Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 01, 2019 | Jun. 30, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | Verb Technology Company, Inc. | ||
Entity Central Index Key | 1,566,610 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business Flag | true | ||
Entity Emerging Growth Company | false | ||
Entity Ex Transition Period | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 71,720,711 | ||
Entity Common Stock, Shares Outstanding | 12,213,670 | ||
Trading Symbol | FUSZD | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash | $ 634,000 | $ 11,000 |
Prepaid expenses | 83,000 | 41,000 |
Accounts receivable | 1,000 | |
Total current assets | 718,000 | 52,000 |
Deferred offering costs | 162,000 | |
Property and equipment, net | 11,000 | 31,000 |
Other assets | 7,000 | 9,000 |
Total assets | 898,000 | 92,000 |
Current liabilities: | ||
Accounts payable and accrued expenses | 1,148,000 | 665,000 |
Accrued officers' salary | 188,000 | 607,000 |
Accrued interest (including $41,000 and $99,000 payable to related parties) | 46,000 | 248,000 |
Note payable | 125,000 | |
Notes payable - related parties | 112,000 | 1,965,000 |
Convertible notes payable, net of discount of $1,082,000 and $675,000, respectively | 818,000 | 1,020,000 |
Derivative liability | 2,576,000 | 1,251,000 |
Total current liabilities | 4,888,000 | 5,881,000 |
Long-term liabilities: | ||
Notes payable - related parties | 1,065,000 | |
Total long-term liabilities | 1,065,000 | |
Total liabilities | 5,953,000 | 5,881,000 |
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, 12,055,491 and 7,941,234 shares issued and outstanding as of December 31, 2018 and 2017 | 1,000 | 1,000 |
Additional paid-in capital | 35,611,000 | 22,750,000 |
Accumulated deficit | (40,667,000) | (28,540,000) |
Total stockholders' deficit | (5,055,000) | (5,789,000) |
Total liabilities and stockholders' deficit | $ 898,000 | $ 92,000 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Accrued interest, related parties | $ 41,000 | $ 99,000 |
Convertible notes payable, discount | $ 1,082,000 | $ 675,000 |
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 | 12,055,491 | 7,941,234 |
Common stock, shares outstanding | 12,055,491 | 7,941,234 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | ||
Net Sales | $ 32,000 | $ 6,000 |
Operating Expenses: | ||
Cost of revenue | 52,000 | 8,000 |
Research and development | 980,000 | 375,000 |
General and administrative | 6,792,000 | 4,328,000 |
Total operating expenses | (7,824,000) | (4,711,000) |
Loss from operations | (7,792,000) | (4,705,000) |
Other income (expense) | ||
Other Income / (Expense) | (5,000) | 28,000 |
Financing costs | (798,000) | (643,000) |
Interest expense - amortization of debt discount | (1,468,000) | (418,000) |
Change in fair value of derivative liability | (1,167,000) | 6,000 |
Debt extinguishment, net | (534,000) | (977,000) |
Interest expense (including $211,000 and $236,000 to related parties) | (362,000) | (555,000) |
Total other expense | (4,334,000) | (2,559,000) |
Loss before income tax provision | (12,126,000) | (7,264,000) |
Income tax provision | 1,000 | 2,000 |
Net Loss | $ (12,127,000) | $ (7,266,000) |
Loss per share - basic and diluted | $ (1.23) | $ (1.03) |
Weighted average number of common shares outstanding - basic and diluted | 9,870,890 | 7,076,540 |
Consolidated Statements of Op_2
Consolidated Statements of Operations (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | ||
Interest expense, related parties | $ 211,000 | $ 236,000 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Deficit - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Common Stock Issuable [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2016 | $ 1,000 | $ 17,825,000 | $ (20,000) | $ (21,274,000) | $ (3,468,000) |
Balance, shares at Dec. 31, 2016 | 6,310,771 | ||||
Fair value vested options and warrants | 445,000 | 445,000 | |||
Proceeds from sale of common stock | 776,000 | 20,000 | $ 796,000 | ||
Proceeds from sale of common stock, shares | 745,476 | 745,476 | |||
Fair value of common shares issued for services | 2,088,000 | $ 2,088,000 | |||
Fair value of common shares issued for services, shares | 552,029 | ||||
Fair value of common stock issued upon conversion Preferred Series A | 303,000 | 303,000 | |||
Fair value of common stock issued upon conversion Preferred Series A, shares | 190,800 | ||||
Fair value of common stock issued upon conversion of debt | 182,000 | 182,000 | |||
Fair value of common stock issued upon conversion of debt, shares | 68,413 | ||||
Common shares issued upon exercise of put option | 50,000 | 50,000 | |||
Common shares issued upon exercise of put option, shares | 43,745 | ||||
Fair value of shares of common stock issued to settle accounts payable | 56,000 | 56,000 | |||
Fair value of shares of common stock issued to settle accounts payable, shares | 26,667 | ||||
Fair value of common shares, warrants and beneficial conversion feature of issued notes | 154,000 | 154,000 | |||
Fair value of common shares, warrants and beneficial conversion feature of issued notes, shares | 3,333 | ||||
Fair value of warrants issued to extinguish debt and accounts payable | 871,000 | $ 871,000 | |||
Common shares issued upon exercise of options, shares | |||||
Net loss | (7,266,000) | $ (7,266,000) | |||
Balance at Dec. 31, 2017 | $ 1,000 | 22,750,000 | (28,540,000) | (5,789,000) | |
Balance, shares at Dec. 31, 2017 | 7,941,234 | ||||
Proceeds from sale of common stock | 2,979,000 | 2,979,000 | |||
Proceeds from sale of common stock, shares | 1,163,938 | ||||
Fair value of common shares issued for services | 1,545,000 | 1,545,000 | |||
Fair value of common shares issued for services, shares | 319,345 | ||||
Fair value of common stock issued upon conversion of debt | 3,066,000 | $ 3,066,000 | |||
Fair value of common stock issued upon conversion of debt, shares | 1,243,189 | 1,243,189 | |||
Common shares issued upon exercise of put option | 1,000,000 | $ 1,000,000 | |||
Common shares issued upon exercise of put option, shares | 203,207 | ||||
Common shares issued upon exercise of warrants | 22,000 | $ 22,000 | |||
Common shares issued upon exercise of warrants, shares | 1,074,921 | 1,074,921 | |||
Common shares issued upon exercise of options | 34,000 | $ 34,000 | |||
Common shares issued upon exercise of options, shares | 32,508 | 32,508 | |||
Fair Value of warrants issued for debt extension | 1,188,000 | $ 1,188,000 | |||
Fair value of common stock upon issuance of convertible debt | 595,000 | 595,000 | |||
Fair value of common stock upon issuance of convertible debt, shares | 96,667 | ||||
Fair value of common stock issued upon conversion of accrued officer's salary | 582,000 | 582,000 | |||
Fair value of common stock issued upon conversion of accrued officer's salary, shares | 27,148 | ||||
Fair value of vested stock options | 1,870,000 | 1,870,000 | |||
Stock repurchase | (20,000) | (20,000) | |||
Stock repurchase, shares | (46,666) | ||||
Net loss | (12,127,000) | (12,127,000) | |||
Balance at Dec. 31, 2018 | $ 1,000 | $ 35,611,000 | $ (40,667,000) | $ (5,055,000) | |
Balance, shares at Dec. 31, 2018 | 12,055,491 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Operating Activities: | ||
Net loss | $ (12,127,000) | $ (7,266,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Fair value of common shares issued for services and vested stock options | 3,415,000 | 2,534,000 |
Financing costs | 798,000 | 643,000 |
Amortization of debt discount | 1,468,000 | 418,000 |
Change in fair value of derivative liability | 1,167,000 | (6,000) |
Debt extinguishment costs, net | 534,000 | 977,000 |
Depreciation and amortization | 20,000 | 22,000 |
Conversion of Series A | 217,000 | |
Effect of changes in assets and liabilities: | ||
Accounts payable, accrued expenses, and accrued interest | 609,000 | 799,000 |
Other assets | 2,000 | 7,000 |
Deferred revenue | ||
Accounts receivable | (1,000) | 8,000 |
Prepaid expenses | (42,000) | (30,000) |
Net cash used in operating activities | (4,157,000) | (1,677,000) |
Financing Activities: | ||
Proceeds from sale of common stock | 2,979,000 | 796,000 |
Proceeds from convertible note payable | 1,772,000 | 813,000 |
Proceeds from exercise of put option | 1,000,000 | 50,000 |
Proceeds from option exercise | 34,000 | |
Proceeds from warrant exercise | 22,000 | |
Proceeds from series A preferred stock | 555,000 | |
Payment of convertible notes payable | (845,000) | |
Deferred offering costs | (162,000) | |
Repurchase common stock | (20,000) | |
Redemption of series A preferred stock | (543,000) | |
Net cash provided by financing activities | 4,780,000 | 1,671,000 |
Net change in cash | 623,000 | (6,000) |
Cash - beginning of period | 11,000 | 17,000 |
Cash - end of period | 634,000 | 11,000 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 402,000 | 326,000 |
Cash paid for income taxes | 1,000 | 2,000 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Conversion of note payable and accrued interest to common stock | 3,066,000 | 56,000 |
Common stock issued to settle accrued officers salary | 582,000 | |
Fair value of derivative liability from issuance of convertible debt, inducement shares and warrant features | 1,694,000 | 1,256,000 |
Fair value of warrants issued and beneficial conversion feature to extinguish debt | 861,000 | |
Fair value of common shares, warrants and beneficial conversion feature of issued convertible note | 154,000 | |
Common stock issued to settle accounts payable | 182,000 | |
Conversion of series A preferred stock | $ 304,000 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 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. The operations of CMG and bBooth (USA), Inc. became known as, and are referred to herein, as “bBoothUSA.” 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. 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 name-change 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 name-change merger became effective on April 21, 2017. Our board of directors approved the name-change merger, which resulted in the name change on that date. In accordance with Section 92A.180 of the Nevada Revised Statutes (the “NRS”), stockholder approval of the name-change merger was not required. Effective February 1, 2019, we changed our corporate name from nFüsz, Inc. to Verb Technology Company, Inc. The name change was effected through a parent/subsidiary short-form merger of Verb Technology Company, 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 name-change merger, we filed Articles of Merger with the Secretary of State of the State of Nevada on January 31, 2019. The name-change merger became effective on February 1, 2019. Our board of directors approved the name-change merger, which resulted in the name change on that date. In accordance with Section 92A.180 of the NRS, stockholder approval of the name-merger was not required. On February 1, 2019, we implemented a 1-for-15 reverse stock split (the “Reverse Stock Split”) of our common stock, $0.0001 par value per share (the “Common Stock”). The Reverse Stock Split became effective upon commencement of trading of our Common Stock on February 4, 2019. As a result of the Reverse Stock Split, every fifteen (15) shares of our pre-Reverse Stock Split Common Stock were combined and reclassified into one share of our Common Stock. The number of shares of Common Stock subject to outstanding options, warrants, and convertible securities were also reduced by a factor of fifteen as of February 1, 2019. All historical share and per-share amounts reflected throughout our consolidated financial statements and other financial information in this Annual Report have been adjusted to reflect the Reverse Stock Split as if the split occurred as of the earliest period presented. The par value per share of our Common Stock was not affected by the Reverse Stock Split. Nature of Business We are an applications services provider marketing cloud-based business software products under the brand name “Tagg” on a subscription basis. Our flagship product, TaggCRM, 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. TaggCRM allows our users to create, distribute, and post interactive videos that contain on-screen clickable “Taggs” which are interactive icons, buttons, and other on-screen 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. For example, our technology allows a prospective customer or a prospect the ability to click on a product they see featured in a video and buy it, or to click on a calendar icon in the video to make an appointment with a salesperson, among many other features and functionality. Tagg videos can be distributed via email or text messaging and can be posted on social media. Our users report increased sales conversion rates compared to traditional, non-interactive video. We developed the proprietary patent-pending interactive video technology that serves as the basis for all of our cloud, Software-as-a-Service (“SaaS”) Tagg applications. Our Tagg applications are accessible on all mobile and desktop devices and no software download is required to view the Tagg interactive videos. The Tagg applications also provide detailed analytics in the application dashboard that reflect when the videos were viewed, by whom, how many times, for how long, and what interactive Taggs 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. TaggCRM users receive a text message immediately notifying them that a customer prospect received their video and additional text messages notifying them when that customer or prospect watched the video and shared the video so they can follow-up in real-time. Our Tagg application platform can accommodate any size sales or marketing campaign, and it is enterprise-class scalable to meet the needs of today’s global organizations. Our TaggMED 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 patient’s 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. TaggMED is offered on a subscription basis. Our TaggEDU application is designed for teachers and school administrators for more effective communications with students, parents, and faculty. TaggEDU allows teachers to deliver interactive video lessons to students that are both more engaging and more effective. TaggEDU allows teachers to communicate with students through their mobile devices and computers to deliver lessons and tests/quizzes on the screen and in the Tagg video. The analytics capabilities of TaggEDU available on the application dashboard of the teacher or school administrator allow them to track which students watched the lesson, when, for how long, how many times, and track and report on test/quiz results. TaggEDU is offered on a subscription basis. Our TaggLIVE application is also part of our proprietary interactive Tagg video applications portfolio. TaggLIVE is a Facebook application that works in conjunction with Facebook Live, allowing users of Facebook Live to place clickable Taggs on the screens of everyone watching their Facebook Live broadcasts in real time. Viewers can click the on-screen Taggs to purchase products and services placed there and offered by the person utilizing our TaggLIVE Facebook application. Tagg LIVE is scheduled for release in the first quarter of 2019. Going Concern The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, during the year ended December 31, 2018, the Company incurred a net loss of $12,127,000, used cash in operations of $4,157,000 and had a stockholders’ deficit of $5,055,000 as of December 31, 2018. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date of the financial statements being issued. 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. 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of Verb Technology Company, Inc. (formerly nFüsz, Inc. and, before that, bBooth, Inc.) Use of Estimates The preparation of financial statements in conformity with Generally Accepted Accounting Principles (“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 analysis of impairment of long term assets, realization of deferred tax assets, determining fair value of derivative liabilities, and value of equity instruments issued for services. 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. On January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. 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 implementation of ASC 606 had no impact on the prior period financial statements and no cumulative effect adjustment was recognized. Property and Equipment Property and equipment are recorded at historical cost and depreciated on a straight-line basis over their estimated useful lives of approximately five years once the individual assets are placed in service. Long-Lived Assets The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. No impairment of long-lived assets was required for the years ended December 31, 2018 and 2017. Income Taxes The Company accounts for income taxes under Financial Accounting Standards Board’s (“FASB”) ASC 740 “Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The deferred tax assets of the Company relate primarily to operating loss carry-forwards for federal income tax purposes. A full valuation allowance for deferred tax assets has been provided because the Company believes it is not more likely than not that the deferred tax asset will be realized. Realization of deferred tax assets is dependent on the Company generating sufficient taxable income in future periods. The Company periodically evaluates its tax positions to determine whether it is more likely than not that such positions would be sustained upon examination by a tax authority for all open tax years, as defined by the statute of limitations, based on their technical merits. The Company accrues interest and penalties, if incurred, on unrecognized tax benefits as components of the income tax provision in the accompanying consolidated statements of operations. As of December 31, 2018, and 2017, the Company has not established a liability for uncertain tax positions. 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. 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 adjusted to fair value of derivatives. Share Based Payment 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 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 “ .” 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 using the Black-Scholes option pricing model. Assumptions used in the Black-Scholes model to value options issued during the years ended December 31, 2018 and 2017 are as follows: Year Ended Year Ended December 31, 2018 December 31, 2017 Expected life in years 5.0 2.5 to 5.0 Stock price volatility 184.45% -190.22 % 84.36% - 173.92 % Risk free interest rate 2.25% - 3.00 % 1.22% - 2.23 % Expected dividends 0 % 0 % Forfeiture rate 18 % 21 % The risk-free interest rate was based on rates established by the Federal Reserve Bank. 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 customarily paid dividends in the past and does not expect to pay dividends in the future. Research and Development Costs Research and development costs consist of expenditures for the research and development of new products and technology. These costs are primarily expenses to vendors contracted to perform research projects and develop technology for the Company’s cloud-based, Tagg interactive video CRM SaaS platform. 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 shares of Common Stock that were outstanding during the period. Dilutive potential shares of Common Stock consist of incremental shares of Common Stock issuable upon exercise of stock options. No dilutive potential shares of Common Stock were included in the computation of diluted net loss per share because their impact was anti-dilutive. As of December 31, 2018, and 2017, the Company had total outstanding options of 2,478,974 and 1,456,064, respectively, and warrants of 940,412 and 1,895,761, respectively, which were excluded from the computation of net loss per share because they are anti-dilutive. Fair Value of Financial Instruments The Company follows paragraph 825-10-50-10 of the FASB ASC for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB ASC (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value under GAAP, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below: Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3: Pricing inputs that are generally observable inputs and not corroborated by market data. The carrying amount of the Company’s financial assets and liabilities, such as cash and cash equivalents, prepaid expenses, and accounts payable and accrued expenses approximate their fair value due to their short-term nature. The carrying values financing obligations approximate their fair values due to the fact that the interest rates on these obligations are based on prevailing market interest rates. The Company uses Level 2 inputs for its valuation methodology for the derivative liabilities. Concentrations During the year ended December 31, 2018, the Company had a single vendor that accounted for 5% of all purchases, and 20.7% of all purchases in the same period in the prior year. 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 Stock holders 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. In June 2018, the FASB issued Accounting Standards Update 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 also clarifies that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Revenue from Contracts with Customers (Topic 606). ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company will adopt the provisions of ASU 2018-07 in the quarter beginning January 1, 2019. The adoption of ASU 2018-07 is not expected to have any impact 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 | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 3. PROPERTY AND EQUIPMENT Property and equipment consisted of the following as of December 31, 2018 and 2017. December 31, 2018 December 31, 2017 Furniture and fixtures $ 57,000 $ 57,000 Office equipment 51,000 51,000 108,000 108,000 Less: accumulated depreciation (97,000 ) (77,000 ) $ 11,000 $ 31,000 Depreciation expense amounted to $20,000 and $22,000 for the year ended December 31, 2018 and 2017, respectively. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Notes Payable | 4. NOTES PAYABLE On March 21, 2015, the Company issued a note payable to a third-party lender for the benefit of DelMorgan Group LLC (“DelMorgan”), financial consultant. The note was unsecured, bore interest at a rate of 12% per annum, payable monthly beginning on April 20, 2015, and had an original maturity date of March 20, 2017. On March 20, 2017, the Company entered into an extension agreement with the third-party lender to extend the maturity date of the note to March 20, 2018. All other terms of the note remained unchanged and there was no additional compensation or incentive given. As of December 31, 2017, the outstanding balance of the note amounted to $125,000. On January 29, 2018, the Company settled the debt of $125,000 in exchange for 83,333 shares of its Common Stock. There was no gain or loss recognized as the fair value of the shares of Common Stock issued approximated the note payable settled. |
Notes Payable - Related Parties
Notes Payable - Related Parties | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Notes Payable - Related Parties | 5. NOTES PAYABLE – RELATED PARTIES The Company has the following related parties outstanding notes payable as of December 31, 2018 and 2017: Note Issuance Date Maturity Date Interest Rate Original Borrowing Balance at December 31, 2018 Balance at December 31, 2017 Note 1 (A) December 1, 2015 February 8, 2021 12.0 % $ 1,249,000 $ 825,000 $ 1,199,000 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 % 112,000 112,000 112,000 Note 4 (D) April 4, 2016 June 4, 2021 12.0 % 343,000 240,000 343,000 Note 5 (E) April 4, 2016 December 4, 2018 12.0 % 122,000 - 122,000 Total notes payable – related parties 1,177,000 1,965,000 Non-current (1,065,000 ) - Current $ 112,000 $ 1,965,000 (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, to consolidate all loans and advances made by Mr. Cutaia to the Company as of that date. The note bore interest at a rate of 12% per annum, was secured by the Company’s assets, and matured on April 1, 2017. Pursuant to the terms of the agreement, at Mr. Cutaia’s discretion, he could convert up to 30%, or $375,000, of the outstanding principal, plus accrued interest thereon, into shares of Common Stock at a conversion rate of $1.05 per share. On May 4, 2017, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note from April 1, 2017 to August 1, 2018. In consideration, the Company issued Mr. Cutaia a three-year warrant to purchase up to 117,013 shares of Common Stock at a price of $5.33 per share with a fair value of $517,000. All other terms of the note remain unchanged. The Company determined that the extension of the note’s maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the original value of the convertible note. As result, the Company recorded the fair value of the new note, which approximated the original carrying value $1,199,000 and expensed the fair value of the warrants granted of $517,000 as debt extinguishment costs. As of December 31, 2017, total outstanding balance of the note amounted to $1,199,000. On August 8, 2018, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note to February 8, 2021. In consideration for extending the note the Company issued Mr. Cutaia warrants exercisable for up to 163,113 shares of Common Stock with a fair market value of $1,075,000. The Company determined that the extension of the note’s maturity date resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the original value of the convertible note. As result, the Company recorded the fair value of the new note which approximates the original carrying value $1,199,000 and expensed the entire fair value of the warrants granted, or $1,075,000 as a debt extinguishment cost. On September 30, 2018, Mr. Cutaia converted the convertible principal balance of $375,000 at $1.05 per share into 356,824 shares of restricted Common Stock. As of December 31, 2018, the outstanding balance of the note amounted to $825,000. (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, bore interest at a rate of 12% per annum, and matured in April 2017. The note was convertible into shares of Common Stock at a conversion price of $1.05 per share. On May 4, 2017, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note from April 1, 2017 to August 1, 2018. All other terms of the note remain unchanged and there were no additional compensation or incentive given. As of December 31, 2017, the outstanding balance of the note amounted to $189,000. On September 30, 2018, Mr. Cutaia converted the entire outstanding principal amount of $189,000 into 180,000 shares of restricted Common Stock. (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 $112,000 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 December 31, 2017, and 2018, the outstanding principal balance of the note was equal to $112,000. As of December 31, 2018, the note was past due, and remains past due. The Company is currently in negotiations with the noteholder to settle the past due note. (D) On April 4, 2016, the Company issued a convertible note to Mr. Cutaia, in the amount of $343,000, to consolidate all advances made by Mr. Cutaia to the Company during the period December 2015 through March 2016. The note bore interest at a rate of 12% per annum, was secured by the Company’s assets, and matured on August 4, 2017. Pursuant to the terms of the note, a total of 30%, or $103,000, of the note principal can be converted to shares of Common Stock at a conversion price $1.05 per share. On August 4, 2017, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note from August 4, 2017 to December 4, 2018. In consideration for extending the note’s maturity, the Company issued Mr. Cutaia warrants to purchase up to 88,610 shares of Common Stock at a price of $2.25 per share with a fair value of $172,000. All other terms of the note remain unchanged. The Company determined that the extension of the note’s maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the recorded value of the original convertible note. As a result, the Company recorded the fair value of the new note, which approximated the original carrying value $343,000 and expensed the entire fair value of the warrants granted of $172,000 as part of loss on debt extinguishment. As of December 31, 2017, the outstanding balance of the note was $343,000. On September 30, 2018, Mr. Cutaia converted the 30% principal amount of the note, or $103,000 of into 98,093 shares of restricted Common Stock. On December 4, 2018, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note to June 4, 2021. In consideration for extending the note, the Company issued Mr. Cutaia warrants to purchase up to 23,562 shares of Common Stock, with a fair market value of the warrants totaling $111,000. The Company determined that the extension of the note’s maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the original value of the convertible note. As result, the Company recorded the fair value of the new note, which approximates the original carrying value of $240,000 and expensed the entire fair value of the warrants granted of $111,000 as part of loss on debt extinguishment. As of December 31, 2018, the outstanding balance of the note amounted to $240,000. (E) On April 4, 2016, the Company issued a convertible note payable to Mr. Cutaia in the amount of $122,000, representing his unpaid salary from December 2015 through March 2016. The note was unsecured, bore interest at a rate of 12% per annum, compounded annually, and matured on August 4, 2017. The note was also convertible into shares of the Company’s Common Stock at $1.05 per share. On August 4, 2017, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note from August 4, 2017 to December 4, 2018. All other terms of the note remain unchanged and there were no additional compensation or incentive given. As of December 31, 2017, the outstanding balance of the note amounted to $122,000. On September 30, 2018, Mr. Cutaia converted $122,000 of outstanding principal amount into 116,701 shares of restricted Common Stock. During the year ended December 31, 2018, the Company recorded total interest expense totaling $211,000 pursuant to the terms of the notes and paid $269,000 in interest. |
Convertible Notes Payable
Convertible Notes Payable | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Convertible Notes Payable | 6. CONVERTIBLE NOTES PAYABLE The Company has the following outstanding convertible notes payable as of December 31, 2018 and 2017: Note Note Date Maturity Date Interest Rate Original Borrowing Balance at December 31, 2018 Balance at December 31, 2017 Note payable (a) April 3, 2016 April 4, 2018 12 % $ 680,000 $ - $ 680,000 Note payable (b) June and August 2017 February and March 2018 5 % $ 220,000 - 220,000 Note payable (c) Various Various 5 % $ 320,000 - 320,000 Note payable (d) December 8, 2017 December 8, 2018 8 % $ 370,000 - 370,000 Note payable (e) December 13, 2017 September 20, 2018 8 % $ 105,000 - 105,000 Note payable (f) October 19, 2018 April 19, 2019 10 % $ 1,500,000 1,500,000 - Note payable (g) October 30, 2018 April 29, 2019 5 % $ 400,000 400,000 - Total notes payable 1,900,000 1,695,000 Debt discount (1,082,000 ) (675,000 ) Total notes payable, net of debt discount $ 818,000 $ 1,020,000 (a) On April 3, 2016, the Company issued a convertible note payable to Oceanside Strategies, Inc. (“Oceanside”), a third party-lender, in the amount of $680,000 to consolidate all notes payable and accrued interest due to Oceanside as of that date. This note superseded and replaced all previous notes and liabilities due to Oceanside from fiscal years 2014 and 2015. The note was unsecured, bore interest at the rate of 12% per annum, compounded annually, and had an original maturity date of December 30, 2016. Pursuant to the terms of the note, the Company granted Oceanside the right to convert up to 30% of the principal amount of such note, or $204,000, into shares of common stock at a conversion price $1.05 per share and granted warrants to purchase up to 161,969 shares of Common Stock at $1.05 per share until April 4, 2019. On December 30, 2016, the Company entered into an extension agreement with Oceanside to extend the maturity date of the note from December 30, 2016 to August 4, 2017. All other terms of the note remain unchanged. In consideration for Oceanside’s agreement to extend the maturity date to August 4, 2017, the Company granted Oceanside a warrant to purchase up to 161,969 shares of the Company’s Common Stock, exercisable at $1.20 per share until December 29, 2019, with a fair value of $159,000. On August 4, 2017, the Company entered into an extension agreement with Oceanside to extend the maturity date of the note from August 4, 2017 to April 4, 2018. All other terms of the note remain unchanged. In consideration for Oceanside’s agreement to extend the maturity date to August 4, 2018, the Company granted Oceanside a warrant to purchase up to 87,787 shares of the Company’s Common Stock, exercisable at $2.25 per share until August 3, 2022 with a fair value of $171,000. The Company determined that the extension of the note’s maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the recorded value of the original convertible note. As a result, Company recorded the fair value of the new note, which approximated the original carrying value of $680,000, and expensed the entire fair value of the warrants granted of $171,000 as part of loss on debt extinguishment. As of December 31, 2017, the outstanding balance of the note amounted to $680,000. In March 2018, the entire principal amount due was settled through the issuance of 305,967 shares of Common Stock. As a result of this conversion, the Company also recorded a loss on debt extinguishment of $1,090,000 to account for the fair value of the 65,469 shares of Common Stock issued to settle the remaining 70%, or $476,000, of the note principal and accrued interest that was not initially convertible to shares of Common Stock. (b) In June and August of 2017, the Company issued unsecured convertible notes to an unaffiliated third-party in the amount of $220,000 in exchange for cash of $200,000, representing an original issue discount of $10,500, and prepaid interest of $10,000. The notes bore interest at a rate of 5% per annum, matured in February and March 2018, and were convertible to shares of Common Stock at a conversion price of either $3.75 per share or $1.50 per share. As part of the issuance, the Company also (i) granted warrants to purchase up to 22,000 shares of Common Stock at $4.50 per share and (ii) issued 3,333 shares of Common Stock with a fair value $12,500. As a result, the Company recorded a debt discount of $175,000 to account for the original issue discount and prepaid interest of $21,000, the relative fair value of the warrants of $40,000, the fair value of the shares of Common Stock of $13,000 and the beneficial conversion feature of $102,000. The debt discount is being amortized to interest expense over the term of the note. As of December 31, 2017, the outstanding balance of the note was $220,000 and unamortized debt discount of $40,000. In March 2018, the entire outstanding principal amount of the notes, and all accrued interest thereon, were settled and converted into 102,900 shares of Common Stock pursuant to the conversion terms of the notes and we expensed the unamortized debt discount. (c) On September 26, 2017, we entered into a purchase agreement, dated September 15, 2017, with Kodiak Capital Group, LLC (“Kodiak”). Under the purchase agreement, the Company was entitled to, from time to time, in the Company’s discretion, sell shares of its Common Stock to Kodiak for aggregate gross proceeds of up to $2,000,000. Unless terminated earlier, Kodiak’s purchase commitment automatically terminates on the earlier of the date on which Kodiak has purchased our shares pursuant to the purchase agreement for an aggregate purchase price of $2,000,000, or September 15, 2019. The Company has no obligation to sell any shares under the purchase agreement. From September 2017 through November 2017, the Company issued three convertible notes payable totaling $320,000 in exchange for cash of $200,000, representing an original issue discount of $20,000, and settlement of financing expenses of $100,000 incurred by Kodiak pursuant to the purchase agreement. The notes were unsecured, had maturity dates starting in March 2018 through June 2018, and bore interest at a rate of 5% per annum. The notes were also convertible into shares of Common Stock at price of $3.75 per share or 70% of the 10-day VWAP prior to conversion, whichever is lower. As part of the issuances, the Company also granted Kodiak a five-year, fully vested, warrant to purchase up to 133,333 shares of Common Stock, exercisable at $2.25 and $3.00 per share. The Company determined that since there was no minimum conversion price, it could no longer determine if it had enough authorized shares to fulfill its conversion obligation. As such, pursuant to current accounting guidelines, the Company determined that the conversion feature of these three notes created a derivative with a fair value totaling $412,000 at the date of issuances. The Company accounted for the fair value of the derivative up to the face amount of the notes of $320,000 as a valuation discount to be amortized over the life of the note, and the excess of $92,000 being recorded as part of financing cost. See Note 8, Derivative Liability, In March 2018, the Company paid Kodiak $226,000 to settle two notes payable totaling $220,000, and all accrued interest thereon, and amortized the corresponding unamortized debt discount of $114,000 to interest expense. As part of the payment, Kodiak cancelled one note payable in the outstanding principal amount of $100,000. As a result of the note’s cancellation, the Company recorded a gain on debt extinguishment of $23,000, to account for the cancellation of the $100,000 note payable, less the amortization of the corresponding debt discount of $77,000. (d) On December 8, 2017, the Company issued unsecured convertible notes to EMA Financial, LLC (“EMA”) and Auctus Fund, LLC (“Auctus”) totaling $370,000 in principal, in exchange for cash of $323,000, representing an original issue discount of $47,000. The notes bore interest at a rate of 8% per annum and matured on December 8, 2018. The notes were also convertible into shares of Common Stock at a conversion price equal to the lower of: (i) the closing sale price of the Common Stock on the principal market (as defined in the notes) on the trading day immediately preceding the closing date, and (ii) 70% of either the lowest sale price for the Common Stock on the principal market during the ten (10) consecutive trading days including and immediately preceding the conversion date, or the closing bid price. The Company determined that since there was no minimum conversion price, that it 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 note created a derivative with a fair value of $565,000 at the date of issuance. The Company accounted for the fair value of the derivative up to the face amount of the note of $370,000 as a valuation discount to be amortized over the life of the note, and the excess of $195,000 was recorded as part of financing cost. See Note 8, Derivative Liability, As part of the offering, the Company also granted EMA and Auctus a five-year warrant to acquire up to 160,000 shares of the Company’s Common Stock with an exercise price of $1.65 per share. Warrants to acquire up to 80,000 shares of Common Stock contained (i) a full ratchet reset provision in the event the Company engages in a future equity offering and the Company offers equity securities at a price less than $1.65 per share and (ii) a fundamental transaction provision that could give rise to an obligation to pay cash to the warrant holder. As such, pursuant to current accounting guidelines, the Company determined that the warrant exercise price and fundamental transaction provision created a derivative with a fair value of $119,000 at the date of issuance. The Company accounted for the fair value of the derivative as part of finance cost. See Note 8, Derivative Liability, In January 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, matured in January 2019, and was convertible into shares of Common Stock at a conversion price equal to 70% of the Company’s 10-day VWAP. The Company determined that since there was no minimum conversion price, that it could no longer determine if it had enough authorized shares to fulfill its 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 $253,000 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 $103,000 was recorded as a financing cost. See Note 8, Derivative Liability, As part of the convertible note offering, the Company also granted a five-year warrant to acquire up to 66,667 shares of the Company’s Common Stock with an exercise price of $2.10 per share. Warrants to purchase up to 33,333 shares of Common Stock included (i) a full ratchet reset provision in the event the Company engaged in a future equity offering at an offering price less than $2.10 per share and (ii) a fundamental transaction provision that could give rise to an obligation to pay cash to the warrant holder and a reset of the exercise price. As such, pursuant to current accounting guidelines, the Company determined that the warrant exercise price and fundamental transaction provision created a derivative with a fair value of $49,000 at the date of issuance. The Company accounted for the fair value of the derivative as a financing cost. See Note 8, Derivative Liability, In March 2018, the Company settled the entire outstanding principal amount of the notes in cash and expensed the corresponding debt discount of $494,000. (e) On December 14, 2017, the Company issued an unsecured convertible note to PowerUp Lending Group, Ltd. in the amount of $105,000 in exchange for cash of $90,000, representing an original issue discount of $15,000. The note matured on September 20, 2018 and bore interest at a rate of 8% per annum. The note was convertible into shares of Common Stock at a conversion price equal to 70% multiplied by the market price, which is equal to the lowest trading price of the Common Stock during the ten (10) trading day period ending on the latest complete trading day prior to the conversion date. The Company determined that since there was no minimum conversion price, it 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 note created a derivative with a fair value of $160,000 at the date of issuance. The Company accounted for the fair value of the derivative up to the face amount of the note of $105,000 as a valuation discount to be amortized over the life of the note, and the excess of $55,000 being recorded as part of financing cost. See Note 8, Derivative Liability, In March 2018, the Company settled the principal amount of the note and expensed the corresponding debt discount of $100,000. (f) On October 19, 2018, the Company issued an unsecured convertible note to Bellridge Capital, LP (“Bellridge”), an unaffiliated third-party entity, in the aggregate principal amount of $1,500,000 in exchange for net proceeds of $1,242,000, representing an original issue discount of $150,000, and paid legal and financing expenses of $109,000. In addition, the Company issued 96,667 shares of its Common Stock with a fair value of $595,000. The note is unsecured and does not bear interest; however, the implied interest was determined to be 10% since the note was issued at 10% less than its face value. The note matures in April 2019. The note is also convertible into shares of the Company’s Common Stock only on or after the occurrence of an uncured “Event of Default.” Primarily, the Company will be in default if it does 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, the Company 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. The Company has agreed that, on or after the occurrence of an Event of Default, it will reserve and keep available that number of shares of its 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 securities purchase agreement and the note (assuming conversion in full of the note and on any date of determination As a result of the issuance of the note, the Company incurred aggregate costs of $2,126,000 related to the note’s original issue discount, legal and financing expenses, the fair value of the Common Stock issued and the recognition of the derivative liability. The Company recorded these costs as a note discount up to the face value of the note of $1,500,000 and the remaining $626,000 as financing costs. The note discount is being amortized over the six-month term of the note. As of December 31, 2018, the outstanding balance of the note amounted to $1,500,000 and unamortized debt discount of $881,000. (g) On October 30, 2018, the Company issued two unsecured convertible notes to one current investor and one otherwise unaffiliated third-party in the aggregate principal amount of $400,000. The notes bear interest at a rate of 5% per annum and will mature on April 29, 2019. 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 outstanding principal amount and (ii) the accrued interest thereunder will be converted into shares of the Company’s Common Stock that shall have been registered therein. The per-share conversion price will be seventy-five percent (75%) of the offering price of the 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 $302,000 at the date of issuance and was accounted as a debt discount and is being amortized over the term of the notes payable. As of December 31, 2018, outstanding balance of the note amounted to $400,000 and unamortized debt discount was $201,000. |
Convertible Series A Preferred
Convertible Series A Preferred Stock | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Convertible Series A Preferred Stock | 7. CONVERTIBLE SERIES A PREFERRED STOCK On February 14, 2017, the Company entered into a Securities Purchase Agreement with an unaffiliated, accredited investor for the sale and issuance of its Series A preferred stock. As part of the agreement, the investor agreed to purchase a total of 1,050,000 shares of Series A Preferred Stock valued at $1,050,000 in exchange for cash of $1,000,000, or a discount of $50,000, in various tranches. The Series A preferred stock had the following rights and privileges: ● 25% redemption premium; ● Senior rights in terms preference as to dividends, distributions and payments upon the liquidation, dissolution, and winding up of the Company; ● Accrued dividends at a rate of 5% per annum; ● Mandatorily redeemable at an installment basis starting August 13, 2017 in the amount of $63,000 plus accrued interest. The Company had the option to redeem the Series A preferred stock shares in cash or in shares of Common Stock based upon the Company’s 5-day Volume Weighted Average Price (“VWAP”). The Company considered the guidance of ASC 480-10, Distinguishing Liabilities From Equity to determine the appropriate treatment of the Series A preferred stock shares. Pursuant to ASC 480-10, the Company determined that the Series A preferred stock shares was an obligation to be settled, at the option of the Company, in cash or in variable number of shares of Common Stock with a fixed monetary value that should be recorded as a liability under ASC 480-10. During the year ended December 31, 2017, the Company issued 630,000 Series A preferred stock shares in exchange for cash of $555,000 and a discount of $75,000. Subsequent to the issuance of the Series A preferred stock shares, the Company redeemed the entire Series A preferred stock shares totaling $630,000 in exchange for 190,800 shares of Common Stock with a fair value of $304,000 and cash payments totaling $543,000 for a total redemption price of $847,000. As a result of this redemption, the Company recognized interest expense of $217,000 to account for the 25% redemption premium of $158,0000, the excess of the fair value of the Common Stock shares issued over the Series A preferred stock shares of $46,000 and the 5% interest due of $14,000. In addition, the Company also amortized the entire $75,000 discount to interest expense. As of December 31, 2017, all of the Series A preferred stock shares were fully redeemed, and no shares remained outstanding. |
Derivative Liability
Derivative Liability | 12 Months Ended |
Dec. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liability | 8. 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 which do not have fixed settlement provisions are deemed to be derivative instruments. The Company has issued certain convertible notes whose conversion price contains reset provisions based on a future offering price and/or whose conversion price is based on a future market price. 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 whose exercise price is subject to reset based on a future market price. As a result, the conversion option and warrants are classified as a liability and 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: Upon Issuance December 31, 2018 December 31, 2017 Stock Price $ 3.00 $ 4.80 $ 1.50 Exercise Price $ 2.25 $ 2.70 $ 0.90 Expected Life 1.60 1.78 1.26 Volatility 177 % 184 % 189 % Dividend Yield 0 % 0 % 0 % Risk-Free Interest Rate 1.70 % 2.6 % 1.72 % 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 $1,251,000. During the year ended December 31, 2018, the Company recorded an additional derivative liability totaling $1,877,000 as a result of the issuance of convertible notes and warrants. The Company also extinguished derivative liability of $1,719,000 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 $1,167,000 to account the change in fair value of these derivative liabilities up to the dates of the extinguishment and at December 31, 2018. At December 31, 2018, the fair value of the derivative liability amounted to $2,576,000. The details of derivative liability transactions during the years ended December 31, 2018 and 2017 are as follows: December 31, 2018 December 31, 2017 Beginning Balance $ 1,251,000 $ 1,256,000 Fair value upon issuance of notes payable and warrants 1,877,000 - Change in fair value 1,167,000 (5,000 ) Extinguishment (1,719,000 ) - Ending Balance $ 2,576,000 $ 1,251,000 |
Common Stock
Common Stock | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Common Stock | 9. COMMON STOCK The following were Common Stock transactions during the year ended December 31, 2018: Shares Issued from Stock Subscription Shares Issued for Services Shares Issued from Conversion of Note Payable Notes Payable Notes Payable – Related Parties Convertible Notes Payable, Shares Issued Upon Issuance of Convertible Note Convertible Notes Payable, Shares Issued for Accrued Officer’s Salary Shares Issued Upon Exercise of Put Option Convertible Notes Payable, Shares Repurchased The following were Common Stock transactions during the year ended December 31, 2017: Shares Issued from Stock Subscription Shares Issued for Services Shares Issued for Preferred Stock Convertible Series A Preferred Stock Shares Issued for Conversion of Debt Shares Issued as Part of Put Notice Shares Issued for Accounts Payable Shares Issued with Note Payable |
Stock Options
Stock Options | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Options | 10. 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. A summary of option activity for the years ended December 31, 2018 and 2017 are presented below. Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Options Price Life (Years) Value Outstanding at December 31, 2016 702,064 $ 4.95 4.03 $ - Granted 880,667 2.55 - - Forfeited (126,667 ) 2.40 - - Exercised - - - - Outstanding at December 31, 2017 1,456,064 $ 3.90 2.09 $ - Granted 1,400,418 6.75 - - Forfeited (345,000 ) 5.85 - - Exercised (32,508 ) 1.05 - - Outstanding at December 31, 2018 2,478,974 $ 5.25 2.93 $ 2,660,000 Vested December 31, 2018 958,115 $ 4.35 $ 2,039,000 Exercisable at December 31, 2018 753,654 $ 5.25 $ 889,000 The following were stock options transactions during the year ended December 31, 2018: During the year ended December 31, 2018, the Company granted stock options to employees and consultants to purchase a total 1,400,418 shares of Common Stock for services rendered. The options have an average exercise price of $6.75 per share, expire in five years, and vest on the grant date or over a period of four years from the grant date. The total fair value of these options at grant date was approximately $9,712,000 using the Black-Scholes Option Pricing model. The total stock compensation expense recognized relating to the vesting of stock options for the year ended December 31, 2018 amounted to $1,870,000. As of December 31, 2018, the total unrecognized stock-based compensation expense was $6,591,000, which is expected to be recognized as part of operating expense through December 2021. During the year ended December 31, 2018, options were exercised resulting in the issuance of 32,508 shares of Common Stock. The Company received cash of $34,000 upon exercise of the options. The following were stock options transactions during the year ended December 31, 2017: During the year ended December 31, 2017, the Company granted stock options to employees and consultants to purchase a total of 880,667 shares of Common Stock for services rendered. The options have an average exercise price of $2.55 per share, expire in five years, and vest over a period of three years from the grant date. The total fair value of these options at the grant date was approximately $1,781,000 using the Black-Scholes Option Pricing model. The total stock compensation expense recognized relating to vesting of these stock options for the year ended December 31, 2017 amounted to $418,000. The fair value of the share option awards was estimated using the Black-Scholes method based on the following weighted-average assumptions: Years Ended December 31, 2018 2017 Risk-free interest rate 2.25%-3.00 % 1.22%-2.23 % Average expected term (years) 5 years 5 years Expected volatility 184.45%-190.22 % 84.36%-173.92 % 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. |
Stock Warrants
Stock Warrants | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Stock Warrants | 11. STOCK WARRANTS The Company has the following warrants as of December 31, 2018 and 2017 are presented below: Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Warrants Price Life (Years) Value Outstanding at December 31, 2016 1,230,351 $ 1.50 2.62 $ - Granted 665,410 2.85 - - Forfeited - - - - Exercised - - - - Outstanding at December 31, 2017 1,895,761 $ 1.95 2.79 $ - Granted 386,675 5.10 - - Forfeited (56,486 ) 1.05 - - Exercised (1,285,538 ) 1.80 - - Outstanding at December 31, 2018, all vested 940,412 $ 3.60 2.32 $ 1,806,000 The following were stock warrant transactions during the year ended December 31, 2018: During the year ended December 31, 2018, 1,285,538 warrants were exercised resulting in the issuance of 1,074,921 shares of Common Stock. The Company received cash of $22,000 upon the exercise of the warrants. During the year ended December 31, 2018, the Company granted warrants to note holders to purchase a total of 66,667 shares of Common Stock. The warrants are exercisable at an average price of $2.10 per share and will expire in January 2023. Warrants exercisable for an aggregate of 33,333 shares of Common Stock were accounted for as a derivative liability. On February 21, 2018, the Company granted warrants exercisable for 133,333 shares of Common Stock as part of the exercise of its put option with Kodiak. The exercise price of the warrants is $3.75 per share and the warrants expire on February 20, 2023. On August 8, 2018, the Company granted warrants exercisable for 163,113 shares of Common Stock in connection with the extension of the maturity date of a secured note payable. See Note 5, Notes Payable-Related Parties, On December 4, 2018, the Company granted warrants exercisable for 23,562 shares of Common Stock in connection with the extension of the maturity date of a secured note payable. See Note 5, Notes Payable-Related Parties, The following were stock warrant transactions during the year ended December 31, 2017: On April 1, 2017, the Company granted warrants to a consultant to purchase 25,000 shares of Common Stock at an exercise price of $1.80 per share. The warrants expire on March 31, 2019 and were fully vested on the grant date. The total share-based compensation expense recognized relating to these warrants for the year ended December 31, 2017 amounted to $27,000. On May 22, 2017, the Company issued warrants to purchase 6,667 shares of Common Stock as part of an equity offering. The exercise price is $6.00 per share, the warrants expire on May 21, 2019, and were fully vested on grant date. In May and August 2017, the Company entered into extension agreements with Mr. Cutaia to extend the maturity date of certain secured notes. In consideration for Mr. Cutaia’s agreement to extend the maturity dates, the Company granted Mr. Cutaia warrants to purchase up to 205,623 shares of Common Stock, exercisable at $2.25 per share and $5.40 per share, with expiration dates starting in May 2020. In August 2017, the Company entered into extension agreement with a noteholder to extend the maturity date of note payable. In consideration, the Company granted the note holder warrants to purchase up to 87,787 shares of Common Stock, exercisable at $2.25 per share, with expirations dates starting in August 2020. From June 2017 through December 2017, the Company issued warrants to note holders to purchase up to 322,000 shares of Common Stock. The warrants are exercisable at an average price of $2.25 per share and will expire starting in June 2020 through December 2022. A total of 80,000 of these warrants were accounted as a derivative liability. On September 16, 2017, the Company issued warrants to purchase up to 18,333 shares of Common Stock in exchange for full settlement and release of a disputed, unasserted claim. The exercise price was $1.20 per share and expired on March 15, 2018. The warrants were fully vested on grant the date with a fair value of $10,000 which was recorded as part of loss on debt extinguishment. The total expense recognized relating to the vesting of these stock warrants for the year ended December 31, 2017 amounted to $27,000. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 12. INCOME TAXES Significant components of the Company’s deferred tax assets and liabilities are as follows: December 31, 2018 December 31, 2017 Net operating loss carry-forwards $ 5,300,000 $ 3,464,000 Share based compensation (524,000 ) (704,000 ) Non-cash interest and financing expenses (694,000 ) (833,000 ) Other temporary differences (378,000 (108,000 ) Less: Valuation allowance (3,704,000 ) (1,819,000 ) Deferred tax assets, net $ - $ - The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for income taxes were as follows: December 31, 2018 December 31, 2017 Statutory federal income tax rate (21.0 )% (34.0 )% State taxes, net of federal benefit (6.0 )% (5.8 )% Non-deductible items (0.1 )% (0.1 )% Change in valuation allowance 27.9 % 27.9 % 0.0 % 0.0 % ASC 740 requires that the tax benefit of net operating losses carry forwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable income within the carry forward period. Because of the Company’s recent history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a 100% valuation allowance against the asset amounts. Any uncertain tax positions would be related to tax years that remain open and subject to examination by the relevant tax authorities. The Company has no liabilities related to uncertain tax positions or unrecognized benefits as of the year end December 31, 2018 or 2017. The Company has not accrued for interest or penalties associated with unrecognized tax liabilities. On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJ Act”) was enacted into law. The TCJ Act provides for significant changes to the U.S. Internal Revenue Code of 1986, as amended (the “Code”), that impact corporate taxation requirements, such as the reduction of the federal tax rate for corporations from 35% to 21% and changes or limitations to certain tax deductions. The Company is currently assessing the extensive changes under the TCJ Act and its overall impact on the Company; however, based on its preliminary assessment of the reduction in the federal corporate tax rate from 35% to 21% to become effective on January 1, 2018, the Company currently expects that its effective tax rate for 2018 will be between 20% and 23%. Such estimated range is based on management’s current assumptions with respect to, among other things, the Company’s earnings, state income tax levels and tax deductions. The Company’s actual effective tax rate in 2018 may differ from management’s estimate. As of December 31, 2018, the Company had federal and state net operating loss carry forwards of approximately $12.8 million, which may be available to offset future taxable income for tax purposes. These net operating losses carry forwards begin to expire in 2034. This carry forward may be limited upon the ownership change under IRC Section 382. IRS Section 382 places limitations (the “Section 382 Limitation”) on the amount of taxable income which can be offset by net operating loss carry forwards after a change in control (generally greater than 50% change in ownership) of a loss corporation. Generally, after a change in control, a loss corporation cannot deduct operating loss carry forwards in excess of the Section 382 Limitation. Due to these “change in ownership” provisions, utilization of the net operating loss may be subject to an annual limitation regarding their utilization against taxable income in future periods. The Company has not concluded its analysis of Section 382 through December 31, 2018 but believes the provisions will not limit the availability of losses to offset future income. The Company is subject to income taxes in the U.S. federal jurisdiction and the state of Nevada. The tax regulations within each jurisdiction are subject to interpretation of related tax laws and regulations and require significant judgment to apply. As of December 31, 2018, tax years 2015 through 2017 remain open for IRS audit. The Company has received no notice of audit from the IRS for any of the open tax years. |
Accrued Officers' Salary
Accrued Officers' Salary | 12 Months Ended |
Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
Accrued Officers' Salary | 13. ACCRUED OFFICERS’ SALARY Accrued officers’ salary consists of unpaid salaries for the Company’s Chief Executive Officer, who is also the owner of approximately 27% of the Company’s outstanding shares of Common Stock, and the Company’s Chief Financial Officer. As of December 31, 2017, accrued officers’ salary amounted to $607,000. The Chief Executive Officer settled accrued payroll of $582,000 in exchange for 27,148 shares of Common Stock with a fair value of $582,000. There was no loss recognized as the fair value of the shares of Common Stock issued approximated the accrued payroll settled. As of December 31, 2018, accrued officers’ salary amounted to $188,000. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 14. COMMITMENTS AND CONTINGENCIES Operating Leases The Company leases office space in Los Angeles, California under an operating lease, which provides for monthly rent of $5,000 through July 29, 2019. The Company had total rent expense for the year ended December 31, 2018 and 2017 of $62,000 and $52,000, respectively, which is recorded as part of General and Administrative expenses in the Statement of Operations. Employment Agreements On November 21, 2014, the Company entered into an executive employment agreement effective November 1, 2014 with Rory J. Cutaia, our president, chief executive officer, secretary and treasurer. Pursuant to the terms of the employment agreement, we have agreed to pay Mr. Cutaia an annual salary of $325,000, which will be increased each year by 10%, subject to the annual review and approval of the board of directors. Notwithstanding the foregoing, a mandatory increase of not less than $100,000 per annum will be implemented on the Company achieving EBITDA break-even. In addition to the base salary, Mr. Cutaia will be eligible to receive an annual bonus in an amount up to $325,000, based upon the attainment of performance targets to be established by the board of directors, in its discretion. The initial term of the employment agreement is five years, and, upon expiration of the initial five-year term, it may be extended for additional one-year periods on ninety days prior notice. In the event that: (i) Mr. Cutaia’s employment is terminated without cause, (ii) Mr. Cutaia is unable to perform his duties due to a physical or mental condition for a period of 120 consecutive days or an aggregate of 180 days in any 12 month period; or (iii) Mr. Cutaia voluntarily terminates the employment agreement upon the occurrence of a material reduction in his salary or bonus, a reduction in his job title or position, or the required relocation of Mr. Cutaia to an office outside of a 30 mile radius of Los Angeles, California, Mr. Cutaia will: (a) receive monthly payments of $27,000, or such sum as is equal to Mr. Cutaia’s monthly base compensation at the time of such termination, whichever is higher, and (b) be reimbursed for COBRA health insurance costs, in each case for 36 months from the date of such termination or to the end of the term of the agreement, whichever is longer. In addition, Mr. Cutaia will have any and all of his unvested stock options immediately vest, with full registration rights; and any unearned and unpaid bonus compensation, expense reimbursement, and all accrued vacation, personal sick days, etc., be deemed earned, vested and paid immediately. As a condition to receiving the foregoing, Mr. Cutaia will be required to execute a release of claims, and a non-competition and non-solicitation agreement having a term which is the same as the term of the monthly severance payments described above. Litigation On April 24, 2018, 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 As of December 31, 2018, the parties have undergone depositions and exchanged document production. Discovery was scheduled to end on January 31, 2019. Neither party has requested to extend the discovery period. Notwithstanding the pending action, in December 2018, EMA attempted to exercise the warrant through the Company’s transfer agent utilizing the disputed cashless exercise formula. The transfer agent rejected EMA’s request and notified the Company who promptly filed a motion for a preliminary injunction to enjoin EMA from making any further attempts to exercise the warrant in this manner during the pendency of the action. The Company is awaiting a decision from the Court on its preliminary injunction motion. As of the date of this Annual Report, the Court has not ruled on our motion. We intend to vigorously defend the action, as well as vigorously prosecute our counterclaims against EMA. The action is still pending. In August 2014, a former employee and then current stockholder (the “Employee”) entered into that certain Executive Employment Agreement (the “Employment Contract”) with bBooth, Inc., our predecessor company. Section 3.1 of the Employment Contract provided, among other things, that Employee was employed to serve as our President and reported directly to Rory Cutaia, our Chief Executive Officer. Section 5.2 of Employment Contract provides, among other things, that Employee was entitled to receive a bonus (the “Bonus”) from us if certain conditions are met. These specified conditions were never met. On or about May 15, 2015, Employee ceased employment at the Company. More than eight months later, on or about January 20, 2016, the parties entered into a certain Stock Repurchase Agreement (the “Repurchase Agreement”) pursuant to which we purchased all of Employee’s shares of Common Stock for a purchase price of $144,000. The Repurchase Agreement also provided, among other things, that Employee released us from all claims, causes of action, suits, and demands (the “Release”). Approximately two years later, in April 2018, at a time when the Company’s share price was on the rise, Employee notified us by email that it is Employee’s position that on or about May 15, 2015: (1) Employee was terminated “without cause” pursuant to Section 6.2 of the Employment Contract; or (2) Employee terminated employment with Company “for good reason” pursuant to Section 6.3 of the Employment Contract. Employee sought approximately $300,000 in allegedly unpaid bonuses, plus 150,000 options priced at $0.50 per share, which expired prior to exercise. We responded in or about April 2018 that Employee’s claims lacked factual and legal merit, including that they are barred by the Release. The lack of response from Employee at that time appeared to indicate Employee’s tacit acknowledgment and ratification of our rationale underpinning our denial of Employee’s claims. Approximately eight (8) months later in December 2018, Employee resurfaced, renewing his claims. We responded by reminding Employee we consider his claims to be without merit, and that, in any event, they are barred by the Release. In our view, the Release set forth in the Repurchase Agreement coupled with the existing merger or integration clause likely shields the Company from liability, even assuming, arguendo, that the claims could be supported by credible evidence. 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. We know of no material proceedings in which any of our directors, officers, or affiliates, or any registered or beneficial stockholder is a party adverse to us or any of our subsidiaries or has a material interest adverse to us or any of our subsidiaries. Board of Directors The Company has committed an aggregate of $270,000 in board fees to its three 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 has been elected and qualified. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 15. SUBSEQUENT EVENTS Merger Agreement On November 8, 2018, we entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among Sound Concepts, Inc., a Utah corporation (“Sound Concepts”), NF Merger Sub, Inc., a Utah corporation (“Merger Sub 1”), NF Acquisition Company, LLC, a Utah limited liability company (“Merger Sub 2”), the shareholders of Sound Concepts (the “Sound Concepts Shareholders”), the shareholders’ representative (the “Shareholder Representative”), and us, pursuant to which we will acquire Sound Concepts (the “Sound Concepts Acquisition”) through a two-step merger, consisting of merging Merger 1 Sub with and into Sound Concepts, with Sound Concepts surviving the “first step” of the merger as our wholly-owned subsidiary (and the separate corporate existence of Merger Sub 1 will cease) and, immediately thereafter, merging Sound Concepts with and into Merger Sub 2, with Merger Sub 2 surviving the “second step” of the merger, such that, upon the conclusion of the “second step” of the merger, the separate corporate existence of Sound Concepts will cease and Merger Sub 2 will continue its limited liability company existence under Utah law as the surviving entity and as our wholly-owned subsidiary (collectively, the “Merger”). On the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of Sound Concepts’ capital stock issued and outstanding immediately prior to the Effective Time (the “Sound Concepts Capital Stock”) will be cancelled and converted into the right to receive a proportionate share of $25,000,000 of value (the “Closing Merger Consideration”), to be payable through a combination of a cash payment by us of $15,000,000 (the “Acquisition Cash Payment”) and the issuance of shares of our Common Stock with a fair market value of $10,000,000 (the “Acquisition Stock”). The Closing Merger Consideration is not subject to any closing working capital adjustment or post-closing working capital adjustment. We expect the Sound Concepts Acquisition to close in the first quarter of 2019. However, we cannot provide any assurance as to the actual timing of completion of the Sound Concepts Acquisition, or whether the Sound Concepts Acquisition will be completed at all. Issuances of Stock Options On January 8, 2019, the Company granted stock options to an officer to purchase a total of 16,667 shares of Common Stock pursuant to the officer’s employment agreement. The options have an exercise price of $4.35 per share, and expire in five years. The options vested 50% on the grant date and the remaining 50% will vest on the 12-month anniversary of the grant date. Total fair value of these options at grant date was $70,000 using the Black-Scholes option pricing model. On January 28, 2019, the Company granted stock options to consultants to purchase a total of 1,667 shares of Common Stock for services to be rendered. The options have an average exercise price of $7.80 per share, expire in five years and vest in sixty days. The total fair value of these options at the grant date was $13,000 using the Black-Scholes option pricing model. Exercise of Warrants On January 25, 2019, a total of 161,969 warrants were exercised on a cashless basis for 141,512 shares of Common Stock at a weighted average exercise price of $1.05 per share. Name-Change Merger Effective February 1, 2019, we changed our corporate name from nFüsz, Inc. to Verb Technology Company, Inc. The name change was effected through a parent/subsidiary short-form merger of Verb Technology Company, 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 name-change merger, we filed Articles of Merger with the Secretary of State of the State of Nevada on January 31, 2019. The name-change merger became effective on February 1, 2019. Our board of directors approved the name-change merger, which resulted in the name change on that date. In accordance with Section 92A.180 of the NRS, stockholder approval of the name-merger was not required. Reverse Stock Split On February 1, 2019, we implemented a 1-for-15 Reverse Stock Split of our Common Stock. The Reverse Stock Split became effective upon commencement of trading of our Common Stock on February 4, 2019. As a result of the Reverse Stock Split, every fifteen (15) shares of our pre-Reverse Stock Split Common Stock were combined and reclassified into one share of our Common Stock. The number of shares of Common Stock subject to outstanding options, warrants, and convertible securities were also reduced by a factor of fifteen as of February 1, 2019. All historical share and per share amounts reflected throughout our consolidated financial statements and other financial information in this Annual Report have been adjusted to reflect the Reverse Stock Split as if the split occurred as of the earliest period presented. The par value per share of our Common Stock was not affected by the Reverse Stock Split. Issuance of Convertible Note On February 1, 2019, the Company issued an unsecured convertible note to Bellridge, an unaffiliated third-party entity, in the aggregate principal amount of $500,000 in exchange for net proceeds of $432,000, representing an original issue discount of $25,000 and paid legal and financing expenses of $43,000. In addition, the Company issued 16,667 shares of its Common Stock with an estimated fair value of $128,000. The note contained a mandatory conversion feature in case of default based upon a discounted VWAP. Furthermore, the note also contained a provision that will require the Company to pay the noteholder an additional $25,000 and issue 8,600 shares of Common Stock if the note is not be paid within 60 days after its issuance. The Company is currently in the process determining the appropriate accounting for this promissory note. The note matures in August 2019. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Verb Technology Company, Inc. (formerly nFüsz, Inc. and, before that, bBooth, Inc.) |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with Generally Accepted Accounting Principles (“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 analysis of impairment of long term assets, realization of deferred tax assets, determining fair value of derivative liabilities, and value of equity instruments issued for services. 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. On January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. 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 implementation of ASC 606 had no impact on the prior period financial statements and no cumulative effect adjustment was recognized. |
Property and Equipment | Property and Equipment Property and equipment are recorded at historical cost and depreciated on a straight-line basis over their estimated useful lives of approximately five years once the individual assets are placed in service. |
Long-Lived Assets | Long-Lived Assets The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. No impairment of long-lived assets was required for the years ended December 31, 2018 and 2017. |
Income Taxes | Income Taxes The Company accounts for income taxes under Financial Accounting Standards Board’s (“FASB”) ASC 740 “Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The deferred tax assets of the Company relate primarily to operating loss carry-forwards for federal income tax purposes. A full valuation allowance for deferred tax assets has been provided because the Company believes it is not more likely than not that the deferred tax asset will be realized. Realization of deferred tax assets is dependent on the Company generating sufficient taxable income in future periods. The Company periodically evaluates its tax positions to determine whether it is more likely than not that such positions would be sustained upon examination by a tax authority for all open tax years, as defined by the statute of limitations, based on their technical merits. The Company accrues interest and penalties, if incurred, on unrecognized tax benefits as components of the income tax provision in the accompanying consolidated statements of operations. As of December 31, 2018, and 2017, the Company has not established a liability for uncertain tax positions. |
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. |
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 adjusted to fair value of derivatives. |
Share Based Payment | Share Based Payment 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 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 “ .” 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 using the Black-Scholes option pricing model. Assumptions used in the Black-Scholes model to value options issued during the years ended December 31, 2018 and 2017 are as follows: Year Ended Year Ended December 31, 2018 December 31, 2017 Expected life in years 5.0 2.5 to 5.0 Stock price volatility 184.45% -190.22 % 84.36% - 173.92 % Risk free interest rate 2.25% - 3.00 % 1.22% - 2.23 % Expected dividends 0 % 0 % Forfeiture rate 18 % 21 % The risk-free interest rate was based on rates established by the Federal Reserve Bank. 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 customarily paid dividends in the past and does not expect to pay dividends in the future. |
Research and Development Costs | Research and Development Costs Research and development costs consist of expenditures for the research and development of new products and technology. These costs are primarily expenses to vendors contracted to perform research projects and develop technology for the Company’s cloud-based, Tagg interactive video CRM SaaS platform. |
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 shares of Common Stock that were outstanding during the period. Dilutive potential shares of Common Stock consist of incremental shares of Common Stock issuable upon exercise of stock options. No dilutive potential shares of Common Stock were included in the computation of diluted net loss per share because their impact was anti-dilutive. As of December 31, 2018, and 2017, the Company had total outstanding options of 2,478,974 and 1,456,064, respectively, and warrants of 940,412 and 1,895,761, respectively, which were excluded from the computation of net loss per share because they are anti-dilutive. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company follows paragraph 825-10-50-10 of the FASB ASC for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB ASC (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value under GAAP, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below: Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3: Pricing inputs that are generally observable inputs and not corroborated by market data. The carrying amount of the Company’s financial assets and liabilities, such as cash and cash equivalents, prepaid expenses, and accounts payable and accrued expenses approximate their fair value due to their short-term nature. The carrying values financing obligations approximate their fair values due to the fact that the interest rates on these obligations are based on prevailing market interest rates. The Company uses Level 2 inputs for its valuation methodology for the derivative liabilities. |
Concentrations | Concentrations During the year ended December 31, 2018, the Company had a single vendor that accounted for 5% of all purchases, and 20.7% of all purchases in the same period in the prior year. |
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 Stock holders 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. In June 2018, the FASB issued Accounting Standards Update 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 also clarifies that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Revenue from Contracts with Customers (Topic 606). ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company will adopt the provisions of ASU 2018-07 in the quarter beginning January 1, 2019. The adoption of ASU 2018-07 is not expected to have any impact 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. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Assumptions Used in Black-Scholes Model to Options Issued | Assumptions used in the Black-Scholes model to value options issued during the years ended December 31, 2018 and 2017 are as follows: Year Ended Year Ended December 31, 2018 December 31, 2017 Expected life in years 5.0 2.5 to 5.0 Stock price volatility 184.45% -190.22 % 84.36% - 173.92 % Risk free interest rate 2.25% - 3.00 % 1.22% - 2.23 % Expected dividends 0 % 0 % Forfeiture rate 18 % 21 % |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consisted of the following as of December 31, 2018 and 2017. December 31, 2018 December 31, 2017 Furniture and fixtures $ 57,000 $ 57,000 Office equipment 51,000 51,000 108,000 108,000 Less: accumulated depreciation (97,000 ) (77,000 ) $ 11,000 $ 31,000 |
Notes Payable - Related Parti_2
Notes Payable - Related Parties (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable to Related Parties | The Company has the following related parties outstanding notes payable as of December 31, 2018 and 2017: Note Issuance Date Maturity Date Interest Rate Original Borrowing Balance at December 31, 2018 Balance at December 31, 2017 Note 1 (A) December 1, 2015 February 8, 2021 12.0 % $ 1,249,000 $ 825,000 $ 1,199,000 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 % 112,000 112,000 112,000 Note 4 (D) April 4, 2016 June 4, 2021 12.0 % 343,000 240,000 343,000 Note 5 (E) April 4, 2016 December 4, 2018 12.0 % 122,000 - 122,000 Total notes payable – related parties 1,177,000 1,965,000 Non-current (1,065,000 ) - Current $ 112,000 $ 1,965,000 (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, to consolidate all loans and advances made by Mr. Cutaia to the Company as of that date. The note bore interest at a rate of 12% per annum, was secured by the Company’s assets, and matured on April 1, 2017. Pursuant to the terms of the agreement, at Mr. Cutaia’s discretion, he could convert up to 30%, or $375,000, of the outstanding principal, plus accrued interest thereon, into shares of Common Stock at a conversion rate of $1.05 per share. On May 4, 2017, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note from April 1, 2017 to August 1, 2018. In consideration, the Company issued Mr. Cutaia a three-year warrant to purchase up to 117,013 shares of Common Stock at a price of $5.33 per share with a fair value of $517,000. All other terms of the note remain unchanged. The Company determined that the extension of the note’s maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the original value of the convertible note. As result, the Company recorded the fair value of the new note, which approximated the original carrying value $1,199,000 and expensed the fair value of the warrants granted of $517,000 as debt extinguishment costs. As of December 31, 2017, total outstanding balance of the note amounted to $1,199,000. On August 8, 2018, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note to February 8, 2021. In consideration for extending the note the Company issued Mr. Cutaia warrants exercisable for up to 163,113 shares of Common Stock with a fair market value of $1,075,000. The Company determined that the extension of the note’s maturity date resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the original value of the convertible note. As result, the Company recorded the fair value of the new note which approximates the original carrying value $1,199,000 and expensed the entire fair value of the warrants granted, or $1,075,000 as a debt extinguishment cost. On September 30, 2018, Mr. Cutaia converted the convertible principal balance of $375,000 at $1.05 per share into 356,824 shares of restricted Common Stock. As of December 31, 2018, the outstanding balance of the note amounted to $825,000. (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, bore interest at a rate of 12% per annum, and matured in April 2017. The note was convertible into shares of Common Stock at a conversion price of $1.05 per share. On May 4, 2017, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note from April 1, 2017 to August 1, 2018. All other terms of the note remain unchanged and there were no additional compensation or incentive given. As of December 31, 2017, the outstanding balance of the note amounted to $189,000. On September 30, 2018, Mr. Cutaia converted the entire outstanding principal amount of $189,000 into 180,000 shares of restricted Common Stock. (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 $112,000 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 December 31, 2017, and 2018, the outstanding principal balance of the note was equal to $112,000. As of December 31, 2018, the note was past due, and remains past due. The Company is currently in negotiations with the noteholder to settle the past due note. (D) On April 4, 2016, the Company issued a convertible note to Mr. Cutaia, in the amount of $343,000, to consolidate all advances made by Mr. Cutaia to the Company during the period December 2015 through March 2016. The note bore interest at a rate of 12% per annum, was secured by the Company’s assets, and matured on August 4, 2017. Pursuant to the terms of the note, a total of 30%, or $103,000, of the note principal can be converted to shares of Common Stock at a conversion price $1.05 per share. On August 4, 2017, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note from August 4, 2017 to December 4, 2018. In consideration for extending the note’s maturity, the Company issued Mr. Cutaia warrants to purchase up to 88,610 shares of Common Stock at a price of $2.25 per share with a fair value of $172,000. All other terms of the note remain unchanged. The Company determined that the extension of the note’s maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the recorded value of the original convertible note. As a result, the Company recorded the fair value of the new note, which approximated the original carrying value $343,000 and expensed the entire fair value of the warrants granted of $172,000 as part of loss on debt extinguishment. As of December 31, 2017, the outstanding balance of the note was $343,000. On September 30, 2018, Mr. Cutaia converted the 30% principal amount of the note, or $103,000 of into 98,093 shares of restricted Common Stock. On December 4, 2018, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note to June 4, 2021. In consideration for extending the note, the Company issued Mr. Cutaia warrants to purchase up to 23,562 shares of Common Stock, with a fair market value of the warrants totaling $111,000. The Company determined that the extension of the note’s maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the original value of the convertible note. As result, the Company recorded the fair value of the new note, which approximates the original carrying value of $240,000 and expensed the entire fair value of the warrants granted of $111,000 as part of loss on debt extinguishment. As of December 31, 2018, the outstanding balance of the note amounted to $240,000. (E) On April 4, 2016, the Company issued a convertible note payable to Mr. Cutaia in the amount of $122,000, representing his unpaid salary from December 2015 through March 2016. The note was unsecured, bore interest at a rate of 12% per annum, compounded annually, and matured on August 4, 2017. The note was also convertible into shares of the Company’s Common Stock at $1.05 per share. On August 4, 2017, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note from August 4, 2017 to December 4, 2018. All other terms of the note remain unchanged and there were no additional compensation or incentive given. As of December 31, 2017, the outstanding balance of the note amounted to $122,000. On September 30, 2018, Mr. Cutaia converted $122,000 of outstanding principal amount into 116,701 shares of restricted Common Stock. |
Convertible Notes Payable (Tabl
Convertible Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Convertible Notes Payable | The Company has the following outstanding convertible notes payable as of December 31, 2018 and 2017: Note Note Date Maturity Date Interest Rate Original Borrowing Balance at December 31, 2018 Balance at December 31, 2017 Note payable (a) April 3, 2016 April 4, 2018 12 % $ 680,000 $ - $ 680,000 Note payable (b) June and August 2017 February and March 2018 5 % $ 220,000 - 220,000 Note payable (c) Various Various 5 % $ 320,000 - 320,000 Note payable (d) December 8, 2017 December 8, 2018 8 % $ 370,000 - 370,000 Note payable (e) December 13, 2017 September 20, 2018 8 % $ 105,000 - 105,000 Note payable (f) October 19, 2018 April 19, 2019 10 % $ 1,500,000 1,500,000 - Note payable (g) October 30, 2018 April 29, 2019 5 % $ 400,000 400,000 - Total notes payable 1,900,000 1,695,000 Debt discount (1,082,000 ) (675,000 ) Total notes payable, net of debt discount $ 818,000 $ 1,020,000 (a) On April 3, 2016, the Company issued a convertible note payable to Oceanside Strategies, Inc. (“Oceanside”), a third party-lender, in the amount of $680,000 to consolidate all notes payable and accrued interest due to Oceanside as of that date. This note superseded and replaced all previous notes and liabilities due to Oceanside from fiscal years 2014 and 2015. The note was unsecured, bore interest at the rate of 12% per annum, compounded annually, and had an original maturity date of December 30, 2016. Pursuant to the terms of the note, the Company granted Oceanside the right to convert up to 30% of the principal amount of such note, or $204,000, into shares of common stock at a conversion price $1.05 per share and granted warrants to purchase up to 161,969 shares of Common Stock at $1.05 per share until April 4, 2019. On December 30, 2016, the Company entered into an extension agreement with Oceanside to extend the maturity date of the note from December 30, 2016 to August 4, 2017. All other terms of the note remain unchanged. In consideration for Oceanside’s agreement to extend the maturity date to August 4, 2017, the Company granted Oceanside a warrant to purchase up to 161,969 shares of the Company’s Common Stock, exercisable at $1.20 per share until December 29, 2019, with a fair value of $159,000. On August 4, 2017, the Company entered into an extension agreement with Oceanside to extend the maturity date of the note from August 4, 2017 to April 4, 2018. All other terms of the note remain unchanged. In consideration for Oceanside’s agreement to extend the maturity date to August 4, 2018, the Company granted Oceanside a warrant to purchase up to 87,787 shares of the Company’s Common Stock, exercisable at $2.25 per share until August 3, 2022 with a fair value of $171,000. The Company determined that the extension of the note’s maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the recorded value of the original convertible note. As a result, Company recorded the fair value of the new note, which approximated the original carrying value of $680,000, and expensed the entire fair value of the warrants granted of $171,000 as part of loss on debt extinguishment. As of December 31, 2017, the outstanding balance of the note amounted to $680,000. In March 2018, the entire principal amount due was settled through the issuance of 305,967 shares of Common Stock. As a result of this conversion, the Company also recorded a loss on debt extinguishment of $1,090,000 to account for the fair value of the 65,469 shares of Common Stock issued to settle the remaining 70%, or $476,000, of the note principal and accrued interest that was not initially convertible to shares of Common Stock. (b) In June and August of 2017, the Company issued unsecured convertible notes to an unaffiliated third-party in the amount of $220,000 in exchange for cash of $200,000, representing an original issue discount of $10,500, and prepaid interest of $10,000. The notes bore interest at a rate of 5% per annum, matured in February and March 2018, and were convertible to shares of Common Stock at a conversion price of either $3.75 per share or $1.50 per share. As part of the issuance, the Company also (i) granted warrants to purchase up to 22,000 shares of Common Stock at $4.50 per share and (ii) issued 3,333 shares of Common Stock with a fair value $12,500. As a result, the Company recorded a debt discount of $175,000 to account for the original issue discount and prepaid interest of $21,000, the relative fair value of the warrants of $40,000, the fair value of the shares of Common Stock of $13,000 and the beneficial conversion feature of $102,000. The debt discount is being amortized to interest expense over the term of the note. As of December 31, 2017, the outstanding balance of the note was $220,000 and unamortized debt discount of $40,000. In March 2018, the entire outstanding principal amount of the notes, and all accrued interest thereon, were settled and converted into 102,900 shares of Common Stock pursuant to the conversion terms of the notes and we expensed the unamortized debt discount. (c) On September 26, 2017, we entered into a purchase agreement, dated September 15, 2017, with Kodiak Capital Group, LLC (“Kodiak”). Under the purchase agreement, the Company was entitled to, from time to time, in the Company’s discretion, sell shares of its Common Stock to Kodiak for aggregate gross proceeds of up to $2,000,000. Unless terminated earlier, Kodiak’s purchase commitment automatically terminates on the earlier of the date on which Kodiak has purchased our shares pursuant to the purchase agreement for an aggregate purchase price of $2,000,000, or September 15, 2019. The Company has no obligation to sell any shares under the purchase agreement. From September 2017 through November 2017, the Company issued three convertible notes payable totaling $320,000 in exchange for cash of $200,000, representing an original issue discount of $20,000, and settlement of financing expenses of $100,000 incurred by Kodiak pursuant to the purchase agreement. The notes were unsecured, had maturity dates starting in March 2018 through June 2018, and bore interest at a rate of 5% per annum. The notes were also convertible into shares of Common Stock at price of $3.75 per share or 70% of the 10-day VWAP prior to conversion, whichever is lower. As part of the issuances, the Company also granted Kodiak a five-year, fully vested, warrant to purchase up to 133,333 shares of Common Stock, exercisable at $2.25 and $3.00 per share. The Company determined that since there was no minimum conversion price, it could no longer determine if it had enough authorized shares to fulfill its conversion obligation. As such, pursuant to current accounting guidelines, the Company determined that the conversion feature of these three notes created a derivative with a fair value totaling $412,000 at the date of issuances. The Company accounted for the fair value of the derivative up to the face amount of the notes of $320,000 as a valuation discount to be amortized over the life of the note, and the excess of $92,000 being recorded as part of financing cost. See Note 8, Derivative Liability, In March 2018, the Company paid Kodiak $226,000 to settle two notes payable totaling $220,000, and all accrued interest thereon, and amortized the corresponding unamortized debt discount of $114,000 to interest expense. As part of the payment, Kodiak cancelled one note payable in the outstanding principal amount of $100,000. As a result of the note’s cancellation, the Company recorded a gain on debt extinguishment of $23,000, to account for the cancellation of the $100,000 note payable, less the amortization of the corresponding debt discount of $77,000. (d) On December 8, 2017, the Company issued unsecured convertible notes to EMA Financial, LLC (“EMA”) and Auctus Fund, LLC (“Auctus”) totaling $370,000 in principal, in exchange for cash of $323,000, representing an original issue discount of $47,000. The notes bore interest at a rate of 8% per annum and matured on December 8, 2018. The notes were also convertible into shares of Common Stock at a conversion price equal to the lower of: (i) the closing sale price of the Common Stock on the principal market (as defined in the notes) on the trading day immediately preceding the closing date, and (ii) 70% of either the lowest sale price for the Common Stock on the principal market during the ten (10) consecutive trading days including and immediately preceding the conversion date, or the closing bid price. The Company determined that since there was no minimum conversion price, that it 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 note created a derivative with a fair value of $565,000 at the date of issuance. The Company accounted for the fair value of the derivative up to the face amount of the note of $370,000 as a valuation discount to be amortized over the life of the note, and the excess of $195,000 was recorded as part of financing cost. See Note 8, Derivative Liability, As part of the offering, the Company also granted EMA and Auctus a five-year warrant to acquire up to 160,000 shares of the Company’s Common Stock with an exercise price of $1.65 per share. Warrants to acquire up to 80,000 shares of Common Stock contained (i) a full ratchet reset provision in the event the Company engages in a future equity offering and the Company offers equity securities at a price less than $1.65 per share and (ii) a fundamental transaction provision that could give rise to an obligation to pay cash to the warrant holder. As such, pursuant to current accounting guidelines, the Company determined that the warrant exercise price and fundamental transaction provision created a derivative with a fair value of $119,000 at the date of issuance. The Company accounted for the fair value of the derivative as part of finance cost. See Note 8, Derivative Liability, In January 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, matured in January 2019, and was convertible into shares of Common Stock at a conversion price equal to 70% of the Company’s 10-day VWAP. The Company determined that since there was no minimum conversion price, that it could no longer determine if it had enough authorized shares to fulfill its 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 $253,000 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 $103,000 was recorded as a financing cost. See Note 8, Derivative Liability, As part of the convertible note offering, the Company also granted a five-year warrant to acquire up to 66,667 shares of the Company’s Common Stock with an exercise price of $2.10 per share. Warrants to purchase up to 33,333 shares of Common Stock included (i) a full ratchet reset provision in the event the Company engaged in a future equity offering at an offering price less than $2.10 per share and (ii) a fundamental transaction provision that could give rise to an obligation to pay cash to the warrant holder and a reset of the exercise price. As such, pursuant to current accounting guidelines, the Company determined that the warrant exercise price and fundamental transaction provision created a derivative with a fair value of $49,000 at the date of issuance. The Company accounted for the fair value of the derivative as a financing cost. See Note 8, Derivative Liability, In March 2018, the Company settled the entire outstanding principal amount of the notes in cash and expensed the corresponding debt discount of $494,000. (e) On December 14, 2017, the Company issued an unsecured convertible note to PowerUp Lending Group, Ltd. in the amount of $105,000 in exchange for cash of $90,000, representing an original issue discount of $15,000. The note matured on September 20, 2018 and bore interest at a rate of 8% per annum. The note was convertible into shares of Common Stock at a conversion price equal to 70% multiplied by the market price, which is equal to the lowest trading price of the Common Stock during the ten (10) trading day period ending on the latest complete trading day prior to the conversion date. The Company determined that since there was no minimum conversion price, it 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 note created a derivative with a fair value of $160,000 at the date of issuance. The Company accounted for the fair value of the derivative up to the face amount of the note of $105,000 as a valuation discount to be amortized over the life of the note, and the excess of $55,000 being recorded as part of financing cost. See Note 8, Derivative Liability, In March 2018, the Company settled the principal amount of the note and expensed the corresponding debt discount of $100,000. (f) On October 19, 2018, the Company issued an unsecured convertible note to Bellridge Capital, LP (“Bellridge”), an unaffiliated third-party entity, in the aggregate principal amount of $1,500,000 in exchange for net proceeds of $1,242,000, representing an original issue discount of $150,000, and paid legal and financing expenses of $109,000. In addition, the Company issued 96,667 shares of its Common Stock with a fair value of $595,000. The note is unsecured and does not bear interest; however, the implied interest was determined to be 10% since the note was issued at 10% less than its face value. The note matures in April 2019. The note is also convertible into shares of the Company’s Common Stock only on or after the occurrence of an uncured “Event of Default.” Primarily, the Company will be in default if it does 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, the Company 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. The Company has agreed that, on or after the occurrence of an Event of Default, it will reserve and keep available that number of shares of its 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 securities purchase agreement and the note (assuming conversion in full of the note and on any date of determination As a result of the issuance of the note, the Company incurred aggregate costs of $2,126,000 related to the note’s original issue discount, legal and financing expenses, the fair value of the Common Stock issued and the recognition of the derivative liability. The Company recorded these costs as a note discount up to the face value of the note of $1,500,000 and the remaining $626,000 as financing costs. The note discount is being amortized over the six-month term of the note. As of December 31, 2018, the outstanding balance of the note amounted to $1,500,000 and unamortized debt discount of $881,000. (g) On October 30, 2018, the Company issued two unsecured convertible notes to one current investor and one otherwise unaffiliated third-party in the aggregate principal amount of $400,000. The notes bear interest at a rate of 5% per annum and will mature on April 29, 2019. 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 outstanding principal amount and (ii) the accrued interest thereunder will be converted into shares of the Company’s Common Stock that shall have been registered therein. The per-share conversion price will be seventy-five percent (75%) of the offering price of the 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 $302,000 at the date of issuance and was accounted as a debt discount and is being amortized over the term of the notes payable. |
Derivative Liability (Tables)
Derivative Liability (Tables) | 12 Months Ended |
Dec. 31, 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: Upon Issuance December 31, 2018 December 31, 2017 Stock Price $ 3.00 $ 4.80 $ 1.50 Exercise Price $ 2.25 $ 2.70 $ 0.90 Expected Life 1.60 1.78 1.26 Volatility 177 % 184 % 189 % Dividend Yield 0 % 0 % 0 % Risk-Free Interest Rate 1.70 % 2.6 % 1.72 % |
Schedule of Derivative Liability Transactions | The details of derivative liability transactions during the years ended December 31, 2018 and 2017 are as follows: December 31, 2018 December 31, 2017 Beginning Balance $ 1,251,000 $ 1,256,000 Fair value upon issuance of notes payable and warrants 1,877,000 - Change in fair value 1,167,000 (5,000 ) Extinguishment (1,719,000 ) - Ending Balance $ 2,576,000 $ 1,251,000 |
Stock Options (Tables)
Stock Options (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock Option Activity | A summary of option activity for the years ended December 31, 2018 and 2017 are presented below. Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Options Price Life (Years) Value Outstanding at December 31, 2016 702,064 $ 4.95 4.03 $ - Granted 880,667 2.55 - - Forfeited (126,667 ) 2.40 - - Exercised - - - - Outstanding at December 31, 2017 1,456,064 $ 3.90 2.09 $ - Granted 1,400,418 6.75 - - Forfeited (345,000 ) 5.85 - - Exercised (32,508 ) 1.05 - - Outstanding at December 31, 2018 2,478,974 $ 5.25 2.93 $ 2,660,000 Vested December 31, 2018 958,115 $ 4.35 $ 2,039,000 Exercisable at December 31, 2018 753,654 $ 5.25 $ 889,000 |
Schedule of Fair Value Assumptions Using Black-Scholes Method | The fair value of the share option awards was estimated using the Black-Scholes method based on the following weighted-average assumptions: Years Ended December 31, 2018 2017 Risk-free interest rate 2.25%-3.00 % 1.22%-2.23 % Average expected term (years) 5 years 5 years Expected volatility 184.45%-190.22 % 84.36%-173.92 % Expected dividend yield - - |
Stock Warrants (Tables)
Stock Warrants (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Schedule of Warrants Outstanding | The Company has the following warrants as of December 31, 2018 and 2017 are presented below: Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Warrants Price Life (Years) Value Outstanding at December 31, 2016 1,230,351 $ 1.50 2.62 $ - Granted 665,410 2.85 - - Forfeited - - - - Exercised - - - - Outstanding at December 31, 2017 1,895,761 $ 1.95 2.79 $ - Granted 386,675 5.10 - - Forfeited (56,486 ) 1.05 - - Exercised (1,285,538 ) 1.80 - - Outstanding at December 31, 2018, all vested 940,412 $ 3.60 2.32 $ 1,806,000 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Deferred Tax Assets and Liabilities | Significant components of the Company’s deferred tax assets and liabilities are as follows: December 31, 2018 December 31, 2017 Net operating loss carry-forwards $ 5,300,000 $ 3,464,000 Share based compensation (524,000 ) (704,000 ) Non-cash interest and financing expenses (694,000 ) (833,000 ) Other temporary differences (378,000 (108,000 ) Less: Valuation allowance (3,704,000 ) (1,819,000 ) Deferred tax assets, net $ - $ - |
Schedule of Provision of Income Taxes | The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for income taxes were as follows: December 31, 2018 December 31, 2017 Statutory federal income tax rate (21.0 )% (34.0 )% State taxes, net of federal benefit (6.0 )% (5.8 )% Non-deductible items (0.1 )% (0.1 )% Change in valuation allowance 27.9 % 27.9 % 0.0 % 0.0 % |
Description of Business (Detail
Description of Business (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Common stock par value | $ 0.0001 | $ 0.0001 | |
Net loss | $ 12,127,000 | $ 7,266,000 | |
Cash in operations | 4,157,000 | 1,677,000 | |
Stockholders' deficit | $ 5,055,000 | $ 5,789,000 | $ 3,468,000 |
February 1, 2019 [Member] | |||
Reverse stock split | 1-for-15 reverse stock split | ||
Common stock par value | $ 0.0001 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property and equipment of useful life | 5 years | |
Impairment charges | ||
Single Vendor [Member] | ||
Concentration risk percentage | 5.00% | 20.70% |
Outstanding Options [Member] | ||
Antidilutive securities | 2,478,974 | 1,456,064 |
Outstanding Warrants [Member] | ||
Antidilutive securities | 940,412 | 1,895,761 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Assumptions Used in Black-scholes Model to Options Issued (Details) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Summary Of Significant Accounting Policies [Line Items] | ||
Expected life in years | 5 years | 4 years |
Stock price volatility | 230.00% | |
Risk free interest rate | 1.92% | |
Expected dividends | 0.00% | 0.00% |
Forfeiture rate | 18.00% | 21.00% |
Minimum [Member] | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Expected life in years | 2 years 6 months | |
Stock price volatility | 184.45% | 84.36% |
Risk free interest rate | 2.25% | 1.22% |
Maximum [Member] | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Expected life in years | 5 years | |
Stock price volatility | 190.22% | 173.92% |
Risk free interest rate | 3.00% | 2.23% |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 20,000 | $ 22,000 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 108,000 | $ 108,000 |
Less: accumulated depreciation | (97,000) | (77,000) |
Property and equipment, net | 11,000 | 31,000 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 57,000 | 57,000 |
Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 51,000 | $ 51,000 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | Jan. 29, 2018 | Mar. 20, 2017 | Mar. 21, 2015 | Dec. 31, 2018 | Dec. 31, 2017 |
Notes payable | $ 125,000 | ||||
Debt conversion amount | $ 125,000 | $ 3,066,000 | $ 182,000 | ||
Number of common stock shares issued upon conversion | 83,333 | 1,243,189 | |||
DelMorgan Group LLC [Member] | |||||
Interest rate | 12.00% | ||||
Maturity date | Mar. 20, 2017 | ||||
Third - Party Lender [Member] | Extension Agreement [Member] | |||||
Maturity date | Mar. 20, 2018 |
Notes Payable - Related Parti_3
Notes Payable - Related Parties (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Interest expense, related parties | $ 211,000 | $ 236,000 |
Interest payable | 46,000 | $ 248,000 |
Notes Payable [Member] | ||
Interest expense, related parties | 211,000 | |
Interest payable | $ 269,000 |
Notes Payable - Related Parti_4
Notes Payable - Related Parties - Schedule of Notes Payable to Related Parties (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Notes payable - related parties, net | $ 1,177,000 | $ 1,965,000 | |
Non-current | (1,065,000) | ||
Current | $ 112,000 | 1,965,000 | |
Note 1 [Member] | |||
Issuance Date | [1] | Dec. 1, 2015 | |
Maturity Date | [1] | Feb. 8, 2021 | |
Interest Rate | [1] | 12.00% | |
Original Borrowing | [1] | $ 1,249,000 | |
Notes payable - related parties, net | [1] | $ 825,000 | 1,199,000 |
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] | $ 112,000 | |
Notes payable - related parties, net | [3] | $ 112,000 | 112,000 |
Note 4 [Member] | |||
Issuance Date | [4] | Apr. 4, 2016 | |
Maturity Date | [4] | Jun. 4, 2021 | |
Interest Rate | [4] | 12.00% | |
Original Borrowing | [4] | $ 343,000 | |
Notes payable - related parties, net | [4] | $ 240,000 | 343,000 |
Note 5 [Member] | |||
Issuance Date | [5] | Apr. 4, 2016 | |
Maturity Date | [5] | Dec. 4, 2018 | |
Interest Rate | [5] | 12.00% | |
Original Borrowing | [5] | $ 122,000 | |
Notes payable - related parties, net | [5] | $ 122,000 | |
[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, to consolidate all loans and advances made by Mr. Cutaia to the Company as of that date. The note bore interest at a rate of 12% per annum, was secured by the Company's assets, and matured on April 1, 2017. Pursuant to the terms of the agreement, at Mr. Cutaia's discretion, he could convert up to 30%, or $375,000, of the outstanding principal, plus accrued interest thereon, into shares of Common Stock at a conversion rate of $1.05 per share. On May 4, 2017, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note from April 1, 2017 to August 1, 2018. In consideration, the Company issued Mr. Cutaia a three-year warrant to purchase up to 117,013 shares of Common Stock at a price of $5.33 per share with a fair value of $517,000. All other terms of the note remain unchanged. The Company determined that the extension of the note's maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the original value of the convertible note. As result, the Company recorded the fair value of the new note, which approximated the original carrying value $1,199,000 and expensed the fair value of the warrants granted of $517,000 as debt extinguishment costs. As of December 31, 2017, total outstanding balance of the note amounted to $1,199,000. On August 8, 2018, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note to February 8, 2021. In consideration for extending the note the Company issued Mr. Cutaia warrants exercisable for up to 163,113 shares of Common Stock with a fair market value of $1,075,000. The Company determined that the extension of the note's maturity date resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the original value of the convertible note. As result, the Company recorded the fair value of the new note which approximates the original carrying value $1,199,000 and expensed the entire fair value of the warrants granted, or $1,075,000 as a debt extinguishment cost. On September 30, 2018, Mr. Cutaia converted the convertible principal balance of $375,000 at $1.05 per share into 356,824 shares of restricted Common Stock. As of December 31, 2018, the outstanding balance of the note amounted to $824,000. | ||
[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, bore interest at a rate of 12% per annum, and matured in April 2017. The note was convertible into shares of Common Stock at a conversion price of $1.05 per share. On May 4, 2017, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note from April 1, 2017 to August 1, 2018. All other terms of the note remain unchanged and there were no additional compensation or incentive given. As of December 31, 2017, the outstanding balance of the note amounted to $189,000. On September 30, 2018, Mr. Cutaia converted the entire outstanding principal amount of $189,000 into 180,000 shares of restricted Common Stock. | ||
[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 $112,000 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 December 31, 2017, and 2018, the outstanding principal balance of the note was equal to $112,000. As of December 31, 2018, the note was past due, and remains past due. The Company is currently in negotiations with the noteholder to settle the past due note. | ||
[4] | On April 4, 2016, the Company issued a convertible note to Mr. Cutaia, in the amount of $343,000, to consolidate all advances made by Mr. Cutaia to the Company during the period December 2015 through March 2016. The note bore interest at a rate of 12% per annum, was secured by the Company's assets, and matured on August 4, 2017. Pursuant to the terms of the note, a total of 30%, or $103,000, of the note principal can be converted to shares of Common Stock at a conversion price $1.05 per share. On August 4, 2017, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note from August 4, 2017 to December 4, 2018. In consideration for extending the note's maturity, the Company issued Mr. Cutaia warrants to purchase up to 88,610 shares of Common Stock at a price of $2.25 per share with a fair value of $172,000. All other terms of the note remain unchanged. The Company determined that the extension of the note's maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the recorded value of the original convertible note. As a result, the Company recorded the fair value of the new note, which approximated the original carrying value $343,000 and expensed the entire fair value of the warrants granted of $172,000 as part of loss on debt extinguishment. As of December 31, 2017, the outstanding balance of the note was $343,000. On September 30, 2018, Mr. Cutaia converted the 30% principal amount of the note, or $103,000 of into 98,093 shares of restricted Common Stock. On December 4, 2018, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note to June 4, 2021. In consideration for extending the note, the Company issued Mr. Cutaia warrants to purchase up to 23,562 shares of Common Stock, with a fair market value of the warrants totaling $111,000. The Company determined that the extension of the note's maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the original value of the convertible note. As result, the Company recorded the fair value of the new note, which approximates the original carrying value of $343,000 and expensed the entire fair value of the warrants granted of $111,000 as part of loss on debt extinguishment. As of December 31, 2018, the outstanding balance of the note amounted to $240,000. | ||
[5] | On April 4, 2016, the Company issued a convertible note payable to Mr. Cutaia in the amount of $122,000, representing his unpaid salary from December 2015 through March 2016. The note was unsecured, bore interest at a rate of 12% per annum, compounded annually, and matured on August 4, 2017. The note was also convertible into shares of the Company's Common Stock at $1.05 per share. On August 4, 2017, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note from August 4, 2017 to December 4, 2018. All other terms of the note remain unchanged and there were no additional compensation or incentive given. As of December 31, 2017, the outstanding balance of the note amounted to $122,000. On September 30, 2018, Mr. Cutaia converted $122,000 of outstanding principal amount into 116,701 shares of restricted Common Stock. |
Notes Payable - Related Parti_5
Notes Payable - Related Parties - Schedule of Notes Payable to Related Parties (Details) (Parenthetical) - USD ($) | Dec. 04, 2018 | Sep. 30, 2018 | Aug. 08, 2018 | Jan. 29, 2018 | Aug. 04, 2017 | May 04, 2017 | Apr. 04, 2016 | Dec. 01, 2015 | Dec. 31, 2018 | Dec. 31, 2017 | Sep. 16, 2017 | May 22, 2017 | |
Debt conversion amount | $ 125,000 | $ 3,066,000 | $ 182,000 | ||||||||||
Warrant to purchase of common stock | 23,562 | 163,113 | 18,333 | 6,667 | |||||||||
Fair value of warrants | 1,188,000 | ||||||||||||
Notes payable related party | $ 112,000 | 1,965,000 | |||||||||||
Debt converted into shares | 83,333 | 1,243,189 | |||||||||||
Note 1 [Member] | |||||||||||||
Debt interest rate | [1] | 12.00% | |||||||||||
Debt instruments maturity date | [1] | Feb. 8, 2021 | |||||||||||
Note 1 [Member] | Extension Agreement [Member] | |||||||||||||
Maturity date description | April 1, 2017 to August 1, 2018 | ||||||||||||
Warrant term | 3 years | ||||||||||||
Warrant to purchase of common stock | 117,013 | ||||||||||||
Common stock price per share | $ 5.33 | ||||||||||||
Fair value of warrants | $ 517,000 | ||||||||||||
Warrant granted percentage | 10.00% | ||||||||||||
Outstanding balance | $ 1,199,000 | ||||||||||||
Debt extinguishment | $ 517,000 | ||||||||||||
Notes payable related party | $ 825,000 | 1,199,000 | |||||||||||
Note 2 [Member] | |||||||||||||
Debt interest rate | [2] | 12.00% | |||||||||||
Debt instruments maturity date | [2] | Feb. 8, 2021 | |||||||||||
Note 2 [Member] | Extension Agreement [Member] | |||||||||||||
Maturity date description | April 1, 2017 to August 1, 2018 | ||||||||||||
Note Payable 1 [Member] | |||||||||||||
Notes payable related party | $ 112,000 | 112,000 | |||||||||||
Note 3 [Member] | |||||||||||||
Debt interest rate | [3] | 12.00% | |||||||||||
Debt instruments maturity date | [3] | Apr. 1, 2017 | |||||||||||
Mr. Cutaia [Member] | Note 1 [Member] | |||||||||||||
Debt interest rate | 12.00% | ||||||||||||
Debt instrument, conversion percentage | 30.00% | ||||||||||||
Debt conversion amount | $ 375,000 | ||||||||||||
Debt conversion price per share | $ 1.05 | ||||||||||||
Maturity date description | April 1, 2017 | ||||||||||||
Mr. Cutaia [Member] | Note 1 [Member] | Restricted Common Stock [Member] | |||||||||||||
Debt conversion amount | $ 375,000 | ||||||||||||
Debt conversion price per share | $ 1.05 | ||||||||||||
Debt converted into shares | 356,824 | ||||||||||||
Mr. Cutaia [Member] | Note 1 [Member] | Extension Agreement [Member] | |||||||||||||
Maturity date description | February 8, 2021 | ||||||||||||
Warrant to purchase of common stock | 163,113 | ||||||||||||
Fair value of warrants | $ 1,075,000 | ||||||||||||
Warrant granted percentage | 10.00% | ||||||||||||
Outstanding balance | $ 1,199,000 | ||||||||||||
Debt extinguishment | $ 1,075,000 | ||||||||||||
Mr. Cutaia [Member] | Note 2 [Member] | |||||||||||||
Debt interest rate | 12.00% | ||||||||||||
Debt conversion price per share | $ 1.05 | ||||||||||||
Outstanding balance | $ 189,000 | ||||||||||||
Notes payable related party | 189,000 | ||||||||||||
Debt instruments maturity date | Apr. 30, 2017 | ||||||||||||
Mr. Cutaia [Member] | Note 2 [Member] | Restricted Common Stock [Member] | |||||||||||||
Debt conversion amount | $ 189,000 | ||||||||||||
Debt converted into shares | 180,000 | ||||||||||||
Mr. Cutaia [Member] | Note 3 [Member] | |||||||||||||
Debt interest rate | 12.00% | ||||||||||||
Debt instrument, conversion percentage | 30.00% | ||||||||||||
Debt conversion amount | $ 103,000 | ||||||||||||
Debt conversion price per share | $ 1.05 | ||||||||||||
Outstanding balance | $ 343,000 | 343,000 | |||||||||||
Notes payable related party | $ 240,000 | ||||||||||||
Debt instruments maturity date | Aug. 4, 2017 | ||||||||||||
Mr. Cutaia [Member] | Note 3 [Member] | Restricted Common Stock [Member] | |||||||||||||
Debt instrument, conversion percentage | 30.00% | ||||||||||||
Debt conversion amount | $ 103,000 | ||||||||||||
Debt converted into shares | 98,093 | ||||||||||||
Mr. Cutaia [Member] | Note 3 [Member] | Extension Agreement [Member] | |||||||||||||
Maturity date description | June 4, 2021 | August 4, 2017 to December 4, 2018 | |||||||||||
Warrant to purchase of common stock | 23,562 | 88,610 | |||||||||||
Common stock price per share | $ 2.25 | ||||||||||||
Fair value of warrants | $ 111,000 | $ 172,000 | |||||||||||
Warrant granted percentage | 10.00% | 10.00% | |||||||||||
Outstanding balance | $ 240,000 | $ 343,000 | |||||||||||
Debt extinguishment | $ 111,000 | $ 172,000 | |||||||||||
Debt instruments maturity date | Jun. 4, 2021 | ||||||||||||
Mr. Cutaia [Member] | Note Payable 2 [Member] | |||||||||||||
Debt conversion price per share | $ 1.05 | ||||||||||||
Outstanding balance | $ 122,000 | ||||||||||||
Notes payable related party | $ 122,000 | ||||||||||||
Debt instruments maturity date | Aug. 4, 2017 | ||||||||||||
Mr. Cutaia [Member] | Note Payable 2 [Member] | Restricted Common Stock [Member] | |||||||||||||
Debt conversion amount | $ 122,000 | ||||||||||||
Debt converted into shares | 116,701 | ||||||||||||
Mr. Cutaia [Member] | Note Payable 2 [Member] | Extension Agreement [Member] | |||||||||||||
Maturity date description | August 4, 2017 to December 4, 2018 | ||||||||||||
Former [Member] | Note Payable 1 [Member] | |||||||||||||
Debt interest rate | 12.00% | ||||||||||||
Outstanding balance | $ 112,000 | ||||||||||||
Debt instruments maturity date | Apr. 30, 2017 | ||||||||||||
[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, to consolidate all loans and advances made by Mr. Cutaia to the Company as of that date. The note bore interest at a rate of 12% per annum, was secured by the Company's assets, and matured on April 1, 2017. Pursuant to the terms of the agreement, at Mr. Cutaia's discretion, he could convert up to 30%, or $375,000, of the outstanding principal, plus accrued interest thereon, into shares of Common Stock at a conversion rate of $1.05 per share. On May 4, 2017, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note from April 1, 2017 to August 1, 2018. In consideration, the Company issued Mr. Cutaia a three-year warrant to purchase up to 117,013 shares of Common Stock at a price of $5.33 per share with a fair value of $517,000. All other terms of the note remain unchanged. The Company determined that the extension of the note's maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the original value of the convertible note. As result, the Company recorded the fair value of the new note, which approximated the original carrying value $1,199,000 and expensed the fair value of the warrants granted of $517,000 as debt extinguishment costs. As of December 31, 2017, total outstanding balance of the note amounted to $1,199,000. On August 8, 2018, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note to February 8, 2021. In consideration for extending the note the Company issued Mr. Cutaia warrants exercisable for up to 163,113 shares of Common Stock with a fair market value of $1,075,000. The Company determined that the extension of the note's maturity date resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the original value of the convertible note. As result, the Company recorded the fair value of the new note which approximates the original carrying value $1,199,000 and expensed the entire fair value of the warrants granted, or $1,075,000 as a debt extinguishment cost. On September 30, 2018, Mr. Cutaia converted the convertible principal balance of $375,000 at $1.05 per share into 356,824 shares of restricted Common Stock. As of December 31, 2018, the outstanding balance of the note amounted to $824,000. | ||||||||||||
[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, bore interest at a rate of 12% per annum, and matured in April 2017. The note was convertible into shares of Common Stock at a conversion price of $1.05 per share. On May 4, 2017, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note from April 1, 2017 to August 1, 2018. All other terms of the note remain unchanged and there were no additional compensation or incentive given. As of December 31, 2017, the outstanding balance of the note amounted to $189,000. On September 30, 2018, Mr. Cutaia converted the entire outstanding principal amount of $189,000 into 180,000 shares of restricted Common Stock. | ||||||||||||
[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 $112,000 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 December 31, 2017, and 2018, the outstanding principal balance of the note was equal to $112,000. As of December 31, 2018, the note was past due, and remains past due. The Company is currently in negotiations with the noteholder to settle the past due note. |
Convertible Notes Payable - Sch
Convertible Notes Payable - Schedule of Convertible Notes Payable (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 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] | $ 1,249,000 | |
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] | $ 112,000 | |
Note 4 [Member] | |||
Note Date | [4] | Apr. 4, 2016 | |
Maturity Date | [4] | Jun. 4, 2021 | |
Interest Rate | [4] | 12.00% | |
Original Borrowing | [4] | $ 343,000 | |
Note 5 [Member] | |||
Note Date | [5] | Apr. 4, 2016 | |
Maturity Date | [5] | Dec. 4, 2018 | |
Interest Rate | [5] | 12.00% | |
Original Borrowing | [5] | $ 122,000 | |
Convertible Notes Payable [Member] | |||
Total convertible notes payable | 1,900,000 | $ 1,695,000 | |
Debt discount | (1,082,000) | (675,000) | |
Total convertible notes payable , net of debt discount | $ 818,000 | 1,020,000 | |
Convertible Notes Payable [Member] | Note 1 [Member] | |||
Note Date | [6] | Apr. 3, 2016 | |
Maturity Date | [6] | Apr. 4, 2018 | |
Interest Rate | [6] | 12.00% | |
Original Borrowing | [6] | $ 680,000 | |
Total convertible notes payable | [6] | 680,000 | |
Convertible Notes Payable [Member] | Note 2 [Member] | |||
Note Date Description | [7] | June and August 2017 | |
Interest Rate | [7] | 5.00% | |
Original Borrowing | [7] | $ 220,000 | |
Maturity Date, Description | [7] | February and March 2018 | |
Total convertible notes payable | [7] | 220,000 | |
Convertible Notes Payable [Member] | Note 3 [Member] | |||
Note Date Description | [8] | Various | |
Interest Rate | [8] | 5.00% | |
Original Borrowing | [8] | $ 320,000 | |
Maturity Date, Description | [8] | Various | |
Total convertible notes payable | [8] | 320,000 | |
Convertible Notes Payable [Member] | Note 4 [Member] | |||
Note Date | [9] | Dec. 8, 2017 | |
Maturity Date | [9] | Dec. 8, 2018 | |
Interest Rate | [9] | 8.00% | |
Original Borrowing | [9] | $ 370,000 | |
Total convertible notes payable | [9] | 370,000 | |
Convertible Notes Payable [Member] | Note 5 [Member] | |||
Note Date | [10] | Dec. 13, 2017 | |
Maturity Date | [10] | Sep. 20, 2018 | |
Interest Rate | [10] | 8.00% | |
Original Borrowing | [10] | $ 105,000 | |
Total convertible notes payable | [10] | 105,000 | |
Convertible Notes Payable [Member] | Note 6 [Member] | |||
Note Date | [11] | Oct. 19, 2018 | |
Maturity Date | [11] | Apr. 19, 2019 | |
Interest Rate | [11] | 10.00% | |
Original Borrowing | [11] | $ 1,500,000 | |
Total convertible notes payable | [11] | $ 1,500,000 | |
Convertible Notes Payable [Member] | Note 7 [Member] | |||
Note Date | [12] | Oct. 30, 2018 | |
Maturity Date | [12] | Apr. 29, 2019 | |
Interest Rate | [12] | 5.00% | |
Original Borrowing | [12] | $ 400,000 | |
Total convertible notes payable | [12] | $ 400,000 | |
[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, to consolidate all loans and advances made by Mr. Cutaia to the Company as of that date. The note bore interest at a rate of 12% per annum, was secured by the Company's assets, and matured on April 1, 2017. Pursuant to the terms of the agreement, at Mr. Cutaia's discretion, he could convert up to 30%, or $375,000, of the outstanding principal, plus accrued interest thereon, into shares of Common Stock at a conversion rate of $1.05 per share. On May 4, 2017, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note from April 1, 2017 to August 1, 2018. In consideration, the Company issued Mr. Cutaia a three-year warrant to purchase up to 117,013 shares of Common Stock at a price of $5.33 per share with a fair value of $517,000. All other terms of the note remain unchanged. The Company determined that the extension of the note's maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the original value of the convertible note. As result, the Company recorded the fair value of the new note, which approximated the original carrying value $1,199,000 and expensed the fair value of the warrants granted of $517,000 as debt extinguishment costs. As of December 31, 2017, total outstanding balance of the note amounted to $1,199,000. On August 8, 2018, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note to February 8, 2021. In consideration for extending the note the Company issued Mr. Cutaia warrants exercisable for up to 163,113 shares of Common Stock with a fair market value of $1,075,000. The Company determined that the extension of the note's maturity date resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the original value of the convertible note. As result, the Company recorded the fair value of the new note which approximates the original carrying value $1,199,000 and expensed the entire fair value of the warrants granted, or $1,075,000 as a debt extinguishment cost. On September 30, 2018, Mr. Cutaia converted the convertible principal balance of $375,000 at $1.05 per share into 356,824 shares of restricted Common Stock. As of December 31, 2018, the outstanding balance of the note amounted to $824,000. | ||
[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, bore interest at a rate of 12% per annum, and matured in April 2017. The note was convertible into shares of Common Stock at a conversion price of $1.05 per share. On May 4, 2017, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note from April 1, 2017 to August 1, 2018. All other terms of the note remain unchanged and there were no additional compensation or incentive given. As of December 31, 2017, the outstanding balance of the note amounted to $189,000. On September 30, 2018, Mr. Cutaia converted the entire outstanding principal amount of $189,000 into 180,000 shares of restricted Common Stock. | ||
[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 $112,000 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 December 31, 2017, and 2018, the outstanding principal balance of the note was equal to $112,000. As of December 31, 2018, the note was past due, and remains past due. The Company is currently in negotiations with the noteholder to settle the past due note. | ||
[4] | On April 4, 2016, the Company issued a convertible note to Mr. Cutaia, in the amount of $343,000, to consolidate all advances made by Mr. Cutaia to the Company during the period December 2015 through March 2016. The note bore interest at a rate of 12% per annum, was secured by the Company's assets, and matured on August 4, 2017. Pursuant to the terms of the note, a total of 30%, or $103,000, of the note principal can be converted to shares of Common Stock at a conversion price $1.05 per share. On August 4, 2017, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note from August 4, 2017 to December 4, 2018. In consideration for extending the note's maturity, the Company issued Mr. Cutaia warrants to purchase up to 88,610 shares of Common Stock at a price of $2.25 per share with a fair value of $172,000. All other terms of the note remain unchanged. The Company determined that the extension of the note's maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the recorded value of the original convertible note. As a result, the Company recorded the fair value of the new note, which approximated the original carrying value $343,000 and expensed the entire fair value of the warrants granted of $172,000 as part of loss on debt extinguishment. As of December 31, 2017, the outstanding balance of the note was $343,000. On September 30, 2018, Mr. Cutaia converted the 30% principal amount of the note, or $103,000 of into 98,093 shares of restricted Common Stock. On December 4, 2018, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note to June 4, 2021. In consideration for extending the note, the Company issued Mr. Cutaia warrants to purchase up to 23,562 shares of Common Stock, with a fair market value of the warrants totaling $111,000. The Company determined that the extension of the note's maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the original value of the convertible note. As result, the Company recorded the fair value of the new note, which approximates the original carrying value of $343,000 and expensed the entire fair value of the warrants granted of $111,000 as part of loss on debt extinguishment. As of December 31, 2018, the outstanding balance of the note amounted to $240,000. | ||
[5] | On April 4, 2016, the Company issued a convertible note payable to Mr. Cutaia in the amount of $122,000, representing his unpaid salary from December 2015 through March 2016. The note was unsecured, bore interest at a rate of 12% per annum, compounded annually, and matured on August 4, 2017. The note was also convertible into shares of the Company's Common Stock at $1.05 per share. On August 4, 2017, the Company entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note from August 4, 2017 to December 4, 2018. All other terms of the note remain unchanged and there were no additional compensation or incentive given. As of December 31, 2017, the outstanding balance of the note amounted to $122,000. On September 30, 2018, Mr. Cutaia converted $122,000 of outstanding principal amount into 116,701 shares of restricted Common Stock. | ||
[6] | On April 3, 2016, the Company issued a convertible note payable to Oceanside Strategies, Inc. ("Oceanside"), a third party-lender, in the amount of $680,000 to consolidate all notes payable and accrued interest due to Oceanside as of that date. This note superseded and replaced all previous notes and liabilities due to Oceanside from fiscal years 2014 and 2015. The note was unsecured, bore interest at the rate of 12% per annum, compounded annually, and had an original maturity date of December 30, 2016. Pursuant to the terms of the note, the Company granted Oceanside the right to convert up to 30% of the principal amount of such note, or $204,000, into shares of common stock at a conversion price $1.05 per share and granted warrants to purchase up to 161,969 shares of Common Stock at $1.05 per share until April 4, 2019. On December 30, 2016, the Company entered into an extension agreement with Oceanside to extend the maturity date of the note from December 30, 2016 to August 4, 2017. All other terms of the note remain unchanged. In consideration for Oceanside's agreement to extend the maturity date to August 4, 2017, the Company granted Oceanside a warrant to purchase up to 161,969 shares of the Company's Common Stock, exercisable at $1.20 per share until December 29, 2019, with a fair value of $159,000. On August 4, 2017, the Company entered into an extension agreement with Oceanside to extend the maturity date of the note from August 4, 2017 to April 4, 2018. All other terms of the note remain unchanged. In consideration for Oceanside's agreement to extend the maturity date to August 4, 2018, the Company granted Oceanside a warrant to purchase up to 87,787 shares of the Company's Common Stock, exercisable at $2.25 per share until August 3, 2022 with a fair value of $171,000. The Company determined that the extension of the note's maturity resulted in a debt extinguishment for accounting purposes since the fair value of the warrants granted was more than 10% of the recorded value of the original convertible note. As a result, Company recorded the fair value of the new note, which approximated the original carrying value of $680,000, and expensed the entire fair value of the warrants granted of $171,000 as part of loss on debt extinguishment. As of December 31, 2017, the outstanding balance of the note amounted to $680,000. In March 2018, the entire principal amount due was settled through the issuance of 305,967 shares of Common Stock. As a result of this conversion, the Company also recorded a loss on debt extinguishment of $1,090,000 to account the fair value of the 65,469 shares of Common Stock issued to settle the remaining 70%, or $476,000, of the note principal and accrued interest that was not initially convertible to shares of Common Stock. | ||
[7] | In June and August of 2017, the Company issued unsecured convertible notes to an unaffiliated third-party in the amount of $220,000 in exchange for cash of $200,000, representing an original issue discount of $10,500, and prepaid interest of $10,000. The notes bore interest at a rate of 5% per annum, matured in February and March 2018, and were convertible to shares of Common Stock at a conversion price of either $3.75 per share or $1.50 per share. As part of the issuance, the Company also (i) granted warrants to purchase up to 22,000 shares of Common Stock at $4.50 per share and (ii) issued 3,333 shares of Common Stock with a fair value $12,500. As a result, the Company recorded a debt discount of $175,000 to account for the original issue discount and prepaid interest of $21,000, the relative fair value of the warrants of $40,000, the fair value of the shares of Common Stock of $13,000 and the beneficial conversion feature of $102,000. The debt discount is being amortized to interest expense over the term of the note. As of December 31, 2017, the outstanding balance of the note was $220,000 and unamortized debt discount of $40,000. In March 2018, the entire outstanding principal amount of the notes, and all accrued interest thereon, were settled and converted into 102,900 shares of Common Stock pursuant to the conversion terms of the notes and we expensed the unamortized debt discount. | ||
[8] | On September 26, 2017, we entered into a purchase agreement, dated September 15, 2017, with Kodiak Capital Group, LLC ("Kodiak"). Under the purchase agreement, the Company was entitled to, from time to time, in the Company's discretion, sell shares of its Common Stock to Kodiak for aggregate gross proceeds of up to $2,000,000. Unless terminated earlier, Kodiak's purchase commitment automatically terminates on the earlier of the date on which Kodiak has purchased our shares pursuant to the purchase agreement for an aggregate purchase price of $2,000,000, or September 15, 2019. The Company has no obligation to sell any shares under the purchase agreement. From September 2017 through November 2017, the Company issued three convertible notes payable totaling $320,000 in exchange for cash of $200,000, representing an original issue discount of $20,000, and settlement of financing expenses of $100,000 incurred by Kodiak pursuant to the purchase agreement. The notes were unsecured, had maturity dates starting in March 2018 through June 2018, and bore interest at a rate of 5% per annum. The notes were also convertible into shares of Common Stock at price of $3.75 per share or 70% of the 10-day VWAP prior to conversion, whichever is lower. As part of the issuances, the Company also granted Kodiak a five-year, fully vested, warrant to purchase up to 133,333 shares of Common Stock, exercisable at $2.25 and $3.00 per share. The Company determined that since there was no minimum conversion price, it could no longer determine if it had enough authorized shares to fulfill its conversion obligation. As such, pursuant to current accounting guidelines, the Company determined that the conversion feature of these three notes created a derivative with a fair value totaling $412,000 at the date of issuances. The Company accounted for the fair value of the derivative up to the face amount of the notes of $320,000 as a valuation discount to be amortized over the life of the note, and the excess of $92,000 being recorded as part of financing cost. See Note 8, Derivative Liability, to these audited consolidated financial statements for further discussion. In addition, the Company also recorded the notes' original issue discount totaling $20,000 and the $100,000 note payable issued to settle financing expenses related to the agreement with Kodiak as part of financing costs. As of December 31, 2017, the outstanding balance of the note was equal to $320,000 and unamortized debt discount was $191,000. In March 2018, the Company paid Kodiak $226,000 to settle two notes payable totaling $220,000, and all accrued interest thereon, and amortized the corresponding unamortized debt discount of $114,000 to interest expense. As part of the payment, Kodiak cancelled one note payable in the outstanding principal amount of $100,000. As a result of the note's cancellation, the Company recorded a gain on debt extinguishment of $23,000, to account for the cancellation of the $100,000 note payable, less the amortization of the corresponding debt discount of $77,000. | ||
[9] | On December 8, 2017, the Company issued unsecured convertible notes to EMA Financial, LLC ("EMA") and Auctus Fund, LLC ("Auctus") totaling $370,000 in principal, in exchange for cash of $323,000, representing an original issue discount of $47,000. The notes bore interest at a rate of 8% per annum and matured on December 8, 2018. The notes were also convertible into shares of Common Stock at a conversion price equal to the lower of: (i) the closing sale price of the Common Stock on the principal market (as defined in the notes) on the trading day immediately preceding the closing date, and (ii) 70% of either the lowest sale price for the Common Stock on the principal market during the ten (10) consecutive trading days including and immediately preceding the conversion date, or the closing bid price. The Company determined that since there was no minimum conversion price, that it 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 note created a derivative with a fair value of $565,000 at the date of issuance. The Company accounted for the fair value of the derivative up to the face amount of the note of $370,000 as a valuation discount to be amortized over the life of the note, and the excess of $195,000 was recorded as part of financing cost. See Note 8, Derivative Liability, to these audited consolidated financial statements for discussion of derivative liability. In addition, the Company also recorded the notes' original issue discount of $47,000 as part of financing costs As part of the offering, the Company also granted EMA and Auctus a five-year warrant to acquire up to 160,000 shares of the Company's Common Stock with an exercise price of $1.65 per share. Warrants to acquire up to 80,000 shares of Common Stock contained (i) a full ratchet reset provision in the event the Company engages in a future equity offering and the Company offers equity securities at a price less than $1.65 per share and (ii) a fundamental transaction provision that could give rise to an obligation to pay cash to the warrant holder. As such, pursuant to current accounting guidelines, the Company determined that the warrant exercise price and fundamental transaction provision created a derivative with a fair value of $119,000 at the date of issuance. The Company accounted for the fair value of the derivative as part of finance cost. See Note 8, Derivative Liability, to these audited consolidated financial statements for discussion of derivative liability. As of December 31, 2017, outstanding balance of the notes amounted to $370,000 and unamortized debt discount was $344,000. In January 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, matured in January 2019, and was convertible into shares of Common Stock at a conversion price equal to 70% of the Company's 10-day VWAP. The Company determined that since there was no minimum conversion price, that it could no longer determine if it had enough authorized shares to fulfill its 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 $253,000 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 $103,000 was recorded as a financing cost. See Note 8, Derivative Liability, to these audited consolidated financial statements 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, the Company also granted a five-year warrant to acquire up to 66,667 shares of the Company's Common Stock with an exercise price of $2.10 per share. Warrants to purchase up to 33,333 shares of Common Stock included (i) a full ratchet reset provision in the event the Company engaged in a future equity offering at an offering price less than $2.10 per share and (ii) a fundamental transaction provision that could give rise to an obligation to pay cash to the warrant holder and a reset of the exercise price. As such, pursuant to current accounting guidelines, the Company determined that the warrant exercise price and fundamental transaction provision created a derivative with a fair value of $49,000 at the date of issuance. The Company accounted for the fair value of the derivative as a financing cost. See Note 8, Derivative Liability, to these audited consolidated financial statements for discussion of derivative liability. In March 2018, the Company settled the entire outstanding principal amount of the notes in cash and expensed the corresponding debt discount of $494,000. | ||
[10] | On December 14, 2017, the Company issued an unsecured convertible note to PowerUp Lending Group, Ltd. in the amount of $105,000 in exchange for cash of $90,000, representing an original issue discount of $15,000. The note matured on September 20, 2018 and bore interest at a rate of 8% per annum. The note was convertible into shares of Common Stock at a conversion price equal to 70% multiplied by the market price, which is equal to the lowest trading price of the Common Stock during the ten (10) trading day period ending on the latest complete trading day prior to the conversion date. The Company determined that since there was no minimum conversion price, it 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 note created a derivative with a fair value of $160,000 at the date of issuance. The Company accounted for the fair value of the derivative up to the face amount of the note of $105,000 as a valuation discount to be amortized over the life of the note, and the excess of $55,000 being recorded as part of financing cost. See Note 8, Derivative Liability, to these audited consolidated financial statements for discussion of derivative liability. In addition, the Company also recorded the note's original issue discount of $15,000 as part of financing costs. As of December 31, 2017, the outstanding principal amount of the note was $105,000 and unamortized debt discount was $100,000. In March 2018, the Company settled the principal amount of the note and expensed the corresponding debt discount of $100,000. | ||
[11] | On October 19, 2018, the Company issued an unsecured convertible note to Bellridge Capital, LLC, an unaffiliated third-party entity, in the aggregate principal amount of $1,500,000 in exchange for net proceeds of $1,242,000, representing an original issue discount of $150,000, and paid legal and financing expenses of $109,000. In addition, the Company issued 96,667 shares of its Common Stock with a fair value of $595,000. The note is unsecured and does not bear interest; however, the implied interest was determined to be 10% since the note was issued at 10% less than its face value. The note matures in April 2019. The note is also convertible into shares of the Company's Common Stock only on or after the occurrence of an uncured "Event of Default". Primarily, the Company will be in default if it does 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, the Company 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. The Company has agreed that, on or after the occurrence of an Event of Default, it will reserve and keep available that number of shares of its 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 securities purchase agreement and the note (assuming conversion in full of the note and on any date of determination). The Company determined that, because the conversion price is unknown, 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 note created a derivative with a fair value of $1,273,000 at the date of issuance. As a result of the issuance of the note, the Company incurred aggregate costs of $2,126,000 related to the note's original issue discount, legal and financing expenses, the fair value of the Common Stock issued and the recognition of the derivative liability. The Company recorded these costs as a note discount up to the face value of the note of $1,500,000 and the remaining $626,000 as financing costs. The note discount is being amortized over the six-month term of the note. As of December 31, 2018, the outstanding balance of the note amounted to $1,500,000 and unamortized debt discount of $881,000. | ||
[12] | On October 30, 2018, the Company issued two unsecured convertible notes to one current investor and one otherwise unaffiliated third-party in the aggregate principal amount of $400,000. The notes bear interest at a rate of 5% per annum and will mature on April 29, 2019. 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 outstanding principal amount and (ii) the accrued interest thereunder will be converted into shares of the Company's Common Stock that shall have been registered therein. The per-share conversion price will be seventy-five percent (75%) of the offering price of the 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 $302,000 at the date of issuance and was accounted as a debt discount and is being amortized over the term of the notes payable. As of December 31, 2018, outstanding balance of the note amounted to $400,000 and unamortized debt discount of $201,000. |
Convertible Notes Payable - S_2
Convertible Notes Payable - Schedule of Convertible Notes Payable (Details) (Parenthetical) | Oct. 30, 2018USD ($) | Oct. 19, 2018USD ($)shares | Jan. 29, 2018shares | Dec. 14, 2017USD ($)Integer | Dec. 08, 2017USD ($)Integer | Sep. 26, 2017USD ($) | Sep. 16, 2017USD ($)$ / sharesshares | Aug. 04, 2017USD ($)$ / sharesshares | Dec. 30, 2016USD ($)$ / sharesshares | Apr. 03, 2016USD ($)$ / sharesshares | Mar. 31, 2018USD ($)shares | Jan. 31, 2018USD ($)$ / sharesshares | Aug. 31, 2017USD ($)$ / sharesshares | Jun. 30, 2017USD ($)$ / sharesshares | Nov. 30, 2017USD ($)$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($) | Dec. 04, 2018shares | Aug. 08, 2018shares | May 22, 2017$ / sharesshares |
Number of warrant purchase shares | shares | 18,333 | 23,562 | 163,113 | 6,667 | ||||||||||||||||
Warrant price per share | $ / shares | $ 1.20 | $ 6 | ||||||||||||||||||
Fair value of warrants | $ 1,188,000 | |||||||||||||||||||
Debt extinguishment | $ 10,000 | $ (534,000) | $ (977,000) | |||||||||||||||||
Number of common stock shares issued upon conversion | shares | 83,333 | 1,243,189 | ||||||||||||||||||
Proceeds from sale of common stock | $ 2,979,000 | 796,000 | ||||||||||||||||||
Financing costs | 798,000 | 643,000 | ||||||||||||||||||
Repayment of debt | 845,000 | |||||||||||||||||||
Notes payable | 125,000 | |||||||||||||||||||
Proceeds from issuance of convertible notes | 1,772,000 | 813,000 | ||||||||||||||||||
Unsecured Convertible Notes [Member] | Unaffiliated Third-Party [Member] | ||||||||||||||||||||
Outstanding balance of debt | $ 220,000 | $ 220,000 | ||||||||||||||||||
Interest rate | 5.00% | 5.00% | ||||||||||||||||||
Number of warrant purchase shares | shares | 22,000 | 22,000 | ||||||||||||||||||
Warrant price per share | $ / shares | $ 4.50 | $ 4.50 | ||||||||||||||||||
Fair value of warrants | $ 12,500 | $ 12,500 | ||||||||||||||||||
Maturity date, description | February and March 2018 | February and March 2018 | ||||||||||||||||||
Number of common stock shares issued upon conversion | shares | 3,333 | 3,333 | ||||||||||||||||||
Exchange for cash | $ 200,000 | $ 200,000 | ||||||||||||||||||
Original issue discount | 10,500 | 10,500 | ||||||||||||||||||
Prepaid interest | $ 10,000 | $ 10,000 | ||||||||||||||||||
Conversion price per share description | Convertible to shares of Common Stock at a conversion price of either $3.75 per share or $1.50 per share. | Convertible to shares of Common Stock at a conversion price of either $3.75 per share or $1.50 per share. | ||||||||||||||||||
Convertible Note [Member] | Unaffiliated Third-Party [Member] | ||||||||||||||||||||
Outstanding balance of debt | 220,000 | |||||||||||||||||||
Fair value of warrants | 40,000 | |||||||||||||||||||
Number of common stock shares issued upon conversion | shares | 102,900 | |||||||||||||||||||
Original issue discount | 175,000 | |||||||||||||||||||
Prepaid interest | 21,000 | |||||||||||||||||||
Beneficial conversion feature | 102,000 | |||||||||||||||||||
Unamortized debt discount | 40,000 | |||||||||||||||||||
Two Unsecured Convertible Notes [Member] | ||||||||||||||||||||
Outstanding balance of debt | 400,000 | |||||||||||||||||||
Interest rate | 5.00% | |||||||||||||||||||
Maturity date | Apr. 29, 2019 | |||||||||||||||||||
Debt conversion percentage of amount | 75.00% | |||||||||||||||||||
Debt principal amount | $ 400,000 | |||||||||||||||||||
Unamortized debt discount | $ 201,000 | |||||||||||||||||||
Fair value of derivatives | $ 302,000 | |||||||||||||||||||
Oceanside Strategies, Inc. [Member] | Extension Agreement [Member] | ||||||||||||||||||||
Outstanding balance of debt | $ 680,000 | $ 476,000 | 680,000 | |||||||||||||||||
Maturity date | Aug. 4, 2018 | Aug. 4, 2017 | ||||||||||||||||||
Number of warrant purchase shares | shares | 87,787 | 161,969 | ||||||||||||||||||
Warrant price per share | $ / shares | $ 2.25 | $ 1.20 | ||||||||||||||||||
Warrant exercisable date | Aug. 3, 2022 | Dec. 29, 2019 | ||||||||||||||||||
Fair value of warrants | $ 171,000 | $ 159,000 | ||||||||||||||||||
Maturity date, description | August 4, 2017 to April 4, 2018 | December 30, 2016 to August 4, 2017 | ||||||||||||||||||
Debt extinguishment | $ 171,000 | $ 1,090,000 | ||||||||||||||||||
Maximum rate of warrants issued | 10.00% | |||||||||||||||||||
Number of common stock shares issued upon conversion | shares | 305,967 | |||||||||||||||||||
Fair value of common shares | $ 65,469 | |||||||||||||||||||
Percentage of shares issued in settlement of debt | 70.00% | |||||||||||||||||||
Oceanside Strategies, Inc. [Member] | Convertible Note Payable [Member] | ||||||||||||||||||||
Outstanding balance of debt | $ 680,000 | |||||||||||||||||||
Interest rate | 12.00% | |||||||||||||||||||
Maturity date | Dec. 30, 2016 | |||||||||||||||||||
Debt conversion percentage of amount | 30.00% | |||||||||||||||||||
Debt principal amount | $ 204,000 | |||||||||||||||||||
Debt conversion price per share | $ / shares | $ 1.05 | |||||||||||||||||||
Number of warrant purchase shares | shares | 161,969 | |||||||||||||||||||
Warrant price per share | $ / shares | $ 1.05 | |||||||||||||||||||
Kodiak Capital Group, LLC [Member] | Purchase Agreement [Member] | ||||||||||||||||||||
Outstanding balance of debt | $ 100,000 | 320,000 | ||||||||||||||||||
Debt extinguishment | 23,000 | |||||||||||||||||||
Unamortized debt discount | 114,000 | 191,000 | ||||||||||||||||||
Proceeds from sale of common stock | $ 2,000,000 | |||||||||||||||||||
Purchase price of shares | $ 2,000,000 | |||||||||||||||||||
Repayment of debt | 226,000 | |||||||||||||||||||
Notes payable | 220,000 | |||||||||||||||||||
Amortization of debt discount | 77,000 | |||||||||||||||||||
Kodiak Capital Group, LLC [Member] | Three Convertible Notes Payable [Member] | Purchase Agreement [Member] | ||||||||||||||||||||
Outstanding balance of debt | $ 320,000 | |||||||||||||||||||
Interest rate | 5.00% | |||||||||||||||||||
Debt conversion percentage of amount | 70.00% | |||||||||||||||||||
Debt conversion price per share | $ / shares | $ 3.75 | |||||||||||||||||||
Number of warrant purchase shares | shares | 133,333 | |||||||||||||||||||
Warrant price per share | $ / shares | $ 2.25 | $ 3 | ||||||||||||||||||
Maturity date, description | March 2018 through June 2018 | |||||||||||||||||||
Exchange for cash | $ 200,000 | |||||||||||||||||||
Original issue discount | 20,000 | |||||||||||||||||||
Settlement of financing expense | 100,000 | |||||||||||||||||||
Fair value of derivatives | 412,000 | |||||||||||||||||||
Financing costs | 92,000 | |||||||||||||||||||
Amortization of debt discount | $ 320,000 | |||||||||||||||||||
Warrants term | 5 years | |||||||||||||||||||
EMA Financial and Auctus Fund [Member] | Convertible Note Payable [Member] | ||||||||||||||||||||
Outstanding balance of debt | $ 150,000 | |||||||||||||||||||
Interest rate | 8.00% | |||||||||||||||||||
Maturity date | Jan. 31, 2019 | |||||||||||||||||||
Debt conversion percentage of amount | 70.00% | |||||||||||||||||||
Exchange for cash | $ 130,000 | |||||||||||||||||||
Original issue discount | 20,000 | |||||||||||||||||||
Fair value of derivatives | 253,000 | |||||||||||||||||||
Financing costs | $ 103,000 | |||||||||||||||||||
EMA Financial and Auctus Fund [Member] | Unsecured Convertible Notes [Member] | ||||||||||||||||||||
Outstanding balance of debt | $ 370,000 | 370,000 | ||||||||||||||||||
Interest rate | 8.00% | |||||||||||||||||||
Maturity date | Dec. 8, 2018 | |||||||||||||||||||
Debt conversion percentage of amount | 70.00% | |||||||||||||||||||
Number of warrant purchase shares | shares | 66,667 | 160,000 | ||||||||||||||||||
Warrant price per share | $ / shares | $ 2.10 | $ 1.65 | ||||||||||||||||||
Exchange for cash | $ 323,000 | |||||||||||||||||||
Original issue discount | 47,000 | |||||||||||||||||||
Unamortized debt discount | 494,000 | $ 344,000 | ||||||||||||||||||
Fair value of derivatives | 565,000 | $ 49,000 | $ 119,000 | |||||||||||||||||
Financing costs | $ 195,000 | |||||||||||||||||||
Description on warrants | Warrants to purchase up to 33,333 shares of Common Stock included (i) a full ratchet reset provision in the event the Company engaged in a future equity offering at an offering price less than $2.10 per share and (ii) a fundamental transaction provision that could give rise to an obligation to pay cash to the warrant holder and a reset of the exercise price. | Warrants to acquire up to 80,000 shares of Common Stock contained (i) a full ratchet reset provision in the event the Company engages in a future equity offering and the Company offers equity securities at a price less than $1.65 per share and (ii) a fundamental transaction provision that could give rise to an obligation to pay cash to the warrant holder. | ||||||||||||||||||
Warrants term | 5 years | 5 years | ||||||||||||||||||
Number of consecutive trading days | Integer | 10 | |||||||||||||||||||
PowerUp Lending Group, Ltd. [Member] | Unsecured Convertible Notes [Member] | ||||||||||||||||||||
Outstanding balance of debt | $ 105,000 | $ 105,000 | ||||||||||||||||||
Interest rate | 8.00% | |||||||||||||||||||
Maturity date | Sep. 20, 2018 | |||||||||||||||||||
Debt conversion percentage of amount | 70.00% | |||||||||||||||||||
Exchange for cash | $ 90,000 | |||||||||||||||||||
Original issue discount | 15,000 | 15,000 | ||||||||||||||||||
Unamortized debt discount | $ 100,000 | 100,000 | ||||||||||||||||||
Fair value of derivatives | 160,000 | |||||||||||||||||||
Financing costs | 55,000 | |||||||||||||||||||
Amortization of debt discount | $ 105,000 | |||||||||||||||||||
Number of consecutive trading days | Integer | 10 | |||||||||||||||||||
Bellridge Capital, LP [Member] | Unsecured Convertible Notes [Member] | ||||||||||||||||||||
Outstanding balance of debt | 1,500,000 | |||||||||||||||||||
Interest rate | 10.00% | |||||||||||||||||||
Maturity date | Apr. 30, 2019 | |||||||||||||||||||
Debt conversion percentage of amount | 70.00% | |||||||||||||||||||
Debt principal amount | $ 1,500,000 | |||||||||||||||||||
Number of common stock shares issued upon conversion | shares | 96,667 | |||||||||||||||||||
Fair value of common shares | $ 595,000 | |||||||||||||||||||
Original issue discount | 150,000 | |||||||||||||||||||
Unamortized debt discount | 881,000 | |||||||||||||||||||
Settlement of financing expense | 109,000 | |||||||||||||||||||
Fair value of derivatives | 1,273,000 | |||||||||||||||||||
Financing costs | $ 626,000 | |||||||||||||||||||
Proceeds from issuance of convertible notes | 1,242,000 | |||||||||||||||||||
Aggregate cost incurred | $ 2,126,000 |
Convertible Series A Preferre_2
Convertible Series A Preferred Stock (Details Narrative) - USD ($) | Feb. 14, 2017 | Dec. 31, 2018 | Dec. 31, 2017 |
Number of shares issued during period | 745,476 | ||
Number of shares issued during period, value | $ 2,979,000 | $ 796,000 | |
Interest expense | $ 362,000 | 555,000 | |
Series A Convertible Preferred Stock [Member] | |||
Interest expense | 75,000 | ||
Redemption premium | $ 14,000 | ||
Series A Preferred Stock [Member] | |||
Number of shares issued during period | 630,000 | ||
Exchange for cash | $ 555,000 | ||
Debt discount | $ 75,000 | ||
Redemption premium | 25.00% | ||
Preferred stock, redemption shares | 630,000 | ||
Conversion of stock, shares converted | 190,800 | ||
Conversion of stock, amount | $ 304,000 | ||
Cash payment | 543,000 | ||
Preferred stock redemption amount | 847,000 | ||
Interest expense | 217,000 | ||
Redemption premium | 1,580,000 | ||
Fair value of common shares | $ 46,000 | ||
Interest rate | 5.00% | ||
Securities Purchase Agreement [Member] | Unaffiliated, Accredited Investor [Member] | Series A Convertible Preferred Stock [Member] | |||
Number of shares issued during period | 1,050,000 | ||
Number of shares issued during period, value | $ 1,050,000 | ||
Exchange for cash | 1,000,000 | ||
Debt discount | $ 50,000 | ||
Redemption premium | 25.00% | ||
Preferred stock accrued dividend rate | 5.00% | ||
Preferred stock redemption description | Mandatorily redeemable at an installment basis starting August 13, 2017 in the amount of $63,000 plus accrued interest. |
Derivative Liability (Details N
Derivative Liability (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||
Derivative liability | $ 2,576,000 | $ 1,251,000 | $ 1,256,000 |
Derivative liability from issuance of convertible debt and warrant | 1,877,000 | ||
Gain on derivative liability | 1,719,000 | ||
Change in fair value of derivative liability | 1,167,000 | $ (6,000) | |
Fair value of the derivative liability | $ 2,576,000 |
Derivative Liability - Schedule
Derivative Liability - Schedule of Derivative Liability Using Weighted Average Black-Scholes-Merton Pricing Model (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Stock Price | $ 4.80 | $ 1.50 |
Exercise Price [Member] | ||
Fair value assumptions, measurement input, exercise price per share | 2.70 | 0.90 |
Expected Term [Member] | ||
Fair value assumptions, measurement input, term | 1 year 9 months 11 days | 1 year 3 months 4 days |
Expected Volatility [Member] | ||
Fair value assumptions, measurement input, percentage | 184.00% | 189.00% |
Dividend Yield [Member] | ||
Fair value assumptions, measurement input, percentage | 0.00% | 0.00% |
Risk Free Interest Rate [Member] | ||
Fair value assumptions, measurement input, percentage | 2.60% | 1.72% |
Upon Issuance [Member] | ||
Stock Price | $ 3 | |
Upon Issuance [Member] | Exercise Price [Member] | ||
Fair value assumptions, measurement input, exercise price per share | 2.25 | |
Upon Issuance [Member] | Expected Term [Member] | ||
Fair value assumptions, measurement input, term | 1 year 7 months 6 days | |
Upon Issuance [Member] | Expected Volatility [Member] | ||
Fair value assumptions, measurement input, percentage | 177.00% | |
Upon Issuance [Member] | Dividend Yield [Member] | ||
Fair value assumptions, measurement input, percentage | 0.00% | |
Upon Issuance [Member] | Risk Free Interest Rate [Member] | ||
Fair value assumptions, measurement input, percentage | 1.70% |
Derivative Liability - Schedu_2
Derivative Liability - Schedule of Derivative Liability Transactions (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Beginning Balance | $ 1,251,000 | $ 1,256,000 |
Fair value upon issuance of notes payable and warrants | 1,877,000 | |
Change in fair value | 1,167,000 | (6,000) |
Extinguishment | (1,719,000) | |
Ending Balance | $ 2,576,000 | $ 1,251,000 |
Common Stock (Details Narrative
Common Stock (Details Narrative) - USD ($) | Mar. 28, 2018 | Jan. 29, 2018 | Sep. 16, 2017 | Oct. 31, 2018 | Feb. 28, 2018 | Jan. 31, 2018 | Nov. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 04, 2018 | Aug. 08, 2018 | Feb. 21, 2018 | May 22, 2017 |
Number of shares issued during period | 745,476 | |||||||||||||
Number of common stock shares issued, value | $ 2,979,000 | $ 796,000 | ||||||||||||
Number of common stock shares issued for service, value | $ 1,545,000 | $ 2,088,000 | ||||||||||||
Number of common stock shares issued upon conversion | 83,333 | 1,243,189 | ||||||||||||
Shares issued upon exercise of option | 32,508 | |||||||||||||
Shares issued upon exercise of option, value | $ 34,000 | |||||||||||||
Warrants granted to purchase of common stock shares | 18,333 | 23,562 | 163,113 | 6,667 | ||||||||||
Warrant exercise price per share | $ 1.20 | $ 6 | ||||||||||||
Stock repurchased, value | 20,000 | |||||||||||||
Number of shares issued for settlement of notes payable | 68,413 | |||||||||||||
Number of shares issued for settlement of notes payable, value | $ 182,000 | |||||||||||||
Loss on debt extinguishment | $ 10,000 | $ (534,000) | $ (977,000) | |||||||||||
Series A Preferred Stock [Member] | ||||||||||||||
Number of common stock shares issued upon conversion | 190,800 | |||||||||||||
Conversion of stock, amount converted | $ 304,000 | |||||||||||||
Number of shares redeemed | 630,000 | |||||||||||||
Number of shares redeemed, value | $ 630,000 | |||||||||||||
Investor [Member] | ||||||||||||||
Number of shares issued during period | 1,163,938 | |||||||||||||
Number of common stock shares issued, value | $ 2,979,000 | |||||||||||||
Warrants granted to purchase of common stock shares | 6,667 | |||||||||||||
Warrant exercise price per share | $ 6 | |||||||||||||
Expiration date | May 21, 2019 | |||||||||||||
Number of Stock repurchased | 46,666 | |||||||||||||
Stock repurchased, value | $ 20,000 | |||||||||||||
Employees and Vendors [Member] | ||||||||||||||
Number of common stock shares issued for service | 319,345 | |||||||||||||
Number of common stock shares issued for service, value | $ 1,545,000 | |||||||||||||
Officers and Directors [Member] | ||||||||||||||
Number of common stock shares issued for service | 300,000 | 300,000 | ||||||||||||
Number of common stock shares issued for service, value | $ 1,539,000 | |||||||||||||
Share based compensation | $ 441,000 | |||||||||||||
Note Holder [Member] | ||||||||||||||
Number of shares issued during period | 96,667 | 3,333 | ||||||||||||
Number of common stock shares issued, value | $ 595,000 | $ 13,000 | ||||||||||||
Warrants granted to purchase of common stock shares | 322,000 | |||||||||||||
Warrant exercise price per share | $ 2.25 | |||||||||||||
CEO [Member] | ||||||||||||||
Conversion of stock, shares converted | 27,148 | |||||||||||||
Conversion of stock, amount converted | $ 582,000 | |||||||||||||
Fair value of shares issued | $ 582,000 | |||||||||||||
Kodiak [Member] | ||||||||||||||
Number of shares issued during period | 43,745 | |||||||||||||
Number of common stock shares issued, value | $ 50,000 | |||||||||||||
Shares issued upon exercise of option | 203,207 | 203,207 | ||||||||||||
Shares issued upon exercise of option, value | $ 1,000,000 | $ 1,000,000 | ||||||||||||
Warrants granted to purchase of common stock shares | 6,667 | 133,333 | 133,333 | |||||||||||
Warrant exercise price per share | $ 3.75 | $ 3.75 | $ 3.75 | |||||||||||
Vendor [Member] | ||||||||||||||
Number of shares issued during period | 26,667 | |||||||||||||
Number of common stock shares issued, value | $ 56,000 | |||||||||||||
Number of common stock shares issued for service | 552,029 | |||||||||||||
Share based compensation | $ 1,647,000 | |||||||||||||
Accounts payable | 30,000 | |||||||||||||
Loss on debt extinguishment | $ 26,000 |
Stock Options (Details Narrativ
Stock Options (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Number of stock options granted | 1,400,418 | 880,667 |
Exercise price of common stock granted | $ 6.75 | $ 2.55 |
Number of common stock exercised | 32,508 | |
Number of common stock exercised, value | $ 34,000 | |
Employees and Consultants [Member] | ||
Number of stock options granted | 1,400,418 | 880,667 |
Exercise price of common stock granted | $ 6.75 | $ 2.55 |
Expiration period | 5 years | 5 years |
Stock option vesting period | 4 years | 3 years |
Fair value of stock options grants | $ 9,712,000 | $ 1,781,000 |
Expense recognized relating to stock options | 1,870,000 | |
Unrecognized stock based compensation expense | $ 6,591,000 | $ 418,000 |
Stock option, description | Expected to be recognized as part of operating expense through December 2021. |
Stock Options - Schedule of Sto
Stock Options - Schedule of Stock Option Activity (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Number of options outstanding beginning balance | 1,456,064 | 702,064 |
Number of options granted | 1,400,418 | 880,667 |
Number of options forfeited | (345,000) | (126,667) |
Number of options exercised | (32,508) | |
Number of options outstanding ending balance | 2,478,974 | 1,456,064 |
Number of options vested | 958,115 | |
Number of options exercisable | 753,654 | |
Weighted average exercise price outstanding beginning balance | $ 3.90 | $ 4.95 |
Weighted average exercise price granted | 6.75 | 2.55 |
Weighted average exercise price forfeited | 5.85 | 2.40 |
Weighted average exercise price exercised | 1.05 | |
Weighted average exercise price outstanding ending balance | 5.25 | $ 3.90 |
Weighted average exercise price vested | 4.35 | |
Weighted average exercise price exercisable | $ 5.25 | |
Weighted average remaining contractual term outstanding | 2 years 1 month 2 days | 4 years 11 days |
Weighted average remaining contractual term outstanding | 2 years 11 months 4 days | 2 years 1 month 2 days |
Aggregate intrinsic value outstanding beginning balance | ||
Aggregate intrinsic value granted | ||
Aggregate intrinsic value forfeited | ||
Aggregate intrinsic value exercised | ||
Aggregate intrinsic value outstanding ending balance | 2,660,000 | |
Aggregate intrinsic value vested | 2,039,000 | |
Aggregate intrinsic value exercisable | $ 889,000 |
Stock Options - Schedule of Fai
Stock Options - Schedule of Fair Value Assumptions Using Black-Scholes Method (Details) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Average expected term (years) | 5 years | 5 years |
Expected dividend yield | 0.00% | 0.00% |
Minimum [Member] | ||
Risk-free interest rate | 2.25% | 1.22% |
Expected volatility | 184.45% | 84.36% |
Maximum [Member] | ||
Risk-free interest rate | 3.00% | 2.23% |
Expected volatility | 190.22% | 173.92% |
Stock Warrants (Details Narrati
Stock Warrants (Details Narrative) - USD ($) | Dec. 04, 2018 | Aug. 08, 2018 | Sep. 16, 2017 | Apr. 01, 2017 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Feb. 21, 2018 | Nov. 30, 2017 | Aug. 31, 2017 | May 31, 2017 | May 22, 2017 |
Number of warrant exercised | 1,285,538 | |||||||||||
Common shares issued upon exercise of warrants, shares | 1,074,921 | |||||||||||
Proceeds from warrant exercised | $ 22,000 | |||||||||||
Warrants granted to purchase of common stock shares | 23,562 | 163,113 | 18,333 | 6,667 | ||||||||
Warrant exercise price per share | $ 1.20 | $ 6 | ||||||||||
Warrants expire date | Mar. 15, 2018 | May 21, 2019 | ||||||||||
Warrants expire date, description | Extension of the maturity date of a secured note payable. | Extension of the maturity date of a secured note payable. | ||||||||||
Debt extinguishment | $ 10,000 | $ (534,000) | (977,000) | |||||||||
Expense recognized relating to stock warrants | $ 27,000 | |||||||||||
Note Holders [Member] | ||||||||||||
Warrants granted to purchase of common stock shares | 66,667 | |||||||||||
Warrant exercise price per share | $ 2.10 | |||||||||||
Warrants expire date | Jan. 31, 2023 | |||||||||||
Warrants issued for derivative liability | 33,333 | |||||||||||
Kodiak [Member] | ||||||||||||
Warrants granted to purchase of common stock shares | 133,333 | 133,333 | 6,667 | |||||||||
Warrant exercise price per share | $ 3.75 | $ 3.75 | $ 3.75 | |||||||||
Warrants expire date | Feb. 20, 2023 | |||||||||||
Note Holder [Member] | ||||||||||||
Number of warrant exercised | 80,000 | |||||||||||
Warrants granted to purchase of common stock shares | 322,000 | 322,000 | ||||||||||
Warrant exercise price per share | $ 2.25 | $ 2.25 | ||||||||||
Warrants expire date, description | June 2020 through December 2022 | |||||||||||
Note Holder [Member] | Extension Agreement [Member] | ||||||||||||
Warrants granted to purchase of common stock shares | 87,787 | |||||||||||
Warrant exercise price per share | $ 2.25 | |||||||||||
Warrants expire date | Aug. 31, 2020 | |||||||||||
Consultant [Member] | ||||||||||||
Warrants granted to purchase of common stock shares | 25,000 | |||||||||||
Warrant exercise price per share | $ 1.80 | |||||||||||
Warrants expire date | Mar. 31, 2019 | |||||||||||
Share based compensation | $ 27,000 | |||||||||||
Rory Cutaia [Member] | Extension Agreement [Member] | ||||||||||||
Warrants granted to purchase of common stock shares | 205,623 | 205,623 | ||||||||||
Warrant exercise price per share | $ 5.40 | $ 2.25 | ||||||||||
Warrants expire date | May 31, 2020 | May 31, 2020 |
Stock Warrants - Schedule of Wa
Stock Warrants - Schedule of Warrants Outstanding (Details) - Warrants [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Number of Warrants outstanding beginning balance | 1,895,761 | 1,230,351 |
Number of Warrants granted | 386,675 | 665,410 |
Number of Warrants forfeited | (56,486) | |
Number of Warrants exercised | (1,285,538) | |
Number of Warrants outstanding ending balance | 940,412 | 1,895,761 |
Weighted average exercise price outstanding beginning balance | $ 1.95 | $ 1.50 |
Weighted average exercise price granted | 5.10 | 2.85 |
Weighted average exercise price forfeited | 1.05 | |
Weighted average exercise price exercised | 1.80 | |
Weighted average exercise price outstanding ending balance | $ 3.60 | $ 1.95 |
Weighted average remaining contractual term outstanding | 2 years 9 months 14 days | 2 years 7 months 13 days |
Weighted average remaining contractual term outstanding | 2 years 3 months 26 days | 2 years 9 months 14 days |
Aggregate intrinsic value outstanding beginning balance | ||
Aggregate intrinsic value granted | ||
Aggregate intrinsic value forfeited | ||
Aggregate intrinsic value exercised | ||
Aggregate intrinsic value outstanding ending balance | $ 1,806,000 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Percentage of valuation allowance against the asset amount | 100.00% | |
Statutory federal corporate tax rate | 21.00% | 34.00% |
Income tax rate description | The Company is currently assessing the extensive changes under the TCJ Act and its overall impact on the Company; however, based on its preliminary assessment of the reduction in the federal corporate tax rate from 35% to 21% to become effective on January 1, 2018, the Company currently expects that its effective tax rate for 2018 will be between 20% and 23%. | |
Federal and state net operating loss carry forwards | $ 12,800,000 | |
Net operating loss carry forwards expire date | 2,034 | |
Change in control percentage | 50.00% | |
Tax Cuts and Jobs Act [Member] | ||
Statutory federal corporate tax rate | 21.00% | |
Income tax rate description | Reduction of the federal tax rate for corporations from 35% to 21% and changes or limitations to certain tax deductions. |
Income Taxes - Schedule of Comp
Income Taxes - Schedule of Components of Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carry-forwards | $ 5,300,000 | $ 3,464,000 |
Share based compensation | (524,000) | (704,000) |
Non-cash interest and financing expenses | (694,000) | (833,000) |
Other temporary differences | (378,000) | (108,000) |
Less: Valuation allowance | (3,704,000) | (1,819,000) |
Deferred tax assets, net |
Income Taxes - Schedule of Prov
Income Taxes - Schedule of Provision of Income Taxes (Details) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Statutory federal income tax rate | (21.00%) | (34.00%) |
State taxes, net of federal benefit | (6.00%) | (5.80%) |
Non-deductible items | (0.10%) | (0.10%) |
Change in valuation allowance | 27.90% | 27.90% |
Provision for income taxes | 0.00% | 0.00% |
Accrued Officers' Salary (Detai
Accrued Officers' Salary (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Accrued officers' salary | $ 188,000 | $ 607,000 |
Chief Executive Officer [Member] | ||
Ownership percentage | 27.00% | |
Accrued payroll | $ 582,000 | |
Conversion of stock, shares issued | 27,148 | |
Conversion of stock, amount issued | $ 582,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | Apr. 30, 2018 | Jan. 20, 2016 | Nov. 21, 2014 | Dec. 31, 2018 | Dec. 31, 2017 |
Rent expenses | $ 62,000 | $ 52,000 | |||
Board of Directors [Member] | |||||
Annual compensation | 270,000 | ||||
Stock Repurchase Agreement [Member] | |||||
Purchase price for employees shares | $ 144,000 | ||||
Employee [Member] | |||||
Unpaid bonus | $ 300,000 | ||||
Number of stock options shares issued | 150,000 | ||||
Stock options price per share | $ 0.50 | ||||
Executive Employment Agreement [Member] | Rory Cutaia [Member] | |||||
Annual salary | $ 325,000 | ||||
Percentage of annual salary increase every year | 10.00% | ||||
Annual bonus | $ 325,000 | ||||
Employment agreement term description | The initial term of the employment agreement is five years, and, upon expiration of the initial five-year term, it may be extended for additional one-year periods on ninety days prior notice. | ||||
Employment termination description | (i) Mr. Cutaia's employment is terminated without cause, (ii) Mr. Cutaia is unable to perform his duties due to a physical or mental condition for a period of 120 consecutive days or an aggregate of 180 days in any 12 month period; or (iii) Mr. Cutaia voluntarily terminates the employment agreement upon the occurrence of a material reduction in his salary or bonus, a reduction in his job title or position, or the required relocation of Mr. Cutaia to an office outside of a 30 mile radius of Los Angeles, California(i) Mr. Cutaia's employment is terminated without cause, (ii) Mr. Cutaia is unable to perform his duties due to a physical or mental condition for a period of 120 consecutive days or an aggregate of 180 days in any 12 month period; or (iii) Mr. Cutaia voluntarily terminates the employment agreement upon the occurrence of a material reduction in his salary or bonus, a reduction in his job title or position, or the required relocation of Mr. Cutaia to an office outside of a 30 mile radius of Los Angeles, California. | ||||
Compensation | $ 27,000 | ||||
Executive Employment Agreement [Member] | Rory Cutaia [Member] | Maximum [Member] | |||||
Maximum annual salary mandatory increase | $ 100,000 | ||||
Los Angeles [Member] | |||||
Operating lease monthly rent | $ 5,000 | ||||
Operating lease, description | Through July 29, 2019 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Feb. 01, 2019 | Feb. 01, 2019 | Jan. 28, 2019 | Jan. 08, 2019 | Nov. 08, 2018 | Oct. 31, 2018 | Jun. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Jan. 25, 2019 | Sep. 16, 2017 | May 22, 2017 |
Number of stock options granted | 1,400,418 | 880,667 | ||||||||||
Exercise price of common stock granted | $ 6.75 | $ 2.55 | ||||||||||
Warrant exercise price | $ 1.20 | $ 6 | ||||||||||
Number of shares issued during period | 745,476 | |||||||||||
Number of shares issued during period, value | $ 2,979,000 | $ 796,000 | ||||||||||
Note Holder [Member] | ||||||||||||
Warrant exercise price | $ 2.25 | |||||||||||
Number of shares issued during period | 96,667 | 3,333 | ||||||||||
Number of shares issued during period, value | $ 595,000 | $ 13,000 | ||||||||||
Subsequent Event [Member] | ||||||||||||
Number of warrants exercised | 161,969 | |||||||||||
Cashless exercise of warrants | 141,512 | |||||||||||
Warrant exercise price | $ 1.05 | |||||||||||
Reverse stock split, description | 1-for-15 Reverse Stock Split of our Common Stock. The Reverse Stock Split became effective upon commencement of trading of our Common Stock on February 4, 2019. As a result of the Reverse Stock Split, every fifteen (15) shares of our Pre-Reverse Stock Split Common Stock were combined and reclassified into one share of our Common Stock. | |||||||||||
Subsequent Event [Member] | Note Holder [Member] | Bellridge [Member] | ||||||||||||
Debt instrument face amount | $ 500,000 | $ 500,000 | ||||||||||
Proceeds from issuance of debt | 432,000 | |||||||||||
Original issue discount, amount | $ 25,000 | 25,000 | ||||||||||
Legal and financing expenses paid | $ 43,000 | |||||||||||
Number of shares issued during period | 16,667 | |||||||||||
Number of shares issued during period, value | $ 128,000 | |||||||||||
Value for shares issued additionally | $ 25,000 | |||||||||||
Additional number of shares issued | 8,600 | |||||||||||
Maturity date, description | The note matures in August 2019. | |||||||||||
Subsequent Event [Member] | Stock Option [Member] | Consultants [Member] | ||||||||||||
Expiration period | 5 years | |||||||||||
Stock option vesting period | 60 days | |||||||||||
Fair value of stock options grants | $ 13,000 | |||||||||||
Number of shares issued for services | 1,667 | |||||||||||
Shares issued price per share | $ 7.80 | |||||||||||
Agreement and Plan of Merger [Member] | ||||||||||||
Pay to shareholder 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 | |||||||||||
Employment Agreements [Member] | Subsequent Event [Member] | Stock Option [Member] | Officers [Member] | ||||||||||||
Number of stock options granted | 16,667 | |||||||||||
Exercise price of common stock granted | $ 4.35 | |||||||||||
Expiration period | 5 years | |||||||||||
Stock option vesting, description | The options vested 50% on the grant date and the remaining 50% will vest on the 12-month anniversary of the grant date. | |||||||||||
Percentage for stock option vesting | 50.00% | |||||||||||
Stock option vesting period | 12 months | |||||||||||
Fair value of stock options grants | $ 70,000 |