Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 26, 2018 | Jun. 30, 2016 | |
Document And Entity Information | |||
Entity Registrant Name | StrikeForce Technologies Inc. | ||
Entity Central Index Key | 1,285,543 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 30,156,085 | ||
Entity Common Stock, Shares Outstanding | 2,335,843,241 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash | $ 455,484 | $ 804,130 |
Accounts receivable, net | 47,454 | 152,009 |
Prepaid expenses | 9,098 | 9,265 |
Total current assets | 512,036 | 965,404 |
Property and equipment, net | 7,676 | 8,926 |
Other assets | 20,485 | 22,539 |
Total Assets | 540,197 | 996,869 |
Current Liabilities: | ||
Accounts payable | 935,979 | 890,799 |
Convertible notes payable, net | 1,438,100 | 1,447,100 |
Convertible notes payable - related parties | 355,500 | 355,500 |
Current maturities of notes payable, net | 1,713,824 | 1,703,824 |
Current maturities of notes payable - related parties | 742,513 | 742,513 |
Accrued interest (including $1,145,941 and $939,654 due to related parties, respectively) | 4,002,811 | 3,805,158 |
Contingent payment obligation | 1,500,000 | |
Derivative liabilities | 623,195 | 262,185 |
Accrued expenses | 9,521 | 9,539 |
Accrued salaries and payroll taxes | 11,940 | 10,549 |
Due to factor | 209,192 | |
Total Current Liabilities | 11,333,383 | 9,436,359 |
Stockholders' Deficit | ||
Preferred stock | ||
Common stock par value $0.0001: 5,000,000,000 shares authorized; 2,335,843,241 and 2,319,683,886 shares issued and outstanding, respectively | 233,584 | 231,970 |
Additional paid-in capital | 25,522,331 | 24,655,363 |
Accumulated deficit | (37,543,101) | (34,318,823) |
Total Stockholders' Deficit | (10,793,186) | (8,439,490) |
Total Liabilities and Stockholders' Deficit | 540,197 | 996,869 |
Series A Preferred Stock [Member] | ||
Stockholders' Deficit | ||
Preferred stock | 987,000 | 987,000 |
Series B Preferred Stock [Member] | ||
Stockholders' Deficit | ||
Preferred stock | $ 7,000 | $ 5,000 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current Liabilities: | ||
Accrued interest due to related parties | $ 1,145,941 | $ 939,654 |
Stockholders' Deficit | ||
Preferred Stock, no par value | ||
Preferred Stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares outstanding | 0 | 0 |
Preferred stock series not designated, par value | $ 0.10 | $ 0.10 |
Common Stock, par or stated value | $ 0.0001 | $ 0.0001 |
Common Stock, shares authorized | 5,000,000,000 | 5,000,000,000 |
Common Stock, shares issued | 2,335,843,241 | 2,319,683,886 |
Common Stock, shares outstanding | 2,335,843,241 | 2,319,683,886 |
Series A Preferred Stock [Member] | ||
Stockholders' Deficit | ||
Preferred Stock, no par value | ||
Preferred Stock, shares authorized | 100 | 100 |
Preferred Stock, shares issued | 3 | 3 |
Preferred Stock, shares outstanding | 3 | 3 |
Series B Preferred Stock [Member] | ||
Stockholders' Deficit | ||
Preferred Stock, no par value | $ 0.10 | $ 0.10 |
Preferred Stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred Stock, shares issued | 70,001 | 50,001 |
Preferred Stock, shares outstanding | 70,001 | 50,001 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Statements Of Operations | ||
Revenue | $ 274,137 | $ 384,289 |
Cost of revenue | 12,504 | 6,363 |
Gross margin | 261,633 | 377,926 |
Operating expenses: | ||
Compensation | 656,653 | 491,255 |
Professional fees | 394,212 | 617,019 |
Selling, general and administrative expenses | 1,067,189 | 1,190,609 |
Research and development | 537,282 | 521,663 |
Total operating expenses | 2,655,336 | 2,820,546 |
Loss from operations | (2,393,703) | (2,442,620) |
Other income (expense): | ||
Interest expense | (837,925) | (875,234) |
Debt discount amortization | (4,000) | (34,293) |
Private placement costs | (222,949) | |
Change in fair value of derivative liabilities | (320,888) | (92,997) |
Extinguishment of derivative liabilities | 557,827 | 819,831 |
Forgiveness of debt | 86,712 | |
Litigation settlement | 9,750,000 | |
Fees related to litigation settlement | (4,187,257) | |
Other income | 119 | 1,135 |
Other income (expense), net | (741,104) | 5,381,185 |
Income (loss) before income taxes | (3,134,807) | 2,938,565 |
Income tax expense | 71,693 | |
Net income (loss) | (3,206,500) | 2,938,565 |
Deemed dividend on convertible preferred stock | (17,778) | |
Net income (loss) attributable to common stockholders | $ (3,224,278) | $ 2,938,565 |
Earnings (loss) per common share - basic and diluted | ||
- Basic and diluted | ||
Weighted average common shares outstanding | ||
- Basic and diluted | 2,323,630,612 | 1,855,338,114 |
STATEMENTS OF CHANGES IN STOCKH
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT - USD ($) | Series A Preferred Stock [Member] | Series B Preferred stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Total |
Beginning balance, Shares at Dec. 31, 2015 | 3 | 175,338 | 22,711,924 | |||
Beginning balance, Amount at Dec. 31, 2015 | $ 987,000 | $ 17,534 | $ 2,271 | $ 22,526,096 | $ (37,257,388) | $ (13,724,487) |
Fair value of common stock issued for services, Shares | 154,905,000 | |||||
Fair value of common stock issued for services, Amount | $ 15,491 | 170,668 | 186,159 | |||
Fair value of vested options | 818,462 | (818,462) | ||||
Common stock issued upon conversion of notes and interest, Shares | 2,105,237,983 | |||||
Common stock issued upon conversion of notes and interest, Amount | $ 210,525 | 368,361 | 578,886 | |||
Common stock issued upon conversion of Series B preferred stock, Shares | (125,337) | 35,703,979 | ||||
Common stock issued upon conversion of Series B preferred stock, Amount | $ (12,534) | $ 3,570 | 8,964 | |||
Common stock issued upon exercise of options and warrants, Shares | 1,125,000 | |||||
Common stock issued upon exercise of options and warrants, Amount | $ 113 | 537 | 650 | |||
Forgiveness of accrued officers' salaries recorded as capital contribution | 762,275 | 762,275 | ||||
Net loss/Income | 2,938,565 | 2,938,565 | ||||
Ending balance, Shares at Dec. 31, 2016 | 3 | 50,001 | 2,319,683,886 | |||
Ending balance, Amount at Dec. 31, 2016 | $ 987,000 | $ 5,000 | $ 231,970 | 24,655,363 | (34,318,823) | (8,439,490) |
Fair value of common stock issued for services, Shares | 30,000 | |||||
Fair value of common stock issued for services, Amount | $ 3 | 541 | 544 | |||
Fair value of vested options | 772,260 | (772,260) | ||||
Common stock issued upon conversion of Series B preferred stock, Shares | (33,334) | 16,129,355 | ||||
Common stock issued upon conversion of Series B preferred stock, Amount | $ (3,333) | $ 1,611 | 1,722 | |||
Forgiveness of accrued officers' salaries recorded as capital contribution | ||||||
Sale of shares of series B preferred stock, Shares | 53,334 | |||||
Sale of shares of series B preferred stock, Amount | $ 5,333 | 74,667 | 80,000 | |||
Deemed dividend on convertible preferred stock | 17,778 | (17,778) | ||||
Net loss/Income | (3,206,500) | (3,206,500) | ||||
Ending balance, Shares at Dec. 31, 2017 | 3 | 70,001 | 2,335,843,241 | |||
Ending balance, Amount at Dec. 31, 2017 | $ 987,000 | $ 7,000 | $ 233,584 | $ 25,522,331 | $ (37,543,101) | $ (10,793,186) |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (3,206,500) | $ 2,938,565 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 6,618 | 5,231 |
Amortization of discount on notes payable | 4,000 | 34,293 |
Discount on notes payable recorded as interest expense | 371,000 | 353,473 |
Fair value of common stock issued for services | 544 | 186,159 |
Fair value of vested options | 772,260 | 818,462 |
Forgiveness of debt | (86,712) | |
Change in fair value of derivative liabilities | 320,888 | 92,997 |
Private placement costs | 222,949 | |
Extinguishment of derivative liabilities | (557,827) | (819,831) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 104,555 | (133,485) |
Prepaid expenses | 167 | (4,533) |
Accounts payable | 45,180 | (405,030) |
Accrued expenses | (18) | (3,829) |
Accrued interest | 285,173 | (66,556) |
Accrued salaries and payroll taxes | 1,391 | (574,948) |
Net cash provided by (used in) operating activities | (1,716,332) | 2,420,968 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (3,314) | (7,918) |
Cash flows from financing activities: | ||
Proceeds from contingent payment obligation | 1,500,000 | |
Proceeds from convertible note payable | 375,000 | |
Proceeds from exercise of options and warrants | 650 | |
Proceeds from sale of Series B preferred stock | 80,000 | |
Proceeds from notes payable | 75,000 | |
Repayment of convertible notes payable | (384,000) | (687,738) |
Repayment of notes payable | (200,000) | (1,033,985) |
Net cash provided by (used in) financing activities | 1,371,000 | (1,646,073) |
Net increase (decrease) in cash | (348,646) | 766,977 |
Cash at beginning of the period | 804,130 | 37,153 |
Cash at end of the period | 455,484 | 804,130 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 89,310 | 233,973 |
Income tax paid | 71,318 | 3,092 |
Non-cash investing and financing activities: | ||
Deemed dividend on convertible preferred stock | 17,778 | |
Note payable in exchange for due to factor and accrued interest | 210,000 | |
Common stock issued for conversion of debt and accrued interest | 192,665 | |
Forgiveness of accrued officers salaries recorded as capital contribution | 762,275 | |
Common stock issued for conversion of Series B preferred stock | $ 3,333 | $ 12,534 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Note 1 - Organization and Summary of Significant Accounting Policies | StrikeForce Technologies, Inc. (the “Company”) is a software development and services company that offers a suite of integrated computer network security products using proprietary technology. The Company’s ongoing strategy is developing and marketing its suite of network security products to the corporate, financial, healthcare, legal, government, technology, insurance, e-commerce and consumer sectors. The Company’s operations are based in Edison, New Jersey. Going Concern The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying financial statements, for the year ended December 31, 2017, the Company incurred a net loss of $3,224,278 and used cash in operating activities of $1,716,332, and at December 31, 2017, the Company had a stockholders’ deficit of $10,793,186. In addition, the Company is in default on notes payable and convertible notes payable in the aggregate amount of $2,539,336. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. At December 31, 2017, the Company had cash on hand in the amount of $455,484. Management estimates that the current funds on hand will be sufficient to continue operations through the next three months. The Company’s ability to continue as a going concern is dependent upon its ability to continue to implement its business plan. Currently, management is attempting to increase revenues by redirecting its sales focus from direct sales to domestic and international sales channels, primarily selling through a channel of distributors, value added resellers, strategic partners and original equipment manufacturers. While the Company believes in the viability of its strategy to increase revenues, there can be no assurances to that effect. The Company’s ability to continue as a going concern is dependent upon its ability to increase its customer base and realize increased revenues. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stock holders, in the case of equity financing. Estimates The preparation of financial statements in conformity with 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. Significant estimates include those related to accounting for potential liabilities, assumptions used in valuing stock instruments issued for services, assumptions used in valuing derivative liabilities, and the valuation allowance for deferred income taxes. Actual results could differ from those estimates. Revenue The Company recognizes revenue when (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer and there are no significant uncertainties surrounding acceptance by the customer, (iii) the sales price is fixed and determinable, and (iv) collectability is reasonably assured. When the Company recognizes revenue, no provisions are made for returns because, historically, there have been very few sales returns and adjustments that have impacted the ultimate collection of revenues. Revenue from hardware sales is recognized when the product is shipped to the customer and there are either no unfulfilled obligations by the Company, or any obligations that will not affect the customer's final acceptance of the arrangement. All costs of these obligations are accrued when the corresponding revenue is recognized. Revenue from time and service contracts is recognized as the services are provided. Revenue from delivered elements of one-time charge licensed software is recognized at the inception of the license term, and determined by the fair value of each delivered element. Revenue is deferred for undelivered elements. The Company recognizes revenue from the sale of software licenses when the four criteria discussed above are met. If the Company determines that collection of a fee is not reasonably assured, it defers the fee and recognizes revenue at the time collection becomes reasonably assured, which is generally upon receipt of payment. Revenue from monthly software licenses is recognized on a subscription basis. The Company offers an Application Service Provider (ASP) hosted cloud service whereby customer usage transactions are invoiced monthly on a cost per transaction basis. Accounts Receivable and Allowance for Doubtful Accounts The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s historical losses and an overall assessment of past due trade accounts receivable outstanding. At December 31, 2017, the allowance for doubtful accounts was $19,584. At December 31, 2016, there was no allowance for doubtful accounts. For the years ended December 31, 2017 and 2016, the Company recorded bad debt expense of $20,715 and $18,226, respectively. Property and Equipment Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation of property and equipment is computed by the straight-line method (after taking into account their respective estimated residual values) over the estimated useful lives of the respective assets as follows: Estimated Useful Life (Years) Computer equipment 5 Computer software 3 Furniture and fixture 7 Office equipment 7 Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the statements of operations. Management assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. For the years ended December 31, 2017 and 2016, the Company did not recognize any impairment for its property and equipment. Long-lived Assets The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. For the years ended December 31, 2017 and 2016, the Company did not recognize any such impairments. Income Taxes The Company accounts for income taxes using the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Stock Compensation The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions, and for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board (FASB) whereas the value of the award is measured on the date of grant and recognized as compensation expense on the straight-line basis over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the FASB whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Options granted to non-employees are revalued each reporting period to determine the amount to be recorded as an expense in the respective period. As the options vest, they are valued on each vesting date and an adjustment is recorded for the difference between the value already recorded and the then current value on the date of vesting. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date. The fair value of the Company’s stock option and warrant grants are estimated using the Black-Scholes-Merton option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model, and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods. Derivative Financial Instruments The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. At each reporting date, the Company reviews its convertible securities to determine that their classification is appropriate. Fair Value of Financial Instruments The Company follows the authoritative guidance issued by the Financial Accounting Standards Board (“FASB”) for fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels as follows: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly. Level 3—Unobservable inputs based on the Company's assumptions. The Company is required to use of observable market data if such data is available without undue cost and effort. As of December 31, 2017 and 2016, the Company’s balance sheets included the fair value of derivative liabilities of $623,195 and $262,185, respectively, which were based on Level 2 measurements. The recorded amounts for accounts receivable, accounts payable, accrued expenses, convertible notes, and notes payables approximate their fair value due to their short-term nature. Income (loss) per Share Basic income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share reflects the potential dilution, using the treasury stock method that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the income (loss) of the Company. In computing diluted income (loss) per share, the treasury stock method assumes that outstanding options, warrants, and convertible preferred stock are exercised and the proceeds are used to purchase common stock at the average market price during the period. Options, warrants, and convertible preferred stock may have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options and warrants. For the years ended December 31, 2017 and 2016, the dilutive impact of stock options exercisable into 259,000,001 and 196,000,001 shares of common stock, respectively, convertible Series B Preferred stock that can convert into 14,815,026 and 33,876,016 shares of common stock, respectively, and notes payable that can convert into 25 and 25 shares of common stock, respectively, have been excluded because their impact on the income and (loss) per share is anti-dilutive. The following tables set forth the computation of basic and diluted earnings (loss) per share: Years ended December 31, 2017 2016 Income (Loss) per share – Basic: and Diluted: Income (Loss) for the period $ (3,224,278 ) $ 2,938,565 Series B convertible preferred stock deemed dividends 17,778 - Net income (loss) attributable to common shareholders (3,206,500 ) 2,938,565 Basic average common stock outstanding 2,323,630,612 1,855,338,114 Net earnings (loss) per share $ - $ - Advertising, Sales and Marketing Costs Advertising, sales and marketing costs are expensed as incurred and are included in sales and marketing expenses. For the years ended December 31, 2017 and 2016, advertising, sales and marketing expenses were $20,507 and $1,534, respectively. Research and Development Costs Costs incurred for research and development are expensed as incurred. The salaries, benefits, and overhead costs of personnel conducting research and development of the Company’s software products comprise research and development expenses. Purchased materials that do not have an alternative future use are also expensed. For the years ended December 31, 2017 and 2016, research and development costs were $537,282 and $521,663, respectively. Significant Concentrations For the year ended December 31, 2017, sales to one customer comprised 55% of revenues. For the year ended December 31, 2016, sales to two customers comprised 39% and 39% of revenues, respectively. At December 31, 2017, four customers comprised 30%, 29%, 19% and 14% of accounts receivable, respectively. At December 31, 2016, one customer comprised 82% of accounts receivable. The Company maintains the majority of its cash balances with one financial institution, in the form of demand deposits. At December 31, 2017 and 2016, the Company had cash deposits that exceeded the federally insured limit of $250,000. The Company believes that no significant concentration of credit risk exists with respect to these cash balances because of its assessment of the creditworthiness and financial viability of the financial institution. Segments The Company operates in one segment for the development and distribution of our products. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying financial statements. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers In February 2016, the FASB issued ASU No. 2016-02, Leases. In July 2017, the FASB issued ASU 2017-11 , Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Note 2 - Property and Equipment | Property and equipment, stated at cost, less accumulated depreciation consisted of the following: December 31, 2017 December 31, 2016 Computer equipment $ 78,769 $ 76,953 Computer software 38,404 36,907 Furniture and fixture 10,157 10,157 Office equipment 16,511 16,511 143,841 140,528 Less accumulated depreciation (136,165 ) (131,602 ) $ 7,676 $ 8,926 Depreciation expense for the years ended December 31, 2017 and 2016 was $4,563 and $3,177, respectively. |
Convertible Notes Payable
Convertible Notes Payable | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Note 3 - Convertible Notes Payable | Convertible notes payable consisted of the following: December 31, 2017 December 31, 2016 Secured (a) DART $ 542,588 $ 542,588 Unsecured (b) Convertible notes with fixed conversion features 895,512 910,512 (c) Convertible notes with adjustable conversion features - - Total convertible notes $ 1,438,100 $ 1,447,100 _________ (a) At December 31, 2017 and December 31, 2016, $542,588 of notes payables are due to DART/Citco Global. The notes are convertible into shares of the Companys common stock based on adjustable conversion prices, are secured by all of the Companys assets, were due in 2010, and are currently in default. The adjustable conversion features of the notes are accounted for as derivative liabilities (see Note 8). DART/Citco Global did not process any conversions of notes into shares of common stock during the years ended December 31, 2017 or 2016. The Company has been in contact with the note holder who has indicated that it has no present intention of exercising its right to convert the debentures into shares of the Company's common stock. Under the terms of the secured debentures, the Company is restricted in its ability to issue additional securities as long as any portion of the principal or interest on the secured debentures remains outstanding. During the year ended December 31, 2017, the Company did not obtain DART/Citco Globals written consent related to any of its financing agreements. (b) Convertible notes payable consisted of 13 unsecured convertible notes convertible at a fixed amount (fixed convertible notes) into 13 shares of the Companys common stock, at fixed prices ranging from $1,950,000 to $9,750,000,000 per share, as defined in the agreements. The notes bear interest at 8% to 18% per annum, and were due on various dates from March 2008 to July 2015. All of the fixed convertible notes are currently in default and the Company is pursuing settlements with certain of the holders. During the year ended December 31, 2017, there were no additional notes issued and the Company repaid $9,000 of note principal. At December 31, 2016, the balance of the accrued interest on the fixed convertible notes was $936,639. During the year ended December 31, 2017, the Company paid $11,500 of accrued interest and interest expense of $79,492 was accrued. At December 31, 2017, the balance of accrued interest on the fixed convertible notes was $1,004,631. During the year ended December 31, 2016, interest expense of $79,687 was accrued, $49,148 of accrued interest was forgiven and written-off, and $3,000 of accrued interest was paid. (c) At December 31, 2016, there were no convertible notes with adjustable conversion features outstanding. During the year ended December 31, 2017, the Company issued two convertible notes payable for an aggregate of $375,000, bearing interest at 10% per annum, and maturing through July 2018. Both notes were paid in full in September 2017, including $96,825 of accrued and premium interest. At the option of the holder, beginning seven months from the date issued, the notes were convertible into shares of common stock of the Company at a price per share discount of 42% of the lowest closing market price of the Companys common stock for the twenty days preceding a conversion notice. As a result, the Company determined that the conversion feature of the convertible notes were not considered indexed to the Companys own stock and characterized the fair value of the conversion feature as a derivative liability upon issuance. The Company determined that upon issuance of the convertible notes in June and July 2017, the initial fair value of the embedded conversion features was $597,949 (see Note 8), of which $375,000 was recorded as debt discount offsetting the face amount of the convertible notes, and the remainder of $222,949 was recorded as private placement costs. During the year ended December 31, 2017 the Company amortized $4,000 of the valuation discount and recorded the balance of $371,000 to interest expense when the convertible notes were paid off. At December 31, 2017 and December 31, 2016, accrued interest due for all convertible notes was $1,004,631 and $936,639, respectively, and is included in accrued interest in the accompanying balance sheets. Interest expense for all convertible notes payable for the years ended December 31, 2017 and 2016 was $176,317 and $96,753, respectively. |
Convertible Notes Payable - Rel
Convertible Notes Payable - Related Parties | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Note 4 - Convertible Notes Payable Related Parties | At December 31, 2017 and December 31, 2016, convertible notes payable - related parties consist of 12 convertible notes payable in the aggregate of $355,500. The notes are unsecured and have extended due dates of December 31, 2018. Six notes totaling $268,000 are due to the Companys Chief Executive Officer, at a compounded interest rate of 8% per annum; two notes totaling $57,000 are due to the Companys VP of Technology, interest at prime plus 2% and prime plus 4% per annum; and four notes totaling $30,000 are due to the spouse of the Companys Chief Technology Officer at a compounded interest rate of 8% per annum. $33,000 of the notes are convertible at a fixed conversion price of $7,312,500 per share and $322,500 of the notes are convertible at a fixed conversion price of $9,750,000,000 per share, as defined in the note agreements. At December 31, 2016, accrued interest due for the convertible notes related parties was $437,305. During the year ended December 31, 2017, interest expense of $60,772 was accrued. At December 31, 2017, accrued interest due for the convertible notes related parties was $498,077. During the year ended December 31, 2016, interest expense of $55,721 was accrued, and $9,417 of accrued interest due a former officer was forgiven and written-off. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Note 5 - Notes Payable | Notes payable consisted of the following: December 31, 2017 December 31, 2016 Unsecured (a) Promissory notes $ 413,824 $ 413,824 (b) Promissory notes StrikeForce Investor Group 1,230,000 1,290,000 (c) Promissory note 70,000 - Notes payable, current maturities $ 1,713,824 $ 1,703,824 _________ (a) Notes payable consists of various unsecured promissory notes with interest from 8% to 14% per annum. $413,824 of the notes were due on various dates from December 2011 to July 2017 and are currently in default, The Company is currently pursuing settlements with certain of the note holders. At December 31, 2017 and December 31, 2016, the balance due under these notes was $413,824. At December 31, 2016, the balance of the accrued interest on the notes payable-various was $414,342. During the year ended December 31, 2017, $45,556 of interest expense was accrued. At December 31, 2017, accrued interest on the notes payable was $459,898. During the year ended December 31, 2016, $45,681 of interest expense was accrued, and $70,121 was forgiven and written-off. (b) Notes payable to StrikeForce Investor Group (SIG), made up of various investors with unsecured notes, interest at 10% per annum, originally due in 2011, and currently in default. At December 31, 2016, the balance of notes payable-SIG was $1,290,000. During the year ended December 31, 2017, one note holder assigned a delinquent note totaling $25,000, to an unrelated party, who agreed to extend payment of the note to February 2018. During the year ended December 31, 2017, the Company repaid $60,000 of principal and at December 31, 2017, the balance of notes payable-SIG was $1,230,000. The Company is currently pursuing extensions on the remaining delinquent notes. At December 31, 2016, the balance of the accrued interest on the notes payable-SIG was $1,425,087. During the year ended December 31, 2017, $125,033 of interest expense was accrued, $71,639 of accrued interest was paid, and $86,140 of accrued interest was forgiven and written-off. At December 31, 2017, accrued interest on the notes payable-SIG was $1,392,341. During the year ended December 31, 2016, $141,995 of interest expense was accrued, and $10,000 of accrued interest was paid. (c) In July 2017, the Company executed an exchange agreement with a factor which transferred the amount due to the factor of approximately $209,000 into a promissory note for $210,000, non-interest bearing, and maturing on February 7, 2018. Per the terms of the note, the Company shall make seven payments as follows: $60,000 in August 2017 and $20,000 each from September through December 2017, which have been paid, $20,000 for January 2018 and $50,000 in February 2018. In the event of a default of the payment terms, the outstanding balance shall increase to 120% of the note balance. Additionally, if the note is not paid in full by the maturity date, the revised outstanding balance shall be convertible at the note holders option into shares of common stock of the Company at a price per share discount of 20% of the lowest trading market price of the Companys common stock for the twenty days preceding a conversion notice. As of December 31, 2017, the balance due on the promissory note was $70,000. The remaining balance was paid off in 2018 (see Note 15). At December 31, 2017 and December 31, 2016, accrued interest due for all notes payable above was $1,852,239 and $1,839,429, respectively, and is included in accrued interest in the accompanying balance sheets. Interest expense for notes payable for the years ended December 31, 2017 and 2016 was $170,589 and $190,478, respectively. |
Notes Payable Related Party
Notes Payable Related Party | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Note 6 - Notes Payable Related Party | Notes payable- related party consist of 18 unsecured notes payable to the Companys Chief Executive Officer ranging in interest rates of 0% per annum to 10% per annum. The notes are unsecured and have extended due dates of December 31, 2018. At December 31, 2017 and 2016, the balance due under these notes $742,513. At December 31, 2016, accrued interest due for the notes payable related party was $591,784. During the year ended December 31, 2017, interest expense of $56,080 was accrued. At December 31, 2017, accrued interest due for the notes payable related party was $647,864. During the year ended December 31, 2016, interest expense of $56,233 was accrued, and accrued interest of $13,102 owed to a former officer was forgiven and written-off. |
Contingent Payment Obligation
Contingent Payment Obligation | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Note 7 - Contingent Payment Obligation | On September 6, 2017, the Company entered into a litigation funding agreement with Therium Inc. and VGL Capital, LLC (collectively the Funders). Under the agreement, the Company received $1,500,000 from the Funders to allow the Company to pursue patent enforcement actions against infringements of its patents (see Note 14). In exchange, the Funders are entitled to receive, after the payment of legal fees, the first $1,500,000 from the gross proceeds of any claims awarded, 10% of any additional claim proceeds until the Funders have received an additional $7,500,000, and 2.5% of any claim proceeds thereafter. The Funders shall be paid only in the event that the Company achieves recoveries of claim proceeds. The terms of the litigation funding agreement allow for additional funding of $1,500,000, between February 1, 2018 to January 31, 2019, which would require the Company to repay the funders an additional $5,000,000, plus a percentage of any claim proceeds thereafter. |
Derivative Financial Instrument
Derivative Financial Instruments | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Note 8 - Derivative Financial Instruments | At December 31, 2017, the Company had convertible promissory notes outstanding that are convertible into shares of common stock of the Company at the option of the holder at a price per share discount of 20% of the Companys common stock market price, as defined in the note agreements. Also, in July 2017, the Company issued two convertible notes payable (see Note 3) that, at the option of the noteholder beginning seven months from the date issued, were convertible into shares of common stock of the Company at a price per share discount of 42% of the lowest closing market price of the Companys common stock for the 20 days preceding a conversion notice. As a result, the Company determined that the conversion features of the convertible notes were not considered indexed to the Companys own stock and characterized the fair value of the conversion features as a derivative liability. As the ultimate determination of shares to be issued upon conversion of these notes could exceed the current number of available authorized shares, the conversion features of these notes are recorded as a derivative liability. Accordingly, the conversion feature of the notes was separated from the host contract (i.e. the notes) and characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations. At December 31, 2016, the balance of the derivative liabilities was $262,185. During the year ended December 31, 2017, the Company recorded additions of $597,949 (see Note 3), an increase in fair value of derivatives of $320,888, and an extinguishment of $557,827. At December 31, 2017, the balance of the derivative liabilities was $623,195. The derivative liability was valued at the following dates using a probability weighted Black-Scholes-Merton model with the following assumptions: December 31, 2017 September 6. 2017 (date extinguished) June, July 2017 (dates issued) December 31, 2016 Conversion feature: Risk-free interest rate 0.18 % 0.16 % 0.16 % 0.16 % Expected volatility 147 % 150 % 152%-157 % 75 % Expected life (in years) 1 year 1 year 1 year 1 year Expected dividend yield - - - - Fair Value: Conversion feature $ 623,195 $ 557,827 $ 597,949 $ 262,185 The risk-free interest rate was based on rates established by the Federal Reserve Bank. The expected volatility is based on the historical volatility of the Companys stock. The expected life of the conversion feature of the notes was based on the remaining terms of the related notes. The expected dividend yield was based on the fact that the Company has not customarily paid dividends to its common stockholders in the past and does not expect to pay dividends to its common stockholders in the future. |
Stockholders' Deficit
Stockholders' Deficit | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Note 9 - Stockholders' Deficit | Preferred Stock On October 21, 2010, the Company amended its Articles of Incorporation in New Jersey to authorize 10,000,000 shares of preferred stock, par value $0.10. The designations, rights, and preferences of such preferred stock are to be determined by the Board of Directors. On November 15, 2010, the Company changed its domicile from the State of New Jersey to the State of Wyoming. In addition to the 10,000,000 shares of preferred stock authorized on October 21, 2010, on January 10, 2011, 100 shares of preferred stock were designated as Series A Preferred Stock and 100,000,000 shares were designated as Series B Preferred Stock. The bylaws under the Wyoming Incorporation were amended to reflect the rights and preferences of each additional new designation. The Series A Preferred Stock collectively has voting rights equal to eighty percent of the total current issued and outstanding shares of common stock. If at least one share of Series A Preferred Stock is outstanding, the aggregate shares of Series A Preferred Stock shall have voting rights equal to the number of shares of common stock equal to four times the sum of the total number of shares of common stock issued and outstanding, plus the number of shares of Series B Preferred Stock (or other designated preferred stock) which are issued and outstanding. The Series B Preferred Stock has preferential liquidation rights in the event of any liquidation, dissolution or winding up of the Company, such liquidation rights to be paid from the assets of the Company not delegated to parties with greater priority at $1.00 per share or, in the event an aggregate subscription by a single subscriber of the Series B Preferred Stock is greater than $100,000,000, $0.997 per share. The Series B Preferred Stock shall be convertible to a number of shares of common stock equal to the price of the Series B Preferred Stock divided by the par value of the Series B Preferred Stock. The option to convert the shares of Series B Preferred Stock may not be exercised until three months following the issuance of the Series B Preferred Stock to the recipient shareholder. The Series B Preferred Stock shall have ten votes on matters presented to the shareholders of the Company for one share of Series B Preferred Stock held. The initial price of the Series B Preferred Stock shall be $2.50, (subject to adjustment by the Companys Board of Directors) until such time, if ever, the Series B Preferred Stock are listed on a secondary and/or public exchange. In February 2014, the Company's Board of Directors amended the conversion feature of the Series B Preferred Stock, to permit conversion to common shares at a 40% market discount to current market value at the time the Company receives a conversion request. Current market value is defined as the average of the immediately prior five trading day's closing prices. Additionally, when Series B Preferred Stock shares convert to the Company's common stock, the minimum price discount floor level is set at $0.005, as decided by the Company's Board of Directors. Series A Preferred Stock In 2011, the Company issued three shares of non-convertible Series A Preferred Stock valued at $329,000 per share, or $987,000 in aggregate to three members of the management team. The Series A Preferred Stock are convertible into four times the total number of common shares plus the total number of shares of Series B preferred stock issued and outstanding at the time of conversion and have voting rights equal to eighty percent of the total issued and outstanding shares of the Company's common stock. This effectively provided the management team, upon retention of their Series A Preferred Stock, voting control on matters presented to the shareholders of the Company. The shareholders of the Series A Preferred Stock have each irrevocably waived their conversion rights relating to the Series A Preferred Stock issued. Series B Preferred Stock The Series B Preferred Stock has preferential liquidation rights in the event of any liquidation, dissolution or winding up of the Company, such liquidation rights to be paid from the assets of the Company not delegated to parties with greater priority at $1.00 per share or, in the event an aggregate subscription by a single subscriber of the Series B Preferred Stock is greater than $100,000,000, $0.997 per share. The Series B Preferred Stock shall be convertible to a number of shares of common stock equal to the price of the Series B Preferred Stock divided by the par value of the Series B Preferred Stock. The option to convert the shares of Series B Preferred Stock may not be exercised until three months following the issuance of the Series B Preferred Stock to the recipient shareholder. The Series B Preferred Stock shall have ten votes on matters presented to the shareholders of the Company for one share of Series B Preferred Stock held. The initial price of the Series B Preferred Stock shall be $2.50, (subject to adjustment by the Companys Board of Directors) until such time, if ever, the Series B Preferred Stock are listed on a secondary and/or public exchange. At December 31, 2016, there were 50,001 shares of Series B Preferred Shares outstanding. In January 2017, the Company sold two individuals 53,334 shares of its Series B Preferred Stock at $1.50 per share, or an aggregate of $80,000. The shares of Series B Preferred Stock are convertible into shares of the Companys common stock at a 25% discount to current market value, as defined, with a minimum conversion price set by the Company's Board of Directors of $0.001 per share. The Series B Preferred Stock can be converted at any time into shares of common stock after twelve months from acceptance by the Company of the subscription agreements, but only once every 30 days. For the year ended December 31, 2017, the Company recorded a deemed dividend for the beneficial conversion feature of $17,778 relating to the issuance of the Series B Preferred Stock. In October 2017, 33,334 shares of Series B Preferred Stock were converted into 16,129,355 shares of the Companys common stock (See below) and at December 31, 2017, there were 70,001 shares of Series B Preferred Stock outstanding. Common Stock During the year ended December 31, 2017, the Company issued an aggregate of 16,159,355 shares of its common stock as follows: • The Company issued 30,000 shares of its common stock for services, valued at $544. • The Company issued 16,129,355 shares of its common stock in exchange for conversion of 33,334 shares of Series B Preferred Stock at a conversion price of $0.00207 per share. During the year ended December 31, 2016, the Company issued an aggregate of 2,296,971,962 shares of its common stock as follows: • The Company issued 1,594,171,737 shares of its common stock in exchange for conversion of $143,123 of convertible note principal and $49,542 of accrued interest at conversion prices ranging from $0.000058 to $0.0013 per share. In addition, the Company issued 511,066,246 shares of common stock, with a fair value of $386,221, to the convertible note holders and recorded as additional interest expense. • The Company issued 125,000 shares of its common stock upon the exercise of 30 warrants for $150. In addition, the Company issued 154,875,000 shares of its common stock, with a fair value of $185,850, to the warrant holder as additional consideration for services and recorded in general and administrative expenses • The Company issued 30,000 shares of its common stock for services, valued at $309. • The Company issued 1,000,000 shares of its common stock for exercise of options at a price of $0.005 per share for $500. • The Company issued 35,703,979 shares of its common stock in exchange for conversion of 125,337 shares of Series B Preferred Stock at conversion prices ranging from $0.00383 to $0.00532 per share. Capital Contribution In January 2016, the Companys officers forgave an aggregate total of $762,275 of accrued payroll due to them from the Company. The Company recorded the forgiveness of accrued payroll as a capital contribution. |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Note 10 - Warrants | At December 31, 2017, the Company had no warrants outstanding. The table below summarizes the Companys warrant activities for the period January 1, 2016 to December 31, 2016: Number of Warrant Shares Exercise Price Range Per Share Weighted Average Exercise Price Balance, January 1, 2016 30 $ 0.00024-9,750,000,000 $ 10,430,000 Granted - - - Canceled (- ) - - Exercised (30 ) $ 0.00024 $ 8,382,915 Expired (- ) $ 0.00024-9,750,000,000 $ 29,886,738 Balance, December 31, 2016 - $ - $ - Vested and exercisable, December 31, 2016 - $ - $ - Unvested, December 31, 2016 - $ - $ - In April 2016, the Company executed a settlement agreement with an investor relating to outstanding warrant agreements issued in conjunction with convertible notes that were repaid by the Company in January 2016. Per the terms of the settlement, the investor processed a cashless exercise of 30 warrant shares into 125,000 shares of the Companys common stock. The investor also received an additional 154,875,000 shares of the Companys common stock valued at $185,850, for services (see Note 9). |
Options
Options | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Note 11 - Options | In November 2012, the stockholders approved the 2012 Stock Option Plan for our employees, effective January 3, 2013. The number of shares authorized for issuance under the plan was 100,000,000 and was increased to 400,000,000 in November 2017 by unanimous consent of the Board of Directors. In September 2016, the Company issued options to purchase 196,000,000 shares of its common stock to its management team and employees with a total fair value of $1,568,000 determined using the Black-Scholes Option Pricing model. The options are exercisable at $0.00625 per share, vest in 6 months, and expire in September 2026. In December 2017, the Company issued options to purchase 63,000,000 shares of its common stock to its management team and employees with a total fair value of $378,000 determined using the Black-Scholes Option Pricing model. The options are exercisable at $0.0057 per share, vest in 6 months, and expire in December 2027. During the years ended December 31, 2017 and 2016, the Company recognized compensation costs of $772,260 and $818,462, respectively, based on the fair value of options that vested. The table below summarizes the Companys 2004 Incentive Plan and 2012 Stock Incentive Plan activities for the period January 1, 2016 to December 31, 2017: Number of Options Shares Exercise Price Range Per Share Weighted Average Exercise Price Balance, January 1, 2016 1,000,003 $ 0.0005-9,750,000,000 $ 2.00 Granted 196,000,000 $ 0.00625 $ 0.00625 Exercised (1,000,000 ) $ 0.0005 $ 0.0005 Expired (2 ) $ 9,750,000,000 $ 9,750,000,000 Balance, January 1, 2017 196,000,001 $ 0.00625- 2,242,500 $ 0.00625 Granted 63,000,000 $ 0.0057 $ 0.0057 Exercised - $ - $ - Expired - $ - $ - Balance, December 31, 2017 259,000,001 $ 0.0057- 2,242,500 $ 0.0062 Vested and exercisable, December 31, 2017 199,786,886 $ 0.0057- 2,242,500 $ 0.0062 Unvested, December 31, 2017 59,213,115 $ 0.0057 $ 0.0057 As of December 31, 2017, options to purchase an aggregate of 259,000,001 shares of common stock were outstanding under the 2012 Stock Incentive Plan and there were 140,999,999 shares remaining available for issuance. At December 31, 2017 and 2016, the intrinsic value of outstanding options was zero. The following table summarizes information concerning 2004 Incentive plan and 2012 Stock Incentive Plan as of December 31, 2017: Options Outstanding Options Exercisable Range of Exercise Prices Number Outstanding Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Average Remaining Contractual Life (in years) Weighted Average Exercise Price $ 975,000,000 1 1.00 $ 975,000,000 1 1.00 $ 975,000,000 $ 0.0057 63,000,000 10.00 $ 0.0057 3,786,885 10.00 $ 0.0057 $ 0.00625 196,000,000 10.00 $ 0.00625 196,000,000 10.00 $ 0.00625 $ 0.00625 - 975,000,000 259,000,001 10.00 $ 0.00625 199,786,886 10.00 $ 0.00625 |
Other Income
Other Income | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Note 12 - Other Income | The Company initiated patent litigation against an outside party in 2013. Mediation took place in May 2015 to discuss a potential settlement, and on January 15, 2016, the parties reached a settlement in the matter. As part of the settlement, the Company received a payment in January 2016 of $9,750,000 and incurred fees related to the settlement of $4,187,257. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Note 13 - Income Tax Provision | On December 22, 2017, the Tax Reform Act was signed into law which significantly changed U.S. tax law by, among other things, lowering the corporate income tax rate from 35% to 21%, effective January 1, 2018; allowing for the acceleration of expensing for certain business assets; requiring companies to pay a one-time transition tax on certain un-remitted earnings of foreign subsidiaries; and eliminating U.S. federal income tax on dividends from foreign subsidiaries. The Company has no tax provision for any period presented due to its history of operating losses. As of December 31, 2017, the Company had deferred tax assets of approximately $4,863,000, resulting from certain temporary differences and net operating loss (NOL) carry-forwards of approximately $21,375,000, which are available to offset future taxable income, if any, through 2036. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as management has determined that their realization is not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards. The income tax provision consists of the following for the year ended: December 31, 2017 December 31, 2016 Federal Current $ 71,693 $ - Deferred - - State Current - - Deferred - - Income tax provision $ 71,693 $ - Components of deferred tax assets as of December 31, 2017 and 2016 are as follows: December 31, 2017 December 31, 2016 Net deferred tax assets non-current: NOL carry-forwards $ 4,489,000 $ 6,369,000 Share-based compensation 374,000 342,000 Less valuation allowance (4,863,000 ) (6,711,000 ) Deferred tax assets, net of valuation allowance $ - $ - A reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income tax provision is as follows: For the year ended December 31, 2017 For the year ended December 31, 2016 Federal statutory income tax rate 34.0 % 34.0 % Change in valuation allowance on net operating loss carry-forwards (34.0 ) (34.0 ) Effective income tax rate 0.0 % 0.0 % The Companys operations are based in New Jersey and it is subject to Federal and New Jersey state income tax. Tax years after 2014 are open to examination by United States and state tax authorities. The Company adopted accounting rules which address the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under these rules, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. These accounting rules also provide guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of December 31, 2017, no liability for unrecognized tax benefits was required to be recorded. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Note 14 - Commitments and Contingencies | Leases The Company operates from leased offices under a lease agreement through January 31, 2019. The Company paid a monthly base rent of $4,067 from February 2016 thru January 2017, $4,190 from February 2017 through January 2018, and will pay a monthly base rent of $4,316 from February 2018 thru January 2019. Asset Sale and Licensing Agreement On August 24, 2015, the Company entered into an agreement with Cyber Safety, Inc., a New York corporation (Cyber Safety) for Cyber Safety to license, and retain an option to purchase, the patents and Intellectual Property related to the GuardedID® and MobileTrust® software. Cyber Safety has the option to buy the Companys GuardedID® patent for $9,000,000 that expires on September 30, 2020. The Company anticipates Cyber Safety will make the purchase by September 30, 2020. Cyber Safety will also resell the Companys GuardedID® and MobileTrust® products, for which the Company will receive a royalty, while the Company retains an unlimited license to resell those products. Cyber Safety also licensed the Malware Suite until September 30, 2020 and agreed to pay the Company 15% to 20% of the net amount Cyber Safety receives from this product. During the years ended December 31, 2017 and 2016, the Company did not receive any royalty or license payments from Cyber Safety. Legal Proceedings On March 28, 2013, we initiated patent litigation against an outside party. On January 15, 2016, the parties reached a settlement in the matter. As part of the settlement, we received a payment in January 2016 of $9,750,000 and incurred fees related to the settlement of $4,187,257. On June 20, 2016, the Company initiated additional patent litigation against three major competitors in the U.S. District Court for the District of New Jersey, for infringement of United States Patent No. 8,484,698. This litigation is ongoing. On March 14, 2017, one of the parties initiated an inter partes review (IPR) (a procedure for challenging the validity of a United States patent before the United States Patent and Trademark Office) against the Companys second Patent No. 8,484,698. On March 14, 2017, the Company initiated additional patent litigation against two major competitors in the U.S. District Court for the District of Massachusetts, for infringement of United States Patent Nos. 7,870,599, 8,484,698 and 8,713,701. This litigation is ongoing. On March 14, 2017, the Company initiated additional patent litigation against two major competitors in the U.S. District Court for the Eastern District of Virginia, for infringement of United States Patent Nos. 7,870,599, 8,484,698 and 8,713,701. This litigation is ongoing. On June 13, 2017, one of the competitors initiated a lawsuit against the Company in the U.S. District Court for the District of New Jersey for patent infringement (which the Company believes is without merit and will defend vigorously). This litigation is ongoing. On December 4, 2017, StrikeForce Technologies, Inc. v. Trustwave Holdings, Inc., StrikeForce Technologies, Inc v. Duo Security Incorporated Due to Factor In March 2007, the Company entered into a sale and subordination agreement with a factoring firm whereby the Company sold its rights to two invoices, from February 2007 and March 2007, totaling $470,200 to the factor. Upon signing the agreement and providing the required disclosures, the factor remitted $197,450 to the Company. As of December 31, 2016, the balance due to the factor was $209,192 including interest. In July 2017, the Company executed an exchange agreement with the factor which transferred the amount due to the factor into a promissory note for $210,000, non-interest bearing, and maturing on February 7, 2018. The Company repaid the remaining balance owed on the promissory note by making payments of $20,000 in January 2018 and $50,000 in February 2018 (see Note 5). |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Note 15 - Subsequent Events | Subsidiary Company In December 2017, the Company formed a new subsidiary, BlockSafe Technologies, Inc. ("BlockSafe"). The Company owns 49% of BlockSafe, 31% is owned by executives of the Company, and the remaining 20% is owned by unrelated parties. Through December 31, 2017, BlockSafe was dormant and had no activity. BlockSafe will focus on providing security solutions to protect blockchain and cryptocurrencies. The Company will license its existing technologies to BlockSafe. In January 2018, BlockSafe executed two promissory notes for an aggregate of $147,000 with two unrelated parties, bearing interest at 8% per annum, unsecured, and maturing in January 2019. Per the terms of the promissory note, the note holder purchased 147,000 units of BlockSafe coins. Term Sheet In March 2018, the Company executed a term sheet with an investor firm whereby the firm would invest in the Company up to $130,000 in the form of a convertible promissory note, bearing interest at 10% per annum maturing twelve months from the date of issuance. Conversions would include a 42% discount to the price of the Companys common stock, as defined. |
Organization and Summary of S22
Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Organization And Summary Of Significant Accounting Policies Policies | |
Going Concern | The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying financial statements, for the year ended December 31, 2017, the Company incurred a net loss of $3,224,278 and used cash in operating activities of $1,716,332, and at December 31, 2017, the Company had a stockholders deficit of $10,793,186. In addition, the Company is in default on notes payable and convertible notes payable in the aggregate amount of $2,539,336. These factors raise substantial doubt about the Companys ability to continue as a going concern within one year of the date that the financial statements are issued. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. At December 31, 2017, the Company had cash on hand in the amount of $455,484. Management estimates that the current funds on hand will be sufficient to continue operations through the next three months. The Companys ability to continue as a going concern is dependent upon its ability to continue to implement its business plan. Currently, management is attempting to increase revenues by redirecting its sales focus from direct sales to domestic and international sales channels, primarily selling through a channel of distributors, value added resellers, strategic partners and original equipment manufacturers. While the Company believes in the viability of its strategy to increase revenues, there can be no assurances to that effect. The Companys ability to continue as a going concern is dependent upon its ability to increase its customer base and realize increased revenues. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stock holders, in the case of equity financing. |
Estimates | At December 31, 2017, the Company had convertible promissory notes outstanding that are convertible into shares of common stock of the Company at the option of the holder at a price per share discount of 20% of the Companys common stock market price, as defined in the note agreements. Also, in July 2017, the Company issued two convertible notes payable (see Note 3) that, at the option of the noteholder beginning seven months from the date issued, were convertible into shares of common stock of the Company at a price per share discount of 42% of the lowest closing market price of the Companys common stock for the 20 days preceding a conversion notice. As a result, the Company determined that the conversion features of the convertible notes were not considered indexed to the Companys own stock and characterized the fair value of the conversion features as a derivative liability. As the ultimate determination of shares to be issued upon conversion of these notes could exceed the current number of available authorized shares, the conversion features of these notes are recorded as a derivative liability. Accordingly, the conversion feature of the notes was separated from the host contract (i.e. the notes) and characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations. At December 31, 2016, the balance of the derivative liabilities was $262,185. During the year ended December 31, 2017, the Company recorded additions of $597,949 (see Note 3), an increase in fair value of derivatives of $320,888, and an extinguishment of $557,827. At December 31, 2017, the balance of the derivative liabilities was $623,195. The derivative liability was valued at the following dates using a probability weighted Black-Scholes-Merton model with the following assumptions: December 31, 2017 September 6. 2017 (date extinguished) June, July 2017 (dates issued) December 31, 2016 Conversion feature: Risk-free interest rate 0.18 % 0.16 % 0.16 % 0.16 % Expected volatility 147 % 150 % 152%-157 % 75 % Expected life (in years) 1 year 1 year 1 year 1 year Expected dividend yield - - - - Fair Value: Conversion feature $ 623,195 $ 557,827 $ 597,949 $ 262,185 The risk-free interest rate was based on rates established by the Federal Reserve Bank. The expected volatility is based on the historical volatility of the Companys stock. The expected life of the conversion feature of the notes was based on the remaining terms of the related notes. The expected dividend yield was based on the fact that the Company has not customarily paid dividends to its common stockholders in the past and does not expect to pay dividends to its common stockholders in the future. |
Revenue | The Company recognizes revenue when (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer and there are no significant uncertainties surrounding acceptance by the customer, (iii) the sales price is fixed and determinable, and (iv) collectability is reasonably assured. When the Company recognizes revenue, no provisions are made for returns because, historically, there have been very few sales returns and adjustments that have impacted the ultimate collection of revenues. Revenue from hardware sales is recognized when the product is shipped to the customer and there are either no unfulfilled obligations by the Company, or any obligations that will not affect the customer's final acceptance of the arrangement. All costs of these obligations are accrued when the corresponding revenue is recognized. Revenue from time and service contracts is recognized as the services are provided. Revenue from delivered elements of one-time charge licensed software is recognized at the inception of the license term, and determined by the fair value of each delivered element. Revenue is deferred for undelivered elements. The Company recognizes revenue from the sale of software licenses when the four criteria discussed above are met. If the Company determines that collection of a fee is not reasonably assured, it defers the fee and recognizes revenue at the time collection becomes reasonably assured, which is generally upon receipt of payment. Revenue from monthly software licenses is recognized on a subscription basis. The Company offers an Application Service Provider (ASP) hosted cloud service whereby customer usage transactions are invoiced monthly on a cost per transaction basis. |
Accounts Receivable and Allowance for Doubtful Accounts | The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customers inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Companys historical losses and an overall assessment of past due trade accounts receivable outstanding. At December 31, 2017, the allowance for doubtful accounts was $19,584. At December 31, 2016, there was no allowance for doubtful accounts. For the years ended December 31, 2017 and 2016, the Company recorded bad debt expense of $20,715 and $18,226, respectively. |
Property and Equipment | Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation of property and equipment is computed by the straight-line method (after taking into account their respective estimated residual values) over the estimated useful lives of the respective assets as follows: Estimated Useful Life (Years) Computer equipment 5 Computer software 3 Furniture and fixture 7 Office equipment 7 Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the statements of operations. Management assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. For the years ended December 31, 2017 and 2016, the Company did not recognize any impairment for its property and equipment. |
Long-lived Assets | The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. For the years ended December 31, 2017 and 2016, the Company did not recognize any such impairments. |
Income Taxes | The Company accounts for income taxes using the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. |
Stock Compensation | The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions, and for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board (FASB) whereas the value of the award is measured on the date of grant and recognized as compensation expense on the straight-line basis over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the FASB whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Options granted to non-employees are revalued each reporting period to determine the amount to be recorded as an expense in the respective period. As the options vest, they are valued on each vesting date and an adjustment is recorded for the difference between the value already recorded and the then current value on the date of vesting. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date. The fair value of the Companys stock option and warrant grants are estimated using the Black-Scholes-Merton option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model, and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods. |
Derivative Financial Instruments | The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. At each reporting date, the Company reviews its convertible securities to determine that their classification is appropriate. |
Fair Value of Financial Instruments | The Company follows the authoritative guidance issued by the Financial Accounting Standards Board (FASB) for fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels as follows: Level 1Quoted prices in active markets for identical assets or liabilities. Level 2Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly. Level 3Unobservable inputs based on the Company's assumptions. The Company is required to use of observable market data if such data is available without undue cost and effort. As of December 31, 2017 and 2016, the Companys balance sheets included the fair value of derivative liabilities of $623,195 and $262,185, respectively, which were based on Level 2 measurements. The recorded amounts for accounts receivable, accounts payable, accrued expenses, convertible notes, and notes payables approximate their fair value due to their short-term nature. |
Income (loss) per Share | Basic income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share reflects the potential dilution, using the treasury stock method that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the income (loss) of the Company. In computing diluted income (loss) per share, the treasury stock method assumes that outstanding options, warrants, and convertible preferred stock are exercised and the proceeds are used to purchase common stock at the average market price during the period. Options, warrants, and convertible preferred stock may have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options and warrants. For the years ended December 31, 2017 and 2016, the dilutive impact of stock options exercisable into 259,000,001 and 196,000,001 shares of common stock, respectively, convertible Series B Preferred stock that can convert into 14,815,026 and 33,876,016 shares of common stock, respectively, and notes payable that can convert into 25 and 25 shares of common stock, respectively, have been excluded because their impact on the income and (loss) per share is anti-dilutive. The following tables set forth the computation of basic and diluted earnings (loss) per share: Years ended December 31, 2017 2016 Income (Loss) per share Basic: and Diluted: Income (Loss) for the period $ (3,224,278 ) $ 2,938,565 Series B convertible preferred stock deemed dividends 17,778 - Net income (loss) attributable to common shareholders (3,206,500 ) 2,938,565 Basic average common stock outstanding 2,323,630,612 1,855,338,114 Net earnings (loss) per share $ - $ - |
Advertising, Sales and Marketing Costs | Advertising, sales and marketing costs are expensed as incurred and are included in sales and marketing expenses. For the years ended December 31, 2017 and 2016, advertising, sales and marketing expenses were $20,507 and $1,534, respectively. |
Research and Development Costs | Costs incurred for research and development are expensed as incurred. The salaries, benefits, and overhead costs of personnel conducting research and development of the Companys software products comprise research and development expenses. Purchased materials that do not have an alternative future use are also expensed. For the years ended December 31, 2017 and 2016, research and development costs were $537,282 and $521,663, respectively. |
Significant Concentrations | For the year ended December 31, 2017, sales to one customer comprised 55% of revenues. For the year ended December 31, 2016, sales to two customers comprised 39% and 39% of revenues, respectively. At December 31, 2017, four customers comprised 30%, 29%, 19% and 14% of accounts receivable, respectively. At December 31, 2016, one customer comprised 82% of accounts receivable. The Company maintains the majority of its cash balances with one financial institution, in the form of demand deposits. At December 31, 2017 and 2016, the Company had cash deposits that exceeded the federally insured limit of $250,000. The Company believes that no significant concentration of credit risk exists with respect to these cash balances because of its assessment of the creditworthiness and financial viability of the financial institution. |
Segments | The Company operates in one segment for the development and distribution of our products. In accordance with the Segment Reporting Topic of the ASC, the Companys chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under Segment Reporting due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by Segment Reporting can be found in the accompanying financial statements. |
Recent Accounting Pronouncements | In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers In February 2016, the FASB issued ASU No. 2016-02, Leases. In July 2017, the FASB issued ASU 2017-11 , Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements. |
Organization and Summary of S23
Organization and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Organization And Summary Of Significant Accounting Policies Tables | |
Property and equipment estimated useful lives | Estimated Useful Life (Years) Computer equipment 5 Computer software 3 Furniture and fixture 7 Office equipment 7 |
Summary of computation of basic and diluted earnings per share | The following tables set forth the computation of basic and diluted earnings (loss) per share: Years ended December 31, 2017 2016 Income (Loss) per share Basic: and Diluted: Income (Loss) for the period $ (3,224,278 ) $ 2,938,565 Series B convertible preferred stock deemed dividends 17,778 - Net income (loss) attributable to common shareholders (3,206,500 ) 2,938,565 Basic average common stock outstanding 2,323,630,612 1,855,338,114 Net earnings (loss) per share $ - $ - |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property And Equipment Tables | |
Property, Plant and Equipment | December 31, 2017 December 31, 2016 Computer equipment $ 78,769 $ 76,953 Computer software 38,404 36,907 Furniture and fixture 10,157 10,157 Office equipment 16,511 16,511 143,841 140,528 Less accumulated depreciation (136,165 ) (131,602 ) $ 7,676 $ 8,926 |
Convertible Notes Payable (Tabl
Convertible Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Convertible Notes Payable Tables | |
Convertible notes payable | December 31, 2017 December 31, 2016 Secured (a) DART $ 542,588 $ 542,588 Unsecured (b) Convertible notes with fixed conversion features 895,512 910,512 (c) Convertible notes with adjustable conversion features - - Total convertible notes $ 1,438,100 $ 1,447,100 |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Notes Payable Tables | |
Notes payable | December 31, 2017 December 31, 2016 Unsecured (a) Promissory notes $ 413,824 $ 413,824 (b) Promissory notes StrikeForce Investor Group 1,230,000 1,290,000 (c) Promissory note 70,000 - Notes payable, current maturities $ 1,713,824 $ 1,703,824 |
Derivative Financial Instrume27
Derivative Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Derivative Financial Instruments Tables | |
Summary of derivative liability | December 31, 2017 September 6. 2017 (date extinguished) June, July 2017 (dates issued) December 31, 2016 Conversion feature: Risk-free interest rate 0.18 % 0.16 % 0.16 % 0.16 % Expected volatility 147 % 150 % 152%-157 % 75 % Expected life (in years) 1 year 1 year 1 year 1 year Expected dividend yield - - - - Fair Value: Conversion feature $ 623,195 $ 557,827 $ 597,949 $ 262,185 |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Warrants [Member] | |
Summary of warrants | Number of Warrant Shares Exercise Price Range Per Share Weighted Average Exercise Price Balance, January 1, 2016 30 $ 0.00024-9,750,000,000 $ 10,430,000 Granted - - - Canceled (- ) - - Exercised (30 ) $ 0.00024 $ 8,382,915 Expired (- ) $ 0.00024-9,750,000,000 $ 29,886,738 Balance, December 31, 2016 - $ - $ - Vested and exercisable, December 31, 2016 - $ - $ - Unvested, December 31, 2016 - $ - $ - |
Options (Tables)
Options (Tables) - Stock Options [Member] | 12 Months Ended |
Dec. 31, 2017 | |
Summary of stock option | Number of Options Shares Exercise Price Range Per Share Weighted Average Exercise Price Balance, January 1, 2016 1,000,003 $ 0.0005-9,750,000,000 $ 2.00 Granted 196,000,000 $ 0.00625 $ 0.00625 Exercised (1,000,000 ) $ 0.0005 $ 0.0005 Expired (2 ) $ 9,750,000,000 $ 9,750,000,000 Balance, January 1, 2017 196,000,001 $ 0.00625- 2,242,500 $ 0.00625 Granted 63,000,000 $ 0.0057 $ 0.0057 Exercised - $ - $ - Expired - $ - $ - Balance, December 31, 2017 259,000,001 $ 0.0057- 2,242,500 $ 0.0062 Vested and exercisable, December 31, 2017 199,786,886 $ 0.0057- 2,242,500 $ 0.0062 Unvested, December 31, 2017 59,213,115 $ 0.0057 $ 0.0057 |
Summary of stock option outstanding and exercisable | Options Outstanding Options Exercisable Range of Exercise Prices Number Outstanding Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Average Remaining Contractual Life (in years) Weighted Average Exercise Price $ 975,000,000 1 1.00 $ 975,000,000 1 1.00 $ 975,000,000 $ 0.0057 63,000,000 10.00 $ 0.0057 3,786,885 10.00 $ 0.0057 $ 0.00625 196,000,000 10.00 $ 0.00625 196,000,000 10.00 $ 0.00625 $ 0.00625 - 975,000,000 259,000,001 10.00 $ 0.00625 199,786,886 10.00 $ 0.00625 |
Income Taxes (Tables )
Income Taxes (Tables ) | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes Tables | |
Schedule of income tax provision | December 31, 2017 December 31, 2016 Federal Current $ 71,693 $ - Deferred - - State Current - - Deferred - - Income tax provision $ 71,693 $ - |
Components of deferred tax assets | December 31, 2017 December 31, 2016 Net deferred tax assets non-current: NOL carry-forwards $ 4,489,000 $ 6,369,000 Share-based compensation 374,000 342,000 Less valuation allowance (4,863,000 ) (6,711,000 ) Deferred tax assets, net of valuation allowance $ - $ - |
Summary of federal statutory income tax rate and the effective income tax rate | For the year ended December 31, 2017 For the year ended December 31, 2016 Federal statutory income tax rate 34.0 % 34.0 % Change in valuation allowance on net operating loss carry-forwards (34.0 ) (34.0 ) Effective income tax rate 0.0 % 0.0 % |
Organization and Summary of S31
Organization and Summary of Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Computer Equipment [Member] | |
Estimated Useful Life (Years) | 5 years |
Computer Software [Member] | |
Estimated Useful Life (Years) | 3 years |
Furniture And Fixture [Member] | |
Estimated Useful Life (Years) | 7 years |
Office Equipment [Member] | |
Estimated Useful Life (Years) | 7 years |
Organization and Summary of S32
Organization and Summary of Significant Accounting Policies (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income (Loss) per share - Basic: and Diluted: | ||
Income (Loss) for the period | $ (3,224,278) | $ 2,938,565 |
Series B convertible preferred stock deemed dividends | 17,778 | |
Net income (loss) attributable to common shareholders | $ (3,206,500) | $ 2,938,565 |
Basic average common stock outstanding | 2,323,630,612 | 1,855,338,114 |
Net earnings (loss) per share |
Organization and Summary of S33
Organization and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Net income (loss) attributable to common stockholders | $ (3,224,278) | $ 2,938,565 | |
Net cash provided by (used in) operating activities | (1,716,332) | 2,420,968 | |
Stockholders' Deficit | (10,793,186) | (8,439,490) | $ (13,724,487) |
Cash | 455,484 | 804,130 | $ 37,153 |
Allowance for doubtful accounts | 19,584 | ||
Bad debt expense | 20,715 | 18,226 | |
Derivative liabilities | $ 623,195 | $ 262,185 | |
Dilutive impact of outstanding stock options | 259,000,001 | 196,000,001 | |
Advertising, sales and marketing expenses | $ 20,507 | $ 1,534 | |
Research and development costs | 537,282 | 521,663 | |
Default in notes payable | 2,539,336 | ||
Federally insured limit | $ 250,000 | $ 250,000 | |
Notes Payable [Member] | |||
Conversion of common stock shares | 25 | 25 | |
Series B Preferred Stock [Member] | |||
Conversion of common stock shares | 14,815,026 | 33,876,016 | |
One customer [Member] | |||
Percentage of sales revenues | 55.00% | 39.00% | |
Percentage of accounts receivable | 30.00% | 82.00% | |
Two customer [Member] | |||
Percentage of sales revenues | 39.00% | ||
Percentage of accounts receivable | 29.00% | ||
Three customer [Member] | |||
Percentage of accounts receivable | 19.00% | ||
Four customer [Member] | |||
Percentage of accounts receivable | 14.00% |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Property and equipment, gross | $ 143,841 | $ 140,528 |
Less accumulated depreciation | (136,165) | (131,602) |
Property and equipment, net | 7,676 | 8,926 |
Computer Equipment [Member] | ||
Property and equipment, gross | 78,769 | 76,953 |
Computer Software [Member] | ||
Property and equipment, gross | 38,404 | 36,907 |
Furniture And Fixture [Member] | ||
Property and equipment, gross | 10,157 | 10,157 |
Office Equipment [Member] | ||
Property and equipment, gross | $ 16,511 | $ 16,511 |
Property and Equipment (Detai35
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property And Equipment Details Narrative | ||
Depreciation expense | $ 4,563 | $ 3,177 |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | |
Secured | |||
(a) DART | [1] | $ 542,588 | $ 542,588 |
Unsecured | |||
(b) Convertible notes with fixed conversion features | [2] | 895,512 | 910,512 |
(c) Convertible notes with adjustable conversion features | [3] | ||
Total Convertible notes | $ 1,438,100 | $ 1,447,100 | |
[1] | (a) At December 31, 2017 and December 31, 2016, $542,588 of notes payables are due to DART/Citco Global. The notes are convertible into shares of the Company's common stock based on adjustable conversion prices, are secured by all of the Company's assets, were due in 2010, and are currently in default. The adjustable conversion features of the notes are accounted for as derivative liabilities (see Note 8). DART/Citco Global did not process any conversions of notes into shares of common stock during the years ended December 31, 2017 or 2016. The Company has been in contact with the note holder who has indicated that it has no present intention of exercising its right to convert the debentures into shares of the Company's common stock. Under the terms of the secured debentures, the Company is restricted in its ability to issue additional securities as long as any portion of the principal or interest on the secured debentures remains outstanding. During the year ended December 31, 2017, the Company did not obtain DART/Citco Global's written consent related to any of its financing agreements. | ||
[2] | (b) Convertible notes payable consisted of 13 unsecured convertible notes convertible at a fixed amount ("fixed convertible notes") into 13 shares of the Company's common stock, at fixed prices ranging from $1,950,000 to $9,750,000,000 per share, as defined in the agreements. The notes bear interest at 8% to 18% per annum, and were due on various dates from March 2008 to July 2015. All of the fixed convertible notes are currently in default and the Company is pursuing settlements with certain of the holders. During the year ended December 31, 2017, there were no additional notes issued and the Company repaid $9,000 of note principal. At December 31, 2016, the balance of the accrued interest on the fixed convertible notes was $936,639. During the year ended December 31, 2017, the Company paid $11,500 of accrued interest and interest expense of $79,492 was accrued. At December 31, 2017, the balance of accrued interest on the fixed convertible notes was $1,004,631. During the year ended December 31, 2016, interest expense of $79,687 was accrued, $49,148 of accrued interest was forgiven and written-off, and $3,000 of accrued interest was paid. | ||
[3] | (c) At December 31, 2016, there were no convertible notes with adjustable conversion features outstanding. During the year ended December 31, 2017, the Company issued two convertible notes payable for an aggregate of $375,000, bearing interest at 10% per annum, and maturing through July 2018. Both notes were paid in full in September 2017, including $96,825 of accrued and premium interest. At the option of the holder, beginning seven months from the date issued, the notes were convertible into shares of common stock of the Company at a price per share discount of 42% of the lowest closing market price of the Company's common stock for the twenty days preceding a conversion notice. As a result, the Company determined that the conversion feature of the convertible notes were not considered indexed to the Company's own stock and characterized the fair value of the conversion feature as a derivative liability upon issuance. The Company determined that upon issuance of the convertible notes in June and July 2017, the initial fair value of the embedded conversion features was $597,949 (see Note 8), of which $375,000 was recorded as debt discount offsetting the face amount of the convertible notes, and the remainder of $222,949 was recorded as private placement costs. During the year ended December 31, 2017 the Company amortized $4,000 of the valuation discount and recorded the balance of $371,000 to interest expense when the convertible notes were paid off. |
Convertible Notes Payable (De37
Convertible Notes Payable (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | ||
DART | [1] | $ 542,588 | $ 542,588 |
Common stock conversion prices | $ 0.005 | ||
Interest rate | 8.00% | ||
Repayment of convertible debt | $ 384,000 | $ 687,738 | |
Acrrued interest | 1,004,631 | 936,639 | |
Convertible notes with adjustable conversion features | [2] | ||
Extinguishment of derivative liabilities | (557,827) | (819,831) | |
Beneficial conversion feature | 597,949 | ||
Debt discount amortization | 4,000 | 34,293 | |
Interest expense | $ 170,589 | 190,478 | |
Minimum [Member] | |||
Interest rate | 8.00% | ||
Maximum [Member] | |||
Interest rate | 14.00% | ||
Unsecured Convertible Notes Payable [Member] | |||
DART | $ 542,588 | 542,588 | |
Balance of unsecured convertible notes | $ 13 | ||
Common stock conversion shares | 13 | ||
Maturity date range, start | Mar. 1, 2008 | ||
Maturity date range, end | Jul. 31, 2015 | ||
Repayment of convertible debt | $ 9,000 | ||
Acrrued interest | 1,004,631 | 936,639 | |
Accrued interest expense | 79,492 | 79,687 | |
Amount of accrued interest forgiven and written-off | 49,148 | ||
Accrued interest paid | 11,500 | $ 3,000 | |
Interest expense | $ 176,317 | ||
Unsecured Convertible Notes Payable [Member] | Minimum [Member] | |||
Common stock conversion prices | $ 1,950,000 | ||
Interest rate | 8.00% | ||
Unsecured Convertible Notes Payable [Member] | Maximum [Member] | |||
Common stock conversion prices | $ 9,750,000,000 | ||
Interest rate | 18.00% | ||
Convertible Notes Payable [Member] | |||
Interest rate | 10.00% | ||
Acrrued interest | $ 96,825 | ||
Convertible notes payable | $ 375,000 | ||
Discount on closing market price | 42.00% | ||
Convertible debt discount offsetting | $ 375,000 | ||
Private placement costs | 222,949 | ||
Unsecured Convertible Notes Payable [Member] | |||
Interest expense | $ 96,753 | ||
[1] | (a) At December 31, 2017 and December 31, 2016, $542,588 of notes payables are due to DART/Citco Global. The notes are convertible into shares of the Company's common stock based on adjustable conversion prices, are secured by all of the Company's assets, were due in 2010, and are currently in default. The adjustable conversion features of the notes are accounted for as derivative liabilities (see Note 8). DART/Citco Global did not process any conversions of notes into shares of common stock during the years ended December 31, 2017 or 2016. The Company has been in contact with the note holder who has indicated that it has no present intention of exercising its right to convert the debentures into shares of the Company's common stock. Under the terms of the secured debentures, the Company is restricted in its ability to issue additional securities as long as any portion of the principal or interest on the secured debentures remains outstanding. During the year ended December 31, 2017, the Company did not obtain DART/Citco Global's written consent related to any of its financing agreements. | ||
[2] | (c) At December 31, 2016, there were no convertible notes with adjustable conversion features outstanding. During the year ended December 31, 2017, the Company issued two convertible notes payable for an aggregate of $375,000, bearing interest at 10% per annum, and maturing through July 2018. Both notes were paid in full in September 2017, including $96,825 of accrued and premium interest. At the option of the holder, beginning seven months from the date issued, the notes were convertible into shares of common stock of the Company at a price per share discount of 42% of the lowest closing market price of the Company's common stock for the twenty days preceding a conversion notice. As a result, the Company determined that the conversion feature of the convertible notes were not considered indexed to the Company's own stock and characterized the fair value of the conversion feature as a derivative liability upon issuance. The Company determined that upon issuance of the convertible notes in June and July 2017, the initial fair value of the embedded conversion features was $597,949 (see Note 8), of which $375,000 was recorded as debt discount offsetting the face amount of the convertible notes, and the remainder of $222,949 was recorded as private placement costs. During the year ended December 31, 2017 the Company amortized $4,000 of the valuation discount and recorded the balance of $371,000 to interest expense when the convertible notes were paid off. |
Convertible Notes Payable - R38
Convertible Notes Payable - Related Parties (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Convertible notes payable - related parties | $ 355,500 | $ 355,500 |
Interest rate | 8.00% | |
Convertible notes payable current | $ 742,513 | $ 742,513 |
Common stock conversion price per share | $ 0.005 | |
Acrrued interest converted | $ 1,004,631 | $ 936,639 |
Maturity date | Dec. 31, 2018 | |
Spouse of Chief Technology Officer [Member] | ||
Convertible notes payable - related parties | $ 30,000 | |
Interest rate | 8.00% | |
VP of Technology [Member] | ||
Convertible notes payable - related parties | $ 57,000 | |
Interest rate description | Interest at prime plus 2% and prime plus 4% per annum | |
Chief Executive Officer [Member] | ||
Convertible notes payable - related parties | $ 268,000 | |
Accrued interest expense | 56,080 | 56,233 |
Convertible Notes Payable Related Parties [Member] | ||
Convertible notes payable current | $ 33,000 | |
Common stock conversion price per share | $ 7,312,500 | |
Accrued interest expense | $ 60,772 | |
Accrued interest due to related parties | 437,305 | |
Convertible Notes Payable Related Parties [Member] | Former officer [Member] | ||
Amount of accrued interest forgiven and written-off | 9,417 | |
Convertible Notes Payable Related Parties One [Member] | ||
Convertible notes payable current | $ 322,500 | |
Common stock conversion price per share | $ 9,750,000,000 | |
Accrued interest expense | $ 55,721 | |
Amount of accrued interest forgiven and written-off | $ 498,077 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | |
Unsecured | |||
(a) Promissory notes | [1] | $ 413,824 | $ 413,824 |
(b) Promissory notes - StrikeForce Investor Group | [2] | 1,230,000 | 1,290,000 |
(c) Promissory note | [3] | 70,000 | |
Notes payable, current maturities | $ 1,713,824 | $ 1,703,824 | |
[1] | (a) Notes payable consists of various unsecured promissory notes with interest from 8% to 14% per annum. $413,824 of the notes were due on various dates from December 2011 to July 2017 and are currently in default, The Company is currently pursuing settlements with certain of the note holders. At December 31, 2017 and December 31, 2016, the balance due under these notes was $413,824. At December 31, 2016, the balance of the accrued interest on the notes payable-various was $414,342. During the year ended December 31, 2017, $45,556 of interest expense was accrued. At December 31, 2017, accrued interest on the notes payable was $459,898. During the year ended December 31, 2016, $45,681 of interest expense was accrued, and $70,121 was forgiven and written-off. | ||
[2] | (b) Notes payable to StrikeForce Investor Group (SIG), made up of various investors with unsecured notes, interest at 10% per annum, originally due in 2011, and currently in default. At December 31, 2016, the balance of notes payable-SIG was $1,290,000. During the year ended December 31, 2017, one note holder assigned a delinquent note totaling $25,000, to an unrelated party, who agreed to extend payment of the note to February 2018. During the year ended December 31, 2017, the Company repaid $60,000 of principal and at December 31, 2017, the balance of notes payable-SIG was $1,230,000. The Company is currently pursuing extensions on the remaining delinquent notes. At December 31, 2016, the balance of the accrued interest on the notes payable-SIG was $1,425,087. During the year ended December 31, 2017, $125,033 of interest expense was accrued, $71,639 of accrued interest was paid, and $86,140 of accrued interest was forgiven and written-off. At December 31, 2017, accrued interest on the notes payable-SIG was $1,392,341. During the year ended December 31, 2016, $141,995 of interest expense was accrued, and $10,000 of accrued interest was paid. | ||
[3] | (c) In July 2017, the Company executed an exchange agreement with a factor which transferred the amount due to the factor of approximately $209,000 into a promissory note for $210,000, non-interest bearing, and maturing on February 7, 2018. Per the terms of the note, the Company shall make seven payments as follows: $60,000 in August 2017 and $20,000 each from September through December 2017, which have been paid, $20,000 for January 2018 and $50,000 in February 2018. In the event of a default of the payment terms, the outstanding balance shall increase to 120% of the note balance. Additionally, if the note is not paid in full by the maturity date, the revised outstanding balance shall be convertible at the note holders option into shares of common stock of the Company at a price per share discount of 20% of the lowest trading market price of the Company's common stock for the twenty days preceding a conversion notice. As of December 31, 2017, the balance due on the promissory note was $70,000. The remaining balance was paid off in 2018 (see Note 15). |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |||||||||
Feb. 28, 2018 | Jan. 31, 2018 | Dec. 31, 2017 | Nov. 30, 2017 | Oct. 31, 2017 | Sep. 30, 2017 | Aug. 31, 2017 | Jul. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Promissory notes | [1] | $ 413,824 | $ 413,824 | $ 413,824 | |||||||
Interest rate | 8.00% | 8.00% | |||||||||
Maturity date | Feb. 7, 2018 | ||||||||||
Accrued interest on notes payable | $ 1,852,239 | 1,839,429 | |||||||||
Interest expense | $ 170,589 | 190,478 | |||||||||
Minimum [Member] | |||||||||||
Interest rate | 8.00% | 8.00% | |||||||||
Maximum [Member] | |||||||||||
Interest rate | 14.00% | 14.00% | |||||||||
Unsecured promissory notes [Member] | |||||||||||
Accrued interest | $ 459,898 | $ 459,898 | 414,342 | ||||||||
Accrued interest expense | 45,556 | ||||||||||
StrikeForce Investor Group [Member] | |||||||||||
Promissory notes | $ 1,230,000 | $ 1,230,000 | $ 1,290,000 | ||||||||
Interest rate | 10.00% | 10.00% | 10.00% | ||||||||
Maturity date | Dec. 31, 2011 | ||||||||||
Accrued interest paid | $ 71,639 | $ 10,000 | |||||||||
Accrued interest | $ 1,392,341 | 1,392,341 | 1,425,087 | ||||||||
Accrued interest expense | 125,033 | $ 141,995 | |||||||||
Interest expense write off | 86,140 | ||||||||||
Repayment of debt | 60,000 | ||||||||||
Delinquent note to an unrelated party | 25,000 | 25,000 | |||||||||
Exchange Agreement [Member] | Factor [Member] | |||||||||||
Promissory notes | 70,000 | $ 210,000 | $ 70,000 | ||||||||
Maturity date | Feb. 7, 2018 | ||||||||||
Repayment of debt | $ 50,000 | $ 20,000 | $ 20,000 | $ 20,000 | $ 20,000 | $ 20,000 | $ 60,000 | ||||
Convertible conversion feature, description | The Company at a price per share discount of 20% of the lowest trading market price of the Company’s common stock for the twenty days preceding a conversion notice | ||||||||||
Due to related party | $ 209,000 | ||||||||||
[1] | (a) Notes payable consists of various unsecured promissory notes with interest from 8% to 14% per annum. $413,824 of the notes were due on various dates from December 2011 to July 2017 and are currently in default, The Company is currently pursuing settlements with certain of the note holders. At December 31, 2017 and December 31, 2016, the balance due under these notes was $413,824. At December 31, 2016, the balance of the accrued interest on the notes payable-various was $414,342. During the year ended December 31, 2017, $45,556 of interest expense was accrued. At December 31, 2017, accrued interest on the notes payable was $459,898. During the year ended December 31, 2016, $45,681 of interest expense was accrued, and $70,121 was forgiven and written-off. |
Notes Payable - Related Party (
Notes Payable - Related Party (Details Narrative) | 12 Months Ended | |
Dec. 31, 2017USD ($)Integer | Dec. 31, 2016USD ($) | |
Current maturities of notes payable - related parties | $ 742,513 | $ 742,513 |
Interest rate | 8.00% | |
Maximum [Member] | ||
Interest rate | 14.00% | |
Minimum [Member] | ||
Interest rate | 8.00% | |
Former Officer [Member] | ||
Interest expense write off | 13,102 | |
Chief Executive Officer [Member] | ||
Accrued interest | $ 647,864 | 591,784 |
Accrued interest expense | $ 56,080 | $ 56,233 |
Number of unsecured notes payable | Integer | 18 | |
Chief Executive Officer [Member] | Maximum [Member] | ||
Interest rate | 10.00% | |
Chief Executive Officer [Member] | Minimum [Member] | ||
Interest rate | 0.00% |
Contingent Payment Obligation (
Contingent Payment Obligation (Details Narrative) - Litigation Funding Agreement [Member] - Therium Inc. and VGL Capital, LLC [Member] | Sep. 06, 2017USD ($) |
Proceeds from funders | $ 1,500,000 |
Contingent payment description | The first $1,500,000 from the gross proceeds of any claims awarded, 10% of any additional claim proceeds until the Funders have received an additional $7,500,000, and 2.5% of any claim proceeds thereafter. |
Additional funding description | The terms of the litigation funding agreement allow for additional funding of $1,500,000, between February 1, 2018 to January 31, 2019, which would require the Company to repay the funders an additional $5,000,000, plus a percentage of any claim proceeds thereafter. |
Derivative Financial Instrume43
Derivative Financial Instruments (Details) - USD ($) | Sep. 06, 2017 | Jul. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Conversion feature: | ||||
Risk-free interest rate | 0.16% | 0.16% | 0.18% | 0.16% |
Expected volatility | 150.00% | 147.00% | 75.00% | |
Expected life (in years) | 1 year | 1 year | 1 year | 1 year |
Expected dividend yield | ||||
Fair Value: | ||||
Conversion feature | $ 557,827 | $ 597,949 | $ 623,195 | $ 262,185 |
Minimum [Member] | ||||
Conversion feature: | ||||
Expected volatility | 152.00% | |||
Maximum [Member] | ||||
Conversion feature: | ||||
Expected volatility | 157.00% |
Derivative Financial Instrume44
Derivative Financial Instruments (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Conversion price description of convertible promissory notes | Convertible promissory notes outstanding that are convertible into shares of common stock of the Company at the option of the holder at a price per share discount of 20% of the Companys common stock market price, as defined in the note agreements. | |
Change in fair value of derivative liabilities | $ 320,888 | $ 92,997 |
Derivative liabilities | 623,195 | 262,185 |
Beneficial conversion feature | 597,949 | |
Extinguishment of derivative liabilities | $ 557,827 | $ 819,831 |
Convertible Notes Payable [Member] | ||
Conversion price description of convertible promissory notes | Two convertible notes payable (see Note 3) that, at the option of the noteholder beginning seven months from the date issued, were convertible into shares of common stock of the Company at a price per share discount of 42% of the lowest closing market price of the Companys common stock for the 20 days preceding a conversion notice. |
Stockholders Deficit (Details N
Stockholders Deficit (Details Narrative) - USD ($) | Jan. 10, 2011 | Oct. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 31, 2017 | Jan. 31, 2016 | Feb. 28, 2014 | Dec. 31, 2011 | Oct. 21, 2010 |
Preferred stock, par value | $ 0.10 | ||||||||
Preferred Stock, shares authorized | 10,000,000 | 10,000,000 | 10,000,000 | ||||||
Preferred stock outstanding shares | 0 | 0 | |||||||
Additional interest expense | $ 386,221 | ||||||||
Additional shares issued | 511,066,246 | ||||||||
Common stock conversion prices | $ 0.005 | ||||||||
Common stock in exchange for conversion of Series B Preferred Stock, shares | 35,703,979 | ||||||||
Common stock in exchange for conversion of Series B Preferred Stock | 125,337 | ||||||||
Forgave accrued payroll amount | $ 762,275 | ||||||||
Common shares issued for warrants, shares | 125,000 | ||||||||
Additional consideration for services, shares | 154,875,000 | ||||||||
Additional consideration for services, value | $ 185,850 | ||||||||
Number of warrants exercised | $ 30 | ||||||||
Common Stock [Member] | |||||||||
Convertible note | $ 143,123 | ||||||||
Accrued interest | $ 49,542 | ||||||||
Converted common stock | 1,594,171,737 | ||||||||
Common stock issued during period, shares | 16,159,355 | 2,296,971,962 | |||||||
Common stock for services, shares | 30,000 | 154,905,000 | |||||||
Common stock for services, value | $ 544 | $ 309 | |||||||
Common shares issued for warrants, shares | 125,000 | ||||||||
Additional consideration for services, shares | 154,875,000 | ||||||||
Additional consideration for services, value | $ 185,850 | ||||||||
Number of warrants exercised | 30 | ||||||||
Common shares issued for warrants, value | $ 150 | ||||||||
Stock Options [Member] | |||||||||
Number of shares issued for option exercised | 1,000,000 | ||||||||
Exercise price per share | $ 0.005 | ||||||||
Exercise price of option | $ 500 | ||||||||
Minimum [Member] | Common Stock [Member] | |||||||||
Common stock conversion prices | $ 0.000058 | ||||||||
Maximum [Member] | Common Stock [Member] | |||||||||
Common stock conversion prices | $ 0.0013 | ||||||||
Preferred Series B [Member] | |||||||||
Preferred stock, par value | $ 1.50 | ||||||||
Sale of Preferred Stock | 53,334 | ||||||||
Preferred stock aggregate shares | $ 80,000 | ||||||||
Discount on common stock | 25.00% | ||||||||
Preferred Stock, shares authorized | 100,000,000 | ||||||||
Preferred stock outstanding shares | 70,001 | 50,001 | |||||||
Preferential liquidation description | The Company not delegated to parties with greater priority at $1.00 per share or, in the event an aggregate subscription by a single subscriber of the Series B Preferred Stock is greater than $100,000,000, $0.997 per share | ||||||||
Initial price | $ 2.50 | ||||||||
Conversion to common shares | 40.00% | ||||||||
Minimum price discount floor level | $ 0.005 | ||||||||
Converted preferred shares | 33,334 | ||||||||
Converted common stock | 16,129,355 | ||||||||
Common stock conversion prices | $ 0.001 | ||||||||
Conversion price | $ 0.00207 | ||||||||
Preferred Series B [Member] | Minimum [Member] | |||||||||
Common stock conversion prices | $ 0.00383 | ||||||||
Preferred Series B [Member] | Maximum [Member] | |||||||||
Common stock conversion prices | $ 0.00532 | ||||||||
Preferred Series A [Member] | |||||||||
Preferred Stock, shares authorized | 100 | ||||||||
Preferred stock issued, value | $ 987,000 | ||||||||
Preferred Series A [Member] | Management Team Two [Member] | |||||||||
Preferred stock issued, value | 329,000 | ||||||||
Preferred Series A [Member] | Management Team One [Member] | |||||||||
Preferred stock issued, value | 329,000 | ||||||||
Preferred Series A [Member] | Management Team [Member] | |||||||||
Preferred stock issued, value | $ 329,000 |
Warrants (Details)
Warrants (Details) - Warrant [Member] | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Outstanding, beginning balance | shares | 30 |
Granted | shares | |
Canceled | shares | |
Exercised | shares | (30) |
Expired | shares | |
Outstanding, ending balance | shares | |
Vested and exercisable | shares | |
Unvested | shares | |
Exercise Price Range Per Share | |
Outstanding, beginning balance | |
Granted | |
Canceled | |
Exercised | 0.00024 |
Outstanding, ending balance | |
Vested and exercisable | |
Unvested | |
Outstanding, beginning balance | 10,430,000 |
Granted | |
Canceled | |
Exercised | 8,382,915 |
Expired | 29,886,738 |
Outstanding, ending balance | |
Vested and exercisable | |
Minimum [Member] | |
Exercise Price Range Per Share | |
Outstanding, beginning balance | 0.00024 |
Expired | 0.00024 |
Maximum [Member] | |
Exercise Price Range Per Share | |
Outstanding, beginning balance | 9,750,000,000 |
Expired | $ 9,750,000,000 |
Warrants (Details Narrative)
Warrants (Details Narrative) | 12 Months Ended |
Dec. 31, 2017USD ($)shares | |
Warrants Details Narrative | |
Common shares issued for warrants, shares | shares | 125,000 |
Additional consideration for services, shares | shares | 154,875,000 |
Additional consideration for services, value | $ | $ 185,850 |
Number of warrants exercised | $ | $ 30 |
Options (Details)
Options (Details) - Stock Option [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Outstanding, beginning balance | 196,000,001 | 1,000,003 |
Granted | 63,000,000 | 196,000,000 |
Exercised | (1,000,000) | |
Expired | (2) | |
Outstanding, ending balance | 259,000,001 | 196,000,001 |
Vested and exercisable | 199,786,886 | |
Unvested | 59,213,115 | |
Exercise Price Range Per Share | ||
Granted | $ 0.0057 | $ 0.00625 |
Exercised | 0.0005 | |
Expired | 9,750,000,000 | |
Unvested | 0.0057 | |
Outstanding, beginning balance | 0.00625 | 2 |
Granted | 0.0057 | 0.00625 |
Exercised | 0.0005 | |
Expired | 9,750,000,000 | |
Outstanding, ending balance | 0.0062 | $ 0.00625 |
Vested and exercisable | 0.0062 | |
Unvested | $ 0.0057 | |
Minimum [Member] | ||
Exercise Price Range Per Share | ||
Outstanding, beginning balance | 0.00625 | 0.0005 |
Outstanding, ending balance | $ 0.0057 | $ 0.00625 |
Vested and exercisable | $ 0.0057 | |
Maximum [Member] | ||
Exercise Price Range Per Share | ||
Outstanding, beginning balance | 2,242,500 | 9,750,000,000 |
Outstanding, ending balance | $ 2,242,500 | $ 2,242,500 |
Vested and exercisable | $ 2,242,500 |
Options (Details 1)
Options (Details 1) - Stock Options [Member] | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
$975,000,000 [Member] | |
Number of warrants outstanding | shares | 1 |
Weighted average remaining contractual life (years) | 1 year |
Weighted average exercise price | $ / shares | $ 975,000,000 |
Number of warrants exercisable | shares | 1 |
Weighted average remaining contractual life (years) | 1 year |
Weighted average exercise price | $ / shares | $ 975,000,000 |
$0.00625 [Member] | |
Number of warrants outstanding | shares | 196,000,000 |
Weighted average remaining contractual life (years) | 10 years |
Weighted average exercise price | $ / shares | $ 0.00625 |
Number of warrants exercisable | shares | 196,000,000 |
Weighted average remaining contractual life (years) | 10 years |
Weighted average exercise price | $ / shares | $ 0.00625 |
0.00625 - 975,000,000 [Member] | |
Number of warrants outstanding | shares | 259,000,001 |
Weighted average remaining contractual life (years) | 10 years |
Weighted average exercise price | $ / shares | $ 0.00625 |
Number of warrants exercisable | shares | 199,786,886 |
Weighted average remaining contractual life (years) | 10 years |
Weighted average exercise price | $ / shares | $ 0.00625 |
0.0057 [Member] | |
Number of warrants outstanding | shares | 63,000,000 |
Weighted average remaining contractual life (years) | 10 years |
Weighted average exercise price | $ / shares | $ 0.0057 |
Number of warrants exercisable | shares | 3,786,885 |
Weighted average remaining contractual life (years) | 10 years |
Weighted average exercise price | $ / shares | $ 0.0057 |
Options (Details Narrative)
Options (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Dec. 31, 2017 | Sep. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Nov. 30, 2017 | |
Common Stock, shares authorized | 5,000,000,000 | 5,000,000,000 | 5,000,000,000 | ||
Fair value of vested options | $ 772,260 | $ 818,462 | |||
2012 Stock Incentive Plan [Member] | |||||
Common Stock, shares authorized | 100,000,000 | ||||
Increased authorized captal | 400,000,000 | ||||
Number of warrants outstanding | 259,000,001 | 259,000,001 | |||
Number of warrants available for issuance | 140,999,999 | 140,999,999 | |||
Stock Options [Member] | |||||
Fair value of vested options | $ 378,000 | $ 1,568,000 | |||
Option issued to purchase common shares | 63,000,000 | 196,000,000 | 63,000,000 | ||
Exercise price | $ 0.0057 | $ 0.00625 | |||
Expiry year | December 2,027 | September 2,026 |
Other Income (Details Narrative
Other Income (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Other Income Details Narrative | ||
Litigation settlement | $ 9,750,000 | |
Fees related to litigation settlement | $ (4,187,257) |
Income Tax Provision (Details)
Income Tax Provision (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Provision Details | ||
Current | $ 71,693 | |
Deferred | ||
State | ||
Current | ||
Deferred | ||
Income tax provision | $ 71,693 |
Income Tax Provision (Details 1
Income Tax Provision (Details 1) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Net deferred tax assets - non-current: | ||
NOL carry-forwards | $ 4,489,000 | $ 6,369,000 |
Share-based compensation | 374,000 | 342,000 |
Less valuation allowance | (4,863,000) | (6,711,000) |
Deferred tax assets, net of valuation allowance |
Income Tax Provision (Details 2
Income Tax Provision (Details 2) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Provision Details 1 | ||
Federal statutory income tax rate | 34.00% | 34.00% |
Change in valuation allowance on net operating loss carry-forwards | (34.00%) | (34.00%) |
Effective income tax rate | 0.00% | 0.00% |
Income Tax Provision (Details N
Income Tax Provision (Details Narrative) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Income Tax Provision Details 1 | |
Deferred tax assets | $ 4,863,000 |
Net operating loss carry-forwards | $ (21,375,000) |
Operating loss carryforwards, expiration date | 2,036 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |||||||||||||
Feb. 28, 2018 | Jan. 31, 2018 | Dec. 31, 2017 | Nov. 30, 2017 | Oct. 31, 2017 | Sep. 30, 2017 | Aug. 31, 2017 | Jul. 31, 2017 | Aug. 24, 2015 | Jan. 31, 2019 | Jan. 31, 2018 | Dec. 31, 2017 | Jan. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2007 | |
Due to factor | $ 209,192 | ||||||||||||||
Remitted by factor | $ 197,450 | ||||||||||||||
Factor invoicing | $ 470,200 | ||||||||||||||
Maturity date | Feb. 7, 2018 | ||||||||||||||
Note payable in exchange for due to factor and accrued interest | $ 210,000 | ||||||||||||||
Operating leases, rent expense | $ 4,316 | $ 4,190 | $ 4,067 | ||||||||||||
Litigation settlement | 9,750,000 | ||||||||||||||
Fees related to litigation settlement | $ (4,187,257) | ||||||||||||||
Cyber Safety, Inc [Member] | |||||||||||||||
Patent expiry year | Sept. 30, 2020 | ||||||||||||||
Option to buy patent price | $ 9,000,000 | ||||||||||||||
Cyber Safety, Inc [Member] | Minimum [Member] | |||||||||||||||
Amount receivable from product percentage | 15.00% | ||||||||||||||
Cyber Safety, Inc [Member] | Maximum [Member] | |||||||||||||||
Amount receivable from product percentage | 20.00% | ||||||||||||||
Exchange Agreement [Member] | Factor [Member] | |||||||||||||||
Repayment of debt | $ 50,000 | $ 20,000 | $ 20,000 | $ 20,000 | $ 20,000 | $ 20,000 | $ 60,000 | ||||||||
Maturity date | Feb. 7, 2018 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended |
Jan. 01, 2018 | Dec. 31, 2017 | |
Debt maturity date | Dec. 31, 2018 | |
Subsequent Event [Member] | Investor firm [Member] | ||
Interest rate | 10.00% | |
Convertible promissory note conversion description | Conversions would include a 42% discount to the price of the Companys common stock, as defined. | |
Subsequent Event [Member] | Investor firm [Member] | Maximum [Member] | ||
Promissory notes | $ 130,000 | |
Subsequent Event [Member] | Executives [Member] | ||
Equity ownership percentage | 31.00% | |
Subsequent Event [Member] | Unrelated Parties [Member] | ||
Equity ownership percentage | 20.00% | |
Subsequent Event [Member] | BlockSafe Technologies, Inc. [Member] | ||
Equity ownership percentage | 49.00% | |
Subsequent Event [Member] | BlockSafe Technologies, Inc. [Member] | Two Unrelated Parties [Member] | Two Promissory Notes [Member] | ||
Promissory notes | $ 147,000 | |
Interest rate | 8.00% | |
Debt maturity date | Jan. 30, 2019 | |
Purchased units | 147,000 |