Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Apr. 13, 2018 | Jun. 30, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | DPW Holdings, Inc. | ||
Entity Central Index Key | 896,493 | ||
Document Type | 10-K | ||
Trading Symbol | DPW | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 6,831,098 | ||
Entity Common Stock, Shares Outstanding | 43,562,860 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 1,478 | $ 996 |
Marketable securities | 1,572 | |
Accounts receivable, net | 1,898 | 1,439 |
Accounts and other receivable, related party | 174 | |
Inventories, net | 1,993 | 1,122 |
Prepaid expenses and other current assets | 1,407 | 285 |
TOTAL CURRENT ASSETS | 8,522 | 3,842 |
Intangible assets | 2,898 | |
Goodwill | 3,652 | |
Property and equipment, net | 1,217 | 570 |
Investments - related parties, net of original issue discount of $2,115 and $45, respectively | 1,049 | 10,061 |
Other investments | 2,900 | |
Other investments, related parties | 917 | |
Other assets | 343 | 11 |
TOTAL ASSETS | 30,510 | 5,472 |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | 4,273 | 1,231 |
Accounts payable and accrued expenses, related party | 70 | |
Advances on future receipts | 1,963 | |
Short term advances | 1,047 | |
Short term advances, related party | 1,637 | |
Revolving credit facility | 388 | |
Notes payable | 402 | |
Notes payable, related party | 134 | (250) |
Convertible notes payable | 398 | |
Other current liabilities | 708 | 398 |
TOTAL CURRENT LIABILITIES | 11,020 | 1,879 |
LONG TERM LIABILITIES | ||
Notes payable | 525 | |
Notes payable, related parties | 175 | |
Convertible notes payable, related party, net of discount of $496 | 34 | |
TOTAL LIABILITIES | 11,720 | 1,913 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' EQUITY | ||
Preferred Stock, $0.001 par value - 23,151,224 shares authorized; nil shares issued and outstanding at December 31, 2017 and December 31, 2016 | ||
Additional paid-in capital | 36,888 | 16,529 |
Accumulated deficit | (23,412) | (12,158) |
Accumulated other comprehensive loss | 4,503 | (820) |
TOTAL DIGITAL POWER STOCKHOLDERS' EQUITY | 18,009 | 3,559 |
Non-controlling interest | 781 | |
TOTAL STOCKHOLDERS' EQUITY | 18,790 | 3,559 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 30,510 | 5,472 |
Series A Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY | ||
Redeemable Convertible Preferred Stock | ||
Series B Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY | ||
Redeemable Convertible Preferred Stock | ||
Series C Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY | ||
Redeemable Convertible Preferred Stock | ||
Series D Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY | ||
Redeemable Convertible Preferred Stock | ||
Series E Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY | ||
Redeemable Convertible Preferred Stock | ||
Common Class A [Member] | ||
STOCKHOLDERS' EQUITY | ||
Common Stock | 30 | 8 |
Common Class B [Member] | ||
STOCKHOLDERS' EQUITY | ||
Common Stock |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Investments - related parties, original issue discount | $ 2,115 | $ 45 |
Net of discount, advances on future receipts | $ 496 | |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 23,151,224 | 23,151,224 |
Preferred stock, issued | ||
Preferred stock, outstanding | ||
Series A Preferred Stock [Member] | ||
Convertible redeemable preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Convertible redeemable preferred stock, authorized | 500,000 | 500,000 |
Convertible redeemable preferred stock, issued | ||
Convertible redeemable preferred stock, outstanding | ||
Convertible redeemable preferred stock, par value (in dollars per share) | ||
Convertible redeemable preferred stock, stated value (in dollars per share) | ||
Convertible redeemable preferred stock, liquidation preference | ||
Series B Preferred Stock [Member] | ||
Convertible redeemable preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Convertible redeemable preferred stock, authorized | 500,000 | 500,000 |
Convertible redeemable preferred stock, issued | 100,000 | |
Convertible redeemable preferred stock, outstanding | ||
Convertible redeemable preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Convertible redeemable preferred stock, stated value (in dollars per share) | $ 10 | $ 10 |
Convertible redeemable preferred stock, liquidation preference | $ 1,000 | |
Series C Preferred Stock [Member] | ||
Convertible redeemable preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Convertible redeemable preferred stock, authorized | 460,000 | 460,000 |
Convertible redeemable preferred stock, issued | ||
Convertible redeemable preferred stock, outstanding | ||
Convertible redeemable preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Convertible redeemable preferred stock, stated value (in dollars per share) | $ 2.40 | $ 2.40 |
Convertible redeemable preferred stock, liquidation preference | ||
Series D Preferred Stock [Member] | ||
Convertible redeemable preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Convertible redeemable preferred stock, authorized | 378,776 | 378,776 |
Convertible redeemable preferred stock, issued | 378,776 | 378,776 |
Convertible redeemable preferred stock, outstanding | ||
Convertible redeemable preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Convertible redeemable preferred stock, stated value (in dollars per share) | $ 0.01 | $ 0.01 |
Convertible redeemable preferred stock, liquidation preference | $ 4 | $ 4 |
Series E Preferred Stock [Member] | ||
Convertible redeemable preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Convertible redeemable preferred stock, authorized | 10,000 | 10,000 |
Convertible redeemable preferred stock, issued | ||
Convertible redeemable preferred stock, outstanding | ||
Convertible redeemable preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Convertible redeemable preferred stock, stated value (in dollars per share) | $ 45 | $ 45 |
Convertible redeemable preferred stock, liquidation preference | ||
Common Class A [Member] | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 200,000,000 | 200,000,000 |
Common stock, issued | 30,222,299 | 7,677,637 |
Common stock, outstanding | 30,222,299 | 7,677,637 |
Common Class B [Member] | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 25,000,000 | 25,000,000 |
Common stock, issued | ||
Common stock, outstanding |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHNSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||
Revenue | $ 10,001 | $ 7,596 |
Revenue, related party | 174 | |
Cost of revenue | 6,325 | 4,890 |
Gross profit | 3,850 | 2,706 |
Operating expenses | ||
Engineering and product development | 1,120 | 709 |
Selling and marketing | 1,721 | 916 |
General and administrative | 6,992 | 2,300 |
Total operating expenses | 9,833 | 3,925 |
Loss from operations | (5,983) | (1,219) |
Interest (expense) income, net | (4,990) | 77 |
Loss before income taxes | (10,973) | (1,142) |
Income tax benefit | (78) | (20) |
Net loss | (10,895) | (1,122) |
Less: Net loss attributable to non-controlling interest | (279) | |
Net loss attributable to Digital Power Corp | (10,616) | (1,122) |
Preferred deemed dividends on Series B and Series C Preferred Stock | (584) | |
Preferred dividends on Series C Preferred Stock | (54) | |
Net loss available to common stockholders | $ (11,254) | $ (1,122) |
Basic and diluted net loss per common share (in dollars per share) | $ (0.88) | $ (0.16) |
Basic and diluted weighted average common shares outstanding (in shares) | 12,789,130 | 6,916,568 |
Comprehensive Loss | ||
Loss available to common stockholders | $ (11,254) | $ (1,122) |
Other comprehensive income (loss) | ||
Foreign currency translation adjustment | 152 | (362) |
Net unrealized gain on securities available-for-sale | 5,171 | |
Other comprehensive income (loss) | 5,323 | (362) |
Total Comprehensive loss | $ (5,931) | $ (1,484) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Non-controlling Interest [Member] | Total |
Balance (in shares) at Dec. 31, 2015 | 6,775,971 | ||||||
Balance at Dec. 31, 2015 | $ 7 | $ 14,958 | $ (11,036) | $ (458) | $ 3,471 | ||
Compensation expense due to stock option issuances | 520 | 520 | |||||
Compensation expense due to warrant issuances | 23 | 23 | |||||
Issuance of common stock and warrants for cash (in shares) | 901,666 | ||||||
Issuance of common stock and warrants for cash | $ 1 | 540 | 541 | ||||
Issuance of common stock for conversion of debt | |||||||
Issuance of common stock for domain name | |||||||
Beneficial conversion feature in connection with convertible notes | 329 | 329 | |||||
Fair value warrants issued in connection with convertible notes | 159 | 159 | |||||
Comprehensive loss: | |||||||
Net loss | (1,122) | (1,122) | |||||
Foreign currency translation adjustments | (362) | (362) | |||||
Net loss attributable to non-controlling interest | |||||||
Balance (in shares) at Dec. 31, 2016 | 7,677,637 | ||||||
Balance at Dec. 31, 2016 | $ 8 | 16,529 | (12,158) | (820) | 3,559 | ||
Compensation expense due to stock option issuances | 485 | 485 | |||||
Compensation expense due to warrant issuances | 93 | 93 | |||||
Issuance of common stock and warrants for cash (in shares) | 2,729,645 | ||||||
Issuance of common stock and warrants for cash | $ 3 | 1,959 | 1,962 | ||||
Issuance of common stock for services (in shares) | 2,161,345 | ||||||
Issuance of common stock for services | $ 2 | 1,661 | 1,663 | ||||
Issuance of common stock for conversion of debt (in shares) | 6,759,798 | ||||||
Issuance of common stock for conversion of debt | $ 7 | 4,029 | 4,036 | ||||
Issuance of common stock upon exercise of stock options (in shares) | 361,458 | ||||||
Issuance of common stock upon exercise of stock options | 557 | 557 | |||||
Issuance of common stock upon exercise of warrants (in shares) | 3,546,108 | ||||||
Issuance of common stock upon exercise of warrants | $ 3 | 2,242 | 2,245 | ||||
Issuance of Series B preferred stock for cash and warrants (in shares) | 50,000 | ||||||
Issuance of Series B preferred stock for cash and warrants | 500 | 500 | |||||
Issuance of Series B preferred stock for conversion of debt (in shares) | 50,000 | ||||||
Issuance of Series B preferred stock for conversion of debt | 500 | 500 | |||||
Issuance of Series C preferred stock for cash and warrants (in shares) | 433,335 | ||||||
Issuance of Series C preferred stock for cash and warrants | 898 | 898 | |||||
Issuance of Series C preferred stock for conversion of debt (in shares) | 21,667 | ||||||
Issuance of Series C preferred stock for conversion of debt | 52 | 52 | |||||
Issuance of common stock for conversion of Series C preferred stock (in shares) | (455,002) | 1,820,008 | |||||
Issuance of common stock for conversion of Series C preferred stock | $ 2 | (2) | |||||
Issuance of Series D preferred stock and common stock in acquisition of Microphase (in shares) | 378,776 | 1,842,448 | |||||
Issuance of Series D preferred stock and common stock in acquisition of Microphase | $ 2 | 1,449 | $ 945 | 2,396 | |||
Issuance of Series E preferred stock and common stock in acquisition of Microphase (in shares) | 10,000 | ||||||
Issuance of common stock for conversion of Series E preferred stock (in shares) | (10,000) | 600,000 | |||||
Issuance of common stock for conversion of Series E preferred stock | $ 1 | 470 | 471 | ||||
Issuance of common stock in connection with convertible notes (in shares) | 450,000 | ||||||
Issuance of common stock in connection with convertible notes | 399 | 399 | |||||
Issuance of common stock for domain name (in shares) | 50,000 | ||||||
Issuance of common stock for domain name | 31 | 31 | |||||
Issuance of common stock and warrants in satisfaction of subsidiary debt (in shares) | 1,523,852 | ||||||
Issuance of common stock and warrants in satisfaction of subsidiary debt | $ 1 | 939 | 940 | ||||
Issuance of common stock for acquisition of debt due from related party (in shares) | 600,000 | ||||||
Issuance of common stock for acquisition of debt due from related party | $ 1 | 599 | 600 | ||||
Beneficial conversion feature in connection with convertible notes | 787 | 787 | |||||
Fair value warrants issued in connection with convertible notes | 2,134 | 2,134 | |||||
Fair value of personal guarantees in connection with debt financings | 75 | 75 | |||||
Issuance of common stock for conversion of debt owed by subsidiary to former stakeholder | 115 | 115 | |||||
Issuance of common stock and cash for exchange fees and other financing costs (in shares) | 100,000 | ||||||
Issuance of common stock and cash for exchange fees and other financing costs | (82) | (82) | |||||
Comprehensive loss: | |||||||
Net loss | (10,616) | (10,616) | |||||
Preferred dividends | (54) | (54) | |||||
Preferred deemed dividends | 584 | (584) | |||||
Net unrealized gain on securities available-for-sale, net of income taxes | 5,171 | 5,171 | |||||
Foreign currency translation adjustments | 152 | 152 | |||||
Net loss attributable to non-controlling interest | (279) | 279 | |||||
Balance (in shares) at Dec. 31, 2017 | 478,776 | 30,222,299 | |||||
Balance at Dec. 31, 2017 | $ 30 | $ 36,888 | $ (23,412) | $ 4,503 | $ 781 | $ 18,009 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (10,895) | $ (1,122) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 194 | 161 |
Amortization | 61 | |
Interest expense - debt discount | 4,688 | 34 |
Accretion of original issue discount on notes receivable - related party | (454) | (2) |
Interest income on conversion of promissory notes to common stock | 13 | |
Deferred taxes | (226) | |
Provision for bad debts | (32) | 32 |
Reserve for inventory | 68 | |
Stock-based compensation | 1,831 | 543 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 285 | (311) |
Accounts receivable, related party | (174) | 77 |
Inventories | 100 | 209 |
Prepaid expenses and other current assets | (764) | (119) |
Other investments, related party | (335) | |
Other assets | (70) | (11) |
Accounts payable and accrued expenses | 1,517 | 322 |
Accounts payable, related parties | 70 | |
Other current liabilities | 74 | (239) |
Net cash used in operating activities | (4,117) | (358) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (403) | (85) |
Proceeds from sale of property and equipment | 17 | |
Purchase of intangible asset | (50) | |
Purchase of Power-Plus | (378) | |
Cash received on acquisiton of Microphase | 111 | |
Sale of investment - related party | 90 | |
Investments - related party | (3,201) | (1,034) |
Investment in real property - related party | (300) | |
Investments in marketable securities | (1,486) | |
Sales of marketable securities | 64 | |
Loans to related parties | (44) | |
Proceeds from loans to related parties | 35 | |
Investments in debt and equity securities | (3,039) | |
Net cash used in investing activities | (8,674) | (1,029) |
Cash flows from financing activities: | ||
Gross proceeds from sales of common stock and warrants | 2,035 | 541 |
Proceeds from issuance of preferred stock | 1,540 | |
Financing cost in connection with sales of equity securities | (297) | |
Proceeds from stock option exercises | 557 | |
Proceeds from warrant exercises | 2,245 | |
Proceeds from convertible notes payable | 2,918 | |
Payments on convertible notes payable | (157) | |
Proceeds from convertible notes payable, net - related party | 488 | |
Proceeds from notes payable - related party | 350 | 250 |
Proceeds from notes payable | 857 | |
Proceeds from short-term advances - related party | 1,637 | |
Proceeds from short-term advances | 1,047 | |
Payments on notes payable | (190) | |
Proceeds from advances on future receipts | 2,889 | |
Payments on advances on future receipts | (1,526) | |
Payments of preferred dividends | (35) | |
Financing cost in connection with sales of debt securities | (122) | |
Payments on revolving credit facilities, net | (524) | |
Net cash provided by financing activities | 13,224 | 1,279 |
Effect of exchange rate changes on cash and cash equivalents | 49 | (137) |
Net increase (decrease) in cash and cash equivalents | 482 | (245) |
Cash and cash equivalents at beginning of period | 996 | 1,241 |
Cash and cash equivalents at end of period | 1,478 | 996 |
Supplemental disclosures of cash flow information: | ||
Cash paid during the period for interest | 271 | |
Non-cash investing and financing activities: | ||
Cancellation of notes payable - related party into shares of common stock | 370 | |
Cancellation of notes payable into shares of common stock | $ 4,036 | |
Cancellation of note payable - related party into series B convertible preferred stock | 500 | |
Cancellation of convertible note payable into shares of common stock | $ 2,497 | |
Cancellation of convertible note payable - related party into shares of common stock | 530 | |
Issuance of common stock for domain name | 31 | |
Issuance of common stock for prepaid services | 410 | |
In connection with the Company's acquisition of Microphase Corporation, equity instruments were issued and liabilities assumed during 2017 as follows: | ||
Fair value of assets acquired | 8,275 | |
Equity instruments issued | (1,451) | |
Non-controlling interest | (945) | |
Liabilities assumed | $ 5,879 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | 1. DESCRIPTION OF BUSINESS DPW Holdings, Inc. ( “DPW” or the “Company” “Coolisys “DP Limited” “DP Lending” purchased 56.4% of the outstanding equity interests of Microphase Corporation, a Delaware corporation (the “Microphase” “OEM” “RF” “DLVA” “Power-Plus” Power-Plus is an industrial distributor of value added power supply solutions, UPS systems, fans, filters, line cords, and other power-related components. The Company’s results of operations include the results of Microphase and Power-Plus from their respective acquisition dates forward. “Company” |
LIQUIDITY, GOING CONCERN AND MA
LIQUIDITY, GOING CONCERN AND MANAGEMENT'S PLANS | 12 Months Ended |
Dec. 31, 2017 | |
Liquidity Going Concern And Managements Plans | |
LIQUIDITY, GOING CONCERN AND MANAGEMENT'S PLANS | 2. LIQUIDITY, GOING CONCERN AND MANAGEMENT’S PLANS The accompanying consolidated financial statements have been prepared on the basis that the Company will continue as a going concern. As of December 31, 2017, the Company had cash and cash equivalents of $1,478, an accumulated deficit of $23,412 and a negative working capital of $2,235. The Company has incurred recurring losses and reported losses for the years ended December 31, 2017 and 2016, totaled $10,616 and $1,122, respectively. In the past, the Company has financed its operations principally through issuances of convertible debt, promissory notes and equity securities. During 2017, the Company continued to successfully obtain additional equity and debt financing and in restructuring existing debt. The Company expects to continue to incur losses for the foreseeable future and needs to raise additional capital to continue its business development initiatives and to support its working capital requirements. In March 2017, the Company was awarded a 3-year, $50 million purchase order by MTIX Ltd. ( “MTIX” “MLSE” |
BASIS OF PRESENTATION AND SIGNI
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 3. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ( “U.S. GAAP” Principles of Consolidation The consolidated financial statements include the accounts of DPW, its wholly-owned subsidiaries, DP Limited, Coolisys, Power-Plus and DP Lending and its majority-owned subsidiary, Microphase. All significant intercompany accounts and transactions have been eliminated in consolidation. Accounting Estimates The preparation of financial statements, in conformity with U.S. GAAP, requires management to make estimates, judgments and assumptions. The Company's management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. Key estimates include acquisition accounting, fair value of certain financial instruments, reserve for trade receivables and inventories, carrying amounts of investments, accruals of certain liabilities including product warranties, and deferred income taxes and related valuation allowance. Foreign Currency Translation A substantial portion of the Company’s revenues are generated in U.S. dollars ( “U.S. dollar” Accordingly, monetary accounts maintained in currencies other than the U.S. dollar are re-measured into U.S. dollars in accordance with Financial Accounting Standards Board ( “FASB” “ASC” Foreign Currency Matters “ASC No. 830” The financial statements of DPL, whose functional currency has been determined to be its local currency, British Pound ( “GBP” Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents. The Company’s cash is maintained in checking accounts, money market funds and certificates of deposits with reputable financial institutions. These balances may, at times, exceed the U.S. Federal Deposit Insurance Corporation insurance limits. The Company has cash and cash equivalents of $292 and $736 at December 31, 2017 and 2016, respectively, in the United Kingdom ( “U.K” Marketable Securities The Company classifies its investments in equity securities, in accordance with ASC No. 320, Investment in Debt and Equity Securities “ASC No. 320” Investment – Other “ASC No. 325” Marketable securities are designated either as trading or available-for-sale securities and are accounted for at fair value. Marketable securities are classified as short-term or long-term based on the nature of the securities and their availability to meet current operating requirements. Marketable securities that are readily available for use in current operations and are classified as short-term available-for-sale securities are reported as a component of current assets in the accompanying consolidated balance sheets. Marketable securities that are not trading securities and are not considered available for use in current operations are classified as long-term available-for-sale securities and are reported as a component of long-term assets in the accompanying consolidated balance sheets. Securities that are classified as trading are carried at fair value, with changes in fair value reported as a component of income. Securities that are classified as available-for-sale are carried at fair value, with temporary unrealized gains and losses reported as a component of stockholders' equity until their disposition. The cost of securities sold is based on the specific identification method. All of the Company’s marketable securities are subject to a periodic impairment review. The Company recognizes an impairment charge when a decline in the fair value of its investments below the cost basis is judged to be other-than-temporary. When evaluating the Company’s debt and equity investments for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer and any changes thereto, and the Company’s intent to sell, or whether it is more likely than not that it will be required to sell, the investment before recovery of the investment’s amortized cost basis. Equity securities that do not have readily determinable fair values (i.e., non-marketable equity securities) and are not required to be accounted for under the equity method are typically carried at cost (i.e., cost method investments), as described in ASC No. 325-20. For the year ended December 31, 2017, no other-than-temporary impairment charges were recorded. Accounts Receivable and Allowance for Doubtful Accounts The Company’s receivables are recorded when billed and represent claims against third parties that will be settled in cash. The carrying amount of the Company’s receivables, net of the allowance for doubtful accounts, represents their estimated net realizable value. The Company individually reviews all accounts receivable balances and based upon an assessment of current creditworthiness, estimates the portion, if any, of the balance that will not be collected. The Company estimates the allowance for doubtful accounts based on historical collection trends, age of outstanding receivables and existing economic conditions. If events or changes in circumstances indicate that a specific receivable balance may be impaired, further consideration is given to the collectability of those balances and the allowance is adjusted accordingly. A customer’s receivable balance is considered past-due based on its contractual terms. Past-due receivable balances are written-off when the Company’s internal collection efforts have been unsuccessful in collecting the amount due. Based on an assessment as of December 31, 2017 and 2016, of the collectability of invoices, accounts receivable are presented net of an allowance for doubtful accounts of $5 and $32, respectively. Inventories Inventories are stated at the lower of cost or net realizable value. Inventory write-offs are provided to cover risks arising from slow-moving items or technological obsolescence. Cost of inventories is determined as follows: Raw materials, parts and supplies - using the “first-in, first-out” method. Work-in-progress and finished products - on the basis of direct manufacturing costs with the addition of indirect manufacturing costs. The Company periodically assesses its inventories valuation in respect of obsolete and slow-moving items by reviewing revenue forecasts and technological obsolescence. When inventories on hand exceed the foreseeable demand or become obsolete, the value of excess inventory, which at the time of the review was not expected to be sold, is written off. During the years ended December 31, 2017 and 2016, the Company recorded inventory write-offs of nil and $84, respectively, within the cost of revenue. Property and Equipment, Net Property and equipment as well as an intangible asset are stated at cost, net of accumulated depreciation and amortization. Repairs and maintenance costs are expensed as incurred. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the assets, at the following annual rates: Useful lives (in years) Computer, software and related equipment 3 - 5 Office furniture and equipment 5 - 10 Leasehold improvements Over the term of the lease or the life of the asset, whichever is shorter. Goodwill The Company evaluates its goodwill for impairment in accordance with ASC 350, Intangibles – Goodwill and Other The Company tests the recorded amount of goodwill for impairment on an annual basis on December 31 of each fiscal year or more frequently if there are indicators that the carrying amount of the goodwill exceeds its carried value. At December 31, 2017, the Company had two reporting units. The Company performed a qualitative assessment and concluded that no impairment existed as of December 31, 2017. Intangible Assets The Company acquired amortizable intangibles assets as part of two asset purchase agreements consisting of trademarks and non-compete agreements. The Company also has the trade name and trademark associated with the acquisition of Microphase that was determined to have an indefinite life. The Company’s intangible assets, net also include definite lived intangible assets, which are being amortized on a straight-line basis over their estimated useful lives as follows: Useful lives (in years) Customer list 5 - 14 Non-competition agreements 3 Domain name 3 The Company reviews intangible assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets might not be recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends, and significant changes or planned changes in the use of the assets. If an impairment review is performed to evaluate a long-lived asset for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset to its carrying value. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset are less than its carrying amount. The impairment loss would be based on the excess of the carrying value of the impaired asset over its fair value, determined based on discounted cash flows. No impairments were recorded on intangible assets as no impairment indicators were noted for the periods presented in these consolidated financial statements. Long-Lived Assets The long-lived assets of the Company are reviewed for impairment in accordance with ASC No. 360, Property, Plant, and Equipment Revenue Recognition The Company generates revenues from the sale of its products through a direct and indirect sales force. Revenues from products are recognized in accordance with ASC No. 605, Revenue Recognition Warranty The Company offers a warranty period for all its manufactured products. Warranty periods range from one to two years depending on the product. The Company estimates the costs that may be incurred under its warranty and records a liability in the amount of such costs at the time product revenue is recognized. Factors that affect the Company's warranty liability include the number of units sold, historical rates of warranty claims and cost per claim. The Company periodically assesses the adequacy of its recorded warranty liability and adjusts the amounts as necessary. As of December 31, 2017 and 2016, the Company’s accrued warranty liability was $86. Income Taxes The Company determines its income taxes under the asset and liability method in accordance with FASB ASC No. 740, Income Taxes The Company accounts for uncertain tax positions in accordance with ASC No. 740-10-25 . Common Stock Purchase Warrants and Other Derivative Financial Instruments The Company classifies common stock purchase warrants and other free standing derivative financial instruments as equity if the contracts (i) require physical settlement or net-share settlement or (ii) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies any contracts that (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company), (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement), or (iii) contain reset provisions as either an asset or a liability. The Company assesses classification of its freestanding derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required. The Company determined that certain freestanding derivatives, which principally consist of issuance of warrants to purchase shares of common in connection with convertible notes, units and to employees of the Company, satisfy the criteria for classification as equity instruments as these warrants do not contain cash settlement features or variable settlement provision that cause them to not be indexed to the Company’s own stock. Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC No. 718, Compensation – Stock Compensation “ASC No. 718” The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of ASC No. 505-50, Equity Based Payments to Non-Employees Convertible Instruments The Company accounts for hybrid contracts that feature conversion options in accordance with ASC No. 815, Derivatives and Hedging Activities “ASC No. 815” Conversion options that contain variable settlement features such as provisions to adjust the conversion price upon subsequent issuances of equity or equity linked securities at exercise prices more favorable than that featured in the hybrid contract generally result in their bifurcation from the host instrument. The Company accounts for convertible instruments, when the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, in accordance with ASC No. 470-20, Debt with Conversion and Other Options “ASC No. 470-20” Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and trade receivables. Cash and cash equivalents are invested in banks in the U.S. and in the UK. Such deposits in the United States may be in excess of insured limits and are not insured in other jurisdictions. Trade receivables of the Company and its subsidiaries are mainly derived from sales to customers located primarily in the U.S. and in Europe. The Company performs ongoing credit evaluations of its customers and to date has not experienced any material losses. An allowance for doubtful accounts is determined with respect to those amounts that the Company and its subsidiaries have determined to be doubtful of collection. Comprehensive Income (Loss) The Company reports comprehensive loss in accordance with ASC No. 220, Comprehensive Income Fair value of Financial Instruments In accordance with ASC No. 820, Fair Value Measurements and Disclosures The guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or model-derived valuations. All significant inputs used in our valuations are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities Level 2 inputs also include quoted prices that were adjusted for security-specific restrictions which are compared to output from internally developed models such as a discounted cash flow models. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The carrying amounts of financial instruments carried at cost, including cash and cash equivalents, accounts receivables and accounts receivable – related party, investments, notes receivable, trade payables and trade payables – related party approximate their fair value due to the short-term maturities of such instruments. As of December 31, 2017 and 2016, the fair value of the Company’s investments were $9,563 and $84, respectively, and were concentrated in equity securities of AVLP, a related party (See Note 9), which are classified as available-for-sale investments. At December 31, 2017, the Company's investment in AVLP included marketable equity securities of $826 and warrants to purchase 8,248,440 shares of AVLP common stock at an exercise price of $0.50 per share of common stock. At December 31, 2016, the Company's investment in AVLP included marketable equity securities of $84. For investments in marketable equity securities, the Company took into consideration general market conditions, the duration and extent to which the fair value is above cost, and the Company’s ability and intent to hold the investment for a sufficient period of time to allow for recovery of value in the foreseeable future. As a result of this analysis, the Company has determined that its investment in AVLP marketable equity securities are valued based upon the closing market price of common stock at December 31, 2017, which resulted in an unrealized gain of $550. At December 31, 2017, the Company held shares of common stock in six companies that it purchased at the market for a total cost of $1,702. In accordance with ASC No. 320-10, these investments are accounted for based upon the closing market prices of common stock for these five companies at December 31, 2017 resulting in an unrealized gain of $133. The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy: Fair Value Measurement at December 31, 2017 Total Level 1 Level 2 Level 3 Investments in common stock and warrants of $ 7,728 $ 826 $ — $ 6,902 Investments in marketable securities $ 1,835 $ 1,835 $ — $ — Total Investments $ 9,563 $ 2,661 $ — $ 6,902 Fair Value Measurement at December 31, 2016 Total Level 1 Level 2 Level 3 Investments in common stock and warrants of $ 84 $ 84 $ — $ — We assess the inputs used to measure fair value using a three-tier hierarchy based on the extent to which inputs used in measuring fair value are observable in the market: · Level 1 – inputs include quoted prices for identical instruments and are the most observable. · Level 2 – inputs include quoted prices for similar assets and observable inputs such as interest rates, currency exchange rates and yield curves. · Level 3 – inputs are not observable in the market and include management’s judgments about the assumptions market participants would use in pricing the asset or liability. Debt Discounts The Company accounts for debt discount according to ASC No. 470-20, Debt with Conversion and Other Options Net Loss per Share Net loss per share is computed by dividing the net loss to common stockholders by the weighted average number of common shares outstanding. The calculation of the basic and diluted earnings per share is the same for all periods presented, as the effect of the potential common stock equivalents is anti-dilutive due to the Company’s net loss position for all periods presented. The Company has included 317,460 warrants, with an exercise price of $.01, in its earnings per share calculation for the year ended December 31, 2017 and 2016. Anti-dilutive securities, which are convertible into the Company’s Class A common stock, consisted of the following at December 31, 2017 2016 Stock options 3,842,500 2,256,000 Warrants (1) 4,071,408 1,431,666 Convertible notes 1,283,940 963,636 Conversion of preferred stock 2,186,123 — Total 11,383,971 4,651,302 (1) The Company has excluded the 317,460 warrants with an exercise price of $0.01 per share in its anti-dilutive securities. Reclassifications Certain prior year amounts have been reclassified for comparative purposes to conform to the current-year financial statement presentation. These reclassifications had no effect on previously reported results of operations. In addition, certain prior year amounts from the restated amounts have been reclassified for consistency with the current period presentation. Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board ( “FASB” “GAAP” In January 2016, the FASB issued ASU No. 2016-01, "Recognition and Measurement of Financial Assets and Liabilities" “ASU 2016-01” In February 2016, the FASB issued ASU No. 2016-02, Leases “ASU 2016-02” In March 2016, the FASB issued ASU No. 2016-09, which revises the guidance in ASC 718, Compensation - Stock Compensation In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments “ASU No. 2016-13” In August 2016, the FASB issued ASU No. 2016-15, which revises the guidance in ASC 230, Statement of Cash Flows In December 2016, the FASB issued ASU No. 2016-19, Technical Corrections and Improvements In January 2017, the FASB issued an ASU No. 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350) “ASU 2017-04” In July 2017, the FASB issued ASU No. 2017-11, Earnings per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815) “ASU 2017-11” |
Marketable Securities
Marketable Securities | 12 Months Ended |
Dec. 31, 2017 | |
Marketable Securities [Abstract] | |
Marketable Securities | 4. Marketable Securities Marketable securities in equity securities with readily determinable market prices consisted of the following as of December 31, 2017: Available-for-sale securities Gross unrealized Gross realized Cost gains (losses) gains (losses) Fair value Common shares $ 1,702 $ 133 $ — $ 1,835 Available-for-sale Securities During 2017, the Company invested in the marketable securities of five publicly traded companies. At December 31, 2017, the Company recorded an unrealized gain of $133, representing the difference between the $1,439 cost basis and the estimated fair value, as accumulated other comprehensive income in the stockholder's equity section of the Company’s consolidated balance sheet and as a change in unrealized gains and losses on marketable securities in the Company’s consolidated statements of comprehensive income (loss). The Company’s investment in marketable securities shall be revalued on each balance sheet date. The fair value of the Company’s holdings in marketable securities at December 31, 2017 is a Level 1 measurement. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | |
INVENTORIES | 5. INVENTORIES At December 31, 2017 and 2016, inventories consist of: 2017 2016 Raw materials, parts and supplies 542 271 Work-in-progress 685 238 Finished products 766 613 Total inventories 1,993 1,122 |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | |
PROPERTY AND EQUIPMENT, NET | 6. PROPERTY AND EQUIPMENT, NET At December 31, 2017 and 2016, property and equipment consist of: 2017 2016 Computer, software and related equipment 2,432 1,652 Office furniture and equipment 289 240 Leasehold improvements 788 699 3,509 2,591 Accumulated depreciation and amortization (2,292 ) (2,021 ) Property and equipment, net 1,217 570 For the years ended December 31, 2017 and 2016, depreciation expense amounted to $194 and $161, respectively. |
INTANGIBLE ASSETS, NET
INTANGIBLE ASSETS, NET | 12 Months Ended |
Dec. 31, 2017 | |
Intangible Assets Net | |
INTANGIBLE ASSETS, NET | 7. INTANGIBLE ASSETS, NET At December 31, 2017 intangible assets consist of: Intangible Assets Balance as of December 31, 2016 $ — Trade name and trademark 1,740 Customer list 988 Non-competition agreements 150 Domain name 81 Accumulated amortization (61 ) Balance as of December 31 2017 $ 2,898 Amortization expense was $61 and nil for the years ended December 31, 2017 and 2016, respectively. The customer list and non-competition agreements are subject to amortization over their estimated useful lives, which range between 3 and 14 years. The following table presents estimated amortization expense for each of the succeeding five calendar years and thereafter. 2018 $ 133 2019 133 2020 117 2021 83 2022 77 Thereafter 534 $ 1,077 |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill Abstract | |
GOODWILL | 8. GOODWILL The Company’s goodwill relates to the acquisition of a majority interest in Microphase and the acquisition of all of the outstanding membership interests in Power Plus (See Note 12). |
INVESTMENTS - RELATED PARTIES
INVESTMENTS - RELATED PARTIES | 12 Months Ended |
Dec. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
INVESTMENTS - RELATED PARTIES | 9. INVESTMENTS – RELATED PARTIES Investments in AVLP at December 31, 2017 and 2016, are comprised of the following: 2017 2016 Investment in convertible promissory note of AVLP $ 4,124 $ 997 Investment in warrants of AVLP 6,902 — Investment in common stock of AVLP 826 84 Accrued interest in convertible promissory note of AVLP 324 9 Total investment in AVLP – Gross 12,176 1,090 Less: original issue discount (2,115 ) (45 ) Total investment in AVLP – Net $ 10,061 $ 1,045 Investment in warrants and common stock of AVLP $ 7,728 $ 84 Investment in convertible promissory note of AVLP 2,333 961 Total investment in AVLP – Net $ 10,061 $ 1,045 During the year ended December 31, 2016, the Company made a strategic decision to invest in AVLP, a related party controlled by Philou, an existing majority stockholder. The Company’s investments in AVLP primarily consist of convertible promissory notes and shares of common stock of AVLP. On October 5, 2016, November 30, 2016, and February 22, 2017, the Company entered into three 12% Convertible Promissory Notes with AVLP (the “AVLP Notes” Subject to adjustment, AVLP . On September 6, 2017, the Company and AVLP entered into a Loan and Security Agreement ( “AVLP Loan Agreement” In consideration of entering into the AVLP Loan Agreement, the Company and AVLP cancelled the AVLP Notes and consolidated the AVLP Notes and prior advances totaling $3,309 plus original issue discount of $165 and issued a new Convertible Promissory Note in the aggregate principal amount of $3,474 (the “New Note” The warrants entitle the Company to purchase up to 8,248,440 shares of AVLP common stock at an exercise price of $0.50 per share for a period of five years. The exercise price of $0.50 is subject to adjustment for customary stock splits, stock dividends, combinations or similar events. The warrant may be exercised for cash or on a cashless basis. The Company recorded an unrealized gain on its investment in warrants of AVLP of $4,513, representing the difference between the cost basis of $2,389 and the estimated fair value of the warrants net of tax as of December 31, 2017, in the Company’s accumulated other comprehensive income in the stockholder's equity section of the Company’s consolidated balance sheet and as a change in net unrealized gains on securities available-for-sale in the Company’s consolidated statements of comprehensive loss. In accordance with ASC No. 310, Receivables “ASC 310” The original issue discount of $165 on the New Note and the discount attributed to the fair value of the warrants of $2,389 is being amortized as interest income through the maturity date. During the years ended December 31, 2017 and 2016, the Company recorded $454 and $2, respectively, of interest income for the discount accretion. As of December 31, 2017 and 2016, the Company recorded contractual interest receivable attributed to the AVLP Notes and AVLP Loan Agreement of $324 and $11, respectively. The Company evaluated the collectability of both interest and principal for the convertible promissory notes in AVLP to determine whether there was an impairment. Based on current information and events, the Company determined that it is probable that it will be able to collect amounts due according to the existing contractual terms. Impairment assessments require significant judgments and are based on significant assumptions related to the borrower’s credit risk, financial performance, expected sales, and estimated fair value of the collateral. During the years ended December 31, 2017 and 2016, the Company also |
INVESTMENTS IN PREFERRED STOCK
INVESTMENTS IN PREFERRED STOCK OF PRIVATE COMPANY AND OTHER INVESTMENTS | 12 Months Ended |
Dec. 31, 2017 | |
Other Investments [Abstract] | |
INVESTMENTS IN PREFERRED STOCK OF PRIVATE COMPANY AND OTHER INVESTMENTS | 10. INVESTMENTS IN PREFERRED STOCK OF PRIVATE COMPANY AND OTHER INVESTMENTS We hold a portfolio of investments in equity and debt securities in other entities that are accounted for under the cost method. Investment in Preferred Stock of Private Company On December 15, 2017, the Company and Sandstone Diagnostics, Inc. ( “Sandstone “Loan Agreement” Sandstone is a medical device company focused on a data-driven approach to men’s reproductive health. Founded in 2012 in part by government scientists from Sandia National Laboratories, Sandstone’s mission is to provide innovative, data-driven tools to help men assess, manage, and improve their reproductive health. The funding from the Series A1 Preferred Stock financing will support sales growth The Company elected to follow the guidance of ASC No. 321, Equity Securities “ASC 321” Other Investments On November 1, 2017, the Company and I. AM, Inc. ( “I. AM |
OTHER INVESTMENTS, RELATED PART
OTHER INVESTMENTS, RELATED PARTIES | 12 Months Ended |
Dec. 31, 2017 | |
Other Investments Related Parties | |
OTHER INVESTMENTS, RELATED PARTIES | 11. OTHER INVESTMENTS, RELATED PARTIES The Company’s other related party investments primarily consist of two investments. MTIX, Ltd. On December 5, 2017, the Company entered into an exchange agreement with WT Johnson pursuant to which the Company issued to WT Johnson two convertible promissory notes in the principal amount of $600 ( “Note A” “Note B” During December 2017, the Company issued 600,000 shares of its common stock to WT Johnson & Sons upon the conversion of Note A and WT Johnson subsequently sold the 600,000 shares. The proceeds from the sale of Note A were sufficient to satisfy the entire $2,268 obligation as well as an additional $400 of value added tax due to WT Johnson. Concurrent with entering into the exchange agreement, the Company received a promissory note in the amount of $2,668 from MTIX and cancelled Note B. At December 31, 2017, the Company has valued the note receivable at $600, the carrying amount of Note A. The Company will recognize the remainder of the amount due from MTIX upon payment of the promissory note by MTIX . Israeli Property During the year ended December 31, 2017, our President, Amos Kohn, purchased certain real property that will serve as a facility for the Company’s business operations in Israel. The Company made $300 of payments to the seller of the property and received a 28% undivided interest in the real property (“Property’). The Company’s subsidiary, Coolisys, entered into a Trust Agreement and Tenancy In Common Agreement with Roni Kohn, who owns a 72% interest in the Property, is the daughter of Mr. Kohn and is an Israeli citizen. The Property was purchased to serve as a residence/office facility for the Company in order to oversee its European operations and to expand its business in the hi-tech industry located in Israel. Pursuant to the Trust Agreement, the Ms. Kohn will hold and manage Coolisys’ undivided 28% interest in the Property. The trust will be in effect until it is terminated by mutual agreement of the parties. During the term of the trust, the Ms. Kohn will not sell, lease, sublease, transfer, grant, encumber, change or effect any other disposition with respect to the Property or the Coolisys’ interest without the Company’s approval. Under the Tenancy In Common Agreement, Coolisys and its executive officers shall have the exclusive rights to use the Property for the Company and its affiliates’ business operations. The Property shall be managed by the Ms. Kohn. Further, pursuant to the Tenancy In Common Agreement, for each completed calendar month of employment of Mr. Kohn by the Company, Ms. Kohn shall have the right to purchase a portion of the Company’s interest in the Property. Such right shall fully vest at the end of five years of continuous employment and the Trustee shall have the right to purchase the Company’s 28% interest in the Property for a nominal value. The Company will amortize its $300,000 investment over ten years, subject to a cliff vesting after five years. During the year ended December 31, 2017, the Company recognized $8 in amortization expense. In the event that Mr. Kohn is not employed by the Company, the Company shall have the right to demand that Ms. Kohn purchase the Company’s remaining interest in the Property that was not subject to vesting for the fair value market value of such unvested Property interest. Other investments and interest receivable During the year ended December 31, 2017, DP Lending made loans to Alzamend Neuro, Inc. ( “Alzamend” AVLP is a party to a |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
ACQUISITIONS | 12. ACQUISITIONS Microphase Corporation On April 28, 2017, the Company entered into a share exchange agreement with Microphase; Microphase Holding Company LLC, a limited liability company organized under the laws of Connecticut ( “MHC” EFLP “RCKJ” “Significant Stockholders” “Minority Stockholders” “Stockholders” “Subject Shares” “MPC Common Stock” “Common Stock” “Exchange Shares” 56.4% of the outstanding equity interests of Microphase Corporation The operating results of Microphase from the closing date of the acquisition, June 2, 2017, through December 31, 2017, are included in the consolidated financial statements. At closing, the purchase price of Digital Power’s 56.4% interest in Microphase was determined to be $1,451, comprised of the Exchange Shares, valued at $1,222 based on the closing price of the Company’s common stock on June 2, 2017 of $0.47 per share, and the warrants, valued at $229. The Company computed the fair value of these warrants using the Black-Scholes option pricing model. The risk-free rate of 1.4% was derived from the U.S. Treasury yield curve, matching the warrant’s term, in effect at the measurement date. The volatility factor of 105.9% was determined based on the Company’s historical stock prices. Power-Plus Technical Distributors On August 3, 2017, Coolisys entered into a Securities Purchase Agreement (the “Purchase Agreement” Under the terms of the Agreement, Coolisys Technologies acquired all the membership Interests of Power-Plus for a price of $850, which was reduced by certain debts of Power-Plus in the amount of $186. The purchase price of $664 was paid by (i) a two-year promissory note in the amount of $255 payable in 24 monthly installments; and (ii) cash at closing of $409 resulting in a net purchase price of $664. The acquisition of Microphase and Power-Plus is being accounted for under the purchase method of accounting in accordance with ASC No. 805, Business Combinations The components of the purchase price are as follows: Microphase Power-Plus Cash and cash equivalents $ 11 $ 31 Accounts receivable 439 235 Inventories 667 241 Prepaid expenses and other current assets 139 2 Restricted cash 100 — Intangible assets 2,628 250 Property and equipment 406 23 Other investments 303 — Deposits and loans 44 — Accounts payable and accrued expenses (1,576 ) (389 ) Deferred tax liability (226 ) — Revolving credit facility (880 ) (210 ) Notes payable (2,204 ) — Notes payable, related parties (406 ) — Convertible notes payable — — Other current liabilities (220 ) — Net liabilities, assets assumed (775 ) 183 Goodwill 3,171 481 Non-controlling interest (945 ) — Purchase price $ 1,451 $ 664 The following pro forma data summarizes the results of operations for the periods indicated as if the Microphase and Power-Plus acquisitions had been completed as of the beginning of each period presented. The pro forma data gives effect to actual operating results prior to the acquisition. These pro forma amounts do not purport to be indicative of the results that would have actually been obtained if the acquisition occurred as of the beginning of each period presented or that may be obtained in future periods: 2017 2016 Total Revenue $ 13,878 $ 16,409 Net loss $ (12,347 ) $ (4,183 ) Less: Net loss attributable to non-controlling interest 773 1,365 Net loss attributable to Digital Power Corp $ (11,574 ) $ (2,818 ) Preferred deemed dividends (584 ) — Preferred dividends (54 ) — Loss available to common shareholders $ (12,212 ) $ (2,818 ) Basic and diluted net loss per common share $ (0.83 ) $ (0.32 ) Basic and diluted weighted average common shares outstanding 14,631,578 8,759,016 Comprehensive Loss Loss available to common shareholders $ (12,212 ) $ (2,818 ) Other comprehensive income (loss) Change in net foreign currency translation adjustments 152 (362 ) Net unrealized gain on securities available-for-sale, net of income taxes 5,171 364 Other comprehensive income 5,323 2 Total Comprehensive loss $ (6,889 ) $ (2,816 ) |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | 13. STOCK-BASED COMPENSATION Under the Company's 2017 Stock Incentive Plan (the “2017” Plan), 2016 Stock Incentive Plan (the “2016 Plan” “2012 Plan” “Plans” “2002 Plan” Options granted under the Plans have an exercise price equal to or greater than the fair value of the underlying common stock at the date of grant and become exercisable based on a vesting schedule determined at the date of grant. Typically, options granted generally become fully vested after four years. Any options that are forfeited or cancelled before expiration become available for future grants. The options expire between 5 and 10 years from the date of grant. Restricted stock awards granted under the Plans are subject to a vesting period determined at the date of grant. As of December 31, 2017, an aggregate of 2,538,832 of the Company's options are still available for future grant. During the years ended December 31, 2017 and 2016, the Company granted 810,000 and 1,800,000 options, respectively, from the Plans to its employees at an average exercise price of $0.84 and $0.67, respectively, per share. These options become fully vested after four years. The Company estimated that the grant date fair value of options granted utilizing the Black-Scholes option pricing model during the years ended December 31, 2017 and 2016 was $482 and $820, respectively, which is being recognized as stock-based compensation expense over the requisite four-year service period. During the years ended December 31, 2017 and 2016, the Company also issued 1,948,798 and nil, respectively, shares of common stock to its consultants and service providers pursuant to the 2016 Plan. The Company estimated that the grant date fair value of these shares of common stock was $1,532, which was determined from the closing price of the Company’s common stock on the date of issuance. The Company has valued the options at their date of grant utilizing the Black-Scholes option pricing model. This model is dependent upon several variables such as the options’ term, exercise price, current stock price, risk-free interest rate estimated over the expected term and estimated volatility of our stock over the expected term of the options. The risk-free interest rate used in the calculations is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options as calculated using the simplified method. The estimated volatility was determined based on the historical volatility of our common stock. During the years ended December 31, 2017 and 2016, the Company estimated the fair value of stock options granted using the Black-Scholes option pricing model with the following weighted average assumptions: 2017 2016 Weighted average risk free interest rate 1.73% — 2.14 % 1.26% — 1.77 % Weighted average life (in years) 5.0 5.0 Volatility 98.4% — 115.8 % 97.7% — 98.2 % Expected dividend yield 0 % 0 % Weighted average grant-date fair value per share of $ 0.60 $ 0.46 The options outstanding as of December 31, 2017, have been classified by exercise price, as follows: Outstanding Exercisable Weighted Average Weighted Weighted Remaining Average Average Exercise Number Contractual Exercise Number Exercise Price Outstanding Life (Years) Price Exercisable Price $0.57 - $0.79 2,350,000 8.89 $0.66 1,568,332 $0.67 $1.10 - $1.38 270,000 9.67 $1.38 35,833 $1.35 $1.51 - $1.69 122,500 5.06 $1.63 92,500 $1.62 $0.57 - 1.69 2,742,500 8.80 $0.77 1,696,665 $0.73 The total stock-based compensation expense related to stock options and stock awards to the Company’s employees, consultants and directors, included in reported net loss 2017 2016 Cost of revenues $ 8 $ 6 Engineering and product development 21 17 Selling and marketing 46 5 General and administrative 1,503 492 Stock-based compensation from Plans $ 1,578 $ 520 Stock-based compensation from issuances outside of Plans 253 — Total Stock-based compensation $ 1,831 $ 520 The combination of stock-based compensation of $1,578 from the issuances of equity-based awards pursuant to the Plans and stock-based compensation attributed to stock awards of $130 and warrants and options of $123, which were issued outside of the Plans, resulted in aggregate stock-based compensation of $1,831 during the year ended December 31, 2017. During the year ended December 31, 2017, the Company issued 1,100,000 options to purchase shares of common stock at $1.38 per share to its directors and officers. These shares were issued outside of the Plans and are subject to shareholder approval. During the year ended December 31, 2016, the only stock-based compensation expense was from issuances pursuant to the Plans. A summary of option activity under the Company's stock option plans as of December 31, 2017 and 2016, and changes during the years ended are as follows: Outstanding Options Weighted Weighted Average Shares Average Remaining Aggregate Available Number Exercise Contractual Intrinsic for Grant of Shares Price Life (years) Value January 1, 2016 337,630 1,256,000 $1.52 6.74 $0 Adoption of 2016 SIP 4,000,000 — Granted (1,800,000) 1,800,000 0.67 Forfeited 650,000 (650,000) 1.59 Expired 40,000 (40,000) 1.16 December 31, 2016 3,227,630 2,366,000 $0.83 9.08 $0 Adoption of 2017 SIP 2,000,000 — Stock awards (1,948,798) — Granted (810,000) 810,000 $0.84 Forfeited 70,000 (70,000) $0.63 Exercised — (363,500) $1.56 December 31, 2017 2,538,832 2,742,500 $0.77 8.80 $6,688 The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company's closing stock price on December 31, 2017, $3.21 and the exercise price, multiplied by the number of in-the-money-options). As of December 31, 2017, there was $606 of unrecognized compensation cost related to non-vested stock-based compensation arrangements granted under the Company's stock option plans. That cost is expected to be recognized over a weighted average period of 2.8 years. |
WARRANTS
WARRANTS | 12 Months Ended |
Dec. 31, 2017 | |
Warrants | |
WARRANTS | 14. WARRANTS During the years ended December 31, 2017 and 2016, the Company issued a total of 10,379,981 warrants at an average exercise price of $0.81 per share. Warrant issuances during 2016 During the year ended December 31, 2016, the Company issued a total of 1,749,126 warrants at an average exercise price of $0.67 per share. (i) On October 31, 2016, the Company issued a three-year warrant to purchase 265,000 shares of common stock at a per share exercise price of $0.80 and a three-year warrant to purchase 265,000 shares of common stock at a per share exercise price of $0.90 in connection with a 12% Convertible Secured Note in the principal amount of $530 that was sold to an existing stockholder of the Company for $500. (See Note 21). (ii) In connection with an executive employment agreement, on November 3, 2016, the Company issued to its Chief Executive Officer a ten-year warrant to purchase 317,460 shares of the Company's common stock, at an exercise price of $0.01 per share. The Warrant is subject to vesting of which warrants to purchase 39,682 shares shall vest beginning on January 1, 2017, and on the first date of each quarter thereafter through July 1, 2018, with warrants to purchase 39,686 shares to vest on October 1, 2018. (iii) On November 15, 2016, the Company issued three-year warrants to purchase 901,666 shares of common stock each at a per share exercise price of $0.80 in connection with subscription agreements entered into with nine accredited investors. Pursuant to the terms of the subscription agreements, the Company sold 901,666 units at $0.60 for an aggregate purchase price of approximately $541. Each unit consists of one share of common stock and one warrant to purchase one share of common stock (See Note 23). Warrant issuances during 2017 During the year ended December 31, 2017, the Company issued a total of 8,630,855 warrants at an average exercise price of $0.83 per share. (i) In February 2017, the Company issued five-year warrants to purchase 333,333 shares of common stock at a per share exercise price of $0.70 in connection with $400 of 6% demand promissory notes (ii) Between March 24, 2017 and June 2, 2017, the Company issued warrants to purchase 1,428,572 shares of common stock, at an exercise price of $0.70 per share of common stock, in connection with preferred stock purchase agreements to purchase 100,000 shares of Series B Preferred Stock by Philou (iii) On April 5, 2017, the Company issued warrants to purchase 180,002 shares of common stock, at an exercise price of $0.90 per share of common stock, in connection with the cancellation of $270 in demand promissory notes (See Note 18j). (iv) On April 17, 2017, the Company issued warrants to purchase 166,668 shares of common stock , at an exercise price of $0.90 per share of common stock, in connection with the issuance of two 7% convertible notes in the aggregate principal amount of $250. On July 25, 2017, the Company agreed to issued a new warrant to purchase 83,334 shares of common stock at $0.55 per share and cancelled the prior warrant to purchase 83,334 shares of common stock at $0.90 per share (See Note 20e). (v) On April 26, 2017, the Company issued warrants to purchase 160,000 shares of common stock , at an exercise price of $0.80 per share of common stock, in connection with the issuance of a 7% convertible note in the aggregate principal amount of $104 (See Note 20f). (vi) Between May 5, 2017 and June 30, 2017, the Company issued warrants to purchase 224,371 shares of common stock in connection with the (vii) Between May 24, 2017 and June 19, 2017, the Company issued warrants to purchase 1,820,002 shares of common stock issued in connection with the sale of twenty-one units (the “Units” (viii) The Company engaged Divine Capital Markets, LLC ( “Divine” “Placement Agent” (ix) On June 2, 2017, the Company issued warrants to purchase 1,000,000 shares of common stock, at an exercise price of $1.10 per share of common stock, pursuant to the terms of a share exchange agreement (See Note 12). (x) On July 25, 2017, the Company issued warrants to purchase an aggregate of 163,636 shares of common stock at an exercise price equal to $0.55 per share of common stock in connection with a private placement agreement under which we issued and sold 272,727 shares of common stock to the investor at $0.55 per share for an aggregate purchase price of $150. (See Note 23). (xi) On July 28, 2017, the Company entered into an exchange agreement related to a 7% Convertible Note in the principal amount of $125 in which the Company exchanged the 7% Convertible Note for three new promissory notes in the principal amounts of $110 due August 1, 2017; $35 due August 1, 2017; and $34 due August 8, 2017 (individually an Exchange Note and collectively the Exchange Notes). Concurrent with entering into the exchange agreement, the investor entered into a subscription agreement under which we issued and sold in a registered direct offering 200,000 shares of common stock at $0.55 per share for an aggregate purchase price of $110. The 200,000 shares of common stock were purchased through the cancellation of the Exchange Note in the principal amount of $110. Further, the Company issued a warrant to purchase 120,000 shares of common stock at $0.55 per share (See Note 20e) . (xii) On August 3, 2017, the Company issued warrants to purchase an aggregate of 666,666 shares of common stock at an exercise price equal to $0.70 per share of common stock in connection with the issuance of a 12% Convertible Promissory Note in the aggregate principal amount of $400 (See Note 20b). (xiii) On August 10, 2017, the Company issued warrants to purchase an aggregate of 1,475,000 shares of the common stock at an exercise price equal to $0.66 per share of common stock in connection with the issuance of 10% Convertible Promissory Notes in the aggregate principal amount of $880 (See Note 20d). (xiv) On November 2, 2017, the Company paid to Aegis Capital Corp. ( “Aegis” (xv) On December 5, 2017, the Company entered into an exchange agreement (the “Exchange Agreement” The following table summarizes information about common stock warrants outstanding at December 31, 2017: Outstanding Exercisable Weighted Average Weighted Weighted Remaining Average Average Exercise Number Contractual Exercise Number Exercise Price Outstanding Life (Years) Price Exercisable Price $0.01 317,460 8.84 $0.01 158,728 $0.01 $0.55 283,636 0.48 $0.55 — — $0.66 148,133 4.84 $0.66 — — $0.70 1,768,572 4.78 $0.70 1,768,572 $0.70 $0.72 182,003 4.47 $0.72 182,003 $0.72 $0.75 135,909 4.37 $0.75 135,909 $0.75 $0.80 481,666 2.69 $0.80 481,666 $0.80 $1.00 312,003 4.46 $1.00 312,003 $1.00 $1.10 759,486 3.68 $1.10 379,020 $1.10 $0.01 - 1.10 4,388,868 4.61 $0.74 3,417,901 $0.76 The Company has valued the warrants at their date of grant utilizing the Black-Scholes option pricing model. This model is dependent upon several variables such as the warrants’ term, exercise price, current stock price, risk-free interest rate and estimated volatility of our stock over the contractual term of the warrants. The risk-free interest rate used in the calculations is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the contractual life of the warrants. The Company utilized the Black-Scholes option pricing model and the assumptions used during the years ended December 31, 2017 and 2016 : 2017 2016 Weighted average risk-free interest rate 1.42% — 2.01% 0.98% — 1.28% Weighted average life (in years) 4.8 4.3 Volatility 98.5% — 128.7% 97.7% — 110.0% Expected dividend yield 0% 0% Weighted average grant-date fair value per $ 0.54 $ 0.49 |
OTHER CURRENT LIABILITIES
OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2017 | |
Other Current Liabilities | |
OTHER CURRENT LIABILITIES | 15. OTHER CURRENT LIABILITIES Other current liabilities at December 31, 2017 and 2016 consist of: 2017 2016 Accrued payroll and payroll taxes $ 359 $ 128 Warranty liability 86 86 Other accrued expenses 263 184 $ 708 $ 398 |
ADVANCES ON FUTURE RECEIPTS
ADVANCES ON FUTURE RECEIPTS | 12 Months Ended |
Dec. 31, 2017 | |
Advances On Future Receipts | |
ADVANCES ON FUTURE RECEIPTS | 16. ADVANCES ON FUTURE RECEIPTS Between July 6, 2017 and November 1, 2017, the Company received funding as a result of entering into multiple Agreements for the Purchase and Sale of Future Receipts with TVT Capital, LLC pursuant to which the Company sold in the aggregate $4,068 in future receipts of the Company for $2,889. Under the terms of the agreements, the Company will be obligated to pay the initial daily amount of $19 until the $4,068 has been paid in full. As of December 31, 2017, the Company had repaid $1,526. The term future receipts means cash, check, ACH, credit card, debit card, bank card, charged card or other form of monetary payment. The Company recorded a discount in the amount of $1,179 which is reflected as a reduction on the outstanding liability. The discount is being amortized as non-cash interest expense over the term of the agreement. During the years ended December 31, 2017, non-cash interest expense of $600 was recorded from the amortization of debt discounts. |
REVOLVING CREDIT FACILITY
REVOLVING CREDIT FACILITY | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
REVOLVING CREDIT FACILITY | 17. REVOLVING CREDIT FACILITY Microphase entered into a revolving loan agreement with Gerber Finance, Inc. ( “Gerber” “Revolving Credit Facility” “Maximum Revolving Amount” Interest accrued at the unpaid principal On November 6, 2017, Microphase entered into a factoring agreement with CSNK Working Capital Finance Corp. (the “Factoring Agreement” |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2017 | |
Notes Payable [Abstract] | |
NOTES PAYABLE | 18. NOTES PAYABLE Notes Payable at December 31, 2017, are comprised of the following. At December 31, 2016 the Company did not have any Notes Payable. 2017 Notes payable to Wells Fargo (a) $ 300 Note payable to Department of Economic and Community Development (b) 292 Power-Plus Credit Facilities (c) 171 Note payable to Power-Plus Member (d) 130 Note payable to People's United Bank (e) 19 10% short-term promissory notes (f) 15 Total notes payable 927 Less: current portion (402 ) Notes payable – long-term portion $ 525 (a) At December 31, 2017, Microphase had guaranteed the repayment of two equity lines of credit in the aggregate amount of $300 with Wells Fargo Bank, NA ( “Wells Fargo” “Wells Fargo Notes” (b) In August 2016, Microphase received a $300 loan, of which $8 has been repaid, pursuant to the State of Connecticut Small Business Express Job Creation Incentive Program which is administered through the Department of Economic and Community Development ( “DECD” “DECD Note” (c) At December 31, 2017, Power-Plus had guaranteed the repayment of two lines of credit in the aggregate amount of $169 with Bank of America NA ( “B of A” “Power-Plus Lines” (d) Pursuant to the terms of the Purchase Agreement with Power-Plus, the Company entered into a two-year promissory note in the amount of $255 payable to the former owner as part of the purchase consideration. The $255 note is payable in 24 equal monthly installments. On October 18, 2017, for cancellation of debt, the Company entered into a subscription agreement with the former owner under which the Company sold 138,806 shares of common stock at $0.67 per share for an aggregate purchase price of $93 (See Note 23). (e) In December 2016, Microphase utilized a $20 overdraft credit line at People’s United Bank with an annual interest rate of 15%. As of December 31, 2017, the balance of that overdraft credit line was $19. (f) In December 2016, Microphase issued $705 in 10% short-term promissory notes to nineteen accredited investors which, after deducting $71 of placement fees to its selling agent, Spartan Capital Securities, LLC ( “Spartan” “10% Short-Term Notes” “Loan Premium” On December 5, 2017, in exchange for the cancellation of $690 of outstanding principal and $250 of accrued interest owed to the investors by Microphase Corporation, the Company entered into an Exchange Agreement pursuant to which the Company issued an aggregate of 1,523,852 shares of common stock and warrants to purchase 380,466 shares of common stock with an exercise price of $1.10 per share of common stock, (See Note 23). (g) On June 2, 2017, pursuant to the terms of the Share Exchange Agreement and in consideration of legal services, Microphase issued a $450 8% promissory note with a maturity date of November 25, 2017 to Lucosky Brookman, LLP (the “Lucosky Note” “Series E Preferred Stock” The Company, at its option, had the right to redeem for cash the outstanding shares of Series E Preferred Stock, upon written notice to the holder of the shares, at a cash redemption price equal to $45 multiplied by the number of shares being redeemed. Any such optional redemption by the Company would have resulted in a credit against the Lucosky Note. the Lucosky Note. Other Notes Payable (h) Between May 5, 2017 and December 31, 2017, the Company received additional short-term loans of $297 from five accredited investors, of which $75 was from the Company’s corporate counsel, a related party. As additional consideration, the investors received five-year warrants to purchase 224,371 shares of common stock at a weighted average exercise price of $0.77 per share. The warrants are exercisable commencing six months after the issuance date and are subject to certain beneficial ownership limitations. The exercise price of these warrants is subject to adjustment for customary stock splits, stock dividends, combinations and other standard anti-dilution events. The warrants may be exercised for cash or on a cashless basis. During the quarter ended June 30, 2017, the Company recorded debt discount in the amount of $95 based on the estimated fair value of these warrants. The Company computed the fair value of these warrants using the Black-Scholes option pricing model. As a result of the short-term feature of these loans and advances, the debt discount was amortized as non-cash interest expense upon issuance of the warrants using the effective interest method. During June 2017, the holders of $55 of these short-term loans agreed to cancel their notes for the purchase of 100,001 shares of the Company’s common stock at a price of $0.55 per share. An additional $75 in short-term loans from the Company’s corporate counsel was converted into the Company’s equity securities; $52 was converted into one of the Series C Units and $23 was converted into the Company’s common stock. The Company did not record any additional interest expense as a result of the extinguishment of $130 in short-term loans since the carrying amount of the short-term loans was equivalent to the fair value of the consideration transferred, which was determined from the closing price of the Company’s equity securities on the date of . During the year ended December 31, 2017, the Company also repaid $157 in short-term loans. (i) In February 2017, the Company issued to eight accredited investors “Feb. 2017 Warrants” Between February 16, 2017 and February 23, 2017, the holders of the $400 in demand promissory notes agreed to cancel their demand promissory notes for the purchase of 666,667 shares of the Company’s common stock, an extinguishment price of $0.60 per share. During the quarter ended March 31, 2017, the Company recorded additional interest expense of $13 as a result of the extinguishment of the $400 in demand promissory notes based on the difference of the carrying amount of the demand promissory notes and the fair value of the consideration transferred, which was determined from the closing price of the Company’s common stock on the date of . (j) On March 28, 2017, the Company issued $270 in demand promissory notes to several investors. These demand promissory notes accrued interest at the rate of 6% per annum. The Company received gross proceeds of $220 on March 31, 2017. The remaining balance of $50 was received on April 3, 2017. On April 5, 2017, the Company canceled these promissory notes by issuing to the investors 360,000 shares of common stock, at $0.75 per share, and warrants to purchase 180,002 shares of common stock at $0.90 per share. During the quarter ended June 30, 2017, the Company recorded additional interest expense of $109 as a result of the extinguishment of the $270 in demand promissory notes based on the difference of the carrying amount of the demand promissory notes and the fair value of the consideration transferred, which was determined from the closing price of the Company’s common stock on the date of . |
NOTES PAYABLE - RELATED PARTIES
NOTES PAYABLE - RELATED PARTIES | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE RELATED PARTIES | 19. NOTES PAYABLE – RELATED PARTIES Notes Payable – Related parties at December 31, 2017 and 2016, are comprised of the following: 2017 2016 Notes payable to MCKEA Holdings, LLC (a) $ — $ 250 Notes payable to former officer and employee (b) 309 — Total notes payable 309 250 Less: current portion (134 ) — Notes payable – long-term portion $ 175 $ 250 (a) On December 29, 2016, the Company entered into an agreement with (“MCKEA” , a director and the wife of Milton C. Ault III, Executive , is the manager and owner of MCKEA, for a demand promissory note (The “MCKEA Note” , the MCKEA Note was cancelled to purchase the Company’s (b) Microphase is a party to several notes payable agreements with seven of its past officers, employees and their family members. As of December 31, 2017, the aggregate outstanding balance pursuant to these notes payable agreements, inclusive of $47 of accrued interest, was $356, with annual interest rates ranging between 3.00% and 6.00%. During the period June 3, 2017 to September 30, 2017, Microphase incurred $10 of interest on these notes payable agreements. In July 2016, one of these noteholders initiated litigation to collect the balance owed under the terms of his respective agreement and in October 2017, Microphase and the noteholder entered into a settlement agreement whereby Microphase agreed to pay the outstanding principal and interest of $122 and $43, respectively, by issuing to the noteholder 95,834 shares of Microphase common stock valued at $115 and paying $25 in cash. The value of the Microphase common stock was derived from the Company’s recent acquisition of a majority interest in Microphase. Further, the parties agreed the final $25 would be paid within 18 months of the settlement agreement or Microphase would be required to pay the noteholder an additional $25. |
CONVERTIBLE NOTES
CONVERTIBLE NOTES | 12 Months Ended |
Dec. 31, 2017 | |
Long-term Debt, Unclassified [Abstract] | |
CONVERTIBLE NOTES | 20. CONVERTIBLE NOTES At December 31, 2016 the Company did not have any Convertible Notes whereas at December 31, 2017, Convertible notes are comprised of the following: 2017 5% Convertible Note (a) $ 550 12% Convertible Note (b) 202 Total convertible notes payable 752 Less: Unamortized debt discounts (351 ) Unamortized financing cost (3 ) Total convertible notes payable, net of financing cost $ 398 (a) On December 4, 2017, the Company entered into a securities purchase agreement to sell a 5% Convertible Note (the “5% Convertible Note” “OID” At the time of issuance of the 5% Convertible Note, the closing price of the Company’s common stock was in excess of the conversion price, resulting in a BCF. The BCF embedded in the 5% Convertible Note 470, De Convertible Note In aggregate, the Company recorded debt discount in the amount of $550 based on the relative fair values of the 150,000 shares of common stock of $256, BCF of $244 and OID of $50. The debt discount is being amortized as non-cash interest expense over the term of the debt. During the year ended December 31, 2017, non-cash interest expense of $381 was recorded from the amortization of debt discounts. In January 2018, the 5% Convertible Note was converted into 921,645 shares of the Company’s common stock based upon the contractual rights included in the 5% Convertible Note. (b) On August 3, 2017, the Company entered into a securities purchase agreement to sell a 12% Convertible Note (the “12% Convertible Note” The 12% Convertible Note is in the principal amount of $400, included an OID of $40 resulting in net proceeds to the Company of $360, bears interest at 12% simple interest on the principal amount, and is due on August 13, 2018. Interest only payments are due on a quarterly basis and the principal is due on August 3, 2018. The principal may be converted into shares of the Company’s common stock at $0.55 per share. The Company computed the fair value of the 666,666 warrants using the Black-Scholes option pricing model and, as a result of this calculation, recorded debt discount in the amount of $167 based on the estimated fair value of the 666,666 warrants. The beneficial conversion feature ( “BCF” 12% Convertible Note 470, De 12% Convertible Note 12% Convertible Note 12% Convertible Note On December 28, 2017, principal and accrued interest of $198 and $5, respectively, on the 12% Convertible Note Convertible Notes Converted into Common Stock during 2017 (c) On November 2, 2017, the Company entered into a securities purchase agreement to sell a 5% Convertible Note (the “November 5% Convertible Note” “OID” In connection with the November 5% Convertible Note, the Company paid to Aegis Capital Corp. ( “Aegis” The debt conversion features embedded in the November 5% Convertible Note 470, De 5% Convertible Note On December 13, 2017 and December 14, 2017, the entire $1,111 of principal on the 5% Convertible Note During the year ended December 31, 2017, non-cash interest expense of $829 was recorded from the amortization of debt discounts and debt financing cost. (d) On August 10, 2017, the Company, entered into securities purchase agreements with five institutional investors to sell for an aggregate purchase price of $800, 10% Senior Convertible Promissory Notes (the “10% Convertible Notes” The 10% Convertible Notes are in the aggregate principal amount of $880, included an OID of $80 resulting in net proceeds to the Company of $800, bear simple interest at 10% on the principal amount, and principal and interest are due on February 10, 2018. Subject to certain beneficial ownership limitations, each investor may convert the principal amount of the 10% Convertible Notes and accrued interest earned thereon at any time into shares of common stock at $0.60 per share. The conversion price of the 10% Convertible Notes is subject to adjustment for customary stock splits, stock dividends, combinations or similar events. The Company computed the fair value of the 1,475,000 warrants using the Black-Scholes option pricing model and, as a result of this calculation, recorded debt discount in the amount of $357 based on the estimated intrinsic value of the 1,475,000 warrants. The intrinsic value of the warrants was estimated using the Black-Scholes option-pricing method. The risk-free rate of 1.78% was derived from the U.S. Treasury yield curve, matching the term of the warrant, in effect at the measurement date. The volatility factor of 107.3% was determined based on the Company’s historical stock prices. The BCF embedded in the 10% Convertible Notes 470, De 10% Convertible Notes 10% Convertible Notes 10% Convertible Notes During December 2017, the entire principal and accrued interest of $880 and $54, respectively, on the 10% Convertible Notes Other Convertible Notes Payable (e) On April 17, 2017, the Company entered into two 7% convertible notes (the “7% Convertible Notes” As additional consideration, the investors received five and a half year warrants to purchase 166,668 shares of common stock at an exercise price of $0.90 per share (collectively the “7% Convertible Note Warrants” The Company computed the fair value of the 7% Convertible Note The BCF embedded in the 7% Convertible Notes 470, De Convertible Note Convertible Notes On July 25, 2017, the Company repaid one of the 7% Convertible Notes. Due to the event of default, the Company agreed to reduce the exercise price of warrants to purchase 83,334 shares of common stock from $0.90 per share to $0.55 per share and made a payment of $144. As a result of this transaction, the Company recorded additional interest expense of $17 and recorded an additional $3 in non-cash interest expense based upon the change in the fair value of the warrants due to the adjustment to the exercise price. On July 28, 2017, the Company entered into an exchange agreement related to the second 7% Convertible Note. Under the terms of the exchange agreement, the Company exchanged the 7% Convertible Note for three new promissory notes in the principal amounts of $110 due August 1, 2017; $35 due August 1, 2017; and $34 due August 8, 2017 (individually an Exchange Note and collectively the Exchange Notes) and issued a new warrant to purchase 83,334 shares of common stock at $0.55 per share and cancelled the prior warrant to purchase 83,334 shares of common stock at $0.90 per share. The Company recorded a $55 extinguishment charge as a result of this transaction. Concurrent with entering into the exchange agreement, the investor entered into a subscription agreement under which the Company issued and sold in a registered direct offering 200,000 shares of common stock at $0.55 per share for an aggregate purchase price of $110. The 200,000 shares of common stock were purchased through the cancellation of the Exchange Note in the principal amount of $110. In addition, in a concurrent private placement, the investor entered into a separate securities purchase agreement under which the Company issued and sold 63,600 shares of common stock at $0.55 per share for an aggregate of purchase price of $35. The 63,600 shares of common stock were purchased through the cancellation of the Exchange Note in the principal amount of $35. Further, the Company issued a warrant to purchase 120,000 shares of common stock at $0.55 per share. The final Exchange Note in the principal amount of $34 was repaid. In aggregate, and including the $55 extinguishment charge above, the Company recorded an additional non-cash interest expense of $110 as a result of the extinguishment of the $125 7% Convertible Note 7% Convertible Note the fair value of the consideration transferred, which was determined from the closing price of the Company’s common stock on the date of 7% Convertible Note (f) On April 26, 2017, the Company entered into a 7% convertible note in the aggregate principal amount of $104. On June 28, 2017, the noteholder converted the outstanding balance into 189,091 shares of the Company’s common stock . The Company did not record any additional interest expense as a result of the extinguishment since the carrying amount of the convertible notes was equivalent to the fair value of the consideration transferred, which was determined from the closing price of the Company’s equity securities on the date of . As additional consideration, the investor received a five-year warrant to purchase 160,000 shares of common stock at an exercise price of $0.80 per share. The warrants are exercisable commencing six months after the issuance date. The exercise price of the warrants is subject to adjustment for customary stock splits, stock dividends, combinations and other standard anti-dilution events. The warrants may be exercised for cash or on a cashless basis. The Company computed the fair value of these warrants using the Black-Scholes option pricing model and, as a result of this calculation, recorded debt discount in the amount of $25 based on the estimated fair value of the warrants. The BCF embedded in this convertible note 470, De convertible note onvertible note |
CONVERTIBLE NOTE - RELATED PART
CONVERTIBLE NOTE - RELATED PARTY | 12 Months Ended |
Dec. 31, 2017 | |
Long-term Debt, Unclassified [Abstract] | |
CONVERTIBLE NOTE RELATED PARTY | 21. CONVERTIBLE NOTE – RELATED PARTY At December 31, 2017 the Company did not have any related party convertible notes. Convertible notes – related party at December 31, 2016 are comprised of the following: 2016 12% Convertible secured note $ 530 Less: Unamortized debt discounts (484 ) Unamortized financing cost (12 ) Convertible note – related party $ 34 2016 Convertible Note On October 21, 2016, the Company entered into a 12% convertible secured note (the “Convertible Note” As additional consideration, the investor received a three-year warrant to purchase 265,000 shares of common stock, at an exercise price of $0.80 per share, and a three-year warrant to purchase 265,000 shares of common stock, at an exercise price of $0.90 per share (collectively the “Convertible Note Warrants” The Company computed the fair value of the Convertible Note The BCF embedded in the Convertible Note 470, De Convertible Note Convertible Note In aggregate, the Company recorded debt discount in the amount of $518 based on the relative fair values of the Convertible Note Warrants of $159, BCF of $329 and OID of $30. The debt discount is being amortized as non-cash interest expense over the term of the debt. In addition, the Company incurred $13 of debt issuance costs which are also being amortized as non-cash interest expense over the term of the debt. During the years ended December 31, 2017 and 2016, non-cash interest expense of $496 and $34, respectively, was recorded from the amortization of debt discounts and debt financing cost. During the period from November 27, 2017 to December 6, 2017, the entire $530 of principal on the Convertible Note 2017 Convertible Note On December 5, 2017, the Company entered into an exchange agreement with WT Johnson & Sons (Huddersfield) Limited (the “Holder” “Note A” “Note B” “MTIX” Note A is convertible into the Company’s common stock at a conversion price of $1.00 per share, does not bear interest, and matures two years from issuance. Note B is convertible into the Company’s common stock at a conversion price of $0.85 per share, does not bear interest, and matures two years from issuance. However, the Holder shall not have the right to convert any portion of Note B, following receipt by the Holder of an aggregate of $2,268 of gross proceeds from the sale of shares of Common Stock issued upon conversion of Note A or Note B. During December 2017, the Company issued 600,000 shares of its common stock upon the conversion of Note A and the Holder notified the Company that gross proceeds during the month of December 2017 from sales of the 600,000 shares of common stock were sufficient to satisfy the entire $2,268 obligation. As a result of entering into the exchange agreement with the Holder, MTIX is obligated to pay the Company $2,668, consisting of amount of the exchange agreement of $2,268 and a value added tax of $400 from the sale of the Textile Multi-Laser Enhancement Technology Machine. At December 31, 2017, the Company has valued the note receivable due from MTIX at $600, the carrying amount of Note A. The Company will recognize the remainder of the amount due from MTIX upon payment of the promissory note by MTIX . |
COMMITMENTS
COMMITMENTS | 12 Months Ended |
Dec. 31, 2017 | |
Commitments | |
COMMITMENTS | 22. COMMITMENTS In November 2012, the Company signed an operating lease agreement for the US headquarters for a period of 7 years with an option to extend for additional 5 years. In September 2009, the Company's United Kingdom subsidiary signed a new agreement for a lease in respect of the UK facility for a period of 15 years with an option to cancel the lease after 10 years on September 2019. In addition, we lease 33,361 square-feet of other space domestically that includes office, engineering, laboratory and warehouse space in both California and Connecticut. The annual base rent under these leases, payable on a monthly basis, is approximately $447,000 during 2018. These leases expire between May 2018 and May 2026. Future non-cancellable rental commitments under operating leases are as follows: 2018 $ 762 2019 682 2020 576 2021 359 2022 348 Thereafter 1,268 $ 3,995 Total rent expense for the years ended December 31, 2017 and 2016 was approximately $291 and $294, respectively. Employment Agreements Amos Kohn On November 30, 2016, the Company entered into an employment agreement with Amos Kohn to serve as President and Chief Executive Officer with an effective date of September 22, 2016. For his services, Mr. Kohn will be paid a salary of $300 per annum increasing to $350 per annum provided that the Company achieves revenues in the aggregate amount of at least $10,000 as determined in accordance with U.S. GAAP for the trailing four calendar quarters. In addition, Mr. Kohn shall be eligible for an annual cash bonus equal to a percentage of his annual base salary based on achievement of applicable performance goals determined by the Company’s compensation committee after conferring with Mr. Kohn. The target amount of Mr. Kohn’s annual performance bonus shall be 25 to 50% of his then annual base salary but may be greater upon mutual agreement between Mr. Kohn and the compensation committee. Further, Mr. Kohn is entitled to receive equity participation as follows: (A) a warrant to purchase 317,460 shares of the Company’s common stock at $0.01 per share; and (B) a ten-year option to purchase 1,000,000 shares of the Company’s Common Stock at an exercise price of $0.65 per share, which represented the high price for a share of common stock on November 3, 2016, the day the Board approved the grant. The option to purchase 1,000,000 shares of common stock is subject to the following vesting schedule: (1) options to purchase 500,000 shares of Common Stock shall vest upon the effective date; (2) options to purchase 250,000 shares of Common Stock shall vest ratably over six months beginning with the first month after the effective date; and (3) options to purchase 250,000 shares of common stock shall vest ratably over twelve months beginning with the first month after the effective date. As part of the grant of the options to purchase 1,000,000 shares, Mr. Kohn forfeited options to purchase 535,000 shares of common stock previously granted to him under the Company’s Incentive Share Option Plans. In the event that Mr. Kohn is terminated by the Company without cause, or if Mr. Kohn resigns for good reason, Mr. Kohn shall be entitled to (A) all annual salary earned prior to the termination date, any earned but unpaid portion of Mr. Kohn’s annual performance bonus for the year preceding in which such termination occurred and any earned but unpaid paid time off; (B) an amount equal to 100% of Mr. Kohn’s then in effect annual base salary plus an additional 1/12th of Mr. Kohn’s annual base salary for each year of employment with the Company prior to such termination; (C) an amount equal to the average of Mr. Kohn’s two prior years’ annual bonuses (with such average not to exceed 50% of the Mr. Kohn’s annual base salary in effect at the time of termination) prorated for the portion of the year that executive was employed; (D) accelerated vesting of all outstanding unvested stock options and other equity arrangements subject to vesting and held by Mr. Kohn through the termination date and the Company’s right to repurchase Mr. Kohn’s restricted stock shall cease; and (E) to the extent required by COBRA, continuation of group health benefits pursuant to the Company's standard programs or in effect at the termination date at Company expense for a period of not less than 18 months. If Mr. Kohn is terminated without cause, or resigns for good reason within 12 months of a change of control, Mr. Kohn shall be entitled to receive: (A) payment in a lump sum of Mr. Kohn annual base salary for 24 months and any accrued, unused paid time-off; (B) accelerated vesting of all outstanding unvested stock options and other equity arrangements subject to vesting and the Company’s right to repurchase Mr. Kohn restricted stock shall cease; and (C) to the extent required by COBRA, continuation of group health benefits pursuant to the Company's standard programs or in effect at the termination date at the Company’s expense for a period of not less than 18 months. William Horne On January 25, 2018, the Company entered into a five-year employment agreement with William Horne to serve as Chief Financial Officer and Executive Vice President of the Company and its subsidiaries. For his services, Mr. Horne will be paid a base salary of $250 per annum. Upon signing of the employment agreement, Mr. Horne is entitled to a signing bonus in the amount of $25. In addition, Mr. Horne shall be eligible to receive an annual cash bonus equal to a percentage of his annual base salary based on achievement of applicable performance goals determined by the Company’s compensation committee. Further, Mr. Horne is entitled to receive equity participation as follows: (A) a grant of restricted stock in the aggregate amount of 1,000,000 shares of common stock, which shares shall vest in installments of two hundred thousand (200,000) shares annually over five (5) years beginning on January 1, 2019, provided, however, that such shares may, in whole or in part, in the discretion of the Compensation Committee, vest immediately upon the filing of an Annual Report on Form 10-K with the SEC that shows that the Company’s revenues for the applicable fiscal year reached or exceeded $100,000; notwithstanding the foregoing, before the Company accelerates any such vesting, the Company’s Compensation Committee must prior thereto have obtained the consent of Mr. Horne, which consent may be withheld in his discretion, and (B) an option to purchase 500,000 shares of common stock of the Company at a per share price equal to the closing price of $2.32, the closing market price of the shares of common stock on January 24, 2018, which option will vest over 60 months. Mr. Horne’s bonuses, if any, and all stock based compensation shall be subject to “Company Clawback Rights” if during the period that Mr. Horne is employed by the Company and upon the termination of Mr. Horne’s employment and for a period of two years thereafter, if there is a restatement of any of the Company’s financial results from which any bonuses and stock based compensation to Mr. Horne shall have been determined. Upon termination of Mr. Horne’s employment (other than upon the expiration of the employment), Mr. Horne shall be entitled to receive: (A) any earned but unpaid base salary through the termination date; (B) all reasonable expenses paid or incurred; and (C) any accrued but unused vacation time. Further, unless Mr. Horne’s employment is terminated as a result of his death or disability or for cause or he terminates his employment without good reason, then upon the termination or non-renewal of Mr. Horne’s employment, the Company shall pay to Mr. Horne a “ Separation Payment Separation Period Acquisition On December 31, 2017, CooliSys entered into a share purchase agreement with Micronet Enertec Technologies, Inc. ( “MICT” “EML” “Seller Parties” “Enertec” “Acquisition” The purchase price shall be $5,250, as adjusted for any closing debt surplus or deficit (the “Purchase Price” “Bank Debt” Either party may terminate the Agreement if the Acquisition has not been consummated within the later of 60 days following signing or 15 days following the Seller Parties’ delivery to Coolisys of Enertec’s audited financial statements for the year ending December 31, 2017 (the “End Date” |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2017 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | 23. STOCKHOLDERS’ EQUITY Preferred Stock The Company is authorized to issue 25,000,000 shares of Preferred Stock $0.01 par value. The Board of Directors has designated 500,000 shares of its Preferred Stock as Series A cumulative Redeemable Convertible Preferred shares (the “Series A Preferred Stock” Convertible Preferred Stock (the “Series B Preferred Stock” Convertible Preferred Stock (the “Series C Preferred Stock” Convertible Preferred Stock (the “Series D Preferred Stock” Convertible Preferred Stock (the “Series E Preferred Stock” As of December 31, 2017, there were 100,000 shares of Series B Preferred Stock, 378,776 shares of Series D Preferred Stock and no other shares of Preferred Stock were issued or outstanding. Series B Preferred Stock On March 9, 2017, the Company entered into a Preferred Stock Purchase Agreement with Philou, a related party. Pursuant to the terms of the Preferred Stock Purchase Agreement, Philou may invest up to $5,000 in the Company through the purchase of Series B Preferred Stock over the term of 36 months. Each share of Series B Preferred Stock has a stated value of $10.00 per share. Each share of Series B Preferred Stock may be convertible at the holder’s option into shares of common stock of the Company at a conversion rate of $0.70 per share, upon the earlier to occur of: (i) 60 months from the closing date, or (ii) upon the filing by the Company of one or more periodic reports that, singly or collectively, evidence that the Company’s gross revenues have reached no less than $10,000 in the aggregate, on a consolidated reporting basis, over four consecutive quarters in accordance with U.S. GAAP. The conversion price will be subject to standard anti-dilution provisions in connection with any stock split, stock dividend, subdivision or similar reclassification of the common stock. Each share of Series B Preferred Stock shall have the right to receive dividends equal to one ten millionth (0.0000001) of earnings before interest, taxes, depreciation, amortization and stock-based compensation ( “EBITDAS” At such time as (i) all shares of common stock issuable upon conversion of all outstanding shares of Series B Preferred Stock (the “Conversion Shares” In addition, for each share of Series B Preferred Stock purchased, Philou will receive warrants to purchase shares of common stock in a number equal to the stated value of each share of Series B Preferred Stock purchased divided by $0.70, at an exercise price equal to $0.70 per share of common stock. The warrants do not require a net cash-settlement or provide the holder with a choice of net-cash settlement. The warrants also do not contain a variable settlement provision. Accordingly, any warrants issued to Philou pursuant to the terms of the Preferred Stock Purchase Agreement shall be classified as equity instruments. Further, Philou shall have the right to participate in the Company’s future financings under substantially the same terms and conditions as other investors in those respective financings in order to maintain its then percentage ownership interest in the Company. Philou’s right to participate in such financings shall accrue and accumulate provided that it still owns at least 100,000 shares of Series B Preferred Stock. Between March 24, 2017 and June 2, 2017, Philou purchased 100,000 shares of Series B Preferred Stock pursuant to the Preferred Stock Purchase Agreement in consideration of the cancellation of the Company debt due to Philou in the aggregate amount of $500 and cash of $500. In addition, Philou received warrants to purchase 1,428,572 shares of common stock at an exercise price of $0.70 per share of common stock, which have been classified as equity instruments. The Company determined that the estimated relative fair value of these warrants, which are classified as equity, was $401 using the Black-Scholes option pricing model. Since the warrants were classified as equity securities, the Company allocated the $1,000 purchase price based on the relative fair values of the Series B Preferred Stock and the warrants following the guidance in ASC No. 470, Debt The Series B Convertible Preferred Stock is convertible at any time, in whole or in part, at the option of Philou, into shares of common stock at a fixed conversion price, which is subject to adjustment for stock splits, stock dividends, combinations or similar events, of $0.70 per share. As the effective conversion price of the Series B Convertible Preferred Stock on a converted basis was below the market price of the Company’s common stock on the date of issuance, it was determined that these discounts represent contingent beneficial conversion features, which was valued at $265 based on the difference between the effective conversion price and the market price of the Company’s common stock on the date of issuance. The Company, however, was prohibited from issuing shares of common stock pursuant to the Series B Convertible Preferred Stock until stockholder approval of such issuance of securities was obtained, as required by applicable NYSE American listing rules. The Company received stockholder approval of such share issuances on December 28, 2017. This provision resulted in a contingent beneficial conversion feature that was recognized on December 28, 2017, the date the contingency was resolved. These features are analogous to preference dividends and are recorded as a non-cash return to preferred shareholders through accumulated deficit. Series C Preferred Stock Between May 24, 2017 and June 19, 2017, the Company entered into subscription agreements (the “Series C Subscription Agreement” “Series C Investors” Each share of Series C Preferred Stock has a stated value of $2.40 per share. Each share of Series C Preferred Stock may be convertible at the holder’s option into shares of Common Stock of the Company at a conversion price of $0.60 per share, which, currently, represents four shares of Common Stock. The conversion price is subject to standard anti-dilution provisions in connection with any stock split, stock dividend, subdivision or similar reclassification of the Common Stock. Each share of Series C Preferred stock is mandatorily converted into shares of Common Stock based on the then conversion price in effect in the event that the Company’s Common Stock closing price exceeds $1.20 per share for 20 consecutive trading days. As the effective conversion price of the Series C Convertible Preferred Stock on a converted basis was below the market price of the Company’s common stock on the date of issuance, it was determined that these discounts represent beneficial conversion features, which were valued at $319 and recognized as a deemed dividend, based on the difference between the effective conversion price and the market price of the Company’s common stock on the date of issuance. Each share of Series C Preferred Stock has the right to receive dividends equal $0.24 per share per annum as declared by the Company’s Board of Directors. The dividends will be paid on a quarterly basis on the 20th day following each calendar quarter. Each share of Series C Preferred Stock shall have dividend and liquidation rights in priority to any shares of Common Stock, the Company’s Series A Preferred Stock (of which none are outstanding) and any other subordinated securities; but shall be subordinated to any senior securities including the Company’s Series B Preferred Stock. Each share of Series C Preferred Stock is subject to redemption by the Company for the stated value plus accrued but unpaid dividends five years after issuance, provided the holders of Series C Preferred Stock had not elected previously to convert the Series C Preferred Stock into shares of Common Stock. During December 2017, pursuant to the conversion terms of the Series C Preferred Stock, all of the Series C Investors elected to convert their 455,002 shares of Series C Preferred Stock into 1,820,008 shares of the Company’s common stock. Additionally, of the 1,820,002 warrants that were issued in conjunction with the Series C Subscription Agreements, the Company issued 1,603,335 shares of its common stock upon cash-based exercises that resulted in gross proceeds to the Company of $1,603 and issued 70,909 shares of its common stock upon the cashless exercise of a warrant to purchase 86,667 shares of common stock. Series D Preferred Stock On June 2, 2017, pursuant to the terms of the Share Exchange Agreement, the Company acquired 1,603,434 shares of the issued and outstanding common stock of Microphase Common Stock in exchange for the issuance by the Company of 1,842,448 shares of the Company’s Common Stock, 378,776 shares of the Company’s Series D Preferred Stock In the event the Company shall liquidate, dissolve or wind up, the holders of Series D Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Company to the holders of the Common Stock, the Company’s Series A Preferred Stock, or to the holders of any other junior series of preferred stock, by reason of their ownership thereof and subject to the rights of the Company’s Series B Preferred Stock, Series C Preferred Stock and any other class or series of Company stock subsequently issued that ranks senior to the Series D Preferred Stock, an amount per share in cash or equivalent value in securities or other consideration equal to its Stated Value of $0.01 per share. The holders of Series D Preferred Stock shall not be entitled to receive dividends and shall have no voting rights except as otherwise required by law. Upon the shareholders of DPW Common Stock approving the conversion of the Series D Preferred Stock into shares of DPW Common Stock in connection with the acquisition of MPC Common Stock and for purposes of compliance with Rule 713 of the NYSE American, then each share of Series D Preferred Stock shall automatically be converted into two shares of DPW Common Stock, for an aggregate of 757,552 shares of DPW Common Stock. Series E Preferred Stock On June 2, 2017, pursuant to the terms of the Share Exchange Agreement and in consideration of legal services, Microphase issued a $450 8% promissory note with a maturity date of November 25, 2017 to an unsecured creditor, Lucosky Brookman, LLP (the “Lucosky Note” equal to forty-five dollars ($45.00) per share The Company, at its option, may redeem for cash, in whole or in part, at any time and from time to time, the shares of Series E Preferred Stock at the time outstanding, upon written notice to the holder of the shares, at a cash redemption price equal to $45 multiplied by the number of shares being redeemed. Any such optional redemption by the Company shall be credited against the Lucosky Note. In the event the Company shall liquidate, dissolve or wind up, the holders of Series E Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Company to the holders of the DPW Common Stock, the Company’s Series A Preferred Stock, or to the holders of any other junior series of preferred stock, by reason of their ownership thereof and subject to the rights of the Company’s Series B Preferred Stock, Series C Preferred Stock and any other class or series of Company stock subsequently issued that ranks senior to the Series E Preferred Stock an amount per share in cash or equivalent value in securities or other consideration equal to $0.01 per share. The holders of Series E Preferred Stock shall not be entitled to receive dividends and shall have no voting rights except as otherwise required by law. Subject to the shareholders of DPW Common Stock of the Company approving the conversion of the Series E Preferred Stock into shares of Common Stock in connection with the acquisition of MPC Common Stock and for purposes of compliance with Rule 713 of the NYSE American, then each share of Series E Preferred Stock may be converted into sixty (60) shares of DPW Common Stock, for an aggregate of 600,000 shares of DPW Common Stock. On December 29, 2017, the Lucosky Note was satisfied through the conversion of the 10,000 shares of Series E Preferred Stock into 600,000 shares of the Company’s common stock. Common Stock 2016 Issuance Common stock confers upon the holders the rights to receive notice to participate and vote in the general meeting of shareholders of the Company, to receive dividends, if and when declared, and to participate in a distribution of surplus of assets upon liquidation of the Company. On November 15, 2016, the Company entered into subscription agreements (the “2016 Subscription Agreements” The 2016 Subscription Agreement provides that, until November 15, 2017, investors who purchased at least $100 had the right to participate in the purchase of up to 50% of the securities offered by the Company in any future financing transactions, with limited exceptions. The Nov. 2016 Warrants entitle the holders to purchase, in the aggregate, up to 901,666 shares of Common Stock at an exercise price of $0.80 per share for a period of three years. The Nov. 2016 Warrants are exercisable upon the six-month anniversary of the issuance date. The exercise price of the Nov. 2016 Warrants is subject to adjustment for stock splits, stock dividends, combinations and other standard anti-dilution events. The Nov. 2016 Warrants may be exercised for cash or, upon the failure to maintain an effective registration statement, on a cashless basis. 2017 Issuances Issuances of Common Stock for Cash or a Combination of Cash and Cancellation of Debt On March 15, 2017, Company entered into a subscription agreement with a related party for the sale of 500,000 shares of common stock at $0.60 per share for the aggregate purchase price of $300. On July 24, 2017, we entered into subscription agreements with six investors, and on July 25, 2017 we entered into a securities purchase agreement with an institutional investor, under which we agreed to issue and sell in the aggregate 851,363 shares of common stock to the investors at $0.55 per share for an aggregate purchase price of $468. Of the aggregate purchase price of $468, $445 was paid in cash and $23, which represented 41,818 of the total shares of common stock sold, was in consideration for the cancellation of debt of the Company. The company granted warrants to purchase 109,090 shares of common stock to two of the investors that entered into the subscription agreements at $0.75 per share. In a concurrent private placement, we sold to the institutional investor warrants to purchase an aggregate of 163,636 shares of the Company’s common stock at an exercise price equal to $0.55 per share. On October 18, 2017, the Company entered into subscription agreements with five investors, under which we agreed to issue and sell in the aggregate 452,239 shares of common stock to the investors at $0.67 per share for an aggregate purchase price of $303. $210 of the purchase price was paid in cash and $93, which represented 138,806 of the total shares of common stock sold, was paid through the cancellation of debt incurred by the Company. On November 7, 2017, the Company entered into subscription agreements with investors under which the Company agreed to issue and sell in the aggregate 725,000 shares of common stock to the investors at $0.60 per share for an aggregate purchase price of $435. $280 of the aggregate purchase price was paid in cash and $155, which represented 258,333 of the total shares of common stock sold, was paid through the cancellation of debt incurred by the Company. On December 5, 2017, the Company entered into subscription agreements with investors for the sale of 640,000 shares of common stock at $1.25 per share for the aggregate purchase price of $800. The direct offering closed December 13, 2017. In aggregate, the above transactions resulted in the issuance of 2,729,645 shares of common stock for cash proceeds, net of $73 in financing costs, of $1,962 and the issuance of 438,957 shares of common stock for the cancellation of $271 in debt incurred by the Company. Issuances of Common Stock for Services On March 8, 2017, the Company issued an aggregate of 12,547 shares of its common stock as payment for services to a consultant. The shares were valued at $10, an average of $0.80 per share Between May 9, 2017 and June 18, 2017, the Company issued an aggregate of 956,153 shares of its common stock as payment for services to its consultant. The shares were valued at $498, an average of $0.52 per share. Between August 21, 2017 and September 5, 2017, the Company issued an aggregate of 580,645 shares of its common stock as payment for services to its consultants. The shares were valued at $364, an average of $0.62 per share. Between October 3, 2017 and December 28, 2017, the Company issued an aggregate of 612,000 shares of its common stock as payment for services to its consultants. The shares were valued at $791, an average of $1.29 per share. In aggregate, during the year ended December 31, 2017, the Company issued a total of 2,161,345 shares of its common stock, with a value of $1,663, to its consultants for services. Issuance of common stock for conversion of debt Between February 16, 2017 and February 23, 2017, the Company issued 666,667 shares of its common stock, an extinguishment price of $0.60 per share, for the cancellation of $400 in demand promissory notes. On April 5, 2017, the Company issued 360,002 shares of its common stock, at a price of $0.75 per share, for the cancellation of $270 in demand promissory notes. On June 28, 2017, the Company issued 189,091 shares of its common stock, at a price of $0.55 per share, for the cancellation of a 7% convertible promissory note in the principal amount of $104. On June 28, 2017, the holders of $55 of in short-term loans agreed to cancel their notes for the purchase of 100,001 shares of the Company’s common stock at a price of $0.55 per share. On July 28, 2017, an institutional investor agreed to cancel two promissory notes in the aggregate amount of $145 for the issuance of 263,600 shares of the Company’s common stock at a price of $0.55 per share. During the period from November 27, 2017 to December 6, 2017, the entire $530 of principal on the Convertible Note On December 13, 2017 and December 14, 2017, the entire $1,111 of principal on the 5% Convertible Note On December 28, 2017, principal and accrued interest of $198 and $5, respectively, on the 12% Convertible Note During December 2017, the entire principal and accrued interest of $880 and $54, respectively, on the 10% Convertible Notes Issuances of Common Stock upon Exercise of Stock Options Between December 4, 2017 and December 22, 2017, the Company issued a total of 361,458 shares of its common stock upon the cash and cashless exercise of options to purchase an aggregate of 363,500 shares of its common stock. These options were issued pursuant to the Company’s Plans. The Company received cash of $557 as a result of these option exercises. Issuances of Common Stock upon Exercise of Warrants Between November 27, 2017 and December 28, 2017, the Company issued a total of 1,871,864 shares of its common stock upon the cash and cashless exercise of warrants to purchase an aggregate of 2,113,465 shares of its common stock. These warrants were issued between November 2016 and August 2017 in conjunction with various common stock and debt financings. The Company received cash of $642 as a result of these warrant exercises. During December 2017, in conjunction with the Series C Subscription Agreements, the Company issued 1,603,335 shares of its common stock upon cash-based exercises that resulted in gross proceeds to the Company of $1,603 and issued 70,909 shares of its common stock upon the cashless exercise of a warrant to purchase 86,667 shares of common stock. In aggregate, the Company received gross proceeds of $2,245 from the issuance of 3,546,108 shares of common stock in connection with warrant exercises. Issuances of common stock in connection with convertible notes On November 2, 2017, in conjunction with the securities purchase agreement to sell the November 5% Convertible Note in the principal amount of $1,111, the Company issued 300,000 shares of restricted common stock to the institutional investor. On December 4, 2017, in conjunction with the securities purchase agreement to sell the 5% Convertible Note in the principal amount of $550, the Company issued 150,000 shares of restricted common stock to the institutional investor. Issuance of common stock for domain name On July 7, 2017, the Company entered into an asset purchase agreement to acquire the intellectual property of Coolisys.com, consisting of the common law rights associated with the trademarks and name as well as the domain name and content of www.Coolisys.com based on the closing price of the Common Stock on the date of the acquisition, Issuance of common stock and warrants in satisfaction of subsidiary debt On December 5, 2017, the Company entered into an exchange agreement with several accredited investors for the cancellation of $690 in outstanding principal on the 10% Short-Term Notes. In December 2016, Microphase issued $705 in 10% Short-Term Notes. The 10% Short-Term Notes were due one year from the date of issuance. The amount due pursuant to the 10% Short-Term Notes is equal to the entire original principal amount multiplied by 125% (the “Loan Premium” In exchange for the cancellation of $690 of outstanding principal and $250 of accrued loan premiums and interest owed to the investors by Microphase Corporation, the Company entered into the exchange agreement pursuant to which the Company issued an aggregate of 1,523,852 shares of common stock and warrants to purchase 380,466 shares of common stock with an exercise price of $1.10 per share of common stock, (See Note 18f). Issuance of common stock for acquisition of debt due from related party On December 5, 2017, the Company entered into an exchange agreement with WT Johnson, pursuant to which the Company issued to WT Johnson convertible promissory notes in the principal amount of $2,268. During December 2017, the Company issued 600,000 shares of its common stock upon the conversion of the promissory notes . |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes | |
INCOME TAXES | 24. INCOME TAXES On December 22, 2017, the United States enacted significant changes to U.S. tax law following the passage and signing of H.R.1, “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018” (the “Tax Act”). The Tax Act reduces the U.S. federal corporate tax rate to a maximum of 21 percent. As of December 31, 2017, we have not completed our accounting for the tax effects of the enactment of the Tax Act, however, in certain cases, as described below, we have made a reasonable estimate of the effects on our existing deferred tax balances. The application of this rate reduction to the ending deferred tax assets and deferred tax liabilities impacted our expense for income taxes by $1,139 which was fully offset by a corresponding change to our valuation allowance in 2017. We are still analyzing the Tax Act and refining our calculations, which could potentially impact the measurement of our tax balances. The Tax Act contains several base broadening provisions that became effective on January 1, 2018, that we do not expect to have a material impact on future earnings. The 2017 impact of the enactment of the Tax Act is reflected in the tables below. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes. Significant components of the Company's deferred tax assets are as follows: 2017 2016 Deferred tax asset: Net operating loss $ 3,543 $ 2,206 Reserves and allowances 725 295 Tax credit carryforward 163 153 Property and equipment 231 194 Total deferred tax asset 4,662 2,848 Deferred tax liability: Intangible assets, net (653 ) — Total deferred tax liability (653 ) — Valuation allowance (4,009 ) (2,848 ) Deferred tax asset, net $ — $ — The Company had Federal and state net operating loss carryforwards of approximately $12,024 and $3,229, respectively, available to offset future taxable income, expiring at various times from December 31, 2018 through December 31, 2037. In accordance with Section 382 of the Internal Revenue Code, the future utilization of the Company’s net operating loss to offset future taxable income may be subject to an annual limitation as a result of ownership changes that may have occurred previously or that could occur in the future. The Company has not yet determined whether such an ownership change has occurred; however, the Company will be completing a Section 382 analysis regarding the limitation of the net operating loss. In assessing the realization 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 temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax assets, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available and due to the last five years significant losses there is substantial doubt related to the Company’s ability to utilize its deferred tax assets, the Company recorded a full valuation allowance of the deferred tax asset. For the year ended December 31, 2017, the valuation allowance has increased by $1,161. The 2014 through 2017 tax years remain open to examination by the Internal Revenue Service ( “IRS” “FTB” As of December 31, 2017, the Company’s foreign subsidiary had accumulated losses for income tax purposes in the amount of approximately $1,403. All of the Company’s international accumulated losses were generated in the United Kingdom, which has a statutory tax rate of 20%. These net operating losses may be carried forward and offset against taxable income in the future for an indefinite period. The Company has not recognized a U.S. deferred income tax asset on non-U.S. losses because the Company plans to indefinitely reinvest such earnings outside the U.S. Remittances of non-U.S. earnings, if any, are based on estimates and judgments of projected cash flow needs, as well as the working capital and investment requirements of the Company’s non-U.S. and U.S. operations. Material changes in the Company’s estimates of cash, working capital, and investment needs could require repatriation of indefinitely reinvested non-U.S. earnings, which would be subject to U.S. income taxes and applicable non-U.S. income and withholding taxes. The net income tax benefit consists of the following: 2017 2016 Current Foreign $ — $ (20 ) Federal 78 — State — — Income tax (benefit) $ 78 $ (20 ) The Company’s effective tax rates were (0.8%) and (1.7%) for the years ended December 31, 2017 and 2016, respectively. During the year ended December 31, 2017, the effective tax rate differed from the U.S. federal statutory rate primarily due to the change in the valuation allowance and the effect of changes in tax rates in future periods. The reconciliation of income tax attributable to operations computed at the U.S. Federal statutory income tax rate of 34% to income tax expense is as follows: 2017 2016 Tax benefit at U.S. Federal statutory tax rate (34.0 %) (34.0 %) Increase (decrease) in tax rate resulting from: Effect of change in tax rates 12.0 % — Stock compensation expense 1.9 % 12.1 % Taxes in respect of prior years — 9.1 % Increase in valuation allowance 17.0 % 8.3 % Nondeductible meals & entertainment expense and other 6.1 % 4.4 % State taxes, net of federal benefit (4.5 %) 0.3 % Foreign rate differential 0.7 % (0.2 %) Foreign R&D credit — (1.7 %) Effective tax rate 0.8 % (1.7 %) The Company accounts for uncertain tax positions in accordance with ASC No. 740-10-25. ASC No. 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC No. 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. To the extent that the final tax outcome of these matters is different than the amount recorded, such differences impact income tax expense in the period in which such determination is made. Interest and penalties, if any, related to accrued liabilities for potential tax assessments are included in income tax expense. ASC No. 740-10-25 also requires management to evaluate tax positions taken by the Company and recognize a liability if the Company has taken uncertain tax positions that more likely than not would not be sustained upon examination by applicable taxing authorities. Management of the Company has evaluated tax positions taken by the Company and has concluded that as of December 31, 2017 and 2016, there are no uncertain tax positions taken, or expected to be taken, that would require recognition of a liability that would require disclosure in the financial statements. |
RELATED PARTY TRANSACTION
RELATED PARTY TRANSACTION | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTION | 25. RELATED PARTY TRANSACTION a. In anticipation of the acquisition of MTIX Ltd., an advanced materials and processing technology company located in Huddersfield, West Yorkshire, UK ( “MTIX” “AVLP Notes” Subject to adjustment, AVLP . On September 6, 2017, the Company and AVLP entered into a Loan and Security Agreement ( “AVLP Loan Agreement” In consideration of entering into the AVLP Loan Agreement, the Company and AVLP cancelled the AVLP Notes and consolidated the AVLP Notes and prior advances totaling $3,309 plus original issue discount of $165 and issued a new Convertible Promissory Note in the aggregate principal amount of $3,474 (the “New Note” During the years ended December 31, 2017 and 2016, the Company also Philou is AVLP’s controlling shareholder. Mr. Ault is Chairman of AVLP’s Board of Directors and the Executive Chairman of the Company’s Board of Directors. Mr. William B. Horne is the Chief Financial Officer of AVLP and also the audit committee chairman of the Company. On October 24, 2016, AVLP entered into a letter of intent to acquire MTIX and made an initial payment of $50 towards the purchase. On August 22, 2017, pursuant to the terms of a Share Exchange Agreement dated as of March 3, 2017, and as amended on July 13, 2017 and August 21, 2017 (the “Exchange Agreement” “MTIX” Sellers “MTIX Shares” “Exchange” “Note” “Notes” “Class B Shares” “Majority Shareholder” On the closing date, the fully-diluted AVLP shares shall be approximately 52 million shares of common stock, assuming that (i) the MTIX promissory notes are convertible into shares of AVLP common stock at a conversion price of $0.50 per share, (ii) the shares of AVLP Class B Convertible Preferred Stock are convertible into shares of AVLP common stock at a conversion rate of $0.50 per share and (iii) the issuance of stock options to purchase an aggregate of 531,919 shares of AVLP common stock to the members of the MTIX management group. During March 2017, the Company was awarded a 3-year, $50 million purchase order by MTIX to manufacture, install and service the MLSE plasma-laser system. During the year ended December 31, 2017, we recognized $174 in revenues resulting from our relationship with MTIX Limited, a company formed under the laws of England and Wales MTIX August 22, 2017 and is therefore deemed to be a related party. MLSE . However, at December 31, 2017, the $924 in revenues had not yet been received and was reflected on the financial statements as accounts receivable, related party. b. On December 5, 2017, the Company entered into an exchange agreement with WT Johnson pursuant to which the Company issued to WT Johnson two convertible promissory notes in the principal amount of $600 ( “Note A” “Note B” During December 2017, the Company issued 600,000 shares of its common stock to WT Johnson & Sons upon the conversion of Note A and WT Johnson subsequently sold the 600,000 shares. The proceeds from the sale of Note A were sufficient to satisfy the entire $2,268 obligation as well as an additional $400 of value added tax due to WT Johnson. Concurrent with entering into the exchange agreement, the Company received a promissory note in the amount of $2,668 from MTIX. At December 31, 2017, the Company has valued the note receivable at $600, the carrying amount of Note A. The Company will recognize the remainder of the amount due from MTIX upon payment of the promissory note by MTIX . c. On September 22, 2016, the Company entered into consulting agreement with Mr. Ault to assist the Company in developing a business strategy, identifying new business opportunities, developing a capital raising program and implementing of a capital deployment program. For his services, Mr. Ault was paid $208 during the year ended December 31, 2017 and $30 for the year ended December 31,2016. d. On October 21, 2016, the Company entered into a 12% convertible secured note in the principal amount of $530 and warrants with the Barry Blank Living Trust, an existing stockholder of the Company, for $500 due on October 20, 2019. The principal amount of the 12% convertible secured note may be convertible into shares of the Company’s common stock at $0.55 per share. Subject to certain beneficial ownership limitations, the Barry Blank Living Trust may convert the principal amount of the convertible note at any time into common stock. During the year ended December 31, 2017 and 2016, the Company recorded interest expenses of $59 and $12, respectively, on the convertible note obligation. During the period from November 27, 2017 to December 6, 2017, the entire $530 of principal was satisfied through the issuance of 963,636 shares of the Company’s common. e. On December 29, 2016, the Company received a $250 short term loan from MCKEA. Kristine Ault, a director of the Company and the wife of Mr. Ault, is the managing member of MCKEA which, in turn, is the Manager of Philou, the majority stockholder of the Company. On March 24, 2017, the $250 loan was cancelled in consideration for the issuance of 25,000 shares of Series B preferred stock of the Company to Philou. During the year ended December 31, 2017 the Company recorded interest expenses of $3 on the f. In February 2017, the Company issued to eight accredited investors g. On March 9, 2017, the Company entered into a Preferred Stock Purchase Agreement with Philou. Pursuant to the terms of the Preferred Stock Purchase Agreement, Philou may invest up to $5,000 in the Company through the purchase of Series B Preferred Stock over 36 months. Between April 1, 2017 and June 2, 2017, Philou purchased 75,000 shares of Series B Preferred Stock pursuant to the terms of the Preferred Stock Purchase Agreement. Further, at December 31, 2017, Philou had made a $200 payment in the form of a short-term advance which will be converted into Series B Preferred Stock during the second quarter of 2018. h. On March 15, 2017, Company entered into a subscription agreement with a related party for the sale of 500,000 shares of common stock at $0.60 per share for the aggregate purchase price of $300. i. On March 20, 2017, the Company received a $250 short term loan from JLA Realty, an entity which owns 666,667 shares of the Company’s common stock, on behalf of Philou. The proceeds from this short-term loan comprised a portion of Philou’s purchase of Series B Preferred Stock. j. Between May 5, 2017 and June 30, 2017, the Company received additional short-term loans of $140 from four accredited investors of which $75 was from the Company’s corporate counsel, a related party. As additional consideration, the investors received five-year warrants to purchase 224,371 shares of common stock at a weighted average exercise price of $0.77 per share.On June 28, 2017, $52 in short-term loans that was received from the related party was converted into one of the Series C Units (See Note 18h) and on July 24, 2017, the remaining $23 in short-term loans was converted in 41,818 shares of the Company’s common stock in conjunction with the subscription agreements that the Company entered into with six investors (See Note 23). k. Between July 6, 2017 and December 31, 2017, Milton C. Ault, III, the Company’s Executive Chairman, personally guaranteed the repayment of (i) $2,585 to TVT Capital (ii) and $1,280 from the sale of the convertible promissory notes. These personal guarantees were necessary to facilitate the consummation of these financing transactions. Mr. Ault’s payment obligations would be triggered if the Company failed to perform under these financing obligations. Our board of directors has agreed to compensate Mr. Ault for his personal guarantees. The amount of annual compensation for each of these guarantees, which will be in the form of non-cash compensation, is approximately 2% of the amount of the obligation. l. During the year ended December 31, 2017, our President, Amos Kohn, purchased certain real property that will serve as a facility for the Company’s business operations in Israel. The Company made $300 of payments to the seller of the property and received a 28% undivided interest in the real property (“Property’). The Company’s subsidiary, Coolisys, entered into a Trust Agreement and Tenancy In Common Agreement with Roni Kohn, who owns a 72% interest in the Property, is the daughter of Mr. Kohn and is an Israeli citizen. The Property was purchased to serve as a residence/office facility for the Company in order to oversee its European operations and to expand its business in the hi-tech industry located in Israel. Pursuant to the Trust Agreement, the Ms. Kohn will hold and manage Coolisys’ undivided 28% interest in the Property. The trust will be in effect until it is terminated by mutual agreement of the parties. During the term of the trust, the Ms. Kohn will not sell, lease, sublease, transfer, grant, encumber, change or effect any other disposition with respect to the Property or the Coolisys’ interest without the Company’s approval. Under the Tenancy In Common Agreement, Coolisys and its executive officers shall have the exclusive rights to use the Property for the Company and its affiliates’ business operations. The Property shall be managed by the Ms. Kohn. Further, pursuant to the Tenancy In Common Agreement, for each completed calendar month of employment of Mr. Kohn by the Company, Ms. Kohn shall have the right to purchase a portion of the Company’s interest in the Property. Such right shall fully vest at the end of five years of continuous employment and the Trustee shall have the right to purchase the Company’s 28% interest in the Property for a nominal value. The Company will amortize its $300 investment over ten years, subject to a cliff vesting after five years. In the event that Mr. Kohn is not employed by the Company, the Company shall have the right to demand that Ms. Kohn purchase the Company’s remaining interest in the Property that was not subject to vesting for the fair value market value of such unvested Property interest. During the year ended December 31, 2017, DP Lending made loans to Alzamend Neuro, Inc. ( “Alzamend” AVLP is a party to a |
SEGMENT CUSTOMERS AND GEOGRAPHI
SEGMENT CUSTOMERS AND GEOGRAPHICAL INFORMATION | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
SEGMENT CUSTOMERS AND GEOGRAPHICAL INFORMATION | 26. SEGMENT, CUSTOMERS AND GEOGRAPHICAL INFORMATION The Company has two reportable geographic segments; see Note 1 for a brief description of the Company’s business. The following data presents the revenues, expenditures and other operating data of the Company’s geographic operating segments and presented in accordance with ASC No. 280. Year ended December 31, 2017 DPC DPL Eliminations Total Revenues $ 7,890 $ 2,111 $ — $ 10,001 Revenue, related party $ 174 $ — $ — $ 174 Inter-segment revenues $ 53 $ — $ (53 ) $ — Total revenues $ 8,117 $ 2,111 $ (53 ) $ 10,175 Depreciation and amortization expense $ 184 $ 71 $ — $ 255 Loss from operations $ (5,558 ) $ (425 ) $ — $ (5,983 ) Interest expense, net $ (4,990 ) Income tax benefit $ 78 Net loss attributable to non-controlling interest $ 279 Net loss attributable to Digital Power Corp $ (10,616 ) Capital expenditures for segment assets, as of $ 382 $ 21 $ — $ 403 Identifiable assets as of December 31, 2017 $ 28,781 $ 1,729 $ — $ 30,510 Year ended December 31, 2016 DPC DPL Eliminations Total Revenues $ 4,552 $ 3,044 $ — $ 7,596 Inter-segment revenues $ 145 $ — $ (145 ) $ — Total revenues $ 4,697 $ 3,044 $ (145 ) $ 7,596 Depreciation and amortization expense $ 75 $ 86 $ — $ 161 Loss from operations $ (1,110 ) $ (109 ) $ — $ (1,219 ) Interest income, net $ 77 Income tax benefit $ 20 Net loss $ (1,122 ) Capital expenditures for segment assets, as of $ 32 $ 53 $ — $ 85 Identifiable assets as of December 31, 2016 $ 3,152 $ 2,320 $ — $ 5,472 Concentration Risk: The following table provides the percentage of total revenues attributable to a single customer from which 10% or more of total revenues are derived: For the year ended December 31, 2017 Total Revenues by Major Percentage of Customers Total Company (in thousands) Revenues Customer A $ 1,341 13 % For the year ended December 31, 2016 Total Revenues by Major Percentage of Customers Total Company (in thousands) Revenues Customer A $ 1,328 17 % Customer B $ 750 10 % Revenue from Customer A was attributable to Coolisys and revenue from Customer B attributable to DP Limited. For the years ended December 31, 2017 and 2016, total revenues from external customers divided on the basis of the Company’s product lines are as follows: 2017 2016 Revenues: Commercial products $ 5,489 $ 5,307 Defense products 4,686 2,289 Total revenues $ 10,175 $ 7,596 Financial data relating to geographic areas: The Company’s total revenues are attributed to geographic areas based on the location. The following table presents total revenues for the years ended December 31, 2017 and 2016. Other than as shown, no foreign country contributed materially to revenues or long-lived assets for these periods: 2017 2016 Revenues: North America $ 6,638 $ 4,541 Europe 2,634 1,845 South Korea 231 751 Other 672 459 Total revenues $ 10,175 $ 7,596 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 27. SUBSEQUENT EVENTS In accordance with FASB ASC 855-10, the Company has analyzed its operations subsequent to December 31, 2017 and has determined that it does not have any material subsequent events to disclose in these financial statements except for the following. Advances on Future Receipts On January 10, 2018, the Company entered into two agreements for the purchase and sale of future receipts with TVT Capital LLC ( “TVT” “Agreement No. 1” “Agreement No. 2” Under the terms of Agreement No. 1, the Company will be obligated to pay $9 on a weekly basis until the purchase price of $350 has been paid in full. In connection with entering into Agreement No. 1, the Company paid a $10 origination fee. Under the terms of Agreement No. 2, the Company will be obligated to pay $34 on a weekly basis until the purchase price of $1,250 has been paid in full. In connection with entering into Agreement No. 2, the Company paid a $37 origination fee. On January 18, 2018, the Company and Libertas Funding LLC ( “Libertas” On January 25, 2018, the Company entered into two agreements for the purchase and sale of future receipts with TVT, pursuant to which the Company sold up to (i) $562 in future receipts of the Company to TVT for a purchase price of $375 ( “Agreement No. 3” “Agreement No. 4” Under the terms of Agreement No. 3, the Company will be obligated to pay $22 on a weekly basis until the purchase amount of $562 has been paid in full. In connection with entering into Agreement No.3, the Company paid an origination fee in the amount of $11. Agreement No. 3 also includes a warrant to purchase 56,250 shares of the Company’s common stock at an exercise price of $2.25 per share and a warrant to purchase 35,000 shares of the Company’s common stock at an exercise price of $2.50 per share. Under the terms of Agreement No. 4, the Company will be obligated to pay $13 on a weekly basis until the purchase amount of $337 has been paid in full. In connection with entering into Agreement No.4, the Company paid an origination fee in the amount of $7. Agreement No. 4 also includes warrants to purchase 56,250 shares of the Company’s common stock at an exercise price of $2.25 per share. On January 25, 2018, the Company and Philou, as guarantor, entered into a future receivables sale agreement with Libertas, pursuant to which the Company sold up to $148 in future receivables of the Company to Libertas for a purchase price of $100. The Company will be obligated to pay $9 on a weekly basis until the purchase amount of $148 has been paid in full. In connection with entering into agreement, Libertas received an additional discount for due diligence in the amount of $3. The agreement also includes warrants to purchase 125,000 shares of the Company’s common stock at an exercise price of $2.50 per share. On March 23, 2018, the Company entered into two agreements for the purchase and sale of future receipts with C6 Capital, LLC ( “C6” “Agreement No. 3” “Agreement No. 4” On March 27, 2018, the Company entered into a future receivables sale agreement with Libertas, pursuant to which the Company sold up to $552 in future receivables of the Company to Libertas for a purchase price of $400. In connection with entering into this agreement, the Company paid an origination fee in the amount of $12. As additional consideration, the Company also issued to Libertas 150,000 shares of its common stock. This agreement has been personally guaranteed by Milton Ault, III, the Company’s Chief Executive Officer and Chairman of the Board of Directors. Promissory Notes On January 25, 2018, the Company issued two 5% promissory notes, each in the principal face amount of $2,500 for an aggregate debt of $5,000 to two institutional investors. The entire unpaid balance of the principal and accrued interest on each of the 5% Promissory Notes is due and payable on February 23, 2018, subject to a 30-day extension available to the Company. The proceeds from the 1,000 Antminer S9s manufactured by Bitmain Technologies, Inc. in connection with the Company’s mining operations. The Company received delivery of the Miners on February 1, 2018. On March 23, 2018, the Company paid $750 to each investor under the 5% promissory notes. On March 27, 2018, the Company paid the balance of the principal and accrued interest on each of the 5% promissory notes. On February 20, 2018, the Company issued a promissory note in the principal face amount of $900 to an accredited investor. This promissory note The principal and OID on this note was due and payable on March 22, 2018. On March 23, 2018, the parties entered into a new promissory note in the principal amount of $1,750 for a term of two months, subject to the Company’s ability to prepay within one month. The Company also issued to the lender a warrant to purchase 1,250,000 shares of common stock at an exercise price of $1.15 per share, pursuant to a consulting agreement. On February 26, 2018, the Company issued a 10% promissory note in the principal face amount of $330 to an accredited investor. This promissory note The principal and accrued interest on this note is due and payable on April 12, 2018, subject to a 30-day extension available to the Company. On March 27, 2018, the Company issued a 10% promissory note in the principal face amount of $200 to an accredited investor The principal and accrued interest on this note is due and payable on March 29, 2018. On March 23, 2018, the Company entered into a securities purchase agreement to sell and issue a 12% promissory note and a warrant to purchase shares 300,000 shares of common stock to an accredited investor. The promissory note has been issued at a 10% original issue discount. The promissory note is in the principal amount of $1,000 and was sold for $900, bears interest at 12% simple interest on the principal amount, and is due on June 22, 2018. Interest only payments are due, in arrears, on a monthly basis commencing on April 23, 2018. The exercise price of the warrant is $1.15 per share. The promissory note is unsecured by any assets of the Company but is guaranteed by the Company’s Chief Executive Officer pursuant to a Guaranty Agreement. Convertible Promissory Notes On January 23, 2018, the Company entered into a securities purchase agreement with an institutional investor to sell, for an aggregate purchase price of $1,000, a 10% Senior Convertible Promissory Notes with an aggregate principal face amount of $1,250, a warrant to purchase an aggregate of 625,000 shares, subject to adjustment, of the Company’s common stock. The promissory note is convertible into shares of common stock at $2.00 per share, subject to adjustment. The exercise price of the warrant is $2.20 per share, subject to adjustment. At The Market Offering On February 27, 2018, the Company entered into a sales agreement with H.C. Wainwright & Co., LLC ( “HCW” ATM Offering The offer and sale of the shares through the ATM Offering will be made pursuant to the Company’s effective “shelf” registration statement on Form S-3 and an accompanying base prospectus contained therein (Registration Statement No. 333-222132) filed with the SEC on December 18, 2017, amended on January 8, 2018, and declared effective by the SEC on January 11, 2018, and a prospectus supplement related to the ATM Offering, dated February 27, 2018. The Company will pay to HCW a commission in an amount equal to 5.0% of the gross sales price per share of common stock sold through it as sales agent under the sales agreement. In addition, the Company has agreed to reimburse HCW for certain expenses it incurs in the performance of its obligations under the sales agreement up to a maximum of $60 and $5 each calendar quarter. Other Agreements On March 8, 2018, Super Crypto Mining, Inc. (“SCM”), the Company’s wholly owned subsidiary, entered into an asset purchase agreement with Blockchain Mining Supply & Services Ltd. (“BMSS”). Pursuant to this agreement, SCM has agreed to acquire 1,100 Antminer S9s (the “Miners”) manufactured by Bitmain Technologies, Inc. (the “Bitmain”), in connection with SCM’s mining operations, from BMSS. Pursuant to the agreement, SCM will pay an aggregate of $3,200,000 to BMSS for the Miners.The Company intends to fund SCM’s acquisition of the Miners though the proceeds derived from its ongoing ATM Offering. On March 22, 2018, SCM entered into a Master Services Agreement with a U.S. based entity, whereby SCM secured the right to 25 megawatts of power in support of SCM’s operations. On April 13, 2018, the Company and Milton C. Ault, III, the Company’s Chief Executive Officer, entered into an Amended and Restated Independent Contractor Agreement pursuant to which the parties thereto agreed to amend and restate that certain Independent Contractor Agreement dated September 22, 2016, by and between the Company and Mr. Ault. In accordance with the terms set forth in the Agreement, Mr. Ault shall continue to serve as the Company’s Chief Executive Officer and Chairman of the Board of Directors in consideration of a monthly fee of $33,333.00, effective November 15, 2017. The Agreement shall terminate on April 30, 2018, and may be renewed on a monthly basis by written agreement between the parties thereto. Issuances of Common Stock for Services Between January 1, 2018 and February 7, 2018, the Company issued an aggregate of 1,683,059 shares of its common stock as payment for services to its consultant. The shares were valued at $3,179, an average of $1.89 per share. Issuances of Common Stock upon Exercise of Stock Options During January 2018, the Company issued a total of 60,000 shares of its common stock upon the cash exercise of options to purchase an aggregate of 60,000 shares of its common stock. These options were issued pursuant to the Company’s Plans. The Company received cash of $98 as a result of these option exercises. |
DESCRIPTION OF BUSINESS (Detail
DESCRIPTION OF BUSINESS (Details Narrative) - Segment | 12 Months Ended | ||
Dec. 31, 2017 | Jun. 02, 2017 | Apr. 28, 2017 | |
Restructuring Cost and Reserve [Line Items] | |||
Number of reportable segments | 2 | ||
Microphase Corporation [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Ownership percentage | 56.40% | 56.40% |
LIQUIDITY, GOING CONCERN AND 35
LIQUIDITY, GOING CONCERN AND MANAGEMENT'S PLANS (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash and cash equivalent | $ 1,478 | $ 996 | $ 1,241 | |
Accumulated deficit | (23,412) | (12,158) | ||
Working capital | 3,161 | |||
Net income (loss) attributable to parent | $ (10,616) | $ (1,122) | ||
MTIX [Member] | MLSE Plasma-Laser System [Member] | ||||
Supply commitment, term | 3 years | |||
Supply commitment, amount committed | $ 50,000 |
BASIS OF PRESENTATION AND SIG36
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Property, and equipment, useful life | Over the term of the lease or the life of the asset, whichever is shorter |
Computer Equipment [Member] | Minimum [Member] | |
Property, and equipment, useful life (Year) | 3 years |
Computer Equipment [Member] | Maximum [Member] | |
Property, and equipment, useful life (Year) | 5 years |
Office Equipment [Member] | Minimum [Member] | |
Property, and equipment, useful life (Year) | 5 years |
Office Equipment [Member] | Maximum [Member] | |
Property, and equipment, useful life (Year) | 10 years |
BASIS OF PRESENTATION AND SIG37
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 1) | 12 Months Ended |
Dec. 31, 2017 | |
Minimum [Member] | |
Intangible asset, useful life | 3 years |
Maximum [Member] | |
Intangible asset, useful life | 14 years |
Customer Lists [Member] | Minimum [Member] | |
Intangible asset, useful life | 5 years |
Customer Lists [Member] | Maximum [Member] | |
Intangible asset, useful life | 14 years |
Non-competition agreements [Member] | |
Intangible asset, useful life | 3 years |
Domain Name [Member] | |
Intangible asset, useful life | 3 years |
BASIS OF PRESENTATION AND SIG38
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Available-for-sale securities | $ 1,049 | $ 10,061 |
Fair Value, Measurements, Recurring [Member] | ||
Available-for-sale securities | 9,563 | |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Available-for-sale securities | 2,661 | |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Available-for-sale securities | ||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Available-for-sale securities | 6,902 | |
Avalanche International Corp. [Member] | Fair Value, Measurements, Recurring [Member] | ||
Available-for-sale securities | 7,728 | 84 |
Avalanche International Corp. [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Available-for-sale securities | 826 | 84 |
Avalanche International Corp. [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Available-for-sale securities | ||
Avalanche International Corp. [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Available-for-sale securities | 6,902 | |
Other Companies [Member] | Fair Value, Measurements, Recurring [Member] | ||
Available-for-sale securities | 1,835 | |
Other Companies [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Available-for-sale securities | 1,835 | |
Other Companies [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Available-for-sale securities | ||
Other Companies [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Available-for-sale securities |
BASIS OF PRESENTATION AND SIG39
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 3) - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Anti-dilutive securities | 11,383,971 | 4,651,302 |
Employee Stock Option [Member] | ||
Anti-dilutive securities | 3,842,500 | 2,256,000 |
Warrant [Member] | ||
Anti-dilutive securities | 4,071,408 | 1,431,666 |
Convertible Notes [Member] | ||
Anti-dilutive securities | 1,283,940 | 963,636 |
Convertible Debt Securities [Member] | ||
Anti-dilutive securities | 2,186,123 |
BASIS OF PRESENTATION AND SIG40
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Apr. 05, 2017 | Feb. 28, 2017 | |
Accrued warranty liability | $ 86 | $ 86 | ||
Available-for-sale securities | 1,049 | 10,061 | ||
Payments to acquire investments | $ 3,201 | $ 1,034 | ||
Exercise price of warrants (in dollars per share) | $ 0.90 | $ 0.70 | ||
Anti-dilutive securities | 11,383,971 | 4,651,302 | ||
Allowance for Doubtful Accounts Receivable | $ 5 | $ 32 | ||
Unrealized gain | 550 | |||
Avalanche International Corp. [Member] | ||||
Available-for-sale securities, equity securities | $ 826 | $ 84 | ||
Warrant outstanding | 8,248,440 | |||
Exercise price of warrants (in dollars per share) | $ 0.50 | |||
Warrant [Member] | ||||
Warrant outstanding | 317,460 | |||
Exercise price of warrants (in dollars per share) | $ 0.01 | |||
Anti-dilutive securities | 4,071,408 | 1,431,666 | ||
Common Stock [Member] | ||||
Payments to acquire investments | $ 1,702 | |||
Unrealized gain | $ 133 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Inventories Details | ||
Raw materials, parts and supplies | $ 542 | $ 271 |
Work-in-progress | 685 | 238 |
Finished products | 766 | 613 |
Total inventories | $ 1,993 | $ 1,122 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Property, plant and equipment, gross | $ 3,509 | $ 2,591 |
Accumulated depreciation and amortization | (2,292) | (2,021) |
Property and equipment, net | 1,217 | 570 |
Computer, software and related equipment [Member] | ||
Property, plant and equipment, gross | 2,432 | 1,652 |
Office furniture and equipment [Member] | ||
Property, plant and equipment, gross | 289 | 240 |
Leasehold Improvements [Member] | ||
Property, plant and equipment, gross | $ 788 | $ 699 |
PROPERTY AND EQUIPMENT, NET (43
PROPERTY AND EQUIPMENT, NET (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property And Equipment Net Details Narrative | ||
Depreciation and Amortization of Intangible Assets | $ 194 | $ 161 |
Marketable Securities (Details)
Marketable Securities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Payments to acquire investments | $ 3,201 | $ 1,034 |
Gross unrealized gains (losses) | 550 | |
Common Stock [Member] | ||
Payments to acquire investments | 1,702 | |
Gross unrealized gains (losses) | 133 | |
Fair value | $ 1,835 |
Marketable Securities (Details
Marketable Securities (Details Narrative) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Gross unrealized gains (losses) | $ 550 |
Common Stock [Member] | |
Gross unrealized gains (losses) | 133 |
Estimated fair value | $ 1,439 |
INTANGIBLE ASSETS, NET (Details
INTANGIBLE ASSETS, NET (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Balance as of December 31, 2016 | ||
Accumulated amortization | (61) | |
Balance as of December 31 2017 | 2,898 | |
Customer Lists [Member] | ||
Balance as of December 31, 2016 | 988 | |
Non-competition agreements [Member] | ||
Balance as of December 31, 2016 | 150 | |
Domain Name [Member] | ||
Balance as of December 31, 2016 | 81 | |
Trademarks and Trade Names [Member] | ||
Balance as of December 31, 2016 | $ 1,740 |
INTANGIBLE ASSETS, NET (Detai47
INTANGIBLE ASSETS, NET (Details 1) $ in Thousands | Dec. 31, 2017USD ($) |
Intangible Assets Net Details 1 | |
2,018 | $ 133 |
2,019 | 133 |
2,020 | 117 |
2,021 | 83 |
2,022 | 77 |
Thereafter | 534 |
Estimated amortization expense | $ 1,077 |
INTANGIBLE ASSETS, NET (Detai48
INTANGIBLE ASSETS, NET (Details Narrative) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Amortization expense | $ (61) |
Minimum [Member] | |
Estimated useful lives | 3 years |
Maximum [Member] | |
Estimated useful lives | 14 years |
INVESTMENTS - RELATED PARTIES (
INVESTMENTS - RELATED PARTIES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Balance | $ 10,061 | |
Balance | 1,049 | $ 10,061 |
Avalanche International Corp. [Member] | ||
Balance | 1,045 | |
Investment in convertible promissory notes of AVLP - Gross | 4,124 | 997 |
Investment in warrants of AVLP | 6,902 | |
Investment in common stock of AVLP | 826 | 84 |
Accrued interest in convertible promissory note of AVLP | 324 | 9 |
Less: original issue discount | (2,115) | (45) |
Investment in warrants and common stock of AVLP - Net | 7,728 | 84 |
Investment in convertible promissory note of AVLP - Net | 2,333 | 961 |
Balance | $ 10,061 | $ 1,045 |
OTHER INVESTMENTS - RELATED PAR
OTHER INVESTMENTS - RELATED PARTIES (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||
Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 05, 2017 | Apr. 05, 2017 | Feb. 28, 2017 | |
Principal face amount | $ 400 | |||||
Payments to acquire property | $ 403 | $ 85 | ||||
Amortization expense | 4,688 | 34 | ||||
Proceeds from short term debt | 1,047 | |||||
Short term debt | $ 1,047 | 1,047 | ||||
Number of warrants purchased | 180,002 | 333,333 | ||||
Exercise price of warrants | $ 0.90 | $ 0.70 | ||||
Alzamend Neuro, Inc. [Member] | ||||||
Proceeds from short term debt | 44 | |||||
Short term debt | $ 13 | $ 13 | ||||
Number of warrants purchased | 22,000 | 22,000 | ||||
Exercise price of warrants | $ 0.30 | $ 0.30 | ||||
Tenancy In Common Agreement [Member] | ||||||
Amortization of property | $ 300,000 | |||||
Amortization expense | 8 | |||||
WT Johnson & Sons [Member] | Convertible Promissory Note A [Member] | ||||||
Number of shares issued upon conversion | 600,000 | |||||
Number of shares sold | 600,000 | |||||
Proceeds from promissory note | $ 2,268 | |||||
Value added tax payable | 400 | 400 | ||||
WT Johnson & Sons [Member] | Exchange Agreement [Member] | Convertible Promissory Note A [Member] | ||||||
Principal face amount | $ 600 | |||||
Value added tax payable | 2,668 | 2,668 | ||||
Debt carrying amount | $ 600 | 600 | ||||
WT Johnson & Sons [Member] | Exchange Agreement [Member] | Convertible Promissory Note B [Member] | ||||||
Principal face amount | $ 1,668 | |||||
Amos Kohn [Member] | ||||||
Payments to acquire property | $ 300 | |||||
Amos Kohn [Member] | Undivided Interest [Member] | ||||||
Percentage of real property | 28.00% | 28.00% | ||||
Roni Kohn [Member] | ||||||
Percentage of real property | 72.00% | 72.00% |
ACQUISITIONS (Details Narrative
ACQUISITIONS (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Apr. 28, 2017 | Dec. 31, 2017 | Jun. 02, 2017 |
Common Stock [Member] | Share Exchange Agreement [Member] | |||
Number of shares issued | 1,842,448 | ||
Warrant [Member] | |||
Number of shares issued | 1,000,000 | ||
Series D Preferred Stock [Member] | Share Exchange Agreement [Member] | |||
Number of shares issued | 378,776 | ||
Common Stock And Warrants [Member] | Series D Preferred Stock [Member] | Share Exchange Agreement [Member] | |||
Number of shares converted | 757,552 | ||
Microphase Corporation [Member] | |||
Ownership percentage | 56.40% | 56.40% | |
Equity instruments issued | $ 1,451 | ||
Shares issued (in dollars per share) | $ 0.47 | ||
Purchase price | $ 1,451 | ||
Microphase Corporation [Member] | Common Stock [Member] | Share Exchange Agreement [Member] | |||
Common stock, shares issued | 1,603,434 | ||
Common stock, shares outstanding | 1,603,434 | ||
Microphase Corporation [Member] | Series D Preferred Stock [Member] | |||
Equity instruments issued | 1,222 | ||
Microphase Corporation [Member] | Common Stock And Warrants [Member] | |||
Equity instruments issued | 229 | ||
Power-Plus Technical Distributors, LLC [Member] | |||
Membership interests acquired | 850 | ||
Certain debt amount reduce form purchase price | $ 186 | ||
Description of purchase price consideration paid | (i) a two year promissory note in the amount of $255,000 payable in 24 monthly installments; and (ii) cash at closing of $409 resulting in a net purchase price of $664. | ||
Purchase price | $ 664 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Jun. 28, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2017 |
Share-based compensation expense | $ 1,831 | |||
Share price (in dollars per share) | $ 3.21 | |||
Number of shares issued | 189,091 | |||
Directors and officers [Member] | ||||
Number of shares granted | 1,100,000 | |||
Weighted average exercise price | $ 1.38 | |||
Restricted Stock Awards [Member] | ||||
Share-based compensation expense | $ 130 | |||
2002 Stock Option Plan [Member] | ||||
Number of shares granted | 206,000 | |||
2016 Stock Incentive Plan [Member] | ||||
Compensation cost not yet recognized | $ 606 | |||
Weighted average period for recognition | 2 years 9 months 18 days | |||
2017 Stock Incentive Plan [Member] | ||||
Number of shares authorized | 7,372,630 | |||
Number of shares available for grant | 2,538,832 | |||
2017 Stock Incentive Plan [Member] | Maximum [Member] | ||||
Expiration period | 10 years | |||
2017 Stock Incentive Plan [Member] | Minimum [Member] | ||||
Expiration period | 5 years | |||
2017 & 2016 Stock Incentive Plan and 2012 Stock Option Plan [Member] | Employee [Member] | ||||
Vesting period | 4 years | |||
Number of shares granted | 810,000 | 1,800,000 | ||
Weighted average exercise price | $ 0.84 | $ 0.67 | ||
Weighted average grant date fair value | $ 482 | $ 820 | ||
Aggregate Stock-based Compensation [Member] | ||||
Share-based compensation expense | 1,578 | |||
Warrant [Member] | Employee Stock Option [Member] | ||||
Share-based compensation expense | 123 | |||
Common Stock [Member] | 2017 Stock Incentive Plan [Member] | Consultants and Service Providers [Member] | ||||
Weighted average grant date fair value | $ 1,532 | |||
Number of shares issued | 1,948,798 |
WARRANTS (Details)
WARRANTS (Details) - $ / shares | 12 Months Ended | 24 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2018 | Apr. 05, 2017 | Feb. 28, 2017 | |
Exercse Price | $ 0.90 | $ 0.70 | ||
Exercise Price $0.01 [Member] | ||||
Exercse Price | $ 0.01 | |||
Number outstanding | 317,460 | |||
Weighted average remaining contractual life (years) | 8 years 10 months 2 days | |||
Weighted Average Exercise Price | $ 0.01 | |||
Number Exercisable | 158,728 | |||
Weighted Average Exercise Price | $ 0.01 | |||
Exercise Price $0.55 [Member] | ||||
Exercse Price | $ 0.55 | |||
Number outstanding | 283,636 | |||
Weighted average remaining contractual life (years) | 5 months 23 days | |||
Weighted Average Exercise Price | $ 0.55 | |||
Number Exercisable | ||||
Weighted Average Exercise Price | ||||
Exercise Price $0.66 [Member] | ||||
Exercse Price | $ 0.66 | |||
Number outstanding | 148,133 | |||
Weighted average remaining contractual life (years) | 4 years 10 months 2 days | |||
Weighted Average Exercise Price | $ 0.66 | |||
Number Exercisable | ||||
Weighted Average Exercise Price | ||||
Exercise Price $0.70 [Member] | ||||
Exercse Price | $ 0.70 | |||
Number outstanding | 1,768,572 | |||
Weighted average remaining contractual life (years) | 4 years 9 months 11 days | |||
Weighted Average Exercise Price | $ 0.70 | |||
Number Exercisable | 1,768,572 | |||
Weighted Average Exercise Price | $ 0.70 | |||
Exercise Price $0.72 [Member] | ||||
Exercse Price | $ 0.72 | |||
Number outstanding | 182,003 | |||
Weighted average remaining contractual life (years) | 4 years 5 months 19 days | |||
Weighted Average Exercise Price | $ 0.72 | |||
Number Exercisable | 182,003 | |||
Weighted Average Exercise Price | $ 0.72 | |||
Exercise Price $0.75 [Member] | ||||
Exercse Price | $ 0.75 | |||
Number outstanding | 135,909 | |||
Weighted average remaining contractual life (years) | 4 years 4 months 13 days | |||
Weighted Average Exercise Price | $ 0.75 | |||
Number Exercisable | 135,909 | |||
Weighted Average Exercise Price | $ 0.75 | |||
Exercise Price $0.80 [Member] | ||||
Exercse Price | $ 0.80 | |||
Number outstanding | 481,666 | |||
Weighted average remaining contractual life (years) | 2 years 8 months 8 days | |||
Weighted Average Exercise Price | $ 0.80 | |||
Number Exercisable | 481,666 | |||
Weighted Average Exercise Price | $ 0.80 | |||
Exercise Price $1.00 [Member] | ||||
Exercse Price | $ 1 | |||
Number outstanding | 312,003 | |||
Weighted average remaining contractual life (years) | 4 years 5 months 16 days | |||
Weighted Average Exercise Price | $ 1 | |||
Number Exercisable | 312,003 | |||
Weighted Average Exercise Price | $ 1 | |||
Exercise Price $1.10 [Member] | ||||
Exercse Price | $ 1.10 | |||
Number outstanding | 759,486 | |||
Weighted average remaining contractual life (years) | 3 years 8 months 5 days | |||
Weighted Average Exercise Price | $ 1.10 | |||
Number Exercisable | 379,020 | |||
Weighted Average Exercise Price | $ 1.10 | |||
Exercise Price $0.01 - 1.10 [Member] | ||||
Number outstanding | 4,388,868 | |||
Weighted average remaining contractual life (years) | 4 years 7 months 7 days | |||
Weighted Average Exercise Price | $ 0.74 | |||
Number Exercisable | 3,417,901 | |||
Weighted Average Exercise Price | $ 0.76 | |||
Exercise Price $0.01 - 1.10 [Member] | Minimum [Member] | ||||
Exercse Price | 0.01 | |||
Exercise Price $0.01 - 1.10 [Member] | maximum [Member] | ||||
Exercse Price | $ 1.10 |
WARRANTS (Details 2)
WARRANTS (Details 2) - Warrant [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Weighted average life (in years) | 4 years 9 months 18 days | 4 years 3 months 18 days |
Expected dividend yield | 0.00% | 0.00% |
Weighted average grant-date fair value per share of warrants granted | $ 0.54 | $ 0.49 |
Minimum [Member] | ||
Weighted average risk-free interest rate | 1.42% | 0.98% |
Volatility | 98.50% | 97.70% |
Maximum [Member] | ||
Weighted average risk-free interest rate | 2.01% | 1.28% |
Volatility | 128.70% | 110.00% |
OTHER CURRENT LIABILITIES (Deta
OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Other Current Liabilities Details | ||
Accrued payroll and payroll taxes | $ 359 | $ 128 |
Warranty liability | 86 | 86 |
Other accrued expenses | 263 | 184 |
Total | $ 708 | $ 398 |
ADVANCES ON FUTURE RECEIPTS (De
ADVANCES ON FUTURE RECEIPTS (Details Narrative) - TVT Capital LLC [Member] - Purchase and Sale Agreement [Member] - USD ($) $ in Thousands | 4 Months Ended | 12 Months Ended |
Nov. 01, 2017 | Dec. 31, 2017 | |
Cost of future receipts | $ 4,068 | $ 1,526 |
Aggregate Value of future receipts | 2,889 | |
Initial daily amount to pay | $ 19 | |
Description of initial daily amount to pay | Agreements for the Purchase and Sale of Future Receipts with TVT Capital, LLC pursuant to which the Company sold in the aggregate $4,068 in future receipts of the Company for $2,889. Under the terms of the agreements, the Company will be obligated to pay the initial daily amount of $19 until the $4,068 has been paid in full. As of December 31, 2017, the Company had repaid $1,526. The term future receipts means cash, check, ACH, credit card, debit card, bank card, charged card or other form of monetary payment. | |
Financing receivable, discount | $ 1,179 | |
Amortization of debt discounts | $ 600 |
REVOLVING CREDIT FACILITY (Deta
REVOLVING CREDIT FACILITY (Details Narrative) - Revolving Credit Facility [Member] - Gerber Finance Inc ("Gerber") [Member] - Revolving loan agreement [Member] - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Jul. 31, 2017 | Dec. 31, 2015 | Dec. 31, 2017 | |
Maximum revolving amount | $ 1,400 | $ 1,400 | |
Description of facility interest rate | Microphase is subject to an annual facility fee in an amount equal to 1.75% of the Maximum Revolving Amount due on each anniversary, a monthly collateral monitoring fees of $1 and other fees. Interest accrued at the prime rate plus three and three-quarters percent (3.75%) on the unpaid principal. Effective June 15, 2017, the prime rate was increased from 4.00% to 4.25% resulting in a base rate of 8.00%. | Microphase is subject to an annual facility fee in an amount equal to 1.75% of the Maximum Revolving Amount due on each anniversary, a monthly collateral monitoring fees of $1 and other fees. Interest accrued at the prime rate plus three and three-quarters percent (3.75%) on the unpaid principal. Effective June 15, 2017, the prime rate was increased from 4.00% to 4.25% resulting in a base rate of 8.00%. | |
Discription of collateral fees | If borrowings under the Revolving Credit Facility exceed the collateral borrowing base, then Microphase is subject to an additional 2.5% interest charge per month on the over-advance amounts and a separate additional charge of 2.5% if borrowings exceed the Maximum Revolving Amount. | If borrowings under the Revolving Credit Facility exceed the collateral borrowing base, then Microphase is subject to an additional 2.5% interest charge per month on the over-advance amounts and a separate additional charge of 2.5% if borrowings exceed the Maximum Revolving Amount. | |
Interest rate during period | 8.00% | 8.00% | |
Percentage of fees | 2.50% | 2.50% | |
Interest expences | $ 84 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Total notes payable | $ 927 | |
Less: current portion | (402) | |
Notes payable - long-term portion | 525 | |
Other short-term notes payable [Member] | ||
Total notes payable | 19 | |
10% short term promissory notes [Member] | ||
Total notes payable | 15 | |
Notes payable to Wells Fargo [Member] | ||
Total notes payable | 300 | |
Power-Plus Credit Facilities [Member] | ||
Total notes payable | 171 | |
Note payable to Power-Plus [Member] | ||
Total notes payable | 130 | |
Note payable to Department of Economic and Community Development Due in August 2026 [Member] | ||
Total notes payable | $ 292 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Oct. 18, 2017 | Jun. 28, 2017 | Jun. 02, 2017 | Apr. 05, 2017 | Apr. 03, 2017 | Mar. 31, 2017 | Feb. 23, 2017 | Dec. 31, 2016 | Aug. 31, 2016 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2017 | Dec. 29, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | Mar. 28, 2017 | Feb. 28, 2017 |
Number of shares issued | 189,091 | ||||||||||||||||
Share price | $ 3.21 | ||||||||||||||||
Amount of shares issued | $ 2,497 | ||||||||||||||||
Total notes payable | $ 927 | 927 | |||||||||||||||
Debt face amount | $ 400 | ||||||||||||||||
Warrant issued | 180,002 | 333,333 | |||||||||||||||
Exercise price of warrants (in dollars per share) | $ 0.90 | $ 0.70 | |||||||||||||||
Debt discount | 484 | 484 | |||||||||||||||
Number of convertible securities cancellation | 360,002 | ||||||||||||||||
Exercise price of convertible securities | $ 0.75 | ||||||||||||||||
Interest expense | 13 | ||||||||||||||||
Original debt amount | $ 270 | ||||||||||||||||
Convertible Securities issued | 100,001 | ||||||||||||||||
Value of convertible securities per share | $ 55 | 4,036 | |||||||||||||||
8% Notes payable to Lucosky Brookman, LLP Due On November 25, 2017 [Member] | |||||||||||||||||
Total notes payable | 450 | 450 | |||||||||||||||
8% Notes payable to Lucosky Brookman, LLP Due On November 25, 2017 [Member] | Microphase Corporation [Member] | |||||||||||||||||
Number of shares issued | 10,000 | ||||||||||||||||
Total notes payable | $ 450 | ||||||||||||||||
8% Notes payable to Lucosky Brookman, LLP Due On November 25, 2017 [Member] | Microphase Corporation [Member] | Redeemable Convertible Series B Preferred Stock [Member] | |||||||||||||||||
Number of shares issued | 600,000 | ||||||||||||||||
Convertible Securities issued | 10,000 | ||||||||||||||||
Value of convertible securities per share | $ 45 | ||||||||||||||||
Demand Promissory Notes [Member] | |||||||||||||||||
Debt face amount | $ 270 | ||||||||||||||||
Number of convertible securities cancellation | 666,667 | ||||||||||||||||
Exercise price of convertible securities | $ 0.60 | ||||||||||||||||
Interest expense | $ 13 | ||||||||||||||||
Original debt amount | $ 400 | $ 400 | |||||||||||||||
Proceeds from Convertible Debt | $ 50 | $ 220 | |||||||||||||||
10% short term promissory notes [Member] | |||||||||||||||||
Total notes payable | 15 | 15 | |||||||||||||||
Note payable to Department of Economic and Community Development Due in August 2026 [Member] | |||||||||||||||||
Total notes payable | 292 | 292 | |||||||||||||||
Note payable to Department of Economic and Community Development Due in August 2026 [Member] | Department of Economic and Community Development ("DECD") [Member] | |||||||||||||||||
Total notes payable | $ 300 | ||||||||||||||||
Interest rate | 3.00% | ||||||||||||||||
Interest expense | 5 | ||||||||||||||||
Debt payment term | Payment of principal and interest is deferred during the initial year and commencing on the thirteenth month, payable in equal monthly installments over the remaining term. | ||||||||||||||||
Grant additional funding | $ 100 | ||||||||||||||||
Granted fund utilized | 100 | ||||||||||||||||
Power-Plus Credit Facilities [Member] | |||||||||||||||||
Total notes payable | 171 | 171 | |||||||||||||||
Notes payable to Wells Fargo [Member] | |||||||||||||||||
Total notes payable | 300 | 300 | |||||||||||||||
Notes payable to Wells Fargo [Member] | Former officer [Member] | |||||||||||||||||
Debt face amount | $ 212 | $ 212 | |||||||||||||||
Interest rate | 4.00% | 4.00% | |||||||||||||||
Interest expense | $ 8 | ||||||||||||||||
Deferred revenue | 82 | ||||||||||||||||
Granted fund utilized | 18 | ||||||||||||||||
Second line of credit [Member] | Chief Executive Officer [Member] | |||||||||||||||||
Debt face amount | $ 88 | $ 88 | |||||||||||||||
Interest rate | 3.00% | 3.00% | |||||||||||||||
Nineteen accredited investors [Member] | 10% short term promissory notes [Member] | Microphase Corporation [Member] | |||||||||||||||||
Number of shares issued | 1,523,852 | ||||||||||||||||
Principal amount | $ 690 | $ 690 | |||||||||||||||
Total notes payable | $ 705 | $ 44 | 44 | 705 | |||||||||||||
Term of notes payable | 1 year | ||||||||||||||||
Accrued interest on debt | $ 250 | ||||||||||||||||
Interest rate | 10.00% | 10.00% | |||||||||||||||
Warrant issued | 380,466 | 380,466 | |||||||||||||||
Exercise price of warrants (in dollars per share) | $ 1.10 | $ 1.10 | |||||||||||||||
Proceeds from Convertible Debt | $ 634 | ||||||||||||||||
Placement fees | $ 71 | ||||||||||||||||
Debt payment term | The amount due pursuant to the 10% Short-Term Notes is equal to the entire original principal amount multiplied by 125% (the “ | ||||||||||||||||
Several Investor [Member] | Demand Promissory Notes [Member] | |||||||||||||||||
Debt face amount | $ 270 | ||||||||||||||||
Interest rate | 6.00% | ||||||||||||||||
Eight Accredited Investor [Member] | Demand Promissory Notes [Member] | |||||||||||||||||
Debt face amount | $ 400 | ||||||||||||||||
Interest rate | 6.00% | ||||||||||||||||
Warrant issued | 333,333 | ||||||||||||||||
Exercise price of warrants (in dollars per share) | $ 0.70 | ||||||||||||||||
Debt discount | $ 151 | ||||||||||||||||
Other short-term notes payable [Member] | |||||||||||||||||
Total notes payable | $ 19 | $ 19 | |||||||||||||||
Other short-term notes payable [Member] | Four Accredited Investor [Member] | |||||||||||||||||
Amount of share canceled | $ 75 | ||||||||||||||||
Number of share canceled | 100,001 | ||||||||||||||||
Description of conversion | An additional $75 in short-term loans from the Company’s corporate counsel was converted into the Company’s equity securities; $52 was converted into one of the Series C Units and $23 was converted into the Company’s common stock. The Company did not record any additional interest expense as a result of the extinguishment of $130 in short-term loans since the carrying amount of the short-term loans was equivalent to the fair value of the consideration transferred, which was determined from the closing price of the Company’s equity securities on the date of extinguishment. During the three months ended September 30, 2017, the Company also repaid $30 in short-term loans. | ||||||||||||||||
Promissory Note [Member] | Power-Plus Credit Facilities [Member] | Asset Purchase Agreement [Member] | |||||||||||||||||
Number of shares issued | 138,806 | ||||||||||||||||
Share price | $ 0.67 | ||||||||||||||||
Amount of shares issued | $ 93 | ||||||||||||||||
Debt face amount | 255 | 255 | |||||||||||||||
Two equity lines of credit [Member] | Bank of America NA ("B of A") [Member] | |||||||||||||||||
Total notes payable | $ 97 | $ 97 | |||||||||||||||
Interest rate | 6.25% | 6.25% | |||||||||||||||
Two equity lines of credit [Member] | Power-Plus Credit Facilities [Member] | |||||||||||||||||
Total notes payable | $ 74 | $ 74 | |||||||||||||||
Interest rate | 10.00% | 10.00% | |||||||||||||||
Two equity lines of credit [Member] | Power-Plus Credit Facilities [Member] | Bank of America NA ("B of A") [Member] | |||||||||||||||||
Total notes payable | $ 169 | $ 169 | |||||||||||||||
Interest expense | 4 | ||||||||||||||||
Overdraft credit line [Member] | Note payable to People's United Bank [Member] | |||||||||||||||||
Total notes payable | $ 20 | $ 19 | $ 19 | $ 20 | |||||||||||||
Interest rate | 15.00% | 15.00% |
NOTES PAYABLE - RELATED PARTI60
NOTES PAYABLE - RELATED PARTIES (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | |
Total notes payable | $ 309 | $ 250 | |
Less: current portion | (134) | 250 | |
Notes payable - long-term portion | 175 | ||
MCKEA [Member] | |||
Total notes payable | [1] | $ 250 | |
Former officer and employee [Member] | |||
Total notes payable | [2] | $ 406 | |
[1] | On December 29, 2016, the Company entered into an agreement with MCKEA Holdings, LLC ("MCKEA"). MCKEA is the majority member of Philou Ventures, LLC, which is the Company's controlling shareholder. Kristine L. Ault, a director and the wife of Milton C. Ault III, Executive Chairman of the Company's Board of Directors, is the manager and owner of MCKEA, for a demand promissory note (The "MCKEA Note") in the amount of $250 bearing interest at the rate of 6% per annum on unpaid principal. The MCKEA Note may be prepaid, in whole or in part, without penalty, at the option of the Company and without the consent of MCKEA. As of December 31, 2016, no interest was accrued on the MCKEA Note. On March 24, 2017, the MCKEA Note was cancelled to purchase the Company's Series B Preferred Stock pursuant to the terms of the Preferred Stock Purchase Agreement entered into on March 9, 2017 (See Note 14). Since there was no difference between the reacquisition price and the net carrying value of the cancelled debt, no gain or loss was recognized as a result of this transaction. | ||
[2] | Microphase is a party to several notes payable agreements with seven of its past officers, employees and their family members. As of September 30, 2017, the aggregate outstanding balance pursuant to these notes payable agreements, inclusive of $87 of accrued interest, was $493, with annual interest rates ranging between 3.00% and 6.00%. During the three months ended September 30, 2017 and the period June 3, 2017 to September 30, 2017, Microphase incurred $7 of interest on these notes payable agreements. In July 2016, one of these noteholders initiated litigation to collect the balance owed under the terms of his respective agreement. At September 30, 2017, the outstanding principal balance and accrued interest owed under this particular agreement was $162. |
NOTES PAYABLE - RELATED PARTI61
NOTES PAYABLE - RELATED PARTIES (Details Narrative) $ in Thousands | Jun. 28, 2017shares | Dec. 31, 2017USD ($)Numbershares | Dec. 31, 2016USD ($) | Oct. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Dec. 29, 2016USD ($) |
Notes payable from related parties | $ 134 | $ (250) | ||||
Number of shares issued | shares | 189,091 | |||||
Amount of shares issued | 2,497 | |||||
MCKEA [Member] | Notes Payable, Other Payables [Member] | ||||||
Notes payable from related parties | $ 250 | |||||
Debt instrument, interest rate | 6.00% | |||||
Interest payable | $ 0 | |||||
Gain (loss) on cancellation of notes payable | $ 0 | |||||
Former officer and employee [Member] | Notes Payable, Other Payables [Member] | ||||||
Number of officers and employees | Number | 7 | |||||
Notes payable from related parties | $ 356 | |||||
Interest payable | 7 | $ 43 | $ 10 | |||
Notes payable outstanding | $ 162 | $ 122 | ||||
Number of shares issued | shares | 95,834 | |||||
Amount of shares issued | $ 115 | |||||
Amount of shares issued in cash | 25 | |||||
Periodic payment | $ 25 | |||||
Maximum [Member] | Former officer and employee [Member] | Notes Payable, Other Payables [Member] | ||||||
Debt instrument, interest rate | 6.00% | |||||
Minimum [Member] | Former officer and employee [Member] | Notes Payable, Other Payables [Member] | ||||||
Debt instrument, interest rate | 3.00% |
CONVERTIBLE NOTES (Details)
CONVERTIBLE NOTES (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Convertible note | $ 752 |
Unamortized debt discounts | (351) |
Unamortized financing cost | (3) |
Convertible notes payable, net of financing cost | 398 |
10% Two Convertible Notes [Member] | |
Convertible note | 550 |
12% Convertible secured notes [Member] | |
Convertible note | $ 202 |
CONVERTIBLE NOTE - RELATED PA63
CONVERTIBLE NOTE - RELATED PARTY (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
12% Convertible secured note | $ 530 | |
Unamortized debt discounts | (484) | |
Unamortized financing cost | (12) | |
Convertible note - related party, net of debt discounts and financing cost | 34 | |
12% Convertible secured note [Member] | ||
12% Convertible secured note | $ 530 |
COMMITMENTS (Details)
COMMITMENTS (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Commitments Details | |
2,018 | $ 762 |
2,019 | 682 |
2,020 | 576 |
2,021 | 359 |
2,022 | 348 |
Thereafter | 1,268 |
Total | $ 3,995 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax asset: | ||
Net operating loss | $ 3,543 | $ 2,206 |
Reserves and allowances | 725 | 295 |
Tax credit carryforward | 163 | 153 |
Property and equipment | 231 | 194 |
Total deferred tax asset | 4,662 | |
Deferred tax liability: | ||
Intangible assets, net | (653) | |
Total deferred tax liability | (653) | 2,848 |
Valuation allowance | $ 4,009 | $ (2,848) |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Current | ||
Foreign | $ (20) | |
Federal | 78 | |
State | ||
Income tax (benefit) | $ 78 | $ (20) |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes Details 2 | ||
Tax benefit at U.S. Federal statutory tax rate | (34.00%) | (34.00%) |
Effect of change in tax rates | 12.00% | |
Stock compensation expense | 1.90% | 12.10% |
Taxes in respect of prior years | 9.10% | |
Increase in valuation allowance | 17.00% | 8.30% |
Nondeductible meals & entertainment expense and other | 6.10% | 4.40% |
State taxes, net of federal benefit | (4.50%) | 0.30% |
Foreign rate differential | 0.70% | (0.20%) |
Foreign R&D credit | (1.70%) | |
Effective tax rate | 0.80% | (1.70%) |
SEGMENT, CUSTOMERS AND GEOGRAPH
SEGMENT, CUSTOMERS AND GEOGRAPHICAL INFORMATION (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues | $ 10,001 | $ 7,596 |
Revenue, related party | 174 | |
Inter-segment revenues | ||
Total Revenues by Major Customer | 10,001 | 7,596 |
Depreciation and amortization expense | 255 | 161 |
Loss from operations | (5,983) | (1,219) |
Interest expense, net | (4,990) | |
Other income, net | 77 | |
Income tax benefit | 78 | 20 |
Net loss attributable to non-controlling interest | 279 | |
Net loss attributable to Digital Power Corp | (10,616) | (1,122) |
Capital expenditures for segment assets | 403 | 85 |
Identifiable assets | 30,510 | 5,472 |
Impairment | ||
Operating Segments [Member] | DPC [Member] | ||
Revenues | 7,890 | 4,552 |
Revenue, related party | 174 | |
Inter-segment revenues | 53 | 145 |
Total Revenues by Major Customer | 8,117 | 4,697 |
Depreciation and amortization expense | 184 | 75 |
Loss from operations | (5,558) | (1,110) |
Capital expenditures for segment assets | 382 | 32 |
Identifiable assets | 23,888 | 3,152 |
Operating Segments [Member] | DPL [Member] | ||
Revenues | 2,111 | 3,044 |
Revenue, related party | ||
Inter-segment revenues | ||
Total Revenues by Major Customer | 2,111 | 3,044 |
Depreciation and amortization expense | 71 | 86 |
Loss from operations | (425) | (109) |
Capital expenditures for segment assets | 21 | 53 |
Identifiable assets | 1,729 | 2,320 |
Intersegment Eliminations [Member] | ||
Revenues | ||
Revenue, related party | ||
Inter-segment revenues | (53) | (145) |
Total Revenues by Major Customer | (53) | $ (145) |
Depreciation and amortization expense | ||
Loss from operations | ||
Capital expenditures for segment assets | ||
Identifiable assets |
SEGMENT, CUSTOMERS AND GEOGRA69
SEGMENT, CUSTOMERS AND GEOGRAPHICAL INFORMATION (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Total Revenues by Major Customer | $ 10,001 | $ 7,596 |
Sales Revenue, Net [Member] | Customer Concentration Risk [Member] | Customer A [Member] | ||
Total Revenues by Major Customer | $ 1,341 | $ 1,328 |
Percentage of Total Company Revenues | 13.00% | 17.00% |
Sales Revenue, Net [Member] | Customer Concentration Risk [Member] | Customer B [Member] | ||
Total Revenues by Major Customer | $ 750 | |
Percentage of Total Company Revenues | 10.00% |
SEGMENT, CUSTOMERS AND GEOGRA70
SEGMENT, CUSTOMERS AND GEOGRAPHICAL INFORMATION (Details 2) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues | $ 10,001 | $ 7,596 |
Commercial Products [Member] | ||
Revenues | 5,489 | 5,307 |
Defense Products [Member] | ||
Revenues | $ 4,686 | $ 2,289 |
SEGMENT, CUSTOMERS AND GEOGRA71
SEGMENT, CUSTOMERS AND GEOGRAPHICAL INFORMATION (Details 3) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues | $ 10,001 | $ 7,596 |
North America [Member] | ||
Revenues | 6,638 | 4,541 |
Europe [Member] | ||
Revenues | 2,634 | 1,845 |
KOREA, REPUBLIC OF | ||
Revenues | 231 | 751 |
Other [Member] | ||
Revenues | $ 672 | $ 459 |
SEGMENT, CUSTOMERS AND GEOGRA72
SEGMENT, CUSTOMERS AND GEOGRAPHICAL INFORMATION (Details Narrative) | 12 Months Ended |
Dec. 31, 2017Segment | |
Segment Customers And Geographical Information Details Narrative | |
Number of Reportable Segments | 2 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Jan. 27, 2018 | Jan. 25, 2018 | Jan. 23, 2018 | Jan. 18, 2018 | Jan. 10, 2018 | Jun. 28, 2017 | Dec. 31, 2017 | Apr. 05, 2017 | Feb. 28, 2017 |
Number of warrants purchased | 180,002 | 333,333 | |||||||
Exercise price of warrants | $ 0.90 | $ 0.70 | |||||||
Number of shares issued | 189,091 | ||||||||
Exercise Price 2.25 [Member] | |||||||||
Exercise price of warrants | $ 0.01 | ||||||||
Exercise Price 2.50 [Member] | |||||||||
Exercise price of warrants | $ 0.55 | ||||||||
Share Purchase Agreement [Member] | Coolisys Technologies, Inc. [Member] | |||||||||
Purchase price | $ 5,250 | ||||||||
Threshold for accelerated bank debt | 2,000 | ||||||||
Termination fee | 300 | ||||||||
Share Purchase Agreement [Member] | Micronet Enertec Technologies, Inc. [Member] | |||||||||
Purchase price | $ 4,000 | ||||||||
Agreement No. 1 [Member] | TVT Capital LLC [Member] | Subsequent Event [Member] | |||||||||
Purchase price | $ 350 | ||||||||
Purchase and sale of future receipts | 476 | ||||||||
Amount of purchase price to be paid, per week | 9 | ||||||||
Origination fee | 10 | ||||||||
Agreement No. 2 [Member] | TVT Capital LLC [Member] | Subsequent Event [Member] | |||||||||
Purchase price | 1,250 | ||||||||
Purchase and sale of future receipts | 1,700 | ||||||||
Amount of purchase price to be paid, per week | 34 | ||||||||
Origination fee | $ 37 | ||||||||
Future Receivables Sale Agreement [Member] | Libertas Funding LLC [Member] | Subsequent Event [Member] | |||||||||
Purchase price | $ 400 | $ 100 | $ 400 | ||||||
Purchase and sale of future receipts | 552 | 148 | 594 | ||||||
Amount of purchase price to be paid, per week | 9 | ||||||||
Origination fee | $ 12 | ||||||||
Discounted amount of purchase price | $ 3 | $ 472 | |||||||
Number of warrants purchased | 125,000 | ||||||||
Exercise price of warrants | $ 2.50 | ||||||||
Number of shares issued | 150,000 | ||||||||
Agreement No. 3 [Member] | TVT Capital LLC [Member] | Subsequent Event [Member] | |||||||||
Purchase price | $ 375 | ||||||||
Purchase and sale of future receipts | 562 | ||||||||
Amount of purchase price to be paid, per week | 22 | ||||||||
Origination fee | $ 11 | ||||||||
Agreement No. 3 [Member] | TVT Capital LLC [Member] | Subsequent Event [Member] | Exercise Price 2.25 [Member] | |||||||||
Number of warrants purchased | 56,250 | ||||||||
Exercise price of warrants | $ 2.25 | ||||||||
Agreement No. 3 [Member] | TVT Capital LLC [Member] | Subsequent Event [Member] | Exercise Price 2.50 [Member] | |||||||||
Number of warrants purchased | 35,000 | ||||||||
Exercise price of warrants | $ 2.50 | ||||||||
Agreement No. 3 [Member] | C6 Capital, LLC [Member] | Subsequent Event [Member] | |||||||||
Purchase price | $ 700 | ||||||||
Purchase and sale of future receipts | 979 | ||||||||
Amount of purchase price to be paid, per week | 37 | ||||||||
Origination fee | 20 | ||||||||
Agreement No. 4 [Member] | TVT Capital LLC [Member] | Subsequent Event [Member] | |||||||||
Purchase price | $ 225 | ||||||||
Purchase and sale of future receipts | 337 | ||||||||
Amount of purchase price to be paid, per week | 13 | ||||||||
Origination fee | $ 7 | ||||||||
Number of warrants purchased | 56,250 | ||||||||
Exercise price of warrants | $ 2.25 | ||||||||
Agreement No. 4 [Member] | C6 Capital, LLC [Member] | Subsequent Event [Member] | |||||||||
Purchase price | 300 | ||||||||
Purchase and sale of future receipts | 420 | ||||||||
Amount of purchase price to be paid, per week | 37 | ||||||||
Origination fee | $ 20 |