Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 14, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | Quest Solution, Inc. | |
Entity Central Index Key | 278,165 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 36,720,304 | |
Trading Symbol | QUES | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,017 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash | $ 279,261 | $ 289,480 |
Restricted Cash | 684,610 | 665,220 |
Accounts receivable, net (Note 5) | 6,685,874 | 10,589,677 |
Inventory, net (Note 6) | 512,595 | 531,593 |
Prepaid expenses | 311,884 | 272,926 |
Other current assets | 205,822 | 772,966 |
Total current assets | 8,680,046 | 13,121,862 |
Fixed assets, net (Note 7) | 111,777 | 136,835 |
Goodwill | 10,114,164 | 10,114,164 |
Trade name, net | 2,647,981 | 2,936,481 |
Customer Relationships, net | 5,873,295 | 6,435,652 |
Other assets | 43,363 | 47,563 |
Total assets | 27,470,626 | 32,792,557 |
Current liabilities | ||
Accounts payable and accrued liabilities | 10,969,558 | 10,566,066 |
Accrued interest on note payable | 28,426 | |
Line of credit (Note 10) | 3,142,490 | 5,059,292 |
Advances, related party | 100,000 | 100,000 |
Accrued payroll and sales tax | 1,555,114 | 1,829,934 |
Deferred revenue, net (Note 9) | 876,247 | 879,026 |
Current portion of note payable (Note 11) | 6,784,745 | 9,782,925 |
Other current liabilities (Note 8) | 164,354 | 227,932 |
Total current liabilities | 23,620,934 | 28,445,175 |
Long term liabilities | ||
Note payable, related party (Note 12) | 17,515,345 | 17,515,345 |
Accrued interest, related party | 949,138 | 629,238 |
Long term portion of note payable (Note 11) | 130,294 | 130,294 |
Deferred revenue, net (Note 9) | 421,957 | 565,423 |
Other long term liabilities (Note 8) | 367,856 | 332,270 |
Total liabilities | 43,005,524 | 47,617,745 |
Stockholders’ (deficit) | ||
Preferred stock, value | ||
Common stock; $0.001 par value; 100,000,000 shares designated, 36,089,703 and 35,095,763 shares outstanding of June 30, 2017 and December 31, 2016, respectively. | 36,089 | 35,095 |
Common stock to be repurchased by the Company | (230,490) | (230,490) |
Additional paid-in capital | 18,464,703 | 18,302,262 |
Accumulated (deficit) | (33,808,344) | (32,935,199) |
Total stockholders’ (deficit) | (15,534,898) | (14,825,188) |
Total liabilities and stockholders’ (deficit) | 27,470,626 | 32,792,557 |
Series A Preferred Stock [Member] | ||
Stockholders’ (deficit) | ||
Preferred stock, value | ||
Series B Preferred Stock [Member] | ||
Stockholders’ (deficit) | ||
Preferred stock, value | ||
Series C Preferred Stock [Member] | ||
Stockholders’ (deficit) | ||
Preferred stock, value | $ 3,144 | $ 3,144 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares outstanding | 36,089,703 | 35,095,763 |
Series A Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares designated | 1,000,000 | 1,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Series B Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares designated | 1 | 1 |
Preferred stock, shares outstanding | 0 | 0 |
Series C Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares designated | 15,000,000 | 15,000,000 |
Preferred stock, shares outstanding | 3,143,530 | 3,143,530 |
Cumulative dividend price per share | $ 0.06 | $ 0.06 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Revenues | ||||
Gross Sales | $ 13,682,289 | $ 15,296,996 | $ 28,283,830 | $ 30,447,696 |
Less sales returns, discounts, & allowances | (197,144) | (296,580) | (361,129) | (572,128) |
Total Revenues | 13,485,145 | 15,000,416 | 27,922,701 | 29,875,568 |
Cost of goods sold | ||||
Cost of goods sold | 10,685,448 | 11,817,836 | 22,131,057 | 23,738,820 |
Total costs of goods sold | 10,685,448 | 11,817,836 | 22,131,057 | 23,738,820 |
Gross profit | 2,799,697 | 3,182,580 | 5,791,644 | 6,136,748 |
Operating expenses | ||||
General and administrative | 414,162 | 454,466 | 827,107 | 1,303,745 |
Salary and employee benefits | 1,840,807 | 2,183,817 | 3,786,690 | 4,361,407 |
Depreciation and amortization | 441,512 | 467,477 | 883,912 | 904,649 |
Professional fees | 138,147 | 199,483 | 241,424 | 410,376 |
Total operating expenses | 2,834,628 | 3,305,243 | 5,739,133 | 6,980,177 |
Income (loss) from operations | (34,931) | (122,663) | 52,511 | (843,429) |
Other income (expenses): | ||||
Restructuring expenses | (26,880) | (460,624) | (26,880) | (460,624) |
Gain on foreign currency | 219,804 | 219,804 | ||
Interest expense | (376,398) | (944,270) | (732,056) | (1,692,176) |
Other (expenses) income | 8,963 | 4,056 | 2,921 | 3,806 |
Total other expenses | (394,315) | (1,181,034) | (756,015) | (1,929,190) |
Net Loss Before Income Taxes | (429,246) | (1,303,697) | (703,504) | (2,772,619) |
Provision for Income Taxes | ||||
Deferred | ||||
Current | (19,210) | (114,928) | (76,110) | (114,928) |
Total Provision for Income Taxes | (19,210) | (114,928) | (76,110) | (114,928) |
Net loss from continuing operations | (448,456) | (1,418,625) | (779,614) | (2,887,547) |
Net loss from discontinued operations | (2,898,893) | (2,932,700) | ||
Net Loss attributable to Quest Solution Inc. | (448,456) | (4,317,518) | (779,614) | (5,820,247) |
Less: Preferred stock – Series C dividend | (47,024) | (10,433) | (93,531) | (10,433) |
Net loss attributable to the common stockholders | $ (495,480) | $ (4,327,951) | $ (873,145) | $ (5,830,680) |
Net income (loss) per share - basic | $ (0.01) | $ (0.12) | $ (0.02) | $ (0.16) |
Net income (loss) per share - diluted | (0.01) | (0.12) | (0.02) | (0.16) |
Net loss per share from continuing operations - basic | (0.01) | (0.04) | (0.02) | (0.08) |
Net loss per share from continuing operations - diluted | (0.01) | (0.04) | (0.02) | (0.08) |
Net loss per share from discontinued operations - basic | (0.08) | (0.08) | ||
Net loss per share from discontinued operations - diluted | $ (0.08) | $ (0.08) | ||
Weighted average number of common shares outstanding - basic | 35,795,675 | 36,842,209 | 35,472,251 | 36,885,105 |
Weighted average number of common shares outstanding - diluted | 35,795,675 | 36,842,209 | 35,472,251 | 36,885,105 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flow (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash flows from continuing operating activities: | ||
Net loss | $ (779,614) | $ (2,887,547) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Stock based compensation | 149,045 | 204,442 |
Debt discount accretion | 660,824 | |
Depreciation and amortization | 883,912 | 904,649 |
Restructuring expenses | 26,880 | 460,624 |
Unrealized Foreign Exchange Gain | (50,516) | |
Changes in operating assets and liabilities: | ||
(Increase) / decrease in accounts receivable | 3,903,803 | 224,163 |
(Increase) / decrease in prepaid expenses | (38,958) | (121,356) |
(Increase) / decrease in inventory | 18,998 | (362,719) |
Increase / (decrease) in accounts payable and accrued liabilities | 403,492 | 3,593,023 |
Increase/(decrease) in accrued interest | 339,744 | 166,726 |
Increase / (decrease) in deferred revenues, net | (146,245) | 61,019 |
Increase / (decrease) in accrued payroll and sales taxes payable | (301,700) | 200,311 |
(Increase) / decrease in other assets | 571,344 | 193,495 |
Increase / (decrease) in other liabilities | (121,523) | (61,014) |
Net cash provided by operating activities | 4,909,178 | 3,186,124 |
Cash flows from investing activities: | ||
Decrease in restricted Cash | (19,390) | (83,248) |
Purchase of property and equipment | (7,997) | (17,274) |
Net cash provided by investing activities | (27,387) | (100,522) |
Cash flows from financing activities: | ||
Proceeds (payment) on line of credit | (1,916,802) | (492,946) |
Proceeds (payment) from notes/loans payable | (3,074,598) | (758,359) |
Proceeds from shares sold | 14,390 | |
Share issuance expenses | (41,259) | |
Increase in Insurance Note | 85,000 | |
Net cash (used in) financing activities | (4,892,010) | (1,292,564) |
Cash used in discontinued operations | (2,068,170) | |
Net (decrease) increase in cash | (10,219) | (275,132) |
Cash, beginning of period | 289,480 | 823,391 |
Cash, end of period | 279,261 | 548,259 |
Cash paid for interest | 334,385 | 619,627 |
Cash paid for taxes | 26,239 | 51,988 |
Supplementary cash flow information: | ||
Stock issued for services | 65,901 | 27,300 |
Stock options issued | $ 83,144 | $ 177,142 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | NOTE 1 – BASIS OF PRESENTATION AND Summary of Significant Accounting Policies- BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION The interim consolidated financial statements of Quest Solution, Inc. include the combined accounts of Quest Marketing, Inc., an Oregon Corporation, and Quest Exchange Ltd. a Canadian based holding Company. Divesture of Canadian Operations Effective September 30, 2016, the Company sold all of the outstanding shares of Quest Solution Canada Inc., and the consideration received was $1.0 million in cash, which was all collected at June 30, 2017. In addition, the Company has redeemed 1 share of Preferred Class B Stock and 1,839,030 shares of Preferred Class C Stock of the Company, as well as the accrued dividend of $31,742 thereon. Lastly, Quest Exchange Ltd., a wholly owned subsidiary of the Company, redeemed 5,200,000 exchangeable shares as part of the divestiture. Additionally, as part of the transaction, Viascan Group Inc., the acquirer, assumed $1.0 million of liabilities which the Company had at September 30, 2016. Other consideration that is part of the transaction included: ● Full release from five employment contracts, inclusive of the former CEO, Gilles Gaudreault. This release included cancelation of the contracts as well as the deferred salary and signing bonus provisions which would have inured to the employee. ● The Company canceled the intercompany debts of approximately $7.0 million as well. The Company will also receive a contingent consideration of 15% of the net value proceeds, up to a maximum of $2.3 million, receivable upon a liquidity event or a change of control of Quest Solution Canada Inc. for a period of 7 years subsequent to the transaction. ● The Company also has a right of first refusal for any offer to purchase Quest Solution Canada Inc. for a 7 year period. ● The assets sold consisted primarily of accounts receivable, inventories, property and equipment, and other assets. The buyer also assumed certain accounts payable and accrued liabilities. The operations of Quest Solution Canada Inc. have been classified as a discontinued operation and the assets and liabilities of Quest Solution Canada Inc. have been classified as held for disposal. On December 31, 2016, the Company merged BCS in Quest Marketing to form one US legal entity as part of its streamlining efforts. The interim consolidated financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2016 and notes thereto included in the Company’s Form 10-K filed with the SEC on April 17, 2017. The Company follows the same accounting policies in the preparation of interim reports. Operating results for the three months ended June 30, 2017 are not necessarily indicative of the results that may be expected for the year ended December 31, 2017. Summary of Significant Accounting Policies This summary of significant accounting policies of Quest Solution, Inc. is presented to assist in understanding the Company’s consolidated financial statements. The consolidated financial statements and notes are representations of the Company’s management who is responsible for the integrity and objectivity of the financial statements. These accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements. Cash Cash consists of petty cash, checking, savings, and money market accounts. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. There were no cash equivalents as of June 30, 2017 and December 31, 2016. The Company maintains its cash in bank deposit accounts which, at times, may exceed federal insured limits. The Company has restricted cash on deposit with a federally insured bank in the amount of $684,610 at June 30, 2017. This cash is security and collateral for a corporate credit card agreement with a bank and for deposit against a letter of credit issued for executive life insurance policies owned by the Company. USE OF ESTIMATES The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Certain accounting policies involve judgments and uncertainties to such an extent that there is reasonable likelihood that materially different amounts could have been reported under different conditions, or if different assumptions had been used. The Company evaluates its estimates and assumptions on a regular basis. The Company uses historical experience and various other assumptions that are believed to be reasonable under the circumstances to form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may materially differ from these estimates and assumptions used in preparation of the consolidated financial statements. PURCHASE ACCOUNTING AND BUSINESS COMBINATIONS The Company accounts for its business combinations using the purchase method of accounting which requires that intangible assets be recognized apart from goodwill if they are contractual in nature or separately identifiable. Acquisitions are measured on the fair value of consideration exchanged and, if the consideration given is not cash, measurement is based on the fair value of the consideration given or the fair value of the assets acquired, whichever is more reliably measurable. The excess of cost of an acquired entity over the fair value of identifiable acquired assets and liabilities assumed is allocated to goodwill. The valuation and allocation process relies on significant assumptions made by management. In certain situations, the allocations of excess purchase price are based upon preliminary estimates and assumptions. Accordingly, the allocations are subject to revision when the Company receives updated information, including appraisals and other analyses, which are completed within one year of the acquisition. Revisions to the fair values, which may be significant, are recorded when pending information is finalized, within one year from the acquisition date. ACCOUNTS RECEIVABLE Accounts receivable are carried at their estimated collectible amounts. The Company provides allowances for uncollectible accounts receivable equal to the estimated collection losses that will be incurred in collection of all receivables. Accounts receivable are periodically evaluated for collectability based on past credit history with customers and their current financial condition. The Company’s management determines which accounts are past due and if deemed uncollectible, the Company charges off the receivable in the period the determination is made. The Company generally requires no collateral to secure its ordinary accounts receivable. PROPERTY AND EQUIPMENT Property and equipment are stated at purchased cost and depreciated using both straight-line and accelerated methods over estimated useful lives ranging from 3 to 15 years. Upon disposition of property and equipment, related gains and losses are recorded in the results of operations. For federal income tax purposes, depreciation is computed using the modified accelerated cost recovery system. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expenses as incurred. INTANGIBLE ASSETS Intangible assets are stated at cost, net of accumulated amortization. The assets are being amortized on the straight-line method over useful lives ranging from 3 to 10 years. Amortization expense for the period ending June 30, 2017 and December 31, 2016 was $850,857 and $1,701,700, respectively. June 30, 2017 December 31,2016 Goodwill $ 10,114,164 $ 10,114,164 Trade Names 4,390,000 4,390,000 Customer Relationships 9,190,000 9,190,000 Accumulated amortization (5,058,724 ) (4,207,867 ) Intangibles, net $ 18,635,440 $ 19,486,297 The future amortization expense on the Trade Names and Customer Relationships are as follows: Years ending December 31, 2017 $ 850,857 2018 1,679,599 2019 1,471,714 2020 1,471,714 2021 1,405,791 Thereafter 1,641,601 Total $ 8,521,276 Goodwill is not amortized, but is evaluated for impairment annually or when indicators of a potential impairment are present. Our impairment testing of goodwill is performed separately from our impairment testing of intangibles. The annual evaluation for impairment of goodwill and intangibles is based on valuation models that incorporate assumptions and internal projections of expected future cash flows and operating plans. None of the goodwill is deductible for income tax purposes. Purchased intangible assets with finite useful lives are amortized over their respective estimated useful lives (using an accelerated method for customer relationships and trade names) to their estimated residual values, if any. The Company’s finite-lived intangible assets consist of customer relationships, contractor and resume databases, trade names, and internal use software and are being amortized over periods ranging from two to nine years. Purchased intangible assets are reviewed annually to determine if facts and circumstances indicate that the useful life is shorter than originally estimated or that the carrying amount of assets may not be recoverable. If such facts and circumstances exist, recoverability is assessed by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Impairments, if any, are based on the excess of the carrying amount over the fair value of those assets. If the useful life is shorter than originally estimated, the rate of amortization is accelerated and the remaining carrying value is amortized over the new shorter useful life. No impairments were identified or changes to estimated useful lives have been recorded as of June 30, 2017 and December 31, 2016. ADVERTISING The Company generally expenses advertising costs as incurred. During the six month periods ending June 30, 2017 and 2016, the Company spent $92,629 and $42,046 on advertising (marketing, trade show and store front expense), net of co-operative rebates, respectively. The Company received rebates on advertising from co-operative advertising agreements with several vendors and suppliers. These rebates have been recorded as a reduction to the related advertising and marketing expense in the period earned. INVENTORY Substantially all inventory consists of raw materials and finished goods and are valued based upon first-in first-out (“FIFO”) cost, not in excess of market. The determination of whether the carrying amount of inventory requires a write-down is based on a detailed evaluation of inventory relative to any potential slow moving products or discontinued items as well as the market conditions for the specific inventory items. DEPRECIATION AND AMORTIZATION Depreciation and amortization expense primarily consists of the non-cash write-down of tangible and intangible assets over their expected economic lives. We expect this expense to continue to grow in absolute dollars and potentially as a percentage of revenue as we continue to grow and incur capital expenditures to improve our technological infrastructure and acquire assets through potential future acquisitions. FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is the price that would be received from selling 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 as of the measurement date. Applicable accounting guidance provides a hierarchy for inputs used in measuring fair value that prioritize the use of observable inputs over the use of unobservable inputs, when such observable inputs are available. The three levels of inputs that may be used to measure fair value are as follows: ● Level 1 - Quoted prices in active markets for identical assets or liabilities. ● Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-driven valuations in which all significant inputs are observable or can be derived principally from, or corroborated with, observable market data. ● Level 3 - Fair value is derived from valuation techniques in which one or more significant inputs are unobservable, including assumptions and judgments made by the Company. Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the observable inputs may result in a reclassification of assets and liabilities within the three levels of the hierarchy outlined above. Liabilities Measured and Recorded at Fair Value on a Recurring Basis The Company measures certain liabilities at fair value on a recurring basis such as our contingent consideration related to business combinations and recognizes transfers within the fair value hierarchy at the end of the fiscal quarter in which the change in circumstances that caused the transfer occurred. There have been no transfers between Level 1, 2 or 3 assets or liabilities during the period ending June 30, 2017 or fiscal year ending December 31, 2016. The Company has classified its contingent consideration related to the acquisitions as a Level 3 liability. Revenue and other assumptions used in the calculation require significant management judgment. The Company reassesses the fair value of the contingent consideration liabilities on a quarterly basis. Based on that assessment, the Company recognized an adjustment of $0 to the actual calculation of the earn-out obligations during the quarter ending June 30, 2017 and in the fiscal year ended December 31, 2016. As of June 30, 2017 and December 31, 2016, the Company does not have any unrecorded contingent liabilities. NET LOSS PER COMMON SHARE Net loss per share is provided in accordance with FASB ASC 260-10, “Earnings per Share”. Basic net loss per common share (“EPS”) is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average shares outstanding, assuming all dilutive potential common shares were issued, unless doing so is anti-dilutive. The weighted-average number of common shares outstanding for computing basic EPS for the six months ended June 30, 2017 and 2016 were 35,472,251 and 36,323,489, respectively. Diluted net loss per share of common stock is the same as basic net loss per share of common stock because the effects of potentially dilutive securities are antidilutive. The following table sets forth the potentially dilutive securities excluded from the computation of diluted net loss per share because such securities have an anti-dilutive impact due to losses reported: As of June 30, 2017 2016 Options to purchase common stock 5,625,000 6,044,000 Convertible preferred stock 3,143,530 10,082,560 Convertible debentures 553,000 553,000 Warrants to purchase common stock 1,405,000 1,410,000 Common stock subject to repurchase (507,079 ) (2,157,079 ) Potential shares excluded from diluted net loss per share 10,219,451 15,932,481 GOODWILL Goodwill is the excess of the purchase price paid over the fair value of the net assets of the acquired business. Goodwill is tested annually at December 31 for impairment. The annual qualitative or quantitative assessments involve determining an estimate of the fair value of reporting units in order to evaluate whether an impairment of the current carrying amount of goodwill exists. A qualitative assessment evaluates whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step quantitative goodwill impairment test. The first step of a quantitative goodwill impairment test compares the fair value of the reporting unit to its carrying amount including goodwill. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss may be recognized. The amount of impairment loss is determined by comparing the implied fair value of reporting unit goodwill with the carrying amount. If the carrying amount exceeds the implied fair value then an impairment loss is recognized equal to that excess. No impairment charges have been recorded as a result of the Company’s annual impairment assessments. We test our goodwill and other indefinite-lived intangible assets for impairment annually, or, under certain circumstances, more frequently, such as when events or circumstances indicate there may be impairment. We are required to write down the value of goodwill only when our testing determines the recorded amount of goodwill exceeds the fair value. Our annual measurement date for testing goodwill impairment is December 31, at which date we test our reporting units, which is currently our ownership in Quest Solution, Inc. FOREIGN CURRENCY TRANSLATION The consolidated financial statements of the Company are presented in U.S. dollars. The functional currency for the Company is U.S. dollars. Transactions in currencies other than the functional currency are recorded using the appropriate exchange rate at the time of the transaction. All of the Company’s continuing operations are conducted in U.S. dollars. The Company owns a non-operating subsidiary in Canada, from which it has received no revenue since October 1, 2016. Canadian records of the divested Canadian operation were maintained in the local currency and re-measured to the functional currency as follows: monetary assets and liabilities are converted using the balance sheet period-end date exchange rate, while the non-monetary assets and liabilities are converted using the historical exchange rate. Expenses and income items are converted using the weighted average exchange rates for the reporting period. Foreign transaction gains and losses are reported on the consolidated statement of operations and were included in the amount of loss from discontinued operations. RECENT ACCOUNTING PRONOUNCEMENTS In August 2014, the FASB issued ASU 2014-15 requiring management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern, which is currently performed by the external auditors. Management will be required to perform this assessment for both interim and annual reporting periods and must make certain disclosures if it concludes that substantial doubt exists. This ASU is effective for annual periods, and interim periods within those annual periods, beginning on or after December 15, 2016. The adoption of this guidance is not expected to have a material effect on our financial statements. In May 2014, the FASB issued new revenue recognition guidance under ASU 2014-09 that will supersede the existing revenue recognition guidance under U.S. Generally Accepted Accounting Principles (“GAAP”). The new standard focuses on creating a single source of revenue guidance for revenue arising from contracts with customers for all industries. The objective of the new standard is for companies to recognize revenue when it transfers the promised goods or services to its customers at an amount that represents what the company expects to be entitled to in exchange for those goods or services. In July 2015, the FASB deferred the effective date by one year (ASU 2015-14). This ASU will now be effective for annual periods, and interim periods within those annual periods, beginning on or after December 15, 2017. Early adoption is permitted, but not before the original effective date of December 15, 2016. Since the issuance of the original standard, the FASB has issued several other subsequent updates including the following: 1) clarification of the implementation guidance on principal versus agent considerations (ASU 2016-08); 2) further guidance on identifying performance obligations in a contract as well as clarifications on the licensing implementation guidance (ASU 2016-10); 3) rescission of several SEC Staff Announcements that are codified in Topic 605 (ASU 2016-11); and 4) additional guidance and practical expedients in response to identified implementation issues (ASU 2016-12). The new standard will be effective for us beginning January 1, 2018 and we expect to implement the standard with the modified retrospective approach, which recognizes the cumulative effect of application recognized on that date. We are evaluating the impact of adoption on our consolidated results of operations, consolidated financial position and cash flows. In July 2015, the Financial Accounting Standard Board (“FASB”) issued ASU 2015-11 (ASC 330) , Simplifying the Measurement of Inventory In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes In February 2016, the FASB issued ASU 2016-02 amending the existing accounting standards for lease accounting and requiring lessees to recognize lease assets and lease liabilities for all leases with lease terms of more than 12 months, including those classified as operating leases. Both the asset and liability will initially be measured at the present value of the future minimum lease payments, with the asset being subject to adjustments such as initial direct costs. Consistent with current U.S GAAP, the presentation of expenses and cash flows will depend primarily on the classification of the lease as either a finance or an operating lease. The new standard also requires additional quantitative and qualitative disclosures regarding the amount, timing and uncertainty of cash flows arising from leases in order to provide additional information about the nature of an organization’s leasing activities. This ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018 and requires modified retrospective application. Early adoption is permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements and related disclosures. In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09 amending several aspects of share-based payment accounting. This guidance requires all excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are settled, with prospective application required. The guidance also changes the classification of such tax benefits or tax deficiencies on the statement of cash flows from a financing activity to an operating activity, with retrospective or prospective application allowed. Additionally, the guidance requires the classification of employee taxes paid when an employer withholds shares for tax-withholding purposes as a financing activity on the statement of cash flows, with retrospective application required. This ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. Early adoption is permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This new standard will be effective for the Company on January 1, 2018; however, early adoption is permitted with prospective application to any business development transaction. In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350) The Company has evaluated other recent pronouncements and believes that none of them will have a material effect on the company’s financial statements. |
Going Concern
Going Concern | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | NOTE 2 – GOING CONCERN The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has acquired a significant working capital deficit and issued a substantial amount of subordinated debt in connection with its acquisitions. As of June 30, 2017, the Company had a working capital deficit of $14,940,888 and an accumulated deficit of $33,808,344. The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis to obtain additional debt or equity financing for working capital (i.e., vendor trade credit extensions ) or refinancing (restructuring of subordinated debt) as may be required and, ultimately, to attain profitable operations. Management is focused on reducing operating expenses. Management’s plan to eliminate the going concern situation include, but are not limited to, the raise of additional capital through the issuance of debt and equity, improved cash flow management, aggressive cost reductions, and the creation of additional sales and profits across its product lines. One initiative to reduce operating expense and start the path to attaining profitability was the sale of Quest Solution Canada Inc. primarily because it had incurred significant operating losses and negative cash flow. In order to mitigate the risk related with this uncertainty, the Company may issue additional shares of common and preferred stock for cash and services during the next 12 months. |
Concentrations
Concentrations | 6 Months Ended |
Jun. 30, 2017 | |
Risks and Uncertainties [Abstract] | |
Concentrations | NOTE 3 – CONCENTRATIONS Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash, accounts receivable, and accounts payable. Beginning January 1, 2015, all of our cash balances were insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per depositor at each financial institution. This coverage is available at all FDIC member institutions. The Company uses Wells Fargo Bank, which are FDIC insured institutions. The restricted cash in the amount of $684,610 at June 30, 2017 is in excess of the FDIC limit. For the six months and year ending June 30, 2017 and December 31, 2016, one customer accounted for 16.3% and 23.1% of the Company’s revenues, respectively. Accounts receivable at June 30, 2017 and December 31, 2016 are made up of trade receivables due from customers in the ordinary course of business. One customer made up 23.7% and another customer 33.1% of the trade accounts receivable balances at June 30, 2017 and December 31, 2016, respectively. Accounts payable are made up of payables due to vendors in the ordinary course of business at June 30, 2017 and December 31, 2016. One vendor made up 80.5% and 76.4%, respectively of the outstanding balance, which represented greater than 10% of accounts payable at June 30, 2017 and December 31, 2016, respectively. |
Discontinued Operations - Dives
Discontinued Operations - Divesture of Quest Solution Canada, Inc. | 6 Months Ended |
Jun. 30, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations - Divesture of Quest Solution Canada, Inc. | NOTE 4 –DISCONTINUED OPERATIONS – DIVESTURE OF QUEST SOLUTION CANADA, INC. Effective September 30, 2016, the Company sold all of the outstanding shares of Quest Solution Canada Inc. The Company decided to sell this division primarily because it has incurred significant operating losses. The consideration received was $1.0 million in cash, which was all collected at June 30, 2017. In addition, the Company has redeemed 1 share of Preferred Class B Stock and 1,839,030 shares of Preferred Class C Stock of the Company, as well as the accrued dividend of $31,742 thereon. Lastly, Quest Exchange Ltd., a wholly owned subsidiary of the Company, redeemed 5,200,000 exchangeable shares as part of the divestiture. Additionally, as part of the transaction, Viascan Group Inc., the acquirer, assumed $1.0 million of liabilities which the Company had at September 30, 2016. Other consideration that is part of the transaction included: ● Full release from five employment contracts, inclusive of the former CEO, Gilles Gaudreault. This release included cancelation of the contracts as well as the deferred salary and signing bonus provisions which would have inured to the employee. ● The Company canceled the intercompany debts of approximately $7.0 million as well. The Company will also receive a contingent consideration of 15% of the net value proceeds, up to a maximum of $2.3 million, receivable upon a liquidity event or a change of control of Quest Solution Canada Inc. for a period of 7 years subsequent to the transaction. ● The Company also has a right of first refusal for any offer to purchase Quest Solution Canada Inc. for a 7 year period. ● The assets sold consisted primarily of accounts receivable, inventories, property and equipment, and other assets. The buyer also assumed certain accounts payable and accrued liabilities. On September 30, 2016, the Company divested its Canadian operations, Quest Solution Canada, Inc., in order to focus its efforts and resources on its US operations. This represented a strategic shift that had a major effect on the Company’s operations and financial results. Accordingly, the assets and liabilities, operating results, and operating and investing activities cash flows for the former Canadian operations are presented as a discontinued operation separate from the Company’s continuing operations, for all periods presented in these consolidated financial statements and footnotes, unless indicated otherwise. The following is a reconciliation of the major line items constituting pretax loss of discontinued operations to the after-tax loss of discontinued operations that are presented in the condensed consolidated statements of operations as indicated below: For the three months For the six months ending June 30, 2016 ending June 30, 2016 Revenues $ 3,895,938 $ 7,415,348 Cost of goods sold (3,107,354 ) (5,762,918 ) Gross profit 788,584 1,652,430 Operating expenses General and administrative (275,894 ) (559,418 ) Salary and employee benefits (675,594 ) (1,385,859 ) Depreciation and amortization (58,578 ) (116,993 ) Professional fees (18,189 ) (36,751 ) Goodwill impairment (2,300,000 ) (2,300,000 ) Total operating expenses (3,328,255 ) (4,399,021 ) Operating loss (2,539,671 ) (2,746,591 ) Other income (expenses): Restructuring expenses (108,637 ) (108,637 ) Gain (loss) on foreign currency (67,826 ) 272,686 Interest expense (188,919 ) (356,402 ) Other (expenses) income 19 103 Total other income (expenses) (365,363 ) (192,250 ) Net Loss Before Income Taxes (2,905,034 ) (2,938,841 ) Provision for Current Income Taxes 6,141 6,141 Net Loss from discontinued operations $ (2,898,893 ) $ (2,932,700 ) The major classes of assets and liabilities of Quest Solution Canada Inc. were classified as held for disposal as at June 30, 2016, as follows: As at June 30, 2016 ASSETS Current assets Cash $ (56,118 ) Accounts receivable, net 2,569,998 Inventory, net 2,585,199 Prepaid expenses 91,496 Other current assets 14,216 Total current assets 5,204,791 Fixed assets 1,187,653 Goodwill 8,837,860 Total assets $ 15,230,304 LIABILITIES Current liabilities Accounts payable and accrued liabilities $ 4,861,433 Line of credit 1,356,593 Accrued payroll and sales tax 479,882 Deferred revenue, net 120,625 Notes payable, related parties, current portion 1,452,696 Other current liabilities 49,537 Total current liabilities 8,320,766 Long term liabilities Other long term liabilities 7,670 Total liabilities $ 8,328,436 Net Assets held for disposal $ 6,901,868 The net cash flows incurred by Quest Solution Canada Inc. for the six months ended June 30, 2016 are presented below: For the six months ending June 30, 2016 Net cash provided by operating activities $ (541,500 ) Net cash provided in investing activities 26,180 Net cash used in financing activities (1,552,850 ) Net Cash Outflow from discontinued operations $ (2,068,170 ) |
Accounts Receivable
Accounts Receivable | 6 Months Ended |
Jun. 30, 2017 | |
Receivables [Abstract] | |
Accounts Receivable | NOTE 5 – ACCOUNTS RECEIVABLE At June 30, 2017 and December 31, 2016, accounts receivable consisted of the following: June 30, 2017 December 31, 2016 Trade Accounts Receivable $ 6.698.375 $ 10,607,378 Less Allowance for doubtful accounts (12,501 ) (17,701 ) Total Accounts Receivable (net) $ 6,685,874 $ 10,589,677 |
Inventory
Inventory | 6 Months Ended |
Jun. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory | NOTE 6 – INVENTORY At June 30, 2017 and December 31, 2016, inventories consisted of the following: June 30, 2017 December 31, 2016 Equipment and clearing service $ 391,761 $ 375,863 Raw Materials 28,857 119,922 Finished Goods 91,977 35,808 Total inventories $ 512,595 $ 531,593 |
Fixed Assets
Fixed Assets | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Fixed Assets | NOTE 7 – FIXED ASSETS Fixed assets are stated at cost, net of accumulated depreciation. Depreciation expense for period ending June 30, 2017 and December 31, 2016 was $33,055 and $90,626, respectively June 30, 2017 December 31, 2016 Equipment $ 2,900,449 2,892,512 Furniture and Fixtures 316,792 316,792 Leasehold improvements 151,553 151,553 Accumulated depreciation (3,257,077 ) (3,224,022 ) Fixed Assets, net $ 111,777 136,835 |
Other Liabilities
Other Liabilities | 6 Months Ended |
Jun. 30, 2017 | |
Other Liabilities Disclosure [Abstract] | |
Other Liabilities | NOTE 8 – OTHER LIABILITIES At June 30, 2017 and December 31, 2016, other liabilities consisted of the following: June 30, 2017 December 31, 2016 Unearned Incentive from credit Cards $ 123,105 $ 123,105 Key Man life Insurance liability 150,145 208,091 Dividend payable 194,606 101,075 Others 64,354 127,931 532,210 560,202 Less Current Portion (164,354 ) (227,932 ) Total long term other liabilities $ 367,856 $ 332,270 The Company has purchased key man life insurance policies for some of its executives to insure the Company against risk of loss of an executive. Should loss of an executive occur, those funds would be used to pay off their respective promissory notes, repurchase their shares and settle out any amounts owed to them and their estate. At June 30, 2017, the balance of amount of premium financed note are $2,158,475 and the cash value of the policy as of this date is $1,945,726, with a net negative cash value of the policies of $212,749. On June 10, 2016, the Company entered into an assignment and whereby three insured will assume the key man insurance policies sometime in 2017. The agreement states that the Company will be assigning the policy over to the insured and the insured will assume all the obligations under the premium financed note in place. At June 30, 2017, two of the three life insurance policies and premium financed notes have been transferred to the insured. The value of the policies is recorded at the new value per the right of offset noted in Topics 210-220. To have right of offset, the Company would need to show (1) amounts of debt are determinable, (2) reporting entity has the ‘right’ to setoff, (3) the right is enforceable by law, and (4) reporting entity has the ‘intention’ to setoff. Given that the Company has met all of these, the Company has elected to use the right of setoff as the cash value of the policies is being used as the collateral for the loans. Should the Company default on payments to the policy or determine to not continue with the policies, the cash value of the policy is intended to pay off of the loan. The Company also intends to settle out the loans in the future with the cash value of the policy. |
Deferred Revenue
Deferred Revenue | 6 Months Ended |
Jun. 30, 2017 | |
Deferred Revenue Disclosure [Abstract] | |
Deferred Revenue | NOTE 9 – DEFERRED REVENUE Deferred revenue consists of prepaid third party hardware service agreements, software maintenance service contracts and the related costs and expenses recorded net of the revenue charged to the customer and paid within normal business terms. The net amount recorded as a deferred revenue liability is being recognized into the results of operations over the related periods on a straight line basis, normally 1-5 years with 3 years being the average term. June 30, 2017 December 31, 2016 Deferred Revenue $ 8,215,110 $ 8,721,725 Less Deferred Costs & Expenses (6,916,906 ) (7,277,276 ) Net Deferred Revenue 1,298,204 1,444,449 Less Current Portion (876,247 ) (879,026 ) Total Long Term net Deferred Revenue $ 421,957 $ 565,423 Expected future recognition of net deferred revenue as of June 30, 2017, is as follows; 2017 $ 421,957 2018 280,399 2019 219,062 2020 192,774 2021 184,012 Total $ 1,298,204 |
Credit Facilities and Line of C
Credit Facilities and Line of Credit | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Credit Facilities and Line of Credit | NOTE 10 – CREDIT FACILITIES AND LINE OF CREDIT On July 1, 2016, the Company entered into a Factoring and Security Agreement (the “FASA”) with Action Capital Corporation (“Action”) to establish a sale of accounts facility, whereby the Company may obtain short-term financing by selling and assigning to Action acceptable accounts receivable. Pursuant to the FASA, the outstanding principal amount of advances made by Action to the Company at any time shall not exceed $5,000,000. Action will reserve and withhold an amount in a reserve account equal to 10% of the face amount of each account purchased under the FASA. The balance at June 30, 2017 was $3,142,490 and at December 31, 2016 $5,059,292 which includes accrued interest. The per annum interest rate with respect to the daily average balance of unpaid advances outstanding under the FASA (computed on a monthly basis) will be equal to the “Prime Rate” of Wells Fargo Bank N.A. plus 2%, plus a monthly fee equal to 0.75% of such average outstanding balance. The Company shall also pay all other costs incurred by Action under the FASA, including all bank fees. The FASA will continue in full force and effect unless terminated by either party upon 30 days’ prior written notice. Performance of the Company’s obligations under the FASA is secured by a security interest in certain collateral of the Company. The FASA includes customary representations and warranties and default provisions for transactions of this type. |
Notes Payable
Notes Payable | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Notes Payable | NOTE 11 - NOTES PAYABLE Notes payable at June 30, 2017 and December 31, 2016, consists of the following: June 31, 2017 December 31, 2016 Supplier Note Payable $ 6,524,007 $ 9,414,352 Insurance Note - 19,502 All Other 391,032 479,365 Total 6,915,039 9,913,219 Less current portion (6,784,745 ) (9,782,925 ) Long Term Notes Payable $ 130,294 $ 130,294 Future maturities of notes payable as of June 30, 2017 are as follows; 2017 $ 6,784,745 2018 - 2019 - 2020 - 2021 - Thereafter 130,294 Total $ 6,915,039 The Company finances its Property and Casualty as well as its Directors and Officers Liability Insurance with First Insurance Funding. The Insurance period is for 12 months and the premium is financed over 9 months. The Property and Casualty Insurance is paid in equal monthly installments of $3,940 at 3.25% interest. The outstanding balance at June 30, 2017 was $0 and the monthly payments are current. The Directors and Officers Liability Insurance is renewed annually is paid in four equal installments of $17,121 at 3.25% interest. The outstanding balance at June 30, 2017 was $0 and the monthly payments are current. In connection with the BCS acquisition the Company assumed a related party note payable to the former CTO of the RFID division of BCS. The note is payable in equal monthly installments of $4,758 beginning October 31, 2014 and ending October 2018. The loan bears interest at 1.89% and is unsecured and subordinated to the Company’s bank debt. The balance on this loan at June 30, 2017 was $130,294 of which all of it was classified as long term. In July 2016, the holder of the note signed a subordination agreement with the Supplier of the Secured Promissory Note and Action, whereby the noteholder agrees to subordinate it right and payment of capital and interest until the Supplier with the Secured Promissory Note is reimbursed in full. In January 2016, the Company entered into a Stock Redemption Agreement whereby the Company would repurchase 507,079 shares of common stock for $230,490 on an installment basis which was recorded as a note on the transaction date carrying interest at 9%. As at June 30, 2017, the Company did not complete the redemption of 507,079 shares of common stock and the remaining balance of the note is $220,490. On July 18, 2016, the Company and the supplier entered into that certain Secured Promissory Note, with an effective date of July 1, 2016, in the principal amount of $12,492,137. The USD Note accrues interest at 12% per annum and is payable in six consecutive monthly installments of principal and accrued interest in a minimum principal amount of $250,000 each, with any remaining principal and accrued interest due and payable on December 31, 2016. On November 30, 2016, the Company entered into an Amendment Agreement to the secured Promissory Note whereby the maturity date was extended to March 31, 2017 and the monthly installments of principal and accrued interest were increased to $400,000 commencing December 15, 2016 with any remaining principal and accrued interest due and payable on March 31, 2017. The Amendment also provides that the Company will make an additional principal payment of $300,000 by December 15, 2016. On March 31, 2017, the Company entered into a Second Amendment Agreement to the secured Promissory Note whereby the maturity date was extended to September 30, 2017 whereby any remaining principal and accrued interest due and payable on September 30, 2017. The Amendment also provides that the Company will continue to make monthly installments of principal and accrued interest in a minimum principal amount of $400,000 each. The balance on this note at June 30, 2017 was $6,524,007. On July 31, 2016 as part of the Separation Agreement with Mr. Ross, the Company issued a promissory note in the amount of $59,500 in connection with the redemption by the Company of 350,000 shares of restricted common stock. The promissory note will be repaid in 12 monthly installments commencing October 1, 2016 and this transaction was recorded as a restructuring charge in the amount of $84,317 in the third quarter of 2016. In addition, the Company restated a promissory note in favor of Mr. Ross and will repay the balance of the $102,000 over 12 monthly installments commencing October 1, 2016. The balance on these two notes at June 30, 2017 was $40,248 which is all classified as current. |
Subordinated Notes Payable
Subordinated Notes Payable | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Subordinated Notes Payable | NOTE 12 – SUBORDINATED NOTES PAYABLE Notes and loans payable consisted of the following: June 30, 2017 December 31, 2016 Note payable - acquisition of Quest $ 5,967,137 $ 5,967,137 Note payable – acquisition of BCS 10,348,808 10,348,808 Quest Preferred Stock note payable 1,199,400 1,199,400 Total notes payable 17,515,345 17,515,345 For the six months ended June 30, 2017 and 2016, the Company recorded interest expense in connection with these notes in the amount of $160,790 and $159,095, respectively. The note payable for acquisition of Quest was issued on January 9, 2014 in conjunction with the acquisition of Quest Marketing, Inc. The initial interest rate was 1.89%, subsequent to December 31, 2015; the interest was increased to 6% and is due in 2018. Principal and interest payments have been postponed. In addition, on June 17, 2016, the Company entered into Promissory Note Conversion Agreement with one of the Noteholders whereby $684,000 of the promissory note was converted into 684,000 shares of Series C Preferred Stock. As part of the transaction, the related debt discount of $171,000 was recorded against Additional paid in capital. As part of the acquisition of Quest Marketing, the Company engaged an independent valuation analysis to do a valuation of the purchase accounting. In July 2016, the holders of the notes signed subordination agreements with the Supplier of the Secured Promissory Note and Action, whereby the noteholders agree to subordinate their rights and payments until the Supplier with the Secured Promissory Note is reimbursed in full. As a result, the balance on this loan and related accrued interest at June 30, 2017 were all classified as long term. The note payable for acquisition of BCS was issued on November 21, 2014 in conjunction with the acquisition of BCS. The current interest is at 1.89% and is due in 2018. This note is convertible at $2.00 per share, subject to board approval such that no debt holder can own more than 5% of the outstanding shares. Principal and interest payments have been postponed. In July 2016, the holders of the notes signed subordination agreements with the Supplier of the Secured Promissory Note and Action, whereby the noteholder agree to subordinate its right and payment of capital and interest until the Supplier with the Secured Promissory Note is reimbursed in full. As a result, the balance on this loan and related accrued interest at June 30, 2017 were all classified as long term. The Quest preferred stock 6% note payable is in conjunction with the promissory note issued in October 2015 related to the redemption and cancelation of 100% of the issued and outstanding Series A preferred stock as well as 3,400,000 stock options that had been issued to a now former employee. The principal payments have been postponed. In June 2016, the holder of the note granted the Company a forgiveness of debt in the amount of $75,000 which was recorded as an increase in the additional paid in capital because it was a related party transaction. In addition, on June 17, 2016, the Company entered into Promissory Note Conversion Agreement with the Noteholder whereby $1,800,000 of the promissory note was converted into 1,800,000 shares of Series C Preferred Stock. In July 2016, the holders of the notes signed subordination agreements with the Supplier of the Secured Promissory Note and Action, whereby the noteholder agree to subordinate its right and payment of capital and interest until the Supplier with the Secured Promissory Note is reimbursed in full. As a result, the balance on this loan and related accrued interest at June 30, 2017 were all classified as long term. The repayment of the subordinated notes payable is contingent on the complete reimbursement of the Supplier Secured Promissory Note and other conditions and as such based on these factors management has estimated that the future maturities of subordinated notes payable at June 30, 2017 is as follows: 2017 - 2018 - 2019 - 2020 - 2021 - Thereafter 17,515,345 Total $ 17,515,345 |
Stockholders' Deficit
Stockholders' Deficit | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Stockholders' Deficit | NOTE 13 – STOCKHOLDERS’ DEFICIT PREFERRED STOCK Series A As of June 30, 2017, there were 1,000,000 Series A preferred shares designated and 0 Series A preferred shares outstanding. The board of directors had previously set the voting rights for the preferred stock at 1 share of preferred to 250 common shares. Series B As of June 30, 2017 there was 1 preferred share designated and 0 preferred shares outstanding. Effective on September 30, 2016, with the divestiture of Quest Solution Canada Inc., the one share was redeemed by the Company and retired. Series C As of June 30, 2017, there were 15,000,000 Series C preferred shares authorized and 3,143,530 Series C preferred share outstanding. It has preferential rights above common shares and the Series B preferred shares and is entitled to receive a quarterly dividend at a rate of $0.06 per share per annum. Each Series C preferred share outstanding is convertible into one (1) share of common stock of Quest Solution, Inc. COMMON STOCK For the six month period ended June 30, 2017, the Company issued 87,500 shares to board members in relation to the vesting schedule agreed to during 4 th In addition, pursuant to the Employee Stock Purchase Program (“ESPP”) for which the Company filed an S-8 registration statement, 196,440 shares of Common Stock were issued for proceeds of $14,390. In April 2017, the Company issued 640,000 shares to the Chief Executive Officer as a signing bonus under his Employment Agreement. The shares were valued at $48,000. In addition, the Company issued 70,000 shares to the Chief Financial Officer as additional fees pursuant to his Contractor Agreement. The shares were valued at $8,400 As of June 30, 2017 the Company had 36,089,703 common shares outstanding. Warrants and Stock Options Warrants June 30, 2017 June 30, 2016 Number of warrants Weighted Average Exercise Price Number of warrants Weighted Average Exercise Price Balance, beginning of period 1,405,000 0.52 1,410,000 0.52 Warrants granted - - - - Warrants expired - - - - Warrants cancelled, forfeited - - - - Warrants exercised - - - - Balance, end of period 1,405,000 0.52 1,410,000 0.52 Exercisable warrants 1,405,000 0.52 1,410,000 0.52 Outstanding warrants as of June 30, 2017 are as follows: Range of Exercise Prices Weighted Average residual life span (in years) Outstanding Warrants Weighted Average Exercise Price Exercisable Warrants Weighted Average Exercise Price 0.25 0.75 900,000 0.25 900,000 0.25 1.00 0.84 505,000 1.00 505,000 1.00 0.25 to 1.00 0.78 1,405,000 0.52 1,405,000 0.52 Warrants outstanding at June 30, 2017 and 2016 have the following expiry date and exercise prices: Expiry Date Exercise Prices June 30, 2017 June 30, 2016 July 10, 2016 1.00 - 5,000 March 22, 2018 1.00 300,000 300,000 April 1, 2018 0.25 900,000 900,000 April 30, 2018 1.00 5,000 5,000 July 10, 2018 1.00 200,000 200,000 1,405,000 1,410,000 Share Purchase Option Plan The Company has a stock option plan whereby the Board of Directors, may grant to directors, officers, employees, or consultants of the Company options to acquire common shares. The Board of Directors of the Company has the authority to determine the terms, limits, restrictions and conditions of the grant of options, to interpret the plan and make all decisions relating thereto. The plan was adopted by the Company’s Board of Directors on November 17, 2014 in order to provide an inducement and serve as a long term incentive program. The maximum number of common shares that may be reserved for issuance was set at 10,000,000. The option exercise price is established by the Board of Directors and may not be lower than the market price of the common shares at the time of grant. The options may be exercised during the option period determined by the Board of Directors, which may vary, but will not exceed ten years from the date of the grant. There are 10,000,000 of the Company’s common shares which may be issued pursuant to the exercise of share options granted under the Plan. As at June 30, 2017, the Company had issued options, allowing for the subscription of 5,625,000 common shares of its share capital. Stock Options June 30, 2017 June 30, 2016 Number of stock options Weighted Average Exercise Price Number of stock options Weighted Average Exercise Price Balance, beginning of period 2,644,000 0.49 6,044,000 0.50 Stock options granted 2,981,000 0.09 - - Stock options expired - - - - Stock options cancelled, forfeited - - - - Stock options exercised - - - - Balance, end of period 5,625,000 0.28 6,044,000 0.50 Exercisable stock options 3,339,750 0.34 2,237,750 0.49 For the six months ended June 30, 2017, the Company granted a total of 2,981,000 stock options, 700,000 stock options were granted to two Board members and 2,281,000 stock options were granted to the Chief Executive Officer pursuant to his Employment Contract. Outstanding stock options as of June 30, 2017 are as follows: Range of Exercise Prices Weighted Average residual life span (in years) Outstanding Stock Options Weighted Average Exercise Price Exercisable Stock Options Weighted Average Exercise Price 0.075 to 0.09 4.66 2,981,000 0.09 1,227,000 0.08 0.33 to 0.38 0.79 144,000 0.36 144,000 0.36 0.50 7.45 2,500,000 0.50 1,968,750 0.50 0.075 to 0.50 5.78 5,625,000 0.28 3,339,750 0.34 Stock options outstanding at June 30, 2017 and 2016 have the following expiry date and exercise prices: Expiry Date Exercise Prices June 30, 2017 June 30, 2016 February 26, 2018 0.37 72,000 72,000 April 27, 2018 0.38 36,000 36,000 July 9, 2018 0.33 36,000 36,000 February 17, 2022 0.075 760,333 - February 17, 2022 0.09 1,520,667 - March 30, 2022 0.09 700,000 - November 20, 2024 0.50 2,500,000 2,500,000 5,625,000 2,644,000 For the period ending June 30, 2017 and 2016, the Company recorded stock compensation expense relating to the vesting of stock options as follows; For the six months ended June 30, 2017 2016 Board compensation expense $ 9,501 19,500 Stock compensation 56,400 7,800 Stock Option vesting 83,144 177,142 Total $ 149,045 204,442 |
Litigation
Litigation | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | NOTE 14 – LITIGATION As of June 30, 2017, the Company is not a party to any pending material legal proceeding. To the knowledge of management, no federal, state or local governmental agency is presently contemplating any proceeding against the Company. To the knowledge of management, no director, executive officer or affiliate of the Company, any owner of record or beneficially of more than five percent of the Company’s Common Stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 15 – RELATED PARTY TRANSACTIONS The Company leases a building from the former owner of BCS for $9,000 per month, which is believed to be the current fair market value of similar buildings in the area. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 16 – SUBSEQUENT EVENTS On August 2, 2017 the Board of Directors approved the grant of 3,500,000 stock options to the following individuals; Name Function Amount Shai S. Lustgarten President and CEO 1,500,000 Niv Nissenson Board Member 500,000 Yaron Shalem Board Member 500,000 Andrew MacMillan Board Member 500,000 Arthur Marcus Legal Consultant 500,000 3,500,000 The stock options have an exercise price of $0.11 per option, have a 4 year life and vest over 12 months in 4 quarterly and equal installments, subject to the option holders’ continuous service to the Company. In addition, on August 2, 2017, the Company entered into a Consulting agreement with Carlos J. Nissensohn, a family member of a Director of the Company. The terms and condition of the contract are as follows: ● 24 month term with 90 day termination notice by the Company ● A monthly fee of $15,000 and a one-time signatory fee of 600,000 restricted shares ● 1,500,000 warrants to buy shares at $0.11 having a four year life and a vesting period of 12 months in 4 quarterly and equal installments, subject to continuous service to the Company ● In case the Company procures debt financing during the term of this agreement, without any equity component, Mr. Nissensohn shall be entitled to 3% of the gross funds raised, however if the Company is required to pay a success fee to another external entity, the Mr. Nissensohn shall be entitled to only 2% of the gross funds raised ● In addition to the above, in the event of an equity financing resulting in gross proceeds of at least $3,000,000 to the Company within 24 months of the date the contract, Mr. Nissensohn shall further be entitled to certain warrants to be granted by the Company which upon their exercise pursuant to their terms, Mr. Nissensohn shall be entitled to receive QUEST shares which represent 3% of the QUEST issued share capital immediately prior to the consummation of such investment. The warrants will carry an exercise price per warrant/share representing 100% of the closing price per share as closed in the equity financing. This section and the issue of the warrant by QUEST are subject to the approval of the Board of Directors of QUEST. However, if the Board does not approve the issuance of warrants; then Mr. Nissensohn will be entitled to a fee with the equivalent value based on a Black Scholes valuation ● In addition to the above, Mr. Nissensohn will be entitled to a $ st ● In addition to the aforementioned, in the event that Company shall close any M&A transaction with a third party target, the Mr. Nissensohn shall be entitled to a success fee in the amount equal to 3% of the total transaction price, in any combination of cash and shares that will be determined by QUEST |
Basis of Presentation and Sum22
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Principles of Consolidation | BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION The interim consolidated financial statements of Quest Solution, Inc. include the combined accounts of Quest Marketing, Inc., an Oregon Corporation, and Quest Exchange Ltd. a Canadian based holding Company. Divesture of Canadian Operations Effective September 30, 2016, the Company sold all of the outstanding shares of Quest Solution Canada Inc., and the consideration received was $1.0 million in cash, which was all collected at June 30, 2017. In addition, the Company has redeemed 1 share of Preferred Class B Stock and 1,839,030 shares of Preferred Class C Stock of the Company, as well as the accrued dividend of $31,742 thereon. Lastly, Quest Exchange Ltd., a wholly owned subsidiary of the Company, redeemed 5,200,000 exchangeable shares as part of the divestiture. Additionally, as part of the transaction, Viascan Group Inc., the acquirer, assumed $1.0 million of liabilities which the Company had at September 30, 2016. Other consideration that is part of the transaction included: ● Full release from five employment contracts, inclusive of the former CEO, Gilles Gaudreault. This release included cancelation of the contracts as well as the deferred salary and signing bonus provisions which would have inured to the employee. ● The Company canceled the intercompany debts of approximately $7.0 million as well. The Company will also receive a contingent consideration of 15% of the net value proceeds, up to a maximum of $2.3 million, receivable upon a liquidity event or a change of control of Quest Solution Canada Inc. for a period of 7 years subsequent to the transaction. ● The Company also has a right of first refusal for any offer to purchase Quest Solution Canada Inc. for a 7 year period. ● The assets sold consisted primarily of accounts receivable, inventories, property and equipment, and other assets. The buyer also assumed certain accounts payable and accrued liabilities. The operations of Quest Solution Canada Inc. have been classified as a discontinued operation and the assets and liabilities of Quest Solution Canada Inc. have been classified as held for disposal. On December 31, 2016, the Company merged BCS in Quest Marketing to form one US legal entity as part of its streamlining efforts. The interim consolidated financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2016 and notes thereto included in the Company’s Form 10-K filed with the SEC on April 17, 2017. The Company follows the same accounting policies in the preparation of interim reports. Operating results for the three months ended June 30, 2017 are not necessarily indicative of the results that may be expected for the year ended December 31, 2017. |
Cash | Cash Cash consists of petty cash, checking, savings, and money market accounts. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. There were no cash equivalents as of June 30, 2017 and December 31, 2016. The Company maintains its cash in bank deposit accounts which, at times, may exceed federal insured limits. The Company has restricted cash on deposit with a federally insured bank in the amount of $684,610 at June 30, 2017. This cash is security and collateral for a corporate credit card agreement with a bank and for deposit against a letter of credit issued for executive life insurance policies owned by the Company. |
Use of Estimates | USE OF ESTIMATES The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Certain accounting policies involve judgments and uncertainties to such an extent that there is reasonable likelihood that materially different amounts could have been reported under different conditions, or if different assumptions had been used. The Company evaluates its estimates and assumptions on a regular basis. The Company uses historical experience and various other assumptions that are believed to be reasonable under the circumstances to form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may materially differ from these estimates and assumptions used in preparation of the consolidated financial statements. |
Purchase Accounting and Business Combinations | PURCHASE ACCOUNTING AND BUSINESS COMBINATIONS The Company accounts for its business combinations using the purchase method of accounting which requires that intangible assets be recognized apart from goodwill if they are contractual in nature or separately identifiable. Acquisitions are measured on the fair value of consideration exchanged and, if the consideration given is not cash, measurement is based on the fair value of the consideration given or the fair value of the assets acquired, whichever is more reliably measurable. The excess of cost of an acquired entity over the fair value of identifiable acquired assets and liabilities assumed is allocated to goodwill. The valuation and allocation process relies on significant assumptions made by management. In certain situations, the allocations of excess purchase price are based upon preliminary estimates and assumptions. Accordingly, the allocations are subject to revision when the Company receives updated information, including appraisals and other analyses, which are completed within one year of the acquisition. Revisions to the fair values, which may be significant, are recorded when pending information is finalized, within one year from the acquisition date. |
Accounts Receivable | ACCOUNTS RECEIVABLE Accounts receivable are carried at their estimated collectible amounts. The Company provides allowances for uncollectible accounts receivable equal to the estimated collection losses that will be incurred in collection of all receivables. Accounts receivable are periodically evaluated for collectability based on past credit history with customers and their current financial condition. The Company’s management determines which accounts are past due and if deemed uncollectible, the Company charges off the receivable in the period the determination is made. The Company generally requires no collateral to secure its ordinary accounts receivable. |
Property and Equipment | PROPERTY AND EQUIPMENT Property and equipment are stated at purchased cost and depreciated using both straight-line and accelerated methods over estimated useful lives ranging from 3 to 15 years. Upon disposition of property and equipment, related gains and losses are recorded in the results of operations. For federal income tax purposes, depreciation is computed using the modified accelerated cost recovery system. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expenses as incurred. |
Intangible Assets | INTANGIBLE ASSETS Intangible assets are stated at cost, net of accumulated amortization. The assets are being amortized on the straight-line method over useful lives ranging from 3 to 10 years. Amortization expense for the period ending June 30, 2017 and December 31, 2016 was $850,857 and $1,701,700, respectively. June 30, 2017 December 31,2016 Goodwill $ 10,114,164 $ 10,114,164 Trade Names 4,390,000 4,390,000 Customer Relationships 9,190,000 9,190,000 Accumulated amortization (5,058,724 ) (4,207,867 ) Intangibles, net $ 18,635,440 $ 19,486,297 The future amortization expense on the Trade Names and Customer Relationships are as follows: Years ending December 31, 2017 $ 850,857 2018 1,679,599 2019 1,471,714 2020 1,471,714 2021 1,405,791 Thereafter 1,641,601 Total $ 8,521,276 Goodwill is not amortized, but is evaluated for impairment annually or when indicators of a potential impairment are present. Our impairment testing of goodwill is performed separately from our impairment testing of intangibles. The annual evaluation for impairment of goodwill and intangibles is based on valuation models that incorporate assumptions and internal projections of expected future cash flows and operating plans. None of the goodwill is deductible for income tax purposes. Purchased intangible assets with finite useful lives are amortized over their respective estimated useful lives (using an accelerated method for customer relationships and trade names) to their estimated residual values, if any. The Company’s finite-lived intangible assets consist of customer relationships, contractor and resume databases, trade names, and internal use software and are being amortized over periods ranging from two to nine years. Purchased intangible assets are reviewed annually to determine if facts and circumstances indicate that the useful life is shorter than originally estimated or that the carrying amount of assets may not be recoverable. If such facts and circumstances exist, recoverability is assessed by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Impairments, if any, are based on the excess of the carrying amount over the fair value of those assets. If the useful life is shorter than originally estimated, the rate of amortization is accelerated and the remaining carrying value is amortized over the new shorter useful life. No impairments were identified or changes to estimated useful lives have been recorded as of June 30, 2017 and December 31, 2016. |
Advertising | ADVERTISING The Company generally expenses advertising costs as incurred. During the six month periods ending June 30, 2017 and 2016, the Company spent $92,629 and $42,046 on advertising (marketing, trade show and store front expense), net of co-operative rebates, respectively. The Company received rebates on advertising from co-operative advertising agreements with several vendors and suppliers. These rebates have been recorded as a reduction to the related advertising and marketing expense in the period earned. |
Inventory | INVENTORY Substantially all inventory consists of raw materials and finished goods and are valued based upon first-in first-out (“FIFO”) cost, not in excess of market. The determination of whether the carrying amount of inventory requires a write-down is based on a detailed evaluation of inventory relative to any potential slow moving products or discontinued items as well as the market conditions for the specific inventory items. |
Depreciation and Amortization | DEPRECIATION AND AMORTIZATION Depreciation and amortization expense primarily consists of the non-cash write-down of tangible and intangible assets over their expected economic lives. We expect this expense to continue to grow in absolute dollars and potentially as a percentage of revenue as we continue to grow and incur capital expenditures to improve our technological infrastructure and acquire assets through potential future acquisitions. |
Fair Value of Financial Instruments | FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is the price that would be received from selling 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 as of the measurement date. Applicable accounting guidance provides a hierarchy for inputs used in measuring fair value that prioritize the use of observable inputs over the use of unobservable inputs, when such observable inputs are available. The three levels of inputs that may be used to measure fair value are as follows: ● Level 1 - Quoted prices in active markets for identical assets or liabilities. ● Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-driven valuations in which all significant inputs are observable or can be derived principally from, or corroborated with, observable market data. ● Level 3 - Fair value is derived from valuation techniques in which one or more significant inputs are unobservable, including assumptions and judgments made by the Company. Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the observable inputs may result in a reclassification of assets and liabilities within the three levels of the hierarchy outlined above. Liabilities Measured and Recorded at Fair Value on a Recurring Basis The Company measures certain liabilities at fair value on a recurring basis such as our contingent consideration related to business combinations and recognizes transfers within the fair value hierarchy at the end of the fiscal quarter in which the change in circumstances that caused the transfer occurred. There have been no transfers between Level 1, 2 or 3 assets or liabilities during the period ending June 30, 2017 or fiscal year ending December 31, 2016. The Company has classified its contingent consideration related to the acquisitions as a Level 3 liability. Revenue and other assumptions used in the calculation require significant management judgment. The Company reassesses the fair value of the contingent consideration liabilities on a quarterly basis. Based on that assessment, the Company recognized an adjustment of $0 to the actual calculation of the earn-out obligations during the quarter ending June 30, 2017 and in the fiscal year ended December 31, 2016. As of June 30, 2017 and December 31, 2016, the Company does not have any unrecorded contingent liabilities. |
Net Loss Per Common Share | NET LOSS PER COMMON SHARE Net loss per share is provided in accordance with FASB ASC 260-10, “Earnings per Share”. Basic net loss per common share (“EPS”) is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average shares outstanding, assuming all dilutive potential common shares were issued, unless doing so is anti-dilutive. The weighted-average number of common shares outstanding for computing basic EPS for the six months ended June 30, 2017 and 2016 were 35,472,251 and 36,323,489, respectively. Diluted net loss per share of common stock is the same as basic net loss per share of common stock because the effects of potentially dilutive securities are antidilutive. The following table sets forth the potentially dilutive securities excluded from the computation of diluted net loss per share because such securities have an anti-dilutive impact due to losses reported: As of June 30, 2017 2016 Options to purchase common stock 5,625,000 6,044,000 Convertible preferred stock 3,143,530 10,082,560 Convertible debentures 553,000 553,000 Warrants to purchase common stock 1,405,000 1,410,000 Common stock subject to repurchase (507,079 ) (2,157,079 ) Potential shares excluded from diluted net loss per share 10,219,451 15,932,481 |
Goodwill | GOODWILL Goodwill is the excess of the purchase price paid over the fair value of the net assets of the acquired business. Goodwill is tested annually at December 31 for impairment. The annual qualitative or quantitative assessments involve determining an estimate of the fair value of reporting units in order to evaluate whether an impairment of the current carrying amount of goodwill exists. A qualitative assessment evaluates whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step quantitative goodwill impairment test. The first step of a quantitative goodwill impairment test compares the fair value of the reporting unit to its carrying amount including goodwill. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss may be recognized. The amount of impairment loss is determined by comparing the implied fair value of reporting unit goodwill with the carrying amount. If the carrying amount exceeds the implied fair value then an impairment loss is recognized equal to that excess. No impairment charges have been recorded as a result of the Company’s annual impairment assessments. We test our goodwill and other indefinite-lived intangible assets for impairment annually, or, under certain circumstances, more frequently, such as when events or circumstances indicate there may be impairment. We are required to write down the value of goodwill only when our testing determines the recorded amount of goodwill exceeds the fair value. Our annual measurement date for testing goodwill impairment is December 31, at which date we test our reporting units, which is currently our ownership in Quest Solution, Inc. |
Foreign Currency Translation | FOREIGN CURRENCY TRANSLATION The consolidated financial statements of the Company are presented in U.S. dollars. The functional currency for the Company is U.S. dollars. Transactions in currencies other than the functional currency are recorded using the appropriate exchange rate at the time of the transaction. All of the Company’s continuing operations are conducted in U.S. dollars. The Company owns a non-operating subsidiary in Canada, from which it has received no revenue since October 1, 2016. Canadian records of the divested Canadian operation were maintained in the local currency and re-measured to the functional currency as follows: monetary assets and liabilities are converted using the balance sheet period-end date exchange rate, while the non-monetary assets and liabilities are converted using the historical exchange rate. Expenses and income items are converted using the weighted average exchange rates for the reporting period. Foreign transaction gains and losses are reported on the consolidated statement of operations and were included in the amount of loss from discontinued operations. |
Recent Accounting Pronouncements | RECENT ACCOUNTING PRONOUNCEMENTS In August 2014, the FASB issued ASU 2014-15 requiring management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern, which is currently performed by the external auditors. Management will be required to perform this assessment for both interim and annual reporting periods and must make certain disclosures if it concludes that substantial doubt exists. This ASU is effective for annual periods, and interim periods within those annual periods, beginning on or after December 15, 2016. The adoption of this guidance is not expected to have a material effect on our financial statements. In May 2014, the FASB issued new revenue recognition guidance under ASU 2014-09 that will supersede the existing revenue recognition guidance under U.S. Generally Accepted Accounting Principles (“GAAP”). The new standard focuses on creating a single source of revenue guidance for revenue arising from contracts with customers for all industries. The objective of the new standard is for companies to recognize revenue when it transfers the promised goods or services to its customers at an amount that represents what the company expects to be entitled to in exchange for those goods or services. In July 2015, the FASB deferred the effective date by one year (ASU 2015-14). This ASU will now be effective for annual periods, and interim periods within those annual periods, beginning on or after December 15, 2017. Early adoption is permitted, but not before the original effective date of December 15, 2016. Since the issuance of the original standard, the FASB has issued several other subsequent updates including the following: 1) clarification of the implementation guidance on principal versus agent considerations (ASU 2016-08); 2) further guidance on identifying performance obligations in a contract as well as clarifications on the licensing implementation guidance (ASU 2016-10); 3) rescission of several SEC Staff Announcements that are codified in Topic 605 (ASU 2016-11); and 4) additional guidance and practical expedients in response to identified implementation issues (ASU 2016-12). The new standard will be effective for us beginning January 1, 2018 and we expect to implement the standard with the modified retrospective approach, which recognizes the cumulative effect of application recognized on that date. We are evaluating the impact of adoption on our consolidated results of operations, consolidated financial position and cash flows. In July 2015, the Financial Accounting Standard Board (“FASB”) issued ASU 2015-11 (ASC 330) , Simplifying the Measurement of Inventory In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes In February 2016, the FASB issued ASU 2016-02 amending the existing accounting standards for lease accounting and requiring lessees to recognize lease assets and lease liabilities for all leases with lease terms of more than 12 months, including those classified as operating leases. Both the asset and liability will initially be measured at the present value of the future minimum lease payments, with the asset being subject to adjustments such as initial direct costs. Consistent with current U.S GAAP, the presentation of expenses and cash flows will depend primarily on the classification of the lease as either a finance or an operating lease. The new standard also requires additional quantitative and qualitative disclosures regarding the amount, timing and uncertainty of cash flows arising from leases in order to provide additional information about the nature of an organization’s leasing activities. This ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018 and requires modified retrospective application. Early adoption is permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements and related disclosures. In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09 amending several aspects of share-based payment accounting. This guidance requires all excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are settled, with prospective application required. The guidance also changes the classification of such tax benefits or tax deficiencies on the statement of cash flows from a financing activity to an operating activity, with retrospective or prospective application allowed. Additionally, the guidance requires the classification of employee taxes paid when an employer withholds shares for tax-withholding purposes as a financing activity on the statement of cash flows, with retrospective application required. This ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. Early adoption is permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This new standard will be effective for the Company on January 1, 2018; however, early adoption is permitted with prospective application to any business development transaction. In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350) The Company has evaluated other recent pronouncements and believes that none of them will have a material effect on the company’s financial statements. |
Basis of Presentation and Sum23
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Goodwill and Intangible Assets | June 30, 2017 December 31,2016 Goodwill $ 10,114,164 $ 10,114,164 Trade Names 4,390,000 4,390,000 Customer Relationships 9,190,000 9,190,000 Accumulated amortization (5,058,724 ) (4,207,867 ) Intangibles, net $ 18,635,440 $ 19,486,297 |
Schedule of Amortization Expense | The future amortization expense on the Trade Names and Customer Relationships are as follows: Years ending December 31, 2017 $ 850,857 2018 1,679,599 2019 1,471,714 2020 1,471,714 2021 1,405,791 Thereafter 1,641,601 Total $ 8,521,276 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table sets forth the potentially dilutive securities excluded from the computation of diluted net loss per share because such securities have an anti-dilutive impact due to losses reported: As of June 30, 2017 2016 Options to purchase common stock 5,625,000 6,044,000 Convertible preferred stock 3,143,530 10,082,560 Convertible debentures 553,000 553,000 Warrants to purchase common stock 1,405,000 1,410,000 Common stock subject to repurchase (507,079 ) (2,157,079 ) Potential shares excluded from diluted net loss per share 10,219,451 15,932,481 |
Discontinued Operations - Div24
Discontinued Operations - Divesture of Quest Solution Canada, Inc. (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Discontinued Operations | The following is a reconciliation of the major line items constituting pretax loss of discontinued operations to the after-tax loss of discontinued operations that are presented in the condensed consolidated statements of operations as indicated below: For the three months For the six months ending June 30, 2016 ending June 30, 2016 Revenues $ 3,895,938 $ 7,415,348 Cost of goods sold (3,107,354 ) (5,762,918 ) Gross profit 788,584 1,652,430 Operating expenses General and administrative (275,894 ) (559,418 ) Salary and employee benefits (675,594 ) (1,385,859 ) Depreciation and amortization (58,578 ) (116,993 ) Professional fees (18,189 ) (36,751 ) Goodwill impairment (2,300,000 ) (2,300,000 ) Total operating expenses (3,328,255 ) (4,399,021 ) Operating loss (2,539,671 ) (2,746,591 ) Other income (expenses): Restructuring expenses (108,637 ) (108,637 ) Gain (loss) on foreign currency (67,826 ) 272,686 Interest expense (188,919 ) (356,402 ) Other (expenses) income 19 103 Total other income (expenses) (365,363 ) (192,250 ) Net Loss Before Income Taxes (2,905,034 ) (2,938,841 ) Provision for Current Income Taxes 6,141 6,141 Net Loss from discontinued operations $ (2,898,893 ) $ (2,932,700 ) |
Schedule of Discontinued Assets and Liabilities | The major classes of assets and liabilities of Quest Solution Canada Inc. were classified as held for disposal as at June 30, 2016, as follows: As at June 30, 2016 ASSETS Current assets Cash $ (56,118 ) Accounts receivable, net 2,569,998 Inventory, net 2,585,199 Prepaid expenses 91,496 Other current assets 14,216 Total current assets 5,204,791 Fixed assets 1,187,653 Goodwill 8,837,860 Total assets $ 15,230,304 LIABILITIES Current liabilities Accounts payable and accrued liabilities $ 4,861,433 Line of credit 1,356,593 Accrued payroll and sales tax 479,882 Deferred revenue, net 120,625 Notes payable, related parties, current portion 1,452,696 Other current liabilities 49,537 Total current liabilities 8,320,766 Long term liabilities Other long term liabilities 7,670 Total liabilities $ 8,328,436 Net Assets held for disposal $ 6,901,868 |
Schedule of Discontinued Cash Flows | The net cash flows incurred by Quest Solution Canada Inc. for the six months ended June 30, 2016 are presented below: For the six months ending June 30, 2016 Net cash provided by operating activities $ (541,500 ) Net cash provided in investing activities 26,180 Net cash used in financing activities (1,552,850 ) Net Cash Outflow from discontinued operations $ (2,068,170 ) |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable Net | At June 30, 2017 and December 31, 2016, accounts receivable consisted of the following: June 30, 2017 December 31, 2016 Trade Accounts Receivable $ 6.698.375 $ 10,607,378 Less Allowance for doubtful accounts (12,501 ) (17,701 ) Total Accounts Receivable (net) $ 6,685,874 $ 10,589,677 |
Inventory (Tables)
Inventory (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | At June 30, 2017 and December 31, 2016, inventories consisted of the following: June 30, 2017 December 31, 2016 Equipment and clearing service $ 391,761 $ 375,863 Raw Materials 28,857 119,922 Finished Goods 91,977 35,808 Total inventories $ 512,595 $ 531,593 |
Fixed Assets (Tables)
Fixed Assets (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Fixed Assets | June 30, 2017 December 31, 2016 Equipment $ 2,900,449 2,892,512 Furniture and Fixtures 316,792 316,792 Leasehold improvements 151,553 151,553 Accumulated depreciation (3,257,077 ) (3,224,022 ) Fixed Assets, net $ 111,777 136,835 |
Other Liabilities (Tables)
Other Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Other Liabilities | At June 30, 2017 and December 31, 2016, other liabilities consisted of the following: June 30, 2017 December 31, 2016 Unearned Incentive from credit Cards $ 123,105 $ 123,105 Key Man life Insurance liability 150,145 208,091 Dividend payable 194,606 101,075 Others 64,354 127,931 532,210 560,202 Less Current Portion (164,354 ) (227,932 ) Total long term other liabilities $ 367,856 $ 332,270 |
Deferred Revenue (Tables)
Deferred Revenue (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Deferred Revenue Disclosure [Abstract] | |
Schedule of Deferred Revenue | June 30, 2017 December 31, 2016 Deferred Revenue $ 8,215,110 $ 8,721,725 Less Deferred Costs & Expenses (6,916,906 ) (7,277,276 ) Net Deferred Revenue 1,298,204 1,444,449 Less Current Portion (876,247 ) (879,026 ) Total Long Term net Deferred Revenue $ 421,957 $ 565,423 |
Schedule of Expected Future Amortization of Net Deferred Revenue | Expected future recognition of net deferred revenue as of June 30, 2017, is as follows; 2017 $ 421,957 2018 280,399 2019 219,062 2020 192,774 2021 184,012 Total $ 1,298,204 |
Notes Payable (Tables)
Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | Notes payable at June 30, 2017 and December 31, 2016, consists of the following: June 31, 2017 December 31, 2016 Supplier Note Payable $ 6,524,007 $ 9,414,352 Insurance Note - 19,502 All Other 391,032 479,365 Total 6,915,039 9,913,219 Less current portion (6,784,745 ) (9,782,925 ) Long Term Notes Payable $ 130,294 $ 130,294 |
Schedule of Future Maturities of Note Payable | Future maturities of notes payable as of June 30, 2017 are as follows; 2017 $ 6,784,745 2018 - 2019 - 2020 - 2021 - Thereafter 130,294 Total $ 6,915,039 |
Subordinated Notes Payable (Tab
Subordinated Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Subordinated Notes payable | Notes and loans payable consisted of the following: June 30, 2017 December 31, 2016 Note payable - acquisition of Quest $ 5,967,137 $ 5,967,137 Note payable – acquisition of BCS 10,348,808 10,348,808 Quest Preferred Stock note payable 1,199,400 1,199,400 Total notes payable 17,515,345 17,515,345 |
Schedule of Future Maturities of Subordinated Notes Payable | The repayment of the subordinated notes payable is contingent on the complete reimbursement of the Supplier Secured Promissory Note and other conditions and as such based on these factors management has estimated that the future maturities of subordinated notes payable at June 30, 2017 is as follows: 2017 - 2018 - 2019 - 2020 - 2021 - Thereafter 17,515,345 Total $ 17,515,345 |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock Options Warrants | The following table summarizes information about warrants granted during the six month periods ended June 30, 2017 and 2016: June 30, 2017 June 30, 2016 Number of warrants Weighted Average Exercise Price Number of warrants Weighted Average Exercise Price Balance, beginning of period 1,405,000 0.52 1,410,000 0.52 Warrants granted - - - - Warrants expired - - - - Warrants cancelled, forfeited - - - - Warrants exercised - - - - Balance, end of period 1,405,000 0.52 1,410,000 0.52 Exercisable warrants 1,405,000 0.52 1,410,000 0.52 |
Schedule of Outstanding Warrants | Outstanding warrants as of June 30, 2017 are as follows: Range of Exercise Prices Weighted Average residual life span (in years) Outstanding Warrants Weighted Average Exercise Price Exercisable Warrants Weighted Average Exercise Price 0.25 0.75 900,000 0.25 900,000 0.25 1.00 0.84 505,000 1.00 505,000 1.00 0.25 to 1.00 0.78 1,405,000 0.52 1,405,000 0.52 |
Schedule of Warrants Outstanding, Expiry Date and Exercise Prices | Warrants outstanding at June 30, 2017 and 2016 have the following expiry date and exercise prices: Expiry Date Exercise Prices June 30, 2017 June 30, 2016 July 10, 2016 1.00 - 5,000 March 22, 2018 1.00 300,000 300,000 April 1, 2018 0.25 900,000 900,000 April 30, 2018 1.00 5,000 5,000 July 10, 2018 1.00 200,000 200,000 1,405,000 1,410,000 |
Schedule of Stock Options Granted | Stock Options June 30, 2017 June 30, 2016 Number of stock options Weighted Average Exercise Price Number of stock options Weighted Average Exercise Price Balance, beginning of period 2,644,000 0.49 6,044,000 0.50 Stock options granted 2,981,000 0.09 - - Stock options expired - - - - Stock options cancelled, forfeited - - - - Stock options exercised - - - - Balance, end of period 5,625,000 0.28 6,044,000 0.50 Exercisable stock options 3,339,750 0.34 2,237,750 0.49 |
Schedule of Outstanding Stock Options | Outstanding stock options as of June 30, 2017 are as follows: Range of Exercise Prices Weighted Average residual life span (in years) Outstanding Stock Options Weighted Average Exercise Price Exercisable Stock Options Weighted Average Exercise Price 0.075 to 0.09 4.66 2,981,000 0.09 1,227,000 0.08 0.33 to 0.38 0.79 144,000 0.36 144,000 0.36 0.50 7.45 2,500,000 0.50 1,968,750 0.50 0.075 to 0.50 5.78 5,625,000 0.28 3,339,750 0.34 |
Schedule of Stock Options, Expiry Date and Exercise Prices | Stock options outstanding at June 30, 2017 and 2016 have the following expiry date and exercise prices: Expiry Date Exercise Prices June 30, 2017 June 30, 2016 February 26, 2018 0.37 72,000 72,000 April 27, 2018 0.38 36,000 36,000 July 9, 2018 0.33 36,000 36,000 February 17, 2022 0.075 760,333 - February 17, 2022 0.09 1,520,667 - March 30, 2022 0.09 700,000 - November 20, 2024 0.50 2,500,000 2,500,000 5,625,000 2,644,000 |
Summary of Stock Compensation Expense | For the period ending June 30, 2017 and 2016, the Company recorded stock compensation expense relating to the vesting of stock options as follows; For the six months ended June 30, 2017 2016 Board compensation expense $ 9,501 19,500 Stock compensation 56,400 7,800 Stock Option vesting 83,144 177,142 Total $ 149,045 204,442 |
Subsequent Events (Tables)
Subsequent Events (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Schedule of Stock Options | On August 2, 2017 the Board of Directors approved the grant of 3,500,000 stock options to the following individuals; Name Function Amount Shai S. Lustgarten President and CEO 1,500,000 Niv Nissenson Board Member 500,000 Yaron Shalem Board Member 500,000 Andrew MacMillan Board Member 500,000 Arthur Marcus Legal Consultant 500,000 3,500,000 |
Basis of Presentation and Sum34
Basis of Presentation and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | Sep. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 |
Number of shares redeemed | 5,200,000 | |||
Accrued dividend | $ 194,606 | $ 101,075 | ||
Debt transfer | $ 7,000,000 | |||
Contingent consideration percentage | 15.00% | |||
Consideration receivable | $ 2,300,000 | |||
Change of control period | 7 years | |||
Cash equivalents | ||||
Cash on deposit in federally insured bank | 684,610 | 250,000 | ||
Amortization expense | 850,857 | 1,701,700 | ||
Advertising expense | 92,629 | $ 42,046 | ||
Recognized an adjustment earn-out obligations | $ 0 | $ 0 | ||
Weighted average number of common shares outstanding | 35,472,251 | 36,323,489 | ||
Minimum [Member] | ||||
Property and equipment estimated useful lives | 3 years | |||
Intangible assets useful lives | 3 years | |||
Maximum [Member] | ||||
Property and equipment estimated useful lives | 15 years | |||
Intangible assets useful lives | 10 years | |||
Viascan Group Inc [Member] | ||||
Business acqusition liabilities assumed | $ 1,000,000 | |||
Preferred Class B Stock [Member] | ||||
Number of shares redeemed | 1 | |||
Preferred Class C Stock [Member] | ||||
Number of shares redeemed | 1,839,030 | |||
Accrued dividend | $ 31,742 | |||
Quest Solution Canada Inc [Member] | ||||
Shares sold consideration received | $ 1,000,000 |
Basis of Presentation and Sum35
Basis of Presentation and Summary of Significant Accounting Policies - Summary of Intangible Assets (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Accumulated amortization | $ (5,058,724) | $ (4,207,867) |
Intangibles, net | 18,635,440 | 19,486,297 |
Goodwill [Member] | ||
Intangibles gross | 10,114,164 | 10,114,164 |
Trade Names [Member] | ||
Intangibles gross | 4,390,000 | 4,390,000 |
Customer Relationships [Member] | ||
Intangibles gross | $ 9,190,000 | $ 9,190,000 |
Basis of Presentation and Sum36
Basis of Presentation and Summary of Significant Accounting Policies - Schedule of Amortization Expense (Details) - Trade Names and Customer Relationships [Member] | Jun. 30, 2017USD ($) |
2,017 | $ 850,857 |
2,018 | 1,679,599 |
2,019 | 1,471,714 |
2,020 | 1,471,714 |
2,021 | 1,405,791 |
Thereafter | 1,641,601 |
Total | $ 8,521,276 |
Basis of Presentation and Sum37
Basis of Presentation and Summary of Significant Accounting Policies - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Potential shares excluded from diluted net loss per share | 10,219,451 | 15,932,481 |
Options to Purchase Common Stock [Member] | ||
Potential shares excluded from diluted net loss per share | 5,625,000 | 6,044,000 |
Convertible Preferred Stock [Member] | ||
Potential shares excluded from diluted net loss per share | 3,143,530 | 10,082,560 |
Convertible Debentures [Member] | ||
Potential shares excluded from diluted net loss per share | 553,000 | 553,000 |
Warrants to Purchase Common Stock [Member] | ||
Potential shares excluded from diluted net loss per share | 1,405,000 | 1,410,000 |
Common Stock Subject to Repurchase [Member] | ||
Potential shares excluded from diluted net loss per share | (507,079) | (2,157,079) |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Working capital deficit | $ 14,940,888 | |
Accumulated deficit | $ 33,808,344 | $ 32,935,199 |
Concentrations (Details Narrati
Concentrations (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2017 | Dec. 31, 2016 | |
Cash on deposit in FDIC | $ 684,610 | $ 250,000 |
Revenue [Member] | One Customer [Member] | ||
Percentage of concentration risk | 16.30% | 23.10% |
Accounts Receivable [Member] | One Customer [Member] | ||
Percentage of concentration risk | 23.70% | 33.10% |
Accounts Payable [Member] | One Vendor [Member] | ||
Percentage of concentration risk | 80.50% | 76.40% |
Accounts Payable [Member] | One Vendor [Member] | Minimum [Member] | ||
Percentage of concentration risk | 10.00% | 10.00% |
Discontinued Operations - Div40
Discontinued Operations - Divesture of Quest Solution Canada, Inc. (Details Narrative) - USD ($) | Sep. 30, 2016 | Jun. 30, 2017 | Dec. 31, 2016 |
Number of shares redeemed | 5,200,000 | ||
Accrued dividend | $ 194,606 | $ 101,075 | |
Debt transfer | $ 7,000,000 | ||
Contingent consideration percentage | 15.00% | ||
Consideration receivable | $ 2,300,000 | ||
Change of control period | 7 years | ||
Viascan Group Inc [Member] | |||
Business acquisition liabilities assumed | $ 1,000,000 | ||
Preferred Class B Stock [Member] | |||
Number of shares redeemed | 1 | ||
Preferred Class C Stock [Member] | |||
Number of shares redeemed | 1,839,030 | ||
Accrued dividend | $ 31,742 | ||
Quest Solution Canada Inc [Member] | |||
Shares sold consideration received | $ 1,000,000 |
Discontinued Operations - Div41
Discontinued Operations - Divesture of Quest Solution Canada, Inc. - Schedule of Discontinued Operations (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | ||||
Revenues | $ 3,895,938 | $ 7,415,348 | ||
Cost of goods sold | (3,107,354) | (5,762,918) | ||
Gross profit | 788,584 | 1,652,430 | ||
General and administrative | (275,894) | (559,418) | ||
Salary and employee benefits | (675,594) | (1,385,859) | ||
Depreciation and amortization | (58,578) | (116,993) | ||
Professional fees | (18,189) | (36,751) | ||
Goodwill impairment | (2,300,000) | (2,300,000) | ||
Total operating expenses | (3,328,255) | (4,399,021) | ||
Operating loss | (2,539,671) | (2,746,591) | ||
Restructuring expenses | (108,637) | (108,637) | ||
Gain (loss) on foreign currency | (67,826) | 272,686 | ||
Interest expense | (188,919) | (356,402) | ||
Other (expenses) income | 19 | 103 | ||
Total other income (expenses) | (365,363) | (192,250) | ||
Net Loss Before Income Taxes | (2,905,034) | (2,938,841) | ||
Provision for Current Income Taxes | 6,141 | 6,141 | ||
Net Loss from discontinued operations | $ (2,898,893) | $ (2,932,700) |
Discontinued Operations - Div42
Discontinued Operations - Divesture of Quest Solution Canada, Inc. - Schedule of Discontinued Assets and Liabilities (Details) | Jun. 30, 2017USD ($) |
Discontinued Operations - Divesture Of Quest Solution Canada Inc. - Schedule Of Discontinued Assets And Liabilities Details | |
Cash | $ (56,118) |
Accounts receivable, net | 2,569,998 |
Inventory, net | 2,585,199 |
Prepaid expenses | 91,496 |
Other current assets | 14,216 |
Total current assets | 5,204,791 |
Fixed assets | 1,187,653 |
Goodwill | 8,837,860 |
Total assets | 15,230,304 |
Accounts payable and accrued liabilities | 4,861,433 |
Line of credit | 1,356,593 |
Accrued payroll and sales tax | 479,882 |
Deferred revenue, net | 120,625 |
Notes payable, related parties, current portion | 1,452,696 |
Other current liabilities | 49,537 |
Total current liabilities | 8,320,766 |
Other long term liabilities | 7,670 |
Total liabilities | 8,328,436 |
Net Assets held for disposal | $ 6,901,868 |
Discontinued Operations - Div43
Discontinued Operations - Divesture of Quest Solution Canada, Inc. - Schedule of Discontinued Cash Flows (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | ||
Net cash used by operating activities | $ (541,500) | |
Net cash provided in investing activities | 26,180 | |
Net cash used in financing activities | (1,552,850) | |
Net Cash Outflow from discontinued operations | $ (2,068,170) |
Accounts Receivable - Schedule
Accounts Receivable - Schedule of Accounts Receivable Net (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Receivables [Abstract] | ||
Trade Accounts Receivable | $ 6,698,375 | $ 10,607,378 |
Less Allowance for doubtful accounts | (12,501) | (17,701) |
Total Accounts Receivable (net) | $ 6,685,874 | $ 10,589,677 |
Inventory - Schedule of Invento
Inventory - Schedule of Inventory (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Equipment and clearing service | $ 391,761 | $ 375,863 |
Raw Materials | 28,857 | 119,922 |
Finished Goods | 91,977 | 35,808 |
Total inventories | $ 512,595 | $ 531,593 |
Fixed Assets (Details Narrative
Fixed Assets (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 33,055 | $ 90,626 |
Fixed Assets - Schedule of Fixe
Fixed Assets - Schedule of Fixed Assets (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Abstract] | ||
Equipment | $ 2,900,449 | $ 2,892,512 |
Furniture and Fixtures | 316,792 | 316,792 |
Leasehold improvements | 151,553 | 151,553 |
Accumulated depreciation | (3,257,077) | (3,224,022) |
Fixed Assets, net | $ 111,777 | $ 136,835 |
Other Liabilities (Details Narr
Other Liabilities (Details Narrative) | Jun. 30, 2017USD ($) |
Other Liabilities Disclosure [Abstract] | |
Premium financed notes | $ 2,158,475 |
Cash value | 1,945,726 |
Negative cash value | $ 212,749 |
Other Liabilities - Schedule of
Other Liabilities - Schedule of Other Liabilities (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Other Liabilities Disclosure [Abstract] | ||
Unearned Incentive from credit Cards | $ 123,105 | $ 123,105 |
Key Man life Insurance liability | 150,145 | 208,091 |
Dividend payable | 194,606 | 101,075 |
Others | 64,354 | 127,931 |
Other liabilities | 532,210 | 560,202 |
Less Current Portion | (164,354) | (227,932) |
Total long term other liabilities | $ 367,856 | $ 332,270 |
Deferred Revenue (Details Narra
Deferred Revenue (Details Narrative) | 6 Months Ended |
Jun. 30, 2017 | |
Amortization period of deferred revenue liability | 3 years |
Minimum [Member] | |
Amortization period of deferred revenue liability | 1 year |
Maximum [Member] | |
Amortization period of deferred revenue liability | 5 years |
Deferred Revenue - Schedule of
Deferred Revenue - Schedule of Deferred Revenue (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Deferred Revenue Disclosure [Abstract] | ||
Deferred Revenue | $ 8,215,110 | $ 8,721,725 |
Less Deferred Costs & Expenses | (6,916,906) | (7,277,275) |
Net Deferred Revenue | 1,298,204 | 1,444,449 |
Less Current Portion | (876,247) | (879,026) |
Total Long Term net Deferred Revenue | $ 421,957 | $ 565,423 |
Deferred Revenue - Schedule o52
Deferred Revenue - Schedule of Expected Future Amortization of Net Deferred Revenue (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Net deferred revenue | $ 421,957 | $ 565,423 |
2017 [Member] | ||
Net deferred revenue | 421,957 | |
2018 [Member] | ||
Net deferred revenue | 280,399 | |
2019 [Member] | ||
Net deferred revenue | 219,062 | |
2020 [Member] | ||
Net deferred revenue | 192,774 | |
2021 [Member] | ||
Net deferred revenue | $ 184,012 |
Credit Facilities and Line of53
Credit Facilities and Line of Credit (Details Narrative) - USD ($) | Jul. 02, 2016 | Jun. 30, 2017 | Dec. 31, 2016 |
Line of credit, balance | $ 3,142,490 | $ 5,059,292 | |
Factoring and Security Agreement [Member] | Prime Rate [Member] | |||
Percentage of average outstanding balance | 2.00% | ||
Factoring and Security Agreement [Member] | Action Capital Corporation [Member] | |||
Percentage of reserve account | 10.00% | ||
Percentage of average outstanding balance | 0.75% | ||
Factoring and Security Agreement [Member] | Action Capital Corporation [Member] | Maximum [Member] | |||
Debt instrument face amount | $ 5,000,000 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | Nov. 30, 2016 | Jul. 31, 2016 | Jul. 18, 2016 | Jan. 31, 2016 | Jun. 30, 2017 | Sep. 30, 2016 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | Dec. 15, 2016 | Nov. 21, 2014 |
Notes payable | $ 6,915,039 | $ 6,915,039 | $ 9,913,219 | |||||||||
Restructuring expenses | $ (26,880) | $ 84,317 | $ (460,624) | (26,880) | $ (460,624) | |||||||
Mr. Ross [Member] | ||||||||||||
Debt instruments periodic payment | $ 102,000 | $ 40,248 | ||||||||||
Restricted shares of common stock | 350,000 | |||||||||||
Stock Redemption Agreement [Member] | ||||||||||||
Debt instruments interest rate | 9.00% | |||||||||||
Stock Repurchased During Period, Shares | 507,079 | 507,079 | ||||||||||
Stock Repurchased During Period, Value | $ 230,490 | $ 220,490 | ||||||||||
Secured Promissory Note [Member] | ||||||||||||
Debt instruments periodic payment | $ 250,000 | |||||||||||
Debt instruments interest rate | 12.00% | |||||||||||
Debt instrument face amount | $ 12,492,137 | |||||||||||
Debt instrument due date | Dec. 31, 2016 | |||||||||||
Secured Promissory Note [Member] | Amendment Agreement [Member] | ||||||||||||
Debt instrument face amount | $ 300,000 | |||||||||||
Debt instrument due date | Mar. 31, 2017 | |||||||||||
Debt instrument, increase, accrued interest | $ 400,000 | |||||||||||
Secured Promissory Note [Member] | Second Amendment Agreement [Member] | March 31, 2017 [Member] | ||||||||||||
Notes payable | $ 6,524,007 | $ 6,524,007 | ||||||||||
Debt instrument due date | Sep. 30, 2017 | |||||||||||
Secured Promissory Note [Member] | Second Amendment Agreement [Member] | March 31, 2017 [Member] | Minimum [Member] | ||||||||||||
Debt instruments periodic payment | $ 400,000 | |||||||||||
Promissory Note [Member] | Mr. Ross [Member] | ||||||||||||
Promissory note issued | $ 59,500 | |||||||||||
BCS Acquisition [Member] | ||||||||||||
Debt instruments periodic payment | $ 4,758 | |||||||||||
Debt instruments interest rate | 1.89% | 1.89% | 1.89% | |||||||||
Promissory note issued | $ 0 | |||||||||||
Debt instrument due date | Oct. 31, 2018 | |||||||||||
BCS Acquisition [Member] | Debt [Member] | ||||||||||||
Notes payable | $ 130,294 | $ 130,294 | ||||||||||
First Insurance Funding [Member] | ||||||||||||
Debt instruments periodic payment | $ 3,940 | |||||||||||
Debt instruments interest rate | 3.25% | 3.25% | ||||||||||
First Insurance Funding [Member] | ||||||||||||
Notes payable | $ 0 | $ 0 | ||||||||||
Debt instrument face amount | $ 17,121 | $ 17,121 |
Notes Payable - Schedule of Not
Notes Payable - Schedule of Notes Payable (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Total notes payable | $ 6,915,039 | $ 9,913,219 |
Less: current portion | (6,784,745) | (9,782,925) |
Long Term Notes Payable | 130,294 | 130,294 |
Supplier Note Payable [Member] | ||
Total notes payable | 6,524,007 | 9,414,352 |
Insurance Note [Member] | ||
Total notes payable | 19,502 | |
All Other [Member] | ||
Total notes payable | $ 391,032 | $ 479,365 |
Notes Payable - Schedule of Fut
Notes Payable - Schedule of Future Maturities of Note Payable (Details) - Notes Payable [Member] | Jun. 30, 2016USD ($) |
2,017 | $ 6,784,745 |
2,018 | |
2,019 | |
2,020 | |
2,021 | |
Thereafter | 130,294 |
Total | $ 6,915,039 |
Subordinated Notes Payable (Det
Subordinated Notes Payable (Details Narrative) - USD ($) | Jun. 17, 2016 | Nov. 21, 2014 | Jan. 09, 2014 | Oct. 31, 2015 | Jun. 30, 2017 | Jun. 30, 2016 |
Interest expense | $ 160,790 | $ 159,095 | ||||
Series A Preferred Stock [Member] | ||||||
Debt instruments interest increase | 6.00% | |||||
Percentage of redemption and cancelation | 100.00% | |||||
Number of option issued | 3,400,000 | |||||
Promissory Note Conversion Agreement [Member] | Noteholders [Member] | ||||||
Forgiveness of debt | $ 75,000 | |||||
Promissory Note Conversion Agreement [Member] | Noteholders [Member] | Series C Preferred Stock [Member] | ||||||
Debt instrument conversion of shares amount | $ 1,800,000 | |||||
Debt instrument conversion of shares | 1,800,000 | |||||
Quest Marketing, Inc [Member] | Promissory Note Conversion Agreement [Member] | Noteholders [Member] | Series C Preferred Stock [Member] | ||||||
Debt instrument conversion of shares amount | $ 684,000 | |||||
Debt instrument conversion of shares | 684,000 | |||||
Debt discount | $ 171,000 | |||||
Quest Marketing, Inc [Member] | ||||||
Debt instruments interest rate | 1.89% | |||||
Debt instruments interest increase | 6.00% | |||||
Debt due date description | 2,018 | |||||
BCS Acquisition [Member] | ||||||
Debt instruments interest rate | 1.89% | 1.89% | ||||
Debt due date description | 2,018 | |||||
Debt convertible price per share | $ 2 | |||||
Percentage of outstanding shares | 5.00% |
Subordinated Notes Payable - Sc
Subordinated Notes Payable - Schedule of Subordinated Notes payable (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 | Mar. 31, 2016 |
Total notes payable | $ 17,515,345 | $ 17,515,345 | |
Note Payable Acquisition of Quest [Member] | |||
Total notes payable | 5,967,137 | $ 5,967,137 | |
Note Payable Acquisition of BCS [Member] | |||
Total notes payable | 10,348,808 | 10,348,808 | |
Quest Preferred Stock Note Payable [Member] | |||
Total notes payable | $ 1,199,400 | $ 1,199,400 |
Subordinated Notes Payable - 59
Subordinated Notes Payable - Schedule of Future Maturities of Subordinated Notes Payable (Details) - Subordinated Notes Payable [Member] | Jun. 30, 2017USD ($) |
2,017 | |
2,018 | |
2,019 | |
2,020 | |
2,021 | |
Thereafter | 17,515,345 |
Total | $ 17,515,345 |
Stockholders' Deficit (Details
Stockholders' Deficit (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | |
Apr. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | |
Common shares outstanding | 36,089,703 | 35,095,763 | |
Shares reserved for future issuance | 10,000,000 | ||
Stock option to purchase an aggregate of common stock, shares | 10,000,000 | ||
Share capital | 5,625,000 | ||
Stock option granted shares | $ 2,981,000 | ||
Employee Stock Purchase Program [Member] | |||
Stock issued during the period, shares | 196,440 | ||
Stock issued during the period | $ 14,390 | ||
Chief Executive Officer [Member] | |||
Stock issued during the period, shares | 640,000 | ||
Stock issued during the period | $ 48,000 | ||
Stock option granted shares | $ 2,281,000 | ||
Chief Financial Officer [Member] | |||
Stock issued during the period, shares | 70,000 | ||
Stock issued during the period | $ 8,400 | ||
Board of Directors [Member] | |||
Preferred stock voting rights | The board of directors had previously set the voting rights for the preferred stock at 1 share of preferred to 250 common shares. | ||
Stock issued during the period, shares | 87,500 | ||
Number of restricted shares granted | 100,000 | ||
Stock issued during the period | $ 9,501 | ||
Stock option granted shares | $ 700,000 | ||
Series A Preferred Stock [Member] | |||
Preferred stock shares designated | 1,000,000 | 1,000,000 | |
Preferred stock shares outstanding | 0 | 0 | |
Preferred stock shares issued | 1 | ||
Series B Preferred Stock [Member] | |||
Preferred stock shares designated | 1 | 1 | |
Preferred stock shares outstanding | 0 | 0 | |
Preferred stock shares issued | 1 | ||
Series C Preferred Stock [Member] | |||
Preferred stock shares designated | 15,000,000 | 15,000,000 | |
Preferred stock shares outstanding | 3,143,530 | 3,143,530 | |
Preferred stock shares issued | 1 | ||
Dividend rate per annum | $ 0.06 | $ 0.06 |
Stockholders' Deficit - Schedul
Stockholders' Deficit - Schedule of Stock Options Warrants (Details) - $ / shares | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Equity [Abstract] | ||
Number of warrants balance, beginning of period | 1,405,000 | 1,410,000 |
Number of warrants, granted | ||
Number of warrants, expired | ||
Number of warrants, cancelled, forfeited | ||
Number of warrants, exercised | ||
Number of warrants, balance end of period | 1,405,000 | 1,410,000 |
Number of warrants, exercisable | 1,405,000 | 1,410,000 |
Weighted Average Exercise Price balance, beginning of period | $ 0.52 | $ 0.52 |
Weighted Average Exercise Price, granted | ||
Weighted Average Exercise Price, expired | ||
Weighted Average Exercise Price, cancelled, forfeited | ||
Weighted Average Exercise Price, exercised | ||
Weighted Average Exercise Price balance, end of period | 0.52 | 0.52 |
Weighted Average Exercise Price, exercisable | $ 0.52 | $ 0.52 |
Stockholders' Deficit - Sched62
Stockholders' Deficit - Schedule of Outstanding Warrants (Details) - Warrant [Member] | 6 Months Ended |
Jun. 30, 2017$ / sharesshares | |
Range of Exercise Prices, Lower Range Limit | $ 0.25 |
Range of Exercise Prices, Upper Range Limit | $ 1 |
Weighted Average residual life span (in years) | 9 months 11 days |
Outstanding Warrants | shares | 1,405,000 |
Weighted Average Exercise Price | $ 0.52 |
Exercisable Warrants | shares | 1,405,000 |
Weighted Average Exercise Price | $ 0.52 |
Exercise Price Range 1 [Member] | |
Range of Exercise Prices, Upper Range Limit | $ 0.25 |
Weighted Average residual life span (in years) | 9 months |
Outstanding Warrants | shares | 900,000 |
Weighted Average Exercise Price | $ 0.25 |
Exercisable Warrants | shares | 900,000 |
Weighted Average Exercise Price | $ 0.25 |
Exercise Price Range 2 [Member] | |
Range of Exercise Prices, Upper Range Limit | $ 1 |
Weighted Average residual life span (in years) | 10 months 3 days |
Outstanding Warrants | shares | 505,000 |
Weighted Average Exercise Price | $ 1 |
Exercisable Warrants | shares | 505,000 |
Weighted Average Exercise Price | $ 1 |
Stockholders' Deficit - Sched63
Stockholders' Deficit - Schedule of Warrants Outstanding, Expiry Date and Exercise Prices (Details) - $ / shares | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Warrant outstanding | 1,405,000 | 1,410,000 |
July 10, 2016 [Member] | ||
Warrant expiry Date | Jul. 10, 2016 | Jul. 10, 2016 |
Warrant exercise Prices | $ 1 | $ 1 |
Warrant outstanding | 5,000 | |
March 22, 2018 [Member] | ||
Warrant expiry Date | Mar. 22, 2018 | Mar. 22, 2018 |
Warrant exercise Prices | $ 1 | $ 1 |
Warrant outstanding | 300,000 | 300,000 |
April 1, 2018 [Member] | ||
Warrant expiry Date | Apr. 1, 2018 | Apr. 1, 2018 |
Warrant exercise Prices | $ 0.25 | $ 0.25 |
Warrant outstanding | 900,000 | 900,000 |
April 30, 2018 [Member] | ||
Warrant expiry Date | Apr. 30, 2018 | Apr. 30, 2018 |
Warrant exercise Prices | $ 1 | $ 1 |
Warrant outstanding | 5,000 | 5,000 |
July 10, 2018 [Member] | ||
Warrant expiry Date | Jul. 10, 2018 | Jul. 10, 2018 |
Warrant exercise Prices | $ 1 | $ 1 |
Warrant outstanding | 200,000 | 200,000 |
Stockholders' Deficit - Sched64
Stockholders' Deficit - Schedule of Stock Options Granted (Details) - $ / shares | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Equity [Abstract] | ||
Number of stock options balance, beginning of period | 2,644,000 | 6,044,000 |
Number of stock options, granted | 2,981,000 | |
Number of stock options, expired | ||
Number of stock options, cancelled, forfeited | ||
Number of stock options, exercised | ||
Number of stock options balance, end of period | 5,625,000 | 6,044,000 |
Number of stock options, exercisable | 3,339,750 | 2,237,750 |
Weighted average exercise price balance, beginning of period | $ 0.49 | $ 0.50 |
Weighted average exercise price, stock options granted | 0.09 | |
Weighted average exercise price, stock options expired | ||
Weighted average exercise price, stock options cancelled, forfeited | ||
Weighted average exercise price, stock options exercised | ||
Weighted average exercise price balance, end of period | 0.28 | 0.50 |
Weighted average exercise price, exercisable | $ 0.34 | $ 0.49 |
Stockholders' Deficit - Sched65
Stockholders' Deficit - Schedule of Outstanding Stock Options (Details) - Stock Options [Member] | 6 Months Ended |
Jun. 30, 2017$ / sharesshares | |
Range of Exercise Prices, Lower Range Limit | $ 0.075 |
Range of Exercise Prices, Upper Range Limit | $ 0.50 |
Weighted Average residual life span (in years) | 5 years 9 months 11 days |
Outstanding Stock Options | shares | 5,625,000 |
Weighted Average Exercise Price | $ 0.28 |
Exercisable Stock Options | shares | 3,339,750 |
Weighted Average Exercise Price | $ 0.34 |
Exercise Price Range 1 [Member] | |
Range of Exercise Prices, Lower Range Limit | 0.075 |
Range of Exercise Prices, Upper Range Limit | $ 0.09 |
Weighted Average residual life span (in years) | 4 years 7 months 28 days |
Outstanding Stock Options | shares | 2,981,000 |
Weighted Average Exercise Price | $ 0.09 |
Exercisable Stock Options | shares | 1,227,000 |
Weighted Average Exercise Price | $ 0.08 |
Exercise Price Range 2 [Member] | |
Range of Exercise Prices, Lower Range Limit | 0.33 |
Range of Exercise Prices, Upper Range Limit | $ 0.38 |
Weighted Average residual life span (in years) | 9 months 14 days |
Outstanding Stock Options | shares | 144,000 |
Weighted Average Exercise Price | $ 0.36 |
Exercisable Stock Options | shares | 144,000 |
Weighted Average Exercise Price | $ 0.36 |
Exercise Price Range 3 [Member] | |
Range of Exercise Prices, Upper Range Limit | $ 0.50 |
Weighted Average residual life span (in years) | 7 years 5 months 12 days |
Outstanding Stock Options | shares | 2,500,000 |
Weighted Average Exercise Price | $ 0.50 |
Exercisable Stock Options | shares | 1,968,750 |
Weighted Average Exercise Price | $ 0.50 |
Stockholders' Deficit - Sched66
Stockholders' Deficit - Schedule of Stock Options, Expiry Date and Exercise Prices (Details) - $ / shares | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Stock option exercise prices | $ 0.28 | $ 0.50 | $ 0.49 | $ 0.50 |
Stock option outstanding | 5,625,000 | 6,044,000 | 2,644,000 | 6,044,000 |
Stock Options [Member] | ||||
Stock option outstanding | 5,625,000 | 2,644,000 | ||
February 26, 2018 [Member] | ||||
Stock option expiry date | Feb. 26, 2018 | Feb. 26, 2018 | ||
Stock option exercise prices | $ 0.37 | $ 0.37 | ||
Stock option outstanding | 72,000 | 72,000 | ||
April 27, 2018 [Member] | ||||
Stock option expiry date | Apr. 27, 2018 | Apr. 27, 2018 | ||
Stock option exercise prices | $ 0.38 | $ 0.38 | ||
Stock option outstanding | 36,000 | 36,000 | ||
July 9, 2018 [Member] | ||||
Stock option expiry date | Jul. 9, 2018 | Jul. 9, 2018 | ||
Stock option exercise prices | $ 0.33 | $ 0.33 | ||
Stock option outstanding | 36,000 | 36,000 | ||
February 17, 2022 [Member] | ||||
Stock option expiry date | Feb. 17, 2022 | Feb. 17, 2022 | ||
Stock option exercise prices | $ 0.075 | $ 0.075 | ||
Stock option outstanding | 760,333 | |||
February 17, 2022 [Member] | ||||
Stock option expiry date | Feb. 17, 2022 | Feb. 17, 2022 | ||
Stock option exercise prices | $ 0.09 | $ 0.09 | ||
Stock option outstanding | 1,520,667 | |||
March 30, 2022 [Member] | ||||
Stock option expiry date | Mar. 30, 2022 | Mar. 30, 2022 | ||
Stock option exercise prices | $ 0.09 | $ 0.09 | ||
Stock option outstanding | 700,000 | |||
November 20, 2024 [Member] | ||||
Stock option expiry date | Nov. 20, 2024 | Nov. 20, 2024 | ||
Stock option exercise prices | $ 0.50 | $ 0.50 | ||
Stock option outstanding | 2,500,000 | 2,500,000 |
Stockholders' Deficit - Summary
Stockholders' Deficit - Summary of Stock Compensation Expense (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Equity [Abstract] | ||
Board compensation expense | $ 9,501 | $ 19,500 |
Stock compensation | 56,400 | 7,800 |
Stock Option vesting | 83,144 | 177,142 |
Total | $ 149,045 | $ 204,442 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Bar Code Specialties Inc. [Member] | |
Rent expense | $ 9,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Aug. 02, 2017 | Jun. 30, 2017 | Jun. 30, 2016 |
Number of stock option shares granted | 2,981,000 | ||
Stock option exercise price per share | $ 0.09 | ||
Subsequent Event [Member] | |||
Number of stock option shares granted | 3,500,000 | ||
Subsequent Event [Member] | Consulting Agreement [Member] | Carlos J. Nissensohn [Member] | |||
Stock option term | 24 months | ||
Debt monthly payment | $ 15,000 | ||
One time signatory fee of restricted stock | 600,000 | ||
Number of warrant shares | 1,500,000 | ||
Warrant exercise price per share | $ 0.11 | ||
Warrant term | 4 years | ||
Equity component description | In case the Company procures debt financing during the term of this agreement, without any equity component, Mr. Nissensohn shall be entitled to 3% of the gross funds raised, however if the Company is required to pay a success fee to another external entity, the Mr. Nissensohn shall be entitled to only 2% of the gross funds raised | ||
Proceeds from equity financing | $ 3,000,000 | ||
Share capital percentage | 3.00% | ||
Warrant exercise price percentage | 100.00% | ||
Payment of financing | $ 50,000 | ||
Total transaction price percentage | 3.00% | ||
Subsequent Event [Member] | Board of Directors [Member] | |||
Number of stock option shares granted | 3,500,000 | ||
Stock option exercise price per share | $ 0.11 | ||
Stock option term | 4 years |
Subsequent Events - Schedule of
Subsequent Events - Schedule of Stock Options (Details) - shares | Aug. 02, 2017 | Jun. 30, 2017 | Jun. 30, 2016 |
Stock option granted shares | 2,981,000 | ||
Subsequent Event [Member] | |||
Stock option granted shares | 3,500,000 | ||
Subsequent Event [Member] | Shai S. Lustgarten [Member] | President and CEO [Member] | |||
Stock option granted shares | 1,500,000 | ||
Subsequent Event [Member] | Niv Nissenson [Member] | Board Member [Member] | |||
Stock option granted shares | 500,000 | ||
Subsequent Event [Member] | Yaron Shalem [Member] | Board Member [Member] | |||
Stock option granted shares | 500,000 | ||
Subsequent Event [Member] | Andrew MacMillan [Member] | Board Member [Member] | |||
Stock option granted shares | 500,000 | ||
Subsequent Event [Member] | Arthur Marcus [Member] | Legal Consultant [Member] | |||
Stock option granted shares | 500,000 |