Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | May 11, 2017 | Jun. 30, 2016 | |
Document And Entity Information | |||
Entity Registrant Name | FTE Networks, Inc. | ||
Entity Central Index Key | 1,122,063 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 2,632,421 | ||
Entity Common Stock, Shares Outstanding | 126,247,694 | ||
Trading Symbol | FTNW | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 |
Current Assets: | |||
Cash | $ 1,411,612 | $ 205,133 | $ 207,740 |
Restricted cash | 3,003,226 | ||
Accounts receivable, net | 7,019,576 | 1,446,480 | 1,215,445 |
Other current assets | 2,833,311 | 2,047,606 | 2,052,583 |
Total Current Assets | 11,264,499 | 6,702,445 | 3,475,768 |
Property and equipment, net | 3,466,519 | 2,544,497 | 1,419,040 |
Total Assets | 14,731,018 | 9,246,942 | 4,894,808 |
Current Liabilities: | |||
Accounts payable | 2,357,334 | 2,998,240 | 2,476,901 |
Due to related parties | 99,860 | 245,764 | 183,538 |
Accrued expenses and other current liabilities | 3,202,105 | 3,578,945 | 2,965,290 |
Notes payable, current portion | 7,611,335 | 1,887,120 | 1,295,271 |
Factoring lines of credit | 600,554 | ||
Notes payable, related parties | 791,158 | 287,301 | 287,302 |
Warrant derivative liability | 594,000 | ||
Accrued litigation costs | 1,335,771 | 1,840,891 | |
Accrued lease termination costs | 113,000 | ||
Total Current Liabilities | 14,655,792 | 10,333,141 | 9,762,747 |
Notes payable, non-current portion | 2,362,262 | 1,572,063 | 4,571,402 |
Senior note payable, non-current portion, net of original issue discount and deferred costs | 7,576,440 | 6,846,110 | |
Accrued interest, non-current portion | 1,686,256 | ||
Total Liabilities | 24,594,494 | 18,751,314 | 16,020,405 |
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 78,019,872, 2,319,524, and 2,266,887 shares issued and outstanding at December 31, 2016, December 31, 2015,and September 30, 2015, respectively | 78,019 | 2,319 | 2,267 |
Additional paid-in capital | 11,500,477 | 3,053,075 | 2,565,709 |
Subscriptions receivable | (2,828,997) | (204,789) | (349,789) |
Accumulated deficit | (19,050,363) | (12,815,929) | (13,362,100) |
Total Stockholders' Deficiency | (10,300,856) | (9,941,752) | (11,125,597) |
Total Liabilities and Stockholders' Deficiency | 14,731,018 | 9,246,942 | 4,894,808 |
Series D Convertible Preferred Stock [Member] | |||
Stockholders' Deficiency: | |||
Preferred stock; $0.01 par value, 5,000,000 shares authorized: | 18,308 | 18,308 | |
Series D Convertible Preferred Stock [Member] | Temporary Equity [Member] | |||
Temporary Equity: | |||
Temporary Equity, value | 129,027 | ||
Series F Convertible Preferred Stock [Member] | |||
Stockholders' Deficiency: | |||
Preferred stock; $0.01 par value, 5,000,000 shares authorized: | 5,256 | ||
Series F Convertible Preferred Stock [Member] | Temporary Equity [Member] | |||
Temporary Equity: | |||
Temporary Equity, value | 308,353 | ||
Common Stock [Member] | Temporary Equity [Member] | |||
Temporary Equity: | |||
Temporary Equity, value | 437,380 | ||
Series A Convertible Preferred Stock [Member] | |||
Stockholders' Deficiency: | |||
Preferred stock; $0.01 par value, 5,000,000 shares authorized: | 5 | 5 | 5 |
Series A-1 Preferred Shares [Member] | |||
Stockholders' Deficiency: | |||
Preferred stock; $0.01 par value, 5,000,000 shares authorized: | $ 3 | $ 3 | $ 3 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 |
Preferred stock, par or stated value per share | $ 0.01 | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | 5,000,000 |
Common stock, par or stated value per share | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 | 200,000,000 |
Common stock, shares, issued | 78,019,872 | 2,319,524 | 2,266,887 |
Common stock, shares, outstanding | 78,019,872 | 2,319,524 | 2,266,887 |
Series D Convertible Preferred Stock [Member] | |||
Preferred stock, par or stated value per share | $ 4 | $ 4 | $ 4 |
Preferred stock shares designated | 2,000,000 | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 1,830,759 | 1,830,759 |
Preferred stock, shares outstanding | 0 | 1,830,759 | 1,830,759 |
Series D Convertible Preferred Stock [Member] | Temporary Equity [Member] | |||
Temporary equity, par or stated value per share | $ 4 | $ 4 | $ 4 |
Temporary equity, shares authorized | 2,000,000 | 2,000,000 | 2,000,000 |
Temporary equity, shares issued | 0 | 163,441 | 0 |
Temporary equity, shares outstanding | 0 | 163,441 | 0 |
Series F Convertible Preferred Stock [Member] | |||
Preferred stock, par or stated value per share | $ 4 | $ 4 | $ 4 |
Preferred stock shares designated | 1,980,000 | 1,980,000 | 1,980,000 |
Preferred stock, shares issued | 0 | 525,559 | 0 |
Preferred stock, shares outstanding | 0 | 525,559 | 0 |
Series F Convertible Preferred Stock [Member] | Temporary Equity [Member] | |||
Temporary equity, par or stated value per share | $ 4 | $ 4 | $ 4 |
Temporary equity, shares authorized | 2,000,000 | 2,000,000 | 2,000,000 |
Temporary equity, shares issued | 0 | 391,903 | 0 |
Temporary equity, shares outstanding | 0 | 391,903 | 0 |
Common Stock [Member] | |||
Common stock, shares, issued | 89,126,752 | 2,319,524 | 2,266,877 |
Common stock, shares, outstanding | 89,126,752 | 2,319,524 | 2,266,877 |
Common Stock [Member] | Temporary Equity [Member] | |||
Temporary equity, par or stated value per share | $ 0.001 | $ 0.001 | $ 0.001 |
Temporary equity, shares authorized | 200,000,000 | 200,000,000 | 200,000,000 |
Temporary equity, shares issued | 11,106,880 | 0 | 0 |
Temporary equity, shares outstanding | 11,106,880 | 0 | 0 |
Series A Convertible Preferred Stock [Member] | |||
Preferred stock, par or stated value per share | $ 1,000 | $ 1,000 | $ 1,000 |
Preferred stock shares designated | 4,500 | 4,500 | 4,500 |
Preferred stock, shares issued | 500 | 500 | 500 |
Preferred stock, shares outstanding | 500 | 500 | 500 |
Preferred stock, liquidation preference per share | $ 1,434,689 | $ 1,434,689 | $ 1,434,689 |
Series A-1 Preferred Shares [Member] | |||
Preferred stock, par or stated value per share | $ 1,000 | $ 1,000 | $ 1,000 |
Preferred stock shares designated | 1,000 | 1,000 | 1,000 |
Preferred stock, shares issued | 295 | 295 | 295 |
Preferred stock, shares outstanding | 295 | 295 | 295 |
Preferred stock, liquidation preference per share | $ 884,753 | $ 884,753 | $ 884,753 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2016 | Sep. 30, 2015 | |
Income Statement [Abstract] | |||
Revenues, net of discounts | $ 3,070,805 | $ 12,269,079 | $ 14,388,682 |
Cost of revenues | 2,567,858 | 8,848,254 | 11,072,080 |
Gross Profit | 502,947 | 3,420,825 | 3,316,602 |
Operating Expenses | |||
Compensation expense, selling, general, and administrative | 1,356,288 | 2,313,433 | 1,888,126 |
Selling, general and administrative expenses | 1,172,508 | 1,735,537 | 2,400,947 |
Travel expense | 178,140 | 319,074 | 389,035 |
Occupancy costs | 92,497 | 744,765 | 201,165 |
Transaction expenses | 226,004 | 44,150 | |
Acquisition expenses | 483,533 | ||
Total Operating Expenses | 2,799,433 | 5,822,346 | 4,923,423 |
Operating Loss | (2,296,486) | (2,401,521) | (1,606,821) |
Other (Expense) Income | |||
Interest expense | (435,463) | (2,272,273) | (1,308,076) |
Amortization of deferred financing costs | (72,876) | (725,165) | |
Debt settlement expense | (80,536) | (421,589) | (538,861) |
Forbearance incentive expense | (101,156) | ||
Stock incentive expense to investors | (35,186) | ||
Change in warrant fair market valuation | (64,800) | ||
Extinguishment loss | (313,900) | ||
Gain on extinguishment of debt | 3,431,533 | ||
Total Other (Expense) Income | 2,842,657 | (3,832,913) | (1,948,093) |
Net (Loss) Income | 546,171 | (6,234,434) | (3,554,914) |
Preferred stock dividends | (19,891) | (79,560) | (79,561) |
Net (Loss) Income attributable to common shareholders | $ 526,280 | $ (6,313,995) | $ (3,634,475) |
Loss per Share | |||
Basic | $ 0.23 | $ (0.10) | $ (1.71) |
Diluted | $ 0.19 | $ (0.10) | $ (1.71) |
Weighted average number of common shares outstanding | |||
Basic | 2,319,311 | 64,770,155 | 2,127,222 |
Diluted | 2,713,474 | 64,770,155 | 2,127,222 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficiency - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2016 | Sep. 30, 2015 | |
Series A Convertible Preferred Stock [Member] | |||
Balance | $ 5 | $ 5 | $ 5 |
Balance, share | 500 | 500 | 500 |
Preferred Shares Issued to Settle Debt | |||
Preferred Shares Issued to Settle Debt, shares | |||
Preferred Shares Issued for Forbearance | |||
Preferred Shares Issued for Forbearance, shares | |||
Common Shares Issued for Forbearance | |||
Common Shares Issued for Forbearance, shares | |||
Cancellation of Preferred Shares | |||
Cancellation of Preferred Shares, shares | |||
Accumulated Dividends Cancelled for Conversion to Common Stock | |||
Collection of Subscription Receivable | |||
Preferred Stock Dividends | |||
True Up to Transfer Agent Records | |||
True Up to Transfer Agent Records, shares | |||
Preferred Shares Issued for Cash | |||
Preferred Shares Issued for Cash, shares | |||
Common Shares to Settle Debt | |||
Common Shares to Settle Debt, shares | |||
Preferred Series F Issued to Employees | |||
Preferred Series F Issued to Employees, shares | |||
Preferred Series F Issued for Note Payables | |||
Preferred Series F Issued for Note Payables, shares | |||
Repayment of Subscription Receivable | |||
Accrued Dividends - Preferred Stock | |||
Stock Incentive to Investors | |||
Stock Incentive to Investors, shares | |||
Common Shares Issued to Employees | |||
Common Shares Issued to Employees, shares | |||
Common Shares Issued to Consultant | |||
Common Shares Issued to Consultant, shares | |||
Common Shares Issued for Equity Raise | |||
Common Shares Issued for Equity Raise, shares | |||
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 | |||
Net (Loss) Income | |||
Balance | $ 5 | $ 5 | $ 5 |
Balance, share | 500 | 500 | 500 |
Series A-1 Convertible Preferred Stock | |||
Balance | $ 3 | $ 3 | $ 3 |
Balance, share | 295 | 295 | 295 |
Preferred Shares Issued to Settle Debt | |||
Preferred Shares Issued to Settle Debt, shares | |||
Preferred Shares Issued for Forbearance | |||
Preferred Shares Issued for Forbearance, shares | |||
Common Shares Issued for Forbearance | |||
Common Shares Issued for Forbearance, shares | |||
Cancellation of Preferred Shares | |||
Cancellation of Preferred Shares, shares | |||
Accumulated Dividends Cancelled for Conversion to Common Stock | |||
Collection of Subscription Receivable | |||
Preferred Stock Dividends | |||
True Up to Transfer Agent Records | |||
True Up to Transfer Agent Records, shares | |||
Preferred Shares Issued for Cash | |||
Preferred Shares Issued for Cash, shares | |||
Common Shares to Settle Debt | |||
Common Shares to Settle Debt, shares | |||
Preferred Series F Issued to Employees | |||
Preferred Series F Issued to Employees, shares | |||
Preferred Series F Issued for Note Payables | |||
Preferred Series F Issued for Note Payables, shares | |||
Repayment of Subscription Receivable | |||
Accrued Dividends - Preferred Stock | |||
Stock Incentive to Investors | |||
Stock Incentive to Investors, shares | |||
Common Shares Issued to Employees | |||
Common Shares Issued to Employees, shares | |||
Common Shares Issued to Consultant | |||
Common Shares Issued to Consultant, shares | |||
Common Shares Issued for Equity Raise | |||
Common Shares Issued for Equity Raise, shares | |||
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 | |||
Net (Loss) Income | |||
Balance | $ 3 | $ 3 | $ 3 |
Balance, share | 295 | 295 | 295 |
Series D Convertible Preferred Stock [Member] | |||
Balance | $ 18,308 | $ 18,308 | $ 16,940 |
Balance, share | 1,830,759 | 1,830,759 | 1,693,981 |
Preferred Shares Issued to Settle Debt | $ 1,308 | ||
Preferred Shares Issued to Settle Debt, shares | 130,832 | ||
Preferred Shares Issued for Forbearance | $ 125 | ||
Preferred Shares Issued for Forbearance, shares | 12,500 | ||
Common Shares Issued for Forbearance | |||
Common Shares Issued for Forbearance, shares | |||
Cancellation of Preferred Shares | $ (2,016) | ||
Cancellation of Preferred Shares, shares | (201,672) | ||
Accumulated Dividends Cancelled for Conversion to Common Stock | |||
Collection of Subscription Receivable | |||
Preferred Stock Dividends | |||
True Up to Transfer Agent Records | |||
True Up to Transfer Agent Records, shares | |||
Preferred Shares Issued for Cash | $ 1,951 | ||
Preferred Shares Issued for Cash, shares | 195,118 | ||
Common Shares to Settle Debt | |||
Common Shares to Settle Debt, shares | |||
Preferred Series F Issued to Employees | |||
Preferred Series F Issued to Employees, shares | |||
Preferred Series F Issued for Note Payables | |||
Preferred Series F Issued for Note Payables, shares | |||
Repayment of Subscription Receivable | |||
Accrued Dividends - Preferred Stock | |||
Stock Incentive to Investors | |||
Stock Incentive to Investors, shares | |||
Common Shares Issued to Employees | |||
Common Shares Issued to Employees, shares | |||
Common Shares Issued to Consultant | |||
Common Shares Issued to Consultant, shares | |||
Common Shares Issued for Equity Raise | |||
Common Shares Issued for Equity Raise, shares | |||
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 | |||
Net (Loss) Income | |||
Balance | $ 18,308 | $ 0 | $ 18,308 |
Balance, share | 1,830,759 | 0 | 1,830,759 |
Series F Convertible Preferred Stock [Member] | |||
Balance | $ 5,256 | ||
Balance, share | 525,559 | ||
Preferred Shares Issued to Settle Debt | |||
Preferred Shares Issued for Forbearance | |||
Common Shares Issued for Forbearance | |||
Common Shares Issued for Forbearance, shares | |||
Cancellation of Preferred Shares | |||
Accumulated Dividends Cancelled for Conversion to Common Stock | |||
Collection of Subscription Receivable | |||
Preferred Stock Dividends | |||
True Up to Transfer Agent Records | |||
True Up to Transfer Agent Records, shares | |||
Preferred Shares Issued for Cash | |||
Preferred Shares Issued for Cash, shares | |||
Common Shares to Settle Debt | |||
Common Shares to Settle Debt, shares | |||
Preferred Series F Issued to Employees | $ 5,193 | ||
Preferred Series F Issued to Employees, shares | 519,309 | ||
Preferred Series F Issued for Note Payables | $ 63 | ||
Preferred Series F Issued for Note Payables, shares | 6,250 | ||
Repayment of Subscription Receivable | |||
Accrued Dividends - Preferred Stock | |||
Stock Incentive to Investors | $ 2,857 | ||
Stock Incentive to Investors, shares | 285,664 | ||
Common Shares Issued to Employees | |||
Common Shares Issued to Employees, shares | |||
Common Shares Issued to Consultant | |||
Common Shares Issued to Consultant, shares | |||
Common Shares Issued for Equity Raise | |||
Common Shares Issued for Equity Raise, shares | |||
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 | |||
Net (Loss) Income | |||
Balance | $ 5,256 | $ 0 | |
Balance, share | 525,559 | 0 | |
Common Stock [Member] | |||
Balance | $ 2,267 | $ 2,319 | $ 1,999 |
Balance, share | 2,266,887 | 2,319,524 | 1,999,567 |
Preferred Shares Issued to Settle Debt | |||
Preferred Shares Issued for Forbearance | |||
Common Shares Issued for Forbearance | $ 256 | ||
Common Shares Issued for Forbearance, shares | 255,778 | ||
Cancellation of Preferred Shares | |||
Accumulated Dividends Cancelled for Conversion to Common Stock | |||
Collection of Subscription Receivable | |||
Preferred Stock Dividends | |||
True Up to Transfer Agent Records | $ 12 | ||
True Up to Transfer Agent Records, shares | 11,542 | ||
Preferred Shares Issued for Cash | |||
Preferred Shares Issued for Cash, shares | |||
Common Shares to Settle Debt | $ 52 | $ 3,809 | |
Common Shares to Settle Debt, shares | 52,637 | 3,809,389 | |
Preferred Series F Issued to Employees | |||
Preferred Series F Issued to Employees, shares | |||
Preferred Series F Issued for Note Payables | |||
Preferred Series F Issued for Note Payables, shares | |||
Repayment of Subscription Receivable | |||
Accrued Dividends - Preferred Stock | |||
Stock Incentive to Investors | |||
Common Shares Issued to Employees | $ 5,029 | ||
Common Shares Issued to Employees, shares | 5,029,000 | ||
Common Shares Issued to Consultant | $ 842 | ||
Common Shares Issued to Consultant, shares | 841,500 | ||
Common Shares Issued for Equity Raise | $ 7,595 | ||
Common Shares Issued for Equity Raise, shares | 7,594,999 | ||
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 | |||
Net (Loss) Income | |||
Balance | $ 2,319 | $ 78,019 | $ 2,267 |
Balance, share | 2,319,524 | 78,019,872 | 2,266,887 |
Paid in Capital [Member] | |||
Balance | $ 2,565,709 | $ 3,053,075 | $ 968,215 |
Preferred Shares Issued to Settle Debt | 522,020 | ||
Preferred Shares Issued for Forbearance | 49,875 | ||
Common Shares Issued for Forbearance | 50,900 | ||
Cancellation of Preferred Shares | 2,016 | ||
Accumulated Dividends Cancelled for Conversion to Common Stock | 273,735 | ||
Collection of Subscription Receivable | |||
Preferred Stock Dividends | (79,561) | ||
True Up to Transfer Agent Records | (12) | ||
Preferred Shares Issued for Cash | 778,521 | ||
Common Shares to Settle Debt | 144,770 | 1,794,629 | |
Preferred Series F Issued to Employees | 337,550 | ||
Preferred Series F Issued for Note Payables | 24,937 | ||
Repayment of Subscription Receivable | |||
Accrued Dividends - Preferred Stock | (19,891) | (79,561) | |
Stock Incentive to Investors | 961,737 | ||
Common Shares Issued to Employees | 2,584,751 | ||
Common Shares Issued to Consultant | 444,958 | ||
Common Shares Issued for Equity Raise | 2,620,405 | ||
Series F adjustment to transfer agent records | (483) | ||
Series F issued to directors and employees for compensation | 150,177 | ||
Conversion of Series D to Common Stock | (18,307) | ||
Conversion of Series F to Common Stock | (10,904) | ||
Repayment of Subscription Receivable | |||
Net (Loss) Income | |||
Balance | 3,053,075 | 11,500,477 | 2,565,709 |
Subscription Receivable [Member] | |||
Balance | (349,789) | (204,789) | (660,000) |
Preferred Shares Issued to Settle Debt | |||
Preferred Shares Issued for Forbearance | |||
Common Shares Issued for Forbearance | |||
Cancellation of Preferred Shares | |||
Accumulated Dividends Cancelled for Conversion to Common Stock | |||
Collection of Subscription Receivable | 660,000 | ||
Preferred Stock Dividends | |||
True Up to Transfer Agent Records | |||
Preferred Shares Issued for Cash | (349,789) | ||
Common Shares to Settle Debt | |||
Preferred Series F Issued to Employees | |||
Preferred Series F Issued for Note Payables | |||
Repayment of Subscription Receivable | 145,000 | 875,000 | |
Accrued Dividends - Preferred Stock | |||
Stock Incentive to Investors | (929,408) | ||
Common Shares Issued to Employees | (2,569,800) | ||
Common Shares Issued to Consultant | |||
Common Shares Issued for Equity Raise | |||
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 | 875,000 | ||
Net (Loss) Income | |||
Balance | (204,789) | (2,828,997) | (349,789) |
Accumulated Deficit [Member] | |||
Balance | (13,362,100) | (12,815,929) | (9,807,186) |
Preferred Shares Issued to Settle Debt | |||
Preferred Shares Issued for Forbearance | |||
Common Shares Issued for Forbearance | |||
Cancellation of Preferred Shares | |||
Accumulated Dividends Cancelled for Conversion to Common Stock | |||
Collection of Subscription Receivable | |||
Preferred Stock Dividends | |||
True Up to Transfer Agent Records | |||
Preferred Shares Issued for Cash | |||
Common Shares to Settle Debt | |||
Preferred Series F Issued to Employees | |||
Preferred Series F Issued for Note Payables | |||
Repayment of Subscription Receivable | |||
Accrued Dividends - Preferred Stock | |||
Stock Incentive to Investors | |||
Common Shares Issued to Employees | |||
Common Shares Issued to Consultant | |||
Common Shares Issued for Equity Raise | |||
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 | |||
Net (Loss) Income | 546,171 | (6,234,434) | (3,554,914) |
Balance | (12,815,929) | (19,050,363) | (13,362,100) |
Balance | (11,125,597) | $ (9,941,752) | (9,480,024) |
Preferred Shares Issued to Settle Debt | 523,328 | ||
Preferred Shares Issued to Settle Debt, shares | 780,472 | ||
Preferred Shares Issued for Forbearance | 50,000 | ||
Common Shares Issued for Forbearance | 51,156 | ||
Cancellation of Preferred Shares | |||
Accumulated Dividends Cancelled for Conversion to Common Stock | 273,735 | ||
Collection of Subscription Receivable | 660,000 | ||
Preferred Stock Dividends | (79,561) | (79,561) | |
True Up to Transfer Agent Records | |||
Preferred Shares Issued for Cash | 430,683 | ||
Common Shares to Settle Debt | 144,822 | $ 1,798,438 | |
Common Shares to Settle Debt, shares | 3,809,389 | ||
Preferred Series F Issued to Employees | 342,743 | ||
Preferred Series F Issued for Note Payables | 25,000 | ||
Repayment of Subscription Receivable | 145,000 | $ 875,000 | |
Accrued Dividends - Preferred Stock | (19,891) | (79,561) | (79,561) |
Stock Incentive to Investors | 35,186 | ||
Common Shares Issued to Employees | 19,980 | ||
Common Shares Issued to Consultant | 445,800 | ||
Common Shares Issued for Equity Raise | 2,628,000 | ||
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 | |||
Conversion of Series F to Common Stock | |||
Repayment of Subscription Receivable | 875,000 | ||
Net (Loss) Income | 546,171 | (6,234,434) | (3,554,914) |
Balance | $ (9,941,752) | $ (10,300,856) | $ (11,125,597) |
Consolidated Statements of Sto6
Consolidated Statements of Stockholders' Deficiency (Parenthetical) | 12 Months Ended |
Dec. 31, 2016USD ($)shares | |
Statement of Stockholders' Equity [Abstract] | |
Number of shares issued | shares | 780,472 |
Payments of stock issuance costs | $ | $ 430,683 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities: | |||
Net (loss) income | $ 546,171 | $ (6,234,434) | $ (3,554,914) |
Adjustments to reconcile net (loss) income to net cash used in operating activities: | |||
Amortization of deferred financing costs | 72,876 | 725,165 | |
Change in warrant valuation | 64,800 | ||
Provision for bad debts | 29,949 | 409,481 | |
Extinguishment loss | 313,900 | ||
Forbearance incentive expense | 101,156 | ||
Stock based compensation | 473,328 | ||
Depreciation | 96,698 | 516,066 | 108,324 |
Amortization of original issue discount | 36,448 | 218,691 | |
Payment in kind interest-senior debt | 48,682 | 329,831 | |
Stock incentive expense to investors | 35,186 | ||
Stock compensation | 342,743 | 618,267 | |
Gain on settlement of lease termination costs | (226,544) | ||
Gain on extinguishment of senior debt | (3,431,533) | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | (231,035) | (5,603,046) | 279,844 |
Other current assets | 4,977 | (785,705) | (1,257,966) |
Accounts payable and accrued liabilities | 1,076,170 | (1,809,093) | 3,602,899 |
Net cash used in operating activities | (1,437,803) | (11,580,423) | (64,392) |
Cash flows from investing activities: | |||
Purchase of property and equipment | (94,358) | (848,181) | (125,573) |
Restricted cash account | (3,003,226) | 3,003,226 | |
Net cash (used in) provided by investing activities | (3,097,584) | 2,155,045 | (125,573) |
Cash flows from financing activities: | |||
Advances (payments) on factor lines of credit, net | (600,554) | (383,682) | |
Advances from related party | 183,538 | ||
Proceeds from issuance of notes payable | 8,000,000 | 8,281,271 | |
Payments on notes payable | (2,194,376) | (569,869) | (143,786) |
Payments on notes payable - related parties | (145,904) | (210,302) | |
Proceeds from notes payable-related parties | 62,226 | 503,857 | |
Proceeds from sale of preferred stock | 430,683 | ||
Proceeds from repayment of subscriptions receivable | 140,000 | 875,000 | 660,000 |
Proceeds from sale of common stock | 2,628,000 | ||
Payment of deferred financing costs | (874,516) | (940,498) | (140,000) |
Net cash provided by financing activities | 4,532,780 | 10,631,857 | 396,451 |
Net change in cash | (2,607) | 1,206,479 | 206,486 |
Cash, beginning of Period | 207,740 | 205,133 | 1,254 |
Cash, end of Period | 205,133 | 1,411,612 | 207,740 |
Supplemental Disclosure of Cash Flow Information: | |||
Cash paid for interest | 264,865 | 1,381,933 | 350,922 |
Cash paid for income taxes | |||
Noncash investing and financing activities: | |||
Issuance of notes payable for the purchase of fixed assets | 1,127,797 | 589,907 | 1,314,474 |
Common stock issued for notes payable | 1,320,453 | ||
Common stock issued for accounts payable | 477,985 | ||
Issuance of notes to settle litigation | 288,000 | 146,000 | 200,000 |
Accrued dividends preferred stock | 19,891 | 79,560 | 79,561 |
Unpaid subscription for preferred shares | 349,789 | ||
Cancellation of preferred shares | |||
Preferred shares issued to settle rent obligations | $ 25,000 |
Description of Business and His
Description of Business and History | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Description of Business and History | 1. DESCRIPTION OF BUSINESS AND HISTORY Overview FTE Networks, Inc. (“FTE” or the “Company”) is a provider of international and regional telecommunications and technology systems and infrastructure services. FTE also offers managed information technology, telecommunications services, subscriber based services and staffing solutions through the following wholly owned subsidiaries: ● JusCom, Inc., (dba FTE Network Services) specializes in the design, engineering, installation, and maintenance of all forms of telecommunications infrastructure. Services including 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, LLC are reported in the Company’s telecommunications segment. FVP Worx represents the Company’s staffing segment (See Note 13 - Segment Data). History Focus Venture Partners, Inc. (“Focus”) was incorporated in the state of Nevada on March 26, 2012 as a holding company operating in the telecommunications industry managing and developing its wholly owned subsidiaries, which were focused on the development of telecommunications networks, acting as a service and support provider, as well as providing temporary and part-time staffing solutions. Through a formerly wholly owned subsidiary, Optos Capital Partners, LLC, a Delaware limited liability company (“Optos”), Focus, operated the following wholly owned entities: ● Focus Fiber Solutions, LLC, a Delaware limited liability company (“Focus Fiber”), which specialized in the design, engineering, installation, and maintenance of a telecommunications infrastructure network. ● JusCom, Inc., an Indiana corporation (“JusCom”), which was a telecommunication service provider providing various services including engineering consulting, design, installation and emergency response in various categories including cable rack/wiring build-outs, infrastructure build-outs, DC power installation, fiber cable splicing and security camera installation. JusCom also operated as a temporary and permanent staffing agency specializing in the telecommunications market. Prior to the Beacon Merger (see below), Focus reorganized such that JusCom became a subsidiary of Focus, and was no longer a subsidiary of Optos. ● MDT Labor, LLC d/b/a MDT Technical, a Delaware limited liability company (“MDT”), operated as a workforce management company providing temporary and permanent staffing services under the MDT Technical brand and as a telecommunication service provider providing various services including engineering consulting, design, installation and emergency response in various categories including cable rack/wiring build-outs, infrastructure build-outs, DC power installation, fiber cable splicing and security camera installation under its Beacon Solutions brand. On May 10, 2013, Beacon Enterprise Solutions Group (“Beacon”), a Nevada Corporation, and Beacon Acquisition Sub, Inc., a Nevada Corporation, entered into a merger agreement with Focus (the “Merger Agreement”). On June 19, 2013, Focus consummated a “reverse shell merger” with Beacon and Beacon Acquisition Sub, a wholly owned subsidiary of Beacon (the “Merger Sub”). Pursuant to the Merger Agreement, the Merger Sub merged with and into Focus, with Focus continuing as the surviving corporation, with the result that Focus became a subsidiary of Beacon (the “Beacon Merger”). In connection with the Beacon Merger, the board of directors authorized the designation of a new series of preferred stock, the Beacon Series D Shares, out of its available “blank check preferred stock” and authorized the issuance of up to 2,000,000 Beacon Series D Shares. The Company filed a Certificate of Designation with the Secretary of State of the State of Nevada on June 17, 2013. Under the Certificate of Designation, each Beacon Series D Share has various rights, privileges and preferences, including: (i) a stated value of $4.00 per share; (ii) mandatory conversion into 20 shares of Common Stock (subject to adjustments) upon the filing of the amendment to the Company’s Articles of Incorporation after incorporating the 1 for 20 reverse stock split of the outstanding shares of common stock required by the Merger Agreement; and (iii) a liquidation preference in the amount of the stated value. Pursuant to the terms of the Merger Agreement: (i) shares of Series B Preferred Stock of Focus, par value $0.0001 per share (the “Focus Preferred B Shares”) and common stock of Focus, par value $0.0001 per share (the “Focus Common Stock”) were converted into the right to receive an aggregate of 1,250,011 shares of Beacon Series D Preferred Shares, par value $0.01 per share); (ii) all shares of Series A Preferred Stock of Focus, par value $0.0001 per share, were converted into the right to receive an aggregate number of 1,000,000 shares of Beacon Series E shares, par value $0.01 per share, (iii) all shares of capital stock of Merger Sub were converted into one share of Focus Common Stock. Each share of Series D Preferred stock is (a) entitled to vote alongside the common stockholders and has 20 votes; and (b) is convertible into 400 pre-split shares of common stock (equal to 20 shares of common stock on a post-split basis) upon an increase in the number of common shares authorized, and the implementation of a 1-for-20 reverse stock split. Each Beacon Series E share is entitled to vote alongside the common stockholders and has 1 vote each. The Beacon Series E shares were subject to redemption and were recorded as a liability, but the shares were returned to the Company and derecognized on September 30, 2013. The Beacon Merger represented a change of control of Beacon and Focus management became responsible for the consolidated entity. Following the Beacon Merger, Beacon changed its name to FTE Networks, Inc., which together with its subsidiaries is referred to herein as the “Company” or “FTE”. For accounting purposes, the Beacon Merger has been treated as an acquisition of Beacon by Focus, whereby Focus was deemed to be the accounting acquirer. The historical consolidated financial statements prior to June 19, 2013 are those of Focus Venture Partners. In connection with the Beacon Merger, Focus Venture Partners has restated its statements of stockholders’ deficiency on a recapitalization basis so that all equity accounts and all related footnote disclosures are presented as if the recapitalization had occurred as of the beginning of the earliest period presented. Accordingly, all Focus common shares transactions occurring prior to the Beacon Merger on June 19, 2013 have been restated and are disclosed in terms of their FTE Networks Series D preferred share equivalents. Stock Purchase Agreement On March 9, 2017, the Company, entered into a Stock Purchase Agreement (the “Purchase Agreement”) with (i) Benchmark, and (ii) each of Benchmark’s stockholders. On April 20, 2017 (the “Closing Date”), FTE acquired all of the issued and outstanding shares of common stock (the “Benchmark Shares”) of Benchmark Builders, Inc., a privately held New York corporation (“Benchmark”) from each of its stockholders (collectively, the “Sellers”), pursuant to the Stock Purchase Agreement, dated as of March 9, 2017, by and among FTE Networks, Benchmark, and the Sellers (the “Purchase Agreement”), as amended by Amendment No. 1 to Stock Purchase Agreement, dated as of the Closing Date (the “Purchase Agreement Amendment” and together with the Purchase Agreement, the “Amended Purchase Agreement”). FTE Networks, Benchmark, and the Sellers, entered into the Purchase Agreement Amendment in order to address certain changes in the purchase price as set forth in the Purchase Agreement. The Purchase Agreement provided that the consideration to the Sellers for the Benchmark Shares would consist of (i) $55,000,000 in cash consideration, (ii) an aggregate of 17,825,350 shares of the Company’s common stock, and (iii) promissory notes in the aggregate amount of $10,000,000 to the Sellers. The Purchase Agreement Amendment has, inter alia, modified the purchase price set forth in the Purchase Agreement to consist of (i) cash consideration of approximately $17,250,000, subject to certain prospective working capital adjustments (the “Cash Consideration”),approximately $10 million cash provided by Lateral and $7 million provided by certain of the sellers, (ii) 26,738,445 shares of FTE Networks’ common stock (the “FTE Shares”), (iii) convertible promissory notes in the aggregate principal amount of $12,500,000 to certain stockholders of Benchmark (the “Series A Notes”, which mature on April 20, 2019), (iv) promissory notes in the aggregate principal amount of $30,000,000 to certain stockholders of Benchmark (the “Series B Notes”, which mature on April 20, 2020) and (v) promissory notes in the aggregate principal amount of $7,500,000 to certain stockholders of Benchmark (the “Series C Notes”, which mature on October 20, 2018, and together with the Series A Notes and the Series B Notes, the “Notes”) in the Amended Purchase Agreement. Additionally, Lateral amended its existing credit facility to provide for the approximate $10 million cash and to restructure the existing debt, which now has a maturity date of March 30, 2019. |
Summary of Significant Policies
Summary of Significant Policies | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Policies | 2. SUMMARY OF SIGNIFICANT POLICIES Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates. The Company’s most significant estimates relate to its allowances for receivables and deferred tax assets, plus the valuation of equity issuances. Cash and Cash Equivalents The Company considers all holdings of highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. As of September 30, 2015, December 31, 2015, and December 31, 2016 the Company did not have any cash equivalents Accounts Receivable and Allowance for Doubtful Accounts The Company recognizes an allowance for doubtful accounts to ensure that accounts receivable are not overstated due to un-collectability. At the time accounts receivable are originated, the Company considers a reserve for doubtful accounts based on the creditworthiness of customers. Aged accounts receivable are reviewed by management for collectability. The provision for uncollectible amounts is continually reviewed and adjusted to maintain the allowance at a level considered adequate to cover future losses. The allowance is management’s best estimate of uncollectible amounts and is determined based on historical performance that is tracked by the Company on an ongoing basis. The customer is billed after the job has been completed, inspected and approval is obtained by its customer. The segmentation of large contracts into small manageable contracts allows for a particular job to be completed, inspected and approved for payment by the customer, with this cycle taking approximately only up to several weeks. The payments terms are generally 30 days. As of December 31, 2016, December 31, 2015, and September 30, 2015, management has provided for an allowance for doubtful accounts of approximately $119,000, $89,000 and $89,000, respectively. Concentration of Credit Risk Financial instruments that potentially expose the Company to significant concentrations of credit risk consist principally of cash and accounts receivable. The Company places its cash with financial institutions with high credit ratings, which at times balances exceed the $250,000 FDIC insured amount. The Company is subject to risk of non-payment of its trade accounts receivable. Our customer base is highly concentrated. Due to the fact that the majority of our revenues are non-recurring, project-based revenues, it is not unusual for there to be significant period-to-period shifts in customer concentrations. Revenue may significantly decline if the Company were to lose one or more of its significant customers, or if the Company were not able to obtain new customers upon the completion of significant contracts. For the year ended September 30, 2015, the Company’s largest customers included a telecommunications company providing fiber optic based network solutions, (Customer C), and a corporate staffing customer within the Company’s staffing segment, (Customer D). During the transitional three months ended December 31, 2015, the Company’s largest customers included a multinational provider of communications technology and services, (Customer I) and a corporate staffing customer within the Company’s staffing segment, (Customer D). For the year ended December 31, 2016, the Company’s largest customers included multinational telecommunications conglomerate (Customer M) and leader service provider in network managed and professional services, (Customer J). The following tables set forth our revenues and accounts receivable balances for the periods indicated: For the Year Ended For the Transitional Three Months Ended For the Year Ended December 31, 2016 December 31, 2015 September 30, 2015 Revenues $ % $ % $ % Customer C 164,987 1 % 41,664 1 % 5,196,380 36 % Customer D - - % 1,592,193 52 % 5,324,866 37 % Customer I 91,000 1 % 316,931 11 % 106,850 1 % Customer J 1,804,760 14 % - - - - Customer M 6,332,966 52 % 130,771 4 % 552,054 4 % All other customers 3,875,366 32 % 989,246 32 % 3,208,532 22 % Total Revenues, net of discounts $ 12,269,079 100 % $ 3,070,805 100 % $ 14,388,682 100 % For the Year Ended For the Transitional Three Months Ended For the Year Ended December 31, 2016 December 31, 2015 September 30, 2015 Accounts Receivable $ % $ % $ % Customer B 85,112 1 % 152,475 10 % 152,475 12 % Customer E 603,663 9 % 718,035 47 % 617,825 47 % Customer H 102,796 2 % 215,609 14 % 50,767 4 % Customer M 4,624,600 66 % 62,233 4 % 66,832 5 % All other customers 1,722,354 22 % 387,128 25 % 416,546 32 % Total Receivables 7,138,525 100 % $ 1,535,480 100 % $ 1,304,445 100 % Less Allowance for doubtful accounts (118,949 ) $ (89,000 ) $ (89,000 ) Accounts Receivable, net of allowance 7,019,576 $ 1,446,480 $ 1,215,445 Revenue and Cost of Goods Sold Recognition Generally, including for the staffing business, revenue is recognized when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the price to the buyer is fixed or determinable, and (4) collectability is reasonably assured. Revenue in the telecommunication segment is principally all derived from construction projects performed under master and other service agreements as well as from contracts for specific projects or jobs requiring the construction and installation of an entire infrastructure system or specified units within an entire infrastructure system. The Company provides services under unit price or fixed price master service or other service agreements under which the Company furnishes specified units of service for a fixed price per unit of service and revenue is recognized upon completion of the defined project due to its short term nature. Revenue from fixed price contracts provides for a fixed amount of revenue for the entire project, subject to certain additions for changed scope or specifications. Such contracts provide that the customer accept completion of progress to date and compensate the Company for services rendered, which may be measured in terms of costs incurred, units installed, hours expended or some other measure of progress. Contract costs include all direct materials, labor and subcontracted costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and the operational costs of capital equipment. Much of the materials associated with the Company’s work are customer-furnished and are therefore not included in contract revenue and costs. Management reviews estimates of contract revenue and costs on an ongoing basis. Changes in job performance, job conditions and management’s assessment of expected contract settlements are factors that influence estimates of total contract value and total costs to complete those contracts and, therefore, the Company’s profit recognition. Changes in these factors may result in revisions to costs and income, and their effects are recognized in the period in which the revisions are determined and accepted by the customer. Provisions for losses on uncompleted contracts are made in the period in which such losses are determined to be probable and the amount can be reasonably estimated. The majority of fixed price contracts are completed within one year. The Company may incur costs subject to change orders, whether approved or unapproved by the customer, and/or claims related to certain contracts. Management determines the probability that such costs will be recovered based upon engineering studies and legal opinions, past practices with the customer, specific discussions, correspondence or preliminary negotiations with the customer. The Company treats such costs as a cost of contract performance in the period incurred if it is not probable that the costs will be recovered, or defers costs and/or recognizes revenue up to the amount of the related cost if it is probable that the contract price will be adjusted and can be reliably estimated. As of December 31, 2016 and 2015, such amounts were not material. The Company actively engages in substantive meetings with its customers to complete the final approval process, and generally expects these processes to be completed within one year. The amounts ultimately realized upon final acceptance by its customers could be higher or lower than such estimated amounts. For short term 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 Network’s 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. Changes in job performance, job conditions and estimated profitability, including those arising from contract penalty provisions, changes in raw materials 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. Provisions for losses on uncompleted contracts are made in the period such losses are known. Deferred Financing Costs The Company has recorded deferred financing costs as a result of fees incurred by the Company in conjunction with its debt financing activities. These costs are amortized to interest expense using the straight-line method which approximates the interest rate method over the term of the related debt. As of December 31, 2016, December 31, 2015, and September 30, 2015, unamortized deferred financing costs were approximately $619,830, $801,640, and $140,000, respectively and are netted against the related debt. As of September 30, 2015, the deferred financing costs were not netted against the debt as the senior credit did not close until October 28, 2015. Amortization of such fees were $725,165, and $72,877, and $0 for the years ended December 31, 2016, transitional three months ended December 31, 2015, and the year ended September 30, 2015, respectively. Property and Equipment Property and equipment are stated at the lower of cost or fair value. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets, as follows: Estimated Life Machinery and equipment 6-8 years Vehicles and trailers 7-10 years Computer equipment and software 2-5 years Product hardware and development 5-7 years The estimated useful lives are based on the nature of the assets as well as current operating strategy and legal considerations such as contractual life. Future events, such as property expansions, property developments, new competition, or new regulations, could result in a change in the manner in which the Company uses certain assets requiring a change in the estimated useful lives of such assets. Maintenance and repairs that neither materially add to the value of the asset nor appreciably prolong its life are charged to expense as incurred. Gains or losses on disposition of property and equipment are included in the consolidated statements of operations. Valuation of Long-lived Assets The Company evaluates its long-lived assets for impairment in accordance with related accounting standards. Assets to be held and used (including projects under development as well as property and equipment), are reviewed for impairment whenever indicators of impairment exist. If an indicator of impairment exists, the Company first groups its assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities (the “asset group”). Secondly, the Company estimates the undiscounted future cash flows that are directly associated with and expected to arise from the completion, use and eventual disposition of such asset group. The Company estimates the undiscounted cash flows over the remaining useful life of the primary asset within the asset group. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then an impairment is measured based on fair value compared to carrying value, with fair value typically based on a discounted cash flow model. If an asset is still under development, future cash flows include remaining construction costs. There were no impairments during the periods presented. Income Taxes The Company records income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and attributable to operating loss and tax credit carryforwards. Accounting standards regarding income taxes requires a reduction of the carrying amounts of deferred tax assets by a valuation allowance, if based on the available evidence, it is more likely than not that such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed at each reporting period based on a “more likely than not” realization threshold. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, the Company’s experience with operating loss and tax credit carryforwards not expiring unused, and tax planning alternatives. Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. Accounting standards regarding uncertainty in income taxes provides a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely, based solely on the technical merits, of being sustained on examinations. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments and which may not accurately anticipate actual outcomes. Equity The Company applies the classification and measurement principles enumerated in Accounting Standards Codification (“ASC”) 815 “Derivatives and Hedging” with respect to accounting for its issuances of the preferred stock. The Company evaluates convertible preferred stock at each reporting date for appropriate balance sheet classification. Fair Value of Financial Instruments The Company adopted the Financial Accounting Standards Board (“FASB”) standard related to fair value measurement at inception. The standard defines fair value, establishes a framework for measuring fair value and expands disclosure of fair value measurements. The standard applies under other accounting pronouncements that require or permit fair value measurements and, accordingly, does not require any new fair value measurements. The standard clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The recorded values of long-term debt approximate their fair values, as interest approximates market rates. As a basis for considering such assumptions, the standard established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: 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 Company’s financial instruments consist of accounts receivable, other current assets, accounts payable, accrued expenses, and notes payable. The recorded values of accounts receivable, other current assets, accounts payable, and accrued expenses 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. Segment Reporting The Company operates in the telecommunications infrastructure services industry and, effective May 8, 2014, entered the staffing industry. The Company has concluded that the staffing business qualifies as a separate segment for the year ended December 31, 2016, the transitional three months ended December 31, 2015, and the year ended September 30, 2015, as such, the Company has reported segment results pursuant to ASC 280-10 “Segment Reporting” for the year ended December 31, 2016, the transitional three months ended December 31, 2015, and the year ended September 30, 2015. Earnings (Loss) Per Share The basic net loss per share is computed by dividing the net loss (the numerator) by the weighted average number of common shares outstanding for the period (the denominator). Diluted net loss per common share is computed by dividing the net loss by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period. Potential common shares include convertible debt, warrants and preferred stock. The number of potential common shares outstanding relating to convertible debt, warrants and preferred stock is computed using the treasury stock method. For the periods presented, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share. Comparative data for the previous period has been adjusted to reflect the 1 for 20 reverse split effectuated May 26, 2016. The following table sets forth the computation of basic and diluted earnings (loss) per common share from continuing operations: For the Years/Three Months Ended Year Ended December 31, 2016 Three Months Ended December 31, 2015 Year Ended September 30, 2015 Numerator: Net (loss) income $ (6,234,434 ) $ 546,171 $ (3,554,914 ) Preferred stock dividends (79,561 ) (19,891 ) (79,561 ) Net (loss) income attributable to common shareholders $ (6,313,995 ) 526,280 $ (3,634,475 ) Denominator: Weighted average number of common shares outstanding - basic 64,770,155 2,319,311 2,127,222 Effect of dilutive securities: Convertible preferred stock, Series A - - - Convertible preferred stock, Series A-1 - - - Convertible preferred stock, Series D - 91,062 - Convertible preferred stock, Series F - 303,163 - Total dilutive shares - 394,163 - Weighted average number of common shares outstanding - diluted 64,770,155 2,713,474 2,127,222 (Loss) Earnings per share: Basic $ (0.10 ) $ 0.23 $ (1.71 ) Diluted $ (0.10 ) $ 0.19 $ (1.71 ) The following securities are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: For the Years and Transitional Three Months Ended Year Ended December 31, 2016 Transitional Three Months December 31, 2015 Year Ended September 30, 2015 Convertible preferred stock, Series A 667,169 667,169 667,169 Convertible preferred stock, Series A-1 393,645 393,645 393,645 Convertible preferred stock, Series D [1] - 40,060,500 36,615,180 Convertible preferred stock, Series F [1] - 18,349,220 - Common stock warrants 16,748,126 4,404,376 744,999 Preferred stock warrants - - 39,396,800 Convertible debt - 200,000 200,000 Total potentially dilutive shares 17,808,940 64,074,910 78,017,793 [1] Advertising Advertising costs, if any, are expensed as incurred. For the year ended December 31, 2016, the transitional three months ended December 31, 2015, and the year ended September 30, 2015, respectively, the Company’s spending on advertising was not material. Reclassifications Certain prior year balances have been reclassified in order to conform to current year presentation. These reclassifications have no effect on previously reported results of operations or loss per share. Comparative data for the previous period has also been adjusted to reflect the 1 for 20 reverse split effectuated May 26, 2016. Liquidity and Managements’ Plans During the year ended December 31, 2016 the Company has incurred a net loss of $6.3 million and, in addition, the Company has working capital deficit of $3.4 million, which includes approximately $2.2 million of liabilities for unpaid payroll taxes and the related penalties and interest. Management’s plans are to enter into an installment plan with the IRS for the payment of the unpaid payroll taxes and to continue to raise additional funds through the sales of debt or equity securities until such time that operations generate sufficient cash to operate the business. On October 28, 2015 the Company entered into an $8 million senior secured credit facility. Of the proceeds received, approximately $1.8 million was used to extinguish approximately $3.4 million of Company debt and $3.0 million was deposited into a restricted Company bank account which requires Lateral’s approval to utilize. On April 20, 2017, in conjunction with the acquisition of Benchmark Builders Inc, Lateral amended its existing credit facility to provide for approximately $10.1 million towards the cash purchase price, and extending the maturity date of the existing credit facility to March 31, 2019. Additionally, the Company, in conjunction with the Benchmark acquisition, took on approximately $50 million dollars of debt, $12,500,000 which matures on April 20, 2019, $30,000,000 which matures on April 20, 2020, and $7,500,000 which matures on October 20, 2018. With Benchmark’s 2016 annual revenues of $386 million and a backlog as of December 31, 2016 of $259 million, combined with the Company’s backlog as of December 31, 2016 of $45.5 million, the Company believes that it has the ability to support this additional debt and fund all current operations. However, if needed, there is no assurance that additional financing will be available or that management will be able to obtain and close financing on terms acceptable to the Company, enter into an acceptable installment plan with the IRS, which is scheduled to be presented in the third quarter of 2017, or whether the Company will become profitable and generate positive operating cash flow. If the Company is unable to raise sufficient additional funds or generate positive operating cash flow, it will have to develop and implement a plan to further extend payables and reduce overhead until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful. Recent Accounting Pronouncements In January 2017, the FASB issued Accounting Standards Update (ASU) 2017-04: “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”), which removes Step 2 from the goodwill impairment test. It is effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment test performed with a measurement date after January 1, 2017. The Company does not expect this new guidance to have a material impact on its financial position or results of operations. In January 2017, the FASB issued ASU 2017-01 “Business Combinations (Topic 805): Clarifying the Definition of a Business”, which clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The standard introduces a screen for determining when assets acquired are not a business and clarifies that a business must include, at a minimum, an input and a substantive process that contribute to an output to be considered a business. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently evaluating the standard to determine the impact of its adoption on the consolidated financial statements. In December 2016, the FASB issued ASU 2016-18 “Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force,” which clarifies the presentation requirements of restricted cash within the statement of cash flows. The changes in restricted cash and restricted cash equivalents during the period should be included in the beginning and ending cash and cash equivalents balance reconciliation on the statement of cash flows. When cash, cash equivalents, restricted cash or restricted cash equivalents are presented in more than one line item within the statement of financial position, an entity shall calculate a total cash amount in a narrative or tabular format that agrees to the amount shown on the statement of cash flows. Details on the nature and amounts of restricted cash should also be disclosed. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company does not expect this new guidance to have a material impact on its financial position or results of operations. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” ASU No. 2016-15 clarifies and provides specific guidance on eight cash flow classification issues that are not currently addressed by current GAAP and thereby reduce the current diversity in practice. ASU No. 2016-15 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2017, with early application permitted. This guidance is applicable to the Company’s fiscal year beginning January 1, 2018. The Company is currently evaluating the standard to determine the impact of its adoption on the consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, which for the Company will commence with the year beginning January 1, 2018, with early adoption permitted commencing January 1, 2017. The Company is currently evaluating the standard to determine the impact of its adoption on the consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The standard requires a lessee to recognize assets and liabilities on the balance sheet for leases with lease terms greater than 12 months. The standard is effective for annual reporting periods beginning after December 15, 2018, which for the Company will commence with the year beginning January 1, 2019, with early application permitted. The adoption will require a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest period presented. The Company is currently evaluating the standard to determine the impact of the adoption on the consolidated financial statements. In November 2015, the FASB issued Accounting Standards Update 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” (“ASU 2015-07”), an update to accounting guidance to simplify the presentation of deferred income taxes. The guidance requires an entity to classify all deferred tax liabilities and assets, along with any valuation allowance, as noncurrent in the balance sheet. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is permitted. The Company has elected to early adopt ASU 2015-17 during the year ended December 31, 2015 with retrospective application. The adoption of ASU 2015-17 did not have a material impact on the Company’s consolidated financial statements. In August 2014, the FASB issued ASU 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. ASU 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. For all entities, the ASU is effective for annual periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016. Early adoption is permitted. The Company adopted this standard for the year ended December 31, 2016. The adoption of these amendments did not have a material effect on our consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, “Revenue Recognition” and some cost guidance included in ASC Subtopic 605-35, “Revenue Recognition - Construction-Type and Production-Type Contracts.” The core principle of ASU 2014-09 is that revenue is recognized when the transfer of goods or services to customers occurs in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. ASU 2014-09 requires the disclosure of sufficient information to enable readers of the Company’s financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. ASU 2014-09 also requires disclosure of information regarding significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 provides two methods of retrospective application. The first method would require the Company to apply ASU 2014-09 to each prior reporting period presented. The second method would require the Company to retrospectively apply ASU 2014-09 with the cumulative effect recognized at the date of initial application. ASU 2014-09 will be effective for the Company beginning in fiscal 2019 as a result of ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” which was issued by the FASB in August 2015 and extended the original effective date by one year. The Company is currently evaluating the impact of adopting the available methodologies of ASU 2014-09 and 2015-14 upon its financial statements in future reporting periods. The Company has not yet selected a transition method. The Company is in the process of evaluating the new standard against |
Restricted Cash Account
Restricted Cash Account | 12 Months Ended |
Dec. 31, 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 Company’s new senior debt (Note 8. Senior Debt). The funds were kept at a bank in an account segregated from our main operating account. The Company did not have direct access to or control over the funds held in this account. The funds were disbursed to the Company upon approval of the lender. These balances were $0 as of December 31, 2016, $3,003,226 as of December 31, 2015, and $0 as of September 30, 2015. |
Other Current Assets
Other Current Assets | 12 Months Ended |
Dec. 31, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Current Assets | 4. OTHER CURRENT ASSETS Other current assets consist of the following: For Year Ended December 31, 2016 December 31, 2015 September 30, 2015 Other receivables, net $ 1,232,555 $ 1,232,555 $ 669,198 Prepaid contract costs for work in process 409,038 623,798 593,711 Prepaid operating expenses 1,191,718 191,253 789,674 $ 2,833,311 $ 2,047,606 $ 2,052,583 Other receivables are presented net of an allowance of $150,000, $150,000 and $772,798 for uncollectible amounts at December 31, 2016 December 31, 2015, and September 30, 2015, respectively. |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | 5. PROPERTY AND EQUIPMENT, NET Property and equipment consist of the following: For Year Ended December 31, 2016 December 31, 2015 September 30, 2015 Machinery and equipment $ 1,596,068 $ 1,180,344 $ 496,543 Vehicles and trailers 1,925,181 1,475,237 1,009,004 Network Services Platform 433,912 - - Computer equipment and software 325,271 186,763 114,642 4,280,432 2,842,344 1,620,189 Less: accumulated depreciation (813,913 ) (297,847 ) (201,149 ) $ 3,466,519 $ 2,544,497 $ 1,419,040 The Company has begun the development of a new network infrastructure services platform, which upon completion, intends market and implement to customers, in the production of revenue. As of December 31, 2016, the capitalized cost of this new system is $433,912, and is not being depreciated as it is still work in progress. The Company leases various equipment under capital leases. Assets held under capital leases are included in property and equipment as follows: For Year Ended December 31, 2016 December 31, 2015 September 30, 2015 Machinery & equipment $ 1,412,709 $ 1,030,733 $ 352,157 Less: accumulated depreciation (231,406 ) (44,424 ) (11,108 ) $ 1,181,303 $ 986,309 $ 341,049 Depreciation expense for the years ended December 31, 2016, transitional three months ended December 31, 2016, and year ended September 30, 2015 was $516,066, $96,698, and $108,324, respectively. |
Factoring Agreement
Factoring Agreement | 12 Months Ended |
Dec. 31, 2016 | |
Factoring Agreement [Abstract] | |
Factoring Agreement | 6. FACTORING AGREEMENT AmeriFactors Financial Group On May 12, 2014, the Company entered into an exclusive Factoring Agreement (“the AmeriFactors Agreement”) with AmeriFactors Financial Group, LLC (AmeriFactors). The one year agreement between the Company and AmeriFactors provided for AmeriFactors to purchase up to $7,000,000 of the Company’s qualified net accounts receivable during the term of the AmeriFactors Agreement, and was renewable on a year to year basis. Unpaid accounts receivable purchased by AmeriFactors could not exceed $3,000,000 at any time. Under the terms of the AmeriFactors Agreement, the Company received 85% of the net sale amount up front, plus additional conditional consideration upon the collection of the receivable. The AmeriFactors Agreement automatically renewed on May 12, 2015. The Company’s accounts receivable were purchased by AmeriFactors on a recourse basis. Certain officers of the Company provided personal guarantees. As of September 30, 2015, under the AmeriFactors Agreement, the Company had factored receivables in the amount of $706,534 and recorded a liability of $600,554. Discounts provided and interest charged related to factoring of the accounts receivable have been expensed on the accompanying consolidated statements of operations as interest expense. The Amerifactors Agreement was cancelled in October 2015 in connection with the inception of the new credit facility. Gibraltar Business Capital On October 6, 2014, the Company entered into an exclusive Factoring Agreement (“the Gibraltar Agreement”) with Gibraltar Business Capital, LLC (Gibraltar). The initial term of the Gibraltar Agreement was one year, and was renewable on a year to year basis. Unpaid accounts receivable purchased by Gibraltar could not exceed $250,000 at any time. Under the terms of the Gibraltar Agreement, the Company received on a recourse basis up to 85% of the net sale amount up front. There were no factored receivables related to the Gibraltar Agreement as of September 30, 2015, December 31, 2015, and December 31, 2016. The Company never factored any receivables with Gibraltar. The Gibraltar Agreement was not renewed in October 2015. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Notes Payable | 7. NOTES PAYABLE December 31, 2016 December 31, 2015 September 30, 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 48 months. $ 1,336,517 $ 491,000 $ 383,970 Senior Secured Notes Senior secured notes issued between October 2011 and January 2012, secured by the assets of the Company, at a stated interest rate of 15%. The senior notes were settled for cash at an approximate rate of $.50 for $1.00. Of the original senior debt balance of $3,550,012, $1,757,731 was paid in cash, resulting in a remaining principal balance of $1,792,281, plus accrued interest payable in the amount of $1,748,380. The remaining principal balance and all of the accrued interest were recognized as a one-time gain of $3,431,533, net of associated costs of $109,124. - - 3,550,012 Other Notes Payable Notes payable bearing interest at a stated rate of 12% and a 4% PIK per annum. Term is for 7 months. 5,094,116 - - Less: Deferred financing cost (926,343 ) - - Total other note payable, net 4,167,773 - - Notes Payable bearing interest at a stated rate between 10% and 12% per annum. Terms range from 1 to 12 months 2,000,000 709,000 709,000 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. 960,549 960,205 339,583 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 1,508,758 1,298,978 884,108 Total Notes Payables 9,973,597 3,459,183 5,866,673 Less: Current portion (7,611,335 ) (1,887,120 ) (1,295,271 ) Total Notes non-current portion $ 2,362,262 $ 1,572,063 $ 4,571,402 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. $ 8,378,512 $ 8,048,682 $ Less: Original issue discount (182,242 ) (400,932 ) - Less: Deferred financing cost (619,830 ) (801,640 ) - Total Senior Debt, non-current portion $ 7,576,440 $ 6,846,110 $ - The required principal payments for all borrowings for each of the five years following the balance sheet date are as follows: 2017 $ 8,357,143 2018 963,176 2019 9,341,899 2020 512,551 2021 238,381 Thereafter 63,614 Total $ 19,476,764 |
Senior Debt
Senior Debt | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Senior Debt | 8. 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 are 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 December 31, 2016 and December 31, 2015, $249,018 and $72,877 was included in amortization of debt discount, respectively, and $236,914 remained unamortized as of December 31, 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, maturing October 28, 2017, 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. On April 20, 2017, in conjunction with the acquisition of Benchmark Builders Inc, Lateral amended its existing credit facility to provide for approximately $10.1 million towards the cash purchase price, combining this new advance with the existing debt, extending the maturity date of the combined facility to March 31, 2019. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Current Liabilities | 9. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES As of December 31, 2016, December 31, 2015, and September 30, 2015, Accrued Expenses and Other Current Liabilities were comprised of the following: For Years Ended December 31, 2016 December 31, 2015 September 30, 2015 Accrued note interest payable [1] $ 364,805 $ 817,452 $ 2,030,745 Accrued dividends payable 530,694 451,133 431,243 Accrued compensation expense [2] 2,299,738 2,015,277 1,731,385 Other accrued expense 6,868 295,083 458,173 Total 3,202,105 3,578,945 4,651,546 Less: current portion (3,202,105 ) (3,578,945 ) (2,965,290 ) Accrued expenses, non-current $ - $ - $ 1,686,256 [1] Accrued interest payable includes approximately $300,000 of estimated penalties and interest associated with the unpaid payroll taxes as of December 31, 2016, December 31, 2015, and September 30, 2015 respectively. [2] Accrued compensation expense includes $1,863,031, $1,863,031 and $1,512,415 of unpaid payroll taxes related for the periods ended December 31, 2016, December 31, 2015 and September 30, 2015, respectively. Accrued interest, non-current portion represents interest payable related to the senior secured notes that was forgiven during the transitional period ended December 31, 2015, and is classified as non-current liability pursuant to the provisions of ASC 470-10. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 10. COMMITMENTS AND CONTINGENCIES Guarantees/Related Party Advances From October 1, 2014 through December 31, 2016, the Chief Executive Officer (CEO) provided cash advances witnessed by an interest bearing note, and from time to time, advances for the Company’s behalf on credit cards the CEO is personally liable for, aggregating $503,856. Additionally, the Company entered into several secured equipment financing arrangements with total obligations of approximately $298,000 as of December 31, 2016 that required the guaranty of a Company officer, which was provided by the CEO. The Chief Financial Officer personally guaranteed several secured equipment financing arrangements with total obligations of approximately $320,525 as of December 31, 2016. Additionally, the Chief Financial Officer provided a personal credit card account for the purchase of goods and services by FTE. While the credit card balances are reflected in the Company’s books and records, the CFO is personally liable for the payment of the entire amount of the open credit obligation, which was $57,525 as of December 31, 2016. Property Lease Obligations On October 1, 2015, the Company entered into a three year lease for 4,500 square feet of warehouse space in Naples, FL, at a monthly rent of $4,500. On October 13, 2015, the Company entered into a seven year lease, commencing December 1, 2015, for 5,377 square feet of office space in Naples, FL, at a monthly rent of $27,158. On November 1, 2015, the Company entered into a one year lease for 4,000 square feet of office and warehouse space in Marysville, WA, at a monthly rent of $3,000. That lease expired October 31, 2016 and was not renewed. On January 1, 2016, the Company renewed its lease for 4,000 square feet of office space in Indianapolis, IN for three years, at a monthly rent of $2,700. On March 1, 2016, the Company entered into a two year lease for 5,000 square feet of office and warehouse space in Des Moines, IA, at a monthly rent of $2,000. On March 1, 2016, the Company entered into a one year lease for 4,000 square feet of office and warehouse space in Springfield, MO, at a monthly rent of $2,400. On May 1, 2016, the Company entered into a three year lease for 8,640 square feet of office and warehouse space in Dallas, TX, at a monthly rent of $4,500. On December 1, 2016, the Company entered into a three year lease for 3,000 square feet of office and warehouse space in Dallas, TX, at a monthly rent of $4,000. The remaining aggregate commitment for lease payments under the operating lease for the facilities as of December 31, 2016 are as follows: 2017 $ 479,266 2018 450,103 2019 367,380 2020 328,757 2021 334,134 Thereafter 131,195 Total Lease Obligations $ 2,090,835 Rental expense, resulting from property lease agreements, for the year ended December 31, 2016, the transitional three months ended December 31, 2015, and the year ended September 30, 2015, was $591,405, $148,555, and $181,895, respectively. Employment Agreements On June 13, 2014, FTE Networks entered into an employment agreement with Michael Palleschi whereby Mr. Palleschi agreed to serve as our Chief Executive Officer in consideration of a salary of $250,000 per year, with standard employee insurance and other benefits. The employment agreement commenced on June 13, 2014 and ends on June 13, 2017, after which it is renewable on a year to year basis, until terminated by either party with 30 days written notice. On October 26, 2015 the employment agreement was amended to extend the term of Mr. Palleschi’s employment through June 13, 2019. Effective September 27, 2016, the Company entered into an employment agreement with Lynn Martin to serve as the Company’s Chief Operating Officer in consideration of a salary of $250,000 per year, with standard employee insurance and benefits. The employment agreement commenced on May 16, 2016, and expires on May 16, 2019. Accrued Litigation Expense Legal Matters Roadsafe Traffic Systems, Inc. v. Focus Fiber Solutions, LLC, et al vs. Zayo Group. Complaint filed February 10, 2014 in the State of Arizona, Maricopa County, Docket No.: CV2014-090231. Plaintiff Roadsafe Traffic Systems, Inc., a services vendor, made breach of contract and other claims against defendants Focus Fiber Solutions, LLC, and Zayo Bandwidth, LLC. Relief sought is approximately $139,932. This claim is subject to indemnification from ProFiber Solutions, LLC and MDT Labor, LLC under the Asset Purchase Agreement and related documents dated June 19, 2013. This matter was settled on December 28, 2016 as described above. Enterprise FM Trust v. Focus Venture Partners, Inc., et al, Complaint filed December 12, 2013, District Court of Tulsa, Oklahoma, Docket No. CJ 2013-05647. Plaintiff Enterprise FM Trust, a vendor, made breach of contract claims against Defendant Focus Venture Partners, Inc. Primary relief sought approximately $118,869 in principal. Consent judgment against Focus Venture Partners, Inc. in the amount of $153,043. This claim is subject to indemnification from ProFiber Solutions, LLC and MDT Labor, LLC under the Asset Purchase Agreement and related documents dated June 19, 2013. This matter was settled on December 28, 2016 as described above. EAN Services, LLC v. Focus Fiber Solutions, LLC, et al, Complaint filed December 4, 2013 District Court of Tulsa, Oklahoma, Docket No. CJ 2013-05529. Plaintiff Enterprise FM Trust, a vendor, made breach of contract claims against Defendant Focus Fiber Solutions, LLC. Primary relief sought is approximately $819,425 in principal. Consent judgment against Focus Fiber Solutions, LLC in the amount of $1,042,796. This claim is subject to indemnification from ProFiber Solutions, LLC and MDT Labor, LLC under the Asset Purchase Agreement and related documents dated June 19, 2013. See FTE Networks, Inc., et al v. ProFiber Solutions, LLC, MDT Labor, LLC et al Praecipe to Issue Writ of Summons filed June 18, 2015, Commonwealth of Pennsylvania, Philadelphia County, CCP June 2015 Term, Case No. 00255. Plaintiffs FTE Networks, Inc., formerly d/b/a Beacon Enterprise Solutions Group, LLC, Focus Fiber Solutions, LLC, Jus-Com, Inc., Focus Wireless, LLC, Optos Capital Partners, LLC, and Focus Venture Partners, Inc. filed against ProFiber Solutions, LLC, MDT Labor, LLC, and others for various matters relating to indemnification including but not limited to the following cases: Roadsafe Traffic Systems, Inc. v. Focus Fiber Solutions, LLC, et al vs. Zayo Group, Enterprise FM Trust v. Focus Venture Partners, Inc., et al, and EAN Services, LLC v. Focus Fiber Solutions, LLC, et al and Primus Electric Corporation v. Focus Fiber Solutions, LLC. This matter was settled December 28, 2016 as described above. Michael Martin and Paris Arey vs. Beacon Enterprise Solutions Group, Inc. and MDT Labor, LLC, et al.’ Complaint filed October 19, 2012 (amended November 6, 2013) in Jefferson Circuit County, Kentucky Circuit, Docket No. 12CI-05572. Plaintiffs Michael L. Martin and Paris G. Arey are former employees of Beacon Enterprise Solutions Group, Inc. and MDT Labor, LLC d/b/a MDT Technical. Bruce Widener, and Michael Traina, former officers of said companies, are also defendants. Plaintiffs’ claims are primarily for severance and change in control bonuses under certain employment agreements. The case is being defended by the Company’s D&O insurance carrier, with reservations. Primary relief sought: $190,000 under the severance claims and $380,000 under the change of control claims. Settled November 2015: $150,000 cash, $250,000 Note, 512,000 Shares of Common Stock. Shorewood Packaging, LLC v. Optos Capital Partners, LLC. Complaint filed October 2, 2013 in Superior Court of New Jersey, Law Division, Bergen County, Docket No. BER-L-7469-13. Plaintiff Shorewood Packaging, LLC is a landlord for a commercial property located in New Jersey with claims for damages against Optos Capital Partners, LLC, the guarantor for tenant, Focus Wireless, LLC, relative to a breach of lease agreement. Primary relief sought approximately $280,000. Settled: October 2015: $75,000. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 11. INCOME TAXES The Company files a consolidated U.S. federal income tax return and various state tax returns. The following summarizes the income tax provision (benefit): For The Years/ Transitional Three Months Ended As Of December 31, 2016 Transitional Three Months As Of December 31, 2015 As Of September 30, 2015 Current: Federal $ - $ - $ - State and local - - - Utilization of fully reserved net operating losses - - - - - - Deferred: Federal 1,901,847 (196,481 ) (1,186,733 ) State and local 55,937 (5,779 ) 98,834 1,957,784 (202,260 ) (1,087,899 ) Change in valuation allowance (1,957,784 ) 202,260 1,087,899 Income tax provision (benefit) $ - - $ - The Company has the following net deferred tax assets: For The Years/Transitional Three Months Ended As Of December 31, 2016 Transitional Three Months As Of December 31, 2015 As Of September 30, 2015 Net operating loss carryforwards $ 4,936,966 $ 1,870,583 $ 1,445,277 Accruals 800,443 1,425,039 2,007,371 Other - reserves 52,500 301,631 301,631 Deferred tax assets, gross 5,789,909 3,597,253 3,754,279 Property and equipment (507,728 ) (272,856 ) (192,219 ) Sub-total 5,282,181 3,324,397 3,562,060 Valuation allowance (5,282,181 ) (3,324,397 ) (3,562,060 ) Deferred tax assets, net $ - $ - $ - The reconciliation of the expected tax expense (benefit), based on statutory rates, with the actual expense, is as follows: For The Years/Transitional Three Months Ended Year Ended December 31, 2016 Transitional Three Months Ended December 31, 2015 Year Ended September 30, 2015 Expected federal statutory rate 34.0 % 34.0 % 34.0 % State tax rate, net of federal benefit 1.0 % 1.0 % 3.1 % Permanent differences - meals & entertainment (3.5 )% 2.0 % 0.8 % Change in valuation allowance (31.5 )% (37.0 )% (37.9 )% Income tax provision (benefit) 0.0 % 0.0 % 0.0 % For the year ended December 31, 2016, transitional three months ended December 31, 2015, and year ended September 30, 2015, the Company had approximately $14.1 million, $5.3 million and $4.1 million of federal and state net operating loss carryovers (“NOLs”), respectively, which begin to expire in 2032. However, the Company has not yet filed its tax returns for its fiscal years ended September 30, 2013, September 30, 2014, September 30, 2015, September 30, 2016 or for December 31, 2016. Therefore, the Company’s NOLs will not be available to offset future taxable income, if any, until the returns are filed. These NOLs are subject to annual limitations under Internal Revenue Code Section 382 if there is a greater than 50% ownership change. In addition, Beacon had generated approximately $25 million of NOLs prior to the Beacon Merger, which the Company’s preliminary analysis indicates would be subject to significant limitations pursuant to Internal Revenue Code Section 382, such that no deferred tax asset has been reflected herein related to the Beacon NOLs. The Company, after considering all available evidence, fully reserved its deferred tax assets since it is more likely than not that such benefits will not be realized in future periods. The Company will continue to evaluate its deferred tax assets to determine whether any changes in circumstances could affect the realization of their future benefit. If it is determined in future periods that portions of the Company’s deferred tax assets satisfy the realization standards, the valuation allowance will be reduced accordingly. During the year ended December 31, 2016, the transitional three months ended December 31, 2015, and the year ended September 30, 2015, the valuation allowance increased by $1,957,784, decreased by $202,260, and decreased by $1,087,899, respectively. During the period of September 30, 2014 through December 31, 2016, the Company operated primarily in Nevada, North Carolina, Colorado, Texas, Iowa, Washington, Missouri, Georgia, and New York. If the Company is required to pay income taxes or penalties in the future, penalties will be recorded in general and administrative expenses and interest will be separately stated as interest expense. The Company has not yet filed its tax returns for its fiscal years ended September 30, 2012, September 30, 2013, September 30, 2014, September 30, 2015, September 30, 2016 or for December 31, 2016, but has engaged a tax professional to begin to compile the past due returns. The Company’s tax returns for the periods from October 1, 2012 through December 31, 2016 remain subject to examination and may be subject to penalties for late filing. The Company does not have any uncertain tax positions for which it is reasonably possible that the total amount of gross unrecognized tax benefits will increase or decrease within 12 months of December 31, 2016. The unrecognized tax benefits may increase or change during the next year for items that arise in the ordinary course of business. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Stockholders' Equity | 12. STOCKHOLDERS’ EQUITY Authorized Capital FTE is currently authorized to issue up to 200,000,000 shares of common stock, par value $0.001 per share, and 5,000,000 shares of convertible preferred stock, par value $0.01 per share, of which the following series have been designated: 4,500 shares of Series A, 1,000 shares of Series A-1, 4,000 shares of Series B, 400 shares of Series C-1, 2,000 shares of Series C-2, 110 shares of Series C-3, and 2,000,000 shares of Series D, and 1,980,000 of Series F. Common Stock The Company is presently authorized to issue up to 200,000,000 shares of common stock, $0.001 par value per share, of which 89,126,752, 2,319,524, and 2,226.877 shares of common stock are presently issued and outstanding as of December 31, 2016, December 31, 2015, and September 30, 2015, respectively. The holders of the Company’s common stock are entitled to receive dividends equally when, as and if declared by the board of directors, out of funds legally available therefor. The holders of the Company’s common stock have sole voting rights, one vote for each share held of record, and are entitled upon liquidation of the Company to share ratably in the net assets of the Company available for distribution after payment of all obligations of the Company and after provision has been made with respect to each class of stock, if any, having preference over the common stock, currently including the Company’s preferred stock. The shares of common stock are not redeemable and have no preemptive or similar rights. All outstanding shares of the Company’s common stock are validly issued, fully paid for and non-assessable. Common Stock Transactions On April 17, 2015, the Company issued 255,778 shares of its common stock with a grant date value of $51,156 to eighty-two (82) Senior Secured Note holders as an incentive for executing amended forbearance agreements on their respective notes. During the fiscal year ended December 31, 2016 the Company issued 5,029,000 shares of its common stock with a grant date value of $2,569,800 to several employees under the terms of their employment agreements, of which $2,305,040 remains unvested. During the fiscal year ended December 31, 2016, the Company issued 3,809,389 shares of its common stock to with a grant date value of $1,798,438 settle debt. During the fiscal year ended December 31, 2016, the Company issued 841,500 shares of its common stock with a grant date value of $445,800 to consultants for services performed for the Company. During the fiscal year ended December 31, 2016, the Company issued 7,594,999 shares of its common stock to individual investors for an equity raise totaling $2,628,000, Since inception, the Company has not paid any cash dividends on its common stock. Preferred Stock The Company is authorized to issue a total of 5,000,000 shares of convertible preferred stock with such designations, rights, preferences and/or limitations as may be determined by the Board, and as expressed in a resolution thereof. Each share of Series D and Series F Preferred stock is (a) entitled to vote alongside the common stockholders and has 20 votes; and (b) is mandatorily convertible into 400 shares of common stock (equal to 20 shares of common stock on a post-split basis) upon an increase in the number of common shares authorized, and the implementation of a 1-for-20 reverse stock split. Dividend charges recorded during the years ended December 31, 2016, the three months ended December 31, 2015 and the year ended September 30, 2015 are as follows: For The Years/Three Months Ended Year Ended December 31, 2016 Transitional Three Months Ended December 31, 2015 Year Ended September 30, 2015 Series A $ 50,038 $ 12,510 $ 50,038 A-1 29,523 7,381 29,523 B - - - C-1 - - - C-2 - - - C-3 - - - Total $ 79,561 $ 19,891 $ 79,561 Accrued dividends payable at December 31, 2016, December 31, 2015, and September 30, 2015 are comprised of the following: As Of December 31, 2016 December 31, 2015 September 30, 2015 Series A $ 304,129 259,646 $ 247,136 A-1 226,565 191,487 184,107 B - - - C-1 - - - C-2 - - - C-3 - - - Total $ 530,694 $ 451,133 $ 431,243 Series A and Series A-1 Convertible Preferred Stock The Company has designated 4,500 shares of Series A Convertible Preferred Stock (“Series A”) and 1,000 shares of Series A-1 Convertible Preferred Stock (“Series A-1”), of which 500 and 295 shares, respectively, are currently issued and outstanding. Holders of the Series A and Series A-1 are entitled to receive contractual cumulative dividends in preference to any dividend on the common stock at the rate of 10% per annum on the initial investment amount commencing on the date of issue. Such dividends are payable on January 1, April 1, July 1 and October 1 of each year, upon the declaration of payment by the Board of Directors. The Series A and Series A-1 shares also contain a right of redemption in the event of liquidation or a change in control. The redemption feature provides for payment of a liquidation fee of 110% of the face value of the Series A shares and 125% of the face value of the series A-1 shares plus any accrued unpaid dividends in the event of bankruptcy, change of control, or any actions to take the Company private. Series B Convertible Preferred Stock The Company has designated 4,000 shares of Series B Convertible Preferred Stock (“Series B”), of which 0 shares are currently issued and outstanding. Holders of Series B are entitled to receive contractual cumulative dividends in preference to any dividend on the common stock (but subject to the rights of the previously issued series of preferred stock) at the rate of 6% per annum on the initial investment amount, commencing on the date of issue. Such dividends are payable on January 1, April 1, July 1 and October 1 of each year upon the declaration of payment by the Board of Directors. The Series B shares also contain a right of redemption in the event of liquidation or a change in control. The redemption feature provides for payment of a liquidation fee of 125% of the face value plus any accrued unpaid dividends in the event of bankruptcy, change of control, or any actions to take the Company private. There are no shares of Series B currently issued or outstanding. Series C-1, Series C-2 and Series C-3 Convertible Preferred Stock The Company has designated 400, 2,000 and 110 shares of Series C-1 Convertible Preferred Stock (“Series C-1”), Series C-2 Convertible Preferred Stock (“Series C-2”) and Series C-3 Convertible Preferred Stock (“Series C-3), respectively. There are no shares of Series C-1, Series C-2 or Series C-3 currently issued or outstanding. Holders of Series C-1, C-2 and C-3 would be entitled to receive contractual cumulative dividends in preference to any dividend on the common stock (but subject to the rights of the previously issued series of preferred stock) at the rate of 6% per annum on the initial investment amount, commencing on the date of issue. Such dividends would be payable on January 1, April 1, July 1 and October 1 of each year upon the declaration of payment by the Board of Directors. Series D Convertible Preferred Stock The Company has designated 2,000,000 shares of Series D Convertible Preferred Stock (“Series D”), of which 0, 1,980,000 and 1,830,759 shares are currently issued and outstanding as of December 31, 2016, December 31, 2015, and September 30, 2015. Each share of Series D was mandatorily converted to 20 shares of common stock after the effect of a 1-for-20 reverse stock split which occurred on May 26, 2016. Upon the declaration or distribution of any dividend to holders of common stock, holders of Series D are entitled to receive dividends equal to the amount of dividend that would have been payable to the holder had such holder converted the Series D to common on the record date for the determination of shareholders entitled to the distribution. Series F Convertible Preferred Stock The Company has designated 1,980,000 shares of Series F Convertible Preferred Stock (“Series F”), of which 0, 525,558, and 0 shares are currently issued and outstanding as of December 31, 2016, December 31, 2015, and September 30, 2015, respectively. Each share of Series F was mandatorily converted to 20 shares of common stock after the effect of a 1-for-20 reverse stock split which occurred on May 26, 2016. Upon the declaration or distribution of any dividend to holders of common stock, holders of Series F are entitled to receive dividends equal to the amount of dividend that would have been payable to the holder had such holder converted the Series F to common on the record date for the determination of shareholders entitled to the distribution. Preferred Stock Transactions Non-cash preferred stock transactions were valued consistent with the valuations observed in cash transactions. During the year ended September 30, 2015, the Company issued 195,918 shares of Series D preferred stock to an investor for aggregate gross proceeds of $783,672, which resulted in aggregate net proceeds of $430,683 used to pay accounts payable on behalf of the Company, after deducting a subscription receivable of $352,989. On January 16, 2015, the Company granted 12,500 shares of its Series D preferred stock with a grant date value of $50,000, to an existing noteholder as incentive for forbearance on the note. On May 1, 2015, the Company issued 12,500 shares of its Series D preferred stock with a grant date value of $50,000 in settlement of lease termination costs. During the fourth quarter of fiscal 2015, the Company expensed the value of 118,332 shares of Series D preferred stock issued to vendors and others in recognition of favorable payments terms that were extended to the Company and recorded $473,328 of stock based compensation. The Company cancelled 201,672 shares of preferred stock that were previously issued where the parties never reached agreement on the issuance terms. During the fiscal year ended December 31, 2016, the Company issued 285,664 shares 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 fiscal year ended December 31, 2016, the Company issued 231,041 shares 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 years ended December 31, 2016 and September 30, 2015, the Company accrued an additional $79,560 and $79,561 of preferred stock dividends, respectively. 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 December 31, 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 Equity Investors 2,589,312 10/12/2016 10/12/2021 0.80 Term Note Lender (1) 2,500,000 11/11/2016 11/11/2021 0.40 16,748,126 (1) Warrants were determined to be a derivative subject to fair value accounting and are booked as a warrant liability. A summary of the warrant activity from the year ended September 30, 2015, the transitional three months ended December 31, 2015, and the year ended December 31, 2016 is presented below: Weighted Weighted Average Average Remaining Aggregate Number of Exercise Life Intrinsic Warrants Price In Years Value Outstanding, September 30, 2014 2,918,254 $ 0.89 1.2 - Issued - - - - Exercised - - - - Expired (2,173,255 ) 1.00 - - Outstanding, September 20, 2015 744,999 .58 0.3 - Issued - - - - Exercised - - - - Expired (307,664 ) .40 - - Outstanding, December 31, 2015 437,335 $ 0.58 0.2 - Issued 16,748,126 0.64 - - Exercised - - - - Expired (437,335 ) .40 - - Outstanding, December 31, 2016 16,748,126 $ 0.55 4.6 $ - Exercisable, December 31, 2016 16,748,126 $ 0.55 4.6 $ - The following table presents information related to common stock warrants at December 31, 2016: Warrants Outstanding Warrants Exercisable Weighted Average Exercisable Exercise Number of Remaining Life Number of Price Warrants In Years Warrants $ 0.20 4,404,376 4.0 4,404,376 0.40 6,250,000 4.9 6,250,000 0.80 6,093,750 4.7 6,093,750 16,748,126 16,748,126 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 and other contractual language 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 Warrant November Warrant September Warrant December 31, 2016 Revaluation November Warrant December 31, 2016 Revaluation Risk free rate 1.14 % 1.5 % 1.91 % 1.92 % Volatility 37.80 % 37.40 37.53 % 37.40 % Dividends 0 0 0 0 Time to maturity 5.0 years 5.0 years 4.75 years 4.87 years Fair value per share price .06111 .1544 .0724 .1697 Fair value of warrants $ 143,200 $ 386,000 169,700 424,300 The following table summarizes the change in fair value of the warrants from inception through December 31, 2016. Fair value Fair value as of New Derivative as of 9/30/2016 Issuances gain (loss) 12/31/2016 Investor warrants (9/30/16) $ (143,200 ) - $ (26,500 ) $ (169,700 ) Investor warrants (11/11/16) $ (386,000 ) $ (38,300 ) $ (424,300 ) Totals $ (143,200 ) $ (386,000 ) $ (64,800 ) $ (594,000 ) 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 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 Company’s 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 Company’s 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 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 Company’s 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 Company’s 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. All periods presented in this Form 10-K have been adjusted for the reverse split. |
Segment Data
Segment Data | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Segment Data | 13. SEGMENT DATA The Company’s 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 Company allocates its Corporate Overhead between its two operating segments. The following tables summarize financial information about the Company’s business segments for the year ended December 31, 2016, the transitional three months ended December 31, 2015, and the year ended September 30, 2015. For the Year Ended September 30, 2015 Telecommunications Staffing Consolidated Revenues, net of discounts $ 8,722,147 $ 5,666,535 $ 14,388,682 Income (Loss) from Operations $ (1,657,238 ) $ 50,417 $ (1,606,821 ) Depreciation and Amortization $ 108,324 $ - $ 108,324 Interest Expense $ 1,281,445 $ 26,631 $ 1,308,076 For the Transitional Three Months Ended December 31, 2015 Telecommunications Staffing Consolidated Revenues, net of discounts $ 1,185,670 1,885,135 3,070,805 Income (Loss) from Operations $ (2,483,328 ) 186,842 (2,296,486 ) Depreciation and Amortization $ 169,574 - 169,574 Interest Expense $ 431,153 4,310 435,463 For the Year Ended December 31, 2016 Telecommunications Staffing Consolidated Revenues, net of discounts $ 12,161,022 108,057 12,269,079 Income (Loss) from Operations $ (2,459,910 ) 58,389 (2,401,521 ) Depreciation and Amortization $ 1,241,231 — 1,241,231 Interest Expense $ 2,251,151 21,122 2,272,273 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | 14. SUBSEQUENT EVENTS Stock Purchase Agreement On March 9, 2017, the Company, entered into a Stock Purchase Agreement (the “Purchase Agreement”) with (i) Benchmark, and (ii) each of Benchmark’s stockholders. On April 20, 2017 (the “Closing Date”), FTE Networks, Inc. (“FTE Networks”) acquired all of the issued and outstanding shares of common stock (the “Benchmark Shares”) of Benchmark Builders, Inc., a privately held New York corporation (“Benchmark”) from each of its stockholders (collectively, the “Sellers”), pursuant to the Stock Purchase Agreement, dated as of March 9, 2017, by and among FTE Networks, Benchmark, and the Sellers (the “Purchase Agreement”), as amended by Amendment No. 1 to Stock Purchase Agreement, dated as of the Closing Date (the “Purchase Agreement Amendment” and together with the Purchase Agreement, the “Amended Purchase Agreement”). FTE Networks, Benchmark, and the Sellers, entered into the Purchase Agreement Amendment in order to address certain changes in the purchase price as set forth in the Purchase Agreement. As described in FTE Networks’ Current Report on Form 8-K filed with filed with the Securities and Exchange Commission (the “SEC”) on March 9, 2017, the Purchase Agreement provided that the consideration to the Sellers for the Benchmark Shares would consist of (i) $55,000,000 in cash consideration, (ii) an aggregate of 17,825,350 shares of the Company’s common stock, and (iii) promissory notes in the aggregate amount of $10,000,000 to the Sellers. The Purchase Agreement Amendment has, inter alia, modified the purchase price set forth in the Purchase Agreement to consist of (i) cash consideration of approximately $17,250,000, subject to certain prospective working capital adjustments (the “Cash Consideration”),approximately $10 million cash provided by Lateral and $7 million provided by certain of the sellers, (ii) 26,738,445 shares of FTE Networks’ common stock (the “FTE Shares”), (iii) convertible promissory notes in the aggregate principal amount of $12,500,000 to certain stockholders of Benchmark (the “Series A Notes”, which mature on April 20, 2019), (iv) promissory notes in the aggregate principal amount of $30,000,000 to certain stockholders of Benchmark (the “Series B Notes”, which mature on April 20, 2020) and (v) promissory notes in the aggregate principal amount of $7,500,000 to certain stockholders of Benchmark (the “Series C Notes”, which mature on October 20, 2018, and together with the Series A Notes and the Series B Notes, the “Notes”) in the Amended Purchase Agreement. Additionally, Lateral amended its existing credit facility to provide for the approximate $10 million cash and to restructure the existing debt, which now has a maturity date of March 30, 2019. Common Stock Transactions On January 12, 2017, the Company issued 20,892 shares of its common stock with a grant date value of $12,535 for settlement of a legal matter. On January 12, 2017, the Company issued 37,500 shares of its common stock to an individual investor, which resulted in net proceeds to the Company of $15,000. On January 18, 2017, the Company issued 300,000 shares of its common stock with a grant date value of $123,000 pursuant to a consulting agreement. On January 19, 2017, the Company issued 100,000 shares of its common stock with a grant date value of $46,000 pursuant to a consulting agreement. On January 20, 2017, the Company issued 50,000 shares of its common stock with a grant date value of $25,000 pursuant to a consulting agreement. On February 2, 2017, the Company issued 12,500 shares of its common stock with a grant date value of $5,000 pursuant to a consulting agreement. On February 7, 2017, the Company issued 70,000 shares of its common stock with a grant date value of $35,000 pursuant to a consulting agreement. On February 9, 2017, the Company issued 62,500 shares of its common stock with a grant date value of $30,625 to an employee as part of his compensation. On February 17, 2017, the Company issued 40,000 shares of its common stock with a grant date value of $28,000 pursuant to a consulting agreement. On February 24, 2017, the Company issued 25,000 shares of its common stock with a grant date value of $12,500 pursuant to a consulting agreement. On March 1, 2017, the Company issued 50,000 shares of its common stock with a grant date value of $25,000 pursuant to a consulting agreement On March 3, 2017, the Company issued 6,420,020 shares of its common stock with a grant date value of $6,420 to its senior lender. On March 7, 2017, the Company issued 83,143 shares of its common stock with a grant date value of $36,583 to settle debt. On March 7, 2017, the Company issued 6,666 shares of its common stock to an individual investor, resulting in net proceeds to the Company of $4,000. On March 9, 2017, the Company issued 5,140 shares of its common stock with a grant date value of $2,056 for settlement of debt. On March 27, 2017, the Company issued 2,983,017 shares of its common stock to various employees with a grant date value of $1,193,207 per their employment agreements. On March 27, 2017, the Company issued 78,619 shares of its common stock with a grant date value of $32,119 for consulting services. On March 28, 2017, the Company issued 37,500 shares of its common stock with a grant date value of $19,125 to an employee per his employment agreement. On April 21, 2017, the Company issued 26,738,445 shares of its common stock with a grant date value of $14,975,935 to certain Benchmark Builders Inc. shareholders in conjunction with the acquisition of Benchmark. |
Condensed Consolidated Statemen
Condensed Consolidated Statement of Operations and Cash Flows | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Condensed Consolidated Statement of Operations and Cash Flows | 15. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND CASH FLOWS FOR THE THREE MONTHS ENDED DECEMBER 31, 2014 For the Three Months Ended December 31, 2014 (unaudited) Revenues, net of discounts $ 2,944,035 Cost of revenues 1,718,238 Gross Profit 1,225,797 Operating Expenses Compensation expense - selling, general, and administrative 293,575 Selling, general and administrative expenses 359,280 Travel expense 60,530 Occupancy costs 37,558 Total Operating Expenses 750,943 Operating (Loss) Income 474,854 Other Income (Expense) Interest expense (263,197 ) Other (expense) income 7,997 Total Other Income (Expense) (255,200 ) Net Income 219,654 Preferred stock dividends (19,890 ) Net Income attributable to common shareholders $ 199,764 Earnings per share: Basic $ .10 Diluted $ .10 Weighted average number of common shares outstanding: Basic 1,999,354 Diluted 2,062,395 For the Three Months Ended December 31, 2015 2014 (unaudited) Cash flows from operating activities: Net income $ 546,171 $ 219,654 Adjustments to reconcile net income to net cash used in operating activities: Amortization of deferred financing costs 72,876 - Stock incentive expense to employees 342,743 - Depreciation and amortization 96,698 9,562 Amortization of original issue discount 36,448 - Gain on extinguishment of senior debt (3,431,533 ) - Payment in kind interest-senior debt 48,682 - Changes in operating assets and liabilities: Accounts receivable (231,035 ) (887,302 ) Other current assets 4,977 59,020 Accounts payable and accrued liabilities 1,076,170 199,496 Net cash used in operating activities (1,437,803 ) (399,570 ) Cash flows from investing activities: Purchases of property and equipment (94,358 ) (153,893 ) Restricted cash account (3,003,226 ) - Net cash used in investing activities (3,097,584 ) (153.893 ) Cash flows from financing activities: Payments on factor lines of credit, net (600,554 ) - Proceeds from issuance of notes payable 8,000,000 - Payments on notes payable (2,194,376 ) (6,419 ) Proceeds from issuance of notes payable-related parties 62,226 - Proceeds from repayment of subscriptions receivable 140,000 600,000 Payment of deferred financing costs prior to closing (874,516 ) - Net cash provided by financing activities 4,532,780 593,581 Net change in cash (2,607 ) 40,118 Cash, beginning of period 207,740 1,254 Cash, end of period $ 205,133 $ 41,372 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest $ 264,865 $ 94,443 Non-cash financing activities: Notes payable issued to finance equipment purchases $ 1,127,797 $ 94,169 Unpaid subscription for preferred shares $ - $ 783,672 Repayment subscription receivable $ 5,000 $ 60,000 Issuance of notes payable $ 288,000 $ - Common stock issued for legal settlement $ 5,120 $ - Common stock issued for notes payable $ 139,701 $ - Preferred stock issued for notes payable $ 25,000 $ - Accrued dividends, preferred stock $ 19,890 $ 19,890 |
Summary of Significant Polici23
Summary of Significant Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates. The Company’s most significant estimates relate to its allowances for receivables and deferred tax assets, plus the valuation of equity issuances. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all holdings of highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. As of September 30, 2015, December 31, 2015, and December 31, 2016 the Company did not have any cash equivalents |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts The Company recognizes an allowance for doubtful accounts to ensure that accounts receivable are not overstated due to un-collectability. At the time accounts receivable are originated, the Company considers a reserve for doubtful accounts based on the creditworthiness of customers. Aged accounts receivable are reviewed by management for collectability. The provision for uncollectible amounts is continually reviewed and adjusted to maintain the allowance at a level considered adequate to cover future losses. The allowance is management’s best estimate of uncollectible amounts and is determined based on historical performance that is tracked by the Company on an ongoing basis. The customer is billed after the job has been completed, inspected and approval is obtained by its customer. The segmentation of large contracts into small manageable contracts allows for a particular job to be completed, inspected and approved for payment by the customer, with this cycle taking approximately only up to several weeks. The payments terms are generally 30 days. As of December 31, 2016, December 31, 2015, and September 30, 2015, management has provided for an allowance for doubtful accounts of approximately $119,000, $89,000 and $89,000, respectively. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially expose the Company to significant concentrations of credit risk consist principally of cash and accounts receivable. The Company places its cash with financial institutions with high credit ratings, which at times balances exceed the $250,000 FDIC insured amount. The Company is subject to risk of non-payment of its trade accounts receivable. Our customer base is highly concentrated. Due to the fact that the majority of our revenues are non-recurring, project-based revenues, it is not unusual for there to be significant period-to-period shifts in customer concentrations. Revenue may significantly decline if the Company were to lose one or more of its significant customers, or if the Company were not able to obtain new customers upon the completion of significant contracts. For the year ended September 30, 2015, the Company’s largest customers included a telecommunications company providing fiber optic based network solutions, (Customer C), and a corporate staffing customer within the Company’s staffing segment, (Customer D). During the transitional three months ended December 31, 2015, the Company’s largest customers included a multinational provider of communications technology and services, (Customer I) and a corporate staffing customer within the Company’s staffing segment, (Customer D). For the year ended December 31, 2016, the Company’s largest customers included multinational telecommunications conglomerate (Customer M) and leader service provider in network managed and professional services, (Customer J). The following tables set forth our revenues and accounts receivable balances for the periods indicated: For the Year Ended For the Transitional Three Months Ended For the Year Ended December 31, 2016 December 31, 2015 September 30, 2015 Revenues $ % $ % $ % Customer C 164,987 1 % 41,664 1 % 5,196,380 36 % Customer D - - % 1,592,193 52 % 5,324,866 37 % Customer I 91,000 1 % 316,931 11 % 106,850 1 % Customer J 1,804,760 14 % - - - - Customer M 6,332,966 52 % 130,771 4 % 552,054 4 % All other customers 3,875,366 32 % 989,246 32 % 3,208,532 22 % Total Revenues, net of discounts $ 12,269,079 100 % $ 3,070,805 100 % $ 14,388,682 100 % For the Year Ended For the Transitional Three Months Ended For the Year Ended December 31, 2016 December 31, 2015 September 30, 2015 Accounts Receivable $ % $ % $ % Customer B 85,112 1 % 152,475 10 % 152,475 12 % Customer E 603,663 9 % 718,035 47 % 617,825 47 % Customer H 102,796 2 % 215,609 14 % 50,767 4 % Customer M 4,624,600 66 % 62,233 4 % 66,832 5 % All other customers 1,722,354 22 % 387,128 25 % 416,546 32 % Total Receivables 7,138,525 100 % $ 1,535,480 100 % $ 1,304,445 100 % Less Allowance for doubtful accounts (118,949 ) $ (89,000 ) $ (89,000 ) Accounts Receivable, net of allowance 7,019,576 $ 1,446,480 $ 1,215,445 |
Revenue and Cost of Goods Sold Recognition | Revenue and Cost of Goods Sold Recognition Generally, including for the staffing business, revenue is recognized when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the price to the buyer is fixed or determinable, and (4) collectability is reasonably assured. Revenue in the telecommunication segment is principally all derived from construction projects performed under master and other service agreements as well as from contracts for specific projects or jobs requiring the construction and installation of an entire infrastructure system or specified units within an entire infrastructure system. The Company provides services under unit price or fixed price master service or other service agreements under which the Company furnishes specified units of service for a fixed price per unit of service and revenue is recognized upon completion of the defined project due to its short term nature. Revenue from fixed price contracts provides for a fixed amount of revenue for the entire project, subject to certain additions for changed scope or specifications. Such contracts provide that the customer accept completion of progress to date and compensate the Company for services rendered, which may be measured in terms of costs incurred, units installed, hours expended or some other measure of progress. Contract costs include all direct materials, labor and subcontracted costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and the operational costs of capital equipment. Much of the materials associated with the Company’s work are customer-furnished and are therefore not included in contract revenue and costs. Management reviews estimates of contract revenue and costs on an ongoing basis. Changes in job performance, job conditions and management’s assessment of expected contract settlements are factors that influence estimates of total contract value and total costs to complete those contracts and, therefore, the Company’s profit recognition. Changes in these factors may result in revisions to costs and income, and their effects are recognized in the period in which the revisions are determined and accepted by the customer. Provisions for losses on uncompleted contracts are made in the period in which such losses are determined to be probable and the amount can be reasonably estimated. The majority of fixed price contracts are completed within one year. The Company may incur costs subject to change orders, whether approved or unapproved by the customer, and/or claims related to certain contracts. Management determines the probability that such costs will be recovered based upon engineering studies and legal opinions, past practices with the customer, specific discussions, correspondence or preliminary negotiations with the customer. The Company treats such costs as a cost of contract performance in the period incurred if it is not probable that the costs will be recovered, or defers costs and/or recognizes revenue up to the amount of the related cost if it is probable that the contract price will be adjusted and can be reliably estimated. As of December 31, 2016 and 2015, such amounts were not material. The Company actively engages in substantive meetings with its customers to complete the final approval process, and generally expects these processes to be completed within one year. The amounts ultimately realized upon final acceptance by its customers could be higher or lower than such estimated amounts. For short term 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 Network’s 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. Changes in job performance, job conditions and estimated profitability, including those arising from contract penalty provisions, changes in raw materials 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. Provisions for losses on uncompleted contracts are made in the period such losses are known. |
Deferred Financing Costs | Deferred Financing Costs The Company has recorded deferred financing costs as a result of fees incurred by the Company in conjunction with its debt financing activities. These costs are amortized to interest expense using the straight-line method which approximates the interest rate method over the term of the related debt. As of December 31, 2016, December 31, 2015, and September 30, 2015, unamortized deferred financing costs were approximately $619,830, $801,640, and $140,000, respectively and are netted against the related debt. As of September 30, 2015, the deferred financing costs were not netted against the debt as the senior credit did not close until October 28, 2015. Amortization of such fees were $725,165, and $72,877, and $0 for the years ended December 31, 2016, transitional three months ended December 31, 2015, and the year ended September 30, 2015, respectively. |
Property and Equipment | Property and Equipment Property and equipment are stated at the lower of cost or fair value. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets, as follows: Estimated Life Machinery and equipment 6-8 years Vehicles and trailers 7-10 years Computer equipment and software 2-5 years Product hardware and development 5-7 years The estimated useful lives are based on the nature of the assets as well as current operating strategy and legal considerations such as contractual life. Future events, such as property expansions, property developments, new competition, or new regulations, could result in a change in the manner in which the Company uses certain assets requiring a change in the estimated useful lives of such assets. Maintenance and repairs that neither materially add to the value of the asset nor appreciably prolong its life are charged to expense as incurred. Gains or losses on disposition of property and equipment are included in the consolidated statements of operations. |
Valuation of Long-lived Assets | Valuation of Long-lived Assets The Company evaluates its long-lived assets for impairment in accordance with related accounting standards. Assets to be held and used (including projects under development as well as property and equipment), are reviewed for impairment whenever indicators of impairment exist. If an indicator of impairment exists, the Company first groups its assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities (the “asset group”). Secondly, the Company estimates the undiscounted future cash flows that are directly associated with and expected to arise from the completion, use and eventual disposition of such asset group. The Company estimates the undiscounted cash flows over the remaining useful life of the primary asset within the asset group. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then an impairment is measured based on fair value compared to carrying value, with fair value typically based on a discounted cash flow model. If an asset is still under development, future cash flows include remaining construction costs. There were no impairments during the periods presented. |
Income Taxes | Income Taxes The Company records income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and attributable to operating loss and tax credit carryforwards. Accounting standards regarding income taxes requires a reduction of the carrying amounts of deferred tax assets by a valuation allowance, if based on the available evidence, it is more likely than not that such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed at each reporting period based on a “more likely than not” realization threshold. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, the Company’s experience with operating loss and tax credit carryforwards not expiring unused, and tax planning alternatives. Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. Accounting standards regarding uncertainty in income taxes provides a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely, based solely on the technical merits, of being sustained on examinations. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments and which may not accurately anticipate actual outcomes. |
Equity | Equity The Company applies the classification and measurement principles enumerated in Accounting Standards Codification (“ASC”) 815 “Derivatives and Hedging” with respect to accounting for its issuances of the preferred stock. The Company evaluates convertible preferred stock at each reporting date for appropriate balance sheet classification. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company adopted the Financial Accounting Standards Board (“FASB”) standard related to fair value measurement at inception. The standard defines fair value, establishes a framework for measuring fair value and expands disclosure of fair value measurements. The standard applies under other accounting pronouncements that require or permit fair value measurements and, accordingly, does not require any new fair value measurements. The standard clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The recorded values of long-term debt approximate their fair values, as interest approximates market rates. As a basis for considering such assumptions, the standard established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: 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 Company’s financial instruments consist of accounts receivable, other current assets, accounts payable, accrued expenses, and notes payable. The recorded values of accounts receivable, other current assets, accounts payable, and accrued expenses 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. |
Segment Reporting | Segment Reporting The Company operates in the telecommunications infrastructure services industry and, effective May 8, 2014, entered the staffing industry. The Company has concluded that the staffing business qualifies as a separate segment for the year ended December 31, 2016, the transitional three months ended December 31, 2015, and the year ended September 30, 2015, as such, the Company has reported segment results pursuant to ASC 280-10 “Segment Reporting” for the year ended December 31, 2016, the transitional three months ended December 31, 2015, and the year ended September 30, 2015. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share The basic net loss per share is computed by dividing the net loss (the numerator) by the weighted average number of common shares outstanding for the period (the denominator). Diluted net loss per common share is computed by dividing the net loss by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period. Potential common shares include convertible debt, warrants and preferred stock. The number of potential common shares outstanding relating to convertible debt, warrants and preferred stock is computed using the treasury stock method. For the periods presented, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share. Comparative data for the previous period has been adjusted to reflect the 1 for 20 reverse split effectuated May 26, 2016. The following table sets forth the computation of basic and diluted earnings (loss) per common share from continuing operations: For the Years/Three Months Ended Year Ended December 31, 2016 Three Months Ended December 31, 2015 Year Ended September 30, 2015 Numerator: Net (loss) income $ (6,234,434 ) $ 546,171 $ (3,554,914 ) Preferred stock dividends (79,561 ) (19,891 ) (79,561 ) Net (loss) income attributable to common shareholders $ (6,313,995 ) 526,280 $ (3,634,475 ) Denominator: Weighted average number of common shares outstanding - basic 64,770,155 2,319,311 2,127,222 Effect of dilutive securities: Convertible preferred stock, Series A - - - Convertible preferred stock, Series A-1 - - - Convertible preferred stock, Series D - 91,062 - Convertible preferred stock, Series F - 303,163 - Total dilutive shares - 394,163 - Weighted average number of common shares outstanding - diluted 64,770,155 2,713,474 2,127,222 (Loss) Earnings per share: Basic $ (0.10 ) $ 0.23 $ (1.71 ) Diluted $ (0.10 ) $ 0.19 $ (1.71 ) The following securities are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: For the Years and Transitional Three Months Ended Year Ended December 31, 2016 Transitional Three Months December 31, 2015 Year Ended September 30, 2015 Convertible preferred stock, Series A 667,169 667,169 667,169 Convertible preferred stock, Series A-1 393,645 393,645 393,645 Convertible preferred stock, Series D [1] - 40,060,500 36,615,180 Convertible preferred stock, Series F [1] - 18,349,220 - Common stock warrants 16,748,126 4,404,376 744,999 Preferred stock warrants - - 39,396,800 Convertible debt - 200,000 200,000 Total potentially dilutive shares 17,808,940 64,074,910 78,017,793 [1] |
Advertising | Advertising Advertising costs, if any, are expensed as incurred. For the year ended December 31, 2016, the transitional three months ended December 31, 2015, and the year ended September 30, 2015, respectively, the Company’s spending on advertising was not material. |
Reclassifications | Reclassifications Certain prior year balances have been reclassified in order to conform to current year presentation. These reclassifications have no effect on previously reported results of operations or loss per share. Comparative data for the previous period has also been adjusted to reflect the 1 for 20 reverse split effectuated May 26, 2016. |
Liquidity and Managements' Plans | Liquidity and Managements’ Plans During the year ended December 31, 2016 the Company has incurred a net loss of $6.3 million and, in addition, the Company has working capital deficit of $3.4 million, which includes approximately $2.2 million of liabilities for unpaid payroll taxes and the related penalties and interest. Management’s plans are to enter into an installment plan with the IRS for the payment of the unpaid payroll taxes and to continue to raise additional funds through the sales of debt or equity securities until such time that operations generate sufficient cash to operate the business. On October 28, 2015 the Company entered into an $8 million senior secured credit facility. Of the proceeds received, approximately $1.8 million was used to extinguish approximately $3.4 million of Company debt and $3.0 million was deposited into a restricted Company bank account which requires Lateral’s approval to utilize. On April 20, 2017, in conjunction with the acquisition of Benchmark Builders Inc, Lateral amended its existing credit facility to provide for approximately $10.1 million towards the cash purchase price, and extending the maturity date of the existing credit facility to March 31, 2019. Additionally, the Company, in conjunction with the Benchmark acquisition, took on approximately $50 million dollars of debt, $12,500,000 which matures on April 20, 2019, $30,000,000 which matures on April 20, 2020, and $7,500,000 which matures on October 20, 2018. With Benchmark’s 2016 annual revenues of $386 million and a backlog as of December 31, 2016 of $259 million, combined with the Company’s backlog as of December 31, 2016 of $45.5 million, the Company believes that it has the ability to support this additional debt and fund all current operations. However, if needed, there is no assurance that additional financing will be available or that management will be able to obtain and close financing on terms acceptable to the Company, enter into an acceptable installment plan with the IRS, which is scheduled to be presented in the third quarter of 2017, or whether the Company will become profitable and generate positive operating cash flow. If the Company is unable to raise sufficient additional funds or generate positive operating cash flow, it will have to develop and implement a plan to further extend payables and reduce overhead until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In January 2017, the FASB issued Accounting Standards Update (ASU) 2017-04: “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”), which removes Step 2 from the goodwill impairment test. It is effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment test performed with a measurement date after January 1, 2017. The Company does not expect this new guidance to have a material impact on its financial position or results of operations. In January 2017, the FASB issued ASU 2017-01 “Business Combinations (Topic 805): Clarifying the Definition of a Business”, which clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The standard introduces a screen for determining when assets acquired are not a business and clarifies that a business must include, at a minimum, an input and a substantive process that contribute to an output to be considered a business. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently evaluating the standard to determine the impact of its adoption on the consolidated financial statements. In December 2016, the FASB issued ASU 2016-18 “Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force,” which clarifies the presentation requirements of restricted cash within the statement of cash flows. The changes in restricted cash and restricted cash equivalents during the period should be included in the beginning and ending cash and cash equivalents balance reconciliation on the statement of cash flows. When cash, cash equivalents, restricted cash or restricted cash equivalents are presented in more than one line item within the statement of financial position, an entity shall calculate a total cash amount in a narrative or tabular format that agrees to the amount shown on the statement of cash flows. Details on the nature and amounts of restricted cash should also be disclosed. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company does not expect this new guidance to have a material impact on its financial position or results of operations. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” ASU No. 2016-15 clarifies and provides specific guidance on eight cash flow classification issues that are not currently addressed by current GAAP and thereby reduce the current diversity in practice. ASU No. 2016-15 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2017, with early application permitted. This guidance is applicable to the Company’s fiscal year beginning January 1, 2018. The Company is currently evaluating the standard to determine the impact of its adoption on the consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, which for the Company will commence with the year beginning January 1, 2018, with early adoption permitted commencing January 1, 2017. The Company is currently evaluating the standard to determine the impact of its adoption on the consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The standard requires a lessee to recognize assets and liabilities on the balance sheet for leases with lease terms greater than 12 months. The standard is effective for annual reporting periods beginning after December 15, 2018, which for the Company will commence with the year beginning January 1, 2019, with early application permitted. The adoption will require a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest period presented. The Company is currently evaluating the standard to determine the impact of the adoption on the consolidated financial statements. In November 2015, the FASB issued Accounting Standards Update 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” (“ASU 2015-07”), an update to accounting guidance to simplify the presentation of deferred income taxes. The guidance requires an entity to classify all deferred tax liabilities and assets, along with any valuation allowance, as noncurrent in the balance sheet. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is permitted. The Company has elected to early adopt ASU 2015-17 during the year ended December 31, 2015 with retrospective application. The adoption of ASU 2015-17 did not have a material impact on the Company’s consolidated financial statements. In August 2014, the FASB issued ASU 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. ASU 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. For all entities, the ASU is effective for annual periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016. Early adoption is permitted. The Company adopted this standard for the year ended December 31, 2016. The adoption of these amendments did not have a material effect on our consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, “Revenue Recognition” and some cost guidance included in ASC Subtopic 605-35, “Revenue Recognition - Construction-Type and Production-Type Contracts.” The core principle of ASU 2014-09 is that revenue is recognized when the transfer of goods or services to customers occurs in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. ASU 2014-09 requires the disclosure of sufficient information to enable readers of the Company’s financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. ASU 2014-09 also requires disclosure of information regarding significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 provides two methods of retrospective application. The first method would require the Company to apply ASU 2014-09 to each prior reporting period presented. The second method would require the Company to retrospectively apply ASU 2014-09 with the cumulative effect recognized at the date of initial application. ASU 2014-09 will be effective for the Company beginning in fiscal 2019 as a result of ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” which was issued by the FASB in August 2015 and extended the original effective date by one year. The Company is currently evaluating the impact of adopting the available methodologies of ASU 2014-09 and 2015-14 upon its financial statements in future reporting periods. The Company has not yet selected a transition method. The Company is in the process of evaluating the new standard against its existing accounting policies, including the timing of revenue recognition, and its contracts with customers to determine the effect the guidance will have on its financial statements and what changes to systems and controls may be warranted. There have been four new ASUs issued amending certain aspects of ASU 2014-09, ASU 2016-08, “Principal versus Agent Considerations (Reporting Revenue Gross Versus Net),” was issued in March, 2016 to clarify certain aspects of the principal versus agent guidance in ASU 2014-09. In addition, ASU 2016-10, “Identifying Performance Obligations and Licensing,” issued in April 2016, amends other sections of ASU 2014-09 including clarifying guidance related to identifying performance obligations and licensing implementation. ASU 2016-12, “Revenue from Contracts with Customers - Narrow Scope Improvements and Practical Expedients” provides amendments and practical expedients to the guidance in ASU 2014-09 in the areas of assessing collectability, presentation of sales taxes received from customers, noncash consideration, contract modification and clarification of using the full retrospective approach to adopt ASU 2014-09. Finally, ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers,” was issued in December 2016, and provides elections regarding the disclosures required for remaining performance obligations in certain cases and also makes other technical corrections and improvements to the standard. With its evaluation of the impact of ASU 2014-09, the Company will also consider the impact on its financial statements related to the updated guidance provided by these four new ASUs. In April 7, 2015, the FASB issued ASU No. 2015-03, “Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”. the FASB issued an Accounting Standard Update relating to simplifying the presentation of debt issuance costs. The amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The adoption of this has been applied retrospectively, and accordingly, the Company’s consolidated balance sheet as of December 31, 2016, December 31, 2015 and September 30, 2015 have been reclassified to reflect this adoption. The impact of this reclassification was a decrease of $619,830 to our senior debt as of December 31, 2016 and $801,640 as of December 31, 2015, and a corresponding elimination of Deferred financing costs as a separate financial statement line item. Deferred financing costs, $140,000 as of September 30, 2015, was carried as a prepaid expense as the new senior debt was not entered into until October 28, 2015. |
Summary of Significant Polici24
Summary of Significant Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Schedule of Revenues and Accounts Receivable | The following tables set forth our revenues and accounts receivable balances for the periods indicated: For the Year Ended For the Transitional Three Months Ended For the Year Ended December 31, 2016 December 31, 2015 September 30, 2015 Revenues $ % $ % $ % Customer C 164,987 1 % 41,664 1 % 5,196,380 36 % Customer D - - % 1,592,193 52 % 5,324,866 37 % Customer I 91,000 1 % 316,931 11 % 106,850 1 % Customer J 1,804,760 14 % - - - - Customer M 6,332,966 52 % 130,771 4 % 552,054 4 % All other customers 3,875,366 32 % 989,246 32 % 3,208,532 22 % Total Revenues, net of discounts $ 12,269,079 100 % $ 3,070,805 100 % $ 14,388,682 100 % For the Year Ended For the Transitional Three Months Ended For the Year Ended December 31, 2016 December 31, 2015 September 30, 2015 Accounts Receivable $ % $ % $ % Customer B 85,112 1 % 152,475 10 % 152,475 12 % Customer E 603,663 9 % 718,035 47 % 617,825 47 % Customer H 102,796 2 % 215,609 14 % 50,767 4 % Customer M 4,624,600 66 % 62,233 4 % 66,832 5 % All other customers 1,722,354 22 % 387,128 25 % 416,546 32 % Total Receivables 7,138,525 100 % $ 1,535,480 100 % $ 1,304,445 100 % Less Allowance for doubtful accounts (118,949 ) $ (89,000 ) $ (89,000 ) Accounts Receivable, net of allowance 7,019,576 $ 1,446,480 $ 1,215,445 |
Schedule of Property, Plant and Equipment Estimated Useful Lives | Property and equipment are stated at the lower of cost or fair value. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets, as follows: Estimated Life Machinery and equipment 6-8 years Vehicles and trailers 7-10 years Computer equipment and software 2-5 years Product hardware and development 5-7 years |
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the computation of basic and diluted earnings (loss) per common share from continuing operations: For the Years/Three Months Ended Year Ended December 31, 2016 Three Months Ended December 31, 2015 Year Ended September 30, 2015 Numerator: Net (loss) income $ (6,234,434 ) $ 546,171 $ (3,554,914 ) Preferred stock dividends (79,561 ) (19,891 ) (79,561 ) Net (loss) income attributable to common shareholders $ (6,313,995 ) 526,280 $ (3,634,475 ) Denominator: Weighted average number of common shares outstanding - basic 64,770,155 2,319,311 2,127,222 Effect of dilutive securities: Convertible preferred stock, Series A - - - Convertible preferred stock, Series A-1 - - - Convertible preferred stock, Series D - 91,062 - Convertible preferred stock, Series F - 303,163 - Total dilutive shares - 394,163 - Weighted average number of common shares outstanding - diluted 64,770,155 2,713,474 2,127,222 (Loss) Earnings per share: Basic $ (0.10 ) $ 0.23 $ (1.71 ) Diluted $ (0.10 ) $ 0.19 $ (1.71 ) |
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 their inclusion would have been anti-dilutive: For the Years and Transitional Three Months Ended Year Ended December 31, 2016 Transitional Three Months December 31, 2015 Year Ended September 30, 2015 Convertible preferred stock, Series A 667,169 667,169 667,169 Convertible preferred stock, Series A-1 393,645 393,645 393,645 Convertible preferred stock, Series D [1] - 40,060,500 36,615,180 Convertible preferred stock, Series F [1] - 18,349,220 - Common stock warrants 16,748,126 4,404,376 744,999 Preferred stock warrants - - 39,396,800 Convertible debt - 200,000 200,000 Total potentially dilutive shares 17,808,940 64,074,910 78,017,793 [1] The Series D and Series F preferred shares are mandatorily convertible at a rate of 400 shares of common stock for each share of preferred stock upon (a) a sufficient increase in the authorized common shares; and (b) a reverse split of the common shares. These shares mandatorily converted to common stock with the reverse split and increase in authorized common shares effective May 26, 2016. All shares have been adjusted to reflect the effect of the reverse split. |
Other Current Assets (Tables)
Other Current Assets (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Current Assets | Other current assets consist of the following: For Year Ended December 31, 2016 December 31, 2015 September 30, 2015 Other receivables, net $ 1,232,555 $ 1,232,555 $ 669,198 Prepaid contract costs for work in process 409,038 623,798 593,711 Prepaid operating expenses 1,191,718 191,253 789,674 $ 2,833,311 $ 2,047,606 $ 2,052,583 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Schedule of Property, Plant and Equipment | Property and equipment consist of the following: For Year Ended December 31, 2016 December 31, 2015 September 30, 2015 Machinery and equipment $ 1,596,068 $ 1,180,344 $ 496,543 Vehicles and trailers 1,925,181 1,475,237 1,009,004 Network Services Platform 433,912 - - Computer equipment and software 325,271 186,763 114,642 4,280,432 2,842,344 1,620,189 Less: accumulated depreciation (813,913 ) (297,847 ) (201,149 ) $ 3,466,519 $ 2,544,497 $ 1,419,040 |
Assets Held under Capital Leases [Member] | |
Schedule of Property, Plant and Equipment | The Company leases various equipment under capital leases. Assets held under capital leases are included in property and equipment as follows: For Year Ended December 31, 2016 December 31, 2015 September 30, 2015 Machinery & equipment $ 1,412,709 $ 1,030,733 $ 352,157 Less: accumulated depreciation (231,406 ) (44,424 ) (11,108 ) $ 1,181,303 $ 986,309 $ 341,049 |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | December 31, 2016 December 31, 2015 September 30, 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 48 months. $ 1,336,517 $ 491,000 $ 383,970 Senior Secured Notes Senior secured notes issued between October 2011 and January 2012, secured by the assets of the Company, at a stated interest rate of 15%. The senior notes were settled for cash at an approximate rate of $.50 for $1.00. Of the original senior debt balance of $3,550,012, $1,757,731 was paid in cash, resulting in a remaining principal balance of $1,792,281, plus accrued interest payable in the amount of $1,748,380. The remaining principal balance and all of the accrued interest were recognized as a one-time gain of $3,431,533, net of associated costs of $109,124. - - 3,550,012 Other Notes Payable Notes payable bearing interest at a stated rate of 12% and a 4% PIK per annum. Term is for 7 months. 5,094,116 - - Less: Deferred financing cost (926,343 ) - - Total other note payable, net 4,167,773 - - Notes Payable bearing interest at a stated rate between 10% and 12% per annum. Terms range from 1 to 12 months 2,000,000 709,000 709,000 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. 960,549 960,205 339,583 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 1,508,758 1,298,978 884,108 Total Notes Payables 9,973,597 3,459,183 5,866,673 Less: Current portion (7,611,335 ) (1,887,120 ) (1,295,271 ) Total Notes non-current portion $ 2,362,262 $ 1,572,063 $ 4,571,402 |
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. $ 8,378,512 $ 8,048,682 $ Less: Original issue discount (182,242 ) (400,932 ) - Less: Deferred financing cost (619,830 ) (801,640 ) - Total Senior Debt, non-current portion $ 7,576,440 $ 6,846,110 $ - |
Schedule of Principal Payments for All Borrowings | The required principal payments for all borrowings for each of the five years following the balance sheet date are as follows: 2017 $ 8,357,143 2018 963,176 2019 9,341,899 2020 512,551 2021 238,381 Thereafter 63,614 Total $ 19,476,764 |
Accrued Expenses and Other Cu28
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
Schedule Of Accrued Expenses And Other Current Liabilities | As of December 31, 2016, December 31, 2015, and September 30, 2015, Accrued Expenses and Other Current Liabilities were comprised of the following: For Years Ended December 31, 2016 December 31, 2015 September 30, 2015 Accrued note interest payable [1] $ 364,805 $ 817,452 $ 2,030,745 Accrued dividends payable 530,694 451,133 431,243 Accrued compensation expense [2] 2,299,738 2,015,277 1,731,385 Other accrued expense 6,868 295,083 458,173 Total 3,202,105 3,578,945 4,651,546 Less: current portion (3,202,105 ) (3,578,945 ) (2,965,290 ) Accrued expenses, non-current $ - $ - $ 1,686,256 [1] Accrued interest payable includes approximately $300,000 of estimated penalties and interest associated with the unpaid payroll taxes as of December 31, 2016, December 31, 2015, and September 30, 2015 respectively. [2] Accrued compensation expense includes $1,863,031, $1,863,031 and $1,512,415 of unpaid payroll taxes related for the periods ended December 31, 2016, December 31, 2015 and September 30, 2015, respectively. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Payments Under Operating leases | The remaining aggregate commitment for lease payments under the operating lease for the facilities as of December 31, 2016 are as follows: 2017 $ 479,266 2018 450,103 2019 367,380 2020 328,757 2021 334,134 Thereafter 131,195 Total Lease Obligations $ 2,090,835 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | The following summarizes the income tax provision (benefit): For The Years/ Transitional Three Months Ended As Of December 31, 2016 Transitional Three Months As Of December 31, 2015 As Of September 30, 2015 Current: Federal $ - $ - $ - State and local - - - Utilization of fully reserved net operating losses - - - - - - Deferred: Federal 1,901,847 (196,481 ) (1,186,733 ) State and local 55,937 (5,779 ) 98,834 1,957,784 (202,260 ) (1,087,899 ) Change in valuation allowance (1,957,784 ) 202,260 1,087,899 Income tax provision (benefit) $ - - $ - |
Schedule of Deferred Tax Assets and Liabilities | The Company has the following net deferred tax assets: For The Years/Transitional Three Months Ended As Of December 31, 2016 Transitional Three Months As Of December 31, 2015 As Of September 30, 2015 Net operating loss carryforwards $ 4,936,966 $ 1,870,583 $ 1,445,277 Accruals 800,443 1,425,039 2,007,371 Other - reserves 52,500 301,631 301,631 Deferred tax assets, gross 5,789,909 3,597,253 3,754,279 Property and equipment (507,728 ) (272,856 ) (192,219 ) Sub-total 5,282,181 3,324,397 3,562,060 Valuation allowance (5,282,181 ) (3,324,397 ) (3,562,060 ) Deferred tax assets, net $ - $ - $ - |
Schedule of Effective Income Tax Rate Reconciliation | The reconciliation of the expected tax expense (benefit), based on statutory rates, with the actual expense, is as follows: For The Years/Transitional Three Months Ended Year Ended December 31, 2016 Transitional Three Months Ended December 31, 2015 Year Ended September 30, 2015 Expected federal statutory rate 34.0 % 34.0 % 34.0 % State tax rate, net of federal benefit 1.0 % 1.0 % 3.1 % Permanent differences - meals & entertainment (3.5 )% 2.0 % 0.8 % Change in valuation allowance (31.5 )% (37.0 )% (37.9 )% Income tax provision (benefit) 0.0 % 0.0 % 0.0 % |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Dividends Preferred Stock | Dividend charges recorded during the years ended December 31, 2016, the three months ended December 31, 2015 and the year ended September 30, 2015 are as follows: For The Years/Three Months Ended Year Ended December 31, 2016 Transitional Three Months Ended December 31, 2015 Year Ended September 30, 2015 Series A $ 50,038 $ 12,510 $ 50,038 A-1 29,523 7,381 29,523 B - - - C-1 - - - C-2 - - - C-3 - - - Total $ 79,561 $ 19,891 $ 79,561 |
Schedule of Accrued Liabilities | Accrued dividends payable at December 31, 2016, December 31, 2015, and September 30, 2015 are comprised of the following: As Of December 31, 2016 December 31, 2015 September 30, 2015 Series A $ 304,129 259,646 $ 247,136 A-1 226,565 191,487 184,107 B - - - C-1 - - - C-2 - - - C-3 - - - Total $ 530,694 $ 451,133 $ 431,243 |
Schedule of Warrants and Derivative Warrant Liability | As of December 31, 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 Equity Investors 2,589,312 10/12/2016 10/12/2021 0.80 Term Note Lender (1) 2,500,000 11/11/2016 11/11/2021 0.40 16,748,126 (1) Warrants were determined to be a derivative subject to fair value accounting and are booked as a warrant liability. |
Schedule of Warrants Activity | A summary of the warrant activity from the year ended September 30, 2015, the transitional three months ended December 31, 2015, and the year ended December 31, 2016 is presented below: Weighted Weighted Average Average Remaining Aggregate Number of Exercise Life Intrinsic Warrants Price In Years Value Outstanding, September 30, 2014 2,918,254 $ 0.89 1.2 - Issued - - - - Exercised - - - - Expired (2,173,255 ) 1.00 - - Outstanding, September 20, 2015 744,999 .58 0.3 - Issued - - - - Exercised - - - - Expired (307,664 ) .40 - - Outstanding, December 31, 2015 437,335 $ 0.58 0.2 - Issued 16,748,126 0.64 - - Exercised - - - - Expired (437,335 ) .40 - - Outstanding, December 31, 2016 16,748,126 $ 0.55 4.6 $ - Exercisable, December 31, 2016 16,748,126 $ 0.55 4.6 $ - |
Schedule of Common Stock Warrants | The following table presents information related to common stock warrants at December 31, 2016: Warrants Outstanding Warrants Exercisable Weighted Average Exercisable Exercise Number of Remaining Life Number of Price Warrants In Years Warrants $ 0.20 4,404,376 4.0 4,404,376 0.40 6,250,000 4.9 6,250,000 0.80 6,093,750 4.7 6,093,750 16,748,126 16,748,126 |
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 Warrant November Warrant September Warrant December 31, 2016 Revaluation November Warrant December 31, 2016 Revaluation Risk free rate 1.14 % 1.5 % 1.91 % 1.92 % Volatility 37.80 % 37.40 37.53 % 37.40 % Dividends 0 0 0 0 Time to maturity 5.0 years 5.0 years 4.75 years 4.87 years Fair value per share price .06111 .1544 .0724 .1697 Fair value of warrants $ 143,200 $ 386,000 169,700 424,300 |
Schedule of Change in the Fair Value of Warrants | The following table summarizes the change in fair value of the warrants from inception through December 31, 2016. Fair value Fair value as of New Derivative as of 9/30/2016 Issuances gain (loss) 12/31/2016 Investor warrants (9/30/16) $ (143,200 ) - $ (26,500 ) $ (169,700 ) Investor warrants (11/11/16) $ (386,000 ) $ (38,300 ) $ (424,300 ) Totals $ (143,200 ) $ (386,000 ) $ (64,800 ) $ (594,000 ) |
Segment Data (Tables)
Segment Data (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The following tables summarize financial information about the Company’s business segments for the year ended December 31, 2016, the transitional three months ended December 31, 2015, and the year ended September 30, 2015. For the Year Ended September 30, 2015 Telecommunications Staffing Consolidated Revenues, net of discounts $ 8,722,147 $ 5,666,535 $ 14,388,682 Income (Loss) from Operations $ (1,657,238 ) $ 50,417 $ (1,606,821 ) Depreciation and Amortization $ 108,324 $ - $ 108,324 Interest Expense $ 1,281,445 $ 26,631 $ 1,308,076 For the Transitional Three Months Ended December 31, 2015 Telecommunications Staffing Consolidated Revenues, net of discounts $ 1,185,670 1,885,135 3,070,805 Income (Loss) from Operations $ (2,483,328 ) 186,842 (2,296,486 ) Depreciation and Amortization $ 169,574 - 169,574 Interest Expense $ 431,153 4,310 435,463 For the Year Ended December 31, 2016 Telecommunications Staffing Consolidated Revenues, net of discounts $ 12,161,022 108,057 12,269,079 Income (Loss) from Operations $ (2,459,910 ) 58,389 (2,401,521 ) Depreciation and Amortization $ 1,241,231 — 1,241,231 Interest Expense $ 2,251,151 21,122 2,272,273 |
Condensed Consolidated Statem33
Condensed Consolidated Statement of Operations and Cash Flows (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Condensed Consolidated Statement of Operations and Cash Flows | For the Three Months Ended December 31, 2014 (unaudited) Revenues, net of discounts $ 2,944,035 Cost of revenues 1,718,238 Gross Profit 1,225,797 Operating Expenses Compensation expense - selling, general, and administrative 293,575 Selling, general and administrative expenses 359,280 Travel expense 60,530 Occupancy costs 37,558 Total Operating Expenses 750,943 Operating (Loss) Income 474,854 Other Income (Expense) Interest expense (263,197 ) Other (expense) income 7,997 Total Other Income (Expense) (255,200 ) Net Income 219,654 Preferred stock dividends (19,890 ) Net Income attributable to common shareholders $ 199,764 Earnings per share: Basic $ .10 Diluted $ .10 Weighted average number of common shares outstanding: Basic 1,999,354 Diluted 2,062,395 For the Three Months Ended December 31, 2015 2014 (unaudited) Cash flows from operating activities: Net income $ 546,171 $ 219,654 Adjustments to reconcile net income to net cash used in operating activities: Amortization of deferred financing costs 72,876 - Stock incentive expense to employees 342,743 - Depreciation and amortization 96,698 9,562 Amortization of original issue discount 36,448 - Gain on extinguishment of senior debt (3,431,533 ) - Payment in kind interest-senior debt 48,682 - Changes in operating assets and liabilities: Accounts receivable (231,035 ) (887,302 ) Other current assets 4,977 59,020 Accounts payable and accrued liabilities 1,076,170 199,496 Net cash used in operating activities (1,437,803 ) (399,570 ) Cash flows from investing activities: Purchases of property and equipment (94,358 ) (153,893 ) Restricted cash account (3,003,226 ) - Net cash used in investing activities (3,097,584 ) (153.893 ) Cash flows from financing activities: Payments on factor lines of credit, net (600,554 ) - Proceeds from issuance of notes payable 8,000,000 - Payments on notes payable (2,194,376 ) (6,419 ) Proceeds from issuance of notes payable-related parties 62,226 - Proceeds from repayment of subscriptions receivable 140,000 600,000 Payment of deferred financing costs prior to closing (874,516 ) - Net cash provided by financing activities 4,532,780 593,581 Net change in cash (2,607 ) 40,118 Cash, beginning of period 207,740 1,254 Cash, end of period $ 205,133 $ 41,372 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest $ 264,865 $ 94,443 Non-cash financing activities: Notes payable issued to finance equipment purchases $ 1,127,797 $ 94,169 Unpaid subscription for preferred shares $ - $ 783,672 Repayment subscription receivable $ 5,000 $ 60,000 Issuance of notes payable $ 288,000 $ - Common stock issued for legal settlement $ 5,120 $ - Common stock issued for notes payable $ 139,701 $ - Preferred stock issued for notes payable $ 25,000 $ - Accrued dividends, preferred stock $ 19,890 $ 19,890 |
Description of Business and H34
Description of Business and History (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Nov. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2016 | Sep. 30, 2015 | |
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | 5,000,000 | |
Business acquisition, terms of stock conversion | (i) shares of Series B Preferred Stock of Focus, par value $0.0001 per share (the “Focus Preferred B Shares”) and common stock of Focus, par value $0.0001 per share (the “Focus Common Stock”) were converted into the right to receive an aggregate of 1,250,011 shares of Beacon Series D Preferred Shares, par value $0.01 per share); (ii) all shares of Series A Preferred Stock of Focus, par value $0.0001 per share, were converted into the right to receive an aggregate number of 1,000,000 shares of Beacon Series E shares, par value $0.01 per share, (iii) all shares of capital stock of Merger Sub were converted into one share of Focus Common Stock. Each share of Series D Preferred stock is (a) entitled to vote alongside the common stockholders and has 20 votes; and (b) is convertible into 400 pre-split shares of common stock (equal to 20 shares of common stock on a post-split basis) upon an increase in the number of common shares authorized, and the implementation of a 1-for-20 reverse stock split. Each Beacon Series E share is entitled to vote alongside the common stockholders and has 1 vote each. | |||
Stock issued during period, shares, new issues | 512,820 | |||
Stock purchase amount | $ 2,628,000 | |||
Proceeds from notes payable | $ 8,000,000 | $ 8,281,271 | ||
Debt maturity date | Apr. 30, 2017 | |||
Stock Purchase Agreement [Member] | March 9, 2017 [Member] | Sellers [Member] | ||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||
Sale of stock consideration to be received on transaction | $ 55,000,000 | |||
Sale of stock, number of shares issued in transaction | 17,825,350 | |||
Stock purchase amount | $ 75,000,000 | |||
Proceeds from notes payable | 10,000,000 | |||
Stock Purchase Agreement Amendment [Member] | March 9, 2017 [Member] | ||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||
Stock purchase amount | $ 10,000,000 | |||
Debt maturity date | Mar. 30, 2019 | |||
Stock Purchase Agreement Amendment [Member] | March 9, 2017 [Member] | Series A Notes [Member] | ||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||
Sale of stock, number of shares issued in transaction | 26,738,445 | |||
Proceeds from notes payable | $ 12,500,000 | |||
Debt maturity date | Apr. 20, 2019 | |||
Stock Purchase Agreement Amendment [Member] | March 9, 2017 [Member] | Series B Notes [Member] | ||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||
Proceeds from notes payable | $ 30,000,000 | |||
Debt maturity date | Apr. 20, 2020 | |||
Stock Purchase Agreement Amendment [Member] | March 9, 2017 [Member] | Series C Notes [Member] | ||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||
Proceeds from notes payable | $ 7,500,000 | |||
Debt maturity date | Oct. 20, 2018 | |||
Stock Purchase Agreement Amendment [Member] | March 9, 2017 [Member] | Sellers [Member] | ||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||
Sale of stock consideration to be received on transaction | $ 17,250,000 | |||
Stock purchase amount | 10,000,000 | |||
Proceeds from notes payable | $ 7,000,000 | |||
Series D Preferred Stock [Member] | ||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||||
Preferred stock, shares authorized | 2,000,000 | |||
Convertible preferred stock, shares issued upon conversion | 20 |
Summary of Significant Polici35
Summary of Significant Policies (Details Narrative) - USD ($) | Oct. 28, 2015 | Dec. 31, 2015 | Dec. 31, 2016 | Sep. 30, 2015 |
Allowance for doubtful accounts | $ 89,000 | $ 119,000 | $ 89,000 | |
FDIC insured amount | $ 250,000 | |||
Concentration risk, percentage | 100.00% | |||
Unamortized deferred financing costs | 801,640 | $ 619,830 | 140,000 | |
Amortization of financing costs | 72,876 | $ 725,165 | ||
Stockholders' equity, reverse stock split | 1 for 20 reverse split | |||
Net (loss) income | 546,171 | $ (6,234,434) | (3,554,914) | |
Working capital | 3,400,000 | |||
Unpaid payroll taxes | 2,200,000 | |||
Secured line of credit | $ 8,000,000 | |||
Gains (losses) on extinguishment of debt | 1,800,000 | 3,431,533 | ||
Extinguishment of debt, amount | 3,400,000 | 378,700 | ||
Restricted cash deposits | $ 3,000,000 | |||
Backlog of future orders to fulfilled in the next twelve months | 259,000,000 | |||
Cumulative backlog amount | 45,500,000 | |||
Reclassification amount decrease in senior debt | 801,640 | 619,830 | ||
Deferred financing costs | 140,000 | |||
Stock purchase amount | $ 2,628,000 | |||
Debt maturity date | Apr. 30, 2017 | |||
Revenues | $ 3,070,805 | $ 12,269,079 | $ 14,388,682 | |
Benchmark Builders Inc [Member] | Debt One [Member] | ||||
Stock purchase amount | $ 12,500,000 | |||
Debt maturity date | Apr. 20, 2019 | |||
Sale of stock consideration to be received on transaction | $ 50,000,000 | |||
Benchmark Builders Inc [Member] | Debt Two [Member] | ||||
Stock purchase amount | $ 30,000,000 | |||
Debt maturity date | Apr. 20, 2020 | |||
Benchmark Builders Inc [Member] | Debt Three [Member] | ||||
Stock purchase amount | $ 7,500,000 | |||
Debt maturity date | Oct. 20, 2018 | |||
Benchmark Builders Inc [Member] | April 20, 2017 [Member] | ||||
Stock purchase amount | $ 10,100,000 | |||
Debt maturity date | Mar. 31, 2019 | |||
Revenues | $ 386,000,000 |
Summary of Significant Polici36
Summary of Significant Policies - Schedule of Revenues and Accounts Receivable (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2016 | Sep. 30, 2015 | |
Concentration risk percentage | 100.00% | |||
Revenue [Member] | ||||
Total Revenues | $ 3,070,806 | $ 12,269,079 | $ 14,388,682 | |
Concentration risk percentage | 100.00% | 100.00% | 100.00% | |
Revenue [Member] | Customer C [Member] | ||||
Total Revenues | $ 41,664 | $ 164,987 | $ 5,196,380 | |
Concentration risk percentage | 1.00% | 1.00% | 36.00% | |
Revenue [Member] | Customer D Member | ||||
Total Revenues | $ 1,592,193 | $ 5,324,866 | ||
Concentration risk percentage | 52.00% | 37.00% | ||
Revenue [Member] | Customer I Member | ||||
Total Revenues | $ 316,931 | $ 91,000 | $ 106,850 | |
Concentration risk percentage | 11.00% | 1.00% | 1.00% | |
Revenue [Member] | Customer J [Member] | ||||
Total Revenues | $ 1,804,760 | |||
Concentration risk percentage | 0.00% | 14.00% | 0.00% | |
Revenue [Member] | Customer M [Member] | ||||
Total Revenues | $ 130,771 | $ 6,332,966 | $ 552,054 | |
Concentration risk percentage | 4.00% | 52.00% | 4.00% | |
Revenue [Member] | All Other Customers [Member] | ||||
Total Revenues | $ 989,247 | $ 3,873,366 | $ 3,208,532 | |
Concentration risk percentage | 32.00% | 32.00% | 22.00% | |
Accounts Receivable [Member] | ||||
Concentration risk percentage | 100.00% | 100.00% | 100.00% | |
Total Receivables | $ 1,535,480 | $ 1,304,445 | $ 7,138,525 | $ 1,304,445 |
Less Allowance for doubtful accounts | (89,000) | (89,000) | (118,949) | (89,000) |
Accounts Receivable, net of allowance | $ 1,446,480 | $ 1,126,445 | $ 7,019,576 | 1,126,445 |
Accounts Receivable [Member] | Customer M [Member] | ||||
Concentration risk percentage | 4.00% | 5.00% | 66.00% | |
Total Receivables | $ 62,233 | $ 66,832 | $ 4,624,600 | 66,832 |
Accounts Receivable [Member] | All Other Customers [Member] | ||||
Concentration risk percentage | 25.00% | 32.00% | 22.00% | |
Total Receivables | $ 387,128 | $ 416,546 | $ 1,722,354 | $ 416,546 |
Accounts Receivable [Member] | Customer B [Member] | ||||
Concentration risk percentage | 10.00% | 1.00% | 12.00% | |
Total Receivables | $ 152,475 | 152,475 | $ 85,112 | $ 152,475 |
Accounts Receivable [Member] | Customer E [Member] | ||||
Concentration risk percentage | 47.00% | 9.00% | 47.00% | |
Total Receivables | $ 718,035 | $ 617,825 | $ 603,663 | $ 617,825 |
Accounts Receivable [Member] | Customer H [Member] | ||||
Concentration risk percentage | 14.00% | 4.00% | 2.00% | |
Total Receivables | $ 215,609 | $ 50,767 | $ 102,796 | $ 50,767 |
Summary of Significant Polici37
Summary of Significant Policies - Schedule of Property, Plant And Equipment Estimated Useful Lives (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Machinery and Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment, Useful Life | 6 years |
Machinery and Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment, Useful Life | 8 years |
Vehicles [Member] | Minimum [Member] | |
Property, Plant and Equipment, Useful Life | 7 years |
Vehicles [Member] | Maximum [Member] | |
Property, Plant and Equipment, Useful Life | 10 years |
Computer Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment, Useful Life | 2 years |
Computer Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment, Useful Life | 5 years |
Product Hardware and Development [Member] | Minimum [Member] | |
Property, Plant and Equipment, Useful Life | 5 years |
Product Hardware and Development [Member] | Maximum [Member] | |
Property, Plant and Equipment, Useful Life | 7 years |
Summary of Significant Polici38
Summary of Significant Policies - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2016 | Sep. 30, 2015 | |
Net (loss) income | $ 546,171 | $ (6,234,434) | $ (3,554,914) |
Preferred stock dividends | (19,891) | (79,561) | (79,561) |
Net (loss) income attributable to common shareholders | $ 526,280 | $ (6,313,995) | $ (3,634,475) |
Weighted average number of common shares outstanding - basic | 2,319,311 | 64,770,155 | 2,127,222 |
Total dilutive shares | 394,163 | ||
Weighted average number of common shares outstanding - diluted | 2,713,474 | 64,770,155 | 2,127,222 |
(Loss) Earnings per share, Basic | $ 0.23 | $ (0.10) | $ (1.71) |
(Loss) Earnings per share, Diluted | $ 0.19 | $ (0.10) | $ (1.71) |
Convertible Preferred Stock Series A [Member] | |||
Total dilutive shares | |||
Convertible Preferred Stock Series A-1 [Member] | |||
Total dilutive shares | |||
Series D Convertible Preferred Stock [Member] | |||
Total dilutive shares | 91,062 | ||
Series F Convertible Preferred Stock [Member] | |||
Total dilutive shares | 303,101 |
Summary of Significant Accounti
Summary of Significant Accounting Policies - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2016 | Sep. 30, 2015 | ||
Earnings Per Share Basic And Diluted [Line Items] | ||||
Total potentially dilutive shares | 64,074,910 | 17,808,940 | 78,017,793 | |
Convertible Debt [Member] | ||||
Earnings Per Share Basic And Diluted [Line Items] | ||||
Total potentially dilutive shares | 200,000 | 200,000 | ||
Series A Convertible Preferred Stock [Member] | ||||
Earnings Per Share Basic And Diluted [Line Items] | ||||
Total potentially dilutive shares | 667,169 | 667,169 | 667,169 | |
Series A-1 Convertible Preferred Stock | ||||
Earnings Per Share Basic And Diluted [Line Items] | ||||
Total potentially dilutive shares | 393,645 | 393,645 | 393,645 | |
Series D Convertible Preferred Stock [Member] | ||||
Earnings Per Share Basic And Diluted [Line Items] | ||||
Total potentially dilutive shares | [1] | 40,060,500 | 36,615,180 | |
Series F Convertible Preferred Stock [Member] | ||||
Earnings Per Share Basic And Diluted [Line Items] | ||||
Total potentially dilutive shares | [2] | 18,349,220 | ||
Common Stock Warrant [Member] | ||||
Earnings Per Share Basic And Diluted [Line Items] | ||||
Total potentially dilutive shares | 4,404,376 | 16,748,126 | 744,999 | |
Preferred Stock Warrant [Member] | ||||
Earnings Per Share Basic And Diluted [Line Items] | ||||
Total potentially dilutive shares | 39,396,800 | |||
[1] | The Series D and Series F preferred shares are mandatorily convertible at a rate of 400 shares of common stock for each share of preferred stock upon (a) a sufficient increase in the authorized common shares; and (b) a reverse split of the common shares. These shares mandatorily converted to common stock with the reverse split and increase in authorized common shares effective May 26, 2016. All shares have been adjusted to reflect the effect of the reverse split. | |||
[2] | The Series D and Series F preferred shares are mandatorily convertible at a rate of 400 shares of common stock for each share of preferred stock upon (a) a sufficient increase in the authorized common shares; and (b) a reverse split of the common shares. These shares mandatorily converted to common stock with the reverse split effective May 26, 2016. All shares have been adjusted to reflect the effect of the reverse split. |
Summary of Significant Accoun40
Summary of Significant Accounting Policies - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) (Parenthetical) | 12 Months Ended |
Dec. 31, 2016shares | |
Accounting Policies [Abstract] | |
Preferred stock converted into common stock | 400 |
Restricted Cash Account (Detail
Restricted Cash Account (Details Narrative) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 |
Cash and Cash Equivalents [Abstract] | |||
Restricted cash | $ 3,003,226 |
Other Current Assets (Details N
Other Current Assets (Details Narrative) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||
Other receivables, net of allowances | $ 150,000 | $ 150,000 | $ 772,798 |
Other Current Assets - Schedule
Other Current Assets - Schedule of Other Current Assets (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||
Other receivables, net | $ 1,232,555 | $ 1,232,555 | $ 669,198 |
Prepaid contract costs for work in process | 409,038 | 623,798 | 593,711 |
Prepaid operating expenses | 1,191,718 | 191,253 | 789,674 |
Total | $ 2,833,311 | $ 2,047,606 | $ 2,052,583 |
Property and Equipment, Net (De
Property and Equipment, Net (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2016 | Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |||
Capitalized cost | $ 433,912 | ||
Depreciation | $ 96,698 | $ 516,066 | $ 108,324 |
Property and Equipment, Net - S
Property and Equipment, Net - Schedule of Property, Plant and Equipment (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 |
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 4,280,432 | $ 2,842,344 | $ 1,620,189 |
Less: accumulated depreciation | (813,913) | (297,847) | (201,149) |
Property, plant and equipment, net | 3,466,519 | 2,544,497 | 1,419,040 |
Machinery and Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 1,596,068 | 1,180,344 | 496,543 |
Vehicles andTrailers [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 1,925,181 | 1,475,237 | 1,009,004 |
Network Services Platform [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 433,912 | ||
Computer Equipment And Software [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 325,271 | $ 186,763 | $ 114,642 |
Factoring Agreement (Details Na
Factoring Agreement (Details Narrative) - USD ($) | Oct. 06, 2014 | May 12, 2014 | Sep. 30, 2015 |
Ameri Factors Financial Group, LLC [Member] | |||
Factoring Agreement [Line Items] | |||
Purchase of Net Accounts Receivable | $ 7,000,000 | ||
Maximum Purchase of Unpaid Accounts Receivable | $ 3,000,000 | ||
Percentage For Net Sale Amount | 85.00% | ||
Nontrade Receivables, Total | $ 706,534 | ||
Other Liabilities | $ 600,554 | ||
Gibraltar Business Capital L L C [Member] | |||
Factoring Agreement [Line Items] | |||
Maximum Purchase of Unpaid Accounts Receivable | $ 250,000 | ||
Percentage For Net Sale Amount | 85.00% |
Notes Payable - Schedule of Not
Notes Payable - Schedule of Notes Payable (Details) - USD ($) | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Dec. 31, 2015 | Nov. 30, 2015 | Sep. 30, 2015 |
Total Notes payables | $ 250,000 | |||||
Less: deferred financing cost | $ (140,000) | |||||
Less: Current portion | $ 7,611,335 | $ 1,887,120 | 1,295,271 | |||
Total Notes current portion | 2,500,000 | $ 2,500,000 | $ 2,500,000 | |||
Vendor Notes [Member] | ||||||
Total Notes payables | 1,336,517 | 491,000 | 383,970 | |||
Senior Secured Notes [Member] | ||||||
Total Notes payables | 3,550,012 | |||||
Other Notes Payable One [Member] | ||||||
Total Notes payables | 5,094,116 | |||||
Notes Payable [Member] | ||||||
Total Notes payables | 4,167,773 | |||||
Less: deferred financing cost | (926,343) | |||||
Total Notes current portion | ||||||
Note Payable Bearing Two [Member] | ||||||
Total Notes payables | 2,000,000 | |||||
Equipment Notes One [Member] | ||||||
Total Notes payables | 960,549 | 960,205 | 339,583 | |||
Equipment Notes Two [Member] | ||||||
Total Notes payables | 1,508,758 | 1,298,978 | 884,108 | |||
Equipment Notes [Member] | ||||||
Total Notes payables | 9,973,597 | 3,459,183 | 5,866,673 | |||
Less: Current portion | (7,611,335) | (1,887,120) | (1,295,271) | |||
Total Notes current portion | $ 2,362,262 | 1,572,063 | 4,571,402 | |||
Other Notes Payable Two [Member] | ||||||
Total Notes payables | $ 709,000 | $ 709,000 |
Notes Payable - Schedule of N48
Notes Payable - Schedule of Notes Payable (Details) (Parenthetical) - USD ($) | Oct. 28, 2015 | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2016 | Sep. 30, 2015 |
Debt instrument, interest rate, stated percentage | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% |
Original debt balance | $ 236,914 | ||||
Line of credit | $ 8,000,000 | ||||
Payment in Kind (PIK) Note [Member] | |||||
Debt instrument, interest rate, stated percentage | 4.00% | 4.00% | 4.00% | 4.00% | 4.00% |
Vendor Notes [Member] | Minimum [Member] | |||||
Debt instrument, interest rate, stated percentage | 0.00% | 0.00% | 0.00% | 0.00% | |
Debt instrument, term | 1 month | 1 month | 1 month | ||
Vendor Notes [Member] | Maximum [Member] | |||||
Debt instrument, interest rate, stated percentage | 6.00% | 6.00% | 6.00% | 6.00% | |
Debt instrument, term | 48 months | 48 months | 48 months | ||
Senior Secured Notes [Member] | |||||
Debt instrument, interest rate, stated percentage | 15.00% | 15.00% | 15.00% | 15.00% | |
Original debt balance | $ 3,550,012 | $ 3,550,012 | $ 3,550,012 | $ 3,550,012 | |
Debt balance paid in cash | 1,757,731 | 1,757,731 | 1,757,731 | 1,757,731 | |
Debt instrument face amount | $ 1,792,281 | $ 1,792,281 | $ 1,792,281 | 1,792,281 | |
Settlement of cash rate description | rate of $.50 for $1.00 | rate of $.50 for $1.00 | rate of $.50 for $1.00 | ||
Accrued interest | $ 1,748,380 | $ 1,748,380 | $ 1,748,380 | 1,748,380 | |
Gain on debt instrument | 3,431,533 | 3,431,533 | 3,431,533 | 3,431,533 | |
Debt costs, net | $ 109,124 | $ 109,124 | $ 109,124 | $ 109,124 | |
Other Notes Payable One [Member] | |||||
Debt instrument, interest rate, stated percentage | 12.00% | 12.00% | 12.00% | 12.00% | |
Debt instrument, term | 7 months | 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% | 4.00% | 4.00% | |
Other Notes Payable Two [Member] | Minimum [Member] | |||||
Debt instrument, interest rate, stated percentage | 10.00% | 10.00% | 10.00% | 10.00% | |
Debt instrument, term | 1 month | 1 month | 1 month | ||
Other Notes Payable Two [Member] | Maximum [Member] | |||||
Debt instrument, interest rate, stated percentage | 12.00% | 12.00% | 12.00% | 12.00% | |
Debt instrument, term | 12 months | 12 months | 12 months | ||
Equipment Notes One [Member] | Minimum [Member] | |||||
Debt instrument, interest rate, stated percentage | 4.10% | 4.10% | 4.10% | 4.10% | |
Debt instrument, term | 48 months | 48 months | 48 months | ||
Equipment Notes One [Member] | Maximum [Member] | |||||
Debt instrument, interest rate, stated percentage | 8.20% | 8.20% | 8.20% | 8.20% | |
Debt instrument, term | 60 months | 60 months | 60 months | ||
Equipment Notes Two [Member] | Minimum [Member] | |||||
Debt instrument, interest rate, stated percentage | 2.00% | 2.00% | 2.00% | 2.00% | |
Debt instrument, term | 36 months | 36 months | 36 months | ||
Equipment Notes Two [Member] | Maximum [Member] | |||||
Debt instrument, interest rate, stated percentage | 41.00% | 41.00% | 41.00% | 41.00% | |
Debt instrument, term | 72 months | 72 months | 72 months |
Notes Payable - Schedule of Sen
Notes Payable - Schedule of Senior Debt (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 | Nov. 11, 2015 | Oct. 28, 2015 | Sep. 30, 2015 |
Senior Debt | $ 8,000,000 | $ 8,000,000 | $ 2,000,000 | $ 6,000,000 | $ 8,000,000 |
Less: Original issue discount | 236,914 | ||||
Less: Deferred financing cost | 140,000 | ||||
Total Senior Debt, non-current portion | 7,576,440 | 6,846,110 | |||
Senior Debt [Member] | |||||
Senior Debt | 8,378,512 | 8,048,682 | |||
Less: Original issue discount | (182,242) | (400,932) | |||
Less: Deferred financing cost | (619,830) | (801,640) | |||
Total Senior Debt, non-current portion | $ 7,576,440 | $ 6,846,110 |
Notes Payable - Schedule of S50
Notes Payable - Schedule of Senior Debt (Details) (Parenthetical) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 | Nov. 11, 2015 | Oct. 28, 2015 | Sep. 30, 2015 |
Senior Debt | $ 8,000,000 | $ 8,000,000 | $ 2,000,000 | $ 6,000,000 | $ 8,000,000 |
Debt instrument, interest rate | 12.00% | 12.00% | 12.00% | 12.00% | |
Payment in Kind (PIK) Note [Member] | |||||
Debt instrument, interest rate | 4.00% | 4.00% | 4.00% | 4.00% |
Notes Payable - Schedule of Pri
Notes Payable - Schedule of Principal Payments for All Borrowings (Details) | Dec. 31, 2016USD ($) |
Debt Disclosure [Abstract] | |
2,017 | $ 8,357,143 |
2,018 | 963,176 |
2,019 | 9,341,899 |
2,020 | 512,551 |
2,021 | 238,381 |
Thereafter | 63,614 |
Total | $ 19,476,764 |
Senior Debt (Details Narrative)
Senior Debt (Details Narrative) - USD ($) | Oct. 28, 2015 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2016 | Jun. 30, 2016 |
Line of credit | $ 8,000,000 | ||||||
Debt instrument, interest rate, stated percentage | 12.00% | 12.00% | 12.00% | 12.00% | 12.00% | ||
Future advance | $ 3,000,000 | ||||||
Original issue discount | $ 437,380 | ||||||
Amortization of debt discount | $ 36,448 | 218,691 | $ 72,877 | ||||
Unamortized discount | 236,914 | ||||||
Short-term loan | $ 2,500,000 | $ 2,500,000 | $ 2,500,000 | ||||
Debt maturity date | Apr. 30, 2017 | ||||||
Stock purchase amount | $ 2,628,000 | ||||||
Benchmark Builders Inc [Member] | April 20, 2017 [Member] | |||||||
Debt maturity date | Mar. 31, 2019 | ||||||
Stock purchase amount | $ 10,100,000 | ||||||
Series D Convertible Preferred Stock [Member] | |||||||
Preferred stock issued shares | 163,441 | ||||||
Series F Convertible Preferred Stock [Member] | |||||||
Preferred stock issued shares | 391,903 | ||||||
Payment in Kind (PIK) Note [Member] | |||||||
Debt instrument, interest rate, stated percentage | 4.00% | 4.00% | 4.00% | 4.00% | 4.00% |
Accrued Expenses and Other Cu53
Accrued Expenses and Other Current Liabilities - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | |
Payables and Accruals [Abstract] | ||||
Accrued interest payable | [1] | $ 364,805 | $ 817,452 | $ 2,030,745 |
Accrued dividends payable | 530,694 | 451,133 | 431,243 | |
Accrued compensation expense | [2] | 2,299,738 | 2,015,277 | 1,731,385 |
Other accrued expense | 6,868 | 295,083 | 458,173 | |
Total | 3,202,105 | 3,578,945 | 4,651,546 | |
Less: current portion | (3,202,105) | (3,578,945) | (2,965,290) | |
Accrued expenses, non current | $ 1,686,256 | |||
[1] | Accrued interest payable includes approximately $300,000 of estimated penalties and interest associated with the unpaid payroll taxes as of December 31, 2016, December 31, 2015, and September 30, 2015 respectively. | |||
[2] | Accrued compensation expense includes $1,863,031, $1,863,031 and $1,512,415 of unpaid payroll taxes related for the periods ended December 31, 2016, December 31, 2015 and September 30, 2015, respectively. |
Accrued Expenses and Other Cu54
Accrued Expenses and Other Current Liabilities - Schedule of Accrued Expenses and Other Current Liabilities (Details) (Parenthetical) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2016 | Sep. 30, 2015 | |
Payables and Accruals [Abstract] | |||
Estimated penalties and interest | $ 300,000 | $ 300,000 | $ 300,000 |
Accrued payroll taxes | $ 1,863,031 | $ 1,863,031 | $ 1,512,415 |
Commitments and Contingencies55
Commitments and Contingencies (Details Narrative) | Dec. 02, 2016USD ($)a | Sep. 27, 2016USD ($) | May 02, 2016USD ($)a | Mar. 02, 2016USD ($)a | Jan. 02, 2016USD ($)a | Nov. 02, 2015USD ($)a | Oct. 31, 2015USD ($) | Oct. 13, 2015USD ($)a | Oct. 02, 2015USD ($)a | Jun. 13, 2014USD ($) | Feb. 10, 2014USD ($) | Dec. 12, 2013USD ($) | Dec. 04, 2013USD ($) | Oct. 19, 2012USD ($) | Nov. 30, 2015USD ($)shares | Dec. 31, 2015USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2015USD ($) | Dec. 28, 2016USD ($) |
Related party advances | $ 245,764 | $ 99,860 | $ 183,538 | ||||||||||||||||
Proceeds from related party debt | 183,538 | ||||||||||||||||||
Operating leases, rent expense | $ 148,555 | 591,405 | 181,895 | ||||||||||||||||
Dismissal of the lawsuits | $ 19,000 | ||||||||||||||||||
Reserve for litigation and contigencies | 0 | ||||||||||||||||||
Loss contingency, damages sought, value | $ 280,000 | $ 139,932 | $ 118,869 | $ 819,425 | |||||||||||||||
Loss contingency, damages awarded, value | $ 153,043 | $ 1,042,796 | |||||||||||||||||
Litigation settlement amount | $ 1,840,891 | ||||||||||||||||||
Promissory note | $ 250,000 | ||||||||||||||||||
Stock issued during period, shares, new issues | shares | 512,820 | ||||||||||||||||||
Primary relief sought paid | $ 75,000 | ||||||||||||||||||
Severance Claims [Member] | |||||||||||||||||||
Loss contingency, damages sought, value | $ 190,000 | ||||||||||||||||||
Change Of Control [Member] | |||||||||||||||||||
Loss contingency, damages sought, value | $ 380,000 | ||||||||||||||||||
Warehouse Space In Naples [Member] | |||||||||||||||||||
Lease term | 3 years | ||||||||||||||||||
Area of land | a | 4,500 | ||||||||||||||||||
Operating leases, rent expense | $ 4,500 | ||||||||||||||||||
Office Space In Naples [Member] | |||||||||||||||||||
Lease term | 7 years | ||||||||||||||||||
Area of land | a | 5,377 | ||||||||||||||||||
Operating leases, rent expense | $ 27,158 | ||||||||||||||||||
Office And Warehouse Space In Marysville [Member] | |||||||||||||||||||
Lease term | 1 year | ||||||||||||||||||
Area of land | a | 4,000 | ||||||||||||||||||
Operating leases, rent expense | $ 3,000 | ||||||||||||||||||
Office Space In Indianapolis [Member] | |||||||||||||||||||
Lease term | 3 years | ||||||||||||||||||
Area of land | a | 4,000 | ||||||||||||||||||
Operating leases, rent expense | $ 2,700 | ||||||||||||||||||
Office And Warehouse Space In Des Moines [Member] | |||||||||||||||||||
Lease term | 2 years | ||||||||||||||||||
Area of land | a | 5,000 | ||||||||||||||||||
Operating leases, rent expense | $ 2,000 | ||||||||||||||||||
Office And Warehouse Space In Springfield [Member] | |||||||||||||||||||
Lease term | 1 year | ||||||||||||||||||
Area of land | a | 4,000 | ||||||||||||||||||
Operating leases, rent expense | $ 2,400 | ||||||||||||||||||
Office And Warehouse Space In Dallas [Member] | |||||||||||||||||||
Lease term | 3 years | 3 years | |||||||||||||||||
Area of land | a | 3,000 | 8,640 | |||||||||||||||||
Operating leases, rent expense | $ 4,000 | $ 4,500 | |||||||||||||||||
Chief Executive Officer [Member] | |||||||||||||||||||
Related party advances | 503,856 | ||||||||||||||||||
Proceeds from related party debt | 298,000 | ||||||||||||||||||
Chief Financial Officer [Member] | |||||||||||||||||||
Related party advances | 57,525 | ||||||||||||||||||
Proceeds from related party debt | $ 320,525 | ||||||||||||||||||
Michael Palleschi [Member] | |||||||||||||||||||
Salary compensation | $ 250,000 | ||||||||||||||||||
Lynn Martin [Member] | |||||||||||||||||||
Salary compensation | $ 250,000 | ||||||||||||||||||
Martin and Arey Lawsuit [Member] | |||||||||||||||||||
Litigation settlement amount | $ 150,000 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule od future Minimum Payments Under Operating Leases (Details) | Dec. 31, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,017 | $ 479,266 |
2,018 | 450,103 |
2,019 | 367,380 |
2,020 | 328,757 |
2,021 | 334,134 |
Thereafter | 131,195 |
Total Lease Obligations | $ 2,090,835 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2016 | Sep. 30, 2015 | |
Operating loss carryforwards | $ 5,300,000 | $ 14,100,000 | $ 4,100,000 |
Operating loss carryforwards expiration period | 2,032 | ||
Valuation allowance, deferred tax asset, increase , amount | $ (202,260) | $ 1,957,784 | $ (1,087,899) |
Income tax description | greater than 50% ownership change | ||
Beacon Merger [Member] | |||
Operating loss carryforwards | $ 25,000,000 |
Income Taxes - Schedule of Comp
Income Taxes - Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2016 | Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |||
Current: Federal | |||
Current: State and local | |||
Current: Utilization of fully reserved net operating losses | |||
Current Income Tax Expense (Benefit), Total | |||
Deferred: Federal | (196,481) | 1,901,847 | (1,186,733) |
Deferred: State and local | (5,779) | 55,937 | 98,834 |
Deferred Federal, State and Local, Tax Expense (Benefit), Total | (202,260) | 1,957,784 | (1,087,899) |
Change in valuation allowance | 202,260 | (1,957,784) | 1,087,899 |
Income tax provision (benefit) |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 |
Income Tax Disclosure [Abstract] | |||
Net operating loss carryforwards | $ 4,936,966 | $ 1,870,583 | $ 1,445,277 |
Accruals | 800,443 | 1,425,039 | 2,007,371 |
Other - reserves | 52,500 | 301,631 | 301,631 |
Deferred tax assets, gross | 5,789,909 | 3,597,253 | 3,754,279 |
Property and equipment | (507,728) | (272,856) | (192,219) |
Sub-total | 5,282,181 | 3,324,397 | 3,562,060 |
Valuation allowance | (5,282,181) | (3,324,397) | (3,562,060) |
Deferred tax assets, net |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Details) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2016 | Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |||
Expected federal statutory rate | 34.00% | 34.00% | 34.00% |
State tax rate, net of federal benefit | 1.00% | 1.00% | 3.10% |
Permanent differences - meals & entertainment | 2.00% | (3.50%) | 0.80% |
Change in valuation allowance | (37.00%) | (31.50%) | (37.90%) |
Income tax provision (benefit) | 0.00% | 0.00% | 0.00% |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | May 26, 2016 | Dec. 23, 2015 | Oct. 28, 2015 | May 02, 2015 | Apr. 17, 2015 | Jan. 16, 2015 | Nov. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2016 | Sep. 30, 2015 |
Common stock, shares authorized | 200,000,000 | 200,000,000 | 200,000,000 | |||||||
Common stock, par or stated value per share | $ 0.001 | $ 0.001 | $ 0.001 | |||||||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | 5,000,000 | |||||||
Preferred stock, par or stated value per share | $ 0.01 | $ 0.01 | $ 0.01 | |||||||
Common stock, shares, issued | 2,319,524 | 78,019,872 | 2,266,887 | |||||||
Common stock, shares, outstanding | 2,319,524 | 78,019,872 | 2,266,887 | |||||||
Stock issued during period, shares, new issues | 512,820 | |||||||||
Common stock issued shares value | $ 2,628,000 | |||||||||
Common shares to settle debt | $ 144,822 | $ 1,798,438 | ||||||||
Common shares to settle debt, shares | 3,809,389 | |||||||||
Common shares issued for services | $ 445,800 | |||||||||
Preferred stock, voting rights | 20 Votes | |||||||||
Stockholders' equity note, stock split | 1-for-20 ratio | 1-for-20 reverse stock split | ||||||||
Proceeds from issuance of common stock | $ 2,628,000 | |||||||||
Dividends, preferred stock, stock | $ 79,561 | $ 79,561 | ||||||||
Eighty -Two Senior Secured Note Holders [Member] | ||||||||||
Stock issued during period, shares, new issues | 255,778 | |||||||||
Common stock issued shares value | $ 51,156 | |||||||||
Maximum [Member] | ||||||||||
Common stock, shares authorized | 200,000,000 | 200,000,000 | ||||||||
Common stock, par or stated value per share | $ 0.001 | |||||||||
Minimum [Member] | Redemption Rights Agreement [Member] | ||||||||||
Market capitalization | $ 25,000,000 | |||||||||
Redemption rights, description | (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. | |||||||||
Series A Preferred Stock [Member] | ||||||||||
Preferred stock shares designated | 4,500 | |||||||||
Preferred stock, shares issued | 500 | |||||||||
Preferred stock, shares outstanding | 500 | |||||||||
Preferred stock, dividend rate, percentage | 10.00% | |||||||||
Preferred stock, liquidation fee, percentage | 110.00% | |||||||||
Series B Preferred Stock [Member] | ||||||||||
Preferred stock shares designated | 4,000 | |||||||||
Preferred stock, shares issued | 0 | |||||||||
Preferred stock, shares outstanding | 0 | |||||||||
Preferred stock, dividend rate, percentage | 6.00% | |||||||||
Preferred stock, liquidation fee, percentage | 125.00% | |||||||||
Series C-1 Preferred Stock [Member] | ||||||||||
Preferred stock shares designated | 400 | |||||||||
Preferred stock, shares issued | ||||||||||
Preferred stock, shares outstanding | ||||||||||
Preferred stock, dividend rate, percentage | 6.00% | |||||||||
Series C-2 Preferred Stock [Member] | ||||||||||
Preferred stock shares designated | 2,000 | |||||||||
Preferred stock, shares issued | ||||||||||
Preferred stock, shares outstanding | ||||||||||
Preferred stock, dividend rate, percentage | 6.00% | |||||||||
Series C-3 Preferred Stock [Member] | ||||||||||
Preferred stock shares designated | 110 | |||||||||
Preferred stock, shares issued | ||||||||||
Preferred stock, shares outstanding | ||||||||||
Preferred stock, dividend rate, percentage | 6.00% | |||||||||
Series D Preferred Stock [Member] | ||||||||||
Preferred stock, shares authorized | 2,000,000 | |||||||||
Preferred stock, par or stated value per share | $ 4 | |||||||||
Preferred stock shares designated | 2,000,000 | |||||||||
Share-based compensation arrangement by share-based payment award, options, grants in period, gross | 12,500 | |||||||||
Stock granted, value, share-based compensation, gross | $ 50,000 | |||||||||
Preferred stock, shares issued | 1,980,000 | 0 | 1,830,759 | |||||||
Preferred stock, shares outstanding | 1,980,000 | 0 | 1,830,759 | |||||||
Series D Preferred Stock [Member] | Investor [Member] | ||||||||||
Stock issued during period, shares, new issues | 195,918 | |||||||||
Common stock issued shares value | $ 783,672 | |||||||||
Proceeds from issuance of common stock | 430,683 | |||||||||
Preferred stock, value, subscriptions | $ 352,989 | |||||||||
Series D Preferred Stock [Member] | Existing Noteholder [Member] | ||||||||||
Share-based compensation arrangement by share-based payment award, options, grants in period, gross | 12,500 | |||||||||
Stock granted, value, share-based compensation, gross | $ 50,000 | |||||||||
Series D Preferred Stock [Member] | Vendor [Member] | ||||||||||
Stock granted, value, share-based compensation, gross | $ 473,328 | |||||||||
Stock granted, value, share-based compensation shares | 118,332 | |||||||||
Stock repurchased during period, shares | 201,672 | |||||||||
Series F Preferred Stock [Member] | ||||||||||
Stock issued during period, shares, stock splits | 20 | |||||||||
Stockholders' equity note, stock split | 1-for-20 reverse stock split | |||||||||
Common Stock [Member] | ||||||||||
Common stock, shares, issued | 2,319,524 | 89,126,752 | 2,266,877 | |||||||
Common stock, shares, outstanding | 2,319,524 | 89,126,752 | 2,266,877 | |||||||
Conversion shares | 11,106,880 | |||||||||
Common Stock [Member] | Employees [Member] | Employment Agreements [Member] | ||||||||||
Share-based compensation arrangement by share-based payment award, options, grants in period, gross | 5,029,000 | |||||||||
Stock granted, value, share-based compensation, gross | $ 2,569,800 | |||||||||
Nonvested awards, compensation | 2,305,040 | |||||||||
Common Stock [Member] | Consultants [Member] | ||||||||||
Common shares issued for services | $ 445,800 | |||||||||
Common shares issued for services , shares | 841,500 | |||||||||
Common Stock [Member] | Individual Investors [Member] | ||||||||||
Share-based compensation arrangement by share-based payment award, options, grants in period, gross | 7,594,999 | |||||||||
Stock granted, value, share-based compensation, gross | $ 2,628,000 | |||||||||
Pre-Stock Split [Member] | ||||||||||
Stock issued during period, shares, stock splits | 400 | |||||||||
Post-Stock Split [Member] | ||||||||||
Stock issued during period, shares, stock splits | 20 | |||||||||
Series A-1 Preferred Shares [Member] | ||||||||||
Preferred stock shares designated | 1,000 | |||||||||
Preferred stock, shares issued | 295 | |||||||||
Preferred stock, shares outstanding | 295 | |||||||||
Preferred stock, dividend rate, percentage | 10.00% | |||||||||
Preferred stock, liquidation fee, percentage | 125.00% | |||||||||
Series D Convertible Preferred Stock [Member] | ||||||||||
Preferred stock, par or stated value per share | $ 4 | $ 4 | $ 4 | |||||||
Preferred stock shares designated | 2,000,000 | 2,000,000 | 2,000,000 | |||||||
Stock issued during period, shares, stock splits | 20 | |||||||||
Stockholders' equity note, stock split | 1-for-20 reverse stock split | |||||||||
Preferred stock, shares issued | 1,830,759 | 0 | 1,830,759 | |||||||
Preferred stock, shares outstanding | 1,830,759 | 0 | 1,830,759 | |||||||
Stock redeemed or called during period, shares | 163,441 | |||||||||
Series F Convertible Preferred Stock [Member] | ||||||||||
Preferred stock, par or stated value per share | $ 4 | $ 4 | $ 4 | |||||||
Preferred stock shares designated | 1,980,000 | 1,980,000 | 1,980,000 | |||||||
Preferred stock, shares issued | 525,559 | 0 | 0 | |||||||
Preferred stock, shares outstanding | 525,559 | 0 | 0 | |||||||
Stock redeemed or called during period, shares | 391,903 | |||||||||
Series D and Series FConvertible Preferred Stock Series D [Member] | ||||||||||
Stockholders' equity note, stock split | 1-for-20 ratio | |||||||||
Parent Company [Member] | ||||||||||
Common stock, shares authorized | 200,000,000 | |||||||||
Common stock, par or stated value per share | $ 0.001 | |||||||||
Preferred stock, shares authorized | 5,000,000 | |||||||||
Preferred stock, par or stated value per share | $ 0.01 | |||||||||
Parent Company [Member] | Series A Preferred Stock [Member] | ||||||||||
Preferred stock shares designated | 4,500 | |||||||||
Parent Company [Member] | Series A-1 Preferred Stock [Member] | ||||||||||
Preferred stock shares designated | 1,000 | |||||||||
Parent Company [Member] | Series B Preferred Stock [Member] | ||||||||||
Preferred stock shares designated | 4,000 | |||||||||
Parent Company [Member] | Series C-1 Preferred Stock [Member] | ||||||||||
Preferred stock shares designated | 400 | |||||||||
Parent Company [Member] | Series C-2 Preferred Stock [Member] | ||||||||||
Preferred stock shares designated | 2,000 | |||||||||
Parent Company [Member] | Series C-3 Preferred Stock [Member] | ||||||||||
Preferred stock shares designated | 110 | |||||||||
Parent Company [Member] | Series D Preferred Stock [Member] | ||||||||||
Preferred stock shares designated | 2,000,000 | |||||||||
Parent Company [Member] | Series F Preferred Stock [Member] | ||||||||||
Preferred stock shares designated | 1,980,000 |
Stockholders' Equity - Dividend
Stockholders' Equity - Dividends Preferred Stock (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2016 | Sep. 30, 2015 | |
Preferred stock dividends | $ 19,891 | $ 79,560 | $ 79,561 |
Series A Preferred Stock [Member] | |||
Preferred stock dividends | 12,510 | 50,038 | 50,038 |
Series A-1 Preferred Stock [Member] | |||
Preferred stock dividends | 7,381 | 29,523 | 29,523 |
Series B Preferred Stock [Member] | |||
Preferred stock dividends | |||
Series C-1 Preferred Stock [Member] | |||
Preferred stock dividends | |||
Series C-2 Preferred Stock [Member] | |||
Preferred stock dividends | |||
Series C-3 Preferred Stock [Member] | |||
Preferred stock dividends |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Accrued Liabilities (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 |
Accrued dividends payable | $ 530,694 | $ 451,133 | $ 431,243 |
Series A Preferred Stock [Member] | |||
Accrued dividends payable | 304,129 | 259,646 | 247,136 |
Series A-1 Preferred Stock [Member] | |||
Accrued dividends payable | 226,565 | 191,487 | 184,107 |
Series B Preferred Stock [Member] | |||
Accrued dividends payable | |||
Series C-1 Preferred Stock [Member] | |||
Accrued dividends payable | |||
Series C-2 Preferred Stock [Member] | |||
Accrued dividends payable | |||
Series C-3 Preferred Stock [Member] | |||
Accrued dividends payable |
Stockholders' Equity - Schedu64
Stockholders' Equity - Schedule of Warrants and Derivative Warrant Liability (Details) | 12 Months Ended | |
Dec. 31, 2016USD ($)$ / shares | ||
Warrant, Amount | $ 16,748,126 | |
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 [Member] | ||
Warrant, Amount | $ 2,423,688 | |
Warrant, Issue date | Sep. 29, 2016 | |
Warrant, Expiration date | Sep. 29, 2021 | |
Warrant, Exercise price | $ / shares | $ 0.80 | |
Equity Investors [Member] | ||
Warrant, Amount | $ 2,589,312 | |
Warrant, Issue date | Oct. 12, 2016 | |
Warrant, Expiration date | Oct. 12, 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 [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] |
Term Note Lender [Member] | ||
Warrant, Amount | $ 2,500,000 | [1] |
Warrant, Issue date | Nov. 11, 2016 | [1] |
Warrant, Expiration date | Nov. 11, 2021 | [1] |
Warrant, Exercise price | $ / shares | $ 0.40 | [1] |
[1] | Warrants were determined to be a derivative subject to fair value accounting and are booked as a warrant liability. |
Stockholders' Equity - Schedu65
Stockholders' Equity - Schedule of Warrants Activity (Details) - Warrants [Member] - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2016 | Sep. 30, 2015 | |
Number of Warrants, Outstanding, Beginning balance | 744,999 | 437,335 | 2,918,254 |
Number of Warrants, Issued | 16,748,126 | ||
Number of Warrants, Exercised | |||
Number of Warrants, Expired | (307,664) | (437.335) | (2,173,255) |
Number of Warrants, Outstanding, Ending balance | 437,335 | 16,748,126 | 744,999 |
Number of Warrants, Outstanding, Exercisable Ending balance | 16,748,126 | ||
Weighted Average Exercise Price, Outstanding, Beginning | $ .58 | $ 0.58 | $ 0.89 |
Weighted Average Exercise Price, Issued | 0.64 | ||
Weighted Average Exercise Price, Exercised | |||
Weighted Average Exercise Price, Expired | .40 | .40 | 1 |
Weighted Average Exercise Price, Outstanding, Ending | $ 0.58 | 0.55 | $ .58 |
Weighted Average Exercise Price, Exercisable, Ending | $ 0.55 | ||
Warrants outstanding ,Weighted Average Remaining Contractual Life in Years, Beginning | 2 months 12 days | 4 years 7 months 6 days | 1 year 2 months 12 days |
Warrants outstanding ,Weighted Average Remaining Contractual Life in Years, Ending | 4 years 7 months 6 days | 3 months 18 days | |
Warrants exercisable, Weighted Average Remaining Contractual Life in Years | 4 years 7 months 6 days | ||
Warrants, Intrinsic value, Beginning | |||
Warrants, Intrinsic value, ending |
Stockholders' Equity - Schedu66
Stockholders' Equity - Schedule of Common Stock Warrants (Details) - Warrants [Member] - $ / shares | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | |
Warrants Outstanding, Number of Warrants | 16,748,126 | 437,335 | 744,999 | 2,918,254 |
Exercise Price One [Member] | ||||
Warrants Outstanding, Exercise Price | $ 0.20 | |||
Warrants Outstanding, Number of Warrants | 4,404,376 | |||
Warrants Exercisable, Weighted Average Remaining Life in Years | 4 years | |||
Warrants Exercisable, Number of Warrants | 4,404,376 | |||
Exercise Price Two [Member] | ||||
Warrants Outstanding, Exercise Price | $ 0.40 | |||
Warrants Outstanding, Number of Warrants | 6,250,000 | |||
Warrants Exercisable, Weighted Average Remaining Life in Years | 4 years 10 months 24 days | |||
Warrants Exercisable, Number of Warrants | 6,250,000 | |||
Exercise Price Three [Member] | ||||
Warrants Outstanding, Exercise Price | $ 0.80 | |||
Warrants Outstanding, Number of Warrants | 6,093,750 | |||
Warrants Exercisable, Weighted Average Remaining Life in Years | 4 years 8 months 12 days | |||
Warrants Exercisable, Number of Warrants | 6,093,750 | |||
Exercise Price [Member] | ||||
Warrants Outstanding, Number of Warrants | 16,748,126 | |||
Warrants Exercisable, Number of Warrants | 16,748,126 |
Stockholders' Equity - Schedu67
Stockholders' Equity - Schedule of Fair Value Assumptions of Warrant Derivative Liability (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2016 | Sep. 30, 2015 | |
Fair value of warrants | $ 64,800 | ||
September Warrant [Member] | |||
Risk free rate | 1.14% | ||
Volatility | 37.80% | ||
Dividends | 0.00% | ||
Time to maturity | 5 years | ||
Fair value per share price | $ .06111 | ||
Fair value of warrants | $ 143,200 | ||
November Warrant [Member] | |||
Risk free rate | 1.50% | ||
Volatility | 37.40% | ||
Dividends | 0.00% | ||
Time to maturity | 5 years | ||
Fair value per share price | $ .1544 | ||
Fair value of warrants | $ 386,000 | ||
September Warrant December 31, 2016 Revaluation [Member] | |||
Risk free rate | 1.91% | ||
Volatility | 37.53% | ||
Dividends | 0.00% | ||
Time to maturity | 4 years 9 months | ||
Fair value per share price | $ .0724 | ||
Fair value of warrants | $ 169,700 | ||
November Warrant December 31, 2016 Revaluation [Member] | |||
Risk free rate | 1.92% | ||
Volatility | 37.40% | ||
Dividends | 0.00% | ||
Time to maturity | 4 years 10 months 13 days | ||
Fair value per share price | $ .1697 | ||
Fair value of warrants | $ 424,300 |
Stockholders' Equity - Schedu68
Stockholders' Equity - Schedule of Change in the Fair Value of Warrants (Details) | 3 Months Ended |
Dec. 31, 2016USD ($)$ / shares | |
Fair value, beginning | $ (143,200) |
New Issuances | $ (386,000) |
Derivative gain (loss) | $ | $ (64,800) |
Fair value, ending | $ (594,000) |
Investor Warrants One [Member] | |
Fair value, beginning | (143,200) |
New Issuances | |
Derivative gain (loss) | $ | $ (26,500) |
Fair value, ending | $ (169,700) |
Investor Warrants Two [Member] | |
Fair value, beginning | |
New Issuances | $ (386,000) |
Derivative gain (loss) | $ | $ (38,300) |
Fair value, ending | $ (424,300) |
Segment Data (Details Narrative
Segment Data (Details Narrative) | 12 Months Ended |
Dec. 31, 2016Segments | |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Segment Data - Schedule of Segm
Segment Data - Schedule of Segment Reporting Information, by Segment (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2016 | Sep. 30, 2015 | |
Revenues, net of discounts | $ 3,070,805 | $ 12,269,079 | $ 14,388,682 |
Income (Loss) from Operations | (2,296,486) | (2,401,521) | (1,606,821) |
Depreciation and Amortization | 169,574 | (1,241,231) | 108,324 |
Interest Expense | 435,463 | 2,272,273 | 1,308,076 |
Telecommunications [Member] | |||
Revenues, net of discounts | 1,185,670 | 12,161,022 | 8,722,147 |
Income (Loss) from Operations | (2,483,328) | (2,459,910) | (1,657,238) |
Depreciation and Amortization | 169,574 | (1,241,231) | 108,324 |
Interest Expense | 431,153 | 2,251,151 | 1,281,445 |
Staffing [Member] | |||
Revenues, net of discounts | 1,885,135 | 108,057 | 5,666,535 |
Income (Loss) from Operations | 186,842 | 58,389 | 50,417 |
Depreciation and Amortization | |||
Interest Expense | $ 4,310 | $ 21,122 | $ 26,631 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Apr. 21, 2017 | Mar. 28, 2017 | Mar. 27, 2017 | Mar. 09, 2017 | Mar. 09, 2017 | Mar. 07, 2017 | Mar. 01, 2017 | Feb. 24, 2017 | Feb. 17, 2017 | Feb. 09, 2017 | Feb. 07, 2017 | Feb. 02, 2017 | Jan. 20, 2017 | Jan. 19, 2017 | Jan. 18, 2017 | Jan. 12, 2017 | Nov. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2016 | Sep. 30, 2015 |
Stock issued during period, shares, new issues | 512,820 | |||||||||||||||||||
Promissory notes | $ 250,000 | |||||||||||||||||||
Proceeds from issuance of common stock | $ 2,628,000 | |||||||||||||||||||
Proceeds from notes payable | $ 8,000,000 | $ 8,281,271 | ||||||||||||||||||
Debt maturity date | Apr. 30, 2017 | |||||||||||||||||||
Common stock issued shares value | $ 2,628,000 | |||||||||||||||||||
Subsequent Event [Member] | ||||||||||||||||||||
Stock issued during period, shares, new issues | 5,140 | 83,143 | 25,000 | 40,000 | 70,000 | 50,000 | ||||||||||||||
Common stock issued shares value | $ 2,056 | $ 36,583 | $ 12,500 | $ 28,000 | $ 35,000 | $ 25,000 | ||||||||||||||
Number of common stock shares issued for settlement of legal matter | 20,892 | |||||||||||||||||||
Number of common stock issued for settlement of legal matter value | $ 12,535 | |||||||||||||||||||
Subsequent Event [Member] | Benchmark Builders Inc [Member] | ||||||||||||||||||||
Stock issued during period, shares, new issues | 26,738,445 | |||||||||||||||||||
Common stock issued shares value | $ 14,975,935 | |||||||||||||||||||
Subsequent Event [Member] | Consulting Services [Member] | ||||||||||||||||||||
Stock issued during period, shares, new issues | 78,619 | |||||||||||||||||||
Common stock issued shares value | $ 32,119 | |||||||||||||||||||
Subsequent Event [Member] | Individual Investor [Member] | ||||||||||||||||||||
Stock issued during period, shares, new issues | 6,666 | 37,500 | ||||||||||||||||||
Proceeds from issuance of common stock | $ 15,000 | |||||||||||||||||||
Common stock issued shares value | $ 4,000 | |||||||||||||||||||
Subsequent Event [Member] | Senior Lender [Member] | ||||||||||||||||||||
Stock issued during period, shares, new issues | 6,420,020 | |||||||||||||||||||
Common stock issued shares value | $ 6,420 | |||||||||||||||||||
Subsequent Event [Member] | Employees [Member] | ||||||||||||||||||||
Stock issued during period, shares, new issues | 62,500 | |||||||||||||||||||
Common stock issued shares value | $ 30,625 | |||||||||||||||||||
Subsequent Event [Member] | Stock Purchase Agreement [Member] | ||||||||||||||||||||
Proceeds from issuance of common stock | $ 10,000,000 | |||||||||||||||||||
Debt maturity date | Mar. 30, 2019 | |||||||||||||||||||
Subsequent Event [Member] | Stock Purchase Agreement [Member] | Sellers [Member] | ||||||||||||||||||||
Sale of stock consideration to be received on transaction | $ 55,000,000 | |||||||||||||||||||
Stock issued during period, shares, new issues | 17,825,350 | |||||||||||||||||||
Subsequent Event [Member] | Stock Purchase Agreement [Member] | Sellers [Member] | ||||||||||||||||||||
Promissory notes | 10,000,000 | $ 10,000,000 | ||||||||||||||||||
Subsequent Event [Member] | Stock Purchase Agreement Amendment [Member] | Series A Notes [Member] | ||||||||||||||||||||
Proceeds from notes payable | $ 12,500,000 | |||||||||||||||||||
Debt maturity date | Apr. 20, 2019 | |||||||||||||||||||
Subsequent Event [Member] | Stock Purchase Agreement Amendment [Member] | Series B Notes [Member] | ||||||||||||||||||||
Proceeds from notes payable | $ 30,000,000 | |||||||||||||||||||
Debt maturity date | Apr. 20, 2020 | |||||||||||||||||||
Subsequent Event [Member] | Stock Purchase Agreement Amendment [Member] | Series C Notes [Member] | ||||||||||||||||||||
Proceeds from notes payable | $ 7,500,000 | |||||||||||||||||||
Debt maturity date | Oct. 20, 2018 | |||||||||||||||||||
Subsequent Event [Member] | Stock Purchase Agreement Amendment [Member] | Sellers [Member] | ||||||||||||||||||||
Sale of stock consideration to be received on transaction | $ 17,250,000 | |||||||||||||||||||
Proceeds from issuance of common stock | 10,000,000 | |||||||||||||||||||
Proceeds from notes payable | $ 7,000,000 | |||||||||||||||||||
Sale of stock, number of shares issued in transaction | 26,738,445 | |||||||||||||||||||
Subsequent Event [Member] | Consulting Agreement [Member] | ||||||||||||||||||||
Stock issued during period, shares, new issues | 12,500 | 100,000 | 300,000 | |||||||||||||||||
Common stock issued shares value | $ 5,000 | $ 46,000 | $ 123,000 | |||||||||||||||||
Subsequent Event [Member] | Employment Agreements [Member] | ||||||||||||||||||||
Stock issued during period, shares, new issues | 37,500 | 2,983,017 | ||||||||||||||||||
Common stock issued shares value | $ 19,125 | $ 1,193,207 |
Condensed Consolidated Statem72
Condensed Consolidated Statement of Operations and Cash Flows - Schedule of Condensed Consolidated Statement of Operations and Cash Flows (Details) - USD ($) | Oct. 28, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 |
Revenues, net of discounts | $ 3,070,805 | $ 12,269,079 | $ 14,388,682 | |||
Cost of revenues | 2,567,858 | 8,848,254 | 11,072,080 | |||
Gross Profit | 502,947 | 3,420,825 | 3,316,602 | |||
Compensation expense - selling, general, and administrative | 1,356,288 | 2,313,433 | 1,888,126 | |||
Selling, general and administrative expenses | 1,172,508 | 1,735,537 | 2,400,947 | |||
Travel expense | 178,140 | 319,074 | 389,035 | |||
Total Operating Expenses | 2,799,433 | 5,822,346 | 4,923,423 | |||
Operating (Loss) Income | (2,296,486) | (2,401,521) | (1,606,821) | |||
Interest expense | (435,463) | (2,272,273) | (1,308,076) | |||
Other (expense) income | (80,536) | (421,589) | (538,861) | |||
Total Other Income (Expense) | 2,842,657 | (3,832,913) | (1,948,093) | |||
Net Income | 546,171 | (6,234,434) | (3,554,914) | |||
Preferred stock dividends | (19,891) | (79,560) | (79,561) | |||
Net Income attributable to common shareholders | $ 526,280 | $ (6,313,995) | $ (3,634,475) | |||
Basic | $ 0.23 | $ (0.10) | $ (1.71) | |||
Diluted | $ 0.19 | $ (0.10) | $ (1.71) | |||
Basic | 2,319,311 | 64,770,155 | 2,127,222 | |||
Diluted | 2,713,474 | 64,770,155 | 2,127,222 | |||
Amortization of deferred financing costs | $ 72,876 | $ 725,165 | ||||
Stock incentive expense to employees | 473,328 | |||||
Depreciation and amortization | 96,698 | 516,066 | 108,324 | |||
Amortization of original issue discount | 36,448 | 218,691 | $ 72,877 | |||
Gain on extinguishment of senior debt | $ (1,800,000) | (3,431,533) | ||||
Payment in kind interest-senior debt | 48,682 | 329,831 | ||||
Accounts receivable | (231,035) | (5,603,046) | 279,844 | |||
Other current assets | 4,977 | (785,705) | (1,257,966) | |||
Accounts payable and accrued liabilities | 1,076,170 | (1,809,093) | 3,602,899 | |||
Net cash used in operating activities | (1,437,803) | (11,580,423) | (64,392) | |||
Purchases of property and equipment | (94,358) | (848,181) | (125,573) | |||
Restricted cash account | (3,003,226) | 3,003,226 | ||||
Net cash used in investing activities | (3,097,584) | 2,155,045 | (125,573) | |||
Payments on factor lines of credit, net | (600,554) | (383,682) | ||||
Proceeds from issuance of notes payable | 8,000,000 | 8,281,271 | ||||
Payments on notes payable | (2,194,376) | (569,869) | (143,786) | |||
Proceeds from issuance of notes payable-related parties | 62,226 | 503,857 | ||||
Proceeds from repayment of subscriptions receivable | 140,000 | 875,000 | 660,000 | |||
Payment of deferred financing costs prior to closing | (874,516) | (940,498) | (140,000) | |||
Net cash provided by financing activities | 4,532,780 | 10,631,857 | 396,451 | |||
Net change in cash | (2,607) | 1,206,479 | 206,486 | |||
Cash paid for interest | 264,865 | 1,381,933 | 350,922 | |||
Notes payable issued to finance equipment purchases | 1,127,797 | 589,907 | 1,314,474 | |||
Unpaid subscription for preferred shares | 349,789 | |||||
Common stock issued for notes payable | 1,320,453 | |||||
Statement of Operations and Cash Flows [Member] | ||||||
Revenues, net of discounts | $ 2,944,035 | |||||
Cost of revenues | 1,718,238 | |||||
Gross Profit | 1,225,797 | |||||
Compensation expense - selling, general, and administrative | 293,575 | |||||
Selling, general and administrative expenses | 359,280 | |||||
Travel expense | 60,530 | |||||
Total Operating Expenses | 750,943 | |||||
Operating (Loss) Income | 474,854 | |||||
Interest expense | (263,197) | |||||
Other (expense) income | 7,997 | |||||
Total Other Income (Expense) | (255,200) | |||||
Net Income | 219,654 | |||||
Preferred stock dividends | (19,890) | |||||
Net Income attributable to common shareholders | $ 199,764 | |||||
Basic | $ 0.10 | |||||
Diluted | $ 0.10 | |||||
Basic | 1,999,354 | |||||
Diluted | 2,062,395 | |||||
Amortization of deferred financing costs | 72,876 | |||||
Stock incentive expense to employees | ||||||
Depreciation and amortization | 96,698 | 9,562 | ||||
Amortization of original issue discount | 36,448 | |||||
Gain on extinguishment of senior debt | (3,431,533) | |||||
Payment in kind interest-senior debt | 48,682 | |||||
Accounts receivable | (231,035) | (887,302) | ||||
Other current assets | 4,977 | 59,020 | ||||
Accounts payable and accrued liabilities | 1,076,170 | 199,496 | ||||
Net cash used in operating activities | (1,437,803) | (399,570) | ||||
Purchases of property and equipment | (94,358) | (153,893) | ||||
Restricted cash account | (3,003,226) | |||||
Net cash used in investing activities | (3,097,584) | (154) | ||||
Payments on factor lines of credit, net | (600,554) | |||||
Proceeds from issuance of notes payable | 8,000,000 | |||||
Payments on notes payable | (2,194,376) | (6,419) | ||||
Proceeds from issuance of notes payable-related parties | 62,226 | |||||
Proceeds from repayment of subscriptions receivable | 140,000 | 600,000 | ||||
Payment of deferred financing costs prior to closing | (874,516) | |||||
Net cash provided by financing activities | 4,532,780 | 593,581 | ||||
Net change in cash | (2,607) | 40,118 | ||||
Cash, beginning of period | 207,740 | 1,254 | $ 205,133 | 41,372 | 1,254 | |
Cash, end of period | 205,133 | 41,372 | $ 205,133 | $ 207,740 | ||
Cash paid for interest | 264,865 | 94,443 | ||||
Notes payable issued to finance equipment purchases | 1,127,797 | 94,169 | ||||
Unpaid subscription for preferred shares | 783,672 | |||||
Repayment of subscription receivable | 5,000 | 60,000 | ||||
Issuance of notes payable | 288,000 | |||||
Common stock issued for legal settlement | 5,120 | |||||
Common stock issued for notes payable | ||||||
Preferred stock issued for notes payable | 25,000 | |||||
Accrued dividends, preferred stock | $ 19,891 | $ 19,890 |