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 | nFusz, Inc. | |
Entity Central Index Key | 1,566,610 | |
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 | 180,832,359 | |
Trading Symbol | FUSZ | |
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 | $ 379,461 | $ 10,560 |
Prepaid expenses | 63,378 | 40,909 |
Accounts receivable | 2,500 | |
Total current assets | 445,339 | 51,469 |
Deferred offering costs | 129,327 | |
Property and equipment, net | 14,731 | 30,554 |
Other assets | 7,494 | 8,780 |
Total assets | 596,891 | 90,803 |
Current liabilities: | ||
Accounts payable and accrued expenses | 820,860 | 663,506 |
Accrued officers' salary | 168,895 | 607,333 |
Accrued interest (including $38,041 and $99,425 payable to related parties) | 38,041 | 248,120 |
Deferred revenue | 2,694 | |
Note payable | 125,000 | |
Notes payable - related party | 352,229 | 1,964,985 |
Convertible notes payable, net of discount of $0 and $675,443, respectively | 1,020,315 | |
Derivative liability | 673,376 | 1,250,581 |
Total current liabilities | 2,056,095 | 5,879,840 |
Long-term liabilities: | ||
Notes payable - related party | 824,218 | |
Total long-term liabilities | 824,218 | |
Total liabilities | 2,880,313 | 5,879,840 |
Stockholders' deficit | ||
Preferred stock, $0.0001 par value, 15,000,000 shares authorized, none issued or outstanding | ||
Common stock, $0.0001 par value, 200,000,000 shares authorized, 175,176,248 and 119,118,513 shares issued and outstanding as of September 30, 2018 and December 31, 2017 | 17,518 | 11,912 |
Additional paid-in capital | 34,431,536 | 22,738,574 |
Common stock issuable, 4,500,000 shares | 430 | |
Accumulated deficit | (36,732,476) | (28,539,953) |
Total stockholders' deficit | (2,283,422) | (5,789,037) |
Total liabilities and stockholders' deficit | $ 596,891 | $ 90,803 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Accrued interest, related parties | $ 38,041 | $ 99,425 |
Convertible notes payable, discount | $ 0 | $ 675,443 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 15,000,000 | 15,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 175,176,248 | 119,118,513 |
Common stock, shares outstanding | 175,176,248 | 119,118,513 |
Common stock issuable, shares | 4,500,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Net Sales | $ 10,085 | $ 26,327 | ||
Operating Expenses: | ||||
Research and development | 202,054 | 109,350 | 437,787 | 291,190 |
General and administrative | 472,538 | 1,082,131 | 5,251,967 | 3,052,161 |
Total operating expenses | (674,592) | (1,191,481) | (5,689,754) | (3,343,351) |
Loss from operations | (664,507) | (1,191,481) | (5,663,427) | (3,343,351) |
Other income (expense) | ||||
Other Income / (Expense) | (12,818) | 21,920 | (25,197) | 21,921 |
Change in fair value of derivative liability | 340,851 | (839,872) | ||
Financing costs | (171,739) | |||
Interest expense (including $58,916 and $59,434 to related parties for three months and $175,846 and $176,364 to related parties for nine months) | (58,916) | (205,038) | (321,637) | (375,862) |
Interest expense - amortization of debt discount | (81,959) | (747,623) | (174,981) | |
Debt extinguishment, net (including $1,074,602 and $172,456 to related parties for three months and $1,074,602 and $689,747 to related parties for nine months) | (1,074,602) | (424,331) | (423,028) | (977,201) |
Total other expense | (805,485) | (689,408) | (2,529,096) | (1,506,123) |
Net Loss | $ (1,469,992) | $ (1,880,889) | $ (8,192,523) | $ (4,849,474) |
Loss per share - basic and diluted | $ (0.01) | $ (0.02) | $ (0.06) | $ (0.05) |
Weighted average number of common shares outstanding - basic and diluted | 153,322,179 | 108,542,493 | 146,164,472 | 102,376,462 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations (Unaudited) (Parenthetical) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Interest expense, related parties | $ 58,916 | $ 59,434 | $ 175,846 | $ 176,364 |
Related party debt | $ 1,074,602 | $ 172,456 | $ 1,074,602 | $ 689,747 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Deficit (Unaudited) - 9 months ended Sep. 30, 2018 - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Common Stock Issuable [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2017 | $ 11,912 | $ 22,738,574 | $ 430 | $ (28,539,953) | $ (5,789,037) |
Balance, shares at Dec. 31, 2017 | 119,118,513 | ||||
Common shares issued upon exercise of warrants | $ 1,191 | 20,809 | 22,000 | ||
Common shares issued upon exercise of warrants, shares | 11,917,705 | ||||
Common shares issued upon exercise of options | $ 49 | 34,084 | $ 34,133 | ||
Common shares issued upon exercise of options, shares | 487,620 | 487,620 | |||
Proceeds from sale of common stock | $ 1,746 | 2,976,754 | $ 2,978,500 | ||
Proceeds from sale of common stock, shares | 17,459,067 | 1,679,276 | |||
Fair Value of warrants issued for debt extension | 1,074,602 | $ 1,074,602 | |||
Fair value of common shares issued for services | $ 479 | 1,547,380 | (430) | 1,547,429 | |
Fair value of common shares issued for services, shares | 4,790,181 | ||||
Fair value of common stock issued upon conversion of debt | $ 1,865 | 3,063,972 | 3,065,837 | ||
Fair value of common stock issued upon conversion of debt, shares | 18,647,831 | ||||
Fair value of common stock issued upon conversion of accrued expenses | $ 41 | 582,292 | 582,333 | ||
Fair value of common stock issued upon conversion of accrued expenses, shares | 407,226 | ||||
Common shares issued upon exercise of put option | $ 305 | 999,695 | 1,000,000 | ||
Common shares issued upon exercise of put option, shares | 3,048,105 | ||||
Fair value of vested stock options | 1,413,304 | 1,413,304 | |||
Stock repurchase | $ (70) | (19,930) | (20,000) | ||
Stock repurchase, shares | (700,000) | ||||
Net loss | (8,192,523) | (8,192,523) | |||
Balance at Sep. 30, 2018 | $ 17,518 | $ 34,431,536 | $ (36,732,476) | $ (2,283,422) | |
Balance, shares at Sep. 30, 2018 | 175,176,248 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Operating Activities: | ||
Net loss | $ (8,192,523) | $ (4,849,474) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Share-based compensation | 2,960,733 | 1,824,045 |
Change in fair value of derivative liability | 839,872 | |
Amortization of debt discount | 747,623 | 174,981 |
Conversion of Series A | 118,698 | |
Debt extinguishment costs, net | 423,028 | 977,201 |
Financing costs | 171,739 | |
Depreciation and amortization | 15,823 | 16,090 |
Effect of changes in assets and liabilities: | ||
Accounts payable, accrued expenses, and accrued interest | 253,289 | 569,881 |
Deferred revenue | 2,694 | |
Other assets | 1,286 | 7,256 |
Accounts receivable | (2,500) | 2,468 |
Prepaid expenses | (22,469) | (15,680) |
Net cash used in operating activities | (2,801,405) | (1,174,534) |
Financing Activities: | ||
Proceeds from sale of common stock | 2,978,500 | 470,000 |
Proceeds from exercise of put option | 1,000,000 | |
Proceeds from convertible note payable | 130,000 | |
Proceeds from option exercise | 34,133 | |
Proceeds from warrant exercise | 22,000 | |
Proceeds from series A preferred stock | 555,000 | |
Proceeds / (payment) of convertible notes payable | (845,000) | 300,000 |
Redemption of series A preferred stock | (138,322) | |
Repurchase common stock | (20,000) | |
Deferred offering costs | (129,327) | |
Net cash provided by financing activities | 3,170,306 | 1,186,678 |
Net change in cash | 368,901 | 12,144 |
Cash - beginning of period | 10,560 | 16,762 |
Cash - end of period | 379,461 | 28,906 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 369,597 | 171,375 |
Cash paid for income taxes | 800 | |
Supplemental disclosure of non-cash investing and financing activities: | ||
Conversion of note payable and accrued interest to common stock | 3,065,837 | |
Common stock issued to settle accrued officers salary | 582,333 | |
Fair value of derivative liability, common shares, warrants and beneficial conversion feature of issued convertible note | 150,000 | 196,953 |
Conversion of notes payable to common stock | 181,845 | |
Common stock issued to settle accounts payable | 56,000 | |
Conversion of series A preferred stock | $ 263,876 |
Description of Business
Description of Business | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Description of Business | 1. DESCRIPTION OF BUSINESS Organization Cutaia Media Group, LLC (“CMG”) was organized on December 12, 2012, as a limited liability company under the laws of the State of Nevada. On May 19, 2014, bBooth, Inc. was incorporated under the laws of the State of Nevada. On May 19, 2014, CMG merged into bBooth, Inc. and, thereafter, bBooth, Inc. changed its name to bBooth (USA), Inc., effective as of October 16, 2014. On October 16, 2014, bBoothUSA was acquired by Global System Designs, Inc. (“GSD”), pursuant to a Share Exchange Agreement entered into with GSD (the “Share Exchange Agreement”). GSD was incorporated in the state of Nevada on November 27, 2012. The acquisition was accounted for as a reverse merger transaction. In connection with the closing of the transactions contemplated by the Share Exchange Agreement, GSD’s management was replaced by bBoothUSA’s management, and GSD changed its name to bBooth, Inc. The operations of CMG and bBooth (USA), Inc. became known as, and are referred to herein as, “bBooth USA.” Effective April 21, 2017, we changed our corporate name from bBooth, Inc. to nFüsz, Inc. The name change was effected through a parent/subsidiary short-form merger of nFüsz, Inc., our wholly-owned Nevada subsidiary, formed solely for the purpose of the name change, with and into us. We were the surviving entity. To effectuate the merger, we filed Articles of Merger and a Certificate of Correction (relative to the effective date of the name change merger) with the Secretary of State of the State of Nevada on April 4, 2017, and April 17, 2017, respectively. The merger became effective on April 21, 2017. Our board of directors approved the merger, which resulted in the name change on that date. In accordance with Section 92A.180 of the Nevada Revised Statutes, stockholder approval of the merger was not required. Our Business We are an applications services provider marketing cloud-based business software products on a subscription basis. Our flagship product, notifiCRM, is a Customer Relationship Management (“CRM”) application that is distinguishable from other CRM programs because it utilizes interactive video as the primary means of communication between sales and marketing professionals and their clients or prospects. notifiCRM allows our users to create, distribute, and post interactive videos that contain on-screen interactive icons, buttons, and other elements, that when clicked, allow their prospects and customers to respond to our users’ call to action in real-time, in the video, while the video is playing, without leaving or stopping the video. Our users report increased sales conversion rates compared to traditional, non-interactive video. We developed the proprietary interactive video technology, which serves as the basis for our cloud, Software-as-a-Service (SaaS) products and services that we market under the brand name “notifi” and they are accessible on all mobile and desktop devices. No download is required to access and use our applications. Our users also have access to detailed analytics in the application dashboard that reflect when the videos were viewed, by whom, how many times, for how long, and what interactive elements were clicked-on in the video, among other things, all of which assist our users in focusing their sales and marketing efforts by identifying which clients or prospects have interest in the subject matter of the video. Our notifiCRM platform can accommodate any size campaign or sales organization, and it is enterprise-class scalable to meet the needs of today’s global organizations. We are working with our vendors to ensure that it is so scalable based upon our current agreements with them. We offer stand-alone versions of our notifiCRM product on a subscription basis to individual consumers, sales-based organizations, consumer brands, marketing and advertising agencies, as well as to artists and social influencers. We also offer notifiCRM through a network of partners and resellers that include Oracle/NetSuite and Marketo, who offer notifiCRM to their respective clients and customers as an upgrade to their existing Oracle/NetSuite or Marketo subscriptions. notifiCRM is fully integrated into each of their platforms and upon payment of the upgrade fee, is accessible through the respective dashboards of Oracle/NetSuite and Marketo. We are actively developing integrations of notifiCRM into other popular marketing, CRM, and Enterprise Resource Management (ERP) platforms. Our notifiMED application is designed for physicians and other healthcare providers to create more efficient and effective interactive communications with patients. Patients are able to avoid unnecessary and inconvenient visits to their physicians’ or other healthcare providers’ offices by viewing and responding to interactive videos through in-video, on-screen clicks that are designed to assess the patients’ need for an office visit. If the patient’s responses to the interactive video indicate that an office visit is either necessary or desirable, the patient can schedule the office visit right in through video in real time. Patients can also download and print prescriptions, care instructions, and other physician distributed documents right from and through the video. notifiMED is offered on a subscription basis. Our notifiEDU application is designed for teachers and school administrators for more effective communications with students, parents, and faculty. notifiEDU allows teachers to deliver interactive lessons to students which are both more engaging and more effective. notifiEDU allows teachers to communicate with students through their mobile devices and computers to deliver lessons and tests/quizzes on the screen and in the video. The analytics capabilities of notifiEDU available on the dashboard of the teacher or school administrator allows them to track which students watched the lesson, when, for how long, how many times, and track and report on test/quiz results. notifiEDU is offered on a subscription basis. Our notifiTV and notifiLIVE products are also part of our proprietary interactive video platform that allows viewers to interact with pre-recorded as well as live broadcast video content by clicking on links embedded in on-screen people, objects, graphics, or sponsors’ signage. Viewers can experience our notifiTV and notifiLIVE interactive content and capabilities on most devices available in the market today without the need to download special software or proprietary video players. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the SEC. The condensed consolidated balance sheet as of December 31, 2017 included herein was derived from the audited consolidated financial statements as of that date. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to fairly present the Company’s financial position and results of operations for the interim periods reflected. Except as noted, all adjustments contained herein are of a normal recurring nature. Results of operations for the fiscal periods presented herein are not necessarily indicative of fiscal year-end results. Principles of Consolidation The consolidated financial statements include the accounts of nFüsz, Inc., (formerly bBooth, Inc.) and Songstagram, Inc., our wholly owned subsidiary. All intercompany transactions and balances have been eliminated in consolidation. Going Concern We have incurred operating losses since inception and have negative cash flows from operations. We had a stockholders’ deficit of $2,283,422 as of September 30, 2018 and incurred a net loss of $8,192,523 and utilized $2,801,405 of cash during the nine-month period then ended September 30, 2018. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to raise additional funds and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s December 31, 2017 consolidated financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern. Our continuation as a going concern is dependent on our ability to obtain additional financing until we can generate sufficient cash flows from operations to meet our obligations. We intend to continue to seek additional debt or equity financing to continue our operations. There is no assurance that we will ever be profitable or that debt or equity financing will be available to us. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should we be unable to continue as a going concern. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. Significant estimates include assumptions made in valuing derivative liabilities, valuation of debt and equity instruments, share-based compensation arrangements and realization of deferred tax assets. Amounts could materially change in the future. Revenue Recognition We generate substantially all of our revenue from subscription services, which are comprised of subscription fees from customer accounts. Subscription service arrangements are generally non-cancelable and do not provide for refunds to customers in the event of cancellations or any other right of return. We record revenue net of sales or excise taxes. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), and (ASC 606). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes (1) identifying the contract(s) or agreement(s) with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. Under ASC 606, revenue is recognized when performance obligations under the terms of a contract are satisfied, which occurs for the Company upon shipment or delivery of products or services to our customers based on written sales terms, which is also when control is transferred. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring the products or services to a customer. The Company adopted the guidance of ASC 606 on January 1, 2018. The implementation of ASC 606 had no impact on the prior period financial statements and no cumulative effect adjustment was recognized. Derivative Financial Instruments The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. The Company uses Level 2 inputs for its valuation methodology for the derivative liabilities as their fair values were determined by using a probability weighted average Black-Scholes-Merton pricing model based on various assumptions. The Company’s derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjustments to fair value of derivatives. Share Based Payments The Company issues stock options, common stock, and equity interests as share-based compensation to employees and non-employees. The Company accounts for its share-based compensation to employees in accordance with FASB ASC 718 “Compensation – Stock Compensation.” Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period. The Company accounts for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50 “ .” a b The Company values stock compensation based on the market price on the measurement date. As described above, for employees this is the date of grant, and for non-employees, this is the date of performance completion. The Company values stock options and warrants using the Black-Scholes option pricing model. Net Loss Per Share Basic net loss per share is computed by using the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed giving effect to all dilutive potential common shares that were outstanding during the period. Dilutive potential common shares consist of incremental common shares issuable upon exercise of stock options. No dilutive potential common shares were included in the computation of diluted net loss per share because their impact was anti-dilutive. As of September 30, 2018, the Company had a total of 33,984,605 options and 19,152,038 warrants outstanding. These shares were excluded from the computation of net loss per share because they are anti-dilutive. As of September 30, 2017, the Company had total of 22,030,953 options and 24,461,413 warrants outstanding. These shares were excluded from the computation of net loss per share because they are anti-dilutive. Deferred Offering Costs Deferred offering costs consist principally of legal, accounting and underwriters’ fees incurred related to the contemplated underwritten public offering of the Company’s common stock. These deferred offering costs will be charged against the gross proceeds received or will be charged to expense if the offering is not completed. Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (Topic 842). ASU 2016-02 requires a lessee to record a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, on the balance sheet for all leases with terms longer than 12 months, as well as the disclosure of key information about leasing arrangements. ASU 2016-02 requires recognition in the statement of operations of a single lease cost, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis. ASU 2016-02 requires classification of all cash payments within operating activities in the statement of cash flows. Disclosures are required to provide the amount, timing and uncertainty of cash flows arising from leases. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. The Company has not yet evaluated the impact of the adoption of ASU 2016-02 on the Company’s financial statement presentation or disclosures. In July 2017, the FASB issued ASU No. 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features; (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception” (“ASU 2017-11”). ASU 2017-11 allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock. As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted for as derivative liabilities. A company will recognize the value of a down round feature only when it is triggered, and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, an entity will treat the value of the effect of the down round as a dividend and a reduction of income available to common stockholders in computing basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The guidance in ASU 2017-11 can be applied using a full or modified retrospective approach. The Company is currently evaluating the impact of the adoption of ASU 2017-11 on the Company’s financial statement presentation or disclosures. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 3. PROPERTY AND EQUIPMENT Property and equipment consisted of the following as of September 30, 2018 and December 31, 2017. September 30, 2018 December 31, 2017 (Unaudited) Furniture and fixtures $ 56,890 $ 56,890 Office equipment 50,669 50,669 107,559 107,559 Less: accumulated depreciation (92,828 ) (77,005 ) $ 14,731 $ 30,554 Depreciation expense amounted to $15,823 and $16,090 for nine months ended September 30, 2018 and 2017, respectively. |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Notes Payable | 4. NOTE PAYABLE On March 21, 2015, the Company entered into an agreement with DelMorgan Group LLC (“DelMorgan”), pursuant to which DelMorgan acted as the Company’s exclusive financial advisor. In connection with the agreement, the Company paid DelMorgan $125,000, which was advanced by a third-party lender in exchange for an unsecured note payable issued by the Company bearing interest at the rate of 12% per annum payable monthly beginning on April 20, 2015. Effective March 20, 2017, for no additional consideration the Company entered into an extension agreement with the third-party lender to extend the maturity date of the Note to March 21, 2018. All other terms of the Note remain unchanged. As of December 31, 2017, the balance due under the note was $125,000. On January 29, 2018, the Company settled the debt of $125,000 in exchange for 1,250,000 shares of its Common Stock. There was no gain or loss recognized as the fair value of the common shares issued approximates the note payable settled. |
Notes Payable - Related Parties
Notes Payable - Related Parties | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Notes Payable - Related Parties | 5. NOTES PAYABLE – RELATED PARTIES The Company has the following related parties notes payable as of September 30, 2018 and December 31, 2017: Note Issuance Date Maturity Date Interest Rate Original Borrowing Balance at September 30, 2018 Balance at December 31, 2017 (Unaudited) Note 1 (A) December 1, 2015 February 8, 2021 12.0 % $ 1,248,883 $ 824,218 $ 1,198,883 Note 2 (B) December 1, 2015 February 8, 2021 12.0 % 189,000 - 189,000 Note 3 (C) December 1, 2015 April 1, 2017 12.0 % 111,901 111,901 111,901 Note 4 (D) April 4, 2016 December 4, 2018 12.0 % 343,326 240,328 343,326 Note 5 (E) April 4, 2016 December 4, 2018 12.0 % 121,875 - 121,875 Total notes payable – related parties, net 1,176,447 1,964,985 Non-current (824,218 ) - Current $ 352,229 $ 1,964,985 (A) On December 1, 2015, the Company issued a convertible note payable to Mr. Rory J. Cutaia, the Company’s majority stockholder and Chief Executive Officer (CEO), to consolidate all loans and advances made by Mr. Cutaia to the Company as of that date. The note bears interest rate of 12% per annum, secured by the Company’s assets and matured on August 1, 2018, as amended. Per the terms of the agreement, at Mr. Cutaia’s discretion, he may convert up to $374,665 of outstanding principal, plus accrued interest thereon, into shares of common stock at a conversion rate of $0.07 per share. As of December 31, 2017, total outstanding balance of the note amounted to $1,198,883. On August 8, 2018, we entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note to February 8, 2021. All other terms of the note remain unchanged. In connection with the extension, we granted to Mr. Cutaia a three-year warrant to purchase up to 2,446,700 shares of Common Stock at a price of $0.49 per share with a fair value of $1,074,602. We determined that the extension of the note’s maturity date resulted in a debt extinguishment for accounting purposes because the fair value of the warrants granted was more than 10% of the original value of the note. As result, we recorded the fair value of the “new” note, which approximates the then-current carrying value of $1,198,833 of the then-current note and expensed the entire fair value of the warrants granted of $1,074,602 as part of debt extinguishment. On September 30, 2018, Mr. Cutaia converted the principal balance that was convertible ($374,665) into 5,352,357 shares of Restricted Common Stock at $0.07 per share. As of September 30, 2018, outstanding balance of the note amounted to $824,218. (B) On December 1, 2015, the Company issued a convertible note with Mr. Cutaia in the amount of $189,000 representing a portion of Mr. Cutaia’s accrued salary for 2015. The note was unsecured, bears interest rate of 12% per annum, matured in August 1, 2018, as amended, and convertible to shares of common stock at a conversion price of $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $189,000. On September 30, 2018, Mr. Cutaia converted the entire unpaid balance of $189,000 into 2,700,000 restricted shares of our Common Stock at $0.07 per share. (C) On December 1, 2015, the Company issued a note payable to a former member of the Company’s Board of Directors, in the amount of $111,901 representing unpaid consulting fees as of November 30, 2015. The note is unsecured, bears interest rate of 12% per annum and matured in April 2017. As of September 30, 2018, and the date of this report, the note is past due. The Company is currently in negotiations with the note holder to settle the note payable. (D) On April 4, 2016, the Company issued a convertible note to Mr. Cutaia, in the amount of $343,326, to consolidate all advances made by Mr. Cutaia to the Company from December 2015 through March 2016. The note bears interest rate of 12% per annum, secured by the Company’s assets and will mature on December 4, 2018, as amended. A total of 30% of the note principal or $102,998 can be converted to shares of common stock at a conversion price $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $343,326 On September 30, 2018 Mr. Cutaia converted the 30% of the principal balance that was convertible ($102,998) into 1,471,397 restricted shares of our Common Stock at $0.07 per share. As of September 30, 2018, outstanding balance of the note amounted to $240,328. (E) On April 4, 2016, the Company issued a convertible note payable to Mr. Cutaia in the amount of $121,875, representing his unpaid salary from December 2015 through March 2016. The note was unsecured, bears interest at the rate of 12% per annum, matures on December 4, 2018, as amended, and convertible to common stock at a conversion price of $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $121,8750. For the period ended September 30, 2018 Mr. Cutaia converted $121,875 of debt into 1,741,071 shares of Restricted Common Stock. Total interest expense for notes payable to related parties was $175,846 and $176,364 for nine months ended September 30, 2018 and 2017, respectively. |
Convertible Notes Payable
Convertible Notes Payable | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Convertible Notes Payable | 6. CONVERTIBLE NOTES PAYABLE The Company has the following convertible notes payable as of September 30, 2018 and December 31, 2017: Note Note Date Maturity Date Interest Rate Original Borrowing Balance at September 30, 2018 Balance at December 31, 2017 (Unaudited) Note payable April 3, 2016 April 4, 2018 12 % $ 600,000 $ - $ 680,268 Note payable June and August 2017 February and March 2018 5 % $ 220,500 - 220,500 Note payable Various Various 5 % $ 320,000 - 320,000 Note payable December 8, 2017 December 8, 2018 8 % $ 370,000 - 370,000 Note payable December 13, 2017 September 20, 2018 8 % $ 105,000 - 105,000 Total notes payable - 1,695,768 Debt discount - (675,453 ) Total notes payable, net of debt discount $ - $ 1,020,315 During 2016 through 2017, the Company issued convertible notes payable to unrelated, third-party creditors/investors totaling $1,695,768. The notes bore an average interest rate of 8% per annum, secured by the Company’s assets, mature starting February 2018 through January 2019 and are convertible to shares of common stock based upon a discounted market price. As of December 31, 2017, outstanding balance of the notes payable and unamortized debt discount amounted to $1,695,768 and $675,453, respectively. During the period ended September 30, 2018, the Company issued similar convertible notes payable totaling $150,000 in exchange for cash of $130,000. The notes were secured by the Company’s assets, bore interest of 8% per annum, matures in January 2019 and convertible to common shares at a conversion price equal to 70% of the Company’s 10-day VWAP. The Company determined that since the conversion floor had no limit to the conversion price, that the Company could no longer determine if it had enough authorized shares to fulfill the conversion obligation. As such, pursuant to current accounting guidelines, the Company determined that the conversion feature of the notes created a derivative with a fair value of $252,778 at the date of issuance. The Company accounted for the fair value of the derivative up to the face amount of the note of $150,000 as a valuation discount to be amortized over the life of the note, and the excess of $102,778 being recorded as financing cost (see Note 7 for discussion of derivative liability). In addition, the Company also recorded the notes’ original issue discount of $20,000 as a financing cost. As part of the convertible note offering during the period ended September 30, 2018, the Company also granted a five-year warrant to acquire 1,000,000 shares of the Company’s common stock with an exercise price of $0.14 per share. A total of 500,000 warrants that were granted included a full ratchet reset provision in case of a future offering at a price below $0.14 per share and a fundamental transaction provision that could give rise to an obligation to pay cash to the warrant holder and a reset. As such, pursuant to current accounting guidelines, the Company determined that the warrant exercise price and fundamental transaction clause created a derivative with a fair value of $48,961 at the date of issuance. The Company accounted for the fair value of the derivative as financing cost. See Note 7 for discussion of derivative liability. During the period ended September 30, 2018, the Company settled outstanding debt of $845,000 through the payment of cash. In addition, Company issued 6,133,006 shares of common stock with fair value of $2,151,297 in settlement of outstanding convertible notes of $900,760 and accrued interest of $161,475 ($1,062,235 in the aggregate) The Company recorded a loss of $1,067,242 to account the difference in the fair value of the shares issued in excess of the aggregate amount of debt converted. Furthermore, upon settlement of the debt, the Company amortized the remaining debt discount of $747,623 to interest expense. As of September 30, 2018, all convertible notes payable and unpaid interest had been paid or settled. Total interest expense for convertible notes payable for the nine months ended September 30, 2018 and 2017 was $144,541 and $40,481, respectively. |
Derivative Liability
Derivative Liability | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liability | 7. DERIVATIVE LIABILITY Under authoritative guidance used by the FASB on determining whether an instrument (or embedded feature) is indexed to an entity’s own stock, instruments that do not have fixed settlement provisions are deemed to be derivative instruments. The Company has issued certain convertible notes whose conversion prices contains reset provisions based on a future offering price and/or whose conversion prices are based on future market prices. However, since the number of shares to be issued is not explicitly limited, the Company is unable to conclude that enough authorized and unissued shares are available to share settle the conversion option. In addition, the Company also granted certain warrants that included a fundamental transaction provision that could give rise to an obligation to pay cash to the warrant holder. As a result, the conversion option and warrants are classified as liabilities and are bifurcated from the debt host and accounted for as a derivative liability in accordance with ASC 815 and will be re-measured at the end of every reporting period with the change in value reported in the statement of operations. The derivative liabilities were valued using a probability weighted average Black-Scholes-Merton pricing model with the following average assumptions: September 30, 2018 Upon Issuance December 31, 2017 Stock Price $ 0.40 $ 0.10 $ 0.10 Exercise Price $ 0.13 $ 0.08 $ 0.06 Expected Life 4.23 2.33 1.26 Volatility 221 % 193 % 189 % Dividend Yield 0 % 0 % 0 % Risk-Free Interest Rate 1.89 % 1.18 % 1.72 % Fair Value $ 673,376 $ 301,739 $ 1,250,581 The expected life of the conversion feature of the notes and warrants was based on the remaining contractual term of the notes and warrants. The Company uses the historical volatility of its common stock to estimate the future volatility for its common stock. The expected dividend yield was based on the fact that the Company has not paid dividends in the past and does not expect to pay dividends in the future. The risk-free interest rate was based on rates established by the Federal Reserve Bank. As of December 31, 2017, the Company had recorded a derivative liability of $1,250,581. During the period ended September 30, 2018, the Company recorded an additional derivative liability totaling $301,739 as a result of the issuance of convertible notes and warrants. The Company also extinguished derivative liability of $1,718,816 upon the conversion and payment of outstanding convertible notes payable, which was recorded as part of gain on extinguishment of debt. In addition, the Company also recorded a change in fair value of $839,872 to account the change in fair value of these derivative liabilities up to the dates of the extinguishment and at September 30, 2018. At September 30, 2018, the fair value of the derivative liability amounted to $673,376. |
Equity Transactions
Equity Transactions | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Equity Transactions | 8. EQUITY TRANSACTIONS The Company’s common stock activity for the nine months ended September 30, 2018 is as follows: Common Stock Shares Issued from Stock Subscription Shares Issued for Services Shares Issued from Conversion of Note Payable Shares Issued for Accrued Salary Shares Issued Upon Exercise of Put Option Shares Repurchased Stock Options Effective October 16, 2014, the Company adopted the 2014 Stock Option Plan (the “Plan”) under the administration of the board of directors to retain the services of valued key employees and consultants of the Company. At its discretion, the Company grants share option awards to certain employees and non-employees, as defined by ASC 718, Compensation—Stock Compensation, under the 204 Stock Option Plan (the “Plan”) and accounts for its share-based compensation in accordance with ASC 718. A summary of option activity for the nine months ended September 30, 2018 is presented below. Shares Weighted Exercise Price Weighted Average Remaining Contractual Life (in Years) Aggregate Intrinsic Value Outstanding at December 31, 2017 21,840,953 $ 0.33 4.03 Granted 16,831,272 0.46 Exercised (487,620 ) 0.07 Forfeited or expired (4,200,000 ) 0.34 Outstanding at September 30, 2018 33,984,605 $ 0.26 3.06 $ 3,992,194 Exercisable at September 30, 2018 11,304,808 $ 0.35 $ 2,994,627 During the nine months ended September 30, 2018, the Company granted stock options to employees and consultants to purchase a total 16,831,272 shares of common stock for services rendered. The options have an average exercise price of $0.46 per share, expire in five years and vest on grant date or over a period of three years from grant date. Total fair value of these options at grant date was approximately $8,019,558 using the Black-Scholes Option Pricing model. During the period ended September 30, 2018, 487,620 options were exercised resulting in the issuance of 487,620 shares of common stock. The Company received cash of $34,133 upon exercise of the options. The total stock compensation expense recognized relating to vesting of stock options for the nine months ended September 30, 2018 amounted to $1,413,304. As of September 30, 2018, total unrecognized stock-based compensation expense was $5,944,834, which is expected to be recognized as part of operating expense through September 2021. The fair value of share option award is estimated using the Black-Scholes method based on the following weighted-average assumptions: Nine Months Ended September 30, 2018 2017 Risk-free interest rate 2.73% - 2.99 % 1.77% - 1.93 % Average expected term (years) 5 years 5 years Expected volatility 184% -190 % 157 %-171 % Expected dividend yield - - The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of measurement corresponding with the expected term of the share option award; the expected term represents the weighted-average period of time that share option awards granted are expected to be outstanding giving consideration to vesting schedules and historical participant exercise behavior; the expected volatility is based upon historical volatility of the Company’s common stock; and the expected dividend yield is based on the fact that the Company has not paid dividends in the past and does not expect to pay dividends in the future. Warrants The Company has the following warrants outstanding as of September 30, 2018 all of which are exercisable: Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Warrants Price Life (Years) Value Outstanding at December 31, 2017 28,436,413 $ 0.13 2.79 $ - Granted 5,446,700 0.34 - - Forfeited (48,000 ) 0.10 - - Exercised (14,683,075 ) 0.09 - - Outstanding at September 30, 2018 19,152,038 $ 0.22 3.03 $ 3,827,516 Exercisable at September 30, 2018 19,152,038 $ 3,827,516 During the period ended September 30, 2018, 14,683,075 warrants were exercised resulting in the issuance of 11,917,705 shares of common stock. The Company received cash of $22,000 upon exercise of the warrants. During the nine months ended September 30, 2018, the Company granted warrants to note holders to purchase a total of 1,000,000 shares of common stock. The warrants are exercisable at an average price of $0.14 per share and will expire in January 2023. A total of 500,000 warrants that had been granted were accounted as derivative liability (see Note 6). On February 21, 2018, the Company granted 2,000,000 warrants as part of the exercise of our put option with Kodiak. The exercise price of the 2,000,000 warrants is $0.25 per share and they expire on February 20, 2023. On August 8, 2018 the Company granted 2,446,700 warrants to extend the maturity date of the $1,248,833 Secured note (see note 5). The fair market value of the warrants totaling $1,074,602 was accounted as part of debt extinguishment. During the nine months ended September 30, 2018, a total of 14,683,075 warrants were exercised in cash and cashless exercises for 11,917,705 shares of common stock at a weighted average exercise price of $0.09. As part of these exercises, the Company also received $22,000 upon the exercise of these warrants. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 9. COMMITMENTS AND CONTINGENCIES Litigation On April 24, 2018, EMA Financial, LLC, a New York limited liability company (“EMA”), commenced an action against us, styled EMA Financial, LLC, a New York limited liability company, Plaintiff, against nFUSZ, Inc., Defendant The circumstances giving rise to the dispute are as follows: On or about December 5, 2017, we issued a warrant to EMA as part of the consideration we were required to provide in connection with a contemporaneous convertible loan EMA made to us. The loan, which was evidenced by a convertible Note, was for a term of one year. Our refusal to honor the warrant exercise notice was due to our good faith belief that EMA’s interpretation of the cashless exercise provision of the warrant was, inter alia On July 20, 2018, we filed an Answer to the Complaint, along with certain Affirmative Defenses, as well as Counterclaims seeking, inter alia We know of no other material pending legal proceedings to which we or any of our subsidiaries is a party or to which any of our assets or properties, or the assets or properties of any of our subsidiaries, are subject and, to the best of our knowledge, no adverse legal activity is anticipated or threatened. In addition, we do not know of any such proceedings contemplated by any governmental authorities. Board of Directors The Company has committed an aggregate of $270,000 in annual compensation to its three independent board members commencing on the date the Company is listed on the NASDAQ. The members will serve on the board until the annual meeting for the year in which their term expires or until their successors have been elected and qualified. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 10. SUBSEQUENT EVENTS Subsequent to September 30, 2018, a total of 4,600,000 warrants were exercised in cashless exercises for 4,206,111 shares of common stock at a weighted average exercise price of $0.21. Subsequent to September 30, 2018, the Company granted stock options to employees and consultants to purchase a total 2,125,000 shares of common stock for services rendered. The options have an average exercise price of $0.50 per share, expire in five years and vest on grant date or over a period of three years from grant date. Total fair value of these options at grant date was $1,021,764 using the Black-Scholes Option Pricing model. On October 19, 2018, we issued an unsecured convertible note (the “Note”) to an otherwise unaffiliated third-party entity in the aggregate principal amount of $1,500,000 in exchange for net proceeds of $1,241,500, after an Original Issue Discount of $150,000 and legal and financing expenses of $108,500. In addition, we issued 1,450,000 shares of our Common Stock. The Note is convertible into shares of our Common Stock only on or after the occurrence of an uncured “Event of Default.” Primarily, we will be in default if we do not repay the principal amount of the Note, as required. The other Events of Default are standard for the type of transaction represented by the related Securities Purchase Agreement and the Note. The conversion price in effect on any date on which some or all of the principal of the Note is to be converted shall be a price equal to 70% of the lowest VWAP during the ten trading days immediately preceding the date on which the third party provided its notice of conversion. Upon an Event of Default, we will owe the third party an amount equivalent to 110% of the then-outstanding principal amount of the Note in addition to of all other amounts, costs, expenses, and liquidated damages that might also be due in respect thereof. We have agreed that, on or after the occurrence of an Event of Default, we will reserve and keep available that number of shares of our Common Stock that is at least equal to 200% of the number of such shares that potentially would be issuable pursuant to the terms of the SPA and the Note (assuming conversion in full of the Note and on any date of determination). On October 30, 2018, we issued two unsecured convertible notes to one current investor and one otherwise unaffiliated third-party in the aggregate principal amount of $400,000 in exchange for net proceeds of $400,000. The notes bear interest at a rate of 5% per annum and will mature on April 29, 2019. These notes, upon the Company’s consummation of the contemplated underwritten public offering of the Company’s common stock, all, and not less than all, of (i) the principal and (ii) the accrued interest hereunder shall be converted into shares of the Company’s common stock that shall have been registered therein. The per-share conversion price shall be seventy-five percent (75%) of the offering price of the Common Stock, as reflected on the cover of the definitive prospectus that the Company shall file with the Securities and Exchange Commission upon its acceleration of effectiveness of the contemplated underwritten public offering of the Company’s common stock. As of the issue date, the notes were convertible into an aggregate of 1,523,809 shares of Common Stock. The Company determined that, because the conversion price is unknown, that the Company could not determine if it had enough authorized shares to fulfill the conversion obligation. As such, pursuant to current accounting guidelines, the Company determined that the conversion feature of the notes created a derivative with a fair value of $383,966 at the date of issuance. The Company accounted for the fair value of the derivative as a financing cost. On November 8, 2018, we, and our two wholly-owned merger subsidiaries, entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Sound Concepts, Inc., a Utah corporation, its shareholders, and a shareholders’ representative, pursuant to which we will acquire Sound Concepts through a two-step merger, consisting of merging one of our merger subsidiaries with and into Sound Concepts (with Sound Concepts surviving the “first step” of the merger) and, immediately thereafter, merging Sound Concepts with and into our other merger subsidiary (with that subsidiary surviving the “second step” of the merger). We will pay $25,000,000 of value to the shareholders of Sound Concepts, payable through a combination of a $15,000,000 cash payment by us and the issuance of shares of our common stock with a fair market value of $10,000,000. The purchase price is not subject to any closing working capital adjustment or post-closing working capital adjustment. Each of the parties to the Merger Agreement made customary representations, warranties, and indemnities subject to, in some cases, exceptions and qualifications as will be set forth in a disclosure schedule to the Merger Agreement. Each of the parties also agreed to certain covenants and other agreements, including, among others, (i) covenants requiring Sound Concepts and its shareholders to not solicit other acquisition bids or proposals and (ii) covenants regarding non-solicitation and non-competition. Completion of the acquisition is subject to the satisfaction or waiver of certain conditions. In addition to customary closing conditions, our obligation to complete the acquisition is conditioned upon the consummation of an underwritten public offering of our common stock and receipt by us of offering proceeds that will be used to pay for all or a portion of the cash portion of the merger consideration. Nothing herein shall constitute an offer to sell or the solicitation of an offer to buy any of the securities in our anticipated offering of shares of our Common Stock. Currently, we anticipate the closing of the Sound Concepts acquisition to occur in the first quarter of fiscal 2019; however, there can be no assurance that it will close in the first quarter of fiscal 2019, or at all. The Merger Agreement may be terminated under certain circumstances, including, but not limited to: (i) the mutual written consent of Sound Concepts and us; (ii) by us if there has been a breach, inaccuracy in, or failure to perform any representation, warranty, covenant, or agreement made by Sound Concepts or its shareholders pursuant to the Merger Agreement that would give rise to the failure of any of the closing conditions and such breach, inaccuracy, or failure has not been cured within 10 days of Sound Concepts’ receipt of written notification of such breach from us; provided, that, we (or our merger subsidiaries) are not then in material breach of any provision of the Merger Agreement; (iii) by us if our closing conditions have not been, or if it becomes apparent that any of such conditions will not be, fulfilled by February 14, 2019, unless such failure is due to our failure to perform or comply with any of the covenants, agreements, or conditions required to be performed or complied with by it prior to the closing of the acquisition; (iv) by Sound Concepts if there has been a breach, inaccuracy in, or failure to perform any representation, warranty, covenant, or agreement made by us (or our merger subsidiaries) pursuant to the Merger Agreement that would give rise to the failure of any of the closing conditions and such breach, inaccuracy, or failure has not been cured within 10 days of our receipt of written notice of such breach from Sound Concepts; provided, that neither Sound Concepts or its shareholders is then in material breach of any provision of the Merger Agreement; (v) by Sound Concepts if any of Sound Concepts’ or its shareholders’ closing conditions have not been, or if it becomes apparent that any of such conditions will not be, fulfilled by January 31, 2019, unless such failure is due to Sound Concepts’, or its shareholders’, failure to perform or comply with any of the covenants, agreements, or conditions to be performed or complied with by it or them prior to the Closing of the acquisition; and (vi) by Sound Concepts or us if (1) there is any law that makes consummation of the transactions contemplated by the Merger Agreement illegal or otherwise prohibited or (2) any governmental authority issued a governmental order restraining or enjoining the transactions contemplated by the Merger Agreement, and such governmental order has become final and non-appealable. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the SEC. The condensed consolidated balance sheet as of December 31, 2017 included herein was derived from the audited consolidated financial statements as of that date. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to fairly present the Company’s financial position and results of operations for the interim periods reflected. Except as noted, all adjustments contained herein are of a normal recurring nature. Results of operations for the fiscal periods presented herein are not necessarily indicative of fiscal year-end results. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of nFüsz, Inc., (formerly bBooth, Inc.) and Songstagram, Inc., our wholly owned subsidiary. All intercompany transactions and balances have been eliminated in consolidation. |
Going Concern | Going Concern We have incurred operating losses since inception and have negative cash flows from operations. We had a stockholders’ deficit of $2,283,422 as of September 30, 2018 and incurred a net loss of $8,192,523 and utilized $2,801,405 of cash during the nine-month period then ended September 30, 2018. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to raise additional funds and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s December 31, 2017 consolidated financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern. Our continuation as a going concern is dependent on our ability to obtain additional financing until we can generate sufficient cash flows from operations to meet our obligations. We intend to continue to seek additional debt or equity financing to continue our operations. There is no assurance that we will ever be profitable or that debt or equity financing will be available to us. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should we be unable to continue as a going concern. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. Significant estimates include assumptions made in valuing derivative liabilities, valuation of debt and equity instruments, share-based compensation arrangements and realization of deferred tax assets. Amounts could materially change in the future. |
Revenue Recognition | Revenue Recognition We generate substantially all of our revenue from subscription services, which are comprised of subscription fees from customer accounts. Subscription service arrangements are generally non-cancelable and do not provide for refunds to customers in the event of cancellations or any other right of return. We record revenue net of sales or excise taxes. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), and (ASC 606). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes (1) identifying the contract(s) or agreement(s) with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. Under ASC 606, revenue is recognized when performance obligations under the terms of a contract are satisfied, which occurs for the Company upon shipment or delivery of products or services to our customers based on written sales terms, which is also when control is transferred. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring the products or services to a customer. The Company adopted the guidance of ASC 606 on January 1, 2018. The implementation of ASC 606 had no impact on the prior period financial statements and no cumulative effect adjustment was recognized. |
Derivative Financial Instruments | Derivative Financial Instruments The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. The Company uses Level 2 inputs for its valuation methodology for the derivative liabilities as their fair values were determined by using a probability weighted average Black-Scholes-Merton pricing model based on various assumptions. The Company’s derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjustments to fair value of derivatives. |
Share Based Payment | Share Based Payments The Company issues stock options, common stock, and equity interests as share-based compensation to employees and non-employees. The Company accounts for its share-based compensation to employees in accordance with FASB ASC 718 “Compensation – Stock Compensation.” Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period. The Company accounts for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50 “ .” a b The Company values stock compensation based on the market price on the measurement date. As described above, for employees this is the date of grant, and for non-employees, this is the date of performance completion. The Company values stock options and warrants using the Black-Scholes option pricing model. |
Net Loss Per Share | Net Loss Per Share Basic net loss per share is computed by using the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed giving effect to all dilutive potential common shares that were outstanding during the period. Dilutive potential common shares consist of incremental common shares issuable upon exercise of stock options. No dilutive potential common shares were included in the computation of diluted net loss per share because their impact was anti-dilutive. As of September 30, 2018, the Company had a total of 33,984,605 options and 19,152,038 warrants outstanding. These shares were excluded from the computation of net loss per share because they are anti-dilutive. As of September 30, 2017, the Company had total of 22,030,953 options and 24,461,413 warrants outstanding. These shares were excluded from the computation of net loss per share because they are anti-dilutive. |
Deferred Offering Costs | Deferred Offering Costs Deferred offering costs consist principally of legal, accounting and underwriters’ fees incurred related to the contemplated underwritten public offering of the Company’s common stock. These deferred offering costs will be charged against the gross proceeds received or will be charged to expense if the offering is not completed. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (Topic 842). ASU 2016-02 requires a lessee to record a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, on the balance sheet for all leases with terms longer than 12 months, as well as the disclosure of key information about leasing arrangements. ASU 2016-02 requires recognition in the statement of operations of a single lease cost, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis. ASU 2016-02 requires classification of all cash payments within operating activities in the statement of cash flows. Disclosures are required to provide the amount, timing and uncertainty of cash flows arising from leases. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. The Company has not yet evaluated the impact of the adoption of ASU 2016-02 on the Company’s financial statement presentation or disclosures. In July 2017, the FASB issued ASU No. 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features; (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception” (“ASU 2017-11”). ASU 2017-11 allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock. As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted for as derivative liabilities. A company will recognize the value of a down round feature only when it is triggered, and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, an entity will treat the value of the effect of the down round as a dividend and a reduction of income available to common stockholders in computing basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The guidance in ASU 2017-11 can be applied using a full or modified retrospective approach. The Company is currently evaluating the impact of the adoption of ASU 2017-11 on the Company’s financial statement presentation or disclosures. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consisted of the following as of September 30, 2018 and December 31, 2017. September 30, 2018 December 31, 2017 (Unaudited) Furniture and fixtures $ 56,890 $ 56,890 Office equipment 50,669 50,669 107,559 107,559 Less: accumulated depreciation (92,828 ) (77,005 ) $ 14,731 $ 30,554 |
Notes Payable - Related Parti_2
Notes Payable - Related Parties (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable to Related Parties | The Company has the following related parties notes payable as of September 30, 2018 and December 31, 2017: Note Issuance Date Maturity Date Interest Rate Original Borrowing Balance at September 30, 2018 Balance at December 31, 2017 (Unaudited) Note 1 (A) December 1, 2015 February 8, 2021 12.0 % $ 1,248,883 $ 824,218 $ 1,198,883 Note 2 (B) December 1, 2015 February 8, 2021 12.0 % 189,000 - 189,000 Note 3 (C) December 1, 2015 April 1, 2017 12.0 % 111,901 111,901 111,901 Note 4 (D) April 4, 2016 December 4, 2018 12.0 % 343,326 240,328 343,326 Note 5 (E) April 4, 2016 December 4, 2018 12.0 % 121,875 - 121,875 Total notes payable – related parties, net 1,176,447 1,964,985 Non-current (824,218 ) - Current $ 352,229 $ 1,964,985 (A) On December 1, 2015, the Company issued a convertible note payable to Mr. Rory J. Cutaia, the Company’s majority stockholder and Chief Executive Officer (CEO), to consolidate all loans and advances made by Mr. Cutaia to the Company as of that date. The note bears interest rate of 12% per annum, secured by the Company’s assets and matured on August 1, 2018, as amended. Per the terms of the agreement, at Mr. Cutaia’s discretion, he may convert up to $374,665 of outstanding principal, plus accrued interest thereon, into shares of common stock at a conversion rate of $0.07 per share. As of December 31, 2017, total outstanding balance of the note amounted to $1,198,883. On August 8, 2018, we entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note to February 8, 2021. All other terms of the note remain unchanged. In connection with the extension, we granted to Mr. Cutaia a three-year warrant to purchase up to 2,446,700 shares of Common Stock at a price of $0.49 per share with a fair value of $1,074,602. We determined that the extension of the note’s maturity date resulted in a debt extinguishment for accounting purposes because the fair value of the warrants granted was more than 10% of the original value of the note. As result, we recorded the fair value of the “new” note, which approximates the then-current carrying value of $1,198,833 of the then-current note and expensed the entire fair value of the warrants granted of $1,074,602 as part of debt extinguishment. On September 30, 2018, Mr. Cutaia converted the principal balance that was convertible ($374,665) into 5,352,357 shares of Restricted Common Stock at $0.07 per share. As of September 30, 2018, outstanding balance of the note amounted to $824,218. (B) On December 1, 2015, the Company issued a convertible note with Mr. Cutaia in the amount of $189,000 representing a portion of Mr. Cutaia’s accrued salary for 2015. The note was unsecured, bears interest rate of 12% per annum, matured in August 1, 2018, as amended, and convertible to shares of common stock at a conversion price of $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $189,000. On September 30, 2018, Mr. Cutaia converted the entire unpaid balance of $189,000 into 2,700,000 restricted shares of our Common Stock at $0.07 per share. (C) On December 1, 2015, the Company issued a note payable to a former member of the Company’s Board of Directors, in the amount of $111,901 representing unpaid consulting fees as of November 30, 2015. The note is unsecured, bears interest rate of 12% per annum and matured in April 2017. As of September 30, 2018, and the date of this report, the note is past due. The Company is currently in negotiations with the note holder to settle the note payable. (D) On April 4, 2016, the Company issued a convertible note to Mr. Cutaia, in the amount of $343,326, to consolidate all advances made by Mr. Cutaia to the Company from December 2015 through March 2016. The note bears interest rate of 12% per annum, secured by the Company’s assets and will mature on December 4, 2018, as amended. A total of 30% of the note principal or $102,998 can be converted to shares of common stock at a conversion price $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $343,326 On September 30, 2018 Mr. Cutaia converted the 30% of the principal balance that was convertible ($102,998) into 1,471,397 restricted shares of our Common Stock at $0.07 per share. As of September 30, 2018, outstanding balance of the note amounted to $240,328. (E) On April 4, 2016, the Company issued a convertible note payable to Mr. Cutaia in the amount of $121,875, representing his unpaid salary from December 2015 through March 2016. The note was unsecured, bears interest at the rate of 12% per annum, matures on December 4, 2018, as amended, and convertible to common stock at a conversion price of $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $121,8750. For the period ended September 30, 2018 Mr. Cutaia converted $121,875 of debt into 1,741,071 shares of Restricted Common Stock. Total interest expense for notes payable to related parties was $175,846 and $176,364 for nine months ended September 30, 2018 and 2017, respectively. |
Convertible Notes Payable (Tabl
Convertible Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Convertible Notes Payable | The Company has the following convertible notes payable as of September 30, 2018 and December 31, 2017: Note Note Date Maturity Date Interest Rate Original Borrowing Balance at September 30, 2018 Balance at December 31, 2017 (Unaudited) Note payable April 3, 2016 April 4, 2018 12 % $ 600,000 $ - $ 680,268 Note payable June and August 2017 February and March 2018 5 % $ 220,500 - 220,500 Note payable Various Various 5 % $ 320,000 - 320,000 Note payable December 8, 2017 December 8, 2018 8 % $ 370,000 - 370,000 Note payable December 13, 2017 September 20, 2018 8 % $ 105,000 - 105,000 Total notes payable - 1,695,768 Debt discount - (675,453 ) Total notes payable, net of debt discount $ - $ 1,020,315 |
Derivative Liability (Tables)
Derivative Liability (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Liability Using Weighted Average Black-Scholes-Merton Pricing Model | The derivative liabilities were valued using a probability weighted average Black-Scholes-Merton pricing model with the following average assumptions: September 30, 2018 Upon Issuance December 31, 2017 Stock Price $ 0.40 $ 0.10 $ 0.10 Exercise Price $ 0.13 $ 0.08 $ 0.06 Expected Life 4.23 2.33 1.26 Volatility 221 % 193 % 189 % Dividend Yield 0 % 0 % 0 % Risk-Free Interest Rate 1.89 % 1.18 % 1.72 % Fair Value $ 673,376 $ 301,739 $ 1,250,581 |
Equity Transactions (Tables)
Equity Transactions (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Schedule of Stock Option Activity | A summary of option activity for the nine months ended September 30, 2018 is presented below. Shares Weighted Exercise Price Weighted Average Remaining Contractual Life (in Years) Aggregate Intrinsic Value Outstanding at December 31, 2017 21,840,953 $ 0.33 4.03 Granted 16,831,272 0.46 Exercised (487,620 ) 0.07 Forfeited or expired (4,200,000 ) 0.34 Outstanding at September 30, 2018 33,984,605 $ 0.26 3.06 $ 3,992,194 Exercisable at September 30, 2018 11,304,808 $ 0.35 $ 2,994,627 |
Schedule of Fair Value Assumptions Using Black-Scholes Method | The fair value of share option award is estimated using the Black-Scholes method based on the following weighted-average assumptions: Nine Months Ended September 30, 2018 2017 Risk-free interest rate 2.73% - 2.99 % 1.77% - 1.93 % Average expected term (years) 5 years 5 years Expected volatility 184% -190 % 157 %-171 % Expected dividend yield - - |
Schedule of Warrants Outstanding | The Company has the following warrants outstanding as of September 30, 2018 all of which are exercisable: Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Warrants Price Life (Years) Value Outstanding at December 31, 2017 28,436,413 $ 0.13 2.79 $ - Granted 5,446,700 0.34 - - Forfeited (48,000 ) 0.10 - - Exercised (14,683,075 ) 0.09 - - Outstanding at September 30, 2018 19,152,038 $ 0.22 3.03 $ 3,827,516 Exercisable at September 30, 2018 19,152,038 $ 3,827,516 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Stockholders' deficit | $ 2,283,422 | $ 2,283,422 | $ 5,789,037 | ||
Net loss | 1,469,992 | $ 1,880,889 | 8,192,523 | $ 4,849,474 | |
Cash | $ 2,801,405 | $ 2,801,405 | |||
Outstanding Options [Member] | |||||
Antidilutive securities | 33,984,605 | 22,030,953 | |||
Outstanding Warrants [Member] | |||||
Antidilutive securities | 19,152,038 | 20,540,456 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 15,823 | $ 16,090 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 107,559 | $ 107,559 |
Less: accumulated depreciation | (92,828) | (77,005) |
Property and equipment, net | 14,731 | 30,554 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 56,890 | 56,890 |
Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 50,669 | $ 50,669 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | Jan. 29, 2018 | Mar. 20, 2017 | Mar. 21, 2015 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 |
Notes payable | $ 845,000 | $ 125,000 | ||||
Debt conversion amount | $ 125,000 | $ 3,065,837 | ||||
Number of common stock shares issued upon conversion | 1,250,000 | |||||
DelMorgan Group LLC [Member] | ||||||
Payment advanced by related party | $ 125,000 | |||||
Interest rate | 12.00% | |||||
Third - Party Lender [Member] | Extension Agreement [Member] | ||||||
Maturity date | Mar. 21, 2018 |
Notes Payable - Related Parti_3
Notes Payable - Related Parties (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Interest expense, related parties | $ 58,916 | $ 59,434 | $ 175,846 | $ 176,364 |
Notes Payable [Member] | ||||
Interest expense, related parties | $ 175,846 | $ 176,364 |
Notes Payable - Related Parti_4
Notes Payable - Related Parties - Schedule of Notes Payable to Related Parties (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2018 | Dec. 31, 2017 | ||
Notes payable - related parties, net | $ 352,229 | $ 1,964,985 | |
Non-current | (824,218) | ||
Current | 125,000 | ||
Note 1 [Member] | |||
Issuance Date | [1] | Dec. 1, 2015 | |
Maturity Date | [1] | Feb. 8, 2021 | |
Interest Rate | [1] | 12.00% | |
Original Borrowing | [1] | $ 1,248,883 | |
Notes payable - related parties, net | [1] | $ 824,218 | 1,198,883 |
Note 2 [Member] | |||
Issuance Date | [2] | Dec. 1, 2015 | |
Maturity Date | [2] | Feb. 8, 2021 | |
Interest Rate | [2] | 12.00% | |
Original Borrowing | [2] | $ 189,000 | |
Notes payable - related parties, net | [2] | 189,000 | |
Note 3 [Member] | |||
Issuance Date | [3] | Dec. 1, 2015 | |
Maturity Date | [3] | Apr. 1, 2017 | |
Interest Rate | [3] | 12.00% | |
Original Borrowing | [3] | $ 111,901 | |
Notes payable - related parties, net | [3] | $ 111,901 | 111,901 |
Note 4 [Member] | |||
Issuance Date | [4] | Apr. 4, 2016 | |
Maturity Date | [4] | Dec. 4, 2018 | |
Interest Rate | [4] | 12.00% | |
Original Borrowing | [4] | $ 343,326 | |
Notes payable - related parties, net | [4] | $ 240,328 | 343,326 |
Note 5 [Member] | |||
Issuance Date | [5] | Apr. 4, 2016 | |
Maturity Date | [5] | Dec. 4, 2018 | |
Interest Rate | [5] | 12.00% | |
Original Borrowing | [5] | $ 121,875 | |
Notes payable - related parties, net | [5] | $ 121,875 | |
[1] | On December 1, 2015, the Company issued a convertible note payable to Mr. Rory J. Cutaia, the Company’s majority stockholder and Chief Executive Officer (CEO), to consolidate all loans and advances made by Mr. Cutaia to the Company as of that date. The note bears interest rate of 12% per annum, secured by the Company’s assets and matured on August 1, 2018, as amended. Per the terms of the agreement, at Mr. Cutaia’s discretion, he may convert up to $374,665 of outstanding principal, plus accrued interest thereon, into shares of common stock at a conversion rate of $0.07 per share. As of December 31, 2017, total outstanding balance of the note amounted to $1,198,883. On August 8, 2018, we entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note to February 8, 2021. All other terms of the note remain unchanged. In connection with the extension, we granted to Mr. Cutaia a three-year warrant to purchase up to 2,446,700 shares of Common Stock at a price of $0.49 per share with a fair value of $1,074,602. We determined that the extension of the note’s maturity date resulted in a debt extinguishment for accounting purposes because the fair value of the warrants granted was more than 10% of the original value of the note. As result, we recorded the fair value of the “new” note, which approximates the then-current carrying value of $1,198,833 of the then-current note and expensed the entire fair value of the warrants granted of $1,074,602 as part of debt extinguishment. On September 30, 2018, Mr. Cutaia converted the principal balance that was convertible ($374,665) into 5,352,357 shares of Restricted Common Stock at $0.07 per share. As of September 30, 2018, outstanding balance of the note amounted to $824,218. | ||
[2] | On December 1, 2015, the Company issued a convertible note with Mr. Cutaia in the amount of $189,000 representing a portion of Mr. Cutaia’s accrued salary for 2015. The note was unsecured, bears interest rate of 12% per annum, matured in August 1, 2018, as amended, and convertible to shares of common stock at a conversion price of $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $189,000. On September 30, 2018, Mr. Cutaia converted the entire unpaid balance of $189,000 into 2,700,000 restricted shares of our Common Stock at $0.07 per share. | ||
[3] | On December 1, 2015, the Company issued a note payable to a former member of the Company’s Board of Directors, in the amount of $111,901 representing unpaid consulting fees as of November 30, 2015. The note is unsecured, bears interest rate of 12% per annum and matured in April 2017. As of September 30, 2018, and the date of this report, the note is past due. The Company is currently in negotiations with the note holder to settle the note payable. | ||
[4] | On April 4, 2016, the Company issued a convertible note to Mr. Cutaia, in the amount of $343,326, to consolidate all advances made by Mr. Cutaia to the Company from December 2015 through March 2016. The note bears interest rate of 12% per annum, secured by the Company’s assets and will mature on December 4, 2018, as amended. A total of 30% of the note principal or $102,998 can be converted to shares of common stock at a conversion price $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $343,326. On September 30, 2018 Mr. Cutaia converted the 30% of the principal balance that was convertible ($102,998) into 1,471,397 restricted shares of our Common Stock at $0.07 per share. As of September 30, 2018, outstanding balance of the note amounted to $240,328. | ||
[5] | On April 4, 2016, the Company issued a convertible note payable to Mr. Cutaia in the amount of $121,875, representing his unpaid salary from December 2015 through March 2016. The note was unsecured, bears interest at the rate of 12% per annum, matures on December 4, 2018, as amended, and convertible to common stock at a conversion price of $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $121,8750. For the period ended September 30, 2018 Mr. Cutaia converted $121,875 of debt into 1,741,071 shares of Restricted Common Stock. Total interest expense for notes payable to related parties was $175,846 and $176,364 for nine months ended September 30, 2018 and 2017, respectively. |
Notes Payable - Related Parti_5
Notes Payable - Related Parties - Schedule of Notes Payable to Related Parties (Details) (Parenthetical) - USD ($) | Aug. 08, 2018 | Jan. 29, 2018 | Apr. 04, 2016 | Dec. 01, 2015 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Debt conversion amount | $ 125,000 | $ 3,065,837 | ||||||
Notes payable related party | $ 352,229 | $ 1,964,985 | ||||||
Common stock price per share | $ 0.50 | |||||||
Fair value of warrants | $ 1,074,602 | $ 1,074,602 | ||||||
Debt converted into shares | 1,250,000 | |||||||
Outstanding amount | 824,218 | |||||||
Note 1 [Member] | ||||||||
Notes payable related party | [1] | $ 824,218 | 1,198,883 | |||||
Debt interest rate | [1] | 12.00% | ||||||
Debt instruments maturity date | [1] | Feb. 8, 2021 | ||||||
Note 1 [Member] | Extension Agreement [Member] | ||||||||
Warrants issued | $ 2,446,700 | |||||||
Common stock price per share | $ 0.49 | |||||||
Fair value of warrants | $ 1,074,602 | |||||||
Warrant granted percentage | 10.00% | |||||||
Outstanding balance | $ 1,198,833 | |||||||
Debt extinguishment | $ 1,074,602 | |||||||
Note 1 [Member] | Extension Agreement [Member] | Restricted Common Stock [Member] | ||||||||
Debt converted into shares | 5,352,357 | |||||||
Note 2 [Member] | ||||||||
Notes payable related party | [2] | 189,000 | ||||||
Debt interest rate | [2] | 12.00% | ||||||
Debt instruments maturity date | [2] | Feb. 8, 2021 | ||||||
Note 3 [Member] | ||||||||
Notes payable related party | [3] | $ 111,901 | 111,901 | |||||
Debt interest rate | [3] | 12.00% | ||||||
Outstanding balance | $ 240,328 | |||||||
Debt instruments maturity date | [3] | Apr. 1, 2017 | ||||||
Mr. Cutaia [Member] | Note 1 [Member] | ||||||||
Debt instrument, conversion percentage | 12.00% | |||||||
Debt conversion amount | $ 374,665 | |||||||
Debt conversion price per share | $ 0.07 | |||||||
Notes payable related party | $ 1,198,883 | |||||||
Mr. Cutaia [Member] | Note 2 [Member] | ||||||||
Debt conversion price per share | $ 0.07 | |||||||
Debt interest rate | 12.00% | |||||||
Outstanding balance | $ 189,000 | |||||||
Mr. Cutaia [Member] | Note 2 [Member] | Restricted Common Stock [Member] | ||||||||
Common stock price per share | $ 0.07 | |||||||
Debt converted into shares | 2,700,000 | |||||||
Mr. Cutaia [Member] | Note 3 [Member] | ||||||||
Debt instrument, conversion percentage | 30.00% | 30.00% | ||||||
Debt conversion amount | $ 102,998 | |||||||
Debt conversion price per share | $ 0.07 | |||||||
Notes payable related party | $ 102,998 | |||||||
Debt interest rate | 12.00% | |||||||
Outstanding balance | $ 343,326 | 343,326 | ||||||
Debt instruments maturity date | Dec. 4, 2018 | |||||||
Mr. Cutaia [Member] | Note 3 [Member] | Restricted Common Stock [Member] | ||||||||
Common stock price per share | $ 0.07 | |||||||
Debt converted into shares | 1,471,397 | |||||||
Mr. Cutaia [Member] | Note Payable 2 [Member] | ||||||||
Debt conversion amount | $ 121,875 | |||||||
Debt conversion price per share | $ 0.07 | |||||||
Notes payable related party | $ 121,875 | |||||||
Debt interest rate | 12.00% | |||||||
Outstanding balance | $ 1,218,750 | |||||||
Debt converted into shares | 1,741,071 | |||||||
Debt instruments maturity date | Dec. 4, 2018 | |||||||
Former [Member] | Note Payable 1 [Member] | ||||||||
Debt interest rate | 12.00% | |||||||
Outstanding balance | $ 111,901 | |||||||
[1] | On December 1, 2015, the Company issued a convertible note payable to Mr. Rory J. Cutaia, the Company’s majority stockholder and Chief Executive Officer (CEO), to consolidate all loans and advances made by Mr. Cutaia to the Company as of that date. The note bears interest rate of 12% per annum, secured by the Company’s assets and matured on August 1, 2018, as amended. Per the terms of the agreement, at Mr. Cutaia’s discretion, he may convert up to $374,665 of outstanding principal, plus accrued interest thereon, into shares of common stock at a conversion rate of $0.07 per share. As of December 31, 2017, total outstanding balance of the note amounted to $1,198,883. On August 8, 2018, we entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note to February 8, 2021. All other terms of the note remain unchanged. In connection with the extension, we granted to Mr. Cutaia a three-year warrant to purchase up to 2,446,700 shares of Common Stock at a price of $0.49 per share with a fair value of $1,074,602. We determined that the extension of the note’s maturity date resulted in a debt extinguishment for accounting purposes because the fair value of the warrants granted was more than 10% of the original value of the note. As result, we recorded the fair value of the “new” note, which approximates the then-current carrying value of $1,198,833 of the then-current note and expensed the entire fair value of the warrants granted of $1,074,602 as part of debt extinguishment. On September 30, 2018, Mr. Cutaia converted the principal balance that was convertible ($374,665) into 5,352,357 shares of Restricted Common Stock at $0.07 per share. As of September 30, 2018, outstanding balance of the note amounted to $824,218. | |||||||
[2] | On December 1, 2015, the Company issued a convertible note with Mr. Cutaia in the amount of $189,000 representing a portion of Mr. Cutaia’s accrued salary for 2015. The note was unsecured, bears interest rate of 12% per annum, matured in August 1, 2018, as amended, and convertible to shares of common stock at a conversion price of $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $189,000. On September 30, 2018, Mr. Cutaia converted the entire unpaid balance of $189,000 into 2,700,000 restricted shares of our Common Stock at $0.07 per share. | |||||||
[3] | On December 1, 2015, the Company issued a note payable to a former member of the Company’s Board of Directors, in the amount of $111,901 representing unpaid consulting fees as of November 30, 2015. The note is unsecured, bears interest rate of 12% per annum and matured in April 2017. As of September 30, 2018, and the date of this report, the note is past due. The Company is currently in negotiations with the note holder to settle the note payable. |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details Narrative) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2018USD ($)$ / sharesshares | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)Number$ / sharesshares | Sep. 30, 2017USD ($) | Feb. 21, 2018$ / sharesshares | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Notes payable | $ 845,000 | $ 845,000 | $ 125,000 | ||||
Fair value of derivatives | 48,961 | 48,961 | |||||
Financing costs | $ 171,739 | ||||||
Number of warrant purchase shares | shares | 2,000,000 | ||||||
Exercise price of warrants | $ / shares | $ 0.14 | $ 0.14 | $ 0.25 | ||||
Loss on debt extinguishment | $ (1,074,602) | $ (424,331) | $ (423,028) | (977,201) | |||
Interest expenses | $ 747,623 | ||||||
Common Stock [Member] | |||||||
Warrant term | 5 years | ||||||
Number of warrant purchase shares | shares | 1,000,000 | 1,000,000 | |||||
Exercise price of warrants | $ / shares | $ 0.14 | $ 0.14 | |||||
Convertible Note Payable [Member] | |||||||
Outstanding balance of debt | $ 150,000 | $ 150,000 | $ 1,695,768 | $ 1,695,768 | |||
Interest rate | 8.00% | 8.00% | |||||
Maturity date, description | February 2018 through January 2019 | ||||||
Notes payable | $ 1,695,768 | $ 1,695,768 | |||||
Unamortized debt discount | 675,453 | 675,453 | |||||
Exchange for cash | 130,000 | $ 130,000 | |||||
Maturity date | Jan. 31, 2019 | ||||||
Debt conversion rate | 70.00% | ||||||
Debt instrument trading day | Number | 10 | ||||||
Fair value of derivatives | 252,778 | $ 252,778 | |||||
Debt instrument face value | 1,062,235 | 1,062,235 | |||||
Financing costs | 102,778 | ||||||
Original issue discount | 20,000 | ||||||
Payment of cash for settled outstanding debt | $ 845,000 | ||||||
Number of common stock issued to settle remaining convertible notes payable | shares | 6,133,006 | ||||||
Number of common stock issued to settle remaining convertible notes payable, value | $ 2,151,297 | ||||||
Settlement of outstanding convertible notes | 900,760 | 900,760 | |||||
Accrued interest | $ 161,475 | 161,475 | |||||
Loss on debt extinguishment | 1,067,242 | ||||||
Interest expenses | $ 144,541 | $ 40,481 |
Convertible Notes Payable - Sch
Convertible Notes Payable - Schedule of Convertible Notes Payable (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2018 | Dec. 31, 2017 | ||
Note 1 [Member] | |||
Note Date | [1] | Dec. 1, 2015 | |
Maturity Date | [1] | Feb. 8, 2021 | |
Interest Rate | [1] | 12.00% | |
Original Borrowing | [1] | $ 1,248,883 | |
Note 2 [Member] | |||
Note Date | [2] | Dec. 1, 2015 | |
Maturity Date | [2] | Feb. 8, 2021 | |
Interest Rate | [2] | 12.00% | |
Original Borrowing | [2] | $ 189,000 | |
Note 3 [Member] | |||
Note Date | [3] | Dec. 1, 2015 | |
Maturity Date | [3] | Apr. 1, 2017 | |
Interest Rate | [3] | 12.00% | |
Original Borrowing | [3] | $ 111,901 | |
Note 4 [Member] | |||
Note Date | [4] | Apr. 4, 2016 | |
Maturity Date | [4] | Dec. 4, 2018 | |
Interest Rate | [4] | 12.00% | |
Original Borrowing | [4] | $ 343,326 | |
Note 5 [Member] | |||
Note Date | [5] | Apr. 4, 2016 | |
Maturity Date | [5] | Dec. 4, 2018 | |
Interest Rate | [5] | 12.00% | |
Original Borrowing | [5] | $ 121,875 | |
Convertible Notes Payable [Member] | |||
Total notes payable | $ 1,695,768 | ||
Debt discount | (675,453) | ||
Total notes payable, net of debt discount | 1,020,315 | ||
Convertible Notes Payable [Member] | Note 1 [Member] | |||
Note Date | Apr. 3, 2016 | ||
Maturity Date | Apr. 4, 2018 | ||
Interest Rate | 12.00% | ||
Original Borrowing | $ 600,000 | ||
Total notes payable | 680,268 | ||
Convertible Notes Payable [Member] | Note 2 [Member] | |||
Note Date Description | June and August 2017 | ||
Interest Rate | 5.00% | ||
Original Borrowing | $ 220,500 | ||
Maturity Date, Description | February and March 2018 | ||
Total notes payable | 220,500 | ||
Convertible Notes Payable [Member] | Note 3 [Member] | |||
Note Date Description | Various | ||
Interest Rate | 5.00% | ||
Original Borrowing | $ 320,000 | ||
Maturity Date, Description | Various | ||
Total notes payable | 320,000 | ||
Convertible Notes Payable [Member] | Note 4 [Member] | |||
Note Date | Dec. 8, 2017 | ||
Maturity Date | Dec. 8, 2018 | ||
Interest Rate | 8.00% | ||
Original Borrowing | $ 370,000 | ||
Total notes payable | 370,000 | ||
Convertible Notes Payable [Member] | Note 5 [Member] | |||
Note Date | Dec. 13, 2017 | ||
Maturity Date | Sep. 20, 2018 | ||
Interest Rate | 8.00% | ||
Original Borrowing | $ 105,000 | ||
Total notes payable | $ 105,000 | ||
[1] | On December 1, 2015, the Company issued a convertible note payable to Mr. Rory J. Cutaia, the Company’s majority stockholder and Chief Executive Officer (CEO), to consolidate all loans and advances made by Mr. Cutaia to the Company as of that date. The note bears interest rate of 12% per annum, secured by the Company’s assets and matured on August 1, 2018, as amended. Per the terms of the agreement, at Mr. Cutaia’s discretion, he may convert up to $374,665 of outstanding principal, plus accrued interest thereon, into shares of common stock at a conversion rate of $0.07 per share. As of December 31, 2017, total outstanding balance of the note amounted to $1,198,883. On August 8, 2018, we entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note to February 8, 2021. All other terms of the note remain unchanged. In connection with the extension, we granted to Mr. Cutaia a three-year warrant to purchase up to 2,446,700 shares of Common Stock at a price of $0.49 per share with a fair value of $1,074,602. We determined that the extension of the note’s maturity date resulted in a debt extinguishment for accounting purposes because the fair value of the warrants granted was more than 10% of the original value of the note. As result, we recorded the fair value of the “new” note, which approximates the then-current carrying value of $1,198,833 of the then-current note and expensed the entire fair value of the warrants granted of $1,074,602 as part of debt extinguishment. On September 30, 2018, Mr. Cutaia converted the principal balance that was convertible ($374,665) into 5,352,357 shares of Restricted Common Stock at $0.07 per share. As of September 30, 2018, outstanding balance of the note amounted to $824,218. | ||
[2] | On December 1, 2015, the Company issued a convertible note with Mr. Cutaia in the amount of $189,000 representing a portion of Mr. Cutaia’s accrued salary for 2015. The note was unsecured, bears interest rate of 12% per annum, matured in August 1, 2018, as amended, and convertible to shares of common stock at a conversion price of $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $189,000. On September 30, 2018, Mr. Cutaia converted the entire unpaid balance of $189,000 into 2,700,000 restricted shares of our Common Stock at $0.07 per share. | ||
[3] | On December 1, 2015, the Company issued a note payable to a former member of the Company’s Board of Directors, in the amount of $111,901 representing unpaid consulting fees as of November 30, 2015. The note is unsecured, bears interest rate of 12% per annum and matured in April 2017. As of September 30, 2018, and the date of this report, the note is past due. The Company is currently in negotiations with the note holder to settle the note payable. | ||
[4] | On April 4, 2016, the Company issued a convertible note to Mr. Cutaia, in the amount of $343,326, to consolidate all advances made by Mr. Cutaia to the Company from December 2015 through March 2016. The note bears interest rate of 12% per annum, secured by the Company’s assets and will mature on December 4, 2018, as amended. A total of 30% of the note principal or $102,998 can be converted to shares of common stock at a conversion price $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $343,326. On September 30, 2018 Mr. Cutaia converted the 30% of the principal balance that was convertible ($102,998) into 1,471,397 restricted shares of our Common Stock at $0.07 per share. As of September 30, 2018, outstanding balance of the note amounted to $240,328. | ||
[5] | On April 4, 2016, the Company issued a convertible note payable to Mr. Cutaia in the amount of $121,875, representing his unpaid salary from December 2015 through March 2016. The note was unsecured, bears interest at the rate of 12% per annum, matures on December 4, 2018, as amended, and convertible to common stock at a conversion price of $0.07 per share. As of December 31, 2017, outstanding balance of the note amounted to $121,8750. For the period ended September 30, 2018 Mr. Cutaia converted $121,875 of debt into 1,741,071 shares of Restricted Common Stock. Total interest expense for notes payable to related parties was $175,846 and $176,364 for nine months ended September 30, 2018 and 2017, respectively. |
Derivative Liability (Details N
Derivative Liability (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||
Derivative liability | $ 673,376 | $ 673,376 | $ 1,250,581 | ||
Derivative liability from issuance of convertible debt and warrant | 301,739 | ||||
Gain on derivative liability | 1,718,816 | ||||
Change in fair value of derivative liability | 340,851 | (839,872) | |||
Fair value of the derivative liability | $ 673,376 | $ 673,376 | $ 1,250,581 |
Derivative Liability - Schedule
Derivative Liability - Schedule of Derivative Liability Using Weighted Average Black-Scholes-Merton Pricing Model (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Stock Price | $ 0.40 | $ 0.10 |
Exercise Price | $ 0.13 | $ 0.06 |
Expected Life | 4 years 2 months 23 days | 1 year 3 months 4 days |
Volatility | 221.00% | 189.00% |
Dividend Yield | 0.00% | 0.00% |
Risk Free Interest Rate | 1.89% | 1.72% |
Fair Value | $ 673,376 | $ 1,250,581 |
Upon Issuance [Member] | ||
Stock Price | $ 0.10 | |
Exercise Price | $ 0.08 | |
Expected Life | 2 years 3 months 29 days | |
Volatility | 193.00% | |
Dividend Yield | 0.00% | |
Risk Free Interest Rate | 1.18% | |
Fair Value | $ 301,739 |
Equity Transactions (Details Na
Equity Transactions (Details Narrative) - USD ($) | Aug. 08, 2018 | Mar. 28, 2018 | Feb. 21, 2018 | Jan. 29, 2018 | Feb. 28, 2018 | Jan. 31, 2018 | Sep. 30, 2018 |
Number of common stock shares issued, shares | 1,679,276 | ||||||
Number of common stock shares issued, value | $ 2,978,500 | ||||||
Stock issued price per share | $ 0.50 | ||||||
Number of common stock shares issued for service, value | $ 1,547,429 | ||||||
Number of common stock shares issued upon conversion | 1,250,000 | ||||||
Shares issued upon exercise of option | 487,620 | ||||||
Shares issued upon exercise of option, value | $ 34,133 | ||||||
Warrants to purchase shares of common stock | 2,000,000 | ||||||
Warrant exercise price per share | $ 0.25 | $ 0.14 | |||||
Stock repurchase | $ 20,000 | ||||||
Number of stock options granted | 16,831,272 | ||||||
Exercise price of common stock granted | $ 0.46 | ||||||
Fair value of stock options grants | $ 8,019,558 | ||||||
Unrecognized stock based compensation expense | $ 5,944,834 | ||||||
Warrants issued for derivative liability | 2,000,000 | 500,000 | |||||
Warrant granted shares | 2,446,700 | ||||||
Secured debt | $ 1,248,833 | ||||||
Fair value of warrant | $ 1,074,602 | $ 1,074,602 | |||||
Warrants expire date | Feb. 20, 2023 | ||||||
Warrants [Member] | |||||||
Weighted average exercise price of warrants | $ 0.34 | ||||||
Number of cash and cashless exercise | 11,917,705 | ||||||
Equity Option [Member] | |||||||
Shares issued upon exercise of option | 487,620 | ||||||
Shares issued upon exercise of option, value | $ 34,133 | ||||||
Number of cash exercise of option during period | 487,620 | ||||||
Expense recognized relating to stock options | $ 1,413,304 | ||||||
Warrant [Member] | |||||||
Shares issued upon exercise of option | 14,683,075 | ||||||
Shares issued upon exercise of option, value | $ 22,000 | ||||||
Number of cash exercise of option during period | 11,917,705 | ||||||
Weighted average exercise price of warrants | $ 0.09 | ||||||
Investor [Member] | |||||||
Number of common stock shares issued, shares | 17,459,067 | ||||||
Number of common stock shares issued, value | $ 2,978,500 | ||||||
Stock repurchase, shares | 700,000 | ||||||
Stock repurchase | $ 20,000 | ||||||
Investor [Member] | Minimum [Member] | |||||||
Stock issued price per share | $ 0.06 | ||||||
Investor [Member] | Maximum [Member] | |||||||
Stock issued price per share | $ 1 | ||||||
Employees and Vendors [Member] | |||||||
Number of common stock shares issued for service | 4,790,181 | ||||||
Number of common stock shares issued for service, value | $ 1,547,429 | ||||||
Officers and Directors [Member] | |||||||
Number of common stock shares issued for service | 4,500,000 | ||||||
Number of common stock shares issued for service, value | $ 1,539,000 | ||||||
Note Holder [Member] | |||||||
Number of common stock shares issued upon conversion | 18,647,831 | ||||||
Warrants to purchase shares of common stock | 1,000,000 | ||||||
Warrant exercise price per share | $ 0.14 | ||||||
Warrants expire date | Jan. 31, 2023 | ||||||
CEO [Member] | |||||||
Conversion of stock, amount converted | $ 582,333 | ||||||
Conversion of stock, shares converted | 407,226 | ||||||
Fair value of shares issued | $ 582,333 | ||||||
Kodiak [Member] | |||||||
Shares issued upon exercise of option | 3,048,105 | 3,048,105 | |||||
Shares issued upon exercise of option, value | $ 1,000,000 | $ 1,000,000 | |||||
Warrants to purchase shares of common stock | 2,000,000 | ||||||
Warrant exercise price per share | $ 0.25 |
Equity Transactions - Schedule
Equity Transactions - Schedule of Stock Option Activity (Details) | 9 Months Ended |
Sep. 30, 2018USD ($)$ / sharesshares | |
Equity [Abstract] | |
Number of options outstanding beginning balance | shares | 21,840,953 |
Number of options granted | shares | 16,831,272 |
Number of options exercised | shares | (487,620) |
Number of options forfeited or expired | shares | (4,200,000) |
Number of options outstanding ending balance | shares | 33,984,605 |
Number of options exercisable | shares | 11,304,808 |
Weighted average exercise price outstanding beginning balance | $ 0.33 |
Weighted average exercise price granted | 0.46 |
Weighted average exercise price exercised | 0.07 |
Weighted average exercise price forfeited or expired | 0.34 |
Weighted average exercise price outstanding ending balance | 0.26 |
Weighted average exercise price exercisable | $ 0.35 |
Weighted average remaining contractual term outstanding | 4 years 11 days |
Weighted average remaining contractual term outstanding | 3 years 22 days |
Aggregate intrinsic value outstanding beginning balance | $ | |
Aggregate intrinsic value granted | |
Aggregate intrinsic value exercised | $ | |
Aggregate intrinsic value forfeited or expired | |
Aggregate intrinsic value outstanding ending balance | $ | $ 3,992,194 |
Aggregate intrinsic value exercisable | $ | $ 2,994,627 |
Equity Transaction - Schedule o
Equity Transaction - Schedule of Fair Value Assumptions Using Black-Scholes Method (Details) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Expected term (years) | 5 years | 5 years |
Expected dividend yield | 0.00% | 0.00% |
Minimum [Member] | ||
Risk-free interest rate | 2.73% | 1.77% |
Expected volatility | 184.00% | 157.00% |
Maximum [Member] | ||
Risk-free interest rate | 2.99% | 1.93% |
Expected volatility | 190.00% | 171.00% |
Equity Transaction - Schedule_2
Equity Transaction - Schedule of Warrants Outstanding (Details) - Warrants [Member] | 9 Months Ended |
Sep. 30, 2018USD ($)$ / sharesshares | |
Number of Warrants outstanding beginning balance | shares | 28,436,413 |
Number of Warrants granted | shares | 5,446,700 |
Number of Warrants forfeited | shares | (48,000) |
Number of Warrants exercised | shares | (14,683,075) |
Number of Warrants outstanding ending balance | shares | 19,152,038 |
Number of Warrants exercisable | shares | 19,152,038 |
Weighted average exercise price outstanding beginning balance | $ / shares | $ 0.13 |
Weighted average exercise price granted | $ / shares | 0.34 |
Weighted average exercise price forfeited | $ / shares | 0.10 |
Weighted average exercise price exercised | $ / shares | 0.09 |
Weighted average exercise price outstanding ending balance | $ / shares | $ 0.22 |
Weighted average remaining contractual term outstanding | 2 years 9 months 14 days |
Weighted average remaining contractual term outstanding | 3 years 11 days |
Aggregate intrinsic value outstanding beginning balance | $ | |
Aggregate intrinsic value granted | $ | |
Aggregate intrinsic value exercised | $ | |
Aggregate intrinsic value forfeited | $ | |
Aggregate intrinsic value outstanding ending balance | $ | 3,827,516 |
Aggregate intrinsic value exercisable | $ | $ 3,827,516 |
Commitments and Contingencies -
Commitments and Contingencies - (Details Narrative) | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Board Members [Member] | |
Annual compensation | $ 270,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | Nov. 08, 2018USD ($) | Oct. 30, 2018USD ($)shares | Oct. 19, 2018USD ($)Numbershares | Jan. 29, 2018shares | Sep. 30, 2018USD ($)$ / sharesshares | Feb. 21, 2018$ / shares |
Warrant exercise price | $ / shares | $ 0.14 | $ 0.25 | ||||
Shares issued price per share | $ / shares | $ 0.50 | |||||
Number of common shares issued during period | shares | 1,679,276 | |||||
Debt converted into shares | shares | 1,250,000 | |||||
Fair value of derivatives | $ 48,961 | |||||
Subsequent Event [Member] | ||||||
Debt instrument face amount | $ 400,000 | |||||
Proceeds from issuance of debt | $ 400,000 | |||||
Common stock conversion percentage | 75.00% | |||||
Debt converted into shares | shares | 1,523,809 | |||||
Fair value of derivatives | $ 383,966 | |||||
Debt instruments maturity date | Apr. 29, 2019 | |||||
Subsequent Event [Member] | Agreement and Plan of Merger [Member] | ||||||
Pay to sharesholder of sound concepts | $ 25,000,000 | |||||
Cash payment | 15,000,000 | |||||
Issuance of shares of common stock with a fair market value | $ 10,000,000 | |||||
Subsequent Event [Member] | Bellridge Capital, LP [Member] | ||||||
Debt instrument face amount | $ 1,500,000 | |||||
Proceeds from issuance of debt | 1,241,500 | |||||
Debt discount amount | 150,000 | |||||
Legal and financing expenses | $ 108,500 | |||||
Number of common shares issued during period | shares | 1,450,000 | |||||
Common stock conversion percentage | 70.00% | |||||
Number of trading days | Number | 10 | |||||
Description of event of default | The Note is convertible into shares of our Common Stock only on or after the occurrence of an uncured “Event of Default.” Primarily, we will be in default if we do not repay the principal amount of the Note, as required. The other Events of Default are standard for the type of transaction represented by the related Securities Purchase Agreement and the Note. The conversion price in effect on any date on which some or all of the principal of the Note is to be converted shall be a price equal to 70% of the lowest VWAP during the ten trading days immediately preceding the date on which the third party provided its notice of conversion. Upon an Event of Default, we will owe the third party an amount equivalent to 110% of the then-outstanding principal amount of the Note in addition to of all other amounts, costs, expenses, and liquidated damages that might also be due in respect thereof. We have agreed that, on or after the occurrence of an Event of Default, we will reserve and keep available that number of shares of our Common Stock that is at least equal to 200% of the number of such shares that potentially would be issuable pursuant to the terms of the SPA and the Note (assuming conversion in full of the Note and on any date of determination). | |||||
Debt converted into shares | shares | 5,603,706 | |||||
Fair value of derivatives | $ 1,674,106 | |||||
Financing cost | $ 1,500,000 | |||||
Debt interest rate | 28550000.00% | |||||
Subsequent Event [Member] | Bellridge Capital, LP [Member] | Maximum [Member] | ||||||
Debt interest rate | 17410600.00% | |||||
Warrant [Member] | ||||||
Number of warrants exercised | shares | 4,600,000 | |||||
Cashless exercise of warrants | shares | 4,206,111 | |||||
Warrant exercise price | $ / shares | $ 0.21 | |||||
Number of shares issued for services | shares | 2,125,000 | |||||
Stock option expiration period | 5 years | |||||
Stock option vesting period | 3 years | |||||
Fair value of stock option grant | $ 1,021,764 |