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Number of common shares purchased | shares | 6,486,667 | ||||||
Exercise price (in dollars per share) | $ / shares | $ 0.15 | ||||||
Warrant term | 5 years | ||||||
12% Note Due October 2016 [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Face amount | $ 225,000 | ||||||
Total Principal Outstanding | 225,000 | 225,000 | |||||
Interest rate | 12.00% | ||||||
Description of collateral | assets of the Company | ||||||
Conversion price (in dollars per share) | $ / shares | $ 0.10 | ||||||
Debt issuance costs | $ 36,400 | ||||||
12% Note Due October 2016 [Member] | Warrant [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Number of common shares purchased | shares | 1,500,000 | ||||||
Exercise price (in dollars per share) | $ / shares | $ 0.15 | ||||||
Warrant term | 5 years | ||||||
12% Note Due October 2016 [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Face amount | $ 25,000 | ||||||
Total Principal Outstanding | 25,000 | 25,000 | |||||
Interest rate | 12.00% | ||||||
Description of collateral | assets of the Company | ||||||
Conversion price (in dollars per share) | $ / shares | $ 0.10 | ||||||
Debt issuance costs | $ 94,400 | ||||||
12% Note Due October 2016 [Member] | Warrant [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Number of common shares purchased | shares | 166,667 | ||||||
Exercise price (in dollars per share) | $ / shares | $ 0.15 | ||||||
Warrant term | 5 years | ||||||
12% Note Due December 2016 [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Face amount | 850,000 | ||||||
Total Principal Outstanding | $ 850,000 | 850,000 | |||||
Interest rate | 12.00% | ||||||
Description of collateral | assets of the Company | ||||||
Conversion price (in dollars per share) | $ / shares | $ 0.48 | ||||||
12% Note Due December 2016 [Member] | Warrant [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Number of common shares purchased | shares | 1,770,834 | ||||||
Exercise price (in dollars per share) | $ / shares | $ 0.48 | ||||||
Warrant term | 5 years | ||||||
12% Note Due January 2017 [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Face amount | $ 100,000 | ||||||
Total Principal Outstanding | $ 100,000 | ||||||
Interest rate | 12.00% | ||||||
Description of collateral | assets of the Company | ||||||
Conversion price (in dollars per share) | $ / shares | $ 0.48 | ||||||
12% Note Due January 2017 [Member] | Warrant [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Number of common shares purchased | shares | 208,332 | 15,966,953 | |||||
Exercise price (in dollars per share) | $ / shares | $ 0.48 | ||||||
Warrant term | 5 years |
CONVERTIBLE NOTES PAYABLE, NE48
CONVERTIBLE NOTES PAYABLE, NET (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Short-term Debt [Line Items] | ||
Total Principal Outstanding | $ 2,568,095 | $ 1,038,095 |
Unamortized Discounts - Deferred Debt Discounts | (139,912) | (583,049) |
Unamortized Deferred - Debt issuance costs | (88,808) | (71,700) |
Convertible Notes, Net | 2,339,375 | 383,346 |
10% Convertible Notes Due June 2016 [Member] | ||
Short-term Debt [Line Items] | ||
Total Principal Outstanding | 680,000 | 700,000 |
10% Convertible Notes Due July 2016 [Member] | ||
Short-term Debt [Line Items] | ||
Total Principal Outstanding | 166,000 | 166,000 |
12% Convertible Notes Due September 2016 [Member] | ||
Short-term Debt [Line Items] | ||
Total Principal Outstanding | 172,095 | 172,095 |
12% Convertible Notes Due October 2016 [Member] | ||
Short-term Debt [Line Items] | ||
Total Principal Outstanding | $ 1,550,000 |
CONVERTIBLE NOTES PAYABLE, NE49
CONVERTIBLE NOTES PAYABLE, NET (Details 1) | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Principal Balance | |
Balance at beginning | $ 1,038,095 |
New issuances | 1,550,000 |
Conversions | (20,000) |
Amortization | |
Balance at end | 2,568,095 |
Debt Issuance Costs | |
Balance at beginning | (71,700) |
New issuances | (226,400) |
Conversions | |
Amortization | 209,292 |
Balance at end | (88,808) |
Debt Discounts | |
Balance at beginning | (583,049) |
New issuances | (636,373) |
Conversions | |
Amortization | 1,079,510 |
Balance at end | (139,912) |
Total | |
Balance at beginning | 383,346 |
New issuances | 687,227 |
Conversions | (20,000) |
Amortization | 1,288,802 |
Balance at end | $ 2,339,375 |
CONVERTIBLE NOTES PAYABLE, NE50
CONVERTIBLE NOTES PAYABLE, NET (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | |||||||
Apr. 30, 2016 | Feb. 29, 2016 | Sep. 30, 2015 | Jul. 31, 2015 | Jun. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Aug. 10, 2016 | ||
Short-term Debt [Line Items] | |||||||||
Amount of note converted | $ 54,470 | [1] | |||||||
Number of shares issued on conversion | 704,074 | ||||||||
Common Stock [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Number of shares issued | 25,000,000 | ||||||||
10% Convertible Notes Due June 2016 [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Face amount | $ 700,000 | ||||||||
Interest rate | 10.00% | ||||||||
Description of collateral | The note are secured by the assets of the Company. | ||||||||
Conversion price (in dollars per share) | $ 0.03 | ||||||||
Debt issuance costs | $ 124,000 | ||||||||
Amount of note converted | $ 21,222 | ||||||||
Number of shares issued on conversion | 704,074 | ||||||||
10% Convertible Notes Due June 2016 [Member] | Warrant [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Number of common shares purchased | 15,400,000 | 15,400,000 | |||||||
Exercise price (in dollars per share) | $ 0.05 | $ 0.05 | |||||||
Warrant term | 5 years | ||||||||
10% Convertible Notes Due July 2016 [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Face amount | $ 190,000 | ||||||||
Interest rate | 10.00% | ||||||||
Description of collateral | The note are secured by the assets of the Company. | ||||||||
Conversion price (in dollars per share) | $ 0.03 | ||||||||
Debt issuance costs | $ 16,200 | ||||||||
10% Convertible Notes Due July 2016 [Member] | Warrant [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Number of common shares purchased | 4,180,000 | ||||||||
Exercise price (in dollars per share) | $ 0.05 | ||||||||
Warrant term | 5 years | ||||||||
12% Convertible Notes Due September 2016 [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Face amount | $ 172,095 | ||||||||
Interest rate | 12.00% | ||||||||
Description of collateral | The note is secured by the assets of the Company. | ||||||||
Conversion price (in dollars per share) | $ 0.10 | ||||||||
12% Convertible Notes Due October 2016 [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Face amount | $ 1,550,000 | ||||||||
Interest rate | 12.00% | ||||||||
Description of collateral | The note is secured by the assets of the Company. | ||||||||
Conversion price (in dollars per share) | $ 0.25 | ||||||||
Debt issuance costs | $ 478,334 | ||||||||
12% Convertible Notes Due October 2016 [Member] | Letter Agreement [Member] | Several Accredited Investors (the "April 2016 Accredited Investors") [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Conversion price (in dollars per share) | $ 0.10 | ||||||||
12% Convertible Notes Due October 2016 [Member] | Warrant [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Number of common shares purchased | 6,200,000 | ||||||||
Exercise price (in dollars per share) | $ 0.25 | ||||||||
Warrant term | 5 years | ||||||||
12% Convertible Notes Due October 2016 [Member] | Warrant [Member] | Letter Agreement [Member] | Several Accredited Investors (the "April 2016 Accredited Investors") [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Number of common shares purchased | 15,500,000 | ||||||||
Exercise price (in dollars per share) | $ 0.10 | ||||||||
12% Convertible Notes Due October 2016 [Member] | Common Stock [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Number of shares issued | 1,033,337 | ||||||||
[1] | Restated |
DERIVATIVE LIABILITY (Details)
DERIVATIVE LIABILITY (Details) | 9 Months Ended |
Sep. 30, 2016 | |
Dividend Rate | 0.00% |
Minimum [Member] | |
Expected Volatility | 70.00% |
Expected Term | 6 months |
Risk Free Rate | 0.20% |
Triggering Capital Raise Probabilities | 50.00% |
Maximum [Member] | |
Expected Volatility | 87.00% |
Expected Term | 5 years |
Risk Free Rate | 0.14% |
Triggering Capital Raise Probabilities | 75.00% |
DERIVATIVE LIABILITY (Details 1
DERIVATIVE LIABILITY (Details 1) | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Balance at beginning | $ 25,445,645 |
New issuances | 648,836 |
Conversions feature reclassified to equity upon conversion of related notes payable | (692,850) |
Change in fair value | (16,082,616) |
Balance at ending | $ 9,319,015 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Feb. 08, 2016 | |
Fin Holdings, Inc. [Member] | ||
Short-term Debt [Line Items] | ||
Number of shares issued for brokerage | 675,000 | |
Board of Director [Member] | Convertible Notes Payable [Member] | ||
Short-term Debt [Line Items] | ||
Convertible notes payable | $ 150,000 | |
Network 1 Financial Securities, Inc. [Member] | ||
Short-term Debt [Line Items] | ||
Number of shares issued for brokerage | 3,430,000 | |
Commission rate | 16.00% | |
Network 1 Financial Securities, Inc. [Member] | Securities Purchase Agreements [Member] | ||
Short-term Debt [Line Items] | ||
Cash fee | $ 224,000 | |
Chief Operating Officer [Member] | Fin Holdings, Inc. [Member] | ||
Short-term Debt [Line Items] | ||
Percentage of common stock owned | 1.70% |
STOCKHOLDER'S EQUITY (Details)
STOCKHOLDER'S EQUITY (Details) - Warrant [Member] | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |
Outstanding at beginning | shares | 35,171,744 |
Granted | shares | 15,966,953 |
Outstanding at ending | shares | 51,138,697 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Weighted Average Exercise Price [Roll Forward] | |
Outstanding at beginning | $ / shares | $ 0.10 |
Granted | $ / shares | 0.11 |
Outstanding at ending | $ / shares | $ 0.10 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Weighted Average Remaining Life [Roll Forward] | |
Outstanding at beginning | 3 years 9 months 29 days |
Granted | 4 years 6 months 18 days |
Outstanding at end | 4 years 18 days |
STOCKHOLDER'S EQUITY (Details 1
STOCKHOLDER'S EQUITY (Details 1) | 9 Months Ended |
Sep. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Dividend Rate | 0.00% |
Minimum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected Volatility | 79.00% |
Expected Term | 2 years 6 months |
Risk Free Rate | 1.16% |
Maximum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected Volatility | 93.00% |
Expected Term | 5 years 10 months 24 days |
Risk Free Rate | 1.49% |
STOCKHOLDER'S EQUITY (Details 2
STOCKHOLDER'S EQUITY (Details 2) - USD ($) | 6 Months Ended | 9 Months Ended |
Jun. 30, 2016 | Sep. 30, 2016 | |
Number of Shares [Roll Forward] | ||
Outstanding at beginning | 47,800,000 | 47,800,000 |
Granted | 3,000,000 | 40,000,000 |
Outstanding at end | 87,800,000 | |
Exercisable at end | 51,258,333 | |
Weighted Average Exercise Price [Roll Forward] | ||
Outstanding at beginning | $ 0.32 | $ 0.32 |
Granted | 0.09 | |
Outstanding at end | 0.21 | |
Exercisable at end | $ 0.30 | |
Weighted Average Contractual Term [Roll Forward] | ||
Outstanding at beginning | 3 years 11 months 26 days | |
Granted | 9 years 10 months 20 days | |
Outstanding at end | 9 years 4 months 24 days | |
Exercisable at end | 9 years 2 months 8 days | |
Aggregate Intrinsic Value [Roll Forward] | ||
Outstanding at beginning | $ 924,650 | $ 924,650 |
Granted | 3,725,000 | |
Outstanding at end | 4,649,650 | |
Exercisable at end | $ 1,570,658 |
STOCKHOLDER'S EQUITY (Details 3
STOCKHOLDER'S EQUITY (Details 3) | 9 Months Ended |
Sep. 30, 2016shares | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Outstanding | 87,800,000 |
Weighted Average Contractual Life | 9 years 2 months 8 days |
Exercisable | 51,258,333 |
Exercise Price $0.0001 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Outstanding | 3,500,000 |
Weighted Average Contractual Life | 9 years |
Exercisable | 1,750,000 |
Exercise Price $0.10 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Outstanding | 8,500,000 |
Weighted Average Contractual Life | 9511 months 5 days |
Exercisable | 4,500,000 |
Exercise Price $0.05 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Outstanding | 37,000,000 |
Weighted Average Contractual Life | 8 years 11 months 23 days |
Exercisable | 10,833,333 |
Exercise Price $0.15 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Outstanding | 6,300,000 |
Weighted Average Contractual Life | 9 years |
Exercisable | 2,825,000 |
Exercise Price $0.25 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Outstanding | 500,000 |
Weighted Average Contractual Life | 9 years 6 months 4 days |
Exercisable | 100,000 |
Exercise Price $0.40 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Outstanding | 1,000,000 |
Weighted Average Contractual Life | 9 years 5 months 1 day |
Exercisable | 1,000,000 |
Exercise Price $0.45 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Outstanding | 31,000,000 |
Weighted Average Contractual Life | 9 years 4 days |
Exercisable | 30,250,000 |
STOCKHOLDER'S EQUITY (Details N
STOCKHOLDER'S EQUITY (Details Narative) - USD ($) | Mar. 22, 2017 | Jan. 31, 2017 | Sep. 30, 2016 | Aug. 10, 2016 | Aug. 26, 2016 | Apr. 30, 2016 | Mar. 31, 2016 | Jan. 31, 2016 | Mar. 31, 2017 | Jun. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | [1] | Sep. 29, 2016 |
Short-term Debt [Line Items] | ||||||||||||||
Amount of note converted | $ 54,470 | |||||||||||||
Number of shares issued on conversion | 704,074 | |||||||||||||
Shares issued for services, value | $ 15,227 | |||||||||||||
Value of shares issued for debt issuance costs | $ 169,125 | |||||||||||||
Number of shares issued for debt issuance costs | 1,430,000 | |||||||||||||
Number of shares issued, value | $ 1,250,000 | |||||||||||||
Common stock issued in settlement of contingent liability | $ 59,681 | |||||||||||||
Common stock issued in settlement of contingent liability (in shares) | 260,537 | |||||||||||||
Number of options granted | 3,000,000 | 40,000,000 | ||||||||||||
Number of options exercisable | 51,258,333 | 51,258,333 | ||||||||||||
Exercise price of option (in dollars per share) | $ 0.30 | $ 0.30 | ||||||||||||
Expiration term | 10 years | |||||||||||||
Weighted average contractual life | 9 years 2 months 8 days | |||||||||||||
Stock based compensation | $ 6,805,776 | $ 3,524,294 | ||||||||||||
Incremental cost associated with term extension | 402,000 | |||||||||||||
Unrecognized compensation costs | $ 3,111,000 | $ 3,111,000 | ||||||||||||
Equity Compensation Plan [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Exercise price (in dollars per share) | $ 0.05 | |||||||||||||
Number of options granted | 17,000,000 | |||||||||||||
Amendment number of common shares granted | 50,800,000 | |||||||||||||
Vesting term | 10 years | |||||||||||||
Description Vesting period | The Plan Options contain vesting periods of 12 quarters commencing on October 1, 2016 as well as various vesting milestones. The Plan Options are exercisable for a period of ten years. Further, the Company amended existing stock options to acquire 50,800,000 shares of common stock under its Equity Compensation Plan to extend the term from five years to 10 years. | |||||||||||||
Tranche One [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Number of options exercisable | 1,000,000 | |||||||||||||
Exercise price of option (in dollars per share) | $ 0.45 | |||||||||||||
Description of vesting | Vesting over two years | |||||||||||||
Tranche Two [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Number of options exercisable | 1,000,000 | |||||||||||||
Exercise price of option (in dollars per share) | $ 0.40 | |||||||||||||
Description of vesting | Vesting on the date of grant | |||||||||||||
Subsequent Event [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Amount of note converted | $ 84,800,000 | |||||||||||||
Number of shares issued on conversion | 6,300,000 | |||||||||||||
Conversion price (in dollars per share) | $ 0.10 | |||||||||||||
Subsequent Event [Member] | Warrant [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Number of common shares purchased | 11,700,000 | |||||||||||||
Fin Holdings, Inc. [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Number of shares issued for aquisition | 22,500,000 | |||||||||||||
Number of shares issued for services | 675,000 | |||||||||||||
Shares issued for services, value | $ 270,000 | |||||||||||||
Number of options granted | 2,000,000 | |||||||||||||
Multipay S.A., a Colombian Corporation [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Common stock issued in settlement of contingent liability | $ 59,681 | |||||||||||||
Common stock issued in settlement of contingent liability (in shares) | 260,537 | |||||||||||||
Several Accredited Investors (the "April 2016 Accredited Investors") [Member] | Subscription Agreements [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Number of shares issued | 23,654,384 | |||||||||||||
Number of shares issued, value | $ 1,250,000 | |||||||||||||
Network 1 Financial Securities, Inc. [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Number of shares issued for services | 3,430,000 | |||||||||||||
Network 1 Financial Securities, Inc. [Member] | Subscription Agreements [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Number of shares issued | 2,000,000 | |||||||||||||
Cancellation of common stock | 3,345,616 | 10,000,000 | ||||||||||||
Cash fee | $ 100,000 | |||||||||||||
Network 1 Financial Securities, Inc. [Member] | Subscription Agreements [Member] | Subsequent Event [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Number of shares issued | 1,000,000 | |||||||||||||
Cancellation of common stock | 6,654,384 | |||||||||||||
Cash fee | $ 240,000 | |||||||||||||
Parity Labs LLC [Member] | Amended Agreement [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Number of shares issued | 20,000,000 | |||||||||||||
Exercise price (in dollars per share) | $ 0.05 | |||||||||||||
Vesting term | 10 years | |||||||||||||
Description Vesting period | 12 equal tranches of 833,333 shares per month commencing on September 1, 2016. | |||||||||||||
12% Convertible Notes Due October 2016 [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Conversion price (in dollars per share) | $ 0.25 | |||||||||||||
Debt issuance costs | $ 478,334 | |||||||||||||
12% Convertible Notes Due October 2016 [Member] | Warrant [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Number of common shares purchased | 6,200,000 | |||||||||||||
Exercise price (in dollars per share) | $ 0.25 | |||||||||||||
Warrant term | 5 years | |||||||||||||
12% Convertible Notes Due October 2016 [Member] | Accredited Investor [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Number of shares issued | 1,033,337 | |||||||||||||
Number of shares issued, value | $ 54,470 | |||||||||||||
12% Convertible Notes Due October 2016 [Member] | Several Accredited Investors (the "April 2016 Accredited Investors") [Member] | Letter Agreement [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Conversion price (in dollars per share) | $ 0.10 | |||||||||||||
12% Convertible Notes Due October 2016 [Member] | Several Accredited Investors (the "April 2016 Accredited Investors") [Member] | Letter Agreement [Member] | Warrant [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Number of common shares purchased | 15,500,000 | |||||||||||||
Exercise price (in dollars per share) | $ 0.10 | |||||||||||||
12% Note Due January 2017 [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Conversion price (in dollars per share) | $ 0.48 | |||||||||||||
12% Note Due January 2017 [Member] | Warrant [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Number of common shares purchased | 15,966,953 | 208,332 | 15,966,953 | |||||||||||
Exercise price (in dollars per share) | $ 0.48 | |||||||||||||
Warrant term | 5 years | |||||||||||||
12% Note Due January 2017 [Member] | Warrant #2 [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Number of common shares purchased | 258,621 | 258,621 | ||||||||||||
Exercise price (in dollars per share) | $ 0.58 | $ 0.58 | ||||||||||||
12% Note Due January 2017 [Member] | Warrant #3 [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Number of common shares purchased | 1,550,000 | 1,550,000 | ||||||||||||
Exercise price (in dollars per share) | $ 0.10 | $ 0.10 | $ 0.25 | |||||||||||
Stock Options #1 [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Number of options granted | 500,000 | |||||||||||||
Exercise price of option (in dollars per share) | $ 0.25 | |||||||||||||
Description of vesting | Vesting over two years | |||||||||||||
Stock Options #2 [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Number of options granted | 500,000 | |||||||||||||
Exercise price of option (in dollars per share) | $ 0.10 | |||||||||||||
Description of vesting | Vesting over two years | |||||||||||||
[1] | Restated |
DIRECT FINANCING LEASE (Details
DIRECT FINANCING LEASE (Details) | Sep. 30, 2016USD ($) |
Direct Financing Lease Details | |
2,016 | $ 30,537 |
2,017 | 122,145 |
2,018 | 122,145 |
2,019 | 122,145 |
2,020 | 122,145 |
2,021 | 122,145 |
Thereafter | 529,323 |
Total | 1,170,585 |
Less Deferred income | (440,486) |
Net investment lease | $ 730,099 |
DIRECT FINANCING LEASE (Detai60
DIRECT FINANCING LEASE (Details Narrative) | 1 Months Ended | 9 Months Ended |
Sep. 30, 2015USD ($)Kiosks$ / Units | Sep. 30, 2016USD ($) | |
Equipment under capital lease | $ 748,000 | |
Aggregate minimum future lease payments | 1,422,000 | |
Unearned income | 474,000 | |
Cash Collection Services (the "Contract") [Member] | Recaudo Bogota S.A.S. [Member] | ||
Number of kiosks | Kiosks | 78 | |
Contract term | 10 years | |
Monthly rental | $ 11,900 | |
Rent expense | $ 142,272 | |
Purchase price at the end of lease term (in dollars per unit) | $ / Units | 40 | |
Revenues | $ 33,050 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | |
Business Acquisition [Line Items] | |||
Common stock issued in settlement of contingent liability | $ 59,681 | ||
Common stock issued in settlement of contingent liability (in shares) | 260,537 | ||
Contingent purchase consideration (Note 10) | $ 310,445 | $ 370,125 | |
Multipay S.A., a Colombian Corporation [Member] | |||
Business Acquisition [Line Items] | |||
Contingent liability | 370,000 | ||
Common stock issued in settlement of contingent liability | $ 59,681 | ||
Common stock issued in settlement of contingent liability (in shares) | 260,537 | ||
Contingent purchase consideration (Note 10) | $ 310,445 | $ 370,125 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) | Mar. 22, 2017USD ($)shares | Jan. 31, 2017USD ($)$ / sharesshares | Dec. 30, 2016USD ($)Payment | Dec. 27, 2016USD ($)shares | Aug. 26, 2016USD ($)shares | Sep. 30, 2015 | Jun. 30, 2016shares | Sep. 30, 2016USD ($)$ / sharesshares | Sep. 30, 2015USD ($) | [1] | Jan. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015$ / shares |
Debt Instrument [Line Items] | ||||||||||||
Number of shares issued, value | $ 1,250,000 | |||||||||||
Proceeds from issuance of shares | $ 1,250,000 | $ 150,500 | ||||||||||
Number of option granted | shares | 3,000,000 | 40,000,000 | ||||||||||
Exercise price option (in dollars per share) | $ / shares | $ 0.09 | |||||||||||
Expiration term | 10 years | |||||||||||
Amount of debt converted | $ 54,470 | |||||||||||
Number of shares issued on conversion | shares | 704,074 | |||||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||||||||||
12% Note Due January 2017 [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt face amount | $ 100,000 | |||||||||||
Conversion price (in dollars per share) | $ / shares | $ 0.48 | |||||||||||
Warrant [Member] | 12% Note Due January 2017 [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Number of common shares purchased | shares | 15,966,953 | 208,332 | ||||||||||
Securities Purchase Agreements [Member] | Network 1 Financial Securities, Inc. [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Cash fee | $ 224,000 | |||||||||||
Cash Collection Services (the "Contract") [Member] | Recaudo Bogota S.A.S. [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Revenues | $ 33,050 | |||||||||||
Contract term | 10 years | |||||||||||
Subscription Agreements [Member] | Network 1 Financial Securities, Inc. [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Cash fee | $ 100,000 | |||||||||||
Number of shares issued | shares | 2,000,000 | |||||||||||
Subsequent Event [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Amount of debt converted | $ 84,800,000 | |||||||||||
Number of shares issued on conversion | shares | 6,300,000 | |||||||||||
Conversion price (in dollars per share) | $ / shares | $ 0.10 | |||||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | |||||||||||
Subsequent Event [Member] | Warrant [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Number of common shares purchased | shares | 11,700,000 | |||||||||||
Subsequent Event [Member] | Mr. Philip D. Beck [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Number of option granted | shares | 15,000,000 | |||||||||||
Exercise price option (in dollars per share) | $ / shares | $ 0.10 | |||||||||||
Expiration term | 10 years | |||||||||||
Subsequent Event [Member] | Mr. Stuart P. Stoller [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Number of option granted | shares | 5,000,000 | |||||||||||
Exercise price option (in dollars per share) | $ / shares | $ 0.10 | |||||||||||
Expiration term | 10 years | |||||||||||
Subsequent Event [Member] | Securities Purchase Agreements [Member] | Several Accredited Investors (the "December 2016 Accredited Investors") [Member] | 12% Note Due January 2017 [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Number of shares issued | shares | 1,912,500 | |||||||||||
Debt face amount | $ 1,275,000 | |||||||||||
Description of interest rate terms | Interest of 10% per annum for the initial six months of the term of the Notes and 15% per annum for the remaining six months of the term of the Notes. | |||||||||||
Subsequent Event [Member] | Cash Collection Services (the "Contract") [Member] | ID Global LATAM S.A.S [Member] | Recaudo Bogota S.A.S. [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Revenues | $ 30,000,000 | |||||||||||
Number of payments | Payment | 740 | |||||||||||
Contract term | 10 years | |||||||||||
Amount of performance bond | $ 6,000,000 | |||||||||||
Subsequent Event [Member] | Securities Purchase Agreement [Member] | Accredited Investor [Member] | 10% Senior Unsecured Note Due January 2019 [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Number of shares issued | shares | 4,500,000 | |||||||||||
Number of shares issued, value | $ 3,000,000 | |||||||||||
Subsequent Event [Member] | Securities Purchase Agreement [Member] | Network 1 Financial Securities, Inc. [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Cash fee | $ 120,000 | |||||||||||
Number of shares issued | shares | 1,020,000 | |||||||||||
Subsequent Event [Member] | Restricted Stock Purchase Agreements [Member] | Mr. Philip D. Beck [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Number of option granted | shares | 15,000,000 | |||||||||||
Subsequent Event [Member] | Restricted Stock Purchase Agreements [Member] | Mr. Stuart P. Stoller [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Number of option granted | shares | 5,000,000 | |||||||||||
Subsequent Event [Member] | Subscription Agreements [Member] | Accredited Investor [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt face amount | $ 830,000 | |||||||||||
Subsequent Event [Member] | Subscription Agreements [Member] | Network 1 Financial Securities, Inc. [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Cash fee | $ 240,000 | |||||||||||
Number of shares issued | shares | 1,000,000 | |||||||||||
Subsequent Event [Member] | Subscription Agreements [Member] | Several Accredited Investors (the "March 2017 Accredited Investors") [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Number of shares issued | shares | 20,000,000 | |||||||||||
Number of shares issued, value | $ 4,000,000 | |||||||||||
Proceeds from issuance of shares | $ 3,170,000 | |||||||||||
[1] | Restated |
RESTATEMENT FOR THE THREE AND63
RESTATEMENT FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | ||||
Revenues | $ 596,201 | $ 75,312 | [1] | $ 1,406,942 | $ 86,358 | [1] | |
Operating Expenses: | |||||||
Depreciation and amortization | 127,473 | 42,684 | [1] | 388,233 | 99,410 | [1] | |
Research and development | 65,582 | [1] | 387,246 | 224,853 | [1] | ||
General and administrative | 2,171,627 | 3,732,887 | [1] | 10,711,942 | 4,664,251 | [1] | |
Total operating expenses | 2,481,058 | 3,775,571 | [1] | 11,836,455 | 4,988,514 | [1] | |
Loss from operations | (1,884,857) | (3,700,259) | [1] | (10,429,513) | (4,902,156) | [1] | |
Derivative expense | (1,594,636) | (24,246,627) | [1] | 16,082,616 | (27,111,980) | [1] | |
Stock compensation expense | |||||||
Financing Costs of debentures | 133,400 | [1] | |||||
Amortizaton of debt discounts | |||||||
Interest expense | (853,543) | (468,790) | [1] | (3,126,320) | (505,161) | [1] | |
Other income | 9,315 | [1] | 9,315 | [1] | |||
Net income (loss) | $ (4,333,036) | $ (28,406,361) | [1] | $ 2,526,783 | $ (32,509,982) | [1] | |
Net loss per share: Basic and Diluted (in dollars per share) | $ (0.17) | $ (0.20) | |||||
As Reported [Member] | |||||||
Revenues | $ 75,312 | $ 86,358 | |||||
Operating Expenses: | |||||||
Depreciation and amortization | 10,135 | 34,312 | |||||
Research and development | 24,853 | ||||||
General and administrative | 840,199 | 1,817,906 | |||||
Total operating expenses | 850,334 | 1,877,071 | |||||
Loss from operations | (775,022) | (1,790,713) | |||||
Derivative expense | (20,478,790) | (20,979,041) | |||||
Stock compensation expense | (4,849,740) | (4,849,740) | |||||
Financing Costs of debentures | (1,357,917) | (4,538,040) | |||||
Amortizaton of debt discounts | (358,705) | (421,524) | |||||
Interest expense | (98,166) | (112,304) | |||||
Other income | 9,315 | 9,315 | |||||
Net income (loss) | $ (27,909,025) | $ (32,682,047) | |||||
Net loss per share: Basic and Diluted (in dollars per share) | $ (0.16) | $ (0.20) | |||||
Reclassifications [Member] | |||||||
Revenues | |||||||
Operating Expenses: | |||||||
Depreciation and amortization | |||||||
Research and development | |||||||
General and administrative | 4,849,740 | 4,849,740 | |||||
Total operating expenses | 4,849,740 | 4,849,740 | |||||
Loss from operations | (4,849,740) | (4,849,740) | |||||
Derivative expense | |||||||
Stock compensation expense | 4,849,740 | 4,849,740 | |||||
Financing Costs of debentures | |||||||
Amortizaton of debt discounts | 358,705 | 421,524 | |||||
Interest expense | (358,705) | (421,524) | |||||
Other income | |||||||
Net income (loss) | |||||||
Net loss per share: Basic and Diluted (in dollars per share) | |||||||
As Reclassified [Member] | |||||||
Revenues | $ 75,312 | $ 86,358 | |||||
Operating Expenses: | |||||||
Depreciation and amortization | 10,135 | 34,312 | |||||
Research and development | 24,853 | ||||||
General and administrative | 5,689,939 | 6,667,646 | |||||
Total operating expenses | 5,700,074 | 6,726,811 | |||||
Loss from operations | (5,624,762) | (6,640,453) | |||||
Derivative expense | (20,478,790) | (20,979,041) | |||||
Stock compensation expense | |||||||
Financing Costs of debentures | (1,357,917) | (4,538,040) | |||||
Amortizaton of debt discounts | |||||||
Interest expense | (456,871) | (533,828) | |||||
Other income | 9,315 | 9,315 | |||||
Net income (loss) | $ (27,909,025) | $ (32,682,047) | |||||
Net loss per share: Basic and Diluted (in dollars per share) | $ (0.16) | $ (0.20) | |||||
Adjustments [Member] | |||||||
Revenues | |||||||
Operating Expenses: | |||||||
Depreciation and amortization | [2] | 32,549 | 65,098 | ||||
Research and development | 200,000 | [3] | |||||
General and administrative | [4],[5] | (1,957,052) | (2,003,395) | ||||
Total operating expenses | (1,924,503) | (1,738,297) | |||||
Loss from operations | 1,924,503 | 1,738,297 | |||||
Derivative expense | [6] | (3,767,837) | (6,132,939) | ||||
Stock compensation expense | |||||||
Financing Costs of debentures | 1,357,917 | 4,538,040 | |||||
Amortizaton of debt discounts | |||||||
Interest expense | [6] | (11,919) | 28,667 | ||||
Other income | |||||||
Net income (loss) | $ (497,336) | $ 172,065 | |||||
Net loss per share: Basic and Diluted (in dollars per share) | $ 0 | $ 0 | |||||
[1] | Restated | ||||||
[2] | Fair Value of Intangible Assets In Connection with Business Acquisition. During the three months ended June 30, 2015, the Company accounted for the acquisition of Multipay as a business combination using the acquisition method of accounting utilizing an incorrect valuation. The adjustment to reflect the correct valuation, including the purchase price allocation of assets acquired, resulted in an increase of $138,336 to Goodwill, $168,438 to Intangible Assets (net of additional amortization) and $370,125 to Contingent Purchase Consideration as of September 30, 2015. In addition, certain previously reported contingent assets and liabilities of $87,941 were eliminated. The increase to Intangible Assets required an increase in previously reported amortization expense by $32,549 and $65,098 for the three and nine months ended September 30, 2015, respectively. | ||||||
[3] | Intangible Assets-Capitalized Software. The Company determined that previously capitalized software should have been expensed in accordance with US GAAP. Accordingly, a reduction of $200,000 to Intangible Assets and an increase to Research and Development Expenses is made as of and for the six months ended September 30, 2015. | ||||||
[4] | Stock-Based Compensation. The adjusted fair value of the Company's stock-based compensation resulted in an increase to general and administrative expenses of $1,730,352 and $1,716,695 for the three and nine months ended September 30, 2015, respectively. | ||||||
[5] | The capitalization of debt issuance costs resulted in a reduction to convertible notes payable of and a corresponding decrease general and administrative of $226,700 and $286,700 for the three and nine months ended September 30, 2015, respectively. The net decrease to General and Administrative expenses, after considering the decrease of $1,730,352 and $1,716,695 related to stock-based compensation in (4) above and the capitalization of debt issuance costs of $226,700 and $286,700 is $1,957,052 and $2,003,395 for the three and nine months ended September 30, 2015, respectively. | ||||||
[6] | Derivative Liability. The fair value of the derivative liabilities related to convertible and other notes payable have now been estimated based on the Monte Carlo Simulation Model because it considers the effect of the down round feature (probability of a triggering capital raise) along with the other assumptions associated with the Black-Scholes option pricing model. The previously used methodology by the Company incorrectly did not take into consideration the probability of a financing at a price that would trigger the instruments down round provision. The adjusted fair value of the Company's derivatives associated with its Convertible Notes and other Notes Payable resulted in an increase of $1,545,232 to the Derivative Liability as of September 30, 2015. For the three and nine months ended September 30, 2015, the Company's derivative expense is increased by $3,767,837 and $6,132,939, respectively. In addition, the finalized fair value analysis of the Company's embedded derivatives associated with its Convertible and other Notes Payable required a reduction to the previously recorded Debt Discount which resulted in an increase (decrease) of interest expense of $11,919 and $(28,667) for the three and nine months ended September 30, 2015, respectively. The adjusted fair value analysis for the derivatives required a decrease to Convertible Notes Payable of $271,655 and an increase to Notes Payable of $159,357 as of September 30, 2015. |
RESTATEMENT FOR THE THREE AND64
RESTATEMENT FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | ||||
Contingent purchase consideration | $ 310,445 | $ 310,445 | $ 370,125 | |||||
Goodwill | 6,736,043 | 6,736,043 | 166,689 | |||||
Intangible Assets (net of additional amortization) | 3,508,617 | 3,508,617 | $ 1,436,534 | |||||
Depreciation and amortization | 127,473 | $ 42,684 | [1] | 388,233 | $ 99,410 | [1] | ||
Research and development | 65,582 | [1] | 387,246 | 224,853 | [1] | |||
Derivative expense | (1,594,636) | (24,246,627) | [1] | 16,082,616 | (27,111,980) | [1] | ||
Interest expense | (853,543) | (468,790) | [1] | (3,126,320) | (505,161) | [1] | ||
Decrease to convertible notes payable | 271,655 | 271,655 | ||||||
Increase to notes payable | 159,357 | 159,357 | ||||||
Stock-based compensation | 6,805,776 | 3,524,294 | [1] | |||||
General and administrative | 2,171,627 | 3,732,887 | [1] | 10,711,942 | 4,664,251 | [1] | ||
General and Administrative Expense [Member] | ||||||||
Stock-based compensation | 1,730,352 | 1,716,695 | ||||||
Debt issuance cost | 226,700 | 226,700 | ||||||
Adjustments [Member] | ||||||||
Depreciation and amortization | [2] | 32,549 | 65,098 | |||||
Research and development | 200,000 | [3] | ||||||
Derivative expense | [4] | (3,767,837) | (6,132,939) | |||||
Interest expense | [4] | (11,919) | 28,667 | |||||
General and administrative | [5],[6] | (1,957,052) | (2,003,395) | |||||
Multipay S.A., a Colombian Corporation [Member] | ||||||||
Contingent purchase consideration | $ 310,445 | 370,125 | $ 310,445 | 370,125 | ||||
Goodwill | 138,336 | 138,336 | ||||||
Intangible Assets (net of additional amortization) | 168,438 | 168,438 | ||||||
Contingent assets and liabilities eliminated | $ 87,941 | $ 87,941 | ||||||
[1] | Restated | |||||||
[2] | Fair Value of Intangible Assets In Connection with Business Acquisition. During the three months ended June 30, 2015, the Company accounted for the acquisition of Multipay as a business combination using the acquisition method of accounting utilizing an incorrect valuation. The adjustment to reflect the correct valuation, including the purchase price allocation of assets acquired, resulted in an increase of $138,336 to Goodwill, $168,438 to Intangible Assets (net of additional amortization) and $370,125 to Contingent Purchase Consideration as of September 30, 2015. In addition, certain previously reported contingent assets and liabilities of $87,941 were eliminated. The increase to Intangible Assets required an increase in previously reported amortization expense by $32,549 and $65,098 for the three and nine months ended September 30, 2015, respectively. | |||||||
[3] | Intangible Assets-Capitalized Software. The Company determined that previously capitalized software should have been expensed in accordance with US GAAP. Accordingly, a reduction of $200,000 to Intangible Assets and an increase to Research and Development Expenses is made as of and for the six months ended September 30, 2015. | |||||||
[4] | Derivative Liability. The fair value of the derivative liabilities related to convertible and other notes payable have now been estimated based on the Monte Carlo Simulation Model because it considers the effect of the down round feature (probability of a triggering capital raise) along with the other assumptions associated with the Black-Scholes option pricing model. The previously used methodology by the Company incorrectly did not take into consideration the probability of a financing at a price that would trigger the instruments down round provision. The adjusted fair value of the Company's derivatives associated with its Convertible Notes and other Notes Payable resulted in an increase of $1,545,232 to the Derivative Liability as of September 30, 2015. For the three and nine months ended September 30, 2015, the Company's derivative expense is increased by $3,767,837 and $6,132,939, respectively. In addition, the finalized fair value analysis of the Company's embedded derivatives associated with its Convertible and other Notes Payable required a reduction to the previously recorded Debt Discount which resulted in an increase (decrease) of interest expense of $11,919 and $(28,667) for the three and nine months ended September 30, 2015, respectively. The adjusted fair value analysis for the derivatives required a decrease to Convertible Notes Payable of $271,655 and an increase to Notes Payable of $159,357 as of September 30, 2015. | |||||||
[5] | Stock-Based Compensation. The adjusted fair value of the Company's stock-based compensation resulted in an increase to general and administrative expenses of $1,730,352 and $1,716,695 for the three and nine months ended September 30, 2015, respectively. | |||||||
[6] | The capitalization of debt issuance costs resulted in a reduction to convertible notes payable of and a corresponding decrease general and administrative of $226,700 and $286,700 for the three and nine months ended September 30, 2015, respectively. The net decrease to General and Administrative expenses, after considering the decrease of $1,730,352 and $1,716,695 related to stock-based compensation in (4) above and the capitalization of debt issuance costs of $226,700 and $286,700 is $1,957,052 and $2,003,395 for the three and nine months ended September 30, 2015, respectively. |