Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Jun. 30, 2014 | Aug. 14, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'Halo Companies, Inc. | ' |
Entity Central Index Key | '0000814286 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Jun-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 66,364,083 |
Document Fiscal Period Focus | 'Q2 | ' |
Document Fiscal Year Focus | '2014 | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
CURRENT ASSETS | ' | ' |
Cash and cash equivalents | $131,556 | $127,048 |
Trade accounts receivable, net of allowance for doubtful accounts of $375,665 and $375,665, respectively | 279,994 | 157,765 |
Total current assets | 411,550 | 284,813 |
PROPERTY, EQUIPMENT AND SOFTWARE, net | 79,689 | 108,348 |
DEPOSITS AND OTHER ASSETS | 30,000 | 39,589 |
TOTAL ASSETS | 521,239 | 432,750 |
CURRENT LIABILITIES | ' | ' |
Accounts payable | 609,700 | 616,878 |
Accrued and other liabilities (including $92,541 and $58,149 to related parties, respectively) | 618,222 | 345,524 |
Deferred revenue | 875 | ' |
Current portion of subordinated debt | 5,000 | 5,417 |
Current portion of notes payable to related parties | 794,717 | 388,232 |
Current portion of deferred rent | 42,337 | 169,349 |
Total current liabilities | 2,070,851 | 1,525,400 |
SUBORDINATED DEBT, LESS CURRENT PORTION | 13,333 | 15,833 |
NOTES PAYABLE TO RELATED PARTIES, LESS CURRENT PORTION | 188,518 | 194,327 |
NOTES PAYABLE | 1,672,600 | 1,551,828 |
ACCRUED INTEREST ON RELATED PARTY NOTES, LESS CURRENT PORTION | 19,275 | 23,011 |
DERIVATIVE LIABILITY | 2,239 | 15,772 |
Total liabilities | 3,966,816 | 3,326,171 |
SHAREHOLDERS' DEFICIT | ' | ' |
Common Stock, par value $0.001 per share; 375,000,000 shares authorized; 66,364,083 shares issued and outstanding at June 30, 2014 and December 31, 2013 | 66,364 | 66,364 |
Additional paid-in capital | 7,638,764 | 7,638,764 |
Accumulated deficit | -11,152,939 | -10,600,783 |
Total shareholders' deficit | -3,445,577 | -2,893,421 |
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT | 521,239 | 432,750 |
Halo Companies, Inc. Series Z Convertible Preferred Stock | ' | ' |
SHAREHOLDERS' DEFICIT | ' | ' |
Preferred Stock | 0 | 0 |
Halo Companies, Inc. Preferred Stock | ' | ' |
SHAREHOLDERS' DEFICIT | ' | ' |
Preferred Stock | 0 | 0 |
Halo Companies, Inc. Series X Convertible Preferred Stock | ' | ' |
SHAREHOLDERS' DEFICIT | ' | ' |
Preferred Stock | 1,437 | 1,437 |
Halo Companies, Inc. Series E Convertible Preferred Stock | ' | ' |
SHAREHOLDERS' DEFICIT | ' | ' |
Preferred Stock | 70 | 70 |
Halo Group, Inc. Series A Convertible Preferred Stock | ' | ' |
SHAREHOLDERS' DEFICIT | ' | ' |
Preferred Stock | 373 | 373 |
Halo Group, Inc. Series B Convertible Preferred Stock | ' | ' |
SHAREHOLDERS' DEFICIT | ' | ' |
Preferred Stock | 230 | 230 |
Halo Group, Inc. Series C Convertible Preferred Stock | ' | ' |
SHAREHOLDERS' DEFICIT | ' | ' |
Preferred Stock | $124 | $124 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Allowance for doubtful accounts | $375,665 | $375,665 |
Accrued and other liabilities to related parties | 92,541 | 58,149 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 375,000,000 | 375,000,000 |
Common stock, shares issued | 66,364,083 | 66,364,083 |
Common stock, shares outstanding | 66,364,083 | 66,364,083 |
Halo Companies, Inc. Series Z Convertible Preferred Stock | ' | ' |
Preferred stock, par value | $0.01 | $0.01 |
Preferred stock, shares authorized | 82,508 | 82,508 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Halo Companies, Inc. Preferred Stock | ' | ' |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 917,492 | 917,492 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Halo Companies, Inc. Series X Convertible Preferred Stock | ' | ' |
Preferred stock, par value | $0.01 | $0.01 |
Preferred stock, shares authorized | 143,677 | 143,677 |
Preferred stock, shares issued | 143,677 | 143,677 |
Preferred stock, shares outstanding | 143,677 | 143,677 |
Preferred stock, liquidation preference | 1,436,770 | ' |
Halo Companies, Inc. Series E Convertible Preferred Stock | ' | ' |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 100,000 | 100,000 |
Preferred stock, shares issued | 70,000 | 70,000 |
Preferred stock, shares outstanding | 70,000 | 70,000 |
Preferred stock, liquidation preference | 700,000 | ' |
Halo Group, Inc. Series A Convertible Preferred Stock | ' | ' |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 500,000 | 500,000 |
Preferred stock, shares issued | 372,999 | 372,999 |
Preferred stock, shares outstanding | 372,999 | 372,999 |
Preferred stock, liquidation preference | 682,177 | ' |
Halo Group, Inc. Series B Convertible Preferred Stock | ' | ' |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 500,000 | 500,000 |
Preferred stock, shares issued | 229,956 | 229,956 |
Preferred stock, shares outstanding | 229,956 | 229,956 |
Preferred stock, liquidation preference | 560,804 | ' |
Halo Group, Inc. Series C Convertible Preferred Stock | ' | ' |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 500,000 | 500,000 |
Preferred stock, shares issued | 124,000 | 124,000 |
Preferred stock, shares outstanding | 124,000 | 124,000 |
Preferred stock, liquidation preference | $378,086 | ' |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
REVENUE | ' | ' | ' | ' |
REVENUE (including $114,680, $126,706, $218,255 and $230,984 from related parties, respectively) | $827,905 | $2,983,081 | $1,420,193 | $3,868,298 |
OPERATING EXPENSES | ' | ' | ' | ' |
Sales and marketing expenses | 206,781 | 581,828 | 466,205 | 1,021,463 |
General and administrative expenses | 194,173 | 263,197 | 375,664 | 559,978 |
Salaries, wages, and benefits | 428,093 | 576,884 | 925,422 | 1,157,315 |
Total operating expenses | 829,047 | 1,421,909 | 1,767,291 | 2,738,756 |
OPERATING INCOME (LOSS) | -1,142 | 1,561,172 | -347,098 | 1,129,542 |
OTHER INCOME (EXPENSE) | ' | ' | ' | ' |
Gain (loss) on change in fair value of derivative | 10,518 | -5,927 | 13,533 | 9,984 |
Wind down of noncontrolling interest subsidiary | ' | -82,460 | ' | -82,460 |
Interest expense (including $27,260, $8,077, $49,010 and $16,170 to related parties, respectively) | -103,671 | -52,201 | -196,466 | -156,359 |
Net income (loss) from operations, before income tax provision | -94,295 | 1,420,584 | -530,031 | 900,707 |
INCOME TAX PROVISION | 22,125 | 23,623 | 22,125 | 23,623 |
NET INCOME (LOSS) | ($116,420) | $1,396,961 | ($552,156) | $877,084 |
Loss per share: | ' | ' | ' | ' |
Basic | $0 | $0.02 | ($0.01) | $0.01 |
Diluted | $0 | $0.02 | ($0.01) | $0.01 |
Weighted Average Shares Outstanding | ' | ' | ' | ' |
Basic | 66,364,083 | 66,364,083 | 66,364,083 | 66,364,083 |
Diluted | 66,364,083 | 71,924,260 | 66,364,083 | 71,924,260 |
Consolidated_Statements_of_Ope1
Consolidated Statements of Operations (Parenthetical) (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
REVENUE | ' | ' | ' | ' |
Revenue from related parties | $114,680 | $126,706 | $218,255 | $230,984 |
OTHER INCOME (EXPENSE) | ' | ' | ' | ' |
Interest expense to related parties | $27,260 | $8,077 | $49,010 | $16,170 |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Shareholders' Deficit (USD $) | Halo Companies, Inc. Common Stock | Halo Companies, Inc. Series X Convertible Preferred Stock | Halo Companies, Inc. Series E Convertible Preferred Stock | Halo Group, Inc. Series A Convertible Preferred Stock | Halo Group, Inc. Series B Convertible Preferred Stock | Halo Group, Inc. Series C Convertible Preferred Stock | Additional Paid-in Capital | Accumulated Deficit | Noncontrolling Interest | Total |
Balance at Dec. 31, 2012 | $66,364 | $1,437 | $70 | $373 | $230 | $124 | $7,638,764 | ($10,678,986) | ($82,460) | ($3,054,084) |
Balance (in shares) at Dec. 31, 2012 | 66,364,083 | 143,677 | 70,000 | 372,999 | 229,956 | 124,000 | ' | ' | ' | ' |
Net income (loss) | ' | ' | ' | ' | ' | ' | ' | 877,084 | ' | 877,084 |
Wind down of noncontrolling interest subsidiary | ' | ' | ' | ' | ' | ' | ' | ' | 82,460 | 82,460 |
Balance at Jun. 30, 2013 | 66,364 | 1,437 | 70 | 373 | 230 | 124 | 7,638,764 | -9,801,902 | ' | -2,094,540 |
Balance (in shares) at Jun. 30, 2013 | 66,364,083 | 143,677 | 70,000 | 372,999 | 229,956 | 124,000 | ' | ' | ' | ' |
Balance at Dec. 31, 2013 | 66,364 | 1,437 | 70 | 373 | 230 | 124 | 7,638,764 | -10,600,783 | ' | -2,893,421 |
Balance (in shares) at Dec. 31, 2013 | 66,364,083 | 143,677 | 70,000 | 372,999 | 229,956 | 124,000 | ' | ' | ' | ' |
Net income (loss) | ' | ' | ' | ' | ' | ' | ' | -552,156 | ' | -552,156 |
Balance at Jun. 30, 2014 | $66,364 | $1,437 | $70 | $373 | $230 | $124 | $7,638,764 | ($11,152,939) | ' | ($3,445,577) |
Balance (in shares) at Jun. 30, 2014 | 66,364,083 | 143,677 | 70,000 | 372,999 | 229,956 | 124,000 | ' | ' | ' | ' |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 6 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
CASH FLOWS FROM OPERATIONS | ' | ' |
Net income (loss) | ($552,156) | $877,084 |
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | ' | ' |
Depreciation | 28,659 | 29,386 |
Amortization of debt discount | ' | 1,454 |
Amortization of loan origination costs | 6,667 | ' |
Capitalization of interest into note payable | 120,772 | ' |
Bad debt expense | 92 | 931 |
Gain on change in fair value of derivative | -13,533 | -9,984 |
Noncontrolling interest | ' | 82,460 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | -122,321 | -196,555 |
Deposits and other assets | 2,922 | ' |
Accounts payable | -7,178 | 276,166 |
Accrued and other liabilities | 270,755 | 113,518 |
Deferred rent | -127,012 | -93,114 |
Deferred revenue | 875 | 20,200 |
Net cash (used in) provided by operating activities | -391,458 | 1,101,546 |
CASH FLOWS FROM INVESTING ACTIVITIES | ' | ' |
Proceeds received from note receivable | ' | 100,000 |
Purchases of property and equipment | ' | -62,067 |
Net cash provided by investing activities | ' | 37,933 |
CASH FLOWS FROM FINANCING ACTIVITIES | ' | ' |
Principal payments on secured asset promissory note | ' | -1,200,000 |
Principal payments on notes payable | ' | -8,509 |
Proceeds from notes payable to related parties | 405,000 | 157,011 |
Principal payments on notes payable to related parties | -6,117 | -115,551 |
Principal payments on subordinated debt | -2,917 | -73,583 |
Net cash provided by (used in) financing activities | 395,966 | -1,240,632 |
Net increase (decrease) in cash and cash equivalents | 4,508 | -101,153 |
CASH AND CASH EQUIVALENTS, beginning of period | 127,048 | 184,121 |
CASH AND CASH EQUIVALENTS, end of period | 131,556 | 82,968 |
SUPPLEMENTAL INFORMATION | ' | ' |
Cash paid for taxes - Texas Margin Tax | ' | 22,000 |
Cash paid for interest | $42,308 | $193,969 |
Organization_and_Recent_Develo
Organization and Recent Developments | 6 Months Ended |
Jun. 30, 2014 | |
Organization And Recent Developments | ' |
Organization and Recent Developments | ' |
NOTE 1. ORGANIZATION AND RECENT DEVELOPMENTS | |
Halo Companies, Inc. (“Halo”, “HCI” or the “Company”) was incorporated under the laws of the State of Delaware on December 9, 1986. Its principal executive offices are located at 7668 Warren Parkway, Suite 350, Frisco, Texas 75034 and its telephone number is 214-644-0065. | |
Unless otherwise provided in footnotes, all references from this point forward in this Report to “we,” “us,” “our company,” “our,” or the “Company” refer to the combined Halo Companies, Inc. entity, together with its subsidiaries. | |
Halo has multiple wholly-owned subsidiaries including Halo Group Inc. (“HGI”), Halo Asset Management, LLC (“HAM”), Halo Portfolio Advisors, LLC (“HPA”), and Halo Benefits, Inc. (“HBI”). HGI is the management and shared services operating company. HAM provides asset management and mortgage servicing services to investors and asset owners including all aspects of buying and managing distressed real estate owned (“REO”) and non-performing loans. HPA exists to market the Company’s operations as a turnkey solution for strategic business to business opportunities with HAM’s investors and asset owners, major debt servicers and field service providers, lenders, and mortgage backed securities holders. HBI was originally established as an association benefit services to customers throughout the United States and although a non-operating entity, remains a subsidiary due to its historical net operating loss carryforward. | |
In August 2013, the Company and its office lessor agreed to a final settlement whereby it would vacate its previously leased office facilities in Allen, Texas. In doing so, the final settlement obligation of $254,023 is to be paid over twelve equal installments beginning in September 2013 through August 2014. This balance is included in the current portion of deferred rent. The final settlement released previously recognized rent expense which was included in accounts payable and deferred rent. The release of these obligations was credited to rent expense which is included in general and administrative expense on the consolidated statements of operations. Additionally, the final settlement included requirements that (1) the office lessor retain the Company’s $45,000 deposit and (2) the Company sell certain furniture and equipment in the office. Both the cost of the furniture and equipment and the related accumulated depreciation have been removed from the respective accounts, with the resulting August 2013 income statement impact being expensed in general and administrative expenses on the consolidated statements of operations. | |
In October 2013, the Company entered into a senior unsecured convertible promissory note agreement of $1,500,000. The terms of the note include an interest rate of 15% with a maturity date of October 10, 2016. See further discussion in Note 10 of the consolidated financial statements. | |
Significant_Accounting_Policie
Significant Accounting Policies | 6 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
Significant Accounting Policies | ' | ||||||||||||||||
Significant Accounting Policies | ' | ||||||||||||||||
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||
The interim consolidated financial statements are unaudited; however, in the opinion of management, all adjustments considered necessary for fair presentation of the results of the interim periods have been included (consisting of normal recurring accruals). The accompanying consolidated financial statements as of June 30, 2014, and for the three and six months ended June 30, 2014 and 2013, include the accounts of the Company and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim information. Accordingly, the financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K. The results of operations for the three and six months ended June 30, 2014, are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. | |||||||||||||||||
Revenue Recognition, Accounts Receivable and Deferred Revenue | |||||||||||||||||
The Company recognizes revenue in the period in which services are earned and realizable. To further understand the Company’s business, HAM earns fees from its clients for its boarding and initial asset management fee, success fees, and its monthly servicing fee. The boarding and initial asset management services are performed in the first 30-60 days of assets being boarded and include; IRR analysis of loans boarded, detailed asset level workout exit strategy analysis, boarding the assets onto HAM’s proprietary software platform and the integrated servicing platform, identification and oversight of custodial files, oversight of mortgage/deed assignment from previous servicer, oversight of title policy administration work, and delinquent property tax research and exposure review. HAM’s monthly success fees are earned for completing its default and asset disposition services including note sales, originating owner finance agreements, and cash sales of REO properties owned by the client. HAM’s servicing fees are earned monthly and are calculated on a monthly unit price for assets under management. | |||||||||||||||||
HAM and HPA receivables are typically paid the month following services performed. As of June 30, 2014, the Company’s accounts receivable are made up of the following percentages; HAM at 91% and HPA at 9%. | |||||||||||||||||
The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Management considers the following factors when determining the collectability of specific customer accounts: past transaction history with the customer, current economic and industry trends, and changes in customer payment terms. The Company provides for estimated uncollectible amounts through an increase to the allowance for doubtful accounts and a charge to earnings based on actual historical trends and individual account analysis. Balances that remain outstanding after the Company has used reasonable collection efforts are written-off through a charge to the allowance for doubtful accounts. The below table summarizes the Company’s allowance for doubtful accounts as of June 30, 2014 and December 31, 2013, respectively; | |||||||||||||||||
Balance at Beginning of Period | Increase in the Provision | Accounts Receivable Write-offs | Balance at End of Period | ||||||||||||||
Six Months ended June 30, 2014 | |||||||||||||||||
Allowance for doubtful accounts | $ | 375,665 | $ | 92 | $ | 92 | $ | 375,665 | |||||||||
Year ended December 31, 2013 | |||||||||||||||||
Allowance for doubtful accounts | $ | 375,665 | $ | 1,197 | $ | 1,197 | $ | 375,665 | |||||||||
As of June 30, 2014, the Company’s allowance for doubtful accounts is made up of the following percentages; HAM at 96% and HPA at 4%. The HAM and HPA allowance is related to one client. The client is in a court appointed receivership and the Company is awaiting final outcome of its receivable claim into the receivership to determine any potential recoverability. As of June 30, 2014, the Company has fully reserved all outstanding accounts receivables of this client. | |||||||||||||||||
Net Income (Loss) Per Common Share | |||||||||||||||||
Basic net income (loss) per share is computed by dividing (i) net income (loss) available to common shareholders (numerator), by (ii) the weighted average number of common shares outstanding during the period (denominator). Diluted net income (loss) per share is computed using the weighted average number of common shares and dilutive potential common shares outstanding during the period. At June 30, 2014 and 2013, there were 4,596,126 and 5,556,577 shares, respectively, underlying potentially dilutive convertible preferred stock and stock options outstanding. For the three and six months ended June 30, 2014, the 4,596,126 shares were not included in dilutive weighted average shares because their effect is anti-dilutive due to the Company’s net loss. | |||||||||||||||||
Use of Estimates and Assumptions | |||||||||||||||||
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include the Company’s revenue recognition method and derivative liabilities. | |||||||||||||||||
Principles of Consolidation | |||||||||||||||||
The consolidated financial statements of the Company for the three and six months ended June 30, 2014 include the financial results of HCI, HGI, HBI, HPA and HAM. All significant intercompany transactions and balances have been eliminated in consolidation. | |||||||||||||||||
The consolidated financial statements of the Company for the three and six months ended June 30, 2013 include the financial results of HCI, HGI, HGM, HBI, HSIS, HCIS, HPA, HAM, and EHF. All significant intercompany transactions and balances have been eliminated in consolidation. | |||||||||||||||||
Cash and Cash Equivalents | |||||||||||||||||
The Company considers all liquid investments with a maturity of 90 days or less to be cash equivalents. | |||||||||||||||||
Deposits and Other Assets | |||||||||||||||||
At June 30, 2014, deposits and other assets was $30,000 ($40,000 in total origination fees offset by $10,000 in accumulated amortization) for the senior unsecured promissory note discussed in Note 10. The fees are to be amortized over the life of the promissory note. At December 31, 2013, deposits and other assets was $39,589, which included $36,667 in deferred origination costs ($40,000 in total origination fees offset by $3,333 in accumulated amortization) for the senior unsecured promissory note, with the remaining $2,922 as a prepaid vendor expense. | |||||||||||||||||
Property, Equipment and Software | |||||||||||||||||
Property, equipment, and software are stated at cost. Depreciation is provided in amounts sufficient to relate the cost of the depreciable assets to operations over their estimated service lives, ranging from three to seven years. Provisions for depreciation are made using the straight-line method. | |||||||||||||||||
Major additions and improvements are capitalized, while expenditures for maintenance and repairs are charged to expense as incurred. Upon sale or retirement, the cost of the property and equipment and the related accumulated depreciation are removed from the respective accounts, and any resulting gains or losses are credited or charged to other general and administrative expenses. | |||||||||||||||||
Fair Value of Financial Instruments | |||||||||||||||||
The carrying value of trade accounts receivable, accounts payable, and accrued and other liabilities approximate fair value due to the short maturity of these items. The estimated fair value of the notes payable and subordinated debt approximates the carrying amounts as they bear market interest rates. | |||||||||||||||||
The Company considers the warrants related to its subordinated debt to be derivatives, and the Company records the fair value of the derivative liabilities in the consolidated balance sheets. Changes in fair value of the derivative liabilities are included in gain (loss) on change in fair value of derivative in the consolidated statements of operations. The Company’s derivative liability has been classified as a Level III valuation according to Accounting Standards Codification (“ASC”) 820. | |||||||||||||||||
Internally Developed Software | |||||||||||||||||
Internally developed legacy application software consisting of database, customer relations management, process management and internal reporting modules are used in each of the Company’s subsidiaries. The Company accounts for computer software used in the business in accordance with ASC 350 “Intangibles-Goodwill and Other”. ASC 350 requires computer software costs associated with internal use software to be charged to operations as incurred until certain capitalization criteria are met. Costs incurred during the preliminary project stage and the post-implementation stages are expensed as incurred. Certain qualifying costs incurred during the application development stage are capitalized as property, equipment and software. These costs generally consist of internal labor during configuration, coding, and testing activities. Capitalization begins when (i) the preliminary project stage is complete, (ii) management with the relevant authority authorizes and commits to the funding of the software project, and (iii) it is probable both that the project will be completed and that the software will be used to perform the function intended. Management has determined that a significant portion of costs incurred for internally developed software came from the preliminary project and post-implementation stages; as such, no costs for internally developed software were capitalized. | |||||||||||||||||
Long-Lived Assets | |||||||||||||||||
Long-lived assets are reviewed on an annual basis or whenever events or changes in circumstance indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets held and used is generally measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by that asset. If it is determined that the carrying amount of an asset may not be recoverable, an impairment loss is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. Fair value is the estimated value at which the asset could be bought or sold in a transaction between willing parties. There were no impairment charges for the three and six months ended June 30, 2014 and 2013. | |||||||||||||||||
Equity-Based Compensation | |||||||||||||||||
The Company accounts for equity instruments issued to employees in accordance with ASC 718 “Compensation-Stock Compensation”. Under ASC 718, the fair value of stock options at the date of grant is recognized in earnings over the vesting period of the options beginning when the specified events become probable of occurrence. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date of the fair value of the equity instrument issued is the earlier of (i) the date on which the counterparty’s performance is complete, or (ii) the date on which it is probable that performance will occur. | |||||||||||||||||
Income Taxes | |||||||||||||||||
The Company accounts for income taxes in accordance with ASC 740 “Income Taxes”. ASC 740 requires the use of the asset and liability method whereby deferred tax assets and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. These differences result in deferred tax assets and liabilities, which are included in the Company’s consolidated balance sheets. | |||||||||||||||||
The Company then assesses the likelihood of realizing benefits related to such assets by considering factors such as historical taxable income and the Company’s ability to generate sufficient taxable income of the appropriate character within the relevant jurisdictions in future years. Based on the aforementioned factors, if the realization of these assets is not likely a valuation allowance is established against the deferred tax assets. | |||||||||||||||||
The Company accounts for its position in tax uncertainties under ASC 740-10. ASC 740-10 establishes standards for accounting for uncertainty in income taxes. ASC 740-10 provides several clarifications related to uncertain tax positions. Most notably, a “more likely-than-not” standard for initial recognition of tax positions, a presumption of audit detection and a measurement of recognized tax benefits based on the largest amount that has a greater than 50 percent likelihood of realization. ASC 740-10 applies a two-step process to determine the amount of tax benefit to be recognized in the financial statements. First, the Company must determine whether any amount of the tax benefit may be recognized. Second, the Company determines how much of the tax benefit should be recognized (this would only apply to tax positions that qualify for recognition.) No additional liabilities have been recognized as a result of the implementation. The Company has not taken a tax position that, if challenged, would have a material effect on the financial statements or the effective tax rate during the three and six months ended June 30, 2014 or 2013. | |||||||||||||||||
The Company incurred no penalties or interest for taxes for the three and six months ended June 30, 2014 or 2013. The Company is subject to a three year statute of limitations by major tax jurisdictions for the fiscal years ended December 31, 2010, 2011 and 2012. The Company files income tax returns in the U.S. federal jurisdiction. | |||||||||||||||||
Deferred Rent | |||||||||||||||||
As discussed in Note 1, in August 2013, the Company and its office lessor agreed to a final settlement whereby it would vacate its previously leased office facilities. In doing so, the final settlement obligation of $254,023 is to be paid over twelve equal installments beginning in September 2013 through August 2014. At June 30, 2014 and December 31, 2013, the $42,337 and $169,349 balance, respectively, is included in current portion of deferred rent. | |||||||||||||||||
Recent Accounting Standards | |||||||||||||||||
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. | |||||||||||||||||
The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard in 2017. | |||||||||||||||||
Concentrations_of_Credit_Risk
Concentrations of Credit Risk | 6 Months Ended |
Jun. 30, 2014 | |
Concentrations Of Credit Risk | ' |
Concentrations of Credit Risk | ' |
NOTE 3. CONCENTRATIONS OF CREDIT RISK | |
The Company maintains aggregate cash balances, at times, with financial institutions, which are in excess of amounts insured by the Federal Deposit Insurance Corporation (“FDIC”). During the three and six months ended June 30, 2014, the FDIC insured deposit accounts up to $250,000. At June 30, 2014, the Company’s cash accounts were all less than the $250,000 FDIC insured amount and as such were insured in full. | |
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of accounts receivable. | |
In the normal course of business, the Company extends unsecured credit to its customers. Because of the credit risk involved, management has provided an allowance for doubtful accounts which reflects its estimate of amounts which will eventually become uncollectible. In the event of complete non-performance by the Company’s customers, the maximum exposure to the Company is the outstanding accounts receivable balance at the date of non-performance. | |
Operating_Segments
Operating Segments | 6 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
Operating Segments | ' | ||||||||||||||||
Operating Segments | ' | ||||||||||||||||
NOTE 4. OPERATING SEGMENTS | |||||||||||||||||
The Company has several operating segments as listed below and as defined in Note 1. The results for these operating segments are based on our internal management structure and review process. We define our operating segments by service industry. If the management structure and/or allocation process changes, allocations may change. See the following summary of operating segment reporting; | |||||||||||||||||
Operating Segments | For the Three Months Ended | For the Six Months Ended | |||||||||||||||
June 30, | June 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Revenue: | |||||||||||||||||
Halo Asset Management | $ | 579,902 | $ | 2,284,338 | $ | 882,419 | $ | 2,608,954 | |||||||||
Halo Portfolio Advisors | 248,003 | 698,743 | 537,774 | 1,230,813 | |||||||||||||
Other | — | — | — | 28,531 | |||||||||||||
Net revenue | $ | 827,905 | $ | 2,983,081 | $ | 1,420,193 | $ | 3,868,298 | |||||||||
Operating income (loss): | |||||||||||||||||
Halo Asset Management | $ | 392,799 | $ | 1,956,415 | $ | 432,412 | $ | 1,930,853 | |||||||||
Halo Portfolio Advisors | 39,668 | 109,477 | 85,651 | 208,659 | |||||||||||||
Other | — | (109,082 | ) | — | (200,085 | ) | |||||||||||
Less: Corporate expenses (a) | (548,887 | ) | (559,849 | ) | (1,070,219 | ) | (1,062,343 | ) | |||||||||
Operating income (loss): | $ | (116,420 | ) | $ | 1,396,961 | $ | (552,156 | ) | $ | 877,084 | |||||||
a. | Corporate expenses include salaries, benefits and other expenses, including rent and general & administrative expenses, related to corporate office overhead and functions that benefit all operating segments. Corporate expenses also include interest expense. Corporate expenses are expenses that the Company does not directly allocate to any segment above. Allocating these indirect expenses to operating segments would require an imprecise allocation methodology. Further, there are no material amounts that are the elimination or reversal of transactions between the above reportable operating segments. | ||||||||||||||||
The assets of the Company consist primarily of cash, trade accounts receivable, and property, equipment and software. Cash is managed at the corporate level of the Company and not at the segment level. Each of the remaining primary assets has been discussed in detail, including the applicable operating segment for which the assets and liabilities reside, in the consolidated notes to the financial statements. As such, the duplication is not warranted in this footnote. | |||||||||||||||||
All debt of the Company is recorded at the corporate parent companies HCI and HGI. In 2014, all interest expense is included in corporate expenses above. In 2013, interest expense of $118,231 (majority of 2013 balance in “Other”) related to the secured asset promissory note is included above in “Other”, with the remaining $38,128 of the $156,359 interest expense in the consolidated statements of operations included in corporate expenses above. Interest expense is discussed in further detail in Notes 9, 10, and 12. | |||||||||||||||||
For the three and six months ended June 30, 2014 and 2013, there have been no material transactions between reportable units that would materially affect an operating segment profit or loss. Intercompany transactions are eliminated in the consolidated financial statements. | |||||||||||||||||
Going_Concern
Going Concern | 6 Months Ended |
Jun. 30, 2014 | |
Going Concern | ' |
Going Concern | ' |
NOTE 5. GOING CONCERN | |
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the Company will need to manage additional asset units under contract and/or additional financing to fully implement its business plan, including continued growth and establishment of a stronger brand name of HAM’s asset management in the distressed asset sector. | |
The Company is actively seeking growth of its asset units under management, both organically and via new client relationships. Management, in the ordinary course of business, is trying to raise additional capital through sales of common stock as well as seeking financing via equity or debt, or both from third parties. There are no assurances that additional financing will be available on favorable terms, or at all. If additional financing is not available, the Company will need to reduce, defer or cancel development programs, planned initiatives and overhead expenditures. The failure to adequately fund its capital requirements could have a material adverse effect on the Company’s business, financial condition and results of operations. Moreover, the sale of additional equity securities to raise financing will result in additional dilution to the Company’s stockholders, and incurring additional indebtedness could involve an increased debt service cash obligation, the imposition of covenants that restrict the Company operations or the Company’s ability to perform on its current debt service requirements. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. | |
The Company has incurred an accumulated deficit of $11,152,939 as of June 30, 2014. However, of the accumulated deficit, $2,110,748 of expense was incurred as stock-based compensation, $562,259 in depreciation expense, and $279,241 in impairment loss on investment in portfolio assets, all of which are noncash expenses. Further, $906,278 of the accumulated deficit is related to the issuance of stock dividends, also non cash reductions. The $3,858,526 total of these non-cash retained earnings reductions represents 35% of the total deficit balance. | |
Property_Equipment_and_Softwar
Property, Equipment and Software | 6 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Property Equipment And Software | ' | ||||||||
Property, Equipment and Software | ' | ||||||||
NOTE 6. PROPERTY, EQUIPMENT AND SOFTWARE | |||||||||
Property, equipment and software consist of the following as of June 30, 2014 and December 31, 2013, respectively: | |||||||||
Computers and purchased software | $ | 149,557 | $ | 149,557 | |||||
Furniture and equipment | 235,515 | 235,515 | |||||||
385,072 | 385,072 | ||||||||
Less: accumulated depreciation | (305,383 | ) | (276,724 | ) | |||||
$ | 79,689 | $ | 108,348 | ||||||
Depreciation totaled $14,286, $28,659, $14,574 and $29,386 for the three and six months ended June 30, 2014 and 2013, respectively. | |||||||||
Investments_in_Portfolio_Asset
Investments in Portfolio Assets | 6 Months Ended |
Jun. 30, 2014 | |
Investments In Portfolio Assets | ' |
Investments in Portfolio Assets | ' |
NOTE 7. INVESTMENTS IN PORTFOLIO ASSETS | |
In December 2010, Equitas Housing Fund, LLC (“EHF”), a subsidiary of the Company, entered into an agreement to purchase non-performing mortgage notes secured by the property, across the United States, for 6.6% of unpaid principal balance. Total purchase price of the investment was $300,000. Payments of $20,759 were received during 2011 and applied to the investment. During 2011, the seller’s estate, including the above mentioned non-performing mortgage notes purchased for $300,000 were placed into receivership with a court appointed receiver of the seller. The receiver has asserted ownership of the assets in receivership, including the referenced mortgage notes. As the Company’s right to these assets had been impaired, the Company assessed its ability to reclaim the assets as remote and an impairment of the investment in portfolio assets was warranted. Accordingly, the Company recognized impairment of the assets of $279,241 as of December 31, 2011. As of June 30, 2014, the Company is still awaiting final outcome of any potential recoverability from the receivership and as such the value remains $0. | |
Accrued_and_Other_Liabilities
Accrued and Other Liabilities | 6 Months Ended |
Jun. 30, 2014 | |
Accrued And Other Liabilities | ' |
Accrued and Other Liabilities | ' |
NOTE 8. ACCRUED AND OTHER LIABILITIES | |
The Company had $618,222 in accrued liabilities at June 30, 2014. Included in this accrual is $307,497 in accrued interest ($214,955 of this balance is related to interest on the secured asset promissory note discussed in more detail in Note 12) and $310,725 in deferred compensation to several senior management personnel. The Company had $345,524 in accrued liabilities at December 31, 2013. Included in this accrual is $63,926 in deferred compensation to multiple senior management personnel, $277,042 in accrued interest ($218,568 of this balance is related to interest on the secured asset promissory note discussed in Note 12), and $4,556 in other. | |
Notes_Payable_to_Related_Parti
Notes Payable to Related Parties | 6 Months Ended |
Jun. 30, 2014 | |
Notes Payable To Related Parties | ' |
Notes Payable Due to Related Parties | ' |
NOTE 9. NOTES PAYABLE TO RELATED PARTIES | |
During March 2011, the Company entered into one unsecured promissory note with a related party (a company director) in the amount of $250,000 (the “2011 Related Party Note”). The 2011 Related Party Note had a fixed interest amount of $50,000 and a maturity date of July 31, 2011. On September 20, 2011, the 2011 Related Party Note was amended to include the 2011 Related Party Note plus $52,426 of accrued interest for a total note balance of $302,426. The 2011 Related Party Note has a 6% interest rate and is a monthly installment note with final balloon payment at maturity in September 2014. As of December 31, 2013, the 2011 Related Party Note was $182,379, all of which is included in current portion of notes payable to related parties. As of June 30, the 2011 Related Party Note was $180,666, all of which is included in current portion of notes payable to related parties. | |
On September 1, 2011, several previous related party notes totaling $370,639 were amended and consolidated (“the 2011 Consolidated Related Party Note”). This note bears interest of 6% and has a maturity date of September 15, 2016. As of December 31, 2013, the 2011 Consolidated Related Party Note balance was $270,180, of which $75,853 is included in current portion of notes payable to related parties. As of June 30, 2014, the 2011 Consolidated Related Party Note balance was $267,569, of which $79,051 is included in current portion of notes payable to related parties. | |
As of December 31, 2013, a Company director had an outstanding advance to the Company of $50,000 for short term capital. During the six months ended June 30, 2014, the director advanced an additional $300,000 for working capital. As of June 30, 2014, the outstanding advance balance was $350,000. At the time of the filing of these consolidated financial statements, the Company and the director had not finalized a maturity date for the advance repayment, and as such the entire balance is included in current portion of notes payable to related parties. The advance accrues interest at a rate of 15%. | |
As of December 31, 2013, the Company’s President and Chief Legal Officer had an outstanding advance balance of $30,000 for short term capital. During the six months ended June 30, 2014, the President advanced an additional $40,000 for working capital. As of June 30, 2014, the outstanding advance balance was $70,000. At the time of the filing of these consolidated financial statements, the Company and the President had not finalized a maturity date for the advance repayment, and as such the entire balance is included in current portion of notes payable to related parties. The advance accrues interest at a rate of 15%. | |
As of December 31, 2013, the Company’s CEO and Director of the Board had an outstanding advance balance of $50,000 for short term capital. During the six months ended June 30, 2014, the CEO advanced an additional $65,000 for working capital. As of June 30, 2014, the outstanding advance balance was $115,000. At the time of the filing of these consolidated financial statements, the Company and the CEO had not finalized a maturity date for the advance repayment, and as such the entire balance is included in current portion of notes payable to related parties. The advance accrues interest at a rate of 15%. | |
As of June 30, 2014, the notes payable to related party balance totaled $983,235, of which $794,717 is included in current portion of notes payable to related parties in the consolidated financial statements. As of December 31, 2013, the notes payable to related party balance totaled $582,559, of which $388,232 is included in current portion of notes payable to related parties in the consolidated financial statements. | |
The Company incurred $27,260, $49,010, $8,077, and $16,170 of interest expense to directors, officers, and other related parties during the three and six months ended June 30, 2014 and 2013, respectively. Accrued interest due to directors and other related parties totaled $111,816 at June 30, 2014, of which $92,541 is included in accrued and other current liabilities. Accrued interest due to directors and other related parties totaled $81,160 at December 31, 2013, of which $58,149 is included in accrued and other current liabilities at December 31, 2013. | |
Notes_Payable
Notes Payable | 6 Months Ended |
Jun. 30, 2014 | |
Notes Payable [Abstract] | ' |
Notes Payable | ' |
NOTE 10. NOTES PAYABLE | |
In October 2013, the Company entered into a senior unsecured convertible promissory note agreement of $1,500,000. The terms of the note include an interest rate of 15% with a maturity date of October 10, 2016. The Company, although not required, is entitled to capitalize any accrued interest into the outstanding principal balance of the note up until maturity. At the maturity date, all unpaid principal and accrued interest is due. As part of the promissory note, the Company was required to pay origination fees and expenses associated with this note agreement (discussed in Other Assets Note 2), pay the subordinated debt originated in January 2010 (debt discussed in Note 11), pay $375,000 to a related party note held by a director (discussed in Note 9 above), with the remaining use of proceeds for general corporate purposes including payment of deferred compensation to several management personnel. Additionally, the noteholder has the right, but not the obligation, to convert up to $1,000,000 of the principal balance of the note into common shares of the Company. The $1,000,000 maximum conversion ratio would entitle the noteholder to a maximum total of 10% of the then outstanding common stock of the Company, calculated on a fully diluted basis. Any conversion of the principal amount of this note into common stock would effectively lower the outstanding principal amount of the note. As of June 30, 2014, the notes payable balance was $1,672,600, which includes capitalized interest of $172,600. As of December 31, 2013, the notes payable balance was $1,551,828, which includes capitalized interest of $51,828. | |
Subordinated_Debt
Subordinated Debt | 6 Months Ended | ||||
Jun. 30, 2014 | |||||
SubordinatedDebtAbstract | ' | ||||
Subordinated Debt | ' | ||||
NOTE 11. SUBORDINATED DEBT | |||||
During January 2010, the Company authorized a $750,000 subordinated debt offering (“Subordinated Offering”), which consists of the issuance of notes paying a 16% coupon with a 1% origination fee at the time of closing. The maturity date of the notes was originally January 31, 2013, however, subsequent to December 31, 2012, the Company and the subordinated debt holders agreed to an extended maturity date of April 30, 2013, and then again to December 31, 2013. In October 2013, the Company entered into a senior unsecured convertible promissory note (discussed in Note 10) which required the use of those financing proceeds to pay down the subordinated debt. As such, as of December 31, 2013, the remaining balance was $0. | |||||
As part of the Subordinated Offering, the Company granted to investors common stock purchase warrants (the “Warrants”) to purchase an aggregate of 200,000 shares of common stock of the Company at an exercise price of $0.01 per share. The 200,000 shares of common stock contemplated to be issued upon exercise of the Warrants are based on an anticipated cumulative debt raise of $750,000. The investors are granted the Warrants pro rata based on their percentage of investment relative to the $750,000 aggregate principal amount of notes contemplated to be issued in the Subordinated Offering. The Warrants shall have a term of seven years, exercisable from January 31, 2015 to January 31, 2017. The Company will have a call option any time prior to maturity, so long as the principal and interest on the notes are fully paid, to purchase the Warrants for an aggregate of $150,000. After the date of maturity until the date the Warrants are exercisable, the Company will have a call option to purchase the Warrants for $200,000. The call option purchase price assumed a cumulative debt raise of $750,000. | |||||
The Company follows the provisions of ASC 815, “Derivatives and Hedging”. ASC 815 requires freestanding contracts that are settled in a company’s own stock to be designated as an equity instrument, assets or liability. Under the provisions of ASC 815, a contract designated as an asset or liability must be initially recorded and carried at fair value until the contract meets the requirements for classification as equity, until the contract is exercised or until the contract expires. Accordingly, the Company determined that the warrants should be accounted for as derivative liabilities and has recorded the initial value as a debt discount which will be amortized into interest expense using the effective interest method. As of December 31, 2013, the balance of the debt discount was $0 (fully amortized). Subsequent changes to the marked-to-market value of the derivative liability will be recorded in earnings as derivative gains and losses. As of June 30, 2014, there were 112,000 warrants outstanding with a derivative liability of $2,239. As of December 31, 2013, there were 112,000 warrants outstanding with a derivative liability of $15,772. The $13,533 decrease in fair value is included in the consolidated statements of operations as gain on change in fair value of derivative. The Warrants were valued using the Black-Scholes model, which resulted in the fair value of the warrants at $0.02 per share using the following assumptions: | |||||
30-Jun-14 | |||||
Risk-free rate | 0.9 | % | |||
Expected volatility | 604.02 | % | |||
Expected remaining life (in years) | 2.5 | ||||
Dividend yield | 0 | % | |||
During August 2012, the Company entered into an additional $25,000 subordinated term note with a then current holder of the Company’s subordinated debt. The note pays an 18% coupon rate with a maturity date of August 31, 2015. There are no warrants associated with this subordinated term note. Repayment terms of the note include interest only payments through February 28, 2013. Thereafter, level monthly payments of principal and interest are made as calculated on a 60 month payment amortization schedule with final balloon payment due at maturity. The rights of the holder of this note is subordinated to any and all liens granted by the Company to a commercial bank or other qualified financial institution in connection with lines of credit or other loans extended to the Company in an amount not to exceed $2,000,000, and liens granted by the Company in connection with the purchase of furniture, fixtures or equipment. As of June 30, 2014, the remaining balance of this note totals $18,333 of which $5,000 is included in current portion of subordinated debt. As of December 31, 2013, the remaining balance of this note totals $21,250 of which $5,417 is included in current portion of subordinated debt. | |||||
Secured_Asset_Promissory_Note
Secured Asset Promissory Note | 6 Months Ended |
Jun. 30, 2014 | |
SecuredAssetPromissoryNoteAbstract | ' |
Secured Asset Promissory Note | ' |
NOTE 12. SECURED ASSET PROMISSORY NOTE | |
During December 2010, the Company authorized a debt offering to be secured by real estate assets purchased in connection with Equitas Housing Fund, LLC, (“Equitas Offering”). The Equitas Offering, which is now closed, generated $1,200,000 in proceeds. Of the $1,200,000 in proceeds received in December 2010, $300,000 was used to acquire non-performing, residential mortgage notes and the balance was used for mortgage note workout expenses and operational expenses of Halo Asset Management. The Secured Asset Promissory Notes consist of a 25% coupon with a maturity date of December 31, 2012. Accrued interest is to be paid quarterly at the end of each fiscal quarter beginning March 31, 2011 through maturity date and continuing until the promissory note has been paid in full. In May 2013, the Secured Asset Promissory Note was paid in full, along with $150,000 of the outstanding accrued interest balance. Halo and the secured asset promissory note holder agreed to include the remaining accrued interest in a promissory note originally due December 31, 2013. The maturity date has been extended to December 31, 2014. The new promissory note will accrue interest at a 10% annual rate, with interest only payments due periodically and final balloon payment due at maturity. As of June 30, 2014, the accrued interest balance was $214,955. As of December 31, 2013, the accrued interest balance was $218,568. For the three and six months ended June 30, 2014 and 2013, the Company incurred $5,419, $10,838, $34,231 and $118,231 respectively, in interest expense on the note. | |
Related_Party_Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2014 | |
Related Party Transactions [Abstract] | ' |
Related Party Transactions | ' |
NOTE 13. RELATED PARTY TRANSACTIONS | |
For the three and six months ended June 30, 2014 and 2013, HAM recognized monthly servicing fee revenue totaling $114,680, $218,255, $126,706 and $230,984, respectively, from an entity that is an affiliate of the Company. | |
For the three and six months ended June 30, 2014 and 2013, the Company incurred interest expense to related parties (See Note 9). | |
Income_Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2014 | |
Income Taxes | ' |
Income Taxes | ' |
NOTE 14. INCOME TAXES | |
For the three and six months ended June 30, 2014 and 2013, the effective tax rate -23%, -4%, 2% and 3% varies from the U.S. federal statutory rate primarily due to state income taxes, net losses, certain non-deductible expenses and an increase in the valuation allowance associated with the net operating loss carryforwards. Our deferred tax assets related to net operating loss carryforwards remain fully reserved due to uncertainty of utilization of those assets. | |
Deferred tax assets and liabilities are computed by applying the effective U.S. federal and state income tax rate to the gross amounts of temporary differences and other tax attributes. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. At June 30, 2014, the Company believed it was more likely than not that future tax benefits from net operating loss carry-forwards and other deferred tax assets would not be realizable through generation of future taxable income and are fully reserved. | |
The Company has net operating loss (“NOL”) carry-forwards of approximately $5,300,000 available for federal income tax purposes, which expire from 2024 to 2033. Separately, because of the changes in ownership that occurred on June 30, 2004 and September 30, 2009, prior to GVC merging with HCI, and based on the Section 382 Limitation calculation, the Company will be allowed approximately $6,500 per year of GVC Venture Corp.’s federal NOLs generated prior to June 30, 2004 until they would otherwise expire. The Company would also be allowed approximately $159,000 per year of GVC Venture Corp.’s federal NOLs generated between June 30, 2004 and September 30, 2009 until they would otherwise expire. | |
Commitments_and_Contingencies
Commitments and Contingencies | 6 Months Ended | |||||
Jun. 30, 2014 | ||||||
Commitments And Contingencies | ' | |||||
Commitments and Contingencies | ' | |||||
NOTE 15. COMMITMENTS AND CONTINGENCIES | ||||||
The Company leases various office equipment, each under a non-cancelable operating lease providing for minimum monthly rental payments. In relation to its office facilities, as discussed in Note 1, effective August 31, 2013 the Company and its office lessor agreed to a final settlement whereby it would vacate its previously leased office facilities in Allen, Texas. In doing so, the final settlement obligation of $254,023, all of which was expensed during 2013, is to be paid over twelve equal installments beginning in September 2013 through August 2014. This balance is included in current portion of deferred rent. As of June 30, 2014, the Company has not entered into any additional office lease whereby it is contractually committed. The Company currently pays for its office space on a month to month basis, and will continue to do so for the foreseeable future. | ||||||
Future minimum rental obligations, including its previous office lease space, as of June 30, 2014 are as follows: | ||||||
Years Ending December 31: | ||||||
2014 | $ | 54,424 | ||||
2015 | 14,601 | |||||
Thereafter | — | |||||
Total minimum lease commitments | $ | 69,025 | ||||
For the three and six months ended June 30, 2014 and 2013, the Company incurred facilities rent expense totaling $29,751, $59,493, $112,142 and $219,462, respectively. | ||||||
In the ordinary course of conducting its business, the Company may be subject to loss contingencies including possible disputes or lawsuits. The Company notes the following; | ||||||
The Company and certain of its affiliates, officers and directors have been named as defendants in an action filed on December 12, 2011 in the 191st District Court of Dallas County, Texas. The Plaintiffs allege that the Company has misappropriated funds in connection with offerings of securities during 2010 and 2011. The complaint further alleges that Defendants engaged in fraudulent inducement, negligent misrepresentation, fraud, breach of fiduciary duty, negligence, breach of contract, unjust enrichment, conversion, violation of the Texas Securities Act, and civil conspiracy. The Plaintiffs amended their Petition on April 24, 2012 and dropped the conversion and civil conspiracy claims. The action seeks an injunction and a demand for accounting along with damages in the amount of $4,898,157. The Company has taken the position that the Plaintiff’s claims have no merit, and accordingly is defending the matter vigorously. Defendants have filed a general denial of the claims as well as a Motion to Designate Responsible Third Parties whom Defendants believe are responsible for any damages Plaintiffs may have incurred. Defendants have also filed a Motion for Sanctions against the Plaintiffs and their counsel arguing, among other things, that (i) Plaintiffs’ claims are “judicially stopped” from moving forward by virtue of the fact that the same Plaintiffs previously filed suit against separate entities and parties with dramatically opposed and contradicting views and facts; (ii) Plaintiffs have asserted claims against Defendants without any basis in law or fact; and (iii) Plaintiffs have made accusations against Defendants that Plaintiffs know to be false. Additionally, Defendants have filed a no evidence Motion for Summary Judgment which was scheduled to be heard in October of 2012. The Plaintiffs requested and were granted a six month continuance on the hearing of that motion. The Plaintiffs have also filed a Motion to Stay the case pending the outcome of the Company’s lawsuit with the insurance companies which the Company has opposed. Initially the motion to stay was granted and Defendants moved for reconsideration. The parties were alerted that the court had reversed the Stay on appeal. The no evidence Motion for Summary Judgment was heard on August 9, 2013. Prior to the hearing, the Plaintiff’s filed a 3rd Amended Petition in which they dropped any claim of fraud including fraudulent inducement, fraud, conversion and civil conspiracy and added a new “control person” claim which was not subject to the no evidence Motion for Summary Judgment heard on August 9, 2013. On September 25, 2013, Defendants no evidence Motion for Summary Judgment was granted in its entirety. Defendants subsequently filed a no evidence Motion for Summary Judgment on the final remaining “control person” claim which was heard before the court on October 21, 2013. On December 18, 2013 a final Order Granting Defendant’s Second No-Evidence Motion of Final Summary Judgment was signed. The Plaintiff’s subsequently filed a motion for new trial. Following a hearing, the Plaintiff’s motion for new trial was denied by operation of law. The Plaintiff’s Filed a Notice of Appeal on March 11, 2014. | ||||||
As noted above, the Company, in conjunction with its Directors and Officers insurance carrier, is defending the matter vigorously. Based on the facts alleged and the proceedings to date, the Company believes that the Plaintiffs’ allegations will prove to be false, and that accordingly, it is not probable or reasonably possible that a negative outcome for the Company or the remaining Defendants will occur. As with any action of this type the timing and degree of any effect upon the Company are uncertain. If the outcome of the action is adverse to the Company, it could have a material adverse effect on our business prospects, financial position, and results of operation. | ||||||
The Company and certain of its affiliates, officers and directors named as defendants in an insurance action filed on April 27, 2012 in the United States District Court for the Northern District of Texas. The Plaintiffs allege that it had no duty to indemnify the Company, its affiliates, officers or directors because the claims set forth in the lawsuit mentioned herein above were not covered by the insurance policy issued by Plaintiff in favor of Defendants. The action sought declaratory judgment that the Plaintiff had no duty to indemnify the Defendants pursuant to the insurance policy that Defendants purchased from Plaintiff. The Company took the position that Plaintiff’s claim had no merit, and defended the matter vigorously. Additionally, Defendants filed a counterclaim against the insurer alleging breach of contract, violation of the Texas Insurance Code and violation of the duty of good faith and fair dealing. On March 12, 2013, Plaintiff and Defendants entered into an agreement whereby Plaintiff’s and Defendant’s claims, are to be dismissed without prejudice while the underlying liability suit in the 191st District Court of Dallas County proceeds. An Agreed Motion to Dismiss Without Prejudice was filed on March 12, 2013, and the parties are awaiting the court’s entry of the Agreed Order of Dismissal Without Prejudice. | ||||||
As noted above, the Company has defended this matter vigorously. Based on the status of the litigation, it is not probable or reasonably possible that a negative outcome for the Company or the remaining Defendants will occur. As with any action of this type the timing and degree of any effect upon the Company are uncertain. If the outcome of the action is adverse to the Company, it could have a material adverse effect on our financial position. | ||||||
The Company and certain of its affiliates, officers and directors have been named as defendants in an action filed on July 19, 2012 in the United States District Court for the Northern District of Texas. The Plaintiff alleges that it has no duty to defend or indemnify the Company, its affiliates, officers or directors because the claims set forth in the lawsuit mentioned herein above are not covered by the insurance policy written by Plaintiff in favor or Defendants. The action seeks declaratory judgment that the Plaintiff has no duty to defend or indemnify the Defendants pursuant to the insurance policy that Defendants purchased from Plaintiff. Initially, the Company took the position that Plaintiff’s claims had no merit, and defended the matter vigorously. Additionally, Defendants filed a counterclaim against the insurer alleging breach of contract, violation of the Texas Insurance Code and violation of the duty of good faith and fair dealing. Plaintiff has filed a Motion for Summary Judgment seeking a judgment that it owes no duty to defend or indemnify Defendants. After careful consideration, Defendants decided not to oppose the Motion for Summary Judgment and a response in opposition was not filed. The Motion for Summary Judgment was granted in part and the remaining matter remains pending before the court. | ||||||
Based on the current status of the litigation, the Company believes it is not probable or reasonably possible that a negative outcome for the Company or the remaining Defendants will occur. As with any action of this type the timing and degree of any effect upon the Company are uncertain. If the outcome of the action is adverse to the Company, it could have a material adverse effect on our financial position. | ||||||
Stock_Options
Stock Options | 6 Months Ended | ||||||||||||||
Jun. 30, 2014 | |||||||||||||||
Stock Options | ' | ||||||||||||||
Stock Options | ' | ||||||||||||||
NOTE 16. STOCK OPTIONS | |||||||||||||||
The Company granted stock options to certain employees under the HGI 2007 Stock Plan, as amended (the “Plan”). The Company was authorized to issue 2,950,000 shares subject to options, or stock purchase rights under the Plan. These options (i) vest over a period no greater than two years, (ii) are contingently exercisable upon the occurrence of a specified event as defined by the option agreements, and (iii) expire three months following termination of employment or five years from the date of grant depending on whether or not the options were granted as incentive options or non-qualified options. At September 30, 2009, pursuant to the terms of the merger, all options granted prior to the merger were assumed by the Company and any options available for issuance under the Plan but unissued, have been forfeited and consequently the Company has no additional shares subject to options or stock purchase rights available for issuance under the Plan. As of June 30, 2014, 438,300 option shares have been exercised. Total stock options outstanding as of June 30, 2014 total 247,500. The weighted average remaining contractual life of the outstanding options at June 30, 2014 is approximately 2.5 years. | |||||||||||||||
A summary of stock option activity in the Plan is as follows: | |||||||||||||||
Weighted | |||||||||||||||
Exercise | Average | ||||||||||||||
Number of | Price | Exercise | |||||||||||||
Options | Per Option | Price | |||||||||||||
Outstanding at December 31, 2012 | 1,215,150 | $ | 0.01 – 1.59 | $ | 0.97 | ||||||||||
Granted | — | — | — | ||||||||||||
Exercised | — | — | — | ||||||||||||
Canceled | (533,450 | ) | 0.01 – 0.94 | 0.93 | |||||||||||
Outstanding at December 31, 2013 | 681,700 | $ | 0.01 – 1.59 | $ | 1 | ||||||||||
Granted | — | — | — | ||||||||||||
Exercised | — | — | — | ||||||||||||
Canceled | (434,200 | ) | 0.94 – 1.59 | 0.96 | |||||||||||
Outstanding at June 30, 2014 | 247,500 | $ | 0.01 – 1.59 | $ | 0.5 | ||||||||||
All stock options granted under the Plan and as of December 31, 2013 became exercisable upon the occurrence of the merger that occurred on September 30, 2009. As such, equity-based compensation for the options was recognized in earnings from issuance date of the options over the vesting period of the options effective December 31, 2009. Total compensation cost expensed over the vesting period of stock options was $2,103,948, all of which was expensed as of September 30, 2011. | |||||||||||||||
On July 19, 2010, the board of directors approved the Company’s 2010 Incentive Stock Plan (“2010 Stock Plan”). The 2010 Stock Plan allows for the reservation of 7,000,000 shares of the Company’s common stock for issuance under the plan. The 2010 Stock Plan became effective July 19, 2010 and terminates July 18, 2020. As of June 30, 2014, 20,000 shares were granted under the 2010 Stock Plan with an exercise price of $0.34 per option. These are the only shares that have been issued under the 2010 Stock Plan. The shares granted vested immediately and can become exercisable for so long as the Company remains a reporting company under the Securities Exchange Act of 1934. Total compensation cost expensed over the vesting period of the stock options was $6,800, all of which was expensed in the year ended December 31, 2012. As of June 30, 2014, none of the shares issued under the 2010 Stock Plan have been exercised. | |||||||||||||||
Shareholders_Deficit_Equity
Shareholders' (Deficit) Equity | 6 Months Ended |
Jun. 30, 2014 | |
Shareholders Deficit Equity | ' |
Shareholders' (Deficit) Equity | ' |
NOTE 17. SHAREHOLDERS’ (DEFICIT) EQUITY | |
Common Stock | |
On December 13, 2010 (“the Closing”), the Company was party to an Assignment and Contribution Agreement (the “Agreement”). Pursuant to the terms of Agreement, the members of Equitas Asset Management, LLC, (“EAM”), a non Halo entity, which owned 100% of the interests of Equitas Housing Fund, LLC (“EHF”), assigned and contributed 100% of the interests of EAM to HAM (a Halo subsidiary) in exchange for shares of 21,200,000 shares of the Company’s Common Stock, $0.001 par value, of the Company. The Agreement did not constitute a business combination. | |
The Company issued 7,500,000 shares of Halo common stock in exchange for $3,000,000 in debt or equity capital. The aggregate of 7,500,000 shares of Halo common stock will be subject to clawback (and cancellation) by Halo in the event that EAM does not generate at least three million dollars ($3,000,000) in new capital to Halo within twelve months following the closing. Halo shall have the right to claw back 2.5 shares of Halo common stock for every dollar not raised within the twelve months. Any cash generated by EAM will need to be designated for use in Halo’s general operations and not that of the EHF business to release the clawback rights. | |
The Company issued 13,700,000 shares of Halo common stock for the purchase of intangible assets owned by EAM which included trade secrets and business processes used in the EHF business. The aggregate 13,700,000 shares of Halo common stock shall be subject to clawback (and cancellation) by Halo in the event that EAM fails to generate at least $10,000,000 of net operating cash flows from the EHF business within twenty-four months following the closing. Halo shall have the right to claw back 1.37 shares of Halo common for every dollar not generated from the net operating cash flows of the EHF business. Once the $10,000,000 in net operating cash flows from the EHF business is generated, the clawback rights will be released. | |
In applying the guidance of ASC 505 “Equity” to the above transactions, the clawback provisions create a performance commitment that has not been met. As such, although the transaction did provide for a grant date at which time the equity shares are issued and outstanding, the equity shares have not met the measurement date requirements required by ASC 505. Accordingly, the par value of the shares issued and outstanding have been recorded at the grant date and as the clawback rights are released and the measurement dates established, the fair value of the transactions will be determined and recorded. The pro-rata fair value of equity issued in connection with fund raising efforts at each measurement date will be recorded as debt issuance costs or a reduction in the equity proceeds raised by the counter party. The pro-rata fair value of equity issued in connection with the purchase of intangible assets at the measurement date will be recorded as amortization expense because the amortization period of the underlining asset purchase and the clawback release rights are commensurate. | |
As mentioned above, the Agreement provides for “clawback” provisions, pursuant to which all of the shares of Halo Common Stock issued to the member of EAM are subject to forfeiture in the event certain financial metrics are not timely achieved. The financial metrics call for significant cash generation by EHF within the first 12 months, and within the first 24 months following the closing date. We refer you to Section 2(b)(i) and (ii) of the Agreement, for the specifics of the clawback provisions. As of December 31, 2012, no cash was generated by EHF. The times to meet both the 12 month and 24 month financial metrics have lapsed and the metrics have not been met. Based upon the events that have transpired, and the lack of progress toward the financial metrics, the Company demanded that the recipients of the shares of Halo Common Stock give effect to both clawback provisions and immediately forfeit back all of the Halo shares issued to such recipients – an aggregate of 21,200,000 shares. Additionally, the Company has instructed the Company’s transfer agent to cancel all of the shares of Company Common Stock issued pursuant to the Agreement. To date, the Company’s transfer agent has refused to cancel the shares without either (i) presentation of the physical certificates to the transfer agent, or (ii) a court order requiring the transfer agent to cancel. At the time of issuing these consolidated financial statements, the Company has been unsuccessful in its attempts to procure the physical certificates for presentment to the transfer agent, and the Company has yet to secure a court order requiring the transfer agent to cancel the certificates. Accordingly, the 21,200,000 shares issued are still outstanding at June 30, 2014. | |
The Company’s total common shares outstanding totaled 66,364,083 at June 30, 2014. | |
Preferred Stock | |
In connection with the merger, the Company authorized 1,000,000 shares of Series Z Convertible Preferred Stock with a par value of $0.01 per share (the “Series Z Convertible Preferred”). The number of shares of Series Z Preferred Stock may be decreased by resolution of the Board; provided, however, that no decrease shall reduce the number of Series Z Preferred Shares to less than the number of shares then issued and outstanding. In the event any Series Z Preferred Shares shall be converted, (i) the Series Z Preferred Shares so converted shall be retired and cancelled and shall not be reissued and (ii) the authorized number of Series Z Preferred Shares set forth in this section shall be automatically reduced by the number of Series Z Preferred Shares so converted and the number of shares of the Corporation’s undesignated Preferred Stock shall be deemed increased by such number. The Series Z Convertible Preferred is convertible into common shares at the rate of 45 shares of common per one share of Series Z Convertible Preferred. The Series Z Convertible Preferred has liquidation and other rights in preference to all other equity instruments. Simultaneously upon conversion of the remaining Series A Preferred, Series B Preferred, and Series C Preferred and exercise of any outstanding stock options issued under the HGI 2007 Stock Plan into Series Z Convertible Preferred, they will automatically, without any action on the part of the holders, be converted into common shares of the Company. Since the merger, in connection with the exercise of stock options into common stock and converted Series A Preferred, Series B Preferred and Series C Preferred as noted above, 82,508 shares of Series Z Convertible Preferred were automatically authorized and converted into shares of the Company’s common stock leaving 917,492 shares of authorized undesignated Preferred Stock in the Company in accordance with the Series Z Convertible Preferred certificate of designation. As of June 30, 2014, there were 82,508 shares of Series Z Preferred authorized with zero shares issued and outstanding. | |
The Company authorized 175,000 shares of Series X Convertible Preferred Stock with a par value of $0.01 per share (the “Series X Preferred”). The number of shares of Series X Preferred may be decreased by resolution of the Board; provided, however, that no decrease shall reduce the number of Series X Preferred to less than the number of shares then issued and outstanding. In the event any Series X Preferred Shares shall be redeemed, (i) the Series X Preferred so redeemed shall be retired and cancelled and shall not be reissued and (ii) the authorized number of Series X Preferred Shares set forth in this section shall be automatically reduced by the number of Series X Preferred Shares so redeemed and the number of shares of the Corporation's undesignated Preferred Stock shall be deemed increased by such number. The Series X Preferred Shares rank senior to the Company’s common stock to the extent of $10.00 per Series X Preferred Shares and on a parity with the Company’s common stock as to amounts in excess thereof. The holders of Series X Preferred shall not have voting rights. Holders of the Series X Preferred shall be entitled to receive, when and as declared by the board of directors, dividends at an annual rate of 9% payable in cash when declared by the board. Holders of Series X Preferred have a liquidation preference per share equal to $10.00. The liquidation preference was $1,436,770 as of June 30, 2014. As of June 30, 2014, there were 143,677 shares authorized with 143,677 shares issued and outstanding. Of the 143,677 shares issued and outstanding, 53,677 shares were related to the 2010 conversion from notes payable due to related parties. The remaining 90,000 shares were issued for cash consideration. | |
In April 2012, the Company authorized 100,000 shares of Series E Convertible Preferred Stock (the “Series E Preferred”) with a par value of $0.001 per share, at ten dollars ($10.00) per share with a conversion rate of fifty (50) shares of the Company’s common stock for one share of Series E Preferred. The number of shares of Series E Preferred may be decreased by resolution of the Board; provided, however, that no decrease shall reduce the number of Series E Preferred to less than the number of shares then issued and outstanding. In the event any Series E Preferred Shares shall be converted, (i) the Series E Preferred so converted shall be retired and cancelled and shall not be reissued and (ii) the authorized number of Series E Preferred Shares set forth shall be automatically reduced by the number of Series E Preferred Shares so converted and the number of shares of the Corporation's undesignated Preferred Stock shall be deemed increased by such number. The Series E Preferred Shares rank senior to the Company’s common stock to the extent of $10.00 per Series E Preferred Shares and on a parity with the Company’s common stock as to amounts in excess thereof. The holders of Series E Preferred shall not have voting rights. Holders of the Series E Preferred shall be entitled to receive, when and as declared by the board of directors, dividends at an annual rate of 9% payable in cash or common stock when declared by the board. Holders of Series E Preferred have a liquidation preference per share equal to $10.00. The liquidation preference was $700,000 as of June 30, 2014. Each share of Series E Preferred, if not previously converted by the holder, will automatically be converted into common stock at the then applicable conversion rate after thirty-six months from the date of purchase. As of June 30, 2014, there were 70,000 shares issued and outstanding with total cash consideration of $700,000, convertible into 3,500,000 shares of the Company’s common stock. | |
The HGI Series A Convertible Preferred Stock (the “Series A Preferred”) has a par value of $0.001 per share and has a liquidation preference of the greater of (a) the consideration paid to the Company for such shares plus all accrued but unpaid dividends, if any or (b) the per share amount the holders of the Series A Preferred would be entitled to upon conversion, as defined in the Series A Preferred certificate of designation. The liquidation preference was $682,177, of which $122,679 is an accrued (but undeclared) dividend as of June 30, 2014. Holders of the Series A Preferred are entitled to receive, if declared by the board of directors, dividends at a rate of 8% payable in cash or common stock of the Company. The Series A Preferred is convertible into the Company’s common stock at a conversion price of $1.25 per share. The Series A Preferred is convertible, either at the option of the holder or the Company, into shares of the Company’s Series Z Convertible Preferred Stock, and immediately, without any action on the part of the holder, converted into common stock of the Company. The Series A Preferred is redeemable at the option of the Company at $1.80 per share prior to conversion. As of June 30, 2014, there have been 127,001 shares of Series A Preferred converted or redeemed. The Series A Preferred does not have voting rights. The Series A Preferred ranks senior to the following capital stock of the Company: (a) Series B Preferred, and (b) Series C Preferred. | |
The HGI Series B Convertible Preferred Stock (the “Series B Preferred”) has a par value of $0.001 per share and has a liquidation preference of the greater of (a) the consideration paid to the Company for such shares plus all accrued but unpaid dividends, if any or (b) the per share amount the holders of the Series B Preferred would be entitled to upon conversion. The liquidation preference was $560,804, of which $100,892 is an accrued (but undeclared) dividend as of June 30, 2014. Holders of the Series B Preferred are entitled to receive, if declared by the board of directors, dividends at a rate of 8% payable in cash or common stock of the Company. The Series B Preferred is convertible into the Company’s common stock at a conversion price of $1.74 per share. The Series B Preferred is convertible, either at the option of the holder or the Company, into shares of the Company’s Series Z Convertible Preferred Stock, and immediately, without any action on the part of the holder, converted into common stock of the Company. The Series B Preferred is redeemable at the option of the Company at $2.30 per share prior to conversion. As of June 30, 2014, there have been 270,044 shares of Series B Preferred converted or redeemed. The Series B Preferred does not have voting rights. Series B Preferred ranks senior to the following capital stock of the Company: the Series C Preferred. | |
The HGI Series C Convertible Preferred Stock (the “Series C Preferred”) has a par value of $0.001 per share and has a liquidation preference of the greater of (a) the consideration paid to the Company for such shares plus all accrued but unpaid dividends, if any or (b) the per share amount the holders of the Series C Preferred would be entitled to upon conversion. The liquidation preference was $378,086, of which $68,086 is an accrued (but undeclared) dividend as of June 30, 2014. Holders of the Series C Preferred are entitled to receive, if declared by the board of directors, dividends at a rate of 8% payable in cash or common stock of the Company. The Series C Preferred is convertible into the Company’s common stock at an initial conversion price of $2.27 per share. The Series C Preferred is convertible, either at the option of the holder or the Company, into shares of the Company’s Series Z Convertible Preferred Stock, and immediately, without any action on the part of the holder, converted into common stock of the Company. The Series C Preferred is redeemable at the option of the Company at $2.75 per share prior to conversion. As of June 30, 2014, there have been 28,000 shares of Series C Preferred converted or redeemed. The Series C Preferred does not have voting rights. Series C Preferred ranks senior to the following capital stock of the Company: None. | |
The Company had issued and outstanding at June 30, 2014, 372,999 shares of Series A Preferred, 229,956 shares of Series B Preferred, and 124,000 shares of Series C Preferred, all with a par value of $0.001. | |
Subsequent_Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2014 | |
Subsequent Events [Abstract] | ' |
Subsequent Events | ' |
NOTE 18. SUBSEQUENT EVENTS | |
There were no subsequent events to disclose. | |
Significant_Accounting_Policie1
Significant Accounting Policies (Policies) | 6 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
Significant Accounting Policies Policies | ' | ||||||||||||||||
Revenue Recognition, Accounts Receivable and Deferred Revenue | ' | ||||||||||||||||
Revenue Recognition, Accounts Receivable and Deferred Revenue | |||||||||||||||||
The Company recognizes revenue in the period in which services are earned and realizable. To further understand the Company’s business, HAM earns fees from its clients for its boarding and initial asset management fee, success fees, and its monthly servicing fee. The boarding and initial asset management services are performed in the first 30-60 days of assets being boarded and include; IRR analysis of loans boarded, detailed asset level workout exit strategy analysis, boarding the assets onto HAM’s proprietary software platform and the integrated servicing platform, identification and oversight of custodial files, oversight of mortgage/deed assignment from previous servicer, oversight of title policy administration work, and delinquent property tax research and exposure review. HAM’s monthly success fees are earned for completing its default and asset disposition services including note sales, originating owner finance agreements, and cash sales of REO properties owned by the client. HAM’s servicing fees are earned monthly and are calculated on a monthly unit price for assets under management. | |||||||||||||||||
HAM and HPA receivables are typically paid the month following services performed. As of June 30, 2014, the Company’s accounts receivable are made up of the following percentages; HAM at 91% and HPA at 9%. | |||||||||||||||||
The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Management considers the following factors when determining the collectability of specific customer accounts: past transaction history with the customer, current economic and industry trends, and changes in customer payment terms. The Company provides for estimated uncollectible amounts through an increase to the allowance for doubtful accounts and a charge to earnings based on actual historical trends and individual account analysis. Balances that remain outstanding after the Company has used reasonable collection efforts are written-off through a charge to the allowance for doubtful accounts. The below table summarizes the Company’s allowance for doubtful accounts as of June 30, 2014 and December 31, 2013, respectively; | |||||||||||||||||
Balance at Beginning of Period | Increase in the Provision | Accounts Receivable Write-offs | Balance at End of Period | ||||||||||||||
Six Months ended June 30, 2014 | |||||||||||||||||
Allowance for doubtful accounts | $ | 375,665 | $ | 92 | $ | 92 | $ | 375,665 | |||||||||
Year ended December 31, 2013 | |||||||||||||||||
Allowance for doubtful accounts | $ | 375,665 | $ | 1,197 | $ | 1,197 | $ | 375,665 | |||||||||
As of June 30, 2014, the Company’s allowance for doubtful accounts is made up of the following percentages; HAM at 96% and HPA at 4%. The HAM and HPA allowance is related to one client. The client is in a court appointed receivership and the Company is awaiting final outcome of its receivable claim into the receivership to determine any potential recoverability. As of June 30, 2014, the Company has fully reserved all outstanding accounts receivables of this client. | |||||||||||||||||
Net Income (Loss) Per Common Share | ' | ||||||||||||||||
Net Income (Loss) Per Common Share | |||||||||||||||||
Basic net income (loss) per share is computed by dividing (i) net income (loss) available to common shareholders (numerator), by (ii) the weighted average number of common shares outstanding during the period (denominator). Diluted net income (loss) per share is computed using the weighted average number of common shares and dilutive potential common shares outstanding during the period. At June 30, 2014 and 2013, there were 4,596,126 and 5,556,577 shares, respectively, underlying potentially dilutive convertible preferred stock and stock options outstanding. For the three and six months ended June 30, 2014, the 4,596,126 shares were not included in dilutive weighted average shares because their effect is anti-dilutive due to the Company’s net loss. | |||||||||||||||||
Use of Estimates and Assumptions | ' | ||||||||||||||||
Use of Estimates and Assumptions | |||||||||||||||||
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include the Company’s revenue recognition method and derivative liabilities. | |||||||||||||||||
Principles of Consolidation | ' | ||||||||||||||||
Principles of Consolidation | |||||||||||||||||
The consolidated financial statements of the Company for the three and six months ended June 30, 2014 include the financial results of HCI, HGI, HBI, HPA and HAM. All significant intercompany transactions and balances have been eliminated in consolidation. | |||||||||||||||||
The consolidated financial statements of the Company for the three and six months ended June 30, 2013 include the financial results of HCI, HGI, HGM, HBI, HSIS, HCIS, HPA, HAM, and EHF. All significant intercompany transactions and balances have been eliminated in consolidation. | |||||||||||||||||
Cash and Cash Equivalents | ' | ||||||||||||||||
Cash and Cash Equivalents | |||||||||||||||||
The Company considers all liquid investments with a maturity of 90 days or less to be cash equivalents. | |||||||||||||||||
Deposits and Other Assets | ' | ||||||||||||||||
Deposits and Other Assets | |||||||||||||||||
At June 30, 2014, deposits and other assets was $30,000 ($40,000 in total origination fees offset by $10,000 in accumulated amortization) for the senior unsecured promissory note discussed in Note 10. The fees are to be amortized over the life of the promissory note. At December 31, 2013, deposits and other assets was $39,589, which included $36,667 in deferred origination costs ($40,000 in total origination fees offset by $3,333 in accumulated amortization) for the senior unsecured promissory note, with the remaining $2,922 as a prepaid vendor expense. | |||||||||||||||||
Property, Equipment and Software | ' | ||||||||||||||||
Property, Equipment and Software | |||||||||||||||||
Property, equipment, and software are stated at cost. Depreciation is provided in amounts sufficient to relate the cost of the depreciable assets to operations over their estimated service lives, ranging from three to seven years. Provisions for depreciation are made using the straight-line method. | |||||||||||||||||
Major additions and improvements are capitalized, while expenditures for maintenance and repairs are charged to expense as incurred. Upon sale or retirement, the cost of the property and equipment and the related accumulated depreciation are removed from the respective accounts, and any resulting gains or losses are credited or charged to other general and administrative expenses. | |||||||||||||||||
Fair Value of Financial Instruments | ' | ||||||||||||||||
Fair Value of Financial Instruments | |||||||||||||||||
The carrying value of trade accounts receivable, accounts payable, and accrued and other liabilities approximate fair value due to the short maturity of these items. The estimated fair value of the notes payable and subordinated debt approximates the carrying amounts as they bear market interest rates. | |||||||||||||||||
The Company considers the warrants related to its subordinated debt to be derivatives, and the Company records the fair value of the derivative liabilities in the consolidated balance sheets. Changes in fair value of the derivative liabilities are included in gain (loss) on change in fair value of derivative in the consolidated statements of operations. The Company’s derivative liability has been classified as a Level III valuation according to Accounting Standards Codification (“ASC”) 820. | |||||||||||||||||
Internally Developed Software | ' | ||||||||||||||||
Internally Developed Software | |||||||||||||||||
Internally developed legacy application software consisting of database, customer relations management, process management and internal reporting modules are used in each of the Company’s subsidiaries. The Company accounts for computer software used in the business in accordance with ASC 350 “Intangibles-Goodwill and Other”. ASC 350 requires computer software costs associated with internal use software to be charged to operations as incurred until certain capitalization criteria are met. Costs incurred during the preliminary project stage and the post-implementation stages are expensed as incurred. Certain qualifying costs incurred during the application development stage are capitalized as property, equipment and software. These costs generally consist of internal labor during configuration, coding, and testing activities. Capitalization begins when (i) the preliminary project stage is complete, (ii) management with the relevant authority authorizes and commits to the funding of the software project, and (iii) it is probable both that the project will be completed and that the software will be used to perform the function intended. Management has determined that a significant portion of costs incurred for internally developed software came from the preliminary project and post-implementation stages; as such, no costs for internally developed software were capitalized. | |||||||||||||||||
Long-Lived Assets | ' | ||||||||||||||||
Long-Lived Assets | |||||||||||||||||
Long-lived assets are reviewed on an annual basis or whenever events or changes in circumstance indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets held and used is generally measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by that asset. If it is determined that the carrying amount of an asset may not be recoverable, an impairment loss is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. Fair value is the estimated value at which the asset could be bought or sold in a transaction between willing parties. There were no impairment charges for the three and six months ended June 30, 2014 and 2013. | |||||||||||||||||
Equity-Based Compensation | ' | ||||||||||||||||
Equity-Based Compensation | |||||||||||||||||
The Company accounts for equity instruments issued to employees in accordance with ASC 718 “Compensation-Stock Compensation”. Under ASC 718, the fair value of stock options at the date of grant is recognized in earnings over the vesting period of the options beginning when the specified events become probable of occurrence. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date of the fair value of the equity instrument issued is the earlier of (i) the date on which the counterparty’s performance is complete, or (ii) the date on which it is probable that performance will occur. | |||||||||||||||||
Income Taxes | ' | ||||||||||||||||
Income Taxes | |||||||||||||||||
The Company accounts for income taxes in accordance with ASC 740 “Income Taxes”. ASC 740 requires the use of the asset and liability method whereby deferred tax assets and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. These differences result in deferred tax assets and liabilities, which are included in the Company’s consolidated balance sheets. | |||||||||||||||||
The Company then assesses the likelihood of realizing benefits related to such assets by considering factors such as historical taxable income and the Company’s ability to generate sufficient taxable income of the appropriate character within the relevant jurisdictions in future years. Based on the aforementioned factors, if the realization of these assets is not likely a valuation allowance is established against the deferred tax assets. | |||||||||||||||||
The Company accounts for its position in tax uncertainties under ASC 740-10. ASC 740-10 establishes standards for accounting for uncertainty in income taxes. ASC 740-10 provides several clarifications related to uncertain tax positions. Most notably, a “more likely-than-not” standard for initial recognition of tax positions, a presumption of audit detection and a measurement of recognized tax benefits based on the largest amount that has a greater than 50 percent likelihood of realization. ASC 740-10 applies a two-step process to determine the amount of tax benefit to be recognized in the financial statements. First, the Company must determine whether any amount of the tax benefit may be recognized. Second, the Company determines how much of the tax benefit should be recognized (this would only apply to tax positions that qualify for recognition.) No additional liabilities have been recognized as a result of the implementation. The Company has not taken a tax position that, if challenged, would have a material effect on the financial statements or the effective tax rate during the three and six months ended June 30, 2014 or 2013. | |||||||||||||||||
The Company incurred no penalties or interest for taxes for the three and six months ended June 30, 2014 or 2013. The Company is subject to a three year statute of limitations by major tax jurisdictions for the fiscal years ended December 31, 2010, 2011 and 2012. The Company files income tax returns in the U.S. federal jurisdiction. | |||||||||||||||||
Deferred Rent | ' | ||||||||||||||||
Deferred Rent | |||||||||||||||||
As discussed in Note 1, in August 2013, the Company and its office lessor agreed to a final settlement whereby it would vacate its previously leased office facilities. In doing so, the final settlement obligation of $254,023 is to be paid over twelve equal installments beginning in September 2013 through August 2014. At June 30, 2014 and December 31, 2013, the $42,337 and $169,349 balance, respectively, is included in current portion of deferred rent. | |||||||||||||||||
Recent Accounting Standards | ' | ||||||||||||||||
Recent Accounting Standards | |||||||||||||||||
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. | |||||||||||||||||
The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard in 2017. | |||||||||||||||||
Significant_Accounting_Policie2
Significant Accounting Policies (Tables) | 6 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
Significant Accounting Policies Tables | ' | ||||||||||||||||
Allowance for Doubtful Accounts | ' | ||||||||||||||||
Balance at Beginning of Period | Increase in the Provision | Accounts Receivable Write-offs | Balance at End of Period | ||||||||||||||
Six Months ended June 30, 2014 | |||||||||||||||||
Allowance for doubtful accounts | $ | 375,665 | $ | 92 | $ | 92 | $ | 375,665 | |||||||||
Year ended December 31, 2013 | |||||||||||||||||
Allowance for doubtful accounts | $ | 375,665 | $ | 1,197 | $ | 1,197 | $ | 375,665 | |||||||||
Operating_Segments_Tables
Operating Segments (Tables) | 6 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
Operating Segments Tables | ' | ||||||||||||||||
Operating Segment Reporting | ' | ||||||||||||||||
Operating Segments | For the Three Months Ended | For the Six Months Ended | |||||||||||||||
June 30, | June 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Revenue: | |||||||||||||||||
Halo Asset Management | $ | 579,902 | $ | 2,284,338 | $ | 882,419 | $ | 2,608,954 | |||||||||
Halo Portfolio Advisors | 248,003 | 698,743 | 537,774 | 1,230,813 | |||||||||||||
Other | — | — | — | 28,531 | |||||||||||||
Net revenue | $ | 827,905 | $ | 2,983,081 | $ | 1,420,193 | $ | 3,868,298 | |||||||||
Operating income (loss): | |||||||||||||||||
Halo Asset Management | $ | 392,799 | $ | 1,956,415 | $ | 432,412 | $ | 1,930,853 | |||||||||
Halo Portfolio Advisors | 39,668 | 109,477 | 85,651 | 208,659 | |||||||||||||
Other | — | (109,082 | ) | — | (200,085 | ) | |||||||||||
Less: Corporate expenses (a) | (548,887 | ) | (559,849 | ) | (1,070,219 | ) | (1,062,343 | ) | |||||||||
Operating income (loss): | $ | (116,420 | ) | $ | 1,396,961 | $ | (552,156 | ) | $ | 877,084 | |||||||
a. | Corporate expenses include salaries, benefits and other expenses, including rent and general & administrative expenses, related to corporate office overhead and functions that benefit all operating segments. Corporate expenses also include interest expense. Corporate expenses are expenses that the Company does not directly allocate to any segment above. Allocating these indirect expenses to operating segments would require an imprecise allocation methodology. Further, there are no material amounts that are the elimination or reversal of transactions between the above reportable operating segments. | ||||||||||||||||
Property_Equipment_and_Softwar1
Property, Equipment and Software (Tables) | 6 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Property Equipment And Software Tables | ' | ||||||||
Property, Equipment and Software | ' | ||||||||
Computers and purchased software | $ | 149,557 | $ | 149,557 | |||||
Furniture and equipment | 235,515 | 235,515 | |||||||
385,072 | 385,072 | ||||||||
Less: accumulated depreciation | (305,383 | ) | (276,724 | ) | |||||
$ | 79,689 | $ | 108,348 | ||||||
Subordinated_Debt_Tables
Subordinated Debt (Tables) | 6 Months Ended | ||||
Jun. 30, 2014 | |||||
Notes to Financial Statements | ' | ||||
Fair Value Assumptions | ' | ||||
30-Jun-14 | |||||
Risk-free rate | 0.9 | % | |||
Expected volatility | 604.02 | % | |||
Expected remaining life (in years) | 2.5 | ||||
Dividend yield | 0 | % | |||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 6 Months Ended | |||||
Jun. 30, 2014 | ||||||
Commitments And Contingencies Tables | ' | |||||
Future Minimum Rental Obligations | ' | |||||
Years Ending December 31: | ||||||
2014 | $ | 54,424 | ||||
2015 | 14,601 | |||||
Thereafter | — | |||||
Total minimum lease commitments | $ | 69,025 | ||||
Stock_Options_Tables
Stock Options (Tables) | 6 Months Ended | ||||||||||||||
Jun. 30, 2014 | |||||||||||||||
Stock Options Tables | ' | ||||||||||||||
Stock Option Activity Summary | ' | ||||||||||||||
Weighted | |||||||||||||||
Exercise | Average | ||||||||||||||
Number of | Price | Exercise | |||||||||||||
Options | Per Option | Price | |||||||||||||
Outstanding at December 31, 2012 | 1,215,150 | $ | 0.01 – 1.59 | $ | 0.97 | ||||||||||
Granted | — | — | — | ||||||||||||
Exercised | — | — | — | ||||||||||||
Canceled | (533,450 | ) | 0.01 – 0.94 | 0.93 | |||||||||||
Outstanding at December 31, 2013 | 681,700 | $ | 0.01 – 1.59 | $ | 1 | ||||||||||
Granted | — | — | — | ||||||||||||
Exercised | — | — | — | ||||||||||||
Canceled | (434,200 | ) | 0.94 – 1.59 | 0.96 | |||||||||||
Outstanding at June 30, 2014 | 247,500 | $ | 0.01 – 1.59 | $ | 0.5 | ||||||||||
Organization_and_Recent_Develo1
Organization and Recent Developments (Details Narrative) (USD $) | 1 Months Ended | |
Aug. 31, 2013 | Oct. 31, 2013 | |
2013 Unsecured Convertible Promissory Note | ||
Final settlement obligation for previously leased office facilities | $254,023 | ' |
Final settlement obligation payment period | '12 months | ' |
Deposit retained by office lessor | 45,000 | ' |
Note amount | ' | $1,500,000 |
Interest rate | ' | 15.00% |
Maturity date | ' | 10-Oct-16 |
Significant_Accounting_Policie3
Significant Accounting Policies - Allowance for Doubtful Accounts (Details) (USD $) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 | |
Significant Accounting Policies - Allowance For Doubtful Accounts Details | ' | ' | ' |
Allowance for doubtful accounts, beginning balance | $375,665 | $375,665 | $375,665 |
Increase in the provision | 92 | 931 | 1,197 |
Account receivable write-offs | 92 | ' | 1,197 |
Allowance for doubtful accounts, ending balance | $375,665 | ' | $375,665 |
Significant_Accounting_Policie4
Significant Accounting Policies (Details Narrative) (USD $) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Aug. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 | |
Boarding and initial asset management services performance period | ' | ' | 'first 30-60 days | ' | ' |
Potentially dilutive convertible preferred stock | ' | ' | 4,596,126 | 5,556,577 | ' |
Shares not included in dilutive weighted average shares outstanding (in shares) | ' | 4,596,126 | 4,596,126 | ' | ' |
Deposits and Other Assets balance at end of period | ' | $30,000 | $30,000 | ' | $39,589 |
Deferred origination costs, net | ' | ' | ' | ' | 36,667 |
Deferred origination costs, gross | ' | 40,000 | 40,000 | ' | 40,000 |
Accumulated amortization of deferred origination costs | ' | 10,000 | 10,000 | ' | 3,333 |
Prepaid vendor expense | ' | ' | ' | ' | 2,922 |
Final settlement obligation for previously leased office facilities | 254,023 | ' | ' | ' | ' |
Final settlement obligation payment period | '12 months | ' | ' | ' | ' |
Current portion of deferred rent | ' | $42,337 | $42,337 | ' | $169,349 |
Minimum Range | ' | ' | ' | ' | ' |
Property and equipment useful lives | ' | ' | '3 Years | ' | ' |
Maximum Range | ' | ' | ' | ' | ' |
Property and equipment useful lives | ' | ' | '7 Years | ' | ' |
Halo Asset Management | ' | ' | ' | ' | ' |
Percentage of accounts receivable balance | ' | 91.00% | 91.00% | ' | ' |
Percentage of allowance for doubtful accounts | ' | 96.00% | 96.00% | ' | ' |
Halo Portfolio Advisors | ' | ' | ' | ' | ' |
Percentage of accounts receivable balance | ' | 9.00% | 9.00% | ' | ' |
Percentage of allowance for doubtful accounts | ' | 4.00% | 4.00% | ' | ' |
Concentrations_of_Credit_Risk_
Concentrations of Credit Risk (Details Narrative) (USD $) | 6 Months Ended | |
Jun. 30, 2014 | Dec. 31, 2013 | |
Concentrations Of Credit Risk Details Narrative | ' | ' |
FDIC insurance amount on deposits | ' | $250,000 |
Bank accounts and FDIC insurance | ' | ' |
At June 30, 2014, the Company's cash accounts were all less than the $250,000 FDIC insured amount and as such were insured in full. |
Operating_Segments_Operating_S
Operating Segments - Operating Segments Reporting (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |||||
Revenue | $827,905 | $2,983,081 | $1,420,193 | $3,868,298 | ||||
Operating income (loss) | -116,420 | 1,396,961 | -552,156 | 877,084 | ||||
Halo Asset Management | ' | ' | ' | ' | ||||
Revenue | 579,902 | 2,284,338 | 882,419 | 2,608,954 | ||||
Operating income (loss) | 392,799 | 1,956,415 | 432,412 | 1,930,853 | ||||
Halo Portfolio Advisors | ' | ' | ' | ' | ||||
Revenue | 248,003 | 698,743 | 537,774 | 1,230,813 | ||||
Operating income (loss) | 39,668 | 109,477 | 85,651 | 208,659 | ||||
Other | ' | ' | ' | ' | ||||
Revenue | ' | ' | ' | 28,531 | ||||
Operating income (loss) | ' | -109,082 | ' | -200,085 | ||||
Corporate Expenses | ' | ' | ' | ' | ||||
Operating income (loss) | ($548,887) | [1] | ($559,849) | [1] | ($1,070,219) | [1] | ($1,062,343) | [1] |
[1] | Corporate expenses include salaries, benefits and other expenses, including rent and general and administrative expenses, related to corporate office overhead and functions that benefit all operating segments. Corporate expenses are expenses that the Company does not directly allocate to any segment above. Allocating these indirect expenses to operating segments would require an imprecise allocation methodology. Further, there are no material amounts that are the elimination or reversal of transactions between the above reportable operating segments. |
Operating_Segments_Details_Nar
Operating Segments (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Interest expense | $103,671 | $52,201 | $196,466 | $156,359 |
Other | ' | ' | ' | ' |
Interest expense | ' | ' | ' | 118,231 |
Corporate Expenses | ' | ' | ' | ' |
Interest expense | ' | ' | ' | $38,128 |
Going_Concern_Details_Narrativ
Going Concern (Details Narrative) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Accumulated deficit at end of period | ($11,152,939) | ($10,600,783) |
Total non-cash retained earnings reductions to total deficit balance | 35.00% | ' |
Deficit Related to Stock-Based Compensation | ' | ' |
Accumulated deficit at end of period | -2,110,748 | ' |
Deficit Related to Depreciation Expense | ' | ' |
Accumulated deficit at end of period | -562,259 | ' |
Deficit Related to Impairment Loss | ' | ' |
Accumulated deficit at end of period | -279,241 | ' |
Deficit Related to Issuance of Stock Dividends | ' | ' |
Accumulated deficit at end of period | -906,278 | ' |
Total Non-Cash Retained Earnings | ' | ' |
Accumulated deficit at end of period | ($3,858,526) | ' |
Property_Equipment_and_Softwar2
Property, Equipment and Software (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Property Equipment And Software Details | ' | ' |
Computers and purchased software | $149,557 | $149,557 |
Furniture and equipment | 235,515 | 235,515 |
Property, equipment and software, gross | 385,072 | 385,072 |
Less: accumulated depreciation | -305,383 | -276,724 |
Property, equipment and software, net | $79,689 | $108,348 |
Property_Equipment_and_Softwar3
Property, Equipment and Software (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Property Equipment And Software Details Narrative | ' | ' | ' | ' |
Depreciation expense during the period | $14,286 | $14,574 | $28,659 | $29,386 |
Investments_in_Portfolio_Asset1
Investments in Portfolio Assets (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2011 | Jun. 30, 2014 | Dec. 31, 2010 | |
Investments In Portfolio Assets Details Narrative | ' | ' | ' |
Purchase price of investment | ' | ' | $300,000 |
Mortgage notes purchased at percentage of unpaid principal balance | ' | ' | 6.60% |
Payments received and applied to investment | 20,759 | ' | ' |
Recognized impairment of investment | 279,241 | ' | ' |
Investment assets placed into receivership | 300,000 | ' | ' |
Investment in portfolio assets at end of period | ' | $0 | ' |
Accrued_and_Other_Liabilities_
Accrued and Other Liabilities (Details Narrative) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Accrued liabilities | $618,222 | $345,524 |
Accrued deferred compensation | 310,725 | 63,926 |
Accrued interest | 307,497 | 277,042 |
Other accrued liabilities | ' | 4,556 |
Secured Asset Promissory Note | ' | ' |
Accrued interest | $214,955 | $218,568 |
Notes_Payable_to_Related_Parti1
Notes Payable to Related Parties (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | 1 Months Ended | 1 Months Ended | 6 Months Ended | 6 Months Ended | 6 Months Ended | |||||||||||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 | Mar. 31, 2011 | Sep. 30, 2011 | Jun. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2011 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | |
2011 Related Party Note | 2011 Amended Related Party Note | 2011 Amended Related Party Note | 2011 Amended Related Party Note | 2011 Consolidated Related Party Note | 2011 Consolidated Related Party Note | 2011 Consolidated Related Party Note | Director Cash Advance | Director Cash Advance | President and Chief Legal Officer Advance | President and Chief Legal Officer Advance | CEO and Director of the Board Advance | CEO and Director of the Board Advance | ||||||
Note payable | $983,235 | ' | $983,235 | ' | $582,559 | $250,000 | $302,426 | $180,666 | $182,379 | $370,639 | $267,569 | $270,180 | ' | ' | ' | ' | ' | ' |
Fixed interest amount on note | ' | ' | ' | ' | ' | 50,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accrued interest | ' | ' | ' | ' | ' | ' | 52,426 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Note interest rate | ' | ' | ' | ' | ' | ' | 6.00% | ' | ' | 6.00% | ' | ' | 15.00% | ' | 15.00% | ' | 15.00% | ' |
Maturity date | ' | ' | ' | ' | ' | 31-Jul-11 | 30-Sep-14 | ' | ' | 15-Sep-16 | ' | ' | ' | ' | ' | ' | ' | ' |
Cash advance from related party | ' | ' | 405,000 | 157,011 | ' | ' | ' | ' | ' | ' | ' | ' | 300,000 | ' | 40,000 | ' | 65,000 | ' |
Current portion of notes payable | 794,717 | ' | 794,717 | ' | 388,232 | ' | ' | 180,666 | 182,379 | ' | 79,051 | 75,853 | 350,000 | 50,000 | 70,000 | 30,000 | 115,000 | 50,000 |
Interest expense to directors and other related parties | 27,260 | 8,077 | 49,010 | 16,170 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accrued interest due to directors and other related parties, current portion | 92,541 | ' | 92,541 | ' | 58,149 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accrued interest due to directors and other related parties, total | $111,816 | ' | $111,816 | ' | $81,160 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Notes_Payable_Details_Narrativ
Notes Payable (Details Narrative) (USD $) | 6 Months Ended | 1 Months Ended | |||
Jun. 30, 2014 | Jun. 30, 2013 | Oct. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | |
2013 Unsecured Convertible Promissory Note | 2013 Unsecured Convertible Promissory Note | 2013 Unsecured Convertible Promissory Note | |||
Note amount | ' | ' | $1,500,000 | ' | ' |
Interest rate | ' | ' | 15.00% | ' | ' |
Maturity date | ' | ' | 10-Oct-16 | ' | ' |
Note payable | ' | ' | 1,500,000 | 1,672,600 | 1,551,828 |
Repayment of cash advance during period | 6,117 | 115,551 | 375,000 | ' | ' |
Principal balance convertible into common stock | ' | ' | 1,000,000 | ' | ' |
Maximum percentage of shares potentially acquired upon conversion | ' | ' | 10.00% | ' | ' |
Capitalized interest | ' | ' | ' | $172,600 | $51,828 |
Subordinated_Debt_Details_Narr
Subordinated Debt (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | 1 Months Ended | 6 Months Ended | 1 Months Ended | ||||||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 | Jan. 31, 2010 | Jun. 30, 2014 | Dec. 31, 2013 | Aug. 31, 2012 | Jun. 30, 2014 | Dec. 31, 2013 | |
2010 Subordinated Debt | 2010 Subordinated Debt | 2010 Subordinated Debt | 2012 Additional Subordinated Debt | 2012 Additional Subordinated Debt | 2012 Additional Subordinated Debt | ||||||
Subordinated debt authorized amount | ' | ' | ' | ' | ' | $750,000 | ' | ' | $25,000 | ' | ' |
Subordinated debt coupon rate | ' | ' | ' | ' | ' | 16.00% | ' | ' | 18.00% | ' | ' |
Subordinated debt origination fee | ' | ' | ' | ' | ' | 1.00% | ' | ' | ' | ' | ' |
Subordinated debt maturity date | ' | ' | ' | ' | ' | 31-Dec-13 | ' | ' | 31-Aug-15 | ' | ' |
Payment amortization term | ' | ' | ' | ' | ' | ' | ' | ' | '60 months | ' | ' |
Subordinated debt rights and restrictions description | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
The rights of the holder of this note is subordinated to any and all liens granted by the Company to a commercial bank or other qualified financial institution in connection with lines of credit or other loans extended to the Company in an amount not to exceed $2,000,000, and liens granted by the Company in connection with the purchase of furniture, fixtures or equipment | |||||||||||
Subordinated debt balance, current portion | 5,000 | ' | 5,000 | ' | 5,417 | ' | ' | ' | ' | 5,000 | 5,417 |
Subordinated debt balance | ' | ' | ' | ' | ' | ' | ' | 0 | ' | 18,333 | 21,250 |
Common stock potentially purchased by warrants offered as part of subordinated debt (in shares) | ' | ' | ' | ' | ' | 200,000 | ' | ' | ' | ' | ' |
Warrants exercise price (per share) | ' | ' | ' | ' | ' | $0.01 | ' | ' | ' | ' | ' |
Subordinated debt warrant description | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
The 200,000 shares of common stock contemplated to be issued upon exercise of the Warrants are based on an anticipated cumulative debt raise of $750,000. The investors are granted the Warrants pro rata based on their percentage of investment relative to the $750,000 aggregate principal amount of notes contemplated to be issued in the Subordinated Offering. The Warrants shall have a term of seven years, exercisable from January 31, 2015 to January 31, 2017. | |||||||||||
Warrant exercise date range, start | ' | ' | ' | ' | ' | 31-Jan-15 | ' | ' | ' | ' | ' |
Warrant exercise date range, end | ' | ' | ' | ' | ' | 31-Jan-17 | ' | ' | ' | ' | ' |
Call option purchase amount, prior to maturity | ' | ' | ' | ' | ' | 150,000 | ' | ' | ' | ' | ' |
Call option purchase amount, after maturity | ' | ' | ' | ' | ' | 200,000 | ' | ' | ' | ' | ' |
Debt discount balance | ' | ' | ' | ' | ' | ' | ' | 0 | ' | ' | ' |
Warrants outstanding | ' | ' | ' | ' | ' | ' | 112,000 | 112,000 | ' | ' | ' |
Derivative liability | 2,239 | ' | 2,239 | ' | 15,772 | ' | 2,239 | 15,772 | ' | ' | ' |
Change in fair value of derivatives | $10,518 | ($5,927) | $13,533 | $9,984 | ' | ' | ($13,533) | ' | ' | ' | ' |
Fair value of warrants | ' | ' | ' | ' | ' | ' | $0.02 | ' | ' | ' | ' |
Subordinated_Debt_Fair_Value_A
Subordinated Debt - Fair Value Assumptions (Details) | 6 Months Ended |
Jun. 30, 2014 | |
Subordinated Debt - Fair Value Assumptions Details | ' |
Risk-free rate | 0.90% |
Expected volatility | 604.02% |
Expected remaining life | '2 years 6 months |
Dividend yield | 0.00% |
Secured_Asset_Promissory_Note_
Secured Asset Promissory Note (Details Narrative) (USD $) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
31-May-13 | Dec. 31, 2010 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 | |
Proceeds from (repayments of) debt offering | ' | ' | ' | ' | ' | ($1,200,000) | ' |
Interest expense | ' | ' | 103,671 | 52,201 | 196,466 | 156,359 | ' |
Accrued interest paid | ' | ' | ' | ' | 42,308 | 193,969 | ' |
Secured Asset Promissory Note | ' | ' | ' | ' | ' | ' | ' |
Proceeds from (repayments of) debt offering | ' | 1,200,000 | ' | ' | ' | ' | ' |
Amount of proceeds used to acquire mortgage notes | ' | 300,000 | ' | ' | ' | ' | ' |
Interest rate | ' | 25.00% | ' | ' | ' | ' | 10.00% |
Note maturity date | 31-Dec-13 | 31-Dec-12 | ' | ' | 31-Dec-14 | ' | ' |
Secured note balance | 0 | ' | ' | ' | ' | ' | 0 |
Interest expense | ' | ' | 5,419 | 34,231 | 10,838 | 118,231 | ' |
Accrued interest | ' | ' | 214,995 | ' | 214,995 | ' | 218,568 |
Accrued interest paid | $150,000 | ' | ' | ' | ' | ' | ' |
Related_Party_Transactions_Det
Related Party Transactions (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Related Party Transactions Details Narrative | ' | ' | ' | ' |
Revenue from related party | $114,680 | $126,706 | $218,255 | $230,984 |
Income_Taxes_Details_Narrative
Income Taxes (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Net operating loss carry-forwards | $5,300,000 | ' | $5,300,000 | ' |
Net operating loss carry-forwards expiration | ' | ' | 31-Dec-33 | ' |
Effective tax rate | -23.00% | 2.00% | -4.00% | 3.00% |
NOLs prior to June 2004 | ' | ' | ' | ' |
GVC NOLs annual benefit | 6,500 | ' | 6,500 | ' |
NOLs between June 2004 and September 2009 | ' | ' | ' | ' |
GVC NOLs annual benefit | $159,000 | ' | $159,000 | ' |
Commitments_and_Contingencies_1
Commitments and Contingencies - Future Minimum Rental Obligations (Details) (USD $) | Jun. 30, 2014 |
Commitments And Contingencies - Future Minimum Rental Obligations Details | ' |
2014 | $54,424 |
2015 | 14,601 |
Thereafter | 0 |
Total minimum lease commitments | $69,025 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details Narrative) (USD $) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Aug. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Commitments And Contingencies Details Narrative | ' | ' | ' | ' | ' |
Facilities rent expense | ' | $29,751 | $112,142 | $59,493 | $219,462 |
Final settlement obligation for previously leased office facilities | 254,023 | ' | ' | ' | ' |
Final settlement obligation payment period | '12 months | ' | ' | ' | ' |
Damages sought in legal action | ' | ' | ' | $4,898,157 | ' |
Stock_Options_Stock_Option_Act
Stock Options - Stock Option Activity Summary (Details) (HGI 2007 Stock Plan, USD $) | 6 Months Ended | 12 Months Ended | 57 Months Ended |
Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | |
HGI 2007 Stock Plan | ' | ' | ' |
Outstanding, beginning balance (in shares) | 681,700 | 1,215,150 | ' |
Exercised (in shares) | ' | ' | 438,300 |
Canceled (in shares) | -434,200 | -533,450 | ' |
Outstanding, ending balance (in shares) | 247,500 | 681,700 | 247,500 |
Outstanding, beginning balance (weighted average exercise price) | $1 | $0.97 | ' |
Canceled (weighted average exercise price) | $0.96 | $0.93 | ' |
Outstanding, ending balance (weighted average exercise price) | $0.50 | $1 | $0.50 |
Exercise price lower range (per share) | $0.01 | $0.01 | ' |
Exercise price upper range (per share) | $1.59 | $1.59 | ' |
Canceled (exercise price per option) lower range | $0.94 | $0.01 | ' |
Canceled (exercise price per option) upper range | $1.59 | $0.94 | ' |
Stock_Options_Details_Narrativ
Stock Options (Details Narrative) (USD $) | 6 Months Ended | 24 Months Ended | 57 Months Ended | 6 Months Ended | 12 Months Ended | 47 Months Ended | ||
Jun. 30, 2014 | Sep. 30, 2011 | Jun. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jun. 30, 2014 | Dec. 31, 2012 | Jun. 30, 2014 | |
HGI 2007 Stock Plan | HGI 2007 Stock Plan | HGI 2007 Stock Plan | HGI 2007 Stock Plan | HGI 2007 Stock Plan | 2010 Stock Plan | 2010 Stock Plan | 2010 Stock Plan | |
Option description | ' | ' | ' | ' | ' | ' | ' | ' |
These options (i) vest over a period no greater than two years, (ii) are contingently exercisable upon the occurrence of a specified event as defined by the option agreements, and (iii) expire three months following termination of employment or five years from the date of grant depending on whether or not the options were granted as incentive options or non-qualified options. | ||||||||
Shares authorized under Plan | 2,950,000 | ' | 2,950,000 | ' | ' | 7,000,000 | ' | 7,000,000 |
Option shares exercised during the period | ' | ' | 438,300 | ' | ' | ' | ' | ' |
Stock options outstanding | 247,500 | ' | 247,500 | 681,700 | 1,215,150 | ' | ' | ' |
Weighted average remaining contractual life of outstanding options | '2 years 6 months | ' | ' | ' | ' | ' | ' | ' |
Compensation costs expensed | ' | $2,103,948 | ' | ' | ' | ' | $6,800 | ' |
Vesting period | '2 years | ' | ' | ' | ' | ' | ' | ' |
Expiration | ' | ' | ' | ' | ' | 18-Jul-20 | ' | ' |
Stock options awarded | ' | ' | ' | ' | ' | 20,000 | ' | 20,000 |
Weighted average exercise price of shares granted during period | ' | ' | ' | ' | ' | $0.34 | ' | ' |
Shareholders_Equity_Deficit_De
Shareholders' Equity (Deficit) (Details Narrative) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2010 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 |
Halo Companies, Inc. Series Z Convertible Preferred Stock | Halo Companies, Inc. Series Z Convertible Preferred Stock | Halo Companies, Inc. Preferred Stock | Halo Companies, Inc. Preferred Stock | Halo Companies, Inc. Series X Convertible Preferred Stock | Halo Companies, Inc. Series X Convertible Preferred Stock | Halo Group, Inc. Series A Convertible Preferred Stock | Halo Group, Inc. Series A Convertible Preferred Stock | Halo Group, Inc. Series B Convertible Preferred Stock | Halo Group, Inc. Series B Convertible Preferred Stock | Halo Group, Inc. Series C Convertible Preferred Stock | Halo Group, Inc. Series C Convertible Preferred Stock | Halo Companies, Inc. Series E Convertible Preferred Stock | Halo Companies, Inc. Series E Convertible Preferred Stock | Halo Companies, Inc. Common Stock | Halo Companies, Inc. Common Stock | Halo Companies, Inc. Series X Convertible Preferred Stock | Halo Companies, Inc. Series X Convertible Preferred Stock | Halo Group, Inc. Series A Convertible Preferred Stock | Halo Group, Inc. Series A Convertible Preferred Stock | Halo Group, Inc. Series B Convertible Preferred Stock | Halo Group, Inc. Series B Convertible Preferred Stock | Halo Group, Inc. Series C Convertible Preferred Stock | Halo Group, Inc. Series C Convertible Preferred Stock | Halo Companies, Inc. Series E Convertible Preferred Stock | |||
Par value | $0.00 | $0.00 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common shares issued per assignment agreement (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 21,200,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock issued for debt or equity capital (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Value of debt or equity capital received | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $3,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares issued for debt or equity capital subject to claw back provision (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Minimum new capital required to be generated by claw back provision | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares available for claw back provision for every dollar not raised (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.5 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock issued for intangible asset (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 13,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares issued for intangible asset subject to claw back provision (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 13,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Minimum net operating cash flows required to be generated by claw back provision | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares available for claw back provision for every dollar not generated from net operating cash flows (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.37 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
New capital generated claw back provision description | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
The Company issued 7,500,000 shares of Halo common stock in exchange for $3,000,000 in debt or equity capital. The aggregate of 7,500,000 shares of Halo common stock will be subject to clawback (and cancellation) by Halo in the event that EAM does not generate at least three million dollars ($3,000,000) in new capital to Halo within twelve months following the closing. Halo shall have the right to claw back 2.5 shares of Halo common stock for every dollar not raised within the twelve months. Any cash generated by EAM will need to be designated for use in Halo’s general operations and not that of the EHF business to release the clawback rights. | |||||||||||||||||||||||||||
Net operating cash claw back provision description | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
The Company issued 13,700,000 shares of Halo common stock for the purchase of intangible assets owned by EAM which included trade secrets and business processes used in the EHF business. The aggregate 13,700,000 shares of Halo common stock shall be subject to clawback (and cancellation) by Halo in the event that EAM fails to generate at least $10,000,000 of net operating cash flows from the EHF business within twenty-four months following the closing. Halo shall have the right to claw back 1.37 shares of Halo common for every dollar not generated from the net operating cash flows of the EHF business. Once the $10,000,000 in net operating cash flows from the EHF business is generated, the clawback rights will be released. | |||||||||||||||||||||||||||
Shares sought for forfeiture under claw back provision | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 21,200,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares issued and outstanding under claw back provision | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 21,200,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common shares outstanding | 66,364,083 | 66,364,083 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 66,364,083 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred shares initially authorized, prior to conversions | ' | ' | 1,000,000 | ' | ' | ' | 175,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred shares automatically authorized and converted | ' | ' | 82,508 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred shares authorized | ' | ' | 82,508 | 82,508 | 917,492 | 917,492 | 143,677 | 143,677 | 500,000 | 500,000 | 500,000 | 500,000 | 500,000 | 500,000 | 100,000 | 100,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Par value | ' | ' | $0.01 | $0.01 | $0.00 | $0.00 | $0.01 | $0.01 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred stock convertible into common shares (in shares) | ' | ' | 45 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Annual dividend rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 9.00% | ' | 8.00% | ' | 8.00% | ' | 8.00% | ' | 9.00% |
Liquidation preference (per share) | ' | ' | ' | ' | ' | ' | $10 | ' | ' | ' | ' | ' | ' | ' | $10 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Aggregate liquidation preference | ' | ' | ' | ' | ' | ' | 1,436,770 | ' | 682,177 | ' | 560,804 | ' | 378,086 | ' | 700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred shares issued | ' | ' | 0 | 0 | 0 | 0 | 143,677 | 143,677 | 372,999 | 372,999 | 229,956 | 229,956 | 124,000 | 124,000 | 70,000 | 70,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred shares outstanding | ' | ' | 0 | 0 | 0 | 0 | 143,677 | 143,677 | 372,999 | 372,999 | 229,956 | 229,956 | 124,000 | 124,000 | 70,000 | 70,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares issued in exchange for debt (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 53,677 | ' | ' | ' | ' | ' | ' | ' |
Shares issued for cash (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 90,000 | ' | ' | ' | ' | ' | ' | 70,000 |
Dividends payable | ' | ' | ' | ' | ' | ' | ' | ' | 122,679 | ' | 100,892 | ' | 68,086 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Conversion price (per share) | ' | ' | ' | ' | ' | ' | ' | ' | $1.25 | ' | $1.74 | ' | $2.27 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Redemption price (per share) | ' | ' | ' | ' | ' | ' | ' | ' | $1.80 | ' | $2.30 | ' | $2.75 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares converted during period (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 127,001 | ' | 270,044 | ' | 28,000 | ' |
Issue price (per share) | ' | ' | ' | ' | ' | ' | $10 | ' | ' | ' | ' | ' | ' | ' | $10 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Automatic conversion period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '36 months |
Proceeds received from issuance of preferred stock | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $700,000 |
Preferred stock convertible into common shares (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |