Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 14, 2019 | |
Cover [Abstract] | ||
Entity Registrant Name | Ondas Holdings Inc. | |
Entity Central Index Key | 0001646188 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 000-56004 | |
Entity Incorporation, State or Country Code | NV | |
Entity Interactive Data Current | Yes | |
Entity Reporting Status Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Shell Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 58,894,485 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Current Assets: | ||
Cash and cash equivalents | $ 4,650,318 | $ 1,129,863 |
Accounts receivable, net | 75,166 | 30,440 |
Inventory, net | 423,209 | 347,945 |
Operating lease right of use assets | 337,000 | |
Other current assets | 526,857 | 533,481 |
Total current assets | 6,012,550 | 2,041,729 |
Property and equipment, net | 462,239 | 502,146 |
Other Assets: | ||
Operating lease right of use assets, net of current | 369,275 | |
Licenses | 200,000 | |
Intangible assets, net | 115,754 | 53,288 |
Lease deposits | 56,002 | 49,376 |
Deferred offering costs | 14,982 | |
Total other assets | 741,031 | 117,646 |
Total assets | 7,215,820 | 2,661,521 |
Current Liabilities: | ||
Accounts payable | 2,754,042 | 1,111,929 |
Operating lease liabilities | 589,158 | |
Accrued expenses and other current liabilities | 2,966,018 | 2,188,271 |
Secured promissory note, net of debt discount of $18,410 and $72,038, respectively | 10,272,264 | 10,063,208 |
Notes payable | 3,882,868 | |
Total current liabilities | 16,581,482 | 17,246,276 |
Long-Term Liabilities: | ||
Notes payable | 539,921 | 300,000 |
Accrued interest | 3,999 | |
Operating lease liabilities, net of current | 432,860 | |
Total long-term liabilities | 976,780 | 300,000 |
Total liabilities | 17,558,262 | 17,546,276 |
Commitments and Contingencies | ||
Stockholders' Deficit: | ||
Preferred stock - par value $0.0001: 10,000,000 shares authorized | ||
Common stock - par value $0.0001; 350,000,000 shares authorized; 58,688,485 and 50,463,732 issued and outstanding, respectively | 5,869 | 5,046 |
Additional paid in capital | 38,168,991 | 17,491,734 |
Accumulated deficit | (48,509,547) | (32,381,535) |
Other accumulated comprehensive loss | (7,755) | |
Total stockholders' deficit | (10,342,442) | (14,884,755) |
Total liabilities and stockholders' deficit | $ 7,215,820 | $ 2,661,521 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Secured promissory note, debt discount | $ 18,410 | $ 72,038 |
Preferred stock, par value (in dollar pers share) | $ 0.0001 | $ 0.0001 |
Preferred stock, authorized | 10,000,000 | 10,000,000 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 350,000,000 | 350,000,000 |
Common stock, issued | 58,688,485 | 50,463,732 |
Common stock, outstanding | 58,688,485 | 50,463,732 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
Revenues, net | $ 88,132 | $ 35,176 | $ 313,583 | $ 83,180 |
Cost of goods sold | 15,185 | 6,427 | 71,133 | 14,985 |
Gross profit | 72,947 | 28,749 | 242,450 | 68,195 |
Operating expenses: | ||||
General and administration | 1,036,013 | 612,343 | 3,874,186 | 1,159,997 |
Sales and marketing | 1,174,293 | 601,826 | 4,728,505 | 1,142,986 |
Research and development | 1,250,736 | 887,039 | 4,411,266 | 1,718,869 |
Total operating expense | 3,461,042 | 2,101,208 | 13,013,957 | 4,021,852 |
Operating loss | (3,388,095) | (2,072,459) | (12,771,507) | (3,953,657) |
Other income (expense) | ||||
Interest expense | (615,518) | (1,618,834) | (1,891,802) | (2,169,906) |
Impairment of deferred offering costs and financing costs associated with canceled financing efforts | (1,208,063) | (1,478,695) | ||
Change in fair value of derivative liability | (975,902) | |||
Gain on conversion of debt | (44,348) | (44,348) | ||
Interest income | 102 | 6,606 | 1,769 | 13,416 |
Other income | 7,915 | 12,223 | ||
Total other income (expense) | (1,815,564) | (1,656,576) | (3,356,505) | (3,176,740) |
Loss before provision for income taxes | (5,203,659) | (3,729,035) | (16,128,012) | (7,130,397) |
Provision for income taxes | ||||
Net loss | $ (5,203,659) | $ (3,729,035) | $ (16,128,012) | $ (7,130,397) |
Net loss per share - basic and diluted (in dollars per share) | $ (0.10) | $ (0.16) | $ (0.32) | $ (0.34) |
Weighted average number of common shares outstanding, basic and diluted (in shares) | 50,542,841 | 24,033,664 | 50,554,113 | 21,135,819 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (5,203,659) | $ (3,729,035) | $ (16,128,012) | $ (7,130,397) |
Other comprehensive income | ||||
Foreign currency translation loss | (21,655) | (7,755) | ||
Comprehensive loss | $ (5,225,314) | $ (3,729,035) | $ (16,135,767) | $ (7,130,397) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Other Accumulated Comprehensive Income [Member] | Subscriptions Receivable [Member] | Total |
Balances at beginning at Dec. 31, 2017 | $ 1,679 | $ 12,485,544 | $ (20,384,478) | $ (7,897,255) | ||
Balances at beginning (in shares) at Dec. 31, 2017 | 16,797,744 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Shares issued in private placement, net of costs | $ 665 | 4,031 | 4,696 | |||
Shares issued in private placement, net of costs (in shares) | 6,648,586 | |||||
Net loss | (1,571,469) | (1,571,469) | ||||
Balances at ending at Mar. 31, 2018 | $ 2,344 | $ 12,489,575 | $ (21,955,947) | $ (9,464,028) | ||
Balance, ending (in shares) at Mar. 31, 2018 | 23,446,330 | |||||
Balances at beginning at Dec. 31, 2017 | $ 1,679 | $ 12,485,544 | $ (20,384,478) | $ (7,897,255) | ||
Balances at beginning (in shares) at Dec. 31, 2017 | 16,797,744 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (7,130,397) | |||||
Balances at ending at Sep. 30, 2018 | $ 5,046 | 17,616,073 | (27,514,875) | $ (1,958) | (9,895,714) | |
Balance, ending (in shares) at Sep. 30, 2018 | 50,463,732 | |||||
Balances at beginning at Mar. 31, 2018 | $ 2,344 | $ 12,489,575 | $ (21,955,947) | $ (9,464,028) | ||
Balances at beginning (in shares) at Mar. 31, 2018 | 23,446,330 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Shares issued in private placement, net of costs | $ (3,326) | $ (3,326) | ||||
Net loss | (1,829,893) | (1,829,893) | ||||
Balances at ending at Jun. 30, 2018 | $ 2,344 | 12,489,575 | (23,785,840) | (3,326) | (11,297,247) | |
Balance, ending (in shares) at Jun. 30, 2018 | 23,446,330 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Shares issued in private placement, net of costs | 1,368 | 1,368 | ||||
Issuance of shares in debt conversion | $ 202 | 4,002,816 | 4,003,018 | |||
Issuance of shares in debt conversion (in shares) | 2,017,402 | |||||
Recovery of derivative liability | 1,141,995 | 1,141,995 | ||||
Purchase and retirement of common stock | $ (3,260) | (3,260) | ||||
Purchase and retirement of common stock (in shares) | (32,600,000) | |||||
Effect of merger and recapitalization pursuant to execution of Agreement and Plan of Merger and Reorganization | $ 5,760 | (18,313) | (12,553) | |||
Effect of merger and recapitalization pursuant to execution of Agreement and Plan of Merger and Reorganization (in shares) | 57,600,000 | |||||
Net loss | (3,729,035) | (3,729,035) | ||||
Balances at ending at Sep. 30, 2018 | $ 5,046 | 17,616,073 | (27,514,875) | $ (1,958) | (9,895,714) | |
Balance, ending (in shares) at Sep. 30, 2018 | 50,463,732 | |||||
Balances at beginning at Dec. 31, 2018 | $ 5,046 | 17,491,734 | (32,381,535) | (14,884,755) | ||
Balances at beginning (in shares) at Dec. 31, 2018 | 50,463,732 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation | 47,023 | 47,023 | ||||
Comprehensive income | 4,661 | 4,661 | ||||
Net loss | (5,823,725) | (5,823,725) | ||||
Balances at ending at Mar. 31, 2019 | $ 5,046 | 17,538,757 | (38,205,260) | 4,661 | (20,656,796) | |
Balance, ending (in shares) at Mar. 31, 2019 | 50,463,732 | |||||
Balances at beginning at Dec. 31, 2018 | $ 5,046 | 17,491,734 | (32,381,535) | (14,884,755) | ||
Balances at beginning (in shares) at Dec. 31, 2018 | 50,463,732 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (16,128,012) | |||||
Balances at ending at Sep. 30, 2019 | $ 5,869 | 38,168,991 | (48,509,547) | (7,755) | (10,342,442) | |
Balance, ending (in shares) at Sep. 30, 2019 | 58,688,485 | |||||
Balances at beginning at Mar. 31, 2019 | $ 5,046 | 17,538,757 | (38,205,260) | 4,661 | (20,656,796) | |
Balances at beginning (in shares) at Mar. 31, 2019 | 50,463,732 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation | 25,013 | 25,013 | ||||
Comprehensive income | 9,239 | 9,239 | ||||
Net loss | (5,100,628) | (5,100,628) | ||||
Balances at ending at Jun. 30, 2019 | $ 5,046 | 17,563,770 | (43,305,888) | 13,900 | (25,723,172) | |
Balance, ending (in shares) at Jun. 30, 2019 | 50,463,732 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation | 840,840 | 797,512 | ||||
Shares issued in private placement, net of costs | $ 243 | 5,268,090 | 5,268,333 | |||
Shares issued in private placement, net of costs (in shares) | 2,426,000 | |||||
Issuance of shares in debt conversion | $ 580 | 14,496,291 | 14,496,871 | |||
Issuance of shares in debt conversion (in shares) | 5,798,753 | |||||
Comprehensive income | (21,655) | (21,655) | ||||
Net loss | (5,203,659) | (5,203,659) | ||||
Balances at ending at Sep. 30, 2019 | $ 5,869 | $ 38,168,991 | $ (48,509,547) | $ (7,755) | $ (10,342,442) | |
Balance, ending (in shares) at Sep. 30, 2019 | 58,688,485 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITES | ||
Net loss | $ (16,128,012) | $ (7,130,397) |
Adjustments to reconcile net loss to net cash flows used in operating activities: | ||
Depreciation | 102,085 | 15,405 |
Allowance for doubtful accounts | (7,914) | |
Amortization of debt discount and deferred financing costs | 53,628 | 145,123 |
Amortization of intangible assets | 742 | 77 |
Amortization of right of use assets | 38,867 | |
Impairment of operating lease | 259,926 | |
Impairment of deferred offering and financing costs | 270,632 | |
Accreted interest | 155,428 | |
Stock-based compensation | 912,876 | |
Loss on conversion of debt | 44,348 | |
Change in fair value of derivative liability | 975,902 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (44,726) | 1,929 |
Inventory | (75,417) | (137,725) |
Other current assets | (185,494) | (110,113) |
Accounts payable | 1,642,113 | 45,355 |
Accrued expenses and other current liabilities | 1,663,868 | 1,515,384 |
Net cash flows used in operating activities | (11,333,484) | (4,642,626) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of licenses | (200,000) | |
Purchase of equipment | (72,030) | (134,833) |
Patent costs | (63,208) | (35,947) |
Deposits | (6,625) | (15,000) |
Net cash flows used in investing activities | (341,863) | (185,780) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from secured promissory note | 10,000,000 | 5,000,000 |
Payments for deferred offering costs | (67,350) | (75,000) |
Proceeds from convertible notes payable | 100,000 | |
Proceeds from sale of common stock, net of costs | 5,268,332 | 2,738 |
Advances from related parties | 12,500 | |
Repayment of advances from related party | (155,645) | |
Net cash flows provided by financing activities | 15,200,982 | 4,884,593 |
(Decrease) increase in cash and cash equivalents | 3,525,635 | 56,187 |
Effect of foreign currency translation on cash | (5,180) | |
Cash and cash equivalent, beginning of period | 1,129,863 | 460,064 |
Cash and cash equivalents, end of period | 4,650,318 | 516,251 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||
Cash paid for interest | 921,605 | 562,798 |
Cash paid for income taxes | ||
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES: | ||
Debt exchanged for common stock | 14,496,871 | |
Accrued interest converted to debt | 230,565 | 17,310 |
Subscriptions receivable | (1,958) | |
Derivative liability | $ 1,141,995 |
DESCRIPTION OF BUSINESS AND BAS
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION The Company Ondas Holdings Inc. (“Ondas Holdings” or the “Company”) was originally incorporated in Nevada on December 22, 2014 under the name of Zev Ventures Incorporated. On September 28, 2018, we closed the Acquisition (see below), changed our name to Ondas Holdings Inc., and Ondas Networks Inc., a Delaware corporation (“Ondas Networks”), became our sole focus and wholly owned subsidiary. The corporate headquarters for the Company and operational headquarters for Ondas Networks is located in Sunnyvale, California. Unless otherwise stated or unless the context otherwise requires, the description of our business set forth below is provided on a combined basis, taking into account our subsidiary, Ondas Networks. Ondas Networks was originally incorporated in Delaware on February 16, 2006 under the name of Full Spectrum Inc. On August 10, 2018, the name was changed to Ondas Networks Inc. Ondas Networks’ wireless networking products are applicable to a wide range of mission critical functions that require secure communications over large geographic areas. We provide wireless connectivity solutions enabling mission-critical Industrial Internet applications and services. We refer to these applications as the Mission-Critical Internet of Things (MC-IoT). We design, develop, manufacture, sell and support FullMAX, our multi-patented, state-of-the-art, point-to-multipoint, Software Defined Radio (SDR) system for secure, licensed, private, wide-area broadband networks. Our customers purchase FullMAX system solutions to deploy wide-area intelligent networks (WANs) for smart grids, smart pipes, smart fields and any other mission critical network that needs internet protocol connectivity. We sell our products and services globally through a direct sales force and value-added sales partners to critical infrastructure providers including electric utilities, water and wastewater utilities, oil and gas producers, and for other critical infrastructure applications in areas such as homeland security and defense, and transportation. Our future capital requirements will depend upon many factors, including progress with developing, manufacturing and marketing our technologies, the time and costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims and other proprietary rights, our ability to establish collaborative arrangements, marketing activities and competing technological and market developments, including regulatory changes and overall economic conditions in our target markets. Our business consists of a single segment of products and services all of which are sold and provided in the United States and certain international markets. The Acquisition On September 28, 2018, we entered into the Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Zev Merger Sub, Inc. and Ondas Networks to acquire Ondas Networks. The transactions contemplated by the Merger Agreement were consummated on September 28, 2018 (the “Closing”), and pursuant to the terms of the Merger Agreement, all outstanding shares of common stock of Ondas Networks, $0.00001 par value per share, (the “Ondas Networks Share(s)”), were exchanged for shares of our common stock, $0.0001 par value per share (the “Company Shares”). Accordingly, Ondas Networks became our wholly-owned subsidiary and its business became the business of the Company. At the Closing, each Ondas Networks Share outstanding immediately prior to the Closing was converted into 3.823 Company Shares (the “Exchange Ratio”), with all fractional shares rounded down to the nearest whole share. Accordingly, we issued an aggregate of 25,463,732 Company Shares for all of the then-outstanding Ondas Networks Shares. In connection with the Closing, we amended and restated our articles of incorporation, effective September 28, 2018 to (i) change our name to Ondas Holdings Inc. and (ii) increase our authorized capital to 360,000,000 shares, consisting of 350,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 shares of “blank check” preferred stock, par value $0.0001 per share. In connection with the Acquisition, our trading symbol changed to “ONDS” effective at the opening of business on October 5, 2018. Also in connection with the Closing, (i) our sole director appointed additional individuals, who previously were members of the board of directors of Ondas Networks and its chief executive officer, to serve on our board of directors, and our board of directors subsequently appointed executive officers; (ii) the former holders of the Ondas Networks Shares executed lock-up agreements (the “Lock-Up Agreements”), which provide for an initial 12-month lock-up period followed by a subsequent 12-month limited sale period, commencing with the date of the Closing (Effective August 30, 2019, the Company entered into a First Amendment to Lock-Up Agreements (the “Amendment”) with stockholders owning an aggregate of 24,428,681 of the Ondas Shares, representing 41% of the Company’s currently outstanding shares of common stock. The Amendment revised the terms of the Lock-Up Agreements to extend the lock-up period an additional twelve months to September 28, 2020 and eliminated the 12-month limited sale period); (iii) we entered into a Common Stock Repurchase Agreement with Energy Capital, LLC, a current stockholder of the Company (“Energy Capital”), pursuant to which the entity sold an aggregate of 32.6 million Company Shares (the “Repurchase Shares”) to us at $0.0001 per share, for an aggregate consideration of $3,260, which Repurchase Shares were canceled and returned to our authorized but unissued shares; (iv) our board of directors approved, and our stockholders adopted, the 2018 Incentive Stock Plan (the “2018 Plan”) pursuant to which 10 million Company Shares have been reserved for issuance to employees, including officers, directors and consultants; and (v) we entered into a Loan and Security Agreement with Energy Capital, pursuant to which Energy Capital agreed to lend us an aggregate principal amount of up to $10 million, subject to specified conditions. In accordance with ASC 805-40, Reverse Acquisitions Liquidity We have incurred losses since inception and have funded our operations primarily through debt and the sale of capital stock. At September 30, 2019, we had an accumulated deficit of approximately $48.5 million. At September 30, 2019, we had short-term and long-term borrowings outstanding of approximately $10.3 million and $0.5 million, respectively. As of September 30, 2019, we had cash of approximately $4.7 million and a working capital deficit of approximately $10.6 million. Our future capital requirements will depend upon many factors, including progress with developing, manufacturing and marketing our technologies, the time and costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims and other proprietary rights, our ability to establish collaborative arrangements, marketing activities and competing technological and market developments, including regulatory changes and overall economic conditions in our target markets. Our ability to generate revenue and achieve profitability depends on our completion of our second-generation products and commencing the manufacture, marketing and sales of those products. These activities, including our planned research and development efforts, will require significant uses of working capital through the end of 2019 and beyond. Based on our current operating plans, we believe that our existing cash at the time of this filing will be sufficient to meet our anticipated operating needs through December 2019. Accounting standards require management to evaluate our ability to continue as a going concern for a period of one year subsequent to the date of the filing of this Form 10-Q (“evaluation period”). As such, we have evaluated if cash on hand and cash generated through operating activities would be sufficient to sustain projected operating activities through November 14, 2020. We anticipate that our current resources, along with cash generated from operations and cash generated from a private placement in September and October 2019 (see NOTES 9 and 12 for further details), will not be sufficient to meet our cash requirements throughout the evaluation period, including funding anticipated losses and scheduled debt maturities. We expect to seek additional funds from a combination of dilutive and/or nondilutive financings in the future. Because such transactions have not been finalized, receipt of additional funding is not considered probable under current accounting standards. If we do not generate sufficient cash flows from operations and obtain sufficient funds when needed, we expect that we would scale back our operating plan by deferring or limiting some, or all, of our capital spending, reducing our spending on travel, and/or eliminating planned headcount additions, as well as other cost reductions to be determined. Because such contingency plans have not been finalized (the specifics would depend on the situation at the time), such actions also are not considered probable for purposes of current accounting standards. Because, under current accounting standards, neither future cash generated from operating activities, nor management’s contingency plans to mitigate the risk and extend cash resources through the evaluation period, are considered probable, substantial doubt is deemed to exist about the Company’s ability to continue as a going concern. As we continue to incur losses, our transition to profitability is dependent upon achieving a level of revenues adequate to support its cost structure. We may never achieve profitability, and unless and until doing so, we intend to fund future operations through additional dilutive or non-dilutive financings. There can be no assurances, however, that additional funding will be available on terms acceptable to us, if at all. The financial information contained in these financial statements have been prepared on a basis that assumes that we will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. This financial information and these financial statements do not include any adjustments that may result from the outcome of this uncertainty. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the Company’s financial statements for interim periods in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The information included in this quarterly report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and the accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (“2018 Form 10-K”). The Company’s accounting policies are described in the “ Notes to Consolidated Financial Statements Principles of Consolidation The consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries, Ondas Networks and FS Partners, and our majority owned subsidiaries, Full Spectrum Holding and Ondas Network Limited. All significant inter-company accounts and transactions between these entities have been eliminated in these unaudited condensed consolidated financial statements. Use of Estimates The process of preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the financial statements. Such management estimates include those relating to revenue recognition, inventory write-downs to reflect net realizable value, assumptions used in the valuation of stock-based awards and warrants, and valuation allowances against deferred tax assets. Actual results could differ from those estimates. Inventory Inventories, which consist solely of equipment components, are stated at the lower of cost (first-in, first-out) or net realizable value, net of reserves for obsolete inventory. We continually analyze our slow-moving and excess inventories. Based on historical and projected sales volumes and anticipated selling prices, we established reserves. Inventory that is in excess of current and projected use is reduced by an allowance to a level that approximates its estimate of future demand. Products that are determined to be obsolete are written down to net realizable value. As of September 30, 2019 and December 31, 2018, we determined that no such reserves were necessary. Inventory consists of the following: September 30, December 31, Raw Material $ 376,417 $ 307,947 Finished Goods 46,792 39,998 TOTAL INVENTORY $ 423,209 $ 347,945 Stock-Based Compensation The Company follows the fair value recognition provisions in ASC 718, Compensation – Stock Compensation Improvements to Nonemployee Share-Based Payment Accounting Fair Value of Financial Instruments Our financial instruments consist primarily of receivables, accounts payable, accrued expenses and short and long-term debt. The carrying amount of receivables, accounts payable and accrued expenses approximates fair value because of the short-term maturity of such instruments. We have elected not to carry our debt instruments at fair value. The carrying amount of our debt approximates fair value. Interest rates that are currently available to us for issuance of short and long-term debt with similar terms and remaining maturities are used to estimate the fair value of our short and long-term debt. We have categorized our assets and liabilities that are valued at fair value on a recurring basis into a three-level fair value hierarchy in accordance with U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and lowest priority to unobservable inputs (Level 3). Assets and liabilities recorded in the balance sheets at fair value are categorized based on a hierarchy of inputs, as follows: Level 1 Level 2 Level 3 At September 30, 2019 and December 31, 2018, we had no instruments requiring a fair value determination. The following table provides a summary of changes in fair value associated with the Level 3 liabilities for the nine months ended September 30, 2019 and for the year ended December 31, 2018: Fair Value Measurements Using Significant Unobservable Inputs Nine Months Ended 2019 Year ended December 31, 2018 Balance, beginning of period $ - $ (166,093 ) Issuances of derivative liability - - Reclassification to additional paid in capital - 1,141,995 Change in fair value of derivative liability - (975,902 ) Balance, end of period $ - $ - The above table of Level 3 liabilities begins with the prior period balance and adjusts the balance for changes that occurred during the current period. The ending balance of the Level 3 financial instrument presented above represent our best estimates and may not be substantiated by comparisons to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. Deferred Offering Costs The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the equity financing, these costs are recorded in stockholders’ deficit as a reduction of additional paid-in capital generated as a result of the offering. Should a planned equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the consolidated statement of operations. In accordance with this policy, for the three and nine months ended September 30, 2019, the Company expensed financing costs of $644,228 and $764,860, respectively. Debt Issuance Costs Debt issuance costs represent costs incurred for the issuance of debt. Once the associated debt instrument is issued, these costs would be recorded as a debt discount and amortized using the effective interest method over the term of the related debt instrument. Upon abandonment of a pending financing transaction, the related deferred financing costs are charged to interest expense. In accordance with this policy, in June 2019 the Company expensed $150,000 of deferred offering costs. Foreign Currency Our functional currency is the U.S. dollar. The functional currency of our foreign operations, generally, is the respective local currency for each foreign subsidiary. Assets and liabilities of foreign operations denominated in local currencies are translated at the spot rate in effect at the applicable reporting date. Our condensed consolidated statements of income are translated at the weighted average rate of exchange during the applicable period. The resulting unrealized cumulative translation adjustment is recorded as a component of accumulated other comprehensive income (loss) in stockholders’ equity. Realized and unrealized transaction gains and losses generated by transactions denominated in a currency different from the functional currency of the applicable entity are recorded in other income (loss) in the period in which they occur. ASC 606, Revenue from Contracts with Customers On January 1, 2018, we adopted ASC 606 , Revenue from Contracts with Customers Under ASC 606, the Company recognizes revenue when the customer obtains control of promised products or services, in an amount that reflects the consideration which is expected to be received in exchange for those products or services. The Company recognizes revenue following the five-step model prescribed under ASC 606: (i) identify contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the products or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the products or services promised within each contract and determines those that are performance obligations and assesses whether each promised product or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration that should be included in the transaction price utilizing the expected value method. Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available. Sales, value add, and other taxes collected on behalf of third parties are excluded from revenue. For the nine months ended September 30, 2019 and 2018, none of our contracts with customers included variable consideration. Contracts that are modified to account for changes in contract specifications and requirements are assessed to determine if the modification either creates new or changes the existing enforceable rights and obligations. Generally, contract modifications are for products or services that are not distinct from the existing contract due to the inability to use, consume or sell the products or services on their own to generate economic benefits and are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price and measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. For the nine months ended September 30, 2019 and 2018, there were no modifications to contract specifications. The Company is engaged in the development, marketing and sale of wireless radio systems for secure, wide area mission-critical business-to-business networks. We generate revenue primarily from the sale of the FullMAX System and the delivery of related services. Product revenue is comprised of sales of the Company’s software defined base station and remote radios, its network management and monitoring system, and accessories. The Company’s software and hardware is sold with a limited one-year basic warranty included in the price. The limited one-year basic warranty is an assurance-type warranty, is not a separate performance obligation, and thus no transaction price is allocated to it. The nature of tasks under the limited one-year basic warranty only provide for remedying defective product(s) covered by the warranty. Product revenue is generally recognized when the customer obtains control of our product, which occurs at a point in time, and may be upon shipment or upon delivery based on the contractual shipping terms of a contract, or upon installation when the combined performance obligation is not distinct within the context of the contract. Service revenue is comprised of separately priced extended warranty sales, network support and maintenance, remote monitoring, as well as ancillary services directly related to the sale of the Company’s wireless communications products including wireless network design, systems engineering, radio frequency planning, software configuration, product training, installation, and onsite support. The extended warranty sold by the Company provides a level of assurance beyond the coverage for defects that existed at the time of a sale or against certain types of covered damage. The extended warranty includes 1) factory hardware repair or replacement, at our election, of the base station and remote radios, 2) software upgrades, bug fixes and new features of the radio software and NMS, 3) deployment and network architecture support, and 4) technical support by phone and email. Extended warranty, network support and maintenance, and remote monitoring revenues are recognized ratably over the term of the service contract. Ancillary service revenues are recognized at the point in time when those services have been provided to the customer and the performance obligation has been satisfied. If the customer contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. We enter into certain contracts that have multiple performance obligations, one or more of which may be delivered subsequent to the delivery of other performance obligations. We allocate the transaction price based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. We determine standalone selling prices based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, we estimate the standalone selling price considering available information such as market conditions and internally approved pricing guidelines related to the performance obligations. Revenue is then allocated to the performance obligations using the relative selling prices of each of the performance obligations in the contract. Our payment terms vary and range from net 15 to net 30 days from the date of the invoices. Disaggregation of Revenue The following tables present our disaggregated revenues by Type of Revenue and Timing of Revenue: Three Months Ended Nine Months Ended 2019 2018 2019 2018 Type of Revenue Product revenue $ 61,182 $ 23,323 $ 212,905 $ 29,913 Service revenue 26,950 11,853 100,459 46,699 Other revenue - - 219 6,568 Total revenue $ 88,132 $ 35,176 $ 313,583 $ 83,180 Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Timing of Revenue Revenue recognized point in time $ 79,166 $ 28,310 $ 281,333 $ 44,356 Revenue recognized over time 8,966 6,866 32,250 38,824 Total revenue $ 88,132 $ 35,176 $ 313,583 $ 83,180 Contract Assets and Liabilities We recognize a receivable or contract asset when we perform a service or transfer a good in advance of receiving consideration. A receivable is recorded when our right to consideration is unconditional and only the passage of time is required before payment of that consideration is due. A contract asset is recorded when our right to consideration in exchange for good or services that we have transferred to a customer is conditional on something other than the passage of time. We did not have any contract assets recorded at September 30, 2019 or December 31, 2018. We recognize a contract liability when we receive consideration, or if we have the unconditional right to receive consideration, in advance of satisfying the performance obligation. A contract liability is our obligation to transfer goods or services to a customer for which we have received consideration, or an amount of consideration is due from the customer. The table below details the activity in our contract liabilities during the nine months ended September 30, 2019, and the year ended December 31, 2018, and is included in other current liabilities in the Company’s unaudited condensed consolidated balance sheet. Nine Months Ended September 30, Year Ended December 31, Balance at beginning of period $ 20,631 $ 30,690 Additions 20,826 32,106 Transfer to revenue (32,250 ) (42,166 ) Balance at end of period $ 9,207 $ 20,631 Warranty Reserve We provide a limited one-year assurance-type warranty on our software and hardware products. The assurance-type warranty covers defects in material and workmanship only. If a warranted software or hardware component is determined to be defective after being tested by the Company, the Company will repair, replace or refund the price of the covered hardware and/or software to the customer (not including any shipping, handling, delivery or installation charges). We estimate, based upon a review of historical warranty claim experience, the costs that may be incurred under our warranties and record a liability in the amount of such estimate at the time a product is sold. Factors that affect our warranty liability include the number of units sold, historical and anticipated rates of warranty claims, and cost per claim. We periodically assess the adequacy of our recorded warranty liability and adjust the accrual as claims data and historical experience warrants. The Company has assessed the costs of fulfilling its existing assurance-type warranties and has determined that the estimated outstanding warranty obligation at September 30, 2019 and December 31, 2018 are immaterial to the Company’s financial statements. Accounting Standard Update 2016-02, Leases Under Topic 842, operating lease expense is generally recognized evenly over the term of the lease. The Company has operating leases primarily consisting of office space with remaining lease terms of 15 months to 44 months. Current facility leases include our offices in Sunnyvale, CA and Chengdu, Sichuan Province, People’s Republic of China. Lease costs were $445,148 for the nine months ended September 30, 2019. There was no sublease rental income for the nine months ended September 30, 2019. Leases with an initial term of twelve months or less are not recorded on the balance sheet. For lease agreements entered into or reassessed after the adoption of Topic 842, we combine the lease and non-lease components in determining the lease liabilities and right of use (“ROU”) assets. Our lease agreements generally do not provide an implicit borrowing rate; therefore, an internal incremental borrowing rate is determined based on information available at lease commencement date for purposes of determining the present value of lease payments. We used the incremental borrowing rate on December 31, 2018 for all leases that commenced prior to that date. Lease Costs Three Months Ended Nine Months Ended Components of total lease costs: Operating lease expense $ 148,922 $ 445,148 Short-term lease costs (1) 11,122 38,626 Total lease costs $ 160,044 $ 483,774 (1) Represents short-term leases which are immaterial. Lease Positions as of September 30, 2019 ROU lease assets and lease liabilities for our operating leases were recorded in the unaudited condensed consolidated balance sheet as follows: As of 2019 Assets: Operating lease assets, current $ 337,000 Operating lease assets, net of current 369,275 Total lease assets $ 706,275 Liabilities: Operating lease liabilities, current $ 589,158 Operating lease liabilities, net of current 432,860 Total lease liabilities $ 1,022,018 Lease Terms and Discount Rate Weighted average remaining lease term (in years) – operating lease 2.3 Weighted average discount rate – operating lease 14 % Cash Flows Nine Months Ended 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 340,044 Undiscounted Cash Flows Future lease payments included in the measurement of lease liabilities on the unaudited condensed consolidated balance sheet as of September 30, 2019, for the following five years and thereafter are as follows: Years ending December 31, 2019 (3 months) $ 155,075 2020 645,248 2021 173,545 2022 116,392 2023 67,895 Total future minimum lease payments 1,158,155 Lease imputed interest (136,137 ) Total $ 1,022,018 In March 2019, one of our long-term operating leases was abandoned and the likelihood of entering into a sublease agreement for the property was minimal; therefore, the Right to Use Asset value of $259,926 was considered impaired and the amount was charged to asset impairment on the accompanying unaudited condensed consolidated financial statements. Net Loss Per Common Share Net loss per share for all periods presented is based on the equity structure of the legal acquirer, which assumes common stock is outstanding and is reflected on a retrospective basis for all periods presented. Basic net loss per share is computed by dividing net loss by the weighted average shares of common stock outstanding for each period. Diluted net loss per share is the same as basic net loss per share since the Company has net losses for each period presented. The following potentially dilutive securities for the nine months ended September 30, 2019 and 2018 have been excluded from the computation of diluted net loss per share because the effect of their inclusion would have been anti-dilutive. Nine months ended September 30, 2019 September 30, 2018 Warrants 5,466,057 - Convertible debt - 140,678 TOTAL 5,466,057 140,678 Concentration of Customers Because we have only recently invested in our customer service and support organization, a small number of customers have accounted for a substantial amount of our revenue. The table below sets forth the Company’s customers that accounted for greater than 10% of its revenues for the three- and nine-month periods ended September 30, 2019 and 2018, respectively: Three Months Ended Nine Months Ended Customer 2019 2018 2019 2018 A - 16 % 44 % 48 % B - 55 % 18 % 33 % C 85 % - 36 % - D - 27 % - 12 % Customers C accounted for 100% of the Company’s accounts receivable balance at September 30, 2019. Recent Accounting Pronouncements In August 2018, the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Update (“ASU”), 2018-13 that eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information and modifies some disclosure requirements. The FASB developed the amendments to Accounting Standards Codification (“ASC”) 820 as part of its broader disclosure framework project, which aims to improve the effectiveness of disclosures in the notes to financial statements by focusing on requirements that clearly communicate the most important information to users of the financial statements. The new guidance is effective for all entities for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. An entity is permitted to early adopt either the entire standard or only the provisions that eliminate or modify requirements. We are currently evaluating the effect of this guidance on our disclosures. In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting In July 2017, the FASB issued ASU 2017-11 (“ASU 2017-11”), Earnings Per Share (“Topic 260”), Distinguishing Liabilities from Equity Derivatives and Hedging In February 2016, the FASB issued ASU 2016-02, Leases. This guidance requires lessees to record most leases on their balance sheets while recognizing expenses on their income statements in a manner similar to current accounting. The guidance also eliminates current real estate-specific provisions for all entities. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. The standard is effective for public business entities for annual periods beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted for all entities. In July 2018, the FASB amended the new leases standard and issued ASU 2018-11, Leases, (Topic 842): Targeted Improvements to give entities another option for transition and to provide lessors with a practical expedient. We adopted ASU 2016-02 on January 1, 2019 utilizing the alternative transition method allowed for under ASU 2018-11. Comparative financial information was not adjusted and will continue to be reported under ASC 840. We also elected the transition relief package of practical expedients and as a result we did not assess (1) whether existing or expired contracts contain leases, (2) lease classification for any existing or expired leases, and (3) whether lease origination costs qualified as initial direct costs. We elected the short-term lease practical expedient by establishing an accounting policy to exclude leases with a term of 12 months or less. We elected not to separate lease components from non-lease components for our specified asset classes. Additionally, the adoption of the new standard resulted in increased disclosure requirements in our quarterly and annual filings. Reclassification Certain amounts reported in prior years in the financial statements have been reclassified to conform to the current year’s presentation. |
OTHER CURRENT ASSETS
OTHER CURRENT ASSETS | 9 Months Ended |
Sep. 30, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
OTHER CURRENT ASSETS | NOTE 3 –OTHER CURRENT ASSETS Other current assets consist of the following: September 30, December 31, Prepaid insurance $ 177,926 $ 102,743 Advances for raw material purchases 175,600 - Other prepaid expenses 122,924 40,654 Deposits 28,115 31,965 Prepaid marketing costs 22,013 125,525 Miscellaneous receivables 279 44,294 Prepaid financing costs - 188,300 TOTAL OTHER CURRENT ASSETS $ 526,857 $ 533,481 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 4 – PROPERTY AND EQUIPMENT Property and equipment consist of the following: September 30, December 31, 2018 Leasehold improvements $ 254,990 $ 256,920 Vehicle 149,916 143,560 Furniture and fixtures 133,540 132,088 Computer Equipment 118,143 87,087 Software 61,287 61,287 Test Equipment 25,244 - 743,120 680,942 Less: accumulated depreciation (280,881 ) (178,796 ) TOTAL PROPERTY AND EQUIPMENT $ 462,239 $ 502,146 Depreciation expense for the three and nine months ended September 30, 2019 was $34,403 and $102,085, respectively. Depreciation expense for the three and nine months ended September 30, 2018 was $7,874 and $15,405, respectively. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 5 – INTANGIBLE ASSETS Our intangible assets include patent costs totaling $116,690 less amortization of patent costs of $936 at September 30, 2019. Our intangible assets include patent costs totaling $53,482 less amortization of patent costs of $194 at December 31, 2018. Estimated amortization expense for the next five years for the patent cost currently being amortized is as follows: Year Ending December 31, Estimated Amortization 2019 (3 months) $ 313 2020 $ 1,252 2021 $ 1,252 2022 $ 1,252 2023 $ 1,252 |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 9 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | NOTE 6 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of the following: September 30, December 31, Accrued payroll and other benefits $ 2,533,294 $ 1,659,577 Accrued interest 254,550 138,605 D&O insurance financing payable 84,150 52,530 Accrued professional fees 47,859 126,384 Accrued rent and facilities costs 34,956 160,544 Deferred revenue 9,207 20,631 Other accrued expenses 2,002 - Accrued travel and entertainment - 30,000 TOTAL ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES $ 2,966,018 $ 2,188,271 |
NOTES PAYABLE AND OTHER FINANCI
NOTES PAYABLE AND OTHER FINANCING AGREEMENTS | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE AND OTHER FINANCING AGREEMENTS | NOTE 7 – NOTES PAYABLE AND OTHER FINANCING AGREEMENTS July 31, 2019 Amendment On August 7, 8 and 9, 2019, effective as of July 31, 2019, the Company and certain lenders entered into amendments to their respective debt agreements and promissory notes (the “July 31, 2019 Amendment”) wherein one lender extended the maturity date on its loan to September 30, 2021 (the “September 2021 Extended Lender”) (described more fully below), and the remaining lenders extended the maturity date of their loans to October 31, 2019. In addition to extending the maturity dates of the instruments to October 31, 2019, the lenders agreed that if the Company completes an equity offering of not less than $8,000,000 (subsequently reduced to $5,000,000 effective on September 6, 2019) on or before the maturity date, at or at less than a specified offering price per security, the lenders shall extinguish their indebtedness in exchange for securities of the Company upon the same terms and conditions of the investors in such equity offering, provided Energy Capital LLC (“Energy Capital”) participates in an extinguishment of all the indebtedness owed to it under the Energy Capital Loan and Security Agreement (See NOTE 8 for further details) in such equity offering. On September 27, 2019, Ondas Holdings entered into a security purchase agreement with certain purchasers which provided for the sale of up to $12,500,000 of Units (a Unit consist of one share of common stock of the Company and one half of one warrant to purchase common stock of the Company). See NOTE 9 for further details. Participation by certain lenders is detailed below. Loan Agreements In October 2007, Ondas Networks entered into a 6% per annum loan agreement, as amended, with a lender in the amount of $550,000 in connection with the issuance of common stock of Ondas Networks (the “October 2007 Loan”); however, the October 2007 Loan was not memorialized. The October 2007 Loan has been amended several times through June 30, 2019 (the “Amended October 2007 Loan”). Effective July 31, 2019, Ondas Networks further amended the Amended October 2007 Loan, as described above under the July 31, 2019 Amendment. On September 27, 2019, the lender exchanged $610,346 of principal and interest for 244,139 Units (as described above and in NOTE 9). Pursuant to the terms of the July 31, 2019 Amendment, the outstanding principal and interest at September 27, 2019 was extinguished. The outstanding principal balance of the Amended October 2007 Loan at December 31, 2018 was $567,310. On December 31, 2013, Ondas Networks entered into a 10% per annum Promissory Note, as amended, with a lender in the amount of $250,000, of which $25,000 was repaid in February 2015 (the “December 2013 Note”). The original maturity of the December 2013 Note was December 31, 2014. On November 1, 2014, Ondas Networks entered into a Loan Agreement, as amended, with the Lender in the amount of $210,000. (the “November 2014 Loan”). The original maturity of the November 2014 Loan was March 16, 2015. The December 2013 Note and the November 2014 Loan have been amended several times and a portion of each note has been assigned through June 30, 2019 (the “Amended December 2013 Note” and Amended November 2014 Loan”, respectively). Effective July 31, 2019, Ondas Networks further amended the Amended December 2013 Note and Amended November 2014 Loan, as described above under the July 31, 2019 Amendment. On September 27, 2019, the lenders exchanged $586,181 of principal and interest for 234,473 Units (as described above and in NOTE 9). Pursuant to the terms of the July 31, 2019 Amendment the outstanding principal and interest at September 27, 2019 was extinguished. The outstanding principal balance of the Amended December 2013 Note and the Amended November 2014 Loan was $311,865 and $274,316, respectively. On April 1, 2015, Ondas Networks entered into a 10% per annum Loan Agreement, as amended, with two individuals in the amount of $50,000 (the “April 2015 Note”). The original maturity of the April 2015 Note was July 1, 2015. The April 2015 Note has been amended several times through June 30, 2019 (the “Amended April 2015 Note”). Effective July 31, 2019, Ondas Networks further amended the Amended April 2015 Note, as described above under the July 31, 2019 Amendment. On September 27, 2019, the lender exchanged $71,556 of principal and interest for 28,623 Units (as described above and in NOTE 9). Pursuant to the terms of the July 31, 2019 Amendment the outstanding principal and interest at September 27, 2019 was extinguished. The outstanding principal balance of the April 2015 Note at December 31, 2018 was $66,511. Financing Agreement On November 3, 2016, Ondas Networks entered into a Purchase Order Financing Agreement with an accompanying 20% per annum Promissory Note, as amended, with an individual in the amount of $250,000 (the “November 2016 Note”). The original maturity of the November 2016 Note was the earlier of the payment of the purchase order for which the loan was advanced or 180 days after issuance. On December 20, 2016, Ondas Networks entered into a second Purchase Order Financing Agreement with an accompanying 10% per annum Promissory Note, as amended, with the same individual in the amount of $100,000 (the “December 2016 Note”). The original maturity of the December 2016 Note was the earlier of the payment of the purchase order for which the loan was advanced or 180 days after issuance. The November 2016 Note and the December 2016 Note have been amended several times through June 30, 2019 (the “Amended November 2016 Note” and Amended December 2016 Note”, respectively). Effective July 31, 2019, Ondas Networks further amended the Amended November and Amended December 2016 Notes, as described above under the July 31, 2019 Amendment. On September 27, 2019, the lender exchanged $433,131 of principal and interest for 173,252 Units (as described above and in NOTE 9). Pursuant to the terms of the July 31, 2019 Amendment, the outstanding principal and interest at September 27, 2019 was extinguished. The outstanding principal balance of the Amended November 2016 and Amended December 2016 Notes at December 31, 2018 was $319,530 and $113,601, respectively. On February 28, 2014, Ondas Networks entered into a Purchase Order Financing Agreement (the “Financing Agreement”) with a lender. Interest on the Financing Agreement accrued at 30% per annum for the first 104 days and at 51% per annum thereafter. Between June 2014 and January 2015, Ondas Networks received an aggregate of $660,000 of which $285,000 was repaid. The Financing Agreement has been amended several times through June 30, 2019 (the “Amended Financing Agreement”). Effective July 31, 2019, Ondas Networks further amended the Amended Financing Agreement, as described above under the July 31, 2019 Amendment. On September 27, 2019, the lender exchanged $1,030,593 of principal and interest for 412,238 Units (as described above and in NOTE 9). Pursuant to the terms of the July 31, 2019 Amendment, the outstanding principal and interest at September 27, 2019 was extinguished. The outstanding principal balance of the Amended Financing Agreement at December 31, 2018 was $957,925. Promissory Notes On December 14, 2015, Ondas Networks approved a private placement offering (“Private Placement”) seeking to sell to investors certain 10% promissory notes in the aggregate face amount of $750,000, which amount was later increased to $1,250,000, with a term of 18 months (“Private Placement Notes”). In connection with the Private Placement Notes, each investor (the “Private Placement Noteholders”) received warrants to purchase shares of common stock of Ondas Networks (“Private Placement Warrants”), equal to 25% of the principal amount of the Private Placement Notes, exercisable at the lower of (i) $2.00 per share or (ii) 40% of the selling price of Ondas Networks’ shares in its proposed initial public offering. In December 2015, pursuant to the terms of security purchase agreements entered into in connection with the Private Placement, Ondas Networks completed the sale of an aggregate of $325,000 in Private Placement Notes to Private Placement Noteholders, of which $25,000 was repaid during 2017, and issued them Private Placement Warrants to purchase an aggregate of 81,250 shares of common stock of Ondas Networks, with a term of ten years, at an exercise price of $2.00 and a fair value of $63,398. Between February and July 2016, pursuant to the terms of security purchase agreements, Ondas Networks completed the sale of an aggregate of $925,000 in Private Placement Notes to Private Placement Noteholders and issued them Private Placement Warrants to purchase an aggregate of 231,250 shares of Ondas Networks common stock, with a term of ten years, at an exercise price of $2.00 and a fair value of $168,678. As of January 1, 2018, the Private Placement Warrants for the 312,500 shares of Ondas Networks common stock were surrendered to Ondas Networks in exchange for participation in a private placement of Ondas Networks’ shares dated April 13, 2018. The Private Placement Notes have been amended several times through June 30, 2019 (the “Amended Private Placement Notes”). Effective July 31, 2019, Ondas Networks further amended the Amended Private Placement Notes, wherein (i) the September 2021 Extended Lender agreed to transfer all accrued and unpaid interest through July 31, 2019 in the amount of $1,983 to principal, to extend the maturity date to September 30, 2021, and to accrue interest from the date of the extension to the maturity date and (ii) all other lender agreements were amended as described above under the July 31, 2019 Amendment. On September 27, 2019, the lenders, excluding the September 2021 Extended Lender, exchanged $1,201,960 of principal and interest for 480,786 Units (as described above and in NOTE 9). Pursuant to the terms of the July 31, 2019 Amendment, the outstanding principal and interest at September 27, 2019 was extinguished. The aggregate outstanding principal balance of the Amended Private Placement Notes at September 30, 2019 and December 31, 2018 was $239,674 and $1,343,682, respectively. Convertible Promissory Notes During 2017, Ondas Networks and certain entities and individuals entered into convertible promissory notes defined herein as (i) notes with mutual conversion preferences (“Group 1 Notes”) and (ii) notes with unilateral conversion preferences (“Group 2 Notes”). On July 11, 2018, the Ondas Networks board of directors, approved certain changes to the outstanding convertible promissory notes. The action approved changes to the Group 2 Notes to match the Group 1 Notes and authorized the issuance of a Security Holder Consent Agreement wherein each holder of a Group 2 Note would agree to the change. The changes modified the conversion option for the Group 2 Notes which resulted in a loss on extinguishment of debt in the amount of $44,348 and caused the derivative liability related to the Group 2 Notes to cease to exist and be classified as additional paid in capital at its fair value on July 11, 2018 in the amount of $1,141,995. On September 28, 2018, in conjunction with the Merger Agreement discussed in NOTE 1, the holders of Group 1 Notes and all but one holder of Group 2 Notes converted their outstanding convertible promissory notes into an aggregate of 2,017,416 Company Shares. At both September 30, 2019 and December 31, 2018, the total outstanding balance of the remaining convertible promissory note (the “Note”) was $300,000. The maturity date of the Note is based on the payment of 0.6% of quarterly gross revenue until 1.5 times the amount of the Note is paid. On September 27, 2019, the holder of the Note was granted a warrant to purchase 140,678 shares of common stock of the Company. The fair value of this warrant was recorded as financing costs on the accompanying condensed consolidated financial statements. See NOTE 9 for further details. Notes payable and other financing consists of: September 30, December 31, 2018 Short Term: Loan Agreements $ - $ 1,178,670 Financing Agreement - 1,360,516 Promissory Notes - 1,343,682 $ - $ 3,882,868 Long Term: Promissory Note $ 239,921 $ - Convertible Promissory Note 300,000 300,000 $ 539,921 $ 300,000 |
SECURED PROMISSORY NOTES
SECURED PROMISSORY NOTES | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
SECURED PROMISSORY NOTES | NOTE 8 –SECURED PROMISSORY NOTES Steward Capital Holdings LP On March 9, 2018, we entered into a loan and security agreement (the “Agreement”) with Steward Capital Holdings LP (the “Steward Capital”) wherein Steward Capital made available to us a loan in the aggregate principal amount of up to $10,000,000 (the “Loan”). On March 9, 2018, the Company and Steward Capital entered into a Secured Term Promissory Note for $5,000,000, having a maturity date of September 9, 2019 (“Tranche A”). The Note bears interest at a per annum rate equal to the greater of (a) 11.25% or (b) 11.25% plus the Prime Rate, less, 3.25%. The Agreement also includes payments of $25,000 in loan commitment fees and $100,000 (1%) of the funding in loan facility charges. The loan commitment fees and $50,000 in loan facility charges associated with Tranche A were recorded as debt discount and amortized ratably over the life of the loan. There is also an end of term charge of $250,000. The end of term charge is being recorded as accreted costs over the term of the loan. The Note is secured by substantially all of the assets of the Company. On October 9, 2018, the Company and Steward Capital entered into a second Secured Term Promissory Note for $5,000,000 having a maturity date of April 9, 2020 (the “Second Note”) to complete the Agreement for $10,000,000. The Second Note bears interest at a per annum rate equal to the greater of (a) 11.25% or (b) 11.25% plus the Prime Rate, less, 3.25%. Pursuant to the terms of the Agreement, the Company is required to pay a $50,000 loan facility charge. On June 18, 2019, the Company and Steward Capital entered into a letter of agreement to amend the Loan and Security Agreement (the “First Amendment”) to (i) extend and amend the Maturity Date, as defined in Section 1.1 of the Agreement, to read in its entirety “means September 9, 2020”; (ii) waive the repayment requirement to Steward Capital under Section 2.3 of the Agreement, in connection with the then proposed public offering of the Company as described in the Company’s Registration Statement on Form S-1, as amended, originally filed on April 12, 2019, and (iii) waive the restriction by Steward Capital on the prepayment of Indebtedness under Section 7.4 of the Agreement. In connection with the waivers, extension and amendment, the Company agreed to pay to Steward Capital, upon the earlier of (a) the completion of the public offering as set forth in Section 2.3 of the Agreement and (b) ten (10) days following the Company’s receipt of Steward’s written demand therefor, a fee equal to three percent (3%) of the current outstanding principal balance of the Loan (as defined in the Agreement), neither of which have occurred at the time of this filing. The Company concluded that the modifications created by the First Amendment resulted in a troubled debt restructuring under Accounting Standard Update—Debt (Topic 470) and it was determined that a concession was granted by Steward Capital. However, as the future payments to be made subsequent to the modification are greater than the carrying value at the time of the modification, no gain was required to be recognized on the restructuring. As the difference between the effective interest rate method and the straight-line method is deemed immaterial, the Company will continue to amortize the deferred loan costs using the straight-line method over the remaining term of the Loan. The Agreement also contains covenants which included certain restrictions with respect to subsequent indebtedness, liens, loans and investments, asset sales and share repurchases and other restricted payments, subject to certain exceptions. The Agreement also contained financial reporting obligations. An event of default under the Agreement includes, but is not limited to, breach of covenants, insolvency, and occurrence of any default under any agreement or obligation of the Company. In addition, the Agreement contained a customary material adverse effect clause which states that in the event of a material adverse effect, an event of default would occur, and the lender has the option to accelerate and demand payment of all or any part of the loan. A material adverse effect is defined in the Agreement as a material change in our business, operations, properties, assets or financial condition or a material impairment of its ability to perform all obligations under its Agreement. As of September 30, 2019, the principal balance was $10,000,000, net of debt discount of $18,410 and accreted cost of $290,674 Energy Capital, LLC On October 1, 2018, we entered into a loan and security agreement (the “Loan and Security Agreement”) with Energy Capital, LLC (“Energy Capital”) wherein Energy Capital made available to us an aggregate principal amount of up to $10,000,000 (the “Loan”). Between January 29 and August 13, 2019, the Company and Energy Capital entered into a series of secured term promissory notes (the “Promissory Notes”) for an aggregate of $10,000,000. The advance proceeds were utilized primarily for operating capital and inventory. The principal amount outstanding under the Promissory Notes bear interest at a per annum rate equal to the greater of (a) 11.25% or (b) 11.25% plus the Prime Rate (as published by the Wall Street Journal (National Edition)), less 3.25%. The Promissory Notes contain customary events of default and affirmative and negative covenants for transactions of this nature. Upon an event of default, Energy Capital has the right to require the Company to prepay the outstanding principal amount of the Promissory Notes plus all accrued and unpaid interest. All amounts outstanding under the Promissory Notes are secured by a lien on the Company’s assets, subject to terms of outstanding debt obligations, and become due and payable on the earlier to occur of September 30, 2019 or the completion by the Company of a capital raise with minimum proceeds to the Company of $20 million. On April 2, 2019, the Company and Energy Capital entered into a First Amendment to Loan and Security Agreement (the “First Amendment”) to (i) amend the notice provisions of an Advance Request under the Loan Agreement from at least five (5) business days to at least one (1) business day before the Advance Date, (ii) increase the amount of the Advance from up to $1,000,000 a month to up to $1,500,000 a month, and (iii) change the definition of the term Maturity Date from the earlier of September 30, 2019 or 10 business days following the date of an Underwritten Public Offering to September 30, 2020. The Promissory Notes, with an aggregate of $10,563,104 principal and interest outstanding, were converted into 4,225,242 Units, and the debt owed under the Promissory Notes was extinguished. As a result, the Promissory Notes terminated pursuant to their terms. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 9 – STOCKHOLDERS’ EQUITY Preferred Stock At September 30, 2019, the Company had 10,000,000 shares of Preferred Stock, par value $0.0001, authorized for issuance, of which no shares of preferred stock were issued or outstanding. Common Stock At September 30, 2019, the Company had 350,000,000 shares of Common Stock, par value $0.0001 (the “Common Stock”) authorized for issuance, of which 58,688,485 shares of our Common Stock were issued and outstanding. Securities Purchase Agreement On September 27, 2019, Ondas Holdings entered into a securities purchase agreement (the “Purchase Agreement”) with certain purchasers (the “Investors”), which provided for the sale of up to $12,500,000 of Units (including an over-allotment option exercisable by the placement agent for the Company to sell up to an additional $2,500,000 of Units) at a cash purchase price of $2.50 per Unit (the “Offering”). Each Unit consists of one share of Common Stock and one-half of one warrant to purchase one share of Common Stock at an exercise price of $3.25 per share for a period commencing six months and ending 36 months after the closing date (the “Investor Warrants”). On September 27, 2019 (the “Initial Closing Date”), pursuant to the Purchase Agreement, the Company issued an aggregate of 2,426,000 Units to the Investors (the “Initial Closing”). In connection with the Initial Closing, Eric Brock, the Company’s Chief Executive Officer, purchased 400,000 Units. The aggregate gross proceeds to the Company from the Initial Closing was $6,065,000. After payment of placement agent cash fees (as described below) and Offering expenses, the net proceeds to the Company from the Initial Closing was approximately $5,268,000. Pursuant to the Purchase Agreement, the Company has agreed to indemnify the Investors for liabilities arising out of or relating to (i) any breach of any of the representations, warranties, covenants or agreements made by the Company or its subsidiary in the Purchase Agreement or related documents or (ii) any action instituted against an Investor with respect to the Offering, subject to certain exceptions. The Purchase Agreement also contains customary representations and warranties and covenants of the Company and was subject to customary closing conditions. In addition, on the Initial Closing Date, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the Investors, pursuant to which the Company agreed to register for resale by the Investors the shares of Common Stock and the shares of Common Stock issuable upon exercise of the Investor Warrants purchased by the Investors pursuant to the Purchase Agreement. The Company previously committed to file the registration statement no later than October 27, 2019, however it now expects to file the registration statement before the end of November 2019. The Registration Rights Agreement provides for liquidated damages upon the occurrence of certain events, including the Company’s failure to file the registration statement by the deadline set forth above. The amount of liquidated damages payable to an Investor would be 1.0% of the aggregate amount invested by such Investor for each 30-day period, or pro rata portion thereof, during which the default continues. Also, in connection with the Offering, the Company’s executive officers and directors entered into lock-up agreements with the Placement Agent (as defined below) that restrict their ability to sell or transfer their shares for a period of 180 days after the Initial Closing Date (the “Lock-Up Agreement”). National Securities Corporation, a wholly owned subsidiary of National Holdings, Inc., acted as placement agent (the “Placement Agent”) in the Offering. On the Initial Closing Date, the Placement Agent received an aggregate cash fee of $606,500, or 10.0% of the gross proceeds raised in connection with the Initial Closing, reimbursement of transaction expenses of $40,000, and warrants to purchase an aggregate of 242,600 shares of Common Stock at an exercise price equal to $3.25 per share (the “Placement Agent Warrants”). The Placement Agent Warrants are exercisable for a period commencing six months and ending 36 months after the Initial Closing Date. The Units were offered and sold exclusively to accredited investors, and the Placement Agent Warrants were offered and sold to the Placement Agent, in a transaction exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), as a transaction not involving a public offering, pursuant to Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder. The Investors and the Placement Agent represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates, Investor Warrants and Placement Agent Warrants issued in the transaction. The offer and sale of the securities were made without any general solicitation or advertising. Conversion of Notes Payable and Other Financing Agreements In connection with the Initial Closing, on the Initial Closing Date, the notes payable and other financing agreements (the “Debt Obligations”) (see NOTE 7 for further details), with an aggregate of $3,933,767 principal and interest outstanding, were converted into an aggregate of 1,573,511 Units. Conversion of Loan and Security Agreement with Energy Capital, LLC In connection with the Initial Closing, on the Initial Closing Date, the Loan and Security Agreement by and between the Company and Energy Capital, a greater than five percent stockholder of the Company, with an aggregate of $10,563,104 principal and interest outstanding, was converted into of 4,225,242 Units. Warrants to Purchase Common Stock We use the Black-Scholes-Merton option pricing model (“Black-Scholes Model”) to determine the fair value of warrants to purchase Common Stock of the Company (“Warrants”). The Black-Scholes Model is an acceptable model in accordance with the GAAP. The Black-Scholes Model requires the use of a number of assumptions including volatility of the stock price, the weighted average risk-free interest rate, and the weighted average term of the Warrant. The risk-free interest rate assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the term of the Warrants. Estimated volatility is a measure of the amount by which our stock price is expected to fluctuate each year during the expected life of the award. Our estimated volatility is an average of the historical volatility of peer entities whose stock prices were publicly available over a period equal to the expected life of the awards. We used the historical volatility of peer entities due to the lack of sufficient historical data of our stock price. As of September 30, 2019, we had Warrants outstanding to purchase an aggregate of 5,466,057 shares of Common Stock with a weighted-average contractual remaining life of approximately 3.05 years, and exercise prices ranging from $0.01 to $3.25 per share, resulting in a weighted average exercise price of $3.17 per share. At September 30, 2019, no warrants were exercised. On September 27, 2019, we granted an aggregate of 5,325,379 3-year Warrants to participants in our Securities Purchase Agreement (see above for further details). The Warrants vested on the date of the grant and had a grant date fair value of $0.46 per share. Also, on September 27, 2019, we granted a Warrant to an individual lender for the purchase of an aggregate of 140,678 shares of Common Stock (see NOTE 7 for further details). The Warrant vested on the date of the grant, expires on September 26, 2024 and has a grant date fair value of $2.49 per share. The assumptions used in the Black-Scholes Model are set forth in the table below. Stock price $ 2.50 Risk-free interest rate 1.56-15.8% Volatility 38.05-40.55% Expected life in years 3-5 Dividend yield 0.00 % Equity Incentive Plan In connection with the Closing, our board of directors (the “Board”) approved, and our stockholders adopted, the 2018 Equity Incentive Plan (the “2018 Plan”) pursuant to which 10 million shares of our Common Stock has been reserved for issuance to employees, including officers, directors and consultants. The 2018 Plan shall be administered by the Board, provided however, that the Board may delegate such administration to the compensation committee (the “Committee”). Subject to the provisions of the 2018 Plan, the Board and/or the Committee shall have authority to grant, in its discretion, incentive stock options, or non-statutory options, stock awards or restricted stock purchase offers (“Equity Awards”). In August 2019, pursuant to the terms of Severance Agreements, 675,000 incentive stock options with deferred distribution were promised to two former employees of the Company pursuant to the 2018 Plan (both employees participated in the restricted stock purchase offers (“RSUs”) discussed below). For the three and nine months ended September 30, 2019, $465,312 in related stock compensation expense has been recorded and is included in the accompanying condensed consolidated financial statements. During 2018, the Company entered into an agreement where 378,478 RSUs with deferred distribution were promised to a consultant for the Company pursuant to the 2018 Plan. For the three and nine months ended September 30, 2019, $10,119 and $40,478, respectively, in related stock compensation expense has been recorded and is included in the accompanying condensed consolidated financial statements. The Company has not yet executed the RSU agreement with the consultant. Also during 2018, the Company entered into agreements where an aggregate of 408,478 RSUs pursuant to the 2018 Plan were promised to employees for services provided during 2019. Accordingly, the Company has recorded expense of $15,056 and $56,733 for the three and nine months ended September 30, 2019, respectively, with respect to such awards which is included in the accompanying condensed consolidated financial statements. The Company has not yet executed RSU agreements with the employees. The total amount of non-vested restricted units awarded as of September 30, 2019 is 393,478 shares. The weighted average grant-date fair value for the restricted stock awards is $0.25. The weighted average vesting period of the restricted stock awards is 2.0 years. As of September 30, 2019, unrecognized compensation expense related to the unvested portion of the Company’s restricted stock awards was $100,048, which is expected to be recognized over a weighted average period of one year. The Company recognizes stock compensation expense generally upon the grant date and over the period of vesting or period that services will be provided. Compensation associated with shares issued or to be issued to consultants and other non-employees is recognized over the expected service period beginning on the measurement date which is generally the time the Company and the service provider enter into a commitment whereby the Company agrees to grant shares in exchange for the services to be provided. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 10 – COMMITMENTS AND CONTINGENCIES We may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. There are no such loss contingencies that are included in the financial statements as of September 30, 2019. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 11 – RELATED PARTY TRANSACTIONS At the Closing, we entered into a Loan and Security Agreement with Energy Capital, a greater than 10% stockholder of the Company, pursuant to which Energy Capital loaned the Company an aggregate principal amount of $10 million (see NOTE 8 for further details). The Promissory Notes, with an aggregate of $10,563,104 principal and interest outstanding, were converted into 4,225,242 Units in the aforementioned Purchase Agreement (see NOTE 9 for further details), and the debt owed under the Promissory Notes was extinguished. Also in connection with the Purchase Agreement, Eric Brock, the Company’s Chief Executive Officer, purchased 400,000 Units totaling $1,000,000. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 12 – SUBSEQUENT EVENTS Modification to Steward Capital Loan and Security Agreement On October 28, 2019, Ondas Networks Inc. f/k/a Full Spectrum Inc. (“Ondas Networks”), the wholly owned subsidiary of Ondas Holdings Inc., (the “Company”), and Steward Capital Holdings, LP (“Steward Capital”) entered into a letter of agreement to amend the Loan and Security Agreement (the “Second Amendment”) entered into between the parties on March 9, 2018, as amended (the “Agreement”), to (i) extend and amend the due date for all accrued and unpaid interest starting September 2, 2019 to the Maturity Date (September 9, 2020) and (ii) extend and amend the due date for the 3% fee payable to Steward Capital in connection with the amendment and waiver dated June 2019 to be payable on the Maturity Date. In connection with the extensions and amendments, the Company agreed to issue to Steward Capital, on or before December 1, 2019, 120,000 shares of the Company’s common stock. The shares will be issued to Steward Capital, in a transaction exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), as a transaction not involving a public offering, pursuant to Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder. Second Closing under Securities Purchase Agreement On October 30, 2019 (the “Second Closing Date”), pursuant to the Purchase Agreement, the Company issued an aggregate of 206,000 Units to the Investors (the “Second Closing”). The aggregate gross proceeds to the Company from the Second Closing was $515,000. After payment of placement agent cash fees, the net proceeds to the Company from the Second Closing was approximately $464,000. The Units were offered and sold exclusively to accredited investors, and the Placement Agent Warrants were offered and sold to the Placement Agent, in a transaction exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), as a transaction not involving a public offering, pursuant to Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder. The Investors and the Placement Agent represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates, Investor Warrants and Placement Agent Warrants issued in the transaction. The offer and sale of the securities were made without any general solicitation or advertising. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the Company’s financial statements for interim periods in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The information included in this quarterly report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and the accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (“2018 Form 10-K”). The Company’s accounting policies are described in the “ Notes to Consolidated Financial Statements |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries, Ondas Networks and FS Partners, and our majority owned subsidiaries, Full Spectrum Holding and Ondas Network Limited. All significant inter-company accounts and transactions between these entities have been eliminated in these unaudited condensed consolidated financial statements. |
Use of Estimates | Use of Estimates The process of preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the financial statements. Such management estimates include those relating to revenue recognition, inventory write-downs to reflect net realizable value, assumptions used in the valuation of stock-based awards and warrants, and valuation allowances against deferred tax assets. Actual results could differ from those estimates. |
Inventory | Inventory Inventories, which consist solely of equipment components, are stated at the lower of cost (first-in, first-out) or net realizable value, net of reserves for obsolete inventory. We continually analyze our slow-moving and excess inventories. Based on historical and projected sales volumes and anticipated selling prices, we established reserves. Inventory that is in excess of current and projected use is reduced by an allowance to a level that approximates its estimate of future demand. Products that are determined to be obsolete are written down to net realizable value. As of September 30, 2019 and December 31, 2018, we determined that no such reserves were necessary. Inventory consists of the following: September 30, December 31, Raw Material $ 376,417 $ 307,947 Finished Goods 46,792 39,998 TOTAL INVENTORY $ 423,209 $ 347,945 |
Stock-Based Compensation | Stock-Based Compensation The Company follows the fair value recognition provisions in ASC 718, Compensation – Stock Compensation Improvements to Nonemployee Share-Based Payment Accounting |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Our financial instruments consist primarily of receivables, accounts payable, accrued expenses and short and long-term debt. The carrying amount of receivables, accounts payable and accrued expenses approximates fair value because of the short-term maturity of such instruments. We have elected not to carry our debt instruments at fair value. The carrying amount of our debt approximates fair value. Interest rates that are currently available to us for issuance of short and long-term debt with similar terms and remaining maturities are used to estimate the fair value of our short and long-term debt. We have categorized our assets and liabilities that are valued at fair value on a recurring basis into a three-level fair value hierarchy in accordance with U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and lowest priority to unobservable inputs (Level 3). Assets and liabilities recorded in the balance sheets at fair value are categorized based on a hierarchy of inputs, as follows: Level 1 Level 2 Level 3 At September 30, 2019 and December 31, 2018, we had no instruments requiring a fair value determination. The following table provides a summary of changes in fair value associated with the Level 3 liabilities for the nine months ended September 30, 2019 and for the year ended December 31, 2018: Fair Value Measurements Using Significant Unobservable Inputs Nine Months Ended 2019 Year ended December 31, 2018 Balance, beginning of period $ - $ (166,093 ) Issuances of derivative liability - - Reclassification to additional paid in capital - 1,141,995 Change in fair value of derivative liability - (975,902 ) Balance, end of period $ - $ - The above table of Level 3 liabilities begins with the prior period balance and adjusts the balance for changes that occurred during the current period. The ending balance of the Level 3 financial instrument presented above represent our best estimates and may not be substantiated by comparisons to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. |
Deferred Offering Costs | Deferred Offering Costs The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the equity financing, these costs are recorded in stockholders’ deficit as a reduction of additional paid-in capital generated as a result of the offering. Should a planned equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the consolidated statement of operations. In accordance with this policy, for the three and nine months ended September 30, 2019, the Company expensed financing costs of $644,228 and $764,860, respectively. |
Debt Issuance Costs | Debt Issuance Costs Debt issuance costs represent costs incurred for the issuance of debt. Once the associated debt instrument is issued, these costs would be recorded as a debt discount and amortized using the effective interest method over the term of the related debt instrument. Upon abandonment of a pending financing transaction, the related deferred financing costs are charged to interest expense. In accordance with this policy, in June 2019 the Company expensed $150,000 of deferred offering costs. |
Foreign Currency | Foreign Currency Our functional currency is the U.S. dollar. The functional currency of our foreign operations, generally, is the respective local currency for each foreign subsidiary. Assets and liabilities of foreign operations denominated in local currencies are translated at the spot rate in effect at the applicable reporting date. Our condensed consolidated statements of income are translated at the weighted average rate of exchange during the applicable period. The resulting unrealized cumulative translation adjustment is recorded as a component of accumulated other comprehensive income (loss) in stockholders’ equity. Realized and unrealized transaction gains and losses generated by transactions denominated in a currency different from the functional currency of the applicable entity are recorded in other income (loss) in the period in which they occur. |
ASC 606, Revenue from Contracts with Customers | ASC 606, Revenue from Contracts with Customers On January 1, 2018, we adopted ASC 606 , Revenue from Contracts with Customers Under ASC 606, the Company recognizes revenue when the customer obtains control of promised products or services, in an amount that reflects the consideration which is expected to be received in exchange for those products or services. The Company recognizes revenue following the five-step model prescribed under ASC 606: (i) identify contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the products or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the products or services promised within each contract and determines those that are performance obligations and assesses whether each promised product or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration that should be included in the transaction price utilizing the expected value method. Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available. Sales, value add, and other taxes collected on behalf of third parties are excluded from revenue. For the nine months ended September 30, 2019 and 2018, none of our contracts with customers included variable consideration. Contracts that are modified to account for changes in contract specifications and requirements are assessed to determine if the modification either creates new or changes the existing enforceable rights and obligations. Generally, contract modifications are for products or services that are not distinct from the existing contract due to the inability to use, consume or sell the products or services on their own to generate economic benefits and are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price and measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. For the nine months ended September 30, 2019 and 2018, there were no modifications to contract specifications. The Company is engaged in the development, marketing and sale of wireless radio systems for secure, wide area mission-critical business-to-business networks. We generate revenue primarily from the sale of the FullMAX System and the delivery of related services. Product revenue is comprised of sales of the Company’s software defined base station and remote radios, its network management and monitoring system, and accessories. The Company’s software and hardware is sold with a limited one-year basic warranty included in the price. The limited one-year basic warranty is an assurance-type warranty, is not a separate performance obligation, and thus no transaction price is allocated to it. The nature of tasks under the limited one-year basic warranty only provide for remedying defective product(s) covered by the warranty. Product revenue is generally recognized when the customer obtains control of our product, which occurs at a point in time, and may be upon shipment or upon delivery based on the contractual shipping terms of a contract, or upon installation when the combined performance obligation is not distinct within the context of the contract. Service revenue is comprised of separately priced extended warranty sales, network support and maintenance, remote monitoring, as well as ancillary services directly related to the sale of the Company’s wireless communications products including wireless network design, systems engineering, radio frequency planning, software configuration, product training, installation, and onsite support. The extended warranty sold by the Company provides a level of assurance beyond the coverage for defects that existed at the time of a sale or against certain types of covered damage. The extended warranty includes 1) factory hardware repair or replacement, at our election, of the base station and remote radios, 2) software upgrades, bug fixes and new features of the radio software and NMS, 3) deployment and network architecture support, and 4) technical support by phone and email. Extended warranty, network support and maintenance, and remote monitoring revenues are recognized ratably over the term of the service contract. Ancillary service revenues are recognized at the point in time when those services have been provided to the customer and the performance obligation has been satisfied. If the customer contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. We enter into certain contracts that have multiple performance obligations, one or more of which may be delivered subsequent to the delivery of other performance obligations. We allocate the transaction price based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. We determine standalone selling prices based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, we estimate the standalone selling price considering available information such as market conditions and internally approved pricing guidelines related to the performance obligations. Revenue is then allocated to the performance obligations using the relative selling prices of each of the performance obligations in the contract. Our payment terms vary and range from net 15 to net 30 days from the date of the invoices. Disaggregation of Revenue The following tables present our disaggregated revenues by Type of Revenue and Timing of Revenue: Three Months Ended Nine Months Ended 2019 2018 2019 2018 Type of Revenue Product revenue $ 61,182 $ 23,323 $ 212,905 $ 29,913 Service revenue 26,950 11,853 100,459 46,699 Other revenue - - 219 6,568 Total revenue $ 88,132 $ 35,176 $ 313,583 $ 83,180 Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Timing of Revenue Revenue recognized point in time $ 79,166 $ 28,310 $ 281,333 $ 44,356 Revenue recognized over time 8,966 6,866 32,250 38,824 Total revenue $ 88,132 $ 35,176 $ 313,583 $ 83,180 Contract Assets and Liabilities We recognize a receivable or contract asset when we perform a service or transfer a good in advance of receiving consideration. A receivable is recorded when our right to consideration is unconditional and only the passage of time is required before payment of that consideration is due. A contract asset is recorded when our right to consideration in exchange for good or services that we have transferred to a customer is conditional on something other than the passage of time. We did not have any contract assets recorded at September 30, 2019 or December 31, 2018. We recognize a contract liability when we receive consideration, or if we have the unconditional right to receive consideration, in advance of satisfying the performance obligation. A contract liability is our obligation to transfer goods or services to a customer for which we have received consideration, or an amount of consideration is due from the customer. The table below details the activity in our contract liabilities during the nine months ended September 30, 2019, and the year ended December 31, 2018, and is included in other current liabilities in the Company’s unaudited condensed consolidated balance sheet. Nine Months Ended September 30, Year Ended December 31, Balance at beginning of period $ 20,631 $ 30,690 Additions 20,826 32,106 Transfer to revenue (32,250 ) (42,166 ) Balance at end of period $ 9,207 $ 20,631 Warranty Reserve We provide a limited one-year assurance-type warranty on our software and hardware products. The assurance-type warranty covers defects in material and workmanship only. If a warranted software or hardware component is determined to be defective after being tested by the Company, the Company will repair, replace or refund the price of the covered hardware and/or software to the customer (not including any shipping, handling, delivery or installation charges). We estimate, based upon a review of historical warranty claim experience, the costs that may be incurred under our warranties and record a liability in the amount of such estimate at the time a product is sold. Factors that affect our warranty liability include the number of units sold, historical and anticipated rates of warranty claims, and cost per claim. We periodically assess the adequacy of our recorded warranty liability and adjust the accrual as claims data and historical experience warrants. The Company has assessed the costs of fulfilling its existing assurance-type warranties and has determined that the estimated outstanding warranty obligation at September 30, 2019 and December 31, 2018 are immaterial to the Company’s financial statements. |
Accounting Standard Update 2016-02, Leases | Accounting Standard Update 2016-02, Leases Under Topic 842, operating lease expense is generally recognized evenly over the term of the lease. The Company has operating leases primarily consisting of office space with remaining lease terms of 15 months to 44 months. Current facility leases include our offices in Sunnyvale, CA and Chengdu, Sichuan Province, People’s Republic of China. Lease costs were $445,148 for the nine months ended September 30, 2019. There was no sublease rental income for the nine months ended September 30, 2019. Leases with an initial term of twelve months or less are not recorded on the balance sheet. For lease agreements entered into or reassessed after the adoption of Topic 842, we combine the lease and non-lease components in determining the lease liabilities and right of use (“ROU”) assets. Our lease agreements generally do not provide an implicit borrowing rate; therefore, an internal incremental borrowing rate is determined based on information available at lease commencement date for purposes of determining the present value of lease payments. We used the incremental borrowing rate on December 31, 2018 for all leases that commenced prior to that date. Lease Costs Three Months Ended Nine Months Ended Components of total lease costs: Operating lease expense $ 148,922 $ 445,148 Short-term lease costs (1) 11,122 38,626 Total lease costs $ 160,044 $ 483,774 (1) Represents short-term leases which are immaterial. Lease Positions as of September 30, 2019 ROU lease assets and lease liabilities for our operating leases were recorded in the unaudited condensed consolidated balance sheet as follows: As of 2019 Assets: Operating lease assets, current $ 337,000 Operating lease assets, net of current 369,275 Total lease assets $ 706,275 Liabilities: Operating lease liabilities, current $ 589,158 Operating lease liabilities, net of current 432,860 Total lease liabilities $ 1,022,018 Lease Terms and Discount Rate Weighted average remaining lease term (in years) – operating lease 2.3 Weighted average discount rate – operating lease 14 % Cash Flows Nine Months Ended 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 340,044 Undiscounted Cash Flows Future lease payments included in the measurement of lease liabilities on the unaudited condensed consolidated balance sheet as of September 30, 2019, for the following five years and thereafter are as follows: Years ending December 31, 2019 (3 months) $ 155,075 2020 645,248 2021 173,545 2022 116,392 2023 67,895 Total future minimum lease payments 1,158,155 Lease imputed interest (136,137 ) Total $ 1,022,018 In March 2019, one of our long-term operating leases was abandoned and the likelihood of entering into a sublease agreement for the property was minimal; therefore, the Right to Use Asset value of $259,926 was considered impaired and the amount was charged to asset impairment on the accompanying unaudited condensed consolidated financial statements. |
Net Loss Per Common Share | Net Loss Per Common Share Net loss per share for all periods presented is based on the equity structure of the legal acquirer, which assumes common stock is outstanding and is reflected on a retrospective basis for all periods presented. Basic net loss per share is computed by dividing net loss by the weighted average shares of common stock outstanding for each period. Diluted net loss per share is the same as basic net loss per share since the Company has net losses for each period presented. The following potentially dilutive securities for the nine months ended September 30, 2019 and 2018 have been excluded from the computation of diluted net loss per share because the effect of their inclusion would have been anti-dilutive. Nine months ended September 30, 2019 September 30, 2018 Warrants 5,466,057 - Convertible debt - 140,678 TOTAL 5,466,057 140,678 |
Concentration of Customers | Concentration of Customers Because we have only recently invested in our customer service and support organization, a small number of customers have accounted for a substantial amount of our revenue. The table below sets forth the Company’s customers that accounted for greater than 10% of its revenues for the three- and nine-month periods ended September 30, 2019 and 2018, respectively: Three Months Ended Nine Months Ended Customer 2019 2018 2019 2018 A - 16 % 44 % 48 % B - 55 % 18 % 33 % C 85 % - 36 % - D - 27 % - 12 % Customers C accounted for 100% of the Company’s accounts receivable balance at September 30, 2019. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2018, the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Update (“ASU”), 2018-13 that eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information and modifies some disclosure requirements. The FASB developed the amendments to Accounting Standards Codification (“ASC”) 820 as part of its broader disclosure framework project, which aims to improve the effectiveness of disclosures in the notes to financial statements by focusing on requirements that clearly communicate the most important information to users of the financial statements. The new guidance is effective for all entities for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. An entity is permitted to early adopt either the entire standard or only the provisions that eliminate or modify requirements. We are currently evaluating the effect of this guidance on our disclosures. In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting In July 2017, the FASB issued ASU 2017-11 (“ASU 2017-11”), Earnings Per Share (“Topic 260”), Distinguishing Liabilities from Equity Derivatives and Hedging In February 2016, the FASB issued ASU 2016-02, Leases. This guidance requires lessees to record most leases on their balance sheets while recognizing expenses on their income statements in a manner similar to current accounting. The guidance also eliminates current real estate-specific provisions for all entities. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. The standard is effective for public business entities for annual periods beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted for all entities. In July 2018, the FASB amended the new leases standard and issued ASU 2018-11, Leases, (Topic 842): Targeted Improvements to give entities another option for transition and to provide lessors with a practical expedient. We adopted ASU 2016-02 on January 1, 2019 utilizing the alternative transition method allowed for under ASU 2018-11. Comparative financial information was not adjusted and will continue to be reported under ASC 840. We also elected the transition relief package of practical expedients and as a result we did not assess (1) whether existing or expired contracts contain leases, (2) lease classification for any existing or expired leases, and (3) whether lease origination costs qualified as initial direct costs. We elected the short-term lease practical expedient by establishing an accounting policy to exclude leases with a term of 12 months or less. We elected not to separate lease components from non-lease components for our specified asset classes. Additionally, the adoption of the new standard resulted in increased disclosure requirements in our quarterly and annual filings. |
Reclassification | Reclassification Certain amounts reported in prior years in the financial statements have been reclassified to conform to the current year’s presentation. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of inventory | Inventory consists of the following: September 30, December 31, Raw Material $ 376,417 $ 307,947 Finished Goods 46,792 39,998 TOTAL INVENTORY $ 423,209 $ 347,945 |
Schedule of changes in fair value associated with level 3 liabilities | The following table provides a summary of changes in fair value associated with the Level 3 liabilities for the nine months ended September 30, 2019 and for the year ended December 31, 2018: Fair Value Measurements Using Significant Unobservable Inputs Nine Months Ended 2019 Year ended December 31, 2018 Balance, beginning of period $ - $ (166,093 ) Issuances of derivative liability - - Reclassification to additional paid in capital - 1,141,995 Change in fair value of derivative liability - (975,902 ) Balance, end of period $ - $ - |
Schedule of disaggregation of revenue | The following tables present our disaggregated revenues by Type of Revenue and Timing of Revenue: Three Months Ended Nine Months Ended 2019 2018 2019 2018 Type of Revenue Product revenue $ 61,182 $ 23,323 $ 212,905 $ 29,913 Service revenue 26,950 11,853 100,459 46,699 Other revenue - - 219 6,568 Total revenue $ 88,132 $ 35,176 $ 313,583 $ 83,180 Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Timing of Revenue Revenue recognized point in time $ 79,166 $ 28,310 $ 281,333 $ 44,356 Revenue recognized over time 8,966 6,866 32,250 38,824 Total revenue $ 88,132 $ 35,176 $ 313,583 $ 83,180 |
Schedule of deferred warranty activity | The table below details the activity in our contract liabilities during the nine months ended September 30, 2019, and the year ended December 31, 2018, and is included in other current liabilities in the Company’s unaudited condensed consolidated balance sheet. Nine Months Ended September 30, Year Ended December 31, Balance at beginning of period $ 20,631 $ 30,690 Additions 20,826 32,106 Transfer to revenue (32,250 ) (42,166 ) Balance at end of period $ 9,207 $ 20,631 |
Schedule of lease costs | We used the incremental borrowing rate on December 31, 2018 for all leases that commenced prior to that date. Lease Costs Three Months Ended Nine Months Ended Components of total lease costs: Operating lease expense $ 148,922 $ 445,148 Short-term lease costs (1) 11,122 38,626 Total lease costs $ 160,044 $ 483,774 (1) Represents short-term leases which are immaterial. |
Schedule of ROU lease assets and lease liabilities | ROU lease assets and lease liabilities for our operating leases were recorded in the unaudited condensed consolidated balance sheet as follows: As of 2019 Assets: Operating lease assets, current $ 337,000 Operating lease assets, net of current 369,275 Total lease assets $ 706,275 Liabilities: Operating lease liabilities, current $ 589,158 Operating lease liabilities, net of current 432,860 Total lease liabilities $ 1,022,018 |
Schedule of lease terms and discount rate | Lease Terms and Discount Rate Weighted average remaining lease term (in years) – operating lease 2.3 Weighted average discount rate – operating lease 14 % |
Schedule of cash paid for amounts included in the measurement of lease liabilities | Nine Months Ended 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 340,044 |
Schedule of future minimum lease payments | Future lease payments included in the measurement of lease liabilities on the unaudited condensed consolidated balance sheet as of September 30, 2019, for the following five years and thereafter are as follows: Years ending December 31, 2019 (3 months) $ 155,075 2020 645,248 2021 173,545 2022 116,392 2023 67,895 Total future minimum lease payments 1,158,155 Lease imputed interest (136,137 ) Total $ 1,022,018 |
Schedule of net loss per share | The following potentially dilutive securities for the nine months ended September 30, 2019 and 2018 have been excluded from the computation of diluted net loss per share because the effect of their inclusion would have been anti-dilutive. Nine months ended September 30, 2019 September 30, 2018 Warrants 5,466,057 - Convertible debt - 140,678 TOTAL 5,466,057 140,678 |
Schedule of concentration of customers | The table below sets forth the Company’s customers that accounted for greater than 10% of its revenues for the three- and nine-month periods ended September 30, 2019 and 2018, respectively: Three Months Ended Nine Months Ended Customer 2019 2018 2019 2018 A - 16 % 44 % 48 % B - 55 % 18 % 33 % C 85 % - 36 % - D - 27 % - 12 % |
OTHER CURRENT ASSETS (Tables)
OTHER CURRENT ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of other current assets | Other current assets consist of the following: September 30, December 31, Prepaid insurance $ 177,926 $ 102,743 Advances for raw material purchases 175,600 - Other prepaid expenses 122,924 40,654 Deposits 28,115 31,965 Prepaid marketing costs 22,013 125,525 Miscellaneous receivables 279 44,294 Prepaid financing costs - 188,300 TOTAL OTHER CURRENT ASSETS $ 526,857 $ 533,481 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consist of the following: September 30, December 31, 2018 Leasehold improvements $ 254,990 $ 256,920 Vehicle 149,916 143,560 Furniture and fixtures 133,540 132,088 Computer Equipment 118,143 87,087 Software 61,287 61,287 Test Equipment 25,244 - 743,120 680,942 Less: accumulated depreciation (280,881 ) (178,796 ) TOTAL PROPERTY AND EQUIPMENT $ 462,239 $ 502,146 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of estimated amortization expense | Estimated amortization expense for the next five years for the patent cost currently being amortized is as follows: Year Ending December 31, Estimated Amortization 2019 (3 months) $ 313 2020 $ 1,252 2021 $ 1,252 2022 $ 1,252 2023 $ 1,252 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consist of the following: September 30, December 31, Accrued payroll and other benefits $ 2,533,294 $ 1,659,577 Accrued interest 254,550 138,605 D&O insurance financing payable 84,150 52,530 Accrued professional fees 47,859 126,384 Accrued rent and facilities costs 34,956 160,544 Deferred revenue 9,207 20,631 Other accrued expenses 2,002 - Accrued travel and entertainment - 30,000 TOTAL ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES $ 2,966,018 $ 2,188,271 |
NOTES PAYABLE AND OTHER FINAN_2
NOTES PAYABLE AND OTHER FINANCING AGREEMENTS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable | Notes payable and other financing consists of: September 30, December 31, 2018 Short Term: Loan Agreements $ - $ 1,178,670 Financing Agreement - 1,360,516 Promissory Notes - 1,343,682 $ - $ 3,882,868 Long Term: Promissory Note $ 239,921 $ - Convertible Promissory Note 300,000 300,000 $ 539,921 $ 300,000 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Schedule of warrants to purchase common stock | The assumptions used in the Black-Scholes Model are set forth in the table below. Stock price $ 2.50 Risk-free interest rate 1.56-15.8% Volatility 38.05-40.55% Expected life in years 3-5 Dividend yield 0.00 % |
DESCRIPTION OF BUSINESS AND B_2
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Details Narrative) - USD ($) | Aug. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | Sep. 28, 2018 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Authorized Capital | 360,000,000 | |||
Common stock, authorized | 350,000,000 | 350,000,000 | ||
Preferred stock, par value (in dollar pers share) | $ 0.0001 | $ 0.0001 | ||
Preferred stock, authorized | 10,000,000 | 10,000,000 | ||
Accumulated deficit | $ (48,509,547) | $ (32,381,535) | ||
Short-term borrowings outstanding | 10,300,000 | |||
Long-term borrowings outstanding | 500,000 | |||
Working capital deficit | 10,600,000 | |||
Cash | $ 4,700,000 | |||
Common stock, issued | 58,688,485 | 50,463,732 | ||
Ondas Networks Share [Member] | ||||
Common stock, par value (in dollars per share) | $ 0.00001 | |||
Ondas Networks Share [Member] | First Amendment To Lock-Up Agreements [Member] | ||||
Common stock, issued | 24,428,681 | |||
Percentage of common stock outstanding | 41.00% | |||
Description of amendment revised terms | The Amendment revised the terms of the Lock-Up Agreements to extend the lock-up period an additional twelve months to September 28, 2020 and eliminated the 12-month limited sale period) | |||
Common Stock Repurchase Agreement [Member] | ||||
Number of shares repurchased | 32,600,000 | |||
Consideration of shares repurchased | $ 3,260 | |||
Employee [Member] | 2018 Equity Incentive Plan [Member] | ||||
Common stock reserved for issuance to employees | $ 10,000,000 |
SUMMARY OF SIGNIFICANT ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNT POLICIES (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||
Raw Material | $ 376,417 | $ 307,947 |
Finished Goods | 46,792 | 39,998 |
TOTAL INVENTORY | $ 423,209 | $ 347,945 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNT POLICIES (Details 1) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Balance, beginning of period | $ (166,093) | |
Issuances of derivative liability | ||
Reclassification to additional paid in capital | 1,141,995 | |
Change in fair value of derivative liability | (975,902) | |
Balance, end of period |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNT POLICIES (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenues | $ 88,132 | $ 35,176 | $ 313,583 | $ 83,180 |
Transferred at Point in Time [Member] | ||||
Revenues | 79,166 | 28,310 | 281,333 | 44,356 |
Transferred Over Time [Member] | ||||
Revenues | 8,966 | 6,866 | 32,250 | 38,824 |
Product Revenue [Member] | ||||
Revenues | 61,182 | 23,323 | 212,905 | 29,913 |
Service Revenue [Member] | ||||
Revenues | 26,950 | 11,853 | 100,459 | 46,699 |
Other Revenue [Member] | ||||
Revenues | $ 219 | $ 6,568 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNT POLICIES (Details 3) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Balance, beginning of period | $ 20,631 | $ 30,690 |
Additions | 20,826 | 32,106 |
Transfer to revenue | (32,250) | (42,166) |
Balance, end of period | $ 9,207 | $ 20,631 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNT POLICIES (Details 4) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2019 | ||
Components of total lease costs: | |||
Operating lease expense | $ 148,922 | $ 445,148 | |
Short-term lease costs | [1] | 11,122 | 38,626 |
Total lease costs | $ 160,044 | $ 483,774 | |
[1] | Represents short-term leases which are immaterial. |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNT POLICIES (Details 5) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Assets: | ||
Operating lease assets, current | $ 337,000 | |
Operating lease assets, net of current | 369,275 | |
Liabilities: | ||
Operating lease liabilities, current | 589,158 | |
Operating lease liabilities, net of current | 432,860 | |
Operating Leases [Member] | ||
Assets: | ||
Operating lease assets, current | 337,000 | |
Operating lease assets, net of current | 369,275 | |
Total lease assets | 706,275 | |
Liabilities: | ||
Operating lease liabilities, current | 589,158 | |
Operating lease liabilities, net of current | 432,860 | |
Total lease liabilities | $ 1,022,018 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNT POLICIES (Details 6) | Sep. 30, 2019 |
Accounting Policies [Abstract] | |
Weighted average remaining lease term (in years) - operating lease | 2 years 3 months 18 days |
Weighted average discount rate - operating lease | 14.00% |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNT POLICIES (Details 7) | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows for operating leases | $ 340,044 |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNT POLICIES (Details 8) | Sep. 30, 2019USD ($) |
Accounting Policies [Abstract] | |
2019 (3 months) | $ 155,075 |
2020 | 645,248 |
2021 | 173,545 |
2022 | 116,392 |
2023 | 67,895 |
Total future minimum lease payments | 1,158,155 |
Lease imputed interest | (136,137) |
Total | $ 1,022,018 |
SUMMARY OF SIGNIFICANT ACCOU_12
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 9) - shares | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
TOTAL | 5,466,057 | 140,678 |
Warrants [Member] | ||
TOTAL | 5,466,057 | |
Convertible Debt [Member] | ||
TOTAL | 140,678 |
SUMMARY OF SIGNIFICANT ACCOU_13
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 10) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
A Customer [Member] | ||||
Concentration Percentage | 16.00% | 44.00% | 48.00% | |
B Customer [Member] | ||||
Concentration Percentage | 55.00% | 18.00% | 33.00% | |
C Customer [Member] | ||||
Concentration Percentage | 85.00% | 36.00% | ||
D Customer [Member] | ||||
Concentration Percentage | 27.00% | 12.00% |
SUMMARY OF SIGNIFICANT ACCOU_14
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2019 | Dec. 31, 2018 | |
Deferred offering costs | $ 150,000 | $ 14,982 | |||
Financing costs | $ 644,228 | 764,860 | |||
Lease cost | 445,148 | ||||
Impairment of operating lease | $ 259,926 | ||||
Minimum [Member] | |||||
Lease Term | 15 months | 15 months | |||
Maximum [Member] | |||||
Lease Term | 44 months | 44 months |
OTHER CURRENT ASSETS (Details)
OTHER CURRENT ASSETS (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid insurance | $ 177,926 | $ 102,743 |
Advances for raw material purchases | 175,600 | |
Other prepaid expenses | 122,924 | 40,654 |
Deposits | 28,115 | 31,965 |
Prepaid marketing costs | 22,013 | 125,525 |
Miscellaneous receivables | 279 | 44,294 |
Prepaid financing costs | 188,300 | |
TOTAL OTHER CURRENT ASSETS | $ 526,857 | $ 533,481 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
PROPERTY AND EQUIPMENT GROSS | $ 743,120 | $ 680,942 |
Less: accumulated depreciation | (280,881) | (178,796) |
TOTAL PROPERTY AND EQUIPMENT | 462,239 | 502,146 |
Leasehold Improvements [Member] | ||
PROPERTY AND EQUIPMENT GROSS | 254,990 | 256,920 |
Vehicle [Member] | ||
PROPERTY AND EQUIPMENT GROSS | 149,916 | 143,560 |
Furniture and Fixtures [Member] | ||
PROPERTY AND EQUIPMENT GROSS | 133,540 | 132,088 |
Computer Equipment [Member] | ||
PROPERTY AND EQUIPMENT GROSS | 118,143 | 87,087 |
Software [Member] | ||
PROPERTY AND EQUIPMENT GROSS | 61,287 | 61,287 |
Test Equipment [Member] | ||
PROPERTY AND EQUIPMENT GROSS | $ 25,244 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 34,403 | $ 7,874 | $ 102,085 | $ 15,405 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) | Sep. 30, 2019USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2019 (3 months) | $ 313 |
2020 | 1,252 |
2021 | 1,252 |
2022 | 1,252 |
2023 | $ 1,252 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Patent costs | $ 116,690 | $ 53,482 |
Amortization of patent costs | $ 936 | $ 194 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | |||
Accrued payroll and other benefits | $ 2,533,294 | $ 1,659,577 | |
Accrued interest | 254,550 | 138,605 | |
D&O insurance financing payable | 84,150 | 52,530 | |
Accrued professional fees | 47,859 | 126,384 | |
Accrued rent and facilities costs | 34,956 | 160,544 | |
Deferred revenue | 9,207 | 20,631 | $ 30,690 |
Other accrued expenses | 2,002 | ||
Accrued travel and entertainment | 30,000 | ||
TOTAL ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | $ 2,966,018 | $ 2,188,271 |
NOTES PAYABLE AND OTHER FINAN_3
NOTES PAYABLE AND OTHER FINANCING AGREEMENTS (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Notes payable curent | $ 3,882,868 | |
Notes payable noncurent | 539,921 | 300,000 |
Loan Agreements [Member] | ||
Notes payable curent | 1,178,670 | |
Financing Agreement [Member] | ||
Notes payable curent | 1,360,516 | |
Promissory Notes [Member] | ||
Notes payable curent | 1,343,682 | |
Promissory Notes [Member] | ||
Notes payable noncurent | 239,921 | |
Convertible Promissory Notes [Member] | ||
Notes payable noncurent | $ 300,000 | $ 300,000 |
NOTES PAYABLE AND OTHER FINAN_4
NOTES PAYABLE AND OTHER FINANCING AGREEMENTS (Details Narrative) - USD ($) | Oct. 31, 2019 | Sep. 27, 2019 | Sep. 06, 2019 | Sep. 28, 2018 | Jul. 11, 2018 | Apr. 13, 2018 | Dec. 14, 2015 | Oct. 31, 2017 | Nov. 30, 2016 | Dec. 31, 2015 | Apr. 30, 2015 | Feb. 28, 2015 | Dec. 31, 2013 | Sep. 30, 2019 | Sep. 30, 2018 | Jul. 31, 2016 | Jan. 31, 2015 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2017 | Mar. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2016 | Nov. 30, 2014 |
Accrued interest | $ 254,550 | $ 254,550 | $ 138,605 | |||||||||||||||||||||
Notes payable noncurent | 539,921 | 539,921 | 300,000 | |||||||||||||||||||||
Loss on extinguishment of debt | $ 44,348 | $ (44,348) | $ (44,348) | |||||||||||||||||||||
Reclassification of derivative liability to additional paid in capital | $ 1,141,995 | |||||||||||||||||||||||
Convertible Promissory Notes [Member] | ||||||||||||||||||||||||
Number of shares converted | 2,017,416 | |||||||||||||||||||||||
Notes payable noncurent | 300,000 | 300,000 | 300,000 | |||||||||||||||||||||
Convertible Promissory Notes [Member] | Common Stock [Member] | ||||||||||||||||||||||||
Number of warrants to purchase common stock | 140,678 | |||||||||||||||||||||||
Financing Agreements and Promissory Notes [Member] | Minimum [Member] | ||||||||||||||||||||||||
Equity offering amount | $ 8,000,000 | $ 5,000,000 | ||||||||||||||||||||||
Securities Purchase Agreement [Member] | September 2019 Note [Member] | ||||||||||||||||||||||||
Note payable | $ 12,500,000 | |||||||||||||||||||||||
Loan Agreements [Member] | October 2007 Note [Member] | ||||||||||||||||||||||||
Original principal amount | $ 550,000 | |||||||||||||||||||||||
Interest rate | 6.00% | |||||||||||||||||||||||
Maturity date | Sep. 27, 2019 | |||||||||||||||||||||||
Note payable | 610,346 | 567,310 | ||||||||||||||||||||||
Accrued interest | 244,139 | |||||||||||||||||||||||
Loan Agreements [Member] | December 2013 Note [Member] | ||||||||||||||||||||||||
Original principal amount | $ 250,000 | |||||||||||||||||||||||
Repayment of note payable | $ 25,000 | |||||||||||||||||||||||
Interest rate | 10.00% | |||||||||||||||||||||||
Note payable | 311,865 | 311,865 | ||||||||||||||||||||||
Loan Agreements [Member] | November 2014 Note [Member] | ||||||||||||||||||||||||
Original principal amount | $ 210,000 | |||||||||||||||||||||||
Note payable | 586,181 | 274,316 | 274,316 | |||||||||||||||||||||
Accrued interest | 234,473 | |||||||||||||||||||||||
Loan Agreements [Member] | April 2015 Note [Member] | ||||||||||||||||||||||||
Original principal amount | $ 50,000 | |||||||||||||||||||||||
Interest rate | 10.00% | |||||||||||||||||||||||
Maturity date | Sep. 30, 2019 | |||||||||||||||||||||||
Note payable | 71,556 | 71,556 | 66,511 | |||||||||||||||||||||
Accrued interest | 28,623 | 28,623 | ||||||||||||||||||||||
Financing Agreement [Member] | ||||||||||||||||||||||||
Original principal amount | $ 660,000 | |||||||||||||||||||||||
Repayment of note payable | $ 285,000 | |||||||||||||||||||||||
Financing Agreement [Member] | November 2016 Note [Member] | ||||||||||||||||||||||||
Original principal amount | $ 250,000 | |||||||||||||||||||||||
Interest rate | 20.00% | |||||||||||||||||||||||
Maturity date | Sep. 27, 2019 | |||||||||||||||||||||||
Note payable | 319,530 | |||||||||||||||||||||||
Financing Agreement [Member] | December 2016 Note [Member] | ||||||||||||||||||||||||
Original principal amount | $ 100,000 | |||||||||||||||||||||||
Note payable | 433,131 | 113,601 | ||||||||||||||||||||||
Accrued interest | 173,252 | |||||||||||||||||||||||
Financing Agreement [Member] | February 2014 Note [Member] | ||||||||||||||||||||||||
Note payable | 1,030,593 | 957,925 | ||||||||||||||||||||||
Accrued interest | 412,238 | |||||||||||||||||||||||
Promissory Notes [Member] | Private Placement Notes [Member] | ||||||||||||||||||||||||
Repayment of note payable | $ 25,000 | |||||||||||||||||||||||
Accrued and unpaid interest transfer to principal | $ 1,983 | |||||||||||||||||||||||
Note payable | $ 239,674 | $ 239,674 | $ 1,343,682 | |||||||||||||||||||||
Accrued interest | 1,201,960 | |||||||||||||||||||||||
Accrued interest paid | $ 480,786 | |||||||||||||||||||||||
Sale of Private Placement Notes | $ 750,000 | $ 325,000 | $ 925,000 | |||||||||||||||||||||
Warrants issued | 231,250 | |||||||||||||||||||||||
Strike price of warrants | $ 2 | $ 2 | ||||||||||||||||||||||
Fair value of warrants | $ 63,398 | $ 168,678 | ||||||||||||||||||||||
Number of warrants surrenderd | 312,500 | 81,250 |
SECURED PROMISSORY NOTES (Detai
SECURED PROMISSORY NOTES (Details Narartive) - USD ($) | Apr. 02, 2019 | Oct. 09, 2018 | Mar. 09, 2018 | Sep. 30, 2019 | Jan. 29, 2019 | Sep. 30, 2019 | Oct. 01, 2018 |
Aggregate principal amount | $ 10,000,000 | $ 10,000,000 | |||||
Accreted costs | 290,674 | ||||||
Secured Term Promissory Note [Member] | |||||||
Aggregate principal amount | $ 10,563,104 | $ 10,563,104 | |||||
Units outstanding | 4,225,242 | 4,225,242 | |||||
Energy Capital [Member] | First Amendment to Loan and Security Agreement | |||||||
Maturity date | Sep. 30, 2020 | ||||||
Advance description | Increase the amount of the Advance from up to $1,000,000 a month to up to $1,500,000 a month | ||||||
Energy Capital [Member] | Loan And Security Agreement [Member] | |||||||
Line of credit interest rate description | 11.25% plus the Prime Rate (as published by the Wall Street Journal (National Edition)), less 3.25% | ||||||
Aggregate principal amount | $ 10,000,000 | ||||||
Secured term promissory note | $ 10,000,000 | $ 10,000,000 | |||||
Effective interest rate | 11.25% | ||||||
Proceeds from capital raise | $ 20,000,000 | ||||||
Steward Capital Holdings LP [Member] | Second Secured Term Promissory Note [Member] | Loan And Security Agreement [Member] | |||||||
Line of credit interest rate description | 11.25% plus the Prime Rate, less, 3.25% | ||||||
Aggregate principal amount | $ 10,000,000 | ||||||
Secured term promissory note | 5,000,000 | ||||||
Funding in loan facility charges | $ 50,000 | ||||||
Effective interest rate | 11.25% | ||||||
Maturity date | Apr. 9, 2020 | ||||||
Steward Capital Holdings LP [Member] | Secured Term Promissory Note [Member] | Loan And Security Agreement [Member] | |||||||
Line of credit interest rate description | 11.25% plus the Prime Rate, less, 3.25% | ||||||
Aggregate principal amount | $ 10,000,000 | ||||||
Secured term promissory note | 5,000,000 | ||||||
Payment of loan commitment fees | 25,000 | ||||||
Funding in loan facility charges | $ 100,000 | ||||||
Effective interest rate | 11.25% | ||||||
Debt discount | $ 50,000 | ||||||
Steward Capital Holdings LP [Member] | Secured Term Promissory Note [Member] | Loan And Security Agreement [Member] | Share-based Compensation Award, Tranche One [Member] | |||||||
Maturity date | Sep. 9, 2019 | ||||||
Accreted costs | $ 250,000 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - Warrant [Member] | Sep. 30, 2019$ / shares |
Warrant Term | 3 years 18 days |
Stock Price [Member] | |
Warrant measurement input | 2.50 |
Risk Free Interest Rate [Member] | Minimum [Member] | |
Warrant measurement input | 1.56 |
Risk Free Interest Rate [Member] | Maximum [Member] | |
Warrant measurement input | 15.8 |
Volatility [Member] | Minimum [Member] | |
Warrant measurement input | 38.05 |
Volatility [Member] | Maximum [Member] | |
Warrant measurement input | 40.55 |
Expected Life [Member] | Minimum [Member] | |
Warrant Term | 3 years |
Expected Life [Member] | Maximum [Member] | |
Warrant Term | 5 years |
Dividend Yield [Member] | |
Warrant measurement input | 0 |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) | Sep. 27, 2019 | Aug. 31, 2019 | Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Sep. 28, 2018 |
Preferred stock, authorized | 10,000,000 | 10,000,000 | 10,000,000 | ||||
Preferred stock, par value (in dollar pers share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Preferred stock, issued | 0 | 0 | |||||
Preferred stock, outstanding | 0 | 0 | |||||
Common stock, authorized | 350,000,000 | 350,000,000 | 350,000,000 | ||||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Common stock, issued | 58,688,485 | 58,688,485 | 50,463,732 | ||||
Common stock, outstanding | 58,688,485 | 58,688,485 | 50,463,732 | ||||
Net proceeds from Initial Closing | $ 5,268,332 | $ 2,738 | |||||
Stock compensation expense | $ 912,876 | ||||||
Warrant [Member] | |||||||
Number of warrants to purchase | 5,466,057 | 5,466,057 | |||||
Exercise price of warrants (in dollars per share) | $ 3.17 | $ 3.17 | |||||
Weighted-average contractual remaining life | 3 years 18 days | 3 years 18 days | |||||
Warrant [Member] | Minimum [Member] | |||||||
Exercise price of warrants (in dollars per share) | $ 0.01 | $ 0.01 | |||||
Warrant [Member] | Maximum [Member] | |||||||
Exercise price of warrants (in dollars per share) | $ 3.25 | $ 3.25 | |||||
Restricted Stock Units (RSUs) [Member] | |||||||
Stock compensation expense | $ 465,312 | $ 465,312 | |||||
Incentive stock options with deferred distribution | $ 675,000 | ||||||
2018 Equity Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member] | |||||||
Non-vested restricted units awarded | 393,478 | 393,478 | |||||
Weighted average grant-date fair value | $ 0.25 | ||||||
Weighted average vesting period | 2 years | ||||||
Unrecognized compensation expense | $ 100,048 | $ 100,048 | |||||
Weighted average period | 1 year | ||||||
Employee [Member] | 2018 Equity Incentive Plan [Member] | |||||||
Common stock reserved for issuance to employees | $ 10,000,000 | ||||||
Employee [Member] | 2018 Equity Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member] | |||||||
Stock awards | 408,478 | ||||||
Stock compensation expense | 15,056 | 56,733 | |||||
Consultant [Member] | 2018 Equity Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member] | |||||||
Stock awards | 378,478 | ||||||
Stock compensation expense | $ 10,119 | $ 40,478 | |||||
Other Financing Agreements [Member] | Convertible Notes Payable [Member] | |||||||
Debt principal and interest outstanding amount | $ 3,933,767 | ||||||
Number of equity instruments convertible | 1,573,511 | ||||||
Securities Purchase Agreement [Member] | Warrant [Member] | |||||||
Number of warrants to purchase | 5,325,379 | ||||||
Exercise price of warrants (in dollars per share) | $ 0.46 | ||||||
Weighted-average contractual remaining life | 3 years | ||||||
Securities Purchase Agreement [Member] | Investor [Member] | |||||||
Number of shares issued | 2,426,000 | ||||||
Gross proceeds from Initial Closing | $ 6,065,000 | ||||||
Net proceeds from Initial Closing | 5,268,000 | ||||||
Securities Purchase Agreement [Member] | Investor [Member] | Over-Allotment Option [Member] | |||||||
Proceeds from sale of units | 12,500,000 | ||||||
Proceeds from sale of additional units | $ 2,500,000 | ||||||
Purchase price per share (in dollars per share) | $ 2.50 | ||||||
Description of transaction | Each Unit consists of one share of Common Stock and one-half of one warrant to purchase one share of Common Stock at an exercise price of $3.25 per share for a period commencing six months and ending 36 months after the closing date (the “Investor Warrants”). | ||||||
Securities Purchase Agreement [Member] | Mr. Eric Brock [Member] | |||||||
Number of shares issued | 400,000 | ||||||
Gross proceeds from Initial Closing | $ 1,000,000 | ||||||
Securities Purchase Agreement [Member] | Placement Agent [Member] | |||||||
Aggregate cash fee | 606,500 | ||||||
Reimbursement of transaction expenses | $ 40,000 | ||||||
Number of warrants to purchase | 242,600 | ||||||
Exercise price of warrants (in dollars per share) | $ 3.25 | ||||||
Securities Purchase Agreement [Member] | Individual Lender [Member] | Warrant [Member] | |||||||
Number of warrants to purchase | 140,678 | ||||||
Exercise price of warrants (in dollars per share) | $ 2.49 | ||||||
Maturity date | Sep. 26, 2024 | ||||||
Registration Rights Agreement [Member] | Investor [Member] | |||||||
Description of liquidated damages payable | The amount of liquidated damages payable to an Investor would be 1.0% of the aggregate amount invested by such Investor for each 30-day period, or pro rata portion thereof, during which the default continues. | ||||||
Loan And Security Agreement [Member] | Energy Capital [Member] | Greater Than Five Percent Stockholder [Member] | |||||||
Debt principal and interest outstanding amount | $ 10,563,104 | ||||||
Number of equity instruments convertible | 4,225,242 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | Sep. 27, 2019 | Sep. 30, 2019 |
Loan And Security Agreement [Member] | Energy Capital [Member] | ||
Aggregate principal amount | $ 10,000,000 | |
Loan And Security Agreement [Member] | Energy Capital [Member] | Convertible Promissory Notes [Member] | ||
Aggregate principal amount | $ 10,563,104 | |
Units outstanding | 4,225,242 | |
Securities Purchase Agreement [Member] | Mr. Eric Brock [Member] | ||
Number of units purchased | 400,000 | |
Units purchased amount | $ 1,000,000 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | Dec. 01, 2019 | Oct. 30, 2019 | Oct. 28, 2019 | Sep. 27, 2019 | Sep. 30, 2019 | Sep. 30, 2018 |
Net proceeds from Second Closing | $ 5,268,332 | $ 2,738 | ||||
Loan And Security Agreement [Member] | Subsequent Event [Member] | ||||||
Description of agreement terms | (i) extend and amend the due date for all accrued and unpaid interest starting September 2, 2019 to the Maturity Date (September 9, 2020) and (ii) extend and amend the due date for the 3% fee payable to Steward Capital in connection with the amendment and waiver dated June 2019 to be payable on the Maturity Date. | |||||
Number of shares issuable | 120,000 | |||||
Securities Purchase Agreement [Member] | Investor [Member] | ||||||
Number of shares issued | 2,426,000 | |||||
Gross proceeds from Second Closing | $ 6,065,000 | |||||
Net proceeds from Second Closing | $ 5,268,000 | |||||
Securities Purchase Agreement [Member] | Subsequent Event [Member] | Investor [Member] | ||||||
Number of shares issued | 206,000 | |||||
Gross proceeds from Second Closing | $ 515,000 | |||||
Net proceeds from Second Closing | $ 464,000 |