Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 10, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | SRAX, Inc. | |
Entity Central Index Key | 0001538217 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 14,134,152 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Assets | ||
Cash and cash equivalents | $ 4,612,000 | $ 32,000 |
Accounts receivable | 647,000 | 805,000 |
Prepaid expenses | 434,000 | 715,000 |
Marketable Securities | 1,666,000 | 22,000 |
Other current assets | 211,000 | 367,000 |
Current assets | 7,570,000 | 1,941,000 |
Property and equipment | 153,000 | 191,000 |
Goodwill | 15,645,000 | 15,645,000 |
Intangible assets | 1,949,000 | 1,966,000 |
Right of use assets | 413,000 | 456,000 |
Other assets | 32,000 | 35,000 |
Total Assets | 25,762,000 | 20,234,000 |
Liabilities and stockholders' equity | ||
Accounts payable and accrued liabilities | 4,300,000 | 2,442,000 |
Derivative liabilities | 4,397,000 | |
Other current liabilities | 1,604,000 | 537,000 |
Payroll protection loan - short-term | 403,000 | |
OID convertible debentures - short term | 1,264,000 | |
Current liabilities | 7,571,000 | 7,376,000 |
Right to use liability - long term | 309,000 | 352,000 |
Payroll protection loan, less current portion | 671,000 | |
OID convertible debentures, less current portion | 1,264,000 | |
Total liabilities | 9,815,000 | 7,728,000 |
Preferred stock | ||
Additional paid-in capital | 59,894,000 | 48,129,000 |
Accumulated deficit | (43,961,000) | (35,637,000) |
Total stockholders' equity | 15,947,000 | 12,506,000 |
Total liabilities and stockholders' equity | 25,762,000 | 20,234,000 |
Class A Common Stock [Member] | ||
Liabilities and stockholders' equity | ||
Common stock, value | 14,000 | 14,000 |
Class B Common Stock [Member] | ||
Liabilities and stockholders' equity | ||
Common stock, value |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||||
Revenues | $ 1,165,000 | $ 904,000 | $ 1,516,000 | $ 1,497,000 |
Cost of revenues | 396,000 | 412,000 | 508,000 | 754,000 |
Gross profit | 769,000 | 492,000 | 1,008,000 | 743,000 |
Operating expenses | ||||
Employee related costs | 1,691,000 | 2,370,000 | 3,717,000 | 4,568,000 |
Marketing and selling expenses | 370,000 | 632,000 | 690,000 | 1,087,000 |
Platform costs | 387,000 | 367,000 | 790,000 | 706,000 |
Depreciation and amortization | 321,000 | 277,000 | 629,000 | 530,000 |
General and administrative expenses | 1,249,000 | 1,468,000 | 2,305,000 | 2,713,000 |
Total operating expenses | 4,018,000 | 5,114,000 | 8,131,000 | 9,604,000 |
Loss from operations | (3,249,000) | (4,622,000) | (7,123,000) | (8,861,000) |
Other income (expense): | ||||
Financing costs | (1,678,000) | (183,000) | (2,038,000) | (251,000) |
Gain (loss) on sale of assets | (78,000) | 395,000 | ||
Other income | 14,000 | |||
Gains from marketable securities | 587,000 | 516,000 | ||
Loss on repricing of equity warrants | (342,000) | (342,000) | ||
Change in fair value of derivative liabilities | (981,000) | (2,875,000) | 321,000 | (4,837,000) |
Total other income (expense) | (2,072,000) | (3,478,000) | (1,201,000) | (5,021,000) |
Loss before provision for income taxes | (5,321,000) | (8,100,000) | (8,324,000) | (13,882,000) |
Provision for income taxes | ||||
Net loss | $ (5,321,000) | $ (8,100,000) | $ (8,324,000) | $ (13,882,000) |
Net loss per share, basic and diluted | $ (0.38) | $ (0.67) | $ (0.59) | $ (1.24) |
Weighted average shares outstanding - basic and diluted | 14,080,890 | 12,129,787 | 14,038,940 | 11,210,810 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2018 | $ 10,000 | $ 32,870,000 | $ (18,778,000) | $ 14,102,000 |
Balance, shares at Dec. 31, 2018 | 10,109,530 | |||
Share based compensation, related employees | 121,000 | 121,000 | ||
Net Income (loss) | (5,786,000) | (5,786,000) | ||
Balance at Mar. 31, 2019 | $ 10,000 | 32,991,000 | (24,564,000) | 8,437,000 |
Balance, shares at Mar. 31, 2019 | 10,109,530 | |||
Balance at Dec. 31, 2018 | $ 10,000 | 32,870,000 | (18,778,000) | 14,102,000 |
Balance, shares at Dec. 31, 2018 | 10,109,530 | |||
Net Income (loss) | (13,882,000) | |||
Balance at Jun. 30, 2019 | $ 12,000 | 42,032,000 | (32,664,000) | 9,380,000 |
Balance, shares at Jun. 30, 2019 | 12,546,022 | |||
Balance at Mar. 31, 2019 | $ 10,000 | 32,991,000 | (24,564,000) | 8,437,000 |
Balance, shares at Mar. 31, 2019 | 10,109,530 | |||
Share based compensation, related employees | 326,000 | 326,000 | ||
Sale of common stock and warrants for cash | $ 2,000 | 6,227,000 | 6,229,000 | |
Sale of common stock and warrants for cash, shares | 1,687,825 | |||
Exercise of warrants | 1,146,000 | 1,146,000 | ||
Exercise of warrants, shares | 328,667 | |||
Shares issued as collateral | ||||
Shares issued as collateral, shares | 220,000 | |||
Loss on repricing of warrants | 342,000 | 342,000 | ||
Shares of common stock in private placement | 1,000,000 | 1,000,000 | ||
Shares of common stock in private placement, shares | 200,000 | |||
Net Income (loss) | (8,100,000) | (8,100,000) | ||
Balance at Jun. 30, 2019 | $ 12,000 | 42,032,000 | (32,664,000) | 9,380,000 |
Balance, shares at Jun. 30, 2019 | 12,546,022 | |||
Balance at Dec. 31, 2019 | $ 14,000 | 48,129,000 | (35,637,000) | 12,506,000 |
Balance, shares at Dec. 31, 2019 | 13,997,452 | |||
Share based compensation, related employees | 260,000 | 260,000 | ||
Relative fair value of warrants issued with notes payable | 83,000 | 83,000 | ||
Shares issued for extension agreement | 71,000 | 71,000 | ||
Shares issued for extension agreement, shares | 36,700 | |||
Net Income (loss) | (3,003,000) | (3,003,000) | ||
Balance at Mar. 31, 2020 | $ 14,000 | 48,543,000 | (38,640,000) | 9,917,000 |
Balance, shares at Mar. 31, 2020 | 14,034,152 | |||
Balance at Dec. 31, 2019 | $ 14,000 | 48,129,000 | (35,637,000) | 12,506,000 |
Balance, shares at Dec. 31, 2019 | 13,997,452 | |||
Net Income (loss) | (8,324,000) | |||
Balance at Jun. 30, 2020 | $ 14,000 | 59,894,000 | (43,961,000) | 15,947,000 |
Balance, shares at Jun. 30, 2020 | 14,134,152 | |||
Balance at Mar. 31, 2020 | $ 14,000 | 48,543,000 | (38,640,000) | 9,917,000 |
Balance, shares at Mar. 31, 2020 | 14,034,152 | |||
Share based compensation, related employees | 246,000 | 246,000 | ||
Relative fair value of warrants issued with notes payable | 2,889,000 | 2,889,000 | ||
Reclassification of warrants from liability to equity | 4,076,000 | 4,076,000 | ||
Shares issued for debt extinguishment | 181,000 | 181,000 | ||
Shares issued for debt extinguishment, shares | 100,000 | |||
Premium on debt extinguishment | 46,000 | 46,000 | ||
Beneficial conversion feature | 3,913,000 | 3,913,000 | ||
Net Income (loss) | (5,321,000) | (5,321,000) | ||
Balance at Jun. 30, 2020 | $ 14,000 | $ 59,894,000 | $ (43,961,000) | $ 15,947,000 |
Balance, shares at Jun. 30, 2020 | 14,134,152 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash Flows From Operating Activities | ||
Net loss | $ (8,324,000) | $ (13,882,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Gain on marketable securities | (516,000) | |
Gain on sale of SRAXmd | (395,000) | |
Stock based compensation | 506,000 | 446,000 |
Amortization of debt issue costs | 453,000 | |
Loss on extinguishment of debt | 1,103,000 | |
Change in fair value of derivative liabilities | (321,000) | 4,837,000 |
Loss on repricing of equity warrants | 342,000 | |
Provision for bad debts | 41,000 | 242,000 |
Depreciation expense | 38,000 | 33,000 |
Amortization of intangibles | 592,000 | 495,000 |
Changes in operating assets and liabilities | ||
Accounts receivable | 117,000 | 807,000 |
Prepaid expenses | 352,000 | (84,000) |
Other current assets | 95,000 | 30,000 |
Accounts payable and accrued expenses | 1,527,000 | (1,363,000) |
Other current liabilities | (354,000) | |
Change in right of use liability | (43,000) | |
Net Cash Used in Operating Activities | (4,734,000) | (8,493,000) |
Cash Flows From Investing Activities | ||
Proceeds from the sale of marketable securities | 397,000 | |
Proceeds from sale of SRAXmd, net | 395,000 | |
Purchase of property and equipment | (53,000) | |
Development of software | (575,000) | (544,000) |
Other assets | 3,000 | |
Net Cash Used by Investing Activities | (175,000) | (202,000) |
Cash Flows From Financing Activities | ||
Proceeds from issuance of OID convertible debentures, less issuance cost | 7,925,000 | |
Proceeds from the issuance of short-term notes payable, less issuance cost | 590,000 | |
Repayment of short-term notes payable | (100,000) | |
Proceeds from payroll protection program loan | 1,074,000 | |
Proceeds from the issuance of notes payable | 2,500,000 | |
Repayment of notes payable | (2,500,000) | |
Proceeds from the issuance of common stock units | 7,229,000 | |
Proceeds from issuance of common stock for warrants exercised | 1,146,000 | |
Net Cash Provided by Financing Activities | 9,489,000 | 8,375,000 |
Net increase (decrease) in Cash | 4,580,000 | (320,000) |
Cash, Beginning of Period | 32,000 | 2,785,000 |
Cash, End of Period | 4,612,000 | 2,465,000 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 176,000 | 100,000 |
Cash paid for income taxes | ||
Noncash investing and financing activities: | ||
Record right-of-use asset | (466,000) | |
Record lease obligation | 466,000 | |
Vesting of prepaid common stock award | 94,000 | |
Relative fair value of warrants issued with term loan | 83,000 | |
Derivative liabilities transferred to equity | 4,076,000 | |
Shares of common stock issued for extension agreement | 252,000 | |
Fair value of BCF for debt financings | 3,913,000 | |
Fair value of warrants issued for debt financings | 2,889,000 | |
Premium on debt financings | 46,000 | |
Original issue discount recorded on OID convertible debentures | 1,250,000 | |
Fair value of marketable securities received for revenue contracts | 2,092,000 | |
Unrealized gain on mark-to-market of marketable securities | 210,000 | |
Payables converted into convertible notes payable | $ 1,169,000 |
Organization and Basis of Prese
Organization and Basis of Presentation | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | NOTE 1 – Organization and Basis Of Presentation Organization SRAX, Inc. (“SRAX”, “we”, “us”, “our” or the “Company”) is a Delaware corporation formed on August 2, 2011. Effective January 1, 2012 we acquired 100% of the member interests and operations of Social Reality, LLC, a California limited liability company formed on August 14, 2009 which began business in May of 2010, in exchange for 2,465,753 shares of our Class A common stock. The former members of Social Reality, LLC owned 100% of our Class A common stock after the acquisition. We are a data technology company offering tools and services to identify and reach consumers for the purpose of marketing and advertising communication. Our technologies assist our clients in: (i) identifying their core consumers and such consumers’ characteristics across various channels in order to discover new and measurable opportunities maximize profits associated with advertising campaigns and (ii) gaining insight into the activities of their customers. We derive our revenues from the: ● Sale and licensing of our proprietary SaaS platform; ● Sales of proprietary consumer data; and ● Sales of digital advertising campaigns. We are headquartered in Los Angeles, California. Basis of Presentation The accompanying unaudited condensed consolidated financial statements and notes thereto are unaudited. The unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and note disclosures normally included in the Company’s annual financial statements have been condensed or omitted. The December 31, 2019 condensed balance sheet data was derived from financial statements but does not include all disclosures required by GAAP. These interim unaudited condensed financial statements, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the interim three and six -month periods ended June 30, 2020 and 2019. The results for the three and six months ended June 30, 2020 are not necessarily indicative of the results to be expected for the full year ending December 31, 2020 or for any future period. These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto for the year ended December 31, 2019, included in the Company’s annual report on Form 10-K filed with the SEC on May 1, 2020. Liquidity and Going Concern The Company has incurred significant losses since its inception and has not demonstrated an ability to generate sufficient revenues from the sales of its goods and services to achieved profitable operations. There can be no assurance that profitable operations will ever be achieved, or if achieved, could be sustained on a continuing basis. In addition, the Company’s operations and specifically, the development of BIGToken will require significant additional financing. These factors create substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Accordingly, the consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business. In making this assessment we performed a comprehensive analysis of our current circumstances including: our financial position, our cash flow and cash usage forecasts for the period ending June 30, 2020, and our current capital structure including outstanding warrants and other equity-based instruments and our obligations and debts. We expect that our existing cash and cash equivalents as of June 30, 2020, along with the proceeds from our recent capital raising transactions will be sufficient to enable us to fund our anticipated level of operations based on our current operating plans, through the first quarter of 2021. Accordingly, we will require additional capital to fund the ongoing development of BIGToken. We anticipate raising additional capital through the private and public sales of our equity or debt securities, or a combination thereof. Although management believes that such capital sources will be available, there can be no assurance that financing will be available to us when needed in order to allow us to continue our operations, or if available, on terms acceptable to us. At June 30, 2020, the Company had $4,612,000 in cash and cash equivalents, combined with the proceeds received on July 1, 2020 from our convertible debenture financing our cash and cash equivalent balances totaled $9,612,000 as of July 1, 2020. If we do not raise sufficient capital in a timely manner, among other things, we may be forced to scale back our operations or cease operations altogether. During the second quarter of 2020, the Company was able to raise net cash proceeds (net of debt repayments, commissions, and fees) of approximately $10.5 million in debt investments. The Company’s capital-raising efforts are ongoing and the Company has undertaken the following to raise capital and reduce its cash burn rate: (i) received a PPP Loan from the Small Business Administration for funding under the Payroll Protection Program, in the amount of $1,074,000 (ii) entered into an “At the Market” sales agreement for the sale of up to $3,125,000 of our equity securities, (iii) sold OID convertible debentures for proceeds of $13,000,000. Based on the Company’s current cash burn rate, it has sufficient capital to operate through the remainder of 2020. If the Company’s operations do not provide for sufficient cash flow to support themselves as well as meet the obligations of our OID Convertible Debentures as they begin to amortize the Company will need to raise additional capital or a refinance of its existing indebtedness. If sufficient capital cannot be raised during the first quarter of 2021, the Company will explore options of curtailing operations by reducing discretionary spending and staffing levels and attempting to operate by only pursuing activities for which it has external financial support. However, there can be no assurance that such external financial support will be sufficient to maintain even limited operations or that the Company will be able to raise additional funds on acceptable terms, or at all. In such a case, the Company might be required to enter into unfavorable agreements or, if that is not possible, be unable to continue operations, and to the extent practicable. Because COVID-19 infections have been reported throughout the United States, certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. Additional, more restrictive proclamations and/or directives may be issued in the future. The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, reduced customer traffic and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but may have a material impact on our business, financial condition and results of operations. The significance of the impact of the COVID-19 outbreak on the Company’s business and the duration for which it may have an impact. Management continues to monitor the business environment for any significant changes that could impact the Company’s operations. Company has taken proactive steps to manage costs and discretionary spending, such as remote working and reducing facility related expenses. Net Loss per Share The Company calculates basic and diluted income (loss) per weighted average share. The Company the weighted-average number of shares of common stock outstanding during the period for the computation of basic earnings per share. Diluted earnings per share include the dilutive effect of all potentially dilutive common stock, including awards granted under its equity incentive compensation plans in the weighted-average number of shares of common stock outstanding. Due to the Company incurring a net loss for the three and six months ended June 30, 2020 and 2019, all potentially dilutive securities were considered anti-dilutive. Recent Accounting Pronouncements The Company reviewed all recently issued pronouncement in 2020, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on the Company’s financial condition or the results of its operations. |
Marketable Securities
Marketable Securities | 6 Months Ended |
Jun. 30, 2020 | |
Cash and Cash Equivalents [Abstract] | |
Marketable Securities | NOTE 2 – Marketable securities During the second quarter of 2020, the Company began offering customers of its Sequire segment who purchase services on the Company’s proprietary SaaS platform the option to pay the contract price in securities issued by the Customer. The customers securities must be trading on a United States securities exchange and the Company must be a fully reporting entity pursuant to SEC Regulation S-X. In accordance with ASC 606 - Revenue Recognition, the Company will value the shares received at the fair market value of the date the contract is executed. The shares received will be accounted for ASC 320 – Investments – Debt and Equity Securities, as such the shares will be classified as available-for-sale securities and will be measured at each reporting period at fair value with the unrealized gain or (loss) as a component of other comprehensive income (loss). Upon the sale of the shares, the Company will record the gain or (loss) in the statement of operations as a component of net income (loss). From these transactions the Company acquired approximately $1,455,000 in securities during the three months ended June 30, 2020. The Company did not receive any equity securities during the three months ended March 31, 2020. The Company’s sales of securities during three months ended June 30, 2020 were sold for approximately $397,000, with a book basis of approximately $21,000 which represented a gain of $376,000, which we recorded as other income included in the gains from marketable securities. The securities acquired during the quarter ended June 30, 2020, had a fair market value on the date of acquisition totaling approximately $1,455,000. As of June 30, 2020, the Company’s marketable securities had a fair market value of approximately $1,666,000. The Company recorded this increase in the fair market value of approximately $210,000 as a component of other income included in the gains from marketable securities. The Company accounts for its investments in equity securities in accordance with ASC 321-10 Investments - Equity Securities. The equity securities may be classified into two categories and accounted for as follows: ● Equity securities with a readily determinable fair value are reported at fair value, with unrealized gains and losses included in earnings. Any dividends received are recorded in interest income, the fair value of equity investments with fair values is primarily obtained from third-party pricing services. ● Equity securities without a readily determinable fair value are reported at their cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer and their impact on fair value. Any dividends received are recorded in interest income. For equity investments without readily determinable fair values, when an orderly transaction for the identical or similar investment of the same issuer is identified, we use the valuation techniques permitted under ASC 820 Fair Value Measurement to evaluate the observed transaction(s) and adjust the fair value of the equity investment |
Sale of Accounts Receivable
Sale of Accounts Receivable | 6 Months Ended |
Jun. 30, 2020 | |
Credit Loss [Abstract] | |
Sale of Accounts Receivable | NOTE 3 – Sale of Accounts Receivable On January 22, 2020 and January 30, 2020, the Company entered into financing agreements, with a single unrelated purchaser to sell, with full recourse, certain accounts receivable with a face value of $454,000 and $75,000, respectively, for a purchase price of $454,000 and $56,000, respectively. Transactions under these agreements were accounted for as financing of accounts receivable and the related accounts receivable was not removed from our consolidated balance sheet at the time of the sales transactions, a liability was recorded for the proceeds received. The terms of the agreements are as follows: Pursuant to the initial purchase agreement, commencing on March 24, 2020, the purchaser may, at its sole discretion, exercise a put option, to cause the Company to purchase from purchaser, any of the outstanding January 22, 2020 receivables which were not collected by the purchaser. Effective April 9, 2020, the put option was extended until June 23, 2020 (See Note 7 below). The purchase price payable by Company to the Purchaser for the receivables upon exercise of the Put Option shall be equal to one hundred and thirty six percent (136%) of the then remaining outstanding balance of the applicable receivables. Upon the occurrence of a payment made on the applicable receivables, the Company is required to pay a true up amount as follows: a. ten percent (10%) of the portion of the receivables which are paid on or before the 30th day following the effective date of the agreement; b. twenty percent (20%) of the portion of the receivables which are paid after the 30 th th c. thirty six percent (36%) of the portion of the receivables which are paid after the 60 th In order to secure performance by the Company, the purchaser was granted a security interest in: (i) 239,029 shares of the Company’s Class A common stock in connection with the sale of the $454,000 receivable and (ii) 29,519 shares of the Company’s Class A common stock in connection with the sale of the $75,000 receivable. The shares have been issued and are being held by the Company’s transfer agent. Since the shares are not outstanding, the Company has treated them as shares reserved for collateral. Since the purchaser of the receivables has recourse, the Company accounted for the purchase price as a liability. Upon the purchaser’s election of the put option or the true up, as applicable the Company will treat the put option price or the true up amounts as interest. On April 9, 2020 the Company entered into an agreement to amend the January 22 and 30 accounts receivable agreements. The purchaser agreed to amend the put option date as described above to June 23, 2020 and June 30, 2020 for the sale of receivables originating on January 22, 2020 and January 30, 2020, respectively. As consideration for the extension the Company agreed to issue the purchaser 32,668 and 4,032 shares of Class A common stock for the receivable sale originating on January 22 , On June 30, 2020, the Purchaser converted the payable of $510,000 and accrued interest of $184,000 (“Old Debt”) into approximately $788,000 of the OID Convertible Notes payable (“Debentures”) (See Note 6 - OID Convertible Debentures). The conversion was treated as an extinguishment of debt as prescribed by ASC 470-50 – Debt Modification and Extinguishment. At the date of issuance, the Debenture had a fair market value of approximately $815,000. The transaction created a loss on extinguishment of approximately $546,000, which consisted of (i) the difference of value between the Old Debt and the fair value of the new debt of approximately $95,000, (ii) the difference between the face value of the debenture and the fair value of the Debenture of approximately $27,000 and (iii) $424,000 for fair value of warrants issued with the Debenture. Also, since the Debenture was convertible into the Company’s common stock, a $27,000 premium associated with the conversion feature was recorded as additional paid in capital. Since the purchaser of the receivables has recourse, the Company accounted for the purchase price as a liability. Upon the purchaser’s election of the put option or the true up, as applicable the Company will treat the put option price or the true up amounts as interest. |
Short Term Promissory Notes
Short Term Promissory Notes | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Short Term Promissory Notes | NOTE 4 – Short Term Promissory Notes In February 2020, the Company entered into three separate short-term promissory notes with an aggregate principal value of $450,000 (the “Notes”), of which $100,000 was borrowed from the Company’s Chief Financial Officer. The notes are due and payable on May 12, 2020 (“Maturity Date”). The notes will accrue interest as follows: (i) on the origination date, ten percent (10%) of the principal amount was added to each note, (ii) on March 12, 2020, an additional ten percent (10%) of the principal amount was added to each note, and (iii) on April 12, 2020, an additional sixteen percent (16%) of the principal amount was added to each note. The note holders were granted security interests (in amounts equal to the face value of their investments on a dollar for share basis) in an aggregate of 450,000 shares of the Company’s Class A common stock (“Security Shares”). The shares have been issued and are being held by the Company’s transfer agent. Since the shares are not outstanding, the Company has treated them as shares reserved for collateral. The interest imputed on the origination date was treated as an original issue discount with the $45,000 amortized over the term of the Notes. On each of the interest date, the Company accrued and expensed the related interest. On the Maturity Date, one of the Note’s was amended to (i) extend the maturity date to December 31, 2020 and (ii) to release 100,000 shares of the Security Shares. The modification was treated as an extinguishment of debt as prescribed by ASC 470-50 – Debt Modification and Extinguishment. Based on the amended terms the fair value of the amended note approximated the book value of the old Note. The fair value of the Security Shares was approximately $181,000, which was expensed as a loss on the extinguishment. On June 30, 2020, the short-term note payable to the Company’s Chief Financial Officer in the amount of approximately $136,000 was repaid from the proceeds of the OID Convertible Notes Payable. On June 30, 2020, the two remaining Note Holders converted the Notes of approximately $350,000 and accrued interest of approximately $126,000 (“Old Debt”) into approximately $541,000 of the OID Convertible Debentures (See Note 6 - OID Convertible Debentures). The conversion was treated as an extinguishment of debt as prescribed by ASC 470-50 – Debt Modification and Extinguishment. At the date of issuance, the Debentures had a fair market value of approximately $560,000. The transaction created a loss on extinguishment of approximately $375,000, which consisted of (i) the difference of value between the Old Debt and the fair value of the Debentures of approximately $65,000, (ii) the difference between the face value of the debenture and the fair value of the Debenture of approximately $19,000 and (iii) $291,000 for fair value of warrants issued with the Debenture. Also, since the Debenture was convertible into the Company’s common stock, a $18,000 premium associated with the conversion feature was recorded as additional paid in capital. |
Term Loan Note
Term Loan Note | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Term Loan Note | NOTE 5 – Term Loan Note On February 28, 2020, the Company entered into a term loan and security agreement with a BRF Finance Co. LLC as lender. Pursuant to the loan agreement, the Company can borrow up to $5,000,000, subject to the conditions described below. Under the loan: (i) the Company received an initial draw of $2,500,000 on February 28, 2020 and (ii) the Company is eligible to receive an additional $2,500,000 loan within (30) days of the Company entering into an at the market sales agreement with the lender and the filing of an at the market offering on Form S-3 with the SEC registering the shares to be sold pursuant to the at the market sales agreement. The Company agreed to file the ATM by May 1, 2020. Additionally, the Company will be required to increase the dollar amount authorized under the at the market sales agreement each time additional capacity of at least $1,000,000 is available under our shelf registration statement. The loan is secured by substantially by all of the assets of the Company pursuant to the loan agreement and the intellectual property security agreement entered into in connection with the transaction. The loan bears interest at ten percent (10%) per annum and has a maturity date of March 1, 2022. Beginning on August 1, 2020, and continuing on the first day of each month thereafter until the maturity date, the Company will make monthly payments of principal and interest on an eighteen (18) month straight line amortization schedule, based on the principal outstanding on July 31, 2020. Additionally, the Company will have the option of a one (1) time payment-in-kind payment for a monthly required payment of principal and interest, which will defer such payments and result in a recalculation of the amortization schedule. In the event that the Company is late on any payments under the Loan, a late charge of three percent (3%) of the amount of the payment due will be assessed. At origination the Company paid lender: (i) an origination fee of $300,000, (ii) $35,000 in attorneys’ fees reimbursement, and (iii) certain other costs and expenses associated with the completion of the loan, including but not limited to escrow fees and recording fees. Accordingly, the Company received net proceeds of approximately $2,164,000 as of May 1, 2020. The Loan may be prepaid in whole or in part at any time at the discretion of the Company. The loan also provides for mandatory prepayments of all of the net cash received upon (i) a sale of the company’ assets, (ii) raising additional capital through the issuance of equity or debt securities, or (iii) sales under the at the market sales agreement described above. As part of the loan the Company agreed to issue to Lender: (i) 500,000 Common Stock purchase warrants on the date of the origination date and (ii) 500,000 Common Stock purchase warrants on the date of the second drawdown. The warrants have an exercise price equal to a 25% premium of the closing price of the Common Stock on their respective date of issue (provided that the exercise price of the warrants cannot be less than $2.50 per share, subject to adjustment contained therein). The initial warrant has an exercise price of $3.60. The warrants will expire on October 31, 2022. The warrants allow for cashless exercise in the event that they are not subject to a registration statement on the six (6) month anniversary of their respective issuances. The warrants do not contain any price protection or non-standard anti-dilution provisions. In accordance with ASC 470 - Debt The Company evaluated the loan and warrant agreements in accordance with ASC 88-15 Derivatives and Hedging. On June 30, 2020, the principal and interest of approximately $2,585,000 was paid from the proceeds from the OID Convertible Debentures. As of June 30, 2020, there is none outstanding loan balance on this account. |
OID Convertible Debentures
OID Convertible Debentures | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
OID Convertible Debentures | NOTE 6 – OID Convertible Debentures On June 25, 2020, the Company entered into a definitive securities purchase agreements (the “Securities Purchase Agreement or Transaction”) with certain accredited and institutional investors (the “Purchasers”) for the purchase and sale of an aggregate of: (i) $16,101,000 in principal amount of Original Issue Discount Senior Secured Convertible Debenture (the “Debentures”) for $14,169,000 (representing a 12% original issue discount) (“Purchase Price”) and (ii) warrants to purchase up to 6,440,561 shares of the Company’s Class A common stock (the “Warrants”) in a private placement (the “Offering”). The Purchase Price consists of (a) $13,000,000 in cash and (b) the cancellation of $1,169,000 in outstanding debt, consisting of the accounts receivable loans of $510,000 with accrued interest of $184,000, and the short-term promissory notes of $350,000 with accrued interest of $125,000. The Debentures, which mature on December 31, 2021, pay interest in cash at the rate of 12.0% per annum commencing on June 30, 2021, with such interest payable quarterly, beginning on October 1, 2021. Commencing after the six month anniversary of the issuance of the Debentures, the Company will be required to make amortization payments (“Amortization Payments”) with each Purchaser having the right to delay such Amortization Payments by a six month period up to three separate times (each, an “Extension”) in exchange for five percent in principal being added to the balance of such applicable Debenture on each such Extension. Accordingly, upon a Purchaser exercising three Extensions, such Purchaser’s Debenture will mature and be due and payable on June 30, 2023. Beginning on the date that the first Amortization Payment is due, and on a monthly basis thereafter, the Company will be required to pay one hundred fifteen percent of the value of one-twelfth of the outstanding principal plus any additional accrued interest due. In the event a Purchaser converts a portion of its Debenture into shares of the Company’s Common Stock, such amount will be deducted from the next applicable Amortization Payment. In the event such conversion exceeds the next applicable Amortization Payment, such excess amount will be deducted, in reverse order, from future Amortization Payments. The Company’s obligations under the Debentures are secured by substantially all of the assets of the Company pursuant to a security agreement (the “Security Agreement”). The Debentures are convertible at the option of the holder into shares of the Company’s common stock at an initial conversion price of $2.69 per share, subject to adjustment in the event of (i) stock splits and dividends, (ii) subsequent rights offerings, (iii) pro-rata distributions, and (iv) certain fundamental transactions, including but not limited to the sale of the Company, business combinations, and reorganizations. The Debentures do not have any price protection or price reset provisions with respect to future issuances of securities. Subject to the Company’s compliance with certain equity conditions, upon ten trading days’ notice to the Purchasers, the Company has the right to redeem the Debentures in cash at 115% of their outstanding principal, plus accrued interest. Additionally, in the event that (i) the Company sells or reprices any securities (each, a “Redemption Financing”), or (ii) the Company disposes of assets (except those sold or transferred in the ordinary course of business) (each, an “Asset Sale”), then the Purchasers shall have the right to cause the Company (a) in the event of a Redemption Financing at a price per Common Stock equivalent of $2.50 or less per share, the Purchasers may mandate that 100% of the proceeds be used to redeem the Debentures (b) in the event of a Redemption Financing at a price per Common Stock equivalent of greater than $2.50 per share, the Purchasers may mandate that up to 50% of the proceeds be used to redeem the Debentures, and (c) in the event of an Asset Sale, the Purchasers may mandate that up to 100% of the proceeds be used to redeem the Debentures. The Debentures also contain certain customary events of default provisions, including, but not limited to, default in payment of principal or interest thereunder, breaches of covenants, agreements, representations or warranties thereunder, the occurrence of an event of default under certain material contracts of the Company, failure to register the shares underlying the Debentures in Warrants (as described below), changes in control of the Company, delisting of its securities from its trading market, and the entering or filing of certain monetary judgments against the Company. Upon the occurrence of any such event of default, the outstanding principal amount of the Debenture plus liquidated damages, interest and other amounts owing in respect thereof through the date of acceleration, shall become, at the Purchaser’s election, immediately due and payable in cash. The Company is also subject to certain negative covenants (unless waived by 67% of the then outstanding Purchasers, and including the lead Purchaser) under the Debentures, including but not limited to, the creation of certain debt obligations, liens on Company assets, amending its charter documents, repayment or repurchase of securities or certain debt of the Company, or the payment of dividends. The Warrants are initially exercisable at 2.50 per share and, are subject to cashless exercise after six months if the shares underlying the Warrants are not subject to an effective resale registration statement. The Warrants are also subject to adjustment in the event of (i) stock splits and dividends, (ii) subsequent rights offerings, (iii) pro-rata distributions, and (iv) certain fundamental transactions, including but not limited to the sale of the Company, business combinations, and reorganizations. The Warrants do not have any price protection or price reset provisions with respect to future issuances of securities. Pursuant to the terms of the Debentures and Warrants, a Purchaser will not have the right to convert any portion of the Debentures or exercise any portion of the Warrants if the holder (together with its affiliates) would beneficially own in excess of 4.99% or 9.99% (at the Purchaser’s option) of the number of shares of Common Stock outstanding immediately after giving effect to such conversion or exercise, as such percentage ownership is determined in accordance with the terms of the Debentures and the Warrants; provided that at the election of a holder and notice to us such percentage ownership limitation may be increased to 9.99%; provided that any increase will not be effective until the 61st day after such notice is delivered from the holder to the Company. The Company also agreed to use proceeds from the Offering to pay (i) $2,500,000 in outstanding principal plus accrued interest pursuant to the Company’s Term Loan and Security Agreement entered into on February 28, 2020 with BRF Finance Co., LLC (the “Term Loan”) and (ii) $136,000 in outstanding short-term promissory notes and accrued interest (collectively, the “Debt Repayments”). In connection with Securities Purchase Agreement, the Company will issue to the Placement Agent (as defined below), an aggregate of 478,854 Common Stock purchase warrants (“PA Warrants”). The PA Warrants are substantially similar to the Warrants, except that the PA Warrants have an exercise price of $3.3625 per share. The fair value of the PA Warrants at issuance was estimated to be $360,000 based on a risk-free interest rate of .11%, an expected term of 2.417 years, an expected volatility of 96% and a 0% dividend yield. Pursuant to a registration rights agreement (“Registration Rights Agreement”), the Company has agreed to file a registration statement registering the resale of the shares of the common stock underlying the Debentures and the Warrants within forty-five days from the date of the Registration Rights Agreement. The Company also agrees to have the registration statement declared effective within 90 days from the date of the Registration Rights Agreement and keep the registration statement continuously effective until the earlier of (i) the date after which all of the securities to be registered thereunder have been sold, or (ii) the date on which all the securities to be registered thereunder may be sold without volume or manner-of-sale restrictions and without current public information pursuant to Rule 144 under the Securities Act. The Company is also obligated to pay the Investors, as partial liquidated damages, a fee of 2.0% of each Purchaser’s subscription amount per month in cash upon the occurrence of certain events, including our failure to file and(or) have the registration statement declared effective within the time periods provided. Bradley Woods & Co. Ltd. (“Placement Agent”) acted as the placement agent, in connection with the sale of the securities pursuant to the Securities Purchase Agreement. Pursuant to an engagement agreement entered into by and between the Company and the Placement Agent, the Company agreed to pay the Placement Agent a cash commission of $1,040,000. Pursuant to the discussion above, the Company also issued an aggregate of 478,854 PA Warrants to the Placement Agent. The Company has agreed to included the shares of our common stock underlying the PA Warrants to be included in the registration statement to be filed. Additionally, upon the exercise of Warrants issued in the Offering, the Placement Agent will be entitled to eight percent (8%) of the cash proceeds received from such exercises. The Transaction closed on June 30, 2020 (the “Closing Date”), with approximately $3,800,000 cash proceeds received prior to Closing date, $4,200,000 received on the closing date and $5,000,000 received after the closing date. The gross proceeds received from the Offering were approximately $13,000,000 and net proceeds of approximately $9,100,000 after deducting the Placement Agent fees, the Debt Repayments and other offering expenses. Also, the Company reimbursed the lead Purchaser $75,000 for legal fees, which was deducted from the required subscription amount to be paid. The Company evaluated all of the associated financial instruments in accordance with ASC 88-15 Derivatives and Hedging. In accordance with ASC 470 - Debt Principal balance $ 10,420,000 Debt discount - OID (1,092,000 ) Debt discount - BCF (3,913,000 ) Debt discount warrants (1,814,000 ) Debt discount fees (1,073,000 ) Net book value 2,528,000 Less OID convertible debentures, short term 1,264,000 OID convertible debentures, long term $ 1,264,000 |
Paycheck Protection Program Loa
Paycheck Protection Program Loan | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Paycheck Protection Program Loan | NOTE 7 - PAYCHECK PROTECTION PROGRAM LOAN On April 17, 2020, we entered into a promissory note evidencing an unsecured approximately $1,075,000 loan under the Paycheck Protection Program (PPP). The loan is being made through Cross River Bank. The term of the loan is two years with an interest rate of 1%, which shall be deferred for the first six months of the term of the loan. The promissory note evidencing the loan contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, or provisions of the promissory note. The occurrence of an event of default may result in the repayment of all amounts outstanding, collection of all amounts owing from the Company, and/or filing suit and obtaining judgment against the Company. As of June 30, 2020, the short-term and long-term balances were $403,000 and $671,000. |
Right to Use Asset
Right to Use Asset | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Right to Use Asset | NOTE 8 – Right To Use Asset We adopted ASU No. 2016-02, Leases Operating leases are included in the right-of-use lease assets, other current liabilities and long-term lease liabilities on the Consolidated Balance Sheet. Right-of-use assets and lease liabilities are recognized at each lease’s commencement date based on the present values of its lease payments over its respective lease term. When a borrowing rate is not explicitly available for a lease, our incremental borrowing rate is used based on information available at the lease’s commencement date to determine the present value of its lease payments. Operating lease payments are recognized on a straight-line basis over the lease term. We had no financing leases as of June 30, 2020. We have operating leases for office space. Our leases have remaining lease terms of 3.25 years. We consider a renewal options in determining the lease term used to establish our right-of-use assets and lease liabilities when it is determined that it is reasonably certain that the renewal option will be exercised. As of June 30, 2020, there were no material variable lease costs or sublease income. Cash paid for operating leases are classified in operating expenses and were $44,000 and $109,000 in the three and six months ended June 30, 2020 and $76,000 and $153,000 in the three and six months ended June 30, 2019. which is classified in operating activities. The following tables summarize the lease expense for the three and six months ended June 30: Three Months Ended June 30, 2020 2019 Operating lease expense $ 21,000 $ 41,000 Short-term lease expense 23,000 35,000 Total lease expense $ 44,000 $ 76,000 Six Months Ended June 30, 2020 2019 Operating lease expense $ 61,000 $ 84,000 Short-term lease expense 48,000 69,000 Total lease expense $ 109,000 $ 153,000 The below table summarizes these lease asset and liability accounts presented on our accompanying Consolidated Balance Sheets: Operating Leases* Consolidated Balance Sheet Caption Balance as of Operating lease right-of-use assets - non-current Right of Use Asset $ 413,000 Operating lease liabilities - current Accrued liabilities $ 90,000 Operating lease liabilities - non-current Lease Obligation – Long-Term $ 309,000 Total operating lease liabilities $ 399,000 Components of Lease Expense We recognize lease expense on a straight-line basis over the term of our operating leases, as reported within “selling, general and administrative” expense on the accompanying condensed consolidated statement of operations. |
Derivative Liabilities
Derivative Liabilities | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liabilities | NOTE 9 – Derivative Liabilities The Company identified embedded features in the Derivative Warrant Instruments which caused the warrants to be classified as a liability. These embedded features included the right for the holders to request for the Company to cash settle the Warrant Instruments from the Holder by paying to the Holder an amount of cash equal to the Black-Scholes value of the remaining unexercised portion of the Derivative Warrant Instruments on the date of the consummation of a fundamental transaction. The accounting treatment of derivative financial instruments requires that the Company treat the whole instrument as liability and record the fair value of the instrument as a derivative as of the inception date of the instrument and to adjust the fair value of the instrument as of each subsequent balance sheet dates. On June 30, 2020, the Company entered into an agreement to amend the warrants underlying the warrant liabilities the Company classified as Liabilities as of December 31, 2019 and March 31, 2020. The amended agreement removed the embedded features that cause the warrants to be accounted for as liabilities. Pursuant to ASC 815 and ASC 480, the Company has reclassified these warrants as additional paid in capital as of June 30, 2020, due to the existence of a fundamental transaction clause the precluded equity classification. On June 30, 2020, each of the holders of warrants issued by the Company in 2017 and 2018 agreed to irrevocably waive their rights to a cash settlement due too in the event the Company has a fundamental transaction. As a result, this derivative liability was reversed to Nil and reclassified into stockholders equity under Additional Paid-In Capital. As consideration for the amendment, the Company issued contingent consideration in the form of warrants linked to the value of BIGtoken should it be transferred to a third-party purchaser. The form of the consideration issued is a warrant to purchase up to approximately 0.35% of BIGtoken’s acquiring entity on a fully-diluted basis. The exercise price of the warrants will be calculated by imputing a $10 million pre-money valuation on the acquiring entity. The form of the warrant is to be substantially similar to the warrants issued in conjunction with the OID Convertible Debentures. The Due to the uncertainty around the transfer of the BIGtoken business to a third-party the Company has determined that the warrant is a contingent consideration, therefore the value will be determined on the date the transaction occurs and will be recorded as a transactional expenses at that time. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 10 – Stockholders’ Equity Authorized Shares Preferred Stock We are authorized to issue 50,000,000 of preferred stock, par value $0.001, of which 200,000 shares were designated as Series 1 Preferred Stock. Our board of directors, without further stockholder approval, may issue preferred stock in one or more series from time to time and fix or alter the designations, relative rights, priorities, preferences, qualifications, limitations and restrictions of the shares of each series. The rights, preferences, limitations and restrictions of different series of preferred stock may differ with respect to dividend rates, amounts payable on liquidation, voting rights, conversion rights, redemption provisions, sinking fund provisions and other matters. Our board of directors may authorize the issuance of preferred stock, which ranks senior to our common stock for the payment of dividends and the distribution of assets on liquidation. In addition, our board of directors can fix limitations and restrictions, if any, upon the payment of dividends on both classes of our common stock to be effective while any shares of preferred stock are outstanding. Common Stock We are authorized to issue an aggregate of 259,000,000 shares of common stock. Our certificate of incorporation provides that we will have two classes of common stock: Class A common stock (authorized 250,000,000 shares, par value $0.001), which has one vote per share, and Class B common stock (authorized 9,000,000 shares, par value $0.001), which has ten votes per share. Any holder of Class B common stock may convert his or her shares at any time into shares of Class A common stock on a share-for-share basis. Otherwise the rights of the two classes of common stock are identical. As of June 30, 2020, the Company had 14,134,152 shares issued and outstanding. As of December 31, 2019, the Company had 13,997,452 shares issued and outstanding. Common Stock Warrants In conjunction with a Term Loan Note, the Company granted the borrower warrants to purchase up to 500,000 shares of Common Stock at an exercise price of $3.60 per warrant share. There were no warrants exercised during the three or six months ended June 30, 2020. During the three and six months ended June 30, 2020, the Company issued approximately 4,646,695 and 5,146,695 common stock purchase warrants (see Note 5 – Term Loan Note and Note 6 – OID Convertible Debentures) Stock Based Compensation During the six months ended June 30, 2020, the Company issued 9,408 common stock options to each of our independent directors for their services. The options have a strike price of $1.95 and vest one year from their issue date or April 16, 2021. The options have a term of seven years from their issue dated. Stock based compensation expense for the three and six months ended June 30, 2020, for all granted equity instruments, was $260,000 and $506,000, respectively. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | NOTE 11 – Fair Value of Financial Instruments The carrying amounts of certain financial instruments, including cash and cash equivalents, restricted cash and accounts payable and accrued expenses, approximate their respective fair values due to the short-term nature of such instruments. Assets and Liabilities Measured at Fair Value on a Recurring Basis The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. This determination requires significant judgments to be made. The Company had the following financial assets of June 30, 2020 and December 31, 2019: Quoted Prices in Significant Other Significant Balance as of Active Markets for Observable Unobservable June 30, Identical Assets Inputs Inputs 2020 (Level 1) (Level 2) (Level 3) Marketable securities 1,666,000 1,666,000 — — Total assets $ 1,666,000 $ 1,666,000 $ — $ — Quoted Prices in Significant Other Significant Balance as of Active Markets for Observable Unobservable December 31, Identical Assets Inputs Inputs 2019 (Level 1) (Level 2) (Level 3) Marketable securities 22,000 22,000 — — Total assets $ 22,000 $ 22,000 $ — $ — |
Segment Reporting
Segment Reporting | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Reporting | NOTE 12 – Segment Reporting The Company has two operating and reportable segments: (i) Investor data analysis technologies ( Sequire BIGtoken). Our Chief Operating Decision Maker (CODM) does not evaluate operating segments using asset or liability information. The following table presents revenues and gross profits by reportable segment. For the Three Months Ended June 30, SEQUIRE BIGToken Corporate and Other Consolidated 2020 2019 2020 2019 2020 2019 2020 2019 Media / Data $ 540,000 $ - $ 377,000 $ 841,000 $ - $ - $ 917,000 $ 841,000 Platform Subscription 206,000 9,000 - - - - 206,000 9,000 Other 42,000 54,000 42,000 54,000 Total Revenue 746,000 9,000 377,000 841,000 42,000 54,000 1,165,000 904,000 Cost of Revenue 231,000 - 163,000 379,000 2,000 33,000 396,000 412,000 Gross profit $ 515,000 $ 9,000 $ 214,000 $ 462,000 $ 40,000 $ 21,000 $ 769,000 $ 492,000 69.0 % 100.0 % 56.8 % 54.9 % 97.9 % 41.8 % 66.2 % 54.6 % For the Six Months Ended June 30, SEQUIRE BIGToken Corporate and Other Consolidated 2020 2019 2020 2019 2020 2019 2020 2019 Media / Data $ 567,000 $ - $ 570,000 $ 1,375,000 $ - $ - $ 1,137,000 $ 1,375,000 Platform Subscription 286,000 10,000 - - - - 286,000 10,000 Other - - - - 93,000 111,000 93,000 111,000 Total Revenue 853,000 10,000 570,000 1,375,000 93,000 111,000 1,516,000 1,496,000 Cost of Revenue 245,000 - 262,000 678,000 1,000 76,000 508,000 754,000 Gross profit $ 608,000 $ 10,000 $ 308,000 $ 697,000 $ 92,000 $ 35,000 $ 1,008,000 $ 742,000 71.3 % 100.0 % 54.0 % 50.7 % 98.9 % 31.5 % 66.5 % 49.6 % Revenue Disaggregation. The following table breaks out the revenue types for Sequire and BIGtoken Three Months Ended Six Months Ended Change June 30, June 30, Three Months Six Months 2020 2019 2020 2019 Dollar Percentage Dollar Percentage Media / Data $ 540,000 $ - $ 567,000 $ - $ 540,000 n/a $ 567,000 n/a Platform Subscription 206,000 9,000 286,000 10,000 197,000 2189 % 276,000 2760 % Sequire revenues 746,000 9,000 853,000 10,000 737,000 8189 % 843,000 8430 % Media / Data 377,000 841,000 570,000 1,375,000 (464,000 ) -55 % (805,000 ) -59 % Platform Subscription - - - - - n/a - n/a BIGtoken & Media vertical revenues 377,000 841,000 570,000 1,375,000 (464,000 ) -55 % (805,000 ) -59 % Other revenues 42,000 54,000 93,000 111,000 (8,000 ) -15 % (17,000 ) -15 % Total revenues $ 1,165,000 $ 904,000 $ 1,516,000 $ 1,496,000 $ 265,000 29 % $ 21,000 1 % As of June 30, 2020 and December 31, 2019, revenue contract liabilities were approximately $1,094,000 and $0, respectively. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 13 – Subsequent Events The Company received the remaining $5,000,000 in cash proceeds outstanding from the sale of the OID Convertible Notes on July 1, 2020 (NOTE 6 – OID Convertible Debentures ) |
OID Convertible Debentures (Tab
OID Convertible Debentures (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of OID Convertible Debentures | The following table presents the balance of the OID Convertible Debentures at the contractual face amount net of discounts: Principal balance $ 10,420,000 Debt discount - OID (1,092,000 ) Debt discount - BCF (3,913,000 ) Debt discount warrants (1,814,000 ) Debt discount fees (1,073,000 ) Net book value 2,528,000 Less OID convertible debentures, short term 1,264,000 OID convertible debentures, long term $ 1,264,000 |
Right to Use Asset (Tables)
Right to Use Asset (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Schedule of Component of Lease Expense | The following tables summarize the lease expense for the three and six months ended June 30: Three Months Ended June 30, 2020 2019 Operating lease expense $ 21,000 $ 41,000 Short-term lease expense 23,000 35,000 Total lease expense $ 44,000 $ 76,000 Six Months Ended June 30, 2020 2019 Operating lease expense $ 61,000 $ 84,000 Short-term lease expense 48,000 69,000 Total lease expense $ 109,000 $ 153,000 |
Schedule of Operating Lease Assets and Liabilities | The below table summarizes these lease asset and liability accounts presented on our accompanying Consolidated Balance Sheets: Operating Leases* Consolidated Balance Sheet Caption Balance as of Operating lease right-of-use assets - non-current Right of Use Asset $ 413,000 Operating lease liabilities - current Accrued liabilities $ 90,000 Operating lease liabilities - non-current Lease Obligation – Long-Term $ 309,000 Total operating lease liabilities $ 399,000 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value On Recurring Basis | The Company had the following financial assets of June 30, 2020 and December 31, 2019: Quoted Prices in Significant Other Significant Balance as of Active Markets for Observable Unobservable June 30, Identical Assets Inputs Inputs 2020 (Level 1) (Level 2) (Level 3) Marketable securities 1,666,000 1,666,000 — — Total assets $ 1,666,000 $ 1,666,000 $ — $ — Quoted Prices in Significant Other Significant Balance as of Active Markets for Observable Unobservable December 31, Identical Assets Inputs Inputs 2019 (Level 1) (Level 2) (Level 3) Marketable securities 22,000 22,000 — — Total assets $ 22,000 $ 22,000 $ — $ — |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Revenue and Gross Profit by Reportable Segment | The following table presents revenues and gross profits by reportable segment. For the Three Months Ended June 30, SEQUIRE BIGToken Corporate and Other Consolidated 2020 2019 2020 2019 2020 2019 2020 2019 Media / Data $ 540,000 $ - $ 377,000 $ 841,000 $ - $ - $ 917,000 $ 841,000 Platform Subscription 206,000 9,000 - - - - 206,000 9,000 Other 42,000 54,000 42,000 54,000 Total Revenue 746,000 9,000 377,000 841,000 42,000 54,000 1,165,000 904,000 Cost of Revenue 231,000 - 163,000 379,000 2,000 33,000 396,000 412,000 Gross profit $ 515,000 $ 9,000 $ 214,000 $ 462,000 $ 40,000 $ 21,000 $ 769,000 $ 492,000 69.0 % 100.0 % 56.8 % 54.9 % 97.9 % 41.8 % 66.2 % 54.6 % For the Six Months Ended June 30, SEQUIRE BIGToken Corporate and Other Consolidated 2020 2019 2020 2019 2020 2019 2020 2019 Media / Data $ 567,000 $ - $ 570,000 $ 1,375,000 $ - $ - $ 1,137,000 $ 1,375,000 Platform Subscription 286,000 10,000 - - - - 286,000 10,000 Other - - - - 93,000 111,000 93,000 111,000 Total Revenue 853,000 10,000 570,000 1,375,000 93,000 111,000 1,516,000 1,496,000 Cost of Revenue 245,000 - 262,000 678,000 1,000 76,000 508,000 754,000 Gross profit $ 608,000 $ 10,000 $ 308,000 $ 697,000 $ 92,000 $ 35,000 $ 1,008,000 $ 742,000 71.3 % 100.0 % 54.0 % 50.7 % 98.9 % 31.5 % 66.5 % 49.6 % |
Schedule of Revenue Disaggregation | The following table breaks out the revenue types for Sequire and BIGtoken Three Months Ended Six Months Ended Change June 30, June 30, Three Months Six Months 2020 2019 2020 2019 Dollar Percentage Dollar Percentage Media / Data $ 540,000 $ - $ 567,000 $ - $ 540,000 n/a $ 567,000 n/a Platform Subscription 206,000 9,000 286,000 10,000 197,000 2189 % 276,000 2760 % Sequire revenues 746,000 9,000 853,000 10,000 737,000 8189 % 843,000 8430 % Media / Data 377,000 841,000 570,000 1,375,000 (464,000 ) -55 % (805,000 ) -59 % Platform Subscription - - - - - n/a - n/a BIGtoken & Media vertical revenues 377,000 841,000 570,000 1,375,000 (464,000 ) -55 % (805,000 ) -59 % Other revenues 42,000 54,000 93,000 111,000 (8,000 ) -15 % (17,000 ) -15 % Total revenues $ 1,165,000 $ 904,000 $ 1,516,000 $ 1,496,000 $ 265,000 29 % $ 21,000 1 % |
Organization and Basis of Pre_2
Organization and Basis of Presentation (Details Narrative) - USD ($) | Jan. 01, 2012 | Jun. 30, 2020 | Jun. 30, 2019 | Jul. 01, 2020 | Dec. 31, 2019 |
Cash and cash equivalents | $ 4,612,000 | $ 32,000 | |||
Proceeds from debt | 10,500,000 | ||||
Proceeds from OID convertible debentures | 7,925,000 | ||||
Convertible Debentures [Member] | |||||
Proceeds from OID convertible debentures | 13,000,000 | ||||
Payroll Protection Program [Member] | |||||
Proceeds from debt | 1,074,000 | ||||
Sales Agreement [Member] | |||||
Proceeds from debt | $ 3,125,000 | ||||
Subsequent Event [Member] | |||||
Cash and cash equivalents | $ 9,612,000 | ||||
Social Reality, LLC [Member] | Class A Common Stock [Member] | |||||
Ownership percentage | 100.00% | ||||
Shares issued in business acquisition | 2,465,753 | ||||
Social Reality, LLC [Member] | Class A Common Stock [Member] | Former Members [Member] | |||||
Ownership percentage | 100.00% |
Marketable Securities (Details
Marketable Securities (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | |
Cash and Cash Equivalents [Abstract] | |||
Marketable securities acquired | $ 1,455,000 | ||
Proceeds from the sale of marketable securities | $ 397,000 | ||
Gain on marketable securities | 21,000 | ||
Marketable securities | $ 376,000 | 376,000 | |
Increase in marketable securities fair value | $ 210,000 |
Sale of Accounts Receivable (De
Sale of Accounts Receivable (Details Narrative) - USD ($) | Mar. 24, 2020 | Jan. 30, 2020 | Jan. 22, 2020 | Jun. 30, 2020 | Jun. 30, 2019 |
Accounts receivable | $ 75,000 | $ 454,000 | |||
Accounts receivable, purchase | 56,000 | $ 454,000 | |||
Description of sale of accounts receivable | Upon the occurrence of a payment made on the applicable receivables, the Company is required to pay a true up amount as follows: a) ten percent (10%) of the portion of the receivables which are paid on or before the 30th day following the effective date of the agreement; b) twenty percent (20%) of the portion of the receivables which are paid after the 30th day but on or before the 60th day following the effective date of the agreement; and d) thirty six percent (36%) of the portion of the receivables which are paid after the 60th day following the effective date of the agreement. | ||||
Loss on extinguishment | $ (1,103,000) | ||||
Difference between face value and fair value | $ 95,000 | ||||
Payable [Member] | |||||
Converted debt | 510,000 | ||||
Accrued Interest [Member] | |||||
Converted debt | 184,000 | ||||
Debentures [Member] | |||||
Convertible debt | 788,000 | ||||
Fair value of debenture | 815,000 | ||||
Loss on extinguishment | (546,000) | ||||
Difference between face value and fair value | 27,000 | ||||
Fair value of warrant issued | 424,000 | ||||
Conversion premium | $ 27,000 | ||||
Class A Common Stock [Member] | |||||
Sale of stock, number of shares issued in transaction | 29,519 | 239,029 | |||
Agreements to Sell Accounts Receivable [Member] | |||||
Percentage of receivables upon exercise of put option | 136.00% | ||||
Agreements to Sell Accounts Receivable Ammended [Member] | |||||
Description of sale of accounts receivable | On April 9, 2020 the Company entered into an agreement to amend the January 22 and 30 accounts receivable agreements. The purchaser agreed to amend the put option date as described above to June 23, 2020 and June 30, 2020 for the sale of receivables originating on January 22, 2020 and January 30, 2020, respectively. As consideration for the extension the Company agreed to issue the purchaser 32,668 and 4,032 shares of Class A common stock for the receivable sale originating on January 22, 2020 and January 30, 2020, respectively. | ||||
Agreements to Sell Accounts Receivable Ammended [Member] | Class A Common Stock [Member] | |||||
Sale of stock, number of shares issued in transaction | 4,032 | 32,668 |
Short Term Promissory Notes (De
Short Term Promissory Notes (Details Narrative) - USD ($) | Feb. 28, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jan. 30, 2020 |
Repayment of short-term note payable | $ 2,500,000 | |||
Loss on extinguishment | (1,103,000) | |||
Difference between face value and fair value | $ 95,000 | |||
Accrued Interest [Member] | ||||
Converted debt | 184,000 | |||
Debentures [Member] | ||||
Convertible debt | 788,000 | |||
Fair value of debenture | 815,000 | |||
Loss on extinguishment | (546,000) | |||
Difference between face value and fair value | 27,000 | |||
Fair value of warrant issued | 424,000 | |||
Conversion premium | $ 27,000 | |||
Short-Term Promissory Notes [Member] | ||||
Debt instrument, face amount | $ 450,000 | |||
Debt instrument, maturity date | Apr. 12, 2020 | Dec. 31, 2020 | ||
Debt instrument, description | The notes are due and payable on May 12, 2020. The notes will accrue interest as follows: (i) on the origination date, ten percent (10%) of the principal amount was added to each note, (ii) on March 12, 2020, an additional ten percent (10%) of the principal amount was added to each note, and (iii) on April 12, 2020, an additional sixteen percent (16%) of the principal amount was added to each note. | |||
Debt conversion, converted instrument, shares issued | 450,000 | |||
Debt instrument, original issue discount | $ 45,000 | |||
Security shares | 100,000 | |||
Fair value of the security shares | $ 181,000 | |||
Converted debt | 350,000 | |||
Difference between face value and fair value | 65,000 | |||
Short-Term Promissory Notes [Member] | Accrued Interest [Member] | ||||
Converted debt | 126,000 | |||
Short-Term Promissory Notes [Member] | Debentures [Member] | ||||
Convertible debt | 541,000 | |||
Fair value of debenture | 560,000 | |||
Loss on extinguishment | 375,000 | |||
Difference between face value and fair value | 19,000 | |||
Fair value of warrant issued | 291,000 | |||
Conversion premium | 18,000 | |||
Short-Term Promissory Notes [Member] | Chief Financial Officer [Member] | ||||
Debt instrument, face amount | $ 100,000 | |||
Repayment of short-term note payable | $ 136,000 |
Term Loan Note (Details Narrati
Term Loan Note (Details Narrative) - USD ($) | May 01, 2020 | Feb. 28, 2020 | Jun. 30, 2020 | Jun. 30, 2019 |
Proceeds from notes payable | $ 2,500,000 | |||
Exercise price of warrant | $ 3.60 | |||
Proceeds from issuance of warrant | 1,146,000 | |||
Repayment of loan priciple and interest | 100,000 | |||
Warrants [Member] | ||||
Class of warrant issued | 500,000 | |||
Exercise price of warrant | $ 3.60 | |||
Warrant expire date | Oct. 31, 2022 | |||
Proceeds from issuance of warrant | $ 83,000 | |||
Warrants [Member] | Maximum [Member] | ||||
Exercise price of warrant | $ 2.50 | |||
Warrants [Member] | Second Drawdown [Member] | ||||
Class of warrant issued | 500,000 | |||
Term loan [Member] | ||||
Term loan, maximum borrowing capacity | $ 5,000,000 | |||
Proceeds from notes payable | $ 2,164,000 | 2,500,000 | ||
Debt instrument, unused borrowing capacity, amount | 2,500,000 | |||
Debt instrument, additional borrowing capacity | $ 1,000,000 | |||
Debt instrument, interest rate | 10.00% | |||
Debt instrument, maturity date | Mar. 1, 2022 | |||
Debt instrument, payment term description | The Company will make monthly payments of principal and interest on an eighteen (18) month straight line amortization schedule, based on the principal outstanding on July 31, 2020. Additionally, the Company will have the option of a one (1) time payment-in-kind payment for a monthly required payment of principal and interest, which will defer such payments and result in a recalculation of the amortization schedule. In the event that the Company is late on any payments under the Loan, a late charge of three percent (3%) of the amount of the payment due will be assessed. | |||
Debt instrument origination fee | $ 300,000 | |||
Attorneys fees | $ 35,000 | |||
Repayment of loan priciple and interest | 2,585,000 | |||
Outstanding loan |
OID Convertible Debentures (Det
OID Convertible Debentures (Details Narrative) | Jun. 25, 2020USD ($)$ / sharesshares | Feb. 28, 2020USD ($) | Jun. 30, 2020USD ($)$ / sharesshares | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) |
Accounts receivable | $ 647,000 | $ 805,000 | |||
Warrant exercise price | $ / shares | $ 3.60 | ||||
Warrant or right, reason for issuance, description | The form of the consideration issued is a warrant to purchase up to approximately 0.35% of BIGtoken’s acquiring entity on a fully-diluted basis. | ||||
Repayment of short-term note payable | $ 2,500,000 | ||||
Warrant issued | shares | 500,000 | ||||
Proceeds from issuance of debt | $ 10,500,000 | ||||
OID Convertible Debentures [Members] | |||||
Debt principle amount | $ 16,101,000 | ||||
Debt discount | $ 14,169,000 | ||||
Original issue discount percentage | 12.00% | ||||
Warrant to purchase common stock | shares | 6,440,561 | ||||
Purchase price | $ 13,000,000 | ||||
Outstanding loan | 1,169,000 | ||||
Accounts receivable | 510,000 | ||||
Short term promissory notes | 350,000 | ||||
Accrued interest | $ 125,000 | ||||
Debt instrument, interest rate | 12.00% | ||||
Initial conversion pric | $ / shares | $ 2.69 | ||||
Warrant exercise price | $ / shares | $ 2.50 | ||||
OID Convertible Debentures [Members] | |||||
Debt principle amount | 10,420,000 | ||||
Debt discount | 1,092,000 | ||||
Debt instrument, maturity date | Dec. 31, 2021 | ||||
Debt instrument discription | Subject to the Company’s compliance with certain equity conditions, upon ten trading days’ notice to the Purchasers, the Company has the right to redeem the Debentures in cash at 115% of their outstanding principal, plus accrued interest. Additionally, in the event that (i) the Company sells or reprices any securities (each, a “Redemption Financing”), or (ii) the Company disposes of assets (except those sold or transferred in the ordinary course of business) (each, an “Asset Sale”), then the Purchasers shall have the right to cause the Company (a) in the event of a Redemption Financing at a price per Common Stock equivalent of $2.50 or less per share, the Purchasers may mandate that 100% of the proceeds be used to redeem the Debentures (b) in the event of a Redemption Financing at a price per Common Stock equivalent of greater than $2.50 per share, the Purchasers may mandate that up to 50% of the proceeds be used to redeem the Debentures, and (c) in the event of an Asset Sale, the Purchasers may mandate that up to 100% of the proceeds be used to redeem the Debentures. | ||||
Debt instrument, restrictive covenants | The Company is also subject to certain negative covenants (unless waived by 67% of the then outstanding Purchasers, and including the lead Purchaser) under the Debentures, including but not limited to, the creation of certain debt obligations, liens on Company assets, amending its charter documents, repayment or repurchase of securities or certain debt of the Company, or the payment of dividends. | ||||
Warrant or right, reason for issuance, description | Pursuant to the terms of the Debentures and Warrants, a Purchaser will not have the right to convert any portion of the Debentures or exercise any portion of the Warrants if the holder (together with its affiliates) would beneficially own in excess of 4.99% or 9.99% (at the Purchaser’s option) of the number of shares of Common Stock outstanding immediately after giving effect to such conversion or exercise, as such percentage ownership is determined in accordance with the terms of the Debentures and the Warrants; provided that at the election of a holder and notice to us such percentage ownership limitation may be increased to 9.99%; provided that any increase will not be effective until the 61st day after such notice is delivered from the holder to the Company. | ||||
Payment of outstanding debt | $ 2,500,000 | ||||
Repayment of short-term note payable | $ 136,000 | ||||
Proceeds from issuance of debt | 4,200,000 | ||||
Proceeds from offering gross | 13,000,000 | ||||
Proceeds from offering, net | 9,100,000 | ||||
Legal fees | $ 1,073,000 | ||||
OID Convertible Debentures [Members] | Securities Purchase Agreement [Member] | |||||
Warrant to purchase common stock | shares | 478,854 | ||||
Warrant exercise price | $ / shares | $ 3.3625 | ||||
Estimated warrant issuance | shares | 360,000 | ||||
Legal fees | $ 75,000 | ||||
OID Convertible Debentures [Members] | Securities Purchase Agreement [Member] | Bradley Woods & Co. Ltd [Member] | |||||
Commission | $ 1,040,000 | ||||
Warrant issued | shares | 478,854 | ||||
OID Convertible Debentures [Members] | Securities Purchase Agreement [Member] | Risk Free Interest Rate [Member] | |||||
Fair value of warrant liability, measurement input, percentage | .11 | ||||
OID Convertible Debentures [Members] | Securities Purchase Agreement [Member] | Expected Term [Member] | |||||
Fair value assumption, warrant expected term | 2 years 50 months 1 day | ||||
OID Convertible Debentures [Members] | Securities Purchase Agreement [Member] | Expected Volatility [Member] | |||||
Fair value of warrant liability, measurement input, percentage | 96 | ||||
OID Convertible Debentures [Members] | Securities Purchase Agreement [Member] | Expected Dividend Yield [Member] | |||||
Fair value of warrant liability, measurement input, percentage | 0 | ||||
OID Convertible Debentures [Members] | Prior to Closing date [Members] | |||||
Proceeds from issuance of debt | $ 3,800,000 | ||||
OID Convertible Debentures [Members] | After the Closing date [Members] | |||||
Proceeds from issuance of debt | $ 5,000,000 | ||||
OID Convertible Debentures [Members] | Accounts Receivable [Members] | |||||
Accrued interest | $ 184,000 |
OID Convertible Debentures - Sc
OID Convertible Debentures - Schedule of OID Convertible Debentures (Details) - OID Convertible Debentures [Members] | Jun. 30, 2020USD ($) |
Principal balance | $ 10,420,000 |
Debt discount - OID | (1,092,000) |
Debt discount - BCF | (3,913,000) |
Debt discount warrants | (1,814,000) |
Debt discount fees | (1,073,000) |
Net book value | 2,528,000 |
Less OID convertible debentures, short term | 1,264,000 |
OID convertible debentures, long term | $ 1,264,000 |
Paycheck Protection Program L_2
Paycheck Protection Program Loan (Details Narrative) - Paycheck Protection Program Loan [Member] - USD ($) | Apr. 17, 2020 | Jun. 30, 2020 |
Unsecured loan | $ 1,074,488 | |
Term loan | 2 years | |
Interest rate | 1.00% | |
Short term loan | $ 403,000 | |
Long term loan | $ 671,000 |
Right to Use Asset (Details Nar
Right to Use Asset (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Leases [Abstract] | ||||
Remaining lease term | 3 years 2 months 30 days | 3 years 2 months 30 days | ||
Variable lease costs | ||||
Sublease income | ||||
Lease expense | $ 44,000 | $ 76,000 | $ 109,000 | $ 153,000 |
Right to Use Asset - Schedule o
Right to Use Asset - Schedule of Component of Lease Expense (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Leases [Abstract] | ||||
Operating lease expense | $ 21,000 | $ 41,000 | $ 61,000 | $ 84,000 |
Short-term lease expense | 23,000 | 35,000 | 48,000 | 69,000 |
Total lease expense | $ 44,000 | $ 76,000 | $ 109,000 | $ 153,000 |
Right to Use Asset - Schedule_2
Right to Use Asset - Schedule of Operating Lease Assets and Liabilities (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Operating lease right-of-use assets - non-current | $ 413,000 | $ 456,000 |
Operating lease liabilities - current | 90,000 | |
Operating lease liabilities - non-current | 309,000 | $ 352,000 |
Total operating lease liabilities | $ 399,000 |
Derivative Liabilities (Details
Derivative Liabilities (Details Narrative) | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Warrant or right, reason for issuance, description | The form of the consideration issued is a warrant to purchase up to approximately 0.35% of BIGtoken’s acquiring entity on a fully-diluted basis. |
Pre-money valuation on the acquiring entity | $ 10,000,000 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Preferred stock shares authorized | 50,000,000 | 50,000,000 | ||
Preferred stock par value | $ 0.001 | $ 0.001 | ||
Common stock shares authorized | 259,000,000 | 259,000,000 | ||
Common stock shares issued | 14,134,152 | 14,134,152 | 13,997,452 | |
Common stock shares outstanding | 14,134,152 | 14,134,152 | 13,997,452 | |
Warrants to purchase common stock shares | 500,000 | 500,000 | ||
Warrants exercise price per share | $ 3.60 | $ 3.60 | ||
Number of stock issued for purchase warrants | 4,646,695 | 5,146,695 | ||
Stock based compensation expenses | $ 260,000 | $ 506,000 | $ 446,000 | |
Independent Directors [Member] | ||||
Number of stock options issued | 9,408 | |||
Stock issued price per share | $ 1.95 | $ 1.95 | ||
Options vesting period | 1 year | |||
Options term | 7 years | |||
Series 1 Preferred Stock [Member] | ||||
Preferred stock shares authorized | 200,000 | 200,000 | ||
Class A Common Stock [Member] | ||||
Common stock shares authorized | 250,000,000 | 250,000,000 | ||
Common stock par value | $ 0.001 | $ 0.001 | ||
Class B Common Stock [Member] | ||||
Common stock shares authorized | 9,000,000 | 9,000,000 | ||
Common stock par value | $ 0.001 | $ 0.001 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Schedule of Assets and Liabilities Measured at Fair Value On Recurring Basis (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Total assets | $ 1,666,000 | $ 22,000 |
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level1) [Member] | ||
Total assets | 1,666,000 | 22,000 |
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Total assets | ||
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level3) [Member] | ||
Total assets | ||
Fair Value, Measurements, Recurring [Member] | Marketable Securities [Member] | ||
Total assets | 1,666,000 | 22,000 |
Fair Value, Measurements, Recurring [Member] | Marketable Securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level1) [Member] | ||
Total assets | 1,666,000 | 22,000 |
Fair Value, Measurements, Recurring [Member] | Marketable Securities [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Total assets | ||
Fair Value, Measurements, Recurring [Member] | Marketable Securities [Member] | Significant Unobservable Inputs (Level3) [Member] | ||
Total assets |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Revenues and Gross Profits By Reportable Segment (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Total Revenue | $ 1,165,000 | $ 904,000 | $ 1,516,000 | $ 1,497,000 |
Cost of Revenue | 396,000 | 412,000 | 508,000 | 754,000 |
Gross profit | $ 769,000 | $ 492,000 | $ 1,008,000 | $ 743,000 |
Revenue percentage | 66.20% | 54.60% | 66.50% | 49.60% |
Media / Data [Member] | ||||
Total Revenue | $ 917,000 | $ 841,000 | $ 1,137,000 | $ 1,375,000 |
Platform Subscription [Member] | ||||
Total Revenue | 206,000 | 9,000 | 286,000 | 10,000 |
Other [Member] | ||||
Total Revenue | 42,000 | 54,000 | 93,000 | 111,000 |
SEQUIRE [Member] | ||||
Total Revenue | 746,000 | 9,000 | 853,000 | 10,000 |
Cost of Revenue | 231,000 | 245,000 | ||
Gross profit | $ 515,000 | $ 9,000 | $ 608,000 | $ 10,000 |
Revenue percentage | 69.00% | 100.00% | 71.30% | 100.00% |
SEQUIRE [Member] | Media / Data [Member] | ||||
Total Revenue | $ 540,000 | $ 567,000 | ||
SEQUIRE [Member] | Platform Subscription [Member] | ||||
Total Revenue | 206,000 | 9,000 | 286,000 | 10,000 |
SEQUIRE [Member] | Other [Member] | ||||
Total Revenue | ||||
BIGToken [Member] | ||||
Total Revenue | 377,000 | 841,000 | 570,000 | 1,375,000 |
Cost of Revenue | 163,000 | 379,000 | 262,000 | 678,000 |
Gross profit | $ 214,000 | $ 462,000 | $ 308,000 | $ 697,000 |
Revenue percentage | 56.80% | 54.90% | 54.00% | 50.70% |
BIGToken [Member] | Media / Data [Member] | ||||
Total Revenue | $ 377,000 | $ 841,000 | $ 570,000 | $ 1,375,000 |
BIGToken [Member] | Platform Subscription [Member] | ||||
Total Revenue | ||||
BIGToken [Member] | Other [Member] | ||||
Total Revenue | ||||
Corporate and Other [Member] | ||||
Total Revenue | 42,000 | 54,000 | 93,000 | 111,000 |
Cost of Revenue | 2,000 | 33,000 | 1,000 | 76,000 |
Gross profit | $ 40,000 | $ 21,000 | $ 92,000 | $ 35,000 |
Revenue percentage | 97.90% | 41.80% | 98.90% | 31.50% |
Corporate and Other [Member] | Media / Data [Member] | ||||
Total Revenue | ||||
Corporate and Other [Member] | Platform Subscription [Member] | ||||
Total Revenue | ||||
Corporate and Other [Member] | Other [Member] | ||||
Total Revenue | $ 42,000 | $ 54,000 | $ 93,000 | $ 111,000 |
Segment Reporting - Schedule _2
Segment Reporting - Schedule of Revenue Disaggregation (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Total Revenue | $ 1,165,000 | $ 904,000 | $ 1,516,000 | $ 1,497,000 |
Change in revenue percentage | 29.00% | 1.00% | ||
Change in Amount [Member] | ||||
Total Revenue | $ 265,000 | $ 21,000 | ||
Media / Data [Member] | ||||
Total Revenue | 917,000 | 841,000 | 1,137,000 | 1,375,000 |
Platform Subscription [Member] | ||||
Total Revenue | 206,000 | 9,000 | 286,000 | 10,000 |
Other [Member] | ||||
Total Revenue | $ 42,000 | 54,000 | $ 93,000 | 111,000 |
Change in revenue percentage | (15.00%) | (15.00%) | ||
Other [Member] | Change in Amount [Member] | ||||
Total Revenue | $ (17,000) | $ (8,000) | ||
SEQUIRE [Member] | ||||
Total Revenue | $ 746,000 | 9,000 | $ 853,000 | 10,000 |
Change in revenue percentage | 8189.00% | 8430.00% | ||
SEQUIRE [Member] | Change in Amount [Member] | ||||
Total Revenue | $ 737,000 | $ 843,000 | ||
SEQUIRE [Member] | Media / Data [Member] | ||||
Total Revenue | $ 540,000 | $ 567,000 | ||
Change in revenue percentage | ||||
SEQUIRE [Member] | Media / Data [Member] | Change in Amount [Member] | ||||
Total Revenue | $ 540,000 | $ 567,000 | ||
SEQUIRE [Member] | Platform Subscription [Member] | ||||
Total Revenue | $ 206,000 | 9,000 | $ 286,000 | 10,000 |
Change in revenue percentage | 2189.00% | 2760.00% | ||
SEQUIRE [Member] | Platform Subscription [Member] | Change in Amount [Member] | ||||
Total Revenue | $ 197,000 | $ 276,000 | ||
SEQUIRE [Member] | Other [Member] | ||||
Total Revenue | ||||
BIGToken [Member] | ||||
Total Revenue | $ 377,000 | 841,000 | $ 570,000 | 1,375,000 |
Change in revenue percentage | (55.00%) | (59.00%) | ||
BIGToken [Member] | Change in Amount [Member] | ||||
Total Revenue | $ (464,000) | $ (805,000) | ||
BIGToken [Member] | Media / Data [Member] | ||||
Total Revenue | $ 377,000 | 841,000 | $ 570,000 | 1,375,000 |
Change in revenue percentage | (55.00%) | (59.00%) | ||
BIGToken [Member] | Media / Data [Member] | Change in Amount [Member] | ||||
Total Revenue | $ (464,000) | $ (805,000) | ||
BIGToken [Member] | Platform Subscription [Member] | ||||
Total Revenue | ||||
BIGToken [Member] | Platform Subscription [Member] | Change in Amount [Member] | ||||
Total Revenue | ||||
BIGToken [Member] | Other [Member] | ||||
Total Revenue |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Jul. 01, 2020 | Jun. 30, 2020 |
Proceeds from issuance of debt | $ 10,500,000 | |
Subsequent Event [Member] | OID Convertible Debentures [Members] | ||
Proceeds from issuance of debt | $ 5,000,000 |