Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 14, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | xG TECHNOLOGY, INC. | |
Entity Central Index Key | 1,565,228 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 17,803,321 | |
Trading Symbol | XGTI | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets | ||
Cash | $ 1,209,000 | $ 2,799,000 |
Accounts receivable, net | 5,238,000 | 8,337,000 |
Inventories, net | 14,217,000 | 14,753,000 |
Prepaid expenses and other current assets | 1,087,000 | 626,000 |
Total current assets | 21,751,000 | 26,515,000 |
Property and equipment, net | 2,448,000 | 3,237,000 |
Intangible assets, net | 5,136,000 | 6,894,000 |
Total assets | 29,335,000 | 36,646,000 |
Current liabilities | ||
Accounts payable | 7,077,000 | 10,918,000 |
Accrued expenses | 2,440,000 | 3,150,000 |
Convertible note payable | 2,000,000 | 2,000,000 |
Convertible promissory notes | 500,000 | |
Due to related parties | 586,000 | 998,000 |
Deferred revenue and customer deposits | 1,963,000 | 634,000 |
Obligation under capital leases | 18,000 | |
Derivative liabilities | 1,801,000 | 2,399,000 |
Total current liabilities | 16,367,000 | 20,117,000 |
Convertible promissory notes, net of discount of $368 and $0, respectively | 3,132,000 | |
Long-term obligation under capital leases, net of current portion | 30,000 | |
Total liabilities | 19,499,000 | 20,147,000 |
Stockholders' equity | ||
Preferred stock - $0.00001 par value per share: 10,000,000 shares authorized as of September 30, 2018 and December 31, 2017; 0 shares issued and outstanding as of September 30, 2018 and December 31, 2017 | ||
Common stock - $0.00001 par value per share, 100,000,000 shares authorized, 17,154,249 and 14,897,392 shares issued and 17,154,247 and 14,897,390 outstanding as of September 30, 2018 and December 31, 2017, respectively | ||
Additional paid in capital | 241,124,000 | 235,819,000 |
Accumulated other comprehensive income | 305,000 | 354,000 |
Treasury stock, at cost - 2 shares at September 30, 2018 and December 31, 2017, respectively | (22,000) | (22,000) |
Accumulated deficit | (231,571,000) | (219,652,000) |
Total stockholders' equity | 9,836,000 | 16,499,000 |
Total liabilities and stockholders' equity | $ 29,335,000 | $ 36,646,000 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Net of debt discount | $ 368 | $ 0 |
Preferred stock, par value | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.00001 | |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 17,154,249 | 14,897,392 |
Common Stock, Shares, Outstanding | 17,154,247 | 14,897,390 |
Treasury stock, shares | 2 | 2 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Revenue | $ 8,325,000 | $ 10,158,000 | $ 27,482,000 | $ 33,711,000 |
Cost of revenue and operating expenses | ||||
Cost of components and personnel | 4,230,000 | 5,050,000 | 13,507,000 | 20,316,000 |
Inventory valuation adjustments | 119,000 | 355,000 | 353,000 | 431,000 |
General and administrative expenses | 4,718,000 | 6,359,000 | 16,578,000 | 19,348,000 |
Research and development expenses | 1,286,000 | 2,758,000 | 6,653,000 | 7,143,000 |
Impairment charge | 168,000 | |||
Amortization and depreciation | 671,000 | 1,128,000 | 2,376,000 | 3,260,000 |
Total cost of revenue and operating expenses | 11,024,000 | 15,650,000 | 39,635,000 | 50,498,000 |
Loss from operations | (2,699,000) | (5,492,000) | (12,153,000) | (16,787,000) |
Other (expense) income | ||||
Changes in fair value of derivative liabilities | 848,000 | 183,000 | 2,502,000 | (7,000) |
Gain on bargain purchase | 15,530,000 | |||
Gain on debt and payables extinguishments | 12,000 | 3,999,000 | ||
Other income (expense) | 13,000 | 51,000 | (250,000) | |
Interest expense, net | (369,000) | (50,000) | (2,319,000) | (581,000) |
Total other income | 492,000 | 145,000 | 234,000 | 18,691,000 |
Net (loss) income | $ (2,207,000) | $ (5,347,000) | $ (11,919,000) | $ 1,904,000 |
Basic (loss) earnings per share | $ (0.13) | $ (0.42) | $ (0.72) | $ 0.17 |
Diluted (loss) earnings per share | $ (0.13) | $ (0.42) | $ (0.72) | $ 0.17 |
Weighted average number of shares outstanding: | ||||
Basic | 16,916 | 12,845 | 16,573 | 11,290 |
Diluted | 16,916 | 12,845 | 16,573 | 11,290 |
Comprehensive (loss) income: | ||||
Net (loss) income | $ (2,207,000) | $ (5,347,000) | $ (11,919,000) | $ 1,904,000 |
Unrealized (loss) gain on currency translation adjustment | (23,000) | 114,000 | (49,000) | 462,000 |
Comprehensive (loss) income | $ (2,230,000) | $ (5,233,000) | $ (11,968,000) | $ 2,366,000 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows used in operating activities | ||||
Net (loss) income | $ (2,207,000) | $ (5,347,000) | $ (11,919,000) | $ 1,904,000 |
Adjustments to reconcile net (loss) income to net cash (used in) operating activities | ||||
Gain on bargain purchase | (15,530,000) | |||
Gain on debt extinguishment | (12,000) | (3,999,000) | ||
Gain on sale of property and equipment | (51,000) | |||
Stock-based compensation | 639,000 | 795,000 | 3,114,000 | 1,397,000 |
Payment made in stock (payroll and consultants) | 1,708,000 | 2,304,000 | ||
Provision for bad debt | 18,000 | |||
Stock issuance commitments | 280,000 | 129,000 | ||
Inventory valuation adjustments | 353,000 | 431,000 | ||
Depreciation and amortization | 671,000 | 1,128,000 | 2,376,000 | 3,260,000 |
Impairment charge | 168,000 | |||
Change in fair value of derivative liabilities | (2,502,000) | 7,000 | ||
Guaranteed interest and debt issuance costs | 434,000 | |||
Line of credit commitment fee | 302,000 | |||
Non-Cash interest costs | 2,094,000 | |||
Changes in assets and liabilities | ||||
Accounts receivable | 2,967,000 | 1,141,000 | ||
Inventory | (128,000) | 1,922,000 | ||
Prepaid expenses and other current assets | (486,000) | (638,000) | ||
Accounts payable | (3,538,000) | 2,012,000 | ||
Accrued expenses and interest expense | (840,000) | 938,000 | ||
Deferred revenue and customer deposits | 1,387,000 | (16,000) | ||
Due to related parties | (232,000) | 1,452,000 | ||
Net cash used in operating activities | (5,231,000) | (2,550,000) | ||
Cash flows provided by (used in) investing activities | ||||
Proceeds from the sale of fixed assets | 155,000 | |||
Cash disbursed for property and equipment | (69,000) | (417,000) | ||
Cash used in Vislink acquisition | (6,500,000) | |||
Net cash provided by (used in) investing activities | 86,000 | (6,917,000) | ||
Cash flows provided by financing activities | ||||
Principal repayments made on capital lease obligations | (48,000) | (43,000) | ||
Proceeds from multiple issuances of convertible preferred stock, common stock and warrants | 6,700,000 | |||
Costs incurred in connection with multiple financings | (900,000) | |||
Principal repayments of Vislink notes | (2,000,000) | |||
Principal repayments of notes payable | (824,000) | |||
Proceeds from the exercise of warrants | 2,124,000 | |||
Proceeds from convertible promissory notes | 4,000,000 | |||
Debt issuance costs | (363,000) | |||
Net cash provided by financing activities | 3,589,000 | 5,057,000 | ||
Effect of exchange rate changes on cash | (34,000) | 69,000 | ||
Net decrease in cash | (1,590,000) | (4,341,000) | ||
Cash, beginning of period | 2,799,000 | 9,054,000 | ||
Cash, end of period | 1,209,000 | 4,713,000 | 1,209,000 | 4,713,000 |
Cash paid for interest | 21,000 | 242,000 | ||
Cash paid for taxes | ||||
Supplemental cash flow disclosures of investing and financing activities common stock issued in connection with: | ||||
Conversion of Series D Convertible Preferred Stock | 648,000 | |||
Services previously accrued | 19,000 | 295,000 | ||
Settlement of amounts due to related parties | 180,000 | 180,000 | ||
Settlement of notes payable to sellers of Vislink with assumption of liabilities and debt extinguishment | 7,500,000 | |||
Total debt issuance costs and guaranteed interest incurred from leak-out agreement | 434,000 | |||
Stock issued as payment of interest on convertible notes | 90,000 | 180,000 | ||
Purchase Consideration | ||||
Amount of consideration: | 16,000,000 | |||
Assets acquired and liabilities assumed at preliminary fair value | ||||
Cash | ||||
Accounts receivable | 7,129,000 | 7,129,000 | ||
Inventories | 18,234,000 | 18,234,000 | ||
Property and equipment | 3,868,000 | 3,868,000 | ||
Prepaid expenses | 1,209,000 | 1,209,000 | ||
Accounts payable | (2,079,000) | (2,079,000) | ||
Deferred rent | ||||
Accrued expenses | (451,000) | (451,000) | ||
Net tangible assets acquired | 27,910,000 | 27,910,000 | ||
Identifiable intangible assets | ||||
Intangible assets | ||||
Trade names and technology | 1,100,000 | 1,100,000 | ||
Customer relationships | 2,520,000 | 2,520,000 | ||
Total Identifiable Intangible Assets | 3,620,000 | 3,620,000 | ||
Total net assets acquired | 31,530,000 | 31,530,000 | ||
Consideration paid | 16,000,000 | |||
Preliminary gain on bargain purchase | $ 15,530,000 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Summary of Significant Accounting Policies | NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business The overarching strategy of xG Technology, Inc. (“xG” or the “Company”) is to design, develop and deliver advanced wireless communications solutions that provide customers in its target markets with enhanced levels of reliability, mobility, performance and efficiency in their business operations and missions. xG’s business lines include the brands of Integrated Microwave Technologies LLC (“IMT”) and Vislink Communication Systems (“Vislink” or “VCS”). There is considerable brand interaction, owing to complementary market focus, compatible product and technology development roadmaps, and solution integration opportunities. IMT: IMT develops, manufactures and sells microwave communications equipment utilizing COFDM (Coded Orthogonal Frequency Division Multiplexing) technology. COFDM is a transmission technique that combines encoding technology with OFDM (Orthogonal Frequency Division Multiplexing) modulation to provide the low latency and high image clarity required for real-time live broadcasting video transmissions. IMT has extensive experience in ultra-compact COFDM wireless technology, and this has allowed IMT to develop integrated solutions that deliver reliable video footage captured from both aerial and ground-based sources to fixed and mobile receiver locations. Vislink: Vislink Communications Systems (“Vislink” or ‘‘VCS’’) specializes in the wireless capture, delivery and management of secure, high-quality, live video from the field to the point of usage. VCS designs and manufactures products encompassing microwave radio components, satellite communication, cellular and wireless camera systems, and associated amplifier items. VCS serves two core markets: broadcast and media and law enforcement, public safety and surveillance. In the broadcast and media market, VCS provides broadcast communication links for the collection of live news and sports and entertainment events. VCS’ customers in the broadcast and media market include national broadcasters, multi-channel broadcasters, network owners and station groups, sports and live broadcasters and hosted service providers. In the law enforcement, public safety and surveillance market, VCS provides secure video communications and mission-critical solutions for law enforcement, defense and homeland security applications. VCS’ customers in the law enforcement, public safety and surveillance market include metropolitan, regional and national law enforcement agencies as well as domestic and international defense agencies and organizations. Basis of Presentation The accompanying unaudited condensed consolidated financial statements were prepared using generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Regulation S-X. Accordingly, these financial statements do not include all information or notes required by generally accepted accounting principles for annual financial statements and should be read in conjunction with the consolidated financial statements as filed on the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the United States Securities and Exchange Commission (the “SEC”) on April 2, 2018. In the opinion of management, the unaudited condensed consolidated financial statements included herein contain all adjustments necessary to present fairly the Company’s consolidated financial position as of September 30, 2018, the results of its operations and cash flows for the nine months ended September 30, 2018 and 2017. Such adjustments are of a normal recurring nature. The results of operations for the three and nine months ended September 30, 2018 may not be indicative of results for the year ending December 31, 2018. Principles of Consolidation The accompanying condensed consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) include the accounts of xG and its wholly-owned subsidiaries, IMT and Vislink, since the date Vislink was acquired. All intercompany transactions and balances have been eliminated in the consolidation. Reclassifications Certain reclassifications have been made in the unaudited condensed consolidated financial statements for comparative purposes. These reclassifications have no effect on the results of operations or financial position of the Company (see Note 12). Segment Reporting Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the operating decision makers, or decision-making group, in making decisions on how to allocate resources and assess performance. The Company’s decision-making group is the senior executive management team. The Company and the decision-making group view the Company’s operations as different product offerings but manage its business as one operating segment. All long-lived assets of the Company reside in the U.S. and U.K. Use of Estimates Management makes estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates and assumptions include reserves and write-downs related to receivables and inventories, the recoverability of long-lived assets, the valuation allowance relating to the Company’s deferred tax assets, valuation of equity and derivative instruments, debt discounts and the valuation of the assets and liabilities acquired in the acquisition of Vislink. Inventories Inventory is recorded at the lower of cost, on a first-in, first-out basis, or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Inventory valuation adjustments are included on the face of the unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2018 and 2017. Revenue Recognition The Company recognizes revenues when persuasive evidence of an arrangement exists, services have been rendered, the price is fixed and determinable, and collectability is reasonably assured. Revenues from management and consulting, time-and-materials service contracts, maintenance agreements and other services are recognized as the services are provided or at the time the goods are shipped, and title has passed. Stock-Based Compensation The Company accounts for stock compensation with persons classified as employees for accounting purposes in accordance with Accounting Standards Codifications (“ASC”) 718 “Compensation – Stock Compensation”, which recognizes awards at fair value on the date of grant and recognition of compensation over the service period for awards expected to vest. The fair value of stock options is determined using the Black-Scholes Option Pricing Model. The fair value of common stock issued for services is determined based on the Company’s stock price on the date of issuance. The Company accounts for stock compensation arrangements with persons classified as non-employees for accounting purposes in accordance with ASC 505-50 “Stock-Based Transactions with Nonemployees”, which requires that such equity instruments are recorded at their fair value on the measurement date. The measurement of share-based compensation is subject to periodic adjustment as the underlying instruments vest. The fair value of stock options is estimated using the Black-Scholes Option Pricing Model and the compensation charges are amortized over the vesting period. Convertible Debt Instruments The Company records debt net of debt discounts for beneficial conversion features and warrants, on either a relative fair value or fair value basis depending on the respective accounting treatment of each instrument. Beneficial conversion features are recorded pursuant to the Beneficial Conversion (“BCF”) and Debt Topics of the FASB Accounting Standards Codification. The amounts allocated to warrants and beneficial conversion rights are recorded as debt discounts with corresponding entries to derivative liability and additional paid-in-capital. Costs paid to third parties ( e.g. The Company evaluates its convertible debt, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for. The result of this accounting treatment is that under certain circumstances the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. If the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to stockholders’ equity. (Loss) Earnings Per Share The Company reports (loss) earnings per share in accordance with ASC Topic 260, “Earnings Per Share,” which establishes standards for computing and presenting earnings per share. Basic (loss) earnings per share of common stock is calculated by dividing net (loss) earnings allocable to common stockholders by the weighted-average shares of common stock outstanding during the period, without consideration of common stock equivalents. Diluted (loss) earnings per share is calculated by adjusting the weighted-average shares of common stock outstanding for the dilutive effect of common stock equivalents, including stock options and warrants, outstanding for the period as determined using the treasury stock method. For purposes of the diluted net loss per share calculation, common stock equivalents are excluded from the calculation because their effect would be anti-dilutive. Therefore, basic and diluted net loss per share applicable to common stockholders is the same for periods with a net loss. The following table illustrates the determination of loss per share for each period presented (in thousands, except per share amounts): Nine Months Ended September 30, 2018 2017 Numerator: Net (loss) income – basic and diluted $ (11,919 ) $ 1,904 Denominator: Weighted average shares outstanding - basic 16,573 11,290 Dilutive stock options — — Dilutive warrants — — Weighted average shares outstanding - diluted 16,573 11,290 Net (loss) earnings per share: Basic $ (0.72 ) $ 0.17 Dilutive $ (0.72 ) $ 0.17 Anti-dilutive potential common stock equivalents excluded from the calculation of (loss) earnings per share: Stock options 6,092 6,271 Convertible debt 4,000 — Warrants 11,892 8,695 Fair Value of Financial Instruments U.S. GAAP requires disclosing the fair value of financial instruments to the extent practicable for financial instruments which are recognized or unrecognized in the consolidated balance sheet. The fair value of the financial instruments disclosed herein is not necessarily representative of the amount that could be realized or settled, nor does the fair value amount consider the tax consequences of realization or settlement. In assessing the fair value of financial instruments, the Company uses a variety of methods and assumptions, which are based on estimates of market conditions and risks existing at the time. For certain instruments, including accounts receivable and accounts payable, the Company estimated that the carrying amount approximated fair value because of the short maturities of these instruments. All debt is based on current rates at which the Company could borrow funds with similar remaining maturities and approximates fair value. U.S. GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use on unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is described below: Level 1 – Quoted prices in active markets for identical assets or liabilities. there are no fair valued assets or liabilities classified under Level 1 as of September 30, 2018. Level 2 – Observable prices that are based on inputs not quoted on active markets but corroborated by market data. there are no fair valued assets or liabilities classified under Level 2 as of September 30, 2018. Level 3 – Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs (see Note 8). Foreign Currency and Other Comprehensive (Loss)/Income The functional currency of our foreign subsidiary is typically the applicable local currency which is British Pounds. The translation from the respective foreign currency to United States Dollars (US Dollar) is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for income statement accounts using an average exchange rate during the period. Gains or losses resulting from such translation are included as a separate component of accumulated other comprehensive (loss)/income. Gains or losses resulting from foreign currency transactions are included in foreign currency income or loss except for the effect of exchange rates on long-term inter-company transactions considered to be a long-term investment, which are accumulated and credited or charged to other comprehensive income. Transaction gains and losses are recognized in our results of operations based on the difference between the foreign exchange rates on the transaction date and on the reporting date. The foreign currency exchange gains and losses are included as a component of general and administrative expenses, in the accompanying Unaudited Condensed Consolidated Statements of Operations. The Company has recognized foreign exchanges gains and losses and changes in accumulated comprehensive income approximately as follows: For the Three Months Ended For the Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Net foreign exchange transactions: Losses $ 126,000 $ 7,000 $ 355,000 $ 245,000 Accumulated comprehensive income: Increases (decreases) $ (23,000 ) $ 114,000 $ (49,000 ) $ 462,000 The exchange rates adopted for the foreign exchange transactions are the rates of exchange as quoted on OANDA, a Canadian-based foreign exchange company and internet website providing currency conversion, online retail foreign exchange trading, online foreign currency transfers, and forex information. Translation of amounts from British Pounds into United States dollars was made at the following exchange rates for the respective periods: ● As of September 30, 2018 – British Pounds $1.3025 to US Dollars $1.00. ● Average rate for the nine months ended September 30, 2018 – British Pounds $1.3511 to US Dollars $1.00. Subsequent Events The Company has evaluated subsequent events in accordance with ASC 855, Subsequent Events, through the filing date of this Quarterly Report, and determined that no events have occurred that have not been disclosed elsewhere in the notes to the condensed consolidated financial statements (unaudited) that would require adjustments to disclosures in the condensed consolidated financial statements (unaudited), except as disclosed herein (see Note 13). Recently Issued Accounting Standards In August 2018, the FASB issued Accounting Standards Update (“ASU”) 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 removes certain disclosures, modifies certain disclosures, and added additional disclosures. The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within that reporting period, with early adoption permitted. Certain disclosures in ASU 2018-13 would need to be applied on a retrospective basis and others on a prospective basis. The Company is currently assessing the impact the new guidance will have on its disclosures. In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 also clarifies that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Revenue from Contracts with Customers (Topic 606). ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within that reporting period, with early adoption permitted. The adoption of ASU 2018-07 is not expected to have a material impact on our results of operations, financial position or liquidity or our related financial statement disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842): Amendments to the FASB Accounting Standards Codification, to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information about leasing arrangements. Under these amendments, lessees are required to recognize lease assets and lease liabilities for leases classified as operating leases under ASC 840. After the issuance of ASC No. 2016-02, the FASB issued additional amendments related to ASU No. 2016-02: (1) ASU No. 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842; (2) ASU No. 2018-10: Codification Improvements to Topic 842, Leases; and (3) ASU No. 2018-11, Leases (Topic 842): Targeted Improvements. ASU No. 2016-02 and related amendments are effective for financial statements issued for fiscal years beginning after December 15, 2018, and early adoption is permitted. The Company’s operating leases include building and equipment leases. The Company is evaluating our current operating leases and expects that most of these current operating leases will be impacted by this ASU and related amendments resulting in increases in assets and liabilities in the Company’s consolidated financial statements. The Company intends to adopt these amendments during the first quarter of fiscal 2019. In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 completes the joint effort by the FASB and IASB to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and International Financial Reporting Standards (“IFRS”). The ASU 2014-09 revenue recognition model virtually replaces all existing revenue recognition guidance and applies to all companies that enter into contracts with customers to transfer goods or services. ASU 2014-09 (as updated by ASU 2015-14 in August 2015, ASU No. 2016-08 in March 2016, ASU No. 10 in April 2016 and ASU No. 12 in May 2016) is effective for public entities for interim and annual reporting periods beginning after December 15, 2017. Public and nonpublic entities have the choice to apply ASU 2014-09 either retrospectively to each reporting period presented or by recognizing the cumulative effect of applying ASU 2014-09 at the date of initial application and not adjusting comparative information. Our emerging growth company (“EGC”) status expires at the end of this calendar year of 2018. Upon the loss of EGC status, an issuer is required to adopt the standard in its next filing. This accounting standard becomes effective for the Company for reporting periods beginning after December 15, 2018, and interim reporting periods thereafter, specifically the first quarter of 2019. The Company is still evaluating whether the adoption of ASU 2014-09 will have a material impact on its consolidated financial statements. Additionally, the Company intends to utilize the modified retrospective adoption and recognize the cumulative effect of initially applying ASU 2014-09, if significant, as an adjustment to the opening balance of accumulated deficit at the date of initial application. Other recent accounting standards issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
Liquidity and Financial Conditi
Liquidity and Financial Condition | 9 Months Ended |
Sep. 30, 2018 | |
Liquidity And Financial Condition | |
Liquidity and Financial Condition | NOTE 2 — LIQUIDITY AND FINANCIAL CONDITION Under ASU 2014-15 Presentation of Financial Statements—Going Concern (Subtopic 205-40) (“ASC 205-40”), the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued. As required by ASC 205-40, this evaluation shall initially not take into consideration the potential mitigating effects of plans that have not been fully implemented as of the date the financial statements are issued. Management has assessed the Company’s ability to continue as a going concern in accordance with the requirement of ASC 205-40. As reflected in the condensed consolidated financial statements, the Company had $1.2 million in cash on the balance sheet. The Company had working capital and an accumulated deficit of $5.4 million and $231.6 million, respectively, at September 30, 2018. In addition, the Company had a loss from operations of approximately $12.2 million and cash used in operating activities of $5.2 million for the nine months ended September 30, 2018. The Company’s condensed consolidated financial statements are prepared assuming the Company can continue as a going concern, which contemplates continuity of operations through realization of assets, and the settling of liabilities in the normal course of business. The Company completed a cost reduction plan announced in April 2018 that resulted in approximately $8.2 million in annual savings. Savings were realized through immediate cost reductions affecting the xMax division by eliminating certain personnel costs, associated benefits and reduction in facilities and other expenses. The Company has also identified an additional $1.3 million in additional savings, primary related to facilities consolidation and severance. The Company believes it can raise additional working capital through equity or debt offerings; however, no assurance can be provided that the Company will be successful in such capital raising efforts. On May 29, 2018, the Company completed a private placement of $4 million in principal amount of 6% Senior Secured Convertible Debentures and warrants to purchase 3,000,000 shares of the Company’s common stock, $0.00001 par value per share, by executing certain agreements with accredited institutional investors. The Company received $3,637,000 net of debt issuance costs consisting of legal and placement fees totaling $363,000. Because of such cost reduction efforts and the Company’s existing working capital, management believes that the Company has sufficient working capital to continue as a going concern for a period of at least twelve months from the date these financial statements have been issued. The ability to recognize revenue and ultimately cash receipts is contingent upon, but not limited to, acceptable performance of the delivered equipment and services. If the Company is unable to close on some of its revenue producing opportunities in the near term, the carrying value of its assets may be materially impacted. |
Acquisition of Vislink
Acquisition of Vislink | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisition of Vislink | NOTE 3 — ACQUISITION OF VISLINK Acquisition of Vislink International Limited On February 2, 2017, the Company completed the acquisition of certain assets and liabilities related to the hardware segment of Vislink International Limited, an England and Wales registered limited company (the ‘‘UK Seller’’), and Vislink Inc., a Delaware corporation (the ‘‘US Seller’’, and together with the UK Seller, the ‘‘Sellers’’), pursuant to a Business Purchase Agreement, dated December 16, 2016, as amended on January 16, 2017, by and among the Company, the Sellers and Vislink PLC, an England and Wales registered limited company, as guarantor. The purchase price paid for the transaction was an aggregate of $16 million consisting of (i) $6.5 million in cash consideration, and (ii) promissory notes in the aggregate principal amount of $9.5 million (the ‘‘Notes’’). In connection with the Notes, the Company entered into a Security Agreement, dated February 2, 2017, with each of the Sellers (the ‘‘Security Agreements’’). Pursuant to the Security Agreements, as collateral security for the Company’s obligations under the Notes, the Company granted the Sellers a security interest in certain assets purchased from the Sellers in connection with the transaction. The Notes were originally due to mature on March 20, 2017 (the ‘‘Maturity Date’’). Interest on the Notes was payable in cash on the Maturity Date at a rate per annum equal to LIBOR plus 1.9%. The fair value of the purchase consideration issued to the sellers of Vislink was allocated to the net assets acquired. The Company accounted for the Vislink acquisition as the purchase of a business under U.S. GAAP under the acquisition method of accounting, and the assets and liabilities acquired were recorded as of the acquisition date at their respective fair values and consolidated with those of the Company. The fair value of the net assets acquired was approximately $26.9 million. The excess of the aggregate fair value of the net tangible assets has been treated as a gain on bargain purchase in accordance with ASC 805. The purchase price allocation was based, in part, on management’s knowledge of Vislink’s business and the results of a third-party appraisal commissioned by management. The Company utilized the services of an independent appraisal company to assist it in assessing the fair value of the assets and liabilities acquired. This assessment included an evaluation of the fair value of inventory, fixed assets and the fair value of the intangible assets acquired based upon the expected cash flows from the assets acquired. Additionally, the Company incorporated the carrying value of the remaining working capital as Vislink’s management represented that the carrying value of these assets and liabilities served as a reasonable proxy for fair value. The valuation process included discussions with management regarding the history and business operations of Vislink, a study of the economic and industry conditions in which Vislink competes and an analysis of the historical and projected financial statements and other records and documents. When it became apparent there was potential for a bargain purchase gain, management reviewed the Vislink assets and liabilities acquired and the assumptions utilized in estimating their fair values. The Company determined that provisional amounts, previously recognized, required adjustments to reflect new information obtained. According to ASC 805-10-25-15, the Company has a period of time, referred to as the measurement period, to finalize the accounting for a business combination. Upon additional review of identifying and valuing all assets and liabilities of the business, the Company concluded that recording a bargain purchase gain with respect to Vislink was appropriate and required under U.S. GAAP. The Company then undertook a review to determine what factors might contribute to a bargain purchase and if it was reasonable for a bargain purchase to occur. Factors that contributed to the bargain purchase price were: ● The Vislink acquisition was completed with motivated Sellers who had a public strategy to concentrate on growing their software business as opposed to their technology and hardware businesses. As a strategic decision, the Sellers intended to sell off the assets of the hardware business. ● The announcement of the U.K. leaving the European Union led to a decline in the pound, which led to pressure by Vislink’s creditors to raise funds. The owners of Vislink were motivated to complete a transaction in order to use the proceeds to reduce the line of credit they owed to the bank. ● The industry in 2015 and 2016 experienced a downturn as decreased spending combined with economic uncertainty caused corporations to delay wireless and broadcast infrastructure upgrades. The Sellers believed these trends would continue. According to IBISWorld, industry revenue is expected to fall at an annualized rate of 0.6% over the next five years reflecting further deterioration in the industry. As a result, the Sellers decided to sell the business. ● Prior to the U.K. leaving the European Union, Vislink was under contract to be sold for a much higher price. The Company took advantage of the economic and industry downturn to negotiate a favorable price which was less than the value of the assets acquired for a total purchase consideration of $16 million. Based upon these factors, the Company concluded that the occurrence of a bargain purchase was reasonable. Purchase Consideration Amount of consideration: $ 16,000,000 Tangible assets acquired and liabilities assumed at fair value Accounts receivable $ 7,129,000 Inventories 15,232,000 Property and equipment 3,868,000 Prepaid expenses 944,000 Accounts payable (2,294,000 ) Customer deposits (1,137,000 ) Accrued expenses (451,000 ) Net tangible assets acquired $ 23,291,000 Identifiable intangible assets Trade names and technology $ 1,100,000 Customer relationships 2,520,000 Total Identifiable Intangible Assets $ 3,620,000 Total net assets acquired $ 26,911,000 Consideration 16,000,000 Gain on bargain purchase $ 10,911,000 Since the closing of the transaction, the Company assumed $4.6 million of additional Vislink liabilities, thus reducing the principal amount due to the Sellers by $4.9 million. On March 17, 2017, the Company came to an agreement with the Sellers, pursuant to which the Company paid $2 million in cash and the Sellers extinguished the remaining $2.9 million of principal owed under the Notes and the Company recorded a gain on debt extinguishment in its Consolidated Statements of Operations. During the fourth quarter of 2017, the Company finalized its purchase price allocation analysis in accordance with ASC 805. As such, the Company’s final reported gain on bargain purchase was determined to be $10.9 million reduced from its previously reported gain on bargain purchase of $15.5 million. Such adjustments were made due to the Company completing its analysis of the net realizable value of certain of the tangible assets acquired. The estimated useful life remaining on the property and equipment acquired is 1 to 11 years and on the intangible assets is 3 to 10 years. The following presents the unaudited pro-forma combined results of operations of xG and Vislink as if the entities were combined on January 1, 2017. For the Nine Months Ended September 30, 2017 Revenues, net $ 34,973 Net loss $ (18,118 ) Net loss per share $ (1.60 ) Weighted average number of shares outstanding 11,290 The unaudited pro-forma results of operations are presented for information purposes only. The unaudited pro-forma results of operations are not intended to present actual results that would have been attained had the acquisitions been completed as of January 1, 2017 or to project potential operating results as of any future date or for any future periods. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | NOTE 4 — INTANGIBLE ASSETS Intangible assets consist of the following: Software Development Costs Patents and Licenses Trade Names and Technology Customer Relationships Accumulated Accumulated Accumulated Accumulated Costs Amortization Costs Amortization Costs Amortization Costs Amortization Net Balance as of December 31, 2017 $ 18,647,000 $ (18,211,000 ) $ 12,378,000 $ (9,171,000 ) $ 1,450,000 $ (243,000 ) $ 2,880,000 $ (836,000 ) $ 6,894,000 Additions - - - - - - - - - Impairments - (168,000 ) - - - - - - (168,000 ) Amortization - (268,000 ) - (498,000 ) - (168,000 ) - (656,000 ) (1,590,000 ) Balance as of September 30, 2018 $ 18,647,000 $ (18,647,000 ) $ 12,378,000 $ (9,669,000 ) $ 1,450,000 $ (411,000 ) $ 2,880,000 $ (1,492,000 ) $ 5,136,000 Amortization of intangible assets amounted to $0.5 million and $1.6 million for the three and nine months ended September 30, 2018, respectively, and $0.6 million and $1.9 million for the three and nine months ended September 30, 2017, respectively. Software Development Costs: At September 30, 2018 and December 31, 2017, the Company had net capitalized software costs of $0.0 million and $0.4 million, respectively. During the nine months ended September 30, 2018 and 2017, the Company recognized amortization of software development costs of $0.3 million and $0.7 million, respectively. During the three months ended September 30, 2018 and 2017, the Company recognized amortization of software development costs of $0.0 million and $0.2 million, respectively. The Company’s software development costs subject to amortization are amortized using the straight-line method over their estimated useful lives of five years. The Company evaluates the recoverability of software development costs periodically by considering events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired. The Company considered potential impairment indicators of xMax software development costs at June 30, 2018 and recorded $0.2 million of impairment due to the winding down of the xMax division during the second quarter of 2018. Patents and Licenses: At September 30, 2018 and December 31, 2017, the Company had net capitalized costs of patents and licenses of $2.7 million and $3.2 million, respectively. The Company amortizes patents and licenses that have been filed over their useful lives which range between 18.5 to 20 years. The costs of provisional patents and pending applications is not amortized until the patent is filed and is reviewed each reporting period to determine if it is likely that the patent will be successfully filed. The Company recognized $0.5 million of amortization expense related to patents and licenses for the nine months ended September 30, 2018 and 2017, and $0.2 million for the three months ended September 30, 2018 and 2017. Other Intangible Assets The Company’s remaining intangible assets include the trade names, technology and customer lists acquired in its acquisition of IMT and Vislink. The Company amortizes trade names, technology and customer relationships over their useful lives which range between 3 to 15 years. Estimated amortization expense for total intangible assets for the succeeding five years is as follows: Balance 2018 $ 441,000 2019 1,763,000 2020 993,000 2021 818,000 2022 574,000 Thereafter 547,000 $ 5,136,000 The Company’s intangible assets acquired in 2016 and 2017 will be amortized over a weighted average remaining life of approximately 2.60 years. |
Convertible Notes Payable
Convertible Notes Payable | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Convertible Notes Payable | NOTE 5 — CONVERTIBLE NOTES PAYABLE Treco On October 6, 2011, the Company entered into a convertible promissory note (the “$2 Million Convertible Note”) in favor of Treco International, S.A. (“Treco”), as part of the settlement compensation to Treco for terminating an infrastructure agreement. The $2 Million Convertible Note is payable on its maturity date, October 6, 2018 and is convertible, at Treco’s option, into shares of the Company’s common stock at a price of $42,000 per share. The Company anticipates this note to be converted according to the original conversion terms. Interest at the rate of 9% per year is payable semi-annually in cash or shares of the Company’s common stock, at the Company’s option. The accrued interest at September 30, 2018 was $87,000. On May 24, 2018, the Company issued 89,109 shares of common stock as the semi-annual payment of interest of $90,000. Interest expense was $45,000 and $135,000, respectively, for the three and nine months ended September 30, 2018 and 2017. May 2018 Financing On May 29, 2018, the Company completed a private placement of $4 million in principal of 6% Senior Secured Convertible Debentures (the “Debentures”) and warrants to purchase 3,000,000 shares of the Company’s common stock, par value $0.00001 per share, by executing certain agreements with accredited institutional investors. The Company received $3,636,760 net of debt issuance costs consisting of legal and placement fees totaling $363,240. The Debentures have a maturity date of May 29, 2019, with a conversion rate of $1.00 per share (which was subsequently amended, see Note 13). If held beyond maturity, the conversion rate shall equal the lesser of (i) the then conversion price and (ii) 85% of the Volume Weighted Average Price (“VWAP”) for the trading day immediately prior to the applicable conversion date. The Company shall pay interest to the holders on the aggregate and unconverted and outstanding principal amount on January 1, April 1, July 1 and October 1, with the remaining principal balance due at maturity. The warrants have a maturity date of May 29, 2023 with an exercise price of $1.00 per share. The warrants meet the definition of a derivative as noted in ASC 815-10-15-83 and ASC 815-10-15-88. The Company allocated the proceeds from the issuance of this note and the warrants based on the fair value for each item. Consequently, the Company recorded a value of $1,788,171 on the warrants and these associated costs are required to be accounted for as liabilities and were immediately expensed as interest. Furthermore, in September 2018, 200,000 warrants were released to various individuals involved in the financing as incentive fees incurred carrying identical dates and terms. The Company recognized an additional value of $116,400 on these warrants, recording them as a debt discount, increasing derivative liabilities, and immediately expensing as interest. The warrants were valued using the binomial model style simulation. The assumptions used in the binomial model style simulation at the date the funds were received are as follows: (1) dividend yield of 0%; (2) expected volatility of 163.50%; (3) risk-free interest rate of 0.27%; and (4) expected life of 5.00 years. The Company also determined that the convertible promissory notes contained beneficial conversion rights and calculated the relative fair value and assigned $193,877 to the BCF. Items recorded to interest expense, net for the three and nine months period ending September 30, 2018 and 2017 are: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2018 2017 2018 2017 Contractual interest expense $ 61,334 $ - $ 82,688 $ - Debt discount amortization 140,427 - 189,271 - Warrant costs 116,400 - 1,904,571 - Total recorded to interest expense, net $ 318,161 $ - $ 2,176,530 $ - The warrants issued in the private placement were considered to be issued as an incentive to complete the closing of the financing and therefore, the initial grant date fair value of such warrants were included within interest expense, net on the condensed consolidated statements of operations for the three and nine months ended September 30, 2018 and 2017. As of September 30, 2018, the remaining period over which any discount will be amortized is eight months. The Debentures are summarized as follows as of September 30, 2018: Principal amount borrowed $ 4,000,000 Debt discount incurred 2,461,698 Amortization of debt discount (2,093,842 ) Un-amortized debt discount 367,856 Ending Balance – September 30, 2018 $ 3,632,144 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 6 — COMMITMENTS AND CONTINGENCIES Leases: The Company leases office space in Sunrise, Florida pursuant to a lease which runs through May 2019. Future payments under such lease will amount to $105,000. The Company leases warehouse space in Sunrise, Florida pursuant to a lease which runs through January 2019. Future payments under such lease will amount to $6,000. The Company leases warehouse and office space in Hackettstown, New Jersey which runs through April 29, 2020. Future payments under such lease will amount to $144,000. The Company leases office space in Hemel, U.K. which runs through October 2020. Future payments under such lease will amount to approximately $502,000. In connection with the acquisition of Vislink, the Company assumed the lease obligations relating to Vislink office space in the following locations: Location Lease End Date Approximate Future Payments Colchester, U.K. March 2025 $ 3,153,000 Billerica, MA May 2021 $ 1,176,000 Anaheim, CA July 2021 $ 84,000 Singapore August 2020 $ 64,000 Dubai, United Arab Emirates June 2019 $ 17,000 The Company’s office, deployment sites and warehouse facilities rent expenses aggregated to approximately $367,000 and $180,000 during the three months ended September 30, 2018 and 2017, respectively, and $1,120,000 and $733,000 during the nine months ended September 30, 2018 and 2017. The leases will expire on different dates from 2019 through 2025. The Company’s total obligation of minimum future annual rentals, exclusive of real estate taxes and related costs, is approximately as follows: Year Ending December 31, Balance 2018 $ 441,000 2019 1,634,000 2020 1,284,000 2021 598,000 2022 398,000 Thereafter 896,000 $ 5,251,000 Legal: The Company is subject, from time to time, to claims by third parties under various legal theories. The defense of such claims, or any adverse outcome relating to any such claims, could have a material adverse effect on the Company’s liquidity, financial condition and cash flows. For the nine months ended September 30, 2018 the Company did not have any material legal actions pending. Pension: The Company at its discretion may make matching contributions to the 401(k) plan its employees participate in. For the nine months ended September 30, 2018 and 2017, the Company made matching contributions of $67,000 and $0, respectively. The Company currently operates a Group Personal Pension Plan in its U.K. subsidiary and funds are invested with Royal London. U.K. employees are entitled to join the plan to which the Company contributes varying amounts subject to status. In addition, the Company operates a stakeholder pension scheme in the U.K. For the nine months ended September 30, 2018 and 2017, the Company made matching contributions of $165,000 and $113,000, respectively. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 7 — STOCKHOLDERS’ EQUITY Common Stock Issuances During the nine months ended September 30, 2018, the Company: ● Issued 1,890,535 shares of its common stock for employees, directors, consultants and other professionals for a total value of $1,708,000. The value of the common stock issued was based on the fair value of the stock at the time of issuance. ● Recognized $3,114,000 of compensation costs associated with outstanding stock options in general and administrative expenses with a corresponding capital contribution. ● Issued 264,981 shares of its common stock in satisfaction of related party obligations valued at $180,000. The value of the common stock issued was based on the fair value of the stock at the time of issuance. ● Issued 12,232 shares of its common stock in satisfactions of amounts previously deferred for employee/consultant agreements in the amount of $19,000. The value of the common stock issued was based on the fair value of the stock at the time of issuance. ● Issued 89,109 shares of its common stock in satisfaction of accrued interested on the Treco convertible promissory note valued at $90,000. The value of the common stock issued was based on the fair value of the stock at the time of issuance. Beneficial Conversion Feature The Company determined that the foregoing Debentures contained a BCF and calculated a relative fair value of $194,000 assigned to the BCF. During the nine months ended September 30, 2018 and 2017, $66,000 and $0, respectively, were amortized to interest expense using the effective interest method with the remaining amortization period being eight months. Warrants and Options Effective, April 30, 2018, the Board of Directors by unanimous written consent, approve of the immediate vesting of all remaining options for employees who were terminated on April 30, 2018 and June 25, 2018. During the three and nine months ended September 30, 2018, the Company recorded approximately $639,000 and $3,114,000, respectively, as stock compensation expense from the amortization of stock options issued, of which $0.8 million was the expense for accelerating the vesting of the remaining options for terminated employees. During the three and nine months ended September 30, 2017, the Company recorded approximately $795,000 and $1,397,000, respectively, as stock compensation expense from the amortization of stock options issued in prior periods. As of September 30, 2018, the weighted average remaining contractual life was 8.66 years for options outstanding and 8.58 years for options exercisable. The intrinsic value of options exercisable at September 30, 2018 and 2017 was $0 and $0.04 per share, respectively. As of September 30, 2018, the remaining expense is approximately $3.98 million over the remaining amortization period which is 1.72 years. The Company estimates forfeiture and volatility using historical information. The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues over the equivalent lives of the options. The expected life of the options represents the estimated period using the simplified method. The Company has not paid dividends on its common stock and no assumption of dividend payment(s) is made in the model. A summary of the warrant and option activity is as follows: Warrants Number of Warrants (in Shares) Weighted Average Exercise Price Outstanding January 1, 2018 8,695,273 $ 5.50 Granted 3,200,000 1.00 Exercised — — Forfeited or Expired (2,900 ) 8,177.00 Outstanding, September 30, 2018 11,892,373 $ 2.21 Exercisable, September 30, 2018 11,892,373 $ 2.21 Options Number of Options (in Shares) Weighted Average Exercise Price Outstanding January 1, 2018 6,550,500 $ 1.58 Granted 220,000 0.89 Exercised — — Forfeited or Expired (678,332 ) 1.58 Outstanding, September 30, 2018 6,092,168 $ 1.55 Exercisable, September 30, 2018 2,600,526 $ 1.57 |
Derivative Liabilities
Derivative Liabilities | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liabilities | NOTE 8 — DERIVATIVE LIABILITIES Each of the warrants issued in connection with the August 2015, May 2016 and, July 2016 underwritten offerings, the August 2017 and May 2018 debt financings and the February 2016 Series B Preferred Stock offering, have been accounted for as derivative liabilities as each of the warrants contain a net cash settlement provision whereby, upon certain fundamental events, the holders could put the warrants back to the Company for cash. The following are the key assumptions used in connection with the valuation of the warrants exercisable into common stock on the date of issuance and September 30, 2018: Number of shares underlying the warrants on September 30, 2018 4,948,569 Fair market value of stock $ 0.46 Exercise price $ 1.00 to 13.79 Volatility 139% to 154 % Risk-free interest rate 2.85% to 2.96 % Expected dividend yield — Warrant life (years) 0.1 to 4.7 Level 3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the liabilities. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company’s accounting and finance department, who report to the Chief Financial Officer, determine its valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s accounting and finance department and are approved by the Chief Financial Officer. Level 3 Valuation Techniques: Level 3 financial liabilities consist of the derivative liabilities for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. The Company deems financial instruments which do not have fixed settlement provisions to be derivative instruments. In accordance with ASC Topic 480, Distinguishing Liabilities from Equity The Company’s derivative liabilities are carried at fair value and are classified as Level 3 in the fair value hierarchy due to the use of significant unobservable inputs. In order to calculate fair value, the Company uses a binomial model style simulation, as the value of certain features of the warrant derivative liabilities would not be captured by the standard Black-Scholes Option Pricing Model. The following table sets forth a summary of the changes in the fair value of our Level 3 financial liabilities that are measured at fair value on a recurring basis: Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Beginning balance $ 2,533,000 $ 1,373,000 $ 2,399,000 $ 1,183,000 Recognition of warrant liabilities on issuance dates 116,000 — 1,904,000 — Change in fair value of derivative liabilities (848,000 ) (183,000 ) (2,502,000 ) 7,000 Ending balance $ 1,801,000 $ 1,190,000 $ 1,801,000 $ 1,190,000 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 9 — RELATED PARTY TRANSACTIONS MB Technology Holdings, LLC On April 29, 2014, the Company entered into a management agreement (the “Management Agreement”) with MB Technology Holdings, LLC (“MBTH”), pursuant to which MBTH agreed to provide certain management and financial services to the Company for a monthly fee of $25,000. The Management Agreement was effective January 1, 2014. For the three and nine months ended September 30, 2018 and 2017, the Company incurred fees related to the Management Agreement of $75,000 and $225,000, respectively. Roger Branton, the Company’s Chief Executive Officer, Chief Financial Officer and director, and George Schmitt, the Company’s director and former Chief Executive Officer and Executive Chairman of the Board, are directors of MBTH, and Richard Mooers, a director of the Company, is the Chief Executive Officer and a director of MBTH. The Company has agreed to award MBTH a 3% cash success fee if MBTH arranges financing, a merger, consolidation or sale by the Company of substantially all of its assets. The Company incurred approximately $0 for fees associated with financings during the three and nine months ended September 30, 2018 and 2017, respectively. In addition, during the nine months ended September 30, 2018 and 2017, the Company’s Board of Directors approved an additional $49,000 and $54,000 fee, respectively, to be paid to MBTH as consideration for additional efforts provided by MBTH in connection with the Company’s financing and acquisition efforts. The Company recorded these fees in general and administrative expenses on the accompanying Condensed Consolidated Statement of Operations. Effective May 1, 2018, MBTH assumed the liability of the office rent for the Company’s corporate headquarters in Sarasota, Florida. The balance outstanding to MBTH at September 30, 2018 and December 31, 2017 was $586,000 and $998,000, respectively, and has been included in due to related parties on the Condensed Consolidated Balance Sheet. On November 29, 2016, the Company and MBTH entered into an acquisition services agreement (the ‘‘M&A Services Agreement’’) pursuant to which the Company engaged MBTH to provide services in connection with merger and acquisition searches, negotiating and structuring deal terms and other related services. The M&A Services Agreement incorporates by reference the terms of the Management Agreement, as well as the Company’s agreement with MBTH on January 12, 2013 to pay MBTH a 3% success fee (the ‘‘3% Success Fee’’) on any financing arranged for the Company, merger or consolidation of the Company or sale by the Company of substantially all of its assets. The M&A Services Agreement has the following additional terms: (1) The Company will pay MBTH an acquisition fee equal to the greater of $250,000 or 8% of the total acquisition price (the ‘‘Acquisition Fee’’). Where possible, the Company will pay MBTH 50% of the Acquisition Fee at closing of a transaction, and in any case, not later than thirty (30) days following such closing, 25% of the Acquisition Fee three (3) months following such closing and 25% of the Acquisition Fee six (6) months following such closing. (2) In addition to any other fees, the Company will pay MBTH a due diligence fee of $250,000 only on successfully closed transactions. This due diligence fee shall be paid to MBTH as warrants to purchase shares of common stock of the Company in an amount equal to $250,000 divided by the lower of the market price of the common stock on the day of closing of the transaction or the price of equity offered to finance such acquisition. The exercise price of such warrants will be $0.01. (3) The Company and MBTH agreed to waive the 3% Success Fee in connection with the Company’s proposed acquisition of Vislink. The Company and MBTH also agreed to waive, on a case by case basis, the 3% Success Fee whenever any future Acquisition Fee is more than $1 million. (4) In the event the Company engages an independent, external advisor to value an acquisition and the valuation is higher than the price negotiated by MBTH on behalf of the Company, then MBTH will receive an additional fee of 5% of such gain (the “Bargain Purchase Gain”). (5) MBTH has the option to convert up to 50% of its fees into shares of common stock of the Company, so long as the receivable remains outstanding. The conversion price will be the lower of 110% of the price of the common stock on the day of closing of a transaction or the price of equity securities offered in connection with any acquisition financing. If MBTH converts at least 25% of its fees, then the Company agrees to register all shares of common stock of the Company held by MBTH. (6) If MBTH’s services assist the Company in achieving forward sales of at least $50 million via acquisitions, then the Company agrees to offer MBTH a three (3) year option to acquire up to 25% of the Company’s shares of common stock outstanding after such issuance (the “Block Purchase Option”). The price per share of common stock will be 125% of the price of the Company’s common stock on the day the option is exercised. On February 16, 2017, the Board of Directors amended the terms of the Block Purchase Option in the M&A Services Agreement to allow MBTH the option to acquire 25% of the fully diluted outstanding shares of common stock and warrants of the Company at a price of $2.10 per share and for a five-year term. There has been no impact on the results from operations since the certainty of the performance condition is not known. The M&A Services Agreement is effective as of November 1, 2016 and will automatically renew annually, unless earlier terminated by the Company or MBTH upon thirty (30) days’ written notice. The Company accrued $1,480,000 in acquisition fees during the nine months ended September 30, 2017 in connection with the acquisition of Vislink as per the M&A Services Agreement. The $1,480,000 in acquisition fees represents 8% of the acquisition price. The Company recorded these fees in general and administrative expenses on the accompanying Condensed Consolidated Statement of Operations and included such fees in due to related parties on the Condensed Consolidated Balance Sheet. The Company did not incur any fees pursuant to the M&A Services Agreement during the nine months ended September 30, 2018. The Company accrued an additional $777,000 in fees as 5% of the Bargain Purchase Gain during the nine months ending September 30, 2017, in connection with the acquisition of Vislink as per the M&A Services Agreement. The $777,000 represents 5% of the Bargain Purchase Gain of $15,530,000 after an independent, external advisor valued the acquisition. The Company recorded these fees in general and administrative expenses on the accompanying Condensed Consolidated Statement of Operations and included such fees in due to related parties on the Condensed Consolidated Balance Sheet. The Company did not incur any fees pursuant to the M&A Services Agreement during the nine months ended September 30, 2018. During the nine months ending September 30, 2017, the Company recorded $265,000 as the Fair Market Value (“FMV”) of the warrant paid to MBTH in connection with the closing of the Vislink acquisition as per the M&A Services Agreement. The Company recorded these fees in general and administrative expenses on the accompanying Condensed Consolidated Statement of Operations. The Company did not incur any fees pursuant to the M&A Services Agreement during the nine months ended September 30, 2018. From January 1, 2018 to September 30, 2018, the Company issued 264,981 shares of common stock to MBTH in settlement of amounts due of $180,000, which was the approximate grant date fair value of the shares. |
Concentrations
Concentrations | 9 Months Ended |
Sep. 30, 2018 | |
Risks and Uncertainties [Abstract] | |
Concentrations | NOTE 10 — CONCENTRATIONS During the three months ended September 30, 2018, the Company recorded sales to one customer of $2,196,000 (26%) in excess of 10% of the Company’s total consolidated sales. During the nine months ended September 30, 2018, the Company did not record sales of over 10% from any one customer. During the nine months ended September 30, 2017, the Company recorded revenue from individual sales or services rendered of $3,668,000 (11%) in excess of 10% from one customer of the Company’s total consolidated sales. During the three months ended September 30, 2017, the Company did not record revenue from individual sales or services rendered in excess of 10% of the Company’s total consolidated sales. At September 30, 2018, approximately $857,000 (16%) of net accounts receivable was due from one customer. At December 31, 2017, approximately 33% of net accounts receivable was due from two customers broken down individually as follows: $1,634,000 (20%) and $1,073,000 (13%). During the three and nine months ended September 30, 2018, approximately 13% of the Company’s inventory purchases were derived from one vendor and approximately 15% of the Company’s inventory purchases were derived from one vendor. During the nine months ended September 30, 2017, approximately 32% of the Company’s inventory purchases were derived from two vendors. During the three months ended September 30, 2017, approximately 28% of the Company’s inventory purchases were derived from one vendor. |
Geographical Information
Geographical Information | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Geographical Information | NOTE 11 – GEOGRAPHICAL INFORMATION The Company has one operating segment and the decision-making group is the senior executive management team. Nine Months Ended Nine Months Ended Three Months Ended Three Months Ended September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017 Revenue North America $ 12,510,000 $ 13,084,000 $ 5,784,000 $ 5,411,000 South America 1,094,000 4,274,000 56,000 1,163,000 Europe 8,239,000 8,972,000 795,000 1,940,000 Asia 3,423,000 4,010,000 1,328,000 984,000 Rest of World 2,216,000 3,371,000 362,000 660,000 $ 27,482,000 $ 33,711,000 $ 8,325,000 $ 10,158,000 Nine Months Ended Nine Months Ended September 30, 2018 September 30, 2017 Long-Lived Assets: United States $ 3,859,000 $ 6,020,000 United Kingdom 3,725,000 5,292,000 $ 7,584,000 $ 11,312,000 |
Prior Period Financial Statemen
Prior Period Financial Statement Revision | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
Prior Period Financial Statement Revision | NOTE 12 — PRIOR PERIOD FINANCIAL STATEMENT REVISION During the second quarter of 2018, the Company identified an error related to the non-recognition of a derivative liability embedded in common stock warrants issued to investors as part of the August 2017 equity financing. Whereas part of the proceeds has been allocated to additional paid-in-capital and not to a derivative liability. Additionally, no gain or loss was recognized as part of the mark to market valuation of the derivative liability. The Company assessed the materiality of these errors on our financial statements for prior periods in accordance with the SEC Staff Accounting Bulletin (SAB) No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, codified in Accounting Standards Codification (ASC) 250-10-20, Error in Previously Issued Financial Statements, and concluded that they were not material to any prior annual or interim periods. The Company has corrected these errors for all prior periods presented by revising the consolidated financial statements and other financial information included herein. The Company also corrected the timing of immaterial previously recorded out-of-period adjustments and reflected them in the revised prior period financial statements, where applicable. Periods not presented herein will be revised, as applicable, in future filings. The effects of the correction of immaterial errors on our Condensed Consolidated Financial Statements were as follows (in thousands): September 30, 2017 Amounts Previously Reported Adjustment As Revised Consolidated Balance Sheet: Total Liabilities $ 16,710 $ 1,146 $ 17,856 Stockholders’ equity before accumulated deficit 235,630 (1,321 ) 234,309 Accumulated deficit (207,570 ) 175 (207,395 ) Total liabilities and stockholders’ equity $ 44,770 $ - $ 44,770 Consolidated Statement of Operations: Net income for the three months ended $ 1,729 $ 175 $ 1,904 December 31, 2017 Amounts Previously Reported Adjustment As Revised Consolidated Balance Sheet: Total Liabilities $ 19,019 $ 1,128 $ 20,147 Stockholders’ equity before accumulated deficit 237,472 (1,321 ) 236,151 Accumulated deficit (219,845 ) 193 (219,652 ) Total liabilities and stockholders’ equity $ 36,646 $ - $ 36,646 Consolidated Statement of Operations: Net loss for the year ended $ (10,546 ) $ 193 $ (10,353 ) March 31, 2018 Amounts Previously Reported Adjustment As Revised Consolidated Balance Sheet: Total Liabilities $ 18,564 $ 688 $ 19,252 Stockholders’ equity before accumulated deficit 238,467 (1,321 ) 237,146 Accumulated deficit (222,614 ) 633 (221,981 ) Total liabilities and stockholders’ equity $ 34,417 $ - $ 34,417 Consolidated Statement of Operations: Net loss for the three months ended $ (3,769 ) $ 440 $ (3,329 ) |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 13 — SUBSEQUENT EVENTS May 2018 Financing Amendment On October 9, 2018, the Company agreed to modify with the holders representing $3.5 million of the $4 million aggregate principal amount of Debentures issued on May 29, 2018 (the “Majority Holders”), to amend and restate the Debentures (the “Amended Debentures” or the “Amendments”). The Amendments principally provide for: 1. The ability to make monthly redemption payments in shares of common stock; 2. The issuance of 302,655 shares of common stock as compensatory shares; 3. A good-faith effort to modify the monthly redemption provisions before the next monthly redemption date; 4. An amendment of the conversion price to $0.45; and 5. In the event that any of the Majority Holders convert its Amended Debenture, the Company shall be given dollar for dollar credit for any and all conversions effected in any month against any monthly redemption amount and provided, further, that in the event that a Majority Holder’s conversions in any particular month exceed such Majority Holder’s individual monthly redemption amount, such overage shall carry over into the succeeding month to be credited against the monthly redemption amount. From October 1, 2018 to November 14, 2018, the Company issued a total of 222,224 shares of common stock for Principal conversions totaling $100,000. Treco Issuance From October 1, 2018 to November 14, 2018, the Company issued a total of 187,735 shares of common stock in repayment of $90,000 in interest relating to its $2 million convertible note payable. Other Common Stock Issuances From October 1, 2018 to November 14, 2018, the Company issued a total of 192,601 shares of common stock having a fair value to employees, directors, consultants and general counsel in lieu of paying approximately $85,000 worth of services. From October 1, 2018 to November 14, 2018, the Company issued a total of 46,512 shares of common stock to MBTH in settlement of amounts due of $20,000, which was the grant date fair value of such shares. |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business The overarching strategy of xG Technology, Inc. (“xG” or the “Company”) is to design, develop and deliver advanced wireless communications solutions that provide customers in its target markets with enhanced levels of reliability, mobility, performance and efficiency in their business operations and missions. xG’s business lines include the brands of Integrated Microwave Technologies LLC (“IMT”) and Vislink Communication Systems (“Vislink” or “VCS”). There is considerable brand interaction, owing to complementary market focus, compatible product and technology development roadmaps, and solution integration opportunities. IMT: IMT develops, manufactures and sells microwave communications equipment utilizing COFDM (Coded Orthogonal Frequency Division Multiplexing) technology. COFDM is a transmission technique that combines encoding technology with OFDM (Orthogonal Frequency Division Multiplexing) modulation to provide the low latency and high image clarity required for real-time live broadcasting video transmissions. IMT has extensive experience in ultra-compact COFDM wireless technology, and this has allowed IMT to develop integrated solutions that deliver reliable video footage captured from both aerial and ground-based sources to fixed and mobile receiver locations. Vislink: Vislink Communications Systems (“Vislink” or ‘‘VCS’’) specializes in the wireless capture, delivery and management of secure, high-quality, live video from the field to the point of usage. VCS designs and manufactures products encompassing microwave radio components, satellite communication, cellular and wireless camera systems, and associated amplifier items. VCS serves two core markets: broadcast and media and law enforcement, public safety and surveillance. In the broadcast and media market, VCS provides broadcast communication links for the collection of live news and sports and entertainment events. VCS’ customers in the broadcast and media market include national broadcasters, multi-channel broadcasters, network owners and station groups, sports and live broadcasters and hosted service providers. In the law enforcement, public safety and surveillance market, VCS provides secure video communications and mission-critical solutions for law enforcement, defense and homeland security applications. VCS’ customers in the law enforcement, public safety and surveillance market include metropolitan, regional and national law enforcement agencies as well as domestic and international defense agencies and organizations. |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements were prepared using generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Regulation S-X. Accordingly, these financial statements do not include all information or notes required by generally accepted accounting principles for annual financial statements and should be read in conjunction with the consolidated financial statements as filed on the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the United States Securities and Exchange Commission (the “SEC”) on April 2, 2018. In the opinion of management, the unaudited condensed consolidated financial statements included herein contain all adjustments necessary to present fairly the Company’s consolidated financial position as of September 30, 2018, the results of its operations and cash flows for the nine months ended September 30, 2018 and 2017. Such adjustments are of a normal recurring nature. The results of operations for the three and nine months ended September 30, 2018 may not be indicative of results for the year ending December 31, 2018. |
Principles of Consolidation | Principles of Consolidation The accompanying condensed consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) include the accounts of xG and its wholly-owned subsidiaries, IMT and Vislink, since the date Vislink was acquired. All intercompany transactions and balances have been eliminated in the consolidation. |
Reclassifications | Reclassifications Certain reclassifications have been made in the unaudited condensed consolidated financial statements for comparative purposes. These reclassifications have no effect on the results of operations or financial position of the Company (see Note 12). |
Segment Reporting | Segment Reporting Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the operating decision makers, or decision-making group, in making decisions on how to allocate resources and assess performance. The Company’s decision-making group is the senior executive management team. The Company and the decision-making group view the Company’s operations as different product offerings but manage its business as one operating segment. All long-lived assets of the Company reside in the U.S. and U.K. |
Use of Estimates | Use of Estimates Management makes estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates and assumptions include reserves and write-downs related to receivables and inventories, the recoverability of long-lived assets, the valuation allowance relating to the Company’s deferred tax assets, valuation of equity and derivative instruments, debt discounts and the valuation of the assets and liabilities acquired in the acquisition of Vislink. |
Inventories | Inventories Inventory is recorded at the lower of cost, on a first-in, first-out basis, or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Inventory valuation adjustments are included on the face of the unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2018 and 2017. |
Revenue Recognition | Revenue Recognition The Company recognizes revenues when persuasive evidence of an arrangement exists, services have been rendered, the price is fixed and determinable, and collectability is reasonably assured. Revenues from management and consulting, time-and-materials service contracts, maintenance agreements and other services are recognized as the services are provided or at the time the goods are shipped, and title has passed. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock compensation with persons classified as employees for accounting purposes in accordance with Accounting Standards Codifications (“ASC”) 718 “Compensation – Stock Compensation”, which recognizes awards at fair value on the date of grant and recognition of compensation over the service period for awards expected to vest. The fair value of stock options is determined using the Black-Scholes Option Pricing Model. The fair value of common stock issued for services is determined based on the Company’s stock price on the date of issuance. The Company accounts for stock compensation arrangements with persons classified as non-employees for accounting purposes in accordance with ASC 505-50 “Stock-Based Transactions with Nonemployees”, which requires that such equity instruments are recorded at their fair value on the measurement date. The measurement of share-based compensation is subject to periodic adjustment as the underlying instruments vest. The fair value of stock options is estimated using the Black-Scholes Option Pricing Model and the compensation charges are amortized over the vesting period. |
Convertible Debt Instruments | Convertible Debt Instruments The Company records debt net of debt discounts for beneficial conversion features and warrants, on either a relative fair value or fair value basis depending on the respective accounting treatment of each instrument. Beneficial conversion features are recorded pursuant to the Beneficial Conversion (“BCF”) and Debt Topics of the FASB Accounting Standards Codification. The amounts allocated to warrants and beneficial conversion rights are recorded as debt discounts with corresponding entries to derivative liability and additional paid-in-capital. Costs paid to third parties ( e.g. The Company evaluates its convertible debt, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for. The result of this accounting treatment is that under certain circumstances the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. If the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to stockholders’ equity. |
(Loss) Earnings Per Share | (Loss) Earnings Per Share The Company reports (loss) earnings per share in accordance with ASC Topic 260, “Earnings Per Share,” which establishes standards for computing and presenting earnings per share. Basic (loss) earnings per share of common stock is calculated by dividing net (loss) earnings allocable to common stockholders by the weighted-average shares of common stock outstanding during the period, without consideration of common stock equivalents. Diluted (loss) earnings per share is calculated by adjusting the weighted-average shares of common stock outstanding for the dilutive effect of common stock equivalents, including stock options and warrants, outstanding for the period as determined using the treasury stock method. For purposes of the diluted net loss per share calculation, common stock equivalents are excluded from the calculation because their effect would be anti-dilutive. Therefore, basic and diluted net loss per share applicable to common stockholders is the same for periods with a net loss. The following table illustrates the determination of loss per share for each period presented (in thousands, except per share amounts): Nine Months Ended September 30, 2018 2017 Numerator: Net (loss) income – basic and diluted $ (11,919 ) $ 1,904 Denominator: Weighted average shares outstanding - basic 16,573 11,290 Dilutive stock options — — Dilutive warrants — — Weighted average shares outstanding - diluted 16,573 11,290 Net (loss) earnings per share: Basic $ (0.72 ) $ 0.17 Dilutive $ (0.72 ) $ 0.17 Anti-dilutive potential common stock equivalents excluded from the calculation of (loss) earnings per share: Stock options 6,092 6,271 Convertible debt 4,000 — Warrants 11,892 8,695 |
Fair Value of Financial Instruments | Fair Value of Financial Instruments U.S. GAAP requires disclosing the fair value of financial instruments to the extent practicable for financial instruments which are recognized or unrecognized in the consolidated balance sheet. The fair value of the financial instruments disclosed herein is not necessarily representative of the amount that could be realized or settled, nor does the fair value amount consider the tax consequences of realization or settlement. In assessing the fair value of financial instruments, the Company uses a variety of methods and assumptions, which are based on estimates of market conditions and risks existing at the time. For certain instruments, including accounts receivable and accounts payable, the Company estimated that the carrying amount approximated fair value because of the short maturities of these instruments. All debt is based on current rates at which the Company could borrow funds with similar remaining maturities and approximates fair value. U.S. GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use on unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is described below: Level 1 – Quoted prices in active markets for identical assets or liabilities. there are no fair valued assets or liabilities classified under Level 1 as of September 30, 2018. Level 2 – Observable prices that are based on inputs not quoted on active markets but corroborated by market data. there are no fair valued assets or liabilities classified under Level 2 as of September 30, 2018. Level 3 – Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs (see Note 8). |
Foreign Currency and Other Comprehensive (Loss)/Income | Foreign Currency and Other Comprehensive (Loss)/Income The functional currency of our foreign subsidiary is typically the applicable local currency which is British Pounds. The translation from the respective foreign currency to United States Dollars (US Dollar) is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for income statement accounts using an average exchange rate during the period. Gains or losses resulting from such translation are included as a separate component of accumulated other comprehensive (loss)/income. Gains or losses resulting from foreign currency transactions are included in foreign currency income or loss except for the effect of exchange rates on long-term inter-company transactions considered to be a long-term investment, which are accumulated and credited or charged to other comprehensive income. Transaction gains and losses are recognized in our results of operations based on the difference between the foreign exchange rates on the transaction date and on the reporting date. The foreign currency exchange gains and losses are included as a component of general and administrative expenses, in the accompanying Unaudited Condensed Consolidated Statements of Operations. The Company has recognized foreign exchanges gains and losses and changes in accumulated comprehensive income approximately as follows: For the Three Months Ended For the Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Net foreign exchange transactions: Losses $ 126,000 $ 7,000 $ 355,000 $ 245,000 Accumulated comprehensive income: Increases (decreases) $ (23,000 ) $ 114,000 $ (49,000 ) $ 462,000 The exchange rates adopted for the foreign exchange transactions are the rates of exchange as quoted on OANDA, a Canadian-based foreign exchange company and internet website providing currency conversion, online retail foreign exchange trading, online foreign currency transfers, and forex information. Translation of amounts from British Pounds into United States dollars was made at the following exchange rates for the respective periods: ● As of September 30, 2018 – British Pounds $1.3025 to US Dollars $1.00. ● Average rate for the nine months ended September 30, 2018 – British Pounds $1.3511 to US Dollars $1.00. |
Subsequent Events | Subsequent Events The Company has evaluated subsequent events in accordance with ASC 855, Subsequent Events, through the filing date of this Quarterly Report, and determined that no events have occurred that have not been disclosed elsewhere in the notes to the condensed consolidated financial statements (unaudited) that would require adjustments to disclosures in the condensed consolidated financial statements (unaudited), except as disclosed herein (see Note 13). |
Recently Issued Accounting Principles | Recently Issued Accounting Standards In August 2018, the FASB issued Accounting Standards Update (“ASU”) 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 removes certain disclosures, modifies certain disclosures, and added additional disclosures. The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within that reporting period, with early adoption permitted. Certain disclosures in ASU 2018-13 would need to be applied on a retrospective basis and others on a prospective basis. The Company is currently assessing the impact the new guidance will have on its disclosures. In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 also clarifies that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Revenue from Contracts with Customers (Topic 606). ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within that reporting period, with early adoption permitted. The adoption of ASU 2018-07 is not expected to have a material impact on our results of operations, financial position or liquidity or our related financial statement disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842): Amendments to the FASB Accounting Standards Codification, to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information about leasing arrangements. Under these amendments, lessees are required to recognize lease assets and lease liabilities for leases classified as operating leases under ASC 840. After the issuance of ASC No. 2016-02, the FASB issued additional amendments related to ASU No. 2016-02: (1) ASU No. 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842; (2) ASU No. 2018-10: Codification Improvements to Topic 842, Leases; and (3) ASU No. 2018-11, Leases (Topic 842): Targeted Improvements. ASU No. 2016-02 and related amendments are effective for financial statements issued for fiscal years beginning after December 15, 2018, and early adoption is permitted. The Company’s operating leases include building and equipment leases. The Company is evaluating our current operating leases and expects that most of these current operating leases will be impacted by this ASU and related amendments resulting in increases in assets and liabilities in the Company’s consolidated financial statements. The Company intends to adopt these amendments during the first quarter of fiscal 2019. In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 completes the joint effort by the FASB and IASB to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and International Financial Reporting Standards (“IFRS”). The ASU 2014-09 revenue recognition model virtually replaces all existing revenue recognition guidance and applies to all companies that enter into contracts with customers to transfer goods or services. ASU 2014-09 (as updated by ASU 2015-14 in August 2015, ASU No. 2016-08 in March 2016, ASU No. 10 in April 2016 and ASU No. 12 in May 2016) is effective for public entities for interim and annual reporting periods beginning after December 15, 2017. Public and nonpublic entities have the choice to apply ASU 2014-09 either retrospectively to each reporting period presented or by recognizing the cumulative effect of applying ASU 2014-09 at the date of initial application and not adjusting comparative information. Our emerging growth company (“EGC”) status expires at the end of this calendar year of 2018. Upon the loss of EGC status, an issuer is required to adopt the standard in its next filing. This accounting standard becomes effective for the Company for reporting periods beginning after December 15, 2018, and interim reporting periods thereafter, specifically the first quarter of 2019. The Company is still evaluating whether the adoption of ASU 2014-09 will have a material impact on its consolidated financial statements. Additionally, the Company intends to utilize the modified retrospective adoption and recognize the cumulative effect of initially applying ASU 2014-09, if significant, as an adjustment to the opening balance of accumulated deficit at the date of initial application. Other recent accounting standards issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table illustrates the determination of loss per share for each period presented (in thousands, except per share amounts): Nine Months Ended September 30, 2018 2017 Numerator: Net (loss) income – basic and diluted $ (11,919 ) $ 1,904 Denominator: Weighted average shares outstanding - basic 16,573 11,290 Dilutive stock options — — Dilutive warrants — — Weighted average shares outstanding - diluted 16,573 11,290 Net (loss) earnings per share: Basic $ (0.72 ) $ 0.17 Dilutive $ (0.72 ) $ 0.17 Anti-dilutive potential common stock equivalents excluded from the calculation of (loss) earnings per share: Stock options 6,092 6,271 Convertible debt 4,000 — Warrants 11,892 8,695 |
Schedule of Foreign Exchanges and Changes in Accumulated Comprehensive Income | The Company has recognized foreign exchanges gains and losses and changes in accumulated comprehensive income approximately as follows: For the Three Months Ended For the Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Net foreign exchange transactions: Losses $ 126,000 $ 7,000 $ 355,000 $ 245,000 Accumulated comprehensive income: Increases (decreases) $ (23,000 ) $ 114,000 $ (49,000 ) $ 462,000 |
Acquisition of Vislink (Tables)
Acquisition of Vislink (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Schedule of Tangible Assets Acquired and Liabilities | Based upon these factors, the Company concluded that the occurrence of a bargain purchase was reasonable. Purchase Consideration Amount of consideration: $ 16,000,000 Tangible assets acquired and liabilities assumed at fair value Accounts receivable $ 7,129,000 Inventories 15,232,000 Property and equipment 3,868,000 Prepaid expenses 944,000 Accounts payable (2,294,000 ) Customer deposits (1,137,000 ) Accrued expenses (451,000 ) Net tangible assets acquired $ 23,291,000 Identifiable intangible assets Trade names and technology $ 1,100,000 Customer relationships 2,520,000 Total Identifiable Intangible Assets $ 3,620,000 Total net assets acquired $ 26,911,000 Consideration 16,000,000 Gain on bargain purchase $ 10,911,000 |
Schedule of Pro-Forma Information | The following presents the unaudited pro-forma combined results of operations of xG and Vislink as if the entities were combined on January 1, 2017. For the Nine Months Ended September 30, 2017 Revenues, net $ 34,973 Net loss $ (18,118 ) Net loss per share $ (1.60 ) Weighted average number of shares outstanding 11,290 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets consist of the following: Software Development Costs Patents and Licenses Trade Names and Technology Customer Relationships Accumulated Accumulated Accumulated Accumulated Costs Amortization Costs Amortization Costs Amortization Costs Amortization Net Balance as of December 31, 2017 $ 18,647,000 $ (18,211,000 ) $ 12,378,000 $ (9,171,000 ) $ 1,450,000 $ (243,000 ) $ 2,880,000 $ (836,000 ) $ 6,894,000 Additions - - - - - - - - - Impairments - (168,000 ) - - - - - - (168,000 ) Amortization - (268,000 ) - (498,000 ) - (168,000 ) - (656,000 ) (1,590,000 ) Balance as of September 30, 2018 $ 18,647,000 $ (18,647,000 ) $ 12,378,000 $ (9,669,000 ) $ 1,450,000 $ (411,000 ) $ 2,880,000 $ (1,492,000 ) $ 5,136,000 |
Schedule of Estimated Amortization Expense for Intangible Assets | Estimated amortization expense for total intangible assets for the succeeding five years is as follows: Balance 2018 $ 441,000 2019 1,763,000 2020 993,000 2021 818,000 2022 574,000 Thereafter 547,000 $ 5,136,000 |
Convertible Notes Payable (Tabl
Convertible Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Interest Expense | Items recorded to interest expense, net for the three and nine months period ending September 30, 2018 and 2017 are: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2018 2017 2018 2017 Contractual interest expense $ 61,334 $ - $ 82,688 $ - Debt discount amortization 140,427 - 189,271 - Warrant costs 116,400 - 1,904,571 - Total recorded to interest expense, net $ 318,161 $ - $ 2,176,530 $ - |
Schedule of Debt | The Debentures are summarized as follows as of September 30, 2018: Principal amount borrowed $ 4,000,000 Debt discount incurred 2,461,698 Amortization of debt discount (2,093,842 ) Un-amortized debt discount 367,856 Ending Balance – September 30, 2018 $ 3,632,144 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule Of Lease Obligations Assumed | In connection with the acquisition of Vislink, the Company assumed the lease obligations relating to Vislink office space in the following locations: Location Lease End Date Approximate Future Payments Colchester, U.K. March 2025 $ 3,153,000 Billerica, MA May 2021 $ 1,176,000 Anaheim, CA July 2021 $ 84,000 Singapore August 2020 $ 64,000 Dubai, United Arab Emirates June 2019 $ 17,000 |
Schedule of Future Minimum Rental Payments for Operating Leases | The Company’s total obligation of minimum future annual rentals, exclusive of real estate taxes and related costs, is approximately as follows: Year Ending December 31, Balance 2018 $ 441,000 2019 1,634,000 2020 1,284,000 2021 598,000 2022 398,000 Thereafter 896,000 $ 5,251,000 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Schedule of Warrant and Option Activity | A summary of the warrant and option activity is as follows: Warrants Number of Warrants (in Shares) Weighted Average Exercise Price Outstanding January 1, 2018 8,695,273 $ 5.50 Granted 3,200,000 1.00 Exercised — — Forfeited or Expired (2,900 ) 8,177.00 Outstanding, September 30, 2018 11,892,373 $ 2.21 Exercisable, September 30, 2018 11,892,373 $ 2.21 Options Number of Options (in Shares) Weighted Average Exercise Price Outstanding January 1, 2018 6,550,500 $ 1.58 Granted 220,000 0.89 Exercised — — Forfeited or Expired (678,332 ) 1.58 Outstanding, September 30, 2018 6,092,168 $ 1.55 Exercisable, September 30, 2018 2,600,526 $ 1.57 |
Derivative Liabilities (Tables)
Derivative Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Valuation and Warrants Exercisable | The following are the key assumptions used in connection with the valuation of the warrants exercisable into common stock on the date of issuance and September 30, 2018: Number of shares underlying the warrants on September 30, 2018 4,948,569 Fair market value of stock $ 0.46 Exercise price $ 1.00 to 13.79 Volatility 139% to 154 % Risk-free interest rate 2.85% to 2.96 % Expected dividend yield — Warrant life (years) 0.1 to 4.7 |
Schedule of Changes in Fair Value of Level 3 Financial Liabilities | The following table sets forth a summary of the changes in the fair value of our Level 3 financial liabilities that are measured at fair value on a recurring basis: Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Beginning balance $ 2,533,000 $ 1,373,000 $ 2,399,000 $ 1,183,000 Recognition of warrant liabilities on issuance dates 116,000 — 1,904,000 — Change in fair value of derivative liabilities (848,000 ) (183,000 ) (2,502,000 ) 7,000 Ending balance $ 1,801,000 $ 1,190,000 $ 1,801,000 $ 1,190,000 |
Geographical Information (Table
Geographical Information (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Operating Segments Information | The Company has one operating segment and the decision-making group is the senior executive management team. Nine Months Ended Nine Months Ended Three Months Ended Three Months Ended September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017 Revenue North America $ 12,510,000 $ 13,084,000 $ 5,784,000 $ 5,411,000 South America 1,094,000 4,274,000 56,000 1,163,000 Europe 8,239,000 8,972,000 795,000 1,940,000 Asia 3,423,000 4,010,000 1,328,000 984,000 Rest of World 2,216,000 3,371,000 362,000 660,000 $ 27,482,000 $ 33,711,000 $ 8,325,000 $ 10,158,000 Nine Months Ended Nine Months Ended September 30, 2018 September 30, 2017 Long-Lived Assets: United States $ 3,859,000 $ 6,020,000 United Kingdom 3,725,000 5,292,000 $ 7,584,000 $ 11,312,000 |
Prior Period Financial Statem_2
Prior Period Financial Statement Revision (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
Schedule of Condensed Consolidated Financial Statements | The effects of the correction of immaterial errors on our Condensed Consolidated Financial Statements were as follows (in thousands): September 30, 2017 Amounts Previously Reported Adjustment As Revised Consolidated Balance Sheet: Total Liabilities $ 16,710 $ 1,146 $ 17,856 Stockholders’ equity before accumulated deficit 235,630 (1,321 ) 234,309 Accumulated deficit (207,570 ) 175 (207,395 ) Total liabilities and stockholders’ equity $ 44,770 $ - $ 44,770 Consolidated Statement of Operations: Net income for the three months ended $ 1,729 $ 175 $ 1,904 December 31, 2017 Amounts Previously Reported Adjustment As Revised Consolidated Balance Sheet: Total Liabilities $ 19,019 $ 1,128 $ 20,147 Stockholders’ equity before accumulated deficit 237,472 (1,321 ) 236,151 Accumulated deficit (219,845 ) 193 (219,652 ) Total liabilities and stockholders’ equity $ 36,646 $ - $ 36,646 Consolidated Statement of Operations: Net loss for the year ended $ (10,546 ) $ 193 $ (10,353 ) March 31, 2018 Amounts Previously Reported Adjustment As Revised Consolidated Balance Sheet: Total Liabilities $ 18,564 $ 688 $ 19,252 Stockholders’ equity before accumulated deficit 238,467 (1,321 ) 237,146 Accumulated deficit (222,614 ) 633 (221,981 ) Total liabilities and stockholders’ equity $ 34,417 $ - $ 34,417 Consolidated Statement of Operations: Net loss for the three months ended $ (3,769 ) $ 440 $ (3,329 ) |
Organization and Summary of S_4
Organization and Summary of Significant Accounting Policies (Details Narrative) | Sep. 30, 2018 |
Foreign exchange transaction rate | 1 |
Foreign exchange transactions average rate | 1 |
GBP [Member] | |
Foreign exchange transaction rate | 1.3025 |
Foreign exchange transactions average rate | 1.3511 |
Organization and Summary of S_5
Organization and Summary of Significant Accounting Policies - Schedule of Earnings Per Share Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Net (loss) income - basic and diluted | $ (2,207) | $ (3,329) | $ (5,347) | $ (11,919) | $ 1,904 | $ (10,353) |
Weighted average shares outstanding - basic | 16,916 | 12,845 | 16,573 | 11,290 | ||
Dilutive stock options | ||||||
Dilutive warrants | ||||||
Weighted average shares outstanding - diluted | 16,916 | 12,845 | 16,573 | 11,290 | ||
Basic | $ (0.13) | $ (0.42) | $ (0.72) | $ 0.17 | ||
Dilutive | $ (0.13) | $ (0.42) | $ (0.72) | $ 0.17 | ||
Stock Options [Member] | ||||||
Antidilutive securities excluded from computation of earnings per share, amount | 6,092 | 6,271 | ||||
Convertible Debt [Member] | ||||||
Antidilutive securities excluded from computation of earnings per share, amount | 4,000 | |||||
Warrants [Member] | ||||||
Antidilutive securities excluded from computation of earnings per share, amount | 11,892 | 8,695 |
Organization and Summary of S_6
Organization and Summary of Significant Accounting Policies - Schedule of Foreign Exchanges and Changes in Accumulated Comprehensive Income (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Net foreign exchange transactions, losses | $ 126,000 | $ 7,000 | $ 355,000 | $ 245,000 |
Accumulated comprehensive income increase (decrease) | $ (23,000) | $ 114,000 | $ (49,000) | $ 462,000 |
Liquidity and Financial Condi_2
Liquidity and Financial Condition (Details Narrative) - USD ($) | May 29, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Cash | $ 1,209,000 | $ 4,713,000 | $ 1,209,000 | $ 4,713,000 | $ 2,799,000 | $ 9,054,000 | ||
Working capital | 5,400,000 | 5,400,000 | ||||||
Accumulated deficit | (231,571,000) | (207,395,000) | (231,571,000) | (207,395,000) | $ (221,981,000) | $ (219,652,000) | ||
Loss from operations | $ (2,699,000) | $ (5,492,000) | (12,153,000) | (16,787,000) | ||||
Cash used in operating activities | (5,231,000) | $ (2,550,000) | ||||||
Expected amount of savings in cost reduction plan | 8,200,000 | |||||||
Other expenses | $ 1,300,000 | |||||||
6% Senior Secured Convertible Debentures [Member] | Private Placement [Member] | ||||||||
Debt instrument, principal amount | $ 4,000,000 | |||||||
Purchase of warrants | 3,000,000 | |||||||
Warrants exercise price per shares | $ 0.00001 | |||||||
Debt issuance cost, net | $ 3,637,000 | |||||||
Legal and placement fees | $ 363,000 |
Acquisition of Vislink (Details
Acquisition of Vislink (Details Narrative) - USD ($) | Mar. 17, 2017 | Feb. 02, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 |
Payments to acquire businesses, gross | $ 16,000,000 | ||||||
Cash consideration | 6,500,000 | ||||||
Preliminary gain on bargain purchase | $ 9,500,000 | $ 15,530,000 | $ 10,900,000 | ||||
Debt instrument, description of variable rate basis | The Notes were originally due to mature on March 20, 2017 (the "Maturity Date"). Interest on the Notes was payable in cash on the Maturity Date at a rate per annum equal to LIBOR plus 1.9%. | ||||||
Fair value of net assets acquired | 26,900,000 | $ 26,900,000 | |||||
Revenue reduction annualized rate | 0.60% | ||||||
Total purchase amount | 16,000,000 | $ 16,000,000 | |||||
Additional closing transaction | 4,600,000 | 4,600,000 | |||||
Reducing principal amount due | 4,900,000 | ||||||
Cash and sellers extinguished | $ 2,000,000 | ||||||
Gain on debt extinguishment | $ 2,900,000 | $ 12,000 | $ 3,999,000 | ||||
Gain on bargain purchase reported | $ 15,500,000 | ||||||
Minimum [Member] | |||||||
Property, plant and equipment, useful life | 1 year | ||||||
Acquired finite-lived intangible assets, weighted average useful life | 3 years | ||||||
Maximum [Member] | |||||||
Property, plant and equipment, useful life | 11 years | ||||||
Acquired finite-lived intangible assets, weighted average useful life | 10 years |
Acquisition of Vislink - Schedu
Acquisition of Vislink - Schedule of Tangible Assets Acquired and Liabilities (Details) - USD ($) | Feb. 02, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 |
Amount of consideration | $ 16,000,000 | |||||
Accounts receivable | $ 7,129,000 | 7,129,000 | ||||
Inventories | 18,234,000 | 18,234,000 | ||||
Property and equipment | 3,868,000 | 3,868,000 | ||||
Prepaid expenses | 1,209,000 | 1,209,000 | ||||
Accrued expenses | (451,000) | (451,000) | ||||
Net tangible assets acquired | 27,910,000 | 27,910,000 | ||||
Total Identifiable Intangible Assets | 3,620,000 | 3,620,000 | ||||
Total net assets acquired | 31,530,000 | 31,530,000 | ||||
Consideration paid | 16,000,000 | |||||
Gain on bargain purchase | $ 9,500,000 | $ 15,530,000 | $ 10,900,000 | |||
Vislink International Limited [Member] | ||||||
Amount of consideration | 16,000,000 | |||||
Accounts receivable | 7,129,000 | 7,129,000 | ||||
Inventories | 15,232,000 | 15,232,000 | ||||
Property and equipment | 3,868,000 | 3,868,000 | ||||
Prepaid expenses | 944,000 | 944,000 | ||||
Accounts payable | (2,294,000) | (2,294,000) | ||||
Customer deposits | (1,137,000) | (1,137,000) | ||||
Accrued expenses | (451,000) | (451,000) | ||||
Net tangible assets acquired | 23,291,000 | 23,291,000 | ||||
Total Identifiable Intangible Assets | 3,620,000 | 3,620,000 | ||||
Total net assets acquired | 26,911,000 | 26,911,000 | ||||
Consideration paid | 16,000,000 | |||||
Gain on bargain purchase | 10,911,000 | |||||
Vislink International Limited [Member] | Trade Names and Technology [Member] | ||||||
Total Identifiable Intangible Assets | 1,100,000 | 1,100,000 | ||||
Vislink International Limited [Member] | Customer Relationships [Member] | ||||||
Total Identifiable Intangible Assets | $ 2,520,000 | $ 2,520,000 |
Acquisition of Vislink - Sche_2
Acquisition of Vislink - Schedule of Pro-Forma Information (Details) | 9 Months Ended |
Sep. 30, 2017USD ($)$ / sharesshares | |
Business Combinations [Abstract] | |
Revenues, net | $ 34,973 |
Net loss | $ (18,118) |
Net loss per share | $ / shares | $ (1.60) |
Weighted average number of shares outstanding | shares | 11,290 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2018 | Jun. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Amortization of intangible assets | $ 500,000 | $ 60,000 | $ 1,600,000 | $ 1,900,000 | |||
Net of capitalized software cost | 0 | 400,000 | 0 | 400,000 | |||
Asset impairment charges | 168,000 | ||||||
Net of capitalized cost patent and licenses | 2,700,000 | $ 2,700,000 | $ 3,200,000 | ||||
Minimum [Member] | |||||||
Property, plant and equipment, useful life | 1 year | ||||||
Amortized weighted average remaining life | 3 years | ||||||
Maximum [Member] | |||||||
Property, plant and equipment, useful life | 11 years | ||||||
Amortized weighted average remaining life | 10 years | ||||||
Software Development [Member] | |||||||
Amortization of intangible assets | 0 | 200,000 | $ 300,000 | 700,000 | |||
Asset impairment charges | $ 200,000 | ||||||
Patents and Licenses [Member] | |||||||
Amortization of intangible assets | $ 200,000 | $ 200,000 | $ 500,000 | $ 500,000 | |||
Patents and Licenses [Member] | Minimum [Member] | |||||||
Property, plant and equipment, useful life | 18 years 6 months | ||||||
Patents and Licenses [Member] | Maximum [Member] | |||||||
Property, plant and equipment, useful life | 20 years | ||||||
Other Intangible Assets [Member] | |||||||
Amortized weighted average remaining life | 2 years 7 months 6 days | 2 years 7 months 6 days | |||||
Other Intangible Assets [Member] | Minimum [Member] | |||||||
Property, plant and equipment, useful life | 3 years | ||||||
Other Intangible Assets [Member] | Maximum [Member] | |||||||
Property, plant and equipment, useful life | 15 years |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Intangible Assets (Details) | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Beginning balance cost/ accumulated amortization | $ 6,894,000 |
Additions,cost/ accumulated amortization | |
Impairments, cost/ accumulated amortization | (168,000) |
Amortization, cost/ accumulated amortization | (1,590,000) |
Ending balance, cost/ accumulated amortization | 5,136,000 |
Software Development [Member] | |
Beginning balance cost | 18,647,000 |
Intangible assets, additions | |
Intangible assets, impairments | |
Intangible assets, amortization | |
Ending balance cost | 18,647,000 |
Beginning balance, accumulated amortization | (18,211,000) |
Intangible assets accumulated amortization, additions | |
Intangible assets accumulated amortization, impairments | (168,000) |
Intangible assets accumulated amortization | (268,000) |
Ending balance, accumulated amortization | (18,647,000) |
Patents and Licenses [Member] | |
Beginning balance cost | 123,778,000 |
Intangible assets, additions | |
Intangible assets, impairments | |
Intangible assets, amortization | |
Ending balance cost | 12,378,000 |
Beginning balance, accumulated amortization | (9,171,000) |
Intangible assets accumulated amortization, additions | |
Intangible assets accumulated amortization, impairments | |
Intangible assets accumulated amortization | (498,000) |
Ending balance, accumulated amortization | (9,669,000) |
Trade Names and Technology [Member] | |
Beginning balance cost | 1,450,000 |
Intangible assets, additions | |
Intangible assets, impairments | |
Intangible assets, amortization | |
Ending balance cost | 1,450,000 |
Beginning balance, accumulated amortization | (243,000) |
Intangible assets accumulated amortization, additions | |
Intangible assets accumulated amortization, impairments | |
Intangible assets accumulated amortization | (168,000) |
Ending balance, accumulated amortization | (411,000) |
Customer Relationships [Member] | |
Beginning balance cost | 2,880,000 |
Intangible assets, additions | |
Intangible assets, impairments | |
Intangible assets, amortization | |
Ending balance cost | 2,880,000 |
Beginning balance, accumulated amortization | (836,000) |
Intangible assets accumulated amortization, additions | |
Intangible assets accumulated amortization, impairments | |
Intangible assets accumulated amortization | (656,000) |
Ending balance, accumulated amortization | $ (1,492,000) |
Intangible Assets - Schedule _2
Intangible Assets - Schedule of Estimated Amortization Expense for Intangible Assets (Details) | Sep. 30, 2018USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Balance 2,018 | $ 441,000 |
2,019 | 1,763,000 |
2,020 | 993,000 |
2,021 | 818,000 |
2,022 | 574,000 |
Thereafter | 547,000 |
Finite-Lived Intangible Assets, Net, Total | $ 5,136,000 |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details Narrative) - USD ($) | May 29, 2018 | May 24, 2018 | Oct. 06, 2011 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 |
Accrued interest | $ 87,000 | $ 87,000 | |||||
Interest and Debt Expense | $ 318,161 | 2,176,530 | |||||
Beneficial conversion | $ 194,000 | ||||||
Dividend Yield [Member] | |||||||
Fair value of assumtions percentage | 0.00% | ||||||
Expected Volatility [Member] | |||||||
Fair value of assumtions percentage | 163.50% | ||||||
Measurement Input, Risk Free Interest Rate [Member] | |||||||
Fair value of assumtions percentage | 0.27% | ||||||
Measurement Input, Expected Dividend Rate [Member] | |||||||
Fair value of assumtions of term | 5 years | ||||||
WarrantMember | |||||||
Debt maturity date | May 29, 2023 | ||||||
Number shares issued, shares | 200,000 | ||||||
Warrant exercise price | $ 1 | $ 1 | |||||
Proceeds from Issuance of Warrants | $ 1,788,171 | ||||||
Six Percent Senior Secured Convertible Debentures [Member] | |||||||
Debt Instrument, Face Amount | $ 4,000,000 | ||||||
Debt maturity date | May 29, 2019 | ||||||
Stock Repurchased During Period, Shares | 3,000,000 | ||||||
Proceeds Issuance Costs | $ 3,636,760 | ||||||
Debt Related Commitment Fees and Debt Issuance Costs | 363,240 | ||||||
Debt Instrument, Convertible, Conversion Price | $ 1 | $ 1 | |||||
Debt Conversion, Description | If held beyond maturity, the conversion rate shall equal the lesser of (i) the then conversion price and (ii) 85% of the Volume Weighted Average Price ("VWAP") for the trading day immediately prior to the applicable conversion date. The Company shall pay interest to the holders on the aggregate and unconverted and outstanding principal amount on January 1, April 1, July 1 and October 1, with the remaining principal balance due at maturity. | ||||||
Beneficial conversion | $ 193,877 | ||||||
Treco International, S.A [Member] | |||||||
Debt Instrument, Face Amount | $ 2,000,000 | ||||||
Debt maturity date | Oct. 6, 2018 | ||||||
Number shares issued value | $ 42,000 | ||||||
Debt interest rate | 9.00% | ||||||
Number shares issued, shares | 89,109 | ||||||
Paid-in-Kind Interest | $ 90,000 | ||||||
Interest and Debt Expense | $ 45,000 | $ 45,000 | $ 135,000 | $ 135,000 |
Convertible Notes Payable - Sch
Convertible Notes Payable - Schedule of Interest Expense (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Debt Disclosure [Abstract] | ||||
Contractual interest expense | $ 61,334 | $ 82,688 | ||
Debt discount amortization | 140,427 | 189,271 | ||
Warrant costs | 116,400 | 1,904,571 | ||
Total recorded to interest expense, net | $ 318,161 | $ 2,176,530 |
Convertible Notes Payable - S_2
Convertible Notes Payable - Schedule of Debt (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Amortization of debt discount | $ 140,427 | $ 189,271 | |||
Ending Balance | 2,000,000 | 2,000,000 | $ 2,000,000 | ||
Convertible Notes Payable [Member] | |||||
Principal amount borrowed | 4,000,000 | 4,000,000 | |||
Debt discount incurred | 2,461,698 | ||||
Amortization of debt discount | (2,093,842) | ||||
Un-amortized debt discount | 367,856 | 367,856 | |||
Ending Balance | $ 3,632,144 | $ 3,632,144 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Operating leases payments amount | $ 441,000 | $ 441,000 | ||
Operating leases payments due | 5,251,000 | 5,251,000 | ||
Operating leases, rent xxpense | 367,000 | $ 180,000 | 1,120,000 | $ 733,000 |
Contributions by employer amount | 67,000 | 0 | ||
Stakeholder Pension Scheme [Member] | ||||
Contributions by employer amount | 165,000 | $ 113,000 | ||
Hemel, U.K [Member] | ||||
Operating leases payments due | 502,000 | 502,000 | ||
Through May 2019 [Member] | ||||
Operating leases payments amount | 105,000 | 105,000 | ||
Through January 2019 [Member] | ||||
Operating leases payments amount | 6,000 | 6,000 | ||
Through April 29 2019 [Member] | ||||
Operating leases payments amount | $ 144,000 | $ 144,000 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule Of Lease Obligations Assumed (Details) | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Approximate Future Payments | $ 5,251,000 |
Colchester [Member] | Vislink [Member] | |
Approximate Future Payments | $ 3,153,000 |
Lease Expiration Date | Mar. 31, 2025 |
Billerica, MA [Member] | Vislink [Member] | |
Approximate Future Payments | $ 1,176,000 |
Lease Expiration Date | May 31, 2021 |
Anaheim, CA [Member] | Vislink [Member] | |
Approximate Future Payments | $ 84,000 |
Lease Expiration Date | Jul. 31, 2021 |
Singapore [Member] | Vislink [Member] | |
Approximate Future Payments | $ 64,000 |
Lease Expiration Date | Aug. 31, 2020 |
Dubai, United Arab Emirates [Member] | Vislink [Member] | |
Approximate Future Payments | $ 17,000 |
Lease Expiration Date | Jun. 30, 2019 |
Commitments and Contingencies_3
Commitments and Contingencies - Schedule of Future Minimum Rental Payments for Operating Leases (Details) | Sep. 30, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Balance 2,018 | $ 441,000 |
2,019 | 1,634,000 |
2,020 | 1,284,000 |
2,021 | 598,000 |
2,022 | 398,000 |
Thereafter | 896,000 |
Operating Leases, Future Minimum Payments Due, Total | $ 5,251,000 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Number of common stock shares issued under compensation | 1,890,535 | |||
Number of common stock issued under compensation, value | $ 1,708,000 | |||
Compensation cost | $ 3,114,000 | |||
Number of common stock shares issued to related party obligations | 264,981 | |||
Number of common stock shares issued to related party obligations, value | $ 180,000 | |||
Number of shares issued on conversion | 89,109 | |||
Number of shares issued on conversion, value | $ 90,000 | |||
Beneficial conversion feature amount | 194,000 | |||
Interest expenses debt | 66,000 | $ 0 | ||
Share-based compensation | $ 639,000 | $ 795,000 | 3,114,000 | $ 1,397,000 |
Stock option related to Vesting of Remaining Options for Terminated Employees | $ 800,000 | |||
Weighted average remaining contractual life of option | 8 years 7 months 28 days | |||
Weighted average remaining contractual life, option exercisable | 8 years 6 months 29 days | |||
Intrinsic value of options exercisable, per share | $ 0 | $ 0.04 | $ 0 | $ 0.04 |
Unrecognized cost of unvested options | $ 3,980,000 | $ 3,980,000 | ||
Remaining amortization period | 1 year 8 months 19 days | |||
Employees and Consultants [Member] | ||||
Number of common stock shares issued under compensation | 12,232 | |||
Number of common stock issued under compensation, value | $ 19,000 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Warrant Activity (Details) | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
Equity [Abstract] | |
Number of warrants, Beginning Balance | shares | 8,695,273 |
Number of warrants, Granted | shares | 3,200,000 |
Number of warrants, Exercised | shares | |
Number of warrants, Forfeited or Expired | shares | (2,900) |
Number of warrants, Ending outstanding | shares | 11,892,373 |
Number of warrants, Ending exercisable | shares | 11,892,373 |
Weighted Average Exercise Price, Beginning Balance | $ / shares | $ 5.50 |
Weighted Average Exercise Price, Granted | $ / shares | 1 |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Exercise Price, Forfeited or Expired | $ / shares | 8,177 |
Weighted Average Exercise Price, Ending outstanding | $ / shares | 2.21 |
Weighted Average Exercise Price, Ending exercisable | $ / shares | $ 2.21 |
Stockholders' Equity - Schedu_2
Stockholders' Equity - Schedule of Option Activity (Details) | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
Equity [Abstract] | |
Number of Options, Beginning Balance | shares | 6,550,500 |
Number of Options, Granted | shares | 220,000 |
Number of Options, Exercised | shares | |
Number of Options, Forfeited or Expired | shares | (678,332) |
Number of Options, Ending Outstanding | shares | 6,092,168 |
Number of Options Exercisable | shares | 2,600,526 |
Weighted Average Exercise Price, Outstanding Beginning Balance | $ / shares | $ 1.58 |
Weighted Average Exercise Price, Granted | $ / shares | 0.89 |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Exercise Price, Forfeited or Expired | $ / shares | 1.58 |
Weighted Average Exercise Price, Outstanding Ending Balance | $ / shares | 1.55 |
Weighted Average Exercise Price, Exercisable Balance | $ / shares | $ 1.57 |
Derivative Liabilities - Schedu
Derivative Liabilities - Schedule of Valuation and Warrants Exercisable (Details) | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
Number of shares underlying the warrants on September 30, 2018 | shares | 4,948,569 |
Fair market value of stock | $ 0.46 |
Expected Dividend Yield [Member] | |
Fair Value Assumptions Rate | 0.00% |
Minimum [Member] | |
Exercise price | $ 1 |
Warrant life (years) | 1 month 6 days |
Minimum [Member] | Volatility [Member] | |
Fair Value Assumptions Rate | 139.00% |
Minimum [Member] | Risk-free Interest Rate [Member] | |
Fair Value Assumptions Rate | 2.85% |
Maximum [Member] | |
Exercise price | $ 13.79 |
Warrant life (years) | 4 years 8 months 12 days |
Maximum [Member] | Volatility [Member] | |
Fair Value Assumptions Rate | 154.00% |
Maximum [Member] | Risk-free Interest Rate [Member] | |
Fair Value Assumptions Rate | 2.96% |
Derivative Liabilities - Sche_2
Derivative Liabilities - Schedule of Changes in Fair Value of Level 3 Financial Liabilities (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Beginning balance | $ 2,533,000 | $ 1,373,000 | $ 2,399,000 | $ 1,183,000 |
Recognition of warrant liabilities on issuance dates | 116,000 | 1,904,000 | ||
Change in fair value of derivative liabilities | (848,000) | (183,000) | (2,502,000) | 7,000 |
Ending balance | $ 1,801,000 | $ 1,190,000 | $ 1,801,000 | $ 1,190,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | Feb. 16, 2017 | Feb. 02, 2017 | Nov. 29, 2016 | Apr. 29, 2014 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 |
Related party transaction rate | 5.00% | ||||||||
Due to related parties | $ 586,000 | $ 586,000 | $ 998,000 | ||||||
Bargain purchase gain amount | $ 9,500,000 | $ 15,530,000 | $ 10,900,000 | ||||||
M&A Services Agreement [Member] | |||||||||
Exercise price per share | $ 2.10 | ||||||||
Option to acquire percentage | 25.00% | ||||||||
Warrant term | 5 years | ||||||||
Acquisition, transaction costs | 1,480,000 | $ 1,480,000 | |||||||
Acquisition price percentage | 8.00% | ||||||||
MB Technology Holdings, LLC [Member] | |||||||||
Related party transaction rate | 8.00% | 3.00% | |||||||
Financing fees | 0 | 0 | $ 0 | $ 0 | |||||
Due to related parties fees | $ 49,000 | 54,000 | |||||||
Terms and manner of settlement description | The Company will pay MBTH an acquisition fee equal to the greater of $250,000 or 8% of the total acquisition price (the "Acquisition Fee"). Where possible, the Company will pay MBTH 50% of the Acquisition Fee at closing of a transaction, and in any case, not later than thirty (30) days following such closing, 25% of the Acquisition Fee three (3) months following such closing and 25% of the Acquisition Fee six (6) months following such closing. | ||||||||
Related party amounts of transaction | $ 250,000 | ||||||||
Due to diligence fee | 250,000 | ||||||||
Warrant to purchase of common stock related to transaction | $ 250,000 | ||||||||
Exercise price per share | $ 0.01 | ||||||||
Acquisition fee minimum amount to waive success fee | $ 1,000,000 | ||||||||
Related party transaction fee, percentage of fee converted to equity | 50.00% | ||||||||
Related party transaction fee, common stock price percentage for conversion | 110.00% | ||||||||
Related party transaction fee, shares registration minimum percentage | 25.00% | ||||||||
Acquisition related to sales | $ 50,000,000 | ||||||||
Option term | 3 years | ||||||||
Option to acquire percentage | 25.00% | ||||||||
Purchase price of common stock percentage | 125.00% | ||||||||
Fair value of warrant | 265,000 | ||||||||
Number of common stock shares converted | 264,981 | ||||||||
Number of common stock shares converted, value | $ 180,000 | ||||||||
MB Technology Holdings, LLC [Member] | Management Agreement [Member] | |||||||||
Management fee | $ 25,000 | $ 225,000 | 75,000 | $ 75,000 | 225,000 | ||||
Vislink Inc [Member] | M&A Services Agreement [Member] | |||||||||
Acquisition, transaction costs | $ 777,000 | $ 777,000 | |||||||
Acquisition price percentage | 5.00% | ||||||||
Bargain purchase gain amount | $ 15,530,000 |
Concentrations (Details Narrati
Concentrations (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Concentration risk percentage | 10.00% | 10.00% | 10.00% | 10.00% | |
Revenues | $ 8,325,000 | $ 10,158,000 | $ 27,482,000 | $ 33,711,000 | |
One Customer [Member] | Sales Revenue, Net [Member] | |||||
Concentration risk net assets amount | $ 2,196,000 | 2,196,000 | |||
Concentration risk percentage | 26.00% | 11.00% | |||
Revenues | $ 3,668,000 | ||||
One Customer [Member] | Accounts Receivable [Member] | |||||
Concentration risk net assets amount | $ 857,000 | $ 857,000 | |||
Concentration risk percentage | 16.00% | ||||
Two Customer [Member] | Accounts Receivable [Member] | |||||
Concentration risk percentage | 33.00% | ||||
Customer One [Member] | Accounts Receivable [Member] | |||||
Concentration risk net assets amount | $ 1,634,000 | ||||
Concentration risk percentage | 20.00% | ||||
Customer Two [Member] | Accounts Receivable [Member] | |||||
Concentration risk net assets amount | $ 1,073,000 | ||||
Concentration risk percentage | 13.00% | ||||
One Vendor [Member] | Inventories [Member] | |||||
Concentration risk percentage | 13.00% | 28.00% | 15.00% | ||
Two Vendor [Member] | Inventories [Member] | |||||
Concentration risk percentage | 32.00% |
Geographical Information - Sche
Geographical Information - Schedule of Operating Segments Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Total Revenue | $ 8,325,000 | $ 10,158,000 | $ 27,482,000 | $ 33,711,000 |
Long-Lived Assets | 7,584,000 | 11,312,000 | 7,584,000 | 11,312,000 |
North America [Member] | ||||
Total Revenue | 5,784,000 | 5,411,000 | 12,510,000 | 13,084,000 |
South America [Member] | ||||
Total Revenue | 56,000 | 1,163,000 | 1,094,000 | 4,274,000 |
Europe [Member] | ||||
Total Revenue | 795,000 | 1,940,000 | 8,239,000 | 8,972,000 |
Asia [Member] | ||||
Total Revenue | 1,328,000 | 984,000 | 3,423,000 | 4,010,000 |
Rest of World [Member] | ||||
Total Revenue | 362,000 | 660,000 | 2,216,000 | 3,371,000 |
United States [Member] | ||||
Long-Lived Assets | 3,859,000 | 6,020,000 | 3,859,000 | 6,020,000 |
United Kingdom [Member] | ||||
Long-Lived Assets | $ 3,725,000 | $ 5,292,000 | $ 3,725,000 | $ 5,292,000 |
Prior Period Financial Statem_3
Prior Period Financial Statement Revision - Schedule of Condensed Consolidated Financial Statements (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Total liabilities | $ 19,499,000 | $ 19,252,000 | $ 17,856,000 | $ 19,499,000 | $ 17,856,000 | $ 20,147,000 |
Stockholders equity before accumulated deficit | 237,146,000 | 234,309,000 | 234,309,000 | 236,151,000 | ||
Accumulated deficit | (231,571,000) | (221,981,000) | (207,395,000) | (231,571,000) | (207,395,000) | (219,652,000) |
Total liabilities and stockholders' equity | 29,335,000 | 34,417,000 | 44,770,000 | 29,335,000 | 44,770,000 | 36,646,000 |
Net Income/(loss) | $ (2,207,000) | (3,329,000) | (5,347,000) | $ (11,919,000) | 1,904,000 | (10,353,000) |
Previously Reported [Member] | ||||||
Total liabilities | 18,564,000 | 16,710,000 | 16,710,000 | 19,019,000 | ||
Stockholders equity before accumulated deficit | 238,467,000 | 235,630,000 | 235,630,000 | 237,472,000 | ||
Accumulated deficit | (222,614,000) | (207,570,000) | (207,570,000) | (219,845,000) | ||
Total liabilities and stockholders' equity | 34,417,000 | 44,770,000 | 44,770,000 | 36,646,000 | ||
Net Income/(loss) | (3,769,000) | 1,729,000 | (10,546,000) | |||
Restatement Adjustment [Member] | ||||||
Total liabilities | 688,000 | 1,146,000 | 1,146,000 | 1,128,000 | ||
Stockholders equity before accumulated deficit | (1,321,000) | (1,321,000) | (1,321,000) | (1,321,000) | ||
Accumulated deficit | 633,000 | 175,000 | 175,000 | 193,000 | ||
Total liabilities and stockholders' equity | ||||||
Net Income/(loss) | $ 440,000 | $ 175,000 | $ 193,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Oct. 09, 2018 | May 24, 2018 | Nov. 14, 2018 | Sep. 30, 2018 | Oct. 06, 2011 |
Number of common stock shares issued as compensatory shares | 1,890,535 | ||||
Treco International, S.A. [Member] | |||||
Debt principal amount | $ 2,000,000 | ||||
Number of common stock shares issued | 89,109 | ||||
MB Technology Holdings, LLC [Member] | |||||
Number of common stock shares converted | 264,981 | ||||
Number of common stock shares converted, value | $ 180,000 | ||||
Subsequent Event [Member] | Employees, Directors, Consultants and General Counsel [Member] | |||||
Number of common stock shares issued as services, shares | 192,601 | ||||
Number of common stock shares issued as services | $ 85,000 | ||||
Subsequent Event [Member] | Treco International, S.A. [Member] | |||||
Number of common stock shares issued | 187,735 | ||||
Repayment of convertible debt | $ 90,000 | ||||
long-term convertible note payable | $ 2,000,000 | ||||
Subsequent Event [Member] | MB Technology Holdings, LLC [Member] | |||||
Number of common stock shares issued as services, shares | 46,512 | ||||
Number of common stock shares issued as services | $ 20,000 | ||||
Subsequent Event [Member] | May 2018 Financing Amendment [Member] | |||||
Debt principal amount | $ 3,500,000 | ||||
Number of common stock shares issued as compensatory shares | 302,655 | ||||
Conversion price per share | $ 0.45 | ||||
Number of common stock shares converted | 222,224 | ||||
Number of common stock shares converted, value | $ 100,000 | ||||
Subsequent Event [Member] | May 2018 Financing Amendment [Member] | Amended Debentures [Member] | |||||
Debt principal amount | $ 4,000,000 |