Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Jul. 31, 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 | Jun. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity a Well-known Seasoned Issuer | No | |
Entity a Voluntary Filer | No | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 344,214,142 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,017 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash | $ 2,376,197 | $ 689,105 |
Accounts receivable, net | 158,028 | 138,359 |
Current portion of net investment in direct financing lease | 50,050 | 44,990 |
Inventory | 854,900 | 150,679 |
Other current assets | 188,242 | 166,479 |
Total current assets | 3,627,417 | 1,189,612 |
Property and equipment, net | 251,363 | 115,682 |
Other assets | 876,395 | 358,343 |
Intangible assets, net | 3,281,809 | 3,474,291 |
Goodwill | 6,736,043 | 6,736,043 |
Net investment in direct financing lease, net of current portion | 645,861 | 674,015 |
Total assets | 15,418,888 | 12,547,986 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 1,602,924 | 1,687,900 |
Convertible notes payable, net | 250,000 | |
Derivative liability | 8,388,355 | |
Notes payable, net, current portion | 15,220 | 109,819 |
Capital lease obligation, current portion | 28,126 | |
Deferred revenue | 120,690 | 398,680 |
Total current liabilities | 1,766,960 | 10,834,754 |
Convertible notes payable, net, less current maturities | 2,245,596 | |
Notes payable, net less current maturities | 2,087,583 | 3,051,603 |
Capital lease obligation, net of current portion | 127,334 | |
Derivative liability, net of current portion | 9,668,276 | |
Total liabilities | 3,981,877 | 25,800,229 |
Commitments and contingencies (Note 11 and 12) | ||
Stockholders' Equity (Deficit): | ||
Common stock, $0.0001 par value, 500,000,000 shares authorized; 344,214,144 and 234,704,655 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively | 34,421 | 23,470 |
Additional paid in capital | 72,944,964 | 35,341,669 |
Stock subscription receivable | (430,000) | |
Accumulated deficit | (61,397,665) | (48,925,993) |
Accumulated comprehensive income | 285,291 | 308,611 |
Total stockholders' equity (deficit) | 11,437,011 | (13,252,243) |
Total liabilities and stockholders' equity (deficit) | $ 15,418,888 | $ 12,547,986 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
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 | 344,214,144 | 234,704,655 |
Common stock, outstanding | 344,214,144 | 234,704,655 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Revenues: | ||||
Products and services | $ 540,616 | $ 476,680 | $ 1,106,161 | $ 797,426 |
Lease income | 18,836 | 13,315 | 37,980 | 13,315 |
Total revenues, net | 559,452 | 489,995 | 1,144,141 | 810,741 |
Operating Expenses: | ||||
Cost of sales | 155,141 | 114,548 | 304,270 | 232,658 |
General and administrative | 2,750,955 | 4,147,408 | 8,006,337 | 8,540,314 |
Research and development | 27,766 | 292,592 | 56,838 | 321,664 |
Depreciation and amortization | 137,000 | 157,702 | 246,534 | 260,761 |
Total operating expenses | 3,070,862 | 4,712,250 | 8,613,979 | 9,355,397 |
Loss from operations | (2,511,410) | (4,222,255) | (7,469,838) | (8,544,656) |
Other Income (Expense): | ||||
Gain (loss) on derivative liability | 4,735,589 | (452,146) | 17,677,252 | |
Gain on extinguishment of notes payable | 2,802,234 | |||
Loss on modification of derivatives | (319,770) | |||
Loss on modification of warrants | (158,327) | |||
Loss on settlement of notes payable | (5,978,643) | |||
Interest expense | (291,168) | (1,346,025) | (895,182) | (2,272,777) |
Other income (expense), net | (291,168) | 3,389,564 | (5,001,834) | 15,404,475 |
(Loss) income before income taxes | (2,802,578) | (832,691) | (12,471,672) | 6,859,819 |
Income Taxes | ||||
Net (loss) income | $ (2,802,578) | $ (832,691) | $ (12,471,672) | $ 6,859,819 |
Net (loss) income Per Share - Basic (in shares) | $ (0.01) | $ 0 | $ (0.04) | $ 0.03 |
Net Loss Per Share - Diluted (in dollars per share) | $ (0.01) | $ 0 | $ (0.04) | $ (0.04) |
Weighted Average Shares Outstanding - Basic (in shares) | 344,140,554 | 213,860,870 | 319,868,353 | 207,537,833 |
Weighted Average Shares Outstanding - Diluted (in shares) | 344,140,554 | 213,860,870 | 319,868,353 | 275,753,226 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ (2,802,578) | $ (832,691) | $ (12,471,672) | $ 6,859,819 |
Foreign currency translation gains | (46,772) | 216,670 | (23,320) | 121,043 |
Comprehensive income (loss) | $ (2,849,350) | $ (616,021) | $ (12,494,992) | $ 6,980,862 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited) - 6 months ended Jun. 30, 2017 - USD ($) | Common Stock [Member] | Stock Subscription Receivable [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Income [Member] | Total |
Balance, beginning at Dec. 31, 2016 | $ 23,470 | $ 35,341,669 | $ (48,925,993) | $ 308,611 | $ (13,252,243) | |
Balance, beginning (in shares) at Dec. 31, 2016 | 234,704,655 | 234,704,655 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Reclassification of derivatives removal of price protection in warrants | 7,614,974 | $ 7,614,974 | ||||
Issuance of common stock upon conversion of debt and related interest | $ 8,482 | 21,601,191 | 21,609,673 | |||
Issuance of common stock upon conversion of debt and related interest (in shares) | 84,822,006 | |||||
Stock-based compensation | 4,266,670 | 4,266,670 | ||||
Common stock issued for services | $ 49 | 62,756 | 62,805 | |||
Common stock issued for services (in shares) | 487,483 | |||||
Common stock issued with note payable | $ 450 | 841,277 | 841,727 | |||
Common stock issued with note payable (in shares) | 4,500,000 | |||||
Common stock issued for debt issuance costs | $ 120 | 224,340 | 224,460 | |||
Common stock issued for debt issuance costs (in shares) | 1,200,000 | |||||
Common stock issued for cash | $ 2,000 | (430,000) | 3,998,000 | 3,570,000 | ||
Common stock issued for cash (in shares) | 20,000,000 | |||||
Cash and common stock issued for equity issuance costs | $ 100 | (289,490) | (289,390) | |||
Cash and common stock issued for equity issuance costs (in shares) | 1,000,000 | |||||
Common stock returned as part of extinguishment of notes payable | $ (250) | (874,750) | (875,000) | |||
Common stock returned as part of extinguishment of notes payable (in shares) | (2,500,000) | |||||
Loss on modification of warrants | 158,327 | 158,327 | ||||
Net loss | (12,471,672) | (12,471,672) | ||||
Foreign currency translation | (23,320) | (23,320) | ||||
Balance, ending at Jun. 30, 2017 | $ 34,421 | $ (430,000) | $ 72,944,964 | $ (61,397,665) | $ 285,291 | $ 11,437,011 |
Balance, ending (in shares) at Jun. 30, 2017 | 344,214,144 | 344,214,144 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net (loss) income | $ (12,471,672) | $ 6,859,819 |
Adjustments to reconcile net (loss) income with cash flows from operations: | ||
Depreciation and amortization expense | 246,534 | 260,761 |
Stock-based compensation | 4,266,670 | 6,152,490 |
Common stock issued for services | 62,805 | 270,000 |
Amortization of debt discount and debt issuance costs | 648,996 | 1,899,726 |
Loss (gain) on derivative liability | 452,146 | (17,677,252) |
Gain on settlement of notes payable | (2,802,234) | |
Loss on modification of derivatives | 319,770 | |
Loss on modification of warrants | 158,327 | |
Loss on settlement of debt | 5,978,643 | |
Write off of abandoned product | 225,862 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (16,913) | 5,606 |
Net investment in direct financing lease | 23,094 | 7,043 |
Other current assets | (21,763) | 75,577 |
Inventory | (705,579) | (162,232) |
Accounts payable and accrued expenses | 240,218 | 281,846 |
Deferred revenue | (277,992) | (194,690) |
Net cash flows from operating activities | (3,898,950) | (1,995,444) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (8,194) | (10,518) |
Investment in other assets | (536,184) | (101,753) |
Cash acquired in acquisition | 419,042 | |
Net cash flows from investing activities | (544,378) | 306,771 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of notes payable and common stock | 3,000,000 | 1,650,000 |
Proceeds from the sale of common stock | 3,570,100 | |
Payment of debt and equity issuance costs | (375,821) | (133,400) |
Principal payments on notes payable | (44,599) | (17,655) |
Principal payments on capital lease obligation | (9,904) | |
Net cash flows from financing activities | 6,139,776 | 1,498,945 |
Effect of Foreign Currencies | (9,356) | 121,043 |
Net Change in Cash | 1,687,092 | (68,685) |
Cash, Beginning of the Period | 689,105 | 349,873 |
Cash, End of the Period | 2,376,197 | 281,188 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for interest | ||
Cash paid for income taxes | ||
Non-cash Investing and Financing Activities: | ||
Issuance of common stock for conversion of debt and accrued interest | 21,609,673 | 21,222 |
Issuance of warrants for inventory costs | 79,081 | |
Reclassification of derivative liabilities upon removal of price protection in warrants | 7,614,974 | 692,850 |
Issuance of common stock for debt issuance costs | 224,460 | 169,125 |
Reclassification of inventory to net investment in direct financing lease | 747,944 | |
Acquisition of equipment pursuant to a capital lease | 163,407 | |
Acquisition of FIN Holdings: | ||
Issuance of common stock as consideration | 9,000,000 | |
Assumed liabilities | 914,218 | |
Inventory | (112,408) | |
Accounts receivable | (311,867) | |
Property and equipment | (100,339) | |
Intangible assets | (8,970,562) | |
Cash acquired | $ 419,042 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2017 | |
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, include all adjustments (consisting only of normal recurring accruals) which we considered as necessary for a fair presentation of the results for the periods presented. Certain information and footnote disclosures normally included (US GAAP) 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, 2016. The results of operations for the three and six months ended June 30, 2017 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 S.A.S., IDGS S.A.S., ID Solutions, Inc., Innovation in Motion 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 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. For the three and six months ended June 30, 2017, and the three months ended June 30, 2016, all potentially diluted shares were excluded from the calculation of diluted EPS because their impact was anti-dilutive. The following table illustrates the computation of basic and diluted EPS for the six months ended June 30, 2016: Net Income Shares Per Share Amount Basic EPS Income (loss) available to stockholders $ 6,859,819 207,538,833 $ 0.03 Effect of Dilutive Securities Stock Options — 10,714,189 Warrants — 25,634,957 Convertible Debt (17,712,426 ) 31,465,287 Dilute EPS Income available to stockholders plus assumed conversions $ (10,852,597 ) 275,353,266 $ (0.04 ) Going concern As of June 30, 2017, the Company had an accumulated deficit of approximately $61.4 million. For the six months ended June 30, 2017, the Company earned revenue of approximately $1.1 million and incurred a loss from operations of approximately $7.5 million. The reports of our independent registered public accounting firms on our consolidated financial statements for the years ended December 31, 2016 and 2015 contained an explanatory paragraph regarding our ability to continue as a going concern based upon our net losses and accumulated deficits. These condensed consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to meet its obligations and continue its operations for the next fiscal year. The continuation of the Company as a going concern is dependent upon financial support from the Company’s current shareholders, the ability of the Company to obtain additional 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. As there can be no assurance that the Company will be able to achieve positive cash flows (become profitable) and raise sufficient capital to maintain operations there is substantial doubt about the Company’s ability to continue as a going concern.. These condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern. 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 will 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 as of June 30, 2017 consist of cards inventory and kiosks that have not been placed into service and inventory as of December 31,2016 consist solely of cards inventory. The Company, in 2017, acquired approximately $707,000 of additional kiosks and components. 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. Other Assets The increase in other assets is principally due to its continuing investments in its technology platform prior to the respective assets being placed into service. Revenue Recognition Revenue is recognized when persuasive evidence of arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable. Revenue is recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities. Revenue from sale of unique secure credential products and solutions to customers is recorded at the completion of the project unless the solution benefits to the end user in which additional resources or services are required to be provided. Revenue from club-based services arrangements that allow for the use of hosted software product that are provided on a consumption basis (for example, the number of transactions processed over a period of time) is recognized commensurate with the customer utilization of such resources. Generally, the contract calls for a minimum number of transactions to be charged by the Company monthly. Accordingly, the Company records the minimum transactional fee based on the passage of a month’s time as revenues. Amounts in excess of the monthly minimum, are charged to customers based on the actual number of transactions. Consulting services revenue is recognized as services are rendered, generally based on the negotiated hourly rate in the consulting arrangement and the number of hours worked during the period. Consulting revenue for fixed price services arrangements is recognized as services are provided. Revenue related to direct financing leases is recognized over the term of the lease using the effective interest method. 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 certain 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 six months ended June 30, 2017 and 2016, there is no provision for income tax as the Company had a tax loss for United States and foreign activities and all of the Company’s carryforwards are reserved for. The Company’s gain or loss on derivative liability during the six months ending June 30, 2017 and 2016 is not subject to tax. Recent Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-04 – Simplifying the Test for Goodwill Impairment In July 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815) |
INTANGIBLE ASSETS, NET (OTHER T
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) | 6 Months Ended |
Jun. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) | NOTE 2 – INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) The Company’s intangible assets consist of intellectual property acquired from MultiPay and FIN and are amortized over their estimated useful lives as indicated below. The following is a summary of activity related to intangible assets for the six months ended June 30, 2017: Customer Relationships Intellectual Property Non-Compete Patents Pending Useful Lives 10 Years 10 Years 10 Years n/a Total Carrying Value at December 31, 2016 $ 1,446,166 $ 2,000,858 $ 8,067 $ 19,200 $ 3,474,291 Additions — — — 18,132 18,132 Amortization (67,953 ) (141,251 ) (1,410 ) — (210,614 ) Carrying Value at June 30, 2017 $ 1,378,213 $ 1,859,607 $ 6,657 $ 37,332 $ 3,281,809 The following is a summary of intangible assets as of June 30, 2017: Customer Relationships Intellectual Property Non-Compete Patent Pending Total Cost $ 1,587,159 $ 2,444,646 $ 14,087 $ 37,332 $ 4,083,224 Accumulated amortization (208,946 ) (585,039 ) (7,430 ) — (801,415 ) Carrying Value at June 30, 2017 $ 1,378,213 $ 1,859,607 $ 6,657 $ 37,332 $ 3,281,809 Future expected amortization of intangible assets is as follows for the six-month period remaining in 2017 and the calender years ending from 2018-2022 and thereafter: 2017 222,017 2018 423,203 2019 423,203 2020 423,203 2021 423,203 2022 423,203 Thereafter 943,777 $ 3,281,809 |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | NOTE 3 – PROPERTY AND EQUIPMENT, NET Property and equipment consisted of the following as of June 30, 2017 and December 31, 2016: 2017 2016 Computers and equipment $ 197,491 $ 192,928 Equipment under capital lease (see note 12) 163,407 — Furniture and fixtures 109,200 109,200 470,098 $ 302,128 Less Accumulated depreciation 218,735 186,446 Property and equipment, net $ 251,363 $ 115,682 Depreciation expense totaled $35,920 and $24,029 for the Six Months ended June 30, 2017 and 2016, respectively. See Note 11 for equipment amounting to $163,407 acquired pursuant to a capital lease. |
ACCOUNTS PAYABLE AND ACCRUED EX
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 6 Months Ended |
Jun. 30, 2017 | |
Payables and Accruals [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | NOTE 4 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consisted of the following as of June 30, 2017 and December 31, 2016: 2017 2016 Trade payables $ 428,858 $ 341,002 Accrued interest 125,000 600,624 Accrued payroll and related 710,848 421,771 Other accrued expenses 338,218 324,503 Total $ 1,602,924 $ 1,687,900 |
NOTES PAYABLE, NET
NOTES PAYABLE, NET | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE, NET | NOTE 5 - NOTES PAYABLE, NET On January 31, 2017, the Company entered into Conversion Agreements with several accredited investors (the “Investors”) pursuant to which substantially all Investors agreed to convert all amounts of notes payable and convertible notes payable (Note 6) due and payable to such persons including interest under the terms of their respective financing or loan agreement as of January 31, 2017 into shares of Company common stock at $0.10 per share. Certain Investors that had a conversion price less than $0.10 converted at such applicable conversion price. The Conversion Agreements resulted in the conversion of notes and convertible notes amounting to approximately $6,331,000 into 84,822,006 shares of Company common stock with a fair value of approximately $21,610,000. The Investors also agreed to waive any existing rights with respect to certain anti-dilution rights contained in their Stock Purchase Warrants. The Company agreed to reduce the exercise of all outstanding Stock Purchase Warrants acquired as part of a financing or loan that had an exercise price in excess of $0.10 per share to $0.10 per share. As a result of the above agreements associated with the conversion Agreements, the Company recorded a loss on the conversion of debt of approximately $6.0 million (including the effect of the elimination of related conversion feature derivative liabilities – see Note 7), a loss on the modification of warrants of approximately $0.2 million, and a loss on the modification of the derivatives of approximately $0.3 million. On February 22, 2017, the Company entered into an Agreement and Release the (“February 22, 2017 Agreement”) with a holder of certain debentures that will represent final and full payment of all amounts owed under these debentures which include debt with a face value of $300,000, accrued interest of approximately $31,000, cancellation of 3,600,000 warrants previously accounted for as derivative liabilities as well as certain pledged shares (2,500,000 shares) in exchange for $300,000 in cash which was paid in May 2017. As a result of the February 22, 2017 Agreement, the Company recorded a gain on the extinguishment of notes payable of approximately $2.8 million. See notes 6 and 7. The following is a summary of notes payable as of June 30, 2017 and December 31, 2016: 2017 2016 In connection with the acquisition of MultiPay in 2015, the Company assumed three promissory notes. At June 30, 2017, the remaining outstanding note carried an outstanding balance of $15,220. Payments of $6,300 including principal and interest are due monthly. The interest rate is 15.47% per annum. Total outstanding principal and interest is due on September 16, 2017. $ 15,220 $ 46,210 The below section of notes payable were all converted to common stock at $0.10 per share. in connection with the January 2017, conversion agreements described above. In September 2015, the Company issued 12% notes totaling $973,000. The notes were secured by the assets of the Company, matured in September 2016, and accrued interest was 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 were presented as a discount against the notes and amortized into interest expense over the terms of the notes. — 963,000 In October 2015, the Company issued 12% notes in the amount of $225,000. The notes were secured by the assets of the Company, matured in October 2016, and accrued interest was 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 were presented as a discount against the note and amortized into interest expense over the terms of the notes. — 225,000 In November 2015, the Company issued a 12% note in the amount of $25,000. The note was secured by the assets of the Company, matured in October 2016, and accrued interest was 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 was presented as a discount against the note and amortized into interest expense over the term of the note — 25,000 In December 2015, the Company issued 12% notes totaling $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 In January 2016, the Company issued 12% notes in the amount of $100,000. The note was secured by the assets of the Company, matured in January 2017, and accrued interest was 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 In December 2016, the Company issued promissory notes with an aggregate face value of $1,275,000 which were payable one year from the date of issuance and accrued 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 holders also received 1,912,500 shares of common stock, with a fair value of $191,250. The Company allocated the proceeds to the notes and common stock based on their relative fair values, resulting in a discount against the notes for the common stock of $166,304, which was amortized into expense through the date of conversion. In connection with the issuance of the notes and common stock, the Company also incurred debt issuance costs of $212,427, of which $184,719 was recorded as debt issuance costs against the notes to be amortized over the one-year terms of the notes. — 1,275,000 In November 2016,, the Company issued a 12% promissory note due in January 2017 to an officer and principal stockholder in the amount of $13,609. In connection with the issuance of this note, the company also issued warrants for the purchase of 1,146,667 shares of the Company’s common stock at an exercise price of $0.15 per share. This loan was repaid in April 2017. The note holder also received 20,414, shares of the Company’s common stock with a fair value of $2,041. — 13,609 In January 2017, the Company issued a Senior Unsecured Note with a face value of $3,000,000, payable two years form issuance, along with an aggregate of 4,500,000 shares of Common Stock, with a fair value of $1,147,500. The Company allocated the proceeds to the common stock based on their relative fair value and recorded a discount of $391,304 to be amortized into interest expense over the two-year term of the note. The Company also paid debt issuance costs consisting of a cash fee of $120,000 and 1,020,000 shares of common stock of the Company with a fair value of $306,000, of which $208,696 was recorded as debt issuance costs to be amortized into interest expense over the two-year term of the note. 3,000,000 — Total Principal Outstanding $ 3,015,220 $ 3,497,819 Unamortized Deferred Debt Discounts (666,375 ) (159,375 ) Unamortized Deferred Debt Issuance Costs (246,042 ) (177,022 ) Notes Payable, Net $ 2,102,803 $ 3,161,422 The following is a roll-forward of the Company’s notes payable and related discounts for the six Months ended June 30, 2017: Principal Balance Debt Issuance Costs Debt Discounts Total Balance at December 31, 2016 $ 3,497,819 $ (177,022 ) $ (159,375 ) $ 3,161,422 New issuances 3,000,000 (310,790 ) (841,727 ) 1,847,483 Payments (44,599 ) — — (44,599 ) Conversions (3,438,000 ) — — (3,438,000 ) Amortization — 241,770 334,727 576,497 Balance at June 30, 2017 $ 3,015,220 $ (246,042 ) $ (666,375 ) $ 2,102,803 Future maturities of notes payable are as follows for the six-month period remaining in 2017 and the calender years ending from 2018-2019: 2017 $ 15,220 2018 — 2019 3,000,000 Net investment in lease $ 3,015,220 |
CONVERTIBLE NOTES PAYABLE, NET
CONVERTIBLE NOTES PAYABLE, NET | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES PAYABLE, NET | NOTE 6 - CONVERTIBLE NOTES PAYABLE, NET See Note 5 for transactions associated with the reduction in convertible notes payable on January 31, 2017. Convertible notes consisted of the following as of June 30, 2017 and December 31, 2016: 2017 2016 The below section of convertible notes payable were all converted to common stock at $0.10 per share in connection with the January 2017, conversion agreements described above. — $ 680,000 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 7. 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 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. In connection with the issuance of this note, the Company issued warrants for the purchase of 1,146,667 shares of the Company’s common stock at an exercise price of $0.15 per share for a period of five years. — 172,095 In April 2016, the Company issued 12% convertible notes in the amount of $1,550,000. The note is secured by the assets of the Company, matures in October 2016, and is 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 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 Company also issued 1,033,337 shares of common stock to the noteholders. 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 Investors to reduce the exercise price on the embedded conversion feature and warrants to $0.10 and 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 debt extinguishment in accordance with ASC 470. The reported amounts under the debt extinguishment are not significantly different than that of the Company’s reported amounts. — 1,550,000 Total Principal Outstanding $ — $ 2,568,095 Unamortized Discounts – Derivatives — (6,466 ) Unamortized Discounts – Debt issuance costs — (66,033 ) Convertible Notes, Net $ — $ 2,495,596 The following is a roll-forward of the Company’s convertible notes and related discounts for the six months ended June 30, 2017: Principal Balance Debt Issuance Costs Debt Discounts Total Balance at December 31, 2016 $ 2,568,095 $ (66,033 ) $ (6,466 ) $ 2,495,596 Conversions (2,568,095 ) — — (2,568,095 ) Amortization — 66,033 6,466 72,499 Balance at June 30, 2017 $ — $ — $ — $ — |
DERIVATIVE LIABILITY
DERIVATIVE LIABILITY | 6 Months Ended |
Jun. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE LIABILITY | NOTE 7 –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 had determined that certain conversion features and warrants are derivative liabilities. As described in Note 5 above, the Company on January 31, 2017 entered into Conversion Agreements with Investors pursuant to which each Investors agreed to convert all amounts of debt accrued and payable to such persons including interest under the terms of their respective financing or loan agreement into shares of Company common stock at $0.10 per share. Certain Investors that had a conversion price less than $0.10 converted at such applicable conversion price. The investors at the time of conversion also agreed to waive any existing rights with respect to certain price protection and anti-dilution rights contained in their Stock Purchase Warrants. Additionally, on February 22, 2017, the Company entered into an Agreement and Release with a holder of certain debentures that will represent final and full payment of all amounts owed under such which include debt with a face value of $300,000, accrued interest of approximately $31,000, cancellation of 3,600,000 warrants (previously accounted for as derivative liabilities) as well as certain pledged shares (2,500,000 shares) in exchange for $300,000 in cash. These debentures also had potential price adjustments on these debentures that have also been eliminated. Therefore, as a result of the conversion and repayment of the outstanding indebtedness and related accrued interest as well as the elimination of anti-dilution rights of Stock Purchase Warrants, the Company no longer holds liabilities with derivatives requiring fair value as of June 30, 2017. A summary of derivative activity for the six months ended June 30, 2017 is as follows: Balance at December 31, 2016 $ 18,056,631 Modification of derivatives 319,770 Cancellation of warrants previously accounted for as derivative liabilities and elimination of derivative conversion features resulting from conversion of related party debt to equity (11,213,573 ) Reclassification of derivatives to equity upon removal of price protection in warrants (7,614,974 ) Change in fair value 452,146 Balance at June 30, 2017 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 8 – RELATED PARTY TRANSACTIONS Amount Due Officer and Director In November 2016, the Company issued a note payable for $13,609 to one if its Board of Directors and was outstanding at December 31, 2016. The note was repaid in April 2017. In November 2016, the related party also received 20,414 shares of the Company’s common stock with a fair value of $2,041. Convertible Notes Payable On January 31, 2017, the Company entered into Conversion Agreements with Mr. Selzer, a director of the Company and Vista Associates, a family partnership to which Mr. Selzer converted $150,000 in debt plus interest into 1,753,500 shares of common stock and $40,000 of debt plus interest into 1,537,778 shares of common stock. Purchase of Common Stock In March 2017, Mr. Selzer purchased an additional 500,000 shares of common stock of the latest offering as described in Note 9. Other In connection with securing third-party financing, the Company incurred fees to Network 1 Financial Securities, Inc. (“Network 1”), a registered broker-dealer. The Network 1 fees comprise of $360,000 payable in cash and the issuance of 2,200,000 shares of common stock of the Company. 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 commission, in cash and stock based on the total amount of proceeds from any financing it secures for the Company. The Company leases it Corporate headquarters from Bridgeworks LLC, (“Bridgeworks”), a company providing office facilities to emerging companies, principally owned by Mr. Beck and his family. Mr. Beck is Chairman, Chief Executive Officer and President of the Company. During the first six months of 2017, the Company paid Bridgeworks $27,000. The Company entered into a consulting agreement with Graham Beck, a son of Mr. Beck for digital marketing services beginning April 1, 2017 at a rate of $2,500 per month with an expected end date of September 2017. During the first six months of 2017, the expense associated with Graham Beck was $7,500. |
STOCKHOLDER'S EQUITY (DEFICIT)
STOCKHOLDER'S EQUITY (DEFICIT) | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
STOCKHOLDER'S EQUITY (DEFICIT) | NOTE 9 STOCKHOLDER’S EQUITY (DEFICIT) Common Stock As described in Note 5, on January 31, 2017, in connection with the issuance of a $3,000,000 Senior Unsecured Note, an aggregate of 4,500,000 shares of Common Stock was issued to the Investor and the Company issued Network 1 Financial Securities, Inc., a registered broker-dealer, 1,200,000 shares of common stock of the Company in conjunction with its services. As described in Notes 5 and 6, on January 31, 2017, the Company entered into Conversion Agreements with Investors pursuant to which each Investors agreed to convert all amounts of debt accrued and payable to such person including interest under the terms of their respective financing or loan agreement as of January 31, 2017 into shares of Company common stock at $0.10 per shares. The Conversion Agreements resulted in the issuance of an approximately of 84,822,000 shares of Company common stock. 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 $3,570,000 through June 30, 2017. An individual March 2017 Accredited Investor has agreed to fund $430,000 by the balance of the offering by the end of the third quarter of 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. Additionally, the Company cancelled certificates for 2,500,000 shares of common stock acquired in conjunction with the purchase of certain debentures. During the quarter ended June 30, 2017, the Company issued approximately 487,000 shares of common stock as consideration for services. The fair value of the shares, totaling approximately $63,000 was estimated based on the publicly quoted trading price and recorded as expense. Warrants As more fully described above the Company agreed to reduce the exercise of all outstanding Stock Purchase Warrants acquired as part of a financing or loan that had an exercise price in excess of $0.10 per share to $0.10 per share. Furthermore, as more fully described above in Note 5, the Company as part of a transaction cancelled 3.6 million warrants. The following is a summary of the Company’s warrant activity for the six months ended June 30, 2017: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Life Outstanding at December 31, 2016 51,138,697 $ 0.11 3.8 Years Cancelled (3,600,000 ) $ 0.08 3.9 Years Outstanding at June 30, 2017 47,538,697 $ 0.08 3.2 Years Stock Options 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 shares of common stock immediately and then in 12 equal tranches of 833,333 shares per month commencing on September 1, 2016. Parity options vested in entirety when Mr. Beck became Chief Executive Officer (“CEO”) of Ipsidy, Inc. in January 2017. Mr. Beck is the manager of Parity. In connection with the engagement of the CEO and Chief Financial Officer (“CFO”) on January 31, 2017, the Company granted the CEO and CFO stock options to acquire 15,000,000 shares and 5,000,000 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 a Restricted Stock Purchase Agreements with the CEO and CFO in which they will be provided 15,000,000 shares and 5,000,000 shares of common stock at a per share price of $0.0001, which shares of common stock vest upon achieving a performance threshold which has not been achieved at June 30, 2017. The Company determined the grant date fair value of the options granted during the Six Months ended June 30, 2017 using the Black Scholes Method and the following assumptions: Expected Volatility – 85% Expected Term – 5.0 Years Risk Free Rate – 1.92% Dividend Rate – 0.00% Activity related to stock options for the Six Months ended June 30, 2017 is summarized as follows: Number of Shares Weighted Average Exercise Price Weighted Average Contractual Term (Yrs.) Aggregate Intrinsic Value Outstanding as of December 31, 2016 86,925,000 $ 0.21 9.5 $ 10,023,400 Granted 20,000,000 $ 0.10 9.8 $ — Forfeitures (875,000 ) $ 0.10 8.8 $ — Outstanding as of June 30, 2017 106,050,000 $ 0.19 9.1 $ 9,215,000 Exercisable as of June 30, 2017 76,183,334 $ 0.16 8.7 $ 5,322,000 The following table summarizes stock option information as of June 30, 2017: Exercise Prices Outstanding Weighted Average Contractual Life Exercisable $ 0.0001 3,500,000 8.25 Years 3,500,000 $ 0.05 36,500,000 9.11 Yeas 22,625,000 $ 0.10 27,250,000 9.30 Years 14,083,335 $ 0.15 6,300,000 8.10 Years 4,049,999 $ 0.25 500,000 8.75 Years 300,000 $ 0.40 1,000,000 8.67 Years 1,000,000 $ 0.45 31,000,000 8.25Years 30,625,000 Total 106,050,000 9.04 Years 76,183,334 Stock option expense for the three and six months ended June 30, 2017 was approximately $973,000 and $4,267,000, respectively, and for the corresponding periods ended June 30, 2016 was $2,037,000 and $6,152,000, respectively. The quarter and six months ended June 30, 2017, included approximately $93,000 and $1,767,000 of non-employee stock compensation. As of June 30, 2017, there was approximately $4,804,000 of unrecognized compensation costs related to stock options outstanding which will be expensed through 2020. |
DIRECT FINANCING LEASE
DIRECT FINANCING LEASE | 6 Months Ended |
Jun. 30, 2017 | |
Direct Financing Lease | |
DIRECT FINANCING LEASE | NOTE 10 – DIRECT FINACING LEASE In September 2015, the Company and an entity in Colombia entered into a rental contract for the rental of 78 kiosks to provide cash collection and fare services at transportation stations. The lease term began in May 2016 when the kiosk were installed and operational and when the lease commenced. The term of the rental contract is ten years at an approximate monthly rental of $11,900. The lease has the option at the end of the lease term to purchase each unit for approximately $40. The term of the lease approximates the expected economic life of the kiosks. The lease was accounted for as a direct financing lease. The Company has recorded the transaction as it’s net investment in the lease and will receive monthly payments of $11,856 before estimated executory costs, or $142,272, annually, to reduce investment in the lease and record income associated with the related amount due. Executory costs are estimated to be $1,677 monthly and initial direct costs are not considered significant. The transaction resulted in incremental revenue in the six-months ended June 30, 2017 of approximately $38,000. The equipment is subject to direct lease valued at approximately $748,000. At the inception of the lease term, the aggregate minimum future lease payments to be received is approximately $1,422,000 before executory cost. Unearned income is recorded at the inception of this lease was approximately $474,000 and will be recorded over the term of the lease using the effective income rate method. Future minimum lease payments to be received under the lease for the next five years and thereafter are as follows for the six-month period remaining in 2017 and the calender years ending from 2018-2022 and thereafter: 2017 $ 61,073 2018 122,145 2019 122,145 2020 122,145 2021 122,145 2022 122,145 Thereafter 529,322 Sub-total 1,078,975 Less deferred revenue (383,064 ) Net investment in lease $ 695,911 |
LEASE OBLIGATION PAYABLE
LEASE OBLIGATION PAYABLE | 6 Months Ended |
Jun. 30, 2017 | |
Lease Obligation Payable | |
LEASE OBLIGATION PAYABLE | NOTE 11 – LEASE OBLIGATION PAYABLE The Company entered into a lease in March 2017 for the rental of its printer for its secured plastic and credential card products business under an arrangement that is classified as a capital lease. The leased equipment is amortized on a straight line basis over its lease term including the last payment (61 payments) which would transfer ownership to the Company. Total amortization related to the lease equipment as of June 30, 2017 is $2,679. The following is a schedule showing the future minimum leas payments under capital lease by year and the present value of the minimum lease payments as of June 30, 2017. The interest rate related to the lease obligation is 12% and the maturity date is March 31, 2022. Future cash payment related to this capital lease are as follow for the six-month period remaining in 2017 and the calender years ending from 2018-2022 and thereafter. 2017 $ 21,547 2018 43,096 2019 43,096 2020 43,096 2021 43,096 2022 10,777 Total minimum lease payments 204,708 Less: Amount representing interest 49,248 Present value of minimum lease payments $ 155,460 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 12 COMMITMENTS AND CONTINGENCIES 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. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Net Loss per Common Share | Net Loss per Common Share The Company computes net loss per share in accordance with FASB ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the statement of operations. Basic EPS is computed by dividing net 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. For the three and six months ended June 30, 2017, and the three months ended June 30, 2016, all potentially diluted shares were excluded from the calculation of diluted EPS because their impact was anti-dilutive. The following table illustrates the computation of basic and diluted EPS for the six months ended June 30, 2016: Net Income Shares Per Share Amount Basic EPS Income (loss) available to stockholders $ 6,859,819 207,538,833 $ 0.03 Effect of Dilutive Securities Stock Options — 10,714,189 Warrants — 25,634,957 Convertible Debt (17,712,426 ) 31,465,287 Dilute EPS Income available to stockholders plus assumed conversions $ (10,852,597 ) 275,353,266 $ (0.04 ) |
Going concern | Going concern As of June 30, 2017, the Company had an accumulated deficit of approximately $61.4 million. For the six months ended June 30, 2017, the Company earned revenue of approximately $1.1 million and incurred a loss from operations of approximately $7.5 million. The reports of our independent registered public accounting firms on our consolidated financial statements for the years ended December 31, 2016 and 2015 contained an explanatory paragraph regarding our ability to continue as a going concern based upon our net losses and accumulated deficits. These condensed consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to meet its obligations and continue its operations for the next fiscal year. The continuation of the Company as a going concern is dependent upon financial support from the Company’s current shareholders, the ability of the Company to obtain additional 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. As there can be no assurance that the Company will be able to achieve positive cash flows (become profitable) and raise sufficient capital to maintain operations there is substantial doubt about the Company’s ability to continue as a going concern.. These condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern. |
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 will 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 as of June 30, 2017 consist of cards inventory and kiosks that have not been placed into service and inventory as of December 31,2016 consist solely of cards inventory. The Company, in 2017, acquired approximately $707,000 of additional kiosks and components. |
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. |
Other Assets | Other Assets The increase in other assets is principally due to its continuing investments in its technology platform prior to the respective assets being placed into service. |
Revenue Recognition | Revenue Recognition Revenue is recognized when persuasive evidence of arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable. Revenue is recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities. Revenue from the sale of unique secure credential products and solutions to customers is recorded at the completion of the project unless the solution benefits to the end user in which additional resources or services are required to be provided. Revenue from club-based services arrangements that allow for the use of hosted software product that are provided on a consumption basis (for example, the number of transactions processed over a period of time) is recognized commensurate with the customer utilization of such resources. Generally, the contract calls for a minimum number of transactions to be charged by the Company monthly. Accordingly, the Company records the minimum transactional fee based on the passage of a month’s time as revenues. Amounts in excess of the monthly minimum, are charged to customers based on the actual number of transactions. Consulting services revenue is recognized as services are rendered, generally based on the negotiated hourly rate in the consulting arrangement and the number of hours worked during the period. Consulting revenue for fixed price services arrangements is recognized as services are provided. Revenue related to direct financing leases is recognized over the term of the lease using the effective interest method. |
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 certain 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 six months ended June 30, 2017 and 2016, there is no provision for income tax as the Company had a tax loss for United States and foreign activities and all of the Company’s carryforwards are reserved for. The Company’s gain or loss on derivative liability during the six months ending June 30, 2017 and 2016 is not subject to tax. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-04 – Simplifying the Test for Goodwill Impairment In July 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815) |
BASIS OF PRESENTATION (Tables)
BASIS OF PRESENTATION (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
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 six months ended June 30, 2016: Net Income Shares Per Share Amount Basic EPS Income (loss) available to stockholders $ 6,859,819 207,538,833 $ 0.03 Effect of Dilutive Securities Stock Options — 10,714,189 Warrants — 25,634,957 Convertible Debt (17,712,426 ) 31,465,287 Dilute EPS Income available to stockholders plus assumed conversions $ (10,852,597 ) 275,353,266 $ (0.04 ) |
INTANGIBLE ASSETS, NET (OTHER22
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | The following is a summary of activity related to intangible assets for the six months ended June 30, 2017: Customer Relationships Intellectual Property Non-Compete Patents Pending Useful Lives 10 Years 10 Years 10 Years n/a Total Carrying Value at December 31, 2016 $ 1,446,166 $ 2,000,858 $ 8,067 $ 19,200 $ 3,474,291 Additions — — — 18,132 18,132 Amortization (67,953 ) (141,251 ) (1,410 ) — (210,614 ) Carrying Value at June 30, 2017 $ 1,378,213 $ 1,859,607 $ 6,657 $ 37,332 $ 3,281,809 The following is a summary of intangible assets as of June 30, 2017: Customer Relationships Intellectual Property Non-Compete Patent Pending Total Cost $ 1,587,159 $ 2,444,646 $ 14,087 $ 37,332 $ 4,083,224 Accumulated amortization (208,946 ) (585,039 ) (7,430 ) — (801,415 ) Carrying Value at June 30, 2017 $ 1,378,213 $ 1,859,607 $ 6,657 $ 37,332 $ 3,281,809 |
Schedule of future amortization expense of intangible assets | Future expected amortization of intangible assets is as follows for the six-month period remaining in 2017 and the calender years ending from 2018-2022 and thereafter: 2017 222,017 2018 423,203 2019 423,203 2020 423,203 2021 423,203 2022 423,203 Thereafter 943,777 $ 3,281,809 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consisted of the following as of June 30, 2017 and December 31, 2016: 2017 2016 Computers and equipment $ 197,491 $ 192,928 Equipment under capital lease (see note 12) 163,407 — Furniture and fixtures 109,200 109,200 470,098 $ 302,128 Less Accumulated depreciation 218,735 186,446 Property and equipment, net $ 251,363 $ 115,682 |
ACCOUNTS PAYABLE AND ACCRUED 24
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Payables and Accruals [Abstract] | |
Schedule of accounts payable and accrued expenses | Accounts payable and accrued expenses consisted of the following as of June 30, 2017 and December 31, 2016: 2017 2016 Trade payables $ 428,858 $ 341,002 Accrued interest 125,000 600,624 Accrued payroll and related 710,848 421,771 Other accrued expenses 338,218 324,503 Total $ 1,602,924 $ 1,687,900 |
NOTES PAYABLE, NET (Tables)
NOTES PAYABLE, NET (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable | The following is a summary of notes payable as of June 30, 2017 and December 31, 2016: 2017 2016 In connection with the acquisition of MultiPay in 2015, the Company assumed three promissory notes. At June 30, 2017, the remaining outstanding note carried an outstanding balance of $15,220. Payments of $6,300 including principal and interest are due monthly. The interest rate is 15.47% per annum. Total outstanding principal and interest is due on September 16, 2017. $ 15,220 $ 46,210 The below section of notes payable were all converted to common stock at $0.10 per share. in connection with the January 2017, conversion agreements described above. In September 2015, the Company issued 12% notes totaling $973,000. The notes were secured by the assets of the Company, matured in September 2016, and accrued interest was 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 were presented as a discount against the notes and amortized into interest expense over the terms of the notes. — 963,000 In October 2015, the Company issued 12% notes in the amount of $225,000. The notes were secured by the assets of the Company, matured in October 2016, and accrued interest was 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 were presented as a discount against the note and amortized into interest expense over the terms of the notes. — 225,000 In November 2015, the Company issued a 12% note in the amount of $25,000. The note was secured by the assets of the Company, matured in October 2016, and accrued interest was 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 was presented as a discount against the note and amortized into interest expense over the term of the note — 25,000 In December 2015, the Company issued 12% notes totaling $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 In January 2016, the Company issued 12% notes in the amount of $100,000. The note was secured by the assets of the Company, matured in January 2017, and accrued interest was 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 In December 2016, the Company issued promissory notes with an aggregate face value of $1,275,000 which were payable one year from the date of issuance and accrued 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 holders also received 1,912,500 shares of common stock, with a fair value of $191,250. The Company allocated the proceeds to the notes and common stock based on their relative fair values, resulting in a discount against the notes for the common stock of $166,304, which was amortized into expense through the date of conversion. In connection with the issuance of the notes and common stock, the Company also incurred debt issuance costs of $212,427, of which $184,719 was recorded as debt issuance costs against the notes to be amortized over the one-year terms of the notes. — 1,275,000 In November 2016,, the Company issued a 12% promissory note due in January 2017 to an officer and principal stockholder in the amount of $13,609. In connection with the issuance of this note, the company also issued warrants for the purchase of 1,146,667 shares of the Company’s common stock at an exercise price of $0.15 per share. This loan was repaid in April 2017. The note holder also received 20,414, shares of the Company’s common stock with a fair value of $2,041. — 13,609 In January 2017, the Company issued a Senior Unsecured Note with a face value of $3,000,000, payable two years form issuance, along with an aggregate of 4,500,000 shares of Common Stock, with a fair value of $1,147,500. The Company allocated the proceeds to the common stock based on their relative fair value and recorded a discount of $391,304 to be amortized into interest expense over the two-year term of the note. The Company also paid debt issuance costs consisting of a cash fee of $120,000 and 1,020,000 shares of common stock of the Company with a fair value of $306,000, of which $208,696 was recorded as debt issuance costs to be amortized into interest expense over the two-year term of the note. 3,000,000 — Total Principal Outstanding $ 3,015,220 $ 3,497,819 Unamortized Deferred Debt Discounts (666,375 ) (159,375 ) Unamortized Deferred Debt Issuance Costs (246,042 ) (177,022 ) Notes Payable, Net $ 2,102,803 $ 3,161,422 |
Schedule of notes payable and related discounts | The following is a roll-forward of the Company’s notes payable and related discounts for the six Months ended June 30, 2017: Principal Balance Debt Issuance Costs Debt Discounts Total Balance at December 31, 2016 $ 3,497,819 $ (177,022 ) $ (159,375 ) $ 3,161,422 New issuances 3,000,000 (310,790 ) (841,727 ) 1,847,483 Payments (44,599 ) — — (44,599 ) Conversions (3,438,000 ) — — (3,438,000 ) Amortization — 241,770 334,727 576,497 Balance at June 30, 2017 $ 3,015,220 $ (246,042 ) $ (666,375 ) $ 2,102,803 |
Schedule of future maturities of notes payable | Future maturities of notes payable are as follows for the six-month period remaining in 2017 and the calender years ending from 2018-2019: 2017 $ 15,220 2018 — 2019 3,000,000 Net investment in lease $ 3,015,220 |
CONVERTIBLE NOTES PAYABLE, NET
CONVERTIBLE NOTES PAYABLE, NET (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of convertible notes payable outstanding | Convertible notes consisted of the following as of June 30, 2017 and December 31, 2016: 2017 2016 The below section of convertible notes payable were all converted to common stock at $0.10 per share in connection with the January 2017, conversion agreements described above. — $ 680,000 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 7. 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 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. In connection with the issuance of this note, the Company issued warrants for the purchase of 1,146,667 shares of the Company’s common stock at an exercise price of $0.15 per share for a period of five years. — 172,095 In April 2016, the Company issued 12% convertible notes in the amount of $1,550,000. The note is secured by the assets of the Company, matures in October 2016, and is 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 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 Company also issued 1,033,337 shares of common stock to the noteholders. 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 Investors to reduce the exercise price on the embedded conversion feature and warrants to $0.10 and 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 debt extinguishment in accordance with ASC 470. The reported amounts under the debt extinguishment are not significantly different than that of the Company’s reported amounts. — 1,550,000 Total Principal Outstanding $ — $ 2,568,095 Unamortized Discounts – Derivatives — (6,466 ) Unamortized Discounts – Debt issuance costs — (66,033 ) Convertible Notes, Net $ — $ 2,495,596 |
Schedule of convertible notes and related discounts | The following is a roll-forward of the Company’s convertible notes and related discounts for the six months ended June 30, 2017: Principal Balance Debt Issuance Costs Debt Discounts Total Balance at December 31, 2016 $ 2,568,095 $ (66,033 ) $ (6,466 ) $ 2,495,596 Conversions (2,568,095 ) — — (2,568,095 ) Amortization — 66,033 6,466 72,499 Balance at June 30, 2017 $ — $ — $ — $ — |
DERIVATIVE LIABLITY (Tables)
DERIVATIVE LIABLITY (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of derivative activity | A summary of derivative activity for the six months ended June 30, 2017 is as follows: Balance at December 31, 2016 $ 18,056,631 Modification of derivatives 319,770 Cancellation of warrants previously accounted for as derivative liabilities and elimination of derivative conversion features resulting from conversion of related party debt to equity (11,213,573 ) Reclassification of derivatives to equity upon removal of price protection in warrants (7,614,974 ) Change in fair value 452,146 Balance at June 30, 2017 $ — |
STOCKHOLDER'S EQUITY (Tables)
STOCKHOLDER'S EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Schedule of warrant activity | The following is a summary of the Company’s warrant activity for the six months ended June 30, 2017: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Life Outstanding at December 31, 2016 51,138,697 $ 0.11 3.8 Years Cancelled (3,600,000 ) $ 0.08 3.9 Years Outstanding at June 30, 2017 47,538,697 $ 0.08 3.2 Years |
Schedule of black - scholes option-pricing model valuation assumption | The Company determined the grant date fair value of the options granted during the Six Months ended June 30, 2017 using the Black Scholes Method and the following assumptions: Expected Volatility – 85% Expected Term – 5.0 Years Risk Free Rate – 1.92% Dividend Rate – 0.00% |
Schedule of outstanding stock options | Activity related to stock options for the Six Months ended June 30, 2017 is summarized as follows: Number of Shares Weighted Average Exercise Price Weighted Average Contractual Term (Yrs.) Aggregate Intrinsic Value Outstanding as of December 31, 2016 86,925,000 $ 0.21 9.5 $ 10,023,400 Granted 20,000,000 $ 0.10 9.8 $ — Forfeitures (875,000 ) $ 0.10 8.8 $ — Outstanding as of June 30, 2017 106,050,000 $ 0.19 9.1 $ 9,215,000 Exercisable as of June 30, 2017 76,183,334 $ 0.16 8.7 $ 5,322,000 |
Schedule of stock option | The following table summarizes stock option information as of June 30, 2017: Exercise Prices Outstanding Weighted Average Contractual Life Exercisable $ 0.0001 3,500,000 8.25 Years 3,500,000 $ 0.05 36,500,000 9.11 Yeas 22,625,000 $ 0.10 27,250,000 9.30 Years 14,083,335 $ 0.15 6,300,000 8.10 Years 4,049,999 $ 0.25 500,000 8.75 Years 300,000 $ 0.40 1,000,000 8.67 Years 1,000,000 $ 0.45 31,000,000 8.25Years 30,625,000 Total 106,050,000 9.04 Years 76,183,334 |
DIRECT FINANCING LEASE (Tables)
DIRECT FINANCING LEASE (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Direct Financing Lease | |
Schedule of future minimum lease payments to be received | Future minimum lease payments to be received under the lease for the next five years and thereafter are as follows for the six-month period remaining in 2017 and the calender years ending from 2018-2022 and thereafter: 2017 $ 61,073 2018 122,145 2019 122,145 2020 122,145 2021 122,145 2022 122,145 Thereafter 529,322 Sub-total 1,078,975 Less deferred revenue (383,064 ) Net investment in lease $ 695,911 |
LEASE OBLIGATION PAYABLE (Table
LEASE OBLIGATION PAYABLE (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Lease Obligation Payable | |
Schedule of lease obligation payable | Future cash payment related to this capital lease are as follow for the six-month period remaining in 2017 and the calender years ending from 2018-2022 and thereafter. 2017 $ 21,547 2018 43,096 2019 43,096 2020 43,096 2021 43,096 2022 10,777 Total minimum lease payments 204,708 Less: Amount representing interest 49,248 Present value of minimum lease payments $ 155,460 |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) | 6 Months Ended |
Jun. 30, 2016USD ($)$ / sharesshares | |
Basic EPS | |
Income (loss) available to stockholders, Income | $ | $ 6,859,819 |
Income (loss) available to stockholders, Shares | shares | 207,538,833 |
Income (loss) available to stockholders, Per-Share Amount | $ / shares | $ 0.03 |
Dilute EPS | |
Income available to stockholders plus assumed conversions, Income | $ | $ (10,852,597) |
Income available to stockholders plus assumed conversions, Shares | shares | 275,353,266 |
Income available to stockholders plus assumed conversions, Per-Share Amount | $ / shares | $ (0.04) |
Stock Options [Member] | |
Effect of Dilutive Securities | |
Antidilutive securities, Income | $ | |
Antidilutive securities, Shares | shares | 10,714,189 |
Warrant [Member] | |
Effect of Dilutive Securities | |
Antidilutive securities, Income | $ | |
Antidilutive securities, Shares | shares | 25,634,957 |
Convertible Debt [Member] | |
Effect of Dilutive Securities | |
Antidilutive securities, Income | $ | $ (17,712,426) |
Antidilutive securities, Shares | shares | 31,465,287 |
BASIS OF PRESENTATION (Details
BASIS OF PRESENTATION (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Accumulated deficit | $ (61,397,665) | $ (61,397,665) | $ (48,925,993) | ||
Revenue | 559,452 | $ 489,995 | 1,144,141 | $ 810,741 | |
Loss from operations | $ (2,511,410) | $ (4,222,255) | $ (7,469,838) | $ (8,544,656) |
INTANGIBLE ASSETS, NET (OTHER33
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Details) | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |
Carrying Value at beginning | $ 3,474,291 |
Additions | 18,132 |
Amortization | (210,614) |
Carrying Value at end | $ 3,281,809 |
Customer Relationships [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Useful Lives | 10 years |
Carrying Value at beginning | $ 1,446,166 |
Additions | |
Amortization | (67,953) |
Carrying Value at end | $ 1,378,213 |
Intellectual Property [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Useful Lives | 10 years |
Carrying Value at beginning | $ 2,000,858 |
Additions | |
Amortization | (141,251) |
Carrying Value at end | $ 1,859,607 |
Non-Compete [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Useful Lives | 10 years |
Carrying Value at beginning | $ 8,067 |
Additions | |
Amortization | (1,410) |
Carrying Value at end | 6,657 |
Patents Pending [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Carrying Value at beginning | 19,200 |
Additions | 18,132 |
Amortization | |
Carrying Value at end | $ 37,332 |
INTANGIBLE ASSETS, NET (OTHER34
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Details 1) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 4,083,224 | |
Accumulated amortization | (801,415) | |
Carrying Value | 3,281,809 | $ 3,474,291 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 1,587,159 | |
Accumulated amortization | (208,946) | |
Carrying Value | 1,378,213 | 1,446,166 |
Intellectual Property [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 2,444,646 | |
Accumulated amortization | (585,039) | |
Carrying Value | 1,859,607 | 2,000,858 |
Non-Compete [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 14,087 | |
Accumulated amortization | (7,430) | |
Carrying Value | 6,657 | 8,067 |
Patents Pending [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 37,332 | |
Accumulated amortization | ||
Carrying Value | $ 37,332 | $ 19,200 |
INTANGIBLE ASSETS, NET (OTHER35
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Details 2) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2,017 | $ 222,017 | |
2,018 | 423,203 | |
2,019 | 423,203 | |
2,020 | 423,203 | |
2,021 | 423,203 | |
2,022 | 423,203 | |
Thereafter | 943,777 | |
Carrying Value | $ 3,281,809 | $ 3,474,291 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 470,098 | $ 302,128 |
Less Accumulated depreciation | 218,735 | 186,446 |
Property and equipment, net | 251,363 | 115,682 |
Computer and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 197,491 | 192,928 |
Equipment Under Capital Lease [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 163,407 | |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 109,200 | $ 109,200 |
PROPERTY AND EQUIPMENT, NET (37
PROPERTY AND EQUIPMENT, NET (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 35,920 | $ 24,029 |
Acquisition of equipment pursuant to a capital lease | $ 163,407 |
ACCOUNTS PAYABLE AND ACCRUED 38
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Payables and Accruals [Abstract] | ||
Trade payables | $ 428,858 | $ 341,002 |
Accrued interest | 125,000 | 600,624 |
Accrued payroll and related | 710,848 | 421,771 |
Other accrued expenses | 338,218 | 324,503 |
Total | $ 1,602,924 | $ 1,687,900 |
NOTES PAYABLE, NET (Details)
NOTES PAYABLE, NET (Details) - USD ($) | Jun. 30, 2017 | Jan. 31, 2017 | Dec. 31, 2016 |
Short-term Debt [Line Items] | |||
Total Principal Outstanding | $ 3,015,220 | $ 3,497,819 | |
Unamortized Deferred Debt Discounts | (666,375) | (159,375) | |
Unamortized Deferred Debt Issuance Costs | (246,042) | (177,022) | |
Notes Payable, Net | 2,102,803 | 3,161,422 | |
15.47% Promissory Note [Member] | |||
Short-term Debt [Line Items] | |||
Total Principal Outstanding | 15,220 | 46,210 | |
12% Note Due September 2016 [Member] | |||
Short-term Debt [Line Items] | |||
Total Principal Outstanding | 963,000 | ||
12% Note Due October 2016 [Member] | |||
Short-term Debt [Line Items] | |||
Total Principal Outstanding | 225,000 | ||
12% Note Due October 2016 [Member] | |||
Short-term Debt [Line Items] | |||
Total Principal Outstanding | 25,000 | ||
12% Note Due December 2016 [Member] | |||
Short-term Debt [Line Items] | |||
Total Principal Outstanding | 850,000 | ||
12% Note Due January 2017 [Member] | |||
Short-term Debt [Line Items] | |||
Total Principal Outstanding | 100,000 | ||
10% Promissory Notes [Member] | |||
Short-term Debt [Line Items] | |||
Total Principal Outstanding | 1,275,000 | ||
Unamortized Deferred Debt Discounts | (166,304) | ||
12% Note Due January 2017 [Member] | |||
Short-term Debt [Line Items] | |||
Total Principal Outstanding | 13,609 | ||
Senior Unsecured Note [Member] | |||
Short-term Debt [Line Items] | |||
Total Principal Outstanding | $ 3,000,000 | ||
Unamortized Deferred Debt Discounts | $ (391,304) |
NOTES PAYABLE, NET (Details 1)
NOTES PAYABLE, NET (Details 1) | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Principal Balance | |
Balance at beginning | $ 3,497,819 |
New issuances | 3,000,000 |
Payments | (44,599) |
Conversions | (3,438,000) |
Amortization | |
Balance at end | 3,015,220 |
Debt Issuance Costs | |
Balance at beginning | (177,022) |
New issuances | (310,790) |
Payments | |
Conversions | |
Amortization | 241,770 |
Balance at end | (246,042) |
Debt Discounts | |
Balance at beginning | (159,375) |
New issuances | (841,727) |
Payments | |
Conversions | |
Amortization | 334,727 |
Balance at end | (666,375) |
Total | |
Balance at beginning | 3,161,422 |
New issuances | 1,847,483 |
Payments | (44,599) |
Conversions | (3,438,000) |
Amortization | 576,497 |
Balance at end | $ 2,102,803 |
NOTES PAYABLE, NET (Details 2)
NOTES PAYABLE, NET (Details 2) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||
2,017 | $ 15,220 | |
2,018 | ||
2,019 | 3,000,000 | |
Net investment in lease | $ 3,015,220 | $ 3,497,819 |
NOTES PAYABLE, NET (Details Nar
NOTES PAYABLE, NET (Details Narrative) | Feb. 22, 2017USD ($)shares | Nov. 30, 2016USD ($)$ / sharesshares | Jan. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)shares | Jan. 31, 2016$ / sharesshares | Dec. 31, 2015$ / sharesshares | Nov. 30, 2015USD ($)$ / sharesshares | Oct. 31, 2015USD ($)$ / sharesshares | Sep. 30, 2015USD ($)$ / sharesshares | Jun. 30, 2017USD ($)Note$ / shares | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)Note$ / sharesshares | Jun. 30, 2016USD ($) |
Short-term Debt [Line Items] | |||||||||||||
Total Principal Outstanding | $ 3,497,819 | $ 3,015,220 | $ 3,015,220 | ||||||||||
Debt discount | 159,375 | 666,375 | 666,375 | ||||||||||
Gain on extinguishment of notes payable | 2,802,234 | ||||||||||||
Loss on modification of derivatives | (319,770) | ||||||||||||
Loss on modification of warrant | (158,327) | ||||||||||||
Loss on modification of debt | (5,978,643) | ||||||||||||
Common stock issues value | $ 3,570,000 | ||||||||||||
15.47% Promissory Note [Member] | |||||||||||||
Short-term Debt [Line Items] | |||||||||||||
Number of notes issued | Note | 3 | 3 | |||||||||||
Total Principal Outstanding | 46,210 | $ 15,220 | $ 15,220 | ||||||||||
Amount of principal and interest payment | $ 6,300 | ||||||||||||
Interest rate | 15.47% | 15.47% | |||||||||||
12% Note Due September 2016 [Member] | |||||||||||||
Short-term Debt [Line Items] | |||||||||||||
Face amount | $ 973,000 | ||||||||||||
Total Principal Outstanding | 963,000 | ||||||||||||
Interest rate | 12.00% | ||||||||||||
Description of collateral | The notes were secured by the assets of the Company. | ||||||||||||
Conversion price (in dollars per share) | $ / shares | $ 0.10 | ||||||||||||
Debt issuance costs | $ 77,480 | ||||||||||||
12% Note Due October 2016 [Member] | |||||||||||||
Short-term Debt [Line Items] | |||||||||||||
Total Principal Outstanding | 225,000 | ||||||||||||
Interest rate | 12.00% | ||||||||||||
Description of collateral | The notes were secured by the assets of the Company. | ||||||||||||
Conversion price (in dollars per share) | $ / shares | $ 0.10 | ||||||||||||
Debt issuance costs | $ 36,400 | ||||||||||||
12% Note Due October 2016 [Member] | |||||||||||||
Short-term Debt [Line Items] | |||||||||||||
Face amount | $ 25,000 | ||||||||||||
Total Principal Outstanding | 25,000 | ||||||||||||
Interest rate | 12.00% | ||||||||||||
Description of collateral | The notes were secured by the assets of the Company. | ||||||||||||
Conversion price (in dollars per share) | $ / shares | $ 0.10 | ||||||||||||
Debt issuance costs | $ 94,400 | ||||||||||||
12% Note Due December 2016 [Member] | |||||||||||||
Short-term Debt [Line Items] | |||||||||||||
Total Principal Outstanding | 850,000 | ||||||||||||
Interest rate | 12.00% | ||||||||||||
Description of collateral | The notes were secured by the assets of the Company. | ||||||||||||
Conversion price (in dollars per share) | $ / shares | $ 0.48 | ||||||||||||
12% Note Due January 2017 [Member] | |||||||||||||
Short-term Debt [Line Items] | |||||||||||||
Total Principal Outstanding | 100,000 | ||||||||||||
Interest rate | 12.00% | ||||||||||||
Description of collateral | The notes were secured by the assets of the Company. | ||||||||||||
Conversion price (in dollars per share) | $ / shares | $ 0.48 | ||||||||||||
10% Promissory Notes [Member] | |||||||||||||
Short-term Debt [Line Items] | |||||||||||||
Total Principal Outstanding | 1,275,000 | ||||||||||||
Debt discount | 166,304 | ||||||||||||
Debt issuance costs | 212,427 | ||||||||||||
Amortized debt issuance costs | $ 184,719 | ||||||||||||
Description interest rate | Payable one year from the date of issuance and accrued 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. | ||||||||||||
Interest rate | 10.00% | ||||||||||||
Warrant term | 1 year | ||||||||||||
Common stock issues value | $ 191,250 | ||||||||||||
Common stock issues shares | shares | 1,912,500 | ||||||||||||
12% Promissory Notes Due in January 2017 [Member] | |||||||||||||
Short-term Debt [Line Items] | |||||||||||||
Face amount | $ 13,609 | ||||||||||||
Total Principal Outstanding | $ 13,609 | ||||||||||||
Interest rate | 12.00% | ||||||||||||
Number of common shares purchased | shares | 20,414 | ||||||||||||
Common stock issues value | $ 2,041 | ||||||||||||
Senior Unsecured Note [Member] | |||||||||||||
Short-term Debt [Line Items] | |||||||||||||
Face amount | $ 3,000,000 | ||||||||||||
Total Principal Outstanding | $ 3,000,000 | $ 3,000,000 | |||||||||||
Debt discount | 391,304 | ||||||||||||
Debt issuance costs | 306,000 | ||||||||||||
Debt issuance costs consisting shares value | $ 120,000 | ||||||||||||
Debt issuance costs consisting shares | shares | 1,020,000 | ||||||||||||
Amortized debt issuance costs | $ 208,696 | ||||||||||||
Warrant term | 2 years | ||||||||||||
Common stock issues value | $ 1,147,500 | ||||||||||||
Common stock issues shares | shares | 4,500,000 | ||||||||||||
Warrant [Member] | |||||||||||||
Short-term Debt [Line Items] | |||||||||||||
Exercise price (in dollars per share) | $ / shares | $ 0.10 | $ 0.10 | |||||||||||
Number of cancellation shares | shares | 3,600,000 | ||||||||||||
Warrant [Member] | 12% Note Due September 2016 [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 | ||||||||||||
Warrant [Member] | 12% Note Due October 2016 [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 | ||||||||||||
Warrant [Member] | 12% Note Due October 2016 [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 | ||||||||||||
Warrant [Member] | 12% Note Due December 2016 [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 | ||||||||||||
Warrant [Member] | 12% Note Due January 2017 [Member] | |||||||||||||
Short-term Debt [Line Items] | |||||||||||||
Number of common shares purchased | shares | 208,332 | ||||||||||||
Exercise price (in dollars per share) | $ / shares | $ 0.48 | ||||||||||||
Warrant term | 5 years | ||||||||||||
Warrant [Member] | 12% Promissory Notes Due in January 2017 [Member] | |||||||||||||
Short-term Debt [Line Items] | |||||||||||||
Number of common shares purchased | shares | 1,146,667 | ||||||||||||
Exercise price (in dollars per share) | $ / shares | $ 0.15 | ||||||||||||
Conversion Agreements [Member] | |||||||||||||
Short-term Debt [Line Items] | |||||||||||||
Face amount | $ 300,000 | ||||||||||||
Debt accrued interest | $ 31,000 | ||||||||||||
Number of cancellation shares | shares | 2,500,000 | ||||||||||||
Value of cancellation shares | $ 300,000 | ||||||||||||
Gain on settlement of debt | $ 2,800,000 | ||||||||||||
Loss on modification of derivatives | $ 300,000 | ||||||||||||
Loss on modification of warrant | 200,000 | ||||||||||||
Loss on modification of debt | $ 6,000,000 | ||||||||||||
Conversion Agreements [Member] | Several Accredited Investors (the "Investors") [Member] | |||||||||||||
Short-term Debt [Line Items] | |||||||||||||
Conversion price (in dollars per share) | $ / shares | $ 0.10 | ||||||||||||
Exercise price (in dollars per share) | $ / shares | $ 0.10 | ||||||||||||
Value of shares issued on conversion | $ 6,331,000 | ||||||||||||
Number of shares issued on conversion | shares | 84,822,006 | ||||||||||||
Fair value of notes payable | $ 21,610,000 | ||||||||||||
Conversion Agreements [Member] | Warrant [Member] | |||||||||||||
Short-term Debt [Line Items] | |||||||||||||
Number of cancellation shares | shares | 3,600,000 |
CONVERTIBLE NOTES PAYABLE, NE43
CONVERTIBLE NOTES PAYABLE, NET (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Short-term Debt [Line Items] | ||
Total Principal Outstanding | $ 2,568,095 | |
Unamortized Discounts - Derivatives | (6,466) | |
Unamortized Discounts - Debt issuance costs | (66,033) | |
Convertible Notes, Net | 2,495,596 | |
10% Convertible Notes Due June 2016 [Member] | ||
Short-term Debt [Line Items] | ||
Total Principal Outstanding | 680,000 | |
10% Convertible Notes Due July 2016 [Member] | ||
Short-term Debt [Line Items] | ||
Total Principal Outstanding | 166,000 | |
12% Convertible Notes Due September 2016 [Member] | ||
Short-term Debt [Line Items] | ||
Total Principal Outstanding | 172,095 | |
12% Convertible Notes Due October 2016 [Member] | ||
Short-term Debt [Line Items] | ||
Total Principal Outstanding | $ 1,550,000 |
CONVERTIBLE NOTES PAYABLE, NE44
CONVERTIBLE NOTES PAYABLE, NET (Details 1) | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Principal Balance | |
Balance at beginning | $ 2,568,095 |
Conversions | (2,568,095) |
Amortization | |
Balance at end | |
Debt Issuance Costs | |
Balance at beginning | (66,033) |
Conversions | |
Amortization | 66,033 |
Balance at end | |
Debt Discounts | |
Balance at beginning | (6,466) |
Conversions | |
Amortization | 6,466 |
Balance at end | |
Total | |
Balance at beginning | 2,495,596 |
Conversions | (2,568,095) |
Amortization | 72,499 |
Balance at end |
CONVERTIBLE NOTES PAYABLE, NE45
CONVERTIBLE NOTES PAYABLE, NET (Details Narrative) - USD ($) | Feb. 22, 2017 | Jan. 31, 2017 | Apr. 30, 2016 | Feb. 29, 2016 | Jul. 31, 2015 | Jun. 30, 2015 | Jun. 30, 2017 | Aug. 10, 2016 |
Conversion Agreements [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Principal amount | $ 300,000 | |||||||
Debt accrued interest | $ 31,000 | |||||||
Conversion Agreements [Member] | Several Accredited Investors (the "Investors") [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Conversion price (in dollars per share) | $ 0.10 | |||||||
Exercise price (in dollars per share) | $ 0.10 | |||||||
Number of shares issued on conversion | 84,822,006 | |||||||
Warrant [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Exercise price (in dollars per share) | $ 0.10 | |||||||
Common Stock [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Number of shares issued | 20,000,000 | |||||||
10% Convertible Notes Due June 2016 [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Principal 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 | |||||||
10% Convertible Notes Due June 2016 [Member] | Warrant [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Number of common shares purchased | 15,400,000 | |||||||
Exercise price (in dollars per share) | $ 0.05 | |||||||
Warrant term | 5 years | |||||||
10% Convertible Notes Due July 2016 [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Principal 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] | ||||||||
Principal 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 September 2016 [Member] | Warrant [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Number of common shares purchased | 1,146,667 | |||||||
Exercise price (in dollars per share) | $ 0.15 | |||||||
Warrant term | 5 years | |||||||
12% Convertible Notes Due October 2016 [Member] | ||||||||
Short-term Debt [Line Items] | ||||||||
Principal 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 | $ 226,400 | |||||||
12% Convertible Notes Due October 2016 [Member] | Letter Agreement [Member] | Several Accredited Investors (the "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 "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 |
DERIVATIVE LIABILITY (Details)
DERIVATIVE LIABILITY (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Balance at beginning | $ 8,388,355 | |||
Modification of derivatives | 319,770 | |||
Cancellation of warrants previously accounted for as derivative liabilities and elimination of derivative conversion features resulting from conversion of related party debt to equity | (11,213,573) | |||
Reclassification of derivatives to equity upon removal of price protection in warrants | (7,614,974) | |||
Change in fair value | $ 4,735,589 | (452,146) | $ 17,677,252 | |
Balance at ending |
DERIVATIVE LIABILITY (Details N
DERIVATIVE LIABILITY (Details Narrative) - USD ($) | Feb. 22, 2017 | Jun. 30, 2017 | Jan. 31, 2017 |
Warrant [Member] | |||
Number of cancellation shares | 3,600,000 | ||
Conversion Agreements [Member] | |||
Debt accrued interest | $ 31,000 | ||
Number of cancellation shares | 2,500,000 | ||
Number of cancellation shares, value | $ 300,000 | ||
Face amount | $ 300,000 | ||
Conversion Agreements [Member] | Warrant [Member] | |||
Number of cancellation shares | 3,600,000 | ||
Conversion Agreements [Member] | Several Accredited Investor [Member] | |||
Share price | $ 0.10 | ||
Conversion Agreements [Member] | Several Accredited Investor [Member] | Minimum [Member] | |||
Conversion price | $ 0.10 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | Mar. 22, 2017 | Jan. 31, 2017 | Nov. 30, 2016 | Jun. 30, 2017 | Mar. 31, 2017 | Feb. 22, 2017 |
Common stock issued for cash | $ 3,570,000 | |||||
Common Stock [Member] | ||||||
Common stock issued for cash | $ 2,000 | |||||
Number of shares issued | 20,000,000 | |||||
Network 1 Financial Securities, Inc. [Member] | ||||||
Cash fee | $ 360,000 | |||||
Network 1 Financial Securities, Inc. [Member] | Common Stock [Member] | ||||||
Number of shares issued | 2,200,000 | |||||
Bridgeworks LLC [Member] | ||||||
Lease expenses | $ 27,000 | |||||
Conversion Agreements [Member] | ||||||
Face amount | $ 300,000 | |||||
Conversion Agreements [Member] | Herbert Selzer [Member] | ||||||
Total debt | $ 150,000 | |||||
Number of shares issued on conversion | 1,753,500 | |||||
Conversion Agreements [Member] | Vista Associates [Member] | ||||||
Total debt | $ 40,000 | |||||
Number of shares issued on conversion | 1,537,778 | |||||
Subscription Agreements [Member] | Herbert Selzer [Member] | ||||||
Additional number of shares issued | 500,000 | |||||
Subscription Agreements [Member] | Network 1 Financial Securities, Inc. [Member] | ||||||
Cash fee | $ 240,000 | |||||
Number of shares issued | 1,000,000 | |||||
Consulting Agreement [Member] | Graham Beck [Member] | ||||||
Digital marketing services per month | 2,500 | |||||
Expenses from transactions with related party | $ 7,500 | |||||
Description of related party transaction | The Company entered into a consulting agreement with Graham Beck, a son of Mr. Beck for digital marketing services beginning April 1, 2017 at a rate of $2,500 per month with an expected end date of September 2017. During the first six months of 2017, the expense associated with Graham Beck was $7,500. | |||||
12% Promissory Notes Due in January 2017 [Member] | ||||||
Face amount | $ 13,609 | |||||
Number of common shares purchased | 20,414 | |||||
Common stock issued for cash | $ 2,041 |
STOCKHOLDER'S EQUITY (DEFICIT)
STOCKHOLDER'S EQUITY (DEFICIT) (Details) - Warrant [Member] | 6 Months Ended |
Jun. 30, 2017$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |
Outstanding at beginning | shares | 51,138,697 |
Cancelled | shares | (3,600,000) |
Outstanding at ending | shares | 47,538,697 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Weighted Average Exercise Price [Roll Forward] | |
Outstanding at beginning | $ / shares | $ 0.11 |
Cancelled | $ / shares | 0.08 |
Outstanding at ending | $ / shares | $ 0.08 |
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 18 days |
Cancelled | 3 years 10 months 24 days |
Outstanding at end | 3 years 2 months 12 days |
STOCKHOLDER'S EQUITY (DEFICIT50
STOCKHOLDER'S EQUITY (DEFICIT) (Details 1) | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Expected Volatility | 85.00% |
Expected Term | 5 years |
Risk Free Rate | 1.92% |
Dividend Rate | 0.00% |
STOCKHOLDER'S EQUITY (DEFICIT51
STOCKHOLDER'S EQUITY (DEFICIT) (Details 2) | 6 Months Ended |
Jun. 30, 2017USD ($)$ / sharesshares | |
Number of Shares [Roll Forward] | |
Outstanding at beginning | shares | 86,925,000 |
Granted | shares | 20,000,000 |
Forfeitures | shares | (875,000) |
Outstanding at end | shares | 106,050,000 |
Exercisable at end | shares | 76,183,334 |
Weighted Average Exercise Price [Roll Forward] | |
Outstanding at beginning | $ / shares | $ 0.21 |
Granted | $ / shares | 0.10 |
Forfeitures | $ / shares | 0.10 |
Outstanding at end | $ / shares | 0.19 |
Exercisable at end | $ / shares | $ 0.16 |
Weighted Average Contractual Term [Roll Forward] | |
Outstanding at beginning | 9 years 6 months |
Granted | 9 years 9 months 18 days |
Forfeitures | 8 years 9 months 18 days |
Outstanding at end | 9 years 1 month 6 days |
Exercisable at end | 8 years 8 months 12 days |
Aggregate Intrinsic Value [Roll Forward] | |
Outstanding at beginning | $ | $ 10,023,400 |
Granted | $ | |
Forfeitures | $ | |
Outstanding at end | $ | 9,215,000 |
Exercisable at end | $ | $ 5,322,000 |
STOCKHOLDER'S EQUITY (DEFICIT52
STOCKHOLDER'S EQUITY (DEFICIT) (Details 3) | 6 Months Ended |
Jun. 30, 2017shares | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Outstanding | 106,050,000 |
Weighted Average Contractual Life | 9 years 14 days |
Exercisable | 76,183,334 |
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 | 8 years 3 months |
Exercisable | 3,500,000 |
Exercise Price $0.05 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Outstanding | 36,500,000 |
Weighted Average Contractual Life | 9 years 1 month 10 days |
Exercisable | 22,625,000 |
Exercise Price $0.10 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Outstanding | 27,250,000 |
Weighted Average Contractual Life | 9 years 3 months 18 days |
Exercisable | 14,083,335 |
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 | 8 years 1 month 6 days |
Exercisable | 4,049,999 |
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 | 8 years 9 months |
Exercisable | 300,000 |
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 | 8 years 8 months 1 day |
Exercisable | 1,000,000 |
Exercise Price $0.45 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Outstanding | 31,000,000 |
Weighted Average Contractual Life | 8 years 3 months |
Exercisable | 30,625,000 |
STOCKHOLDER'S EQUITY (DEFICIT53
STOCKHOLDER'S EQUITY (DEFICIT) (Details Narrative) - USD ($) | Mar. 22, 2017 | Feb. 22, 2017 | Jan. 31, 2017 | Aug. 10, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Sep. 30, 2017 | Dec. 31, 2016 |
Common stock issued for cash | $ 3,570,000 | |||||||||
Proceeds from issuance of shares | 3,570,100 | |||||||||
Number of shares issued for services, value | $ 62,805 | |||||||||
Number of options granted | 20,000,000 | |||||||||
Common stock par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||
Stock based compensation | $ 973,000 | $ 2,037,000 | $ 4,266,670 | $ 6,152,490 | ||||||
Unrecognized compensation costs | $ 4,804,000 | $ 4,804,000 | ||||||||
Common Stock [Member] | ||||||||||
Number of shares issued | 20,000,000 | |||||||||
Common stock issued for cash | $ 2,000 | |||||||||
Number of shares issued for services | 487,483 | |||||||||
Number of shares issued for services, value | $ 49 | |||||||||
Warrant [Member] | ||||||||||
Exercise price (in dollars per share) | $ 0.10 | $ 0.10 | ||||||||
Cancellation of common stock | 3,600,000 | |||||||||
Network 1 Financial Securities, Inc. [Member] | ||||||||||
Cash fee | $ 360,000 | |||||||||
Network 1 Financial Securities, Inc. [Member] | Common Stock [Member] | ||||||||||
Number of shares issued | 2,200,000 | |||||||||
Mr. Philip D. Beck [Member] | ||||||||||
Exercise price (in dollars per share) | 0.10 | $ 0.10 | ||||||||
Number of options granted | 15,000,000 | |||||||||
Expiration term | 10 years | |||||||||
Mr. Stuart P. Stoller [Member] | ||||||||||
Exercise price (in dollars per share) | $ 0.10 | $ 0.10 | ||||||||
Number of options granted | 5,000,000 | |||||||||
Expiration term | 10 years | |||||||||
Non - Employees [Member] | ||||||||||
Stock based compensation | $ 93,000 | $ 1,767,000 | ||||||||
Securities Purchase Agreement [Member] | Accredited Investor [Member] | 10% Senior Unsecured Note Due January 2019 [Member] | ||||||||||
Number of shares issued | 4,500,000 | |||||||||
Common stock issued for cash | $ 3,000,000 | |||||||||
Securities Purchase Agreement [Member] | Network 1 Financial Securities, Inc. [Member] | ||||||||||
Number of shares issued for services | 1,200,000 | |||||||||
Conversion Agreements [Member] | ||||||||||
Face amount | $ 300,000 | |||||||||
Cancellation of common stock | 2,500,000 | |||||||||
Conversion Agreements [Member] | Warrant [Member] | ||||||||||
Cancellation of common stock | 3,600,000 | |||||||||
Conversion Agreements [Member] | Several Accredited Investor [Member] | ||||||||||
Number of shares issued on conversion | 84,822,000 | |||||||||
Share price | $ 0.10 | |||||||||
Subscription Agreements [Member] | ||||||||||
Cancellation of common stock | 2,500,000 | |||||||||
Subscription Agreements [Member] | Network 1 Financial Securities, Inc. [Member] | ||||||||||
Number of shares issued | 1,000,000 | |||||||||
Cash fee | $ 240,000 | |||||||||
Subscription Agreements [Member] | Several Accredited Investors (the "March 2017 Accredited Investors") [Member] | ||||||||||
Number of shares issued | 20,000,000 | |||||||||
Common stock issued for cash | $ 4,000,000 | |||||||||
Proceeds from issuance of shares | $ 3,570,000 | |||||||||
Subscription Agreements [Member] | Several Accredited Investors (the "March 2017 Accredited Investors") [Member] | Subsequent Event [Member] | ||||||||||
Face amount | $ 430,000 | |||||||||
Amended Agreement [Member] | Parity Labs LLC [Member] | ||||||||||
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. | |||||||||
Number of shares vested | 10,000,000 | |||||||||
Restricted Stock Purchase Agreements [Member] | Mr. Philip D. Beck [Member] | ||||||||||
Number of options granted | 15,000,000 | |||||||||
Common stock par value (in dollars per share) | $ 0.0001 | $ 0.0001 | ||||||||
Restricted Stock Purchase Agreements [Member] | Mr. Stuart P. Stoller [Member] | ||||||||||
Number of options granted | 5,000,000 | |||||||||
Common stock par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
DIRECT FINANCING LEASE (Details
DIRECT FINANCING LEASE (Details) | Jun. 30, 2017USD ($) |
Direct Financing Lease | |
2,017 | $ 61,073 |
2,018 | 122,145 |
2,019 | 122,145 |
2,020 | 122,145 |
2,021 | 122,145 |
2,022 | 122,145 |
Thereafter | 529,322 |
Sub-total | 1,078,975 |
Less deferred revenue | (383,064) |
Net investment in lease | $ 695,911 |
DIRECT FINANCING LEASE (Detai55
DIRECT FINANCING LEASE (Details Narrative) | 1 Months Ended | 6 Months Ended |
Sep. 30, 2015USD ($)kiosks$ / Units | Jun. 30, 2017USD ($) | |
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 | |
Lease contract term | 10 years | |
Lease monthly rental | $ 11,900 | |
Lease rent expense | 142,272 | |
Estimated executory costs | $ 1,677 | |
Purchase price at the end of lease term (in dollars per unit) | $ / Units | 40 | |
Revenues | $ 38,000 |
LEASE OBLIGATION PAYABLE (Detai
LEASE OBLIGATION PAYABLE (Details) | Jun. 30, 2017USD ($) |
Lease Obligation Payable | |
2,017 | $ 21,547 |
2,018 | 43,096 |
2,019 | 43,096 |
2,020 | 43,096 |
2,021 | 43,096 |
2,022 | 10,777 |
Total minimum lease payments | 204,708 |
Less: Amount representing interest | 49,248 |
Present value of minimum lease payments | $ 155,460 |
LEASE OBLIGATION PAYABLE (Det57
LEASE OBLIGATION PAYABLE (Details Narrative) | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Lease Obligation Payable | |
Amortization of lease equipment | $ 2,679 |
Lease obligation interest rate | 12.00% |
Lease obligation maturity date | Mar. 31, 2022 |