Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | Apr. 30, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | Ipsidy Inc. | |
Entity Central Index Key | 1,534,154 | |
Document Type | 10-Q | |
Trading Symbol | IDTY | |
Document Period End Date | Mar. 31, 2018 | |
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 | 405,708,228 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,018 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash | $ 2,412,363 | $ 4,413,822 |
Accounts receivable, net | 676,628 | 165,929 |
Current portion of net investment in direct financing lease | 54,215 | 52,790 |
Inventory, net | 475,541 | 492,030 |
Other current assets | 560,721 | 218,537 |
Total current assets | 4,179,468 | 5,343,108 |
Property and Equipment, net | 202,926 | 209,719 |
Other Assets | 1,446,732 | 1,243,531 |
Intangible Assets, net | 2,794,600 | 2,878,080 |
Goodwill | 6,736,043 | 6,736,043 |
Net investment in direct financing lease, net of current portion | 604,663 | 618,763 |
Total assets | 15,964,432 | 17,029,244 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 1,816,982 | 1,447,185 |
Capital lease obligation, current portion | 28,251 | 27,420 |
Deferred revenue | 538,812 | 122,511 |
Total current liabilities | 2,384,045 | 1,597,116 |
Notes payable, net | 2,519,785 | 2,375,720 |
Capital lease obligation, net of current portion | 108,127 | 115,509 |
Total liabilities | 5,011,957 | 4,088,345 |
Stockholders' Equity: | ||
Common stock, $0.0001 par value, 1,000,000,000 shares authorized; 405,708,228 and 403,311,988 shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively | 40,571 | 40,331 |
Additional paid in capital | 79,791,311 | 79,053,339 |
Accumulated deficit | (69,160,547) | (66,407,622) |
Accumulated comprehensive income | 281,140 | 254,851 |
Total stockholders' equity (deficit) | 10,952,475 | 12,940,899 |
Total liabilities and stockholders' equity (deficit) | $ 15,964,432 | $ 17,029,244 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, issued | 405,708,228 | 403,311,988 |
Common stock, outstanding | 405,708,228 | 403,311,988 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenues: | ||
Products and services | $ 507,927 | $ 565,545 |
Lease income | 17,862 | 19,144 |
Total revenues, net | 525,789 | 584,689 |
Operating Expenses: | ||
Cost of Sales | 120,248 | 149,129 |
General and administrative | 2,798,699 | 5,251,212 |
Research and development | 5,361 | 29,070 |
Depreciation and amortization | 110,676 | 109,534 |
Total operating expenses | 3,034,984 | 5,538,945 |
Loss from operations | (2,509,195) | (4,954,256) |
Other Income (Expense): | ||
Loss on derivative liabilities | (452,146) | |
Gain on extinguishment of notes payable | 2,802,235 | |
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 | (239,169) | (604,015) |
Other expense, net | (239,169) | (4,710,666) |
Loss before income taxes | (2,748,364) | (9,664,922) |
Income tax expense | (4,561) | (4,170) |
Net loss | $ (2,752,925) | $ (9,669,092) |
Net Loss Per Share - Basic and Diluted (in dollars per shares) | $ (0.01) | $ (0.03) |
Weighted Average Shares Outstanding - Basic and Diluted (in shares) | 404,254,263 | 295,596,151 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (2,752,925) | $ (9,669,092) |
Foreign currency translation gains | 26,289 | 23,452 |
Comprehensive income loss | $ (2,726,636) | $ (9,645,640) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTCHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - 3 months ended Mar. 31, 2018 - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Income [Member] | Total |
Balance, beginning at Dec. 31, 2017 | $ 40,331 | $ 79,053,339 | $ (66,407,622) | $ 254,851 | $ 12,940,899 |
Balance, beginning (in shares) at Dec. 31, 2017 | 403,311,988 | 403,311,988 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Restricted stock issued for services | $ 72 | 89,928 | $ 90,000 | ||
Restricted stock issued for services (in shares) | 720,000 | ||||
Stock-based compensation | 648,212 | 648,212 | |||
Exercise of common stock warrants | $ 168 | (168) | |||
Exercise of common stock warrants (in shares) | 1,676,240 | ||||
Net loss | (2,752,925) | (2,752,925) | |||
Foreign currency translation | 26,289 | 26,289 | |||
Balance, ending at Mar. 31, 2018 | $ 40,571 | $ 79,791,311 | $ (69,160,547) | $ 281,140 | $ 10,952,475 |
Balance, ending (in shares) at Mar. 31, 2018 | 405,708,228 | 405,708,228 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (2,752,925) | $ (9,669,092) |
Adjustments to reconcile net loss with cash flows from operations: | ||
Depreciation and amortization expense | 110,676 | 109,534 |
Stock-based compensation | 738,212 | 3,294,160 |
Common stock issued for services | 42,376 | |
Amortization of debt discounts and issuance costs | 144,065 | 504,939 |
Loss on derivative liability | 452,146 | |
Gain on settlement of notes payable | (2,802,235) | |
Loss on modification of derivatives | 319,770 | |
Loss on modification of warrants | 158,327 | |
Loss on settlement of debt | 5,978,643 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (514,722) | 25,725 |
Net investment in direct financing lease | 12,675 | 11,394 |
Other current assets | (169,973) | (226,174) |
Inventory | (196,655) | 2,863 |
Accounts payable and accrued expenses | 381,730 | 736,535 |
Deferred revenue | 416,301 | (143,012) |
Net cash flows from operating activities | (1,830,616) | (1,204,101) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (10,474) | (4,563) |
Investment in other assets | (182,140) | (343,655) |
Net cash flows from investing activities | (192,614) | (348,218) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of notes payable and common stock | 3,000,000 | |
Proceeds from the sale of common stock | 2,880,710 | |
Payment of debt and equity issuance costs | (86,331) | |
Principal payments on notes payable | (14,173) | |
Principal payments on capital lease obligation | (7,382) | (1,957) |
Net cash flows from financing activities | (7,382) | 5,778,249 |
Effect of foreign currencies exchange on cash | 29,153 | 30,977 |
Net change in cash | (2,001,459) | 4,256,907 |
Cash, beginning of the period | 4,413,822 | 689,105 |
Cash, end of the period | 2,412,363 | 4,946,012 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for interest | 3,392 | 1,634 |
Cash paid for income taxes | 4,561 | 4,170 |
Non-cash Investing and Financing Activities: | ||
Issuance of common stock for conversion of debt and accrued interest | 21,609,673 | |
Issuance of warrants for inventory costs | 224,460 | |
Reclassification of derivative liabilities upon removal of price protection in warrants | 7,614,974 | |
Acquisition of equipment pursuant to a capital lease | $ 163,407 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | NOTE 1 – BASIS OF PRESENTATION In the opinion of Management, the accompanying unaudited condensed consolidated financial statements are prepared in accordance with instructions for Form 10-Q, include all adjustments (consisting only of normal recurring accruals) which we considered as necessary for a fair presentation of the results for the periods presented. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The results of operations for the three months ended March 31, 2018 are not necessarily indicative of the results to be expected for future periods or the full year. The condensed consolidated financial statements include the accounts of Ipsidy Inc. and its wholly-owned subsidiaries MultiPay S.A.S., ID Global LATAM, IDGS S.A.S., ID Solutions, Inc., FIN Holdings Inc., Ipsidy Enterprises Limited, and Cards Plus Pty Ltd. (collectively the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation. Going concern As of March 31, 2018, the Company had an accumulated deficit of approximately $69.2 million. For the three months ended March 31, 2018 the Company earned revenue of approximately $0.5 million and incurred a loss from operations of approximately $2.5 million. The reports of our independent registered public accounting firm on our consolidated financial statements for the years ended December 31, 2017 and 2016 contained an explanatory paragraph regarding our ability to continue as a going concern based upon our net losses. These unaudited condensed consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to meet its obligations and continue its operations for the next fiscal year. The continuation of the Company as a going concern is dependent upon financial support from the Company’s current shareholders, the ability of the Company to obtain additional equity financing to continue operations, the Company’s ability to generate sufficient cash flows from operations, successfully locating and negotiating with other business entities for potential acquisition and /or acquiring new clients to generate revenues and cash flows. There is no assurance that the Company will ever be profitable or be able to secure funding or generate sufficient revenues to sustain operations. As such, there is substantial doubt about the Company’s ability to continue as a going concern. These unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern. Net Loss per Common Share The Company computes net loss per share in accordance with FASB ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the statement of operations. Basic EPS is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible notes and stock warrants, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options, warrants and conversion of convertible notes. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. The following potentially dilutive securities were excluded from the calculation of diluted loss per share for the three months ended March 31, 2018 and 2017 because their effect was antidilutive: Security 2018 2017 Stock Options 107,958,331 106,050,000 Warrants 45,964,543 47,538,697 Total 153,922,874 153,588,669 Inventories Inventories of kiosks held by IDGS S.A.S are stated at the lower of cost (using the first-in, first-out method) or net realizable value. The kiosks provide electronic ticketing for transit systems. Inventory of plastic/ID cards, digital printing material, which are held by Cards Plus Pty Ltd., are at the lower of cost (using the average method) or market. The Plastic/ID cards and digital printing material are used to provide plastic loyal ID and other types of cards. Inventories at March 31, 2018 and December 31, 2017 consist of kiosks that were not placed into service and are held for sale and cards inventory. Leases All leases are classified at the inception as direct finance leases or operating leases based on whether the lease transfers substantially all the risks and rewards of ownership. Leases that transfer to the lessee substantially all of the risks and rewards incidental to ownership of the asset are classified as direct finance leases. Revenue Recognition In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“Topic 606”). Topic 606 supersedes the revenue recognition requirements in ASU Topic 605, Revenue Recognition (“Topic 605”), and requires the recognition of revenue when promised goods or services are transferred to customers in an amount that reflects the considerations to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 also includes Subtopic 340-40, Other Assets and Deferred Costs - Contracts with Customers, which discusses the deferral of incremental costs of obtaining a contract with a customer, including the period of amortization of such costs. Collectively, we refer to Topic 606 and Subtopic 340-40 as the “new standard.” The new standard was adopted by the Company in our fiscal year beginning January 1, 2018. The two permitted transition methods under the new standard are the full retrospective method, in which the new standard would be applied to each prior reporting period presented and the cumulative effect of applying the new standard would be recognized at the earliest period shown, or the modified retrospective method, in which the cumulative effect of applying the new standard would be recognized at the date of initial application. Based on our assessment, the impact of the new standard on our operations in prior periods is not significant. The following is the Company’s revenue recognition policy determined by revenue stream for its significant revenue generating activities through March 31, 2018. Cards Plus - The Company recognizes revenue for the design and production of cards when products are shipped or a services have been performed due to the short term nature of the contracts. Payment Processing – The Company recognizes revenue for variable fees generated for payment processing solutions that are earned on a usage fee bas over time based on monthly transaction volumes. Additionally, the Company also sells certain equipment from time to time for which revenue is recognized upon delivery to the customer. Identity Solutions Software – The Company recognizes revenue based on the identified performance obligations over the performance period for fixed consideration and for variable fees generated that are earned on a usage fee based over time based on monthly transaction volumes or on a monthly flat fee rate. The Company had a deferred revenue contract liability of approximately $539,000 and $123,000 as of March 31, 2018 and December 31, 2017 for certain revenue that will be earned in future periods. The $123,000 of deferred revenue contract liability as of December 31, 2017 was earned in the three months ended March 31, 2018. In 2018, the Company introduced its new transaction platform and products as well as its pay for performance plan for both internal and external salesforce, which is based on a percentage of revenues received by the Company. For the quarter ended March 31, 2018, no revenues associated with these new platforms were recognized or required to be recognized as the services have not yet commenced. The requirements under the new standard will impact future revenue and expenses recognition. The primary impact on accounting for expenses of adopting the new standard, relates to the capitalization and deferral of incremental commission and other costs of obtaining new contracts. We will defer direct and incremental commission as well as costs to obtain a contract and amortize those costs over the term of the related contract. As of March 31, 2018, there was no deferred commissions. We will review each new contract for the related performance obligations and related revenue and expense recognition implications. We expect that the revenues derived from the new identity services could include multiple performance obligations. A performance obligation under the new revenue standard is defined as a promise to provide a “distinct” good or service to a customer. The Company has determined that one possible treatment under the new standard is that these services will represent a stand-ready series of distinct daily services that are substantially the same, with the same pattern of transfer to the customer. Further, the Company has determined that the performance obligation to provide account access and facilitate transactions may meet the criteria for the “as invoiced” practical expedient, in that the Company has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the Company’s performance completed to date. As a result, the Company anticipates it may recognize revenue in the amount to which the Company has a right to invoice, based on completed performance at the relevant date. Additionally, the contracts could include implementation services, or support on an “as needed” basis and we will review each contract and determine whether such performance obligations are separate and distinct and apply the new standard accordingly to the revenue and expense derived from or related to each such service. A more complete analysis of the impact of the standard on these contracts will be performed during the three months ended June 30, 2018 which is the period of time when services are expected to commence and the conclusions reached by management may be different from those described above. For the quarter ended March 31, 2018, no revenues were recognized or required to be recognized under this practical expedient. Additionally, the Company will capitalize the incremental costs of acquiring and fulfilling a contract with a customer if the Company expects to recover those costs. The incremental costs of acquiring and fulfilling a contract are those that the Company incurs to acquire and fulfill a contract with a customer that it would not have incurred if the contract had not been acquired (for example, a sales commission or specific incremental costs associated with the contract). The Company capitalizes the costs incurred to acquire and fulfill a contract only if those costs meet all the following criteria: a. The costs relate directly to a contract or to an anticipated contract that the Company can specifically identify. b. The costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy) performance obligations in the future. c. The costs are expected to be recovered. The Company will capitalize contract acquisition and fulfillment costs related to signing or renewing contracts that meet the above criteria, which will be classified as contract cost assets in the Company’s Consolidated Balance Sheets. Contract cost assets will be amortized using the straight-line method over the expected period of benefit beginning at the time revenue begins to be realized. The amortization of contract fulfillment cost assets associated with facilitating transactions will be recorded as cost of services in the Company’s Consolidated Statements of Operations. The amortization of contract acquisition cost assets associated with sales commissions that qualify for capitalization will be recorded as selling, general and administrative expense in the Company’s Consolidated Statements of Operations. As of March 31, 2018, the Company had deferred contract costs, represented by contract cost assets of approximately $206,000 which are included in other currents assets for certain costs incurred for the future delivery of election support services. The performance obligation should principally be met in the second quarter of 2018 when most of the costs are expected to be expensed and the associated revenue recognized for the related performance obligation. Revenue related to direct financing leases is outside the scope of Topic 606 and is recognized over the term of the lease using the effective interest method. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | NOTE 2 – PROPERTY AND EQUIPMENT, NET Property and equipment consisted of the following as of March 31, 2018 and December 31, 2017: 2018 2017 Computers and equipment $ 189,825 $ 179,351 Furniture and fixtures 156,867 156,867 346,692 $ 336,218 Less Accumulated depreciation 143,766 126,499 Property and equipment, net $ 202,926 $ 209,719 Depreciation expense totaled $17,267 and $15,266 for the three months ended March 31, 2018 and 2017, respectively. |
OTHER ASSETS
OTHER ASSETS | 3 Months Ended |
Mar. 31, 2018 | |
Other Assets [Abstract] | |
OTHER ASSETS | NOTE 3 – OTHER ASSETS The Company’s other assets consist of software being developed for new product offerings that have not been placed into service. Other assets consisted of the following at March 31, 2018 and December 31, 2017: March 31, 2018 December 31, 2017 Software and development $ 1,346,202 $ 1,139,409 Other 100,530 104,122 $ 1,446,732 $ 1,243,531 |
INTANGIBLE ASSETS, NET (OTHER T
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) | NOTE 4 – INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) The Company’s intangible assets consist of intellectual property acquired from MultiPay and FIN and are amortized over their estimated useful lives as indicated below. The following is a summary of activity related to intangible assets for the three months ended March 31, 2018: Customer Relationships Intellectual Property Non-Compete Patents Useful Lives 10 Years 10 Years 10 Years n/a Total Carrying Value at December 31, 2017 $ 1,287,450 $ 1,556,934 $ 5,250 $ 28,446 $ 2,878,080 Additions — — — 9,929 9,929 Amortization (39,679 ) (53,026 ) (704 ) — (93,409 ) Carrying Value at March 31, 2018 $ 1,247,771 $ 1,503,908 $ 4,546 $ 38,375 $ 2,794,600 The following is a summary of intangible assets as of March 31, 2018: Customer Relationships Intellectual Property Non-Compete Patent Pending Total Cost $ 1,587,159 $ 2,146,561 $ 14,087 $ 38,375 $ 3,786,192 Accumulated amortization (339,388 ) (642,653 ) (9,541 ) — (991,582 ) Carrying Value at March 31, 2018 $ 1,247,771 $ 1,503,908 $ 4,546 $ 38,375 $ 2,794,600 Future expected amortization of intangible assets is as follows: Fiscal Year Ending December 31, Remainder of 2018 $ 280.229 2019 373,252 2020 366,313 2021 364,498 2022 355,008 Thereafter 1,055,300 $ 2,794,600 |
ACCOUNTS PAYABLE AND ACCRUED EX
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 3 Months Ended |
Mar. 31, 2018 | |
Payables and Accruals [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | NOTE 5 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consisted of the following as of March 31, 2018 and December 31, 2017: 2018 2017 Trade payables $ 344,544 $ 232,842 Accrued interest 350,000 275,000 Accrued payroll and related obligations 653,419 468,012 Other accrued expenses 469,019 471,331 Total $ 1,816,982 $ 1,447,185 |
NOTES PAYABLE, NET
NOTES PAYABLE, NET | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE, NET | NOTE 6 - NOTES PAYABLE, NET The following is a summary of notes payable as of March 31, 2018 and December 31, 2017: March 31, 2018 December 31, 2017 In January 2017, the Company issued a Senior Unsecured Note (“Note”) a face value of $3,000,000, payable two years from issuance, along with an aggregate of 4,500,000 shares of Common Stock, with a fair value of $1,147,500. The Company allocated the proceeds to the common stock based on their relative fair value and recorded a discount of $830,018 to be amortized into interest expense over the two-year term of the note. The Company also paid debt issuance costs consisting of a cash fee of $120,000 and 1,020,000 shares of common stock of the Company with a fair value of $306,000. On April 30, 2018, the Company and the Noteholder agreed to extend the due date of the note until April 30, 2020 for an extension fee of 1,500,000 shares of the Common Stock issued to the Noteholder. 3,000,000 3,000,000 Total Principal Outstanding $ 3,000,000 $ 3,000,000 Unamortized Deferred Debt (129,496 ) (168,345 ) Unamortized Deferred Debt Issuance Costs (350,719 ) (455,935 ) Notes Payable, Net $ 2,519,785 $ 2,375,720 The following is a roll-forward of the Company’s notes payable and related discounts for the three months ended March 31, 2018: Principal Debt Issuance Costs Debt Total Balance at December 31, 2017 $ 3,000,000 $ (168,345 ) $ (455,935 ) $ 2,375,720 Amortization — 38,849 105,216 144,065 Balance at March 31, 2018 $ 3,000,000 $ (129,496 ) $ (350,719 ) $ 2,519,785 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 7 – 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 March 31, 2017. The note was repaid in April 2017. Notes Payable In January 2017, the Company issued to the Theodore Stern Revocable Trust (the “Stern Trust”) a Senior Unsecured Note with a face value of $3,000,000, payable over two years from issuance along with an aggregate of 4,500,000 shares of Common Stock with a fair value of $1,147,500 (Note 6). The loan became a note due to one of its Board of Directors upon Mr. Stern’s election in September 2017. During the quarter ended March 31, 2018, the Company recorded $75,000 of interest expense under the terms and conditions of the Note. Convertible Notes Payable On January 31, 2017, the Company entered into a Conversion Agreements with Mr. Selzer, a director of the Company or 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 April 2017, Mr. Selzer purchased an additional 500,000 shares of common stock. Other In connection with securing third-party financing, the Company incurred fees to Network 1 Financial Securities, Inc. (“Network 1”), a registered broker-dealer. In the first quarter of 2017, 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. |
STOCKHOLDER'S EQUITY
STOCKHOLDER'S EQUITY | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
STOCKHOLDER'S EQUITY (DEFICIT) | NOTE 8 STOCKHOLDER’S EQUITY Common Stock During the quarter ended March 31, 2018, the Company granted 720,000 shares of Restricted Stock to the non-employee Directors in connection with their compensation to serve as Board Members. The shares were valued at the fair market value at the date of grant and vest quarterly. During the quarter ended March 31, 2018, an investor exercised 2,200,000 warrants at $0.05 cents on a cashless exercise basis in exchange for 1,672,190 shares of common stock of the Company. Warrants The following is a summary of the Company’s warrant activity for the three months ended March 31, 2018: Number of Weighted Weighted Outstanding at December 31,2017 48,164,543 $ 0.08 2.9 Years Exercised 2,200,000 $ 0.05 — Outstanding at March 31, 2018 45,964,543 $ 0.08 2.6 Years Stock Options During the three months ended March 31, 2018, the Company granted options to acquire 4,750,000 shares of common stock to four employees and one non-employee of which 2,750,000 options are exercisable at $0.22 per share and 2,000,000 are exercisable at $0.25 cents share. The options have a term of ten years, were granted at fair market value at the date of grant .and vest over three years. The grant date fair value of the options totaled approximately $700,000, which will charged to expense over the three year vesting term of which approximately $167,000 was related to non-employees. The Company determined the grant date fair value of the options granted during the three months ended March 31, 2018 using the Black Scholes Method and the following assumptions: Expected Volatility – 77-78% Expected Term – 6.5 Years Risk Free Rate – 2.4-2.7% Dividend Rate – 0.00% Activity related to stock options for the three months ended March 31, 2018 is summarized as follows: Weighted Weighted Exercise Contractual Aggregate Number of Shares Price Term (Yrs.) Intrinsic Value Outstanding as of December 31, 2017 103,208,331 $ 0.19 8.3 $ 11,457,291 Granted 4,750,000 $ 0.23 9.8 $ 237,500 Forfeitures — — Outstanding as of March 31, 2018 107,958,331 0.20 8.18 $ 14,544,583 Exercisable as of March 31, 2018 86,162,500 $ 0.21 8.17 $ 11,129,208 The following table summarizes stock option information as of March 31, 2018: Weighted Contractual Exercise Prices Outstanding Life Exercisable $ 0.00 3,500,000 7.50 Years 3,500,000 $ 0.05 33,450,000 8.36 Years 25,937,500 $ 0.10 27,250,000 8.80 Years 20,166,669 $ 0.13 250,000 9.75 Years — $ 0.15 5,258,331 7.60 Years 4,258,331 $ 0.22 2,750,000 9.80 Years — $ 025 2,500,000 9.5 Years 300,000 $ 0.29 1,000,000 9.25 Years — $ 0.40 l,000,000 7.92 Years l,000,000 $ 0.45 31,000,000 7.55 Years 31,000,000 Total 107,958,331 8.18 Years 86,162,500 During the three months ended March 31, 2018, the Company recognized approximately $648,000 of stock-based compensation expense related to options of which non-employees expense was approximately $167,000. As of March 31, 2018, there was approximately $3,700,000 of unrecognized compensation costs related to stock options outstanding of which approximately $829,000 was related to non-employees and will be expensed through 2010. |
DIRECT FINANCING LEASE
DIRECT FINANCING LEASE | 3 Months Ended |
Mar. 31, 2018 | |
Direct Financing Lease | |
DIRECT FINANCING LEASE | NOTE 9 – DIRECT FINANCING LEASE In September 2015, the Company and an entity in Colombia entered into a rental contract for the rental of 78 kiosks to provide cash collection and fare services at transportation stations. The lease term began in May 2016 when the kiosk was installed and operational and when the lease commenced. The term of the rental contract is ten years at an approximate monthly rental of $11,900. The lease has the option at the end of the lease term to purchase each unit for approximately $40. The term of the lease approximates the expected economic life of the kiosks. The lease was accounted for as a direct financing lease. The Company has recorded the transaction as it net investment in the lease and will receive monthly payments of $11,856 before estimated executory costs, or $142,272, annually, to reduce investment in the lease and record income associated with the related amount due. Executory costs are estimated to be $1,677 month and initial direct costs are not considered significant. The transaction resulted in incremental revenue in the quarter ended March 31, 2018 of approximately $19,000. 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: 2018 $ 91,609 2019 122,145 2020 122,145 2021 122,145 2022 122,145 Thereafter 407,174 Sub-total 987,363 Less deferred revenue (328,485 ) Net investment in lease $ 658,878 |
LEASE OBLIGATION PAYABLE
LEASE OBLIGATION PAYABLE | 3 Months Ended |
Mar. 31, 2018 | |
Lease Obligation Payable Details Narrative | |
LEASE OBLIGATION PAYABLE | NOTE 10 – 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 March 31, 2018 is $32,322. The following is a schedule showing the future minimum lease payments under capital lease by year and the present value of the minimum lease payments as of March 31, 2018. The interest rate related to the lease obligation is 12% and the maturity date is March 31, 2022. Year Ending 2018 $ 32,322 2019 43,096 2020 43,096 2021 43,096 Thereafter 10,776 Total minimum lease payments 172,386 Less: Amount representing interest ( 36,008 ) Present value of minimum lease payments $ 136,378 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 11 – COMMITMENTS AND CONTINGENCIES Legal Matters From time to time, the Company is a party to various legal or administrative proceedings arising in the ordinary course of our business. While any litigation contains an element of uncertainty, we have no reason to believe the outcome of such proceedings will have a material adverse effect on the financial condition or results of operations of the Company. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going concern | Going concern As of March 31, 2018, the Company had an accumulated deficit of approximately $69.2 million. For the three months ended March 31, 2018 the Company earned revenue of approximately $0.5 million and incurred a loss from operations of approximately $2.5 million. The reports of our independent registered public accounting firm on our consolidated financial statements for the years ended December 31, 2017 and 2016 contained an explanatory paragraph regarding our ability to continue as a going concern based upon our net losses. These unaudited condensed consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to meet its obligations and continue its operations for the next fiscal year. The continuation of the Company as a going concern is dependent upon financial support from the Company’s current shareholders, the ability of the Company to obtain additional equity financing to continue operations, the Company’s ability to generate sufficient cash flows from operations, successfully locating and negotiating with other business entities for potential acquisition and /or acquiring new clients to generate revenues and cash flows. There is no assurance that the Company will ever be profitable or be able to secure funding or generate sufficient revenues to sustain operations. As such, there is substantial doubt about the Company’s ability to continue as a going concern. These unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern. |
Net Loss per Common Share | Net Loss per Common Share The Company computes net loss per share in accordance with FASB ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the statement of operations. Basic EPS is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible notes and stock warrants, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options, warrants and conversion of convertible notes. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. The following potentially dilutive securities were excluded from the calculation of diluted loss per share for the three months ended March 31, 2018 and 2017 because their effect was antidilutive: Security 2018 2017 Stock Options 107,958,331 106,050,000 Warrants 45,964,543 47,538,697 Total 153,922,874 153,588,669 |
Inventories | Inventories Inventories of kiosks held by IDGS S.A.S are stated at the lower of cost (using the first-in, first-out method) or net realizable value. The kiosks provide electronic ticketing for transit systems. Inventory of plastic/ID cards, digital printing material, which are held by Cards Plus Pty Ltd., are at the lower of cost (using the average method) or market. The Plastic/ID cards and digital printing material are used to provide plastic loyal ID and other types of cards. Inventories at March 31, 2018 and December 31, 2017 consist of kiosks that were not placed into service and are held for sale and cards inventory. |
Leases | Leases All leases are classified at the inception as direct finance leases or operating leases based on whether the lease transfers substantially all the risks and rewards of ownership. Leases that transfer to the lessee substantially all of the risks and rewards incidental to ownership of the asset are classified as direct finance leases. |
Revenue Recognition | Revenue Recognition In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“Topic 606”). Topic 606 supersedes the revenue recognition requirements in ASU Topic 605, Revenue Recognition (“Topic 605”), and requires the recognition of revenue when promised goods or services are transferred to customers in an amount that reflects the considerations to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 also includes Subtopic 340-40, Other Assets and Deferred Costs - Contracts with Customers, which discusses the deferral of incremental costs of obtaining a contract with a customer, including the period of amortization of such costs. Collectively, we refer to Topic 606 and Subtopic 340-40 as the “new standard.” The new standard was adopted by the Company in our fiscal year beginning January 1, 2018. The two permitted transition methods under the new standard are the full retrospective method, in which the new standard would be applied to each prior reporting period presented and the cumulative effect of applying the new standard would be recognized at the earliest period shown, or the modified retrospective method, in which the cumulative effect of applying the new standard would be recognized at the date of initial application. Based on our assessment, the impact of the new standard on our operations in prior periods is not significant. The following is the Company’s revenue recognition policy determined by revenue stream for its significant revenue generating activities through March 31, 2018. Cards Plus - The Company recognizes revenue for the design and production of cards when products are shipped or a services have been performed due to the short term nature of the contracts. Payment Processing – The Company recognizes revenue for variable fees generated for payment processing solutions that are earned on a usage fee bas over time based on monthly transaction volumes. Additionally, the Company also sells certain equipment from time to time for which revenue is recognized upon delivery to the customer. Identity Solutions Software – The Company recognizes revenue based on the identified performance obligations over the performance period for fixed consideration and for variable fees generated that are earned on a usage fee based over time based on monthly transaction volumes or on a monthly flat fee rate. The Company had a deferred revenue contract liability of approximately $539,000 and $123,000 as of March 31, 2018 and December 31, 2017 for certain revenue that will be earned in future periods. The $123,000 of deferred revenue contract liability as of December 31, 2017 was earned in the three months ended March 31, 2018. In 2018, the Company introduced its new transaction platform and products as well as its pay for performance plan for both internal and external salesforce, which is based on a percentage of revenues received by the Company. For the quarter ended March 31, 2018, no revenues associated with these new platforms were recognized or required to be recognized as the services have not yet commenced. The requirements under the new standard will impact future revenue and expenses recognition. The primary impact on accounting for expenses of adopting the new standard, relates to the capitalization and deferral of incremental commission and other costs of obtaining new contracts. We will defer direct and incremental commission as well as costs to obtain a contract and amortize those costs over the term of the related contract. As of March 31, 2018, there was no deferred commissions. We will review each new contract for the related performance obligations and related revenue and expense recognition implications. We expect that the revenues derived from the new identity services could include multiple performance obligations. A performance obligation under the new revenue standard is defined as a promise to provide a “distinct” good or service to a customer. The Company has determined that one possible treatment under the new standard is that these services will represent a stand-ready series of distinct daily services that are substantially the same, with the same pattern of transfer to the customer. Further, the Company has determined that the performance obligation to provide account access and facilitate transactions may meet the criteria for the “as invoiced” practical expedient, in that the Company has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the Company’s performance completed to date. As a result, the Company anticipates it may recognize revenue in the amount to which the Company has a right to invoice, based on completed performance at the relevant date. Additionally, the contracts could include implementation services, or support on an “as needed” basis and we will review each contract and determine whether such performance obligations are separate and distinct and apply the new standard accordingly to the revenue and expense derived from or related to each such service. A more complete analysis of the impact of the standard on these contracts will be performed during the three months ended June 30, 2018 which is the period of time when services are expected to commence and the conclusions reached by management may be different from those described above. For the quarter ended March 31, 2018, no revenues were recognized or required to be recognized under this practical expedient. Additionally, the Company will capitalize the incremental costs of acquiring and fulfilling a contract with a customer if the Company expects to recover those costs. The incremental costs of acquiring and fulfilling a contract are those that the Company incurs to acquire and fulfill a contract with a customer that it would not have incurred if the contract had not been acquired (for example, a sales commission or specific incremental costs associated with the contract). The Company capitalizes the costs incurred to acquire and fulfill a contract only if those costs meet all the following criteria: a. The costs relate directly to a contract or to an anticipated contract that the Company can specifically identify. b. The costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy) performance obligations in the future. c. The costs are expected to be recovered. The Company will capitalize contract acquisition and fulfillment costs related to signing or renewing contracts that meet the above criteria, which will be classified as contract cost assets in the Company’s Consolidated Balance Sheets. Contract cost assets will be amortized using the straight-line method over the expected period of benefit beginning at the time revenue begins to be realized. The amortization of contract fulfillment cost assets associated with facilitating transactions will be recorded as cost of services in the Company’s Consolidated Statements of Operations. The amortization of contract acquisition cost assets associated with sales commissions that qualify for capitalization will be recorded as selling, general and administrative expense in the Company’s Consolidated Statements of Operations. As of March 31, 2018, the Company had deferred contract costs, represented by contract cost assets of approximately $206,000 which are included in other currents assets for certain costs incurred for the future delivery of election support services. The performance obligation should principally be met in the second quarter of 2018 when most of the costs are expected to be expensed and the associated revenue recognized for the related performance obligation. Revenue related to direct financing leases is outside the scope of Topic 606 and is recognized over the term of the lease using the effective interest method. |
BASIS OF PRESENTATION (Tables)
BASIS OF PRESENTATION (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of potentially dilutive securities | The following potentially dilutive securities were excluded from the calculation of diluted loss per share for the three months ended March 31, 2018 and 2017 because their effect was antidilutive: Security 2018 2017 Stock Options 107,958,331 106,050,000 Warrants 45,964,543 47,538,697 Total 153,922,874 153,588,669 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consisted of the following as of March 31, 2018 and December 31, 2017: 2018 2017 Computers and equipment $ 189,825 $ 179,351 Furniture and fixtures 156,867 156,867 346,692 $ 336,218 Less Accumulated depreciation 143,766 126,499 Property and equipment, net $ 202,926 $ 209,719 |
OTHER ASSETS (Tables)
OTHER ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Other Assets [Abstract] | |
Schedule of other assets | The Company’s other assets consist of software being developed for new product offerings that have not been placed into service. Other assets consisted of the following at March 31, 2018 and December 31, 2017: March 31, 2018 December 31, 2017 Software and development $ 1,346,202 $ 1,139,409 Other 100,530 104,122 $ 1,446,732 $ 1,243,531 |
INTANGIBLE ASSETS, NET (OTHER23
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | The following is a summary of activity related to intangible assets for the three months ended March 31, 2018: Customer Relationships Intellectual Property Non-Compete Patents Useful Lives 10 Years 10 Years 10 Years n/a Total Carrying Value at December 31, 2017 $ 1,287,450 $ 1,556,934 $ 5,250 $ 28,446 $ 2,878,080 Additions — — — 9,929 9,929 Amortization (39,679 ) (53,026 ) (704 ) — (93,409 ) Carrying Value at March 31, 2018 $ 1,247,771 $ 1,503,908 $ 4,546 $ 38,375 $ 2,794,600 The following is a summary of intangible assets as of March 31, 2018: Customer Relationships Intellectual Property Non-Compete Patent Pending Total Cost $ 1,587,159 $ 2,146,561 $ 14,087 $ 38,375 $ 3,786,192 Accumulated amortization (339,388 ) (642,653 ) (9,541 ) — (991,582 ) Carrying Value at March 31, 2018 $ 1,247,771 $ 1,503,908 $ 4,546 $ 38,375 $ 2,794,600 |
Schedule of future amortization expense of intangible assets | Future expected amortization of intangible assets is as follows: Fiscal Year Ending December 31, Remainder of 2018 $ 280.229 2019 373,252 2020 366,313 2021 364,498 2022 355,008 Thereafter 1,055,300 $ 2,794,600 |
ACCOUNTS PAYABLE AND ACCRUED 24
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of accounts payable and accrued expenses | Accounts payable and accrued expenses consisted of the following as of March 31, 2018 and December 31, 2017: 2018 2017 Trade payables $ 344,544 $ 232,842 Accrued interest 350,000 275,000 Accrued payroll and related obligations 653,419 468,012 Other accrued expenses 469,019 471,331 Total $ 1,816,982 $ 1,447,185 |
NOTES PAYABLE, NET (Tables)
NOTES PAYABLE, NET (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable | The following is a summary of notes payable as of March 31, 2018 and December 31, 2017: March 31, 2018 December 31, 2017 In January 2017, the Company issued a Senior Unsecured Note (“Note”) a face value of $3,000,000, payable two years from issuance, along with an aggregate of 4,500,000 shares of Common Stock, with a fair value of $1,147,500. The Company allocated the proceeds to the common stock based on their relative fair value and recorded a discount of $830,018 to be amortized into interest expense over the two-year term of the note. The Company also paid debt issuance costs consisting of a cash fee of $120,000 and 1,020,000 shares of common stock of the Company with a fair value of $306,000. On April 30, 2018, the Company and the Noteholder agreed to extend the due date of the note until April 30, 2020 for an extension fee of 1,500,000 shares of the Common Stock issued to the Noteholder. 3,000,000 3,000,000 Total Principal Outstanding $ 3,000,000 $ 3,000,000 Unamortized Deferred Debt (129,496 ) (168,345 ) Unamortized Deferred Debt Issuance Costs (350,719 ) (455,935 ) Notes Payable, Net $ 2,519,785 $ 2,375,720 |
Schedule of notes payable and related discounts | The following is a roll-forward of the Company’s notes payable and related discounts for the three months ended March 31, 2018: Principal Debt Issuance Costs Debt Total Balance at December 31, 2017 $ 3,000,000 $ (168,345 ) $ (455,935 ) $ 2,375,720 Amortization — 38,849 105,216 144,065 Balance at March 31, 2018 $ 3,000,000 $ (129,496 ) $ (350,719 ) $ 2,519,785 |
STOCKHOLDER'S EQUITY (Tables)
STOCKHOLDER'S EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Schedule of warrant activity | The following is a summary of the Company’s warrant activity for the three months ended March 31, 2018: Number of Weighted Weighted Outstanding at December 31,2017 48,164,543 $ 0.08 2.9 Years Exercised 2,200,000 $ 0.05 — Outstanding at March 31, 2018 45,964,543 $ 0.08 2.6 Years |
Schedule of black - scholes option-pricing model valuation assumption | The Company determined the grant date fair value of the options granted during the three months ended March 31, 2018 using the Black Scholes Method and the following assumptions: Expected Volatility – 77-78% Expected Term – 6.5 Years Risk Free Rate – 1.92% Dividend Rate – 0.00% |
Schedule of outstanding stock options | Activity related to stock options for the three months ended March 31, 2018 is summarized as follows: Weighted Weighted Exercise Contractual Aggregate Number of Shares Price Term (Yrs.) Intrinsic Value Outstanding as of December 31, 2017 103,208,331 $ 0.19 8.3 $ 11,457,291 Granted 4,750,000 $ 0.23 9.8 $ 237,500 Forfeitures — — Outstanding as of March 31, 2018 107,958,331 0.20 8.18 $ 14,544,583 Exercisable as of March 31, 2018 86,162,500 $ 0.21 8.17 $ 11,129,208 |
Schedule of stock option | The following table summarizes stock option information as of March 31, 2018: Weighted Contractual Exercise Prices Outstanding Life Exercisable $ 0.00 3,500,000 7.50 Years 3,500,000 $ 0.05 33,450,000 8.36 Years 25,937,500 $ 0.10 27,250,000 8.80 Years 20,166,669 $ 0.13 250,000 9.75 Years — $ 0.15 5,258,331 7.60 Years 4,258,331 $ 0.22 2,750,000 9.80 Years — $ 025 2,500,000 9.5 Years 300,000 $ 0.29 1,000,000 9.25 Years — $ 0.40 l,000,000 7.92 Years l,000,000 $ 0.45 31,000,000 7.55 Years 31,000,000 Total 107,958,331 8.18 Years 86,162,500 |
DIRECT FINANCING LEASE (Tables)
DIRECT FINANCING LEASE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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: 2018 $ 91,609 2019 122,145 2020 122,145 2021 122,145 2022 122,145 Thereafter 407,174 Sub-total 987,363 Less deferred revenue (328,485 ) Net investment in lease $ 658,878 |
LEASE OBLIGATION PAYABLE (Table
LEASE OBLIGATION PAYABLE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Lease Obligation Payable Details Narrative | |
Schedule of lease obligation payable | The interest rate related to the lease obligation is 12% and the maturity date is March 31, 2022. Year Ending 2018 $ 32,322 2019 43,096 2020 43,096 2021 43,096 Thereafter 10,776 Total minimum lease payments 172,386 Less: Amount representing interest ( 36,008) Present value of minimum lease payments $ 136,378 |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Antidilutive securities, Shares | 153,922,874 | 153,588,669 |
Employee Stock Option [Member] | ||
Antidilutive securities, Shares | 107,958,331 | 106,050,000 |
Warrant [Member] | ||
Antidilutive securities, Shares | 45,964,543 | 47,538,697 |
BASIS OF PRESENTATION (Details
BASIS OF PRESENTATION (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Accumulated deficit | $ (69,160,547) | $ (66,407,622) | |
Revenue | 525,789 | $ 584,689 | |
Loss from operations | (2,509,195) | $ (4,954,256) | |
Deferred contract costs | 206,000 | ||
Deferred revenue contract liability | $ 539,000 | $ 123,000 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 346,692 | $ 336,218 |
Less Accumulated depreciation | (143,766) | (126,499) |
Property and equipment, net | 202,926 | 209,719 |
Computer and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 189,825 | 179,351 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 156,867 | $ 156,867 |
PROPERTY AND EQUIPMENT, NET (32
PROPERTY AND EQUIPMENT, NET (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 17,267 | $ 15,266 |
OTHER ASSETS (Details)
OTHER ASSETS (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Other Assets [Abstract] | ||
Software and development | $ 1,346,202 | $ 1,139,409 |
Other | 100,530 | 104,122 |
Other assets | $ 1,446,732 | $ 1,243,531 |
INTANGIBLE ASSETS, NET (OTHER34
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Details) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |
Carrying Value at December 31, 2017 | $ 2,878,080 |
Additions | 9,929 |
Amortization | (93,409) |
Carrying Value at March 31, 2018 | $ 2,794,600 |
Customer Relationships [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Useful Lives | 10 years |
Carrying Value at December 31, 2017 | $ 1,287,450 |
Additions | |
Amortization | (39,679) |
Carrying Value at March 31, 2018 | $ 1,247,771 |
Intellectual Property [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Useful Lives | 10 years |
Carrying Value at December 31, 2017 | $ 1,556,934 |
Additions | |
Amortization | (53,026) |
Carrying Value at March 31, 2018 | $ 1,503,908 |
Non-Compete [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Useful Lives | 10 years |
Carrying Value at December 31, 2017 | $ 5,250 |
Additions | |
Amortization | (704) |
Carrying Value at March 31, 2018 | 4,546 |
Patents Pending [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Carrying Value at December 31, 2017 | 28,446 |
Additions | 9,929 |
Amortization | |
Carrying Value at March 31, 2018 | $ 38,375 |
INTANGIBLE ASSETS, NET (OTHER35
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Details 1) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 3,786,192 | |
Accumulated amortization | (991,582) | |
Carrying Value at March 31, 2018 | 2,794,600 | $ 2,878,080 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 1,587,159 | |
Accumulated amortization | (339,388) | |
Carrying Value at March 31, 2018 | 1,247,771 | 1,287,450 |
Intellectual Property [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 2,146,561 | |
Accumulated amortization | (642,653) | |
Carrying Value at March 31, 2018 | 1,503,908 | 1,556,934 |
Non-Compete [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 14,087 | |
Accumulated amortization | (9,541) | |
Carrying Value at March 31, 2018 | 4,546 | 5,250 |
Patents Pending [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 38,375 | |
Accumulated amortization | ||
Carrying Value at March 31, 2018 | $ 38,375 | $ 28,446 |
INTANGIBLE ASSETS, NET (OTHER36
INTANGIBLE ASSETS, NET (OTHER THAN GOODWILL) (Details 2) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remainder of 2018 | $ 280,229 | |
2,019 | 373,252 | |
2,020 | 366,313 | |
2,021 | 364,498 | |
2,022 | 355,008 | |
Thereafter | 1,055,300 | |
Carrying Value | $ 2,794,600 | $ 2,878,080 |
ACCOUNTS PAYABLE AND ACCRUED 37
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | ||
Trade payables | $ 344,544 | $ 232,842 |
Accrued interest | 350,000 | 275,000 |
Accrued payroll and related obligations | 653,419 | 468,012 |
Other accrued expenses | 469,019 | 471,331 |
Total | $ 1,816,982 | $ 1,447,185 |
NOTES PAYABLE, NET (Details)
NOTES PAYABLE, NET (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 | Jan. 31, 2017 |
Short-term Debt [Line Items] | |||
Total Principal Outstanding | $ 3,000,000 | $ 3,000,000 | |
Unamortized Deferred Debt | (129,496) | (168,345) | |
Unamortized Deferred Debt Issuance Costs | (350,719) | (455,935) | |
Notes Payable, net of current maturities | 2,519,785 | 2,375,720 | |
Senior Unsecured Note [Member] | |||
Short-term Debt [Line Items] | |||
Total Principal Outstanding | $ 3,000,000 | $ 3,000,000 | |
Unamortized Deferred Debt Issuance Costs | $ 830,018 |
NOTES PAYABLE, NET (Details 1)
NOTES PAYABLE, NET (Details 1) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Principal Balance | |
Balance at December 31, 2017 | $ 3,000,000 |
Amortization | |
Balance at March 31, 2018 | 3,000,000 |
Debt Issuance Costs | |
Balance at December 31, 2017 | 168,345 |
Amortization | 38,849 |
Balance at March 31, 2018 | 129,496 |
Debt Discounts | |
Balance at December 31, 2017 | 455,935 |
Amortization | 144,065 |
Balance at March 31, 2018 | 350,719 |
Total | |
Balance at December 31, 2017 | 2,375,720 |
Amortization | 144,065 |
Balance at March 31, 2018 | $ 2,519,785 |
NOTES PAYABLE, NET (Details Nar
NOTES PAYABLE, NET (Details Narrative) - USD ($) | Apr. 30, 2018 | Jan. 31, 2017 | Mar. 31, 2018 | Dec. 31, 2017 |
Short-term Debt [Line Items] | ||||
Debt discount | $ (350,719) | $ (455,935) | ||
Senior Unsecured Note [Member] | ||||
Short-term Debt [Line Items] | ||||
Face amount | $ 3,000,000 | |||
Debt discount | 830,018 | |||
Debt issuance costs | 306,000 | |||
Debt issuance costs consisting shares value | $ 120,000 | |||
Debt issuance costs consisting shares | 1,020,000 | |||
Warrant term | 2 years | |||
Common stock issues value | $ 1,147,500 | |||
Common stock issues shares | 4,500,000 | |||
Senior Unsecured Note [Member] | Subsequent Event [Member] | ||||
Short-term Debt [Line Items] | ||||
Number of shares issued for an extension fee | 1,500,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | Jan. 31, 2017 | Jan. 31, 2017 | Mar. 31, 2017 | Apr. 30, 2017 | Nov. 30, 2016 |
Network 1 Financial Securities, Inc. [Member] | |||||
Cash fee | $ 360,000 | ||||
Conversion Agreements [Member] | Herbert Selzer [Member] | |||||
Total debt | $ 150,000 | $ 150,000 | |||
Number of shares issued on conversion | 1,753,500 | ||||
Conversion Agreements [Member] | Vista Associates [Member] | |||||
Total debt | $ 40,000 | 40,000 | |||
Number of shares issued on conversion | 1,537,778 | ||||
Subscription Agreements [Member] | Herbert Selzer [Member] | |||||
Additional number of shares issued | 500,000 | ||||
12% Promissory Notes Due in January 2017 [Member] | |||||
Face amount | $ 13,609 | ||||
Senior Unsecured Note [Member] | |||||
Face amount | $ 3,000,000 | $ 3,000,000 | |||
Warrant term | 2 years | ||||
Common stock issues value | $ 1,147,500 | ||||
Common stock issues shares | 4,500,000 |
STOCKHOLDER'S EQUITY (DEFICIT)
STOCKHOLDER'S EQUITY (DEFICIT) (Details) - Warrant [Member] | 3 Months Ended |
Mar. 31, 2018$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |
Outstanding at December 31,2017 | shares | 48,164,543 |
Exercised | shares | 2,200,000 |
Outstanding at March 31, 2018 | shares | 45,964,543 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Weighted Average Exercise Price [Roll Forward] | |
Outstanding at December 31,2017 | $ / shares | $ 0.08 |
Exercised | $ / shares | 0.05 |
Outstanding at March 31, 2018 | $ / 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 December 31,2017 | 2 years 10 months 24 days |
Outstanding at March 31, 2018 | 2 years 7 months 6 days |
STOCKHOLDER'S EQUITY (DEFICIT43
STOCKHOLDER'S EQUITY (DEFICIT) (Details 1) | 3 Months Ended |
Mar. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected Term | 6 years 6 months |
Dividend Rate | 0.00% |
Minimum 1 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected Volatility | 77.00% |
Risk Free Rate | 2.40% |
Maximum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected Volatility | 78.00% |
Risk Free Rate | 2.70% |
STOCKHOLDER'S EQUITY (DEFICIT44
STOCKHOLDER'S EQUITY (DEFICIT) (Details 2) | 3 Months Ended |
Mar. 31, 2018USD ($)$ / sharesshares | |
Number of Shares [Roll Forward] | |
Outstanding at beginning | shares | 103,208,331 |
Granted | shares | 4,750,000 |
Forfeitures | shares | |
Outstanding at end | shares | 107,958,331 |
Exercisable at end | shares | 86,162,500 |
Weighted Average Exercise Price [Roll Forward] | |
Outstanding at beginning | $ / shares | $ 0.19 |
Granted | $ / shares | 0.23 |
Forfeitures | $ / shares | |
Outstanding at end | $ / shares | 0.20 |
Exercisable at end | $ / shares | $ 0.21 |
Weighted Average Contractual Term [Roll Forward] | |
Outstanding at beginning | 8 years 3 months 18 days |
Granted | 9 years 9 months 18 days |
Outstanding at end | 8 years 2 months 5 days |
Exercisable at end | 8 years 2 months 1 day |
Aggregate Intrinsic Value [Roll Forward] | |
Outstanding at beginning | $ | $ 11,457,291 |
Granted | $ | 237,500 |
Forfeitures | $ | |
Outstanding at end | $ | 14,544,583 |
Exercisable at end | $ | $ 11,129,208 |
STOCKHOLDER'S EQUITY (DEFICIT45
STOCKHOLDER'S EQUITY (DEFICIT) (Details 3) | 3 Months Ended |
Mar. 31, 2018shares | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Outstanding | 107,958,331 |
Weighted Average Contractual Life | 8 years 2 months 5 days |
Exercisable | 86,162,500 |
Exercise Price $0.00 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Outstanding | 3,500,000 |
Weighted Average Contractual Life | 7 years 6 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 | 33,450,000 |
Weighted Average Contractual Life | 8 years 4 months 10 days |
Exercisable | 25,937,500 |
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 | 8 years 9 months 18 days |
Exercisable | 20,166,669 |
Exercise Price $0.13 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Outstanding | 250,000 |
Weighted Average Contractual Life | 9 years 9 months |
Exercisable | |
Exercise Price $0.15 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Outstanding | 5,258,331 |
Weighted Average Contractual Life | 7 years 7 months 6 days |
Exercisable | 4,258,331 |
Exercise Price $0.22 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Outstanding | 2,750,000 |
Weighted Average Contractual Life | 9 years 9 months 18 days |
Exercisable | |
Exercise Price $0.25 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Outstanding | 2,500,000 |
Weighted Average Contractual Life | 9 years 6 months |
Exercisable | 300,000 |
Exercise Price $0.29 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Outstanding | 1,000,000 |
Weighted Average Contractual Life | 9 years 3 months |
Exercisable | |
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 | 7 years 11 months 1 day |
Exercisable | 1,000,000 |
Exercise Price $0.45 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Outstanding | 31,000,000 |
Weighted Average Contractual Life | 7 years 6 months 18 days |
Exercisable | 31,000,000 |
STOCKHOLDER'S EQUITY (DEFICIT46
STOCKHOLDER'S EQUITY (DEFICIT) (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Number of options granted | 4,750,000 | |
Number of options exercisable | 86,162,500 | |
Exercise price of option (in dollars per share) | $ 0.21 | |
Expected Term | 6 years 6 months | |
Dividend Rate | 0.00% | |
Stock based compensation | $ 738,212 | $ 3,294,160 |
Unrecognized compensation costs | $ 3,700,000 | |
Minimum [Member] | ||
Expected Volatility | 77.00% | |
Risk Free Rate | 2.40% | |
Maximum [Member] | ||
Expected Volatility | 78.00% | |
Risk Free Rate | 2.70% | |
Employees and One Non Employee [Member] | ||
Number of options granted | 4,750,000 | |
Expected Term | 6 years 6 months | |
Dividend Rate | 0.00% | |
Value of options granted | $ 700,000 | |
Employees and One Non Employee Member [Member] | Tranche One [Member] | ||
Number of options exercisable | 2,750,000 | |
Exercise price of option (in dollars per share) | $ 0.22 | |
Employees and Service Provider [Member] | Minimum [Member] | ||
Risk Free Rate | 2.70% | |
Employees and Service Provider [Member] | Maximum [Member] | ||
Risk Free Rate | 2.90% | |
Employees and Service Provider [Member] | Tranche One [Member] | ||
Expected Volatility | 300.00% | |
Value of options granted | $ 125,000 | |
Employees and Service Provider [Member] | Tranche Two[Member] | ||
Number of options exercisable | 2,000,000 | |
Exercise price of option (in dollars per share) | $ 0.25 | |
Expected Volatility | 300.00% | |
Vesting term | 10 years | |
Non - Employees [Member] | ||
Stock based compensation | $ 167,000 | |
Unrecognized compensation costs | $ 829,000 | |
Warrant [Member] | Investor [Member] | ||
Exercise price (in dollars per share) | $ 0.05 | |
Common stock issued upon exercise of warrants (in shares) | 2,200,000 | |
Number of shares issued for conversion | 1,672,190 | |
Restricted Stock [Member] | ||
Number of restricted stock issued for services | 720,000 |
DIRECT FINANCING LEASE (Details
DIRECT FINANCING LEASE (Details) | Mar. 31, 2018USD ($) |
Direct Financing Lease | |
2,018 | $ 91,609 |
2,019 | 122,145 |
2,020 | 122,145 |
2,021 | 122,145 |
2,022 | 122,145 |
Thereafter | 407,174 |
Sub-total | 987,363 |
Less deferred revenue | (328,485) |
Net investment in lease | $ 658,878 |
DIRECT FINANCING LEASE (Detai48
DIRECT FINANCING LEASE (Details Narrative) | 1 Months Ended | 3 Months Ended |
Sep. 30, 2015USD ($)Kiosks$ / Units | Mar. 31, 2018USD ($) | |
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 | $ 19,000 |
LEASE OBLIGATION PAYABLE (Detai
LEASE OBLIGATION PAYABLE (Details) | Mar. 31, 2018USD ($) |
Lease Obligation Payable Details Narrative | |
2,018 | $ 32,322 |
2,019 | 43,096 |
2,020 | 43,096 |
2,021 | 43,096 |
Thereafter | 10,776 |
Total minimum lease payments | 172,386 |
Less: Amount representing interest | (36,008) |
Present value of minimum lease payments | $ 136,378 |
LEASE OBLIGATION PAYABLE (Det50
LEASE OBLIGATION PAYABLE (Details Narrative) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Lease Obligation Payable Details Narrative | |
Amortization of lease equipment | $ 32,322 |
Lease obligation interest rate | 12.00% |
Lease obligation maturity date | Mar. 31, 2022 |