Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 19, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Spectrum Global Solutions, Inc. | |
Entity Central Index Key | 0001413891 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Ex Transition Period | false | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 58,136,841 | |
Entity File Number | 000-53461 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation, State or Country Code | NV |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Current Assets: | ||
Cash | $ 262,678 | $ 620,593 |
Accounts receivable, net of allowances of $504,785 and $502,868, respectively | 5,891,400 | 6,562,182 |
Contract assets | 241,069 | 1,861,895 |
Escrow | 1,325,895 | |
Prepaid expenses and deposits | 53,764 | 22,682 |
Total current assets | 7,774,806 | 9,067,352 |
Property and equipment, net of accumulated depreciation of $1,048,292 and $1,020,959, respectively | 98,986 | 61,257 |
Goodwill | 2,505,615 | 1,834,856 |
Customer lists, net of accumulated amortization of $372,764 and $187,299, respectively | 2,464,784 | 850,249 |
Tradenames, net accumulated amortization of $194,146 and $118,810, respectively | 1,311,459 | 1,086,795 |
Operating lease right-of-use assets | 209,767 | |
Other assets | 25,637 | 29,887 |
Total assets | 14,391,054 | 12,930,396 |
Current Liabilities: | ||
Accounts payable and accrued liabilities | 4,720,310 | 5,472,108 |
Contract liabilities | 247,766 | |
Loans payable, net of debt discount of $211,183 and $257,194, respectively | 6,482,640 | 3,362,078 |
Loans payable to related parties, net of debt discount of $0 and $458,306, respectively | 701,258 | 4,372,549 |
Convertible debentures, net of discount of $286,028 and $1,311,821, respectively | 2,533,510 | 1,058,700 |
Derivative liability | 475,892 | 3,166,886 |
Warrant liability | 100,000 | 100,000 |
Operating lease liabilities | 214,283 | |
Total current liabilities | 15,475,659 | 17,532,321 |
Commitments and Contingencies | ||
Preferred stock, value | 1,528,873 | 1,089,407 |
Stockholders' Deficit: | ||
Common stock; $0.00001 par value; 750,000,000 shares authorized; 57,216,447 and 7,708,684 issued and 56,595,189 and 7,087,426 outstanding as of September 30, 2019 and December 31, 2018, respectively | 572 | 77 |
Additional paid-in capital | 24,952,439 | 18,681,390 |
Treasury stock, at cost | (277,436) | (277,436) |
Common stock subscribed | 74,742 | 74,742 |
Accumulated deficit | (27,363,795) | (24,170,105) |
Total stockholders' deficit | (2,613,478) | (5,691,332) |
Total liabilities and stockholders' deficit | 14,391,054 | 12,930,396 |
Series A Preferred Stock | ||
Current Liabilities: | ||
Preferred stock, value | 1,044,343 | 604,877 |
Series B Preferred Stock | ||
Current Liabilities: | ||
Preferred stock, value | $ 484,530 | $ 484,530 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Accounts receivable (net of allowance for doubtful accounts) | $ 504,785 | $ 502,868 |
Property and equipment, net of accumulated depreciation | 1,048,292 | 1,020,959 |
Customer lists (net of accumulated amortization) | 372,764 | 187,299 |
Tradenames (net of accumulated amortization) | 194,146 | 118,810 |
Loans payable, net of debt discount | 211,183 | 257,194 |
Loans payable to related parties, net of debt discount | 0 | 458,306 |
Convertible debentures, net of discount | $ 286,028 | $ 1,311,821 |
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 750,000,000 | 750,000,000 |
Common stock, shares issued | 57,216,447 | 7,708,684 |
Common stock, shares outstanding | 56,595,189 | 7,087,426 |
Series A Preferred Stock | ||
Preferred stock, par value | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 8,000,000 | 8,000,000 |
Preferred stock, shares issued | 899,427 | 899,427 |
Preferred stock, shares outstanding | 859,427 | 899,427 |
Series B Preferred Stock | ||
Preferred stock, par value | $ 3,500 | $ 3,500 |
Preferred stock, shares authorized | 1,000 | 1,000 |
Preferred stock, shares issued | 1,000 | 1,000 |
Preferred stock, shares outstanding | 1,000 | 1,000 |
Condensed consolidated statemen
Condensed consolidated statements of operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
Revenue | $ 7,505,937 | $ 9,671,990 | $ 27,159,071 | $ 24,963,876 |
Operating expenses: | ||||
Cost of revenues | 6,160,847 | 8,067,227 | 22,150,257 | 21,223,736 |
Depreciation and amortization | 97,281 | 56,874 | 288,134 | 161,480 |
General and administrative | 1,217,116 | 1,248,441 | 3,196,782 | 3,409,804 |
Salaries and wages | 1,182,640 | 606,900 | 3,673,533 | 2,502,408 |
Total operating expenses | 8,657,884 | 9,979,442 | 29,308,706 | 27,297,428 |
Loss from operations | (1,151,947) | (307,452) | (2,149,635) | (2,333,552) |
Other (expenses) income: | ||||
(Loss) gain on settlement of debt | (196,674) | 202,000 | 285,613 | 776,375 |
Amortization of discounts on convertible debentures and loans payable | (124,867) | (516,500) | (1,241,764) | (2,057,744) |
Gain on change in fair value of derivatives | 453,711 | 1,304,531 | 1,924,637 | 1,128,642 |
Interest expense | (242,552) | (268,094) | (1,492,147) | (776,537) |
Foreign exchange gain (loss) | (10,022) | (10,022) | ||
Gain on extinguishment of preferred stock liability | 290,814 | |||
Gain on disposal of subsidiaries | 577,299 | |||
Total other (expense) income | (120,404) | 721,937 | (533,683) | (61,151) |
Net (loss) income before income taxes | (1,272,351) | 414,485 | (2,683,318) | (2,394,703) |
Provision for income taxes | 2,099 | 22,300 | ||
Net (loss) income | (1,274,450) | 414,485 | (2,705,618) | (2,394,703) |
Less: net loss attributable to the non-controlling interest | 53,429 | |||
Net loss attributable to Spectrum Global Solutions, Inc. | (1,274,450) | 414,485 | (2,705,618) | (2,341,274) |
Less: deemed dividend - Series A preferred stock modification | (488,072) | (488,072) | (152,187) | |
Net (loss) income attributable to common shareholders | $ (1,762,522) | $ 414,485 | $ (3,193,690) | $ (2,493,461) |
Net (loss) income per share attributable to Spectrum Global Solutions, Inc. common shareholders: | ||||
Basic | $ (0.04) | $ 0.27 | $ (0.12) | $ (1.44) |
Diluted | $ (0.04) | $ 0.04 | $ (0.12) | $ (1.44) |
Weighted average common shares outstanding: | ||||
Basic | 44,739,064 | 1,557,763 | 27,554,495 | 1,737,473 |
Diluted | 44,739,064 | 14,668,805 | 27,554,495 | 1,737,473 |
Condensed consolidated statem_2
Condensed consolidated statements of stockholder's deficit (Unaudited) - USD ($) | Common stock | Additional paid-in capital | Common stock subscribed | Treasury stock | Subscriptions receivable | Accumulated deficit | Non-controlling interest | Total |
Balance at Dec. 31, 2017 | $ 21 | $ 15,909,612 | $ 74,742 | $ (22,322,725) | $ (88,650) | $ (6,427,000) | ||
Balance, in shares at Dec. 31, 2017 | 2,115,136 | |||||||
Issuance of common stock to RDW Capital, LLC | $ 1 | 431,328 | 431,329 | |||||
Issuance of common stock to RDW Capital, LLC, shares | 135,474 | |||||||
Issuance of common stock to Dominion Capital | $ 1 | 95,039 | 95,040 | |||||
Issuance of common stock to Dominion Capital, shares | 52,800 | |||||||
Warrant issued to acquire non-controlling interest | (125,744) | (133,254) | (258,998) | |||||
Shares issued for services | 312,561 | 312,561 | ||||||
Shares issued for services, shares | ||||||||
Net income (loss) for the period | 134,269 | (54,773) | 79,496 | |||||
Balance at Mar. 31, 2018 | $ 23 | 16,622,796 | 74,742 | (22,188,456) | (276,677) | (5,767,572) | ||
Balance, in shares at Mar. 31, 2018 | 2,303,410 | |||||||
Balance at Dec. 31, 2017 | $ 21 | 15,909,612 | 74,742 | (22,322,725) | (88,650) | (6,427,000) | ||
Balance, in shares at Dec. 31, 2017 | 2,115,136 | |||||||
Net income (loss) for the period | (2,394,703) | |||||||
Balance at Sep. 30, 2018 | $ 66 | 17,985,375 | 74,742 | (277,436) | (222,964) | (24,816,186) | (7,256,403) | |
Balance, in shares at Sep. 30, 2018 | 6,597,565 | |||||||
Balance at Mar. 31, 2018 | $ 23 | 16,622,796 | 74,742 | (22,188,456) | (276,677) | (5,767,572) | ||
Balance, in shares at Mar. 31, 2018 | 2,303,410 | |||||||
Issuance of common stock to RDW Capital, LLC | $ 1 | 97,503 | 97,504 | |||||
Issuance of common stock to RDW Capital, LLC, shares | 65,692 | |||||||
Shares issued upon conversion of preferred shares | $ 1 | 225,886 | 225,887 | |||||
Shares issued upon conversion of preferred shares, shares | 144,842 | |||||||
Shares issued upon conversion of common shares to preferred | $ (11) | (207,084) | (277,436) | (484,531) | ||||
Shares issued upon conversion of common shares to preferred, shares | (1,085,000) | |||||||
Shares issued for services | 839,177 | 839,177 | ||||||
Shares issued for services, shares | ||||||||
Subscriptions receivable | (222,964) | (222,964) | ||||||
Disposal of subsidiaries | 275,333 | 275,333 | ||||||
Deemed dividend - Series A preferred stock modification | (152,187) | (152,187) | ||||||
Net income (loss) for the period | (2,890,028) | 1,344 | (2,888,684) | |||||
Balance at Jun. 30, 2018 | $ 14 | 17,578,278 | 74,742 | (277,436) | (222,964) | (25,230,671) | (8,078,037) | |
Balance, in shares at Jun. 30, 2018 | 1,428,944 | |||||||
Issuance of common stock to RDW Capital, LLC | $ 1 | 91,704 | 91,705 | |||||
Issuance of common stock to RDW Capital, LLC, shares | 78,048 | |||||||
Issuance of common stock to Silverback | 19,500 | 19,500 | ||||||
Issuance of common stock to Silverback, shares | 30,000 | |||||||
Shares issued upon conversion of preferred shares | $ 1 | (1) | ||||||
Shares issued upon conversion of preferred shares, shares | 50,286 | |||||||
Pryor Cashman warrant for services | 276,428 | 276,428 | ||||||
Shares issued for services | $ 50 | 19,466 | 19,516 | |||||
Shares issued for services, shares | 5,010,000 | |||||||
Post stock-split adjustment | ||||||||
Post stock-split adjustment, shares | 287 | |||||||
Net income (loss) for the period | 414,485 | 414,485 | ||||||
Balance at Sep. 30, 2018 | $ 66 | 17,985,375 | 74,742 | (277,436) | $ (222,964) | (24,816,186) | (7,256,403) | |
Balance, in shares at Sep. 30, 2018 | 6,597,565 | |||||||
Balance at Dec. 31, 2018 | $ 77 | 18,681,390 | 74,742 | (277,436) | (24,170,105) | (5,691,332) | ||
Balance, in shares at Dec. 31, 2018 | 7,708,684 | |||||||
Issuance of common stock to RDW Capital, LLC | $ 11 | 293,154 | 293,165 | |||||
Issuance of common stock to RDW Capital, LLC, shares | 1,159,657 | |||||||
Issuance of common stock to Silverback | $ 6 | 119,657 | 119,663 | |||||
Issuance of common stock to Silverback, shares | 617,600 | |||||||
Issuance of common stock to Virtual Capital | $ 11 | 321,414 | 321,425 | |||||
Issuance of common stock to Virtual Capital, shares | 1,071,418 | |||||||
Issuance of common stock to employees pursuant to the conversions of convertible debt | $ 14 | 307,986 | 308,000 | |||||
Issuance of common stock to employees pursuant to the conversions of convertible debt, shares | 1,400,000 | |||||||
Shares issued for services | $ 29 | 471,314 | 471,343 | |||||
Shares issued for services, shares | 2,869,231 | |||||||
Net income (loss) for the period | (1,332,587) | (1,332,587) | ||||||
Balance at Mar. 31, 2019 | $ 148 | 20,194,915 | 74,742 | (277,436) | (25,502,692) | (5,510,323) | ||
Balance, in shares at Mar. 31, 2019 | 14,826,590 | |||||||
Balance at Dec. 31, 2018 | $ 77 | 18,681,390 | 74,742 | (277,436) | (24,170,105) | (5,691,332) | ||
Balance, in shares at Dec. 31, 2018 | 7,708,684 | |||||||
Net income (loss) for the period | (2,705,618) | |||||||
Balance at Sep. 30, 2019 | $ 572 | 24,952,439 | 74,742 | (277,436) | (27,363,795) | (2,613,478) | ||
Balance, in shares at Sep. 30, 2019 | 57,216,447 | |||||||
Balance at Mar. 31, 2019 | $ 148 | 20,194,915 | 74,742 | (277,436) | (25,502,692) | (5,510,323) | ||
Balance, in shares at Mar. 31, 2019 | 14,826,590 | |||||||
Issuance of common stock to RDW Capital, LLC | 10,863 | 10,863 | ||||||
Issuance of common stock to RDW Capital, LLC, shares | 77,598 | |||||||
Issuance of common stock to Silverback | $ 2 | 26,998 | 27,000 | |||||
Issuance of common stock to Silverback, shares | 200,000 | |||||||
Issuance of common stock to Virtual Capital | $ 29 | 377,467 | 377,496 | |||||
Issuance of common stock to Virtual Capital, shares | 2,899,960 | |||||||
Issuance of common stock to InterCloud | $ 157 | 2,104,603 | 2,104,760 | |||||
Issuance of common stock to InterCloud, shares | 15,707,163 | |||||||
Impact of Dominion Capital beneficial conversion feature | 314,228 | 314,228 | ||||||
Shares issued for services | 272,895 | 272,895 | ||||||
Shares issued for services, shares | ||||||||
Cancellation of shares for services | $ (1) | 1 | ||||||
Cancellation of shares for services, shares | (140,000) | |||||||
Net income (loss) for the period | (98,581) | (98,581) | ||||||
Balance at Jun. 30, 2019 | $ 335 | 23,301,970 | 74,742 | (277,436) | (25,601,273) | (2,501,662) | ||
Balance, in shares at Jun. 30, 2019 | 33,571,311 | |||||||
Issuance of common stock to Silverback | $ 10 | 41,421 | 41,431 | |||||
Issuance of common stock to Silverback, shares | 950,000 | |||||||
Issuance of common stock to Dominion Capital | $ 6 | 24,297 | 24,303 | |||||
Issuance of common stock to Dominion Capital, shares | 597,047 | |||||||
Issuance of common stock to M2B Funding | $ 7 | 24,297 | 24,304 | |||||
Issuance of common stock to M2B Funding, shares | 666,668 | |||||||
Issuance of common stock to InterCloud | $ 206 | 1,276,875 | 1,277,081 | |||||
Issuance of common stock to InterCloud, shares | 20,598,088 | |||||||
Issuance of common stock to MZ Group for services | $ 8 | 37,492 | 37,500 | |||||
Issuance of common stock to MZ Group for services, shares | 833,333 | |||||||
Shares issued for services | 246,087 | 246,087 | ||||||
Shares issued for services, shares | ||||||||
Deemed dividend - Series A preferred stock modification | (488,072) | (488,072) | ||||||
Net income (loss) for the period | (1,274,450) | (1,274,450) | ||||||
Balance at Sep. 30, 2019 | $ 572 | $ 24,952,439 | $ 74,742 | $ (277,436) | $ (27,363,795) | $ (2,613,478) | ||
Balance, in shares at Sep. 30, 2019 | 57,216,447 |
Condensed consolidated statem_3
Condensed consolidated statements of cash flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (2,705,618) | $ (2,394,703) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Gain on change in fair value of derivative liability | (1,924,637) | (1,128,642) |
Amortization of discounts on convertible debentures, loans payable, and loans payable to related parties | 1,241,764 | 2,057,744 |
Depreciation and amortization | 288,134 | 161,480 |
Amortization of operating right-of-use assets | 106,833 | |
Shares issued for services | 1,027,825 | 1,447,683 |
Gain on settlement of debt | (285,613) | (776,375) |
Foreign exchange loss (gain) | 10,022 | (4,721) |
Gain on disposal of subsidiaries | (577,299) | |
Derivative warrants issued for services | 68,536 | |
Gain on extinguishment of preferred stock liability | (290,814) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 735,948 | (1,406,100) |
Prepaid expenses and deposits | 599,728 | 24,808 |
Accounts payable and accrued liabilities | (615,606) | 1,156,652 |
Other assets | 4,250 | 3,595 |
Contract assets | 1,620,826 | |
Operating lease liabilities | (55,058) | |
Contract liabilities | (725,267) | |
Due to related parties | (42,872) | |
Net cash used in operating activities | (676,469) | (1,701,028) |
Cash flows from investing activities: | ||
Net cash paid upon acquisition | (941,593) | (328) |
Purchase of equipment | (65,060) | (15,415) |
Cash received upon acquisition of subsidiary | 191,744 | |
Net cash (used in) provided by investing activities | (1,006,653) | 176,001 |
Cash flows from financing activities: | ||
Proceeds from loans payable | 22,974,878 | 302,500 |
Repayments of loans payable | (22,827,367) | (1,723,000) |
Proceeds from loans payable to related parties | 170,000 | 165,000 |
Repayments of loans payable to related parties | (112,724) | |
Proceeds from convertible debentures | 84,000 | 2,430,959 |
Repayments of convertible debentures | (289,475) | (131,579) |
Cash received to fund escrow account | 1,325,895 | |
Proceeds from factoring agreement | 1,034,294 | |
Repurchase of preferred shares | (280,960) | |
Net cash provided by financing activities | 1,325,207 | 1,797,214 |
Net (decrease) increase in cash | (357,915) | 272,187 |
Cash, beginning of period | 620,593 | 28,893 |
Cash, end of period | 262,678 | 301,080 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 322,889 | 357,986 |
Cash paid for income taxes | 106,974 | |
Non-cash investing and financing activities: | ||
Common stock issued for conversion of loans payable | 4,880,886 | 232,833 |
Common stock issued for conversion of Series A preferred stock | 48,606 | |
Original issue discounts | 20,000 | 751,630 |
Original debt discount against derivative liability | 189,000 | 3,365,959 |
Net assets acquired in TNS acquisition | 1,645,000 | |
Convertible note issued in TNS acquisition | 665,000 | |
Third-party payment of third-party debt | 150,000 | |
Addition to principal of convertible debenture due to Barn 11 default | 119,342 | |
Addition to derivative liability due to Barn 11 default | 466,000 | |
Deemed dividend - Series A preferred stock modification | 488,072 | 152,187 |
Right-of-use operating lease assets obtained in exchange for operating lease liabilities | 316,599 | |
Convertible notes issued to settle contingent liability | 793,893 | |
Common stock issued to settle accounts payable and debt | 2,640 | |
Net assets acquired in ADEX acquisition | 4,332,577 | |
Goodwill from ADEX acquisition | 331,223 | |
Warrant issued for non-controlling interest | 133,256 | |
Series A preferred stock issued to settle loans payable and accrued interest | 406,560 | |
Preferred stock issued to settle derivative liabilities | $ 291,064 |
Organization and Going Concern
Organization and Going Concern | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Going Concern | 1. Organization and Going Concern Spectrum Global Solutions, Inc., (the "Company") (f/k/a Mantra Venture Group Ltd.) was incorporated in the State of Nevada on January 22, 2007 to acquire and commercially exploit various new energy related technologies through licenses and purchases. On December 8, 2008, the Company continued its corporate jurisdiction out of the State of Nevada and into the province of British Columbia, Canada. On April 25, 2017, the Company entered into and closed on an Asset Purchase Agreement with InterCloud Systems, Inc. ("InterCloud"). Pursuant to the terms of the Asset Purchase Agreement, the Company purchased 80.1% of the assets associated with InterCloud's AW Solutions, Inc., AW Solutions Puerto Rico, LLC, and Tropical Communications, Inc. (collectively "AWS" or the "AWS Entities") subsidiaries. After the acquisition of the AWS Entities, the Company provides professional, multi-service line, telecommunications infrastructure and outsource services to the wireless and wireline industry. On November 15, 2017, the Company changed its name to "Spectrum Global Solutions, Inc." On February 14, 2018, the Company entered into an agreement with InterCloud providing for the sale, transfer, conveyance and delivery to the Company of the remaining 19.9% of the assets associated with InterCloud's AWS business not already purchased by the Company. On February 6, 2018, the Company entered into and closed on a Stock Purchase Agreement with InterCloud Systems, Inc. ("InterCloud"). Pursuant to the terms of the Stock Purchase Agreement, the Company purchased all of the issued and outstanding capital stock and membership interests of ADEX Corporation, ADEX Puerto Rico LLC, ADEX Towers, Inc. and ADEX Telecom, Inc. (collectively "ADEX" or the "ADEX Entities"). The Company completed the acquisition on February 27, 2018. After the acquisition of the ADEX Entities, the Company provides professional, multi-service line, telecommunications infrastructure, outsource services and staffing solutions to the wireless and wireline industry. On May 18, 2018, the Company transferred all of its ownership interests in and to its subsidiaries Carbon Commodity Corporation, Mantra China Limited, Mantra Media Corp., Mantra NextGen Power Inc., Mantra Wind Inc., Climate ESCO Ltd. and Mantra Energy Alternatives Ltd. to an entity controlled by the Company's former Chief Executive Officer, Larry Kristof. The new owner of the aforementioned entities assumed all liabilities and obligations with respect to such entities. On January 4, 2019, the Company entered into a Stock Purchase Agreement with InterCloud. Pursuant to the terms of the Purchase Agreement, InterCloud agreed to sell, and the Company agreed to purchase, all of the issued and outstanding capital stock of TNS, Inc. ("TNS"), an Illinois corporation. During September 2019, the Company formed ADEX Canada, which is included in the ADEX Entities. On November 14, 2019, the Company closed on its acquisition of WaveTech GmbH (refer to Note 17, Subsequent Events, for additional detail). These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The recently acquired AWS and ADEX businesses have also incurred losses and experienced negative cash flows from operations during their most recent fiscal years. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of management to raise additional equity capital through private and public offerings of its common stock, and the attainment of profitable operations. As of September 30, 2019, the Company had an accumulated deficit of $27,363,795, and a working capital deficit of $7,700,853. These factors raise substantial doubt regarding the Company's ability to continue as a going concern for a period of one year from the issuance of these financial statements. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management requires additional funds over the next twelve months to fully implement its business plan. Management is currently seeking additional financing through the sale of equity and from borrowings from private lenders to cover its operating expenditures. There can be no certainty that these sources will provide the additional funds required for the next twelve months. |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | 2. Significant Accounting Policies Condensed Financial Statements The accompanying unaudited interim consolidated financial statements of the Company should be read in conjunction with the consolidated financial statements and accompanying notes filed with the U.S. Securities and Exchange Commission in the Company's Form 10-K for the year ended December 31, 2018. In the opinion of management, the accompanying financial statements reflect all adjustments of a recurring nature considered necessary to present fairly the Company's financial position and the results of its operations and its cash flows for the periods shown. The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. The results of operations and cash flows for the periods shown are not necessarily indicative of the results to be expected for the full year. Basis of Presentation/Principles of Consolidation These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States. These consolidated financial statements include the accounts of the Company and its subsidiaries, the AWS Entities (from the date of acquisition, April 25, 2017), the ADEX Entities (from the date of acquisition, February 27, 2018), and TNS (from the date of acquisition, January 4, 2019). All of the subsidiaries are wholly-owned. During the year ended December 31, 2018, the Company disposed of the following subsidiaries; Carbon Commodity Corporation, Climate ESCO Ltd., Mantra Energy Alternatives Ltd., Mantra China Inc., Mantra China Limited, Mantra Media Corp., Mantra NextGen Power Inc., and Mantra Wind Inc. All inter-company balances and transactions have been eliminated. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to allowance for doubtful accounts, the estimated useful lives and recoverability of long-lived assets, equity component of convertible debt, stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Cash and Cash Equivalents The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company records unbilled receivables for services performed but not billed. Management reviews a customer's credit history before extending credit. The Company maintains an allowance for doubtful accounts for estimated losses. Estimates of uncollectible amounts are reviewed each period, and changes are recorded in the period in which they become known. Management analyzes the collectability of accounts receivable each period. This review considers the aging of account balances, historical bad debt experience, and changes in customer creditworthiness, current economic trends, customer payment activity and other relevant factors. Should any of these factors change, the estimate made by management may also change. The allowance for doubtful accounts at September 30, 2019 and December 31, 2018 was $504,785 and $502,868, respectively. Property and Equipment Property and equipment are stated at cost. The Company depreciates the cost of property and equipment over their estimated useful lives at the following annual rates: Automotive 3-5 years straight-line basis Computer equipment and software 3-7 years straight-line basis Leasehold improvements 5 years straight-line basis Office equipment and furniture 5 years straight-line basis Research equipment 5 years straight-line basis Goodwill Goodwill was generated through the acquisition of AWS, ADEX and TNS as the total consideration paid exceeded the fair value of the net assets acquired. The Company tests its goodwill for impairment at least annually on December 31st and whenever events or circumstances change that indicate impairment may have occurred. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a significant decline in the Company's expected future cash flows; a significant adverse change in legal factors or in the business climate; unanticipated competition; and slower growth rates. Any adverse change in these factors could have a significant impact on the recoverability of goodwill and the Company's consolidated financial results. The Company tests goodwill by estimating fair value using a Discounted Cash Flow ("DCF") model. The key assumptions used in the DCF model to determine the highest and best use of estimated future cash flows include revenue growth rates and profit margins based on internal forecasts, terminal value and an estimate of a market participant's weighted-average cost of capital used to discount future cash flows to their present value. There were no impairment charges during the nine months ended September 30, 2019. Intangible Assets At September 30, 2019 and December 31, 2018, definite-lived intangible assets primarily consist of tradenames and customer relationships which are being amortized over their estimated useful lives ranging from 3-20 years. The Company periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removed from the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques. The Company has no intangibles with indefinite lives. For long-lived assets, impairment losses are only recorded if the asset's carrying amount is not recoverable through its undiscounted, probability-weighted future cash flows. The Company measures the impairment loss based on the difference between the carrying amount and the estimated fair value. When an impairment exists, the related assets are written down to fair value. Long-lived Assets In accordance with ASC 360, "Property, Plant and Equipment", the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. There were no impairment charges recorded during the nine months ended September 30, 2019. Foreign Currency Translation Transactions in foreign currencies are translated into the currency of measurement at the exchange rates in effect on the transaction date. Monetary balance sheet items expressed in foreign currencies are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. The resulting foreign exchange gains and losses are recognized in income. The Company's integrated foreign subsidiaries are financially or operationally dependent on the Company. The Company uses the temporal method to translate the accounts of its integrated operations into U.S. dollars. Monetary assets and liabilities are translated at the exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at average rates for the period, except for amortization, which is translated on the same basis as the related asset. The resulting foreign exchange gains or losses are recognized in income. Income Taxes The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, " Accounting for Income Taxes The Company conducts business, and files federal and state income, franchise or net worth, tax returns in Canada, the United States, in various states within the United States and the Commonwealth of Puerto Rico. The Company determines it's filing obligations in a jurisdiction in accordance with existing statutory and case law. The Company may be subject to a reassessment of federal and provincial income taxes by Canadian tax authorities for a period of three years from the date of the original notice of assessment in respect of any particular taxation year. For Canadian and U.S. income tax returns, the open taxation years range from 2010 to 2018. In certain circumstances, the U.S. federal statute of limitations can reach beyond the standard three year period. U.S. state statutes of limitations for income tax assessment vary from state to state. Tax authorities of Canada and U.S. have not audited any of the Company's, or its subsidiaries', income tax returns for the open taxation years noted above. Significant management judgment is required in determining the provision for income taxes, and in particular, any valuation allowance recorded against the Company's deferred tax assets. Deferred tax assets are regularly reviewed for recoverability. The Company currently has significant deferred tax assets resulting from net operating loss carryforwards and deductible temporary differences, which should reduce taxable income in future periods. The realization of these assets is dependent on generating future taxable income. The Company follows the guidance set forth within ASC Topic 740, " Income Taxes The Company received a tax notice from the Puerto Rican government requesting payment of taxes related to 2014. The amount due as of September 30, 2019 was $156,711 plus penalties and interest of $119,401 for a total obligation due of $276,112. The amount due as of December 31, 2018 was $156,711 plus penalties and interest of $111,200 for a total obligation due of $267,911. This tax assessment is included in accrued expenses at September 30, 2019 and December 31, 2018. Revenue Recognition Adoption of New Accounting Guidance on Revenue Recognition The Company recognizes revenue based on the five criteria for revenue recognition established under Topic 606: 1) identify the contract, 2) identify separate performance obligations, 3) determine the transaction price, 4) allocate the transaction price among the performance obligations, and 5) recognize revenue as the performance obligations are satisfied. Contract Types The Company's contracts fall under three main types: 1) unit-price, 2) fixed-price, and 3) time-and-materials. Unit-price contracts relate to services being performed and paid on a unit basis, such as per mile of construction completed. Fixed-price contracts are based on purchase order line items that are billed on individual invoices as the project progresses and milestones are reached. Time-and-materials contracts include employees working permanently at customer locations and materials costs incurred by those employees. A significant portion of the Company's revenues come from customers with whom the Company has a master service agreement ("MSA"). These MSA's generally contain customer specific service requirements. Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in the new revenue standard. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. For the Company's different revenue service types the performance obligation is satisfied at different times. For professional services revenue, the performance obligation is met when the work is performed. In certain cases this may be each day, or each week depending on the customer. For construction services, the performance obligation is met when the work is completed and the customer has approved the work. Contract assets include unbilled amounts for services performed but not yet billed. These amounts are included in accounts receivable on the consolidated balance sheets. Contract liabilities include unbilled costs and are included in accrued expenses on the consolidated balance sheets. Revenue Service Types The following is a description of the Company's revenue service types, which include professional services and construction: ● Professional services are services provided to the clients where the company delivers distinct contractual deliverables and/or services. Deliverables may include but are not be limited to: engineering drawings, designs, reports and specification. Services may include, but are not be limited to: consulting or professional staffing to support our client's objectives. Consulting or professional staffing services may be provided remotely or on client premises and under their direction and supervision. ● Construction Services are services provided to the client where the Company may self-perform or subcontract services that require the physical construction of infrastructure or installation of equipment and materials. Disaggregation of Revenues The Company disaggregates its revenue from contracts with customers by service type, contract type, contract duration, and timing of transfer of goods or services. See the below tables: Revenue by service type Three months ended September 30, Three months ended September 30, Nine months ended September 30, Nine months ended September 30, Professional Services $ 4,493,906 $ 5,138,882 $ 17,687,718 $ 16,336,594 Construction 3,012,031 4,533,108 9,471,353 8,627,282 Total $ 7,505,937 $ 9,671,990 $ 27,159,071 $ 24,963,876 Revenue by contract duration Three months ended September 30, Three months ended September 30, Nine months ended September 30, Nine months ended September 30, Short-term $ 57,747 $ 96,720 $ 232,185 $ 249,639 Long-term 7,448,190 9,575,270 26,926,886 24,714,237 Total $ 7,505,937 $ 9,671,990 $ 27,159,071 $ 24,963,876 Revenue by contract type Three months ended September 30, Three months ended September 30, Nine months ended September 30, Nine months ended September 30, Unit-price $ 1,751,363 $ 1,683,925 $ 4,910,033 $ 4,516,596 Fixed-price $ 1,260,668 $ 2,849,183 $ 4,561,320 $ 4,110,686 Time-and-materials 4,493,906 5,138,882 17,687,718 16,336,594 Total $ 7,505,937 $ 9,671,990 $ 27,159,071 $ 24,963,876 The Company also disaggregates its revenue by operating segment and geographic location (refer to Note 15, Segment Disclosures, for additional information). Accounts Receivable Accounts receivable include amounts from work completed in which the Company has billed. The amounts due are stated at their net estimated realizable value. The Company maintains an allowance for doubtful accounts to provide for the estimated amount of receivables that will not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables and collateral to the extent applicable. Contract Assets and Liabilities Contract assets include unbilled amounts for services performed but not yet billed. These amounts are included in contract assets on the consolidated balance sheets. The Company records unbilled receivables for services performed but not billed. At September 30, 2019 and December 31, 2018, unbilled receivables totaled $241,069 and $1,861,895, respectively. Contract liabilities include unbilled costs and are included in accrued expenses on the consolidated balance sheets. Cost of Revenues Cost of revenues includes all direct costs of providing services under our contracts, including costs for direct labor provided by employees, services by independent subcontractors, operation of capital equipment (excluding depreciation and amortization), direct materials, insurance claims and other direct costs. Research and Development Costs Research and development costs are expensed as incurred. Stock-based Compensation The Company records stock-based compensation in accordance with ASC 718, " Compensation – Stock Compensation The Company accounts for stock-based compensation awards issued to non-employees for services, as prescribed by ASC 718-10, at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in ASU 2018-07. The Company uses the Black-Scholes option pricing model to calculate the fair value of stock-based awards. This model is affected by the Company's stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to, the Company's expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the consolidated statement of operations over the requisite service period. Loss per Share The Company computes loss per share in accordance with ASC 260, "Earnings per Share" which requires presentation of both basic and diluted loss per share ("EPS") on the face of the income statement. Basic EPS is computed by dividing the loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of September 30, 2019 and 2018, respectively, the Company had 63,373,688 and 13,111,043 common stock equivalents outstanding. Comprehensive Loss ASC 220, " Comprehensive Income Leases The Company adopted FASB Accounting Standards Codification, Topic 842, Leases ("ASC 842") electing the practical expedient that allows the Company not to restate its comparative periods prior to the adoption of the standard on January 1, 2019. As such, the disclosures required under ASC 842 are not presented for periods before the date of adoption. For the comparative periods prior to adoption, the Company presented the disclosures which were required under ASC 840. The new leasing standard requires recognition of leases on the consolidated balance sheets as right-of-use ("ROU") assets and lease liabilities. ROU assets represent the Company's right to use underlying assets for the lease terms and lease liabilities represent the Company's obligation to make lease payments arising from the leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value and future minimum lease payments over the lease term at commencement date. As the Company's leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company recognized lease liabilities, with corresponding ROU assets, based on the present value of unpaid lease payments for existing operating leases longer than twelve months as of January 1, 2019. The ROU assets were adjusted per ASC 842 transition guidance for existing lease-related balances of accrued and prepaid rent, unamortized lease incentives provided by lessors, and restructuring liabilities, Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term and is recorded in selling, general and administrative expenses. Variable lease payments for common area maintenance, property taxes and other operating expenses are recognized as expense in the period when the changes in facts and circumstances on which the variable lease payments are based occur. Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases The Company adopted ASU 2016-02 and its amendments and applied the transition provisions as of January 1, 2019, which included recognizing a cumulative-effect adjustment through opening retained earnings as of that date. Prior year amounts were not recast under this transition approach and, therefore, prior year amounts are excluded from the leased properties footnote. The Company elected the package of practical expedients permitted under the transition guidance, which allowed the Company to carryforward its historical assessments of: (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. In addition, the Company did not elect the hindsight practical expedient to determine the reasonably certain lease term for existing leases. The Company elected a policy of not recording leases on its condensed consolidated balance sheets when the leases have a term of 12 months or less and the Company is not reasonably certain to elect an option to purchase the leased asset. The Company recognizes payments on these leases within selling, administrative and other expenses on a straight-line basis over the lease term. The standard did not materially impact consolidated net income or liquidity. The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or result of operations In June 2018, the FASB issued ASU 2018-07, Compensation – "Stock Compensation (Topic 718): Improvements to Nonemployee Share-based Payment Accounting", which addresses aspects of the accounting for nonemployee share-based payment transactions. This pronouncement is effective for annual reporting periods and interim periods within those annual periods beginning after December 15, 2019. The Company early adopted ASU 2018-07 on January 1, 2019. The adoption of this ASU did not have a material impact on the Company's condensed consolidated financial statements. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivables. The Company maintains its cash balances with high-credit-quality financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. These deposits may be withdrawn upon demand and therefore bear minimal risk. The Company provides credit to customers on an uncollateralized basis after evaluating client creditworthiness. For the nine months ended September 30, 2019, four customers accounted for 25%, 18%, 12% and 11%, respectively, of consolidated revenues for the period. In addition, amounts due from these customers represented 38%, 15%, 7% and 3%, respectively, of trade accounts receivable as of September 30, 2019. For the nine months ended September 30, 2018, four customers accounted for 22%, 19%, 16% and 13%, respectively, of consolidated revenues for the period. In addition, amounts due from these customers represented 12%, 12%, 25% and 14%, respectively, of trade accounts receivable as of September 30, 2018. The Company's customers are primarily located within the domestic United States of America and Puerto Rico. Revenues generated within the domestic United States of America accounted for approximately 96% and 93% of consolidated revenues for the nine month periods ended September 30, 2019 and 2018, respectively. Revenues generated from customers in Puerto Rico accounted for approximately 4% and 7% of consolidated revenues for the nine month periods ended September 30, 2019 and 2018, respectively. Fair Value Measurements The Company measures and discloses the estimated fair value of financial assets and liabilities using the fair value hierarchy prescribed by US generally accepted accounting principles. The fair value hierarchy has three levels, which are based on reliable available inputs of observable data. The hierarchy requires the use of observable market data when available. The three-level hierarchy is defined as follows: Level 1 – quoted prices for identical instruments in active markets; Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which significant inputs and significant value drivers are observable in active markets; and Level 3 – fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Financial instruments consist principally of cash and cash equivalents, accounts receivable, restricted cash, accounts payable, loans payable and convertible debentures. Derivative liabilities are determined based on "Level 3" inputs, which are significant and unobservable and have the lowest priority. There were no transfers into or out of "Level 3" during the nine months ended September 30, 2019 or the year ended December 31, 2018. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations. Our financial assets and liabilities carried at fair value measured on a recurring basis as of September 30, 2019 and December 31, 2018, consisted of the following: Total fair value at September 30, 2019 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Derivative liability (1) $ 475,892 $ - $ - $ 475,892 Total fair value at December 31, 2018 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Derivative liability (1) $ 3,166,886 $ - $ - $ 3,166,886 (1) The Company has estimated the fair value of these derivatives using the Monte-Carlo model and/or a Binomial Model. Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial statement. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Refer to Note 9, Derivative Liabilities, for additional information. Derivative Liabilities The Company accounts for derivative instruments in accordance with ASC Topic 815, " Derivatives and Hedging Sequencing Policy Under ASC 815-40-35, the Company has adopted a sequencing policy whereby, in the event that reclassification of contracts from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company's inability to demonstrate it has sufficient authorized shares as a result of certain securities with a potentially indeterminable number of shares, shares will be allocated on the basis of the earliest issuance date of potentially dilutive instruments, with the earliest grants receiving the first allocation of shares. Pursuant to ASC 815, issuance of securities to the Company's employees or directors are not subject to the sequencing policy. Reclassifications Certain balances in previously issued consolidated financial statements have been reclassified to be consistent with the current period presentation. The reclassification had no impact on total financial position, net income, or stockholders' equity. |
Acquisition of TNS, Inc.
Acquisition of TNS, Inc. | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Acquisition of TNS, Inc. | 3. Acquisition of TNS, Inc. On January 4, 2019, the Company entered into a Stock Purchase Agreement (the "Purchase Agreement") with InterCloud Systems, Inc., a Delaware corporation ("InterCloud"). Pursuant to the terms of the Purchase Agreement, InterCloud agreed to sell, and the Company agreed to purchase, all of the issued and outstanding capital stock of TNS, Inc., an Illinois corporation ("TNS"). The Company closed and completed the acquisition on January 4, 2019. The purchase price paid by the Company for the includes $980,000 in cash, paid at closing, and the issuance to InterCloud of a convertible promissory note in the aggregate principal amount of $620,000 (the "Note"). The Company has performed a preliminary valuation analysis of the fair market value of TNS' assets and liabilities. The provisional fair value of the purchase consideration issued to the sellers of TNS was allocated to the net tangible assets acquired. We accounted for the acquisition of TNS as the purchase of a business under GAAP under the acquisition method of accounting, the assets and liabilities acquired were recorded as of the acquisition date, at their respective fair values and consolidated with those of our company. The excess of the aggregate fair value of the net tangible assets has been allocated to an intangible asset, value of customer accounts and the remainder to goodwill. The purchase price allocation was based, in part, on management's knowledge of TNS' business and is preliminary. Once we complete our analysis to finalize the purchase price allocation, which includes finalizing the valuation report from a third-party appraiser and a review of potential intangible assets, it is reasonably possible that, there could be significant changes to the preliminary values below. The following table summarizes the allocation of the preliminary purchase price as of the acquisition date: Provisional purchase consideration $620,000 convertible note $ 665,000 Cash 980,000 Total purchase price $ 1,645,000 Preliminary allocation of purchase price Cash $ 38,407 Accounts receivable, net 65,166 Prepaid expenses 630,810 Customer lists* 1,800,000 Tradenames* 300,000 Goodwill* 670,759 Accounts payable (275,331 ) Accrued expenses (611,778 ) Contract liabilities (973,033 ) Net assets acquired $ 1,645,000 * The Company is reviewing for potential identifiable intangible assets, which may potentially change the value allocated to intangible assets. The following table summarizes the Company's consolidated results of operations for the nine months ended September 30, 2019 and the three and nine months ended September 30, 2018, as well as unaudited pro forma consolidated results of operations as though the acquisition had occurred on January 1, 2018: Nine months ended Three months ended Nine months ended As Reported Pro Forma As Reported Pro Forma As Reported Pro Forma Net sales $ 27,159,071 $ 27,159,071 $ 9,671,990 $ 10,439,718 $ 24,963,876 $ 30,238,512 Net (loss) income attributable to common shareholders (1,762,522 ) (1,770,076 ) 414,485 444,055 (2,493,461 ) (1,486,743 ) (Loss) earnings per common share, basic: (0.06 ) (0.06 ) 0.27 0.29 (1.44 ) (0.86 ) (Loss) earnings per common share, diluted: (0.06 ) (0.06 ) 0.04 0.04 (1.44 ) (0.86 ) |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 4. Property and Equipment Property and equipment as of September 30, 2019 and December 31, 2018 consisted of the following: September 30, December 31, 2019 2018 Computers and office equipment $ 344,509 $ 329,937 Equipment 382,140 382,140 Research equipment 143,129 143,129 Software 227,563 177,073 Vehicles 94,356 94,356 Vehicles under capital lease - - Total 1,191,697 1,126,635 Less: impairment (44,419 ) (44,419 ) Less: accumulated depreciation (1,048,292 ) (1,020,959 ) Equipment, net $ 98,986 $ 61,257 During the three months ended September 30, 2019 and 2018, the Company recorded depreciation expense of $10,348 and $4,940, respectively. During the nine months ended September 30, 2019 and 2018, the Company recorded depreciation expense of $27,333 and $14,174, respectively. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | 5. Intangible Assets Intangible assets as of September 30, 2019 and December 31, 2018 consisted of the following: Cost Accumulated Amortization Impairment Net carrying value at September 30, 2019 Net carrying value at December 31, 2018 Customer relationship and lists $ 2,837,548 $ 372,764 $ - $ 2,464,784 $ 850,249 Trade names 1,505,605 194,146 - 1,311,459 1,086,795 Total intangible assets $ 4,343,153 $ 566,910 $ - $ 3,776,243 $ 1,937,044 During the three months ended September 30, 2019 and 2018, the Company recorded amortization expense of $86,933 and $51,934, respectively. During the nine months ended September 30, 2019 and 2018, the Company recorded amortization expense of $260,802 and $147,306, respectively. The estimated future amortization expense for the next five years and thereafter is as follows: Year ending December 31, 2019 $ 86,586 2020 347,387 2021 347,387 2022 347,387 2023 347,387 Thereafter 2,300,109 Total $ 3,776,243 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 6. Related Party Transactions Unsecured Amounts Due to InterCloud As of September 30, 2019 and December 31, 2018, the Company owed $50,577 and $51,889, respectively, to InterCloud, which is non-interest bearing, unsecured, and due on demand and included in accounts payable and accrued liabilities. Exchange of Shares of Common Stock for Series B Preferred Stock On April 23, 2018, each of Roger Ponder, the Company's Chief Executive Officer, and Keith Hayter, the Company's President, exchanged certain shares of common stock of the Company held by each of them for shares of the newly designated Series B preferred stock. Mr. Ponder exchanged 542,500 shares of common stock for an aggregate of 500 shares of Series B preferred stock, and Mr. Hayter exchanged 542,500 shares of common stock for an aggregate of 500 shares of Series B preferred stock. The Company recorded the fair value of the Series B preferred stock of $484,530 as mezzanine equity and reduced common shares and additional paid in capital an equal amount (refer to Note 11, Preferred Stock, for additional information). InterCloud Related Party Reclassification During the three months ended June 30, 2019, as a result of shares of common stock issued to InterCloud as a result of conversions of convertible debentures, the Company determined that InterCloud is a related party. The effective date of the reclassification was January 1, 2018. Loans Payable to Related Parties As of September 30, 2019 and December 31, 2018, the Company had outstanding the following loans payable to related parties: September 30, December 31, 2019 2018 Promissory note issued to Roger Ponder, 10% interest, unsecured, matured on November 30, 2018 and extended to November 30, 2019 $ 18,858 $ 18,858 Promissory note issued to Keith Hayter, 10% interest, unsecured, matured on November 30, 2018 and extended to November 30, 2019 130,000 130,000 Promissory note issued to Keith Hayter, 10% and 8% interest, unsecured, matures April 13, 2020 85,000 85,000 Promissory note issued to Keith Hayter, 8% interest, unsecured, matured on October 1, 2019, due on demand 80,000 80,000 Promissory note issued to Keith Hayter, 10% interest, unsecured, matures August 11, 2020 170,000 - Convertible promissory note, InterCloud Systems, Inc., 8% interest, unsecured, matured April 27, 2018 - 1,645,625 Convertible promissory note, InterCloud Systems, Inc., 1% interest, unsecured, matures August 16, 2019, net of debt discount of $0 and $171,557 - 622,392 Convertible promissory note, InterCloud Systems, Inc., 6% interest, unsecured, matured March 27, 2019, net of debt discount of $0 and $286,749 - 1,515,674 Promissory note issued to InterCloud Systems, Inc., non-interest bearing, unsecured and due on demand 217,400 275,000 Total $ 701,258 $ 4,372,549 Promissory note issued to Roger Ponder, 10% interest, unsecured, matured on November 30, 2018 and extended to November 30, 2019 On November 30, 2017, the Company received $18,858 pursuant to a promissory note issued to the Chief Executive Officer of the Company. The note issued was unsecured, due on November 30, 2018 and bears interest at a rate of 10% per annum. On November 30, 2018, the lender agreed to extend the maturity of the loan to November 30, 2019. The Company accounted for the modification in accordance with ASC 470-50 "Modifications and Extinguishments". In accordance with ASC 470-50, the Company accounted for the extension as a modification and no gain or loss was recognized. Promissory note issued to Keith Hayter, 10% interest, unsecured, matured on November 30, 2018 and extended to November 30, 2019 On November 30, 2017, the Company received $130,000 pursuant to a promissory note issued to the President of the Company. The note issued is unsecured, due on November 30, 2018 and bears interest at a rate of 10% per annum. On November 30, 2018, the lender agreed to extend the maturity of the loan to November 30, 2019. The Company accounted for the modification in accordance with ASC 470-50 "Modifications and Extinguishments". In accordance with ASC 470-50, the Company accounted for the extension as a modification and no gain or loss was recognized. Promissory note issued to Keith Hayter, 10% and 8% interest, unsecured, matures April 13, 2020 On April 13, 2018, the Company received $85,000 pursuant to a promissory note issued to the President of the Company. The note issued is unsecured, due on April 13, 2019 and bears interest at a rate of 8% per annum. At December 31, 2018, the amount of $85,000 was owed. On April 13, 2019, the note was amended to a maturity date of April 13, 2020 and an interest rate of 10%. The Company accounted for the modification in accordance with ASC 470-50 "Modifications and Extinguishments". In accordance with ASC 470-50, the Company accounted for the extension as a modification and no gain or loss was recognized. Promissory note issued to Keith Hayter, 8% interest, unsecured, matured October 1, 2019 On August 21, 2018, the Company received $80,000 pursuant to a promissory note issued to the President of the Company. The note issued is unsecured, was due on August 20, 2019 and bears interest at a rate of 8% per annum. On August 20, 2019, the note was amended to a maturity date of October 1, 2019 and an interest rate of 10%. The Company accounted for the modification in accordance with ASC 470-50 "Modifications and Extinguishments". In accordance with ASC 470-50, the Company accounted for the extension as a modification and no gain or loss was recognized. The note matured on October 1, 2019 and is now due on demand. Promissory note issued to Keith Hayter, 10% interest, unsecured, matures August 11, 2020 On August 12, 2019, the Company received $170,000 pursuant to a promissory note issued to the President of the Company. The note issued is unsecured, is due on August 11, 2020 and bears interest at a rate of 10% per annum. Convertible promissory note, InterCloud Systems, Inc, 8% interest, unsecured, matured April 27, 2018 On April 27, 2017, the Company issued a convertible promissory note in the aggregate principal amount of $2,000,000. The interest on the outstanding principal due under the Unsecured Note accrues at a rate of 8% per annum. All principal and accrued interest under the Unsecured Note is due one year following the issue date of the Unsecured Note and is convertible into shares of common stock at a conversion price equal to 75% of the lowest volume-weighted average price during the 15 trading days immediately preceding the date of conversion. The embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 "Derivatives and Hedging". The initial fair value of the conversion feature of $1,174,000 resulted in a discount to the note payable of $943,299. On December 15, 2017, February 14, 2018, February 21, 2018, June 7, 2018, January 24, 2019, and March 15, 2019 the holder of the convertible promissory note entered into agreement to sell and assign a total of $105,000, $105,000, $105,000, $39,375, $100,000 and $100,000 of the outstanding principal, respectively to a third party. The Company approved and is bound by the assignment and sale agreement. As a result of the assignment, the conversion price for the total of $354,375 of notes assigned is now equal to the lesser 70% of the lowest volume-weighted average price during the 15 trading days immediately preceding the date of conversion and $8. The Company accounted for this assignment in accordance with ASC 470-50 "Modifications and Extinguishments". In accordance with ASC 470-50, the Company accounted for the assignment as a debt extinguishment and adjusted the fair value of the derivative to its fair value on the assignment date. Refer to Note 8, Convertible Debentures, for additional information on the assignments. On May 6, 2019, the remaining principal balance of $1,445,625 was converted into shares of the Company's common stock through an automatic forced conversion (refer to Note 10, Common Stock, for additional information). Convertible promissory note, InterCloud Systems, Inc, 1% interest, unsecured, matures August 16, 2019 On February 16, 2018, the Company issued InterCloud a convertible note with a principal amount of $793,894 to settle a contingent liability of $793,894 owed to InterCloud as a result of the acquisition of AWS. The note is due on August 16, 2019 and bears interest at 1% per annum. The note is convertible into common shares of the Company at a conversion price equal to the 80% of the lowest volume-weighted average price during the 5 trading days immediately preceding the date of conversion. The embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 "Derivatives and Hedging" (refer to Note 9, Derivative Liabilities, for additional information on embedded conversion features). The initial fair value of the conversion feature of $348,000 resulted in a discount to the note payable of $348,000. On August 16, 2019, the remaining principal balance of $793,894 was converted into shares of the Company's common stock through an automatic forced conversion (refer to Note 10, Common Stock, for additional information). As a result of the conversion, the Company recorded a loss on settlement of debt of $178,663 to the unaudited condensed consolidated statement of operations for the three and nine months ended September 30, 2019. Convertible promissory note, InterCloud Systems, Inc, 6% interest, unsecured, matured March 27, 2019 On February 27, 2018, the Company issued a convertible promissory note in the aggregate principal amount of $2,000,000. The interest on the outstanding principal due under the ADEX Note accrues at a rate of 6% per annum. All principal and accrued interest under the ADEX Note is due one year following the issue date of the ADEX Note and is convertible into shares of common stock at a conversion price equal to of the lowest volume-weighted average price during the 15 trading days immediately preceding the date of conversion, but in no event ever lower than $1 (the "Floor"), unless the note is in default, at which time the Floor terminates. The embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 "Derivatives and Hedging". The initial fair value of the conversion feature of $2,455,000 resulted in a discount to the note payable of $639,000. On September 26, 2018, the holder of the convertible promissory note entered into agreement to sell and assign a total of $75,000 of the outstanding principal to a third party. The Company approved and is bound by the assignment and sale agreement. As a result of the assignment, the assigned note bears interest at 5% and the conversion price for the $75,000 of notes assigned is now equal to the lesser 75% of the lowest volume-weighted average price during the 15 trading days immediately preceding the date of conversion and $8. On December 3, 2018, the holder of the convertible promissory note entered into agreement to sell and assign a total of $50,000 of the outstanding principal to a third party. The Company accounted for the assignments in accordance with ASC 470-50 "Modifications and Extinguishments". In accordance with ASC 470-50, the Company accounted for the assignment as a debt extinguishment and adjusted the fair value of the derivative to its fair value on the assignment date. Refer to Note 8, Convertible Debentures, for additional information on the assignments. During the nine months ended September 30, 2019, the Company repaid $55,124 of principal outstanding. During the nine months ended September 30, 2019, the principal amount was reduced by $295,000 as a result of a working capital adjustment. On May 6, 2019, the remaining principal balance of $1,452,299 was converted into shares of the Company's common stock through an automatic forced conversion (refer to Note 10, Common Stock, for additional information). Promissory note issued to InterCloud Systems, Inc., non-interest bearing, unsecured and due on demand In connection with the acquisition of ADEX from InterCloud, $500,000 of the purchase price was retained by the Company to satisfy any outstanding liabilities of ADEX incurred prior to the closing date. During the year ended December 31, 2018, the Company repaid $225,000 of this amount. During the nine months ended September 30, 2019, the Company repaid $57,600 of this amount. |
Loans Payable
Loans Payable | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Loans Payable | 7. Loans Payable As of September 30, 2019 and December 31, 2018, the Company had outstanding the following loans payable: September 30, December 31, 2019 2018 Promissory note issued to J. Thacker, non-interest bearing, unsecured and due on demand $ 41,361 $ 41,361 Promissory note issued to S. Kahn, non-interest bearing, unsecured and due on demand 7,760 7,760 Promissory note issued to 0738856 BC ltd non-interest bearing, unsecured and due on demand 2,636 2,636 Promissory note issued to 0738856 BC Ltd, non-interest bearing, unsecured and due on demand 15,000 15,000 Promissory note issued to Bluekey Energy, non-interest bearing, unsecured and due on demand 7,500 7,500 Subscription amount due to T. Warkentin non-interest bearing, unsecured and due on demand 50,000 50,000 Promissory note issued to Old Main Capital LLC, 10% interest, unsecured and due on demand 12,000 12,000 Loan with Heritage Bank of Commerce, interest rate of prime plus 2%, secured by all assets of the Company, matures October 20, 2020, net of debt discount of $149,180 and $257,194 3,121,109 3,225,821 Loan with WaveTech GmbH, non-interest bearing, matures March 31, 2020 3,000,000 - Promissory note issued to C6 Capital, non-interest bearing, matures April 15, 2020, net of debt discount of $62,003 225,274 - Total $ 6,482,640 $ 3,362,078 Promissory note issued to J. Thacker, non-interest bearing, unsecured and due on demand The Company owed $41,361 ($53,300 Canadian dollars) to a non-related party as of September 30, 2019 and December 31, 2018. This promissory note is non-interest bearing, unsecured, and due on demand. Promissory note issued to S. Kahn, non-interest bearing, unsecured and due on demand The Company owed $7,760 ($10,000 Canadian dollars) to a non-related party as of September 30, 2019 and December 31, 2018. This promissory note is non-interest bearing, unsecured, and due on demand. Promissory note issued to 0738856 BC ltd non-interest bearing, unsecured and due on demand The Company owed $2,636 ($3,400 Canadian dollars) to a non-related party as of September 30, 2019 and December 31, 2018. This promissory note is non-interest bearing, unsecured, and due on demand. Promissory note issued to 0738856 BC Ltd, non-interest bearing, unsecured and due on demand The Company owed $15,000 to a non-related party as of September 30, 2019 and December 31, 2018. This promissory note is non-interest bearing, unsecured, and due on demand. Promissory note issued to Bluekey Energy, non-interest bearing, unsecured and due on demand The Company owed $7,500 to a non-related party as of September 30, 2019 and December 31, 2018. This promissory note is non-interest bearing, unsecured, and due on demand. Subscription amount due to T. Warkentin non-interest bearing, unsecured and due on demand In March 2012, the Company received $50,000 for the subscription of 10,000,000 shares of the Company's common stock. During the year ended May 31, 2013, the Company and the subscriber agreed that the shares would not be issued and that the subscription would be returned. The subscription has been reclassified as a non-interest bearing demand loan until the funds are refunded to the subscriber. The Company owed $50,000 as of September 30, 2019 and December 31, 2018. Promissory note issued to Old Main Capital LLC, 10% interest, unsecured and due on demand On April 12, 2017, received $12,000 pursuant to a promissory note. The note issued is unsecured, due on demand and bears interest at a rate of 10% per annum. The Company owed $12,000 as of September 30, 2019 and December 31, 2018. Loan with Heritage Bank of Commerce, interest rate of prime plus 2%, secured by all assets of the Company, matures October 20, 2020 On October 10, 2018, the Company's wholly-owned subsidiary, ADEX (the "Borrower"), entered into a Loan and Security Agreement (the "Loan and Security Agreement") with Heritage Bank of Commerce (the "Lender"). Under the Loan and Security Agreement, the Borrower may borrow an aggregate outstanding amount not to exceed the lesser of up to (i) $5,000,000 or (ii) the Borrowing Base (as defined in the Loan and Security Agreement) through one or more advances through October 10, 2020 (the "Maturity Date"), subject to the Lender's satisfactory annual review of the Borrower which is currently ongoing. On the Maturity Date, all advances must be repaid. The Lender may, in its sole discretion and upon the Borrower's request, make advances to the Borrower after the Maturity Date subject to the terms and conditions under the Loan and Security Agreement. Part of the proceeds of the initial credit extension of the Loan and Security Agreement were used to pay off borrowings owed to Prestige Capital Corporation described in Note 8, Convertible Debentures. Interest is payable under the Loan and Security Agreement at a per annum rate equal to the Prime Rate (as defined in the Loan and Security Agreement) plus 2%. The Borrower's obligations under the Loan and Security Agreement are secured by all assets of the Company. In addition, the Company issued a warrant (the "Warrant") to the Lender to purchase an amount of shares of the Company's common stock equal to $150,000 divided by the Warrant Price (as defined in the Warrant) at a price per share equal to 125% of the prior day's closing price. The Loan and Security Agreement provides that upon the occurrence of an event of default, among other things, all outstanding amounts under the Loan and Security Agreement or any portion thereof becomes immediately due and payable. Events of default under the Loan and Security Agreement include, among other items, the Borrower's failure to comply with certain affirmative and negative covenants relating to the Company, its securities and its financial condition. In connection with the financing, on October 10, 2018, the Company also issued a warrant to purchase 113,953 shares of the Company's common stock at $1.25 per share for three years. The fair value of the warrants of $87,410 and $190,000 of debt issuance costs resulted in a discount to the note payable of $277,410. At December 31, 2018, the Company owed $3,483,015 pursuant to this agreement and will record accretion equal to the debt discount of $257,194 over the remaining term of the note. During the nine months ended September 30, 2019, the Company received an aggregate of $21,111,888 and repaid an aggregate of $21,324,842, for a net repaid amount of $212,954. At September 30, 2019, the Company owed $3,270,289 pursuant to this agreement and will record accretion equal to the debt discount of $149,180 over the remaining term of the note. Loan with Libertas Funding LLC On January 4, 2019, the Company, together with its subsidiaries, AWS, ADEX, and TNS (collectively with the Company, the "Financing Parties"), entered into an Agreement of Sale of Future Receipts (the "Financing Agreement") with Libertas Funding LLC, a Connecticut limited liability company ("Libertas"). Under the Financing Agreement, the Financing Parties sold to Libertas future receivables in an aggregate amount equal to $1,460,000 for a purchase price of $1,000,000. Pursuant to the terms of the Financing Agreement, the Company agreed to pay Libertas $31,602 each week based upon an anticipated 20% of its future receivables until such time as $1,460,000 had been paid, a period Libertas and the Financing Parties estimated to be approximately eleven months. In the event that the Financing Agreement was paid off earlier than eleven months, there was to be a discount to the sum owed. The Financing Agreement also contained customary affirmative and negative covenants, representations and warranties, and default and termination provisions. The Company used the proceeds of the Financing Agreement for the acquisition of TNS, as discussed in Note 3, Acquisition of TNS, Inc. On February 1, 2019, the Company fully repaid the Financing Agreement. As a result, the amount owed at June 30, 2019 was $0. Loan with WaveTech Global, Inc., matured April 28, 2019 On February 4, 2019, the Company entered into a share purchase agreement with WaveTech Global. This agreement included a promissory note in the principal amount of $1,325,895, which matured on April 28, 2019. On July 9, 2019, the share purchase agreement was terminated. As a result, the Company has placed the amount due to WaveTech Global into escrow using cash received from the WaveTech GmbH share purchase agreement (refer to note 14, Commitments and Contingencies for additional detail). This amount is shown in escrow on the balance sheet as of September 30, 2019. During November 2019, in connection with the closing of the Company's acquisition of WaveTech GmbH, the amount in escrow was returned to the Company (refer to Note 17, Subsequent Events, for additional detail). Loan with WaveTech GmbH., matures March 31, 2020 On July 15, 2019, the Company entered into a share purchase agreement with WaveTech GmbH, a German Corporation (refer to Note 14, Commitments and Contingencies, for additional detail). In connection with the share purchase agreement, the Company was to receive $3,000,000 in cash at or before consummation of the transactions described in the agreement. The Company received $1,325,895 which was placed into escrow to satisfy the amounts outstanding to WaveTech Global, Inc. The Company received an additional $1,664,083 during the three months ended September 30, 2019 to satisfy the $3,000,000 of cash per the share purchase agreement. The remaining $10,022 was recorded as a foreign exchange loss in the unaudited condensed consolidated statement of operations for the three and nine months ended September 30, 2019. On November 14, 2019, the Company closed on its acquisition of WaveTech GmbH (refer to Note 17, Subsequent Events, for additional detail). Loan with C6 Capital On August 16, 2019, the Company, together with its subsidiaries, AWS, ADEX, and TNS (collectively with the Company, the "Financing Parties"), entered into an Agreement of Sale of Future Receipts (the "Financing Agreement") with C6 Capital. Under the Financing Agreement, the Financing Parties sold to C6 Capital future receivables in an aggregate amount equal to $337,500 for a purchase price of $250,000. The Company received cash of $242,500 and recorded a debt discount of $95,000. Pursuant to the terms of the Financing Agreement, the Company agreed to pay C6 Capital $10,045 each week based upon an anticipated 20% of its future receivables until such time as $337,500 has been paid, a period C6 Capital and the Financing Parties estimate to be approximately eight months. In the event that the Financing Agreement is paid off earlier than eight months, there is to be a discount to the sum owed. The Financing Agreement also contains customary affirmative and negative covenants, representations and warranties, and default and termination provisions. During the nine months ended September 30, 2019, the Company paid $50,223 of the original balance under the agreement. At September 30, 2019, the Company owed $287,277 pursuant to this agreement and will record accretion equal to the debt discount of $62,003 over the remaining term of the note. |
Convertible Debentures
Convertible Debentures | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Convertible Debentures | 8. Convertible Debentures As of September 30, 2019 and December 31, 2018, the Company had outstanding the following convertible debentures: September 30, December 31, 2019 2018 Convertible promissory note, Barn 11, 6% interest, unsecured, matured June 1, 2019, net of debt discount of $0 and $55,000 $ 594,374 $ 445,000 Convertible promissory note, Dominion Capital, 12% interest, unsecured, matures October 17, 2020, net of debt discount of $179,543 and $0 1,391,591 - Convertible promissory note, Michael Roeske, 6% interest, unsecured, matures, January 30, 2020, net of debt discount of $13,342 and $0 102,658 - Convertible promissory note, Joel Raven, 6% interest, unsecured, matures January 30, 2020, net of debt discount of $33,364 and $0 330,636 - Convertible promissory note, GS Capital Partners, LLC, 8% interest, secured. matures August 2, 2020, net of debt discount of $33,888 89,112 - Convertible promissory note, SCS, LLC, 8% interest, unsecured, matures March 30, 2020, net of debt discount of $25,891 25,139 - Convertible promissory note, Dominion Capital, 18% interest, secured, matures October 23, 2019, net of debt discount of $0 and $1,009,630 - 240,370 Convertible promissory note, Dominion Capital, 12% interest, unsecured, matures May 18, 2019, net of debt discount of $0 and $172,570 - 123,176 Convertible promissory note, Silverback, 8% interest, unsecured, matures December 4, 2019, net of debt discount of $0 and $24,140 - 3,367 Convertible promissory note, RDW Capital, February 21, 2018 assignment - 50,000 Convertible promissory note, RDW Capital, June 7, 2018 assignment - 39,375 Convertible promissory note, Silverback Capital, December 3, 2018 assignment - 50,000 Convertible promissory note, M2B Funding, 12% interest, unsecured, matures March 15, 2019, net of debt discount of $0 and $9,087 - 69,860 Convertible promissory note, M2B Funding, 12% interest, unsecured, matures March 15, 2019, net of debt discount of $0 and $41,395 - 37,552 Total $ 2,533,510 $ 1,058,700 Convertible promissory note, Barn 11, 6% interest, unsecured, matured June 1, 2019 On February 21, 2018, the Company issued a convertible note with a principal amount of $500,000 and a warrant with a term of three years to purchase up to 125,000 shares of common stock of the Company at an exercise price of $1.60 per share to Barn 11. The exercise price of the warrant was to reduce to 85% of the closing price of the Company's common stock if the closing price of the Company's common stock was less than $1.60 on July 31, 2018. The note was due on January 15, 2019, and in February 2019, the maturity date was extended to June 1, 2019, and bears interest at 6% per annum. The note is convertible into common shares of the Company at a conversion price equal to the lower of 80% of the lowest volume-weighted average price during the 5 trading days immediately preceding the date of conversion and $1 (the "Floor"), unless the note is in default, at which time the Floor terminates. The embedded conversion option and warrant qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 "Derivatives and Hedging". The initial fair value of the conversion feature of $571,079 and the warrant of $158,772 resulted in a discount to the note payable of $500,000 and an initial derivative expense of $229,851. On June 1, 2019, the Company was in default on the note. As a result of the default, a 15% premium was added to the balance owed, including all accrued interest. Subsequent to the default, the new principal balance of the note is $619,362, with interest now accruing at 18% per annum. Additionally, $466,000 was added to the derivative liability balance in connection with the default. During the three months ended September 30, 2019, the Company paid $25,000 of principal. The Company owed $594,362 as of September 30, 2019. Convertible promissory note, Dominion Capital, 18% interest, secured, matures October 23, 2019 On April 23, 2018, the Company entered into and closed on a Securities Purchase Agreement with an institutional investor, pursuant to which the Company issued to the lender a senior secured convertible promissory note in the aggregate principal amount of $1,578,947 for an aggregate purchase price of $1,500,000. The interest on the outstanding principal due under the secured note accrued at a rate of 12% per annum. All principal and accrued interest under the secured note was originally due on October 23, 2019 and was convertible into shares of the Company's common stock at a fixed conversion price of $1.00. While during the first three months that the secured note is outstanding, only interest payments were due to the lender, beginning in month four, and on each monthly anniversary thereafter until maturity, amortization payments were due for principal and interest due under the secured note. The secured note included customary events of default, including non-payment of the principal or accrued interest due on the secured note. Upon an event of default, all obligations under the secured note would become immediately due and payable. If the Company issued any common stock or common stock equivalents at an effective price per share less than $1 then the conversion price of the note would be reduced to the lower price. As long as the note was not in default the Company could repay the note at 110% of the outstanding principal amount. If the Company defaulted upon the note it would accrue interest at 18% per annum. In connection with the Purchase Agreement, the Company entered into a security agreement, dated as of April 23, 2018, with the Lender (the "Security Agreement") and an intellectual property security agreement, dated as of April 23, 2018, with the Lender pursuant to which the Company granted a security interest in substantially all of the assets of the Company, but for those assets over which Prestige Capital Corporation holds a lien, to secure the Company's obligations under the secured note. In addition, all of the Company's subsidiaries are guarantors of the Company's obligations to the Lender pursuant to the Secured Note. The embedded conversion option qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 "Derivatives and Hedging". The initial fair value of the conversion feature of $3,325,000 resulted in a discount to the note payable of $1,500,000 and an initial derivative expense of $1,825,000. On April 17, 2019, the holder of the note exchanged this note for a new note (refer to the "Convertible promissory note, Dominion Capital, 12% interest, unsecured, matures October 17, 2020" section of this note for additional detail). Convertible promissory note, Dominion Capital, 12% interest, unsecured, matures May 18, 2019 On May 18, 2018, the Company entered into and closed on a Securities Purchase Agreement with an institutional investor, pursuant to which the Company issued to the investor a senior secured convertible promissory note in the aggregate principal amount of $295,746 for an aggregate purchase price of $280,959. The interest on the outstanding principal due under the secured note accrued at a rate of 12% per annum. All principal and accrued but unpaid interest under the secured note was originally due on May 18, 2019. The secured note was convertible into shares of the Company's common stock at a fixed conversion price of $1 per share. Interest was payable monthly on the 18th of each month. While interest payments were to be made in cash during the first six months that the secured note was outstanding, beginning in month seven, and on each monthly anniversary thereafter until maturity, the Company had the option to pay interest payments in stock, subject to certain equity conditions being satisfied. Any payment of interest or principal scheduled after December 1, 2018 that was made in cash would be subject to a 5% prepayment premium. Any other prepayment is subject to a 10% premium. The secured note included customary events of default, including non-payment of the principal or accrued interest due on the secured note and cross default to other notes owing to the investor. Upon an event of default, all obligations under the secured note and other notes owing to the investor would become immediately due and payable. In connection with the issuance of the secured note, the Company issued the investor 496,101 shares of Series A Preferred Stock with a fair value of $193,509 which was expensed. The investor was granted a right to participate in future financing transactions of the Company while the secured note remains outstanding. If the Company issued any common stock or common stock equivalents at an effective price per share less than $1 then the conversion price of the note would be reduced to the lower price. As long as the note is not in default the Company could repay the note at 110% of the outstanding principal amount. If the Company defaulted upon the note it would accrue interest at 18% per annum. In connection with the Securities Purchase Agreement, the Company entered into an amendment to the existing Security Agreement described in Note 10(o). Pursuant to the amendment, the Company agreed that obligations under the secured note and related documents will be secured pursuant to the existing security interest in substantially all of the assets of the Company securing other notes issued to the Investor (except for those assets over which Prestige Capital Corporation holds a lien). In addition, all of the Company's subsidiaries are guarantors of the Company's obligations to the Investor pursuant to the Secured Note and have granted a similar security interest over substantially their assets. The embedded conversion option qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 "Derivatives and Hedging". The initial fair value of the conversion feature of $468,000 resulted in a discount to the note payable of $280,959 and an initial derivative expense of $187,041. On April 17, 2019, the holder of the note exchanged this note for a new note (refer to the "Convertible promissory note, Dominion Capital, 12% interest, unsecured, matures October 17, 2020" section of this note for additional detail). Convertible promissory note, Dominion Capital, 12% interest, unsecured, matures October 17, 2020 On April 17, 2019, Dominion Capital exchanged the notes described in the "Convertible promissory note, Dominion Capital, 18% interest, secured, matures October 23, 2019" and "Convertible promissory note, Dominion Capital, 12% interest, unsecured, matures May 18, 2019" sections above into a new note (the "Exchange Note") with a principal amount of $1,571,134. Interest accrues on the new note at 12% per annum. All principal and accrued interest under the Exchange Note is due on October 17, 2020 and is convertible into shares of the Company's common stock. The conversion price in effect on the date such conversion is effected shall be equal to (i) initially, $0.10 or (ii) on or after the date of the closing of the next public or private offering of equity or equity-linked securities of the Company in which the Company receives gross proceeds in an amount greater than $100,000, one hundred and five percent (105%) of the price of the common stock issuable in the offering. While during the first six months that the Exchange Note is outstanding, only interest payments are due to the holder, beginning in October 2019, and on each monthly anniversary thereafter until maturity, amortization payments are due for principal and interest due under the Exchange Note. The Exchange Note includes customary events of default, including non-payment of the principal or accrued interest due on the Exchange Note. Upon an event of default, all obligations under the Exchange Note will become immediately due and payable. The Holder was granted a right to participate in future financing transactions of the Company while the Exchange Note remains outstanding. As a result of the beneficial conversion feature associated with the Dominion notes, $314,228 was added to additional paid-in capital during the nine months ended September 30, 2019. In connection with the exchange, the Company recorded a loss on settlement of debt of $904,469 on the unaudited condensed consolidated statement of operations for the nine months ended September 30, 2019. At September 30, 2019, the Company owed $1,571,134 pursuant to this agreement and will record accretion equal to the debt discount of $179,543 over the remaining term of the note. The Company was to begin making principal payments in equal installments beginning on October 1, 2019. On October 22, 2019, the Company reached an agreement with Dominion Capital to postpone the principal payments. In exchange for the extension, the Company will pay to Dominion Capital an extension fee equal to 14% of the postponed payments. Convertible promissory note, Silverback, 8% interest, unsecured, matures December 4, 2019 On December 4, 2018, the Company entered into and closed on a Securities Purchase Agreement with an institutional investor, pursuant to which the Company issued to the investor a senior secured convertible promissory note in the aggregate principal amount of $27,500 for an aggregate purchase price of $25,000. The interest on the outstanding principal due under the secured note accrues at a rate of 8% per annum. All principal and accrued but unpaid interest under the secured note is due on December 4, 2019. The secured note is convertible into shares of the Company's at 65% of lowest trading price for the fifteen trading days prior to the conversion date. The Company may repay the note at 150% of the outstanding principal amount. If the Company defaults upon the note it bears interest at 18% per annum. The embedded conversion option qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 "Derivatives and Hedging". The initial fair value of the conversion feature of $30,000 resulted in a discount to the note payable of $25,000 and an initial derivative expense of $5,000. During the nine months ended September 30, 2019, Silverback converted $27,500 of principal into shares of the Company's common stock (refer to Note 10, Common Stock, for additional information). As a result of these conversions, the balance of the note was $0 as of September 30, 2019. Convertible promissory note issued in connection with the acquisition of TNS, Inc. On January 4, 2019, as part of the acquisition described in Note 3, Acquisition of TNS, Inc., the Company issued to InterCloud a convertible promissory note in the aggregate principal amount of $620,000 (the "Note"). The interest on the outstanding principal due under the Note accrued at a rate of 6% per annum. All principal and accrued interest under the Note was due January 30, 2020, and was convertible, at any time at InterCloud's election, into shares of common stock of the Company at a conversion price equal to the greater of 75% of the lowest volume-weighted average price during the 10 trading days immediately preceding the date of conversion and $0.10. The embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 "Derivatives and Hedging". The initial fair value of the conversion feature of $189,000 resulted in a discount to the note payable of $144,000. On January 28, 2019, the holder of the convertible promissory note entered into agreement to sell and assign a total of $620,000 of the $620,000 outstanding principal to two third parties, with $186,000 and $434,000 of principal assigned to each party (refer to the "Convertible promissory note, Michael Roeske, 6% interest, unsecured, matures, January 30, 2020" and "Convertible promissory note, Joel Raven, 6% interest, unsecured, matures January 30, 2020" sections of this note for further detail). The Company approved and is bound by the assignment and sale agreement. Convertible promissory note, Michael Roeske, 6% interest, unsecured, matures, January 30, 2020 On January 28, 2019, InterCloud assigned $186,000 of the note issued in connection with the acquisition of TNS to Michael Roeske. The note accrues interest at a rate of 6% per annum and has a maturity date of January 30, 2020. During the nine months ended September 30, 2019, Mr. Roeske converted $70,000 of principal of the note into shares of the Company's common stock (refer to Note 10, Common Stock, for additional information). At September 30, 2019, the Company owed $116,000 pursuant to this agreement and will record accretion equal to the debt discount of $13,342 over the remaining term of the note. Convertible promissory note, Joel Raven, 6% interest, unsecured, matures January 30, 2020 On January 28, 2019, InterCloud assigned $434,000 of the note issued in connection with the acquisition of TNS to Joel Raven. The note accrues interest at a rate of 6% per annum and has a maturity date of January 30, 2020. During the nine months ended September 30, 2019, Mr. Raven converted $70,000 of principal of the note into shares of the Company's common stock (refer to Note 10, Common Stock, for additional information). At September 30, 2019, the Company owed $364,000 pursuant to this agreement and will record accretion equal to the debt discount of $33,364 over the remaining term of the note. Convertible promissory note, GS Capital Partners, LLC, 8% interest, secured, matures August 2, 2020 On August 2, 2019, the Company entered into and closed on a Securities Purchase Agreement with GS Capital Partners, LLC, pursuant to which the Company issued to GS Capital Partners, LLC a senior secured convertible promissory note in the aggregate principal amount of $123,000 for an aggregate purchase price of $112,000. The interest on the outstanding principal due under the secured note accrues at a rate of 8% per annum. All principal and accrued but unpaid interest under the secured note is due on August 2, 2020. The secured note is convertible into shares of the Company's common stock at 71% of the average of the three lowest VWAPs in the 12 trading days prior to and including the conversion date. The conversion price has a floor of $0.01 per share. The embedded conversion option qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 "Derivatives and Hedging". The initial fair value of the conversion feature of $28,000 resulted in an additional discount to the note payable of $28,000, for a total debt discount of $39,000. At September 30, 2019, the Company owed $123,000 pursuant to this agreement and will record accretion equal to the debt discount of $33,888 over the remaining term of the note. Convertible promissory note, SCS, LLC, 8% interest, unsecured, matures March 30, 2020 On September 1, 2019, the Company entered into and closed on a Securities Purchase Agreement with SCS, LLC, pursuant to which the Company issued to SCS, LLC an unsecured convertible promissory note in the aggregate principal amount of $51,030 in exchange for rent. The interest on the outstanding principal due under the unsecured note accrues at a rate of 8% per annum. All principal and accrued but unpaid interest under the secured note is due on March 30, 2020. The secured note is convertible into shares of the Company's common stock at 75% of the lowest average VWAP in the 15 trading days prior to the conversion date. The conversion price has a floor of $0.005 per share. The embedded conversion option qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 "Derivatives and Hedging". The initial fair value of the conversion feature of $29,000 resulted in a discount to the note payable of $29,000. At September 30, 2019, the Company owed $51,030 pursuant to this agreement and will record accretion equal to the debt discount of $25,891 over the remaining term of the note. Convertible promissory note, M2B Funding, 12% interest, unsecured, matures March 15, 2019 On July 3, 2018, the Company entered into and closed on a Securities Purchase Agreement with an institutional investor, pursuant to which the Company issued to the investor a senior secured convertible promissory note in the aggregate principal amount of $78,947 for an aggregate purchase price of $75,000. The interest on the outstanding principal due under the secured note accrued at a rate of 12% per annum. All principal and accrued but unpaid interest under the secured note was due on March 15, 2019. The secured note was convertible into shares of the Company's common stock at the greater of $0.80 or 75% of the lowest VWAP in the 10 trading days prior to conversion. The Company was allowed to repay the note at 115% of the outstanding principal amount. If the Company defaulted upon the note it would have accrued interest at 18% per annum. The embedded conversion option qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 "Derivatives and Hedging". The initial fair value of the conversion feature of $23,000 resulted in a discount to the note payable of $23,000. During the nine months ended September 30, 2019, the Company repaid the note in full and recognized a loss on settlement of debt of $2,300 in the unaudited condensed consolidated statement of operations. Convertible promissory note, M2B Funding, 12% interest, unsecured, matures March 15, 2019 On July 31, 2018, the Company entered into and closed on a Securities Purchase Agreement with an institutional investor, pursuant to which the Company issued to the investor a senior secured convertible promissory note in the aggregate principal amount of $78,947 for an aggregate purchase price of $75,000. The interest on the outstanding principal due under the secured note accrued at a rate of 12% per annum. All principal and accrued but unpaid interest under the secured note was due on March 15, 2019. The secured note was convertible into shares of the Company's common stock at the greater of $1 or 75% of the lowest VWAP in the 10 trading days prior to conversion. The Company was allowed to repay the note at 115% of the outstanding principal amount. If the Company defaulted upon the note it would have accrued interest at 18% per annum. The embedded conversion option qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 "Derivatives and Hedging". The initial fair value of the conversion feature of $103,000 resulted in a discount to the note payable of $75,000 and an initial derivative expense of $28,000. During the nine months ended September 30, 2019, the Company repaid the note in full and recognized a loss on settlement of debt of $90,000 in the unaudited condensed consolidated statement of operations. Assignments of Convertible Related Party Debt to RDW Capital LLC On February 21, 2018, the holder of the convertible promissory note described in Note 6, Related Party Transactions, entered into agreements to sell and assign a total of $105,000 of the outstanding principal to a third party. During the year ended December 31, 2018, $55,000 of the note was converted. During the six months ended June 30, 2019, the remaining $50,000 was converted into shares of the Company's common stock (refer to Note 10, Common Stock, for additional information). On June 7, 2018, the holder of the convertible promissory note described in Note 6, Related Party Transactions, entered into agreements to sell and assign a total of $39,375 of the outstanding principal to a third party. During the nine months ended September 30, 2019, the full $39,375 was converted into shares of the Company's common stock (refer to Note 10, Common Stock, for additional information). Assignments of Convertible Related Party Debt to Silverback On September 26, 2018, the holder of the convertible promissory note described in Note 6, Related Party Transactions, entered into agreement to sell and assign a total of $75,000 of the outstanding principal to a third party. The Company approved and is bound by the assignment and sale agreement. As a result of the assignment, the assigned note bore interest at 5% and the conversion price for the $75,000 of notes assigned was equal to the lesser 75% of the lowest volume-weighted average price during the 15 trading days immediately preceding the date of conversion and $8. During the year ended December 31, 2018, the full $75,000 was converted into shares of the Company's common stock. On December 3, 2018, the holder of the convertible promissory note described in Note 6, Related Party Transactions, entered into agreements to sell and assign a total of $50,000 of the outstanding principal to a third party. During the nine months ended September 30, 2019, the full $50,000 was converted into shares of the Company's common stock (refer to Note 10, Common Stock, for additional information). Assignments of Convertible Related Party Debt to Virtual Capital On January 24, 2019 and March 15, 2019, the holder of the convertible promissory note described in Note 6, Related Party Transactions, entered into agreements to sell and assign a total of $200,000 of the outstanding principal to a third party. During the nine months ended September 30, 2019, the full $200,000 was converted into shares of the Company's common stock (refer to Note 10, Common Stock, for additional information). |
Derivative Liabilities
Derivative Liabilities | 9 Months Ended |
Sep. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liabilities | 9. Derivative Liabilities The embedded conversion options of the convertible debentures described in Note 8, Convertible Debentures, contain conversion features that qualify for embedded derivative classification. The fair value of the liability is re-measured at the end of every reporting period and the change in fair value is reported in the statement of operations as a gain or loss on change in fair value of derivatives. Upon the issuance of the convertible debentures described in Note 8, Convertible Debentures, the Company concluded that it only has sufficient shares to satisfy the conversion of some but not all of the outstanding convertible notes, warrants and options. The Company elected to reclassify contracts from equity with the earliest inception date first. As a result, none of the Company's previously outstanding convertible instruments qualified for derivative reclassification, however, any convertible securities issued after the election qualified for derivative classification. The Company reassesses the classification of the instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. The table below sets forth a summary of changes in the fair value of the Company's Level 3 financial liabilities as of September 30, 2019 and December 31, 2018: September 30, December 31, 2019 2018 Balance at the beginning of the period $ 3,166,886 $ 4,749,712 Original discount limited to proceeds of notes 246,000 2,839,369 Conversion of derivative liability (1,281,889 ) (678,142 ) Repayment of convertible note (196,468 ) (310,041 ) Change in fair value of embedded conversion option (1,924,637 ) (6,049,473 ) Addition to derivative due to default penalty 466,000 - Derivative issued as part of acquisition - 302,800 Fair value of derivative liabilities in excess of notes proceeds received - 2,274,892 Derivative warrants issued for services and to acquire non-controlling interest - 328,833 Derivative liability settled through the issuance of preferred stock - (291,064 ) Balance at the end of the period $ 475,892 $ 3,166,886 The Company uses Level 3 inputs for its valuation methodology for the embedded conversion option liabilities as their fair values were determined by using Monte-Carlo model or a Binomial Model based on various assumptions. Significant changes in any of these inputs in isolation would result in a significant change in the fair value measurement. As required, these are classified based on the lowest level of input that is significant to the fair value measurement. The following table shows the assumptions used in the calculations: Expected volatility Risk-free interest rate Expected dividend yield Expected life At December 31, 2018 172 - 381% 2.45 - 2.63% 0 % 0.04 - 2.78 At September 30, 2019 265 - 355% 1.63 - 1.88% 0 % 0.25 - 2.03 |
Common Stock
Common Stock | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Common Stock | 10. Common Stock Authorized Shares On November 15, 2017, the Company revised its authorized share capital to increase the number of authorized common shares from 275,000,000 common shares with a par value of $0.00001, to 750,000,000 common shares with a par value of $0.00001. Treasury Stock The Company holds 621,258 common shares in treasury at a cost of $277,436. Issuance of Shares Pursuant to RDW Capital LLC Convertible Debentures On January 14, 2019, the Company issued 110,742 shares of common stock to RDW Capital LLC upon the conversion of $10,000 of principal pursuant to the convertible debenture described in Note 8, Convertible Debentures. On February 7, 2019, the Company issued 172,414 shares of common stock to RDW Capital LLC upon the conversion of $12,500 of principal pursuant to the convertible debenture described in Note 8, Convertible Debentures. On February 12, 2019, the Company issued 300,000 shares of common stock to RDW Capital LLC upon the conversion of $21,750 of principal pursuant to the convertible debenture described in Note 8, Convertible Debentures. On March 7, 2019, the Company issued 576,501 shares of common stock to RDW Capital LLC upon the conversion of $39,375 of principal pursuant to the convertible debenture described in Note 8, Convertible Debentures. On May 21, 2019, the Company issued 77,598 shares of common stock to RDW Capital LLC upon the conversion of $5,750 of principal pursuant to the convertible debenture described in Note 8, Convertible Debentures. Issuance of Shares Pursuant to Silverback Capital Convertible Debentures On January 14, 2019, the Company issued 100,000 shares of common stock to Silverback Capital upon the conversion of $9,746 of principal pursuant to the convertible debenture described in Note 8, Convertible Debentures. On January 28, 2019, the Company issued 200,000 shares of common stock to Silverback Capital upon the conversion of $15,552 of principal pursuant to the convertible debenture described in Note 8, Convertible Debentures. On February 11, 2019, the Company issued 317,600 shares of common stock to Silverback Capital upon the conversion of $24,697 of principal pursuant to the convertible debenture described in Note 8, Convertible Debentures. On May 17, 2019, the Company issued 200,000 shares of common stock to Silverback Capital upon the conversion of $13,000 of principal pursuant to the convertible debenture described in Note 8, Convertible Debentures. On July 2, 2019, the Company issued 300,000 shares of common stock to Silverback Capital upon the conversion of $8,500 of principal and $290 of accrued interest pursuant to the convertible debenture described in Note 8, Convertible Debentures. On August 29, 2019, the Company issued 650,000 shares of common stock to Silverback Capital upon the conversion of $6,000 of principal and $338 of accrued interest pursuant to the convertible debenture described in Note 8, Convertible Debentures. Issuance of Shares Pursuant to Virtual Capital Convertible Debentures On February 7, 2019, the Company issued 1,071,418 shares of common stock to Virtual Capital upon the conversion of $75,000 of principal and $7,499 of accrued interest pursuant to the convertible debenture described in Note 8, Convertible Debentures. On April 1, 2019, the Company issued 1,400,000 shares of common stock to Virtual Capital upon the conversion of $70,000 of principal and $6,930 of accrued interest pursuant to the convertible debenture described in Note 8, Convertible Debentures. On April 25, 2019, the Company issued 1,499,960 shares of common stock to Virtual Capital upon the conversion of $55,000 of principal and $19,998 of accrued interest pursuant to the convertible debenture described in Note 8, Convertible Debentures. Issuance of Shares Pursuant to InterCloud Convertible Debentures On May 6, 2019, the Company issued 15,707,163 shares of common stock to InterCloud upon the conversion of $2,897,924 of principal pursuant to the convertible debentures described in Note 6, Related Party Transactions. On August 16, 2019, the Company issued 20,598,088 shares of common stock to InterCloud upon the conversion of $793,894 of principal and $12,063 of accrued interest pursuant to the convertible debentures described in Note 6, Related Party Transactions. Issuance of Shares Pursuant to Employee Convertible Debentures On February 14, 2019, the Company issued 1,400,000 shares of common stock to employees of the Company upon the conversion of $140,000 principal pursuant to the convertible debenture described in Note 8, Convertible Debentures. Issuance of Shares Pursuant to Conversion of Series A Preferred Stock On August 26, 2019, the Company issued 263,713 shares of common stock to Dominion Capital upon the conversion of 10,000 shares of Series A preferred stock with a stated value of $1 per share. On August 30, 2019, the Company issued 333,334 shares of common stock to Dominion Capital upon the conversion of 10,000 shares of Series A preferred stock with a stated value of $1 per share. On September 18, 2019, the Company issued 333,334 shares of common stock to M2B Funding upon the conversion of 10,000 shares of Series A preferred stock with a stated value of $1 per share. On September 27, 2019, the Company issued 333,334 shares of common stock to M2B Funding upon the conversion of 10,000 shares of Series A preferred stock with a stated value of $1 per share. Issuance of Shares for Services On February 1, 2019, the Company issued 2,869,231 shares of common stock to employees and directors of the Company in exchange for services for the Company. On July 18, 2019, the Company issued 833,333 shares of common stock to MZ Group in exchange for services for the Company. Cancellation of Shares for Services On April 12, 2019, the Company cancelled 90,000 shares of common stock issued to former employees for services. On May 22, 2019, the Company cancelled 30,000 shares of common stock issued to former employees for services. On June 18, 2019, the Company cancelled 20,000 shares of common stock issued to former employees for services. |
Preferred Stock
Preferred Stock | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Preferred Stock | 11. Preferred Stock Series A On November 15, 2017, the Company created one series of the 20,000,000 preferred shares it is authorized to issue, consisting of 8,000,000 shares, to be designated as Series A preferred stock. On October 29, 2018, the Company made the first amendment to the Certificate of Designation of its Series A convertible preferred stock. This amendment updated the conversion price to be equal to the greater of 75% of the lowest VWAP during the ten trading day period immediately preceding the date a conversion notice is delivered or $0.40, subject to adjustment for any subdivision or combination of the Company's outstanding shares of common stock. On August 16, 2019, the Company made the second amendment to the Certificate of Designation of its Series A convertible preferred stock. As a result of this amendment, the Company recorded a deemed dividend of $488,072 for the three and nine months ended September 30, 2019 in accordance with ASC 260-10-599-2. Subsequent to the second amendment, the principal terms of the Series A preferred stock shares are as follows: Voting rights Dividend rights Conversion rights Liquidation rights In accordance with ASC 480 Distinguishing Liabilities from Equity Holders of Series A preferred stock shares began converting into shares of common stock during the three months ended September 30, 2019 (refer to Note 10, Common Stock, for additional detail). Series B On April 16, 2018, the Company designated 1,000 shares of Series B preferred stock of the Company with a stated value of $3,500 per share. The Series B preferred stock is neither redeemable nor convertible into common stock. The principal terms of the Series B preferred stock shares are as follows: Issue Price - Redemption - Dividends - Preference of Liquidation - Voting - Conversion - In accordance with ASC 480 Distinguishing Liabilities from Equity Series C On November 14, 2019, the Company designated 9,000,000 shares of Series C preferred stock of the Company with a stated value of $0.00001 per share in connection with the closing of the Company's acquisition of WaveTech GmbH (refer to Note 17, Subsequent Events, for additional detail). |
Share Purchase Warrants
Share Purchase Warrants | 9 Months Ended |
Sep. 30, 2019 | |
Warrants and Rights Note Disclosure [Abstract] | |
Share Purchase Warrants | 12. Share Purchase Warrants The following table summarizes the activity of share purchase warrants for the nine months ended September 30, 2019: Number of Weighted Balance at December 31, 2018 1,715,177 $ 2.14 Issued 284,717 1.20 Expired (60,000 ) 0.32 Balance at March 31, 2019 1,939,894 $ 1.96 Issued 731,938 1.20 Expired (20,375 ) 74.00 Balance at June 30, 2019 2,651,457 $ 1.27 Issued 938,806 1.20 Expired (200,000 ) 0.0001 Balance at September 30, 2019 3,390,263 $ 1.32 As of September 30, 2019, the following share purchase warrants were outstanding: Number of warrants Exercise price Issuance Date Expiry date 137,500 5.10 4/28/2017 4/28/2020 250,000 1.00 6/27/2017 6/27/2020 2,263,808 * 1.20 2/14/2018 2/13/2021 125,000 1.60 2/21/2018 2/21/2021 500,000 1.00 5/17/2018 5/17/2020 113,955 1.08 10/10/2018 10/10/2021 3,390,263 * This warrant is convertible into 4% of the number of common shares of the Company outstanding. At September 30, 2019, it is 4% of the 56,595,189 shares outstanding as of that date. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Leases | 13. Leases In February 2016, the FASB issued ASU No. 2016-02, Leases The depreciable lives of operating lease assets and leasehold improvements are limited by the expected lease term. The Company's leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The Company used incremental borrowing rates as of January 1, 2019 for operating leases that commenced prior to that date. The following table sets forth the operating lease right of use ("ROU") assets and liabilities as of September 30, 2019: September 30, 2019 Operating lease assets $ 209,767 Operating lease liabilities: Current operating lease liabilities 214,283 Total operating lease liabilities $ 214,283 Expense related to leases is recorded on a straight-line basis over the lease term, including rent holidays. During the three and nine months ended September 30, 2019, the Company recognized operating lease expense of $61,122 and $167,644, respectively. Operating lease costs are included within selling, administrative and other expenses on the condensed consolidated statements of income and comprehensive income. During the three and nine months ended September 30, 2019, short-term lease costs were $55,413 and $198,703, respectively. Cash paid for amounts included in the measurement of operating lease liabilities were $57,909 and $163,127, respectively, for the three and nine months ended September 30, 2019, and this amount is included in operating activities in the condensed consolidated statements of cash flows. During the three and nine months ended September 30, 2019, the Company reduced its operating lease liabilities by $35,027 and $102,316, respectively, for cash paid. The operating lease liabilities as of September 30, 2019 reflect a weighted average discount rate of between 48% and 58%. Lease payments over the next five years and thereafter are as follows: Year ending December 31, 2019 $ 66,222 2020 122,001 2021 95,914 2022 86,681 2023 21,330 Thereafter - Total lease payments 392,148 Less: imputed interest (177,865 ) Total $ 214,283 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 14. Commitments and Contingencies Leases The Company leases certain of its properties under leases that expire on various dates through 2023. Some of these agreements include escalation clauses and provide for renewal options ranging from one to five years. Leases with an initial term of 12 months or less and immaterial leases are not recorded on the balance sheet. WaveTech GmbH Share Purchase Agreement On July 15, 2019, the Company entered into a share purchase agreement with WaveTech GmbH, a German corporation. The merger of WaveTech GmbH into the Company shall be effected through a sale and exchange of shares and cash. Pursuant to the share purchase agreement, in exchange for shares of common stock of the Company, the Company will acquire all right, title and interest in all of the issued and outstanding shares of stock of WaveTech GmbH. The Company will also receive $3,000,000 in cash at or before consummation of the transactions contemplated by the share purchase agreement (the "Transactions"). Upon consummation of the Transactions, the current WaveTech GmbH shareholders will beneficially own a majority of the outstanding shares of the Company. The consummation of the Transactions is also subject to the satisfaction or waiver (if permitted by law) of certain closing conditions, including, among other things, (i) the accuracy of the representations and warranties of the parties in all material respects and (ii) the performance of and compliance with the covenants of the parties in all material respects. The parties are required to use commercially reasonable efforts to cause to be taken and to do or cause to be done all actions and things as are necessary under the terms of the share purchase agreement or under applicable law, in order to consummate the Transactions. The parties are also required to, among other things, cooperate in all respects with each other in connection with any filing or submission to any governmental authority in connection with the Transactions. The share purchase agreement also contains certain termination rights for both the Company and WaveTech GmbH, including that the Company or WaveTech GmbH may terminate the share purchase agreement if WaveTech GmbH has not obtained executed assignment agreements from its shareholders holding an aggregate of (i) fifty one percent (51%) of the issued and outstanding shares of WaveTech GmbH by the date that is ninety (90) days following the date of the share purchase agreement and (ii) ninety percent (90%) of the issued and outstanding shares of WaveTech GmbH by March 31, 2020. At October 13, 2019, the executed assignment agreements had not been obtained. As of the date of this report, neither party had chosen to terminate the deal. Upon consummation of the Transactions, the Company's board of directors will expand to include two new board members from WaveTech GmbH. As of the date of this report, the Company has received $2,989,978 in cash from WaveTech GmbH. Of that amount, $1,325,895 is in escrow to satisfy the amounts outstanding to WaveTech Global for the loan payable discussed in Note 7, Loans Payable. Additionally, the Company recorded a foreign exchange loss of $10,022 in the unaudited condensed consolidated statement of operations for the three and nine months ended September 30, 2019. On November 14, 2019, the Company closed on its acquisition of WaveTech GmbH (refer to Note 17, Subsequent Events, for additional detail). Oasis Capital, LLC Equity Purchase Agreement and Registration Rights Agreement On August 29, 2019, the Company entered into an equity purchase agreement and registration rights agreement with Oasis Capital, LLC, a Puerto Rico limited liability Company. Under the terms of the equity purchase agreement, Oasis Capital agreed to purchase from the Company up to $2,500,000 of the Company's common stock upon effectiveness of a registration statement on Form S-1 (the "Registration Statement") filed with the SEC and subject to certain limitations and conditions set forth in the equity purchase agreement. Following effectiveness of the Registration Statement, and subject to certain limitations and conditions set forth in the equity purchase agreement, the Company shall have the discretion to deliver put notices to Oasis Capital and Oasis Capital will be obligated to purchase shares of the Company's common stock, par value $0.00001 per share based on the investment amount specified in each put notice. The maximum amount that the Company shall be entitled to put to Oasis Capital in each put notice shall not exceed the lesser of $250,000 or two hundred percent (200%) of the average daily trading volume of the Company's common stock during the ten (10) trading days preceding the put. Pursuant to the equity purchase agreement, Oasis Capital and its affiliates will not be permitted to purchase and the Company may not put shares of the Company's common stock to Oasis Capital that would result in Oasis Capital's beneficial ownership of the Company's outstanding common stock exceeding 9.99%. The price of each put share shall be equal to eighty five percent (85%) of the market price (as defined in the equity purchase agreement). Puts may be delivered by the Company to Oasis Capital until the earlier of (i) the date on which Oasis Capital has purchased an aggregate of $2,500,000 worth of common stock under the terms of the equity purchase agreement, (ii) August 29, 2022, or (iii) written notice of termination delivered by the Company to Oasis Capital, subject to certain equity conditions set forth in the equity purchase agreement. As of the date of this report, the Company has not received the funds described in the equity purchase agreement and has not filed the Registration Statement with the SEC. |
Segment Disclosures
Segment Disclosures | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment Disclosures | 15. Segment Disclosures During the nine months ended September 30, 2019, the Company had two operating segments including: ● AWS/ADEX/TNS, which is comprised of the AWS Entities, the ADEX Entities, and TNS. ● Spectrum Global Solutions (SGS), which consists of the rest of the Company's operations. During the nine months ended September 30, 2018, the Company had two operating segments including: ● AWS/ADEX, which was comprised of the AWS Entities and the ADEX Entities. ● Spectrum Global Solutions (SGS), which consists of the rest of the Company's operations. Factors used to identify the Company's reportable segments include the organizational structure of the Company and the financial information available for evaluation by the chief operating decision-maker in making decisions about how to allocate resources and assess performance. The Company's operating segments have been broken out based on similar economic and other qualitative criteria. The Company operates the SGS reporting segment in one geographical area (the United States) and the AWS/ADEX/TNS operating segment in two geographical areas (the United States and Puerto Rico). Financial statement information by operating segment for the three and nine months ended September 30, 2019 is presented below: Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Spectrum Global AWS/ADEX/TNS Total Spectrum Global AWS/ADEX/TNS Total Net sales $ - $ 7,505,937 $ 7,505,937 $ - $ 27,159,071 $ 27,159,071 Operating (loss) income (1,260,709 ) 108,762 (1,151,947 ) (2,979,974 ) 830,339 (2,149,635 ) Interest expense 126,969 115,583 242,552 1,224,353 267,794 1,492,147 Depreciation and amortization - 97,281 97,281 - 288,134 288,134 Total assets as of September 30, 2019 1,350,584 13,040,470 14,391,054 1,350,584 13,040,470 14,391,054 Geographic information for the three and nine months ended and as of September 30, 2019 is presented below: Revenues Three Months Ended September 30, Nine Months Ended September 30, Long-lived Assets as of September 30, Puerto Rico $ 383,246 $ 1,094,475 $ 10,128 United States 7,122,691 26,064,596 6,606,120 Consolidated total 7,505,937 27,159,071 6,616,248 Financial statement information by operating segment for the three and nine months ended September 30, 2018 is presented below: Three Months Ended Nine Months Ended Spectrum Global AWS/ADEX Total Spectrum Global AWS/ADEX Total Net sales $ - $ 9,671,990 $ 9,671,990 $ - $ 24,963,876 $ 24,963,876 Operating (loss) income (688,561 ) 381,109 (307,452 ) (2,873,265 ) 539,713 (2,333,552 ) Interest expense 117,361 150,733 268,094 404,073 372,464 776,537 Depreciation and amortization - 56,874 56,874 - 161,480 161,480 Total assets as of December 31, 2018 99,835 12,830,561 12,930,396 99,835 12,830,561 12,930,396 Geographic information for the nine months ended September 30, 2018 and as of December 31, 2018 is presented below: Revenues Three Months Nine Months Long-lived Assets as of December 31, Puerto Rico $ 641,416 $ 1,653,878 $ 3,657 United States 9,030,574 23,309,998 3,859,387 Consolidated total 9,671,990 24,963,876 3,863,044 |
Net (Loss) Income per Share
Net (Loss) Income per Share | 9 Months Ended |
Sep. 30, 2019 | |
Net (Loss) Income Per Share [Abstract] | |
Net (Loss) Income Per Share | 16. Net (Loss) Income Per Share The following table shows the calculation of basic and diluted net (loss) income per share for the three and nine months ended September 30, 2019 and 2018: For the three months ended For the nine months ended September 30, September 30, 2019 2018 2019 2018 Numerator: Net (loss) income attributable to common shareholders (1,762,522 ) 414,485 (3,193,690 ) (2,493,461 ) Convertible note interest - 147,789 - - Adjusted diluted net (loss) income attributable to common shareholders (1,762,522 ) 562,274 (3,193,690 ) (2,493,461 ) Denominator Weighted average shares outstanding used in computer net loss (income) per share Basic 44,739,064 1,557,763 27,554,495 1,737,473 Effect of dilutive stock options and convertible notes payable - 12,707,716 - - Effect of preferred shares - 403,326 - - Diluted 44,739,064 14,668,805 27,554,495 1,737,473 Basic $ (0.04 ) $ 0.27 $ (0.12 ) $ (1.44 ) Diluted $ (0.04 ) $ 0.04 $ (0.12 ) $ (1.44 ) |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | 17. Subsequent Events Convertible promissory note, Power Up Lending Group Ltd, 8% interest, unsecured, matures January 22, 2021 On October 22, 2019, the Company entered into and closed on a Securities Purchase Agreement with Power Up Lending Group Ltd., pursuant to which the Company issued to Power Up Lending Group Ltd. a convertible promissory note in the aggregate principal amount of $68,500 for an aggregate purchase price of $60,000. The interest on the outstanding principal due under the secured note accrues at a rate of 8% per annum. All principal and accrued but unpaid interest under the secured note is due on January 22, 2021. 180 days following the issuance of the note, the note is convertible into shares of the Company's common stock at the greater of $0.005 per share and 70% of the average of the three lowest trading prices in the 15 trading days prior to the conversion date. Convertible promissory note, GS Capital Partners, LLC, 8% interest, unsecured, matures October 24, 2020 On October 24, 2019, the Company entered into and closed on a Securities Purchase Agreement with GS Capital Partners, LLC, pursuant to which the Company issued to GS Capital Partners, LLC a convertible promissory note in the aggregate principal amount of $123,000 for an aggregate purchase price of $112,000. The interest on the outstanding principal due under the secured note accrues at a rate of 8% per annum. All principal and accrued but unpaid interest under the secured note is due on October 24, 2020. The secured note is convertible into shares of the Company's common stock at 71% of the average of the three lowest VWAPs in the 12 trading days prior to and including conversion date. The conversion price has a floor of $0.01 per share. Issuance of Shares Pursuant to Conversion of Series A Preferred Stock On October 15, 2019, the Company issued 333,334 shares of common stock to M2B Funding upon the conversion of 10,000 shares of Series A preferred stock with a stated value of $1 per share. On October 21, 2019, the Company issued 333,334 shares of common stock to Dominion Capital upon the conversion of 10,000 shares of Series A preferred stock with a stated value of $1 per share. On October 24, 2019, the Company issued 333,334 shares of common stock to M2B Funding upon the conversion of 10,000 shares of Series A preferred stock with a stated value of $1 per share. Issuance of Shares Pursuant to Silverback Capital Convertible Debentures On October 21, 2019, the Company issued 541,650 shares of common stock to Silverback Capital upon the conversion of $627 of accrued interest pursuant to a convertible debenture. Acquisition of WaveTech GmbH On November 14, 2019, the Company closed on its acquisition of WaveTech GmbH per the share purchase agreement discussed in Note 14, Commitments and Contingencies. The closing of the transaction involved the merger of WaveTech GmbH into the Company through a sale and exchange of shares and cash. Pursuant to the share purchase agreement, in exchange for shares of Series C Preferred Stock of the Company (refer to the "Series C Preferred Stock" section of this note for additional detail), at closing the Company acquired sixty percent (60%) of the issued and outstanding shares of WaveTech GmbH. In connection with the closing of the acquisition, $1,325,000 of the amount in escrow as of September 30, 2019 was returned to the Company. The share purchase agreement also contains certain termination rights for both the Company and WaveTech GmbH in the event the Company has not acquired ninety percent (90%) of the issued and outstanding shares of WaveTech GmbH by March 31, 2020. Effective immediately upon the closing of the acquisition, the Board of Directors of the Company appointed Silas Poel as the Chief Operating Officer of the Company. The Board of Directors also agreed to add Silas Poel and Dag Viland as directors. Series C Preferred Stock On November 14, 2019, the Company designated 9,000,000 shares of Series C preferred stock of the Company with a stated value of $0.00001 per share. The principal terms of the Series C preferred stock shares are as follows: Issue Price Redemption Dividends Preference of Liquidation Voting Conversion For purposes hereof, a "Triggering Event" shall include any liability arising from a breach of the representations or warranties of WaveTech GmbH (as defined below) contained in the share purchase agreement dated July 15, 2019 and all amendments thereto (as amended, the "SPA"), by and between the Company and WaveTech GmbH, a corporation organized under the laws of the Republic of Germany. "Closing Date" shall have the meaning ascribed to the term in the SPA. "Strike Price" shall mean the closing price per share of the Company's common stock on the trading day immediately preceding the Series C Conversion Date. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Condensed financial statements | Condensed Financial Statements The accompanying unaudited interim consolidated financial statements of the Company should be read in conjunction with the consolidated financial statements and accompanying notes filed with the U.S. Securities and Exchange Commission in the Company’s Form 10-K for the year ended December 31, 2018. In the opinion of management, the accompanying financial statements reflect all adjustments of a recurring nature considered necessary to present fairly the Company’s financial position and the results of its operations and its cash flows for the periods shown. The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. The results of operations and cash flows for the periods shown are not necessarily indicative of the results to be expected for the full year. |
Basis of Presentation/Principles of Consolidation | Basis of Presentation/Principles of Consolidation These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States. These consolidated financial statements include the accounts of the Company and its subsidiaries, the AWS Entities (from the date of acquisition, April 25, 2017), the ADEX Entities (from the date of acquisition, February 27, 2018), and TNS (from the date of acquisition, January 4, 2019). All of the subsidiaries are wholly-owned. During the year ended December 31, 2018, the Company disposed of the following subsidiaries; Carbon Commodity Corporation, Climate ESCO Ltd., Mantra Energy Alternatives Ltd., Mantra China Inc., Mantra China Limited, Mantra Media Corp., Mantra NextGen Power Inc., and Mantra Wind Inc. All inter-company balances and transactions have been eliminated. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to allowance for doubtful accounts, the estimated useful lives and recoverability of long-lived assets, equity component of convertible debt, stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. |
Accounts Receivable | Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company records unbilled receivables for services performed but not billed. Management reviews a customer’s credit history before extending credit. The Company maintains an allowance for doubtful accounts for estimated losses. Estimates of uncollectible amounts are reviewed each period, and changes are recorded in the period in which they become known. Management analyzes the collectability of accounts receivable each period. This review considers the aging of account balances, historical bad debt experience, and changes in customer creditworthiness, current economic trends, customer payment activity and other relevant factors. Should any of these factors change, the estimate made by management may also change. The allowance for doubtful accounts at September 30, 2019 and December 31, 2018 was $504,785 and $502,868, respectively. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. The Company depreciates the cost of property and equipment over their estimated useful lives at the following annual rates: Automotive 3-5 years straight-line basis Computer equipment and software 3-7 years straight-line basis Leasehold improvements 5 years straight-line basis Office equipment and furniture 5 years straight-line basis Research equipment 5 years straight-line basis |
Goodwill | Goodwill Goodwill was generated through the acquisition of AWS, ADEX and TNS as the total consideration paid exceeded the fair value of the net assets acquired. The Company tests its goodwill for impairment at least annually on December 31st and whenever events or circumstances change that indicate impairment may have occurred. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a significant decline in the Company’s expected future cash flows; a significant adverse change in legal factors or in the business climate; unanticipated competition; and slower growth rates. Any adverse change in these factors could have a significant impact on the recoverability of goodwill and the Company’s consolidated financial results. The Company tests goodwill by estimating fair value using a Discounted Cash Flow (“DCF”) model. The key assumptions used in the DCF model to determine the highest and best use of estimated future cash flows include revenue growth rates and profit margins based on internal forecasts, terminal value and an estimate of a market participant’s weighted-average cost of capital used to discount future cash flows to their present value. There were no impairment charges during the nine months ended September 30, 2019. |
Intangible Assets | Intangible Assets At September 30, 2019 and December 31, 2018, definite-lived intangible assets primarily consist of tradenames and customer relationships which are being amortized over their estimated useful lives ranging from 3-20 years. The Company periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removed from the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques. The Company has no intangibles with indefinite lives. For long-lived assets, impairment losses are only recorded if the asset’s carrying amount is not recoverable through its undiscounted, probability-weighted future cash flows. The Company measures the impairment loss based on the difference between the carrying amount and the estimated fair value. When an impairment exists, the related assets are written down to fair value. |
Long-lived Assets | Long-lived Assets In accordance with ASC 360, “Property, Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. There were no impairment charges recorded during the nine months ended September 30, 2019. |
Foreign Currency Translation | Foreign Currency Translation Transactions in foreign currencies are translated into the currency of measurement at the exchange rates in effect on the transaction date. Monetary balance sheet items expressed in foreign currencies are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. The resulting foreign exchange gains and losses are recognized in income. The Company's integrated foreign subsidiaries are financially or operationally dependent on the Company. The Company uses the temporal method to translate the accounts of its integrated operations into U.S. dollars. Monetary assets and liabilities are translated at the exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at average rates for the period, except for amortization, which is translated on the same basis as the related asset. The resulting foreign exchange gains or losses are recognized in income. |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “ Accounting for Income Taxes The Company conducts business, and files federal and state income, franchise or net worth, tax returns in Canada, the United States, in various states within the United States and the Commonwealth of Puerto Rico. The Company determines it’s filing obligations in a jurisdiction in accordance with existing statutory and case law. The Company may be subject to a reassessment of federal and provincial income taxes by Canadian tax authorities for a period of three years from the date of the original notice of assessment in respect of any particular taxation year. For Canadian and U.S. income tax returns, the open taxation years range from 2010 to 2018. In certain circumstances, the U.S. federal statute of limitations can reach beyond the standard three year period. U.S. state statutes of limitations for income tax assessment vary from state to state. Tax authorities of Canada and U.S. have not audited any of the Company’s, or its subsidiaries’, income tax returns for the open taxation years noted above. Significant management judgment is required in determining the provision for income taxes, and in particular, any valuation allowance recorded against the Company’s deferred tax assets. Deferred tax assets are regularly reviewed for recoverability. The Company currently has significant deferred tax assets resulting from net operating loss carryforwards and deductible temporary differences, which should reduce taxable income in future periods. The realization of these assets is dependent on generating future taxable income. The Company follows the guidance set forth within ASC Topic 740, “ Income Taxes The Company received a tax notice from the Puerto Rican government requesting payment of taxes related to 2014. The amount due as of September 30, 2019 was $156,711 plus penalties and interest of $119,401 for a total obligation due of $276,112. The amount due as of December 31, 2018 was $156,711 plus penalties and interest of $111,200 for a total obligation due of $267,911. This tax assessment is included in accrued expenses at September 30, 2019 and December 31, 2018. |
Revenue Recognition | Revenue Recognition Adoption of New Accounting Guidance on Revenue Recognition The Company recognizes revenue based on the five criteria for revenue recognition established under Topic 606: 1) identify the contract, 2) identify separate performance obligations, 3) determine the transaction price, 4) allocate the transaction price among the performance obligations, and 5) recognize revenue as the performance obligations are satisfied. Contract Types The Company’s contracts fall under three main types: 1) unit-price, 2) fixed-price, and 3) time-and-materials. Unit-price contracts relate to services being performed and paid on a unit basis, such as per mile of construction completed. Fixed-price contracts are based on purchase order line items that are billed on individual invoices as the project progresses and milestones are reached. Time-and-materials contracts include employees working permanently at customer locations and materials costs incurred by those employees. A significant portion of the Company’s revenues come from customers with whom the Company has a master service agreement (“MSA”). These MSA’s generally contain customer specific service requirements. Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in the new revenue standard. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. For the Company’s different revenue service types the performance obligation is satisfied at different times. For professional services revenue, the performance obligation is met when the work is performed. In certain cases this may be each day, or each week depending on the customer. For construction services, the performance obligation is met when the work is completed and the customer has approved the work. Contract assets include unbilled amounts for services performed but not yet billed. These amounts are included in accounts receivable on the consolidated balance sheets. Contract liabilities include unbilled costs and are included in accrued expenses on the consolidated balance sheets. Revenue Service Types The following is a description of the Company’s revenue service types, which include professional services and construction: ● Professional services are services provided to the clients where the company delivers distinct contractual deliverables and/or services. Deliverables may include but are not be limited to: engineering drawings, designs, reports and specification. Services may include, but are not be limited to: consulting or professional staffing to support our client’s objectives. Consulting or professional staffing services may be provided remotely or on client premises and under their direction and supervision. ● Construction Services are services provided to the client where the Company may self-perform or subcontract services that require the physical construction of infrastructure or installation of equipment and materials. Disaggregation of Revenues The Company disaggregates its revenue from contracts with customers by service type, contract type, contract duration, and timing of transfer of goods or services. See the below tables: Revenue by service type Three months ended September 30, Three months ended September 30, Nine months ended September 30, Nine months ended September 30, Professional Services $ 4,493,906 $ 5,138,882 $ 17,687,718 $ 16,336,594 Construction 3,012,031 4,533,108 9,471,353 8,627,282 Total $ 7,505,937 $ 9,671,990 $ 27,159,071 $ 24,963,876 Revenue by contract duration Three months ended September 30, Three months ended September 30, Nine months ended September 30, Nine months ended September 30, Short-term $ 57,747 $ 96,720 $ 232,185 $ 249,639 Long-term 7,448,190 9,575,270 26,926,886 24,714,237 Total $ 7,505,937 $ 9,671,990 $ 27,159,071 $ 24,963,876 Revenue by contract type Three months ended September 30, Three months ended September 30, Nine months ended September 30, Nine months ended September 30, Unit-price $ 1,751,363 $ 1,683,925 $ 4,910,033 $ 4,516,596 Fixed-price $ 1,260,668 $ 2,849,183 $ 4,561,320 $ 4,110,686 Time-and-materials 4,493,906 5,138,882 17,687,718 16,336,594 Total $ 7,505,937 $ 9,671,990 $ 27,159,071 $ 24,963,876 The Company also disaggregates its revenue by operating segment and geographic location (refer to Note 15, Segment Disclosures, for additional information). Accounts Receivable Accounts receivable include amounts from work completed in which the Company has billed. The amounts due are stated at their net estimated realizable value. The Company maintains an allowance for doubtful accounts to provide for the estimated amount of receivables that will not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables and collateral to the extent applicable. Contract Assets and Liabilities Contract assets include unbilled amounts for services performed but not yet billed. These amounts are included in contract assets on the consolidated balance sheets. The Company records unbilled receivables for services performed but not billed. At September 30, 2019 and December 31, 2018, unbilled receivables totaled $241,069 and $1,861,895, respectively. Contract liabilities include unbilled costs and are included in accrued expenses on the consolidated balance sheet. |
Cost of Revenues | Cost of Revenues Cost of revenues includes all direct costs of providing services under our contracts, including costs for direct labor provided by employees, services by independent subcontractors, operation of capital equipment (excluding depreciation and amortization), direct materials, insurance claims and other direct costs. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred. |
Stock-based Compensation | Stock-based Compensation The Company records stock-based compensation in accordance with ASC 718, “ Compensation – Stock Compensation The Company accounts for stock-based compensation awards issued to non-employees for services, as prescribed by ASC 718-10, at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in ASU 2018-07. The Company uses the Black-Scholes option pricing model to calculate the fair value of stock-based awards. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the consolidated statement of operations over the requisite service period. |
Loss Per Share | Loss per Share The Company computes loss per share in accordance with ASC 260, “Earnings per Share” which requires presentation of both basic and diluted loss per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing the loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of September 30, 2019 and 2018, respectively, the Company had 63,373,688 and 13,111,043 common stock equivalents outstanding. |
Comprehensive Loss | Comprehensive Loss ASC 220, “ Comprehensive Income |
Leases | Leases The Company adopted FASB Accounting Standards Codification, Topic 842, Leases (“ASC 842”) electing the practical expedient that allows the Company not to restate its comparative periods prior to the adoption of the standard on January 1, 2019. As such, the disclosures required under ASC 842 are not presented for periods before the date of adoption. For the comparative periods prior to adoption, the Company presented the disclosures which were required under ASC 840. The new leasing standard requires recognition of leases on the consolidated balance sheets as right-of-use (“ROU”) assets and lease liabilities. ROU assets represent the Company’s right to use underlying assets for the lease terms and lease liabilities represent the Company’s obligation to make lease payments arising from the leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value and future minimum lease payments over the lease term at commencement date. As the Company’s leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company recognized lease liabilities, with corresponding ROU assets, based on the present value of unpaid lease payments for existing operating leases longer than twelve months as of January 1, 2019. The ROU assets were adjusted per ASC 842 transition guidance for existing lease-related balances of accrued and prepaid rent, unamortized lease incentives provided by lessors, and restructuring liabilities, Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term and is recorded in selling, general and administrative expenses. Variable lease payments for common area maintenance, property taxes and other operating expenses are recognized as expense in the period when the changes in facts and circumstances on which the variable lease payments are based occur. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases The Company adopted ASU 2016-02 and its amendments and applied the transition provisions as of January 1, 2019, which included recognizing a cumulative-effect adjustment through opening retained earnings as of that date. Prior year amounts were not recast under this transition approach and, therefore, prior year amounts are excluded from the leased properties footnote. The Company elected the package of practical expedients permitted under the transition guidance, which allowed the Company to carryforward its historical assessments of: (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. In addition, the Company did not elect the hindsight practical expedient to determine the reasonably certain lease term for existing leases. The Company elected a policy of not recording leases on its condensed consolidated balance sheets when the leases have a term of 12 months or less and the Company is not reasonably certain to elect an option to purchase the leased asset. The Company recognizes payments on these leases within selling, administrative and other expenses on a straight-line basis over the lease term. The standard did not materially impact consolidated net income or liquidity. The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or result of operations In June 2018, the FASB issued ASU 2018-07, Compensation – “Stock Compensation (Topic 718): Improvements to Nonemployee Share-based Payment Accounting”, which addresses aspects of the accounting for nonemployee share-based payment transactions. This pronouncement is effective for annual reporting periods and interim periods within those annual periods beginning after December 15, 2019. The Company early adopted ASU 2018-07 on January 1, 2019. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivables. The Company maintains its cash balances with high-credit-quality financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. These deposits may be withdrawn upon demand and therefore bear minimal risk. The Company provides credit to customers on an uncollateralized basis after evaluating client creditworthiness. For the nine months ended September 30, 2019, four customers accounted for 25%, 18%, 12% and 11%, respectively, of consolidated revenues for the period. In addition, amounts due from these customers represented 38%, 15%, 7% and 3%, respectively, of trade accounts receivable as of September 30, 2019. For the nine months ended September 30, 2018, four customers accounted for 22%, 19%, 16% and 13%, respectively, of consolidated revenues for the period. In addition, amounts due from these customers represented 12%, 12%, 25% and 14%, respectively, of trade accounts receivable as of September 30, 2018. The Company’s customers are primarily located within the domestic United States of America and Puerto Rico. Revenues generated within the domestic United States of America accounted for approximately 96% and 93% of consolidated revenues for the nine month periods ended September 30, 2019 and 2018, respectively. Revenues generated from customers in Puerto Rico accounted for approximately 4% and 7% of consolidated revenues for the nine month periods ended September 30, 2019 and 2018, respectively. |
Fair Value Measurements | Fair Value Measurements The Company measures and discloses the estimated fair value of financial assets and liabilities using the fair value hierarchy prescribed by US generally accepted accounting principles. The fair value hierarchy has three levels, which are based on reliable available inputs of observable data. The hierarchy requires the use of observable market data when available. The three-level hierarchy is defined as follows: Level 1 – quoted prices for identical instruments in active markets; Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which significant inputs and significant value drivers are observable in active markets; and Level 3 – fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Financial instruments consist principally of cash and cash equivalents, accounts receivable, restricted cash, accounts payable, loans payable and convertible debentures. Derivative liabilities are determined based on "Level 3" inputs, which are significant and unobservable and have the lowest priority. There were no transfers into or out of "Level 3" during the nine months ended September 30, 2019 or the year ended December 31, 2018. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations. Our financial assets and liabilities carried at fair value measured on a recurring basis as of September 30, 2019 and December 31, 2018, consisted of the following: Total fair value at September 30, 2019 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Derivative liability (1) $ 475,892 $ - $ - $ 475,892 Total fair value at December 31, 2018 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Derivative liability (1) $ 3,166,886 $ - $ - $ 3,166,886 (1) The Company has estimated the fair value of these derivatives using the Monte-Carlo model and/or a Binomial Model. Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial statement. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Refer to Note 9, Derivative Liabilities, for additional information. |
Derivative Liabilities | Derivative Liabilities The Company accounts for derivative instruments in accordance with ASC Topic 815, “ Derivatives and Hedging |
Sequencing Policy | Sequencing Policy Under ASC 815-40-35, the Company has adopted a sequencing policy whereby, in the event that reclassification of contracts from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient authorized shares as a result of certain securities with a potentially indeterminable number of shares, shares will be allocated on the basis of the earliest issuance date of potentially dilutive instruments, with the earliest grants receiving the first allocation of shares. Pursuant to ASC 815, issuance of securities to the Company’s employees or directors are not subject to the sequencing policy. |
Reclassifications | Reclassifications Certain balances in previously issued consolidated financial statements have been reclassified to be consistent with the current period presentation. The reclassification had no impact on total financial position, net income, or stockholders’ equity. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of property and equipment estimated useful lives | Automotive 3-5 years straight-line basis Computer equipment and software 3-7 years straight-line basis Leasehold improvements 5 years straight-line basis Office equipment and furniture 5 years straight-line basis Research equipment 5 years straight-line basis |
Schedule of disaggregates its revenue from contracts with customers by service type | Revenue by service type Three months ended September 30, Three months ended September 30, Nine months ended September 30, Nine months ended September 30, Professional Services $ 4,493,906 $ 5,138,882 $ 17,687,718 $ 16,336,594 Construction 3,012,031 4,533,108 9,471,353 8,627,282 Total $ 7,505,937 $ 9,671,990 $ 27,159,071 $ 24,963,876 Revenue by contract duration Three months ended September 30, Three months ended September 30, Nine months ended September 30, Nine months ended September 30, Short-term $ 57,747 $ 96,720 $ 232,185 $ 249,639 Long-term 7,448,190 9,575,270 26,926,886 24,714,237 Total $ 7,505,937 $ 9,671,990 $ 27,159,071 $ 24,963,876 Revenue by contract type Three months ended September 30, Three months ended September 30, Nine months ended September 30, Nine months ended September 30, Unit-price $ 1,751,363 $ 1,683,925 $ 4,910,033 $ 4,516,596 Fixed-price $ 1,260,668 $ 2,849,183 $ 4,561,320 $ 4,110,686 Time-and-materials 4,493,906 5,138,882 17,687,718 16,336,594 Total $ 7,505,937 $ 9,671,990 $ 27,159,071 $ 24,963,876 |
Schedule of financial assets and liabilities fair value measured on a recurring basis | Total fair value at September 30, 2019 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Derivative liability (1) $ 475,892 $ - $ - $ 475,892 Total fair value at December 31, 2018 Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Derivative liability (1) $ 3,166,886 $ - $ - $ 3,166,886 |
Acquisition of TNS, Inc. (Table
Acquisition of TNS, Inc. (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Schedule of allocation of preliminary purchase price | Provisional purchase consideration $620,000 convertible note $ 665,000 Cash 980,000 Total purchase price $ 1,645,000 Preliminary allocation of purchase price Cash $ 38,407 Accounts receivable, net 65,166 Prepaid expenses 630,810 Customer lists* 1,800,000 Tradenames* 300,000 Goodwill* 670,759 Accounts payable (275,331 ) Accrued expenses (611,778 ) Contract liabilities (973,033 ) Net assets acquired $ 1,645,000 |
Schedule of unaudited pro forma consolidated of operations | Nine months ended Three months ended Nine months ended As Reported Pro Forma As Reported Pro Forma As Reported Pro Forma Net sales $ 27,159,071 $ 27,159,071 $ 9,671,990 $ 10,439,718 $ 24,963,876 $ 30,238,512 Net (loss) income attributable to common shareholders (1,762,522 ) (1,770,076 ) 414,485 444,055 (2,493,461 ) (1,486,743 ) (Loss) earnings per common share, basic: (0.06 ) (0.06 ) 0.27 0.29 (1.44 ) (0.86 ) (Loss) earnings per common share, diluted: (0.06 ) (0.06 ) 0.04 0.04 (1.44 ) (0.86 ) |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | September 30, December 31, 2019 2018 Computers and office equipment $ 344,509 $ 329,937 Equipment 382,140 382,140 Research equipment 143,129 143,129 Software 227,563 177,073 Vehicles 94,356 94,356 Vehicles under capital lease - - Total 1,191,697 1,126,635 Less: impairment (44,419 ) (44,419 ) Less: accumulated depreciation (1,048,292 ) (1,020,959 ) Equipment, net $ 98,986 $ 61,257 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | Cost Accumulated Amortization Impairment Net carrying value at September 30, 2019 Net carrying value at December 31, 2018 Customer relationship and lists $ 2,837,548 $ 372,764 $ - $ 2,464,784 $ 850,249 Trade names 1,505,605 194,146 - 1,311,459 1,086,795 Total intangible assets $ 4,343,153 $ 566,910 $ - $ 3,776,243 $ 1,937,044 |
Schedule of estimated future amortization expense | Year ending December 31, 2019 $ 86,586 2020 347,387 2021 347,387 2022 347,387 2023 347,387 Thereafter 2,300,109 Total $ 3,776,243 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
Schedule of related party transactions | September 30, December 31, 2019 2018 Promissory note issued to Roger Ponder, 10% interest, unsecured, matured on November 30, 2018 and extended to November 30, 2019 $ 18,858 $ 18,858 Promissory note issued to Keith Hayter, 10% interest, unsecured, matured on November 30, 2018 and extended to November 30, 2019 130,000 130,000 Promissory note issued to Keith Hayter, 10% and 8% interest, unsecured, matures April 13, 2020 85,000 85,000 Promissory note issued to Keith Hayter, 8% interest, unsecured, matured on October 1, 2019, due on demand 80,000 80,000 Promissory note issued to Keith Hayter, 10% interest, unsecured, matures August 11, 2020 170,000 - Convertible promissory note, InterCloud Systems, Inc., 8% interest, unsecured, matured April 27, 2018 - 1,645,625 Convertible promissory note, InterCloud Systems, Inc., 1% interest, unsecured, matures August 16, 2019, net of debt discount of $0 and $171,557 - 622,392 Convertible promissory note, InterCloud Systems, Inc., 6% interest, unsecured, matured March 27, 2019, net of debt discount of $0 and $286,749 - 1,515,674 Promissory note issued to InterCloud Systems, Inc., non-interest bearing, unsecured and due on demand 217,400 275,000 Total $ 701,258 $ 4,372,549 |
Loans Payable (Tables)
Loans Payable (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of loans payable | September 30, December 31, 2019 2018 Promissory note issued to J. Thacker, non-interest bearing, unsecured and due on demand $ 41,361 $ 41,361 Promissory note issued to S. Kahn, non-interest bearing, unsecured and due on demand 7,760 7,760 Promissory note issued to 0738856 BC ltd non-interest bearing, unsecured and due on demand 2,636 2,636 Promissory note issued to 0738856 BC Ltd, non-interest bearing, unsecured and due on demand 15,000 15,000 Promissory note issued to Bluekey Energy, non-interest bearing, unsecured and due on demand 7,500 7,500 Subscription amount due to T. Warkentin non-interest bearing, unsecured and due on demand 50,000 50,000 Promissory note issued to Old Main Capital LLC, 10% interest, unsecured and due on demand 12,000 12,000 Loan with Heritage Bank of Commerce, interest rate of prime plus 2%, secured by all assets of the Company, matures October 20, 2020, net of debt discount of $149,180 and $257,194 3,121,109 3,225,821 Loan with WaveTech GmbH, non-interest bearing, matures March 31, 2020 3,000,000 - Promissory note issued to C6 Capital, non-interest bearing, matures April 15, 2020, net of debt discount of $62,003 225,274 - Total $ 6,482,640 $ 3,362,078 |
Convertible Debentures (Tables)
Convertible Debentures (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of convertible promissory note | September 30, December 31, 2019 2018 Convertible promissory note, Barn 11, 6% interest, unsecured, matured June 1, 2019, net of debt discount of $0 and $55,000 $ 594,374 $ 445,000 Convertible promissory note, Dominion Capital, 12% interest, unsecured, matures October 17, 2020, net of debt discount of $179,543 and $0 1,391,591 - Convertible promissory note, Michael Roeske, 6% interest, unsecured, matures, January 30, 2020, net of debt discount of $13,342 and $0 102,658 - Convertible promissory note, Joel Raven, 6% interest, unsecured, matures January 30, 2020, net of debt discount of $33,364 and $0 330,636 - Convertible promissory note, GS Capital Partners, LLC, 8% interest, secured. matures August 2, 2020, net of debt discount of $33,888 89,112 - Convertible promissory note, SCS, LLC, 8% interest, unsecured, matures March 30, 2020, net of debt discount of $25,891 25,139 - Convertible promissory note, Dominion Capital, 18% interest, secured, matures October 23, 2019, net of debt discount of $0 and $1,009,630 - 240,370 Convertible promissory note, Dominion Capital, 12% interest, unsecured, matures May 18, 2019, net of debt discount of $0 and $172,570 - 123,176 Convertible promissory note, Silverback, 8% interest, unsecured, matures December 4, 2019, net of debt discount of $0 and $24,140 - 3,367 Convertible promissory note, RDW Capital, February 21, 2018 assignment - 50,000 Convertible promissory note, RDW Capital, June 7, 2018 assignment - 39,375 Convertible promissory note, Silverback Capital, December 3, 2018 assignment - 50,000 Convertible promissory note, M2B Funding, 12% interest, unsecured, matures March 15, 2019, net of debt discount of $0 and $9,087 - 69,860 Convertible promissory note, M2B Funding, 12% interest, unsecured, matures March 15, 2019, net of debt discount of $0 and $41,395 - 37,552 Total $ 2,533,510 $ 1,058,700 |
Derivative Liabilities (Tables)
Derivative Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of changes in the fair value of the Company's Level 3 financial liabilities | September 30, December 31, 2019 2018 Balance at the beginning of the period $ 3,166,886 $ 4,749,712 Original discount limited to proceeds of notes 246,000 2,839,369 Conversion of derivative liability (1,281,889 ) (678,142 ) Repayment of convertible note (196,468 ) (310,041 ) Change in fair value of embedded conversion option (1,924,637 ) (6,049,473 ) Addition to derivative due to default penalty 466,000 - Derivative issued as part of acquisition - 302,800 Fair value of derivative liabilities in excess of notes proceeds received - 2,274,892 Derivative warrants issued for services and to acquire non-controlling interest - 328,833 Derivative liability settled through the issuance of preferred stock - (291,064 ) Balance at the end of the period $ 475,892 $ 3,166,886 |
Schedule of assumptions used in the calculations | Expected volatility Risk-free interest rate Expected dividend yield Expected life At December 31, 2018 172 - 381% 2.45 - 2.63% 0 % 0.04 - 2.78 At September 30, 2019 265 - 355% 1.63 - 1.88% 0 % 0.25 - 2.03 |
Share Purchase Warrants (Tables
Share Purchase Warrants (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Warrants and Rights Note Disclosure [Abstract] | |
Schedule of share purchase warrants | Number of Weighted Balance at December 31, 2018 1,715,177 $ 2.14 Issued 284,717 1.20 Expired (60,000 ) 0.32 Balance at March 31, 2019 1,939,894 $ 1.96 Issued 731,938 1.20 Expired (20,375 ) 74.00 Balance at June 30, 2019 2,651,457 $ 1.27 Issued 938,806 1.20 Expired (200,000 ) 0.0001 Balance at September 30, 2019 3,390,263 $ 1.32 |
Schedule of share purchase warrants outstanding | Number of warrants Exercise price Issuance Date Expiry date 137,500 5.10 4/28/2017 4/28/2020 250,000 1.00 6/27/2017 6/27/2020 2,263,808 * 1.20 2/14/2018 2/13/2021 125,000 1.60 2/21/2018 2/21/2021 500,000 1.00 5/17/2018 5/17/2020 113,955 1.08 10/10/2018 10/10/2021 3,390,263 * This warrant is convertible into 4% of the number of common shares of the Company outstanding. At September 30, 2019, it is 4% of the 56,595,189 shares outstanding as of that date. |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Schedule of operating leases related to assets and liabilities | September 30, 2019 Operating lease assets $ 209,767 Operating lease liabilities: Current operating lease liabilities 214,283 Total operating lease liabilities $ 214,283 |
Schedule of weighted-average discount rate | Year ending December 31, 2019 $ 66,222 2020 122,001 2021 95,914 2022 86,681 2023 21,330 Thereafter - Total lease payments 392,148 Less: imputed interest (177,865 ) Total $ 214,283 |
Segment Disclosures (Tables)
Segment Disclosures (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of information by operating segment | Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Spectrum Global AWS/ADEX/TNS Total Spectrum Global AWS/ADEX/TNS Total Net sales $ - $ 7,505,937 $ 7,505,937 $ - $ 27,159,071 $ 27,159,071 Operating (loss) income (1,260,709 ) 108,762 (1,151,947 ) (2,979,974 ) 830,339 (2,149,635 ) Interest expense 126,969 115,583 242,552 1,224,353 267,794 1,492,147 Depreciation and amortization - 97,281 97,281 - 288,134 288,134 Total assets as of September 30, 2019 1,350,584 13,040,470 14,391,054 1,350,584 13,040,470 14,391,054 Three Months Ended Nine Months Ended Spectrum Global AWS/ADEX Total Spectrum Global AWS/ADEX Total Net sales $ - $ 9,671,990 $ 9,671,990 $ - $ 24,963,876 $ 24,963,876 Operating (loss) income (688,561 ) 381,109 (307,452 ) (2,873,265 ) 539,713 (2,333,552 ) Interest expense 117,361 150,733 268,094 404,073 372,464 776,537 Depreciation and amortization - 56,874 56,874 - 161,480 161,480 Total assets as of December 31, 2018 99,835 12,830,561 12,930,396 99,835 12,830,561 12,930,396 |
Schedule of geographic information | Revenues Three Months Ended September 30, Nine Months Ended September 30, Long-lived Assets as of September 30, Puerto Rico $ 383,246 $ 1,094,475 $ 10,128 United States 7,122,691 26,064,596 6,606,120 Consolidated total 7,505,937 27,159,071 6,616,248 Revenues Three Months Nine Months Long-lived Assets as of December 31, Puerto Rico $ 641,416 $ 1,653,878 $ 3,657 United States 9,030,574 23,309,998 3,859,387 Consolidated total 9,671,990 24,963,876 3,863,044 |
Net (Loss) Income per Share (Ta
Net (Loss) Income per Share (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Net (Loss) Income Per Share [Abstract] | |
Schedule of net (loss) income per share | For the three months ended For the nine months ended September 30, September 30, 2019 2018 2019 2018 Numerator: Net (loss) income attributable to common shareholders (1,762,522 ) 414,485 (3,193,690 ) (2,493,461 ) Convertible note interest - 147,789 - - Adjusted diluted net (loss) income attributable to common shareholders (1,762,522 ) 562,274 (3,193,690 ) (2,493,461 ) Denominator Weighted average shares outstanding used in computer net loss (income) per share Basic 44,739,064 1,557,763 27,554,495 1,737,473 Effect of dilutive stock options and convertible notes payable - 12,707,716 - - Effect of preferred shares - 403,326 - - Diluted 44,739,064 14,668,805 27,554,495 1,737,473 Basic $ (0.04 ) $ 0.27 $ (0.12 ) $ (1.44 ) Diluted $ (0.04 ) $ 0.04 $ (0.12 ) $ (1.44 ) |
Organization and Going Concern
Organization and Going Concern (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Feb. 14, 2018 | Apr. 25, 2017 |
Organization and Significant Accounting Policies (Textual) | ||||
Accumulated deficit | $ (27,363,795) | $ (24,170,105) | ||
Working capital deficit | $ 7,700,853 | |||
Inter Cloud [Member] | ||||
Organization and Significant Accounting Policies (Textual) | ||||
Business acquisition, percentage | 19.90% | |||
Financial Support, Purchase Agreement of Financial Assets [Member] | Inter Cloud [Member] | ||||
Organization and Significant Accounting Policies (Textual) | ||||
Business acquisition, percentage | 80.10% |
Significant Accounting Polici_4
Significant Accounting Policies (Details) | 9 Months Ended |
Sep. 30, 2019 | |
Office equipment and furniture [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful lives | 5 years |
Research equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful lives | 5 years |
Leasehold improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful lives | 5 years |
Minimum [Member] | Automotive [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful lives | 3 years |
Minimum [Member] | Computer equipment and software [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful lives | 3 years |
Maximum [Member] | Automotive [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful lives | 5 years |
Maximum [Member] | Computer equipment and software [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful lives | 7 years |
Significant Accounting Polici_5
Significant Accounting Policies (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenue by service type | ||||
Professional Services | $ 4,493,906 | $ 5,138,882 | $ 17,687,718 | $ 16,336,594 |
Construction | 3,012,031 | 4,533,108 | 9,471,353 | 8,627,282 |
Total | 7,505,937 | 9,671,990 | 27,159,071 | 24,963,876 |
Revenue by contract duration | ||||
Short-term | 57,747 | 96,720 | 232,185 | 249,639 |
Long-term | 7,448,190 | 9,575,270 | 26,926,886 | 24,714,237 |
Total | 7,505,937 | 9,671,990 | 27,159,071 | 24,963,876 |
Revenue by contract type | ||||
Total | 7,505,937 | 9,671,990 | 27,159,071 | 24,963,876 |
Unit-price [Member] | ||||
Revenue by contract type | ||||
Total | 1,751,363 | 1,683,925 | 4,910,033 | 4,516,596 |
Fixed-price [Member] | ||||
Revenue by contract type | ||||
Total | 1,260,668 | 2,849,183 | 4,561,320 | 4,110,686 |
Time-and-materials [Member] | ||||
Revenue by contract type | ||||
Total | $ 4,493,906 | $ 5,138,882 | $ 17,687,718 | $ 16,336,594 |
Significant Accounting Polici_6
Significant Accounting Policies (Details 2) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Derivative liability | [1] | $ 475,892 | $ 3,166,886 |
Fair Value, Inputs, Level 3 [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Derivative liability | [1] | 475,892 | 3,166,886 |
Fair Value, Inputs, Level 2 [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Derivative liability | [1] | ||
Fair Value, Inputs, Level 1 [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Derivative liability | [1] | ||
[1] | The Company has estimated the fair value of these derivatives using the Monte-Carlo model and/or a Binomial Model. |
Significant Accounting Polici_7
Significant Accounting Policies (Details Textual) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | ||
Organization and Significant Accounting Policies (Textual) | ||||
Unbilled receivables | $ 241,069 | $ 1,861,895 | ||
Definite-lived intangible assets useful lives | 3 years | 20 years | ||
Allowance for doubtful accounts | $ 504,785 | $ 502,868 | ||
Dilutive potential shares outstanding | 63,373,688 | 13,111,043 | ||
Derivative liability | [1] | $ 475,892 | $ 3,166,886 | |
Income taxes, description | A tax notice from the Puerto Rican government requesting payment of taxes related to 2014. The amount due as of September 30, 2019 was $156,711 plus penalties and interest of $119,401 for a total obligation due of $276,112. The amount due as of December 31, 2018 was $156,711 plus penalties and interest of $111,200 for a total obligation due of $267,911. | |||
United States [Member] | Sales Revenue, Net [Member] | ||||
Organization and Significant Accounting Policies (Textual) | ||||
Customers risk, percentage | 96.00% | 93.00% | ||
Puerto Rico [Member] | Sales Revenue, Net [Member] | ||||
Organization and Significant Accounting Policies (Textual) | ||||
Customers risk, percentage | 4.00% | 7.00% | ||
Customer One [Member] | Sales Revenue, Net [Member] | ||||
Organization and Significant Accounting Policies (Textual) | ||||
Customers risk, percentage | 25.00% | 22.00% | ||
Customer One [Member] | Accounts Receivable [Member] | ||||
Organization and Significant Accounting Policies (Textual) | ||||
Customers risk, percentage | 38.00% | 12.00% | ||
Customer Two [Member] | Sales Revenue, Net [Member] | ||||
Organization and Significant Accounting Policies (Textual) | ||||
Customers risk, percentage | 18.00% | 19.00% | ||
Customer Two [Member] | Accounts Receivable [Member] | ||||
Organization and Significant Accounting Policies (Textual) | ||||
Customers risk, percentage | 15.00% | 12.00% | ||
Customer Three [Member] | Sales Revenue, Net [Member] | ||||
Organization and Significant Accounting Policies (Textual) | ||||
Customers risk, percentage | 12.00% | 16.00% | ||
Customer Three [Member] | Accounts Receivable [Member] | ||||
Organization and Significant Accounting Policies (Textual) | ||||
Customers risk, percentage | 7.00% | 25.00% | ||
Customer Four [Member] | Sales Revenue, Net [Member] | ||||
Organization and Significant Accounting Policies (Textual) | ||||
Customers risk, percentage | 11.00% | 13.00% | ||
Customer Four [Member] | Accounts Receivable [Member] | ||||
Organization and Significant Accounting Policies (Textual) | ||||
Customers risk, percentage | 3.00% | 14.00% | ||
[1] | The Company has estimated the fair value of these derivatives using the Monte-Carlo model and/or a Binomial Model. |
Acquisition of TNS, Inc. (Detai
Acquisition of TNS, Inc. (Details) - USD ($) | Jan. 04, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | |
Preliminary allocation of purchase price | ||||
Goodwill | $ 2,505,615 | $ 1,834,856 | ||
Acquisition-related Costs [Member] | ||||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||||
$620,000 Convertible Note | $ 665,000 | |||
Cash | 980,000 | |||
Total purchase price | 1,645,000 | |||
Preliminary allocation of purchase price | ||||
Cash | 38,407 | |||
Accounts receivable, net | 65,166 | |||
Prepaid expenses | 630,810 | |||
Customer lists | [1] | 1,800,000 | ||
Tradenames | [1] | 300,000 | ||
Goodwill | [1] | 670,759 | ||
Accounts payable | (275,331) | |||
Accrued expenses | (611,778) | |||
Contract liabilities | (973,033) | |||
Net assets acquired | $ 1,645,000 | |||
[1] | The Company is reviewing for potential identifiable intangible assets, which may potentially change the value allocated to intangible assets. |
Acquisition of TNS, Inc. (Det_2
Acquisition of TNS, Inc. (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Business Combination, Separately Recognized Transactions [Line Items] | ||||
Net Sales | $ 7,505,937 | $ 9,671,990 | $ 27,159,071 | $ 24,963,876 |
Net (loss) income attributable to common shareholders | $ (1,274,450) | $ 414,485 | $ (2,705,618) | $ (2,341,274) |
(Loss) earnings per common share, basic: | $ (0.04) | $ 0.27 | $ (0.12) | $ (1.44) |
(Loss) earnings per common share, diluted: | $ 0.04 | $ (0.06) | $ (1.44) | |
Pro Forma [Member] | ||||
Business Combination, Separately Recognized Transactions [Line Items] | ||||
Net Sales | $ 10,439,718 | $ 27,159,071 | $ 30,238,512 | |
Net (loss) income attributable to common shareholders | $ 444,055 | $ (1,770,076) | $ (1,486,743) | |
(Loss) earnings per common share, basic: | $ 0.29 | $ (0.06) | $ (0.86) | |
(Loss) earnings per common share, diluted: | $ 0.04 | $ (0.06) | $ (0.86) |
Acquisition of TNS, Inc. (Det_3
Acquisition of TNS, Inc. (Details Textual) - USD ($) | Jan. 04, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
TNS Acquisition (Textual) | |||
Aggregate principal amount | $ 620,000 | ||
Business acquisition, description | The purchase price paid by the Company for the includes $980,000 in cash, paid at closing, and the issuance to InterCloud of a convertible promissory note in the aggregate principal amount of $620,000 (the "Note"). | ||
Convertible note | $ 2,533,510 | $ 1,058,700 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Total | $ 1,191,697 | $ 1,126,635 |
Less: impairment | (44,419) | (44,419) |
Less: accumulated depreciation | (1,048,292) | (1,020,959) |
Equipment, net | 98,986 | 61,257 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | 94,356 | 94,356 |
Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | 227,563 | 177,073 |
Research equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | 143,129 | 143,129 |
Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | 382,140 | 382,140 |
Computers and office equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | 344,509 | 329,937 |
Vehicles under capital lease [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total |
Property and Equipment (Detai_2
Property and Equipment (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Property and Equipment (Textual) | ||||
Depreciation expense | $ 10,348 | $ 4,940 | $ 27,333 | $ 14,174 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 2,464,784 | $ 850,249 |
Accumulated amortization | 1,311,459 | 1,086,795 |
Net carrying value | 3,776,243 | $ 1,937,044 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 2,837,548 | |
Accumulated amortization | 372,764 | |
Impairment | ||
Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 1,505,605 | |
Accumulated amortization | 194,146 | |
Impairment | ||
Total intangible assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 4,343,153 | |
Accumulated amortization | 566,910 | |
Impairment |
Intangible Assets (Details 1)
Intangible Assets (Details 1) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2019 | $ 86,586 | |
2020 | 347,387 | |
2021 | 347,387 | |
2022 | 347,387 | |
2023 | 347,387 | |
Thereafter | 2,300,109 | |
Total | $ 3,776,243 | $ 1,937,044 |
Intangible Assets (Details Text
Intangible Assets (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Intangible Assets (Textual) | ||||
Amortization expense | $ 86,933 | $ 51,934 | $ 260,802 | $ 147,306 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Total | $ 701,258 | $ 4,372,549 |
Promissory note issued to Roger Ponder [Member] | ||
Total | 18,858 | 18,858 |
Promissory note issued to Keith Hayter [Member] | ||
Total | 130,000 | 130,000 |
Promissory note issued to Keith Hayter One [Member] | ||
Total | 85,000 | 85,000 |
Promissory note issued to Keith Hayter Two [Member] | ||
Total | 80,000 | 80,000 |
Promissory note issued to Keith Hayter Three [Member] | ||
Total | 170,000 | |
Convertible promissory note, InterCloud Systems, Inc. One [Member] | ||
Total | 1,645,625 | |
Convertible promissory note, InterCloud Systems, Inc. Two [Member] | ||
Total | 622,392 | |
Promissory note issued to InterCloud Systems, Inc. [Member] | ||
Total | 1,515,674 | |
Promissory note issued to InterCloud Systems, Inc. [Member] | ||
Total | $ 217,400 | $ 275,000 |
Related Party Transactions (D_2
Related Party Transactions (Details Textual) - USD ($) | Aug. 12, 2019 | Mar. 15, 2019 | Jan. 04, 2019 | Dec. 03, 2018 | Jun. 07, 2018 | Apr. 13, 2018 | Dec. 15, 2017 | Nov. 30, 2017 | May 06, 2019 | Jan. 24, 2019 | Sep. 26, 2018 | Aug. 21, 2018 | Apr. 23, 2018 | Feb. 27, 2018 | Feb. 21, 2018 | Feb. 16, 2018 | Feb. 14, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Aug. 16, 2019 | Apr. 27, 2017 |
Related Party Transactions (Textual) | ||||||||||||||||||||||||
Gain loss on settlement of debt | $ (196,674) | $ 202,000 | $ 285,613 | $ 776,375 | ||||||||||||||||||||
Description of convertible debentures | The Company agreed to pay Libertas $31,602 each week based upon an anticipated 20% of its future receivables until such time as $1,460,000 had been paid, a period Libertas and the Financing Parties estimated to be approximately eleven months. | |||||||||||||||||||||||
Debt discount | 211,183 | 211,183 | $ 257,194 | |||||||||||||||||||||
Adex [Member] | ||||||||||||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||||||||||||
Repaid loan amount | 57,600 | 225,000 | ||||||||||||||||||||||
Purchase price | 500,000 | |||||||||||||||||||||||
Convertible promissory note, InterCloud Systems, Inc. [Member] | ||||||||||||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||||||||||||
Description of convertible debentures | The remaining principal balance of $1,445,625 was converted into shares of the Company’s common stock through an automatic forced conversion | |||||||||||||||||||||||
Convertible promissory note, InterCloud Systems, Inc. [Member] | ||||||||||||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||||||||||||
Aggregate principal amount | $ 50,000 | $ 75,000 | $ 2,000,000 | 55,124 | 55,124 | |||||||||||||||||||
Debt instrument, interest rate terms, description | The holder of the convertible promissory note entered into agreement to sell and assign a total of $50,000 of the outstanding principal to a third party. The Company accounted for the assignments in accordance with ASC 470-50 “Modifications and Extinguishments”. In accordance with ASC 470-50, the Company accounted for the assignment as a debt extinguishment and adjusted the fair value of the derivative to its fair value on the assignment date. | The holder of the convertible promissory note entered into agreement to sell and assign a total of $75,000 of the outstanding principal to a third party. The Company approved and is bound by the assignment and sale agreement. As a result of the assignment, the assigned note bears interest at 5% and the conversion price for the $75,000 of notes assigned is now equal to the lesser 75% of the lowest volume-weighted average price during the 15 trading days immediately preceding the date of conversion and $8. | ||||||||||||||||||||||
Notes payable | $ 639,000 | |||||||||||||||||||||||
Description of convertible debentures | The remaining principal balance of $1,452,299 was converted into shares of the Company’s common stock through an automatic forced conversion | The Company issued a convertible promissory note in the aggregate principal amount of $2,000,000. The interest on the outstanding principal due under the ADEX Note accrues at a rate of 6% per annum. All principal and accrued interest under the ADEX Note is due one year following the issue date of the ADEX Note and is convertible into shares of common stock at a conversion price equal to of the lowest volume-weighted average price during the 15 trading days immediately preceding the date of conversion, but in no event ever lower than $1 (the “Floor”), unless the note is in default, at which time the Floor terminates. | ||||||||||||||||||||||
Fair value of the warrants | $ 2,455,000 | |||||||||||||||||||||||
Working capital adjustment | $ 295,000 | |||||||||||||||||||||||
Promissory note issued to Roger Ponder [Member] | ||||||||||||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||||||||||||
Bearing interest rate, per annum | 10.00% | |||||||||||||||||||||||
Due date | Nov. 30, 2019 | |||||||||||||||||||||||
Promissory note issued to Keith Hayter [Member] | ||||||||||||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||||||||||||
Bearing interest rate, per annum | 10.00% | |||||||||||||||||||||||
Due date | Nov. 30, 2019 | |||||||||||||||||||||||
Promissory note issued to Keith Hayter [Member] | ||||||||||||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||||||||||||
Bearing interest rate, per annum | 10.00% | |||||||||||||||||||||||
Due date | Apr. 13, 2020 | |||||||||||||||||||||||
Promissory note issued to Keith Hayter [Member] | ||||||||||||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||||||||||||
Bearing interest rate, per annum | 8.00% | |||||||||||||||||||||||
Due date | Oct. 1, 2019 | |||||||||||||||||||||||
Convertible promissory note, InterCloud Systems, Inc [Member] | ||||||||||||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||||||||||||
Bearing interest rate, per annum | 10.00% | |||||||||||||||||||||||
Due date | Aug. 11, 2020 | |||||||||||||||||||||||
Convertible promissory note, InterCloud Systems, Inc [Member] | ||||||||||||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||||||||||||
Bearing interest rate, per annum | 8.00% | |||||||||||||||||||||||
Due date | Apr. 27, 2018 | |||||||||||||||||||||||
Convertible promissory note, InterCloud Systems, Inc [Member] | ||||||||||||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||||||||||||
Bearing interest rate, per annum | 1.00% | |||||||||||||||||||||||
Due date | Aug. 16, 2019 | |||||||||||||||||||||||
Debt discount | 0 | $ 0 | 171,557 | |||||||||||||||||||||
Convertible promissory note, InterCloud Systems, Inc [Membe] | ||||||||||||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||||||||||||
Bearing interest rate, per annum | 6.00% | |||||||||||||||||||||||
Due date | Mar. 27, 2019 | |||||||||||||||||||||||
Debt discount | 0 | $ 0 | 286,749 | |||||||||||||||||||||
Convertible Promissory Notes [Member] | ||||||||||||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||||||||||||
Fair value of the conversion feature | $ 1,174,000 | |||||||||||||||||||||||
Notes payable | 943,299 | |||||||||||||||||||||||
Outstanding principal amount | $ 100,000 | $ 39,375 | $ 105,000 | $ 100,000 | $ 105,000 | $ 105,000 | ||||||||||||||||||
Amount of conversion price | $ 354,375 | |||||||||||||||||||||||
Convertible Promissory Notes [Member] | Unsecured Debt [Member] | ||||||||||||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||||||||||||
Aggregate principal amount | $ 2,000,000 | |||||||||||||||||||||||
Debt instrument, interest rate terms, description | The lesser 70% of the lowest volume-weighted average price during the 15 trading days immediately preceding the date of conversion and $8. | |||||||||||||||||||||||
Debt instrument, interest rate | 8.00% | |||||||||||||||||||||||
Convertible Note [Member] | Designated as Hedging Instrument [Member] | ||||||||||||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||||||||||||
Aggregate principal amount | $ 793,894 | $ 793,894 | ||||||||||||||||||||||
Debt instrument, interest rate terms, description | The note is due on August 16, 2019 and bears interest at 1% per annum. The note is convertible into common shares of the Company at a conversion price equal to the 80% of the lowest volume-weighted average price during the 5 trading days immediately preceding the date of conversion. | |||||||||||||||||||||||
Fair value of the conversion feature | $ 348,000 | |||||||||||||||||||||||
Notes payable | $ 348,000 | |||||||||||||||||||||||
Series B Preferred Stock [Member] | ||||||||||||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||||||||||||
Fair value of Series B Preferred Stock | $ 484,530 | |||||||||||||||||||||||
Chief Executive Officer [Member] | ||||||||||||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||||||||||||
Proceeds from issuance of promissory notes | $ 18,858 | |||||||||||||||||||||||
Bearing interest rate, per annum | 10.00% | |||||||||||||||||||||||
Due date | Nov. 30, 2018 | |||||||||||||||||||||||
President [Member] | ||||||||||||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||||||||||||
Proceeds from issuance of promissory notes | $ 170,000 | $ 130,000 | $ 80,000 | 80,000 | ||||||||||||||||||||
Bearing interest rate, per annum | 10.00% | 10.00% | ||||||||||||||||||||||
Due date | Aug. 11, 2020 | Nov. 30, 2018 | ||||||||||||||||||||||
President One [Member] | ||||||||||||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||||||||||||
Proceeds from issuance of promissory notes | $ 85,000 | $ 85,000 | ||||||||||||||||||||||
Bearing interest rate, per annum | 8.00% | 8.00% | ||||||||||||||||||||||
Due date | Apr. 13, 2019 | Apr. 13, 2020 | ||||||||||||||||||||||
President Two [Member] | ||||||||||||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||||||||||||
Proceeds from issuance of promissory notes | $ 80,000 | |||||||||||||||||||||||
Bearing interest rate, per annum | 8.00% | |||||||||||||||||||||||
Due date | Aug. 20, 2019 | |||||||||||||||||||||||
Ponder [Member] | Series B Preferred Stock [Member] | ||||||||||||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||||||||||||
Common stock exchanged, shares | 542,500 | |||||||||||||||||||||||
Common stock aggregate, shares | 500 | |||||||||||||||||||||||
Hayter [Member] | Series B Preferred Stock [Member] | ||||||||||||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||||||||||||
Common stock exchanged, shares | 542,500 | |||||||||||||||||||||||
Common stock aggregate, shares | 500 | |||||||||||||||||||||||
Inter Cloud [Member] | ||||||||||||||||||||||||
Related Party Transactions (Textual) | ||||||||||||||||||||||||
Due to related parties | $ 50,577 | $ 50,577 | $ 51,889 | |||||||||||||||||||||
Contingent liability | $ 0 |
Loans Payable (Details)
Loans Payable (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Loans payable | $ 6,482,640 | $ 3,362,078 |
Subscription amount due to T. Warkentin [Member] | ||
Loans payable | 50,000 | 50,000 |
Loan with Heritage Bank of Commerce [Member] | ||
Loans payable | 3,121,109 | 3,225,821 |
Loan with WaveTech GmbH [Member] | ||
Loans payable | 3,000,000 | |
Promissory note issued to J. Thacker [Member] | ||
Loans payable | 41,361 | 41,361 |
Promissory note issued to S. Kahn [Member] | ||
Loans payable | 7,760 | 7,760 |
Promissory note issued to 0738856 BC ltd [Member] | ||
Loans payable | 2,636 | 2,636 |
Promissory note issued to 0738856 BC Ltd [Member] | ||
Loans payable | 15,000 | 15,000 |
Promissory note issued to Bluekey Energy [Member] | ||
Loans payable | 7,500 | 7,500 |
Promissory note issued to Old Main Capital LLC [Member] | ||
Loans payable | 12,000 | 12,000 |
Promissory note issued to C6 Capital [Member] | ||
Loans payable | $ 225,274 |
Loans Payable (Details Textual)
Loans Payable (Details Textual) - USD ($) | Jan. 04, 2019 | Oct. 10, 2018 | Aug. 16, 2019 | Sep. 30, 2019 | Sep. 30, 2019 | Sep. 23, 2019 | Sep. 30, 2018 | Jul. 15, 2019 | Feb. 04, 2019 | Dec. 31, 2018 | Apr. 12, 2017 | Mar. 31, 2012 |
Loans Payable (Textual) | ||||||||||||
Common stock subscribed | $ 74,742 | $ 74,742 | $ 74,742 | |||||||||
Description of loan payable | The Company agreed to pay Libertas $31,602 each week based upon an anticipated 20% of its future receivables until such time as $1,460,000 had been paid, a period Libertas and the Financing Parties estimated to be approximately eleven months. | |||||||||||
Debt discount | 211,183 | 211,183 | 257,194 | |||||||||
Escrow deposits | 1,325,895 | 1,325,895 | $ 1,325,895 | |||||||||
Exchange loss | (10,022) | $ 4,721 | ||||||||||
Repaid on aggregate amount | 289,475 | $ 131,579 | ||||||||||
Promissory note issued to J. Thacker [Member] | ||||||||||||
Loans Payable (Textual) | ||||||||||||
Owed to a non-related party | 41,361 | 41,361 | 41,361 | |||||||||
Promissory note issued to J. Thacker [Member] | Canadian [Member] | ||||||||||||
Loans Payable (Textual) | ||||||||||||
Owed to a non-related party | 53,300 | 53,300 | 53,300 | |||||||||
Promissory note issued to 0738856 BC ltd [Member] | ||||||||||||
Loans Payable (Textual) | ||||||||||||
Owed to a non-related party | 2,636 | 2,636 | 2,636 | |||||||||
Promissory note issued to 0738856 BC ltd [Member] | Canadian [Member] | ||||||||||||
Loans Payable (Textual) | ||||||||||||
Owed to a non-related party | 3,400 | $ 3,400 | 3,400 | |||||||||
Loan with Heritage Bank [Member] | ||||||||||||
Loans Payable (Textual) | ||||||||||||
Debt discount | 257,194 | |||||||||||
Promissory note issued to Old Main Capital LLC [Member] | ||||||||||||
Loans Payable (Textual) | ||||||||||||
Promissory note | $ 12,000 | |||||||||||
Description of loan payable | 10% interest, unsecured and due on demand. | |||||||||||
Owed to a non-related party | $ 12,000 | $ 12,000 | 12,000 | |||||||||
Promissory note issued to Old Main Capital LLC [Member] | Unsecured Debt [Member] | ||||||||||||
Loans Payable (Textual) | ||||||||||||
Interest rate | 10.00% | 10.00% | ||||||||||
Promissory note issued to Old Main Capital LLC [Member] | Secured Debt [Member] | ||||||||||||
Loans Payable (Textual) | ||||||||||||
Debt discount | $ 149,180 | $ 149,180 | 257,194 | |||||||||
Interest rate | 2.00% | 2.00% | ||||||||||
Maturity date | Oct. 20, 2020 | |||||||||||
Loan with Heritage Bank of Commerce [Member] | ||||||||||||
Loans Payable (Textual) | ||||||||||||
Description of loan payable | Interest rate of prime plus 2%, secured by all assets of the Company, matures October 20, 2020 | |||||||||||
Loan with WaveTech Global, Inc [Member] | ||||||||||||
Loans Payable (Textual) | ||||||||||||
Description of loan payable | Matured April 28, 2019. | |||||||||||
Owed to a non-related party | $ 1,325,895 | |||||||||||
Cash | 3,000,000 | |||||||||||
Escrow deposits | $ 1,325,895 | |||||||||||
Additional cash received | $ 1,664,083 | |||||||||||
Exchange loss | 10,022 | $ 10,022 | ||||||||||
Loan with WaveTech Global, Inc [Member] | Share Purchase Aggrement [Member] | ||||||||||||
Loans Payable (Textual) | ||||||||||||
Cash | 3,000,000 | $ 3,000,000 | ||||||||||
Promissory note issued to S. Kahn [Member] | ||||||||||||
Loans Payable (Textual) | ||||||||||||
Owed to a non-related party | 7,760 | 7,760 | 7,760 | |||||||||
Promissory note issued to S. Kahn [Member] | Canadian [Member] | ||||||||||||
Loans Payable (Textual) | ||||||||||||
Owed to a non-related party | 10,000 | 10,000 | 10,000 | |||||||||
Promissory note issued to 0738856 BC Ltd [Member] | ||||||||||||
Loans Payable (Textual) | ||||||||||||
Owed to a non-related party | 15,000 | 15,000 | 15,000 | |||||||||
Promissory note issued to Bluekey Energy [Member] | ||||||||||||
Loans Payable (Textual) | ||||||||||||
Owed to a non-related party | 7,500 | 7,500 | 7,500 | |||||||||
Loan with C6 Capital [Member] | ||||||||||||
Loans Payable (Textual) | ||||||||||||
Description of loan payable | Pursuant to the terms of the Financing Agreement, the Company agreed to pay C6 Capital $10,045 each week based upon an anticipated 20% of its future receivables until such time as $337,500 has been paid, a period C6 Capital and the Financing Parties estimate to be approximately eight months | |||||||||||
Debt discount | $ 95,000 | 62,003 | 62,003 | |||||||||
Owed to a non-related party | 287,277 | 287,277 | ||||||||||
Cash | 242,500 | |||||||||||
Aggregate amount | 337,500 | |||||||||||
purchase price | $ 250,000 | |||||||||||
Original balance | $ 50,223 | |||||||||||
Loan with WaveTech GmbH [Member] | ||||||||||||
Loans Payable (Textual) | ||||||||||||
Maturity date | Mar. 31, 2020 | |||||||||||
Promissory note issued to C6 Capital [Member] | ||||||||||||
Loans Payable (Textual) | ||||||||||||
Debt discount | 62,003 | $ 62,003 | ||||||||||
Maturity date | Apr. 15, 2020 | |||||||||||
Subscription amount due to T. Warkentin [Member] | ||||||||||||
Loans Payable (Textual) | ||||||||||||
Common stock subscribed | 50,000 | $ 50,000 | 50,000 | $ 50,000 | ||||||||
Common stock share subscriptions | 10,000,000 | |||||||||||
Loan and Security Agreement [Member] | ||||||||||||
Loans Payable (Textual) | ||||||||||||
Description of loan payable | (i) $5,000,000 or (ii) the Borrowing Base (as defined in the Loan and Security Agreement) through one or more advances through October 10, 2020 (the "Maturity Date"), subject to the Lender's satisfactory annual review of the Borrower which is currently ongoing. | |||||||||||
Loan and Security Agreement [Member] | Warrant [Member] | ||||||||||||
Loans Payable (Textual) | ||||||||||||
Common stock share subscriptions | 150,000 | |||||||||||
Description of loan payable | Price per share equal to 125% of the prior day's closing price. | |||||||||||
Debt discount | 149,180 | 149,180 | 257,194 | |||||||||
Owed to a non-related party | $ 3,270,289 | 3,270,289 | $ 3,483,015 | |||||||||
Received on aggregate amount | 21,111,888 | |||||||||||
Repaid on aggregate amount | 21,324,842 | |||||||||||
Repaid net amount | $ 212,954 | |||||||||||
Loan and Security Agreement [Member] | Common Stock [Member] | ||||||||||||
Loans Payable (Textual) | ||||||||||||
Description of loan payable | The Company also issued a warrant to purchase 113,953 shares of the Company's common stock at $1.25 per share for three years. The fair value of the warrants of $87,410 and $190,000 of debt issuance costs resulted in a discount to the note payable of $277,410. | |||||||||||
Financing Agreement [Member] | ||||||||||||
Loans Payable (Textual) | ||||||||||||
Description of loan payable | The Financing Parties sold to Libertas future receivables in an aggregate amount equal to $1,460,000 for a purchase price of $1,000,000. |
Convertible Debentures (Details
Convertible Debentures (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Convertible promissory note | $ 2,533,510 | $ 1,058,700 |
Barn [Member] | ||
Convertible promissory note | 594,374 | 445,000 |
Dominion Capital One [Member] | ||
Convertible promissory note | 1,391,591 | |
Michael Roeske [Member] | ||
Convertible promissory note | 102,658 | |
Joel Raven [Member] | ||
Convertible promissory note | 330,636 | |
GS Capital Partners, LLC [Member] | ||
Convertible promissory note | 89,112 | |
SCS, LLC [Member] | ||
Convertible promissory note | 25,139 | |
Dominion Capital Two [Member] | ||
Convertible promissory note | 240,370 | |
Dominion Capital Three [Member] | ||
Convertible promissory note | 123,176 | |
Silverback [Member] | ||
Convertible promissory note | 3,367 | |
RDW Capital [Member] | ||
Convertible promissory note | 50,000 | |
RDW Capital One [Member] | ||
Convertible promissory note | 39,375 | |
Silverback Capital [Member] | ||
Convertible promissory note | 50,000 | |
M2B Funding [Member] | ||
Convertible promissory note | 69,860 | |
M2B Funding One [Member] | ||
Convertible promissory note | $ 37,552 |
Convertible Debentures (Detai_2
Convertible Debentures (Details Textual) - USD ($) | Apr. 17, 2019 | Jan. 04, 2019 | Feb. 21, 2018 | Jun. 01, 2019 | May 18, 2018 | Apr. 23, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Apr. 27, 2017 | |
Short-term Debt [Line Items] | |||||||||||||
Accretion expense | $ 124,867 | $ 516,500 | $ 1,241,764 | $ 2,057,744 | |||||||||
Proceeds from issuance of convertible debentures | 84,000 | $ 2,430,959 | |||||||||||
Derivative expenses | [1] | 475,892 | 475,892 | $ 3,166,886 | |||||||||
Beneficial conversion feature | 314,228 | ||||||||||||
Description of convertible debentures | The Company agreed to pay Libertas $31,602 each week based upon an anticipated 20% of its future receivables until such time as $1,460,000 had been paid, a period Libertas and the Financing Parties estimated to be approximately eleven months. | ||||||||||||
Convertible Note One [Member] | Barn [Member] | |||||||||||||
Short-term Debt [Line Items] | |||||||||||||
Aggregate principal amount | 25,000 | 25,000 | |||||||||||
Face owed amount | $ 594,362 | $ 594,362 | |||||||||||
Convertible Note One [Member] | DominionCapitalTwoMember | |||||||||||||
Short-term Debt [Line Items] | |||||||||||||
Debt instrument, interest rate terms, description | The Company issued any common stock or common stock equivalents at an effective price per share less than $1 then the conversion price of the note would be reduced to the lower price. As long as the note is not in default the Company could repay the note at 110% of the outstanding principal amount. If the Company defaulted upon the note it would accrue interest at 18% per annum. | ||||||||||||
Convertible Note One [Member] | DominionCapitalTwoMember | Securities Purchase Agreement One [Member] | |||||||||||||
Short-term Debt [Line Items] | |||||||||||||
Aggregate principal amount | $ 295,746 | ||||||||||||
Cash prepayment premium | 5.00% | ||||||||||||
Debt instrument, interest rate terms, description | The holder of the note exchanged this note for a new note (refer to the "Convertible promissory note, Dominion Capital, 12% interest, unsecured, matures October 17, 2020"". | The interest on the outstanding principal due under the secured note accrued at a rate of 12% per annum. All principal and accrued but unpaid interest under the secured note was originally due on May 18, 2019. The secured note was convertible into shares of the Company's common stock at a fixed conversion price of $1 per share. Interest was payable monthly on the 18th of each month. While interest payments were to be made in cash during the first six months that the secured note was outstanding, beginning in month seven, and on each monthly anniversary thereafter until maturity, the Company had the option to pay interest payments in stock, subject to certain equity conditions being satisfied. | |||||||||||
Aggregate purchase price | $ 280,959 | ||||||||||||
Other prepayment premium | 10.00% | ||||||||||||
Share, issued | 496,101 | ||||||||||||
Convertible Note One [Member] | DominionCapitalTwoMember | Securities Purchase Agreement One [Member] | Series A Preferred Stock [Member] | |||||||||||||
Short-term Debt [Line Items] | |||||||||||||
Fair value of the conversion feature | $ 193,509 | ||||||||||||
Convertible Note One [Member] | Derivative And Hedging [Member] | Barn [Member] | |||||||||||||
Short-term Debt [Line Items] | |||||||||||||
Aggregate principal amount | $ 500,000 | $ 619,362 | |||||||||||
Issued shares of common stock | 125,000 | ||||||||||||
Fair value of the conversion feature | $ 571,079 | ||||||||||||
Debt instrument, interest rate | 6.00% | ||||||||||||
Exercise price | $ 1.60 | ||||||||||||
Derivative expenses | $ 229,851 | $ 466,000 | |||||||||||
Premium balance owed percentage | 15.00% | ||||||||||||
Accrued interest, percentage | 18.00% | ||||||||||||
Fair value of the warrants | $ 158,772 | ||||||||||||
Debt instrument, interest rate terms, description | The exercise price of the warrant was to reduce to 85% of the closing price of the Company's common stock if the closing price of the Company's common stock was less than $1.60 on July 31, 2018. The note was due on January 15, 2019, and in February 2019, the maturity date was extended to June 1, 2019, and bears interest at 6% per annum. The note is convertible into common shares of the Company at a conversion price equal to the lower of 80% of the lowest volume-weighted average price during the 5 trading days immediately preceding the date of conversion and $1. | ||||||||||||
Notes payable | $ 500,000 | ||||||||||||
Convertible Note One [Member] | Derivative And Hedging [Member] | Dominion Capital [Member] | |||||||||||||
Short-term Debt [Line Items] | |||||||||||||
Fair value of the conversion feature | $ 3,325,000 | ||||||||||||
Derivative expenses | $ 1,825,000 | ||||||||||||
Convertible promissory note exchange, description | The holder of the note exchanged this note for a new note (refer to the "Convertible promissory note, Dominion Capital, 12% interest, unsecured, matures October 17, 2020. | ||||||||||||
Debt instrument, interest rate terms, description | The Company issued any common stock or common stock equivalents at an effective price per share less than $1 then the conversion price of the note would be reduced to the lower price. As long as the note was not in default the Company could repay the note at 110% of the outstanding principal amount. If the Company defaulted upon the note it would accrue interest at 18% per annum. | ||||||||||||
Notes payable | $ 1,500,000 | ||||||||||||
Convertible Note One [Member] | Derivative And Hedging [Member] | DominionCapitalTwoMember | |||||||||||||
Short-term Debt [Line Items] | |||||||||||||
Derivative expenses | 187,041 | ||||||||||||
Notes payable | $ 280,959 | ||||||||||||
Convertible Promissory Notes [Member] | |||||||||||||
Short-term Debt [Line Items] | |||||||||||||
Fair value of the conversion feature | $ 1,174,000 | ||||||||||||
Notes payable | $ 943,299 | ||||||||||||
Convertible Promissory Notes [Member] | Dominion Capital [Member] | Securities Purchase Agreement One [Member] | |||||||||||||
Short-term Debt [Line Items] | |||||||||||||
Aggregate principal amount | $ 1,578,947 | ||||||||||||
Accrued interest, percentage | 12.00% | ||||||||||||
Debt instrument, interest rate terms, description | All principal and accrued interest under the secured note was originally due on October 23, 2019 and was convertible into shares of the Company's common stock at a fixed conversion price of $1.00. While during the first three months that the secured note is outstanding, only interest payments were due to the lender, beginning in month four, and on each monthly anniversary thereafter until maturity, amortization payments were due for principal and interest due under the secured note. | ||||||||||||
Aggregate purchase price | $ 1,500,000 | ||||||||||||
[1] | The Company has estimated the fair value of these derivatives using the Monte-Carlo model and/or a Binomial Model. |
Convertible Debentures (Detai_3
Convertible Debentures (Details Textual 1) - USD ($) | Apr. 17, 2019 | Jan. 04, 2019 | Jan. 28, 2019 | Jan. 04, 2019 | Dec. 04, 2018 | Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Short-term Debt [Line Items] | ||||||||||||
Debt Instrument, description | The Company agreed to pay Libertas $31,602 each week based upon an anticipated 20% of its future receivables until such time as $1,460,000 had been paid, a period Libertas and the Financing Parties estimated to be approximately eleven months. | |||||||||||
Fair value of conversion feature | $ 308,000 | |||||||||||
Convertible debentures, net of discount | $ 286,028 | $ 286,028 | $ 1,311,821 | |||||||||
Loss on settlement of debt | (196,674) | $ 202,000 | 285,613 | $ 776,375 | ||||||||
Additional paid-in capital | 24,952,439 | 24,952,439 | 18,681,390 | |||||||||
Accretion expense | 124,867 | $ 516,500 | 1,241,764 | $ 2,057,744 | ||||||||
Derivative expenses | [1] | 475,892 | $ 475,892 | $ 3,166,886 | ||||||||
Convertible Note Two [Member] | Dominion Capital Three [Member] | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Debt Instrument, description | The conversion price in effect on the date such conversion is effected shall be equal to (i) initially, $0.10 or (ii) on or after the date of the closing of the next public or private offering of equity or equity-linked securities of the Company in which the Company receives gross proceeds in an amount greater than $100,000, one hundred and five percent (105%) of the price of the common stock issuable in the offering. While during the first six months that the Exchange Note is outstanding, only interest payments are due to the holder, beginning in October 2019, and on each monthly anniversary thereafter until maturity, amortization payments are due for principal and interest due under the Exchange Note. | The Company was to begin making principal payments in equal installments beginning on October 1, 2019. On October 22, 2019, the Company reached an agreement with Dominion Capital to postpone the principal payments. In exchange for the extension, the Company will pay to Dominion Capital an extension fee equal to 14% of the postponed payments. | ||||||||||
Debt instrument, interest rate terms, description | The "Convertible promissory note, Dominion Capital, 18% interest, secured, matures October 23, 2019" and "Convertible promissory note, Dominion Capital, 12% interest, unsecured, matures May 18, 2019. | |||||||||||
Convertible debentures, net of discount | 179,543 | $ 179,543 | ||||||||||
Face amount | 1,571,134 | 1,571,134 | ||||||||||
Loss on settlement of debt | $ 904,469 | 904,469 | ||||||||||
Additional paid-in capital | 314,228 | 314,228 | ||||||||||
Accrued interest maturity date | Oct. 17, 2020 | |||||||||||
Accrued interest, percentage | 12.00% | |||||||||||
Convertible note principal amount | $ 1,571,134 | |||||||||||
Convertible Note Two [Member] | Silverback [Member] | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Notes payable | 0 | 0 | ||||||||||
Convertible note principal amount | $ 27,500 | $ 27,500 | ||||||||||
Convertible Note Two [Member] | Silverback [Member] | Securities Purchase Agreement One [Member] | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Debt Instrument, description | The secured note is convertible into shares of the Company's at 65% of lowest trading price for the fifteen trading days prior to the conversion date. | |||||||||||
Debt instrument, interest rate terms, description | The Company may repay the note at 150% of the outstanding principal amount. If the Company defaults upon the note it bears interest at 18% per annum. | |||||||||||
Convertible debentures carrying value | $ 30,000 | |||||||||||
Accrued interest maturity date | Dec. 4, 2019 | |||||||||||
Accrued interest, percentage | 8.00% | |||||||||||
Aggregate purchase price | $ 25,000 | |||||||||||
Notes payable | 25,000 | |||||||||||
Convertible note principal amount | 27,500 | |||||||||||
Derivative expenses | $ 5,000 | |||||||||||
Convertible Note Two [Member] | TNS, Inc. [Member] | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Debt Instrument, description | The Company at a conversion price equal to the greater of 75% of the lowest volume-weighted average price during the 10 trading days immediately preceding the date of conversion and $0.10. | |||||||||||
Accrued interest maturity date | Jan. 30, 2020 | |||||||||||
Accrued interest, percentage | 6.00% | 6.00% | ||||||||||
Convertible note principal amount | $ 620,000 | $ 620,000 | $ 620,000 | |||||||||
Convertible Note Two [Member] | TNS, Inc. [Member] | Derivative And Hedging [Member] | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Fair value of conversion feature | 189,000 | |||||||||||
Notes payable | $ 144,000 | $ 144,000 | ||||||||||
Convertible Note Two [Member] | TNS, Inc. [Member] | Third Party [Member] | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Convertible note principal amount | 186,000 | |||||||||||
Convertible Note Two [Member] | TNS, Inc. [Member] | Third Party One [Member] | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Convertible note principal amount | $ 434,000 | |||||||||||
Convertible Note Two [Member] | Michael Roeske [Member] | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Accrued interest maturity date | Jan. 30, 2020 | |||||||||||
Accrued interest, percentage | 6.00% | |||||||||||
Convertible Note Two [Member] | Joel Raven [Member] | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Accrued interest maturity date | Jan. 30, 2020 | |||||||||||
Accrued interest, percentage | 6.00% | |||||||||||
[1] | The Company has estimated the fair value of these derivatives using the Monte-Carlo model and/or a Binomial Model. |
Convertible Debentures (Detai_4
Convertible Debentures (Details Textual 2) - USD ($) | Mar. 15, 2019 | Jan. 04, 2019 | Dec. 03, 2018 | Aug. 31, 2019 | Aug. 31, 2019 | Jan. 28, 2019 | Jan. 24, 2019 | Sep. 26, 2018 | Jul. 31, 2018 | Jul. 03, 2018 | Jun. 07, 2018 | Feb. 21, 2018 | Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Aug. 02, 2018 | |
Short-term Debt [Line Items] | ||||||||||||||||||||
Accretion expense | $ 124,867 | $ 516,500 | $ 1,241,764 | $ 2,057,744 | ||||||||||||||||
Convertible debentures, net of discount | 286,028 | 286,028 | $ 1,311,821 | |||||||||||||||||
Debt Instrument, description | The Company agreed to pay Libertas $31,602 each week based upon an anticipated 20% of its future receivables until such time as $1,460,000 had been paid, a period Libertas and the Financing Parties estimated to be approximately eleven months. | |||||||||||||||||||
Fair value of conversion feature | $ 308,000 | |||||||||||||||||||
Derivative expenses | [1] | 475,892 | 475,892 | 3,166,886 | ||||||||||||||||
Convertible Note Three [Member] | Michael Roeske [Member] | ||||||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||||||
Convertible debentures, net of discount | 13,342 | 13,342 | ||||||||||||||||||
Face amount | 116,000 | 116,000 | ||||||||||||||||||
Accrued interest, percentage | 6.00% | |||||||||||||||||||
Accrued interest maturity date | Jan. 30, 2020 | |||||||||||||||||||
Convertible note principal amount | $ 186,000 | 70,000 | 70,000 | |||||||||||||||||
Convertible Note Three [Member] | Joel Raven [Member] | ||||||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||||||
Convertible debentures, net of discount | 33,364 | 33,364 | ||||||||||||||||||
Face amount | 364,000 | 364,000 | ||||||||||||||||||
Accrued interest, percentage | 6.00% | |||||||||||||||||||
Accrued interest maturity date | Jan. 30, 2020 | |||||||||||||||||||
Convertible note principal amount | $ 434,000 | 70,000 | 70,000 | |||||||||||||||||
Convertible Note Three [Member] | M2B Funding [Member] | Securities Purchase Agreement One [Member] | ||||||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||||||
Debt instrument, interest rate terms, description | The Company was allowed to repay the note at 115% of the outstanding principal amount. If the Company defaulted upon the note it would have accrued interest at 18% per annum. | |||||||||||||||||||
Notes payable | $ 23,000 | |||||||||||||||||||
Accrued interest, percentage | 12.00% | |||||||||||||||||||
Debt Instrument, description | The secured note was convertible into shares of the Company's common stock at the greater of $0.80 or 75% of the lowest VWAP in the 10 trading days prior to conversion. | |||||||||||||||||||
Accrued interest maturity date | Mar. 15, 2019 | |||||||||||||||||||
Aggregate purchase price | $ 75,000 | |||||||||||||||||||
Debenture holders to settle convertible debenture | 2,300 | 2,300 | ||||||||||||||||||
Fair value of conversion feature | 23,000 | |||||||||||||||||||
Convertible note principal amount | $ 78,947 | |||||||||||||||||||
Convertible Note Three [Member] | MTwoBFundingOneMember | Securities Purchase Agreement One [Member] | ||||||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||||||
Debt instrument, interest rate terms, description | The Company was allowed to repay the note at 115% of the outstanding principal amount. If the Company defaulted upon the note it would have accrued interest at 18% per annum. | |||||||||||||||||||
Notes payable | $ 75,000 | |||||||||||||||||||
Accrued interest, percentage | 12.00% | |||||||||||||||||||
Debt Instrument, description | The secured note was convertible into shares of the Company's common stock at the greater of $1 or 75% of the lowest VWAP in the 10 trading days prior to conversion. | |||||||||||||||||||
Aggregate purchase price | $ 75,000 | |||||||||||||||||||
Debenture holders to settle convertible debenture | 90,000 | 90,000 | ||||||||||||||||||
Fair value of conversion feature | 103,000 | |||||||||||||||||||
Convertible note principal amount | 78,947 | |||||||||||||||||||
Derivative expenses | $ 28,000 | |||||||||||||||||||
Convertible Note Three [Member] | RDW Capital LLC [Member] | ||||||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||||||
Debt Instrument, description | The holder of the convertible promissory note described in Note 6, Related Party Transactions, entered into agreements to sell and assign a total of $39,375 of the outstanding principal to a third party. During the nine months ended September 30, 2019, the full $39,375 was converted into shares of the Company’s common stock (refer to Note 10, Common Stock, for additional information). | The holder of the convertible promissory note described in Note 6, Related Party Transactions, entered into agreements to sell and assign a total of $105,000 of the outstanding principal to a third party. During the year ended December 31, 2018, $55,000 of the note was converted. During the six months ended June 30, 2019, the remaining $50,000 was converted into shares of the Company's common stock (refer to Note 10, Common Stock, for additional information). | ||||||||||||||||||
Convertible Note Three [Member] | Silverback [Member] | ||||||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||||||
Debt Instrument, description | The holder of the convertible promissory note described in Note 6, Related Party Transactions, entered into agreements to sell and assign a total of $50,000 of the outstanding principal to a third party. During the nine months ended September 30, 2019, the full $50,000 was converted into shares of the Company’s common stock (refer to Note 10, Common Stock, for additional information). | The holder of the convertible promissory note described in Note 6, Related Party Transactions, entered into agreement to sell and assign a total of $75,000 of the outstanding principal to a third party. The Company approved and is bound by the assignment and sale agreement. As a result of the assignment, the assigned note bore interest at 5% and the conversion price for the $75,000 of notes assigned was equal to the lesser 75% of the lowest volume-weighted average price during the 15 trading days immediately preceding the date of conversion and $8. During the year ended December 31, 2018, the full $75,000 was converted into shares of the Company's common stock. | ||||||||||||||||||
Convertible Note Three [Member] | Virtual Capital [Member] | ||||||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||||||
Debt Instrument, description | The holder of the convertible promissory note described in Note 6, Related Party Transactions, entered into agreements to sell and assign a total of $200,000 of the outstanding principal to a third party. During the nine months ended September 30, 2019, the full $200,000 was converted into shares of the Company’s common stock (refer to Note 10, Common Stock, for additional information). | The holder of the convertible promissory note described in Note 6, Related Party Transactions, entered into agreements to sell and assign a total of $200,000 of the outstanding principal to a third party. During the nine months ended September 30, 2019, the full $200,000 was converted into shares of the Company’s common stock (refer to Note 10, Common Stock, for additional information). | ||||||||||||||||||
Convertible Note [Member] | Michael Roeske [Member] | ||||||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||||||
Convertible debentures, net of discount | 13,342 | 13,342 | 0 | |||||||||||||||||
Face amount | 116,000 | $ 116,000 | ||||||||||||||||||
Convertible promissory note, maturity date | Jan. 30, 2020 | |||||||||||||||||||
Convertible Note [Member] | Joel Raven [Member] | ||||||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||||||
Convertible debentures, net of discount | 0 | |||||||||||||||||||
Convertible Note [Member] | M2B Funding [Member] | ||||||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||||||
Convertible debentures, net of discount | $ 0 | $ 0 | 9,087 | |||||||||||||||||
Debt instrument, interest rate | 12.00% | 12.00% | ||||||||||||||||||
Convertible promissory note, maturity date | Mar. 15, 2019 | |||||||||||||||||||
Convertible Note [Member] | MTwoBFundingOneMember | ||||||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||||||
Convertible debentures, net of discount | $ 0 | $ 0 | 41,395 | |||||||||||||||||
Debt instrument, interest rate | 12.00% | 12.00% | ||||||||||||||||||
Convertible promissory note, maturity date | Mar. 15, 2019 | |||||||||||||||||||
Convertible Note [Member] | Silverback [Member] | ||||||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||||||
Convertible debentures, net of discount | $ 10,781 | $ 10,781 | 24,140 | |||||||||||||||||
Debt instrument, interest rate | 8.00% | 8.00% | ||||||||||||||||||
Convertible promissory note, maturity date | Dec. 4, 2019 | |||||||||||||||||||
Convertible Note [Member] | Barn [Member] | ||||||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||||||
Convertible debentures, net of discount | $ 0 | $ 0 | 55,000 | |||||||||||||||||
Debt instrument, interest rate | 6.00% | 6.00% | ||||||||||||||||||
Convertible promissory note, maturity date | Jun. 1, 2019 | |||||||||||||||||||
Convertible Note [Member] | Dominion Capital [Member] | ||||||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||||||
Convertible debentures, net of discount | $ 0 | $ 0 | 1,009,630 | |||||||||||||||||
Debt instrument, interest rate | 18.00% | 18.00% | ||||||||||||||||||
Convertible promissory note, maturity date | Oct. 23, 2019 | |||||||||||||||||||
Convertible Note [Member] | DominionCapitalTwoMember | ||||||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||||||
Convertible debentures, net of discount | $ 0 | $ 0 | 172,570 | |||||||||||||||||
Debt instrument, interest rate | 12.00% | 12.00% | ||||||||||||||||||
Convertible promissory note, maturity date | May 18, 2019 | |||||||||||||||||||
Convertible Note [Member] | Dominion Capital Three [Member] | ||||||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||||||
Convertible debentures, net of discount | $ 0 | |||||||||||||||||||
Convertible Note Four [Member] | GS Capital Partners, LLC [Member] | Securities Purchase Agreement One [Member] | ||||||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||||||
Notes payable | $ 33,888 | $ 33,888 | $ 28,000 | |||||||||||||||||
Convertible debentures, net of discount | 123,000 | 123,000 | $ 39,000 | |||||||||||||||||
Accrued interest, percentage | 8.00% | |||||||||||||||||||
Debt Instrument, description | The secured note is convertible into shares of the Company’s common stock at 71% of the average of the three lowest VWAPs in the 12 trading days prior to and including the conversion date. The conversion price has a floor of $0.01 per share. | |||||||||||||||||||
Accrued interest maturity date | Aug. 2, 2020 | |||||||||||||||||||
Aggregate purchase price | $ 112,000 | |||||||||||||||||||
Fair value of conversion feature | $ 28,000 | |||||||||||||||||||
Convertible note principal amount | $ 123,000 | |||||||||||||||||||
Convertible Note Five [Member] | SCS, LLC [Member] | Securities Purchase Agreement One [Member] | ||||||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||||||
Notes payable | 25,891 | 25,891 | $ 29,000 | |||||||||||||||||
Convertible debentures, net of discount | $ 51,030 | $ 51,030 | ||||||||||||||||||
Accrued interest, percentage | 8.00% | |||||||||||||||||||
Debt Instrument, description | The secured note is convertible into shares of the Company's common stock at 75% of the lowest average VWAP in the 15 trading days prior to the conversion date. The conversion price has a floor of $0.005 per share. | |||||||||||||||||||
Accrued interest maturity date | Mar. 30, 2020 | |||||||||||||||||||
Fair value of conversion feature | $ 29,000 | |||||||||||||||||||
Convertible note principal amount | $ 51,030 | |||||||||||||||||||
[1] | The Company has estimated the fair value of these derivatives using the Monte-Carlo model and/or a Binomial Model. |
Derivative Liabilities (Details
Derivative Liabilities (Details) - Fair Value, Inputs, Level 3 [Member] - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Derivative [Line Items] | ||
Balance at the beginning of the period | $ 3,166,886 | $ 4,749,712 |
Original discount limited to proceeds of notes | 246,000 | 2,839,369 |
Conversion of derivative liability | (1,281,889) | (678,142) |
Repayment of convertible note | (196,468) | (310,041) |
Change in fair value of embedded conversion option | (1,924,637) | (6,049,473) |
Addition to derivative due to default penalty | 466,000 | |
Derivative issued as part of acquisition | 302,800 | |
Fair value of derivative liabilities in excess of notes proceeds received | 2,274,892 | |
Derivative warrants issued for services and to acquire non-controlling interest | 328,833 | |
Derivative liability settled through the issuance of preferred stock | (291,064) | |
Balance at the end of the period | $ 475,892 | $ 3,166,886 |
Derivative Liabilities (Detai_2
Derivative Liabilities (Details 1) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Derivative [Line Items] | ||
Expected Dividend Yield | 0.00% | 0.00% |
Minimum [Member] | ||
Derivative [Line Items] | ||
Expected Volatility | 172.00% | |
Risk-free Interest Rate | 2.45% | |
Expected Life (in years) | 15 days | |
Maximum [Member] | ||
Derivative [Line Items] | ||
Expected Volatility | 381.00% | |
Risk-free Interest Rate | 2.63% | |
Expected Life (in years) | 2 years 9 months 11 days | |
Minimum [Member] | ||
Derivative [Line Items] | ||
Expected Volatility | 265.00% | |
Risk-free Interest Rate | 1.63% | |
Expected Life (in years) | 2 months 30 days | |
Maximum [Member] | ||
Derivative [Line Items] | ||
Expected Volatility | 355.00% | |
Risk-free Interest Rate | 1.88% | |
Expected Life (in years) | 2 years 11 days |
Common Stock (Details)
Common Stock (Details) - USD ($) | Aug. 16, 2019 | Jul. 02, 2019 | May 22, 2019 | May 21, 2019 | May 17, 2019 | May 06, 2019 | Apr. 25, 2019 | Apr. 12, 2019 | Mar. 07, 2019 | Feb. 14, 2019 | Feb. 12, 2019 | Feb. 11, 2019 | Feb. 07, 2019 | Feb. 01, 2019 | Jan. 28, 2019 | Jan. 14, 2019 | Sep. 27, 2019 | Sep. 18, 2019 | Aug. 30, 2019 | Aug. 29, 2019 | Aug. 26, 2019 | Jul. 18, 2019 | Jun. 18, 2019 | Apr. 30, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2018 | Nov. 15, 2017 |
Common Stock (Textual) | ||||||||||||||||||||||||||||||||
Common stock price | $ 0.00001 | $ 0.00001 | ||||||||||||||||||||||||||||||
Common stock, shares authorized | 750,000,000 | 750,000,000 | ||||||||||||||||||||||||||||||
Treasury stock, shares | 621,258 | |||||||||||||||||||||||||||||||
Treasury stock, cost | $ 277,436 | |||||||||||||||||||||||||||||||
Common Stock [Member] | ||||||||||||||||||||||||||||||||
Common Stock (Textual) | ||||||||||||||||||||||||||||||||
Common stock, cancelled shares | 30,000 | 90,000 | 20,000 | |||||||||||||||||||||||||||||
Common stock issued for services | 2,869,231 | 833,333 | 2,869,231 | 5,010,000 | ||||||||||||||||||||||||||||
Common Stock [Member] | Maximum [Member] | ||||||||||||||||||||||||||||||||
Common Stock (Textual) | ||||||||||||||||||||||||||||||||
Common stock price | $ 0.00001 | |||||||||||||||||||||||||||||||
Common stock, shares authorized | 750,000,000 | |||||||||||||||||||||||||||||||
Common Stock [Member] | Minimum [Member] | ||||||||||||||||||||||||||||||||
Common Stock (Textual) | ||||||||||||||||||||||||||||||||
Common stock price | $ 0.00001 | |||||||||||||||||||||||||||||||
Common stock, shares authorized | 275,000,000 | |||||||||||||||||||||||||||||||
Common Stock [Member] | Silverback Capital Convertible Debentures [Member] | ||||||||||||||||||||||||||||||||
Common Stock (Textual) | ||||||||||||||||||||||||||||||||
Common stock, shares issued | 300,000 | 200,000 | 317,600 | 200,000 | 100,000 | 650,000 | ||||||||||||||||||||||||||
Principal amount | $ 8,500 | $ 13,000 | $ 24,697 | $ 15,552 | $ 9,746 | $ 6,000 | ||||||||||||||||||||||||||
Accrued interest | $ 290 | $ 338 | ||||||||||||||||||||||||||||||
Common Stock [Member] | RDW Capital LLC Convertible Debentures [Member] | ||||||||||||||||||||||||||||||||
Common Stock (Textual) | ||||||||||||||||||||||||||||||||
Common stock, shares issued | 77,598 | 576,501 | 300,000 | 172,414 | 110,742 | |||||||||||||||||||||||||||
Principal amount | $ 5,750 | $ 39,375 | $ 21,750 | $ 12,500 | $ 10,000 | |||||||||||||||||||||||||||
Common Stock [Member] | Virtual Capital Convertible Debentures [Member] | ||||||||||||||||||||||||||||||||
Common Stock (Textual) | ||||||||||||||||||||||||||||||||
Common stock, shares issued | 1,499,960 | 1,071,418 | 1,400,000 | |||||||||||||||||||||||||||||
Principal amount | $ 55,000 | $ 75,000 | $ 70,000 | |||||||||||||||||||||||||||||
Accrued interest | $ 19,998 | $ 7,499 | $ 6,930 | |||||||||||||||||||||||||||||
Common Stock [Member] | InterCloud Convertible Debentures [Member] | ||||||||||||||||||||||||||||||||
Common Stock (Textual) | ||||||||||||||||||||||||||||||||
Common stock, shares issued | 20,598,088 | 15,707,163 | ||||||||||||||||||||||||||||||
Principal amount | $ 793,894 | $ 2,897,924 | ||||||||||||||||||||||||||||||
Accrued interest | $ 12,063 | |||||||||||||||||||||||||||||||
Common Stock [Member] | Employee Convertible Debentures [Member] | ||||||||||||||||||||||||||||||||
Common Stock (Textual) | ||||||||||||||||||||||||||||||||
Common stock, shares issued | 1,400,000 | |||||||||||||||||||||||||||||||
Principal amount | $ 140,000 | |||||||||||||||||||||||||||||||
Common Stock [Member] | Series A Preferred Stock [Member] | ||||||||||||||||||||||||||||||||
Common Stock (Textual) | ||||||||||||||||||||||||||||||||
Common stock issued for services | 333,334 | 333,334 | 333,334 | 263,713 | ||||||||||||||||||||||||||||
Conversion of shares | 10,000 | 10,000 | 10,000 | 10,000 | ||||||||||||||||||||||||||||
Stated value per share | $ 1 | $ 1 | $ 1 | $ 1 |
Preferred Stock (Details)
Preferred Stock (Details) - USD ($) | Apr. 16, 2018 | Oct. 29, 2018 | Oct. 29, 2018 | Nov. 15, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Nov. 14, 2019 | Dec. 31, 2018 |
Preferred Stock (Textual) | ||||||||||
Stated value of per share | $ 3,500 | |||||||||
Series B preferred stock voting, description | The holders of shares of Series B preferred stock shall be voted together with the shares of common stock such that the aggregate voting power of the Series B preferred stock is equal to 51% of the total voting power of the Company. | |||||||||
Less: deemed dividend - Series A preferred stock redemption | $ (488,072) | $ (488,072) | $ (152,187) | |||||||
Series C Preferred Stock [Member] | Subsequent Event [Member] | ||||||||||
Preferred Stock (Textual) | ||||||||||
Preferred stock, shares issued | 9,000,000 | |||||||||
Preferred stock, stated value | $ 0.00001 | |||||||||
Series A Preferred Stock [Member] | ||||||||||
Preferred Stock (Textual) | ||||||||||
Series A preferred stock, shares authorized | 20,000,000 | 8,000,000 | 8,000,000 | 8,000,000 | ||||||
Preferred stock, shares issued | 8,000,000 | 899,427 | 899,427 | 899,427 | ||||||
Conversion rights, description | The number of shares of common stock into which each share of the Series A preferred stock shares may be converted shall be determined by dividing the sum of the stated value of the Series A preferred stock shares ($1.00 per share) being converted and any accrued and unpaid dividends by the conversion price in effect at the time of the conversion. The Series A preferred stock shares may be converted at an initial conversion price of the lower of 80% of the lowest VWAP during the five trading day period immediately preceding the date a conversion notice is delivered or $0.05, subject to adjustment for any subdivision or combination of the Company's outstanding shares of common stock. The conversion price has a floor of $0.03 per share. | |||||||||
Series A preferred stock conversion, description | The lowest VWAP during the ten trading day period immediately preceding the date a conversion notice is delivered or $0.40. | The Company made the first amendment to the Certificate of Designation of its Series A convertible preferred stock. This amendment updated the conversion price to be equal to the greater of 75% of the lowest VWAP during the ten trading day period immediately preceding the date a conversion notice is delivered or $0.40, subject to adjustment for any subdivision or combination of the Company's outstanding shares of common stock. | ||||||||
Less: deemed dividend - Series A preferred stock redemption | $ 488,072 | $ 488,072 | ||||||||
Series B Preferred Stock [Member] | ||||||||||
Preferred Stock (Textual) | ||||||||||
Series A preferred stock, shares authorized | 1,000 | 1,000 | 1,000 | |||||||
Preferred stock, shares issued | 1,000 | 1,000 | 1,000 | |||||||
Shares, issued | 1,000 | |||||||||
Stated value of per share | $ 3,500 |
Share Purchase Warrants (Detail
Share Purchase Warrants (Details) - $ / shares | 3 Months Ended | ||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | |
Warrants and Rights Note Disclosure [Abstract] | |||
Number of warrants, Beginning Balance | 2,651,457 | 1,939,894 | 1,715,177 |
Number of warrants, Issued | 938,806 | 731,938 | 284,717 |
Number of warrants, Expired | (200,000) | (20,375) | (60,000) |
Number of warrants, Ending Balance | 3,390,263 | 2,651,457 | 1,939,894 |
Weighted average exercise price, Beginning Balance | $ 1.27 | $ 1.96 | $ 2.14 |
Weighted average exercise price, Issued | 1.20 | 1.20 | 1.20 |
Weighted average exercise price, Expired | 0.0001 | 74 | 0.32 |
Weighted average exercise price, Ending Balance | $ 1.32 | $ 1.27 | $ 1.96 |
Share Purchase Warrants (Deta_2
Share Purchase Warrants (Details 1) | 9 Months Ended | |
Sep. 30, 2019shares | ||
Class of Warrant or Right [Line Items] | ||
Number of warrants | 3,390,263 | |
Warrant Expiry Date One [Member] | ||
Class of Warrant or Right [Line Items] | ||
Number of warrants | 137,500 | |
Exercise price | 5.10 | |
Issuance Date | Apr. 28, 2017 | |
Expiry date | Apr. 28, 2020 | |
Warrant Expiry Date Two [Member] | ||
Class of Warrant or Right [Line Items] | ||
Number of warrants | 250,000 | |
Exercise price | 1 | |
Issuance Date | Jun. 27, 2017 | |
Expiry date | Jun. 27, 2020 | |
Warrant Expiry Date Three [Member] | ||
Class of Warrant or Right [Line Items] | ||
Number of warrants | 2,263,808 | [1] |
Exercise price | 1.20 | |
Issuance Date | Feb. 14, 2018 | |
Expiry date | Feb. 13, 2021 | |
Warrant Expiry Date Four [Member] | ||
Class of Warrant or Right [Line Items] | ||
Number of warrants | 125,000 | |
Exercise price | 1.60 | |
Issuance Date | Feb. 21, 2018 | |
Expiry date | Feb. 21, 2021 | |
Warrant Expiry Date Five [Member] | ||
Class of Warrant or Right [Line Items] | ||
Number of warrants | 500,000 | |
Exercise price | 1 | |
Issuance Date | May 17, 2018 | |
Expiry date | May 17, 2020 | |
Warrant Expiry Date Six [Member] | ||
Class of Warrant or Right [Line Items] | ||
Number of warrants | 113,955 | |
Exercise price | 1.08 | |
Issuance Date | Oct. 10, 2018 | |
Expiry date | Oct. 10, 2021 | |
[1] | This warrant is convertible into 4% of the number of common shares of the Company outstanding. At September 30, 2019, it is 4% of the 56,595,189 shares outstanding as of that date. |
Share Purchase Warrants (Deta_3
Share Purchase Warrants (Details Textual) | 9 Months Ended |
Sep. 30, 2019shares | |
Share Purchase Warrants (Textual) | |
Percentage of warrant convertible shares | 4.00% |
Common stock, shares outstanding | 56,595,189 |
Leases (Details)
Leases (Details) | Sep. 30, 2019USD ($) |
Leases [Abstract] | |
Operating lease assets | $ 209,767 |
Current operating lease liabilities | 214,283 |
Total operating lease liabilities | $ 214,283 |
Leases (Details 1)
Leases (Details 1) | Sep. 30, 2019USD ($) |
Leases [Abstract] | |
2019 | $ 66,222 |
2020 | 122,001 |
2021 | 95,914 |
2022 | 86,681 |
2023 | 21,330 |
Thereafter | |
Total lease payments | 392,148 |
Less: imputed interest | (177,865) |
Total | $ 214,283 |
Leases (Details Textual)
Leases (Details Textual) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019USD ($) | Sep. 30, 2019USD ($) | |
Leases (Textual) | ||
Additional net lease assets | $ 269,341 | $ 269,341 |
Net lease liabilities | 269,341 | 269,341 |
Non-cash operating lease liabilities | 316,600 | |
operating lease expense | 61,122 | 167,644 |
Measurement of operating lease liabilities | $ 57,909 | $ 163,217 |
Lease payments term | 5 years | 5 years |
Short-term lease costs | $ 55,413 | $ 198,703 |
Lease, description | The Company reduced its operating lease liabilities by $35,027 and $102,316, respectively, for cash paid. | |
Minimum [Member] | ||
Leases (Textual) | ||
Weighted average discount rate | 48.00% | 48.00% |
Maximum [Member] | ||
Leases (Textual) | ||
Weighted average discount rate | 58.00% | 58.00% |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | Jul. 15, 2019 | Aug. 29, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
Commitments and Contingencies (Textual) | |||||||
Lease term, description | The Company leases certain of its properties under leases that expire on various dates through 2023. Some of these agreements include escalation clauses and provide for renewal options ranging from one to five years. Leases with an initial term of 12 months or less and immaterial leases are not recorded on the balance sheet. | ||||||
Purchase Agreement, Description | The share purchase agreement also contains certain termination rights for both the Company and WaveTech GmbH, including that the Company or WaveTech GmbH may terminate the share purchase agreement if WaveTech GmbH has not obtained executed assignment agreements from its shareholders holding an aggregate of (i) fifty one percent (51%) of the issued and outstanding shares of WaveTech GmbH by the date that is ninety (90) days following the date of the share purchase agreement and (ii) ninety percent (90%) of the issued and outstanding shares of WaveTech GmbH by March 31, 2020. | ||||||
Outstanding amount | $ 1,325,895 | $ 1,325,895 | $ 1,325,895 | ||||
Exchange loss | $ (10,022) | $ (10,022) | |||||
Description of equity purchase agreement | The equity purchase agreement, the Company shall have the discretion to deliver put notices to Oasis Capital and Oasis Capital will be obligated to purchase shares of the Company’s common stock, par value $0.00001 per share based on the investment amount specified in each put notice. The maximum amount that the Company shall be entitled to put to Oasis Capital in each put notice shall not exceed the lesser of $250,000 or two hundred percent (200%) of the average daily trading volume of the Company’s common stock during the ten (10) trading days preceding the put. Pursuant to the equity purchase agreement, Oasis Capital and its affiliates will not be permitted to purchase and the Company may not put shares of the Company’s common stock to Oasis Capital that would result in Oasis Capital’s beneficial ownership of the Company’s outstanding common stock exceeding 9.99%. The price of each put share shall be equal to eighty five percent (85%) of the market price (as defined in the equity purchase agreement). Puts may be delivered by the Company to Oasis Capital until the earlier of (i) the date on which Oasis Capital has purchased an aggregate of $2,500,000 worth of common stock under the terms of the equity purchase agreement, (ii) August 29, 2022, or (iii) written notice of termination delivered by the Company to Oasis Capital, subject to certain equity conditions set forth in the equity purchase agreement. | ||||||
WaveTech GmbH [Member] | |||||||
Commitments and Contingencies (Textual) | |||||||
Cash received | 2,989,978 | ||||||
Oasis Capital Agreed [Member] | |||||||
Commitments and Contingencies (Textual) | |||||||
Purchase of common stock | $ 2,500,000 | ||||||
Transactions [Member] | |||||||
Commitments and Contingencies (Textual) | |||||||
Cash received | $ 3,000,000 |
Segment Disclosures (Details)
Segment Disclosures (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Segment Reporting Information [Line Items] | |||||
Net sales | $ 7,505,937 | $ 9,671,990 | $ 27,159,071 | $ 24,963,876 | |
Operating (loss) income | (1,151,947) | (307,452) | (2,149,635) | (2,333,552) | |
Interest expense | 242,552 | 268,094 | 1,492,147 | 776,537 | |
Depreciation and amortization | 97,281 | 56,874 | 288,134 | 161,480 | |
Total assets | 14,391,054 | 12,930,396 | 14,391,054 | 12,930,396 | $ 12,930,396 |
Spectrum Global [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | |||||
Operating (loss) income | (1,260,709) | (688,561) | (2,979,974) | (2,873,265) | |
Interest expense | 126,969 | 117,361 | 1,224,353 | 404,073 | |
Depreciation and amortization | |||||
Total assets | 1,350,584 | 99,835 | 1,350,584 | 99,835 | |
AWS [Member] | ADEX [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 9,671,990 | 24,963,876 | |||
Operating (loss) income | 381,109 | 539,713 | |||
Interest expense | 150,733 | 372,464 | |||
Depreciation and amortization | 56,874 | 161,480 | |||
Total assets | $ 12,830,561 | $ 12,830,561 | |||
AWS [Member] | TNS [Member] | ADEX [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 7,505,937 | 27,159,071 | |||
Operating (loss) income | 108,762 | 830,339 | |||
Interest expense | 115,583 | 267,794 | |||
Depreciation and amortization | 97,281 | 288,134 | |||
Total assets | $ 13,040,470 | $ 13,040,470 |
Segment Disclosures (Details 1)
Segment Disclosures (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Segment Reporting Information [Line Items] | |||||
Revenues, Consolidated Total | $ 7,505,937 | $ 9,671,990 | $ 27,159,071 | $ 24,963,876 | |
Long-Lived Assets, Consolidated Total | 6,616,248 | 6,616,248 | $ 3,863,044 | ||
Puerto Rico [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenues, Consolidated Total | 383,246 | 641,416 | 1,094,475 | 1,653,878 | |
Long-Lived Assets, Consolidated Total | 10,128 | 10,128 | 3,657 | ||
United States [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenues, Consolidated Total | 7,122,691 | $ 9,030,574 | 26,064,596 | $ 23,309,998 | |
Long-Lived Assets, Consolidated Total | $ 6,606,120 | $ 6,606,120 | $ 3,859,387 |
Segment Disclosures (Details Te
Segment Disclosures (Details Textual) | 9 Months Ended | |
Sep. 30, 2019SegmentsArea | Sep. 30, 2018Segments | |
Segment Disclosures (Textual) | ||
Number of operating segments | Segments | 2 | 2 |
Number of geographical area | Area | 1 | |
Segment reporting, description | The Company operates the SGS reporting segment in one geographical area (the United States) and the AWS/ADEX/TNS operating segment in two geographical areas (the United States and Puerto Rico). |
Net (Loss) Income per Share (De
Net (Loss) Income per Share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Numerator: | ||||
Net (loss) income attributable to common shareholders | $ (1,274,450) | $ 414,485 | $ (2,705,618) | $ (2,341,274) |
Convertible note interest | 147,789 | |||
Adjusted diluted net (loss) income attributable to common shareholders | $ (1,762,522) | $ 562,274 | $ (3,193,690) | $ (2,493,461) |
Weighted average shares outstanding used in computer net loss (income) per share | ||||
Basic | 44,739,064 | 1,557,763 | 27,554,495 | 1,737,473 |
Effect of dilutive stock options and convertible notes payable | $ 12,707,716 | |||
Effect of preferred shares | 403,326 | |||
Diluted | 44,739,064 | 14,668,805 | 27,554,495 | 1,737,473 |
Basic | $ (0.04) | $ 0.27 | $ (0.12) | $ (1.44) |
Diluted | $ (0.04) | $ 0.04 | $ (0.12) | $ (1.44) |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Nov. 14, 2019 | Oct. 15, 2019 | Oct. 24, 2019 | Oct. 22, 2019 | Oct. 21, 2019 | Nov. 15, 2017 | Sep. 30, 2019 | Dec. 31, 2018 |
Series A Preferred Stock [Member] | ||||||||
Subsequent Events (Textual) | ||||||||
Conversion price, description | The number of shares of common stock into which each share of the Series A preferred stock shares may be converted shall be determined by dividing the sum of the stated value of the Series A preferred stock shares ($1.00 per share) being converted and any accrued and unpaid dividends by the conversion price in effect at the time of the conversion. The Series A preferred stock shares may be converted at an initial conversion price of the lower of 80% of the lowest VWAP during the five trading day period immediately preceding the date a conversion notice is delivered or $0.05, subject to adjustment for any subdivision or combination of the Company's outstanding shares of common stock. The conversion price has a floor of $0.03 per share. | |||||||
Preferred stock, shares issued | 8,000,000 | 899,427 | 899,427 | |||||
Subsequent Event [Member] | ||||||||
Subsequent Events (Textual) | ||||||||
Common stock issue | 333,334 | 333,334 | 333,334 | |||||
Subsequent Event [Member] | Series C Preferred Stock [Member] | ||||||||
Subsequent Events (Textual) | ||||||||
Conversion of shares, description | (i) the reverse split of the Company's common stock, (ii) the listing of the Company on a national securities exchange and (iii) the six-month anniversary of the closing date (as defined below) (the "Series C Conversion Date"), without any further action, all outstanding shares of Series C shall automatically convert into an aggregate number of shares of the Company's common stock equal to the greater of (i) $90,000,000 (the "Aggregate Value")/Strike Price (as defined below), or (ii) the Aggregate Value/$0.0325 (as adjusted for any reverse stock split or similar adjustment that may occur prior to the Series C Conversion Date). | |||||||
Business combination acquisition, description | The Company through a sale and exchange of shares and cash. Pursuant to the share purchase agreement, in exchange for shares of Series C Preferred Stock of the Company (refer to the "Series C Preferred Stock" section of this note for additional detail), at closing the Company acquired sixty percent (60%) of the issued and outstanding shares of WaveTech GmbH. In connection with the closing of the acquisition, $1,325,000 of the amount in escrow as of September 30, 2019 was returned to the Company. The share purchase agreement also contains certain termination rights for both the Company and WaveTech GmbH in the event the Company has not acquired ninety percent (90%) of the issued and outstanding shares of WaveTech GmbH by March 31, 2020. | |||||||
Preferred stock, shares issued | 9,000,000 | |||||||
Preferred stock, stated value | $ 0.00001 | |||||||
Subsequent Event [Member] | Series A Preferred Stock [Member] | ||||||||
Subsequent Events (Textual) | ||||||||
Common stock issue | 10,000 | 10,000 | 10,000 | |||||
Preferred stock per share | $ 1 | $ 1 | $ 1 | |||||
Subsequent Event [Member] | GS Capital Partners LLC [Member] | ||||||||
Subsequent Events (Textual) | ||||||||
Aggregate principal amount | $ 123,000 | |||||||
Aggregate purchase price | $ 112,000 | |||||||
Interest rate | 8.00% | |||||||
Maturity date | Aug. 2, 2018 | |||||||
Conversion price, description | The secured note is convertible into shares of the Company's common stock at 71% of the average of the three lowest VWAPs in the 12 trading days prior to and including conversion date. The conversion price has a floor of $0.01 per share. | |||||||
Subsequent Event [Member] | Share Purchase Agreement [Member] | ||||||||
Subsequent Events (Textual) | ||||||||
Aggregate principal amount | $ 68,500 | |||||||
Aggregate purchase price | $ 60,000 | |||||||
Conversion price, description | The note is convertible into shares of the Company's common stock at the greater of $0.005 per share and 70% of the average of the three lowest trading prices in the 15 trading days prior to the conversion date. | |||||||
Subsequent Event [Member] | Silverback Capital [Member] | ||||||||
Subsequent Events (Textual) | ||||||||
Common stock issue | 541,650 | |||||||
Accrued interest | $ 627 |