Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 13, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Helix TCS, Inc. | |
Entity Central Index Key | 1,611,277 | |
Trading Symbol | HLIX | |
Amendment Flag | true | |
Amendment Description | Helix TCS, Inc., (the "Company") is filing this Amendment No. 1 on Form 10-Q/A (this "Amendment No. 1") to its quarterly report on Form 10-Q for the period ended September 30, 2018, which was originally filed with the Securities and Exchange Commission ("SEC") on November 14, 2018 (the "Original Filing"). The Company is filing this Amendment No. 1 to reflect the correction of an error regarding the understatement of cost of revenue for the three months ended September 30, 2018. The Company has made the requisite correction to the financial statements and related footnote disclosures and updated the Management Discussion and Analysis Section accordingly. This Amendment No. 1 amends information in Part 1, Item 1 and Item 2, along with Part 2, Item 6. All other information and items as presented in the Original Filing and as included herein are unchanged. Except for the foregoing, this Amendment No. 1 does not amend, update or change any other information presented in the Original Filing. This Amendment No. 1 also includes updated information of the preceding cover page, this explanatory note, the signature page and certifications required to be filed as exhibits. | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q/A | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 72,088,603 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash | $ 464,992 | $ 868,554 |
Accounts receivable, net | 1,152,337 | 610,313 |
Costs & earnings in excess of billings | 24,792 | 40,847 |
Total current assets | 1,642,121 | 1,519,714 |
Property and equipment, net | 280,524 | 110,634 |
Intangible assets, net | 19,777,516 | 3,042,259 |
Goodwill | 39,913,559 | 664,329 |
Deposits and other assets | 518,124 | 68,313 |
Total assets | 62,131,844 | 5,405,249 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 1,319,261 | 598,637 |
Advances from related parties | 55,250 | 124,750 |
Billings in excess of costs | 3,786 | 20,191 |
Deferred rent | 3,264 | 9,667 |
Notes payable, current portion | 7,582 | 11,179 |
Obligation pursuant to acquisition | 253,334 | 559,103 |
Convertible notes payable, net of discount | 132,625 | 812,393 |
Convertible note payable - related party | 243,506 | |
Promissory notes | 250,000 | |
Contingent consideration | 909,292 | |
Obligation to issue warrants | 994,809 | 2,429,569 |
Total current liabilities | 3,929,203 | 4,808,995 |
Long-term liabilities | ||
Notes payable, net of current portion | 73,161 | 53,293 |
Total long-term liabilities | 73,161 | 53,293 |
Total liabilities | 4,002,364 | 4,862,288 |
Shareholders' equity: | ||
Common stock; par value $0.001; 200,000,000 shares authorized; 71,363,953 shares issued and outstanding as of September 30, 2018; 28,771,402 shares issued and outstanding as of December 31, 2017 | 71,364 | 28,771 |
Additional paid-in capital | 81,212,979 | 18,741,114 |
Accumulated other comprehensive income | 17,538 | |
Accumulated deficit | (23,187,185) | (18,241,708) |
Total shareholders' equity | 58,129,480 | 542,961 |
Total liabilities and shareholders' equity | 62,131,844 | 5,405,249 |
Preferred stock (Class A) | ||
Shareholders' equity: | ||
Preferred stock value | 1,000 | 1,000 |
Total shareholders' equity | 1,000 | 1,000 |
Preferred stock (Class B) | ||
Shareholders' equity: | ||
Preferred stock value | 13,784 | 13,784 |
Total shareholders' equity | $ 13,784 | $ 13,784 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 71,363,953 | 28,771,402 |
Common stock, shares outstanding | 71,363,953 | 28,771,402 |
Preferred stock (Class A) | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 3,000,000 | 3,000,000 |
Preferred stock, shares issued | 1,000,000 | 1,000,000 |
Preferred stock, shares outstanding | 1,000,000 | 1,000,000 |
Preferred stock (Class B) | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 17,000,000 | 17,000,000 |
Preferred stock, shares issued | 13,784,201 | 13,784,201 |
Preferred stock, shares outstanding | 13,784,201 | 13,784,201 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Security and guarding | $ 1,141,676 | $ 1,129,746 | $ 3,432,651 | $ 2,837,145 |
Systems installation | 318,850 | 454,113 | ||
Software | 1,653,195 | 2,229,337 | ||
Total revenues | 3,113,721 | 1,129,746 | 6,116,101 | 2,837,145 |
Cost of revenue | 1,880,061 | 814,031 | 3,892,716 | 2,192,366 |
Gross margin | 1,233,660 | 315,715 | 2,223,385 | 644,779 |
Operating expenses: | ||||
Selling, general and administrative | 802,724 | 269,143 | 1,678,603 | 649,973 |
Salaries and wages | 1,888,155 | 315,316 | 4,308,994 | 602,254 |
Professional and legal fees | 473,651 | 261,098 | 1,362,205 | 641,958 |
Depreciation and amortization | 806,611 | 194,347 | 1,869,889 | 292,757 |
Total operating expenses | 3,971,141 | 1,039,904 | 9,219,691 | 2,186,942 |
Loss from operations | (2,737,481) | (724,189) | (6,996,306) | (1,542,163) |
Other income (expenses): | ||||
Change in fair value of convertible note | (17,880) | 115,000 | 679,766 | (210,000) |
Change in fair value of convertible note - related party | (34,725) | 118,506 | 8,971 | |
Change in fair value of obligation to issue warrants | 136,920 | 531,395 | 1,434,760 | 406,604 |
Change in fair value of contingent consideration | (131,994) | (25,078) | (131,994) | 10,186 |
Loss on induced conversion of convertible note | (1,503,876) | |||
Loss on extinguishment of debt | (4,611,395) | |||
Loss on impairment of Goodwill | (664,329) | |||
Gain on reduction of obligation pursuant to acquisition | 50,361 | 607,415 | ||
Interest income/(expense), net | 21,622 | (117,760) | 6,705 | (678,354) |
Other income (expenses) | 59,029 | 468,832 | 2,050,829 | (6,577,864) |
Net loss | (2,678,452) | (255,357) | (4,945,477) | (8,120,027) |
Other comprehensive income: | ||||
Changes in foreign currency translation adjustment | 17,538 | 17,538 | ||
Total other comprehensive income | 17,538 | 17,538 | ||
Total comprehensive loss | (2,660,914) | (255,357) | (4,927,939) | (8,120,027) |
Convertible preferred stock beneficial conversion feature accreted as a deemed dividend | (8,044,958) | (22,202,194) | (11,200,845) | |
Net loss attributable to common shareholders | $ (2,660,914) | $ (8,300,315) | $ (27,130,133) | $ (19,320,872) |
Net loss per share attributable to common shareholders: | ||||
Basic | $ (0.04) | $ (0.29) | $ (0.57) | $ (0.68) |
Diluted | $ (0.04) | $ (0.29) | $ (0.57) | $ (0.68) |
Weighted average common shares outstanding: | ||||
Basic | 70,420,857 | 28,644,522 | 47,598,820 | 28,592,643 |
Diluted | 70,420,857 | 28,644,522 | 47,598,820 | 28,592,643 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss, as reported | $ (2,678,452) | $ (255,357) | $ (4,945,477) | $ (8,120,027) |
Other comprehensive income: | ||||
Foreign currency translation adjustments | 17,538 | 17,538 | ||
Comprehensive loss | $ (2,660,914) | $ (255,357) | $ (4,927,939) | $ (8,120,027) |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Shareholders' Equity (Unaudited) - 9 months ended Sep. 30, 2018 - USD ($) | Total | Preferred Stock (Class A) | Preferred Stock (Class B) | Common Stock | Additional Paid-In Capital | Accumulated Deficit |
Balance at Dec. 31, 2017 | $ 542,961 | $ 1,000 | $ 13,784 | $ 28,771 | $ 18,741,114 | $ (18,241,708) |
Balance, Shares at Dec. 31, 2017 | 1,000,000 | 13,784,201 | 28,771,402 | |||
Beneficial conversion feature of Series B convertible preferred stock | $ 22,202,194 | 22,202,194 | ||||
Beneficial conversion feature of Series B convertible preferred stock, Shares | (22,202,194) | |||||
Deemed dividend on conversion of Series B convertible preferred stock to common stock | (22,202,194) | |||||
Issuance of common stock per stock subscription agreements | $ 2,594,997 | $ 2,883 | 2,592,115 | |||
Issuance of common stock per stock subscription agreements, Shares | 2,883,331 | |||||
Issuance of common stock resulting from convertible note conversion | 175,000 | $ 206 | 174,794 | |||
Issuance of common stock resulting from convertible note conversion, Shares | 205,974 | |||||
Issuance of restricted common stock | 452,979 | $ 158 | 452,821 | |||
Issuance of restricted common stock, Shares | 157,850 | |||||
Reduction in Additional Paid-In Capital due to Security Grade acquisition settlement agreement | (340,039) | (340,039) | ||||
Restricted common stock issued as part of BioTrack acquisition | 57,552,033 | $ 38,185 | 57,513,848 | |||
Restricted common stock issued as part of BioTrack acquisition, Shares | 38,184,985 | |||||
Restricted common stock issued as part of Engeni acquisition | 388,702 | $ 367 | 388,335 | |||
Restricted common stock issued as part of Engeni acquisition, Shares | 366,700 | |||||
Issuance of common stock to employees under Stock Incentive Plan | 309,069 | $ 227 | 308,842 | |||
Issuance of common stock to employees under Stock Incentive Plan, Shares | 227,095 | |||||
Issuance of common stock resulting from inducement of consulting agreement | 336,500 | $ 250 | 336,250 | |||
Issuance of common stock resulting from inducement of consulting agreement, Shares | 250,000 | |||||
Issuance of restricted common stock resulting from an investor relation consulting agreement | 102,000 | $ 100 | 101,900 | |||
Issuance of restricted common stock resulting from an investor relation consulting agreement, Shares | 100,000 | |||||
Issuance of warrants pursuant to consulting agreement | 943,000 | $ 943,000 | ||||
Issuance of warrants pursuant to consulting agreement, Shares | 101,898 | |||||
Issuance of common stock resulting from exercise of stock options | 217 | $ 217 | ||||
Issuance of common stock resulting from exercise of stock options, Shares | 216,616 | |||||
Foreign currency translation | 17,538 | |||||
Net loss | (4,945,477) | (4,945,477) | ||||
Balance at Sep. 30, 2018 | $ 58,129,480 | $ 1,000 | $ 13,784 | $ 71,364 | $ 81,212,979 | $ (23,187,185) |
Balance, Shares at Sep. 30, 2018 | 1,000,000 | 13,784,201 | 71,363,953 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (4,945,477) | $ (8,120,027) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 1,869,889 | 292,757 |
Amortization of debt discounts | 244,843 | |
Share-based compensation expense | 2,143,548 | |
Change in fair value of convertible notes | (504,768) | 210,000 |
Change in fair value of obligation to issue warrants | (1,434,760) | (406,604) |
Change in fair value of convertible notes - related party | (93,506) | (8,971) |
Change in fair value of contingent consideration | 131,994 | (10,186) |
Loss on induced conversion of convertible debt | 1,503,876 | |
Loss on extinguishment of debt | 4,611,395 | |
Loss on beneficial conversion feature of convertible note | 390,666 | |
Loss on impairment of goodwill | 664,329 | |
Gain on reduction of obligation pursuant to acquisition | (607,415) | |
Change in operating assets and liabilities: | ||
Accounts receivable | (373,314) | (246,375) |
Prepaid expenses | ||
Deposits | (87,161) | (14,640) |
Costs in excess of billings | 16,055 | (54,547) |
Accounts payable and accrued expenses | 26,044 | 122,875 |
Deferred rent | (6,403) | 3,002 |
Billings in excess of costs | (16,405) | 29,270 |
Net cash used in operating activities | (3,217,350) | (1,452,666) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (85,665) | (31,054) |
Payments for business combination, net of cash acquired | (79,664) | (1,631,313) |
Cash acquired as part of business combination | 454,306 | |
Payments for asset acquisition | (58,729) | (46,872) |
Net cash provided by (used in) investing activities | 230,248 | (1,709,239) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from the issuance of convertible notes payable | 229,167 | |
Payments pursuant to convertible notes payable - related party | (150,000) | |
(Repayments to)/advances from related parties | (69,500) | 60,500 |
Repayment to related parties | (32,000) | |
Payments pursuant to notes payable | (3,466) | |
Proceeds from notes payable | 16,271 | |
Proceeds from the issuance of a promissory note | 250,000 | 255,000 |
Proceeds from the issuance of common stock | 2,595,214 | 100,000 |
Proceeds from the issuance of Series B convertible preferred stock | 2,624,988 | |
Net cash provided by financing activities | 2,641,985 | 3,234,189 |
Effect of foreign exchange rate changes on cash | (58,445) | |
Net change in cash | (403,562) | 72,284 |
Cash, beginning of period | 868,554 | 57,841 |
Cash, end of period | 464,992 | 130,125 |
Supplemental disclosure of cash and non-cash transactions: | ||
Financing of property and equipment purchases | 52,082 | |
Equity issuance pursuant to asset acquisition (non-cash acquisition of BioTrack) | 57,552,033 | |
Equity issuance pursuant to asset acquisition (non-cash acquisition of Engeni) | 1,166,000 | |
Cost of issuance of Series B preferred shares | (1,941,633) | |
Stock options issued pursuant to acquisition consideration | 916,643 | |
Stock options issued pursuant to contingent consideration as part of acquisition | 871,193 | |
Warrant issuances to investors | 93,200 | |
Reacquisition price of convertible debt | 4,581,395 | |
Partial conversion of convertible note into common stock | $ 175,000 |
Description of Business
Description of Business | 9 Months Ended |
Sep. 30, 2018 | |
Description of Business [Abstract] | |
Description of Business | 1. Description of Business Helix TCS, Inc. (the “Company” or “Helix”) was incorporated in Delaware on March 13, 2014. Pursuant to the acquisition of the assets of Helix TCS, LLC, as discussed below, we changed our name from Jubilee4 Gold, Inc. to Helix TCS, Inc. effective October 25, 2015. Effective October 25, 2015, we entered into an acquisition and exchange agreement with Helix TCS, LLC. We closed the transaction contemplated under the acquisition and exchange agreement on December 23, 2015 and Helix TCS, LLC was merged into and with Helix. Effective October 1, 2015, for accounting purposes, as part of an acquisition amounting to a reorganization dated December 21, 2015, Helix Opportunities LLC exchanged 100% of Helix TCS, LLC and its wholly-owned subsidiaries, Security Consultants Group, LLC and Boss Security Solutions, Inc. to the Company in exchange for 20 million common shares and 1 million convertible preferred shares of the Company. The acquisition of Helix was treated as a recapitalization for financial accounting purposes. Jubilee4 Gold, Inc. is considered the acquiree for accounting purposes and their historical financial statements before the Acquisition Agreement were replaced with the historical financial statements of the Company. The common stock account of the Company continues post-merger, while the retained earnings of the acquiree is eliminated. Furthermore, on April 11, 2016, the Company acquired the assets of Revolutionary Software, LLC (“Revolutionary”) (see Note 7). On June 2, 2017 (the “Closing”), the Company entered into a Membership Interest Purchase Agreement (the “Agreement”) in which the Company purchased all issued and outstanding Units of Security Grade Protective Services, Ltd. (“Security Grade”), which consisted of 800,000 Class A Units and 200,000 Class B Units. At closing, the Company delivered $800,000 in cash and 207,427 non-qualified stock options (the “Initial Stock Options”). Furthermore, provided that, within the first 60 days following the Closing, no material customer identified in the Agreement terminates its contractual relationship with the Company and that all contracts with such material customers are in full force and effect without default or cancellation as of the 60 th st In the first quarter of 2018, the Company notified the selling members of Security Grade of their intent to exercise their right of setoff noted in the Agreement after discovering misrepresentations made by one of the selling members of Security Grade. The Company has settled with all of the six selling members. See Note 6 On March 3, 2018, Helix, Inc. and its wholly owned subsidiary, Helix Acquisition Sub, Inc. (“Merger Sub”), entered into an Agreement and Plan of Merger (the “BioTrack Merger Agreement”) with Bio-Tech Medical Software, Inc. (“BioTrackTHC”) and Terence J. Ferraro, as the representative of the BioTrackTHC shareholders. Pursuant to the BioTrackTHC Merger Agreement, subject to the satisfaction or waiver of specified conditions, Merger Sub will merge with and into BioTrackTHC, with BioTrackTHC surviving the merger as a wholly-owned subsidiary of the Company. On June 1, 2018 (the “BioTrackTHC Closing Date”), in connection with closing the Merger, the Company issued 38,184,985 unregistered shares of its common stock to BioTrackTHC stockholders, of which 1,852,677 shares were held back to satisfy indemnification obligations in the Merger Agreement, if necessary. The Company also assumed the Bio-Tech Medical Software, Inc. 2014 Stock Incentive Plan (“BioTrackTHC Stock Plan”), pursuant to which options exercisable in the amount of 8,132,410 shares of common stock are outstanding. As a result, BioTrackTHC stockholders will own 48% of the Company on a fully diluted basis on the BioTrackTHC Closing Date. On August 3, 2018 (the “Engeni Closing Date”), the Company and its wholly owned subsidiary, Engeni Merger Sub, LLC (“Engeni Merger Sub”), entered into an Agreement and Plan of Merger (the “Engeni Merger Agreement”) with Engeni LLC (“Engeni US”), Engeni S.A (“Engeni SA”), Scott Zienkewicz, Nicolas Heller and Alberto Pardo Saleme (the Engeni US members), and Scott Zienkewicz, as the representative of the Engeni US member. Pursuant to the Engeni Merger Agreement, Engeni Merger Sub merged with and into Engeni US, with Engeni US surviving the merger as a wholly-owned subsidiary of the Company (the “Engeni Merger”). On the Engeni Closing Date, in connection with closing the Engeni Merger Agreement, the Company issued 366,700 shares of Company common stock to Engeni US members. Furthermore, the Company will also issue Engeni US members 366,700 and 366,600 shares of Company common stock upon achievement of specific objectives. If applicable, the Company will pay Engeni US members the aggregate amount of $100,000, on a pro rata basis, if Engeni SA reaches financial breakeven on or before December 31, 2018, as determined by the Company’s Chief Financial Officer and Scott Zienkewicz. |
Revision of Prior Period Financ
Revision of Prior Period Financial Statements | 9 Months Ended |
Sep. 30, 2018 | |
Revision of Prior Period Financial Statements [Abstract] | |
Revision of Prior Period Financial Statements | 2. Revision of Prior Period Financial Statements The Company corrected certain immaterial errors in its financial statements contained herein. In accordance with ASC 650-10-S99 and S55 (formerly Staff Accounting Bulletins (“SAB”) No. 99 and No. 108), Accounting Changes and Error Corrections, the Company concluded that these errors were, individually, and in the aggregate, not material, quantitatively or qualitatively, to the financial statements in these periods. On May 17, 2017, the Company sold to accredited investors an aggregate of 5,781,426 Series B Preferred Shares for gross proceeds of $1,875,000 and converted a $500,000 Unsecured Convertible Promissory Note into 1,536,658 Series B Preferred Shares. This tranche of Series B Preferred Shares is convertible into 7,318,084 shares of common stock based on the current conversion price, at a purchase price of $0.325 per share. Net proceeds were approximately $1,772,500 after legal and placement agent fees and the satisfaction of the promissory notes. On October 11, 2017, as contemplated by the Initial Series B Purchase Agreement, the Parties entered into a fifth Series B Preferred Stock Purchase Agreement (the “Fifth Series B Purchase Agreement”) whereby the Company issued and sold to accredited investors 231,097 shares of the Company’s Series B Preferred Stock in exchange for an aggregate cash payment equal to $75,000. Upon further review of the Fifth Series B Purchase Agreement, it was noted the total number of shares issued under the Fifth Series B Purchase Agreement was 462,195 shares with total proceeds of $150,000. On October 31, 2017, as contemplated by the Initial Series B Purchase Agreement, the Parties entered into a sixth Series B Preferred Stock Purchase Agreement (the “Sixth Series B Purchase Agreement”) whereby the Company issued and sold to accredited investors 795,833 shares of the Company’s Series B Preferred Stock in exchange for an aggregate cash payment equal to $80,000. Upon further review of the Sixth Series B Purchase Agreement, it was noted the total number of shares issued under the Sixth Series B Purchase Agreement was 1,042,337 shares with total proceeds of $557,500. As a result of the October 11, 2017 and October 31, 2017 transactions, the Company recorded an increase of $477, $552,023 and $552,500 to Series B Preferred Shares – par amount, additional paid-in capital and accumulated deficit, respectively. On November 16, 2017, the Company amended Notes Five, Six, and Seven (“the Amended Notes”) with the Fourth Investor. All three notes shall have maturity dates that are six months from November 16, 2017, shall convert at a 40% discount to the lowest one-day Volume Average Weighted Price (“VWAP”) during the 30 trading days preceding such conversion, shall incur interest at an annual rate of 5%, and shall be prepayable at any time at 110% of the unpaid principal and accrued interest balances. The amendment of Note Six and Seven included terms, permitting the Company the option to tender payment in full on or before November 21, 2017, at a 15% discount of the amended principal amounts. Note Five, Six and Seven Principal Amounts were amended to $281,900, $38,441 and $131,107, respectively. The Company evaluated the Amended Notes in accordance with ASC 480, Distinguishing Liabilities from Equity and determined the Amended Notes will be accounted for as a liability initially measured at fair value and subsequently at fair value with changes in fair value recognized in earnings. At November 16, 2017, the principal amounts of Note Five, Six and Seven were $281,900, $38,441 and $131,107, respectively. As of December 31, 2017, the Company recorded the fair value of Note Five, Six and Seven at $812,393, $110,781 and $377,830, respectively. Therefore, the Company recorded a charge to the change in fair value of $(530,493), $(72,340) and $(246,723) related to Note Five, Six and Seven, respectively. Upon further review it was noted, on November 21, 2017, the Company paid the remaining principal balance, at the 15% discount on Notes Six and Seven in the amount of $144,259. Therefore, Notes Six and Seven did not have a balance as of December 31, 2017. As a result of the November 21, 2017 transaction, the Company recorded a reduction to convertible notes payable, net of discount of $488,611 and a credit to the change in fair value of convertible notes of $488,611. When taking into consideration the two transactions indicated above, the net impact to accumulated deficit was a charge of $63,889, resulting from the netting of the gain of $488,611 from the reduction in the fair value of convertible notes at December 31, 2017 offset by the $552,500 of additional expense associated with the Series B Purchase Agreement. Upon further review it was noted that, during the six months ended June 30, 2018 the Company erroneously recorded revenue for transactions with a consolidating entity and not recording the intercompany entry to eliminate the revenue. Therefore revenue and cost of revenues for the six months ended June 30, 2018 were overstated by $338,437. The Company will adjust for these errors on a prospective basis. Accordingly, these interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s amended audited consolidated financial statements for the year ended December 31, 2017 included in the Company’s Amended Fiscal 2017 Annual Report on Form 10-K/A, filed with the SEC on April 4, 2018. In addition, the Company’s future Quarterly Reports on Form 10-Q for subsequent quarterly periods during the current fiscal year will reflect the impact of the revision in the comparative prior quarter and year-to-date periods. The following table summarizes the effects of the revisions on the financial statements for the periods reported. Previously Reported Adjustments Revised Condensed Consolidated Balance Sheet as of December 31, 2017 Convertible notes payable, net of discount $ 1,301,004 $ (488,611 ) $ 812,393 Total liabilities $ 5,350,899 $ (488,611 ) $ 4,862,288 Preferred Shares (Class B) Outstanding 13,306,599 477,602 13,784,201 Preferred Shares (Class B) Par Amount $ 13,307 $ 477 $ 13,784 Additional Paid in Capital $ 3,923,234 $ 552,023 $ 4,475,257 Accumulated Deficit $ (18,177,819 ) $ (63,889 ) $ (18,241,708 ) Total Shareholders’ Equity $ 54,350 $ 488,611 $ 542,961 Total Liabilities and Shareholders’ Equity $ 5,405,249 $ - $ 5,405,249 Previously Reported Adjustments As revised Condensed Consolidated Statement of Operations for the Six Months Ended June 30, 2018 Revenue $ 3,340,817 $ (338,437 ) $ 3,002,380 Cost of Revenue $ 2,689,529 $ (338,437 ) $ 2,351,092 |
Going Concern Uncertainty, Fina
Going Concern Uncertainty, Financial Condition and Management's Plans | 9 Months Ended |
Sep. 30, 2018 | |
Going Concern Uncertainty, Financial Condition and Management's Plans [Abstract] | |
Going Concern Uncertainty, Financial Condition and Management's Plans | 3. Going Concern Uncertainty, Financial Condition and Management’s Plans The Company believes that there is substantial doubt about the Company’s ability to continue as a going concern. The Company believes that its available cash balance as of the date of this filing will not be sufficient to fund its anticipated level of operations for at least the next 12 months. The Company believes that its ability to continue operations depends on its ability to sustain and grow revenue and results of operations as well as its ability to access capital markets when necessary to accomplish the Company’s strategic objectives. The Company believes that it will continue to incur losses for the immediate future. The Company expects to finance future cash needs from its results of operations and, depending on the results of operations, the Company may need additional equity or debt financing until it can achieve profitability and positive cash flows from operating activities, if ever. At September 30, 2018, the Company had a working capital deficit of approximately $2,287,082, as compared to a working capital deficit of approximately $3,289,281 at December 31, 2017. The decrease of $1,002,199 in the Company’s working capital deficit from December 31, 2017 to September 30, 2018 was primarily the result of a decrease in the Company’s obligation to issue warrants and a decrease in the balance of the Company’s convertible notes payable, partially offset by a decrease in cash and increase in accounts payable and accrued liabilities. The Company’s future capital requirements for its operations will depend on many factors, including the profitability of its businesses, the number and cash requirements of other acquisition candidates that the Company pursues, and the costs of operations. The Company has been investing in expanding its operation in new states, its security service in Colorado, and upgrading the capabilities of BioTrackTHC. The Company’s management has taken several actions to ensure that it will have sufficient liquidity to meet its obligations through December 31, 2018, including growing and diversifying its revenue streams, selectively reducing expenses, and considering additional funding. Additionally, if the Company’s actual revenues are less than forecasted, the Company anticipates that variable expenses will also decline, and the Company’s management can implement expense reduction as necessary. The Company is evaluating other measures to further improve its liquidity, including the sale of equity or debt securities. Lastly, the Company may elect to reduce certain related-party and third-party debt by converting such debt into common shares. The Company’s management believes that these actions will enable the Company to meet its liquidity requirements through November 15, 2019. There is no assurance that the Company will be successful in any capital-raising efforts that it may undertake to fund operations during 2018 and beyond. The Company plans to generate positive cash flow from its Colorado security operations, BioTrackTHC and Engeni acquisitions to address some of the liquidity concerns. However, to execute the Company’s business plan, service existing indebtedness and implement its business strategy, the Company anticipates that it will need to obtain additional financing from time to time and may choose to raise additional funds through public or private equity or debt financings, borrowings from affiliates or other arrangements. The Company cannot be sure that any additional funding, if needed, will be available on terms favorable to the Company or at all. Furthermore, any additional capital raised through the sale of equity or equity-linked securities may dilute the Company’s current stockholders’ ownership and could also result in a decrease in the market price of the Company’s common stock. The terms of those securities issued by the Company in future capital transactions may be more favorable to new investors and may include the issuance of warrants or other derivative securities, which may have a further dilutive effect. The Company also may be required to recognize non-cash expenses in connection with certain securities it issues, such as convertible notes and warrants, which may adversely impact the Company’s operating results and financial condition. Furthermore, any debt financing, if available, may subject the Company to restrictive covenants and significant interest costs. There can be no assurance that the Company will be able to raise additional capital, when needed, to continue operations in their current form. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 4. Summary of Significant Accounting Policies Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, which include Helix TCS, LLC (“Helix TCS”), Security Consultants Group, LLC (“Security Consultants”), Boss Security Solutions, Inc. (“Boss Security”), Security Consultants Group Oregon, LLC (“Security Oregon”), Security Grade, BioTrackTHC (since June 1, 2018), and Engeni US (since August 3, 2018) Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Changes in estimates and assumptions are reflected in reported results in the period in which they become known. Use of estimates includes the following: 1) allowance for doubtful accounts, 2) estimated useful lives of property, equipment and intangible assets, 3) intangibles impairment, 4) valuation of convertible notes payable and 5) revenue recognition. Actual results could differ from estimates. Cash Cash consists of checking accounts. The Company considers all highly-liquid investments purchased with a maturity of three months or less at the time of purchase to be cash. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recorded at the invoiced amount, net of an allowance for doubtful accounts. The Company performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information; and determines the allowance for doubtful accounts based on historical write-off experience, customer specific facts and economic conditions. Management charges balances off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company determines when receivables are past due, or delinquent based on how recently payments have been received. Outstanding account balances are reviewed individually for collectability. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. Allowance for doubtful accounts was $65,103 and $3,000 at September 30, 2018 and December 31, 2017, respectively. Long-Lived Assets, Including Definite Lived Intangible Assets Long-lived assets, other than goodwill and other indefinite-lived intangibles, are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through the estimated undiscounted future cash flows derived from such assets. Definite-lived intangible assets primarily consist of non-compete agreements and customer relationships. For long-lived assets used in operations, impairment losses are only recorded if the asset’s carrying amount is not recoverable through its undiscounted, probability-weighted future cash flows. The Company measures the impairment loss based on the difference between the carrying amount and the estimated fair value. When an impairment exists, the related assets are written down to fair value. Goodwill Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, is carried at cost. Goodwill is not amortized; rather, it is subject to a periodic assessment for impairment by applying a fair value-based test. Helix reviews goodwill for possible impairment annually during the fourth quarter, or whenever events or circumstances indicate that the carrying amount may not be recoverable. The impairment model prescribes a two-step method for determining goodwill impairment. However, an entity is permitted to first assess qualitative factors to determine whether the two-step goodwill impairment test is necessary. The qualitative factors considered by Helix may include, but are not limited to, general economic conditions, Helix’s outlook, market performance of Helix’s industry and recent and forecasted financial performance. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that a reporting unit’s fair value is less than its carrying amount. Otherwise, no further impairment testing is required. In the first step, Helix determines the fair value of its reporting unit using a discounted cash flow analysis. If the net book value of the reporting unit exceeds its fair value, Helix then performs the second step of the impairment test, which requires allocation of the reporting unit’s fair value to all of its assets and liabilities using the acquisition method prescribed under authoritative guidance for business combinations with any residual fair value being allocated to goodwill. An impairment charge is recognized when the implied fair value of Helix’s goodwill is less than its carrying amount. Assumptions and estimates used in the evaluation of impairment may affect the carrying value of long-lived assets, which could result in impairment charges in future periods. Such assumptions include projections of future cash flows and the current fair value of the asset. It was determined that during the first quarter of 2018, the Company’s entire amount of goodwill attributable to the Security Grade acquisition was impaired. See Note 9 for a further discussion on the impairment. Accounting for Acquisitions In accordance with the guidance for business combinations, the Company determines whether a transaction or other event is a business combination, which requires that the assets acquired, and liabilities assumed constitute a business. Each business combination is then accounted for by applying the acquisition method. If the assets acquired are not a business, the Company accounts for the transaction or other event as an asset acquisition. Under both methods, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase. The Company capitalizes acquisition-related costs and fees associated with asset acquisitions and immediately expense acquisition-related costs and fees associated with business combinations. Business Combinations The Company accounts for its business combinations under the provisions of Accounting Standards Codification (“ASC”) Topic 805-10, Business Combinations (“ASC 805-10”), which requires that the purchase method of accounting be used for all business combinations. Assets acquired and liabilities assumed, including non-controlling interests, are recorded at the date of acquisition at their respective fair values. ASC 805-10 also specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill. Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. Acquisition-related expenses are recognized separately from the business combinations and are expensed as incurred. If the business combination provides for contingent consideration, the Company records the contingent consideration at fair value at the acquisition date and any changes in fair value after the acquisition date are accounted for as measurement-period adjustments. Changes in fair value of contingent consideration resulting from events after the acquisition date, such as earn-outs, are recognized as follows: 1) if the contingent consideration is classified as equity, the contingent consideration is not re-measured and its subsequent settlement is accounted for within equity, or 2) if the contingent consideration is classified as a liability, the changes in fair value are recognized in earnings. The estimated fair value of net assets acquired, including the allocation of the fair value to identifiable assets and liabilities, was determined using established valuation techniques. The estimated fair value of the net assets acquired was determined using the income approach to valuation based on the discounted cash flow method. Under this method, expected future cash flows of the business on a stand-alone basis are discounted back to a present value. The estimated fair value of identifiable intangible assets, consisting of software and trade name acquired were determined using the relief from royalty method. The most significant assumptions under the relief from royalty method used to value software and trade names include: estimated remaining useful life, expected revenue, royalty rate, tax rate, discount rate and tax amortization benefit. The discounted cash flow method used to value non-compete agreements includes assumptions such as: expected revenue, term of the non-compete agreements, probability and ability to compete, operating margin, tax rate and discount rate. Management has developed these assumptions on the basis of historical knowledge of the business and projected financial information of the Company. These assumptions may vary based on future events, perceptions of different market participants and other factors outside the control of management, and such variations may be significant to estimated values. Revenue Recognition Under FASB Topic 606, Revenue from Contacts with Customers The security services revenue is generated from performing armed and unarmed guarding which is contracted for on an hourly basis. Revenues associated with these contracted services are recognized under time-based arrangements as services are provided. Additionally, the Company provides transportation security services, which are generally contracted for on a per-run basis and sometimes additional fees and surcharges are also billed to the client depending on the length of the run. Revenues associated with these services are recognized as the transportation service is provided. The Company also generates revenue from developing and licensing seed to sale cannabis compliance software to both private-sector and public-sector (government agencies) businesses that are involved in cannabis related operations. The Company also generates revenue from on-going training, support and software customization services. Occasionally, the Company will enter into systems installation arrangements. Installation jobs are estimated based on the cost of equipment to be installed, the number of hours expected to be incurred to complete the job and other ancillary costs. Revenue associated with these services are recognized over the arrangement period. Lastly, the Company generates advertising revenues from consumer advertising on its Cannabase platform. Revenue is recognized over the contract period associated with each specific advertising campaign. Segment Information Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the Chief Executive Officer, who reviews the financial performance and the results of operations of the segments prepared in accordance with GAAP when making decisions about allocating resources and assessing performance of the Company. Asset information by operating segment is not presented since the chief operating decision maker does not review this information by segment. The reporting segments follow the same accounting policies used in the preparation of the Company’s condensed unaudited consolidated financial statements. Expenses Cost of Revenues The cost of revenues is the total cost incurred to obtain a sale and the cost of the goods or services sold. Cost of revenues primarily consisted of hourly compensation for security personnel and employees involved in the creation and development of licensing software. Operating Expenses Operating expenses encompass selling general and administrative expenses, salaries and wages, professional and legal fees and depreciation. Selling, general and administrative expenses consist primarily of rent/moving expenses, advertising and travel expenses. Salaries and wages is composed of non-revenue generating employees. Professional services are principally comprised of outside legal, audit, information technology consulting, marketing and outsourcing services as well as the costs related to being a publicly traded company. Other (Expense) Income, net Other (expense) income, net consisted of change in fair value of convertible note, change in fair value of convertible note – related party, interest expense, change in fair value of obligation to issue warrants, loss on extinguishment of debt, loss on impairment of Goodwill and gain on reduction of obligation pursuant to acquisition. Property and Equipment Property and equipment are stated at cost and depreciated on a straight-line basis over their estimated useful lives. Useful lives are 3 years for vehicles and 5 years for furniture and equipment. Maintenance and repairs are expensed as incurred and major improvements are capitalized. When assets are sold, or retired, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is included in other income. Contingencies Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions. Leases Lease agreements are evaluated to determine if they are capital leases meeting any of the following criteria at inception: (a) transfer of ownership; (b) bargain purchase option; (c) the lease term is equal to 75 percent or more of the estimated economic life of the leased property; or (d) the present value at the beginning of the lease term of the minimum lease payments, excluding that portion of the payments representing executory costs such as insurance, maintenance, and taxes to be paid by the lessor, including any profit thereon, equals or exceeds 90 percent of the excess of the fair value of the leased property to the lessor at lease inception over any related investment tax credit retained by the lessor and expected to be realized by the lessor. If at its inception, a lease meets any of the four lease criteria above, the lease is classified by the Company as a capital lease; and if none of the four criteria are met, the lease is classified by the Company as an operating lease. Operating lease payments are recognized as an expense in the income statement on a straight-line basis over the lease term, whereby an equal amount of rent expense is attributed to each period during the term of the lease, regardless of when actual payments are made. This generally results in rent expense in excess of cash payments during the early years of a lease and rent expense less than cash payments in the later years. The difference between rent expense recognized and actual rental payments is recorded as deferred rent and included in liabilities. Advertising Advertising costs are expensed as incurred and included in selling, general and administrative expenses and amounted to $9,079 and $7,298 for the three months ended September 30, 2018 and 2017, respectively, and $74,408 and $12,477 for the nine months ended September 30, 2018 and 2017, respectively. Foreign Currency The local currency is the functional currency for one entity’s operations outside the United States. Assets and liabilities of these operations are translated to U.S. dollars at the exchange rate in effect at the end of each period. Income statement accounts are translated at the average exchange rate prevailing during the period. Translation adjustments arising from the use of differing exchange rates from period to period are included as a component of other comprehensive loss within shareholders’ equity. Gains and losses from foreign currency transactions are included in net loss for the period. Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company has incurred net operating loss for financial-reporting and tax-reporting purposes. Accordingly, for Federal and state income tax purposes, the benefit for income taxes has been offset entirely by a valuation allowance against the related federal and state deferred tax asset for the nine months ended September 30, 2018 and 2017. Comprehensive Loss Comprehensive loss consists of consolidated net loss and foreign currency translation adjustments. Foreign currency translation adjustments included in comprehensive loss were not tax-effected as investments in international affiliates are deemed to be permanent. Distinguishing Liabilities from Equity The Company relies on the guidance provided by ASC Topic 480, Distinguishing Liabilities from Equity Once the Company determines that a financial instrument should not be classified as a liability, the Company determines whether the financial instrument should be presented between the liability section and the equity section of the balance sheet (“temporary equity”). The Company will determine temporary equity classification if the redemption of the financial instrument is outside the control of the Company (i.e. at the option of the holder). Otherwise, the Company accounts for the financial instrument as permanent equity. Initial Measurement The Company records its financial instruments classified as liability, temporary equity or permanent equity at issuance at the fair value, or cash received. Subsequent Measurement – Financial instruments classified as liabilities The Company records the fair value of its financial instruments classified as liabilities at each subsequent measurement date. The changes in fair value of its financial instruments classified as liabilities are recorded as other expense/income. Beneficial Conversion Feature If the conversion features of conventional convertible debt provide for a rate of conversion that is below market value, this feature is characterized as a Beneficial Conversion Feature (“BCF”). A beneficial conversion feature is recorded by the Company as a debt discount pursuant to ASC 470-20, Debt with Conversion and Other Options The Company accounts for the beneficial conversion feature on its convertible preferred stock in accordance with ASC 470-20, Debt with Conversion and Other Options To determine the effective conversion price, the Company first allocates the proceeds received to the convertible preferred stock and then uses those allocated proceeds to determine the effective conversion price. If the convertible instrument is issued in a basket transaction (i.e., issued along with other freestanding financial instruments), the proceeds should first be allocated to the various instruments in the basket. Any amounts paid to the investor when the transaction is consummated (e.g., origination fees, due diligence costs) represent a reduction in the proceeds received by the issuer. The intrinsic value of the conversion option should be measured using the effective conversion price for the convertible preferred stock on the proceeds allocated to that instrument. The effective conversion price represents proceeds allocable to the convertible preferred stock divided by the number of shares into which it is convertible. The effective conversion price is then compared to the per share fair value of the underlying shares on the commitment date. The accounting for a BCF requires that the BCF be recognized by allocating the intrinsic value of the conversion option to additional paid-in capital, resulting in a discount on the convertible preferred stock. This discount should be accreted from the date on which the BCF is first recognized through the earliest conversion date for instruments that do not have a stated redemption date. The intrinsic value of the BCF is recognized as a deemed dividend on convertible preferred stock over a period specified in the guidance. Share-based Compensation The Company accounts for stock-based compensation to employees in conformity with the provisions of ASC Topic 718, Stock Based Compensation The Company accounts for equity instruments issued to non-employees in accordance with the provisions of ASC Topic 505, subtopic 50, Equity-Based Payments to Non-Employees The Company calculates the fair value of option grants utilizing the Black-Scholes pricing model and estimates the fair value of the stock based upon the estimated fair value of the common stock. The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. The resulting stock-based compensation expense for both employee and non-employee awards is generally recognized on a straight- line basis over the requisite service period of the award. Fair Value of Financial Instruments ASC Topic 820, Fair Value Measurements and Disclosures ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC Topic 820 are described as follows: ● Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date. ● Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. ● Level 3 – Inputs that are unobservable for the asset or liability. Certain assets and liabilities of the Company are required to be recorded at fair value either on a recurring or non-recurring basis. Fair value is determined based on the price that would be received for an asset or paid to transfer a liability in an orderly transaction based on market participants. The following section describes the valuation methodologies that the Company used to measure, for disclosure purposes, its financial instruments at fair value. Convertible notes payable The fair value of the Company’s convertible notes payable, approximated the carrying value as of September 30, 2018 and December 31, 2017. Factors that the Company considered when estimating the fair value of its debt included market conditions and the term of the debt. The level of the debt would be considered as Level 2. Additional Disclosures Regarding Fair Value Measurements The carrying value of cash, accounts receivable, prepaid expenses, deposits, accounts payable and accrued liabilities, advances from shareholders and obligation pursuant to acquisition approximate their fair value due to the short-term maturity of those items. Earnings (Loss) per Share The Company follows ASC 260, Earnings Per Share Basic net loss per share is based on the weighted average number of common and common-equivalent shares outstanding. Potential common shares includable in the computation of fully-diluted per share results are not presented in the consolidated financial statements for the three and nine months ended September 30, 2018 and 2017 as their effect would be anti-dilutive. Basic loss per common share is computed based on the weighted average number of shares outstanding during the period. Diluted loss per share is computed in a manner similar to the basic loss per share, except the weighted-average number of shares outstanding is increased to include all common shares, including those with the potential to be issued by virtue of warrants, options, convertible debt and other such convertible instruments. Diluted loss per share contemplates a complete conversion to common shares of all convertible instruments only if they are dilutive in nature with regards to earnings per share. The anti-dilutive shares of common stock outstanding for the three and nine months ended September 30, 2018 and 2017 were as follows: For the Three Months Ended For the Nine Months Ended 2018 2017 2018 2017 Potentially dilutive securities: Convertible notes payable 106,957 226,320 106,957 226,320 Convertible Preferred A Stock 1,000,000 1,000,000 1,000,000 1,000,000 Convertible Preferred B Stock 13,784,201 9,830,035 13,784,201 9,830,035 Warrants 3,307,073 2,557,195 3,307,073 2,557,195 Stock options 8,739,669 - 8,739,669 - Reclassifications Certain reclassifications have been made to the prior period financial statements to conform to the current period financial statement presentation. These reclassifications had no effect on net earnings or cash flows as previously reported. Recent Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). “Revenue from Contracts with Customers – Identifying Performance Obligations and Licensing” “Revenue Recognition and Derivatives and Hedging – Recession of SEC Guidance”, , “Revenue from Contracts with Customers – Narrow-Scope Improvements and Practical Expedients”, , “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers”. On January 1, 2018, we adopted the new accounting standard ASC 606 , “Revenue from Contracts with Customers In February 2016, the FASB issued ASU 2016-02, “Leases”, In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business. In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350); Simplifying the Test for Goodwill Impairment. In May 2017, the FASB issued ASU No 2017-09 “Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting” In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; 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. Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company is currently assessing the potential impact of adopting ASU 2017-11 on its financial statements and related disclosures. In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220); Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this ASU allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act. Consequently, the amendments eliminate the stranded tax effects resulting from the Act and will improve the usefulness of information reported to financial statement users. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted in any interim period after issuance of the ASU. The Company is evaluating the effect that this update will have on its financial statements and related disclosures. In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (ASC 718): Improvements to Nonemployee Share-Based Payment Accounting In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (ASC 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on our consolidated financial statements and related disclosures. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2018 | |
Revenue Recognition [Abstract] | |
Revenue Recognition | 5. Revenue Recognition Adoption of ASC 606 Revenue from Contracts with Customers The Company adopted the new revenue standard, ASC 606, using the modified retrospective method with respect to all non-completed contracts as of January 1, 2018. This method required retrospective application of the new accounting standard to all unfulfilled contracts that were outstanding as of January 1, 2018. Revenues and contract assets and liabilities for contracts completed prior to January 1, 2018 are presented in accordance with ASC 605. The Company has determined that there were no adjustments required with respect to the adoption of ASC 606 with respect to any prior periods. Disaggregation of revenue For the Three Months Ended For the Nine Months Ended 2018 2017 2018 2017 Types of Revenues: Security and Guarding $ 1,141,676 $ 1,129,746 $ 3,432,651 $ 2,837,145 Systems Installation 318,850 - 454,113 - Software 1,653,195 - 2,229,337 - Total revenues $ 3,113,721 $ 1,129,746 $ 6,116,101 $ 2,837,145 The following is a description of the principal activities from which we generate our revenue. Security and Guarding Revenue Helix provides armed and unarmed guards, as well as armed transportation services. The guards are charged out at an hourly rate, with invoices typically sent to clients shortly after each month-end for the previous month, with revenue being recognized at a point in time once the service has been provided. Transportation services are typically invoiced on a per-run basis, with revenue being recognized at a point in time once the service has been completed. Systems Installation Revenue Security systems, including IP CCTV, intrusion alarm systems, perimeter alarm systems, and access controls are installed for clients. Installation jobs are estimated based on the cost of the equipment, the number of man hours expected to complete the work, supplies, travel, and any other ancillary costs. The installation is typically invoiced with 60% of the total price immediately after signing and the balance upon completion of the installation service. The timing of these contracts are short-term in nature and are less than 12 months in duration. Software The Company generates revenue from developing and licensing seed to sale cannabis compliance software to both private-sector and public-sector (government agencies) clients that are involved in cannabis related operations. The Company also generates revenue from on-going training, support and software customization services. The private-sector software entails cultivation tracking, inventory management, point of sale and analytic reporting to assist businesses in meeting their compliance requirements and effectively managing their businesses. Customers within the private sector business are charged an initial one-time installation fee and the revenues associated with these services are recognized upon completion of installation and configuration at a point in time. After the installation and configuration of the software is completed, the customer is invoiced monthly and revenues associated with these services are recognized monthly over a period of time in which the customer continues to use the software and related services. The public-sector software assists government agencies in efficient oversight of cannabis related business under their jurisdiction. Revenues associated with governmental contracts are longer-term in nature and recognized upon completion of certain milestones over a period of time or on a completed-contract basis at a point in time. The Company considers the contract to be complete when all significant costs have been incurred and the customer accepts the project. Costs incurred prior to the customer accepting the project are deferred and reflected on the Balance Sheet as Work-in-process – Traceability. Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in accordance with ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Generally, the Company’s contracts include a single performance obligation that is separately identifiable, and therefore, distinct. Under ASC 606, the allocation of transaction price is not necessary if only one performance obligation is identified. Significant Judgments Accounting for long-term contracts involves the use of various techniques to estimate total contract revenue, costs and satisfaction of performance obligation. The Company satisfies its performance obligations and subsequently recognizes revenue, at a point in time, as security and installation services are performed. There were no changes to the significant judgments used by the Company to determine the timing of satisfaction of the performance obligations under ASC 606. Costs to Obtain or Fulfill Contract The Company’s costs to fulfill or obtain contracts with customers primarily consist of commissions and legal costs. The Company provides sales team members with commissions at 0-6%. Although sales commissions are incremental in nature and are only incurred when a contract is obtained, there is no up-front commission paid on the satisfactory obtainment of a contract, resulting in no sales commissions being capitalized at September 30, 2018. The Company also incurs legal costs relating to the drafting and negotiating of contracts with select customers. Because legal costs are not incremental in nature and are incurred regardless of whether a contract is ultimately obtained, there were no legal costs capitalized as of September 30, 2018. The Company did not record amortization of costs incurred to obtain the contract or any impairment losses for the period ending September 30, 2018. |
Business Combinations
Business Combinations | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Business Combinations | 6. Business Combinations Security Grade Acquisition On June 2, 2017 (the “Closing”), the Company entered into a Membership Interest Purchase Agreement (the “Agreement”) in which the Company purchased all issued and outstanding Units of Security Grade Protective Services, Ltd. (“Security Grade”), which comprised of 800,000 Class A Units and 200,000 Class B Units. At closing, the Company delivered $800,000 in cash and 207,427 non-qualified stock options (the “Initial Stock Options”). Furthermore, provided that, within the first 60 days following the closing, no material customer identified in the Agreement terminates its contractual relationship with the Company and that all contracts with such material customers are in full force and effect without default or cancellation as of the 60 th st The merger is being accounted for as a business combination in accordance with ASC 805. The Company’s allocation of the purchase price was calculated as follows: Base Price – Cash $ 2,100,373 Base Price - Stock Options 916,643 Contingent Consideration - Stock Options 916,643 Total Purchase Price $ 3,933,659 Weighted Average Useful Life Description Fair Value (in years) Assets acquired: Cash $ 14,137 Accounts receivable 53,792 Costs & earnings in excess of billings 96,898 Property, plant and equipment, net 27,775 Trademarks 25,000 10 Customer lists 3,154,578 5 Web address 5,000 5 Goodwill 664,329 Other assets 3,880 Total assets acquired $ 4,045,389 Liabilities assumed: Billings in excess of costs $ 23,967 Loans payable 18,414 Credit card payable and other liabilities 69,349 Total liabilities assumed 111,730 Estimated fair value of net assets acquired $ 3,933,659 The initial stock options are included as part of the purchase price. The Company determined the fair value of the contingent consideration to be $916,643 at June 2, 2017 and recorded it as a liability in its unaudited condensed consolidated balance sheets. The Company satisfied their contingent consideration liability during the third quarter of 2017. During the period ended September 30, 2018, the Company reached settlement agreements with all six selling members. As a result of these settlements, 80,979 options previously issued as part of the acquisition were cancelled. BioTrack Acquisition On March 3, 2018, Helix TCS, Inc. (the “Company”) and its wholly owned subsidiary, Helix Acquisition Sub, Inc. (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Bio-Tech Medical Software, Inc. (“BioTrackTHC”) and Terence J. Ferraro, as the representative of the BioTrackTHC shareholders. Pursuant to the Merger Agreement, subject to the satisfaction or waiver of specified conditions, Merger Sub will merge with and into BioTrackTHC, with BioTrackTHC surviving the merger as a wholly-owned subsidiary of the Company (the “Merger”). On June 1, 2018, the Company closed the Merger. In connection with closing the Merger, the Company issued 38,184,985 unregistered shares of Company common stock to BioTrackTHC stockholders, of which 1,852,677 shares were held back to satisfy indemnification obligations in the Merger Agreement, if necessary. The Company also assumed the Bio-Tech Medical Software, Inc 2014 Stock Incentive Plan (“BioTrackTHC Stock Plan”), pursuant to which options exercisable for 8,132,410 shares of Company common stock are outstanding so that the BioTrackTHC stockholders will own 48% of the Company on a fully diluted basis. The Merger is being accounted for as a business combination in accordance with ASC 805. The Company has determined preliminary fair values of the assets acquired and liabilities assumed in the BioTrackTHC merger. These values are subject to change as we perform additional reviews of our assumptions utilized. The Company has made a provisional allocation of the purchase price of the BioTrackTHC transaction to the assets acquired and the liabilities assumed as of the purchase date. The following table summarizes the provisional purchase price allocations relating to the BioTrackTHC transaction: Base Price - Common Stock $ 44,905,542 Base Price - Stock Options 12,646,491 Total Purchase Price $ 57,552,033 Weighted Average Useful Life Description Fair Value (in years) Assets acquired: Cash $ 448,697 Accounts receivable 128,427 Prepaid expenses 351,615 Property, plant and equipment, net 72,252 Goodwill 39,135,007 Customer list 8,304,449 5 Software 9,321,627 4.5 Tradename 466,081 4.5 Total assets acquired $ 58,228,155 Liabilities assumed: Accounts payable $ 223,581 Other liabilities 452,541 Total liabilities assumed 676,122 Estimated fair value of net assets acquired $ 57,552,033 The Company has not completed the valuation studies necessary to finalize the acquisition fair values of the assets acquired and liabilities assumed and related allocation of purchase price for BioTrackTHC. Accordingly, the type and value of the intangible assets amounts set forth above are preliminary. Once the valuation process is finalized for BioTrackTHC, there could be changes to the reported values of the assets acquired and liabilities assumed, including goodwill and intangible assets and those changes could differ materially from what is presented above. Total acquisition costs for the BioTrackTHC merger incurred during the three and nine months ended September 30, 2018 was $116,624, and is included in selling, general and administrative expense in the Company’s Statements of Operations. Unaudited Pro Forma Results BioTrackTHC contributed revenues of $2,204,411 and a net loss of $(490,459) for the period June 1, 2018 through September 30, 2018, included in the Company’s consolidated condensed statements of operations. The following table below represents the revenue, net loss and loss per share effect of the acquired company, as reported in our pro forma basis as if the acquisition occurred on January 1, 2017. These pro forma results are not necessarily indicative of the results that actually would have occurred if the acquisition had occurred on the first day of the periods presented, nor does the pro forma financial information purport to represent the results of operations for future periods. For the Three Months Ended For the Nine Months Ended Description 2018 2017 2018 2017 Revenues $ 3,134,396 $ 3,883,759 $ 8,957,690 $ 8,958,725 Net loss (2,722,404 ) 343,718 (5,213,028 ) (7,911,500 ) Net loss attributable to common shareholders (2,704,866 ) (7,701,240 ) (27,397,684 ) (19,320,872 ) Loss per share attributable to common shareholders: Basic and diluted-as pro forma (unaudited) (0.04 ) (0.29 ) (0.57 ) (0.68 ) Engeni SA Acquisition On August 3, 2018 (the “Engeni Closing Date”), the Company and its wholly owned subsidiary, Engeni Merger Sub, LLC (“Engeni Merger Sub”), entered into an Agreement and Plan of Merger (the “Engeni Merger Agreement”) with Engeni LLC (“Engeni US”), Engeni S.A (“Engeni SA”), Scott Zienkewicz, Nicolas Heller and Alberto Pardo Saleme (the members of Engeni US), and Scott Zienkewicz as the representative of the Engeni US members. Pursuant to the Engeni Merger Agreement, Engeni Merger Sub merged with and into Engeni US, with Engeni US surviving the merger as a wholly-owned subsidiary of the Company (the “Engeni Merger”). On the Engeni Closing Date, in connection with closing the Engeni Merger Agreement, the Company issued 366,700 shares of Company common stock to Engeni US members. Furthermore, the Company may also issue Engeni US members 366,700 and 366,600 shares of Parent common stock upon the achievement of specific objectives. If applicable, the Company will pay Engeni US members the aggregate amount of $100,000, on a pro rata basis, if Engeni SA reaches financial breakeven on or before December 31, 2018, as determined by the Company’s Chief Financial Officer and Scott Zienkewicz. The Merger is being accounted for as a business combination in accordance with ASC 805. The Company has determined preliminary fair values of the assets acquired and liabilities assumed in the Merger. These values are subject to change as we perform additional reviews of our assumptions utilized. The Company has made a provisional allocation of the purchase price of the Merger transaction to the assets acquired and the liabilities assumed as of the purchase date. The following table summarizes the provisional purchase price allocations relating to the Merger transaction: Base Price - Common Stock $ 388,702 Contingent Consideration - Common Stock 777,298 Contingent Consideration - Cash 100,000 Total Purchase Price $ 1,266,000 Weighted Average Useful Life Description Fair Value (in years) Assets acquired: Cash $ 5,609 Accounts receivable and other assets 30,479 Property, plant and equipment, net 57,830 Software 449,568 3.3 Goodwill 778,552 Total assets acquired $ 1,322,038 Liabilities assumed: Accounts payable $ 56,038 Total liabilities assumed 56,038 Estimated fair value of net assets acquired $ 1,266,000 Total acquisition costs for the Engeni merger incurred during the three and nine months ended September 30, 2018 was $38,409, and is included in selling, general and administrative expense in the Company’s Statements of Operations. |
Asset Acquisition
Asset Acquisition | 9 Months Ended |
Sep. 30, 2018 | |
Asset Acquisition [Abstract] | |
Asset Acquisition | 7. Asset Acquisition The acquisition of the assets of Revolutionary Software, LLC occurred via two transactions. 1. On March 14, 2016, the Company purchased one-third of the equity interest in Revolutionary for total consideration of $350,000 in cash and 75,000 shares of common stock of the Company. $50,000 was paid in cash at closing, with the balance ($300,000) being paid in twenty-four monthly installments of $10,417, with a final payment of $50,000 to be paid on the twenty-fifth month. 2. On April 11, 2016, the Company entered into an asset purchase agreement with Revolutionary, in which the Company purchased all of the intangible rights and property of Revolutionary for total consideration of $300,000 payable in two equal installments pursuant to a promissory note and 2,320,000 shares of restricted common stock of the Company. As of September 30, 2018, the Company owed Revolutionary $0. The total purchase price for the Revolutionary assets acquired was $1,596,750. The acquisition cost has been allocated over the intangible assets acquired in accordance with the guidance set forth in ASC 805, Business Combinations |
Property and Equipment, Net
Property and Equipment, Net | 9 Months Ended |
Sep. 30, 2018 | |
Property and Equipment, Net [Abstract] | |
Property and Equipment, Net | 8. Property and Equipment, Net At September 30, 2018 and December 31, 2017, property and equipment consisted of the following: September 30, 2018 December 31, 2017 Furniture and equipment $ 119,391 $ 16,332 Software equipment 15,094 1,382 Vehicles 205,157 175,647 Total 339,642 193,361 Less: Accumulated depreciation (59,118 ) (82,727 ) Property and equipment, net $ 280,524 $ 110,634 Depreciation expense for the three months ended September 30, 2018 and 2017 was $27,528 and $19,553, respectively, and $63,421 and $42,589 for the nine months ended September 30, 2018 and 2017, respectively. |
Intangible Assets, Net and Good
Intangible Assets, Net and Goodwill | 9 Months Ended |
Sep. 30, 2018 | |
Intangible Assets, Net and Goodwill [Abstract] | |
Intangible Assets, Net and Goodwill | 9. Intangible Assets, Net and Goodwill The following table summarizes the Company’s intangible assets as of September 30, 2018 and December 31, 2017: September 30, 2018 Estimated Useful Life (Years) Gross Carrying Amount Assets Acquired Pursuant to Business Combination (2) (3) Accumulated Amortization Net Book Value Database 5 $ 93,427 $ - $ (46,151 ) $ 47,276 Trade names and trademarks 5 - 10 125,000 466,081 (62,323 ) 528,758 Web addresses 5 130,000 - (63,075 ) 66,925 Customer list 5 3,154,578 8,304,449 (1,388,176 ) 10,070,851 Software 4.5 - 9,771,195 (707,489 ) 9,063,706 $ 3,503,005 $ 18,541,725 $ (2,267,214 ) $ 19,777,516 December 31, 2017 Estimated Useful Life (Years) Gross Carrying Amount at December 31, 2016 Assets Acquired Pursuant to Business Combination (1) Accumulated Amortization Net Book Value Database 5 $ 93,427 $ - $ (32,183 ) $ 61,244 Trade names and trademarks 10 100,000 25,000 (18,675 ) 106,325 Web addresses 5 125,000 5,000 (43,639 ) 86,361 Customer list 5 - 3,154,578 (366,249 ) 2,788,329 $ 318,427 $ 3,184,578 $ (460,746 ) $ 3,042,259 (1) On June 2, 2017, the Company acquired various assets of Security Grade Protective Services, Ltd. (See Note 6) (2) On June 1, 2018, the Company acquired various assets of BioTrackTHC (See Note 6) (3) On August 3, 2018, the Company acquired various assets of Engeni (See Note 6) The Company uses the straight-line method to determine the amortization expense for its definite lived intangible assets. Amortization expense related to the purchased intangible assets was $1,160,889 and $173,344 for the three months ended September 30, 2018 and 2017, respectively, and $1,806,468 and $248,718 for the nine months ended September 30, 2018 and 2017, respectively. The following table summarizes the Company’s Goodwill as of September 30, 2018: Total Goodwill Balance at January 1, 2018 $ 664,329 Impairment of goodwill (664,329 ) Goodwill attributable to Biotrack acquisition 39,135,007 Goodwill attributable to Engeni acquisition 778,552 Balance at September 30, 2018 $ 39,913,559 During the first quarter of 2018, the Company came to a settlement agreement with numerous Security Grade employees resulting from a misrepresentation of revenue and customer list information provided as part of the acquisition. Therefore, the Company considers the settlement to be an indicator for goodwill impairment testing. Accordingly, at March 30, 2018, goodwill was tested for potential impairment. As a result of the goodwill impairment test performed, it was determined that the carrying value for each reporting unit was higher than its fair value and therefore goodwill was fully impaired, which resulted in a write-off of $664,329 for the nine months ended September 30, 2018. As part of the BioTrack acquisition, Goodwill in the amount of $39,135,007 was recognized on the Company’s Condensed Consolidated Balance Sheet. As part of the Engeni US acquisition, Goodwill in the amount of $778,552 was recognized of the Company’s Condensed Consolidated Balance Sheet. |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 9 Months Ended |
Sep. 30, 2018 | |
Accounts Payable and Accrued Expenses [Abstract] | |
Accounts Payable and Accrued Expenses | 10. Accounts Payable and Accrued Expenses As of September 30, 2018 and December 31, 2017, accounts payable and accrued expenses consisted of the following: September 30, 2018 December 31, 2017 Accounts payable $ 1,022,211 $ 334,751 Accrued expenses 284,183 220,682 Accrued interest 12,867 43,204 Total $ 1,319,261 $ 598,637 |
Costs, Estimated Earnings and B
Costs, Estimated Earnings and Billings | 9 Months Ended |
Sep. 30, 2018 | |
Costs, Estimated Earnings and Billings [Abstract] | |
Costs, Estimated Earnings and Billings | 11. Costs, Estimated Earnings and Billings Costs, estimated earnings and billings on uncompleted contracts are summarized as follows as of September 30, 2018 and December 31, 2017: September 30, 2018 December 31, 2017 Costs incurred on uncompleted contracts $ 118,741 $ 64,705 Estimated earnings 50,261 27,731 Cost and estimated earnings earned on uncompleted contracts 169,002 92,436 Billings to date 147,996 71,778 Costs and estimated earnings in excess of billings on uncompleted contracts 21,006 20,658 Costs in excess of billings $ 24,792 $ 40,848 Billings in excess of cost (3,786 ) (20,190 ) $ 21,006 $ 20,658 |
Convertible Note Payable
Convertible Note Payable | 9 Months Ended |
Sep. 30, 2018 | |
Notes Payable/Convertible Note Payable/Promissory Notes [Abstract] | |
Convertible Note Payable | 12. Convertible Note Payable September 30, 2018 December 31, 2017 Note Five, 5% convertible promissory note, fixed secured, maturing May 16, 2018 $ 132,625 $ 812,393 132,625 812,393 Less: Current portion (132,625 ) (812,393 ) Long-term portion $ - $ - On September 30, 2016, the Company entered into an Unsecured Convertible Promissory Note (“Note Four”) with a fourth investor (the “Fourth Investor”) in which the Fourth Investor provided the Company $500,000 in cash. As of December 31, 2016, the Class B Preferred Shares were not established as a result of Holder Default, in which, the Fourth Investor did not act in good faith towards the prompt negotiation, execution and delivery of the Class B Preferred Shares. On March 31, 2017, the First Amendment to Note Four (the “Amended Note”) was entered by the Company and the Holder. In the absence of a Company Event of Default or Holder Event of Default, Amended Note is payable by issuance upon conversion into Class B Preferred Shares of the Company, which was to occur no later than June 1, 2017. The Amended Note had the following conversion features: ● Automatic Conversion. ● Company Default. ● Holder Default. ● The Valuation and Consideration provision in Section 2 of the Term Sheet is affirmed and ratified; provided, however, that the parties agree that the $12,000,000 valuation therein is subject to dilution of $600,000 from additional investments in the Company by third parties following the Holder’s $500,000 investment that is memorialized in the Note. For the avoidance of doubt, the Holder will receive the same number of shares as it would have for its investment if it had converted at a $12,000,000 valuation on October 20, 2016 given the 26,587,497 shares outstanding at that time. For the avoidance of doubt, the Note will convert into 1,162,500 shares. Due to the terms of the Amendment, the Company evaluated Note Four under ASC 470-50 to determine if modification or extinguishment treatment was necessary. After performing the analysis under ASC 470-50, it was determined extinguishment treatment was appropriate and the Company should extinguish Note Four and recognize the Amended Note as new debt. The Company recognized a loss on extinguishment of $4,611,395 on Note Four. The Company evaluated the Amended Note and the embedded conversion feature under ASC 815 and determined the conversion feature did not meet the definition of a derivative and therefore should not be bifurcated. The Company then evaluated the Amended Note in accordance with ASC 480 and determined that Note Four will be accounted for as a liability measured at fair value. As of March 31, 2017, the fair value of the liability was $500,000. On February 13, 2017, the Company entered into a $183,333 10% Fixed Secured Convertible Promissory Note (“Note Five”) with a third investor (the “Third Investor”). The Third Investor provided the Company with $166,666 in cash, which was received by the Company during the period ended March 31, 2017. The additional $16,666 was retained by the Third Investor for due diligence and legal bills for the transaction. The Company promised to pay the principal amount, together with guaranteed interest at the annual rate of 10%, with principal and accrued interest on Note Five due and payable on September 12, 2017 (unless converted under terms and provisions as set forth within Note Five). The principal balance of Note Five was convertible at the election of the Third Investor, in whole or in part, at any time or from time to time, into the Company’s common stock at $1.50 per share. In conjunction with Note Five, the Company issued a warrant to the third investor to purchase 25,000 shares of the Company’s common stock at $1.00 per share. Note Five became effective on February 14, 2017 upon the execution by the Company and the Holder of numerous exhibit documents. In addition, the Company reserved 2,500,000 shares of the Company’s common stock for the Third Investor. The Company evaluated the embedded conversion feature within the above convertible note under ASC 815 and determined the conversion feature did not meet the definition of a derivative and therefore should not be bifurcated. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible note payable and a total debt discount of $183,333 was recorded. The Company recorded a debt discount relating to the warrants issued in the amount of $22,000 based on the relative fair values of Note Five without the warrants and the warrants themselves at the effective date of Note Five. The additional $16,666 retained by the Third Investor for due diligence and legal bills for the transaction will be recorded as a debt discount. The calculated value of the beneficial conversion feature and the combined value of the debt discount resulted in a value greater than the value of the debt and as such, the total discount was limited to the value of the debt balance of $183,333. Therefore, the debt discount related to the Beneficial Conversion Feature was in the amount of $144,666. The excess value of the Beneficial Conversion Feature discount was recognized as a loss in earnings and recorded as an interest expense in the amount of $390,666 and will be amortized through Maturity of Note Five. The debt discounts will be amortized to interest expense over the life of the note. Amounts amortized to interest expense were approximately $39,286 for the three months ended March 31, 2017. The unamortized discount balance at March 31, 2017 was approximately $144,047. On February 13, 2017, the Company entered into a $25,000 10% Fixed Secured Convertible Promissory Note (“Note Six”) with a third investor (the “Third Investor”). The Third Investor provided the Company with $25,000 in cash, which was received by the Company during the period ended March 31, 2017. The Company promised to pay the principal amount, together with guaranteed interest at the annual rate of 10%, with principal and accrued interest on Note Six due and payable on September 13, 2017. The principal balance of Note Six was convertible at the election of the Third Investor, in whole or in part, at any time or from time to time, into the Company’s common stock at $6.10 per share. Note Six become effective on February 14, 2017 upon the execution by the Company and the Holder of numerous exhibit documents. The Company evaluated Note Six in accordance with ASC 815 to determine if the conversion feature should be bifurcated and accounted for at fair value and remeasured at fair value in income. The Company determined that the conversion feature did not meet the requirements for bifurcation pursuant to ASC 815. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception and determined that Note Six did not have a beneficial conversion feature. As a result, the Company recorded the conventional convertible note as a debt instrument in its entirety. The interest expense associated with Note Six was $536 for the period ended March 31, 2017. On April 26, 2017, the Company entered into a $100,000 10% Secured Convertible Promissory Note (“Note Seven”) with a fourth investor (the “Fourth Investor”). The Fourth Investor provided the Company with $72,000 in cash proceeds, which was received by the Company during the three months ended June 30, 2017. Note Seven is due on October 26, 2017 and the Company must pay guaranteed interest on the principal balance at an amount equivalent to 10% of the note amount. The principal balance of Note Seven is convertible at the election of the Fourth Investor, in whole or in part, at any time or from time to time, into the Company’s common stock at the lower of $1.00 or a 50% discount to the lowest closing bid price of the Company’s common stock for the 30 Trading Days prior to conversion. In conjunction with Note Seven, the Company issued a warrant to the fourth investor to purchase 150,000 shares of the Company’s common stock at $1.00 per share. On November 16, 2017, the Company amended Notes Five, Six, and Seven (“the Amended Notes”) with the Fourth Investor. All three notes shall have maturity dates that are six months from November 16, 2017, shall convert at a 40% discount to the lowest one-day Volume Average Weighted Price (“VWAP”) during the 30 trading days preceding such conversion, shall incur interest at an annual rate of 5%, and shall be prepayable at any time at 110% of the unpaid principal and accrued interest balances. The amendment of Note Six and Seven included terms, permitting the Company the option to tender payment in full on or before November 21, 2017, at a 15% discount of the amended principal amounts. At November 16, 2017, the principal amounts of Note Five, Six and Seven were $281,900, $38,441 and $131,107, respectively. On November 21, 2017, the Company paid the remaining principal balance, at the 15% discount on Notes Six and Seven in the amount of $144,259. On May 16, 2018, the Company amended Note Five (“Second Amendment”) with the Fourth Investor. The Second Amendment states that Note Five shall have a maturity of November 16, 2018 and shall be prepayable at any time at 120% of the unpaid principal and accrued interest balance. The principal amount as of the date of the Second Amendment was $112,305. The Company evaluated Note Five in accordance with ASC 480, Distinguishing Liabilities from Equity and determined the Note Five will be accounted for as a liability initially measured at fair value and subsequently at fair value with changes in fair value recognized in earnings. As of September 30, 2018, and December 31, 2017, the fair value of Note Five was $132,625 and $812,393, respectively. Therefore, the Company recorded a (loss) gain to the change in fair value of $(17,880) and $679,766 related to Note Five for the three and nine months ended September 30, 2018, respectively. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 13. Related Party Transactions Advances from Related Parties The Company has a loan outstanding from a former Company executive. The advance does not accrue interest and has no definite repayment terms. The loan balance was $55,250 and $124,750 as of September 30, 2018 and December 31, 2017, respectively. Convertible Note Payable On March 11, 2016, the Company entered into an Unsecured Convertible Promissory Note (“Note Eight”) with Paul Hodges, a Director of the Company (the “Related Party Holder”). The Related Party Holder provided the Company with $150,000 in cash, and the Company promised to pay the principal amount, together with interest at an annual rate of 7%, with principal and accrued interest on Note Five due and payable on December 31, 2017 (unless converted under terms and provisions as set forth below). The principal balance of Note Eight was convertible at the election of the Related Party Holder, in whole or in part, at any time or from time to time, into the Company’s common stock at a forty percent (40%) discount to the average market closing price for the previous five (5) trading days, preceding the date of conversion election. The Company evaluated Note Eight in accordance with ASC 480, Distinguishing Liabilities from Equity On February 20, 2018, the Company entered into an agreement to amend Note Eight (this “Amendment”) with the Related Party Holder March 2016 (the “Note”). The Company and Holders desire to extend the maturity date of the Note to August 20, 2018. The Note is hereby amended as follows. The Company promises to pay (i) all accrued interest on the unpaid principal amount through December 31, 2017 and (ii) $25,000 in principal within 5 business days of the date of this Amendment. The Company agrees to issue 15,000 shares of restricted Company common stock as an inducement for this amendment within 10 business days of the date of this Amendment. The principal amount of the note will be reduced to $125,000. Unless extended by the Company, converted or prepaid earlier, all unpaid principal and unpaid accrued interest on this Note shall be due and payable on August 20, 2018 (the “Maturity Date”). All provisions related to conversion of the Note into equity securities of the Company were terminated as part of this Amendment. As of February 20, 2018, the fair value of the liability was $239,343, however due to termination of the conversion of the note into equity securities, Note Eight will be valued in its principal amount of $125,000 and accordingly the Company recorded a credit regarding the change in fair value of $0 and charge of $34,725 for the three months ended September 30, 2018 and 2017, respectively, and $118,506 and $8,971 for the nine months ended September 30, 2018 and 2017, respectively. The interest expense associated with Note Five was $2,479 and $2,675 for the three months ended September 30, 2018 and 2017, respectively and $10,217 and $7,853 for the nine months ended September 30, 2018 and 2017, respectively. Note Eight was paid in full on the Maturity Date. Warrants In March 2016, the Company issued 960,000 shares of restricted common stock to the Related Party Holder per a subscription agreement for total proceeds of $150,000. In conjunction with the subscription agreement, the Company issued a warrant to the Related Party Holder to purchase 1,920,000 restricted shares of the Company’s common stock at $0.16 per share. The Warrant Exercise Date is the later of the following to occur (i) March 9, 2017, (ii) ten (10) days after the Company’s notice to the holder of the warrant that the Company shall have an effective S-1 registration with the SEC; or (iii) ten (10) days after Company’s notice to the holder of the warrants that the Company has entered into an agreement for the sale of substantially all the assets or Common Stock of the Company. As of September 30, 2018, the warrants granted are not exercisable. Promissory Note On August 29, 2018, the Company entered into an unsecured promissory note with an affiliate of an investor of the Company. Refer to Note 14 for additional details regarding the unsecured promissory note. |
Promissory Notes
Promissory Notes | 9 Months Ended |
Sep. 30, 2018 | |
Notes Payable/Convertible Note Payable/Promissory Notes [Abstract] | |
Promissory Notes | 14. Promissory Notes On February 13, 2017, the Company entered into an unsecured promissory note in the amount of $180,000. The unsecured promissory note has a fixed interest rate of 8% and was due and payable on June 30, 2017. In conjunction with the Series B Preferred Stock Purchase Agreement, as discussed in Note 16, the Company satisfied its liability in exchange for Series B Preferred Stock. The interest expense associated with the unsecured promissory note was $0 for the three months ended September 30, 2018 and 2017, respectively and $0 and $2,570 for the nine months ended September 30, 2018 and 2017, respectively. On January 30, 2017, the Company entered into an unsecured promissory note in the amount of $75,000. The unsecured promissory note had a fixed interest rate of 8% and was due and payable on June 30, 2017. In conjunction with the Series B Preferred Stock Purchase Agreement, as discussed in Note 16, the Company satisfied its liability in exchange for Series B Preferred Stock. The interest expense associated with the unsecured promissory note was $0 for the three months ended September 30, 2018 and 2017, respectively and $0 and $2,570 for the nine months ended September 30, 2018 and 2017, respectively. On August 29, 2018, the Company entered into an unsecured promissory note in the amount of $250,000. The unsecured promissory note has a fixed interest rate of 7% and is due and payable on July 31, 2019. As of September 30, 2018 and December 31, 2017, the Company had $250,000 and $0 outstanding on the unsecured promissory note. The interest expense associated with the unsecured promissory note was $1,534 and $0 for the three months ended September 30, 2018 and 2017, respectively, and $1,534 and $0 for the nine months ended September 30, 2018 and 2017, respectively. |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2018 | |
Notes Payable/Convertible Note Payable/Promissory Notes [Abstract] | |
Notes Payable | 15. Notes Payable September 30, 2018 December 31, 2017 Vehicle financing loans payable, between 4.7% and 7.0% interest and maturing between June 2022 and July 2022 $ 75,090 $ 55,890 Loans Payable - Credit Union 5,653 8,582 Less: Current portion of loans payable (7,582 ) (11,179 ) Long-term portion of loans payable $ 73,161 $ 53,293 The interest expense associated with the notes payable was $2,901 and $230 for the three months ended September 30, 2018 and 2017, respectively, and $4,321 and $600 for the nine months ended September 30, 2018 and 2017, respectively. |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Sep. 30, 2018 | |
Shareholders' Equity [Abstract] | |
Shareholders' Equity | 16. Shareholders’ Equity Common Stock Subscription Agreements In February 2018, the Company issued 222,222 shares of restricted common stock to an investor per a subscription agreement for total proceeds of $200,000. In March 2018, the Company issued 500,000 shares of restricted common stock to an investor per a subscription agreement for total proceeds of $450,000. In April 2018, the Company issued 500,000 shares of restricted common stock to an investor per a subscription agreement for total proceeds of $450,000. In May 2018, the Company issued 244,444 shares of restricted common stock to an investor per a subscription agreement for total proceeds of $220,000. In July 2018, the Company issued 327,777 shares of restricted common stock at $0.90 per share to an investor per a subscription agreement for total proceeds of $294,999. In August 2018, the Company issued 327,777 shares of restricted common stock at $0.90 per share to an investor per a subscription agreement for total proceeds of $294,999. In August 2018, the Company issued 183,333 shares of restricted common stock at $0.90 per share to an investor per a subscription agreement for total proceeds of $164,999. In September 2018, the Company issued 577,778 shares of restricted common stock at $0.90 per share to an investor per a subscription agreement for total proceeds of $520,000. Other Common Stock Issuances In May 2018, the Company issued 50,000 shares of restricted common stock to a consultant per a consulting agreement. In June 2018, the Company issued 38,184,985 shares of common stock as part of the BioTrack acquisition. In June 2018, two selling shareholders of Security Grade exercised their right to purchase 212,633 shares of the Company’s common stock. In July 2018, one selling shareholder of Security Grade exercised their right to purchase 3,983 shares of the Company’s common stock. In July 2018, the Company issued 200,000 shares of restricted common stock to consultants as an inducement to enter into a leak-out agreement with the Company. In August 2018, the Company issued 100,000 shares of restricted common stock as part of an agreement entered into with an investor relation consultant. In August 2018, the Company issued 366,700 shares of common stock as part of the Engeni US acquisition. Conversion of Convertible Note to Common Stock On February 15, 2018, the holder of a 10% fixed secured convertible promissory note issued by the Company elected their option to partially convert $50,000 in principal of the convertible note into 46,066 shares of the Company’s common stock. On March 12, 2018, the same holder partially converted an additional $50,000 in principal of the convertible note into 63,963 shares of the Company’s common stock. On March 21, 2018, the same holder partially converted an additional $75,000 in principal of the convertible note into 95,945 shares of the Company’s common stock. Amended Convertible Note On February 20, 2018, the Company entered into an agreement to amend a Convertible Promissory Note with the undersigned holder initially issued to such Holder and dated March 2016. The Company and Holders desire to extend the maturity date of the Note to August 20, 2018. The holder was issued 15,000 shares of the Company’s restricted common stock as part of the amendment. The Note is hereby amended as follows. The Company promises to pay (i) all accrued interest on the unpaid principal amount through December 31, 2017 and (ii) $25,000 in principal within 5 business days of the date of this Amendment. The Company agrees to issue 15,000 shares of restricted Company common stock as an inducement for this amendment within 10 business days of the date of this Amendment. The principal amount of the note will be reduced to $125,000. Unless extended by the Company, converted or prepaid earlier, all unpaid principal and unpaid accrued interest on this Note shall be due and payable on August 20, 2018 (the “Maturity Date”). All provisions related to conversion of the Note into equity securities of the Company are hereby deleted. On May 16, 2018, the Company entered into a second amendment agreement of a Convertible Promissory Note with the holder of a 10% fixed secured convertible promissory note. The new Maturity Date is November 16, 2018. The new interest rate is 5%. The note is prepayable at 120% of the unpaid balance upon 10 business days’ notice to the holder, which has the option to convert, in whole or in part, during the notice period. The conversion price shall be equal to a 40% discount to the lowest one-day Volume Average Weighted Price (“VWAP”) during the 30 trading days preceding such conversion. 2017 Omnibus Incentive Plan On January 11, 2018, the Company issued 42,850 shares of the Company’s restricted common stock under the 2017 Omnibus Incentive Plan to select personnel of the Company. Additionally, on March 15, 2018, the Company issued an additional 100,000 shares of the Company’s common stock to select employees of the Company. In May 2018, the Company issued 83,900 shares of common stock to various employees pursuant to the Company’s 2017 Omnibus Stock Incentive Plan. In July 2018, the Company issued 100,000 shares of common stock to various employees pursuant to the Company’s 2017 Omnibus Stock Incentive Plan. In August 2018, the Company issued 43,195 shares of common stock to various employees pursuant to the Company’s 2017 Omnibus Stock Incentive Plan. Series A convertible preferred stock In October 2015, the Company issued a total of 1,000,000 shares of its Class A Preferred Stock as part of a reorganization in which Helix Opportunities LLC contributed 100% of itself and its wholly-owned subsidiaries, Security Consultants Group, LLC and Boss Security Solutions, Inc. to the Company in exchange for 1,000,000 convertible preferred shares of the Company. The Class A Preferred Stock included super majority voting rights and were convertible into 60% of the Company’s common stock. During the third quarter of 2017, the Company modified the conversion rate on the Class A Preferred Stock to a 1:1 ratio. This modification reduced the amount of potentially dilutive Convertible Series A Stock by 15,746,127 shares to a total of 1,000,000 at September 30, 2017. Series B convertible preferred stock Series B Preferred Stock Purchase Agreement On May 17, 2017, the Company sold to accredited investors an aggregate of 5,781,426 Series B Preferred Shares for gross proceeds of $1,875,000 and converted a $500,000 Unsecured Convertible Promissory Note into 1,536,658 Series B Preferred Shares. This tranche of Series B Preferred Shares are convertible into 7,318,084 shares of common stock based on the current conversion price, at a purchase price of $0.325 per share. Net proceeds were approximately $1,772,500 after legal and placement agent fees listed below and the satisfaction of the promissory notes discussed in Note 14. In connection with the Series B Preferred Stock Purchase Agreement, the Company is obligated to issue warrants to a third-party for services to purchase 462,195 shares of common stock at $0.325 per share (see Note 18). These warrants have been accounted for as an obligation to issue because as of the balance sheet date the Company did not deliver the warrants though incurred the obligation; accordingly, they were recognized as a liability on the unaudited condensed consolidated balance sheet and cost of issuance of Series B preferred shares on the unaudited condensed consolidated statement of shareholders’ equity (deficit). On July 28, 2017, as contemplated by the Initial Series B Preferred Purchase Agreement, the Parties entered into a second Series B Preferred Stock Purchase Agreement (the “Second Series B Purchase Agreement”) whereby the Company issued and sold to accredited investors 1,680,000 shares of the Company’s Series B Preferred Stock in exchange for an aggregate cash payment equal to $840,000. On August 29, 2017, as contemplated by the Initial Series B Purchase Agreement, the Parties entered into a third Series B Preferred Stock Purchase Agreement (the “Third Series B Purchase Agreement”) whereby the Company issued and sold to accredited investors 369,756 shares of the Company’s Series B Preferred Stock in exchange for an aggregate cash payment equal to $120,000. On September 15, 2017, as contemplated by the Initial Series B Purchase Agreement, the Parties entered into a fourth Series B Preferred Stock Purchase Agreement (the “Third Series B Purchase Agreement”) whereby the Company issued and sold to accredited investors 462,195 shares of the Company’s Series B Preferred Stock in exchange for an aggregate cash payment equal to $150,000. On October 11, 2017, as contemplated by the Initial Series B Purchase Agreement, the Parties entered into a fifth Series B Preferred Stock Purchase Agreement (the “Third Series B Purchase Agreement”) whereby the Company issued and sold to accredited investors 462,195 shares of the Company’s Series B Preferred Stock in exchange for an aggregate cash payment equal to $150,000. On October 31, 2017, as contemplated by the Initial Series B Purchase Agreement, the Parties entered into a sixth Series B Preferred Stock Purchase Agreement (the “Third Series B Purchase Agreement”) whereby the Company issued and sold to accredited investors 1,042,337 shares of the Company’s Series B Preferred Stock in exchange for an aggregate cash payment equal to $557,500. On December 19, 2017, as contemplated by the Initial Series B Purchase Agreement, the Parties entered into a seventh Series B Preferred Stock Purchase Agreement (the “Third Series B Purchase Agreement”) whereby the Company issued and sold to accredited investors 2,449,634 shares of the Company’s Series B Preferred Stock in exchange for an aggregate cash payment equal to $795,000. Series B Preferred Stock In accordance with the Certificate of Incorporation, there were 9,000,000 authorized Series B Preferred Stock at a par value of $ 0.001 . Conversion: Each Series B Preferred Share is convertible at the option of the holder at any time on or after May 12, 2018 into such number of shares of the Company’s common stock equal to the number of Series B Preferred Shares to be converted, multiplied by the Preferred Conversation Rate. The Preferred Conversion Rate shall be the quotient obtained by dividing the Preferred Stock Original Issue Price ($0.3253815) by the Preferred Stock Conversation Price in effect at the time of the conversion (the initial conversion price will be equal to the Preferred Stock Original Issue Price, subject to adjustment in the event of stock splits, stock dividends, and fundamental transactions). Based on the current conversion price, the Series B Preferred Shares are convertible into 13,306,599 shares of common stock. A fundamental transaction means: (i) our merger or consolidation with or into another entity, (ii) any sale of all or substantially all of our assets in one transaction or a series of related transactions, (iii) any reclassification of our Common Stock or any compulsory share exchange by which Common Stock is effectively converted into or exchanged for other securities, cash or property; or (iv) sale of shares below the preferred stock conversion price. Each Series B Preferred Share will automatically convert into common stock upon the earlier of (i) notice by the Company to the holders that the Company has elected to convert all outstanding Series B Preferred Shares at any time on or after May 12, 2018; or (ii) immediately prior to the closing of a firmly underwritten initial public offering (involving the listing of the Company’s Common Stock on an Approved Stock Exchange) pursuant to an effective registration statement under the Securities Act of 1933, as amended, covering the offer and sale of the Common Stock for the account of the Company in which the net cash proceeds to the Company (before underwriting discounts, commissions and fees) are at least fifty million dollars ($50,000,000). Beneficial Conversion Feature – Series B Preferred Stock (deemed dividend): Each share of Series B Preferred Stock is convertible into shares of common stock, at any time at the option of the holder at any time on or after May 12, 2018. On May 17, 2017, the date of issuances of the Series B, the publicly traded common stock price was $3.98. Based on the guidance in ASC 470-20-20, the Company determined that a beneficial conversion feature exists, as the effective conversion price for the Series B preferred shares at issuance was less than the fair value of the common stock into which the preferred shares are convertible. A beneficial conversion feature based on the intrinsic value at the date of issuances for the Series B preferred shares is scheduled below. For the three and nine months ended September 30, 2018, the beneficial conversion amount of $14,998,505 and $22,202,194, respectively was accreted back to the preferred stock as a deemed dividend and charged to additional paid in capital in the absence of earning as the beneficial conversion feature is amortized over time through the earliest conversion date, May 12, 2018. As of June 30, 2018 the beneficial conversion feature was fully amortized. Provided below is a schedule of the issuances of Series B preferred shares and the amount accredited to deemed dividend at September 30, 2018. For the Nine Months Ended September 30, 2018 Issuance Date Beneficial Conversion Feature Term (months) Number of shares Fair Value of Beneficial Conversion Feature Amount accreted as a deemed dividend at December 31, 2017 Amount accreted as a deemed dividend for the Nine Months Ended September 30, 2018 Unamortized Beneficial Conversion Feature May 17, 2017 12 7,318,084 $ 25,247,098 $ (15,779,436 ) $ (9,467,661 ) $ - July 29, 2017 9.5 1,680,000 6,804,000 (3,674,634 ) (3,129,366 ) - August 29, 2017 8.5 369,756 1,148,263 (556,190 ) (592,073 ) - September 15, 2017 8 462,195 1,435,329 (648,601 ) (786,728 ) - October 11, 2017 7 462,195 1,121,036 (426,309 ) (694,727 ) - October 31, 2017 6.5 1,042,337 1,735,641 (548,570 ) (1,187,071 ) - December 19, 2017 5 2,449,634 6,921,347 (576,779 ) (6,344,568 ) - Total 13,784,201 $ 44,412,714 $ (22,210,519 ) $ (22,202,194 ) $ - Dividends, Voting Rights and Liquidity Value: Pursuant to the Certificate of Designations, the Series B Preferred Shares shall bear no dividends, except that if the Board shall declare a dividend payable upon the then-outstanding shares of the Company’s common stock. The Series B Preferred Shares vote together with the common stock and all other classes and series of stock of the Company as a single class on all actions to be taken by the stockholders of the Company including, but not limited to, actions amending the certificate of incorporation of the Company to increase the number of authorized shares of the common stock. Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of Series B Preferred Shares are entitled to (i) first receive distributions out of our assets in an amount per share equal to the Stated Value plus all accrued and unpaid dividends, whether capital or surplus before any distributions shall be made on any shares of common stock and (ii) second, on an as-converted basis alongside the common stock. Classification: These Series B Preferred Shares are classified within permanent equity on the Company’s consolidated balance sheet as they do not meet the criteria that would require presentation outside of permanent equity under ASC 480, Distinguishing Liabilities from Equity |
Stock Options
Stock Options | 9 Months Ended |
Sep. 30, 2018 | |
Stock Options/2017 Omnibus Incentive Plan [Abstract] | |
Stock Options | 17. Stock Options As part of the Membership Interest Purchase Agreement entered into between the Company and Security Grade, on June 2, 2017 (see Note 6), the Company granted to the selling Members the option to purchase up to 414,854 shares of the Company’s common stock at a price of $0.001 per share. Of the 414,854 options granted, 207,427 were vested at closing and equity classified. The vesting of the remaining 207,427 shares were subject to certain milestones being achieved and was initially recognized as contingent consideration, both a component of purchase price. As a result of the milestones being met during the third quarter of 2017, the remaining 207,427 shares have also vested. The options have an expiration date of 36 months from the closing date. The exercise price will be based on the fair market value of the share on the date of grant. On March 6, 2018, the Company filed a lawsuit in the United States Court for the District of Colorado alleging violations in previously disclosed representations and warranties by the plaintiff as part of the Acquisition. Following the appointment of a registered Public Company Accounting Oversight Board (“PCAOB”) auditor, certain misrepresentations, primarily surrounding the misclassification of certain revenues as being recurring, were discovered, artificially inflating the price of the membership interest in Security Grade. As a result of the settlements with the selling shareholders, 80,979 options previously issued as part of the acquisition were cancelled. As part of the Merger Agreement entered into between the Company and BioTrackTHC, on June 1, 2018 (see Note 6), the Company assumed the BioTrackTHC Stock Plan, pursuant to which options exercisable at prices between $0.001 to $1.66 per share for 8,132,410 shares of Company common stock are outstanding so that the BioTrackTHC stockholders will own 48% of the Company on a fully diluted basis as of the closing date. Stock option activity for the period ended September 30, 2018 is as follows: Shares Underlying Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Outstanding at January 1, 2018 414,854 $ 0.001 2.42 Granted 490,000 $ 1.92 0.51 Options assumed pursuant to acquisition 8,132,410 $ 0.72 2.17 Forfeited and expired (80,979 ) $ 0.001 Exercised (216,616 ) $ 0.001 Outstanding at September 30, 2018 8,739,669 $ 0.001 2.70 Vested options at September 30, 2018 8,466,285 $ 0.69 2.19 |
Warrants
Warrants | 9 Months Ended |
Sep. 30, 2018 | |
Warrants [Abstract] | |
Warrants | 18. Warrants On February 13, 2017, the Company entered into a $183,333 Fixed secured Convertible Promissory Note (“Note Five”) with a fourth investor (the “Fourth Investor”). The Fourth Investor provided the Company with $166,666 in cash, which was received by the Company during the period ended March 31, 2017. The additional $16,666 was retained by the Fourth Investor for due diligence and legal bills for the transaction. In conjunction with Note Five, the Company issued a warrant, of which the value was derived and based off the fair value of Note Five, to the fourth investor to purchase 25,000 shares of the Company’s common stock at $1.00 per share. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after February 14, 2017 and on or before February 12, 2022, by delivery to the Company of the Notice of Exercise. On December 11, 2017, the investor exercised their purchase right in a net settlement cashless exercise. In connection with the issuance of the Note Seven, the Company issued a warrant (the “Warrant”) to the Purchaser to purchase 150,000 shares of Common Stock pursuant to the terms and provisions thereunder. The Warrant is exercisable at any time within five (5) years of issuance and entitles the Purchaser to purchase 150,000 shares of the Common Stock at an exercise price of the lesser of either i) $1.00 or ii) a 50% discount to the lowest closing bid price thirty (30) trading days immediately preceding conversion, subject to certain adjustments. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after April 26, 2017 and on or before April 26, 2022, by delivery to the Company of the Notice of Exercise. On December 11, 2017, the investor exercised their purchase right in a net settlement cashless exercise. During the nine months ended September 30, 2018, the Company entered into a Graduated Lock-Up Letter to induce the entering into of a consulting agreement in exchange for 50,000 shares of the Company’s common stock and the granting of 575,000 warrants for the purchase of common stock of the Company. The company recognized compensation expense of $943,000 for the three and nine months ended September 30, 2018 relating to the granting of the new warrants. A summary of warrant activity is as follows: For the Nine Months Ended September 30, 2018 Warrant Shares Weighted Average Exercise Price Balance at January 1, 2018 2,732,073 $ 0.23 Warrants granted 575,000 $ 0.01 Balance at September 30, 2018 3,307,073 $ 0.19 Warrant Obligations In connection with the Series B Preferred Stock Purchase Agreement (See FN 16), the Company is obligated to issue warrants to a third-party to purchase 812,073 shares of common stock at $0.325 per share for services rendered. These warrants have been accounted for as warrant obligations and are recognized as a liability on the unaudited condensed consolidated balance sheets as of September 30, 2018 and December 31, 2017. For the three months ended September 30, 2018 and 2017, the Company recorded a credit and a charge in the change in fair value of the warrant obligations of $136,920 and $531,395, respectively, and is reflected in the unaudited condensed consolidated statements of operations, other income (expense). For the nine months ended September 30, 2018 and 2017, the Company recorded a credit and charge in the change in fair value of the warrant obligations of $1,434,760 and $406,604, respectively, and is reflected in the unaudited condensed consolidated statements of operations, other income (expense). Although the Company issued warrants during the first quarter of 2018, the rights entitled to the third-party holder of the warrants to purchase shares of the Company’s common stock was not exercised. Upon exercising the right to purchase the Company’s common stock by the third-party, the Company will de-recognize the liability for warrant obligations and reclassify the appropriate amount into equity. The fair value of the Company’s obligation to issue warrants was calculated using the Black-Scholes model and the following assumptions: As of September 30, 2018 As of December 31, 2017 As of Fair value of company’s common stock $ 1.24 $ 3.00 $ 3.98 Dividend yield 0 % 0 % 0 % Expected volatility 222.8 % 266.4 % 181.2 % Risk Free interest rate 2.88 % 1.98 % 1.42 % Expected life (years) 1.90 2.65 3.00 Fair value of financial instruments - warrants $ 994,809 $ 2,429,569 $ 1,839,133 The change in fair value of the financial instruments – warrants is as follows: Amount Balance as of January 1, 2018 $ 2,429,569 Change in fair value of liability to issue warrants $ (1,434,760 ) Balance as of September 30, 2018 $ 994,809 Amount Balance as of July 1, 2018 $ 1,131,729 Change in fair value of liability to issue warrants $ (136,920 ) Balance as of September 30, 2018 $ 994,809 |
2017 Omnibus Incentive Plan
2017 Omnibus Incentive Plan | 9 Months Ended |
Sep. 30, 2018 | |
Stock Options/2017 Omnibus Incentive Plan [Abstract] | |
2017 Omnibus Incentive Plan | 19. 2017 Omnibus Incentive Plan The Company’s 2017 Omnibus Incentive Plan (the “2017 Plan”) was adopted by our Board of Directors and a majority of our voting security holders on October 17, 2017. The 2017 Plan permits the granting of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards and dividend equivalent rights to eligible employees, directors and consultants. We grant options to purchase shares of common stock under the 2017 Plan at no less than the fair value of the underlying common stock as of the date of grant. Options granted under the Plan have a maximum term of ten years. Under the Plan, a total of 5,000,000 shares of common stock are reserved for issuance. As of September 30, 2018, there were 1,109,995 shares of common stock outstanding and 490,000 stock options were granted under the 2017 Plan. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Taxes [Abstract] | |
Income Taxes | 20 Income Taxes No provision for U.S. federal or state income taxes has been recorded as the Company has incurred net operating losses since inception. Significant components of the Company’s net deferred income tax assets for the nine months ended September 30, 2018 and 2017 consist of income tax loss carryforwards. These amounts are available for carryforward for use in offsetting taxable income of future years through 2035. Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable income within the carry-forward period. Utilization of the net operating loss carry-forwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. Due to the Company’s history of operating losses, these deferred tax assets arising from the future tax benefits are currently not likely to be realized and are thus reduced to zero by an offsetting valuation allowance. As a result, there is no provision for income taxes. For the nine months ended September 30, 2018 and 2017, the Company has a net operating loss carry forward of approximately $9,825,000 and $5,800,000, respectively. Utilization of these net loss carry forwards is subject to the limitations of Internal Revenue Code Section 382. The Company applied a 100% valuation reserve against the deferred tax benefit as the realization of the benefit is not certain. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 21. Commitments and Contingencies The Company is obligated under two operating lease agreements for office facilities in Colorado, Florida, Washington and Hawaii, which expire in February and March 2021. Rent expense incurred under the Company’s operating leases amount to $133,211 and $14,438 during the three months ended September 30, 2018 and 2017, respectively and $217,662 and $55,159 for the nine months ended September 30, 2018 and 2017, respectively. |
Segment Results
Segment Results | 9 Months Ended |
Sep. 30, 2018 | |
Segment Results [Abstract] | |
Segment Results | 22. Segment Results FASB ASC 280-10-50 requires use of the “management approach” model for segment reporting. The management approach is based on the way a company’s management organized segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision–making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision–making group is composed of the Chief Executive Officer. The Company operates in three segments, Security and guarding, Systems installation and Software. Asset information by operating segment is not presented below since the chief operating decision maker does not review this information by segment. The reporting segments follow the same accounting policies used in the preparation of the Company’s unaudited condensed consolidated financial statements. The following represents selected information for the Company’s reportable segments: For the Three Months Ended For the Nine Months Ended 2018 (Revised) 2017 2018 2017 Security and guarding Revenue $ 1,141,676 $ 1,129,746 $ 3,432,651 $ 2,837,145 Cost of revenue 917,620 814,031 2,458,548 2,192,366 Gross profit 224,056 315,715 974,103 644,779 Total operating expenses 2,536,916 1,039,904 7,279,486 2,186,942 Loss from operations (2,312,860 ) (724,189 ) (6,305,383 ) (1,542,163 ) Total other income/(expense) 58,716 468,832 2,050,109 (6,577,864 ) Total net income (loss) $ (2,254,144 ) $ (255,357 ) $ (4,255,274 ) $ (8,120,027 ) Systems installation Revenue $ 318,850 $ - $ 454,113 $ - Cost of revenue 194,013 - 379,046 - Gross profit 124,837 - 75,067 - Total operating expenses 49,683 - 134,097 - Loss from operations 75,154 - (59,030 ) - Total other income/(expense) 406 - 804 - Total net income (loss) $ 75,560 $ - $ (58,226 ) $ - Software Revenue $ 1,653,195 $ - $ 2,229,337 $ - Cost of revenue 768,428 - 1,055,122 - Gross profit 884,767 - 1,174,215 - Total operating expenses 1,384,542 - 1,806,108 - Loss from operations (499,775 ) - (631,893 ) - Total other income/(expense) (93 ) - (84 ) - Total net income (loss) $ (499,868 ) $ - $ (631,977 ) $ - |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 23. Subsequent Events In October 2018 the Company issued 111,111 shares of restricted common stock at $0.90 per share to an investor per a subscription agreement for total proceeds of $100,000. In October 2018 the Company issued 583,333 shares of restricted common stock at $0.90 per share to an investor per a subscription agreement for total proceeds of $524,999. In October 2018 the Company entered into an executive employment agreement with Patrick Vo (the “Executive”) whereas the Company wishes to continue to employ the Executive as the Chief Executive Officer of its wholly owned Subsidiary, BioTrack THC. The Company will initially pay the Executive a base salary of $175,000 (“Base Salary”). Commencing with the calendar year 2019, the Executive will be eligible to receive an annual bonus targeted at up to fifty percent (50%) of Executive’s Base Salary plus an option grant to be determined by the Company’s Board of Directors or an applicable compensation committee of the Board, subject to specific provisions. The Executive will be entitled to such other benefits, and to participate in such benefit plans, as are generally made available to similarly situated employees of the Company from time to time, subject to Company policy and the terms and conditions of any applicable benefit plans. In October 2018 the Company entered into an executive employment agreement with Terrance Ferraro (the “Executive”) whereas the Company wishes to continue to employ the Executive as the Chief Software Architect of its wholly owned Subsidiary, BioTrack THC. The Company will initially pay the Executive a base salary of $175,000 (“Base Salary”). Commencing with the calendar year 2019, the Executive will be eligible to receive an annual bonus targeted at up to fifty percent (50%) of Executive’s Base Salary plus an option grant to be determined by the Company’s Board of Directors or an applicable compensation committee of the Board, subject to specific provisions. The Executive will be entitled to such other benefits, and to participate in such benefit plans, as are generally made available to similarly situated employees of the Company from time to time, subject to Company policy and the terms and conditions of any applicable benefit plans. In October 2018 the Company issued 10,000 shares of free trading shares at $1.02 per share to a shareholder per a corporate stock transfer for total proceeds of $10,200. In October 2018 the Company issued an additional 10,000 shares of free trading shares at $1.02 per share to a shareholder per a corporate stock transfer for total proceeds of $10,200. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, which include Helix TCS, LLC (“Helix TCS”), Security Consultants Group, LLC (“Security Consultants”), Boss Security Solutions, Inc. (“Boss Security”), Security Consultants Group Oregon, LLC (“Security Oregon”), Security Grade, BioTrackTHC (since June 1, 2018), and Engeni US (since August 3, 2018) |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Changes in estimates and assumptions are reflected in reported results in the period in which they become known. Use of estimates includes the following: 1) allowance for doubtful accounts, 2) estimated useful lives of property, equipment and intangible assets, 3) intangibles impairment, 4) valuation of convertible notes payable and 5) revenue recognition. Actual results could differ from estimates. |
Cash | Cash Cash consists of checking accounts. The Company considers all highly-liquid investments purchased with a maturity of three months or less at the time of purchase to be cash. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recorded at the invoiced amount, net of an allowance for doubtful accounts. The Company performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information; and determines the allowance for doubtful accounts based on historical write-off experience, customer specific facts and economic conditions. Management charges balances off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company determines when receivables are past due, or delinquent based on how recently payments have been received. Outstanding account balances are reviewed individually for collectability. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. Allowance for doubtful accounts was $65,103 and $3,000 at September 30, 2018 and December 31, 2017, respectively. |
Long-Lived Assets, Including Definite Lived Intangible Assets | Long-Lived Assets, Including Definite Lived Intangible Assets Long-lived assets, other than goodwill and other indefinite-lived intangibles, are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through the estimated undiscounted future cash flows derived from such assets. Definite-lived intangible assets primarily consist of non-compete agreements and customer relationships. For long-lived assets used in operations, impairment losses are only recorded if the asset’s carrying amount is not recoverable through its undiscounted, probability-weighted future cash flows. The Company measures the impairment loss based on the difference between the carrying amount and the estimated fair value. When an impairment exists, the related assets are written down to fair value. |
Goodwill | Goodwill Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, is carried at cost. Goodwill is not amortized; rather, it is subject to a periodic assessment for impairment by applying a fair value-based test. Helix reviews goodwill for possible impairment annually during the fourth quarter, or whenever events or circumstances indicate that the carrying amount may not be recoverable. The impairment model prescribes a two-step method for determining goodwill impairment. However, an entity is permitted to first assess qualitative factors to determine whether the two-step goodwill impairment test is necessary. The qualitative factors considered by Helix may include, but are not limited to, general economic conditions, Helix’s outlook, market performance of Helix’s industry and recent and forecasted financial performance. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that a reporting unit’s fair value is less than its carrying amount. Otherwise, no further impairment testing is required. In the first step, Helix determines the fair value of its reporting unit using a discounted cash flow analysis. If the net book value of the reporting unit exceeds its fair value, Helix then performs the second step of the impairment test, which requires allocation of the reporting unit’s fair value to all of its assets and liabilities using the acquisition method prescribed under authoritative guidance for business combinations with any residual fair value being allocated to goodwill. An impairment charge is recognized when the implied fair value of Helix’s goodwill is less than its carrying amount. Assumptions and estimates used in the evaluation of impairment may affect the carrying value of long-lived assets, which could result in impairment charges in future periods. Such assumptions include projections of future cash flows and the current fair value of the asset. It was determined that during the first quarter of 2018, the Company’s entire amount of goodwill attributable to the Security Grade acquisition was impaired. See Note 9 for a further discussion on the impairment. |
Accounting for Acquisitions | Accounting for Acquisitions In accordance with the guidance for business combinations, the Company determines whether a transaction or other event is a business combination, which requires that the assets acquired, and liabilities assumed constitute a business. Each business combination is then accounted for by applying the acquisition method. If the assets acquired are not a business, the Company accounts for the transaction or other event as an asset acquisition. Under both methods, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase. The Company capitalizes acquisition-related costs and fees associated with asset acquisitions and immediately expense acquisition-related costs and fees associated with business combinations. |
Business Combinations | Business Combinations The Company accounts for its business combinations under the provisions of Accounting Standards Codification (“ASC”) Topic 805-10, Business Combinations (“ASC 805-10”), which requires that the purchase method of accounting be used for all business combinations. Assets acquired and liabilities assumed, including non-controlling interests, are recorded at the date of acquisition at their respective fair values. ASC 805-10 also specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill. Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. Acquisition-related expenses are recognized separately from the business combinations and are expensed as incurred. If the business combination provides for contingent consideration, the Company records the contingent consideration at fair value at the acquisition date and any changes in fair value after the acquisition date are accounted for as measurement-period adjustments. Changes in fair value of contingent consideration resulting from events after the acquisition date, such as earn-outs, are recognized as follows: 1) if the contingent consideration is classified as equity, the contingent consideration is not re-measured and its subsequent settlement is accounted for within equity, or 2) if the contingent consideration is classified as a liability, the changes in fair value are recognized in earnings. The estimated fair value of net assets acquired, including the allocation of the fair value to identifiable assets and liabilities, was determined using established valuation techniques. The estimated fair value of the net assets acquired was determined using the income approach to valuation based on the discounted cash flow method. Under this method, expected future cash flows of the business on a stand-alone basis are discounted back to a present value. The estimated fair value of identifiable intangible assets, consisting of software and trade name acquired were determined using the relief from royalty method. The most significant assumptions under the relief from royalty method used to value software and trade names include: estimated remaining useful life, expected revenue, royalty rate, tax rate, discount rate and tax amortization benefit. The discounted cash flow method used to value non-compete agreements includes assumptions such as: expected revenue, term of the non-compete agreements, probability and ability to compete, operating margin, tax rate and discount rate. Management has developed these assumptions on the basis of historical knowledge of the business and projected financial information of the Company. These assumptions may vary based on future events, perceptions of different market participants and other factors outside the control of management, and such variations may be significant to estimated values. |
Revenue Recognition | Revenue Recognition Under FASB Topic 606, Revenue from Contacts with Customers The security services revenue is generated from performing armed and unarmed guarding which is contracted for on an hourly basis. Revenues associated with these contracted services are recognized under time-based arrangements as services are provided. Additionally, the Company provides transportation security services, which are generally contracted for on a per-run basis and sometimes additional fees and surcharges are also billed to the client depending on the length of the run. Revenues associated with these services are recognized as the transportation service is provided. The Company also generates revenue from developing and licensing seed to sale cannabis compliance software to both private-sector and public-sector (government agencies) businesses that are involved in cannabis related operations. The Company also generates revenue from on-going training, support and software customization services. Occasionally, the Company will enter into systems installation arrangements. Installation jobs are estimated based on the cost of equipment to be installed, the number of hours expected to be incurred to complete the job and other ancillary costs. Revenue associated with these services are recognized over the arrangement period. Lastly, the Company generates advertising revenues from consumer advertising on its Cannabase platform. Revenue is recognized over the contract period associated with each specific advertising campaign. |
Segment Information | Segment Information Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the Chief Executive Officer, who reviews the financial performance and the results of operations of the segments prepared in accordance with GAAP when making decisions about allocating resources and assessing performance of the Company. Asset information by operating segment is not presented since the chief operating decision maker does not review this information by segment. The reporting segments follow the same accounting policies used in the preparation of the Company’s condensed unaudited consolidated financial statements. |
Expenses | Expenses Cost of Revenues The cost of revenues is the total cost incurred to obtain a sale and the cost of the goods or services sold. Cost of revenues primarily consisted of hourly compensation for security personnel and employees involved in the creation and development of licensing software. Operating Expenses Operating expenses encompass selling general and administrative expenses, salaries and wages, professional and legal fees and depreciation. Selling, general and administrative expenses consist primarily of rent/moving expenses, advertising and travel expenses. Salaries and wages is composed of non-revenue generating employees. Professional services are principally comprised of outside legal, audit, information technology consulting, marketing and outsourcing services as well as the costs related to being a publicly traded company. Other (Expense) Income, net Other (expense) income, net consisted of change in fair value of convertible note, change in fair value of convertible note – related party, interest expense, change in fair value of obligation to issue warrants, loss on extinguishment of debt, loss on impairment of Goodwill and gain on reduction of obligation pursuant to acquisition. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost and depreciated on a straight-line basis over their estimated useful lives. Useful lives are 3 years for vehicles and 5 years for furniture and equipment. Maintenance and repairs are expensed as incurred and major improvements are capitalized. When assets are sold, or retired, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is included in other income. |
Contingencies | Contingencies Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions. |
Leases | Leases Lease agreements are evaluated to determine if they are capital leases meeting any of the following criteria at inception: (a) transfer of ownership; (b) bargain purchase option; (c) the lease term is equal to 75 percent or more of the estimated economic life of the leased property; or (d) the present value at the beginning of the lease term of the minimum lease payments, excluding that portion of the payments representing executory costs such as insurance, maintenance, and taxes to be paid by the lessor, including any profit thereon, equals or exceeds 90 percent of the excess of the fair value of the leased property to the lessor at lease inception over any related investment tax credit retained by the lessor and expected to be realized by the lessor. If at its inception, a lease meets any of the four lease criteria above, the lease is classified by the Company as a capital lease; and if none of the four criteria are met, the lease is classified by the Company as an operating lease. Operating lease payments are recognized as an expense in the income statement on a straight-line basis over the lease term, whereby an equal amount of rent expense is attributed to each period during the term of the lease, regardless of when actual payments are made. This generally results in rent expense in excess of cash payments during the early years of a lease and rent expense less than cash payments in the later years. The difference between rent expense recognized and actual rental payments is recorded as deferred rent and included in liabilities. |
Advertising | Advertising Advertising costs are expensed as incurred and included in selling, general and administrative expenses and amounted to $9,079 and $7,298 for the three months ended September 30, 2018 and 2017, respectively, and $74,408 and $12,477 for the nine months ended September 30, 2018 and 2017, respectively. |
Foreign Currency | Foreign Currency The local currency is the functional currency for one entity’s operations outside the United States. Assets and liabilities of these operations are translated to U.S. dollars at the exchange rate in effect at the end of each period. Income statement accounts are translated at the average exchange rate prevailing during the period. Translation adjustments arising from the use of differing exchange rates from period to period are included as a component of other comprehensive loss within shareholders’ equity. Gains and losses from foreign currency transactions are included in net loss for the period. |
Income Taxes | Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company has incurred net operating loss for financial-reporting and tax-reporting purposes. Accordingly, for Federal and state income tax purposes, the benefit for income taxes has been offset entirely by a valuation allowance against the related federal and state deferred tax asset for the nine months ended September 30, 2018 and 2017. |
Comprehensive Loss | Comprehensive Loss Comprehensive loss consists of consolidated net loss and foreign currency translation adjustments. Foreign currency translation adjustments included in comprehensive loss were not tax-effected as investments in international affiliates are deemed to be permanent. |
Distinguishing Liabilities from Equity | Distinguishing Liabilities from Equity The Company relies on the guidance provided by ASC Topic 480, Distinguishing Liabilities from Equity Once the Company determines that a financial instrument should not be classified as a liability, the Company determines whether the financial instrument should be presented between the liability section and the equity section of the balance sheet (“temporary equity”). The Company will determine temporary equity classification if the redemption of the financial instrument is outside the control of the Company (i.e. at the option of the holder). Otherwise, the Company accounts for the financial instrument as permanent equity. Initial Measurement The Company records its financial instruments classified as liability, temporary equity or permanent equity at issuance at the fair value, or cash received. Subsequent Measurement – Financial instruments classified as liabilities The Company records the fair value of its financial instruments classified as liabilities at each subsequent measurement date. The changes in fair value of its financial instruments classified as liabilities are recorded as other expense/income. |
Beneficial Conversion Feature | Beneficial Conversion Feature If the conversion features of conventional convertible debt provide for a rate of conversion that is below market value, this feature is characterized as a Beneficial Conversion Feature (“BCF”). A beneficial conversion feature is recorded by the Company as a debt discount pursuant to ASC 470-20, Debt with Conversion and Other Options The Company accounts for the beneficial conversion feature on its convertible preferred stock in accordance with ASC 470-20, Debt with Conversion and Other Options To determine the effective conversion price, the Company first allocates the proceeds received to the convertible preferred stock and then uses those allocated proceeds to determine the effective conversion price. If the convertible instrument is issued in a basket transaction (i.e., issued along with other freestanding financial instruments), the proceeds should first be allocated to the various instruments in the basket. Any amounts paid to the investor when the transaction is consummated (e.g., origination fees, due diligence costs) represent a reduction in the proceeds received by the issuer. The intrinsic value of the conversion option should be measured using the effective conversion price for the convertible preferred stock on the proceeds allocated to that instrument. The effective conversion price represents proceeds allocable to the convertible preferred stock divided by the number of shares into which it is convertible. The effective conversion price is then compared to the per share fair value of the underlying shares on the commitment date. The accounting for a BCF requires that the BCF be recognized by allocating the intrinsic value of the conversion option to additional paid-in capital, resulting in a discount on the convertible preferred stock. This discount should be accreted from the date on which the BCF is first recognized through the earliest conversion date for instruments that do not have a stated redemption date. The intrinsic value of the BCF is recognized as a deemed dividend on convertible preferred stock over a period specified in the guidance. |
Share-based Compensation | Share-based Compensation The Company accounts for stock-based compensation to employees in conformity with the provisions of ASC Topic 718, Stock Based Compensation The Company accounts for equity instruments issued to non-employees in accordance with the provisions of ASC Topic 505, subtopic 50, Equity-Based Payments to Non-Employees The Company calculates the fair value of option grants utilizing the Black-Scholes pricing model and estimates the fair value of the stock based upon the estimated fair value of the common stock. The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. The resulting stock-based compensation expense for both employee and non-employee awards is generally recognized on a straight- line basis over the requisite service period of the award. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments ASC Topic 820, Fair Value Measurements and Disclosures ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC Topic 820 are described as follows: ● Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date. ● Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. ● Level 3 – Inputs that are unobservable for the asset or liability. Certain assets and liabilities of the Company are required to be recorded at fair value either on a recurring or non-recurring basis. Fair value is determined based on the price that would be received for an asset or paid to transfer a liability in an orderly transaction based on market participants. The following section describes the valuation methodologies that the Company used to measure, for disclosure purposes, its financial instruments at fair value. Convertible notes payable The fair value of the Company’s convertible notes payable, approximated the carrying value as of September 30, 2018 and December 31, 2017. Factors that the Company considered when estimating the fair value of its debt included market conditions and the term of the debt. The level of the debt would be considered as Level 2. Additional Disclosures Regarding Fair Value Measurements The carrying value of cash, accounts receivable, prepaid expenses, deposits, accounts payable and accrued liabilities, advances from shareholders and obligation pursuant to acquisition approximate their fair value due to the short-term maturity of those items. |
Earnings (Loss) per Share | Earnings (Loss) per Share The Company follows ASC 260, Earnings Per Share Basic net loss per share is based on the weighted average number of common and common-equivalent shares outstanding. Potential common shares includable in the computation of fully-diluted per share results are not presented in the consolidated financial statements for the three and nine months ended September 30, 2018 and 2017 as their effect would be anti-dilutive. Basic loss per common share is computed based on the weighted average number of shares outstanding during the period. Diluted loss per share is computed in a manner similar to the basic loss per share, except the weighted-average number of shares outstanding is increased to include all common shares, including those with the potential to be issued by virtue of warrants, options, convertible debt and other such convertible instruments. Diluted loss per share contemplates a complete conversion to common shares of all convertible instruments only if they are dilutive in nature with regards to earnings per share. The anti-dilutive shares of common stock outstanding for the three and nine months ended September 30, 2018 and 2017 were as follows: For the Three Months Ended For the Nine Months Ended 2018 2017 2018 2017 Potentially dilutive securities: Convertible notes payable 106,957 226,320 106,957 226,320 Convertible Preferred A Stock 1,000,000 1,000,000 1,000,000 1,000,000 Convertible Preferred B Stock 13,784,201 9,830,035 13,784,201 9,830,035 Warrants 3,307,073 2,557,195 3,307,073 2,557,195 Stock options 8,739,669 - 8,739,669 - |
Reclassifications | Reclassifications Certain reclassifications have been made to the prior period financial statements to conform to the current period financial statement presentation. These reclassifications had no effect on net earnings or cash flows as previously reported. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). “Revenue from Contracts with Customers – Identifying Performance Obligations and Licensing” “Revenue Recognition and Derivatives and Hedging – Recession of SEC Guidance”, , “Revenue from Contracts with Customers – Narrow-Scope Improvements and Practical Expedients”, , “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers”. On January 1, 2018, we adopted the new accounting standard ASC 606 , “Revenue from Contracts with Customers In February 2016, the FASB issued ASU 2016-02, “Leases”, In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business. In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350); Simplifying the Test for Goodwill Impairment. In May 2017, the FASB issued ASU No 2017-09 “Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting” In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; 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. Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company is currently assessing the potential impact of adopting ASU 2017-11 on its financial statements and related disclosures. In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220); Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this ASU allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act. Consequently, the amendments eliminate the stranded tax effects resulting from the Act and will improve the usefulness of information reported to financial statement users. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted in any interim period after issuance of the ASU. The Company is evaluating the effect that this update will have on its financial statements and related disclosures. In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (ASC 718): Improvements to Nonemployee Share-Based Payment Accounting In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (ASC 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on our consolidated financial statements and related disclosures. |
Revision of Prior Period Fina_2
Revision of Prior Period Financial Statements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revision of Prior Period Financial Statements [Abstract] | |
Summary of effects of revisions on financial statements | Previously Reported Adjustments Revised Condensed Consolidated Balance Sheet as of December 31, 2017 Convertible notes payable, net of discount $ 1,301,004 $ (488,611 ) $ 812,393 Total liabilities $ 5,350,899 $ (488,611 ) $ 4,862,288 Preferred Shares (Class B) Outstanding 13,306,599 477,602 13,784,201 Preferred Shares (Class B) Par Amount $ 13,307 $ 477 $ 13,784 Additional Paid in Capital $ 3,923,234 $ 552,023 $ 4,475,257 Accumulated Deficit $ (18,177,819 ) $ (63,889 ) $ (18,241,708 ) Total Shareholders’ Equity $ 54,350 $ 488,611 $ 542,961 Total Liabilities and Shareholders’ Equity $ 5,405,249 $ - $ 5,405,249 Previously Reported Adjustments As revised Condensed Consolidated Statement of Operations for the Six Months Ended June 30, 2018 Revenue $ 3,340,817 $ (338,437 ) $ 3,002,380 Cost of Revenue $ 2,689,529 $ (338,437 ) $ 2,351,092 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of anti-dilutive shares of common stock outstanding | For the Three Months Ended For the Nine Months Ended 2018 2017 2018 2017 Potentially dilutive securities: Convertible notes payable 106,957 226,320 106,957 226,320 Convertible Preferred A Stock 1,000,000 1,000,000 1,000,000 1,000,000 Convertible Preferred B Stock 13,784,201 9,830,035 13,784,201 9,830,035 Warrants 3,307,073 2,557,195 3,307,073 2,557,195 Stock options 8,739,669 - 8,739,669 - |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue Recognition [Abstract] | |
Schedule of disaggregation of revenue | For the Three Months Ended For the Nine Months Ended 2018 2017 2018 2017 Types of Revenues: Security and Guarding $ 1,141,676 $ 1,129,746 $ 3,432,651 $ 2,837,145 Systems Installation 318,850 - 454,113 - Software 1,653,195 - 2,229,337 - Total revenues $ 3,113,721 $ 1,129,746 $ 6,116,101 $ 2,837,145 |
Business Combinations (Tables)
Business Combinations (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Business Acquisition [Line Items] | |
Schedule of the pro forma financial information purport to represent the results of operations for future periods | For the Three Months Ended For the Nine Months Ended Description 2018 2017 2018 2017 Revenues $ 3,134,396 $ 3,883,759 $ 8,957,690 $ 8,958,725 Net loss (2,722,404 ) 343,718 (5,213,028 ) (7,911,500 ) Net loss attributable to common shareholders (2,704,866 ) (7,701,240 ) (27,397,684 ) (19,320,872 ) Loss per share attributable to common shareholders: Basic and diluted-as pro forma (unaudited) (0.04 ) (0.29 ) (0.57 ) (0.68 ) |
Security Grade Acquisition [Member] | |
Business Acquisition [Line Items] | |
Schedule of allocation of the purchase price | Base Price – Cash $ 2,100,373 Base Price - Stock Options 916,643 Contingent Consideration - Stock Options 916,643 Total Purchase Price $ 3,933,659 |
Schedule of assets acquired and liabilities assumed | Weighted Average Useful Life Description Fair Value (in years) Assets acquired: Cash $ 14,137 Accounts receivable 53,792 Costs & earnings in excess of billings 96,898 Property, plant and equipment, net 27,775 Trademarks 25,000 10 Customer lists 3,154,578 5 Web address 5,000 5 Goodwill 664,329 Other assets 3,880 Total assets acquired $ 4,045,389 Liabilities assumed: Billings in excess of costs $ 23,967 Loans payable 18,414 Credit card payable and other liabilities 69,349 Total liabilities assumed 111,730 Estimated fair value of net assets acquired $ 3,933,659 |
Biotrack Acquisition [Member] | |
Business Acquisition [Line Items] | |
Schedule of allocation of the purchase price | Base Price - Common Stock $ 44,905,542 Base Price - Stock Options 12,646,491 Total Purchase Price $ 57,552,033 |
Schedule of assets acquired and liabilities assumed | Weighted Average Useful Life Description Fair Value (in years) Assets acquired: Cash $ 448,697 Accounts receivable 128,427 Prepaid expenses 351,615 Property, plant and equipment, net 72,252 Goodwill 39,135,007 Customer list 8,304,449 5 Software 9,321,627 4.5 Tradename 466,081 4.5 Total assets acquired $ 58,228,155 Liabilities assumed: Accounts payable $ 223,581 Other liabilities 452,541 Total liabilities assumed 676,122 Estimated fair value of net assets acquired $ 57,552,033 |
Engeni Acquisition [Member] | |
Business Acquisition [Line Items] | |
Schedule of allocation of the purchase price | Base Price - Common Stock $ 388,702 Contingent Consideration - Common Stock 777,298 Contingent Consideration - Cash 100,000 Total Purchase Price $ 1,266,000 |
Schedule of assets acquired and liabilities assumed | Weighted Average Useful Life Description Fair Value (in years) Assets acquired: Cash $ 5,609 Accounts receivable and other assets 30,479 Property, plant and equipment, net 57,830 Software 449,568 3.3 Goodwill 778,552 Total assets acquired $ 1,322,038 Liabilities assumed: Accounts payable $ 56,038 Total liabilities assumed 56,038 Estimated fair value of net assets acquired $ 1,266,000 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Property and Equipment, Net [Abstract] | |
Schedule of property and equipment | September 30, 2018 December 31, 2017 Furniture and equipment $ 119,391 $ 16,332 Software equipment 15,094 1,382 Vehicles 205,157 175,647 Total 339,642 193,361 Less: Accumulated depreciation (59,118 ) (82,727 ) Property and equipment, net $ 280,524 $ 110,634 |
Intangible Assets, Net and Go_2
Intangible Assets, Net and Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Intangible Assets, Net and Goodwill [Abstract] | |
Schedule of intangible assets | September 30, 2018 Estimated Useful Life (Years) Gross Carrying Amount Assets Acquired Pursuant to Business Combination (2) (3) Accumulated Amortization Net Book Value Database 5 $ 93,427 $ - $ (46,151 ) $ 47,276 Trade names and trademarks 5 - 10 125,000 466,081 (62,323 ) 528,758 Web addresses 5 130,000 - (63,075 ) 66,925 Customer list 5 3,154,578 8,304,449 (1,388,176 ) 10,070,851 Software 4.5 - 9,771,195 (707,489 ) 9,063,706 $ 3,503,005 $ 18,541,725 $ (2,267,214 ) $ 19,777,516 December 31, 2017 Estimated Useful Life (Years) Gross Carrying Amount at December 31, 2016 Assets Acquired Pursuant to Business Combination (1) Accumulated Amortization Net Book Value Database 5 $ 93,427 $ - $ (32,183 ) $ 61,244 Trade names and trademarks 10 100,000 25,000 (18,675 ) 106,325 Web addresses 5 125,000 5,000 (43,639 ) 86,361 Customer list 5 - 3,154,578 (366,249 ) 2,788,329 $ 318,427 $ 3,184,578 $ (460,746 ) $ 3,042,259 (1) On June 2, 2017, the Company acquired various assets of Security Grade Protective Services, Ltd. (See Note 6) (2) On June 1, 2018, the Company acquired various assets of BioTrackTHC (See Note 6) (3) On August 3, 2018, the Company acquired various assets of Engeni (See Note 6) |
Schedule of goodwill | Total Goodwill Balance at January 1, 2018 $ 664,329 Impairment of goodwill (664,329 ) Goodwill attributable to Biotrack acquisition 39,135,007 Goodwill attributable to Engeni acquisition 778,552 Balance at September 30, 2018 $ 39,913,559 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounts Payable and Accrued Expenses [Abstract] | |
Schedule of accounts payable and accrued expenses | September 30, 2018 December 31, 2017 Accounts payable $ 1,022,211 $ 334,751 Accrued expenses 284,183 220,682 Accrued interest 12,867 43,204 Total $ 1,319,261 $ 598,637 |
Costs, Estimated Earnings and_2
Costs, Estimated Earnings and Billings (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Costs, Estimated Earnings and Billings [Abstract] | |
Schedule of costs estimated earnings and billings on uncompleted contracts | September 30, 2018 December 31, 2017 Costs incurred on uncompleted contracts $ 118,741 $ 64,705 Estimated earnings 50,261 27,731 Cost and estimated earnings earned on uncompleted contracts 169,002 92,436 Billings to date 147,996 71,778 Costs and estimated earnings in excess of billings on uncompleted contracts 21,006 20,658 Costs in excess of billings $ 24,792 $ 40,848 Billings in excess of cost (3,786 ) (20,190 ) $ 21,006 $ 20,658 |
Convertible Note Payable (Table
Convertible Note Payable (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Notes Payable/Convertible Note Payable/Promissory Notes [Abstract] | |
Schedule of convertible note payable | September 30, 2018 December 31, 2017 Note Five, 5% convertible promissory note, fixed secured, maturing May 16, 2018 $ 132,625 $ 812,393 132,625 812,393 Less: Current portion (132,625 ) (812,393 ) Long-term portion $ - $ - |
Notes Payable (Tables)
Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Notes Payable/Convertible Note Payable/Promissory Notes [Abstract] | |
Schedule of notes payable | September 30, 2018 December 31, 2017 Vehicle financing loans payable, between 4.7% and 7.0% interest and maturing between June 2022 and July 2022 $ 75,090 $ 55,890 Loans Payable - Credit Union 5,653 8,582 Less: Current portion of loans payable (7,582 ) (11,179 ) Long-term portion of loans payable $ 73,161 $ 53,293 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Shareholders' Equity [Abstract] | |
Schedule of the issuances of Series B preferred shares | For the Nine Months Ended September 30, 2018 Issuance Date Beneficial Conversion Feature Term (months) Number of shares Fair Value of Beneficial Conversion Feature Amount accreted as a deemed dividend at December 31, 2017 Amount accreted as a deemed dividend for the Nine Months Ended September 30, 2018 Unamortized Beneficial Conversion Feature May 17, 2017 12 7,318,084 $ 25,247,098 $ (15,779,436 ) $ (9,467,661 ) $ - July 29, 2017 9.5 1,680,000 6,804,000 (3,674,634 ) (3,129,366 ) - August 29, 2017 8.5 369,756 1,148,263 (556,190 ) (592,073 ) - September 15, 2017 8 462,195 1,435,329 (648,601 ) (786,728 ) - October 11, 2017 7 462,195 1,121,036 (426,309 ) (694,727 ) - October 31, 2017 6.5 1,042,337 1,735,641 (548,570 ) (1,187,071 ) - December 19, 2017 5 2,449,634 6,921,347 (576,779 ) (6,344,568 ) - Total 13,784,201 $ 44,412,714 $ (22,210,519 ) $ (22,202,194 ) $ - |
Stock Options (Tables)
Stock Options (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Stock Options/2017 Omnibus Incentive Plan [Abstract] | |
Schedule of stock option activity | Shares Underlying Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Outstanding at January 1, 2018 414,854 $ 0.001 2.42 Granted 490,000 $ 1.92 0.51 Options assumed pursuant to acquisition 8,132,410 $ 0.72 2.17 Forfeited and expired (80,979 ) $ 0.001 Exercised (216,616 ) $ 0.001 Outstanding at September 30, 2018 8,739,669 $ 0.001 2.70 Vested options at September 30, 2018 8,466,285 $ 0.69 2.19 |
Warrants (Tables)
Warrants (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Warrants [Abstract] | |
Schedule of warrant activity | For the Nine Months Ended September 30, 2018 Warrant Shares Weighted Average Exercise Price Balance at January 1, 2018 2,732,073 $ 0.23 Warrants granted 575,000 $ 0.01 Balance at September 30, 2018 3,307,073 $ 0.19 |
Schedule of fair value of the company's obligation to issue warrants using Black-Scholes model | As of September 30, 2018 As of December 31, 2017 As of Fair value of company’s common stock $ 1.24 $ 3.00 $ 3.98 Dividend yield 0 % 0 % 0 % Expected volatility 222.8 % 266.4 % 181.2 % Risk Free interest rate 2.88 % 1.98 % 1.42 % Expected life (years) 1.90 2.65 3.00 Fair value of financial instruments - warrants $ 994,809 $ 2,429,569 $ 1,839,133 |
Schedule of fair value of the financial instrument | Amount Balance as of January 1, 2018 $ 2,429,569 Change in fair value of liability to issue warrants $ (1,434,760 ) Balance as of September 30, 2018 $ 994,809 Amount Balance as of July 1, 2018 $ 1,131,729 Change in fair value of liability to issue warrants $ (136,920 ) Balance as of September 30, 2018 $ 994,809 |
Segment Results (Tables)
Segment Results (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Results [Abstract] | |
Schedule of represents selected information reportable segments | For the Three Months Ended For the Nine Months Ended 2018 (Revised) 2017 2018 2017 Security and guarding Revenue $ 1,141,676 $ 1,129,746 $ 3,432,651 $ 2,837,145 Cost of revenue 917,620 814,031 2,458,548 2,192,366 Gross profit 224,056 315,715 974,103 644,779 Total operating expenses 2,536,916 1,039,904 7,279,486 2,186,942 Loss from operations (2,312,860 ) (724,189 ) (6,305,383 ) (1,542,163 ) Total other income/(expense) 58,716 468,832 2,050,109 (6,577,864 ) Total net income (loss) $ (2,254,144 ) $ (255,357 ) $ (4,255,274 ) $ (8,120,027 ) Systems installation Revenue $ 318,850 $ - $ 454,113 $ - Cost of revenue 194,013 - 379,046 - Gross profit 124,837 - 75,067 - Total operating expenses 49,683 - 134,097 - Loss from operations 75,154 - (59,030 ) - Total other income/(expense) 406 - 804 - Total net income (loss) $ 75,560 $ - $ (58,226 ) $ - Software Revenue $ 1,653,195 $ - $ 2,229,337 $ - Cost of revenue 768,428 - 1,055,122 - Gross profit 884,767 - 1,174,215 - Total operating expenses 1,384,542 - 1,806,108 - Loss from operations (499,775 ) - (631,893 ) - Total other income/(expense) (93 ) - (84 ) - Total net income (loss) $ (499,868 ) $ - $ (631,977 ) $ - |
Description of Business (Detail
Description of Business (Details) | Aug. 01, 2017 | Oct. 01, 2015 | Jun. 01, 2018 | Jun. 02, 2017 | Sep. 30, 2018 |
Description of Business (Textual) | |||||
Exchanged percentage of Helix TCS | 100.00% | ||||
Business acquisition, description | Effective October 1, 2015, for accounting purposes, as part of an acquisition amounting to a reorganization dated December 21, 2015, Helix Opportunities LLC exchanged 100% of Helix TCS, LLC and its wholly-owned subsidiaries, Security Consultants Group, LLC and Boss Security Solutions, Inc. to the Company in exchange for 20 million common shares and 1 million convertible preferred shares of the Company. | The Company issued 38,184,985 unregistered shares of its common stock to BioTrackTHC stockholders, of which 1,852,677 shares were held back to satisfy indemnification obligations in the Merger Agreement, if necessary. The Company also assumed the Bio-Tech Medical Software, Inc. 2014 Stock Incentive Plan ("BioTrackTHC Stock Plan"), pursuant to which options exercisable in the amount of 8,132,410 shares of common stock are outstanding. As a result, BioTrackTHC stockholders will own 48% of the Company on a fully diluted basis on the BioTrackTHC Closing Date. | |||
Merger Agreement | In connection with closing the Engeni Merger Agreement, the Company issued 366,700 shares of Company common stock to Engeni US members. Furthermore, the Company will also issue Engeni US members 366,700 and 366,600 shares of Company common stock upon achievement of specific objectives. If applicable, the Company will pay Engeni US members the aggregate amount of $100,000, on a pro rata basis, if Engeni SA reaches financial breakeven on or before December 31, 2018, as determined by the Company's Chief Financial Officer and Scott Zienkewicz. | ||||
Security Grade Protective Services, Ltd [Member] | |||||
Description of Business (Textual) | |||||
Business acquisition, description | The Company subsequently issued the 207,427 additional stock options on August 1, 2017 as well as a second cash payment of $800,000 pursuant to the original terms of the Agreement. | The Company entered into a Membership Interest Purchase Agreement (the "Agreement") in which the Company purchased all issued and outstanding Units of Security Grade Protective Services, Ltd. ("Security Grade"), which consisted of 800,000 Class A Units and 200,000 Class B Units. At closing, the Company delivered $800,000 in cash and 207,427 non-qualified stock options (the "Initial Stock Options"). |
Revision of Prior Period Fina_3
Revision of Prior Period Financial Statements (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Convertible note payable, net of discount | $ 132,625 | $ 132,625 | $ 812,393 | ||
Total liabilities | 4,002,364 | 4,002,364 | 4,862,288 | ||
Additional Paid in Capital | 81,212,979 | 81,212,979 | 18,741,114 | ||
Accumulated Deficit | (23,187,185) | (23,187,185) | (18,241,708) | ||
Total Shareholders' Equity | 58,129,480 | 58,129,480 | 542,961 | ||
Total Liabilities and Shareholders' Equity | 62,131,844 | 62,131,844 | 5,405,249 | ||
Revenue | 3,113,721 | $ 1,129,746 | 6,116,101 | $ 2,837,145 | |
Cost of Revenue | $ 1,880,061 | $ 814,031 | 3,892,716 | $ 2,192,366 | |
Previously Reported [Member] | |||||
Convertible note payable, net of discount | 1,301,004 | ||||
Total liabilities | 5,350,899 | ||||
Additional Paid in Capital | 3,923,234 | ||||
Accumulated Deficit | (18,177,819) | ||||
Total Shareholders' Equity | 54,350 | ||||
Total Liabilities and Shareholders' Equity | 5,405,249 | ||||
Revenue | 3,340,817 | ||||
Cost of Revenue | 2,689,529 | ||||
Adjustments [Member] | |||||
Convertible note payable, net of discount | (488,611) | ||||
Total liabilities | (488,611) | ||||
Additional Paid in Capital | 552,023 | ||||
Accumulated Deficit | (63,889) | ||||
Total Shareholders' Equity | 488,611 | ||||
Total Liabilities and Shareholders' Equity | |||||
Revenue | (338,437) | ||||
Cost of Revenue | $ (338,437) | ||||
Preferred Class B [Member] | |||||
Preferred Shares (Class B) Outstanding | 13,784,201 | 13,784,201 | 13,784,201 | ||
Preferred Shares (Class B) Par Amount | $ 13,784 | $ 13,784 | $ 13,784 | ||
Total Shareholders' Equity | $ 13,784 | $ 13,784 | $ 13,784 | ||
Preferred Class B [Member] | Previously Reported [Member] | |||||
Preferred Shares (Class B) Outstanding | 13,306,599 | ||||
Preferred Shares (Class B) Par Amount | $ 13,307 | ||||
Preferred Class B [Member] | Adjustments [Member] | |||||
Preferred Shares (Class B) Outstanding | 477,602 | ||||
Preferred Shares (Class B) Par Amount | $ 477 |
Revision of Prior Period Fina_4
Revision of Prior Period Financial Statements (Details Textual) - USD ($) | Oct. 11, 2017 | Sep. 15, 2017 | Dec. 19, 2017 | Nov. 16, 2017 | Oct. 31, 2017 | Aug. 29, 2017 | Jul. 28, 2017 | May 17, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Nov. 21, 2017 | Feb. 13, 2017 | Jan. 30, 2017 |
Revision of Prior Period Financial Statements (Textual) | ||||||||||||||||
Sale of accredited investors, shares | 462,195 | 462,195 | 2,449,634 | 1,042,337 | 369,756 | 1,680,000 | ||||||||||
Convertible shares of common stock | 1,000,000 | 1,000,000 | ||||||||||||||
Exchange for aggregate cash payment | $ (58,445) | |||||||||||||||
Total proceeds | 2,624,988 | |||||||||||||||
Additional paid-in capital | $ 81,212,979 | 81,212,979 | $ 18,741,114 | |||||||||||||
Revision of prior period financial statements, description | The Company amended Notes Five, Six, and Seven ("the Amended Notes") with the Fourth Investor. All three notes shall have maturity dates that are six months from November 16, 2017, shall convert at a 40% discount to the lowest one-day Volume Average Weighted Price ("VWAP") during the 30 trading days preceding such conversion, shall incur interest at an annual rate of 5%, and shall be prepayable at any time at 110% of the unpaid principal and accrued interest balances. The amendment of Note Six and Seven included terms, permitting the Company the option to tender payment in full on or before November 21, 2017, at a 15% discount of the amended principal amounts. | |||||||||||||||
Retained Earnings (Accumulated Deficit) | (23,187,185) | (23,187,185) | (18,241,708) | |||||||||||||
Convertible note payable, net of discount | 132,625 | 132,625 | 812,393 | |||||||||||||
Cost of revenue | 1,880,061 | $ 814,031 | 3,892,716 | $ 2,192,366 | ||||||||||||
Secured Convertible Promissory Note Five [Member] | ||||||||||||||||
Revision of Prior Period Financial Statements (Textual) | ||||||||||||||||
Principal amount of notes | $ 281,900 | |||||||||||||||
Fair value of notes | $ 132,625 | $ 132,625 | 812,393 | $ 144,259 | ||||||||||||
Charge to change in fair value | (530,493) | |||||||||||||||
Secured Convertible Promissory Note Six [Member] | ||||||||||||||||
Revision of Prior Period Financial Statements (Textual) | ||||||||||||||||
Principal amount of notes | 38,441 | |||||||||||||||
Fair value of notes | 110,781 | |||||||||||||||
Charge to change in fair value | (72,340) | |||||||||||||||
Remaining principal balance interest rate | 15.00% | |||||||||||||||
Secured Convertible Promissory Note Seven [Member] | ||||||||||||||||
Revision of Prior Period Financial Statements (Textual) | ||||||||||||||||
Principal amount of notes | $ 131,107 | $ 144,259 | ||||||||||||||
Fair value of notes | 377,830 | |||||||||||||||
Charge to change in fair value | (246,723) | |||||||||||||||
Remaining principal balance interest rate | 15.00% | |||||||||||||||
Convertible Notes Payable [Member] | ||||||||||||||||
Revision of Prior Period Financial Statements (Textual) | ||||||||||||||||
Unsecured convertible promissory note | $ 180,000 | $ 75,000 | ||||||||||||||
Fair value of notes | $ 488,611 | |||||||||||||||
Remaining principal balance interest rate | 8.00% | 8.00% | ||||||||||||||
Convertible note payable, net of discount | $ 488,611 | |||||||||||||||
Adjustments [Member] | ||||||||||||||||
Revision of Prior Period Financial Statements (Textual) | ||||||||||||||||
Additional paid-in capital | 552,023 | |||||||||||||||
Revision of prior period financial statements, description | When taking into consideration the two transactions indicated above, the net impact to accumulated deficit was a charge of $63,889, resulting from the netting of the gain of $488,611 from the reduction in the fair value of convertible notes at December 31, 2017 offset by the $552,500 of additional expense associated with the Series B Purchase Agreement. | |||||||||||||||
Retained Earnings (Accumulated Deficit) | (63,889) | |||||||||||||||
Convertible note payable, net of discount | $ (488,611) | |||||||||||||||
Cost of revenue | $ (338,437) | |||||||||||||||
Fifth Series B Preferred Stock Purchase Agreement [Member] | ||||||||||||||||
Revision of Prior Period Financial Statements (Textual) | ||||||||||||||||
Sale of accredited investors, shares | 231,097 | |||||||||||||||
Exchange for aggregate cash payment | $ 75,000 | |||||||||||||||
Total proceeds | $ 150,000 | |||||||||||||||
Agreement issued of shares | 462,195 | |||||||||||||||
Sixth Series B Preferred Stock Purchase Agreement [Member] | ||||||||||||||||
Revision of Prior Period Financial Statements (Textual) | ||||||||||||||||
Sale of accredited investors, shares | 795,833 | |||||||||||||||
Exchange for aggregate cash payment | $ 80,000 | |||||||||||||||
Total proceeds | $ 557,500 | |||||||||||||||
Agreement issued of shares | 1,042,337 | |||||||||||||||
Series B Preferred Stock [Member] | ||||||||||||||||
Revision of Prior Period Financial Statements (Textual) | ||||||||||||||||
Sale of accredited investors, shares | 5,781,426 | |||||||||||||||
Gross proceeds | $ 1,875,000 | |||||||||||||||
Unsecured convertible promissory note | $ 500,000 | |||||||||||||||
Preferred stock, shares issued | 7,318,084 | 13,784,201 | 13,784,201 | 13,784,201 | ||||||||||||
Convertible shares of common stock | 1,536,658 | 13,306,599 | 13,306,599 | |||||||||||||
Conversion price | $ 0.325 | |||||||||||||||
Placement agent fees | $ 1,772,500 | |||||||||||||||
Revision of prior period financial statements, description | As a result of the October 11, 2017 and October 31, 2017 transactions, the Company recorded an increase of $477, $552,023 and $552,500 to Series B Preferred Shares par amount, additional paid-in capital and accumulated deficit, respectively. | |||||||||||||||
Series B Preferred Stock [Member] | Unsecured Convertible Promissory Note [Member] | ||||||||||||||||
Revision of Prior Period Financial Statements (Textual) | ||||||||||||||||
Preferred stock, shares issued | 1,536,658 |
Going Concern Uncertainty, Fi_2
Going Concern Uncertainty, Financial Condition and Management's Plans (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Going Concern Uncertainty, Financial Condition and Management's Plans (Textual) | ||
Working capital deficit | $ 2,287,082 | $ 3,289,281 |
Increase of working capital | $ 1,002,199 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Warrants [Member] | ||||
Anti-dilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Potentially dilutive securities | 3,307,073 | 2,557,195 | 3,307,073 | 2,557,195 |
Stock options [Member] | ||||
Anti-dilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Potentially dilutive securities | 8,739,669 | 8,739,669 | ||
Convertible notes payable [Member] | ||||
Anti-dilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Potentially dilutive securities | 106,957 | 226,320 | 106,957 | 226,320 |
Convertible Preferred A Stock [Member] | ||||
Anti-dilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Potentially dilutive securities | 1,000,000 | 1,000,000 | 1,000,000 | 1,000,000 |
Convertible Preferred B Stock [Member] | ||||
Anti-dilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Potentially dilutive securities | 9,830,035 | 9,830,035 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Summary of Significant Accounting Policies (Textual) | |||||
Allowance for doubtful accounts | $ 65,103 | $ 65,103 | $ 3,000 | ||
Lease agreements, description | (a) transfer of ownership; (b) bargain purchase option; (c) the lease term is equal to 75 percent or more of the estimated economic life of the leased property; or (d) the present value at the beginning of the lease term of the minimum lease payments, excluding that portion of the payments representing executory costs such as insurance, maintenance, and taxes to be paid by the lessor, including any profit thereon, equals or exceeds 90 percent of the excess of the fair value of the leased property to the lessor at lease inception over any related investment tax credit retained by the lessor and expected to be realized by the lessor. | ||||
Advertising expense | $ 12,671 | $ 7,298 | $ 74,408 | $ 12,477 | |
Vehicles [Member] | |||||
Summary of Significant Accounting Policies (Textual) | |||||
Property and equipment estimated useful lives | 3 years | ||||
Furniture and equipment [Member] | |||||
Summary of Significant Accounting Policies (Textual) | |||||
Property and equipment estimated useful lives | 5 years |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Types of Revenues: | ||||
Security and Guarding | $ 1,141,676 | $ 1,129,746 | $ 3,432,651 | $ 2,837,145 |
Systems Installation | 318,850 | 454,113 | ||
Software | 1,653,195 | 2,229,337 | ||
Total revenues | $ 3,113,721 | $ 1,129,746 | $ 6,116,101 | $ 2,837,145 |
Revenue Recognition (Details Te
Revenue Recognition (Details Textual) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue Recognition (Textual) | |
System installation invoice, percentage | 60.00% |
Sales team members commissions, description | The Company provides sales team members with commissions at 0-6%. |
Business Combinations (Details)
Business Combinations (Details) | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Security Grade Acquisition [Member] | |
Business Acquisition [Line Items] | |
Base Price - Cash | $ 2,100,373 |
Base Price - Stock Options | 916,643 |
Contingent Consideration - Stock Options | 916,643 |
Total Purchase Price | 3,933,659 |
BioTrack Acquisition [Member] | |
Business Acquisition [Line Items] | |
Base Price - Common Stock | 44,905,542 |
Base Price - Stock Options | 12,646,491 |
Total Purchase Price | 57,552,033 |
Engeni Acquisition [Member] | |
Business Acquisition [Line Items] | |
Base Price - Common Stock | 388,702 |
Contingent Consideration - Common Stock | 777,298 |
Contingent Consideration - Cash | 100,000 |
Total Purchase Price | $ 1,266,000 |
Business Combinations (Details
Business Combinations (Details 1) | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Security Grade Acquisition [Member] | |
Assets acquired: | |
Cash | $ 14,137 |
Accounts receivable | 53,792 |
Costs & earnings in excess of billings | 96,898 |
Property, plant and equipment, net | 27,775 |
Trademarks | 25,000 |
Customer lists | 3,154,578 |
Web address | 5,000 |
Goodwill | 664,329 |
Other assets | 3,880 |
Total assets acquired | 4,045,389 |
Liabilities assumed: | |
Billings in excess of costs | 23,967 |
Loans payable | 18,414 |
Credit card payable and other liabilities | 69,349 |
Total liabilities assumed | 111,730 |
Estimated fair value of net assets acquired | 3,933,659 |
BioTrack Acquisition [Member] | |
Assets acquired: | |
Cash | 448,697 |
Accounts receivable | 128,427 |
Prepaid expenses | 351,615 |
Property, plant and equipment, net | 72,252 |
Customer lists | 8,304,449 |
Goodwill | 39,135,007 |
Software | 9,321,627 |
Tradename | 466,081 |
Total assets acquired | 58,228,155 |
Liabilities assumed: | |
Accounts payable | 223,581 |
Other liabilities | 452,541 |
Total liabilities assumed | 676,122 |
Estimated fair value of net assets acquired | 57,552,033 |
Engeni Acquisition [Member] | |
Assets acquired: | |
Cash | 5,609 |
Accounts receivable and other assets | 30,479 |
Property, plant and equipment, net | 57,830 |
Goodwill | 778,552 |
Software | 449,568 |
Total assets acquired | 1,322,038 |
Liabilities assumed: | |
Accounts payable | 56,038 |
Total liabilities assumed | 56,038 |
Estimated fair value of net assets acquired | $ 1,266,000 |
Trademarks [Member] | Security Grade Acquisition [Member] | |
Liabilities assumed: | |
Weighted Average Useful Life (in years) | 10 years |
Customer lists [Member] | Security Grade Acquisition [Member] | |
Liabilities assumed: | |
Weighted Average Useful Life (in years) | 5 years |
Customer lists [Member] | BioTrack Acquisition [Member] | |
Liabilities assumed: | |
Weighted Average Useful Life (in years) | 5 years |
Web address [Member] | Security Grade Acquisition [Member] | |
Liabilities assumed: | |
Weighted Average Useful Life (in years) | 5 years |
Software [Member] | BioTrack Acquisition [Member] | |
Liabilities assumed: | |
Weighted Average Useful Life (in years) | 4 years 6 months |
Software [Member] | Engeni Acquisition [Member] | |
Liabilities assumed: | |
Weighted Average Useful Life (in years) | 3 years 3 months 19 days |
Tradename [Member] | BioTrack Acquisition [Member] | |
Liabilities assumed: | |
Weighted Average Useful Life (in years) | 4 years 6 months |
Business Combinations (Detail_2
Business Combinations (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Net loss attributable to common shareholders | $ (2,660,914) | $ (8,300,315) | $ (27,130,133) | $ (19,320,872) |
Pro Forma [Member] | ||||
Revenues | 3,134,396 | 3,883,759 | 8,957,690 | 8,958,725 |
Net loss | (2,722,404) | 343,718 | (5,213,028) | (7,911,500) |
Net loss attributable to common shareholders | $ (2,704,866) | $ (7,701,240) | $ (27,397,684) | $ (19,320,872) |
Loss per share attributable to common shareholders: | ||||
Basic and diluted-as pro forma (unaudited) | $ (0.04) | $ (0.29) | $ (0.57) | $ (0.68) |
Business Combinations (Detail_3
Business Combinations (Details Textual) - USD ($) | Aug. 03, 2018 | Aug. 01, 2017 | Oct. 01, 2015 | Jun. 01, 2018 | Jun. 02, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 |
Business Combination (Textual) | ||||||||||
Business acquisition, description | Effective October 1, 2015, for accounting purposes, as part of an acquisition amounting to a reorganization dated December 21, 2015, Helix Opportunities LLC exchanged 100% of Helix TCS, LLC and its wholly-owned subsidiaries, Security Consultants Group, LLC and Boss Security Solutions, Inc. to the Company in exchange for 20 million common shares and 1 million convertible preferred shares of the Company. | The Company issued 38,184,985 unregistered shares of its common stock to BioTrackTHC stockholders, of which 1,852,677 shares were held back to satisfy indemnification obligations in the Merger Agreement, if necessary. The Company also assumed the Bio-Tech Medical Software, Inc. 2014 Stock Incentive Plan ("BioTrackTHC Stock Plan"), pursuant to which options exercisable in the amount of 8,132,410 shares of common stock are outstanding. As a result, BioTrackTHC stockholders will own 48% of the Company on a fully diluted basis on the BioTrackTHC Closing Date. | ||||||||
Liability pursuant to agreement | $ 153,333 | $ 153,333 | $ 153,333 | |||||||
Fair value of contingent consideration | $ 916,643 | |||||||||
Total acquisition costs | $ 116,624 | $ 116,624 | ||||||||
Option issued of acquisition | 8,466,285 | 8,466,285 | 8,466,285 | |||||||
Selling, general and administrative | $ 802,724 | $ 269,143 | $ 1,678,603 | $ 649,973 | ||||||
Security Grade Protective Services, Ltd [Member] | ||||||||||
Business Combination (Textual) | ||||||||||
Business acquisition, description | The Company subsequently issued the 207,427 additional stock options on August 1, 2017 as well as a second cash payment of $800,000 pursuant to the original terms of the Agreement. | The Company entered into a Membership Interest Purchase Agreement (the "Agreement") in which the Company purchased all issued and outstanding Units of Security Grade Protective Services, Ltd. ("Security Grade"), which consisted of 800,000 Class A Units and 200,000 Class B Units. At closing, the Company delivered $800,000 in cash and 207,427 non-qualified stock options (the "Initial Stock Options"). | ||||||||
Business combination, contractual relationship, description | Provided that, within the first 60 days following the closing, no material customer identified in the Agreement terminates its contractual relationship with the Company and that all contracts with such material customers are in full force and effect without default or cancellation as of the 60th day following the closing, on the 61st day following the closing, the Company shall deliver an additional $800,000 in cash and issue 207,427 additional stock options (the ''Additional Stock Options''). In the event of termination, cancellation or default of any contract with one or more material customer identified in the Agreement within the first 60 days following the closing, the stock options received by the acquiree shall be reduced and/or forfeited to the extent necessary (pro rata based upon their ownership interest in the Company immediately preceding the closing) by a percentage equal to the revenue received by the Company from the terminating customer(s) in the 180 days immediately preceding such termination divided by the revenue received by the Company from all material customers identified in the Agreement in the 180 days immediately preceding such termination. | |||||||||
Option issued of acquisition | 80,979 | 80,979 | 80,979 | |||||||
Bio-Tech Medical Software, Inc. [Member] | ||||||||||
Business Combination (Textual) | ||||||||||
Business acquisition, description | The Company closed the Merger. In connection with closing the Merger, the Company issued 38,184,985 unregistered shares of Company common stock to BioTrackTHC stockholders, of which 1,852,677 shares were held back to satisfy indemnification obligations in the Merger Agreement, if necessary. The Company also assumed the Bio-Tech Medical Software, Inc 2014 Stock Incentive Plan ("BioTrackTHC Stock Plan"), pursuant to which options exercisable for 8,132,410 shares of Company common stock are outstanding so that the BioTrackTHC stockholders will own 48% of the Company on a fully diluted basis. | |||||||||
Revenues | $ 2,204,411 | |||||||||
Net loss | $ (490,459) | |||||||||
Engeni Acquisition [Member] | ||||||||||
Business Combination (Textual) | ||||||||||
Business acquisition, description | The Company issued 366,700 shares of Company common stock to Engeni US members. Furthermore, the Company may also issue Engeni US members 366,700 and 366,600 shares of Parent common stock upon the achievement of specific objectives. If applicable, the Company will pay Engeni US members the aggregate amount of $100,000, on a pro rata basis, if Engeni SA reaches financial breakeven on or before December 31, 2018, as determined by the Company's Chief Financial Officer and Scott Zienkewicz. | |||||||||
Selling, general and administrative | $ 38,409 | $ 38,409 |
Asset Acquisition (Details)
Asset Acquisition (Details) - USD ($) | Apr. 11, 2016 | Mar. 14, 2016 | Sep. 30, 2018 | Dec. 31, 2017 |
Asset Acquisition (Textual) | ||||
Total consideration | $ 300,000 | $ 350,000 | ||
Acquisition of assets, description | On April 11, 2016, the Company entered into an asset purchase agreement with Revolutionary, in which the Company purchased all of the intangible rights and property of Revolutionary for total consideration of $300,000 payable in two equal installments pursuant to a promissory note and 2,320,000 shares of restricted common stock of the Company. As of September 30, 2018, the Company owed Revolutionary $0. | On March 14, 2016, the Company purchased one-third of the equity interest in Revolutionary for total consideration of $350,000 in cash and 75,000 shares of common stock of the Company. $50,000 was paid in cash at closing, with the balance ($300,000) being paid in twenty-four monthly installments of $10,417, with a final payment of $50,000 to be paid on the twenty-fifth month. | ||
Liability pursuant to the revolutionary asset acquisition | $ 0 | $ 58,370 | ||
Purchase price for assets acquired | $ 1,596,750 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Property and Equipment, Net [Line Items] | ||
Total | $ 339,642 | $ 193,361 |
Less: Accumulated depreciation | (59,118) | (82,727) |
Property and equipment, net | 280,524 | 110,634 |
Furniture and equipment [Member] | ||
Property and Equipment, Net [Line Items] | ||
Total | 119,391 | 16,332 |
Vehicles [Member] | ||
Property and Equipment, Net [Line Items] | ||
Total | 205,157 | 175,647 |
Software equipment [Member] | ||
Property and Equipment, Net [Line Items] | ||
Total | $ 15,094 | $ 1,382 |
Property and Equipment, Net (_2
Property and Equipment, Net (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Property and Equipment, Net (Textual) | ||||
Depreciation expense | $ 27,528 | $ 19,553 | $ 63,421 | $ 42,589 |
Intangible Assets, Net and Go_3
Intangible Assets, Net and Goodwill (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Dec. 31, 2017 | ||||
Intangible Assets, Net [Line Items] | |||||
Gross Carrying Amount | $ 3,503,005 | $ 318,427 | |||
Assets Acquired Pursuant to Business Combination | 18,541,725 | [1],[2] | 3,184,578 | [3] | |
Accumulated Amortization | (2,267,214) | (460,746) | |||
Net Book Value | $ 19,777,516 | $ 3,042,259 | |||
Software [Member] | |||||
Intangible Assets, Net [Line Items] | |||||
Estimated Useful Life (Years) | 4 years 6 months | ||||
Gross Carrying Amount | |||||
Assets Acquired Pursuant to Business Combination | [1],[2] | 9,771,195 | |||
Accumulated Amortization | (707,489) | ||||
Net Book Value | $ 9,063,706 | ||||
Database [Member] | |||||
Intangible Assets, Net [Line Items] | |||||
Estimated Useful Life (Years) | 5 years | 5 years | |||
Gross Carrying Amount | $ 93,427 | $ 93,427 | |||
Assets Acquired Pursuant to Business Combination | [3] | ||||
Accumulated Amortization | (46,151) | (32,183) | |||
Net Book Value | 47,276 | $ 61,244 | |||
Trade names and trademarks [Member] | |||||
Intangible Assets, Net [Line Items] | |||||
Estimated Useful Life (Years) | 10 years | ||||
Gross Carrying Amount | 125,000 | $ 100,000 | |||
Assets Acquired Pursuant to Business Combination | 466,081 | [1],[2] | 25,000 | [3] | |
Accumulated Amortization | (62,323) | (18,675) | |||
Net Book Value | $ 528,758 | $ 106,325 | |||
Trade names and trademarks [Member] | Maximum [Member] | |||||
Intangible Assets, Net [Line Items] | |||||
Estimated Useful Life (Years) | 10 years | ||||
Trade names and trademarks [Member] | Minimum [Member] | |||||
Intangible Assets, Net [Line Items] | |||||
Estimated Useful Life (Years) | 5 years | ||||
Web addresses [Member] | |||||
Intangible Assets, Net [Line Items] | |||||
Estimated Useful Life (Years) | 5 years | 5 years | |||
Gross Carrying Amount | $ 130,000 | $ 125,000 | |||
Assets Acquired Pursuant to Business Combination | [1],[2] | 5,000 | [3] | ||
Accumulated Amortization | (63,075) | (43,639) | |||
Net Book Value | $ (66,925) | $ 86,361 | |||
Customer list [Member] | |||||
Intangible Assets, Net [Line Items] | |||||
Estimated Useful Life (Years) | 5 years | 5 years | |||
Gross Carrying Amount | $ 3,154,578 | ||||
Assets Acquired Pursuant to Business Combination | 8,304,449 | [1],[2] | 3,154,578 | [3] | |
Accumulated Amortization | (1,388,176) | (366,249) | |||
Net Book Value | $ 10,070,851 | $ 2,788,329 | |||
[1] | On August 3, 2018, the Company acquired various assets of Engeni (See Note 6) | ||||
[2] | On June 1, 2018, the Company acquired various assets of BioTrackTHC (See Note 6) | ||||
[3] | On June 2, 2017, the Company acquired various assets of Security Grade Protective Services, Ltd. (See Note 6) |
Intangible Assets, Net and Go_4
Intangible Assets, Net and Goodwill (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Intangible Assets, Net and Goodwill [Abstract] | ||||
Balance at January 1, 2018 | $ 664,329 | $ 664,329 | ||
Impairment of goodwill | (664,329) | |||
Goodwill attributable to Biotrack acquisition | 39,135,007 | |||
Goodwill attributable to Engeni acquisition | 778,552 | |||
Balance at September 30, 2018 | $ 39,913,559 | $ 664,329 | $ 39,913,559 | $ 664,329 |
Intangible Assets, Net and Go_5
Intangible Assets, Net and Goodwill (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Intangible Assets, Net and Goodwill (Textual) | ||||
Amortization expense related to intangible assets | $ 1,160,889 | $ 173,344 | $ 1,806,468 | $ 248,718 |
Goodwill write-off | 664,329 | |||
Goodwill attributable to Biotrack acquisition | 39,135,007 | |||
Goodwill attributable to Engeni acquisition | $ 778,552 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Expenses (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Accounts Payable and Accrued Expenses [Abstract] | ||
Accounts payable | $ 1,022,211 | $ 334,751 |
Accrued expenses | 284,183 | 220,682 |
Accrued interest | 12,867 | 43,204 |
Total | $ 1,319,261 | $ 598,637 |
Costs, Estimated Earnings and_3
Costs, Estimated Earnings and Billings (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Costs, Estimated Earnings and Billings [Abstract] | ||
Costs incurred on uncompleted contracts | $ 118,741 | $ 64,705 |
Estimated earnings | 50,261 | 27,731 |
Cost and estimated earnings earned on uncompleted contracts | 169,002 | 92,436 |
Billings to date | 147,996 | 71,778 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 21,006 | 20,658 |
Costs in excess of billings | 24,792 | 40,847 |
Billings in excess of cost | (3,786) | (20,190) |
Total | $ 21,006 | $ 20,658 |
Convertible Note Payable (Detai
Convertible Note Payable (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Short-term Debt [Line Items] | ||
Convertible note payable | $ 132,625 | $ 812,393 |
Less: Current portion | (132,625) | (812,393) |
Long-term portion | ||
Note Five, 5% convertible promissory note, fixed secured, maturing May 16, 2018 [Member] | ||
Short-term Debt [Line Items] | ||
Convertible note payable | $ 132,625 | $ 812,393 |
Convertible Note Payable (Det_2
Convertible Note Payable (Details Textual) | Nov. 21, 2017USD ($) | Apr. 26, 2017USD ($)TradingDays$ / sharesshares | May 16, 2018USD ($) | Nov. 16, 2017USD ($) | Mar. 31, 2017USD ($) | Feb. 13, 2017USD ($)$ / sharesshares | Sep. 30, 2016USD ($) | Sep. 30, 2018USD ($)shares | Sep. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Sep. 30, 2018USD ($)shares | Sep. 30, 2017USD ($) | Aug. 29, 2018USD ($) | Dec. 31, 2017USD ($) | Jan. 30, 2017USD ($) |
Convertible Note Payable (Textual) | |||||||||||||||
Loss on extinguishment of debt | $ (4,611,395) | ||||||||||||||
Unamortized discount | $ 144,047 | $ 144,047 | |||||||||||||
Loss on induced conversion of convertible note | 1,503,876 | ||||||||||||||
Debt discounts amortized to interest expense | 39,286 | ||||||||||||||
Gain to change in fair value | (17,880) | $ 115,000 | 679,766 | $ (210,000) | |||||||||||
Unsecured Convertible Promissory Note One [Member] | |||||||||||||||
Convertible Note Payable (Textual) | |||||||||||||||
Unsecured convertible promissory note | $ 180,000 | $ 75,000 | |||||||||||||
Fair value of notes | $ 488,611 | ||||||||||||||
Unsecured Convertible Promissory Note Three [Member] | |||||||||||||||
Convertible Note Payable (Textual) | |||||||||||||||
Unsecured convertible promissory note | $ 250,000 | ||||||||||||||
Unsecured Convertible Promissory Note Four [Member] | |||||||||||||||
Convertible Note Payable (Textual) | |||||||||||||||
Change in fair value liability | 500,000 | 500,000 | |||||||||||||
Loss on extinguishment of debt | 4,611,395 | ||||||||||||||
Unsecured Convertible Promissory Note Four [Member] | Fourth investor [Member] | |||||||||||||||
Convertible Note Payable (Textual) | |||||||||||||||
Convertible preferred stock, terms of conversion, description | Automatic Conversion. The principal balance of the Amended shall automatically convert into shares of Class B Preferred Shares upon execution by the Company and the Fourth Investor of definitive documentation relating to the $500,000, aggregate principal amount, and investment by the Fourth Investor in Class B Preferred Shares of the Company. Company Default. In the event of a Company Event of Default, the Fourth Investor the shall have the right to elect to (i) at any time prior to June 30, 2017, convert the aggregate outstanding principal amount of Note Four into Class B Preferred Shares equal to 6.3% of the Company's equity capital calculated on a fully-diluted basis, or (ii) at any time commencing on July 1, 2017 and ending on September 31, 2017, have Note Four redeemed for cash at a redemption price, in aggregate, equal to 150% of the aggregate principal outstanding balance of Note Four or (iii) to convert Note Four into common shares of the Company equal to 6.3% of the Company's equity capital calculated on a fully-diluted basis. In the event the Holder does not elect any remedy in the event of a Company Event of Default, on September 31, 2017 the Amended Note shall be converted in whole into common shares of the Company equal to 6.3% of the Company's equity capital calculated on a fully-diluted basis. Holder Default. In the event of a Holder Event of Default, the Company shall have the right to either (i) redeem the Amended Note at par value at any time prior to June 1, 2017 or (ii) convert the outstanding principal balance into common shares of the Company at market value. The Valuation and Consideration provision in Section 2 of the Term Sheet is affirmed and ratified; provided, however, that the parties agree that the $12,000,000 valuation therein is subject to dilution of $600,000 from additional investments in the Company by third parties following the Holder's $500,000 investment that is memorialized in the Note. For the avoidance of doubt, the Holder will receive the same number of shares as it would have for its investment if it had converted at a $12,000,000 valuation on October 20, 2016 given the 26,587,497 shares outstanding at that time. For the avoidance of doubt, the Note will convert into 1,162,500 shares. | ||||||||||||||
Aggregate principal amount of investment | $ 500,000 | ||||||||||||||
Value of debt | 166,666 | ||||||||||||||
Secured Convertible Promissory Note Five [Member] | |||||||||||||||
Convertible Note Payable (Textual) | |||||||||||||||
Change in fair value liability | $ (530,493) | ||||||||||||||
Retained amount | 16,666 | ||||||||||||||
Warrants issued amount | 22,000 | ||||||||||||||
Value of debt | 183,333 | ||||||||||||||
Beneficial conversion feature | 144,666 | ||||||||||||||
Interest expense | 390,666 | ||||||||||||||
Principal amount of notes | $ 281,900 | ||||||||||||||
Fair value of notes | 144,259 | $ 132,625 | $ 132,625 | 812,393 | |||||||||||
Secured Convertible Promissory Note Five [Member] | Third Investor [Member] | |||||||||||||||
Convertible Note Payable (Textual) | |||||||||||||||
Unsecured convertible promissory note | $ 183,333 | ||||||||||||||
Annual interest rate on debt | 10.00% | ||||||||||||||
Convertible notes payable, due date | Sep. 12, 2017 | ||||||||||||||
Conversion rate, per share | $ / shares | $ 1.50 | ||||||||||||||
Warrant issued to purchase shares of common stock | shares | 25,000 | ||||||||||||||
Warrants exercise price | $ / shares | $ 1 | ||||||||||||||
Retained amount | $ 16,666 | ||||||||||||||
Value of debt | $ 25,000 | 166,666 | |||||||||||||
Beneficial conversion feature | $ 183,333 | ||||||||||||||
Reserved for issuance of common stock | shares | 2,500,000 | 2,500,000 | |||||||||||||
Secured Convertible Promissory Note Five [Member] | Fourth investor [Member] | |||||||||||||||
Convertible Note Payable (Textual) | |||||||||||||||
Discount on debt conversion, description | The Second Amendment states that Note Five shall have a maturity of November 16, 2018 and shall be prepayable at any time at 120% of the unpaid principal and accrued interest balance. | ||||||||||||||
Principal amount of notes | $ 112,305 | 281,900 | |||||||||||||
Secured Convertible Promissory Note Six [Member] | |||||||||||||||
Convertible Note Payable (Textual) | |||||||||||||||
Change in fair value liability | (72,340) | ||||||||||||||
Interest expense | $ 536 | ||||||||||||||
Principal amount of notes | 38,441 | ||||||||||||||
Fair value of notes | 110,781 | ||||||||||||||
Secured Convertible Promissory Note Six [Member] | Third Investor [Member] | |||||||||||||||
Convertible Note Payable (Textual) | |||||||||||||||
Annual interest rate on debt | 10.00% | ||||||||||||||
Guaranteed annual interest rate | 10.00% | ||||||||||||||
Convertible notes payable, due date | Sep. 13, 2017 | ||||||||||||||
Conversion rate, per share | $ / shares | $ 6.10 | ||||||||||||||
Secured convertible promissory note | $ 25,000 | ||||||||||||||
Secured Convertible Promissory Note Six [Member] | Fourth investor [Member] | |||||||||||||||
Convertible Note Payable (Textual) | |||||||||||||||
Annual interest rate on debt | 10.00% | ||||||||||||||
Convertible notes payable, due date | Oct. 26, 2017 | ||||||||||||||
Trading days related to conversion of debt | TradingDays | 30 | ||||||||||||||
Convertible preferred stock, terms of conversion, description | At the lower of $1.00 or a 50% discount to the lowest closing bid price of the Company's common stock for the 30 Trading Days prior to conversion. | ||||||||||||||
Secured convertible promissory note | $ 100,000 | ||||||||||||||
Warrant issued to purchase shares of common stock | shares | 150,000 | ||||||||||||||
Warrants exercise price | $ / shares | $ 1 | ||||||||||||||
Ownership Percentage | 10.00% | ||||||||||||||
Cash proceeds from investors | $ 72,000 | ||||||||||||||
Principal amount of notes | 38,441 | ||||||||||||||
Secured Convertible Promissory Note Seven [Member] | |||||||||||||||
Convertible Note Payable (Textual) | |||||||||||||||
Change in fair value liability | (246,723) | ||||||||||||||
Principal amount of notes | $ 144,259 | 131,107 | |||||||||||||
Fair value of notes | $ 377,830 | ||||||||||||||
Secured Convertible Promissory Note Seven [Member] | Fourth investor [Member] | |||||||||||||||
Convertible Note Payable (Textual) | |||||||||||||||
Principal amount of notes | $ 131,107 | ||||||||||||||
Notes Five, Six, and Seven [Member] | |||||||||||||||
Convertible Note Payable (Textual) | |||||||||||||||
Annual interest rate on debt | 15.00% | ||||||||||||||
Secured convertible promissory note | $ 144,259 | ||||||||||||||
Notes Five, Six, and Seven [Member] | Fourth investor [Member] | |||||||||||||||
Convertible Note Payable (Textual) | |||||||||||||||
Discount on debt conversion, description | All three notes shall have maturity dates that are six months from November 16, 2017, shall convert at a 40% discount to the lowest one-day Volume Average Weighted Price ("VWAP") during the 30 trading days preceding such conversion, shall incur interest at an annual rate of 5%, and shall be prepayable at any time at 110% of the unpaid principal and accrued interest balances. |
Related Party Transactions (Det
Related Party Transactions (Details) | Mar. 11, 2016USD ($)TradingDays | Feb. 20, 2018USD ($)shares | Mar. 31, 2016USD ($)$ / sharesshares | Sep. 30, 2018USD ($)$ / sharesshares | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)$ / sharesshares | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($)$ / sharesshares |
Related Party Transactions (Textual) | ||||||||
Related party loan balance | $ 55,250 | $ 55,250 | $ 124,750 | |||||
Fair value of liability | $ 239,343 | |||||||
Shares of restricted common stock | shares | 15,000 | |||||||
Common stock per share | $ / shares | $ 0.19 | $ 0.19 | $ 0.23 | |||||
Warrants to purchase shares | shares | 3,307,073 | 3,307,073 | 2,732,073 | |||||
Subscription Agreement [Member] | ||||||||
Related Party Transactions (Textual) | ||||||||
Shares of restricted common stock | shares | 960,000 | |||||||
Total proceeds | $ 150,000 | |||||||
Common stock per share | $ / shares | $ 0.16 | |||||||
Warrant exercise date, description | The Warrant Exercise Date is the later of the following to occur (i) March 9, 2017, (ii) ten (10) days after the Company's notice to the holder of the warrant that the Company shall have an effective S-1 registration with the SEC; or (iii) ten (10) days after Company's notice to the holder of the warrants that the Company has entered into an agreement for the sale of substantially all the assets or Common Stock of the Company. | |||||||
Warrants to purchase shares | shares | 1,920,000 | |||||||
Note [Member] | ||||||||
Related Party Transactions (Textual) | ||||||||
Principal amount | $ 125,000 | |||||||
Maturity date | Aug. 20, 2018 | |||||||
Promissory note, description | The Company promises to pay (i) all accrued interest on the unpaid principal amount through December 31, 2017 and (ii) $25,000 in principal within 5 business days of the date of this Amendment. The Company agrees to issue 15,000 shares of restricted Company common stock as an inducement for this amendment within 10 business days of the date of this Amendment. The principal amount of the note will be reduced to $125,000. Unless extended by the Company, converted or prepaid earlier, all unpaid principal and unpaid accrued interest on this Note shall be due and payable on August 20, 2018 (the "Maturity Date"). All provisions related to conversion of the Note into equity securities of the Company were terminated as part of this Amendment. | |||||||
Note Five [Member] | ||||||||
Related Party Transactions (Textual) | ||||||||
Principal amount | $ 125,000 | |||||||
Change in fair value of convertible note - related party | $ 0 | $ 34,725 | $ 118,506 | $ 8,971 | ||||
Interest expense | $ 2,479 | $ 2,675 | $ 10,217 | $ 7,853 | ||||
Note Five [Member] | Related Party Holder [Member] | ||||||||
Related Party Transactions (Textual) | ||||||||
Principal amount | $ 150,000 | |||||||
Maturity date | Dec. 31, 2017 | |||||||
Annual rate of interest | 7.00% | |||||||
Discount on debt conversion, description | Forty percent (40%) discount to the average market closing price. | |||||||
Trading days related to conversion of debt | TradingDays | 5 |
Promissory Notes (Details)
Promissory Notes (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Aug. 29, 2018 | Feb. 13, 2017 | Jan. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Promissory Notes (Textual) | ||||||||
Interest expense on unsecured promissory note | $ 2,901 | $ 230 | $ 4,321 | $ 600 | ||||
Unsecured Promissory Note [Member] | ||||||||
Promissory Notes (Textual) | ||||||||
Unsecured promissory note | $ 180,000 | $ 75,000 | ||||||
Fixed interest rate of unsecured promissory note | 8.00% | 8.00% | ||||||
Interest expense on unsecured promissory note | 0 | 0 | 0 | 2,570 | ||||
Promissory note due, description | Due and payable on June 30, 2017. | |||||||
Unsecured Promissory Note One [Member] | ||||||||
Promissory Notes (Textual) | ||||||||
Interest expense on unsecured promissory note | 0 | 0 | 0 | 2,570 | ||||
Promissory note due, description | Due and payable on June 30, 2017. | |||||||
Unsecured Promissory Note Two [Member] | ||||||||
Promissory Notes (Textual) | ||||||||
Unsecured promissory note | $ 250,000 | |||||||
Fixed interest rate of unsecured promissory note | 7.00% | |||||||
Outstanding on unsecured promissory note | 250,000 | $ 0 | ||||||
Interest expense on unsecured promissory note | $ 1,534 | $ 0 | $ 1,534 | $ 0 | ||||
Promissory note due, description | Due and payable on July 31, 2019. |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Notes Payable/Convertible Note Payable/Promissory Notes [Abstract] | ||
Vehicle financing loans payable, between 4.7% and 7.0% interest and maturing between June 2022 and July 2022 | $ 75,090 | $ 55,890 |
Loans Payable - Credit Union | 5,653 | 8,582 |
Less: Current portion of loans payable | (7,582) | (11,179) |
Long-term portion of loans payable | $ 73,161 | $ 53,293 |
Notes Payable (Details Textual)
Notes Payable (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Notes Payable (Textual) | ||||
Interest expense associated with notes payable | $ 2,901 | $ 230 | $ 4,321 | $ 600 |
Maturity date, description | Maturing between June 2022 and July 2022. | |||
Maximum [Member] | ||||
Notes Payable (Textual) | ||||
Loans payable, interest rate | 7.00% | 7.00% | ||
Minimum [Member] | ||||
Notes Payable (Textual) | ||||
Loans payable, interest rate | 4.70% | 4.70% |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | May 17, 2017 | |
Class of Stock [Line Items] | |||
Fair Value of Beneficial Conversion Feature | $ 22,202,194 | ||
Series B Preferred Stock [Member] | |||
Class of Stock [Line Items] | |||
Number of shares | 13,784,201 | 13,784,201 | 7,318,084 |
Fair Value of Beneficial Conversion Feature | $ 44,412,714 | ||
Amount accreted as a deemed dividend | (22,202,194) | $ (22,210,519) | |
Unamortized Beneficial Conversion Feature | |||
May 17, 2017 [Member] | Series B Preferred Stock [Member] | |||
Class of Stock [Line Items] | |||
Issuance Date | May 17, 2017 | ||
Beneficial Conversion Feature Term (months) | 12 months | ||
Number of shares | 7,318,084 | ||
Fair Value of Beneficial Conversion Feature | $ 25,247,098 | ||
Amount accreted as a deemed dividend | (9,467,661) | (15,779,436) | |
Unamortized Beneficial Conversion Feature | |||
July 29, 2017 [Member] | Series B Preferred Stock [Member] | |||
Class of Stock [Line Items] | |||
Issuance Date | Jul. 29, 2017 | ||
Beneficial Conversion Feature Term (months) | 9 years 6 months | ||
Number of shares | 1,680,000 | ||
Fair Value of Beneficial Conversion Feature | $ 6,804,000 | ||
Amount accreted as a deemed dividend | (3,129,366) | (3,674,634) | |
Unamortized Beneficial Conversion Feature | |||
August 29, 2017 [Member] | Series B Preferred Stock [Member] | |||
Class of Stock [Line Items] | |||
Issuance Date | Aug. 29, 2017 | ||
Beneficial Conversion Feature Term (months) | 8 years 6 months | ||
Number of shares | 369,756 | ||
Fair Value of Beneficial Conversion Feature | $ 1,148,263 | ||
Amount accreted as a deemed dividend | (592,073) | (556,190) | |
Unamortized Beneficial Conversion Feature | |||
September 15, 2017 [Member] | Series B Preferred Stock [Member] | |||
Class of Stock [Line Items] | |||
Issuance Date | Sep. 15, 2017 | ||
Beneficial Conversion Feature Term (months) | 8 months | ||
Number of shares | 462,195 | ||
Fair Value of Beneficial Conversion Feature | $ 1,435,329 | ||
Amount accreted as a deemed dividend | (786,728) | (648,601) | |
Unamortized Beneficial Conversion Feature | |||
October 11, 2017 [Member] | Series B Preferred Stock [Member] | |||
Class of Stock [Line Items] | |||
Issuance Date | Oct. 11, 2017 | ||
Beneficial Conversion Feature Term (months) | 7 months | ||
Number of shares | 462,195 | ||
Fair Value of Beneficial Conversion Feature | $ 1,121,036 | ||
Amount accreted as a deemed dividend | (694,727) | (426,309) | |
Unamortized Beneficial Conversion Feature | |||
October 31, 2017 [Member] | Series B Preferred Stock [Member] | |||
Class of Stock [Line Items] | |||
Issuance Date | Oct. 31, 2017 | ||
Beneficial Conversion Feature Term (months) | 6 years 6 months | ||
Number of shares | 1,042,337 | ||
Fair Value of Beneficial Conversion Feature | $ 1,735,641 | ||
Amount accreted as a deemed dividend | (1,187,071) | (548,570) | |
Unamortized Beneficial Conversion Feature | |||
December 19, 2017 [Member] | Series B Preferred Stock [Member] | |||
Class of Stock [Line Items] | |||
Issuance Date | Dec. 19, 2017 | ||
Beneficial Conversion Feature Term (months) | 5 months | ||
Number of shares | 2,449,634 | ||
Fair Value of Beneficial Conversion Feature | $ 6,921,347 | ||
Amount accreted as a deemed dividend | (6,344,568) | $ (576,779) | |
Unamortized Beneficial Conversion Feature |
Shareholders' Equity (Details T
Shareholders' Equity (Details Textual) - USD ($) | Mar. 12, 2018 | Aug. 31, 2018 | Jul. 31, 2018 | Jun. 30, 2018 | May 31, 2018 | Apr. 30, 2018 | Mar. 31, 2018 | Mar. 21, 2018 | Feb. 28, 2018 | Feb. 20, 2018 | Feb. 15, 2018 | Sep. 30, 2018 |
Shareholders' Equity (Textual) | ||||||||||||
Shares of restricted common stock | 15,000 | |||||||||||
Other Common Stock Issuances [Member] | ||||||||||||
Shareholders' Equity (Textual) | ||||||||||||
Common stock, shares issued | 366,700 | |||||||||||
Other Common Stock Issuances [Member] | Consulting Agreement [Member] | ||||||||||||
Shareholders' Equity (Textual) | ||||||||||||
Shares of restricted common stock | 50,000 | |||||||||||
Other Common Stock Issuances [Member] | BioTrackTHC [Member] | ||||||||||||
Shareholders' Equity (Textual) | ||||||||||||
Shares of restricted common stock | 38,184,985 | |||||||||||
Other Common Stock Issuances [Member] | Two selling shareholder of security [Member] | ||||||||||||
Shareholders' Equity (Textual) | ||||||||||||
Shares of restricted common stock | 3,983 | 212,633 | ||||||||||
Other Common Stock Issuances [Member] | Investor relation consultant [Member] | ||||||||||||
Shareholders' Equity (Textual) | ||||||||||||
Shares of restricted common stock | 100,000 | |||||||||||
Convertible Note to Common Stock [Member] | ||||||||||||
Shareholders' Equity (Textual) | ||||||||||||
Principal amount | $ 50,000 | $ 75,000 | $ 50,000 | |||||||||
Convertible of common stock, shares | 63,963 | 95,945 | 46,066 | |||||||||
Convertible note, percentage | 10.00% | |||||||||||
Subscription Agreements [Member] | ||||||||||||
Shareholders' Equity (Textual) | ||||||||||||
Shares of restricted common stock | 183,333 | |||||||||||
Price, per share | $ 0.90 | |||||||||||
Total proceeds | $ 164,999 | |||||||||||
Leak-out agreement [Member] | Other Common Stock Issuances [Member] | ||||||||||||
Shareholders' Equity (Textual) | ||||||||||||
Shares of restricted common stock | 200,000 | |||||||||||
Common Stock [Member] | ||||||||||||
Shareholders' Equity (Textual) | ||||||||||||
Shares of restricted common stock | 38,184,985 | |||||||||||
Common Stock [Member] | Subscription Agreements [Member] | ||||||||||||
Shareholders' Equity (Textual) | ||||||||||||
Shares of restricted common stock | 327,777 | 327,777 | 244,444 | 500,000 | 500,000 | 222,222 | 577,778 | |||||
Price, per share | $ 0.90 | $ 0.90 | $ 0.90 | |||||||||
Total proceeds | $ 294,999 | $ 294,999 | $ 220,000 | $ 450,000 | $ 450,000 | $ 200,000 | $ 520,000 |
Shareholders' Equity (Details_2
Shareholders' Equity (Details Textual 1) - USD ($) | Jan. 11, 2018 | Oct. 11, 2017 | Sep. 15, 2017 | May 16, 2018 | Feb. 20, 2018 | Dec. 19, 2017 | Oct. 31, 2017 | Aug. 29, 2017 | Jul. 28, 2017 | May 17, 2017 | Oct. 31, 2015 | Sep. 30, 2018 | Aug. 31, 2018 | Jul. 31, 2018 | May 31, 2018 | Mar. 15, 2018 | Sep. 30, 2017 |
Shareholders' Equity (Textual) | |||||||||||||||||
Shares of restricted common stock | 15,000 | ||||||||||||||||
Convertible preferred shares | 1,000,000 | ||||||||||||||||
Accredited investors an aggregate shares | 462,195 | 462,195 | 2,449,634 | 1,042,337 | 369,756 | 1,680,000 | |||||||||||
Class A Preferred Stock [Member] | |||||||||||||||||
Shareholders' Equity (Textual) | |||||||||||||||||
Equity ownership percentage | 100.00% | ||||||||||||||||
Convertible preferred shares | 1,000,000 | 15,746,127 | |||||||||||||||
Series A Convertible Preferred Stock [Member] | |||||||||||||||||
Shareholders' Equity (Textual) | |||||||||||||||||
Preferred conversion, description | The Company issued a total of 1,000,000 shares of its Class A Preferred Stock as part of a reorganization in which Helix Opportunities LLC contributed 100% of itself and its wholly-owned subsidiaries, Security Consultants Group, LLC and Boss Security Solutions, Inc. to the Company in exchange for 1,000,000 convertible preferred shares of the Company. The Class A Preferred Stock included super majority voting rights and were convertible into 60% of the Company's common stock. During the third quarter of 2017, the Company modified the conversion rate on the Class A Preferred Stock to a 1:1 ratio. This modification reduced the amount of potentially dilutive Convertible Series A Stock by 15,746,127 shares to a total of 1,000,000 at September 30, 2017. | ||||||||||||||||
Series B Preferred Shares [Member] | |||||||||||||||||
Shareholders' Equity (Textual) | |||||||||||||||||
Gross proceeds from sold on shares | $ 1,875,000 | ||||||||||||||||
Unsecured convertible promissory note | $ 500,000 | ||||||||||||||||
Convertible preferred shares | 1,536,658 | 13,306,599 | |||||||||||||||
Preferred shares are convertible into common stock | 7,318,084 | ||||||||||||||||
Price, per share | $ 0.325 | ||||||||||||||||
Net proceeds | $ 1,772,500 | ||||||||||||||||
Shares issued, price per share | $ 0.3253815 | ||||||||||||||||
Accredited investors an aggregate shares | 5,781,426 | ||||||||||||||||
Second Amendment Agreement [Member] | |||||||||||||||||
Shareholders' Equity (Textual) | |||||||||||||||||
Preferred conversion, description | Convertible Promissory Note with the holder of a 10% fixed secured convertible promissory note. The new Maturity Date is November 16, 2018. The new interest rate is 5%. The note is prepayable at 120% of the unpaid balance upon 10 business days' notice to the holder, which has the option to convert, in whole or in part, during the notice period. The conversion price shall be equal to a 40% discount to the lowest one-day Volume Average Weighted Price ("VWAP") during the 30 trading days preceding such conversion. | ||||||||||||||||
Series B Preferred Stock Purchase Agreement [Member] | |||||||||||||||||
Shareholders' Equity (Textual) | |||||||||||||||||
Warrants issue | 462,195 | ||||||||||||||||
Shares issued, price per share | $ 0.325 | ||||||||||||||||
Second Series B Purchase Agreement [Member] | |||||||||||||||||
Shareholders' Equity (Textual) | |||||||||||||||||
Accredited investors an aggregate shares | 1,680,000 | ||||||||||||||||
Aggregate cash payment | $ 840,000 | ||||||||||||||||
Third Series B Purchase Agreement [Member] | |||||||||||||||||
Shareholders' Equity (Textual) | |||||||||||||||||
Accredited investors an aggregate shares | 462,195 | 462,195 | 2,449,634 | 1,042,337 | 369,756 | ||||||||||||
Aggregate cash payment | $ 150,000 | $ 150,000 | $ 795,000 | $ 557,500 | $ 120,000 | ||||||||||||
Amended Convertible Note [Member] | |||||||||||||||||
Shareholders' Equity (Textual) | |||||||||||||||||
Preferred stock majority voting rights, description | (i) all accrued interest on the unpaid principal amount through December 31, 2017 and (ii) $25,000 in principal within 5 business days of the date of this Amendment. The Company agrees to issue 15,000 shares of restricted Company common stock as an inducement for this amendment within 10 business days of the date of this Amendment. The principal amount of the note will be reduced to $125,000. Unless extended by the Company, converted or prepaid earlier, all unpaid principal and unpaid accrued interest on this Note shall be due and payable on August 20, 2018 (the "Maturity Date"). All provisions related to conversion of the Note into equity securities of the Company are hereby deleted. | ||||||||||||||||
Shares of restricted common stock | 15,000 | ||||||||||||||||
2017 Omnibus Incentive Plan [Member] | |||||||||||||||||
Shareholders' Equity (Textual) | |||||||||||||||||
Shares of restricted common stock | 42,850 | ||||||||||||||||
Additional number of common stock issued to select employees | 100,000 | ||||||||||||||||
Common stock issued various employees | 43,195 | 100,000 | 83,900 |
Shareholders' Equity (Details_3
Shareholders' Equity (Details Textual 2) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
May 17, 2017 | Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Aug. 23, 2017 | May 12, 2017 | |
Shareholders' Equity (Textual) | ||||||
Convertible preferred shares | 1,000,000 | |||||
Series B Preferred Stock [Member] | ||||||
Shareholders' Equity (Textual) | ||||||
Preferred stock, shares authorized | 17,000,000 | 9,000,000 | ||||
Preferred stock, par value | $ 0.001 | |||||
Preferred stock original issue price | $ 0.3253815 | $ 0.3253815 | ||||
Convertible preferred shares | 1,536,658 | 13,306,599 | 13,306,599 | |||
Net cash proceeds | $ 50,000,000 | $ 50,000,000 | ||||
Traded common stock, price | $ 3.98 | |||||
Beneficial conversion feature | $ 14,998,505 | $ 22,202,194 |
Stock Options (Details)
Stock Options (Details) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Stock Options/2017 Omnibus Incentive Plan [Abstract] | ||
Beginning Outstanding, Shares Underlying Options | 414,854 | |
Granted, Shares Underlying Options | 490,000 | |
Options assumed pursuant to acquisition, Shares Underlying Options | 8,132,410 | |
Forfeited and expired, Shares Underlying Options | (80,979) | |
Exercised, Shares Underlying Options | (216,616) | |
Ending Outstanding, Shares Underlying Options | 8,739,669 | 414,854 |
Vested options, Shares Underlying Options | 8,466,285 | |
Beginning Outstanding, Weighted Average Exercise Price | $ 0.001 | |
Granted, Weighted Average Exercise Price | 1.92 | |
Assumed Options pursuant to acquisition, Weighted Average Exercise Price | 0.72 | |
Forfeited and expired, Weighted Average Exercise Price | 0.001 | |
Exercised, Weighted Average Exercise Price | 0.001 | |
Ending Outstanding, Weighted Average Exercise Price | 0.001 | $ 0.001 |
Vested options, Weighted Average Exercise Price | $ 0.69 | |
Granted, Weighted Average Remaining Contractual Term (in years) | 6 months 3 days | |
Options assumed pursuant to acquisition, Weighted Average Remaining Contractual Term (in years) | 2 years 2 months 1 day | |
Outstanding, Weighted Average Remaining Contractual Term (in years) | 2 years 8 months 12 days | 2 years 5 months 1 day |
Vested options, Weighted Average Remaining Contractual Term (in years) | 2 years 2 months 8 days |
Stock Options (Details Textual)
Stock Options (Details Textual) - $ / shares | Mar. 06, 2018 | Jun. 02, 2017 | Jun. 01, 2018 | Sep. 30, 2017 |
Stock Options (Textual) | ||||
Options to purchase on shares | 414,854 | |||
Common stock at price per share | $ 0.001 | |||
Options to purchase issued shares | 207,427 | |||
Vesting of remaining shares | 207,427 | 207,427 | ||
Options term, description | The options have an expiration date of 36 months from the closing date. The exercise price will be based on the fair market value of the share on the date of grant. | |||
Options granted shares | 414,854 | |||
Previously issued options cancelled | 80,979 | |||
Pursuant to options exercisable price per share | 8,132,410 | |||
Options exercisable at prices per share, description | Options exercisable at prices between $0.001 to $1.66 per share for 8,132,410 shares of Company common stock are outstanding so that the BioTrackTHC stockholders. | |||
BioTrackTHC [Member] | ||||
Stock Options (Textual) | ||||
Equity ownership percentage | 48.00% |
Warrants (Details)
Warrants (Details) | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
Summary of warrant activity | |
Warrant Shares, Balance at January 1, 2018 | shares | 2,732,073 |
Warrant Shares, Warrants granted | shares | 575,000 |
Warrant Shares, Balance at September 30, 2018 | shares | 3,307,073 |
Weighted Average Exercise Price, Balance at January 1, 2018 | $ / shares | $ 0.23 |
Weighted Average Exercise Price, Warrants granted | $ / shares | 0.01 |
Weighted Average Exercise Price, Balance at September 30, 2018 | $ / shares | $ 0.19 |
Warrants (Details 1)
Warrants (Details 1) - USD ($) | Dec. 31, 2017 | May 17, 2017 | Sep. 30, 2018 |
Schedule of fair value of the warrants Black-Scholes model | |||
Fair value of company's common stock | $ 3 | $ 3.98 | $ 1.24 |
Dividend yield | 0.00% | 0.00% | 0.00% |
Expected volatility | 266.40% | 181.20% | 222.80% |
Risk Free interest rate | 1.98% | 1.42% | 2.88% |
Expected life (years) | 2 years 7 months 24 days | 3 years | 1 year 10 months 25 days |
Fair value of financial instruments - warrants | $ 2,429,569 | $ 1,839,133 | $ 994,809 |
Warrants (Details 2)
Warrants (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | |
Summary of warrants | |||
Beginning Balance | $ 1,131,729 | $ 2,429,569 | |
Change in fair value of liability to issue warrants | (136,920) | (1,434,760) | $ (406,604) |
Ending Balance | $ 994,809 | $ 994,809 |
Warrants (Details Textual)
Warrants (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2017 | Feb. 13, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Warrants (Textual) | ||||||
Warrant obligations | $ 136,920 | $ 531,395 | $ 1,434,760 | $ 406,604 | ||
Issuance of warrants pursuant to consulting agreement | $ 943,000 | |||||
Warrants for the purchase of common stock | 575,000 | |||||
Warrant compensation expense | $ 943,000 | $ 943,000 | ||||
Series B Preferred Stock [Member] | ||||||
Warrants (Textual) | ||||||
Warrant issued to purchase shares of common stock | 812,073 | |||||
Warrants exercise price | $ 0.325 | |||||
Warrant [Member] | ||||||
Warrants (Textual) | ||||||
Warrant issued to purchase shares of common stock | 150,000 | |||||
Warrants, description | The Warrant is exercisable at any time within five (5) years of issuance and entitles the Purchaser to purchase 150,000 shares of the Common Stock at an exercise price of the lesser of either i) $1.00 or ii) a 50% discount to the lowest closing bid price thirty (30) trading days immediately preceding conversion, subject to certain adjustments. | |||||
Consulting Agreement [Member] | ||||||
Warrants (Textual) | ||||||
Issuance of common stock resulting from inducement of consulting agreement, Shares | 50,000 | |||||
Secured Convertible Promissory Note Five [Member] | Fourth Investor [Member] | ||||||
Warrants (Textual) | ||||||
Secured convertible promissory note | $ 183,333 | |||||
Cash | $ 166,666 | |||||
Retained amount | $ 16,666 | |||||
Warrant issued to purchase shares of common stock | 25,000 | |||||
Warrants exercise price | $ 1 |
2017 Omnibus Incentive Plan (De
2017 Omnibus Incentive Plan (Details) - shares | 1 Months Ended | 9 Months Ended | |
Oct. 17, 2017 | Sep. 30, 2018 | Dec. 31, 2017 | |
2017 Omnibus Incentive Plan (Textual) | |||
Common stock, shares outstanding | 71,363,953 | 28,771,402 | |
Granted, Weighted Average Remaining Contractual Term (in years) | 6 months 3 days | ||
Stock options granted | 490,000 | ||
2017 Omnibus Incentive Plan [Member] | |||
2017 Omnibus Incentive Plan (Textual) | |||
Reserved for issuance of common stock | 5,000,000 | ||
Common stock, shares outstanding | 1,109,995 | ||
Granted, Weighted Average Remaining Contractual Term (in years) | 10 years |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Income Taxes (Textual) | ||
Tax carryforward, description | These amounts are available for carryforward for use in offsetting taxable income of future years through 2035. | |
Reduced to offsetting valuation allowance | $ 0 | |
Percentage of valuation reserve deferred tax benefit | 100.00% | |
Net operating loss carry forward | $ 9,825,000 | $ 5,800,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)Agreements | Sep. 30, 2017USD ($) | |
Commitments and Contingencies (Textual) | ||||
Operating lease, rent expense | $ | $ 133,211 | $ 14,438 | $ 217,662 | $ 55,159 |
Lease agreement expires date | Mar. 31, 2021 | |||
Number of operating lease agreements | Agreements | 2 |
Segment Results (Details)
Segment Results (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Segment Reporting Information [Line Items] | ||||
Revenue | $ 3,113,721 | $ 1,129,746 | $ 6,116,101 | $ 2,837,145 |
Cost of revenue | 1,880,061 | 814,031 | 3,892,716 | 2,192,366 |
Gross profit | 1,233,660 | 315,715 | 2,223,385 | 644,779 |
Total operating expenses | 3,971,141 | 1,039,904 | 9,219,691 | 2,186,942 |
Loss from operations | (2,737,481) | (724,189) | (6,996,306) | (1,542,163) |
Total other income/(expense) | 59,029 | 468,832 | 2,050,829 | (6,577,864) |
Total net income (loss) | (2,678,452) | (255,357) | (4,945,477) | (8,120,027) |
Security and guarding [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 1,141,676 | 1,129,746 | 3,432,651 | 2,837,145 |
Cost of revenue | 917,620 | 814,031 | 2,458,548 | 2,192,366 |
Gross profit | 224,056 | 315,715 | 974,103 | 644,779 |
Total operating expenses | 2,536,916 | 1,039,904 | 7,279,486 | 2,186,942 |
Loss from operations | (2,312,860) | (724,189) | (6,305,383) | (1,542,163) |
Total other income/(expense) | 58,716 | 468,832 | 2,050,109 | (6,577,864) |
Total net income (loss) | (2,254,144) | (255,357) | (4,255,274) | (8,120,027) |
Systems installation [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 318,850 | 454,113 | ||
Cost of revenue | 194,013 | 379,046 | ||
Gross profit | 124,837 | 75,067 | ||
Total operating expenses | 49,683 | 134,097 | ||
Loss from operations | 75,154 | (59,030) | ||
Total other income/(expense) | 406 | 804 | ||
Total net income (loss) | 75,560 | (58,226) | ||
Software [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 1,653,195 | 2,229,337 | ||
Cost of revenue | 768,428 | 1,055,122 | ||
Gross profit | 884,767 | 1,174,215 | ||
Total operating expenses | 1,384,542 | 1,806,108 | ||
Loss from operations | (499,775) | (631,893) | ||
Total other income/(expense) | (93) | (84) | ||
Total net income (loss) | $ (499,868) | $ (631,977) |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 1 Months Ended | ||
Oct. 31, 2018 | Aug. 31, 2018 | Feb. 20, 2018 | |
Subsequent Events (Textual) | |||
Shares of restricted common stock | 15,000 | ||
Subscription Agreements [Member] | |||
Subsequent Events (Textual) | |||
Shares of restricted common stock | 183,333 | ||
Subsequent Events [Member] | |||
Subsequent Events (Textual) | |||
Shares of restricted common stock | 583,333 | ||
Price per share | $ 0.90 | ||
Investor per a subscription agreement for total proceeds | $ 524,999 | ||
Subsequent Events [Member] | Free Trading Shares [Member] | |||
Subsequent Events (Textual) | |||
Shares issued | 10,000 | ||
Trading, per shares | $ 1.02 | ||
Total proceeds | $ 10,200 | ||
Subsequent Events [Member] | Additional shares of free trading shares [Member] | |||
Subsequent Events (Textual) | |||
Shares issued | 10,000 | ||
Trading, per shares | $ 1.02 | ||
Total proceeds | $ 10,200 | ||
Subsequent Events [Member] | Chief Executive Officer [Member] | |||
Subsequent Events (Textual) | |||
Base salary | $ 175,000 | ||
Annual bonus, percentage | 50.00% | ||
Subsequent Events [Member] | Chief Software Architect [Member] | |||
Subsequent Events (Textual) | |||
Base salary | $ 175,000 | ||
Annual bonus, percentage | 50.00% | ||
Subsequent Events [Member] | Subscription Agreements [Member] | |||
Subsequent Events (Textual) | |||
Shares of restricted common stock | 111,111 | ||
Price per share | $ 0.90 | ||
Investor per a subscription agreement for total proceeds | $ 100,000 |