Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 21, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | FTE Networks, Inc. | |
Entity Central Index Key | 1,122,063 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 85,625,252 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,016 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Current Assets: | ||
Cash | $ 8,586 | $ 205,133 |
Restricted Cash | 3,003,226 | |
Accounts receivable, net | 7,025,156 | 1,446,480 |
Other current assets | 2,829,789 | 2,047,606 |
Total Current Assets | 9,863,531 | 6,702,445 |
Property and equipment, net | 3,268,877 | 2,544,497 |
Total Assets | 13,132,408 | 9,246,942 |
Current Liabilities: | ||
Accounts payable | 2,232,859 | 2,998,240 |
Due to related parties | 418,707 | 245,764 |
Accrued expenses and other current liabilities | 4,109,342 | 3,578,945 |
Notes payable, current portion | 4,105,491 | 1,887,120 |
Notes payable, related parties, current portion | 287,301 | 287,301 |
Warrant derivative liability | 143,200 | |
Accrued litigation costs | 1,195,839 | 1,335,771 |
Total Current Liabilities | 12,492,739 | 10,333,141 |
Notes payable, non-current portion | 2,275,856 | 1,572,063 |
Senior note payable, non-current portion, net of original issue discount and deferred costs | 7,244,074 | 6,846,110 |
Total Liabilities | 22,012,669 | 18,751,314 |
Temporary Equity: | ||
Total Temporary Equity | 437,380 | 437,380 |
Commitments and contingencies | ||
Stockholders' Deficiency: | ||
Common stock; $0.001 par value, 200,000,000 shares authorized and 67,305,373 and 2,319,524 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively | 67,504 | 2,319 |
Additional paid-in capital | 7,489,707 | 3,053,075 |
Common shares to be issued | 848,138 | |
Subscriptions receivable | (1,716,997) | (204,789) |
Accumulated deficit | (16,006,001) | (12,815,929) |
Total Stockholders' Deficiency | (9,317,641) | (9,941,752) |
Total Liabilities and Stockholders' Deficiency | 13,132,408 | 9,246,942 |
Convertible Preferred Stock Series D [Member] | ||
Stockholders' Deficiency: | ||
Preferred stock; $0.01 par value, 5,000,000 shares authorized: | 18,308 | |
Convertible Preferred Stock Series D [Member] | Temporary Equity [Member] | ||
Temporary Equity: | ||
Temporary Equity, value | 129,027 | |
Convertible Preferred Stock Series F [Member] | ||
Stockholders' Deficiency: | ||
Preferred stock; $0.01 par value, 5,000,000 shares authorized: | 5,256 | |
Convertible Preferred Stock Series F [Member] | Temporary Equity [Member] | ||
Temporary Equity: | ||
Temporary Equity, value | 308,353 | |
Common Stock [Member] | Temporary Equity [Member] | ||
Temporary Equity: | ||
Temporary Equity, value | 437,380 | |
Convertible Preferred Stock Series A [Member] | ||
Stockholders' Deficiency: | ||
Preferred stock; $0.01 par value, 5,000,000 shares authorized: | 5 | 5 |
Series A-1 Preferred Shares [Member] | ||
Stockholders' Deficiency: | ||
Preferred stock; $0.01 par value, 5,000,000 shares authorized: | $ 3 | $ 3 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
Preferred stock, par or stated value per share | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Common stock, par or stated value per share | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares, issued | 67,305,373 | 2,319,524 |
Common stock, shares, outstanding | 67,305,373 | 2,319,524 |
Convertible Preferred Stock Series D [Member] | ||
Preferred stock, par or stated value per share | $ 4 | $ 4 |
Preferred stock shares designated | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 1,830,759 |
Preferred stock, shares outstanding | 0 | 1,830,759 |
Convertible Preferred Stock Series D [Member] | Temporary Equity [Member] | ||
Temporary equity, par or stated value per share | $ 4 | $ 4 |
Temporary equity, shares authorized | 2,000,000 | 2,000,000 |
Temporary equity, shares issued | 0 | 163,441 |
Temporary equity, shares outstanding | 0 | 163,441 |
Convertible Preferred Stock Series F [Member] | ||
Preferred stock, par or stated value per share | $ 4 | $ 4 |
Preferred stock shares designated | 1,980,000 | 1,980,000 |
Preferred stock, shares issued | 0 | 525,559 |
Preferred stock, shares outstanding | 0 | 525,559 |
Convertible Preferred Stock Series F [Member] | Temporary Equity [Member] | ||
Temporary equity, par or stated value per share | $ 4 | $ 4 |
Temporary equity, shares authorized | 2,000,000 | 2,000,000 |
Temporary equity, shares issued | 0 | 391,903 |
Temporary equity, shares outstanding | 0 | 391,903 |
Common Stock [Member] | Temporary Equity [Member] | ||
Temporary equity, par or stated value per share | $ 0.001 | $ 0.001 |
Temporary equity, shares authorized | 200,000,000 | 200,000,000 |
Temporary equity, shares issued | 11,106,880 | 0 |
Temporary equity, shares outstanding | 11,106,880 | 0 |
Convertible Preferred Stock Series A [Member] | ||
Preferred stock, par or stated value per share | $ 1,000 | $ 1,000 |
Preferred stock shares designated | 4,500 | 4,500 |
Preferred stock, shares issued | 500 | 500 |
Preferred stock, shares outstanding | 500 | 500 |
Preferred stock, liquidation preference per share | $ 1,422,178 | $ 1,422,178 |
Series A-1 Preferred Shares [Member] | ||
Preferred stock, par or stated value per share | $ 1,000 | $ 1,000 |
Preferred stock shares designated | 1,000 | 1,000 |
Preferred stock, shares issued | 295 | 295 |
Preferred stock, shares outstanding | 295 | 295 |
Preferred stock, liquidation preference per share | $ 877,373 | $ 877,373 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Statement [Abstract] | ||||
Revenues, net of discounts | $ 3,827,853 | $ 4,026,208 | $ 9,083,959 | $ 11,444,647 |
Cost of revenues | 2,402,605 | 3,475,189 | 5,648,968 | 9,353,841 |
Gross Profit | 1,425,248 | 551,019 | 3,434,991 | 2,090,805 |
Operating Expenses | ||||
Compensation expense/selling, general and administrative | 605,491 | 645,235 | 1,705,892 | 1,594,552 |
Selling, general and administrative expenses | 547,376 | 1,223,478 | 1,919,791 | 2,318,212 |
Travel expense | 43,406 | 130,991 | 209,670 | 328,505 |
Occupancy costs | 201,057 | 62,641 | 559,411 | 163,607 |
Transaction expenses | 42,650 | 44,150 | ||
Total Operating Expenses | 1,397,330 | 2,104,995 | 4,394,764 | 4,449,027 |
Operating Income (Loss) | 27,918 | (1,553,976) | (959,773) | (2,358,221) |
Other (Expense) Income | ||||
Interest expense | (490,236) | (630,959) | (1,452,354) | (1,044,879) |
Amortization of debt discount | (109,314) | (327,944) | ||
Forbearance expense | 971,956 | (51,156) | ||
Other income (expense) | (146,456) | (331,270) | (100,915) | (320,314) |
Incentive expense for investor | (35,186) | |||
Extinguishment loss | (313,900) | (313,900) | ||
Total Other (Expense) Income | (1,059,906) | 9,727 | (2,230,299) | (1,416,349) |
Net Loss | (1,031,988) | (1,544,249) | (3,190,072) | (3,774,570) |
Preferred stock dividends | (19,890) | (19,891) | (59,670) | (59,670) |
Net Loss attributable to common shareholders | $ (1,051,878) | $ (1,564,140) | $ (3,249,742) | $ (3,834,241) |
Loss per share: | ||||
Basic and diluted | $ (0.02) | $ (0.04) | $ (0.05) | $ (0.09) |
Weighted average number of common shares outstanding: | ||||
Basic and diluted | 60,450,606 | 42,313,609 | 60,450,606 | 42,313,609 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Changes in Stockholders' Deficiency (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016 | Sep. 30, 2016 | |
Series A Convertible Preferred Stock[Member] | ||
Balance | $ 5 | |
Balance, share | 500 | |
Preferred Series F Issued to Investor | ||
Preferred Series F Issued to Investor, shares | ||
Common Shares Issued to Employees | ||
Common Shares Issued to Employees, shares | ||
Common Shares to Settle Debt | ||
Common Shares to Settle Debt, shares | ||
Common Shares Issued to Consultants | ||
Common Shares Issued to Consultants, shares | ||
Common Shares Issued Equity Raise | ||
Common Shares Issued Equity Raise, shares | ||
Common Shares to be issued for Equity Raise | ||
Series F adjustment to transfer agent records | ||
Series F adjustment to transfer agent records, shares | ||
Series F issued to directors and employees for compensation | ||
Series F issued to directors and employees for compensation, shares | ||
Conversion of Series D to Common Stock | ||
Conversion of Series D to Common Stock, shares | ||
Conversion of Series F to Common Stock | ||
Conversion of Series F to Common Stock, shares | ||
Repayment of Subscription Receivable | ||
Accrued Dividends -Preferred Stock | ||
Net Loss | ||
Balance | $ 5 | $ 5 |
Balance, share | 500 | 500 |
Series A-1 Convertible Preferred Stock | ||
Balance | $ 3 | |
Balance, share | 295 | |
Preferred Series F Issued to Investor | ||
Preferred Series F Issued to Investor, shares | ||
Common Shares Issued to Employees | ||
Common Shares Issued to Employees, shares | ||
Common Shares to Settle Debt | ||
Common Shares to Settle Debt, shares | ||
Common Shares Issued to Consultants | ||
Common Shares Issued to Consultants, shares | ||
Common Shares Issued Equity Raise | ||
Common Shares Issued Equity Raise, shares | ||
Common Shares to be issued for Equity Raise | ||
Series F adjustment to transfer agent records | ||
Series F adjustment to transfer agent records, shares | ||
Series F issued to directors and employees for compensation | ||
Series F issued to directors and employees for compensation, shares | ||
Conversion of Series D to Common Stock | ||
Conversion of Series D to Common Stock, shares | ||
Conversion of Series F to Common Stock | ||
Conversion of Series F to Common Stock, shares | ||
Repayment of Subscription Receivable | ||
Accrued Dividends -Preferred Stock | ||
Net Loss | ||
Balance | $ 3 | $ 3 |
Balance, share | 295 | 295 |
Convertible Preferred Stock Series D [Member] | ||
Balance | $ 18,308 | |
Balance, share | 1,830,759 | |
Preferred Series F Issued to Investor | ||
Preferred Series F Issued to Investor, shares | ||
Common Shares Issued to Employees | ||
Common Shares Issued to Employees, shares | ||
Common Shares to Settle Debt | ||
Common Shares to Settle Debt, shares | ||
Common Shares Issued to Consultants | ||
Common Shares Issued to Consultants, shares | ||
Common Shares Issued Equity Raise | ||
Common Shares Issued Equity Raise, shares | ||
Common Shares to be issued for Equity Raise | ||
Series F adjustment to transfer agent records | ||
Series F adjustment to transfer agent records, shares | ||
Series F issued to directors and employees for compensation | ||
Series F issued to directors and employees for compensation, shares | ||
Conversion of Series D to Common Stock | $ (18,308) | |
Conversion of Series D to Common Stock, shares | (1,830,759) | |
Conversion of Series F to Common Stock | ||
Conversion of Series F to Common Stock, shares | ||
Repayment of Subscription Receivable | ||
Accrued Dividends -Preferred Stock | ||
Net Loss | ||
Balance | ||
Balance, share | 0 | 0 |
Convertible Preferred Stock Series F [Member] | ||
Balance | $ 5,256 | |
Balance, share | 525,559 | |
Preferred Series F Issued to Investor | $ 2,857 | |
Preferred Series F Issued to Investor, shares | 285,664 | |
Common Shares Issued to Employees | ||
Common Shares Issued to Employees, shares | ||
Common Shares to Settle Debt | ||
Common Shares to Settle Debt, shares | ||
Common Shares Issued to Consultants | ||
Common Shares Issued to Consultants, shares | ||
Common Shares Issued Equity Raise | ||
Common Shares Issued Equity Raise, shares | ||
Common Shares to be issued for Equity Raise | ||
Series F adjustment to transfer agent records | $ 483 | |
Series F adjustment to transfer agent records, shares | 48,250 | |
Series F issued to directors and employees for compensation | $ 2,310 | |
Series F issued to directors and employees for compensation, shares | 231,041 | |
Conversion of Series D to Common Stock | ||
Conversion of Series D to Common Stock, shares | ||
Conversion of Series F to Common Stock | $ (10,906) | |
Conversion of Series F to Common Stock, shares | 1,090,514 | |
Repayment of Subscription Receivable | ||
Accrued Dividends -Preferred Stock | ||
Net Loss | ||
Balance | ||
Balance, share | 2,181,028 | 2,181,028 |
Common Stock [Member] | ||
Balance | $ 2,319 | |
Balance, share | 2,319,524 | |
Preferred Series F Issued to Investor | ||
Preferred Series F Issued to Investor, shares | ||
Common Shares Issued to Employees | $ 2,229 | |
Common Shares Issued to Employees, shares | 2,229,000 | |
Common Shares to Settle Debt | $ 1,559 | |
Common Shares to Settle Debt, shares | 1,559,389 | |
Common Shares Issued to Consultants | $ 465 | |
Common Shares Issued to Consultants, shares | 465,000 | |
Common Shares Issued Equity Raise | $ 2,507 | |
Common Shares Issued Equity Raise, shares | 2,507,000 | |
Common Shares to be issued for Equity Raise | ||
Series F adjustment to transfer agent records | ||
Series F adjustment to transfer agent records, shares | ||
Series F issued to directors and employees for compensation | ||
Series F issued to directors and employees for compensation, shares | ||
Conversion of Series D to Common Stock | $ 36,615 | |
Conversion of Series D to Common Stock, shares | 36,615,180 | |
Conversion of Series F to Common Stock | $ 21,810 | |
Conversion of Series F to Common Stock, shares | 21,810,280 | |
Repayment of Subscription Receivable | ||
Accrued Dividends -Preferred Stock | ||
Net Loss | ||
Balance | $ 67,504 | $ 67,504 |
Balance, share | 67,505,373 | 67,505,373 |
Paid-In Capital [Member] | ||
Balance | $ 3,053,075 | |
Balance, share | ||
Preferred Series F Issued to Investor | $ 961,737 | |
Preferred Series F Issued to Investor, shares | ||
Common Shares Issued to Employees | $ 1,375,551 | |
Common Shares Issued to Employees, shares | ||
Common Shares to Settle Debt | $ 896,879 | |
Common Shares to Settle Debt, shares | ||
Common Shares Issued to Consultants | $ 290,735 | |
Common Shares Issued to Consultants, shares | ||
Common Shares Issued Equity Raise | $ 850,917 | |
Common Shares Issued Equity Raise, shares | ||
Common Shares to be issued for Equity Raise | ||
Series F adjustment to transfer agent records | $ (483) | |
Series F adjustment to transfer agent records, shares | ||
Series F issued to directors and employees for compensation | $ 150,177 | |
Series F issued to directors and employees for compensation, shares | ||
Conversion of Series D to Common Stock | $ (18,307) | |
Conversion of Series D to Common Stock, shares | ||
Conversion of Series F to Common Stock | $ (10,904) | |
Conversion of Series F to Common Stock, shares | ||
Repayment of Subscription Receivable | ||
Accrued Dividends -Preferred Stock | (59,670) | |
Net Loss | ||
Balance | $ 7,489,707 | 7,489,707 |
Common Shares to be Issued [Member] | ||
Balance | ||
Preferred Series F Issued to Investor | ||
Common Shares Issued to Employees | ||
Common Shares to Settle Debt | ||
Common Shares Issued to Consultants | ||
Common Shares Issued to Consultants, shares | ||
Common Shares Issued Equity Raise | ||
Common Shares Issued Equity Raise, shares | ||
Common Shares to be issued for Equity Raise | $ 848,138 | |
Series F adjustment to transfer agent records | ||
Series F issued to directors and employees for compensation | ||
Conversion of Series D to Common Stock | ||
Conversion of Series F to Common Stock | ||
Repayment of Subscription Receivable | ||
Accrued Dividends -Preferred Stock | ||
Net Loss | ||
Balance | 848,138 | 848,138 |
Subscription Receivable [Member] | ||
Balance | $ (204,789) | |
Balance, share | ||
Preferred Series F Issued to Investor | $ (929,408) | |
Preferred Series F Issued to Investor, shares | ||
Common Shares Issued to Employees | $ (1,357,800) | |
Common Shares Issued to Employees, shares | ||
Common Shares to Settle Debt | ||
Common Shares to Settle Debt, shares | ||
Common Shares Issued to Consultants | ||
Common Shares Issued to Consultants, shares | ||
Common Shares Issued Equity Raise | ||
Common Shares Issued Equity Raise, shares | ||
Common Shares to be issued for Equity Raise | ||
Series F adjustment to transfer agent records | ||
Series F adjustment to transfer agent records, shares | ||
Series F issued to directors and employees for compensation | ||
Series F issued to directors and employees for compensation, shares | ||
Conversion of Series D to Common Stock | ||
Conversion of Series D to Common Stock, shares | ||
Conversion of Series F to Common Stock | ||
Conversion of Series F to Common Stock, shares | ||
Repayment of Subscription Receivable | $ 775,000 | |
Accrued Dividends -Preferred Stock | ||
Net Loss | ||
Balance | (1,716,997) | (1,716,997) |
Accumulated Deficit [Member] | ||
Balance | $ (12,815,929) | |
Balance, share | ||
Preferred Series F Issued to Investor | ||
Preferred Series F Issued to Investor, shares | ||
Common Shares Issued to Employees | ||
Common Shares Issued to Employees, shares | ||
Common Shares to Settle Debt | ||
Common Shares to Settle Debt, shares | ||
Common Shares Issued to Consultants | ||
Common Shares Issued to Consultants, shares | ||
Common Shares Issued Equity Raise | ||
Common Shares Issued Equity Raise, shares | ||
Common Shares to be issued for Equity Raise | ||
Series F adjustment to transfer agent records | ||
Series F adjustment to transfer agent records, shares | ||
Series F issued to directors and employees for compensation | ||
Series F issued to directors and employees for compensation, shares | ||
Conversion of Series D to Common Stock | ||
Conversion of Series D to Common Stock, shares | ||
Conversion of Series F to Common Stock | ||
Conversion of Series F to Common Stock, shares | ||
Repayment of Subscription Receivable | ||
Accrued Dividends -Preferred Stock | ||
Net Loss | (319,072) | |
Balance | (160,061,001) | (160,061,001) |
Balance | (9,941,752) | |
Preferred Series F Issued to Investor | 35,186 | |
Common Shares Issued to Employees | 19,980 | |
Common Shares to Settle Debt | 898,438 | |
Common Shares Issued to Consultants | 291,200 | |
Common Shares Issued Equity Raise | 853,424 | |
Common Shares to be issued for Equity Raise | 848,138 | |
Series F adjustment to transfer agent records | 0 | |
Series F issued to directors and employees for compensation | 152,487 | |
Conversion of Series D to Common Stock | 0 | |
Conversion of Series F to Common Stock | 0 | |
Repayment of Subscription Receivable | 775,000 | |
Accrued Dividends -Preferred Stock | (59,670) | |
Net Loss | (1,031,988) | (3,190,072) |
Balance | $ (9,317,641) | $ (9,317,641) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities: | ||
Net Loss | $ (3,190,072) | $ (3,774,570) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Amortization of deferred financing costs | 327,944 | |
Change in value of term loan | 313,900 | |
Forbearance incentive expense | 101,156 | |
Depreciation expense | 374,935 | 98,762 |
Amortization of original issue discount | 164,018 | |
Payment in kind interest-senior debt | 246,600 | |
Stock incentive expense to investor | 35,186 | |
Stock compensation expense to employees | 172,467 | 473,328 |
Provision for bad debt | 409,481 | |
Gain on lease termination costs | (226,544) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (5,578,676) | 1,167,146 |
Other current assets | 600,984 | (1,316,984) |
Due to related party | 183,538 | |
Accounts payable and accrued liabilities | 900,568 | 3,819,086 |
Net cash (used in) provided by operating activities | (6,834,114) | 934,399 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (308,907) | 28,320 |
Restricted cash account | 3,003,226 | |
Net cash provided by investing activities | 2,694,319 | 28,320 |
Cash flows from financing activities: | ||
Proceeds from issuance of notes payable | 2,500,000 | |
Payments on factor line of credit, net | (383,682) | |
Payments on notes payable | (691,183) | (137,367) |
Proceeds from issuance of notes payable-related parties | 195,086 | |
Payments on notes payable-related parties | (43,518) | (210,302) |
Payment of deferred financing costs | (493,699) | (125,000) |
Collection of subscription receivable | 775,000 | 60,000 |
Net proceeds from sale of common stock | 1,701,562 | |
Net cash provided (used in) by financing activities | 3,943,248 | (796,351) |
Net change in cash | (196,547) | 166,368 |
Cash, beginning of period | 205,133 | 41,372 |
Cash, end of period | 8,586 | 207,740 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid for interest | 1,083,160 | 256,479 |
Non-cash financing activities: | ||
Notes payable issued to finance equipment purchases | 794,302 | 1,220,305 |
Common stock shares issued for notes payable | 898,438 | |
Issuance of notes to settle accrued litigation | 146,000 | 200,000 |
Issuance of notes to settle accounts payable | 719,877 | 430,683 |
Accrued dividends, preferred stock | 59,670 | 59,670 |
Cancellation of preferred shares | 202 | |
Repayment in kind of subscription receivable | (60,000) | |
Unpaid subscription for preferred shares | (433,883) | |
Preferred shares issued to settle rent obligation | 50,000 | |
Common shares issued as subscription receivable | 1,357,800 | |
Conversion of preferred shares to common shares | $ 58,425 |
Description of Business and His
Description of Business and History | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Description of Business and History | 1. DESCRIPTION OF BUSINESS AND HISTORY Overview FTE Networks, Inc. (FTNW), and its wholly owned subsidiaries, is a leading international networking infrastructure service solutions company. The Company designs, build, and support telecommunications and technology systems and infrastructure services for Fortune 500 companies operating four (4) telecommunication segments; Data Center Infrastructure, Fiber Optics, Wireless Integration, and Surveillance & Security. FTE Networks is headquartered in Naples, Florida, with offices throughout the United States and Europe. ● Jus-Com, Inc., (dba FTE Network Services) specializes in the design, engineering, installation, and maintenance of all forms of telecommunications infrastructure. Services include engineering consulting, design, installation, maintenance, and emergency response in various categories including cabling, equipment installation and configuration, rack and stack, wiring build-outs, infrastructure build-outs, DC power installation, OSP/ISP fiber placement, fiber cable splicing and testing. ● FTE Wireless, LLC, offers wireless solutions to major wireless carriers including equipment installation, fiber backhaul, antennae installation and testing, small cell solutions, fiber-to-site and other turnkey solutions as needed by such clients. ● Focus Venture Partners, Inc. (dba FVP Worx) is a multifaceted employment firm offering full service staffing solutions, specializing in the telecommunications, technology and construction services industries. FTE Network Services and FTE Wireless Service, LLC are reported in the Companys telecommunications segment. FVP Worx represents the Companys staffing segment. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Effective January 27, 2016, the Company changed its fiscal year end from September 30 to December 31 and filed an unaudited transitional report on Form 10-QT to cover the period from October 1, 2015 to December 31, 2015 with the Securities and Exchange Commission on April 11, 2016. The unaudited condensed consolidated financial statements and these notes should be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2015 (the Annual Report). The condensed consolidated balance sheet data as of December 31, 2015 is unaudited and was derived from the Companys Form 10-QT and does not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP) for audited financial statements. The unaudited condensed consolidated financial statements include all normal recurring adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. Certain information and footnote disclosures, including critical and significant accounting policies, normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. Results of operations and cash flows for interim periods presented in the unaudited condensed consolidated financial statements are not necessarily indicative of results of operations and cash flows for the full fiscal year. RECENT ACCOUNTING PRONOUNCEMENTS On January 5, 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) ASU 2016-01, Financial InstrumentsOverall: Recognition and Measurement of Financial Assets and Financial Liabilities. Changes to the current GAAP model primarily affects the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The classification and measurement guidance will be effective in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating how the adoption of this standard will impact its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (ASU 2016-02 Topic 842). The core change with ASU 2016-02 is the requirement for the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect that the adoption of ASU 2016-02 will have on its financial statements. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, or ASU 2016-09, which amends ASC Topic 718, Compensation Stock Compensation. ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The standard is effective for fiscal years beginning after December 31, 2016, and interim periods within those years and early adoption is permitted. The Company is currently evaluating how the adoption of this standard will impact its consolidated financial statements. On June 16, 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments On August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230 ASU 2016-15) Liquidity Reclassifications Use of Estimates Revenue and Cost of Goods Sold Recognition Due to the short term nature of the Companys construction contracts, revenue is recognized once 100% of a contract segment is completed. A contract may have many segments, of which, once a segment is completed, the revenue for the segment is recognized when no further significant performance obligations exists. The Companys construction contracts or segments of contracts typically range from several days to two to four months. Contract costs may be billed as incurred. Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools and repairs. Selling, general and administrative costs are charged to expense as incurred. The Company begins recognizing revenue on a project as project costs are incurred and revenue recognition criteria are met. As expenses are incurred on a project but the invoicing criteria are not met, but the work has been accepted by the customer, revenue is recognized in that period and recognized in accounts receivable as unbilled revenue. Such amount approximated $5 million and $1 million at September 30, 2016 and December 31, 2015, respectively. Provisions for losses on uncompleted contracts are made in the period such losses are known. Changes in job performance, job conditions and estimated profitability, including those arising from contract penalty provisions, changes in raw material costs, and final contract settlements may result in revisions to revenue, costs and income and are recognized in the period in which the revisions are determined. Basic and Diluted Loss Per Share - The following securities are excluded from the calculation of weighted average dilutive common shares because they are not currently convertible, or because their inclusion would have been anti-dilutive: For the Nine Months Ended September 30, 2016 2015 Convertible preferred stock, Series A 667,169 667,169 Convertible preferred stock, Series A-1 393,645 393,645 Convertible preferred stock, Series D [1] - 760,959,600 Convertible preferred stock, Series F [1] - - Warrants 11,658,814 797,358 Convertible debt - 200,000 Total potentially dilutive shares 12,719,628 763,017,722 [1] The Series D and Series F preferred shares are convertible at a rate of 400 pre-split shares of common stock for each share of preferred stock but not until the Company has effected a sufficient increase in the authorized common shares. The Series D and Series F preferred shares were mandatorily converted to common shares at a ratio of 1 to 20 when the reverse split of common shares was effectuated on May 26, 2016. Concentration of Credit Risk The Companys customer base is highly concentrated. As of December 31, 2015, the Companys three largest customers, Customer E, Customer H and Customer B, represented 47%, 14%, and 10% of accounts receivable, respectively. As of September 30, 2016, the Companys four largest customers, innovative communications service providers, Customer M, Customer E, Customer N and Customer J represented 34%, 13%, 12%, and 11% of accounts receivable, respectively. Revenue may significantly decline if the Company were to lose one or more of its significant customers. For the three and nine months ended September 30, 2015, Customer E represented approximately 51% and 47% of revenues respectively, and customer B represented approximately 8% and 23% respectively. During the three and nine months ended September 30, 2016 the Company generated revenue by four major customers, Customer M, represented approximately 49% and 33% of revenues respectively Customer J, represented approximately 8% and 19% of revenues respectively, Customer N, represented approximately 16% and 13% of revenues respectively, and Customer L representing 6% and 10% of revenues, respectively. Amortization of Senior Note Debt Discount and Deferred Financing Costs Fair Value of Financial Instruments - Level 1: Observable inputs such as quoted prices in active markets; Level 2: Inputs other than quoted prices in active markets that are observable either directly or indirectly; and Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The Companys financial instruments consist of cash, accounts receivable, inventory, prepaid expenses, leasehold improvements, property and equipment, deposits, other assets, accounts payable, accrued expenses, deferred revenue, capital leases, equity-linked warrants, and notes payable. The recorded values of cash, accounts receivable, inventory, prepaid expenses, and accounts payable approximate fair values due to the short maturities of such instruments. Recorded values for notes payable and related liabilities approximate fair values, since their amortization of deferred financing cost stated or imputed interest rates are commensurate with prevailing market rates for similar obligations. |
Restricted Cash Account
Restricted Cash Account | 9 Months Ended |
Sep. 30, 2016 | |
Cash and Cash Equivalents [Abstract] | |
Restricted Cash Account | 3. RESTRICTED CASH ACCOUNT The restricted cash account was created to deposit the unused proceeds from the Companys new senior debt (Note 7. Senior Debt). The funds are kept at a bank in an account segregated from our main operating account. The Company does not have direct access to or control over the funds held in this account. The funds are disbursed to the Company upon the written request of the lender. These balances were $0 as of September 30, 2016 and $3,003,226 as of December 31, 2015. |
Other Current Assets
Other Current Assets | 9 Months Ended |
Sep. 30, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Current Assets | 4. OTHER CURRENT ASSETS Other current assets consist of the following as of September 30, 2016 and December 31, 2015: September 30, 2016 December 31, 2015 Other receivables, net of reserve of $150,000 as of September 30, 2016 and December 31, 2015 $ 1,306,781 $ 1,232,555 Security deposits 82,489 69,805 Prepaid expenses 654,060 121,448 Prepaid consultants fees 291,200 - Pre-paid Cost (Work in Process) 495,259 623,798 TOTAL $ 2,829,789 $ 2,047,606 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 9 Months Ended |
Sep. 30, 2016 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Current Liabilities | 5. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES As of September 30, 2016 and December 31, 2015, Accrued Expenses and Other Current Liabilities were comprised of the following: September 30, 2016 December 31, 2015 Accrued interest payable[1] $ 748,465 $ 817,452 Accrued dividends payable 510,804 451,133 Accrued compensation expense[2] 1,984,029 2,015,277 Other accrued expense 866,044 295,083 Accrued expenses, current $ 4,109,342 $ 3,578,945 [1] Accrued interest payable includes approximately $300,000 of estimated penalties and interest associated with the unpaid payroll taxes as of September 30, 2016 and December 31, 2015, respectively. [2] Accrued compensation expense includes $1,863,031 of unpaid payroll taxes for the period ended September 30, 2016 and December 31, 2015, respectively. |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Notes Payable | 6. NOTES PAYABLE September 30, 2016 December 31, 2015 Vendors Notes (Unsecured) Long term vendor Notes (Vendor Notes) issued to settle litigation bearing interest rates between 0% and 6% per annum. Terms range from 1 to 9 months. $ 1,059,337 $ 491,000 Other Notes Payable Notes payable bearing interest at a stated rate of 12% and a 4% PIK per annum. Terms is for 7 months. 2,560,700 - Less deferred financing costs (473,100 ) Total other note payable, net 2,087,600 Notes payable bearing interest at a stated rate between 10% and 12% per annum. Terms range from 1 to 4 months. 609,000 709,000 Equipment Notes Obligations under capital leases, bearing interest rates between 4.1% and 8.2% per annum, secured by equipment having a value that approximates the debt value. Terms range from 48 to 60 months. 1,050,935 960,205 Various Equipment notes, bearing interest rates between 2% and 41% per annum, secured by equipment having a value that approximates the debt value. Terms range from 36 to 72 months. 1,574,475 1,298,978 Total Notes payables $ 6,381,347 $ 3,459,183 Less: Current portion $ 4,105,491 $ (1,887,120 ) Total Notes non-current portion $ 2,275,856 $ 1,572,063 |
Senior Debt
Senior Debt | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Senior Debt | 7. SENIOR DEBT On October 28, 2015, the Company, through its main operating entity Jus-Com, Inc. entered into an $8 million dollar senior credit facility. The facility has a two year term, and calls for interest payments in the amount of 12%, paid quarterly in arrears. Additionally, there is a payment in kind (PIK) provision which calls for a 4% per annum increase in the principal balance monthly. The facility is a senior credit facility, and is secured by principally all assets of the Company. The uses of the senior facility were to retire the existing senior debt and related accrued interest through a tender offer, retire the factoring line of credit, pay certain senior loan closing costs, settle certain pending litigation, and provide working capital to the Company. A blocked bank deposit account, controlled by the lender, was also initially established in the amount of $3,000,000 to be held for future advances. (See restricted cash, note 3). The Company is prohibited from an early payoff of the facility until October 28, 2017. There are several affirmative and negative covenants the Company must comply with, such as minimum bank account balances, minimum EDITDA thresholds, capital expenditures, leverage ratio, and debt service coverage ratio. As a condition of the facility, the Company issued 163,441 shares of its Series D preferred stock and 391,903 shares of its Series F preferred stock to the lender. As a result of a market valuation performed on this transaction by a qualified third party valuation firm, an original issue discount of $437,380 was determined, which will be amortized on a straight line method, which approximates the interest rate method, over a twenty four month period to interest expense. During the period ended September 30, 2016, $164,018 was included in amortization of debt discount, and $236,914 remained unamortized as of September 30, 2016. On April 5, 2016 the Company entered into an amendment agreement to its existing credit facility with Lateral, amending the original credit agreement signed October 28, 2015. The agreement amends select provisions of the original credit agreement, including equity raises and changes to certain financial and operational covenants. On September 30, 2016, the Company entered into a second amendment agreement to its existing credit facility, amending the original credit agreement signed October 28, 2015. The agreement was amended solely to consolidate a series of short term bridge loans granted to the Company from time to time during the second and third quarter of 2016 into a $2.5 million loan, which matures on April 30, 2017. The second amendment also amended the covenants related to consolidated EBITDA, consolidated leverage, consolidated debt service, SG&A expenses, and compensation expense. The Company is in compliance with its covenants as of September 30, 2016. Senior Debt Disclosure On October 28, 2015 the Company entered into a credit agreement, pursuant to which the Company received $8,000,000. The funds were disbursed as follow $6,000,000 and $2,000,000 on October 28, 2015 and November 11, 2015 respectively. The interest rate used is 12% per annum, also required to make 4% PIK payments, which is booked monthly as an increase to the senior debt balance. $ 8,295,282 $ 8,048,682 Less: Original issue discount (236,914 ) (400,932 ) Less: Deferred financing cost (814,294 ) (801,640 ) Total Senior Debt, non-current portion $ 7,244,074 $ 6,846,110 |
Term Loan
Term Loan | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Term Loan | 8. TERM LOAN On September 30, 2016, the Company and its senior lender modified certain bridge loans entered into from June 2016 through September 2016. The various bridge loans with an outstanding balance of $2.25 million were restructured into one term loan for $2.5 million, with a maturity date of April 30, 2017 and an interest rate of 16% per year. Consideration was then made whether the terms of the restructured debt instrument were substantially different from the original debt instrument. Under ASC 470-50 Modifications and Extinguishment if the present value of the cash flows under the new debt is at least 10% different from the present value of the remaining cash flows under the original debt, they are considered to be substantially different and extinguishment accounting is applied. Based on the calculations performed, there was a greater than 10% difference between the present value of cash flows under the restructured debt compared to the present value of the remaining cash flows under the original debt. Therefore, the restructuring met the conditions for debt extinguishment accounting under ASC 470-50. As of September 30, 2016, the fair value of this debt was determined to be $2,560,700, and is recorded as such in Section 6, Notes Payable. The difference in the face value of the note and the fair value of the note, $60,700 was recorded as a one time extinguishment expense in this period, along with $110,000 of fees paid to the lender and $143,200 to establish the warrant liability, for a total one time extinguishment expense of $313,900. See Footnote 10 Warrants and Derivative Warrant Liability for the fair value calculation of the warrant issued in conjunction with this term loan. As of September 30, 2016 there are $473,100 in deferred financing costs associated with the term loan, which will be amortized on a straight line method, which approximates the interest rate method, over a seven month period to interest expense. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 9. COMMITMENTS AND CONTINGENCIES Property Lease Obligations Rental expense, resulting from property lease agreements was $158,469 and $56,265 for the three months ending September 30, 2016 and September 30, 2015, respectively, and $442,848 and $147,239 for the nine months ending September 30, 2016, and September 30, 2015, respectively Following is a schedule by years of future minimum payments required under leases obligations with initial or remaining non-cancelable lease terms in excess of one year as of September 30, 2016: 2016 (Remaining) $ 142,584 2017 473,172 2018 452,189 2019 410,589 2020 381,252 Thereafter 508,398 Total Lease Obligations $ 2,368,184 Accrued Litigation Expense Legal Matters - The Company is involved in litigation claims arising in the ordinary course of business. Legal fees and other costs associated with such actions are expensed as incurred. In addition, the Company assesses, in conjunction with its legal counsel, the need to record a liability for litigation and contingencies. The Company reserves for costs relating to these matters when a loss is probable and the amount can be reasonably estimated. There have been no material developments in any legal proceedings since the disclosures contained in the Companys Form 10-K for the year ended September 30, 2015, at which time the Company provided for an accrual of $1,840,891 to settle these claims. On November 20, 2015, the Company settled the Martin and Arey lawsuit for $150,000 cash, a promissory note for $250,000, and 512,820 share of common stock, having a value of $5,120. On November 24, 2015, the Company settled the Daniel Fournier lawsuit for $100,000 in cash. On December 14, 2015, the Company settled the RoadSafe lawsuit for $130,000, payable in 13 monthly installments of $10,000 in cash. Related Party Advances Through September 30, 2016, the Chief Executive Officer (CEO) provided cash advances witnessed by a note, and from time to time, advances for the Companys behalf on credit cards the CEO is personally liable for, aggregating $380,316. Additionally, the Company entered into several secured equipment financing arrangements with total obligations of approximately $321,000 as of September 30, 2016 that required the guaranty of a Company officer, which was provided by the CEO. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Stockholders' Equity | 10. STOCKHOLDERS EQUITY Stock To Be Issued On September 29, 2016, the Company closed on its second round of an equity raise thru its investment banker. The transaction, which resulted in proceeds to the Company of $848,138 (gross proceeds of $969,475 less transaction fees of $121,337) called for the issuance of 2,423,687 shares of common stock on the closing date. Since the transfer agent did not issue the shares until October 12, 2016, these shares, as of September 30, 2016, were classified as common shares to be issued in stockholders equity. As of December 31, 2015, there were no shares classified as common shares to be issued. Dividends Dividend charges recorded during the three months and nine months ended September 30, 2016 and 2015 are as follows: For the three Months Ended September 30, 2016 2015 Series A $ 12,510 12,510 A-1 7,380 7,381 Total $ 19,890 19,891 For the nine Months Ended September 30, 2016 2015 Series A $ 37,530 37,529 A-1 22,140 22,141 Total $ 59,670 59,670 Accrued dividends payable at September 30, 2016 and December 31, 2015 are comprised of the following: September 30, 2016 December 31, 2015 Series A $ 297,176 $ 259,646 A-1 213,628 191,487 Total $ 510,804 $ 451,133 Warrants and Derivative Warrant Liability The Company accounts for common stock warrants as either equity instruments or derivative liabilities depending on the specific terms of the warrant agreement. Stock warrants are accounted for as derivative liabilities if the warrants allow for cash settlement or provide for modification of the warrant exercise price in the event subsequent sales of common stock by the Company are at a lower price per share than the then-current warrant exercise price. We classify derivative warrant liabilities on the balance sheet at fair value, and changes in fair value during the periods presented in the statement of operations, which is revalued at each balance sheet date subsequent to the initial issuance of the stock warrant. As of September 30, 2016, the following warrants are outstanding: Issued to Amount Issue date Expiration Date Exercise Price Term Note Lender(1) 2,343,750 9/30/2016 9/30/2021 0.80 Investment Bank 1,969,837 12/9/2012 12/9/2019 0.20 Investment Bank 2,434,539 10/31/2014 10/31/2021 0.20 Equity Investors 2,487,000 9/8/2016 9/8/2021 0.80 Equity Investors 2,423,688 9/29/2016 9/29/2021 0.80 11,658,814 (1) Warrant was determined to be a derivative subject to fair value accounting and is booked as a warrant liability. A summary of the warrant activity during the nine months ended September 30, 2016 is presented below: Weighted Weighted Average Average Number of Exercise Remaining Intrinsic Warrants Price Life in Years Value Outstanding, December 31, 2015 437,335 $ 0.60 - - Issued 11,658,814 0.57 4.7 - Exercised - - - - Expired (437,335 ) 0.60 - - Outstanding, September 30, 2016 11,658,814 $ .57 4.7 $ - Exercisable, September 30, 2016 11,658,814 $ .57 4.7 $ - The Company has assessed its outstanding equity-linked financial instruments issued with the term loan cited in Footnote 8 and has concluded that the warrants are subject to derivative accounting as a result of certain anti-dilution provisions contained in the warrants. The fair value of these warrants is classified as a liability in the financial statements, with the change in fair value during the future periods being recorded in the statement of operations. The following table summarizes the calculated aggregate fair values for the warrant derivative liability using the Lattice Model method based on the following assumptions: September 30, 2016 Risk free rate 1.14 % Volatility 37.80 % Dividends 0 Time to maturity 5 years Fair value per share price .0611 Fair value of warrants $ 143,200 These warrants are Level 3 valuation which were issued and measured on September 30, 2016. Subscription Receivable During the nine months ended September 30, 2016 the Company issued 2,229,000 shares of common stock to employees that were subject to certain vesting requirements. As of September 30, 2016, 2,100,000 shares of such shares that with a grant date value of $1,357,800 remain unvested. Because these common shares are subject to forfeiture if the employees are no longer employed with the Company at the end of their employment agreements, their unvested value is carried in subscriptions receivable within stockholders equity. Equity Transactions During the nine months ended September 30, 2016, the Company issued 285,664 shares of its of its Preferred Series F stock with a grant date value of $35,186 to one of its investors as an incentive to continue raising equity proceeds. During the nine months ended September 30, 2016, the Company issued 231,041 shares of its of its Preferred Series F stock to its independent directors and two officers with a grant date value of $152,487 for compensation. During the nine months ended September 30, 2016, the Company issued 1,559,389 shares of its common stock with a grant date value of $898,438 to settle debt, with a $100,913 expense recorded in other income/expense. During the nine months ended September 30, 2016, the Company issued 465,000 shares of its common stock with a grant date value of $291,200 to consultants for services performed for the Company. During the nine months ended September 30, 2016, the Company issued 2,507,000 shares of its common stock to individual investors for an equity raise totaling $853,424. Temporary Equity In conjunction with the Lateral senior credit agreement dated October 28, 2015, the Company also entered into a Redemption Rights Agreement (agreement). Contained in this agreement is a put provision related to the preferred shares of stock issued as a condition of the transaction. The Redemption Rights may be exercised at any time on or after October 28, 2017, provided the following conditions are met: (i) The Companys market capitalization on such date is equal to greater than $25,000,000, or (ii) the last twelve months earnings before interest, taxes depreciation, and amortization ending on the last day of the month preceding such date is greater than $3,000,000. Further, the Redemption Rights are barred from being exercised if the exercise of such Redemption Rights would, in good faith, prevent the Company from continuing as a going concern. The Redeemable Shares are redeemable at the per share price implied by 10 multiplied by the Companys LTM EBITDA, multiplied by the Ownership Percentage, divided by the number of Redeemable shares then held. An analysis was performed, under ASC 480-10-25-7 to determine if the redeemable shares should be classified as debt or equity. The results of this analysis determined the redeemable shares did not fall under the definition of mandatorily redeemable financial instruments and therefore should not be classified as debt. Pursuant to ASC 480-10-S99, preferred stock redeemable for cash or other assets are to be classified outside of permanent equity if it is redeemable with any one of the following characteristics: ● At a fixed or determinable price on a fixed or determinable date, ● At the option of the shareholder, or ● Upon the occurrence of an event that is not solely within the control of the reporting entity. The Redeemable Shares are redeemable upon the occurrence of certain events that are not solely within the control of the reporting entity. In the natural course of pursuing the fulfillment of its required fiduciary duties, the Company may meet the conditions upon which the shares would become redeemable (i.e. market capitalization and/or EBITDA, along with going concern status), and would be thus unable to control the events leading to redemption. As a result of the evaluation, the Company has concluded that the Redeemable Shares are appropriately classified outside of permanent equity as temporary equity. The Redeemable Shares originally issued with the transaction, 163,441 of Series D Preferred Convertible shares and 391,903 of Series F Preferred Convertible shares, were converted to 11,106,880 shares of the Companys Common Stock on or around May 26, 2016. The conversion was completed due to the mandatory conversion feature of the preferred shares due to the reverse split of the Companys Common Stock on May 26, 2016. Reverse Split On December 23, 2015, the Board unanimously authorized and approved an amendment to our Articles of Incorporation to effect a reverse stock split of our Common Stock at a 1-for-20 ratio (the Reverse Split) and increase our common shares authorized to 200,000,000. On December 30, 2015, stockholders holding a majority of our voting power approved by written consent the amendment to our Articles of Incorporation, which would affect the Reverse Split. The Reverse Split will reduce the number of outstanding shares of our Common Stock by reclassifying and converting all outstanding shares of our Common Stock into a proportionately fewer number of shares of Common Stock. The reverse stock was approved by the Financial Industry Regulatory Authority (FINRA) on May 25, 2016 and effectuated on May 26, 2016. In conjunction with the Reverse Split approval, all of the Series D and Series F preferred convertible shares mandatorily converted to common shares at a 1-for-20 ratio. |
Segment Data
Segment Data | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Segment Data | 11. SEGMENT DATA The Companys reportable operating segments consist of its telecommunications segment and its staffing segment, which are organized, managed and operated along key product and service lines. The following tables summarize financial information about the Companys business segments for the three and nine months ended September 30, 2016 and September 30, 2015. For the Three Months Ended September 30, 2016 Telecommunications Staffing Consolidated Revenues $ 3,795,306 32,547 3,827,853 Income (Loss) from Operations $ 23,000 4,918 27,918 Depreciation and Amortization $ (247,512 ) - (247,512 ) Interest Expense $ 485,926 4,310 490,236 For the Three Months Ended September 30, 2015 Telecommunications Staffing Consolidated Revenues $ 1,729,915 2,296,293 4,026,208 Income (Loss) from Operations $ (1,563,759 ) 9,783 (1,553,976 ) Depreciation and Amortization $ (45,714 ) - (45,714 ) Interest Expense $ 326,649 304,310 630,959 For the Nine Months Ended September 30, 2016 Telecommunications Staffing Consolidated Revenues $ 9,017,652 66,307 9,083,959 Income (Loss) from Operations $ (1,009,788 ) 50,015 (959,773 ) Depreciation and Amortization $ (702,878 ) - (702,878 ) Interest Expense $ 1,439,425 12,929 1,452,354 For the Nine Months Ended September 30, 2015 Telecommunications Staffing Consolidated Revenues $ 5,822,267 5,622,380 11,444,647 Income (Loss) from Operations $ (2,382,750 ) 24,529 (2,358,221 ) Depreciation and Amortization $ (98,762 ) - (98,762 ) Interest Expense $ 728,732 316,147 1,044,879 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | 12. SUBSEQUENT EVENTS On October 12, 2016, the Company issued 2,423,687 shares of its common stock with a grant date value of $969,475 for proceeds from an equity raise purchase, resulting in net proceeds to the Company of $848,138. On October 19, 2016, the Company issued 2,589,312 shares of its common stock with a grant date value of $1,035,725 for proceeds from an equity raise purchase, resulting in net proceeds to the Company of $688,138. On October 19, 2016, the Company issued 2,000,000 shares of its common stock with a grant date value of $1,040,000 to several employees resulting in incentive compensation expense of the grant date value. On October 12, 2016, FTE Networks, Inc. (the Company Offering Unit Units Common Stock Warrant Purchase Agreement Investor Investors Pursuant to the Purchase Agreement, the Company also entered into a Registration Rights Agreement with the Investors. The Company will be required to file within 45 days of the termination date of the Offering a registration statement registering for resale all shares of Common Stock issued as part of the Units and all of the shares issued under the Warrants. Each of the Investors is an accredited investor as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the Act The foregoing descriptions of each of the Purchase Agreement, Registration Right Agreement and Warrant do not purport to be complete and are qualified in their entirety by reference to the complete text of the Purchase Agreement, which is filed hereto as Exhibit 10.1 Exhibit 10.2 Exhibit 10.3 The common shares issued as described above were not registered under the Securities Act of 1933, as amended (the Securities Act) in reliance upon the exemption from registration provided by Section 4(2) of that Act and Regulation D promulgated thereunder, which exempts transactions by an issuer not involving any public offering. These securities may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. Certificates representing these securities contain a legend stating the same. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Policiies) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | RECENT ACCOUNTING PRONOUNCEMENTS On January 5, 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) ASU 2016-01, Financial InstrumentsOverall: Recognition and Measurement of Financial Assets and Financial Liabilities. Changes to the current GAAP model primarily affects the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The classification and measurement guidance will be effective in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating how the adoption of this standard will impact its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (ASU 2016-02 Topic 842). The core change with ASU 2016-02 is the requirement for the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect that the adoption of ASU 2016-02 will have on its financial statements. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, or ASU 2016-09, which amends ASC Topic 718, Compensation Stock Compensation. ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The standard is effective for fiscal years beginning after December 31, 2016, and interim periods within those years and early adoption is permitted. The Company is currently evaluating how the adoption of this standard will impact its consolidated financial statements. On June 16, 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments On August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230 ASU 2016-15) |
Liquidity | Liquidity |
Reclassifications | Reclassifications |
Use of Estimates | Use of Estimates |
Revenue and Cost of Goods Sold Recognition | Revenue and Cost of Goods Sold Recognition Due to the short term nature of the Companys construction contracts, revenue is recognized once 100% of a contract segment is completed. A contract may have many segments, of which, once a segment is completed, the revenue for the segment is recognized when no further significant performance obligations exists. The Companys construction contracts or segments of contracts typically range from several days to two to four months. Contract costs may be billed as incurred. Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools and repairs. Selling, general and administrative costs are charged to expense as incurred. The Company begins recognizing revenue on a project as project costs are incurred and revenue recognition criteria are met. As expenses are incurred on a project but the invoicing criteria are not met, but the work has been accepted by the customer, revenue is recognized in that period and recognized in accounts receivable as unbilled revenue. Such amount approximated $5 million and $1 million at September 30, 2016 and December 31, 2015, respectively. Provisions for losses on uncompleted contracts are made in the period such losses are known. Changes in job performance, job conditions and estimated profitability, including those arising from contract penalty provisions, changes in raw material costs, and final contract settlements may result in revisions to revenue, costs and income and are recognized in the period in which the revisions are determined. |
Basic and Diluted Loss Per Share | Basic and Diluted Loss Per Share - The following securities are excluded from the calculation of weighted average dilutive common shares because they are not currently convertible, or because their inclusion would have been anti-dilutive: For the Nine Months Ended September 30, 2016 2015 Convertible preferred stock, Series A 667,169 667,169 Convertible preferred stock, Series A-1 393,645 393,645 Convertible preferred stock, Series D [1] - 760,959,600 Convertible preferred stock, Series F [1] - - Warrants 11,658,814 797,358 Convertible debt - 200,000 Total potentially dilutive shares 12,719,628 763,017,722 [1] The Series D and Series F preferred shares are convertible at a rate of 400 pre-split shares of common stock for each share of preferred stock but not until the Company has effected a sufficient increase in the authorized common shares. The Series D and Series F preferred shares were mandatorily converted to common shares at a ratio of 1 to 20 when the reverse split of common shares was effectuated on May 26, 2016. |
Concentration of Credit Risk | Concentration of Credit Risk The Companys customer base is highly concentrated. As of December 31, 2015, the Companys three largest customers, Customer E, Customer H and Customer B, represented 47%, 14%, and 10% of accounts receivable, respectively. As of September 30, 2016, the Companys four largest customers, innovative communications service providers, Customer M, Customer E, Customer N and Customer J represented 34%, 13%, 12%, and 11% of accounts receivable, respectively. Revenue may significantly decline if the Company were to lose one or more of its significant customers. For the three and nine months ended September 30, 2015, Customer E represented approximately 51% and 47% of revenues respectively, and customer B represented approximately 8% and 23% respectively. During the three and nine months ended September 30, 2016 the Company generated revenue by four major customers, Customer M, represented approximately 49% and 33% of revenues respectively Customer J, represented approximately 8% and 19% of revenues respectively, Customer N, represented approximately 16% and 13% of revenues respectively, and Customer L representing 6% and 10% of revenues, respectively. |
Amortization of Senior Note Debt Discount and Deferred Financing Costs | Amortization of Senior Note Debt Discount and Deferred Financing Costs |
Fair Value of Financial Instruments | Fair Value of Financial Instruments - Level 1: Observable inputs such as quoted prices in active markets; Level 2: Inputs other than quoted prices in active markets that are observable either directly or indirectly; and Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The Companys financial instruments consist of cash, accounts receivable, inventory, prepaid expenses, leasehold improvements, property and equipment, deposits, other assets, accounts payable, accrued expenses, deferred revenue, capital leases, equity-linked warrants, and notes payable. The recorded values of cash, accounts receivable, inventory, prepaid expenses, and accounts payable approximate fair values due to the short maturities of such instruments. Recorded values for notes payable and related liabilities approximate fair values, since their amortization of deferred financing cost stated or imputed interest rates are commensurate with prevailing market rates for similar obligations. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following securities are excluded from the calculation of weighted average dilutive common shares because they are not currently convertible, or because their inclusion would have been anti-dilutive: For the Nine Months Ended September 30, 2016 2015 Convertible preferred stock, Series A 667,169 667,169 Convertible preferred stock, Series A-1 393,645 393,645 Convertible preferred stock, Series D [1] - 760,959,600 Convertible preferred stock, Series F [1] - - Warrants 11,658,814 797,358 Convertible debt - 200,000 Total potentially dilutive shares 12,719,628 763,017,722 [1] The Series D and Series F preferred shares are convertible at a rate of 400 pre-split shares of common stock for each share of preferred stock but not until the Company has effected a sufficient increase in the authorized common shares. The Series D and Series F preferred shares were mandatorily converted to common shares at a ratio of 1 to 20 when the reverse split of common shares was effectuated on May 26, 2016. |
Other Current Assets (Tables)
Other Current Assets (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Current Assets | Other current assets consist of the following as of September 30, 2016 and December 31, 2015: September 30, 2016 December 31, 2015 Other receivables, net of reserve of $150,000 as of September 30, 2016 and December 31, 2015 $ 1,306,781 $ 1,232,555 Security deposits 82,489 69,805 Prepaid expenses 654,060 121,448 Prepaid consultants fees 291,200 - Pre-paid Cost (Work in Process) 495,259 623,798 TOTAL $ 2,829,789 $ 2,047,606 |
Accrued Expenses and Other Cu22
Accrued Expenses and Other Current Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Payables and Accruals [Abstract] | |
Schedule Of Accrued Expenses And Other Current Liabilities | As of September 30, 2016 and December 31, 2015, Accrued Expenses and Other Current Liabilities were comprised of the following: September 30, 2016 December 31, 2015 Accrued interest payable[1] $ 748,465 $ 817,452 Accrued dividends payable 510,804 451,133 Accrued compensation expense[2] 1,984,029 2,015,277 Other accrued expense 866,044 295,083 Accrued expenses, current $ 4,109,342 $ 3,578,945 [1] Accrued interest payable includes approximately $300,000 of estimated penalties and interest associated with the unpaid payroll taxes as of September 30, 2016 and December 31, 2015, respectively. [2] Accrued compensation expense includes $1,863,031 of unpaid payroll taxes for the period ended September 30, 2016 and December 31, 2015, respectively. |
Notes Payable (Tables)
Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | September 30, 2016 December 31, 2015 Vendors Notes (Unsecured) Long term vendor Notes (Vendor Notes) issued to settle litigation bearing interest rates between 0% and 6% per annum. Terms range from 1 to 9 months. $ 1,059,337 $ 491,000 Other Notes Payable Notes payable bearing interest at a stated rate of 12% and a 4% PIK per annum. Terms is for 7 months. 2,560,700 - Less deferred financing costs (473,100 ) Total other note payable, net 2,087,600 Notes payable bearing interest at a stated rate between 10% and 12% per annum. Terms range from 1 to 4 months. 609,000 709,000 Equipment Notes Obligations under capital leases, bearing interest rates between 4.1% and 8.2% per annum, secured by equipment having a value that approximates the debt value. Terms range from 48 to 60 months. 1,050,935 960,205 Various Equipment notes, bearing interest rates between 2% and 41% per annum, secured by equipment having a value that approximates the debt value. Terms range from 36 to 72 months. 1,574,475 1,298,978 Total Notes payables $ 6,381,347 $ 3,459,183 Less: Current portion $ 4,105,491 $ (1,887,120 ) Total Notes non-current portion $ 2,275,856 $ 1,572,063 |
Senior Debt (Tables)
Senior Debt (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Senior Debt | Senior Debt Disclosure On October 28, 2015 the Company entered into a credit agreement, pursuant to which the Company received $8,000,000. The funds were disbursed as follow $6,000,000 and $2,000,000 on October 28, 2015 and November 11, 2015 respectively. The interest rate used is 12% per annum, also required to make 4% PIK payments, which is booked monthly as an increase to the senior debt balance. $ 8,295,282 $ 8,048,682 Less: Original issue discount (236,914 ) (400,932 ) Less: Deferred financing cost (814,294 ) (801,640 ) Total Senior Debt, non-current portion $ 7,244,074 $ 6,846,110 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Payments Under Operating leases | Following is a schedule by years of future minimum payments required under leases obligations with initial or remaining non-cancelable lease terms in excess of one year as of September 30, 2016: 2016 (Remaining) $ 142,584 2017 473,172 2018 452,189 2019 410,589 2020 381,252 Thereafter 508,398 Total Lease Obligations $ 2,368,184 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Dividends Preferred Stock | Dividend charges recorded during the three months and nine months ended September 30, 2016 and 2015 are as follows: For the three Months Ended September 30, 2016 2015 Series A $ 12,510 12,510 A-1 7,380 7,381 Total $ 19,890 19,891 For the nine Months Ended September 30, 2016 2015 Series A $ 37,530 37,529 A-1 22,140 22,141 Total $ 59,670 59,670 |
Schedule of Accrued Liabilities | Accrued dividends payable at September 30, 2016 and December 31, 2015 are comprised of the following: September 30, 2016 December 31, 2015 Series A $ 297,176 $ 259,646 A-1 213,628 191,487 Total $ 510,804 $ 451,133 |
Schedule of Warrants and Derivative Warrant Liability | As of September 30, 2016, the following warrants are outstanding: Issued to Amount Issue date Expiration Date Exercise Price Term Note Lender(1) 2,343,750 9/30/2016 9/30/2021 0.80 Investment Bank 1,969,837 12/9/2012 12/9/2019 0.20 Investment Bank 2,434,539 10/31/2014 10/31/2021 0.20 Equity Investors 2,487,000 9/8/2016 9/8/2021 0.80 Equity Investors 2,423,688 9/29/2016 9/29/2021 0.80 11,658,814 (1) Warrant was determined to be a derivative subject to fair value accounting and is booked as a warrant liability. |
Schedule of Warrants Activity | A summary of the warrant activity during the nine months ended September 30, 2016 is presented below: Weighted Weighted Average Average Number of Exercise Remaining Intrinsic Warrants Price Life in Years Value Outstanding, December 31, 2015 437,335 $ 0.60 - - Issued 11,658,814 0.57 4.7 - Exercised - - - - Expired (437,335 ) 0.60 - - Outstanding, September 30, 2016 11,658,814 $ .57 4.7 $ - Exercisable, September 30, 2016 11,658,814 $ .57 4.7 $ - |
Schedule of Fair Value Assumptions of Warrant Derivative Liability | The following table summarizes the calculated aggregate fair values for the warrant derivative liability using the Lattice Model method based on the following assumptions: September 30, 2016 Risk free rate 1.14 % Volatility 37.80 % Dividends 0 Time to maturity 5 years Fair value per share price .0611 Fair value of warrants $ 143,200 |
Segment Data (Tables)
Segment Data (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The following tables summarize financial information about the Companys business segments for the three and nine months ended September 30, 2016 and September 30, 2015. For the Three Months Ended September 30, 2016 Telecommunications Staffing Consolidated Revenues $ 3,795,306 32,547 3,827,853 Income (Loss) from Operations $ 23,000 4,918 27,918 Depreciation and Amortization $ (247,512 ) - (247,512 ) Interest Expense $ 485,926 4,310 490,236 For the Three Months Ended September 30, 2015 Telecommunications Staffing Consolidated Revenues $ 1,729,915 2,296,293 4,026,208 Income (Loss) from Operations $ (1,563,759 ) 9,783 (1,553,976 ) Depreciation and Amortization $ (45,714 ) - (45,714 ) Interest Expense $ 326,649 304,310 630,959 For the Nine Months Ended September 30, 2016 Telecommunications Staffing Consolidated Revenues $ 9,017,652 66,307 9,083,959 Income (Loss) from Operations $ (1,009,788 ) 50,015 (959,773 ) Depreciation and Amortization $ (702,878 ) - (702,878 ) Interest Expense $ 1,439,425 12,929 1,452,354 For the Nine Months Ended September 30, 2015 Telecommunications Staffing Consolidated Revenues $ 5,822,267 5,622,380 11,444,647 Income (Loss) from Operations $ (2,382,750 ) 24,529 (2,358,221 ) Depreciation and Amortization $ (98,762 ) - (98,762 ) Interest Expense $ 728,732 316,147 1,044,879 |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | Dec. 31, 2015 | Dec. 23, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 |
Accumulated deficit | $ (12,815,929) | $ (16,006,001) | $ (16,006,001) | |||
Working capital deficiency | 3,600,000 | 2,600,000 | 2,600,000 | |||
Net proceeds from private placement | $ 1,500,000 | |||||
Concentration risk, percentage | 100.00% | |||||
Unbilled revenue | $ 1,000,000 | 5,000,000 | $ 5,000,000 | |||
Backlog of future orders to fulfilled in the next twelve months | $ 32,500,000 | $ 32,500,000 | ||||
Stockholders' equity, reverse stock split | 1-for 20 ratio | 1 for 20 reverse split | ||||
Accounts Receivable [Member] | Customer E [Member] | ||||||
Concentration risk, percentage | 47.00% | 13.00% | ||||
Accounts Receivable [Member] | Customer H [Member] | ||||||
Concentration risk, percentage | 14.00% | |||||
Accounts Receivable [Member] | Customer B [Member] | ||||||
Concentration risk, percentage | 10.00% | |||||
Accounts Receivable [Member] | Customer M [Member] | ||||||
Concentration risk, percentage | 34.00% | |||||
Accounts Receivable [Member] | Customer N [Member] | ||||||
Concentration risk, percentage | 12.00% | |||||
Accounts Receivable [Member] | Customer J [Member] | ||||||
Concentration risk, percentage | 11.00% | |||||
Revenue [Member] | Customer E [Member] | ||||||
Concentration risk, percentage | 51.00% | 47.00% | ||||
Revenue [Member] | Customer B [Member] | ||||||
Concentration risk, percentage | 8.00% | 23.00% | ||||
Revenue [Member] | Customer M [Member] | ||||||
Concentration risk, percentage | 49.00% | 33.00% | ||||
Revenue [Member] | Customer N [Member] | ||||||
Concentration risk, percentage | 16.00% | 13.00% | ||||
Revenue [Member] | Customer J [Member] | ||||||
Concentration risk, percentage | 8.00% | 19.00% | ||||
Revenue [Member] | Customer L [Member] | ||||||
Concentration risk, percentage | 6.00% | 10.00% |
Summary of Significant Accoun29
Summary of Significant Accounting Policies - Schedule of Antidilutive Securities Excluded from Earnings Per Share (Details) - shares | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | |||
Total potentially dilutive shares | 12,719,628 | 763,017,722 | ||
Convertible Debt [Member] | ||||
Total potentially dilutive shares | 200,000 | |||
Warrants [Member] | ||||
Total potentially dilutive shares | 11,658,814 | 797,358 | ||
Convertible Preferred Stock Series A [Member] | ||||
Total potentially dilutive shares | 667,169 | 667,169 | ||
Convertible Preferred Stock Series A-1 [Member] | ||||
Total potentially dilutive shares | 393,645 | 393,645 | [1] | |
Convertible Preferred Stock Series D [Member] | ||||
Total potentially dilutive shares | [1] | 760,959,600 | ||
Convertible Preferred Stock Series F [Member] | ||||
Total potentially dilutive shares | [1] | |||
[1] | The Series D and Series F preferred shares are convertible at a rate of 400 pre-split shares of common stock for each share of preferred stock but not until the Company has effected a sufficient increase in the authorized common shares. The Series D and Series F preferred shares were mandatorily converted to common shares at a ratio of 1 to 20 when the reverse split of common shares was effectuated on May 26, 2016. |
Summary of Significant Accoun30
Summary of Significant Accounting Policies - Schedule of Antidilutive Securities Excluded from Earnings Per Share (Details) (Parenthetical) | Dec. 23, 2015 | Sep. 30, 2016 | Sep. 30, 2015 |
Reverse stock split | 1-for 20 ratio | 1 for 20 reverse split | |
Convertible Preferred Stock Series D [Member] | |||
Covertible rate of pre-split shares | 400 | 400 | |
Reverse stock split | 1 to 20 | 1 to 20 | |
Convertible Preferred Stock Series F [Member] | |||
Covertible rate of pre-split shares | 400 | 400 | |
Reverse stock split | 1 to 20 | 1 to 20 |
Restricted Cash Account (Detail
Restricted Cash Account (Details Narrative) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Cash and Cash Equivalents [Abstract] | ||
Restricted cash | $ 3,003,226 |
Other Current Assets - Schedule
Other Current Assets - Schedule of Other Current Assets (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Other receivables, net of reserve of $150,000 as of September 30, 2016 and December 31, 2015 | $ 1,306,781 | $ 1,232,555 |
Security deposits | 82,489 | 69,805 |
Prepaid expenses | 654,060 | 121,448 |
Prepaid consultants fees | 291,200 | |
Pre-paid Cost (Work in Process) | 495,259 | 623,798 |
Total | $ 2,829,789 | $ 2,047,606 |
Other Current Assets - Schedu33
Other Current Assets - Schedule of Other Current Assets (Details) (Parenthetical) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Other receivables, net of reserve | $ 150,000 | $ 150,000 |
Accrued Expenses and Other Cu34
Accrued Expenses and Other Current Liabilities - Schedule Of Accrued Expenses And Other Current Liabilities (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 | |
Payables and Accruals [Abstract] | |||
Accrued interest payable | [1] | $ 748,465 | $ 817,452 |
Accrued dividends payable | 510,804 | 451,133 | |
Accrued compensation expense | [2] | 1,984,029 | 2,015,277 |
Other accrued expense | 866,044 | 295,083 | |
Accrued expenses, current | $ 4,109,342 | $ 3,578,945 | |
[1] | Accrued interest payable includes approximately $300,000 of estimated penalties and interest associated with the unpaid payroll taxes as of September 30, 2016 and December 31, 2015, respectively. | ||
[2] | Accrued compensation expense includes $1,863,031 of unpaid payroll taxes for the period ended September 30, 2016 and December 31, 2015, respectively. |
Accrued Expenses and Other Cu35
Accrued Expenses and Other Current Liabilities - Schedule Of Accrued Expenses And Other Current Liabilities (Details) (Parenthetical) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Payables and Accruals [Abstract] | ||
Estimated penalties and interest | $ 300,000 | $ 300,000 |
Accrued payroll taxes | $ 1,863,031 | $ 1,863,031 |
Notes Payable - Schedule of Not
Notes Payable - Schedule of Notes Payable (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 | Nov. 20, 2015 |
Total Notes payables | $ 6,381,347 | $ 3,459,183 | $ 250,000 |
Less: Current portion | 4,105,491 | 1,887,120 | |
Total Notes non-current portion | 2,275,856 | 1,572,063 | |
Less: deferred financing cost | (473,100) | ||
Total other note payable, net | 2,087,600 | ||
Vendor Notes [Member] | |||
Total Notes payables | 1,059,337 | 491,000 | |
Other Notes Payable One [Member] | |||
Total Notes payables | 2,560,700 | ||
Note Payable Bearing Two [Member] | |||
Total Notes payables | 609,000 | ||
Equipment Notes One [Member] | |||
Total Notes payables | 1,050,935 | 960,205 | |
Equipment Notes Two [Member] | |||
Total Notes payables | 1,574,475 | 1,298,978 | |
Equipment Notes [Member] | |||
Total Notes payables | 6,381,347 | 3,459,183 | |
Less: Current portion | 4,105,491 | 1,887,120 | |
Total Notes non-current portion | $ 2,275,856 | 1,572,063 | |
Other Notes Payable Two [Member] | |||
Total Notes payables | $ 709,000 |
Notes Payable - Schedule of N37
Notes Payable - Schedule of Notes Payable (Details) (Parenthetical) - USD ($) | Oct. 28, 2015 | Sep. 30, 2016 | Dec. 31, 2015 |
Debt instrument, interest rate, stated percentage | 12.00% | 12.00% | |
Line of credit | $ 8,000,000 | ||
Payment in Kind (PIK) Note [Member] | |||
Debt instrument, interest rate, stated percentage | 4.00% | 4.00% | |
Vendor Notes [Member] | Minimum [Member] | |||
Debt instrument, interest rate, stated percentage | 0.00% | 0.00% | |
Debt instrument, term | 1 month | 1 month | |
Vendor Notes [Member] | Maximum [Member] | |||
Debt instrument, interest rate, stated percentage | 6.00% | 6.00% | |
Debt instrument, term | 9 months | 9 months | |
Other Notes Payable One [Member] | |||
Debt instrument, interest rate, stated percentage | 12.00% | 12.00% | |
Debt instrument, term | 7 months | 7 months | |
Other Notes Payable One [Member] | Payment in Kind (PIK) Note [Member] | |||
Debt instrument, interest rate, stated percentage | 4.00% | 4.00% | |
Other Notes Payable Two [Member] | Minimum [Member] | |||
Debt instrument, interest rate, stated percentage | 10.00% | 10.00% | |
Debt instrument, term | 1 month | 1 month | |
Other Notes Payable Two [Member] | Maximum [Member] | |||
Debt instrument, interest rate, stated percentage | 12.00% | 12.00% | |
Debt instrument, term | 4 months | 4 months | |
Equipment Notes One [Member] | Minimum [Member] | |||
Debt instrument, interest rate, stated percentage | 4.10% | 4.10% | |
Debt instrument, term | 48 months | 48 months | |
Equipment Notes One [Member] | Maximum [Member] | |||
Debt instrument, interest rate, stated percentage | 8.20% | 8.20% | |
Debt instrument, term | 60 months | 60 months | |
Equipment Notes Two [Member] | Minimum [Member] | |||
Debt instrument, interest rate, stated percentage | 2.00% | 2.00% | |
Debt instrument, term | 36 months | 36 months | |
Equipment Notes Two [Member] | Maximum [Member] | |||
Debt instrument, interest rate, stated percentage | 41.00% | 41.00% | |
Debt instrument, term | 72 months | 72 months |
Senior Debt (Details Narrative)
Senior Debt (Details Narrative) - USD ($) | Oct. 28, 2015 | Sep. 30, 2016 | Sep. 30, 2015 |
Line of credit | $ 8,000,000 | ||
Debt instrument, interest rate, stated percentage | 12.00% | 12.00% | |
Future advance | $ 3,000,000 | ||
Original issue discount | $ 437,380 | ||
Amortization of debt discount | 164,018 | ||
Unamortized discount | 236,914 | ||
Short-term loan | $ 2,500,000 | ||
Debt maturity date | Apr. 30, 2017 | ||
Convertible Preferred Stock Series D [Member] | |||
Preferred stock issued shares | 163,441 | ||
Convertible Preferred Stock Series F [Member] | |||
Preferred stock issued shares | 391,903 | ||
Payment in Kind (PIK) Note [Member] | |||
Debt instrument, interest rate, stated percentage | 4.00% | 4.00% |
Senior Debt - Schedule of Senio
Senior Debt - Schedule of Senior Debt (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 | Nov. 11, 2015 | Oct. 28, 2015 |
Senior Debt | $ 8,000,000 | $ 2,000,000 | $ 6,000,000 | |
Less: Original issue discount | 236,914 | |||
Less: Deferred financing cost | 473,100 | |||
Total Senior Debt, non-current portion | 7,244,074 | 6,846,110 | ||
Senior Debt [Member] | ||||
Senior Debt | 8,295,282 | 8,048,682 | ||
Less: Original issue discount | (236,914) | (400,932) | ||
Less: Deferred financing cost | (814,294) | (801,640) | ||
Total Senior Debt, non-current portion | $ 7,244,074 | $ 6,846,110 |
Senior Debt - Schedule of Sen40
Senior Debt - Schedule of Senior Debt (Details) (Parenthetical) - USD ($) | Sep. 30, 2016 | Nov. 11, 2015 | Oct. 28, 2015 |
Senior Debt | $ 8,000,000 | $ 2,000,000 | $ 6,000,000 |
Debt instrument, interest rate | 12.00% | 12.00% | |
Payment in Kind (PIK) Note [Member] | |||
Debt instrument, interest rate | 4.00% | 4.00% |
Term Loan (Details Narrative)
Term Loan (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Oct. 28, 2015 | |
Bridge loan | $ 2,250,000 | |
Term loan | $ 2,500,000 | |
Debt maturity date | Apr. 30, 2017 | |
Debt instrument, interest rate | 12.00% | 12.00% |
Percentage of present value of new debt | 10.00% | |
Short-term debt, fair value | $ 2,560,700 | |
Extinguishment of debt | 60,700 | |
Deferred financing cost | 473,100 | |
Lender [Member] | ||
Extinguishment of debt | 313,900 | |
Amount paid during period | 110,000 | |
Amount paid for establish the warrant liability | $ 143,200 | |
Minimum [Member] | ||
Percentage of present value of new debt | 10.00% | |
Bridge Loan [Member] | ||
Debt instrument, interest rate | 16.00% |
Commitments and Contingencies42
Commitments and Contingencies (Details Narrative) - USD ($) | Sep. 29, 2016 | Dec. 14, 2015 | Nov. 24, 2015 | Nov. 20, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2015 | Dec. 31, 2015 |
Operating leases, rent expense | $ 158,469 | $ 56,265 | $ 442,848 | $ 147,239 | ||||||
Litigation settlement amount | $ 1,840,891 | |||||||||
Promisory note | $ 250,000 | 6,381,347 | 6,381,347 | $ 3,459,183 | ||||||
Comon stock shares | 2,423,687 | 512,820 | ||||||||
Common stock shares value | $ 969,475 | $ 5,120 | 853,424 | |||||||
Related party advances | 418,707 | 418,707 | $ 245,764 | |||||||
Martin and Arey Lawsuit [Member] | ||||||||||
Litigation settlement amount | $ 150,000 | |||||||||
Daniel Fournier Lawsuit [Member] | ||||||||||
Litigation settlement amount | $ 100,000 | |||||||||
RoadSafe Lawsuit [Member] | ||||||||||
Litigation settlement amount | $ 130,000 | |||||||||
Litigation settlement amount monthly installment | $ 10,000 | |||||||||
Chief Executive Officer [Member] | ||||||||||
Related party advances | $ 380,316 | 380,316 | ||||||||
Proceeds from related party debt | $ 321,000 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule od future Minimum Payments Under Operating Leases (Details) | Sep. 30, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2016 (Remaining) | $ 142,584 |
2,017 | 473,172 |
2,018 | 452,189 |
2,019 | 410,589 |
2,020 | 381,252 |
Thereafter | 508,398 |
Total Lease Obligations | $ 2,368,184 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Sep. 29, 2016 | May 26, 2016 | Dec. 23, 2015 | Nov. 20, 2015 | Oct. 28, 2015 | Sep. 30, 2016 | Dec. 31, 2015 |
Common shares to be issued | $ 848,138 | $ 848,138 | |||||
Issued shares value | 969,475 | $ 5,120 | 853,424 | ||||
Transaction fees | $ 121,337 | ||||||
Common stock shares issued | 2,423,687 | 512,820 | |||||
Common shares issued to employees | 19,980 | ||||||
Common stock shares issued for services value | $ 291,200 | ||||||
Temporary equity, description | (i) The Companys market capitalization on such date is equal to or greater than $25,000,000, or (ii) the last twelve months earnings before interest, taxes depreciation, and amortization ending on the last day of the month preceding such date is greater than $3,000,000. | ||||||
Reverse stock split | 1-for 20 ratio | 1 for 20 reverse split | |||||
Common stock, shares authorized | 200,000,000 | 200,000,000 | 200,000,000 | ||||
Subscription Receivable [Member] | |||||||
Issued shares value | |||||||
Common stock shares issued | |||||||
Common shares issued to employees, shares | |||||||
Common shares issued to employees | $ (1,357,800) | ||||||
Common stock shares issued for services | |||||||
Common stock shares issued for services value | |||||||
Common Stock [Member] | |||||||
Issued shares value | $ 898,438 | ||||||
Common stock shares issued | 1,559,389 | ||||||
Consultant [Member] | |||||||
Common stock shares issued for services | 465,000 | ||||||
Common stock shares issued for services value | $ 291,200 | ||||||
Investor [Member] | |||||||
Common stock shares issued for services | 2,507,000 | ||||||
Common stock shares issued for services value | $ 853,424 | ||||||
Series F Preferred Shares [Member] | Investors [Member] | |||||||
Issued shares value | $ 35,186 | ||||||
Common stock shares issued | 285,664 | ||||||
Series D Preferred Shares [Member] | |||||||
Common stock shares issued | 163,441 | ||||||
Reverse stock split | 1-for-20 ratio | ||||||
Series F Preferred Stock [Member] | |||||||
Common stock shares issued | 391,903 | ||||||
Reverse stock split | 1-for-20 ratio | ||||||
Common Stock [Member] | |||||||
Common stock shares issued | 11,106,880 | ||||||
Employees [Member] | |||||||
Common stock shares issued | 2,229,000 | ||||||
Common shares issued to employees, shares | 2,100,000 | ||||||
Common shares issued to employees | $ 1,357,800 | ||||||
Directors and Two Officers [Member] | Series F Preferred Shares [Member] | |||||||
Issued shares value | $ 152,487 | ||||||
Common stock shares issued | 231,041 | ||||||
Employees [Member] | Employment Agreements [Member] | |||||||
Issued shares value | $ 1,375,551 | ||||||
Common stock shares issued | 2,229,000 | ||||||
Employees [Member] | Employment Agreements [Member] | Subscription Receivable [Member] | |||||||
Common shares issued to employees | $ 1,357,800 |
Stockholders' Equity - Dividend
Stockholders' Equity - Dividends Preferred Stock (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Preferred stock dividends | $ 19,890 | $ 19,891 | $ 59,670 | $ 59,670 |
Series A Preferred Stock [Member] | ||||
Preferred stock dividends | 12,510 | 12,510 | 37,530 | 37,529 |
Series A-1 Preferred Stock [Member] | ||||
Preferred stock dividends | $ 7,380 | $ 7,381 | $ 22,140 | $ 22,141 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Accrued Liabilities (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Accrued dividends payable | $ 510,804 | $ 451,133 |
Series A Preferred Stock [Member] | ||
Accrued dividends payable | 297,176 | 259,646 |
Series A-1 Preferred Stock [Member] | ||
Accrued dividends payable | $ 213,628 | $ 191,487 |
Stockholders' Equity - Schedu47
Stockholders' Equity - Schedule of Warrants and Derivative Warrant Liability (Details) | 9 Months Ended | |
Sep. 30, 2016USD ($)$ / shares | ||
Warrant, Amount | $ 11,658,814 | |
Equity Investors [Member] | ||
Warrant, Amount | $ 2,487,000 | |
Warrant, Issue date | Sep. 8, 2016 | |
Warrant, Expiration date | Sep. 8, 2021 | |
Warrant, Exercise price | $ / shares | $ 0.80 | |
Equity Investors One [Member] | ||
Warrant, Amount | $ 2,423,688 | |
Warrant, Issue date | Sep. 29, 2016 | |
Warrant, Expiration date | Sep. 29, 2021 | |
Warrant, Exercise price | $ / shares | $ 0.80 | |
Investment Bank [Member] | ||
Warrant, Amount | $ 1,969,837 | |
Warrant, Issue date | Dec. 9, 2012 | |
Warrant, Expiration date | Dec. 9, 2019 | |
Warrant, Exercise price | $ / shares | $ 0.20 | |
Investment Bank One [Member] | ||
Warrant, Amount | $ 2,434,539 | |
Warrant, Issue date | Oct. 31, 2014 | |
Warrant, Expiration date | Oct. 31, 2021 | |
Warrant, Exercise price | $ / shares | $ 0.20 | |
Term Note Lender [Member] | ||
Warrant, Amount | $ 2,343,750 | [1] |
Warrant, Issue date | Sep. 30, 2016 | [1] |
Warrant, Expiration date | Sep. 30, 2021 | [1] |
Warrant, Exercise price | $ / shares | $ 0.80 | [1] |
[1] | Warrant was determined to be a derivative subject to fair value accounting and is booked as a warrant liability. |
Stockholders' Equity - Schedu48
Stockholders' Equity - Schedule of Warrants Activity (Details) - Warrants [Member] | 9 Months Ended |
Sep. 30, 2016USD ($)$ / sharesshares | |
Number of Warrants, Outstanding, Beginning balance | shares | 437,335 |
Number of Warrants, Issued | shares | 11,658,814 |
Number of Warrants, Exercised | shares | |
Number of Warrants, Expired | shares | (437,335) |
Number of Warrants, Outstanding, Ending balance | shares | 11,658,814 |
Number of Warrants, Outstanding, Exercisable Ending balance | shares | 11,658,814 |
Weighted Average Exercise Price, Outstanding, Beginning | $ / shares | $ 0.60 |
Weighted Average Exercise Price, Issued | $ / shares | 0.57 |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Exercise Price, Expired | $ / shares | 0.60 |
Weighted Average Exercise Price, Outstanding, Ending | $ / shares | 0.57 |
Weighted Average Exercise Price, Exercisable, Ending | $ / shares | $ .57 |
Weighted Average Remaining Contractual Life in Years, Issued | 4 years 8 months 12 days |
Warrants outstanding ,Weighted Average Remaining Contractual Life in Years | 4 years 8 months 12 days |
Warrants exercisable, Weighted Average Remaining Contractual Life in Years | 4 years 8 months 12 days |
Warrants, Intrinsic value, Beginning | $ | |
Warrants, Intrinsic value, ending | $ |
Stockholders' Equity - Schedu49
Stockholders' Equity - Schedule of Fair Value Assumptions of Warrant Derivative Liability (Details) | 9 Months Ended |
Sep. 30, 2016USD ($)$ / shares | |
Stockholders Equity - Schedule Of Fair Value Assumptions Of Warrant Derivative Liability Details | |
Risk free rate | 1.14% |
Volatility | 37.80% |
Dividends | 0.00% |
Time to maturity | 5 years |
Fair value per share price | $ / shares | $ .0611 |
Fair value of warrants | $ | $ 143,200 |
Segment Data - Schedule of Segm
Segment Data - Schedule of Segment Reporting Information, by Segment (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenues | $ 3,827,853 | $ 4,026,208 | $ 9,083,959 | $ 11,444,647 |
Income (Loss) from Operations | 27,918 | (1,553,976) | (959,773) | (2,358,221) |
Depreciation and Amortization | (247,512) | (45,714) | (702,878) | (98,762) |
Interest Expense | 490,236 | 630,959 | 1,452,354 | 1,044,879 |
Telecommunications [Member] | ||||
Revenues | 3,795,306 | 1,729,915 | 9,017,652 | 5,822,267 |
Income (Loss) from Operations | 23,000 | (1,563,759) | (1,009,788) | (2,382,750) |
Depreciation and Amortization | (247,512) | (45,714) | (702,878) | (98,762) |
Interest Expense | 485,926 | 326,649 | 1,439,425 | 728,732 |
Staffing [Member] | ||||
Revenues | 32,547 | 2,296,293 | 66,307 | 5,622,380 |
Income (Loss) from Operations | 4,918 | 9,783 | 50,015 | 24,529 |
Depreciation and Amortization | ||||
Interest Expense | $ 4,310 | $ 304,310 | $ 12,929 | $ 316,147 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Oct. 19, 2016 | Oct. 12, 2016 | Sep. 29, 2016 | Nov. 20, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 |
Common stock shares issued | 2,423,687 | 512,820 | |||||
Issued shares value | $ 969,475 | $ 5,120 | $ 853,424 | ||||
Proceeds from issuance of common stock | $ 1,701,562 | ||||||
Common stock price par value | $ 0.001 | $ 0.001 | |||||
Subsequent Event [Member] | |||||||
Common stock shares issued | 2,589,312 | 2,423,687 | |||||
Issued shares value | $ 1,035,725 | $ 969,475 | |||||
Proceeds from issuance of common stock | $ 688,138 | $ 848,138 | |||||
Subsequent Event [Member] | Private Placement [Member] | |||||||
Common stock shares issued | 7,500,000 | ||||||
Common stock price par value | $ 0.001 | ||||||
Common stock price per share | $ 0.40 | ||||||
Minimum investment amount of shares | 25,000 | ||||||
Aggregate minimum purchase price | $ 10,000 | ||||||
Warrant initial exercise price | $ 0.80 | ||||||
Warrant term | 5 years | ||||||
Subsequent Event [Member] | Employees [Member] | |||||||
Common stock shares issued | 2,000,000 | ||||||
Issued shares value | $ 1,040,000 |